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TITLE I—GENERAL PROVISIONS
PART A—EXTENSION AND REVISION OF
GENERAL PROVISIONS
SEC. 101. REDESIGNATION AND TRANSFER OF PROVISIONS.
(a) IN GENERAL.—
(1) REPEAL OF TITLE I.—Title I (20 U.S.C.
1001 et seq.) is repealed.
(2) REPEAL OF TITLE XII PROVISIONS.—The
following sections of title XII are repealed: sections
1206, 1211, and 1212 (20 U.S.C. 1145a, 1145e,
and 1145f ).
(3) REDESIGNATIONS.—
(A) Title XII is redesignated as title I.
(B) Sections 1201, 1202, and 1203 (20
U.S.C. 1141, 1142, and 1143) are redesignated
as sections 101, 102, and 103, respectively.
(C) Section 1204(b), as redesignated by
section 251 of the Higher Education Amend-
ments of 1968 (20 U.S.C. 1144(b); 82 Stat.
1042), is redesignated as section 104.
(D) Section 1204, as added by section
1201 of the Education Amendments of 1980
(20 U.S.C. 1144a; 94 Stat. 1495), is amended
by striking subsection (a), and by redesignating
subsection (b) as section 105.
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(E) Sections 1205, 1207, 1208, 1209,
1210, and 1213 (20 U.S.C. 1145, 1145b,
1145c, 1145d, 1145d-1, and 1145g) are redes-
ignated as sections 106 through 111, respec-
tively.
(4) TRANSFER.—Title I (including sections 101
through 111), as redesignated by paragraph (3), is
transferred to immediately follow the short title of
the Higher Education Act of 1965 (20 U.S.C. 1001
note).
(b) INTERNAL CROSS-REFERENCES.—The Higher
Education Act of 1965 is amended—
(1) in section 106 (as redesignated by sub-
section (a)(3)), by striking ‘‘481(a)’’ and inserting
‘‘101(a)’’;
(2) in section 485(f )(1)(I), by striking ‘‘section
1213’’ and inserting ‘‘section 111’’;
(3) in section 498(j)(2), by striking ‘‘section
1201(a)(2)’’ and inserting ‘‘section 101(a)(2)’’;
(4) in section 591(d)(2), by striking ‘‘section
1201(a)’’ and inserting ‘‘section 101(a)(1)’’; and
(5) in section 631(a)(8), by striking ‘‘section
1201(a)’’ each place it appears and inserting ‘‘sec-
tion 101(a)(1)’’.
(c) CONFORMING AMENDMENTS.—
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(1) TITLE 10, UNITED STATES CODE.—Sections
2193(c)(1) and 2199(2) of title 10, United States
Code, are each amended by striking ‘‘1201(a) of the
Higher Education Act of 1965 (20 U.S.C. 1141(a))’’
and inserting ‘‘101(a)(1) of the Higher Education
Act of 1965’’.
(2) TITLE 18, UNITED STATES CODE.—Section
207(j)(2)(B) of title 18, United States Code, is
amended by striking ‘‘1201(a)’’ and inserting
‘‘101(a)(1)’’.
(3) TITLE 39, UNITED STATES CODE.—Section
3626(b)(3) of title 39, United States Code, is
amended by striking ‘‘1201(a) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1141(a))’’ and insert-
ing ‘‘101(a)(1) of the Higher Education Act of
1965’’.
(4) ANTI-DRUG ABUSE ACT OF 1988.—Section
3601(7) of the Anti-Drug Abuse Act of 1988 (42
U.S.C. 11851(7)) is amended by striking ‘‘1201(a)
of the Higher Education Act of 1965 (20 U.S.C.
1141(a))’’ and inserting ‘‘101(a)(1) of the Higher
Education Act of 1965’’.
(5) CRANSTON-GONZALEZ
NATIONAL
AFFORD-
ABLE HOUSING ACT.—Section 457(9) of the Cran-
ston-Gonzalez National Affordable Housing Act (42
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U.S.C. 12899f(9)) is amended by striking ‘‘1201(a)’’
and inserting ‘‘101(a)(1)’’.
(6) DEPARTMENT
OF
STATE
AUTHORIZATION
ACT, FISCAL YEARS 1984 AND 1985.—Section 803(1)
of the Department of State Authorization Act, Fis-
cal Years 1984 and 1985 (22 U.S.C. 4502(1)) is
amended by striking ‘‘1201(a)’’ and inserting
‘‘101(a)(1)’’.
(7) EDUCATION
FOR
ECONOMIC
SECURITY
ACT.—Section 3(6) of the Education for Economic
Security Act (20 U.S.C. 3902(6)) is amended by
striking ‘‘1201(a)’’ and inserting ‘‘101(a)(1)’’.
(8) ELEMENTARY AND SECONDARY EDUCATION
ACT OF 1965.—The Elementary and Secondary Edu-
cation Act of 1965 is amended—
(A) 
in 
section 
7501(4) 
(20 
U.S.C.
7601(4)) by striking ‘‘1201(a)’’ and inserting
‘‘101(a)(1)’’; and
(B) in section 14101(17) (20 U.S.C.
8801(17)), by striking ‘‘1201(a)’’ and inserting
‘‘101(a)(1)’’.
(9) FEDERAL
AGRICULTURE
IMPROVEMENT
AND REFORM ACT OF 1996.—Section 922 of the Fed-
eral Agriculture Improvement and Reform Act of
1996 (7 U.S.C. 2279c) is amended in subsections
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(a)(1)(B) and (b)(1) by striking ‘‘1201 of the High-
er Education Act of 1965 (20 U.S.C. 1141)’’ and in-
serting ‘‘101(a)(1) of the Higher Education Act of
1965’’.
(10) FOLLOW THROUGH ACT.—Section 670G(5)
of the Follow Through Act (42 U.S.C. 9877(5)) is
amended by striking ‘‘1201 of the Higher Education
Act of 1965’’ and inserting ‘‘101(a)(1) of the Higher
Education Act of 1965’’.
(11) FOOD AND AGRICULTURE ACT OF 1977.—
Section 1417(h)(1)(A) of the Food and Agriculture
Act of 1977 (7 U.S.C. 3152(h)(1)(A)) is amended
by striking ‘‘1201(a) of the Higher Education Act of
1965 (20 U.S.C. 1141(a))’’ and inserting ‘‘101(a)(1)
of the Higher Education Act of 1965’’.
(12) FOREIGN
RELATIONS
AUTHORIZATION
ACT, FISCAL YEARS 1986 AND 1987.—Section 603(d)
of the Foreign Relations Authorization Act, Fiscal
Years 1986 and 1987 (20 U.S.C. 4703(d)) is
amended by striking ‘‘1201(a)’’ and inserting
‘‘101(a)(1)’’.
(13) GENERAL EDUCATION PROVISIONS ACT.—
Section 429(d)(2)(B)(ii) of the General Education
Provisions Act (20 U.S.C. 1228c(d)(2)(B)(ii)) is
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amended by striking ‘‘1201(a)’’ and inserting
‘‘101(a)(1)’’.
(14) HARRY S TRUMAN MEMORIAL SCHOLAR-
SHIP ACT.—Section 3(4) of the Harry S Truman
Memorial Scholarship Act (20 U.S.C. 2002(4)) is
amended by striking ‘‘1201(a)’’ and inserting
‘‘101(a)(1)’’.
(15) HEAD START ACT.—Section 649(c)(3) of
the Head Start Act (42 U.S.C. 9844(c)(3)) is
amended by striking ‘‘1201(a) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1141(a))’’ and insert-
ing ‘‘101(a)(1) of the Higher Education Act of
1965’’.
(16) HIGHER
EDUCATION
AMENDMENTS
OF
1992.—Section 1371(a)(1)(B) of the Higher Edu-
cation 
Amendments 
of 
1992 
(25 
U.S.C.
3371(a)(1)(B)) is amended by striking ‘‘1201(a)’’
and inserting ‘‘101(a)(1)’’.
(17) INTELLIGENCE AUTHORIZATION ACT, FIS-
CAL YEAR 1992.—Section 808(3) of the Intelligence
Authorization Act, Fiscal Year 1992 (20 U.S.C.
1908(3)) is amended by striking ‘‘1201(a) of the
Higher Education Act of 1965 (20 U.S.C. 1141(a))’’
and inserting ‘‘101(a)(1) of the Higher Education
Act of 1965’’.
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(18) JOB TRAINING PARTNERSHIP ACT.—The
Job Training Partnership Act is amended—
(A) in section 4(12) (29 U.S.C. 1503(12)),
by 
striking 
‘‘1201(a)’’ 
and 
inserting
‘‘101(a)(1)’’; and
(B) in section 141(d)(3)(B) (29 U.S.C.
1551(d)(3)(B)), by striking ‘‘1201(a) of the
Higher Education Act of 1965 (20 U.S.C.
1141(a))’’ and inserting ‘‘101(a)(1) of the
Higher Education Act of 1965’’.
(19) JUSTICE SYSTEM IMPROVEMENT ACT OF
1979.—Section 901(a)(17) of the Justice System Im-
provement Act of 1979 (42 U.S.C. 3791(a)(17)) is
amended by striking ‘‘1201(a) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1141(a))’’ and insert-
ing ‘‘101(a)(1) of the Higher Education Act of
1965’’.
(20) MUTUAL
EDUCATIONAL
AND
CULTURAL
EXCHANGE ACT OF 1961.—Section 112(a)(8) of the
Mutual Educational and Cultural Exchange Act of
1961 (22 U.S.C. 2460(a)(8)) is amended by striking
‘‘1201(a) of the Higher Education Act of 1965 (20
U.S.C. 1141(a))’’ and inserting ‘‘101(a)(1) of the
Higher Education Act of 1965’’.
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(21) NATIONAL AND COMMUNITY SERVICE ACT
OF 1990.—Sections 101(13) and 166(6) of the Na-
tional and Community Service Act of 1990 (42
U.S.C. 12511(13); 12626(6)) are each amended by
striking ‘‘1201(a) of the Higher Education Act of
1965 (20 U.S.C. 1141(a))’’ and inserting ‘‘101 of
the Higher Education Act of 1965’’.
(22) NATIONAL DEFENSE AUTHORIZATION ACT
FOR FISCAL YEAR 1987.—Section 1403(4) of the Na-
tional Defense Authorization Act for Fiscal Year
1987 (20 U.S.C. 4702(4)) is amended by striking
‘‘1201(a) of the Higher Education Act of 1965 (20
U.S.C. 1141(a))’’ and inserting ‘‘101(a)(1) of the
Higher Education Act of 1965’’.
(23) NATIONAL DEFENSE AUTHORIZATION ACT
FOR FISCAL YEAR 1993.—The National Defense Au-
thorization Act for Fiscal Year 1993 is amended in
section 4451(b)(1) (10 U.S.C. 2701 note) by strik-
ing ‘‘1201(a) of the Higher Education Act of 1965
(20 U.S.C. 1141(a))’’ and inserting ‘‘101(a)(1) of
the Higher Education Act of 1965’’.
(24) NATIONAL DEFENSE AUTHORIZATION ACT
FOR
FISCAL
YEARS
1992
AND
1993.—Section
3132(b)(1) of the National Defense Authorization
Act for Fiscal Years 1992 and 1993 (42 U.S.C.
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amended by striking ‘‘1201(a)’’ and inserting
‘‘101(a)(1)’’.
(27) OLDER AMERICANS ACT OF 1965.—Section
102(32) of the Older Americans Act of 1965 (42
U.S.C. 3002(32)) is amended by striking ‘‘1201(a)
of the Higher Education Act of 1965 (20 U.S.C.
1141(a))’’ and inserting ‘‘101(a)(1) of the Higher
Education Act of 1965’’.
(28) OMNIBUS PARKS AND PUBLIC LANDS MAN-
AGEMENT ACT OF 1996.—Section 1007(c)(5) of the
Omnibus Parks and Public Lands Management Act
of 1996 (16 U.S.C. 698u–5) is amended by striking
‘‘1201(a) of the Higher Education Act of 1965 (20
U.S.C. 1141(a))’’ and inserting ‘‘101(a)(1) of the
Higher Education Act of 1965’’.
(29) PUBLIC
LAW
OF
THE
67TH
CON-
GRESS.—Public Law 85 of the 67th Congress (42
Stat. 208; 25 U.S.C. 13), popularly referred to as
the Snyder Act, is amended by striking ‘‘1201’’ and
inserting ‘‘101(a)(1)’’.
(30) COMMUNICATION
ACT
OF
1934.—Section
223(h)(4) of the Communication Act of 1934 (47
U.S.C. 223(h)(4)) is amended by striking ‘‘1201 of
the Higher Education Act of 1965 (20 U.S.C.
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1141)’’ and inserting ‘‘101(a)(1) of the Higher Edu-
cation Act of 1965’’.
(31) FEDERAL
WATER
POLLUTION
CONTROL
ACT.—Section 112(a)(1) of the Federal Water Pollu-
tion Control Act (33 U.S.C. 1262(a)(1)) is amended
by striking ‘‘1201’’ and inserting ‘‘101(a)(1)’’.
(32) CARL D. PERKINS VOCATIONAL AND AP-
PLIED
TECHNOLOGY
EDUCATION
ACT.—Section
347(2)(A) of the Carl D. Perkins Vocational and
Applied Technology Education Act (20 U.S.C.
2394(2)(A)) is amended by striking ‘‘1201(a)’’ and
inserting ‘‘101(a)(1)’’.
(33) ENERGY
POLICY
AND
CONSERVATION
ACT.—Section 362(f )(5)(A) of the Energy Policy
and Conservation Act (42 U.S.C. 6322(f )(5)(A)) is
amended by striking ‘‘1201(a) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1141(a))’’ and insert-
ing ‘‘101(a)(1) of the Higher Education Act of
1965’’.
(34) JAMES MADISON MEMORIAL FELLOWSHIP
ACT.—Section 815 of the James Madison Memorial
Fellowship Act (20 U.S.C. 4514) is amended—
(A) 
in 
paragraph 
(3), 
by 
striking
‘‘1201(a)’’ and inserting ‘‘101(a)(1)’’; and
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(B) 
in 
paragraph 
(4), 
by 
striking
‘‘1201(d)’’ and inserting ‘‘101(a)(1)’’.
(35) REHABILITATION ACT OF 1973.—Sections
7(32) and 101(a)(7)(A)(iv)(II) of the Rehabilitation
Act of 1973 (29 U.S.C. 706(32); 29 U.S.C.
721(a)(7)(A)(iv)(II)) are each amended by striking
‘‘1201(a) of the Higher Education Act of 1965 (20
U.S.C. 1141(a))’’ and inserting ‘‘101(a)(1) of the
Higher Education Act of 1965’’.
(36) TECHNOLOGY RELATED ASSISTANCE FOR
INDIVIDUALS WITH DISABILITIES ACT OF 1988.—Sec-
tion 3(8) of the Technology Related Assistance for
Individuals with Disabilities Act of 1988 (29 U.S.C.
2202(8)) is amended by striking ‘‘1201(a) of the
Higher Education Act of 1965 (20 U.S.C. 1141(a))’’
and inserting ‘‘101(a)(1) of the Higher Education
Act of 1965’’.
(37) TRIBALLY CONTROLLED COMMUNITY COL-
LEGE ASSISTANCE ACT OF 1978.—The Tribally Con-
trolled Community College Assistance Act of 1978 is
amended—
(A) 
in 
section 
2(a)(5) 
(25 
U.S.C.
1801(a)(5)), by striking ‘‘1201(a)’’ and insert-
ing ‘‘101(a)(1)’’; and
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(B) in section 113(b)(2) (25 U.S.C.
1813(b)(2)), by striking ‘‘1201(a) of the Higher
Education Act of 1965 (20 U.S.C. 1141(a))’’
and inserting ‘‘101(a)(1) of the Higher Edu-
cation Act of 1965’’.
(38) VIOLENT CRIME CONTROL AND LAW EN-
FORCEMENT ACT OF 1994.—The Violent Crime Con-
trol and Law Enforcement Act of 1994 is amend-
ed—
(A) in sections 200103 and 200202 (42
U.S.C. 14092; 14111), by striking ‘‘1201(a) of
the Higher Education Act of 1965 (20 U.S.C.
1141(a))’’ and inserting ‘‘101(a)(1) of the
Higher Education Act of 1965’’; and
(B) in section 30401(b) (42 U.S.C.
13791(b)), by striking ‘‘a public’’ through ‘‘that
Act’’ and inserting ‘‘an elementary school as de-
fined in section 14101(14) of the Elementary
and Secondary Education Act of 1965, and a
secondary 
school 
as 
defined 
by 
section
14101(25) of such Act, which are public insti-
tutions’’.
(39) SCHOOL-TO-WORK OPPORTUNITIES ACT OF
1994.—Section 4 of the School-to-Work Opportuni-
ties Act of 1994 (20 U.S.C. 6103) is amended—
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(A) in paragraph (11)(B)(viii), by striking
‘‘section 
481(b)’’ 
and 
inserting 
‘‘section
101(a)(3)’’; and
(B) in paragraph (12), by striking ‘‘section
481’’ and inserting ‘‘section 101(a)(2)’’.
(40) NATIONAL AND COMMUNITY SERVICE ACT
OF 1990.—Section 148(g) of the National and Com-
munity Service Act of 1990 (42 U.S.C. 12604(g)) is
amended by striking ‘‘section 481(a) of the Higher
Education Act of 1965 (20 U.S.C. 1088(a))’’ and
inserting ‘‘section 101(a)(2) of the Higher Edu-
cation Act of 1965’’.
SEC. 102. DEFINITIONS.
(a) INSTITUTION OF HIGHER EDUCATION.—Section
101 (as redesignated by section 101(a)(3) of this Act) is
amended by striking subsections (a) and (b) and inserting
the following:
‘‘(a) INSTITUTION OF HIGHER EDUCATION.—
‘‘(1) IN GENERAL.—Subject to paragraphs (2)
through (4) of this subsection:
‘‘(A) PRINCIPAL CRITERIA.—The term ‘in-
stitution of higher education’ means an edu-
cational institution in any State that—
‘‘(i) admits as regular students only
persons having a certificate of graduation
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from a school providing secondary edu-
cation, or the recognized equivalent of such
a certificate;
‘‘(ii) is legally authorized within such
State to provide a program of education
beyond secondary education;
‘‘(iii) provides an educational program
for which it awards a bachelor’s degree or
provides not less than a two-year program
that is acceptable for full credit toward
such a degree;
‘‘(iv) is a public or other nonprofit in-
stitution; and
‘‘(v) is accredited by a nationally rec-
ognized accrediting agency or association,
or if not so accredited, is an institution
that has been granted preaccreditation sta-
tus by such an agency or association that
has been recognized by the Secretary for
the granting of preaccreditation status,
and the Secretary has determined that
there is satisfactory assurance that the in-
stitution will meet the accreditation stand-
ards of such an agency or association with-
in a reasonable time.
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‘‘(B) 
ADDITIONAL
INSTITUTIONS
IN-
CLUDED.—The term ‘institution of higher edu-
cation’ also includes—
‘‘(i) any school that provides not less
than a one-year program of training to
prepare students for gainful employment in
a recognized occupation and that meets the
provision of clauses (i), (ii), (iv), and (v) of
subparagraph (A); and
‘‘(ii) a public or nonprofit private edu-
cational institution in any State that, in
lieu of the requirement in subparagraph
(A)(i), admits as regular students persons
who are beyond the age of compulsory
school attendance in the State in which the
institution is located.
‘‘(C) LIST OF ACCREDITING AGENCIES.—
For purposes of this subsection, the Secretary
shall publish a list of nationally recognized ac-
crediting agencies or associations that he deter-
mines, pursuant to subpart 2 of part H of title
IV of this Act, to be reliable authority as to the
quality of the education or training offered.
‘‘(2) DEFINITION FOR PURPOSES OF TITLE IV
PROGRAMS.—
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‘‘(A) INCLUSION OF ADDITIONAL INSTITU-
TIONS.—Subject to subparagraphs (B) through
(D) of this paragraph, the term ‘institution of
higher education’ for purposes of title IV of this
Act includes, in addition to the institutions cov-
ered by the definition in paragraph (1) of this
subsection—
‘‘(i) a proprietary institution of higher
education;
‘‘(ii) a postsecondary vocational insti-
tution; and
‘‘(iii) only for the purposes of part B
of title IV, an institution outside the
United States that is comparable to an in-
stitution of higher education as defined in
paragraph (1) of this subsection and that
has been approved by the Secretary for the
purpose of part B of title IV.
‘‘(B) INSTITUTIONS OUTSIDE THE UNITED
STATES.—
‘‘(i) For the purpose of qualifying as
an institution under subparagraph (A)(iii)
of this paragraph, the Secretary shall es-
tablish criteria by regulation for the ap-
proval of institutions outside the United
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States and for the determination that such
institutions are comparable to an institu-
tion of higher education as defined in para-
graph (1) of this subsection. In the case of
a graduate medical or veterinary school
outside the United States, such criteria
shall include a requirement that a student
attending such school outside the United
States is ineligible for loans made, insured,
or guaranteed under part B of this title
unless—
‘‘(I)(aa) at least 60 percent of
those enrolled and at least 60 percent
of the graduates of the graduate med-
ical school outside the United States
were not persons described in section
484(a)(5) in the year preceding the
year for which a student is seeking a
loan under part B of title IV; and
‘‘(bb) at least 60 percent of the
individuals who were students or
graduates of the graduate medical
school outside the United States (both
nationals of the United States and
others) taking the examinations ad-
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ministered by the Educational Com-
mission for Foreign Medical Grad-
uates received a passing score in the
year preceding the year for which a
student is seeking a loan under part
B of title IV; or
‘‘(II) the institution has a clinical
training program that was approved
by a State as of January 1, 1992, or
the institution’s students complete
their clinical training at an approved
veterinary school located in the United
States.
‘‘(ii) For the purpose of qualifying as
an institution under subparagraph (A)(iii)
of this paragraph, the Secretary shall es-
tablish an advisory panel of medical ex-
perts that shall—
‘‘(I) evaluate the standards of ac-
creditation applied to applicant for-
eign medical schools; and
‘‘(II) determine the comparability
of those standards to standards for
accreditation applied to United States
medical schools.
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If such accreditation standards are deter-
mined not to be comparable, the foreign
medical school shall be required to meet
the requirements of paragraph (1) of this
subsection.
‘‘(iii) The failure of an institution out-
side the United States to provide, release,
or authorize release to the Secretary of
such information as may be required by
clause (i) of this subparagraph shall render
such institution ineligible for the purpose
of part B of title IV.
‘‘(iv) If, pursuant to this subpara-
graph, an institution loses eligibility to
participate in the programs under title IV,
then a student enrolled at such institution
may, notwithstanding such loss of eligi-
bility, continue to be eligible to receive a
loan under part B while attending such in-
stitution for the academic year succeeding
the academic year in which such loss of eli-
gibility occurred.
‘‘(C) LIMITATIONS BASED ON COURSE OF
STUDY OR ENROLLMENT.—An institution shall
not be considered to meet the definition of an
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institution of higher education in subparagraph
(A) of this paragraph if such institution—
‘‘(i) offers more than 50 percent of
such institution’s courses by correspond-
ence, unless the institution is an institution
that meets the definition in section
521(4)(C) of the Carl D. Perkins Voca-
tional and Applied Technology Education
Act;
‘‘(ii) enrolls 50 percent or more of its
students in correspondence courses, unless
the institution is an institution that meets
the definition in such section, except that
the Secretary, at the request of such insti-
tution, may waive the applicability of this
clause to such institution for good cause,
as determined by the Secretary in the case
of an institution of higher education that
provides a 2-year or 4-year program of in-
struction for which the institution awards
an associate or baccalaureate degree;
‘‘(iii) has a student enrollment in
which more than 25 percent of the stu-
dents are incarcerated, except that the
Secretary may waive the prohibition of this
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clause for a nonprofit institution that pro-
vides a 4-year or a 2-year program of in-
struction (or both) for which it awards a
bachelor’s or associate’s degree or diploma,
respectively; or
‘‘(iv) has a student enrollment in
which more than 50 percent of the stu-
dents do not have a high school diploma or
its recognized equivalent and does not pro-
vide a 4-year or a 2-year program of in-
struction (or both) for which it awards a
bachelor’s or associate’s degree, respec-
tively, except that the Secretary may waive
the limitation contained in this clause if a
nonprofit institution demonstrates to the
satisfaction of the Secretary that it exceeds
such limitation because it serves, through
contracts with Federal, State, or local gov-
ernment agencies, significant numbers of
students who do not have a high school di-
ploma or its recognized equivalent.
‘‘(D) LIMITATIONS
BASED
ON
MANAGE-
MENT.—An institution shall not be considered
to meet the definition of an institution of higher
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Marshall Islands, the Republic of Palau, and the
Federated States of Micronesia.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 481 (20 U.S.C. 1088) is amended—
(A) by striking subsections (a), (b), and
(c); and
(B) 
by 
redesignating 
subsections 
(d)
through (f ) as subsections (a) through (c), re-
spectively.
(2) Each of the following provisions are amend-
ed by striking ‘‘section 481’’ and inserting ‘‘section
101(a)(2)’’: sections 435(a)(1), 487(d), and 496(j)
and (k).
(3) Section 498(i) (20 U.S.C. 1099c) is amend-
ed by striking ‘‘section 481 (other than the require-
ments in subsections (b)(5) and (c)(3))’’ and insert-
ing ‘‘section 101(a) (other than the requirements in
paragraphs (3)(A)(v) and (4)(A)(iii))’’.
(4) Section 498(j) is amended by striking ‘‘sec-
tions 481(b)(5) and 481(c)(3)’’ and inserting ‘‘para-
graphs (3)(A)(v) and (4)(A)(iii) of section 101(a)’’.
(5) Section 105 (as redesignated by section
101(a)(3)(D)) is amended by adding at the end the
following new sentence: ‘‘This subsection shall cease
to be effective on October 1, 2001.’’.
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SEC. 103. REGULATORY REFORM.
Title I is amended by adding at the end the following
new section:
‘‘SEC. 112. REGULATORY REFORM.
‘‘(a) BIENNIAL REVIEW OF REGULATIONS.—In every
even-numbered year (beginning with 1998), the Sec-
retary—
‘‘(1) shall review all regulations issued under
title IV of the Higher Education Act of 1965 in ef-
fect at the time of the review that apply to the oper-
ations or activities of any participant in those pro-
grams; and
‘‘(2) shall determine whether any such regula-
tion is no longer necessary in the public interest.
‘‘(b) EFFECT OF DETERMINATION.—The Secretary
shall repeal, consolidate, simplify, or otherwise modify any
regulation the Secretary determines to be no longer nec-
essary in the public interest.
‘‘(c) REPORT TO CONGRESS.—The Secretary shall re-
port to the Congress any legislative changes necessary to
permit regulatory simplification under this section.’’.
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PART B—PERFORMANCE-BASED ORGANIZATION
FOR THE DELIVERY OF FEDERAL STUDENT
FINANCIAL ASSISTANCE.
SEC. 111. PERFORMANCE-BASED ORGANIZATION FOR THE
DELIVERY OF FEDERAL STUDENT FINANCIAL
ASSISTANCE.
Title I (as amended by part A of this title) is amend-
ed—
(1) by striking the heading of such title and in-
serting the following:
‘‘TITLE I—GENERAL AND
ADMINISTRATIVE PROVISIONS
‘‘PART A—GENERAL PROVISIONS’’;
and
(2) by adding at the end the following new part:
‘‘PART B—ADMINISTRATIVE PROVISIONS FOR
DELIVERY OF STUDENT FINANCIAL ASSISTANCE
‘‘SEC. 131. PERFORMANCE-BASED ORGANIZATION FOR THE
DELIVERY OF FEDERAL STUDENT FINANCIAL
ASSISTANCE.
‘‘(a) ESTABLISHMENT AND PURPOSE.—
‘‘(1) ESTABLISHMENT.—There is established in
the Department a Performance-Based Organization
(hereafter referred to as the ‘PBO’) which shall be
a discrete management unit responsible for manag-
ing the information systems supporting the pro-
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grams authorized under title IV of this Act, as speci-
fied in subsection (b).
‘‘(2) PURPOSES.—The purposes of the PBO
are—
‘‘(A) to improve the level of service to stu-
dents and participants in the programs;
‘‘(B) to reduce the costs of administering
the Federal student financial assistance pro-
grams authorized under title IV;
‘‘(C) to increase the accountability of the
officials responsible for administering the oper-
ational aspects of these programs;
‘‘(D) to provide greater flexibility in the
management of the operational functions of the
Federal student financial assistance programs;
‘‘(E) to integrate the information systems
supporting the Federal student financial assist-
ance programs; and
‘‘(F) to implement an open, common, inte-
grated system for the delivery of student finan-
cial assistance under title IV.
‘‘(b) AUTHORITY.—
‘‘(1) AUTHORITY
OF
SECRETARY.— Notwith-
standing any other provision of this Act, the Sec-
retary shall maintain responsibility for the develop-
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ment and promulgation of policy relating to the pro-
grams of student financial assistance under title IV.
In the exercise of its functions, the PBO shall be
subject to the direction of the Secretary. The Sec-
retary shall—
‘‘(A) request the advice of, and work in co-
operation with, the Chief Operating Officer in
developing regulations, policies, administrative
guidance, or procedures affecting the informa-
tion systems administered by the PBO, and
other functions performed by the PBO;
‘‘(B) request cost estimates from the Chief
Operating Officer for system changes required
by specific policies proposed by the Secretary;
‘‘(C) consider the Chief Operating Officer’s
comments and estimates prior to finalizing such
regulations, policies, administrative guidance, or
procedures;
‘‘(D) assist the Chief Operating Officer in
identifying goals for the administration and
modernization of the delivery system for stu-
dent financial assistance under title IV; and
‘‘(E) if necessary, arrange for additional
funding to ensure that the PBO can efficiently
perform its functions.
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‘‘(2) FUNCTIONS.—The PBO shall carry out
the following functions:
‘‘(A) All aspects of contracting for the data
and information systems supporting student fi-
nancial assistance under title IV, including the
operational administration of the William D.
Ford Federal Direct Loan Program, but not in-
cluding the development of policy relating to
such programs.
‘‘(B) The administrative, accounting, and
financial management functions of the delivery
system for Federal student assistance, includ-
ing—
‘‘(i) the collection, processing and
transmission of applicant data to students,
institutions and authorized third parties,
as provided for in section 483;
‘‘(ii) technical specifications for soft-
ware development and systems supporting
the delivery of student financial assistance
under title IV;
‘‘(iii) information technology and sys-
tems infrastructure related to the delivery
and management of student financial as-
sistance under title IV;
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‘‘(iv) all software and hardware acqui-
sitions and all information technology con-
tracts related to the delivery and manage-
ment of student financial assistance under
title IV; and
‘‘(v) all customer service, training and
user support related to the functions de-
scribed in clauses (i) through (iv).
‘‘(C) Annual development of a budget for
the operations and services of the PBO, in con-
sultation with the Secretary, and for consider-
ation and inclusion in the Department’s annual
budget submission.
‘‘(D) Annual development of goals, in con-
sultation with the Secretary, for the administra-
tion and modernization of the system for deliv-
ery of student financial assistance under title
IV.
‘‘(E) Other functions proposed by the Sec-
retary, and agreed to by the Chief Operating
Officer as are not inconsistent with the func-
tions of the PBO.
‘‘(3) INDEPENDENCE.—In carrying out its
functions, the PBO shall exercise independent con-
trol of its budget allocations and expenditures, per-
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sonnel decisions and processes, procurements, and
other administrative and management functions.
‘‘(4) REVIEW OF PBO.—The PBO shall be sub-
ject to the usual and customary Federal audit proce-
dures, and be subject to review by the Inspector
General of the Department.
‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—For the
purpose of funding the administrative costs incurred by
the PBO in administering systems supporting programs
under this part, there are authorized to be appropriated
such sums as may be necessary for fiscal year 1999 and
each of the 4 succeeding fiscal years, except that funds
authorized under section 458 shall be made available to
the PBO by the Secretary for administrative costs author-
ized to be funded under that section.
‘‘(d) ORGANIZATIONAL REPORTS.—
‘‘(1) PERFORMANCE PLAN.—Within 6 months
of the hiring of the Chief Operating Officer, and
every 12 months thereafter, the Secretary and the
Chief Operating Officer of the Department shall de-
velop a performance plan for the PBO that estab-
lishes measurable goals and objectives for the orga-
nization. In developing this performance plan, the
Secretary and the Chief Operating Officer shall con-
sult with the Committee on Education and the
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Workforce of the House of Representatives, the
Committee on Labor and Human Resources of the
Senate, and the Advisory Committee on Student Fi-
nancial Assistance. The performance plan shall in-
clude a concise statement of goals for a modernized
system for the delivery of student financial assist-
ance under title IV and identify action steps nec-
essary to achieve such goals. Such goals shall be
used in evaluating the performance of the Chief Op-
erating Officer and the PBO pursuant to paragraph
(2).
‘‘(2) ANNUAL ACCOUNTABILITY REPORT.—The
Chief Operating Officer shall prepare and submit an
annual accountability report to the Secretary and
the Committee on Education and the Workforce of
the House of Representatives and the Committee on
Labor and Human Resources of the Senate. The ac-
countability report shall include—
‘‘(A) an independent financial audit of the
expenditures of both the PBO and programs
administered by it;
‘‘(B) financial and performance require-
ments applicable to the PBO under the Chief
Financial Officer Act of 1990 and the Govern-
ment Performance and Results Act of 1993;
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‘‘(C) the results achieved by the PBO dur-
ing the year relative to the goals established in
the organization’s performance plan;
‘‘(D) the results of the evaluations of per-
formance of the Chief Operating Officer and
senior managers under subsections (e)(2) and
(f )(2), including the amounts of bonus com-
pensation awarded to these individuals;
‘‘(E) a discussion of the effectiveness of co-
ordination between the PBO and the Secretary;
‘‘(F) recommendations for legislative and
regulatory changes to improve service to stu-
dents and their families, and to improve pro-
gram efficiency and integrity; and
‘‘(G) other such information as the Direc-
tor of the Office of Management and Budget
shall prescribe for performance based organiza-
tions.
‘‘(e) CHIEF OPERATING OFFICER.—
‘‘(1) IN
GENERAL.—The management of the
PBO shall be vested in a Chief Operating Officer
who shall be appointed by the Secretary to a 5-year
term and compensated without regard to chapters
33, 51, and 53 of title 5, United States Code. The
Secretary shall appoint the Chief Operating Officer
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within 6 months of the date of enactment of this
part. The Secretary shall consult with the Chairmen
of the Committee on Education and the Workforce
of the House of Representatives and the Committee
on Labor and Human Resources of the Senate prior
to making an appointment. The appointment shall
be made on the basis of demonstrated management
ability and expertise in information technology, in-
cluding extensive experience in the financial services
industry, and without regard to political affiliation
or activity. The Secretary may reappoint the Chief
Operating Officer to subsequent terms so long as the
performance of the Chief Operating Officer, as set
forth in the performance agreement, is satisfactory
or better. The Chief Operating Officer may be re-
moved by—
‘‘(A) the President; or
‘‘(B) the Secretary, for misconduct or fail-
ure to meet performance goals set forth in the
performance agreement in paragraph (2).
The President or Secretary shall communicate the
reasons for any such removal to the appropriate
committees of Congress.
‘‘(2) PERFORMANCE
AGREEMENT.—The Sec-
retary and the Chief Operating Officer shall enter
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the maximum rate of basic pay for the Senior Exec-
utive Service under section 5382 of title 5, United
States Code, including any applicable locality-based
comparability payment that may be authorized
under section 5304(h)(2)(C) of such title 5. In addi-
tion, a senior manager may receive a bonus in an
amount up to, but not in excess of, 50 percent of
such annual rate of basic pay, based upon the Chief
Operating Officer’s evaluation of the manager’s per-
formance in relation to the performance goals set
forth in the performance agreement described in
paragraph (2).
‘‘(g) PERSONNEL FLEXIBILITY.—
‘‘(1) PERSONNEL
CEILINGS.—The PBO shall
not be subject to any ceiling relating to the number
or grade of employees.
‘‘(2) 
ADMINISTRATIVE
FLEXIBILITY.—The
Chief Operating Officer shall work with the Office of
Personnel Management to develop and implement
personnel flexibilities in staffing, classification, and
pay that meet the needs of the PBO, subject to com-
pliance with title 5, United States Code.
‘‘(h) ESTABLISHMENT OF A FAIR AND EQUITABLE
SYSTEM FOR MEASURING STAFF PERFORMANCE.—The
PBO shall establish an annual performance management
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system, subject to compliance with title 5, United States
Code and consistent with applicable provisions of law and
regulations, which strengthens the organizational effec-
tiveness of the PBO by providing for establishing goals
or objectives for individual, group, or organizational per-
formance (or any combination thereof), consistent with the
performance plan of the PBO and its performance plan-
ning procedures, including those established under the
Government Performance and Results Act of 1993, and
communicating such goals or objectives to employees.
‘‘(i) PROCUREMENT FLEXIBILITY.—
‘‘(1) IN GENERAL.—Except as provided in this
subsection, the PBO shall abide by all applicable
Federal procurement laws and regulations when pro-
curing property and services. The PBO shall—
‘‘(A) enter into contracts for information
systems supporting the programs authorized
under title IV to carry out the functions set
forth in subsection (b)(2); and
‘‘(B) obtain the services of experts and
consultants without regard to section 3109 of
title 5, United States Code and set pay in ac-
cordance with such section.
‘‘(2) PERFORMANCE
BASED
SERVICING
CON-
TRACTS.—The Chief Operating Officer shall, to the
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extent practicable, maximize the use of performance
based servicing contracts, consistent with guidelines
for such contracts published by the Office of Federal
Procurement Policy, to achieve cost savings and im-
prove service.
‘‘(3) FEE FOR SERVICE ARRANGEMENTS.—The
Chief Operating Officer shall, to the extent prac-
ticable and consistent with the purpose of the PBO,
utilize services available outside of the Federal Gov-
ernment in the delivery of Federal student financial
assistance. To achieve this purpose, the PBO is au-
thorized to pay fees to an organization that are
equivalent to those paid by other entities for such
services, if the Chief Operating Officer determines
that such organization currently provides an infor-
mation system or service that meets the require-
ments of the PBO.
‘‘(j) FOCUS GROUPS.—To facilitate information shar-
ing and customer involvement, the Chief Operating Officer
may establish focus groups composed of students, institu-
tions, and other participants in the programs authorized
by title IV to provide advice on student aid delivery mat-
ters.
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‘‘SEC. 132. ADMINISTRATIVE SIMPLIFICATION OF STUDENT
AID DELIVERY.
‘‘(a) IN GENERAL.—The Secretary, and the Chief
Operating Officer shall improve the efficiency and effec-
tiveness of the student aid delivery system by encouraging
and participating in the establishment of voluntary con-
sensus standards and requirements for the electronic
transmission of information necessary for the administra-
tion of programs under title IV.
‘‘(b) ADOPTION OF VOLUNTARY CONSENSUS STAND-
ARDS.—Except with respect to the common financial re-
porting form under section 483(a), the Secretary shall
adopt voluntary consensus standards for transactions re-
quired under title IV, and common data elements for such
transactions, to enable information to be exchanged elec-
tronically between systems administered by the Depart-
ment and among participants in the Federal student aid
delivery system.
‘‘(c) REQUIREMENTS FOR ADOPTION OF VOLUNTARY
CONSENSUS
STANDARDS.—Any 
voluntary 
consensus
standard adopted under this section shall—
‘‘(1) be a standard that has been developed,
adopted, or modified by a standard setting organiza-
tion that is open to the participation of the various
entities engaged in the delivery of Federal student
financial assistance; and
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‘‘(2) be consistent with the objective of reducing
the administrative costs of delivering student finan-
cial assistance under title IV.
‘‘(d) PARTICIPATION IN STANDARD SETTING ORGA-
NIZATIONS.—
‘‘(1) The Chief Operating Officer shall partici-
pate in the activities of standard setting organiza-
tions in carrying out the provisions of this section.
‘‘(2) The Chief Operating Officer shall encour-
age higher education groups seeking to develop com-
mon forms, standards, and procedures in support of
the delivery of Federal student financial assistance
to conduct these activities within a standard setting
organization.
‘‘(3) The Chief Operating Officer may pay nec-
essary dues and fees associated with participating in
standard setting organizations pursuant to this sub-
section from funds available under subsection (j).
‘‘(e) PROCEDURES FOR ADOPTION AND IMPLEMEN-
TATION
OF VOLUNTARY CONSENSUS STANDARDS.—In
adopting voluntary consensus standards and implementa-
tion timetables under this section, including modifications
of existing standards, the Secretary shall follow the proce-
dures for negotiated rulemaking in section 492.
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‘‘(f ) INITIAL VOLUNTARY CONSENSUS STANDARDS
TO BE ADOPTED.—Through coordinated participation be-
tween the Chief Operating Officer and standard setting
organizations, the initial standards adopted by the Sec-
retary shall include the following:
‘‘(1) ELECTRONIC PERSONAL IDENTIFIER NUM-
BER.—The Secretary shall adopt standards for a
single electronic personal identifier number for stu-
dents receiving assistance under title IV.
‘‘(2) ELECTRONIC SIGNATURE.—The Secretary,
in coordination with the Secretary of Commerce,
shall adopt standards specifying procedures for the
electronic transmission and authentication of signa-
tures with respect to transactions requiring a signa-
ture under title IV.
‘‘(3) SINGLE INSTITUTIONAL IDENTIFIER.—The
Secretary shall adopt standards for a single identi-
fier for eligible institutions under title IV.
‘‘(g) USE OF CLEARINGHOUSES.—Nothing in this
section shall restrict the ability of participating institu-
tions and lenders from using a clearinghouse to comply
with the standards for the exchange of information estab-
lished under this section.
‘‘(h) APPLICABILITY TO CURRENT SYSTEMS.—
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‘‘(1) GENERAL RULE.—Except as provided in
paragraph (2) and (3), this section shall apply to all
Department of Education information systems sup-
porting the delivery of programs under title IV no
later than 12 months from the date of enactment of
this part.
‘‘(2) NATIONAL
STUDENT
LOAN
DATA
SYS-
TEM.—This section shall apply to sections 485B(e)
and (f ) no later than 18 months after the date of
enactment of this part.
‘‘(3) INTEGRATED POSTSECONDARY EDUCATION
DATA SYSTEM.—The Secretary shall coordinate the
adoption of voluntary consensus standards under
this section to ensure that standards are compatible
with the integrated postsecondary education data
system (IPEDS).
‘‘(i) DATA SECURITY.—Any entity that maintains or
transmits information under a transaction covered by this
section shall maintain reasonable and appropriate admin-
istrative, technical, and physical safeguards—
‘‘(1) to ensure the integrity and confidentiality
of the information; and
‘‘(2) to protect against any reasonably antici-
pated security threats, or unauthorized uses or dis-
closures of the information.
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TITLE II—POSTSECONDARY EDU-
CATION IMPROVEMENT PRO-
GRAMS
SEC. 201. URBAN COMMUNITY SERVICE.
(a) DESIGNATION OF TITLE.—The Higher Education
Act of 1965 is amended by inserting at the end of title
I (20 U.S.C. 1001 et seq.) the following:
‘‘TITLE 
II—POSTSECONDARY
EDUCATION 
IMPROVEMENT
PROGRAMS’’.
(b) REDESIGNATION
AND TRANSFER
OF URBAN
COMMUNITY SERVICE PROGRAM.—
(1) INTERNAL CROSS-REFERENCES.—Part A of
title XI is amended—
(A) in section 1102(b), by striking ‘‘section
1104’’ and inserting ‘‘section 204’’;
(B) in section 1104(12), by striking ‘‘sec-
tion 1103(a)(2)(B)’’ and inserting ‘‘section
203(a)(2)(B)’’; and
(C) in section 1108(1), by striking ‘‘section
1103’’ and inserting ‘‘section 203’’.
(2) REDESIGNATION.—Part A of title XI (20
U.S.C. 1136 et seq.) is redesignated as part A of
title II, and sections 1101 through 1109 are redesig-
nated as sections 201 through 209.
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(3) TRANSFER.—Part A of title II (including
sections 201 through 209), as redesignated by para-
graph (2), is transferred to immediately follow the
heading inserted by subsection (a) of this section.
(4) REPEAL.—Part B of title XI (20 U.S.C.
1137 et seq.) and the heading of title XI are re-
pealed.
(c) ALLOWABLE ACTIVITIES.—Section 204 (as redes-
ignated by subsection (b)(2)) is amended by adding at the
end the following new paragraph:
‘‘(14) Improving access to technology in local
communities.’’.
(d) DESIGNATION
OF
URBAN
GRANT
INSTITU-
TIONS.—Section 207 (as redesignated by subsection
(b)(2)) is amended by adding at the end the following new
sentence: ‘‘The information developed as a result of this
section shall be made available to Urban Grant Institu-
tions and to any other interested institution of higher edu-
cation by any appropriate means, including the Internet.’’.
(e) AUTHORIZATION OF APPROPRIATIONS.—Section
209 (as redesignated by subsection (b)(2)) is amended by
striking ‘‘1993’’ and inserting ‘‘1999’’.
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SEC. 202. FUND FOR THE IMPROVEMENT OF POSTSECOND-
ARY EDUCATION.
(a) REDESIGNATION
AND
TRANSFER
OF
PRO-
GRAMS.—
(1) REDESIGNATION.—Part A of title X (20
U.S.C. 1135 et seq.) is redesignated as part B of
title II (as amended by section 201) and—
(A) sections 1001 through 1003 (20
U.S.C. 1135 et seq.) are redesignated as sec-
tions 221 through 223; and
(B) section 1011 (20 U.S.C. 1135a–11) is
redesignated as section 224.
(2) TRANSFER.—Part B of title II (including
sections 221 through 224), as redesignated by para-
graph (1), is transferred to follow part A of title II.
(3) REPEAL.—Section 1004 and parts B, C,
and D of title X (20 U.S.C. 1135a–3, 1135e et seq.)
and the heading of title X are repealed.
(b) ENDOWMENT GRANTS.—Section 221(a) (as re-
designated by subsection (a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(7);
(2) by striking the period at the end of para-
graph (8) and inserting ‘‘; and’’; and
(3) by adding at the end the following new
paragraph:
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‘‘(9) awarding an endowment grant, on a com-
petitive basis, to a national organization to enable
such organization to support the establishment or
ongoing work of area program centers that foster
the development of local affiliated chapters in high-
poverty areas to improve graduation rates and post-
secondary attendance through the provision of aca-
demic support services and scholarship assistance for
the pursuit of postsecondary education.’’.
(c) SPECIAL PROJECTS.—Section 224 (as redesig-
nated by subsection (a)(2)(B)) is amended—
(1) by striking paragraphs (1), (2), and (3) of
subsection (c) and inserting the following:
‘‘(1) institutional restructuring to improve
learning and promote productivity, efficiency, quality
improvement, and cost and price control;
‘‘(2) articulation agreements between two-year
and four-year institutions;
‘‘(3) cooperation between institutions to encour-
age cost saving initiatives through joint purchase of
goods and services, and shared use of facilities and
faculty resources.
‘‘(4) evaluation and dissemination of model pro-
grams; and
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‘‘(5) international cooperation and student ex-
change among postsecondary educational institu-
tions.’’; and
(2) by striking subsection (d).
(d) AUTHORIZATION OF APPROPRIATIONS.—
(1) COMBINATION OF SUBPARTS.—Part B of
title II (as redesignated by subsection (a)) is amend-
ed by striking the subpart designations and head-
ings.
(2) AUTHORIZATION.—Part B of title II (as so
redesignated) is amended by adding at the end the
following:
‘‘SEC. 225. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated to carry out
this part $30,000,000 for fiscal year 1999 and such sums
as may be necessary for each of the 4 succeeding fiscal
years.’’.
SEC. 203. GRANTS TO STATES FOR WORKPLACE AND COM-
MUNITY TRANSITION TRAINING FOR INCAR-
CERATED YOUTH OFFENDERS.
(a) REDESIGNATION
AND
TRANSFER
OF
PRO-
GRAMS.—
(1) REDESIGNATION.—Part E of title X (20
U.S.C. 1135g) is redesignated as part C of title II
and section 1091 is redesignated as section 231.
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(2) TRANSFER.—Part C of title II (including
section 231), as redesignated by paragraph (1), is
transferred to follow part B of title II (as amended
by section 202 of this Act).
(b) REAUTHORIZATION.—Section 231(j) (as so redes-
ignated) is amended to read as follows:
‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out this section
$5,000,000 for fiscal year 1999 and such sums as may
be necessary for each of the four succeeding fiscal years.’’.
SEC. 204. ADVANCED PLACEMENT FEE PAYMENT PRO-
GRAM.
(a) REDESIGNATION
AND
TRANSFER
OF
PRO-
GRAMS.—
(1) REDESIGNATION.—Part G of title XV of
the Higher Education Amendments of 1992 (20
U.S.C. 1170) is redesignated as part D of title II
and section 1545 of such Act is redesignated as sec-
tion 241.
(2) TRANSFER.—Part D of title II (including
section 241), as redesignated by paragraph (1), is
transferred to follow part C of title II (as amended
by section 203 of this Act).
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(b) REAUTHORIZATION.—Section 241(f ) (as so re-
designated) is amended by striking ‘‘1993’’ and inserting
‘‘1999’’.
SEC. 205. TEACHER QUALITY ENHANCEMENT GRANTS.
Title II is further amended by adding at the end the
following new part:
‘‘PART E—TEACHER QUALITY ENHANCEMENT
GRANTS
‘‘SEC. 271. PURPOSE.
‘‘The purposes of this part are—
‘‘(1) to provide competitive grants to States for
assistance in strengthening the quality of the teach-
ing force by improving the academic knowledge of
teachers in the subject areas in which they teach,
such as math, science, English, foreign languages,
history, economics, art, civics, Government, and ge-
ography;
‘‘(2) to hold institutions of higher education
with teacher preparation programs accountable for
preparing teachers who are highly competent in the
academic content areas in which they plan to teach,
including training in the effective uses of tech-
nologies in the classroom; and
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‘‘(3) to recruit high quality individuals, includ-
ing individuals from other occupations, into the
teaching force.
‘‘SEC. 272. ELIGIBILITY.
‘‘(a) DEFINITIONS.—For purposes of this part:
‘‘(1) ELIGIBLE GRANT RECIPIENT.—The term
‘eligible grant recipient’ means—
‘‘(A) other than for the purpose of section
273(b), a Governor of a State, except that if,
pursuant to the law or constitution of such
State, another individual, entity, or agency in a
State that is responsible for the teacher certifi-
cation and preparation activities contained in
the application, such term means that individ-
ual, entity, or agency; and
‘‘(B) for the purpose of section 273(b), an
eligible partnership.
‘‘(2) ELIGIBLE PARTNERSHIP.—The term ‘eligi-
ble partnership’ means an entity consisting of an ex-
emplary private independent or State-supported pub-
lic institution of higher education which prepares
teachers, and a local educational agency, and which
may also consist of the eligible grant recipient, other
institutions of higher education, public charter
schools, public and private nonprofit elementary and
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secondary schools, or other public and private non-
profit agencies or organizations.
‘‘(b) APPLICATIONS.—To be eligible to receive a
grant under this part, an eligible grant recipient shall, at
the time of the initial grant application, submit an applica-
tion to the Secretary that meets the requirements of this
part.
‘‘(c) CONTENTS OF APPLICATION.—Such application
shall include a description of how the eligible grant recipi-
ent intends to use funds provided under this part and such
other information and assurances as the Secretary may
require.
‘‘SEC. 273. USE OF FUNDS.
‘‘(a) GENERAL ACTIVITIES.—The eligible grant re-
cipient of a State that receives a grant under this subpart
shall use a portion of such grant to carry out 1 or more
of the following activities:
‘‘(1) Reforming State teacher certification re-
quirements to ensure that current and future teach-
ers possess the necessary academic content knowl-
edge in the subject areas in which they are certified
and assigned to teach.
‘‘(2) Providing prospective teachers alternatives
to schools of education through programs at colleges
of arts and sciences or at nonprofit organizations.
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‘‘(3) Funding programs which establish or ex-
pand alternative routes to State certification for
highly qualified individuals, including mid-career
professionals from other occupations, paraprofes-
sionals, and former military personnel.
‘‘(4) Implementing reforms which hold institu-
tions of higher education with teacher preparation
programs accountable for preparing teachers who
are highly competent in the academic content areas
in which they plan to teach.
‘‘(5) Developing and implementing effective
mechanisms to expeditiously remove incompetent or
unqualified teachers.
‘‘(6) Recruiting minorities, and others, into the
teaching and counseling professions, including edu-
cation paraprofessionals, former military personnel,
and mid-career professionals, by providing financial
and other assistance related to instruction, induc-
tion, mentoring, and support services that include
pre-service and in-service components, to serve with-
in schools which have—
‘‘(A) a high percentage of children in pov-
erty;
‘‘(B) low retention rates for teachers; or
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‘‘(C) a high percentage of teachers teach-
ing subjects for which they are not qualified to
teach.
‘‘(7) Developing and implementing effective
mechanisms to provide principals and superintend-
ents with advanced managerial skills.
‘‘(8) Creating opportunities for school principals
and superintendents to further their professional de-
velopment by providing advanced managerial skills
training.
‘‘(b) PARTNERSHIP ACTIVITIES.—An eligible part-
nership that receives a grant under this subpart shall use
such funds to carry out 1 or more of the following activi-
ties:
‘‘(1) Implementing reforms which hold institu-
tions of higher education with teacher preparation
programs accountable for preparing teachers who
are highly competent in the academic content areas
in which they plan to teach.
‘‘(2) Creating opportunities for enhanced and
ongoing professional development which improves
the academic content knowledge of teachers in the
subject areas in which they are certified to teach or
in which they are working toward certification to
teach.
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‘‘(3) Providing programs designed to implement
the successful integration of technology into teaching
and learning.
‘‘(4) Recruiting minorities, and others, into the
teaching and counseling professions, including edu-
cation paraprofessionals, former military personnel,
and mid-career professionals, by providing financial
and other assistance related to instruction, induc-
tion, mentoring, and support services that include
pre-service and in-service components, to serve with-
in schools which have—
‘‘(A) a high percentage of children in pov-
erty;
‘‘(B) low retention rates for teachers; or
‘‘(C) a high percentage of teachers teach-
ing subjects for which they are not qualified to
teach.
‘‘SEC. 274. COMPETITIVE AWARDS.
‘‘(a) COMPETITIVE GRANTS.—
‘‘(1) 
APPLICABILITY.—The 
Secretary 
shall
make grants in accordance with the requirements of
this subsection for any fiscal year for which the
amount appropriated under section 276 does not
equal or exceed $250,000,000.
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‘‘(2) COMPETITIVE BASIS FOR AWARDS.—The
Secretary shall make annual grants under this sub-
section on a competitive basis.
‘‘(3) PEER
REVIEW
PANEL.—The Secretary
shall provide the applications submitted by eligible
grant recipients under section 272 to a peer review
panel for evaluation. With respect to each applica-
tion, the peer review panel shall initially recommend
the application for funding or for disapproval.
‘‘(4) PRIORITY.—In recommending applications
to the Secretary, the panel shall give priority to—
‘‘(A) applications from States with propos-
als which promise initiatives to reform State
teacher certification requirements which are de-
signed to ensure that current and future teach-
ers possess the necessary academic content
knowledge in the subject areas in which they
are certified to teach or which include innova-
tive reforms to hold institutions of higher edu-
cation with teacher preparation programs ac-
countable for preparing teachers who are highly
competent in the academic content areas in
which they plan to teach; and
‘‘(B) 
eligible 
partnership 
applications
which—
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‘‘(i) include the eligible grant recipient
and demonstrate a high degree of collabo-
ration with the State agency responsible
for teacher certification and preparation;
and
‘‘(ii) include a local educational agen-
cy which includes a school with—
‘‘(I) a high percentage of children
in poverty;
‘‘(II) low retention rates for
teachers; or
‘‘(III) a high percentage of teach-
ers teaching subjects for which they
are not qualified to teach.
‘‘(5) RANKING
OF
APPLICATIONS.—With re-
spect to each application recommended for funding,
the panel shall assign the application a rank, relative
to other recommended applications, based on the pri-
ority described in subsection (c), the extent to which
the application furthers the purposes of this part,
and the overall quality of the application, based on
the quality and scope of State-supported strategies
to improve quality of teacher preparation and their
teaching force.
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‘‘(6) RECOMMENDATION OF AMOUNT.—With re-
spect to each application recommended for funding,
the panel shall make a recommendation to the Sec-
retary with respect to the amount of the grant that
should be made. The Secretary shall use 1⁄3 of the
funds made available under this part to fund appli-
cations submitted by eligible partnerships.
‘‘(7) SECRETARIAL SELECTION.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary shall determine, based
on the peer review panel’s recommendations,
which applications shall receive funding and the
amounts of such grants. In determining grant
amounts, the Secretary shall take into account
the total amount of funds available for all
grants under this part and the types of activi-
ties proposed to be carried out.
‘‘(B) EFFECT OF RANKING BY PANEL.—In
making grants under this part, the Secretary
shall select applications according to the rank-
ing of the applications by the peer review panel,
except in cases where the Secretary determines,
for good cause, that a variation from that order
is appropriate.
‘‘(b) FORMULA GRANTS.—
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‘‘(1) ALLOTMENT.—For any fiscal year for
which the amount appropriated to carry out this
part exceeds $250,000,000, the Secretary shall make
allotments to the eligible grant recipient of each
State, pursuant to the formula described in para-
graph (2), to enable the eligible grant recipient to
carry out the activities under this part, including the
funding of eligible partnerships to carry out activi-
ties described in section 273(b).
‘‘(2) ALLOTMENT FORMULA.—For any such fis-
cal year, an eligible grant recipient from each State
that submits an application under section 272(a)
shall receive an allotment under this part in an
amount that bears the same ratio to the amount ap-
propriated as the school age population ages 5
through 17 of the State bears to the school age pop-
ulation ages 5 through 17 of all the States, except
that no State shall receive less than an amount
equal to 1⁄4 of 1 percent of the total amount.
‘‘(c) ADDITIONAL REQUIREMENTS.—
‘‘(1) MATCHING
REQUIREMENT.—Each State
receiving funds under this part shall provide, from
non-Federal sources, an amount equal to 1⁄2 of the
amount of the grant in cash or in kind to carry out
the activities supported by the grant.
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‘‘(2) LIMITATION
ON
ADMINISTRATIVE
EX-
PENSES.—An eligible recipient that receives a grant
under this part may use not more than 2 percent of
the grant funds for administrative costs.
‘‘(3) REPORTING.—
‘‘(A) IN GENERAL.—An eligible grant re-
cipient that receives a grant under this section
shall submit an accountability report to the
Secretary and the Committee on Education and
the Workforce of the House of Representatives
and the Committee on Labor and Human Re-
sources of the Senate. Such reports shall in-
clude a description of the degree to which sub-
stantial progress has been made in meeting the
following goals:
‘‘(i) Raising the State academic stand-
ards required to enter the teaching profes-
sion.
‘‘(ii) Increasing the percentage of
classes taught in core academic subject
areas by teachers fully certified by the
State to teach in those subject areas.
‘‘(iii) Decreasing shortages of quali-
fied teachers in poor urban and rural
areas.
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‘‘(iv) Increasing opportunities for en-
hanced and ongoing professional develop-
ment which improves the academic content
knowledge of teachers in the subject areas
in which they are certified to teach or in
which they are working toward certification
to teach.
‘‘(B) ACCOUNTABILITY OF STATE INSTITU-
TION OF HIGHER EDUCATION.—Prior to receiv-
ing funds under this part, an eligible grant re-
cipient shall demonstrate that at least 80 per-
cent of graduates of each of the exemplary in-
stitutions of higher education in any eligible
partnership described in section 273(a)(2) who
enter the field of teaching pass all applicable
State qualification assessments of new teachers,
which must include assessments of each pro-
spective teacher’s subject matter knowledge in
the content area or areas in which the teacher
provides instruction. Prior to each subsequent
receipt of funds under this part, such State
shall demonstrate that 70 percent of the grad-
uates of each institution of higher education in
the State have met such goal and continue to
progress to exceed such goal. Such assessment
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shall be at least as rigorous as those in place
on the date of enactment of this Act and shall
have qualifying scores no lower than those in
place on the date of enactment of this Act.
‘‘(C) 
PROVISION
TO
PEER
REVIEW
PANEL.—The Secretary shall provide the re-
ports submitted under subparagraph (A) to the
peer review panel convened under subsection
(a)(3). The panel shall use such accountability
report in recommending applications for subse-
quent funding under this section.
‘‘(4) TEACHERS QUALIFICATIONS PROVIDED TO
PARENT
UPON
REQUEST.—Any local educational
agency that participates as an eligible recipient or
partner under this part shall make available, upon
request and in an understandable and uniform for-
mat, to any parent of a student attending any school
in the local educational agency, information regard-
ing the qualifications of the student’s classroom
teacher, both generally and with regard to the sub-
ject matter in which the teacher provides instruction.
‘‘SEC. 275. LIMITATIONS.
‘‘(a) FEDERAL CONTROL PROHIBITED.—Nothing in
this part shall be construed to permit, allow, encourage,
or authorize any Federal control over any aspect of any
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private, religious, or home school, whether or not a home
school is treated as a private school or home school under
State law. This section shall not be construed to bar pri-
vate, religious, or home schools from participation in pro-
grams or services under this part.
‘‘(b) NO CHANGE IN STATE CONTROL ENCOURAGED
OR REQUIRED.—Nothing in this part shall be construed
to encourage or require any change in a State’s treatment
of any private, religious, or home school, whether or not
a home school is treated as a private school or home school
under State law.
‘‘(c) NATIONAL SYSTEM
OF TEACHER CERTIFI-
CATION PROHIBITED.—Nothing in this part shall be con-
strued to permit, allow, encourage, or authorize any na-
tional system of teacher certification.
‘‘SEC. 276. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated to carry out
this part such sums as may be necessary for each of the
fiscal years 1999 through 2003.’’.
SEC. 206. CAMPUS SAFETY.
(a) GRANTS TO COMBAT VIOLENT CRIMES AGAINST
WOMEN ON CAMPUSES.—Title II is further amended by
adding at the end the following new part:
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‘‘Part F—Grants to Combat Violent Crimes Against
Women on Campuses
‘‘SEC. 281. GRANTS TO COMBAT VIOLENT CRIMES AGAINST
WOMEN ON CAMPUSES.
‘‘(a) GRANTS AUTHORIZED.—
‘‘(1) IN GENERAL.—The Secretary is authorized
to make grants to institutions of higher education
for use to provide training to administrators, secu-
rity personnel, and campus personnel and student
organizations for the purpose of developing and
strengthening effective security and investigation
strategies to combat violent crimes against women
on campuses, and to develop and strengthen victim
services in cases involving violent crimes against
women on campuses, which may include partner-
ships with local criminal justice authorities and com-
munity-based victims services agencies.
‘‘(2) AWARD BASIS.—The Secretary shall award
grants and contracts under this section on a com-
petitive basis.
‘‘(3) EQUITABLE
PARTICIPATION.—The Sec-
retary shall make every effort to ensure the equi-
table participation of private and public institutions
of higher education and to ensure the equitable geo-
graphic participation of such institutions in the ac-
tivities assisted under this part.
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‘‘(4) PRIORITY.—In the award of grants and
contracts under this section, the Secretary shall give
priority to institutions of higher education or consor-
tia of such institutions that show the greatest need
for the sums requested.
‘‘(b) USE OF GRANT FUNDS.—Funds provided under
this part may be used for the following purposes:
‘‘(1) To provide training for campus security
and college personnel, including campus disciplinary
or judicial boards, that address the issues of sexual
assaults, stalking, and domestic violence.
‘‘(2) To implement and operate education pro-
grams for the prevention of violent crimes against
women.
‘‘(3) To develop, enlarge, or strengthen support
services programs including medical or psychological
counseling for victims of sexual offense crimes.
‘‘(4) To create, disseminate, or otherwise pro-
vide assistance and information about victims’ op-
tions on and off campus to bring disciplinary or
other legal action.
‘‘(5) To train campus administrators and cam-
pus security personnel to more effectively identify
and respond to violent crimes against women on
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campus, including the crimes of sexual assault,
stalking, and domestic violence.
‘‘(6) To develop and implement more effective
campus policies, protocols, orders, and services spe-
cifically devoted to prevent, identify, and respond to
violent crimes against women on campus, including
the crimes of sexual assault, stalking, and domestic
violence.
‘‘(7) To develop, enlarge, or strengthen victim
services programs for local campuses and to improve
delivery of victim services on campuses.
‘‘(8) To provide capital improvements (includ-
ing improved lighting and communications facilities
but not including the construction of buildings) on
campuses to address violent crimes against women
on campus, including the crimes of sexual assault,
stalking, and domestic violence.
‘‘(9) To support improved coordination between
campus administrators, campus security personnel,
and local law enforcement to reduce violent crimes
against women on campus.
‘‘(c) APPLICATIONS.—
‘‘(1) IN GENERAL.—In order to be eligible to be
awarded a grant under this section for any fiscal
year, an institution of higher education shall submit
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an application to the Secretary at such time and in
such manner as the Secretary shall prescribe.
‘‘(2) CONTENTS.—Each application submitted
under paragraph (1) shall—
‘‘(A) describe the need for grant funds and
the plan for implementation for any of the pur-
poses described in subsection (b);
‘‘(B) describe how the campus authorities
shall consult and coordinate with nonprofit and
other victim services programs, including sexual
assault and domestic violence victim services
programs;
‘‘(C) provide measurable goals and ex-
pected results from the use of the grants funds;
‘‘(D) provide assurances that the Federal
funds made available under this section shall be
used to supplement and, to the extent practical,
increase the level of funds that would, in the
absence of Federal funds, be made available by
the applicant for the purpose described in this
part; and
‘‘(E) include such other information and
assurances as the Secretary reasonably deter-
mines to be necessary.
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‘‘(3) COMPLIANCE
WITH
CAMPUS
CRIME
RE-
PORTING REQUIRED.—No institution of higher edu-
cation shall be eligible for a grant under this section
unless such institution is in compliance with the re-
quirements of section 485(f ) of this Act.
‘‘(d) REPORTING.—Not later than 180 days after the
end of the fiscal year for which grants are made under
this part, the Secretary shall submit to the committees of
the House of Representatives and the Senate responsible
for issues relating to higher education and crime, a report
that includes—
‘‘(1) the number of grants and funds distrib-
uted under this part;
‘‘(2) a summary of the purposes for which these
grants were provided and an evaluation of their
progress;
‘‘(3) a statistical summary of the persons
served, detailing the nature of victimization, and
providing data on age, sex, race, ethnicity, disability,
relationship to offender, geographic distribution, and
type of campus; and
‘‘(4) an evaluation of the effectiveness of pro-
grams funded under this part, including an evalua-
tion based on the reduction observed in crimes re-
ported pursuant to section 485(f ).
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‘‘(f ) GRANTEE REPORTING.—Upon completion of the
grant or contract period under this section, the grantee
institution or consortium of such institutions shall file a
performance report with the Secretary explaining the ac-
tivities carried out together with an assessment of the ef-
fectiveness of those activities in achieving the purposes of
this section. The Secretary shall suspend funding for an
approved application if an applicant fails to submit an an-
nual performance report.
‘‘(g) DEFINITIONS.—In this part—
‘‘(1) the term ‘domestic violence’ includes acts
or threats of violence, not including acts of self-de-
fense, committed by a current or former spouse of
the victim, by a person with whom the victim shares
a child in common, by a person who is cohabitating
with or has cohabitated with the victim, by a person
similarly situated to a spouse of the victim under the
domestic or family violence laws of the jurisdiction,
or by any other person against a victim who is pro-
tected from that person’s acts under the domestic or
family violence laws of the jurisdiction;
‘‘(2) the term ‘sexual assault’ means any con-
duct proscribed by chapter 109A of title 18, United
States Code, whether or not the conduct occurs in
the special maritime and territorial jurisdiction of
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the United States or in a Federal prison and in-
cludes both assaults committed by offenders who are
strangers to the victim and assaults committed by
offenders who are known or related by blood or mar-
riage to the victim; and
‘‘(3) the term ‘victim services’ means a non-
profit, nongovernmental organization that assists do-
mestic violence or sexual assault victims, including
campus women’s centers, rape crisis centers, bat-
tered women’s shelters, and other sexual assault or
domestic violence programs including campus coun-
seling support and victim advocate organizations
with domestic violence, stalking, and sexual assault
programs, whether or not organized and staffed by
students.
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—For the
purpose of carrying out this part, there are authorized to
be appropriated $10,000,000 for fiscal year 1999 and
such sums as may be necessary for each of the 4 succeed-
ing fiscal years.’’.
SEC. 207. ACCOUNTABILITY FOR INSTITUTIONS OF HIGHER
EDUCATION THAT PREPARE TEACHERS.
Title II is further amended by adding at the end the
following new part:
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‘‘PART F—ACCOUNTABILITY FOR INSTITUTIONS
OF HIGHER EDUCATION THAT PREPARE
TEACHERS
‘‘SEC. 281. DATA COLLECTION.
‘‘(a) DATA REQUIRED.—Within one year after the
date of enactment of the Higher Education Amendments
of 1998, and annually thereafter, the Secretary shall col-
lect from each State receiving funds under this Act and
publish the following information:
‘‘(1) A description of the teacher licensing and
credentialing assessments used by each State, in-
cluding any and all assessments required in the sub-
ject matter area or areas in which a teacher provides
instruction.
‘‘(2) The standards and criteria established by
each State that teachers or prospective teachers
must meet in order to receive a passing score on
such assessments, including information on the ex-
tent to which passing such examinations is required
in order for an individual to be a classroom teacher.
‘‘(3) Information on the extent to which teach-
ers or prospective teachers in each State are re-
quired to take examinations or other assessments of
their subject matter knowledge in the area or areas
in which they provide instruction, the standards es-
tablished for passing any such assessments, and the
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extent to which teachers or prospective teachers are
required to receive a passing score on such assess-
ments in order to teach in specific subject areas or
grade levels.
‘‘(4) Information on the extent to which each
State waives teacher credentialing and licensing re-
quirements, including the proportion of all teachers
or prospective teachers in the State for whom such
licensing and credentialing requirements have been
waived and the distribution of such individuals
across high- and low-poverty schools and across
grade levels and subject areas.
‘‘(5) The pass rate, for the preceding year, on
all teacher licensing and credentialing assessments
for all individuals in the State who took such assess-
ments, disaggregated by the institution of higher
education from which the teacher received his or her
most recent degree.
‘‘(b) COORDINATION.—The Secretary, to the extent
practicable, shall coordinate the information collected and
published under this part among States for individuals
who took State teacher licensing or credentialing assess-
ments in a State other than the State in which the individ-
ual received his or her most recent degree.
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‘‘(c) USE OF LOCAL AGENCIES.—For each State in
which there are no State licensing or credentialing assess-
ments, the Secretary shall, to the extent practicable, col-
lect data comparable to the data described in paragraphs
(1) through (5) of subsection (a) from local educational
agencies, colleges and universities, or other entities that
administer such assessments to teachers or prospective
teachers.
‘‘SEC. 282. DATA DISSEMINATION.
‘‘(a) EFFECTIVE DATE
OF REQUIREMENTS.—The
data required to be distributed under this section shall be
distributed beginning within 3 years after the date of en-
actment of the Higher Education Amendments of 1998
and annually thereafter.
‘‘(b) PASSING RATES.—Each institution of higher
education that has a course of study that prepares elemen-
tary and secondary school teachers and receives Federal
funds will report and distribute widely, including through
prominent publications such as catalogs and promotional
materials sent to potential applicants, high school guid-
ance counselors, and the employers of graduates of such
institutions, their pass rate for graduates of the institution
on each of the State’s initial teacher certification and li-
censing assessments for the most recent year for which
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data are available at the time of publication of such mate-
rials.
‘‘(c) IDENTIFICATION OF INSTITUTIONS WITH PASS-
ING RATES BELOW 70 PERCENT.—Each State shall sub-
mit to the Secretary a list of institutions of higher edu-
cation that prepare teachers and receive Federal funds
under this Act for which, for the preceding year, less than
70 percent of graduates who took any of the State’s initial
teacher licensing and credentialing assessments failed to
receive a passing score on any such assessment. For each
assessment, data shall be disaggregated by the institution
of higher education from which the student received his
or her most recent degree, unless such degree was granted
more than 3 years prior to the date such assessment was
administered.
‘‘SEC. 283. STATE FUNCTIONS.
‘‘(a) STATE ASSESSMENT.—In order to receive funds
under this Act, a State shall, no later than one year after
the date of enactment of the Higher Education Amend-
ments of 1998, have in place a procedure to identify low
performing programs of teacher preparation within insti-
tutions of higher education. Such levels of performance
shall be determined solely by the State and may include
criteria based upon information collected pursuant to this
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part. Such assessment shall be described in the report
under section 281.
‘‘(b) TERMINATION OF ELIGIBILITY.—Any institu-
tion of higher education that offers a program of teacher
preparation in which the State has withdrawn its approval
or terminated its financial support due to the low perform-
ance of its teacher preparation program based upon the
State assessment described in section (a)—
‘‘(1) shall be ineligible for any funding for pro-
fessional development activities awarded by the De-
partment of Education; and
‘‘(2) shall not be permitted to accept or enroll
any student that receives aid under title IV of this
Act in its teacher preparation program.
‘‘SEC. 284. NEGOTIATED RULEMAKING.
‘‘If the Secretary develops any regulations imple-
menting section 283(b)(2), the Secretary shall submit
such proposed regulations to a negotiated rulemaking
process which shall include representatives of States and
institutions of higher education for their review and com-
ment.
SEC. 208. ADDITIONAL REPEAL.
Title VIII (20 U.S.C. 1133 et seq.), relating to coop-
erative education, is repealed.
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TITLE III—INSTITUTIONAL AID
SEC. 301. STRENGTHENING INSTITUTIONS.
(a) PROGRAM PURPOSE; USE OF FUNDS.—Section
311 (20 U.S.C. 1057) is amended—
(1) in subsection (b)(2), by striking ‘‘or’’ at the
end of subparagraph (A) and inserting ‘‘and’’;
(2) by amending paragraph (3) of subsection
(b) to read as follows:
‘‘(3) Special consideration shall be given to applica-
tions which propose, pursuant to the institution’s plan, the
use of funds for integrating computer technology into in-
stitutional facilities to create smart buildings.’’; and
(3) by adding at the end the following new sub-
sections:
‘‘(c) AUTHORIZED
ACTIVITIES.—Grants awarded
under this section shall be used for one or more of the
following activities:
‘‘(1) purchase, rental, or lease of scientific or
laboratory equipment for educational purposes, in-
cluding instructional and research purposes;
‘‘(2) construction, maintenance, renovation, and
improvement in classrooms, libraries, laboratories,
and other instructional facilities;
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‘‘(3) support of faculty exchanges, faculty devel-
opment, and faculty fellowships to assist in attaining
advanced degrees in their field of instruction;
‘‘(4) purchase of library books, periodicals, and
other educational materials, including telecommuni-
cations program material;
‘‘(5) tutoring, counseling, and student service
programs designed to improve academic success;
‘‘(6) funds management, administrative man-
agement, and acquisition of equipment for use in
strengthening funds management;
‘‘(7) joint use of facilities, such as laboratories
and libraries;
‘‘(8) establishing or improving a development
office to strengthen or improve contributions from
alumni and the private sector;
‘‘(9) establishing or improving an endowment
fund;
‘‘(10) creating or improving facilities for Inter-
net or other distance learning academic instruction
capabilities, including purchase or rental of tele-
communications technology equipment or services;
and
‘‘(11) other activities proposed in the applica-
tion submitted pursuant to subsection (c) that—
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‘‘(A) contribute to carrying out the pur-
poses of this section; and
‘‘(B) are approved by the Secretary as part
of the review and acceptance of such applica-
tion.
‘‘(d) ENDOWMENT FUND LIMITATIONS.—
‘‘(1) PORTION OF GRANT.—An institution may
not use more than 20 percent of its grant under this
part for any fiscal year for establishing or improving
an endowment fund.
‘‘(2) MATCHING
REQUIRED.—An institution
that uses any portion of its grant under this part for
any fiscal year for establishing or improving an en-
dowment fund shall provide an equal or greater
amount for such purposes from non-Federal funds.
‘‘(3) REGULATIONS.—The Secretary shall pub-
lish rules and regulations specifically governing the
use of funds for establishing or improving an endow-
ment fund.’’.
(b) ENDOWMENT FUND DEFINITION.—Section 312
(20 U.S.C. 1058) is amended by adding at the end the
following new subsection:
‘‘(g) ENDOWMENT FUND.—For the purpose of this
part, the term ‘endowment fund’ means a fund that—
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‘‘(1) is established by State law, by an institu-
tion of higher education, or by a foundation that is
exempt from Federal income taxation;
‘‘(2) is maintained for the purpose of generat-
ing income for the support of the institution; and
‘‘(3) does not include real estate.’’.
(c) DURATION OF GRANT.—Section 313 (20 U.S.C.
1059) is amended—
(1) in subsection (a), by inserting before the pe-
riod at the end the following: ‘‘, except that no insti-
tution shall be eligible to secure a subsequent 5-year
grant award under this part until two calendar years
have elapsed since the expiration of its most recent
5-year grant award’’; and
(2) in subsection (b), by inserting ‘‘subsection
(c) and a grant under’’ before ‘‘section 354(a)(1)’’.
(d) APPLICATIONS.—Title III is amended by striking
section 314 (20 U.S.C. 1059a) and inserting the following:
‘‘SEC. 314. APPLICATIONS.
‘‘Each eligible institution desiring to receive assist-
ance under this part shall submit an application in accord-
ance with the requirements of section 351.’’.
(e) PROGRAM
FOR TRIBALLY CONTROLLED COL-
LEGES
AND UNIVERSITIES.—Section 316 (20 U.S.C.
1059c) is amended to read as follows:
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‘‘SEC. 316. AMERICAN INDIAN TRIBALLY CONTROLLED COL-
LEGES AND UNIVERSITIES.
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall
provide grants and related assistance to American Indian
Tribal Colleges and Universities to enable such institu-
tions to improve and expand their capacity to serve Indian
students.
‘‘(b) DEFINITIONS.—For the purposes of this section:
‘‘(1) The term ‘Indian’ has the same meaning
as in section 2 of the Tribally Controlled Community
Colleges Act of 1978.
‘‘(2) The term ‘Indian tribe’ has the same
meaning as in section 2 of such Act.
‘‘(3) The term ‘Tribal College or University’
has the meaning given the term ‘tribally controlled
college or university’ in section 2 of such Act, and
includes an institution listed in the Equity in Edu-
cational Land Grant Status Act of 1994.
‘‘(4) The term ‘institution of higher education’
means an institution of higher education as defined
by section 101(a)(1) of this Act, except that sub-
paragraph (A)(ii) of such section shall not be appli-
cable.
‘‘(c) AUTHORIZED
ACTIVITIES.—Grants awarded
under this section shall be used by Tribal Colleges or Uni-
versities to assist such institutions to plan, develop, under-
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take, and carry out authorized activities. Such authorized
activities may include—
‘‘(1) purchase, rental, or lease of scientific or
laboratory equipment for educational purposes, in-
cluding instructional and research purposes;
‘‘(2) construction, maintenance, renovation, and
improvement in classrooms, libraries, laboratories,
and other instructional facilities, including purchase
or rental of telecommunications technology equip-
ment or services;
‘‘(3) support of faculty exchanges, faculty devel-
opment, and faculty fellowships to assist in attaining
advanced degrees in their field of instruction;
‘‘(4) academic instruction in disciplines in
which American Indians are underrepresented;
‘‘(5) purchase of library books, periodicals, and
other educational materials, including telecommuni-
cations program material;
‘‘(6) tutoring, counseling, and student service
programs designed to improve academic success;
‘‘(7) funds management, administrative man-
agement, and acquisition of equipment for use in
strengthening funds management;
‘‘(8) joint use of facilities, such as laboratories
and libraries;
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‘‘(9) establishing or improving a development
office to strengthen or improve contributions from
alumni and the private sector;
‘‘(10) establishing or enhancing a program of
teacher education designed to qualify students to
teach in elementary or secondary schools, with a
particular emphasis on teaching American Indian
children and youth, that shall include, as part of
such program, preparation for teacher certification;
‘‘(11) establishing community outreach pro-
grams which will encourage American Indian ele-
mentary and secondary students to develop the aca-
demic skills and the interest to pursue postsecondary
education;
‘‘(12) establishing or improving an endowment
fund; and
‘‘(13) other activities proposed in the applica-
tion submitted pursuant to this subsection that—
‘‘(A) contribute to carrying out the pur-
poses of this section; and
‘‘(B) are approved by the Secretary as part
of the review and acceptance of such applica-
tion.
‘‘(d) APPLICATION PROCESS.—
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‘‘(1) INSTITUTIONAL ELIGIBILITY.—To be eligi-
ble to receive assistance under this section, an insti-
tution shall be an institution which—
‘‘(A) is an eligible institution under section
312(b);
‘‘(B) is eligible to receive assistance under
the Tribally Controlled Community College As-
sistance Act of 1978 (Public Law 95–471); or
‘‘(C) is eligible to receive funds under the
Equity in Educational Land Grant Status Act
of 1994.
‘‘(2) APPLICATION.—Any institution desiring to
receive assistance under this section shall submit an
application to the Secretary at such time, and in
such manner, as the Secretary may by regulation
reasonably require. Each such application shall in-
clude—
‘‘(A) a 5-year plan for improving the as-
sistance provided by the Tribal College or uni-
versity to Indian students, increasing the rates
at which Indian high school students enroll in
higher education, and increasing overall post-
secondary retention rates for Indian students;
and
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‘‘(B) such enrollment data and other infor-
mation and assurances as the Secretary may re-
quire to demonstrate compliance with subpara-
graphs (A) and (B) of paragraph (1).
‘‘(3) SPECIAL RULE.—For the purposes of this
part, no Tribal College or University which is eligible
for and receives funds under this section may con-
currently receive other funds under this part or part
B.’’.
SEC. 302. HISTORICALLY BLACK COLLEGES AND UNIVER-
SITIES.
(a) USES OF FUNDS.—Section 323(a) (20 U.S.C.
1062(a)) is amended—
(1) by redesignating paragraph (12) as para-
graph (13); and
(2) by inserting after paragraph (11) the fol-
lowing new paragraph:
‘‘(12) Establishing or improving an endowment
fund.’’.
(b) LIMITATIONS.—Section 323(b) is amended by
striking paragraph (3) and inserting the following:
‘‘(3)(A) An institution may not use more than 20 per-
cent of its grant under this part for any fiscal year for
establishing or improving an endowment fund.
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‘‘(B) An institution that uses any portion of its grant
under this part for any fiscal year for establishing or im-
proving an endowment fund shall provide an equal or
greater amount for such purposes from non-Federal
funds.
‘‘(C) The Secretary shall publish rules and regula-
tions specifically governing the use of funds for establish-
ing or improving an endowment fund.’’.
(c) PROFESSIONAL OR GRADUATE INSTITUTIONS.—
(1) GENERAL AUTHORIZATION.—Section 326(a)
(20 U.S.C. 1063b(a)) is amended—
(A) in paragraph (1), by inserting ‘‘in
mathematics 
or 
the 
physical 
or 
natural
sciences’’ after ‘‘graduate education opportuni-
ties’’; and
(B) in paragraph (2), by striking ‘‘except
that’’ and all that follows and inserting the fol-
lowing: ‘‘, except that no institution shall be re-
quired to match any portion of the first
$500,000 of its award from the Secretary. After
allocations are made to each eligible institution
under the funding rules provided in subsection
(f ), the Secretary shall reallocate, on a pro rata
basis, any amounts which remain unallocated
(by reason of the failure of an institution to
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comply with the matching requirements of this
paragraph) among the institutions that have
complied with such matching requirement.’’.
(2) USE OF FUNDS.—Section 326(c) (20 U.S.C.
1063b(c)) is amended by striking paragraphs (1)
through (3) and inserting the following:
‘‘(1) purchase, rental or lease of scientific or
laboratory equipment for educational purposes, in-
cluding instructional and research purposes;
‘‘(2) construction, maintenance, renovation, and
improvement in classroom, library, laboratory, and
other instructional facilities used exclusively for the
purposes of this section, including purchase or rental
of telecommunications technology equipment or serv-
ices;
‘‘(3) purchase of library books, periodicals,
technical and other scientific journals, microfilm,
microfiche, and other educational materials, includ-
ing telecommunications program materials;
‘‘(4) scholarships, fellowships, and other finan-
cial assistance for needy graduate and professional
students to permit their enrollment in and comple-
tion of the doctoral degree in medicine, dentistry,
pharmacy, veterinary medicine, law, and the doctor-
ate degree in the physical or natural sciences, engi-
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neering, mathematics, or other scientific disciplines
in which African Americans are underrepresented;
‘‘(5) establish or improve a development office
to strengthen and increase contributions from alum-
ni and the private sector;
‘‘(6) assist in the establishment or maintenance
of an institutional endowment to facilitate financial
independence pursuant to section 331 of this title;
and
‘‘(7) funds and administrative management,
and the acquisition of equipment, including software,
for use in strengthening funds management and
management information systems.’’.
(3) ELIGIBILITY.—Section 326(e) (20 U.S.C.
1063b(e)) is amended—
(A) in paragraph (1)
(i) by striking ‘‘include—’’ and insert-
ing ‘‘are the following:’’;
(ii) by inserting ‘‘and other qualified
graduate programs’’ before the semicolon
at the end of subparagraphs (F) through
(J);
(iii) by striking ‘‘and’’ at the end of
subparagraph (O);
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(iv) by inserting ‘‘University’’ after
‘‘Jackson State’’ in subparagraph (P);
(v) by striking the period at the end
of such subparagraph and inserting a
semicolon; and
(vi) by inserting after such subpara-
graph the following new subparagraphs:
‘‘(Q) Norfolk State University qualified
graduate program; and
‘‘(R) Tennessee State University qualified
graduate program.’’; and
(B) by striking paragraphs (2) and (3) and
inserting the following:
‘‘(2) QUALIFIED
GRADUATE
PROGRAM.—For
the purposes of this section, the term ‘qualified
graduate program’ means a graduate or professional
program that provides an accredited program of in-
struction in the physical or natural sciences, engi-
neering, mathematics, or other scientific discipline in
which African Americans are underrepresented and
has students enrolled in such program at the time
of application for a grant under this section.
‘‘(3) SPECIAL
RULE.—Institutions that were
awarded grants under this section prior to October
1, 1998, shall continue to receive such grants, sub-
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ject to the availability of appropriated funds, regard-
less of the eligibility of the institutions described in
subparagraphs (Q) and (R) of paragraph (1).’’; and
(C) in paragraph (4), by inserting before
the period at the end the following: ‘‘, except
that the president or chancellor of the institu-
tion may decide which graduate or professional
school or qualified graduate program will re-
ceive funds under the grant in any one fiscal
year’’.
(4) FUNDING
RULE.—Section 326(f ) (20
U.S.C. 1063b(f )) is amended—
(A) by striking ‘‘Of the amount appro-
priated’’ and inserting ‘‘Subject to subsection
(g), of the amount appropriated’’;
(B) in paragraph (1)—
(i) by striking ‘‘$12,000,000’’ and in-
serting ‘‘$26,000,000’’; and
(ii) by striking ‘‘(A) through (E)’’ and
inserting ‘‘(A) through (P)’’.
(C) by striking paragraph (2) and insert-
ing the following:
‘‘(2) 
the 
next 
$1,000,000 
in 
excess 
of
$26,000,000 shall be available for the purpose of
making grants to institutions or programs identified
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in subparagraphs (Q) and (R) of subsection (e)(1);
and
‘‘(3) if the amount appropriated exceeds
$27,000,000, the Secretary shall develop a formula
for making allotments of such excess to each of the
institutions or programs identified in subparagraphs
(A) through (R) using the following elements:
‘‘(A) the number of students enrolled in
the eligible institution’s professional or grad-
uate school, or qualified graduate program
which received funding under this section in the
previous year;
‘‘(B) the average cost of education per stu-
dent for all full-time graduate or professional
students (or the equivalent) enrolled in the eli-
gible professional school, graduate school or
doctoral students in the qualified graduate pro-
gram; and
‘‘(C) the number of students who received
their first professional or doctoral degree at the
professional or graduate school or the qualified
graduate program in the preceding year for
which the institution received funding under
this section.’’.
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(5) HOLD
HARMLESS
RULE.—Section 326 is
further amended by adding at the end the following
new subsection:
‘‘(g) HOLD
HARMLESS
RULE.—Notwithstanding
paragraphs (2) and (3) of subsection (f ), no institution
or qualified program identified in subsection (e)(1) that
received a grant for fiscal year 1998 and that is eligible
to receive a grant in a subsequent fiscal year shall receive
a grant amount in any such subsequent fiscal year that
is less than the grant amount received for fiscal year 1998,
unless the amount appropriated is not sufficient to provide
such grant amounts to all such institutions and pro-
grams.’’.
SEC. 303. MINORITY SCIENCE AND ENGINEERING IMPROVE-
MENT PROGRAM.
(a) AMENDMENT.—Title III (20 U.S.C. 1051) is
amended—
(1) by redesignating part D as part E; and
(2) by inserting after part C the following new
part:
‘‘PART D—MINORITY SCIENCE AND
ENGINEERING IMPROVEMENT PROGRAM
‘‘SEC. 341. PROGRAM AUTHORIZED.
‘‘The Secretary shall, in accordance with the provi-
sions of this part, carry out a program of making grants
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to institutions of higher education that are designed to
effect long-range improvements in science and engineering
education, and improve support programs for minority
students enrolled in science and engineering programs at
predominantly minority institutions.
‘‘SEC. 342. USE OF FUNDS.
‘‘Funds appropriated for the purpose of this subpart
may be made available for—
‘‘(1) providing needed services to groups of mi-
nority institutions or providing training for scientists
and engineers from eligible minority institutions;
‘‘(2) providing needed services to groups of in-
stitutions serving significant numbers of minority
students or providing training for scientists and en-
gineers from such institutions to improve their abil-
ity to train minority students in science or engineer-
ing;
‘‘(3) assisting minority institutions to improve
the quality of preparation of their students for grad-
uate work or careers in science, mathematics, and
technology;
‘‘(4) improving access of undergraduate stu-
dents at minority institutions to careers in the
sciences, mathematics, and engineering;
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‘‘(5) improving access of minority students,
particularly minority women, to careers in the
sciences, mathematics, and engineering;
‘‘(6) improving access for pre-college minority
students to careers in science, mathematics, and en-
gineering through community outreach programs
conducted through colleges and universities eligible
for support through the Minority Science and Engi-
neering Improvement Programs;
‘‘(7) disseminating activities, information, and
educational materials designed to address specific
barriers to the entry of minorities into science and
technology, and conducting activities and studies
concerning the flow of underrepresented ethnic mi-
norities into scientific careers;
‘‘(8) supporting curriculum models to encourage
minority student participation in research careers in
science, mathematics, and technology; and
‘‘(9) improving the capability of minority insti-
tutions for self-assessment, management, and eval-
uation of their science, mathematics, and engineer-
ing programs and dissemination of their results.
‘‘SEC. 343. ELIGIBILITY FOR GRANTS.
‘‘The Secretary may make grants under this part to
minority institutions (as defined in section 347), organiza-
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tions, and entities to enable them to carry out programs
and activities authorized by this part:
‘‘(1)(A) institutions of higher education grant-
ing baccalaureate degrees; and
‘‘(B) institutions of higher education granting
associate degrees which—
‘‘(i) have a curriculum including science or
engineering subjects;
‘‘(ii) apply jointly with institutions de-
scribed in subparagraph (A); and
‘‘(iii) have an articulation agreement with
institutions described in subparagraph (A) for
its science or engineering students; and
‘‘(2) consortia of—
‘‘(A) institutions which have a curriculum
in science or engineering;
‘‘(B) graduate institutions which have a
curriculum in science or engineering;
‘‘(C) Federal Education Research Centers;
‘‘(D) research laboratories of, or under
contract with, the Department of Energy;
‘‘(E) private organizations which have
science or engineering facilities; or
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‘‘(F) quasi-governmental entities which
have a significant scientific or engineering mis-
sion;
to enable such institutions and consortia to carry
programs and activities authorized by this part.
‘‘SEC. 344. GRANT APPLICATION.
‘‘(a) SUBMISSION
AND
CONTENTS
OF
APPLICA-
TIONS.—An eligible applicant (as determined under sec-
tion 343) that desires to receive a grant under this part
shall submit to the Secretary an application therefore at
such time or times, in such manner, and containing such
information as the Secretary may prescribe by regulation.
Such application shall set forth—
‘‘(1) a program of activities for carrying out
one or more of the purposes described in section 342
in such detail as will enable the Secretary to deter-
mine the degree to which such program will accom-
plish such purpose or purposes; and
‘‘(2) such other policies, procedures, and assur-
ances as the Secretary may require by regulation.
‘‘(b) 
APPROVAL
BASED
ON
LIKELIHOOD
OF
PROGRESS.—The Secretary shall approve an application
only if the Secretary determines that the application sets
forth a program of activities which are likely to make sub-
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stantial progress toward achieving the purposes of this
part.
‘‘SEC. 345. CROSS PROGRAM AND CROSS AGENCY COOPERA-
TION.
‘‘The Minority Science and Engineering Improvement
Programs shall cooperate and consult with other programs
within the Department and within Federal, State, and pri-
vate agencies which carry out programs to improve the
quality of science, mathematics, and engineering edu-
cation.
‘‘SEC. 346. ADMINISTRATIVE PROVISIONS.
‘‘(a) TECHNICAL STAFF.—The Secretary shall ap-
point, without regard to the provisions of title 5 of the
United States Code governing appointments in the com-
petitive service, not less than one technical employees with
appropriate scientific and educational background to ad-
minister the programs under this part who may be paid
without regard to the provisions of chapter 51 and sub-
chapter III of chapter 53 of such title relating to classi-
fication and General Schedule pay rates.
‘‘(b) PROCEDURES FOR GRANT REVIEW.—The Sec-
retary shall establish procedures for reviewing and evalu-
ating grants and contracts made or entered into under
such programs. Procedures for reviewing grant applica-
tions, based on the peer review system, or contracts for
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financial assistance under this title may not be subject to
any review outside of officials responsible for the adminis-
tration of the Minority Science and Engineering Improve-
ment Program.
‘‘SEC. 347. DEFINITIONS.
‘‘For the purpose of this part—
‘‘(1) The term ‘minority institution’ means an
institution of higher education whose enrollment of
a single minority or a combination of minorities (as
defined in paragraph (2)) exceeds 50 percent of the
total enrollment. The Secretary shall verify this in-
formation from the data on enrollments in the high-
er education general information surveys (HEGIS)
furnished by the institution to the Office for Civil
Rights, Department of Education.
‘‘(2) The term ‘minority’ means American In-
dian, Alaskan Native, Black (not of Hispanic ori-
gin), Hispanic (including persons of Mexican, Puerto
Rican, Cuban, and Central or South American ori-
gin), Pacific Islander or other ethnic group under-
represented in science and engineering.
‘‘(3) The term ‘science’ means, for the purpose
of this program, the biological, engineering, mathe-
matical, physical, behavioral, and social sciences, and
history and philosophy of science; also included are
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interdisciplinary fields which are comprised of over-
lapping areas among two or more sciences.’’.
SEC. 304. GENERAL PROVISIONS.
(a) 
APPLICATIONS
FOR
ASSISTANCE.—Section
351(a) (20 U.S.C. 1066(a)) is amended to read as follows:
‘‘(a) APPLICATIONS.—
‘‘(1) APPLICATIONS REQUIRED.—Any institu-
tion which is eligible for assistance under this title
shall submit to the Secretary an application for as-
sistance at such time, in such form, and containing
such information, as may be necessary to enable the
Secretary to evaluate its need for assistance. Subject
to the availability of appropriations to carry out this
title, the Secretary may approve an application for
a grant under this title only if the Secretary deter-
mines that—
‘‘(A) the application meets the require-
ments of subsection (b);
‘‘(B) the applicant is eligible for assistance
in accordance with the part of this title under
which the assistance is sought; and
‘‘(C) the applicant’s performance goals are
sufficiently rigorous as to meet the purposes of
this title and the performance objectives and in-
dicators for this title established by the Sec-
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retary pursuant to the Government Perform-
ance and Results Act.
‘‘(2) PRELIMINARY APPLICATIONS.—In carrying
out paragraph (1), the Secretary shall develop a pre-
liminary application for use by eligible institutions
applying under part A prior to the submission of the
principal application.’’.
(b) CONTENTS OF APPLICATIONS.—Section 351(b) is
amended—
(1) in paragraph (5)(A), by inserting ‘‘and the
Government Performance and Results Act’’ after
‘‘under this title’’; and
(2) in paragraph (6), by inserting before the
semicolon the following: ‘‘, except that for purposes
of section 316, paragraphs (2) and (3) shall not
apply’’.
(c) WAIVERS.—Section 352(a) (20 U.S.C. 1067(a))
is amended—
(1) by striking ‘‘or’’ at the end of paragraph
(5);
(2) by redesignating paragraph (6) as para-
graph (7); and
(3) by inserting after paragraph (5) the follow-
ing new paragraph:
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‘‘(6) that is a tribally controlled community col-
lege as defined in the Tribally Controlled Commu-
nity College Act of 1978; or’’.
(d) APPLICATION REVIEW PROCESS.—Section 353(a)
(20 U.S.C. 1068(a)) is amended—
(1) in paragraph (2), by striking ‘‘Native Amer-
ican colleges and universities’’ and inserting ‘‘Tribal
Colleges and Universities’’; and
(2) in paragraph (3)—
(A) by striking subparagraph (A); and
(B) by redesignating subparagraphs (B)
and (C) as subparagraphs (A) and (B), respec-
tively.
(e) CONTINUATION AWARDS.—Part D of title III is
amended by inserting after section 354 (20 U.S.C. 1069)
the following new section:
‘‘SEC. 355. CONTINUATION AWARDS.
‘‘The Secretary shall make continuation awards
under this title for the second and succeeding years of a
grant only after determining that the recipient is making
satisfactory progress in carrying out the grant.’’.
(f ) AUTHORIZATION OF APPROPRIATIONS.—Section
360 (20 U.S.C. 1069f) is amended—
(1) by striking subsection (a) and inserting the
following:
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‘‘(a) AUTHORIZATIONS.—
‘‘(1) PART A.—(A) There are authorized to be
appropriated to carry out part A (other that sections
316), $135,000,000 for fiscal year 1999, and such
sums as may be necessary for each of the 4 succeed-
ing fiscal years.
‘‘(B) There are authorized to be appropriated
to carry out section 316, $10,000,000 for fiscal year
1999, and such sums as may be necessary for each
of the 4 succeeding fiscal years.
‘‘(2) PART B.—(A) There are authorized to be
appropriated to carry out part B (other than section
326), $135,000,000 for fiscal year 1999, and such
sums as may be necessary for each of the 4 succeed-
ing fiscal years.
‘‘(B) There are authorized to be appropriated
to carry out section 326, $35,000,000 for fiscal year
1999, and such sums as may be necessary for each
of the 4 succeeding fiscal years.
‘‘(3) PART C.—There are authorized to be ap-
propriated to carry out part C, $10,000,000 for fis-
cal year 1999, and such sums as may be necessary
for each of the 4 succeeding fiscal years.
‘‘(4) PART D.—There are authorized to be ap-
propriated to carry out Part D, $10,000,000 for fis-
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cal year 1999, and such sums as may be necessary
for each of the 4 succeeding fiscal years.’’; and
(2) by striking subsections (c), (d), and (e).
TITLE IV—STUDENT ASSISTANCE
PART A—GRANTS TO STUDENTS
SEC. 401. PELL GRANTS.
(a) EXTENSION OF AUTHORITY.—Section 401(a) (20
U.S.C. 1070a(a)) is amended—
(1) in paragraph (1)—
(A) by striking ‘‘September 30, 1998’’ and
inserting ‘‘September 30, 2004’’; and
(B) by striking the second sentence; and
(2) in paragraph (2), by striking ‘‘the disburse-
ment system required by paragraph (1)’’ and insert-
ing ‘‘the disbursement of Federal Pell Grants’’.
(b) AMOUNT OF GRANT.—Section 401(b)(2)(A) is
amended to read as follows:
‘‘(2)(A) The amount of the Federal Pell Grant for
a student eligible under this part shall be—
‘‘(i) $4,500 for academic year 1999–2000;
‘‘(ii) $4,700 for academic year 2000–2001;
‘‘(iii) $4,900 for academic year 2001–2002;
‘‘(iv) $5,100 for academic year 2002–2003; and
‘‘(v) $5,300 for academic year 2003–2004,
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less an amount equal to the amount determined to be the
expected family contribution with respect to that student
for that year.’’.
(c) RELATION OF MAXIMUM GRANT TO TUITION AND
EXPENSES.—Section 401(b)(3) is amended—
(1) by striking ‘‘$2,400’’ each place it appears
and inserting ‘‘$3,000’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) An institution that charged only fees in lieu of
tuition as of January 31, 1997, may include in its deter-
mination of tuition charged, fees that would normally con-
stitute tuition.’’.
(d) DEPENDENT CARE AND DISABILITY RELATED
EXPENSES.—Section 401(b)(3)(B) is amended by striking
‘‘$750’’ and inserting ‘‘$1,500’’.
(e) INSTITUTIONAL INELIGIBILITY BASED ON DE-
FAULT RATES.—Section 401 is amended by adding at the
end the following new subsection:
‘‘(j) INSTITUTIONAL INELIGIBILITY BASED ON DE-
FAULT RATES.—
‘‘(1) IN
GENERAL.—No institution of higher
education shall be an eligible institution for purposes
of this section if such institution of higher education
is ineligible to participate in a loan program under
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this title as a result of a final default rate deter-
mination made by the Secretary under part B or D
of this title, or both, after the final publication of
fiscal year 1996 cohort default rates.
‘‘(2) SANCTIONS SUBJECT TO APPEAL OPPOR-
TUNITY.—No institution may be subject to the
terms of this subsection unless it has had the oppor-
tunity to appeal its default rate determination under
regulations issued by the Secretary for the Federal
Family Education Loan or Federal Direct Loan
Program, as applicable. This subsection shall not
apply to an institution that was not participating in
the loan programs authorized under part B or D of
this title on the date of enactment of the Higher
Education Amendments of 1998, unless the institu-
tion subsequently participates in the loan pro-
grams.’’.
(f ) PELL GRANT INCENTIVES.—Subpart 1 of part A
of title IV of the Higher Education Act of 1965 is amend-
ed by inserting after section 401 (20 U.S.C. 1070a) the
following new section:
‘‘SEC. 401A. PELL GRANT INCENTIVES.
‘‘(a) PROGRAM AUTHORITY.—From the amounts ap-
propriated pursuant to subsection (d), the Secretary shall
establish a program to increase the Pell grant awards
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under section 401 during their first two academic years
of undergraduate education to students who graduate
after May 1, 1998, in the top 10 percent of their high
school graduating class.
‘‘(b) AMOUNT OF INCREASE.—The additional amount
of Pell grant that shall be awarded under this section to
any student who qualifies under this section shall be an
amount equal to the amount for which the student is eligi-
ble under section 401 (determined without regard to the
provisions of this section), except that if the amount ap-
propriated pursuant to subsection (d) is less than the
amount required to award such additional amounts to all
such students, the additional amount awarded to each
such student under this section shall be ratably reduced.
‘‘(c) DETERMINATIONS OF ELIGIBILITY.—
‘‘(1) PROCEDURES ESTABLISHED BY REGULA-
TION.—The Secretary shall establish by regulation
procedures for the determination of eligibility of stu-
dents for increased Pell grant awards under this sec-
tion. Such procedures shall include measures to pre-
vent any secondary school from certifying more than
10 percent of it’s students for eligibility under this
section.
‘‘(2) COORDINATION WITH NEED ANALYSIS.—In
prescribing procedures under paragraph (1), the
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Secretary shall ensure that the determination of eli-
gibility and the amount of the increase in the Pell
grant award is determined in a timely manner con-
sistent with the requirements of section 482 and the
submission of the financial aid form required by sec-
tion 483. For such purposes, the Secretary may pro-
vide that, for the first of a student’s two academic
years of eligibility under this section, class rank may
be determined prior to graduation, at such time and
in such manner as the Secretary may specify in the
regulations prescribed under this subsection.
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to award increased Pell
grants under this section $240,000,000 for fiscal year
1999 and such sums as may be necessary for each of the
4 succeeding fiscal years.’’.
(g) CONFORMING AMENDMENTS.—
(1) Section 400(a)(1) (20 U.S.C. 1070(a)(1)) is
amended by striking ‘‘basic educational opportunity
grants’’ and inserting ‘‘Federal Pell Grants’’.
(2) The heading of subpart 1 of part A of title
IV is amended to read as follows:
‘‘Subpart 1—Federal Pell Grants’’.
(3) Section 401 is amended—
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(A) in the heading of the section, by strik-
ing ‘‘BASIC EDUCATIONAL OPPORTUNITY’’
and inserting ‘‘FEDERAL PELL’’;
(B) in subsection (a)(3), by striking
‘‘Basic grants’’ and inserting ‘‘Grants’’;
(C) by striking ‘‘basic grant’’ each place it
appears and inserting ‘‘Federal Pell Grant’’;
and
(D) by striking ‘‘basic grants’’ each place
it appears and inserting ‘‘Federal Pell Grants’’.
(4) Section 401(f )(3) is amended by striking
‘‘Education and Labor’’ and inserting ‘‘Education
and the Workforce’’.
(5) Section 452(c) (20 U.S.C. 1087b(c)) is
amended by striking ‘‘basic grants’’ and inserting
‘‘Federal Pell Grants’’.
(6) Subsections (j)(2) and (k)(3) of section 455
(20 U.S.C. 1087e) are each amended by striking
‘‘basic grants’’ and inserting ‘‘Federal Pell Grants’’.
SEC. 402. FEDERAL TRIO PROGRAMS.
(a) PROGRAM AUTHORITY; AUTHORIZATION OF AP-
PROPRIATIONS.—
(1) 
DURATION
OF
GRANTS.—Section
402A(b)(2) (20 U.S.C. 1070a–11(b)(2)) is amend-
ed—
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(A) by striking subparagraph (A);
(B) by striking the period at the end of
subparagraph (B) and inserting ‘‘; and’’;
(C) by redesignating subparagraph (B) as
subparagraph (A); and
(D) by adding at the end the following new
subparagraph:
‘‘(B) grants under section 402H shall be
awarded for a period determined by the Sec-
retary.’’.
(2) MINIMUM GRANTS.—Section 402A(b)(3) is
amended to read as follows:
‘‘(3) MINIMUM GRANTS.—Unless the institution
or agency requests a smaller amount, individual
grants under this chapter shall be no less than—
‘‘(A) $170,000 for programs authorized by
sections 402D and 402G;
‘‘(B) $180,000 for programs authorized by
sections 402B and 402F; and
‘‘(C) $190,000 for programs authorized by
sections 402C and 402E.’’.
(3) PROCEDURES FOR AWARDING GRANTS AND
CONTRACTS.—Subsection (c) of section 402A is
amended to read as follows:
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section 110 and adjusted for prior experience in ac-
cordance with paragraph (2) of this subsection.
‘‘(B) The Secretary is not required to provide
assistance to a program otherwise eligible for assist-
ance under this chapter, if the Secretary has deter-
mined that such program has involved the fraudu-
lent use of funds under this chapter.
‘‘(4) PEER
REVIEW
PROCESS.—(A) The Sec-
retary shall assure that, to the extent practicable,
members of groups underrepresented in higher edu-
cation, including African Americans, Hispanics, Na-
tive Americans, Alaska Natives, Asian Americans,
Native American Pacific Islanders (including Native
Hawaiians), are represented as readers of applica-
tions submitted under this chapter. The Secretary
shall also assure that persons from urban and rural
backgrounds are represented as readers.
‘‘(B) The Secretary shall ensure that each ap-
plication submitted under this chapter is read by at
least 3 readers who are not employees of the Federal
Government (other than as readers of applications).
‘‘(5) NUMBER OF APPLICATIONS FOR GRANTS
AND CONTRACTS.—The Secretary shall not limit the
number of applications submitted by an entity under
any program authorized under this chapter if the
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additional applications describe programs serving
different populations or campuses.
‘‘(6) COORDINATION
WITH
OTHER
PROGRAMS
FOR
DISADVANTAGED
STUDENTS.—The Secretary
shall encourage coordination of programs assisted
under this chapter with other programs for dis-
advantaged students operated by the sponsoring in-
stitution or agency, regardless of the funding source
of such programs. The Secretary shall not limit an
entity’s eligibility to receive funds under this chapter
because such entity sponsors a program similar to
the program to be assisted under this chapter, re-
gardless of the funding source of such program. The
Secretary shall permit the Director of a program re-
ceiving funds under this chapter to administer one
or more additional programs for disadvantaged stu-
dents operated by the sponsoring institution or agen-
cy, regardless of the funding sources of such pro-
grams.
‘‘(7) APPLICATION
STATUS.—The Secretary
shall inform each entity operating programs under
this chapter regarding the status of their application
for continued funding at least 8 months prior to the
expiration of the grant or contract. The Secretary,
in the case of an entity that is continuing to operate
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a successful program under this chapter, shall en-
sure that the start-up date for a new grant or con-
tract for such program immediately follows the ter-
mination of preceding grant or contract so that no
interruption of funding occurs for such successful re-
applicants. The Secretary shall inform each entity
requesting assistance under this chapter for a new
program regarding the status of their application at
least 8 months prior to the proposed startup date of
such program.’’.
(4) AUTHORIZATION
OF
APPROPRIATIONS.—
Section 402A(f ) is amended—
(A) by striking ‘‘$650,000,000 for fiscal
year 1993’’ and inserting ‘‘$800,000,000 for
fiscal year 1999’’; and
(B) by striking everything after the first
sentence.
(b) TALENT SEARCH.—Section 402B(b) (20 U.S.C.
1070a–12(b)) is amended—
(1) by striking paragraph (4) and inserting the
following:
‘‘(4) guidance on and assistance in secondary
school reentry, entry to general educational develop-
ment (GED) programs, other alternative education
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programs for secondary school dropouts, or post-
secondary education;’’; and
(2) in paragraph (8), by striking ‘‘parents’’ and
inserting ‘‘families’’.
(c) UPWARD BOUND.—Section 402C (20 U.S.C.
1070a–13) is amended—
(1) in subsection (b)—
(A) in paragraph (2), by striking ‘‘personal
counseling’’ and inserting ‘‘counseling and
workshops’’;
(B) in paragraph (6)—
(i) by inserting ‘‘work-study and
other’’ before ‘‘activities’’; and
(ii) by inserting before the semicolon
at the end the following: ‘‘, including ca-
reers requiring a postsecondary degree’’;
(C) in paragraph (9), by striking ‘‘and’’ at
the end;
(D) 
in 
paragraph 
(10), 
by 
striking
‘‘through (9)’’ and inserting ‘‘through (10)’’;
and
(E) by redesignating paragraph (10) as
paragraph (11) and by inserting after para-
graph (9) the following new paragraph:
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‘‘(10) special services to enable veterans to
make the transition to postsecondary education;
and’’; and
(2) in subsection (c), by inserting ‘‘, other than
a project a majority of the participants in which are
veterans,’’ after ‘‘this chapter’’.
(d) 
STUDENT
SUPPORT
SERVICES.—Section
402D(c)(6) (20 U.S.C. 1070a–14(c)(6)) is amended by in-
serting before the period at the end the following: ‘‘and
minimize the student’s loan burden’’.
(e) 
POSTBACCALAUREATE
ACHIEVEMENT
PRO-
GRAM.—Section 402E (20 U.S.C. 1070a–15) is amend-
ed—
(1) in subsection (c)(3), by inserting ‘‘or accept-
ed in a graduate program’’ after ‘‘degree program’’;
and
(2) in subsection (e)(1), by striking ‘‘$2,400’’
and inserting ‘‘$3,200’’.
(f ) STAFF
DEVELOPMENT
ACTIVITIES.—Section
402G(b) (20 U.S.C. 1070a–17(b)) is amended by insert-
ing after paragraph (3) the following new paragraph:
‘‘(4) The use of appropriate educational tech-
nology in the operation of projects assisted under
this chapter.’’.
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(g) EVALUATION
FOR PROJECT IMPROVEMENT.—
Section 402H(b) (20 U.S.C. 1070a–18(b)) is amended by
adding at the end the following new sentence: ‘‘Such eval-
uations shall also investigate the effectiveness of alter-
native and innovative methods within Federal TRIO pro-
grams of increasing access to, and retention of, students
in postsecondary education.’’.
SEC. 403. NATIONAL EARLY INTERVENTION AND PARTNER-
SHIP PROGRAM.
Section 404G (20 U.S.C. 1070a–27) is amended by
striking ‘‘1993’’ and inserting ‘‘1999’’.
SEC. 404. REPEALS.
(a) REPEALS OF SUBPART 2 PROVISIONS.—The fol-
lowing provisions of subpart 2 of part A of title IV are
repealed:
(1) Chapter 3 (20 U.S.C. 1070a–31 et seq.).
(2) Chapter 4 (20 U.S.C. 1070a–41 et seq.).
(3) Chapter 5 (20 U.S.C. 1070a–51 et seq.).
(4) Chapter 6 (20 U.S.C. 1070a–61 et seq.).
(5) Chapter 7 (20 U.S.C. 1070a–71 et seq.).
(6) Chapter 8 (20 U.S.C. 1070a–81 et seq.).
(b) SUBPART 8.—Subpart 8 of part A of title IV (20
U.S.C. 1070f) is repealed.
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(c) CONFORMING AMENDMENT.—Section 400(b) (20
U.S.C. 1070(b)) is amended by striking ‘‘subparts 1
through 8’’ and inserting ‘‘subparts 1 through 6’’.
SEC. 405. ESTABLISHMENT OF NEW PROGRAMS.
Subpart 2 of part A of title IV is amended by insert-
ing after chapter 2 (20 U.S.C. 1070a–81) the following
new chapters:
‘‘CHAPTER 3—HIGH HOPES FOR COLLEGE
‘‘Subchapter A—21st Century Scholar Certificates
‘‘SEC. 406A. 21ST CENTURY SCHOLAR CERTIFICATES.
‘‘(a) FINDINGS.—The Congress makes the following
findings:
‘‘(1) Among low-income students who, despite
high test scores, are not planning on attending col-
lege, nearly 60 percent cite an inability to afford
school as the reason.
‘‘(2) About 80 percent of our 12th graders who
are interested in continuing their education after
high school go on to college if their parents read ma-
terials about financial aid, compared to only 55 per-
cent of such students if their parents do not read
this material.
‘‘(3) In 1996, the American Council on Edu-
cation found that the public overestimated the tui-
tion of public 2-year colleges by about 3 times the
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actual average tuition, of public 4-year colleges by
over twice the actual average tuition, and of private
4-year universities by almost one-third more than
the actual average tuition.
‘‘(4) There is a need for, and a significant ben-
efit from, providing students, and through them
their parents, with information about the variety of
Federal student financial assistance programs, such
as Pell grants, Federal work-study and loans, and
the AmeriCorps Education Awards that make college
more affordable than ever before.
‘‘(b) AUTHORITY.—
‘‘(1) The Secretary, using funds appropriated
under section 407H(a) of this Act—
‘‘(A) shall ensure that certificates, to be
known as 21st Century Scholar Certificates, are
provided to all students participating in projects
under chapter 2; and
‘‘(B) may, as practicable, ensure that such
certificates are provided to all students in
grades 6 through 12 who attend schools at
which at least 50 percent of the students en-
rolled are eligible for free or reduced-price
lunch.
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‘‘(2) A 21st Century Scholar Certificate shall be
personalized for each student and indicate the
amount of Federal financial aid for college for which
a student may be eligible.
‘‘Subchapter B—High Hopes Partnerships
‘‘SEC. 407A. PURPOSE.
‘‘It is the purpose of this chapter to encourage and
prepare students in low-income communities, beginning
not later than the 7th grade, to prepare for, enter, and
successfully complete college by assisting college-school-
community partnerships to—
‘‘(1) provide in-school and on-campus early col-
lege awareness activities to these students and their
parents;
‘‘(2) ensure ongoing adult guidance and other
support to these students;
‘‘(3) provide useful, early information to these
students and their parents on the need for, options
related to, and financing (including the availability
of financial assistance) of a college education; and
‘‘(4) help ensure that these students have ac-
cess to rigorous core courses, such as algebra and
geometry, that prepare them for college.
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‘‘SEC. 407B. GRANTS.
‘‘(a) GRANTS AUTHORIZED.—From funds appro-
priated under section 407H(a), the Secretary shall make
grants to college-school-community partnerships for activi-
ties under section 407D.
‘‘(b) ELIGIBLE PARTNERSHIP.—For purposes of this
chapter, an eligible partnership shall include—
‘‘(1) one or more local educational agencies act-
ing on behalf of—
‘‘(A) one or more participating schools;
and
‘‘(B) the public secondary schools that stu-
dents from these schools would normally attend;
‘‘(2) one or more degree granting institutions of
higher education; and
‘‘(3) at least two community organizations or
entities, such as State agencies, businesses, profes-
sional associations, community-based organizations,
or other public or private agencies or organizations.
‘‘(c) DEFINITIONS.—For the purpose of this chap-
ter—
‘‘(1) ‘participating school’ means a public
school in which—
‘‘(A) there is a 7th grade;
‘‘(B) one or more cohorts of students re-
ceive services under this chapter; and
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‘‘(C) at least 50 percent of the students
enrolled are eligible for free or reduced-price
lunch; and
‘‘(2) ‘cohort of students’ means—
‘‘(A) an entire grade level of students in a
participating school; or
‘‘(B) if the partnership determines that it
would promote the effectiveness of a project, an
entire grade level of students, beginning not
later than the 7th grade, who reside in public
housing as defined in section 3(b)(1) of the
United States Housing Act of 1937.
‘‘(d) DURATION.—Each grant awarded under this
chapter shall be for a 6-year period.
‘‘(e) COST SHARING.—
‘‘(1) Federal funds shall provide no more than
80 percent of the cost of the project in the first
year, 70 percent of the cost in the second year, 60
percent of the cost in the third year, 50 percent of
the cost in the fourth year, 40 percent of the cost
in the fifth year, and 30 percent of the cost in the
sixth year.
‘‘(2) The non-Federal share of grants awarded
under this chapter may—
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‘‘(A) be in cash or in kind, fairly evalu-
ated, including services, supplies, or equipment;
and
‘‘(B) include the non-Federal share of
work-study grants under part C of title IV of
this Act awarded to students who serve as tu-
tors or mentors in projects under this chapter.
‘‘(3) The Secretary may waive the cost sharing
requirement described in paragraph (1) for any eligi-
ble partnership that demonstrates to the satisfaction
of the Secretary an extraordinary hardship that pre-
vents compliance with that requirement.
‘‘(f ) EQUITABLE GEOGRAPHIC DISTRIBUTION.—To
the extent possible, the Secretary shall award grants under
this chapter in a manner that achieves an equitable geo-
graphic distribution of those grants.
‘‘(g) PRIORITY AWARDS UNDER CHAPTER 2.—Be-
fore making grants under this chapter for fiscal year
1999, the Secretary shall, as appropriate, make awards
to recipients eligible for continuation awards under chap-
ter 2 of subpart 2 of this title as it was in effect prior
to the enactment of the Higher Education Amendments
of 1998.
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‘‘SEC. 407C. GRANT APPLICATION; PREFERENCES.
‘‘(a) APPLICATION REQUIRED.—An eligible partner-
ship desiring to receive a grant under this chapter shall
submit an application to the Secretary, in such form and
containing such information, as the Secretary may re-
quire.
‘‘(b) APPLICATION
CONTENTS.—Each application
shall include—
‘‘(1) the name of each partner and a descrip-
tion of its responsibilities, including the designation
of either an institution of higher education or a local
educational agency as the fiscal agent for the part-
nership;
‘‘(2) a description of the need for the project,
including a description of how the project will build
on existing services and activities, if any;
‘‘(3) a listing of the human, financial (other
than funds under this chapter), and other resources
that each member of the partnership will contribute
to the partnership, and a description of the efforts
each member of the partnership will make in seeking
additional resources;
‘‘(4) a description of how the project will oper-
ate, including how grant funds will be used to meet
the purpose of this chapter;
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‘‘(5) a description of how services will be coordi-
nated with, and will complement and enhance, serv-
ices received by participating schools and students
under other related Federal and non-Federal pro-
grams, including programs under title I, part A of
title VII, and part 1 of title X of the Elementary
and Secondary Education Act of 1965, the School-
to-Work Opportunities Act of 1994, section 402 of
this Act, and the Individuals with Disabilities Edu-
cation Act;
‘‘(6) a description of how the partnership will
support and continue the services under this chapter
after the grant has expired;
‘‘(7) an assurance from each local educational
agency using funds under this chapter that—
‘‘(A) at least 50 percent of the students
enrolled in each participating school are eligible
for free or reduced-price lunch;
‘‘(B) its aggregate expenditures per stu-
dent for activities described in this chapter will
not be reduced from the level of such expendi-
tures in the year prior to the grant; and
‘‘(C) someone at each participating school
will be designated as the primary point of con-
tact for the partnership;
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‘‘(8) an assurance that participating students
will have access to rigorous core academic courses
that reflect challenging State or local academic
standards; and
‘‘(9) an assurance that members will provide
the performance information required by the Sec-
retary, which would be used to base continuation of
the grant.
‘‘(c) 
PREFERENCES.—In 
reviewing 
applications
under this chapter, the Secretary shall give preference to
projects that—
‘‘(1) will serve participating schools in which at
least 75 percent of the students enrolled are eligible
for free or reduced-price lunch;
‘‘(2) provide a commitment from non-Federal
sources to pay all or part of the cost of college,
through tuition assistance or guarantees (not al-
ready available), such as ‘last-dollar grants’, for par-
ticipating students; and
‘‘(3) hold participating students responsible for
school or community service and high academic per-
formance.
‘‘SEC. 407D. PROGRAM REQUIREMENTS; USES OF FUNDS.
‘‘(a) PROGRAM REQUIREMENTS.—Projects under this
chapter shall—
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‘‘(1) have a program coordinator who is either
full-time or whose primary responsibility is the
project under this chapter;
‘‘(2) provide services to at least one cohort of
students, beginning not later than the 7th grade;
‘‘(3) ensure that the services authorized under
this chapter are provided through the 12th grade to
students in the cohort, including students who at-
tend another participating school or a secondary
school identified under section 407B(b)(1)(B);
‘‘(4) include activities and information that fos-
ter and improve parent involvement in promoting
postsecondary education for their children, including
the provision of useful early information on the ad-
vantages of a college education, academic admissions
requirements, and the need to take core courses, ad-
missions and achievement tests, application proce-
dures, college costs and options, and the availability
of student financial aid;
‘‘(5) include academic counseling, career aware-
ness, and tutoring or mentoring from trained per-
sonnel, as well as other student support services that
enable students to succeed academically and apply
for, enter, and complete college;
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‘‘(6) include training in promoting early college
awareness for classroom teachers, guidance coun-
selors, and staff of the schools involved in the
project; faculty and program personnel in participat-
ing institutions of higher education; and participat-
ing mentors and tutors;
‘‘(7) include activities on college campuses and
enrichment activities associated with postsecondary
education; and
‘‘(8) include arrangements that ensure that all
participating students have access to rigorous core
courses that reflect challenging State or local aca-
demic standards and that prepare them for college.
‘‘(b) USE OF FUNDS.—In addition to the activities
described in subsection (a), recipient of funds under this
chapter may use them—
‘‘(1) where necessary and appropriate to ensure
active participation, to pay stipends to participating
students and their mentors;
‘‘(2) where necessary and appropriate to ensure
active participation, to pay transportation costs for
participants to attend project-sponsored activities;
‘‘(3) to provide out-of-school and summer ac-
tivities related to the project;
‘‘(4) for project evaluation; and
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‘‘(5) to recognize the responsibility and achieve-
ment of participating students through ceremonies,
awards, and other means.
‘‘SEC. 407E. SERVICES FOR STUDENTS ATTENDING PRIVATE
SCHOOLS.
‘‘A local educational agency that participates in an
eligible partnership shall provide services supported with
Federal funds under this chapter on an equitable basis,
consistent with section 14503 of Elementary and Second-
ary Education Act of 1965, to students in private schools
that—
‘‘(1) have a 7th grade;
‘‘(2) have students at least 50 percent of whom
are eligible for free or reduced-price lunch; and
‘‘(3) are located in the normal attendance area
of a participating school.
‘‘SEC. 407F. EVALUATION.
‘‘In order to improve the operation of the program
assisted under this chapter, the Secretary shall, with funds
appropriated under section 407H(a), make grants to, and
enter into contracts and cooperative agreements with, in-
stitutions of higher education and other public and private
institutions and organizations to evaluate the effectiveness
of the program assisted under this chapter and, as appro-
priate, disseminate such results.
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‘‘SEC. 407G. PEER REVIEW.
‘‘The Secretary shall use a peer review process to re-
view applications under this chapter and make rec-
ommendations for funding to the Secretary.
‘‘SEC. 407H. AUTHORIZATION OF APPROPRIATIONS.
‘‘(a) AUTHORIZATION
OF APPROPRIATION.—There
are authorized to be appropriated $140,000,000 for fiscal
year 1999 and such sums as may be necessary for each
of the 5 succeeding fiscal years to carry out this chapter.
‘‘(b) RESERVATION
FOR TECHNICAL ASSISTANCE
AND PEER REVIEW.—From the amount appropriated
under subsection (a) for any fiscal year, the Secretary may
reserve up 0.5 percent of that amount to obtain additional
qualified readers and additional staff to review applica-
tions, to increase the level of oversight monitoring, to sup-
port impact studies, program assessments and reviews,
and to provide technical assistance to potential applicants
and current grantees.
‘‘CHAPTER 4—FRANK TEJEDA SCHOLARSHIP
PROGRAM
‘‘SEC. 408A. STATEMENT OF PURPOSE.
‘‘It is the purpose of this chapter to establish a Frank
Tejeda Scholarship Program to recruit and train teachers
who are proficient in both Spanish and English and who
show promise of academic achievement.
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‘‘SEC. 408B. SCHOLARSHIPS AUTHORIZED.
‘‘(a) PROGRAM AUTHORITY.—The Secretary is au-
thorized, in accordance with the provisions of this chapter,
to award scholarships to individuals consistent with the
purposes of this chapter.
‘‘(b) 
TEJEDA
SCHOLARS.—Individuals 
awarded
scholarships under this chapter shall be known as ‘Tejeda
Scholars’.
‘‘SEC. 408C. ALLOCATION AMONG STATES.
‘‘(a) ALLOCATION FORMULA.—From the sums ap-
propriated pursuant to the authority of section 408H for
any fiscal year, the Secretary shall allocate to each State
an amount equal to $5,000 multiplied by the number of
scholarships determined by the Secretary to be available
to such State in accordance with subsection (b).
‘‘(b) NUMBER OF SCHOLARSHIPS AVAILABLE.—The
number of scholarships to be made available in a State
for any fiscal year shall bear the same ratio to the number
of scholarships made available to all States as the State’s
population ages 5 through 17 bears to the population ages
5 through 17 in all the States, except that not less than
10 scholarships shall be made available to any State.
‘‘(c) USE OF CENSUS DATA.—For the purpose of this
section, the population ages 5 through 17 in a State and
in all the States shall be determined by the most recently
available data, satisfactory to the Secretary, from the Bu-
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reau of the Census. The Bureau of the Census shall
produce and publish intercensal data for Puerto Rico and
the other territories.
‘‘SEC. 408D. ELIGIBILITY OF SCHOLARS.
‘‘(a) HIGH SCHOOL GRADUATION OR EQUIVALENT
AND ADMISSION TO INSTITUTION REQUIRED.—Each stu-
dent awarded a scholarship under this chapter shall—
‘‘(1) be—
‘‘(A) a low-income individual, as that term
is defined in section 402A(g)(2) of this title; or
‘‘(B) an individual who is eligible for a Pell
Grant under subpart 1 of this part;
‘‘(2) be a citizen of the United States;
‘‘(3) be a resident of the State in which he or
she applies;
‘‘(4) be enrolled or accepted for enrollment on
a full- or part-time basis, at a graduate or under-
graduate level, in an institution of higher education
that has an accredited teacher preparation program;
‘‘(5) have demonstrated proficiency in the
English and Spanish languages, as certified by the
applicant’s academic institution; and
‘‘(6) have agreed, upon graduation from such
program—
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‘‘(A) to serve no less than one year for
each year of scholarship assistance, but no
fewer than two years of service in total, as a
teacher in a public elementary or secondary
school in which there is a demonstrated need
for Spanish-speaking teachers and profes-
sionals, as determined by the Secretary;
‘‘(B) to complete such service within 6
years of graduation; and
‘‘(C) that if the student is unable to com-
plete such service, the student will, except as
provided in subsection (c), repay the Secretary
the total amount, or a pro rata amount of the
scholarship received under this chapter in pro-
portion to the amount of service completed, plus
interest and collection costs in the same manner
as repayment of a student loan made under
part D of this title.
‘‘(b) SELECTION BASED ON PROMISE OF ACADEMIC
ACHIEVEMENT.—Each student awarded a scholarship
under this chapter must demonstrate outstanding aca-
demic achievement and show promise of continued aca-
demic achievement, as certified by the student’s academic
institution.
‘‘(c) EXCEPTION TO REPAYMENT OBLIGATION.—
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‘‘(1) DEFERRAL DURING CERTAIN PERIODS.—A
recipient shall not be considered in violation of the
agreement entered into pursuant to subsection
(a)(4)(C) during any period in which the recipient—
‘‘(A) is pursuing a full-time course of
study related to the field of teaching at an eligi-
ble institution;
‘‘(B) is serving, not in excess of 3 years,
as a member of the armed services of the
United States;
‘‘(C) is temporarily totally disabled for a
period of time not to exceed 3 years as estab-
lished by sworn affidavit of a qualified physi-
cian;
‘‘(D) is unable to secure employment for a
period not to exceed 12 months by reason of
having to care for a spouse, child, parent, or
immediate family member who is disabled;
‘‘(E) is seeking and unable to find full-
time employment for a single period not to ex-
ceed 12 months;
‘‘(F) is seeking and unable to find full-time
employment as a teacher in a public or private
nonprofit preschool, elementary or secondary
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school, or education program for a single period
not to exceed 27 months; or
‘‘(G) satisfies the provisions of additional
repayment exceptions that may be prescribed by
the Secretary in regulations issued pursuant to
this subpart.
‘‘(2) FORGIVENESS IF PERMANENTLY TOTALLY
DISABLED.—A recipient shall be excused from re-
payment of any scholarship assistance received
under this chapter if the recipient becomes perma-
nently totally disabled as established by sworn affi-
davit of a qualified physician.
‘‘SEC. 408E. SELECTION OF SCHOLARS.
‘‘(a) ESTABLISHMENT OF CRITERIA.—The Secretary
shall establish criteria for the selection of scholars under
this chapter that meet the requirements of section 408D.
‘‘(b) TIMING OF SELECTION.—The selection process
shall be completed, and the awards made, no later than
May 1 of the academic year preceding the academic year
for which the award will be used.
‘‘SEC. 408F. STIPENDS AND SCHOLARSHIP CONDITIONS.
‘‘(a) AMOUNT OF AWARD.—Each student awarded a
scholarship under this chapter shall receive a stipend of
$5,000 for the academic year of study for which the schol-
arship is awarded, except that in no case shall the total
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amount of financial aid awarded to such student exceed
such student’s total cost-of-attendance.
‘‘(b) USE OF AWARD.—The State educational agency
shall establish procedures to assure that a scholar awarded
a scholarship under this chapter pursues a course of study
at an institution of higher education.
‘‘SEC. 408G. CONSTRUCTION OF NEEDS PROVISIONS.
‘‘Notwithstanding section 471, nothing in this chap-
ter, or any other Act, shall be construed to permit the
receipt of a scholarship under this chapter to be counted
for any needs test in connection with the awarding of any
grant or the making of any loan under this Act or any
other provision of Federal law relating to educational as-
sistance.
‘‘SEC. 408H. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated for this
chapter $5,000,000 for fiscal year 1998 and such sums
as may be necessary for each of the 4 succeeding fiscal
years.
‘‘CHAPTER 5—CAMPUS-BASED CHILD CARE
‘‘SEC. 410A. CAMPUS-BASED CHILD CARE.
‘‘(a) PROGRAM AUTHORIZED.—
‘‘(1) AUTHORITY.—The Secretary may award
grants to institutions of higher education to assist
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the institutions in providing campus-based child care
services to low-income students.
‘‘(2) AMOUNT OF GRANTS.—
‘‘(A) IN
GENERAL.—The amount of a
grant awarded to an institution of higher edu-
cation under this section for a fiscal year shall
not exceed 1 percent of the total amount of all
Federal Pell Grant funds awarded to students
enrolled at the institution of higher education
for the preceding fiscal year.
‘‘(B) MINIMUM.—A grant under this sec-
tion shall be awarded in an amount that is not
less than $10,000.
‘‘(3) DURATION AND PAYMENTS.—
‘‘(A) DURATION.—The Secretary shall
award a grant under this section for a period
of 3 years.
‘‘(B) PAYMENTS.—Subject to paragraph
(2), the Secretary shall make annual grant pay-
ments under this section.
‘‘(4) ELIGIBLE INSTITUTIONS.—An institution
of higher education shall be eligible to receive a
grant under this section for a fiscal year if the total
amount of all Federal Pell Grant funds awarded to
students enrolled at the institution of higher edu-
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cation for the preceding fiscal year equals or exceeds
$350,000.
‘‘(5) USE OF FUNDS.—Grant funds under this
section shall be used by an institution of higher edu-
cation to support or establish a campus-based child
care program serving the needs of low-income stu-
dents enrolled at the institution of higher education.
‘‘(6) DEFINITION OF LOW-INCOME STUDENT.—
For the purpose of this section, the term ‘low-income
student’ means a student who is eligible to receive
a Federal Pell Grant for the fiscal year for which
the determination is made.
‘‘(b) APPLICATIONS.—An institution of higher edu-
cation desiring a grant under this section shall submit an
application to the Secretary at such time, in such manner,
and accompanied by such information as the Secretary
may require. Each application shall—
‘‘(1) demonstrate that the institution is an eligi-
ble institution described in subsection (a)(4);
‘‘(2) specify the amount of funds requested;
‘‘(3) demonstrate the need of low-income stu-
dents at the institution for campus-based child care
services by including in the application student de-
mographics and other relevant data;
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‘‘(4) identify the resources the institution will
draw upon to support the child care program and
the participation of low-income students in the pro-
gram, such as accessing social services funding,
using student activity fees to help pay the costs of
child care, using resources obtained by meeting the
needs of parents who are not low-income students,
accessing foundation, corporate, or other institu-
tional support, and demonstrating that the use of
the resources will not result in increases in student
tuition;
‘‘(5) contain an assurance that the institution
will meet the child care needs of low-income students
through the provision of services, or through a con-
tract for the provision of services;
‘‘(6) provide a timeline, covering the period
from receipt of the grant through the provision of
the child care services, delineating the specific steps
the institution will take to achieve the goal of provid-
ing low-income students with child care services;
‘‘(7) specify any measures the institution will
take to assist low-income students with child care
during the period before the institution provides
child care services;
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‘‘(8) include a plan for identifying resources
needed for the child care services, including space in
which to provide child care services, and technical
assistance if necessary;
‘‘(9) contain an assurance that any child care
facility assisted under this section will meet the ap-
plicable State or local government licensing, certifi-
cation, approval, or registration requirements; and
‘‘(10) contain a plan for any child care facility
assisted under this section to become accredited
within 3 years of the date the institution first re-
ceives assistance under this section.
‘‘(c) REPORTING REQUIREMENTS; CONTINUING ELI-
GIBILITY.—
‘‘(1) REPORTING REQUIREMENTS.—
‘‘(A) REPORTS.—Each institution of high-
er education receiving a grant under this sec-
tion shall report to the Secretary 18 months
and 36 months after receiving the first grant
payment under this section.
‘‘(B) CONTENTS.—The report shall in-
clude—
‘‘(i) data on the population served
under this section;
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‘‘(ii) information on campus and com-
munity resources and funding used to help
low-income students access child care serv-
ices;
‘‘(iii) information on progress made
toward accreditation of any child care fa-
cility; and
‘‘(iv) information on the impact of the
grant on the quality, availability, and af-
fordability of campus-based child care serv-
ices.
‘‘(2) CONTINUING ELIGIBILITY.—The Secretary
shall make the third annual grant payment under
this section to an institution of higher education
only if the Secretary determines, on the basis of the
18-month report submitted under paragraph (1),
that the institution is making a good faith effort to
ensure that low-income students at the institution
have access to affordable, quality child care services.
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out this section
$30,000,000 for fiscal year 1999 and such sums as may
be necessary for each of the 4 succeeding fiscal years.
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‘‘CHAPTER 6—PUBLIC SAFETY OFFICER
MEMORIAL SCHOLARSHIPS
‘‘SEC. 411A. SCHOLARSHIPS AUTHORIZED.
‘‘(a) IN GENERAL.—
‘‘(1) SCHOLARSHIP AWARDS.—The Secretary is
authorized to award a scholarship to any eligible ap-
plicant who is enrolled, or has been accepted for en-
rollment, in an eligible institution as a full-time or
part-time postsecondary level student.
‘‘(2) APPLICATION.—To receive a scholarship
award under this chapter, each eligible applicant
shall submit an application to the Secretary in such
time and manner as may be determined appropriate
by the Secretary—
‘‘(A) accompanied by a certification from
the head of the agency that employed the public
safety officer to whom the applicant was mar-
ried (in the case of a surviving spouse), or with
whom the applicant was living or from whom
the applicant was receiving support contribu-
tions (in the case of a dependent child), stating
that such officer died as a result of the per-
formance of the officer’s official duties; and
‘‘(B) demonstrating the applicant’s need
for financial aid under part F of this title, de-
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termined without regard to any assets derived
from death benefits for such officer, to pursue
a program of postsecondary education.
‘‘(b) MAXIMUM AWARD.—For any academic year, the
maximum amount of a scholarship award under this sec-
tion for a postsecondary student may equal, but not ex-
ceed, the lesser of the following:
‘‘(1) The average cost of attendance (as defined
in section 472), at a State university in the State in
which the student resides, for a State resident carry-
ing the same academic workload as the student, with
the same number of dependents as the student, and
residing in the same type of housing as the student.
‘‘(2) The actual cost of attendance (as defined
in section 472) of such student.
‘‘(c) AWARD PERIOD.—The duration of each award
under this chapter for a postsecondary student, shall be
the lesser of—
‘‘(1) the time actually required by the student
to complete a course of study and obtain a diploma;
and
‘‘(2) 6 years in the case of a student engaged
in undergraduate studies and 3 years in the case of
a student engaged in postgraduate studies.
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‘‘(d) NOTIFICATION.—The Secretary shall notify the
recipient and the eligible institution of the applicant’s se-
lection for receipt of an award under this chapter, the con-
ditions pertaining to award eligibility and continuance.
‘‘(e) FISCAL AGENT.—The Secretary shall, if prac-
ticable, use the eligible institution as fiscal agent for pay-
ment of an award.
‘‘SEC. 411B. ADDITIONAL AWARD REQUIREMENTS.
‘‘A student awarded a scholarship grant under this
chapter, as a condition for initial receipt of such award
and periodically thereafter as a condition for its continu-
ation, shall demonstrate to the satisfaction of the Sec-
retary that the student is—
‘‘(1) maintaining satisfactory progress in the
course of study the student is pursuing consistent
with section 484(c);
‘‘(2) committed to remaining drug-free; and
‘‘(3) attending class on a regular basis as to not
interfere with normal course of studies except for ex-
cused absence for vacation, illness, military service
and such other periods deemed good cause by the el-
igible institution or the Secretary.
‘‘SEC. 411C. AGREEMENTS WITH ELIGIBLE INSTITUTIONS.
‘‘For the purposes of this chapter, the Secretary is
authorized to enter into agreements with eligible institu-
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tions in which any student receiving a scholarship award
under this chapter has enrolled or has been accepted for
enrollment. Each such agreement shall—
‘‘(1) provide that an eligible institution will co-
operate with the Secretary in carrying out the provi-
sions of this chapter, including the provision of in-
formation necessary for a student to satisfy the re-
quirements in section 411B;
‘‘(2) provide that the institution will conduct a
periodic review to determine whether students en-
rolled and receiving scholarship awards continue to
be entitled to payments under this chapter and will
notify the Secretary of the results of such reviews;
and
‘‘(3) provide for control and accounting proce-
dures as may be necessary to assure proper dis-
bursements and accounting of funds paid under to
the institution under section 411A(e).
‘‘SEC. 411D. DEFINITIONS.
‘‘In this chapter:
‘‘(1) DEPENDENT CHILD.—The term ‘depend-
ent child’ means a child who is either living with or
receiving regular support contributions from a public
safety officer at the time of the officer’s death, in-
cluding a stepchild or an adopted child.
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‘‘(2) ELIGIBLE APPLICANT.—The term ‘eligible
applicant’ means a person residing in a State who
is—
‘‘(A) a surviving spouse; or
‘‘(B) a dependent child.
‘‘(3) ELIGIBLE INSTITUTION.—The term ‘eligi-
ble institution’ means an eligible institution as de-
fined in section 435(a) that—
‘‘(A) is located in a State; and
‘‘(B) complies with the antidiscrimination
provisions of section 601 of the Civil Rights Act
of 1964 and does not discriminate on the basis
of race.
‘‘(4) PUBLIC
SAFETY
OFFICER.—The term
‘public safety officer’ means a person serving a pub-
lic agency of a State or of a unit of general local
government, with or without compensation, as—
‘‘(A) a law enforcement officer, including a
corrections or a court officer engaged in—
‘‘(i) apprehending or attempting to
apprehend of any person—
‘‘(I) for the commission of a
criminal act; or
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‘‘(II) who at the time was sought
as a material witness in a criminal
proceeding; or
‘‘(ii) protecting or guarding a person
held for the commission of a criminal act,
or held as a material witness in connection
with a criminal act; or
‘‘(iii) lawfully preventing of, or law-
fully attempting to prevent the commission
of, a criminal act or an apparent criminal
act in the performance of his official duty;
or
‘‘(B) a firefighter.
‘‘(5) SURVIVING SPOUSE.—The term ‘surviving
spouse’ means the legally married husband or wife
of a public safety officer at the time of the officer’s
death.
‘‘(6) UNIT
OF
GENERAL
LOCAL
GOVERN-
MENT.—The term ‘unit of general local government’
means any city, county, township, town, borough,
parish, village, or any other general purpose subdivi-
sion of a State, or any Indian tribe which the Sec-
retary of the Interior determines performs law en-
forcement functions.’’.
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SEC. 406. FEDERAL SUPPLEMENTAL EDUCATIONAL OPPOR-
TUNITY GRANTS.
(a) 
EXTENSION
OF
AUTHORITY.—Section
413A(b)(1) (20 U.S.C. 1070b(b)(1)) is amended by strik-
ing ‘‘1993’’ and inserting ‘‘1999’’.
(b) USE
OF FUNDS
FOR LESS-THAN-FULL-TIME
STUDENTS.—Subsection (d) of section 413C (20 U.S.C.
1070b–2(d)) is amended by striking ‘‘and if the total fi-
nancial need’’ and all that follows and inserting the follow-
ing: ‘‘, then grant funds shall be made available to such
independent and less-than-full-time students.’’.
(c) ALLOCATION
OF FUNDS.—Section 413D (20
U.S.C. 1070b-3) is amended—
(1) by striking subsection (b);
(2) in subsection (c)(1), by striking ‘‘three-
quarters of the remainder’’ and inserting ‘‘the re-
mainder’’;
(3) in subsection (c)(2)(A)(i), by striking ‘‘sub-
section (d)’’ and inserting ‘‘subsection (c)’’;
(4) by redesignating subsections (c), (d), (e),
and (f ) as subsections (b), (c), (d), and (e), respec-
tively; and
(5) by inserting after subsection (e) (as so re-
designated) the following new subsection:
‘‘(f ) CARRY-OVER /CARRY-BACK AUTHORITY.—
‘‘(1) CARRY-OVER AUTHORITY.—
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‘‘(A) CARRY-OVER UP TO 10 PERCENT.—
Of the sums granted to an eligible institution
under this subpart for any fiscal year, 10 per-
cent may, at the discretion of the institution,
remain available for expenditure during the suc-
ceeding fiscal year to carry out the program
under this subpart.
‘‘(B) REALLOCATION OF EXCESS.—Any of
the sums so granted to an institution for a fis-
cal year which are not needed by that institu-
tion to operate programs under this subpart
during that fiscal year, and which it does not
wish to use during the next fiscal year as au-
thorized in the preceding sentence, shall remain
available to the Secretary for making grants
under section 413B to other institutions in the
same State until the close of the second fiscal
year next succeeding the fiscal year for which
such funds were appropriated.
‘‘(2) CARRY-BACK AUTHORITY.—
‘‘(A) CARRY-BACK UP TO 10 PERCENT.—
Up to 10 percent of the sums the Secretary de-
termines an eligible institution may receive
from funds which have been appropriated for a
fiscal year may be used by the institution for
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expenditure during the fiscal year preceding the
fiscal year for which the sums were appro-
priated.
‘‘(B) USE OF CARRIED-BACK FUNDS.—An
eligible institution may make grants to students
after the end of the academic year, but prior to
the beginning of the succeeding fiscal year,
from such succeeding fiscal year’s appropria-
tions.’’.
SEC. 407. GRANTS TO STATES FOR STATE STUDENT INCEN-
TIVES.
(a) AUTHORIZATION OF APPROPRIATIONS.—Section
415A(b) of the Higher Education Act of 1965 (20 U.S.C.
1070c(b)) is amended—
(1) in paragraph (1), by striking ‘‘1993’’ and
inserting ‘‘1999’’;
(2) by redesignating paragraph (2) as para-
graph (3); and
(3) by inserting after paragraph (1) the follow-
ing:
‘‘(2) RESERVATION.—For any fiscal year for
which the amount appropriated under paragraph (1)
exceeds $25,000,000, the excess shall be available to
carry out section 415E.’’.
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(b) SPECIAL LEVERAGING EDUCATIONAL ASSIST-
ANCE PARTNERSHIP PROGRAM.—Subpart 4 of part A of
title IV of the Higher Education Act of 1965 (20 U.S.C.
1070c et seq.) is amended—
(1) by redesignating section 415E as section
415F; and
(2) by inserting after section 415D the follow-
ing:
‘‘SEC. 415E. SPECIAL LEVERAGING EDUCATIONAL ASSIST-
ANCE PARTNERSHIP PROGRAM.
‘‘(a) IN GENERAL.—From amounts reserved under
section 415A(b)(2) for each fiscal year, the Secretary
shall—
‘‘(1) make allotments among States in the same
manner as the Secretary makes allotments among
States under section 415B; and
‘‘(2) award grants to States, from allotments
under paragraph (1), to enable the States to pay the
Federal share of the cost of the authorized activities
described in subsection (c).
‘‘(b) AUTHORIZED ACTIVITIES.—Each State receiv-
ing a grant under this section may use the grant funds
for—
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‘‘(1) increasing the dollar amount of grants
awarded under section 415B to eligible students who
demonstrate financial need;
‘‘(2) carrying out transition programs from sec-
ondary school to postsecondary education for eligible
students who demonstrate financial need;
‘‘(3) carrying out a financial aid program for
eligible students who demonstrate financial need and
wish to enter teaching or careers in information
technology, or other fields of study determined by
the State to be critical to the State’s workforce
needs;
‘‘(4) carrying out early intervention programs,
mentoring programs, and career education programs
for eligible students who demonstrate financial need;
and
‘‘(5) awarding merit or academic scholarships
to eligible students who demonstrate financial need.
‘‘(c) MAINTENANCE OF EFFORT REQUIREMENT.—
Each State receiving a grant under this section for a fiscal
year shall provide the Secretary an assurance that the ag-
gregate amount expended per student or the aggregate ex-
penditures by the State, from funds derived from non-Fed-
eral sources, for the authorized activities described in sub-
section (b) for the preceding fiscal year were not less than
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the amount expended per student or the aggregate expend-
itures by the State for the activities for the second preced-
ing fiscal year. The Secretary may waive this subsection
for good cause, as determined by the Secretary.
‘‘(d) FEDERAL SHARE.—The Federal share of the
cost of the authorized activities described in subsection (b)
for any fiscal year shall be 25 percent.’’.
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) PURPOSE.—Subsection (a) of section 415A
of the Higher Education Act of 1965 (20 U.S.C.
1070c(a)) is amended to read as follows:
‘‘(a) PURPOSE OF SUBPART.—It is the purpose of
this subpart to make incentive grants available to States
to assist States in—
‘‘(1) providing grants to—
‘‘(A) eligible students attending institu-
tions of higher education or participating in
programs of study abroad that are approved for
credit by institutions of higher education at
which such students are enrolled; and
‘‘(B) eligible students for campus-based
community service work-study; and
‘‘(2) carrying out the activities described in sec-
tion 415F.’’.
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(2) ALLOTMENT.—Section 415B(a)(1) of the
Higher Education Act of 1965 (20 U.S.C. 1070c–
1(a)(1)) is amended by inserting ‘‘and not reserved
under section 415A(b)(2)’’ after ‘‘415A(b)(1)’’.
SEC. 408. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAM-
ILIES ARE ENGAGED IN MIGRANT AND SEA-
SONAL FARMWORK.
(a) COORDINATION.—Section 418A(d) (20 U.S.C.
1070d–2(d)) is amended by inserting after ‘‘contains as-
surances’’ the following: ‘‘that the grant recipient will co-
ordinate its project, to the extent feasible, with other local,
State, and Federal programs to maximize the resources
available for migrant students, and’’.
(b) EXTENSION OF AUTHORITY.—Section 418A(g) is
amended by striking ‘‘1993’’ each place it appears and
inserting ‘‘1999’’.
(c) DATA COLLECTION.—Section 418A is amended
by adding at the end the following new subsection:
‘‘(h) DATA COLLECTION.—The National Center for
Education Statistics shall collect postsecondary education
data on migrant students.’’.
(d) TECHNICAL AMENDMENTS.—Section 418A(e) is
amended by striking ‘‘authorized by subpart 4 of this part
in accordance with section 417A(b)(2)’’ and inserting ‘‘in
accordance with section 402A(c)(1)’’.
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SEC. 409. BYRD SCHOLARSHIPS.
(a) ELIGIBILITY.—Section 419G (20 U.S.C. 1070d–
37) is amended by adding at the end the following new
subsection:
‘‘(e) TERMINATION OF ELIGIBILITY.—The eligibility
of students from the Federated States of Micronesia, the
Republic of the Marshall Islands, and Palau shall expire
on the earlier of the date of enactment of the Higher Edu-
cation Amendments of 1998 or October 1, 1998.’’.
(b) AUTHORIZATION OF APPROPRIATIONS.—Section
419K (20 U.S.C. 1070d–41) is amended by striking
‘‘$10,000,000 for fiscal year 1993’’ and inserting
‘‘$40,000,000 for fiscal year 1999’’.
PART B—FEDERAL FAMILY EDUCATION LOAN
PROGRAM
SEC. 411. LIMITATION REPEALED.
Section 421 (20 U.S.C. 1071) is amended by striking
subsection (d).
SEC. 412. ADVANCES TO RESERVE FUNDS.
Section 422 (20 U.S.C. 1072) is amended—
(1) 
in 
subsection 
(a)(2), 
by 
striking
‘‘428(c)(10)(E)’’ and inserting ‘‘428(c)(9)(E)’’;
(2) in subsection (c)(6)(B)(i), by striking ‘‘han-
dle written’’ and inserting ‘‘handle written, elec-
tronic,’’;
(3) in subsection (c)(7)
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(A) by striking ‘‘to a guaranty agency—’’
and everything that follows through ‘‘(B) if the
Secretary’’ and inserting ‘‘to a guaranty agen-
cy, if the Secretary’’;
(B) by striking ‘‘428(c)(10)(F)(v)’’ and in-
serting ‘‘428(c)(9)(F)(v)’’;
(C) by inserting ‘‘and’’ after ‘‘cash
needs,’’; and
(D) by striking ‘‘or ensure’’ and everything
that follows and inserting a period; and
(4) in the first and second sentences of sub-
section (g)(1), by striking ‘‘or the program author-
ized by part D of this title’’ each place it appears.
SEC. 412A. GUARANTY AGENCY REFORMS.
The Secretary shall conduct a study to investigate to
what extent the actions of the lenders and the guarantors
impact upon the default rates of student borrowers as it
relates to the servicing of the loans or the due diligence
of the loan.
SEC. 413. GUARANTY AGENCY REFORMS.
(a) FEDERAL STUDENT LOAN RESERVE FUND.—
Part B of title IV is amended by inserting after section
422 (20 U.S.C. 1072) the following new section:
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‘‘SEC. 422A. FEDERAL STUDENT LOAN RESERVE FUND.
‘‘(a) ESTABLISHMENT.—Each guaranty agency shall,
not later than 60 days after the date of enactment of this
section, deposit all funds, securities, and other liquid as-
sets contained in the reserve fund established pursuant to
section 422 of this part into a Federal Student Loan Re-
serve Fund (in this section and section 422B referred to
as the ‘Federal Fund’) which shall be an account of a type
selected by the agency, with the approval of the Secretary.
‘‘(b) INVESTMENT OF FUNDS.—Funds maintained in
the Federal Fund shall be invested in obligations issued
or guaranteed by the United States or a State, or in other
similarly low-risk securities selected by the guaranty agen-
cy.
‘‘(c) ADDITIONAL DEPOSITS.—After the establish-
ment of the Federal Fund, a guaranty agency shall deposit
into the Federal Fund—
‘‘(1) all amounts received from the Secretary as
payment of reinsurance on loans pursuant to section
428(c)(1);
‘‘(2) from amounts collected on behalf of the
obligation of a defaulted borrower, a percentage
amount equal to the complement of the reinsurance
percentage in effect when payment under the guar-
anty agreement was made with respect to the de-
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faulted loan pursuant to sections 428(c)(6)(A) and
428F(a)(1)(B); and
‘‘(3) insurance premiums collected from borrow-
ers pursuant to sections 428(b)(1)(H) and 428H(h).
‘‘(d) USES OF FUNDS.—Subject to subsection (f ),
the Federal Fund may only be used by a guaranty agen-
cy—
‘‘(1) to pay lender claims pursuant to section
428(b)(1)(G), section 428(j), section 437, and sec-
tion 439(q); and
‘‘(2) to pay into the Agency Operating Fund es-
tablished pursuant to section 422B a default preven-
tion fee in accordance with section 428(l).
‘‘(e) OWNERSHIP OF FEDERAL FUND.—
‘‘(1) IN GENERAL.—The Federal Fund of the
guaranty agency, and any assets purchased or devel-
oped with funds from the Federal Fund or any other
funds considered reserve funds on the date of enact-
ment of this section, regardless of who holds or con-
trols the reserves or assets, shall be considered to be
the property of the United States to be used in the
operation of the program authorized by this part, as
provided in subsection (d) of this section.
‘‘(2) NONLIQUID RESERVE FUND AND OTHER
ASSETS.—Notwithstanding any other provision of
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law, nonliquid reserve fund assets, such as buildings
and equipment purchased or developed by the guar-
anty agency with funds from the Federal Fund, or
any other funds considered reserve funds on the date
of enactment of this section shall—
‘‘(A) remain the property of the United
States;
‘‘(B) be used only for such purposes as the
Secretary determines are appropriate; and
‘‘(C) be subject to such restrictions on the
disposition of such assets (which may include a
requirement that any sale of such assets be at
not less than fair market value) as the Sec-
retary determines are appropriate.
‘‘(f ) TRANSITION.—
‘‘(1) IN GENERAL.—In order to establish the
Agency Operating Fund authorized by section 422B,
each guaranty agency may transfer up to 180 days
cash expenses for normal operating expenses, as a
working capital reserve as defined in Office of Man-
agement and budget circular A–87 (Cost Accounting
Standards) from the Federal Fund for deposit into
the Agency Operating Fund for use in the perform-
ance of its duties under this part. Such transfers
may occur during the first three years following the
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establishment of the Operating Fund. However, no
agency may transfer in excess of 50 percent of the
Federal Fund balance to its Operating Fund during
any fiscal year. In determining the transfer amount,
the agency shall insure that sufficient funds remain
in the Federal Fund to pay lender claims within the
required time periods and to meet the reserve recall
requirements of the Balanced Budget Act of 1997.
‘‘(2) REPAYMENT PROVISIONS.—Each guaranty
agency shall begin repayment of sums transferred
pursuant to this subsection no later than the start
of the fourth year after the establishment of the
Agency Operating Fund, and shall repay all
amounts transferred no later than 5 years from the
date of the establishment of the Agency Operating
Fund. Each guaranty agency shall provide to the
Secretary, on an annual basis, a financial analysis
demonstrating its ability to repay all outstanding
amounts while any transferred amounts are owned
to the Federal Fund.
‘‘(3) SPECIAL RULE.—In applying the minimum
reserve level required by section 428(c)(9)(A), the
Secretary shall include all amounts owed to the Fed-
eral Fund by the agency due to transfers allowed
under paragraph (1) in the calculation.’’.
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(b) AGENCY OPERATING FUND ESTABLISHED.—Part
B of title IV is further amended by inserting after section
422A (as added by subsection (a)) the following new sec-
tion:
‘‘SEC. 422B. AGENCY OPERATING FUND.
‘‘(a) ESTABLISHMENT.—Each guaranty agency shall,
not later than 60 days after the date of enactment of this
section, establish a fund designated as the Agency Operat-
ing Fund (hereinafter referred to as the ‘Operating
Fund’).
‘‘(b) INVESTMENT OF FUNDS.—Funds deposited into
the Operating Fund shall be invested at the discretion of
the guaranty agency in accordance with prudent investor
standards.
‘‘(c) ADDITIONAL DEPOSITS.—After the establish-
ment of the Operating Fund, the guaranty agency shall
deposit into the Operating Fund—
‘‘(1) the loan processing and issuance fee paid
by the Secretary pursuant to section 428(f );
‘‘(2) the portfolio maintenance fee paid by the
Secretary pursuant to section 458;
‘‘(3) the default prevention fee paid in accord-
ance with section 428(l);
‘‘(4) amounts retained by the guaranty agency
pursuant to section 428(c)(6)(B) from collection on
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defaulted loans held by the agency, after payment of
the Secretary’s equitable share, excluding amounts
deposited in the Federal Fund pursuant to section
422A(c)(2); and
‘‘(5) interest earned on the Federal Fund dur-
ing the first 3 years after the date of enactment of
this section by a limited number of guaranty agen-
cies (not to exceed 10) that demonstrate to the Sec-
retary the potential for a negative cash flow in the
Operating Fund during the restructuring of their
operations in accordance with the requirements of
this section and section 422A.
‘‘(d) USES OF FUNDS.—
‘‘(1) IN
GENERAL.—Funds in the Operating
Fund shall be used for activities related to student
financial aid, including application processing, loan
disbursement, enrollment and repayment status
management, default prevention activities, default
collection activities, school and lender training, fi-
nancial awareness and outreach activities, compli-
ance monitoring, other loan program related activi-
ties in support of postsecondary education and other
student financial aid related activities as determined
by the guaranty agency.
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‘‘(2) SPECIAL
RULE.—The guaranty agency
may, in its discretion, transfer funds from the Oper-
ating Fund to the Federal Student Loan Reserve
Fund for use in accordance with section 422A. Such
transfer shall be irrevocable, and any funds so trans-
ferred shall become the property of the United
States.
‘‘(3) DEFINITIONS.—For purposes of this sub-
section:
‘‘(A) The term ‘default collection activities’
means activities of a guaranty agency which are
directly related to the collection of the loan on
which a default claim has been paid to the par-
ticipating lender, including the due diligence ac-
tivities required pursuant to regulations of the
Secretary.
‘‘(B) The term ‘default prevention activi-
ties’ means activities of a guaranty agency
which are directly related to providing collection
assistance to the lender on a delinquent loan,
prior to the loan’s being legally in a default sta-
tus, including due diligence activities required
pursuant to regulations of the Secretary.
‘‘(C) The term ‘enrollment and repayment
status management’ means activities of a guar-
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anty agency which are directly related to
ascertaining the student’s enrollment status, in-
cluding prompt notification to the lender of
such status, an audit of the note or written
agreement to determine if the provisions of that
note or agreement are consistent with the
records of the guaranty agency as to the prin-
cipal amount of the loan guaranteed, and an ex-
amination of the note or agreement to assure
that the repayment provisions are consistent
with the provisions of this part.
‘‘(e) OWNERSHIP OF OPERATING FUND.—The Oper-
ating Fund of the guaranty agency shall be considered to
be the property of the guaranty agency. The Secretary
may regulate the uses or expenditure of moneys in the
Operating Fund with respect to activities required under
guaranty agency agreements under subsections (b) and (c)
of section 428 until such time as a guaranty agency has
repaid to the Federal Fund all reserve funds transferred
under section 422A(f ). During any period in which funds
are owed to the Federal Fund as a result of a transfer
under 422A(f ), moneys in the Operating Fund may only
be used for expenses related to the student loan programs
authorized under this part. The Secretary may require
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such necessary reports and audits as provided in section
428(b)(2).’’.
(c) ADDITIONAL RECALL
OF RESERVES.—Section
422 (as amended by section 412) is further amended by
adding at the end the following new subsection:
‘‘(i) ADDITIONAL RECALL OF RESERVES.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision 
of 
law, 
the 
Secretary 
shall 
recall
$43,000,000 for each of the fiscal years 1999, 2000,
2001, 2002, and 2003 from the reserve funds held
by guaranty agencies.
‘‘(2) DEPOSIT.—Funds recalled by the Sec-
retary under this subsection shall be deposited in the
Treasury.
‘‘(3) REQUIRED SHARE.—The Secretary shall
require each guaranty agency to return annually re-
serve funds under paragraph (1) based on one-fifth
of the agency’s required share. For purposes of this
paragraph, a guaranty agency’s required share shall
be determined as follows:
‘‘(A) The Secretary shall impose on each
guaranty agency an equal percentage reduction
in the amount of the agency’s reserve funds
held as of September 30, 1996.
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‘‘(B) The equal percentage reduction shall
be the percentage obtained by dividing—
‘‘(i) $215,000,000 by
‘‘(ii) the total amount of all such
agencies’ reserve funds held as of Septem-
ber 30, 1996.
‘‘(4) OFFSET OF REQUIRED SHARES.—If any
guaranty agency returns to the Secretary any re-
serves in excess of the amount required under this
subsection or subsection (h), the total amount re-
quired to be returned under paragraph (1) shall be
reduced by the amount of such additional reserve re-
turn.
‘‘(5) DEFINITION
OF
RESERVE
FUNDS.—The
term ‘reserve funds’ when used with respect to a
guaranty agency—
‘‘(A) includes any reserve funds in cash or
liquid assets held by the guaranty agency, or
held by, or under the control of, any other en-
tity; and
‘‘(B) does not include building, equipment,
or other nonliquid assets.’’.
(d) CONFORMING AMENDMENTS.—
(1) REINSURANCE PAYMENTS.—
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(A) AMENDMENTS.—Section 428(c)(1) (20
U.S.C. 1078(c)(1)) is amended—
(i) in subparagraph (A), by striking
‘‘98 percent’’ and inserting ‘‘95 percent’’;
(ii) in subparagraph (B)(i), by strik-
ing ‘‘88 percent’’ and inserting ‘‘85 per-
cent’’; and
(iii) in subparagraph (B)(ii), by strik-
ing ‘‘78 percent’’ and inserting ‘‘75 per-
cent’’;
(iv) in subparagraph (E)—
(I) by striking ‘‘for ‘98 percent’;’’
and inserting ‘‘for ‘95 percent’;’’;
(II) by striking ‘‘for ‘88 per-
cent’;’’ and inserting ‘‘for ‘85 per-
cent’;’’; and
(III) by striking ‘‘for ‘78 per-
cent’.’’ and inserting ‘‘for ‘75 per-
cent’.’’;
(v) in subparagraph (F)—
(I) by striking ‘‘for ‘98 percent’;’’
and inserting ‘‘for ‘95 percent’;’’;
(II) by striking ‘‘for ‘88 per-
cent’;’’ and inserting ‘‘for ‘85 per-
cent’;’’; and
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(III) by striking ‘‘for ‘78 per-
cent’.’’ and inserting ‘‘for ‘75 per-
cent’.’’;
(vi) by striking subparagraph (D) and
redesignating subparagraphs (E) and (F)
as subparagraphs (D) and (E), respec-
tively.
(B) EFFECTIVE DATE.—The amendments
made by subparagraph (A) of this paragraph
apply to loans for which the first disbursement
is made on or after October 1, 1998.
(2) EQUITABLE SHARE.—Section 428(c)(6) is
amended—
(A) in subparagraph (A)—
(i) by striking ‘‘(A) For the purpose’’
and inserting ‘‘For the purpose’’; and
(ii) by striking clause (ii) and insert-
ing the following:
‘‘(ii) an amount equal to 24 percent of
such payments for use in accordance with sec-
tion 422B.’’;
(B) by striking subparagraphs (B) and
(C); and
(C) by redesignating clauses (i) and (ii) as
subparagraphs (A) and (B).
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(3) GUARANTY AGENCY RESERVE LEVEL.—Sec-
tion 428(c)(9) is amended—
(A) in subparagraph (A), by striking ‘‘.5
percent’’ and inserting ‘‘0.25 percent’’; and
(B) in subparagraph (C)—
(i) by striking ‘‘80 percent pursuant
to section 428(c)(1)(B)(ii)’’ and inserting
‘‘85 
percent 
pursuant 
to 
paragraph
(1)(B)(i) of this subsection’’; and
(ii) by striking ‘‘30 working days’’
and inserting ‘‘45 working days’’.
(4) PAYMENT
OF
CERTAIN
COSTS.—Section
428(f ) is amended—
(A) by striking paragraph (1)(A) and in-
serting the following:
‘‘(1) PAYMENT FOR CERTAIN ACTIVITIES.—(A)
The Secretary shall, in accordance with the provi-
sions of this paragraph, pay to each guaranty agen-
cy for each fiscal year a loan processing and
issuance fee equal to 0.65 percent of the total prin-
cipal amount of the loans on which insurance was
issued under this part during such fiscal year by
such agency.’’; and
(B) in paragraph (1)(B), by striking the
first sentence and inserting the following: ‘‘The
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payment required by subparagraph (A) shall be
paid on a quarterly basis.’’.
(5) DEFAULT AVERSION ASSISTANCE.—Section
428(l) is amended to read as follows:
‘‘(l) DEFAULT AVERSION ASSISTANCE.—
‘‘(1) ASSISTANCE REQUIRED.—Upon receipt of
a proper request from a lender received not earlier
than the 60th day of delinquency, a guaranty agency
having an agreement with the Secretary under sub-
section (c) of this section shall engage in default
aversion activities designed to prevent the default by
a borrower on a loan covered by such agreement.
‘‘(2) REIMBURSEMENT.—(A) guaranty agency
may, in accordance with the provisions of this para-
graph, transfer from the Federal Student Loan Re-
serve Account to the Operating Account a default
aversion fee. Such fee shall be paid for any loan on
which a claim for default has not been paid as a re-
sult of the loan being brought into current repay-
ment status on or before the 210th day after the
loan becomes 60 days delinquent.
‘‘(B) The default aversion fee shall be equal to
1 percent of the total unpaid principal and accrued
interest on the loan at the time the request is sub-
mitted by the lender. Such fee shall not be paid
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more than once on any loan for which the guaranty
agency averts the default unless at least 12 months
has elapsed between the date the borrower became
current in his or her payments and the date the
lender filed a subsequent default aversion assistance
request. A guaranty agency may transfer such fees
earned under this subsection no more frequently
than monthly.
‘‘(C) For the purpose of earning the default
aversion fee, the term ‘current repayment status’
means that the borrower is not delinquent in the
payment of any principal or interest on the loan.’’.
SEC. 414. SCOPE AND DURATION OF PROGRAM.
Section 424(a) (20 U.S.C. 1074(a)) is amended—
(1) by striking ‘‘October 1, 2002’’ and inserting
‘‘October 1, 2004’’; and
(2) by striking ‘‘September 30, 2006’’ and in-
serting ‘‘September 30, 2008’’.
SEC. 415. LIMITATIONS ON INDIVIDUAL FEDERALLY IN-
SURED LOANS AND FEDERAL LOAN INSUR-
ANCE.
Section 425(a)(1)(A) (20 U.S.C. 1075(a)(1)(A)) is
amended—
(1) in clause (i)—
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(A) by inserting ‘‘and’’ after the semicolon
at the end of subclause (I); and
(B) by striking subclauses (II) and (III)
and inserting the following:
‘‘(II) if such student is enrolled in a
program of undergraduate education which
is less than one academic year, the maxi-
mum annual loan amount that such stu-
dent may receive may not exceed the
amount that bears the same ratio to the
amount specified in subclause (I) as the
length of such program measured in se-
mester, trimester, quarter, or clock hours
bears to one academic year;’’; and
(2) by inserting ‘‘and’’ after the semicolon at
the end of clause (iii).
SEC. 416. APPLICABLE INTEREST RATES.
(a) APPLICABLE INTEREST RATES.—
(1) AMENDMENT.—Section 427A (20 U.S.C.
1077a) is amended to read as follows:
‘‘SEC. 427A. APPLICABLE INTEREST RATES.
‘‘(a) INTEREST RATES
FOR NEW LOANS ON
OR
AFTER JULY 1, 1998.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
with respect to any loan made, insured, or guaran-
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teed under this part (other than a loan made pursu-
ant to section 428B or 428C) for which the first dis-
bursement is made on or after July 1, 1998, the ap-
plicable rate of interest shall, during any 12-month
period beginning on July 1 and ending on June 30,
be determined on the preceding June 1 and be equal
to—
‘‘(A) the bond equivalent rate of 91-day
Treasury bills auctioned at the final auction
held prior to such June 1; plus
‘‘(B) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
‘‘(2) IN SCHOOL AND GRACE PERIOD RULES.—
With respect to any loan under this part (other than
a loan made pursuant to section 428B or 428C) for
which the first disbursement is made on or after
July 1, 1998, the applicable rate of interest for in-
terest which accrues—
‘‘(A) prior to the beginning of the repay-
ment period of the loan; or
‘‘(B) during the period in which principal
need not be paid (whether or not such principal
is in fact paid) by reason of a provision de-
scribed 
in 
section 
428(b)(1)(M) 
or
427(a)(2)(C),
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shall be determined under paragraph (1) by sub-
stituting ‘1.7 percent’ for ‘2.3 percent’.
‘‘(3) PLUS LOANS.—With respect to any loan
under section 428B for which the first disbursement
is made on or after July 1, 1998, the applicable rate
of interest shall, during any 12-month period begin-
ning on July 1 and ending on June 30, be deter-
mined on the preceding June 1 and be equal to the
lesser of—
‘‘(A)(i) the bond equivalent rate of 91-day
Treasury bills auctioned at the final auction
held prior to such June 1; plus
‘‘(ii) 3.1 percent; or
‘‘(B) 9.0 percent.
‘‘(4) CONSOLIDATION LOANS.—With respect to
any consolidation loan under section 428C for which
the application is received by an eligible lender on or
after October 1, 1998, the applicable rate of interest
shall be at an annual rate on the unpaid principal
balance of the loan that is equal to the lesser of—
‘‘(A) the weighted average of the interest
rates on the loans consolidated, rounded to the
nearest higher one-eighth of one percent; or
‘‘(B) 8.25 percent.
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‘‘(b) LESSER RATES PERMITTED.—Nothing in this
section or section 428C shall be construed to prohibit a
lender from charging a borrower interest at a rate less
than the rate which is applicable under this part.
‘‘(c) CONSULTATION.—The Secretary shall determine
the applicable rate of interest under this section after con-
sultation with the Secretary of the Treasury and shall
publish such rate in the Federal Register as soon as prac-
ticable after the date of determination.’’.
(2) 
CONFORMING
AMENDMENT.—Section
428B(d)(4) (20 U.S.C. 1078–2(d)(4)) is amended by
striking ‘‘section 427A(c)’’ and inserting ‘‘section
427A(a)(3)’’.
(b) SPECIAL ALLOWANCES.—
(1) AMENDMENT.—Section 438(b)(2)(F) (20
U.S.C. 1087–1(b)(2)(F)) is amended to read as fol-
lows:
‘‘(F) LOANS
DISBURSED
AFTER
JULY
1,
1998.—
‘‘(i) IN GENERAL.—Subject to paragraph
(4) and clauses (ii), (iii), and (iv) of this sub-
paragraph, and except as provided in subpara-
graph (B), the special allowance paid pursuant
to this subsection on loans for which the first
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disbursement is made on or after July 1, 1998,
shall be computed—
‘‘(I) by determining the average of the
bond equivalent rates of 91-day Treasury
bills auctioned for such 3-month period;
‘‘(II) by subtracting the applicable in-
terest rates on such loans from such aver-
age bond equivalent rate;
‘‘(III) by adding 2.8 percent to the re-
sultant percent; and
‘‘(IV) by dividing the resultant per-
cent by 4.
‘‘(ii) IN SCHOOL AND GRACE PERIOD.—In
the case of any loan for which the first dis-
bursement is made on or after July 1, 1998,
and for which the applicable rate of interest is
described in section 427A(a)(2), clause (i)(III)
of this subparagraph shall be applied by sub-
stituting ‘2.2 percent’ for ‘2.8 percent’.
‘‘(iii) PLUS LOANS.—In the case of any
loan for which the first disbursement is made
on or after July 1, 1998, and for which the ap-
plicable rate of interest is described in section
427A(a)(3), clause (i)(III) of this subparagraph
shall be applied by substituting ‘3.1 percent’ for
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‘2.8 percent’, subject to clause (v) of this sub-
paragraph.
‘‘(iv) CONSOLIDATION LOANS.—In the case
of any consolidation loan for which the applica-
tion is received by an eligible lender on or after
October 1, 1998, and for which the applicable
interest rate is determined under section
427A(a)(4), clause (i)(III) of this subparagraph
shall be applied by substituting ‘3.1 percent’ for
‘2.8 percent’, subject to clause (v) of this sub-
paragraph.
‘‘(v) LIMITATION
ON
SPECIAL
ALLOW-
ANCES
FOR
PLUS 
AND
CONSOLIDATION
LOANS.—In the case of PLUS loans made
under section 428B and disbursed on or after
July 1, 1998, for which the interest rate is de-
termined under 427A(a)(3), a special allowance
shall not be paid for such loan unless the rate
determined under subparagraph (A) of such
section (without regard to subparagraph (B) of
such section) exceeds 9.0 percent. In the case of
consolidation loans made under section 428C
for which the application is received by an eligi-
ble lender on or after October 1, 1998, and for
which the applicable interest rate is determined
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under section 427A(a)(4), a special allowance
shall not be paid for such loan unless the rate
determined under subparagraph (A) of such
section (without regard to subparagraph (B) of
such section) exceeds 8.25 percent.’’.
(2) 
CONSOLIDATION
LOANS.—Section
428C(c)(1) (20 U.S.C. 1078-3) is amended—
(A) by striking everything preceding sub-
paragraph (D) and inserting the following:
‘‘(1) INTEREST RATE.—(A) Except as provided
in subparagraph (B), with respect to any loan made
under this section for which the application is re-
ceived by an eligible lender on or after October 1,
1998, the applicable interest rate shall be deter-
mined under section 427A(a)(4).’’; and
(B) by redesignating subparagraph (D) as
subparagraph (B).
(3) 
CONFORMING
AMENDMENT.—Section
438(b)(2)(C)(ii) is amended by striking ‘‘In the
case’’ and inserting ‘‘Subject to subparagraph (F),
in the case’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to any loan made, in-
sured, or guaranteed under part B of title IV of the High-
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er Education Act of 1965 for which the first disbursement
is made on or after July 1, 1998.
SEC. 417. FEDERALLY GUARANTEED STUDENT LOANS.
(a) REQUIREMENTS FOR FEDERAL INTEREST SUB-
SIDIES.—Section 428(a)(2) (20 U.S.C. 1078(a)(2)) is
amended by striking everything preceding subparagraph
(D) and inserting the following:
‘‘(2) ADDITIONAL REQUIREMENTS TO RECEIVE
SUBSIDY.—(A) Each student qualifying for a portion
of an interest payment under paragraph (1) shall
provide to the lender a statement from the eligible
institution, at which the student has been accepted
for enrollment, or at which the student is in attend-
ance, which certifies the eligibility of the student to
receive a loan under this part and the amount of the
loan for which such student is eligible.
‘‘(B) A student shall qualify for a portion of an
interest payment under paragraph (1) if the eligible
institution has provided the lender with a statement
that sets forth a schedule for disbursement of the
proceeds of the loan in installments, consistent with
the requirements of section 428G.
‘‘(C) For the purpose of subparagraph (B), a
student shall qualify for a portion of an interest pay-
ment under paragraph (1) if the eligible institution
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has provided the lender with a statement evidencing
a determination of need for a loan (as determined
under part F of this title) and the amount of such
need, subject to the provisions of subparagraph
(D).’’.
(b) DURATION OF AUTHORITY.—Section 428(a)(5) is
amended—
(1) by striking ‘‘September 30, 2002’’ and in-
serting ‘‘September 30, 2004’’; and
(2) by striking ‘‘September 30, 2006’’ and in-
serting ‘‘September 30, 2008’’.
(c) ANNUAL LOAN LIMITS.—Section 428(b)(1)(A) is
amended—
(1) in clause (i)—
(A) by inserting ‘‘and’’ after the semicolon
at the end of subclause (I); and
(B) by striking subclauses (II) and (III)
and inserting the following:
‘‘(II) if such student is enrolled
in a program of undergraduate edu-
cation which is less than one academic
year, the maximum annual loan
amount that such student may receive
may not exceed the amount that bears
the same ratio to the amount specified
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in subclause (I) as the length of such
program measured in semester, tri-
mester, quarter, or clock hours bears
to one academic year;’’; and
(2) by inserting ‘‘and’’ after the semicolon at
the end of clause (iii).
(d) SELECTION
OF REPAYMENT PLANS.—Section
428(b)(1)(D) is amended by striking ‘‘and (iii)’’ and in-
serting the following: ‘‘(iii) the student borrower may an-
nually change the selection of a repayment plan under this
part, and (iv)’’.
(e) COINSURANCE.—Section 428(b)(1)(G) is amend-
ed by striking ‘‘not less than’’.
(f ) DEFERMENTS.—Section 428(b)(1)(M) is amend-
ed—
(1) in clause (i)(I), by inserting before the semi-
colon the following: ‘‘, except that no borrower, not-
withstanding the provisions of the promissory note,
shall be required to borrow an additional loan under
this title in order to be eligible to receive a
deferment under this clause’’; and
(2) in clause (ii), by inserting before the semi-
colon the following: ‘‘, except that no borrower who
qualifies for unemployment benefits shall be required
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to provide any additional paperwork for a deferment
under this clause’’.
(g) LIMITATION, SUSPENSION, AND TERMINATION.—
Section 428(b)(1)(U) is amended—
(1) by striking ‘‘emergency action,,’’ each place
it appears and inserting ‘‘emergency action,’’; and
(2) by striking ‘‘a compliance audit of each
lender’’ and inserting the following: ‘‘in the case of
any lender that originates or holds more than
$5,000,000 in loans made under this title during an
annual audit period, a compliance audit of such
lender’’.
(h) ADDITIONAL INSURANCE PROGRAM REQUIRE-
MENTS.—Section 428(b)(1) is further amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (W);
(2) in subparagraph (X)—
(A) by striking ‘‘428(c)(10)’’ and inserting
‘‘428(c)(9)’’; and
(B) by striking the period at the end and
inserting ‘‘; and’’;
(3) by adding at the end the following new sub-
paragraph:
‘‘(Y) provides that the lender shall deter-
mine the eligibility of a borrower for a
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deferment described in subparagraph (M)(i)
based on receipt of (i) a request for deferment
from the borrower, (ii) a newly completed loan
application that documents the borrower’s eligi-
bility for a deferment, or (iii) student status in-
formation received by the lender that the bor-
rower is enrolled on at least a half-time basis.’’.
(i) 
RESTRICTIONS
ON
INDUCEMENTS.—Section
428(b)(3) is amended—
(1) by striking subparagraph (C) and inserting
the following:
‘‘(C) conduct unsolicited mailings of stu-
dent loan application forms to students enrolled
in secondary school or a postsecondary institu-
tion, or to parents of such students, except that
applications may be mailed to students who
have previously received loans guaranteed under
this part by the guaranty agency; or’’; and
(2) by adding at the end the following new sen-
tence:
‘‘It shall not be a violation of this paragraph for a
guaranty agency to provide assistance to institutions
of higher education comparable to the kinds of as-
sistance provided to institutions of higher education
by the Department of Education.’’.
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(j) DELAY IN COMMENCEMENT OF REPAYMENT PE-
RIOD.—Section 428(b)(7) is amended by inserting after
subparagraph (C) the following new subparagraph:
‘‘(D) There shall be excluded from the 6
months determined under subparagraph (A)(i) any
period during which the student was called or or-
dered to active duty in a reserve component of the
Armed Forces of the United States.’’.
(k) GUARANTY AGENCY INFORMATION TO ELIGIBLE
INSTITUTIONS.—Section 428(c)(2)(H)(ii) is amended to
read as follows:
‘‘(ii) the guaranty agency shall not re-
quire the payment from the institution of
any fee for such information; and’’.
(l) FORBEARANCE.—Section 428(c)(3) is amended—
(1) in subparagraph (A)(i), by striking ‘‘writ-
ten’’;
(2) in subparagraph (B), by inserting before
the semicolon the following: ‘‘, including forbearance
granted after consideration of a borrower’s total
debt burden’’; and
(3) in the last sentence—
(A) by striking ‘‘and (ii)’’ and inserting
‘‘(ii)’’; and
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(B) by inserting before the period at the
end the following: ‘‘, and (iii) forbearance for
periods not to exceed 60 days if the lender rea-
sonably determines that such suspensions are
necessary to research or process information
relative to such loan or to collect appropriate
documentation relating to the borrower’s re-
quest for a deferment or forbearance’’.
(m) ASSIGNMENT.—Section 428(c)(8) is amended—
(1) by striking ‘‘(A)’’; and
(2) by striking subparagraph (B).
(n) AGENCY TERMINATION.—Section 428(c)(9) is
amended—
(1) in subparagraph (E)—
(A) by inserting ‘‘or’’ at the end of clause
(iv);
(B) by striking ‘‘; or’’ at the end of clause
(v) and inserting a period; and
(C) by striking clause (vi);
(2) in subparagraph (F)(vii), by striking ‘‘to
avoid disruption’’ and everything that follows and in-
serting ‘‘and to avoid disruption of the student loan
program.’’;
(3) in subparagraph (I), by inserting ‘‘on the
record’’ after ‘‘for a hearing’’; and
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(4) in subparagraph (K)—
(A) by striking ‘‘and Labor’’ and inserting
‘‘and the Workforce’’; and
(B) by striking everything after ‘‘guaranty
agency system’’ and inserting a period.
(o) LENDER REFERRAL.—Section 428(e) is amend-
ed—
(1) in paragraph (1)(B)(ii), by striking ‘‘during
the transition’’ and everything that follows through
‘‘part D of this title’’; and
(2) in paragraph (3), by striking ‘‘for costs of
transition’’.
(p) ACTION ON AGREEMENTS.—Section 428(g) is
amended by striking ‘‘and Labor’’ and inserting ‘‘and the
Workforce’’.
(q) LENDERS-OF-LAST-RESORT.—Section 428(j)(3)
is amended—
(1) in subparagraph (A)—
(A) in the heading thereof, by striking
‘‘DURING
TRANSITION
TO
DIRECT
LEND-
ING’’;
(B) by striking out ‘‘during the transition
from the Federal Family Education Loan Pro-
gram under this part ot the Federal Direct Stu-
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dent Loan Program under part D of this title,’’
and inserting a comma;
(C) by inserting ‘‘designated for a State’’
immediately after ‘‘a guaranty agency’’; and
(D) by inserting ‘‘subparagraph (C) and’’
immediately before ‘‘section 422(c)(7),’’; and
(2) by adding at the end thereof the following
new subparagraph:
‘‘(C) The Secretary shall exercise the authority
described in subparagraph (A) only if the Secretary
determines that eligible borrowers are seeking and
are unable to obtain loans under this part, and that
the guaranty agency designated for that State has
the capability to provide lender-of-last-resort loans in
a timely manner, in accordance with its obligations
under paragraph (1), but cannot do so without ad-
vances provided by the Secretary under this para-
graph. If the Secretary makes the determinations
described in the preceding sentence and determines
that it would be cost-effective to do so, the Secretary
may provide advances under this paragraph to that
guaranty agency. If the Secretary determines that
guaranty agency does not have such capability, or
will not provide such loans in a timely fashion, the
Secretary may provide such advances to enable an-
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other guaranty agency, that the Secretary deter-
mines to have such capability, to make lender-of-
last-resort loans to eligible borrowers in that State
who are experiencing loan access problems.’’.
(r) INCOME
CONTINGENT
REPAYMENT.—Section
428(m) is amended by striking ‘‘shall require at least 10
percent of the borrowers’’ and inserting ‘‘may require bor-
rowers’’.
(s) STATE SHARE OF DEFAULT COSTS.—Subsection
(n) of section 428 is repealed.
(t) BLANKET CERTIFICATE OF GUARANTY.—Section
428 of the Act is amended by adding at the end the follow-
ing new subsection:
‘‘(n) BLANKET CERTIFICATE OF LOAN GUARANTY.—
‘‘(1) IN GENERAL.—Any guaranty agency that
has or enters into any insurance program agreement
with the Secretary under this part may—
‘‘(A) offer eligible lenders participating in
the agency’s guaranty program blanket certifi-
cates of loan guaranty that permit the lender to
make loans without receiving prior approval
from the guaranty agency of individual loans
for eligible borrowers enrolled in eligible pro-
grams at eligible institutions; and
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‘‘(B) provide eligible lenders with the abil-
ity to transmit electronically data to the agency
concerning loans the lender has elected to make
under the agency’s insurance program via
standard reporting formats, such reporting to
occur at reasonable, mutually acceptable inter-
vals.
‘‘(2) LIMITATIONS ON BLANKET CERTIFICATE
OF
GUARANTY.—(A) An eligible lender may not
make a loan to a borrower under this section after
such lender receives a notification from the guaranty
agency that the borrower is not an eligible borrower.
‘‘(B) A guaranty agency and eligible lender may
establish by mutual agreement limitations or restric-
tions on the number or volume of loans issued by a
lender under the blanket certificate of guaranty.’’.
(u) NOTICE OF AVAILABILITY OF INCOME-SENSITIVE
REPAYMENT OPTION.—
(1) AMENDMENT.—Section 428 is further
amended by adding at the end the following new
subsection:
‘‘(o) NOTICE
OF AVAILABILITY
OF INCOME-SEN-
SITIVE REPAYMENT OPTION.—At the time of offering a
borrower a loan under this part, and at the time of offer-
ing the borrower the option of repaying a loan in accord-
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ance with this subsection, the lender shall provided the
borrower with a notice that informs the borrower, in a
form prescribed by the Secretary by regulation—
‘‘(1) that all borrowers are eligible for income-
sensitive repayment through loan consolidation
under section 428C;
‘‘(2) the procedures by which the borrower may
elect income-sensitive repayment; and
‘‘(3) where and how the borrower may obtain
additional information concerning income-sensitive
repayment.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 428(b)(1)(E)(i) is amended by
inserting before the semicolon the following: ‘‘or
of repaying the loan in accordance with an in-
come-sensitive repayment schedule offered pur-
suant to section 428C’’.
(B) Section 485(b)(1)(A) is amended—
(i) by striking ‘‘and’’ at the end of
clause (i);
(ii) by striking the period at the end
of clause (ii) and inserting ‘‘; and’’; and
(iii) by adding at the end the follow-
ing new clause:
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‘‘(iii) the information required to be disclosed
by lenders pursuant to section 428(o).’’.
(v) NOTICE TO INSTITUTIONS OF DEFAULTS.—
(1) ADMINISTRATIVE
AND
FISCAL
PROCE-
DURES.—Section 428(c)(2)(A) is amended by strik-
ing ‘‘proof that reasonable attempts were made’’ and
inserting ‘‘proof that the institution was contacted
and other reasonable attempts were made’’.
(2) REIMBURSEMENT.—Section 428(c)(2)(G)
(20 U.S.C. 1078(c)(2)(G)) is amended by striking
‘‘certifies to the Secretary that diligent attempts
have been made’’ and inserting ‘‘demonstrates to the
Secretary that diligent attempts, including direct
contact with the institution, have been made.’’.
(3) NOTICE TO SECRETARY AND PAYMENT OF
LOSS.—The third sentence of section 430(a) (20
U.S.C. 1080(a)) is amended by inserting ‘‘the insti-
tution was contacted and other’’ after ‘‘submit proof
that’’.
SEC. 418. VOLUNTARY AGREEMENTS WITH GUARANTY
AGENCIES.
Part B of title IV is amended by inserting after sec-
tion 428 (20 U.S.C. 1078) the following new section:
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‘‘SEC. 428A. VOLUNTARY FLEXIBLE AGREEMENTS WITH
GUARANTY AGENCIES.
‘‘(a) VOLUNTARY AGREEMENTS.—
‘‘(1) AUTHORITY.—Notwithstanding any other
provision of law, the Secretary may enter into a vol-
untary, flexible agreement with not more than 6
guaranty agencies under this section, in lieu of
agreements with a guaranty agency under sub-
sections (b) and (c) of section 428, under which the
Secretary may waive or modify any requirement
under this title applicable to the responsibilities of
the Secretary and a guaranty agency.
‘‘(2) ELIGIBILITY.—Any guaranty agency that
had one or more agreements with the Secretary
under subsections (b) and (c) of section 428 as of
the day before the date of enactment of this section
may enter into an agreement with the Secretary
under this subsection.
‘‘(b) TERMS
OF AGREEMENT.—An agreement be-
tween the Secretary and a guaranty agency under this sec-
tion—
‘‘(1) shall be developed by the Secretary, in con-
sultation with the guaranty agency;
‘‘(2) shall be for a period not to exceed five
years, and may be renewed upon the agreement of
the parties;
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‘‘(3) may include provisions—
‘‘(A) specifying the responsibilities of the
guaranty agency under the agreement, such
as—
‘‘(i) administering the issuance of in-
surance on loans made under this part on
behalf of the Secretary;
‘‘(ii) monitoring insurance commit-
ments made under this part;
‘‘(iii) default prevention activities;
‘‘(iv) review of default claims made by
lenders;
‘‘(v) payment of default claims;
‘‘(vi) collection of defaulted loans;
‘‘(vii) adoption of internal systems of
accounting and auditing that are accept-
able to the Secretary, and reporting the re-
sult thereof to the Secretary on a timely,
accurate, and auditable basis;
‘‘(viii) timely and accurate collection
and reporting of such other data as the
Secretary may require to carry out the
purposes of the programs under this title;
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‘‘(ix) monitoring of institutions and
lenders participating in the program under
this part; and
‘‘(x) the performance of other pro-
gram functions by the guaranty agency.
‘‘(B) regarding the fees the Secretary shall
pay, in lieu of revenues that the guaranty agen-
cy may otherwise receive under this part, to the
guaranty agency under the agreement, and
other funds that the guaranty agency may re-
ceive or retain under the agreement, except that
in no case may the cost to the Secretary of the
agreement, as reasonably projected by the Sec-
retary, exceed the cost to the Secretary, as
similarly projected, in the absence of the agree-
ment;
‘‘(C) regarding the use of net revenues, as
described in the agreement under this section,
for such other activities in support of post-
secondary education as may be agreed to by the
Secretary and the guaranty agency;
‘‘(D) regarding the standards by which the
guaranty agency’s performance of its respon-
sibilities under the agreement will be assessed,
and the consequences for a guaranty agency’s