204
cation Act of 1965 for which the first disbursement is
made on or after July 1, 1998.
(b) CONSOLIDATION LOANS.—The first sentence of sec-
tion 455(g) is amended by striking everything after ‘‘section
428C(a)(4)’’ and inserting a period.
SEC. 438. CONTRACTS.
Section 456(b) (20 U.S.C. 1087f(b)) is amended—
(1) by inserting ‘‘and’’ after the semicolon at the
end of paragraph (3);
(2) by striking paragraph (4); and
(3) by redesignating paragraph (5) as para-
graph (4).
SEC. 439. FUNDS FOR ADMINISTRATIVE EXPENSES.
Section 458 (20 U.S.C. 1087h) is amended—
(1) in subsection (a)(1), by striking subpara-
graph (B) and everything that follows and inserting
the following:
‘‘(B) account maintenance fees payable to
guaranty agencies under part B and calculated
in accordance with paragraph (2),
not to exceed (from such funds not otherwise appro-
priated) 
$626,000,000 
in 
fiscal 
year 
1999,
$726,000,000 in fiscal year 2000, $770,000,000 in fis-
cal year 2001, $780,000,000 in fiscal year 2002, and
$795,000,000 in fiscal year 2003. Account mainte-
205
nance fees under subparagraph (B) of this paragraph
shall be paid quarterly and deposited in the Operat-
ing Fund established under 422B. The Secretary may
carry over funds available under this section to a sub-
sequent fiscal year.’’;
(2) by striking paragraph (2) of subsection (a)
and inserting the following:
‘‘(2) CALCULATION
BASIS.—Account mainte-
nance fees payable to guaranty agencies under para-
graph (1)(B) shall be calculated for fiscal year 1999
and fiscal year 2000, on the basis of 0.12 percent of
the original principal amount of outstanding loans
on which insurance was issued under part B, and for
fiscal years 2001 and succeeding fiscal years, shall be
calculated on the basis of 0.10 percent of the original
principal amount of outstanding loans on which in-
surance was issued under part B.’’; and
(3) by striking subsection (d).
SEC. 440. AUTHORITY TO SELL LOANS.
Part D of title IV (20 U.S.C. 1087a et seq.) is amended
by adding at the end the following new section:
‘‘SEC. 459. AUTHORITY TO SELL LOANS.
‘‘The Secretary, in consultation with the Secretary of
the Treasury, is authorized to sell loans made under this
part on such terms as the Secretary determines are in the
206
best interest of the United States, except that any such sale
shall not result in any cost to the Federal Government. Not-
withstanding any other provision of law, the proceeds of
any such sale may be used by the Secretary to offer reduc-
tions in the interest rate paid by a borrower of a loan made
under this part as the Secretary determines appropriate to
encourage on-time repayment. Such reductions may be of-
fered only if the Secretary determines they are in the best
financial interests of the Federal Government.’’.
SEC. 441. CANCELLATION OF LOANS FOR CERTAIN PUBLIC
SERVICE.
Part D of title IV is amended by inserting after section
459, as added by section 440, the following new section:
‘‘SEC. 459A. CANCELLATION OF LOANS FOR CERTAIN PUB-
LIC SERVICE.
‘‘(a) CANCELLATION OF PERCENTAGE OF DEBT BASED
ON YEARS OF QUALIFYING SERVICE.—
‘‘(1) FUNCTIONS
OF
SECRETARY.—The percent
specified in paragraph (4) of the total amount of any
qualifying loan shall be canceled for each complete
year of service by the borrower described in para-
graph (3).
‘‘(2) QUALIFYING LOANS.—
‘‘(A) IN
GENERAL.—For purposes of this
subsection, a loan is a qualifying loan if—
207
‘‘(i) the loan was a Federal Direct
Stafford Loan made on or after the date of
enactment of the Higher Education Amend-
ments of 1998 to a borrower who, on the
date of entering into the note or other writ-
ten evidence of the loan, had no outstanding
balance of principal or interest on any loan
made before such date; and
‘‘(ii) the loan was obtained to cover the
cost of instruction for an academic year
after the first and second year of under-
graduate education.
‘‘(B) LIMITATION.—The Secretary may not
repay loans described in subparagraph (A) to
cover the costs of instruction for more than two
academic years, or three academic years in the
case of a program of instruction normally re-
quiring five years.
‘‘(C) 
TREATMENT
OF
CONSOLIDATION
LOANS.—A Federal Direct Consolidation Loan
may be a qualifying loan for the purposes of this
subsection only to the extent that such loan was
used to repay a loan or loans that meet the re-
quirements of subparagraphs (A) and (B), as de-
208
termined in accordance with regulations pre-
scribed by the Secretary.
‘‘(3) QUALIFYING SERVICE.—A loan shall be can-
celled under paragraph (1) for service by the borrower
as a full-time teacher for each complete academic year
of service, after completion of the second academic
year of service, in a public or other nonprofit private
elementary or secondary school—
‘‘(A) which is in the school district of a
local educational agency which is eligible in such
year for assistance pursuant to title I of the Ele-
mentary and Secondary Education Act of 1965;
and
‘‘(B) which for the purpose of this para-
graph and for that year has been determined by
the State educational agency of the State in
which the school is located to be a school in
which the enrollment of children counted under
section 1124(c) of the Elementary and Secondary
Education Act of 1965 exceeds 30 percent of the
total enrollment of that school.
‘‘(4) PERCENTAGE OF CANCELLATION.—(A) The
percent of a loan which shall be canceled under para-
graph (1) of this subsection is at the rate of—
209
‘‘(i) 30 percent for the first or second com-
plete academic year of qualifying service as de-
scribed in paragraph (3) (after completion of two
years of service); and
‘‘(ii) 40 percent for the third complete year
of such qualifying service.
‘‘(B) The total amount that may be canceled
under this subsection for any borrower shall not ex-
ceed $17,750.
‘‘(C) If a portion of a loan is canceled under this
subsection for any year, the entire amount of interest
on such loan which accrues for such year shall be can-
celed.
‘‘(D) Nothing in this section shall be construed
to authorize refunding of any repayment of a loan.
‘‘(5) LIMITATION ON TEACHER ELIGIBILITY.—
‘‘(A) SECONDARY
SCHOOL
TEACHERS.—A
borrower may not receive assistance under this
subsection by virtue of teaching in a secondary
school unless such borrower majored in the sub-
ject area in which they are teaching.
‘‘(B) ELEMENTARY SCHOOL TEACHERS.—A
borrower may not receive assistance under this
subsection by virtue of teaching in a elementary
school unless such borrower demonstrates, in ac-
210
cordance with State teacher certification or li-
censing requirements, subject matter knowledge
and teaching skills in reading, writing, mathe-
matics, and other subjects taught in elementary
schools.
‘‘(6) DEFINITION.—For the purpose of this sec-
tion, the term ‘year’ where applied to service as a
teacher means an academic year as defined by the
Secretary.
‘‘(7) TREATMENT OF CANCELED AMOUNTS.—The
amount of a loan, and interest on a loan, which is
canceled under this section shall not be considered in-
come for purposes of the Internal Revenue Code of
1986.
‘‘(8) PREVENTION
OF
DOUBLE
BENEFITS.—No
borrower may, for the same volunteer service, receive
a benefit under both this section and subtitle D of
title I of the National and Community Service Act of
1990 (42 U.S.C. 12571 et seq.).
‘‘(b) SPECIAL RULES.—
‘‘(1) LIST.—If the list of schools in which a
teacher may perform service pursuant to subsection
(a)(3) is not available before May 1 of any year, the
Secretary may use the list for the year preceding the
211
year for which the determination is made to make
such service determination.
‘‘(2) CONTINUING
ELIGIBILITY.—Any teacher
who performs service in a school which—
‘‘(A) meets the requirements of subsection
(a)(3) in any year during such service; and
‘‘(B) in a subsequent year fails to meet the
requirements of such subsection,
may continue to teach in such school and shall be eli-
gible for loan cancellation pursuant to subsection
(a)(1) with respect to such subsequent years.’’.
PART E—FEDERAL PERKINS LOANS
SEC. 445. AMENDMENTS TO PART E.
(a) EXTENSION OF AUTHORITY.—Section 461(b) (20
U.S.C. 1087aa(b)) is amended—
(1) in paragraph (1), by striking ‘‘1993’’ and in-
serting ‘‘1999’’; and
(2) in paragraph (2), by striking ‘‘1997’’ each
place it appears and inserting ‘‘2003’’.
(b) ALLOCATION OF FUNDS.—Section 462 (20 U.S.C.
1087bb) is amended—
(1) by striking subsection (b);
(2) in subsection (c)(1), by striking ‘‘three-quar-
ters of the remainder’’ and inserting ‘‘the remainder’’;
212
(3) in subsection (c)(2), by striking ‘‘subsection
(g)’’ and inserting ‘‘subsection (f)’’;
(4) in subsection (c)(3)—
(A) by striking ‘‘subsection (d)’’ and insert-
ing ‘‘subsection (c)’’;
(B) by striking ‘‘subsection (f)’’ and insert-
ing ‘‘subsection (e)’’; and
(C) by striking ‘‘subsection (g)’’ and insert-
ing ‘‘subsection (f)’’;
(5) in subsection (f)(1), by striking ‘‘subsection
(g)’’ and inserting ‘‘subsection (f)’’;
(6) in subsection (j)(2)—
(A) by striking ‘‘subsection (c)’’ and insert-
ing ‘‘subsection (b)’’; and
(B) by striking ‘‘subsection (c) of section
462’’ and inserting ‘‘subsection (b)’’; and
(7) by redesignating subsections (c) through (j)
as subsections (b) through (i), respectively.
(c) 
DEFAULT
REDUCTION
PENALTIES.—Section
462(e)(2)(A) (as redesignated by subsection (b)(7) of this
section) is amended by inserting before the semicolon at the
end the following: ‘‘, except that a plan shall not be required
with respect to any such institution that has a default rate
of less than 20 percent and has less than 100 students who
have loans under this part in any academic year’’.
213
(d) DEFINITIONS
FOR DEFAULT RATE CALCULA-
TIONS.—Section 462(g) (as redesignated by subsection
(b)(7) of this section) is amended by adding at the end the
following new paragraph:
‘‘(5) For the purpose of this subsection, the term ‘satis-
factory arrangements to resume payment’ includes—
‘‘(A) receipt of voluntary monthly payments for
three consecutive months after the time periods speci-
fied in paragraph (4);
‘‘(B) receipt of voluntary payments sufficient to
bring the loan current prior to the calculation being
made for any award year under paragraph (3);
‘‘(C) obtaining any deferment, postponement, re-
habilitation, forbearance, or cancellation of the loan
after the time periods specified in paragraph (4), but
prior to the calculation being made for any award
year under paragraph (3);
‘‘(D) receipt of the full amount due on the loan
after the time periods specified in paragraph (4), but
prior to the calculation being made for any award
year under paragraph (3); or
‘‘(E) any other arrangements to resume payment
which the Secretary determines to be satisfactory.’’.
214
(e) REPORTS TO CREDIT BUREAUS OF PAYMENT RE-
SUMPTIONS.—Section 463(c) (20 U.S.C. 1087cc(c)) is
amended by adding at the end the following new paragraph:
‘‘(5) Each institution of higher education shall notify
the appropriate credit bureau organizations whenever a
borrower of a loan that is made and held by the institution
and that is in default makes 12 consecutive monthly pay-
ments on such loan, for the purpose of encouraging such
organizations to update the status of information main-
tained with respect to that borrower.’’.
(f) INCENTIVE REPAYMENT PROGRAMS.—Section 463
is amended by adding at the end the following new sub-
section:
‘‘(f) INCENTIVE REPAYMENT PROGRAMS.—
‘‘(1) PROGRAM
AUTHORIZED.—Any institution
of higher education participating in the program
under this part may establish, with the approval of
the Secretary, an incentive repayment program de-
signed to reduce defaults on loans under this part and
to assist in replenishing the student loan fund estab-
lished under this part.
‘‘(2) CONTENTS OF PROGRAM.—An incentive re-
payment program under this part may contain pro-
visions that—
215
‘‘(A) offer a reduction in the interest rate on
a loan on which the borrower has made 48 con-
secutive monthly payments, but in no event may
the interest rate be reduced by more than one
percent;
‘‘(B) provide for a discount on the balance
owed on a loan on which the borrower pays the
principal and interest in full prior to the end of
the applicable repayment period, but in no event
shall such discount exceed 5 percent of the un-
paid principal balance due on the loan at the
time the early repayment is made; and
‘‘(C) include such other incentive repayment
options as the institution determines, with the
approval of the Secretary, will carry out the ob-
jectives of this subsection.
‘‘(3) NO NET COST TO THE GOVERNMENT.—No
incentive option contained in a program authorized
by this subsection may be charged to the Federal Gov-
ernment.’’.
(g) TERMS OF LOANS.—
(1) AGGREGATE AMOUNT.—Section 464(a)(2)(B)
(20 U.S.C. 1087dd(a)(2)(B)) is amended by striking
‘‘the aggregate of the loans for all years’’ and insert-
216
ing ‘‘the aggregate unpaid principal amount for all
loans’’.
(2) ALLOCATION TO LESS-THAN-FULL-TIME STU-
DENTS.—Section 464(b) is amended—
(A) by striking ‘‘(1)’’; and
(B) by striking paragraph (2).
(3) QUALIFICATION FOR DEFERMENTS.—Section
464(c)(2) is amended by adding at the end the follow-
ing new subparagraph:
‘‘(C) An individual with an outstanding loan balance
who meets the eligibility criteria for a deferment described
in subparagraph (A) as in effect on the date of enactment
of this subparagraph shall be eligible for deferment under
this paragraph notwithstanding any contrary provision of
the promissory note under which the loan or loans were
made, and notwithstanding any amendment (or effective
date provision relating to any amendment) to this section
made prior to the date of such deferment.’’.
(4) CLERICAL AMENDMENT.—The matter follow-
ing clause (iv) of section 464(c)(2)(A) is amended by
striking ‘‘subparagraph (B)’’ and inserting ‘‘subpara-
graph (A) of paragraph (1)’’.
(h) REHABILITATION AND DISCHARGE OF LOANS.—
Section 464 is further amended by adding at the end the
following new subsections:
218
this title shall be restored. A borrower may obtain the bene-
fit of this paragraph with respect to restored eligibility only
once.
‘‘(h) DISCHARGE.—
‘‘(1) IN GENERAL.—If a student borrower who
received a loan made under this part on or after Jan-
uary 1, 1986, is unable to complete the program in
which such student is enrolled due to the closure of the
institution, then the Secretary shall discharge the bor-
rower’s liability on the loan (including interest and
collection fees) by repaying the amount owed on the
loan and shall subsequently pursue any claim avail-
able to such borrower against the institution and its
affiliates and principals, or settle the loan obligation.
‘‘(2) ASSIGNMENT.—A borrower whose loan has
been discharged pursuant to this subsection shall be
deemed to have assigned to the United States the right
to a loan refund up to the amount discharged against
the institution and its affiliates and principals.
‘‘(3) ELIGIBILITY
FOR
ADDITIONAL
ASSIST-
ANCE.—The period of a student’s assistance at an in-
stitution at which the student was unable to complete
a course of study due to the closing of the institution
shall not be considered for purposes of calculating the
219
student’s period of eligibility for additional assistance
under this title.
‘‘(4) SPECIAL RULE.—A borrower whose loan has
been discharged pursuant to this subsection shall not
be precluded, because of that discharge, from receiving
additional grant, loan, or work assistance under this
title for which the borrower would be otherwise eligi-
ble (but for the default on the discharged loan). The
amount discharged under this subsection shall be
treated the same as loans under section 465(a)(5).
‘‘(5) REPORTING.—The Secretary or institution,
as the case may be, shall report to credit bureaus with
respect to loans that have been discharged pursuant to
this subsection.’’.
(i) CANCELLATION.—Section 465 (20 U.S.C. 1087ee)
is amended—
(1) in subsection (a)—
(A) in paragraph (2)(C), by striking ‘‘sec-
tion 
676(b)(9)’’ 
and 
inserting 
‘‘section
635(a)(10)’’;
(B) by striking subparagraph (H) of para-
graph (2) and inserting the following:
‘‘(H) as a full-time nurse or medical technician
providing health care services;’’;
220
(C) by striking the period at the end of sub-
paragraph (I) of such paragraph and inserting
a semicolon;
(D) by adding at the end of such paragraph
the following new subparagraphs:
‘‘(J) as a member of the Commissioned Corps of
the Public Health Service of the United States; or
‘‘(K) as a non-physician mental health profes-
sional providing health care services in a health pro-
fessional shortage area designated under section 332
of the Public Health Service Act.’’;
(E) in the last sentence of paragraph (2),
by striking ‘‘section 602(a)(1)’’ and inserting
‘‘section 602(3)’’; and
(F) by adding at the end the following new
paragraph:
‘‘(7) An individual with an outstanding loan obliga-
tion who performs service of any type that is described in
paragraph (2) as in effect on the date of enactment of this
paragraph shall be eligible for cancellation under this sec-
tion for such service notwithstanding any contrary provi-
sion of the promissory note under which the loan or loans
were made, and notwithstanding any amendment (or effec-
tive date provision relating to any amendment) to this sec-
tion made prior to the date of such service.’’; and
221
(2) in subsection (b), by adding at the end the
following new sentence: ‘‘To the extent feasible, the
Secretary shall pay the amounts for which any insti-
tution qualifies under this subsection no later than
three months after the institution files an institu-
tional application for campus-based funds.’’.
(j) DISTRIBUTION
OF
ASSETS.—Section 466 (20
U.S.C. 1087ff) is amended—
(1) by striking ‘‘1996’’ each place it appears and
inserting ‘‘2003’’; and
(2) by striking ‘‘1997’’ each place it appears and
inserting ‘‘2004’’.
(k) COLLECTION OF DEFAULTED LOANS.—
(1) REPEAL.—Subsection (c) of section 467 (20
U.S.C. 1087gg(c)) is repealed.
(2) DEPOSIT.—Any funds in the Perkins Revolv-
ing Loan Fund on the date of enactment of this Act
shall be deposited in the general fund of the Treasury.
(l) STATUS CONFIRMATION REPORTS.—Section 468
(20 U.S.C. 1087hh) is amended—
(1) by inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In
carrying out’’; and
(2) by adding at the end the following new sub-
section:
222
‘‘(b) STUDENT STATUS CONFIRMATION REPORTS.—
The Secretary shall ensure that borrowers under this part
are included in the student status confirmation report re-
quired by the Secretary in the same manner as borrowers
under parts B and D of this title.’’.
PART F—NEED ANALYSIS
SEC. 446. COST OF ATTENDANCE.
Section 472 (20 U.S.C. 1087ll) is amended—
(1) in paragraph (2), by inserting after ‘‘per-
sonal expenses’’ the following: ‘‘, including a reason-
able allowance for the rental or purchase of a per-
sonal computer,’’; and
(2) in paragraph (10), by striking everything
after ‘‘determining costs’’ and inserting a semicolon.
SEC. 447. DATA ELEMENTS.
Section 474(b)(3) (20 U.S.C. 1087nn(b)(3)) is amend-
ed by inserting ‘‘, excluding the student’s parents,’’ after
‘‘family of the student’’.
SEC. 448. FAMILY CONTRIBUTION FOR DEPENDENT STU-
DENTS.
(a) PARENTS’ CONTRIBUTION FROM ADJUSTED AVAIL-
ABLE INCOME.—Section 475(b)(3) (20 U.S.C. 1087oo(b)(3))
is amended by inserting ‘‘, excluding the student’s parents,’’
after ‘‘number of the family members’’.
223
(b) FAMILY CONTRIBUTION FROM ASSETS.—Section
475 is amended—
(1) in subsection (b)(1)(B), by striking ‘‘parents’
contribution’’ and inserting ‘‘family contribution’’;
(2) in the heading of subsection (d), by striking
‘‘PARENTS’ CONTRIBUTION’’ and inserting ‘‘FAMILY
CONTRIBUTION’’;
(3) in subsection (d)(1)—
(A) by striking ‘‘parents’ contribution’’ and
inserting ‘‘family contribution’’; and
(B) by striking ‘‘parental net worth’’ in
subparagraph (A) and inserting ‘‘family net
worth’’;
(4) in subsection (d)(2)—
(A) by striking ‘‘PARENTAL’’ in the heading
and inserting ‘‘FAMILY’’;
(B) by striking ‘‘parental net worth’’ and
inserting ‘‘family net worth’’; and
(C) by inserting ‘‘, for both the parents and
the dependent student’’ after ‘‘by adding’’;
(5) by striking subsection (h); and
(6) by redesignating subsection (i) as subsection
(h).
(c) STUDENT CONTRIBUTION FROM AVAILABLE IN-
COME.—Section 475(g) is amended—
224
(1) in paragraph (2)—
(A) in subparagraph (D), by striking
‘‘$1,750; and’’ and inserting ‘‘$3,000, or a suc-
cessor amount prescribed by the Secretary under
section 478;’’;
(B) by striking the period at the end of sub-
paragraph (E) and inserting ‘‘; and’’; and
(C) by inserting after subparagraph (E) the
following new subparagraph:
‘‘(F) an allowance for parents’ negative
available income, determined in accordance with
paragraph (6).’’; and
(2) by adding at the end the following new para-
graph:
‘‘(6) ALLOWANCE
FOR
PARENTS’ 
NEGATIVE
AVAILABLE INCOME.—The allowance for parents’ neg-
ative available income is the amount, if any, by
which the sum of the amounts deducted under sub-
paragraphs (A) through (F) of paragraph (2) exceeds
the parents’ total income (as defined in section
480).’’.
(e) ADJUSTMENTS TO STUDENTS CONTRIBUTION FOR
ENROLLMENT PERIODS OTHER THAN NINE MONTHS.—
Section 475 is amended by adding at the end the following
new subsection:
225
‘‘(i) ADJUSTMENTS TO STUDENTS CONTRIBUTION FOR
ENROLLMENT PERIODS OF LESS THAN NINE MONTHS.—
For periods of enrollment of less than nine months, the stu-
dent’s contribution from adjusted available income (as de-
termined under subsection (g)) is determined, for purposes
other than subpart 2 of part A, by dividing amount deter-
mined under such subsection by nine, and multiplying the
result by the number of months in the period of enroll-
ment.’’.
SEC. 449. FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS WITHOUT DEPENDENTS OTHER THAN
A SPOUSE.
(a) ADJUSTMENTS FOR ENROLLMENT PERIODS OTHER
THAN
NINE
MONTHS.—Section 
476(a) 
(20 
U.S.C.
1087pp(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(1)(B);
(2) by inserting ‘‘and’’ after the semicolon at the
end of paragraph (2); and
(3) by inserting after paragraph (2) the follow-
ing new paragraph:
‘‘(3) for periods of enrollment of other than 9
months, for purposes other than subpart 2 of part
A—
226
‘‘(A) dividing the quotient resulting under
paragraph (2) by nine; and
‘‘(B) multiplying the result by the number
of months in the period of enrollment;’’.
(b) CONTRIBUTION FROM AVAILABLE INCOME.—Sec-
tion 476(b)(1)(A)(iv) is amended—
(1) by striking ‘‘allowance of—’’ and inserting
‘‘allowance of the following amount (or a successor
amount prescribed by the Secretary under section
478)—’’;
(2) by striking ‘‘$3,000’’ each place it appears in
subclauses (I) and (II) and inserting ‘‘$5,500’’; and
(3) by striking ‘‘$6,000’’ in subclause (III) and
inserting ‘‘$8,500’’.
SEC. 450. FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS WITH DEPENDENTS OTHER THAN A
SPOUSE.
Section 477(a) (20 U.S.C. 1087qq(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(2);
(2) by inserting ‘‘and’’ after the semicolon at the
end of paragraph (3); and
(3) by inserting after paragraph (3) the follow-
ing new paragraph:
227
‘‘(4) for periods of enrollment of other than 9
months, for purposes other than subpart 2 of part
A—
‘‘(A) dividing the quotient resulting under
paragraph (3) by nine; and
‘‘(B) multiplying the result by the number
of months in the period of enrollment;’’.
SEC. 451. REGULATIONS; UPDATED TABLES AND AMOUNTS.
Section 478(b) (20 U.S.C. 1087rr(b)) is amended—
(1) by striking ‘‘For each academic year’’ and
inserting the following:
‘‘(1) REVISED
TABLES.—For each academic
year’’; and
(2) by adding at the end the following new para-
graph:
‘‘(2) REVISED
AMOUNTS.—For each academic
year after academic year 1997–1998, the Secretary
shall publish in the Federal Register revised income
protection allowances for the purpose of sections
475(g)(2)(D) and 476(b)(1)(A)(iv). Such revised al-
lowances shall be developed by increasing each of the
dollar amounts contained in such section by a per-
centage equal to the estimated percentage increase in
the Consumer Price Index (as determined by the Sec-
retary) between December 1996 and the December
228
next preceding the beginning of such academic year,
and rounding the result to the nearest $10.’’.
SEC. 452. DISCRETION OF STUDENT FINANCIAL AID ADMIN-
ISTRATORS.
(a) SPECIAL CIRCUMSTANCES.—Section 479A(a) (20
U.S.C. 1087tt(a)) is amended—
(1) in the first sentence, by inserting after ‘‘(or
both)’’ the following: ‘‘or, in extraordinary cir-
cumstances, the amount of the expected family con-
tribution,’’; and
(2) by inserting after the second sentence the fol-
lowing new sentence: ‘‘Special circumstances may in-
clude tuition expenses at an elementary or secondary
school, medical or dental expenses not covered by in-
surance, unusually high child care costs, recent unem-
ployment of a family member, or other changes in a
family’s income or assets or a student’s status. Ex-
traordinary circumstances shall be defined by the Sec-
retary by regulation.’’.
(b) REFUSAL
OR ADJUSTMENT
OF LOAN CERTIFI-
CATIONS.—Section 479A is amended by striking subsection
(c) and inserting the following:
‘‘(c) REFUSAL OR ADJUSTMENT OF LOAN CERTIFI-
CATIONS.—On a case-by-case basis, an eligible institution
may refuse to certify a statement which permits a student
229
to receive a loan under part B, or refuse to make a loan
under part D, or may certify a loan amount or make a
loan that is less than the student’s determination of need
(as determined under this part), if the reason for the action
is documented and provided in written form to the student
and the student is afforded an opportunity to appeal the
action in a timely fashion. No eligible institution shall dis-
criminate against any borrower or applicant in obtaining
a loan on the basis of race, national origin, religion, sex,
marital status, age, or handicapped status.’’.
SEC. 453. TREATMENT OF OTHER FINANCIAL ASSISTANCE.
Section 480(j)(3) (20 U.S.C. 1087vv(j)(3)) is amended
by inserting after ‘‘paragraph (1),’’ the following: ‘‘a post-
service benefit under chapter 30 of title 38, United States
Code, or’’.
PART G—GENERAL PROVISIONS
SEC. 461. DEFINITIONS.
Section 481 (20 U.S.C. 1088), as amended by section
102(b), is further amended by adding at the end the follow-
ing new subsection:
‘‘(d) DISTANCE LEARNING.—For the purpose of any
program under this title, the term ‘distance learning’ means
an educational process that is characterized by the separa-
tion, in time or place, between instructor and student. Dis-
230
tance learning may include courses offered principally
through the use of—
‘‘(1) television, audio, or computer transmission,
such as open broadcast, closed circuit, cable, micro-
wave, or satellite transmission;
‘‘(2) audio or computer conferencing;
‘‘(3) video cassettes or discs; or
‘‘(4) correspondence.’’.
SEC. 462. MASTER CALENDAR.
(a) REQUIRED
SCHEDULE.—Section 482(a) (20
U.S.C. 1089(a)) is amended by adding at the end the follow-
ing new paragraphs:
‘‘(3) The Secretary shall, to the extent prac-
ticable, notify eligible institutions, guaranty agencies,
lenders, interested software providers, and, upon re-
quest, other interested parties, by December 1 prior to
the start of an award year of minimal hardware and
software requirements necessary to administer pro-
grams under this title.
‘‘(4) The Secretary shall attempt to conduct
training activities for financial aid administrators
and others in an expeditious and timely manner
prior to the start of such award year in order to en-
sure that all participants are informed of all admin-
istrative requirements.’’.
231
(b) DELAY OF EFFECTIVE DATE.—Section 482(c) is
amended by striking the second sentence and inserting the
following: ‘‘The Secretary shall provide a period for public
comment of not less than 60 days after publication of any
notice of proposed rulemaking affecting programs under
this title.’’.
SEC. 463. FORMS AND REGULATIONS.
(a) COMMON FINANCIAL AID FORM.—Section 483(a)
(20 U.S.C. 1090(a)) is amended—
(1) in paragraph (1)—
(A) by striking ‘‘A, C, D, and E’’ and in-
serting ‘‘A through E’’;
(B) by striking ‘‘and to determine the need
of a student for the purpose of part B of this
title’’; and
(C) by striking the last sentence and insert-
ing the following: ‘‘The Secretary shall include,
on the first page of the form, a prominently dis-
played notice to students and parents advising
them to check with the college financial aid office
in the event that they have unusual cir-
cumstances which may affect their eligibility for
financial aid.’’;
(2) in paragraph (2)—
232
(A) by striking ‘‘A, C, D, and E’’ each place
it appears and inserting ‘‘A through E’’;
(B) by striking ‘‘and the need of a student
for the purpose of part B of this title,’’; and
(C) by striking ‘‘or have the student’s need
established for the purpose of part B of this
title’’;
(3) in the first sentence of paragraph (3), by in-
serting ‘‘processing loan applications and’’ after ‘‘for
the purposes of’’; and
(4) by adding at the end the following new para-
graph:
‘‘(5) ELECTRONIC FORMS.—(A) The Secretary,
in cooperation with representatives of agencies and
organizations involved in student financial assist-
ance, including private computer software providers,
shall develop an electronic version of the form de-
scribed in paragraph (1). Such an electronic version
shall not require a signature to be collected at the
time such version is submitted, as permitted by the
Secretary. The Secretary shall prescribe such version
no later than 120 days after the date of enactment of
the Higher Education Amendments of 1998.
‘‘(B) Nothing in this section shall prohibit the
use of the version of the form developed by the Sec-
233
retary pursuant to subparagraph (A) by an eligible
institution, eligible lender, guaranty agency, State
grant agency, private computer software providers, a
consortium thereof, or such other entities as the Sec-
retary may designate.
‘‘(C) The Secretary shall provide to such organi-
zation or consortium necessary specifications that
software developed, produced, distributed (including
any diskette, modem or network communications, or
otherwise) must meet. Included in the specifications
shall be test cases that such organization or consortia
must use to prove accuracy of its cases to the Sec-
retary. If the results of the test cases are inconsistent
with the provisions of this part, the Secretary shall
notify the submitting organizations or consortium of
his objection within 30 days of such submission. In
the absence of such an objection the organization or
consortium may use the electronic form as submitted.
No fee shall be charged to students in connection with
the use of the electronic form, or of any other elec-
tronic forms used in conjunction with such form in
applying for Federal or State student financial assist-
ance.
‘‘(D) The Secretary shall ensure that data collec-
tion complies with section 552a of title 5, United
234
States Code, and that any entity using the version
of the form developed by the Secretary pursuant to
subparagraph (A) shall maintain reasonable and ap-
propriate administrative, technical, and physical
safeguards to ensure the integrity and confidentiality
of the information, and to protect against security
threats, or unauthorized uses or disclosures of the in-
formation provided on the version of the form. Data
collected by such version of the form shall be used only
for the application, award, and administration of aid
awarded under this title, State aid, or aid awarded
by eligible institutions or such entities as the Sec-
retary may designate. No data collected by such ver-
sion of the form shall be used for making final aid
awards under this title until such data have been
processed by the Secretary or a contractor or designee
of the Secretary.’’.
(b) STREAMLINED REAPPLICATION PROCESS.—Section
483(b)(1) is amended by striking ‘‘, within 240 days’’ and
everything that follows through ‘‘of 1992,’’.
(c) INFORMATION TO COMMITTEES.—Section 483(c) is
amended by striking ‘‘and Labor’’ and inserting ‘‘and the
Workforce’’.
235
(d) TOLL-FREE INFORMATION.—Section 483(d) is
amended by striking ‘‘section 633(c)’’ and inserting ‘‘sec-
tion 685(d)(2)(C)’’.
(e) REPEAL.—Subsection (f) of section 483 is repealed.
SEC. 464. STUDENT ELIGIBILITY.
(a) 
IN
GENERAL.—Section 
484(a) 
(20 
U.S.C.
1091(a))—
(1) in paragraph (4), by striking ‘‘the institu-
tion’’ and everything that follows through ‘‘lender), a
document’’ and inserting ‘‘the Federal Government, as
part of the original financial aid application process,
a certification’’; and
(2) in paragraph (4)(B), by inserting after ‘‘so-
cial security number,’’ the following: ‘‘and if a de-
pendent student, the social security number of any
parent of such student whose income information is
required to be included on the form,’’.
(b) TERMINATION OF ELIGIBILITY.—Section 484(j) is
amended by inserting ‘‘until September 30, 2001’’ after ‘‘a
student shall be eligible’’.
(c) VERIFICATION OF INCOME DATA.—Section 484 is
amended by adding at the end the following new subsection:
‘‘(q) VERIFICATION OF INCOME DATA.—
‘‘(1) CONFIRMATION WITH IRS.—The Secretary
of Education, in cooperation with the Secretary of the
236
Treasury, is authorized to confirm with the Internal
Revenue Service the adjusted gross income, filing sta-
tus, and exemptions reported by applicants (includ-
ing parents) under this title on their Federal income
tax returns for the purpose of verifying the informa-
tion reported by applicants on student financial aid
applications.
‘‘(2) NOTIFICATION.—The Secretary shall estab-
lish procedures under which an applicant is notified
that the Internal Revenue Service will disclose to the
Secretary tax return information as authorized under
section 6103(l)(13) of the Internal Revenue Code of
1986.’’.
(d) SUSPENSION OF ELIGIBILITY FOR DRUG-RELATED
OFFENSES.—
(1) AMENDMENT.—Section 484 is further amend-
ed by adding at the end thereof the following new sub-
section:
‘‘(r) 
SUSPENSION
OF
ELIGIBILITY
FOR
DRUG-
RELATED OFFENSES.—
‘‘(1) IN GENERAL.—An individual student who
has been convicted of any offense under any Federal
or State law involving the possession or sale of a con-
trolled substance shall not be eligible to receive any
grant, loan, or work assistance under this title during
237
the period beginning on the date of such conviction
and ending after the interval specified in the follow-
ing table:
‘‘If convicted of an offense involving:
The possession of a controlled substance:
Ineligibility period is:
First offense ..................................................
1 year
Second offense ...............................................
2 years
Third offense .................................................
indefinite
The sale of a controlled substance:
First offense ..................................................
2 years
Second offense ...............................................
indefinite
‘‘(2) REHABILITATION.—A student whose eligi-
bility has been suspended under paragraph (1) may
resume eligibility before the end of the period deter-
mined under such paragraph if the student satisfac-
torily completes a drug rehabilitation program that
complies with such criteria as the Secretary shall pre-
scribe for purposes of this paragraph.
‘‘(3) DEFINITIONS.—As used in this subsection,
the term ‘controlled substance’ has the meaning given
in section 102(6) of the Controlled Substances Act (21
U.S.C. 802(6)).’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply with respect to financial
assistance to cover the costs of attendance for periods
of enrollment beginning after the date of enactment of
this Act.
238
SEC. 465. STATE COURT JUDGMENTS.
Section 484A (20 U.S.C. 1091a) is amended by adding
at the end the following new subsection:
‘‘(c) STATE COURT JUDGMENTS.—A judgment of a
State court for the recovery of money provided as grant,
loan, or work assistance under this title that has been as-
signed or transferred to the Secretary under this title may
be registered in any district court by filing a certified copy
of the judgment and the assignment or other transfer to the
Secretary. A judgment so registered shall have the same
force and effect, and may be enforced in the same manner,
as a judgment of the district court of the district in which
the judgment is registered.’’.
SEC. 466. INFORMATION FOR STUDENTS.
(a) INFORMATION DISSEMINATION.—Section 485(a)
(20 U.S.C. 1092(a)) is amended—
(1) in paragraph (1), by striking the second sen-
tence and inserting the following: ‘‘The information
required by this section shall be produced and be
made readily available upon request, through appro-
priate publications, mailings, and electronic media to
all current students and to any prospective student.
Each eligible institution shall, on an annual basis,
provide to all enrolled students a list of the informa-
tion that is required to be provided by institutions to
students by this Act and section 444 of the General
239
Education Provisions Act (also referred to as the
Family Educational Rights and Privacy Act of
1974), together with a statement of the procedures re-
quired to obtain such information.’’;
(2) in paragraph (3)—
(A) in the first sentence, by striking ‘‘, or
enrolled in any program of an eligible institu-
tion for which the prior program provides sub-
stantial preparation’’; and
(B) by striking subparagraph (A) and in-
serting the following:
‘‘(A) shall be made available by July 1 each year
to current and prospective students prior to enrolling
or entering into any financial obligation; and’’; and
(3) by adding at the end the following new para-
graph:
‘‘(6) Each institution may, but is not required to, pro-
vide supplemental information to enrolled and prospective
students showing the completion or graduation rate for stu-
dents transferring into the institution or information show-
ing the rate at which students transfer out of the institu-
tion.’’.
(b) DEPARTMENTAL PUBLICATIONS.—Section 485(d)
is amended—
240
(1) by striking ‘‘(1) assist’’ and inserting ‘‘(A)
assist’’;
(2) by striking ‘‘(2) assist’’ and inserting ‘‘(B)
assist’’;
(3) by inserting ‘‘(1)’’ before ‘‘The Secretary’’ the
first place it appears; and
(4) by adding at the end the following new para-
graphs:
‘‘(2) The Secretary shall, to the extent such informa-
tion is available, compile information describing State pre-
paid tuition programs and disseminate such information
to States, eligible institutions, students, and parents in de-
partmental publications.
‘‘(3) The Secretary shall, to the extent practicable, up-
date the Department’s Internet site to include direct links
to databases which contain information on public and pri-
vate financial assistance programs. The Secretary shall
only provide direct links to databases which can be accessed
without charge and shall verify with appropriate parties
that the databases included in the direct link are not in
any way providing fraudulent information. The Secretary
shall prominently display adjacent to the direct link a dis-
claimer indicating that a direct link to a database does not
constitute an endorsement or recommendation of the data-
base or its provider or any services or products of such pro-
241
vider. The Secretary shall provide additional direct links
to information resources from which students may obtain
information about fraudulent and deceptive practices in the
provision of services related to student financial aid.’’.
(c) DISCLOSURES.—Section 485(e) is amended—
(1) in paragraph (2)—
(A) by striking ‘‘his parents, his guidance’’
and inserting ‘‘the student’s parents, guidance’’;
and
(B) by adding at the end the following new
sentence: ‘‘If the institution is a member of a na-
tional collegiate athletic association that com-
piles graduation rate data on behalf of its mem-
ber institutions that the Secretary determines is
substantially comparable to the information de-
scribed in paragraph (1), the distribution of the
compilation of such data to all secondary schools
in the United States shall fulfill the responsibil-
ity of the institution to provide information to
a prospective student athlete’s guidance counselor
and coach.’’;
(2) in paragraph (4), by striking ‘‘when such
completion or graduation rate includes students
transferring into and out of such institution’’ and in-
serting ‘‘for students transferring into the institution
242
or information showing the rate at which students
transfer out of the institution’’; and
(3) by striking paragraph (9) and inserting the
following:
‘‘(9) The reports required by this subsection shall be
due on each July 1 and shall cover the 1-year period ending
August 31 of the preceding year.’’.
(d) CAMPUS CRIME REPORTING AND DISCLOSURE.—
Section 485(f) is amended—
(1) in paragraph (1)—
(A) by striking subparagraph (F) and in-
serting the following:
‘‘(F) Statistics concerning the occurrence on
campus, during the most recent calendar year, and
during the 2 preceding calendar years, of the follow-
ing criminal offenses or arrests reported to campus se-
curity authorities, campus officials who have direct
administrative responsibility for student or campus
activities, disciplinary officers and other officials re-
sponsible for resolving student disciplinary matters,
athletic department officials, or local police agencies
(including offenses handled through the campus dis-
ciplinary system):
‘‘(i) murder;
‘‘(ii) sex offenses, forcible or nonforcible;
243
‘‘(iii) robbery;
‘‘(iv) aggravated assault;
‘‘(v) burglary;
‘‘(vi) motor vehicle theft;
‘‘(vii) manslaughter;
‘‘(viii) larceny;
‘‘(ix) arson; and
‘‘(x) arrests or persons referred for campus
disciplinary action for liquor law violations,
drug-related violations, and weapons posses-
sion.’’;
(B) by striking subparagraph (H); and
(C) by redesignating subparagraph (I) as
subparagraph (H);
(2) in paragraph (4)—
(A) by striking ‘‘Upon request of the Sec-
retary, each’’ and inserting ‘‘On an annual
basis, each’’;
(B) by striking ‘‘paragraphs (1)(F) and
(1)(H)’’ and inserting ‘‘paragraph (1)(F)’’;
(C) by striking ‘‘and Labor’’ and inserting
‘‘and the Workforce’’;
(D) by striking ‘‘1995’’ and inserting
‘‘2000’’;
244
(E) by striking ‘‘and’’ at the end of sub-
paragraph (A);
(F) by redesignating subparagraph (B) as
subparagraph (C); and
(G) by inserting after subparagraph (A) the
following new subparagraph:
‘‘(B) make copies of the statistics submitted to
the Secretary available to the public; and’’;
(3) in paragraph (6)—
(A) by striking ‘‘paragraphs (1)(F) and
(1)(H)’’ and inserting ‘‘paragraph (1)(F)’’; and
(B) by adding at the end the following new
sentence: ‘‘Such statistics shall not identify vic-
tims of crimes or persons accused of crimes.’’;
and
(4) by adding at the end the following new para-
graphs:
‘‘(8)(A) Each institution participating in any pro-
gram under this title that maintains either a police or secu-
rity department of any kind shall make, keep, and main-
tain a daily log, written in a form that can be easily under-
stood, recording in chronological order all crimes reported
to such police or security department, including the nature,
date, time, and general location of each crime and the dis-
position of the complaint, if known.
245
‘‘(B) All entries that are required by this paragraph
shall be open to public inspection during normal business
hours within two business days of the initial report being
made to the department, unless—
‘‘(i) disclosure of such information is prohibited
by law; or
‘‘(ii) the release of such information is likely to
jeopardize an ongoing criminal investigation or the
safety of an individual, cause a suspect to flee or
evade detection, or result in the destruction of evi-
dence.
Any information withheld under clause (ii) shall be open
to public inspection as soon as the damage that is the basis
for such withholding is no longer likely to occur.
‘‘(9) The Secretary shall provide technical assistance
in complying with the provisions of this section to an insti-
tution of higher education who requests such assistance.’’.
(e) DATA REQUIRED.—Section 485(g) is amended—
(1) in paragraph (1), by adding at the end the
following new subparagraphs:
‘‘(I)(i) The total revenues, and the revenues
from football, men’s basketball, women’s basket-
ball, all other men’s sports combined and all
other women’s sports combined, derived by the
246
institution from its intercollegiate athletics ac-
tivities.
‘‘(ii) For the purpose of clause (i), revenues
from intercollegiate athletics activities allocable
to a sport shall include (without limitation) gate
receipts, broadcast revenues, appearance guaran-
tees and options, concessions, and advertising,
but revenues such as student activities fees or
alumni contributions not so allocable shall be in-
cluded in the calculation of total revenues only.
‘‘(J)(i) The total expenses, and the expenses
attributable to football, men’s basketball, wom-
en’s basketball, all other men’s sports combined,
and all other women’s sports combined, made by
the institution for its intercollegiate athletics ac-
tivities.
‘‘(ii) For the purpose of clause (i) expenses
for intercollegiate athletics activities allocable to
a sport shall include (without limitation) grants-
in-aid, salaries, travel, equipment, and supplies,
but expenses such as general and administrative
overhead not so allocable shall be included in the
calculation of total expenses only.
‘‘(K) A statement of any reduction that
may or is likely to occur during the ensuing 4
247
academic years in the number of athletes that
will be permitted to participate in any collegiate
sport, or in the financial resources that the insti-
tution will make available to any such sport,
and the reasons for any such reduction.’’; and
(2) by striking paragraph (5).
SEC. 467. NATIONAL STUDENT LOAN DATA SYSTEM.
Section 485B(a) (20 U.S.C. 1092b(a)) is amended by
inserting before the period at the end of the third sentence
the following: ‘‘no later than one year after the date of en-
actment of the Higher Education Amendments of 1997’’.
SEC. 468. PROGRAM PARTICIPATION AGREEMENTS.
(a) REQUIRED CONTENT.—Section 487(a) (20 U.S.C.
1094(a)) is amended—
(1) in the first sentence, by striking ‘‘, except
with respect to a program under subpart 4 of part
A,’’;
(2) in paragraph (3), by striking subparagraph
(B) and inserting the following:
‘‘(B) the appropriate State agency;’’;
(3) in paragraph (4), by striking ‘‘subsection
(b)’’ and inserting ‘‘subsection (c)’’;
(4) in paragraph (15), by striking ‘‘State review
entities under subpart 1 of part H’’ and inserting
‘‘appropriate State agencies’’;
254
SEC. 471. GARNISHMENT REQUIREMENTS.
(a) MAXIMUM PERCENTAGE.—Section 488A(a)(1) (20
U.S.C. 1095a(a)(1)) is amended by striking ‘‘10 percent’’
and inserting ‘‘15 percent’’.
(b) NO ATTACHMENT OF STUDENT ASSISTANCE.—Sec-
tion 488A is further amended—
(1) by redesignating subsection (d) as subsection
(e); and
(2) by inserting after subsection (c) the following
new subsection:
‘‘(d) NO ATTACHMENT OF STUDENT ASSISTANCE.—
Except as authorized in this section, notwithstanding any
other provision of Federal or State law, no grant, loan, or
work assistance awarded under this title, or property trace-
able to such assistance, shall be subject to garnishment or
attachment in order to satisfy any debt owed by the student
awarded such assistance, other than a debt owed to the Sec-
retary and arising under this title.’’.
SEC. 472. ADMINISTRATIVE SUBPOENA AUTHORITY.
Part G of title IV of the Act is further amended by
inserting immediately after section 490 (20 U.S.C. 1097)
the following new section:
‘‘SEC. 490A. ADMINISTRATIVE SUBPOENAS.
‘‘(a) AUTHORITY.—To assist the Secretary in the con-
duct of investigations of possible violations of the provisions
of this title, the Secretary is authorized to require by sub-