I 
110TH CONGRESS 
1ST SESSION H. R. 1010 
To ensure that Federal student loans are delivered as efficiently as possible 
in order to provide additional grant aid to students. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 13, 2007 
Mr. GEORGE MILLER of California (for himself and Mr. PETRI) introduced 
the following bill; which was referred to the Committee on Education and 
Labor 
A BILL 
To ensure that Federal student loans are delivered as effi-
ciently as possible in order to provide additional grant 
aid to students. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Student Aid Reward 
Act of 2007’’. 
SEC. 2. STUDENT AID REWARD PROGRAM. 
Part G of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1088 et seq.) is amended by inserting 
after section 489 the following: 
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‘‘SEC. 489A. STUDENT AID REWARD PROGRAM. 
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall 
carry out a Student Aid Reward Program to encourage 
institutions of higher education to participate in the stu-
dent loan program under this title that is most cost-effec-
tive for taxpayers. 
‘‘(b) PROGRAM REQUIREMENTS.—In carrying out the 
Student Aid Reward Program, the Secretary shall— 
‘‘(1) provide to each institution of higher edu-
cation participating in the student loan program 
under this title that is most cost-effective for tax-
payers, a Student Aid Reward Payment, in an 
amount determined in accordance with subsection 
(c), to encourage the institution to participate in 
that student loan program; 
‘‘(2) require each institution of higher edu-
cation receiving a payment under this section to pro-
vide student loans under such student loan program 
for a period of 5 years after the date the first pay-
ment is made under this section; 
‘‘(3) where appropriate, require that funds paid 
to institutions of higher education under this section 
be used to award students a supplement to such stu-
dents’ Federal Pell Grants under subpart 1 of part 
A; 
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‘‘(4) permit such funds to also be used to award 
need-based grants to lower- and middle-income grad-
uate students; and 
‘‘(5) encourage all institutions of higher edu-
cation to participate in the Student Aid Reward Pro-
gram under this section. 
‘‘(c) AMOUNT.—The amount of a Student Aid Re-
ward Payment under this section shall be not less than 
50 percent of the savings to the Federal Government gen-
erated by the institution of higher education’s participa-
tion in the student loan program under this title that is 
most cost-effective for taxpayers instead of the institu-
tion’s participation in the student loan program that is 
not most cost-effective for taxpayers. 
‘‘(d) TRIGGER TO ENSURE COST NEUTRALITY.— 
‘‘(1) LIMIT TO ENSURE COST NEUTRALITY.— 
Notwithstanding subsection (c), the Secretary shall 
not distribute Student Aid Reward Payments under 
the Student Aid Reward Program that, in the aggre-
gate, exceed the Federal savings resulting from the 
implementation of the Student Aid Reward Pro-
gram. 
‘‘(2) FEDERAL SAVINGS.—In calculating Fed-
eral savings, as used in paragraph (1), the Secretary 
shall determine Federal savings on loans made to 
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students at institutions of higher education that par-
ticipate in the student loan program under this title 
that is most cost-effective for taxpayers and that, on 
the date of enactment of this section, participated in 
the student loan program that is not most cost-effec-
tive for taxpayers, resulting from the difference of— 
‘‘(A) the Federal cost of loan volume made 
under the student loan program under this title 
that is most cost-effective for taxpayers; and 
‘‘(B) the Federal cost of an equivalent type 
and amount of loan volume made, insured, or 
guaranteed under the student loan program 
under this title that is not most cost-effective 
for taxpayers. 
‘‘(3) DISTRIBUTION
RULES.—If the Federal 
savings determined under paragraph (2) is not suffi-
cient to distribute full Student Aid Reward Pay-
ments under the Student Aid Reward Program, the 
Secretary shall— 
‘‘(A) first make Student Aid Reward Pay-
ments to those institutions of higher education 
that participated in the student loan program 
under this title that is not most cost-effective 
for taxpayers on the date of enactment of this 
section; and 
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‘‘(B) with any remaining Federal savings 
after making Student Aid Reward Payments 
under subparagraph (A), make Student Aid Re-
ward Payments to the institutions of higher 
education eligible for a Student Aid Reward 
Payment and not described in subparagraph 
(A) on a pro-rata basis. 
‘‘(4) DISTRIBUTION TO STUDENTS.—Any insti-
tution of higher education that receives a Student 
Aid Reward Payment under this section— 
‘‘(A) shall distribute, where appropriate, 
part or all of such payment among the students 
of such institution who are Federal Pell Grant 
recipients by awarding such students a supple-
mental grant; and 
‘‘(B) may distribute part of such payment 
as a supplemental grant to graduate students in 
financial need. 
‘‘(5) ESTIMATES, ADJUSTMENTS, AND
CARRY 
OVER.— 
‘‘(A) ESTIMATES
AND
ADJUSTMENTS.— 
The Secretary shall make Student Aid Reward 
Payments to institutions of higher education on 
the basis of estimates, using the best data avail-
able at the beginning of an academic or fiscal 
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