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‘‘PART F—PRINCIPAL LEADERSHIP 
DEVELOPMENT 
‘‘SEC. 2601. PROFESSIONAL DEVELOPMENT FOR PRIN-
CIPALS AS LEADERS OF SCHOOL REFORM. 
‘‘(a) COMPETITIVE GRANTS.—The Secretary is au-
thorized to award, on a competitive basis, grants to eligible 
partnerships—
‘‘(1) consisting of—
‘‘(A) one or more institutions of higher 
education that provide professional development 
for principals and other school administrators; 
and 
‘‘(B) one or more local educational agen-
cies; and 
‘‘(2) that may include other entities, agencies, 
and organizations, such as a State educational agen-
cy, a State agency for higher education, and profes-
sional organizations for principals, administrators, 
teachers, and parents. 
‘‘(b) APPLICATION.—An eligible partnership that de-
sires to receive a grant under this section shall submit an 
application to the Secretary at such time, in such form, 
and containing such information as the Secretary may re-
quire. Each such application shall include—
‘‘(1) a description of the activities the partner-
ship will carry out to meet the purpose of this part;
499
‘‘(2) a description of how those activities will 
build on and be coordinated with other professional 
development activities, including activities under this 
title and title II of the Higher Education Act of 
1965; 
‘‘(3) a description of how principals, teachers, 
and other interested parties were involved in devel-
oping the application and will be involved in plan-
ning and carrying out the activities under this sec-
tion; and 
‘‘(4) a description of how the professional devel-
opment will result in the acquisition of a license, de-
gree, or continuing education unit. 
‘‘(c) USE OF FUNDS.—An eligible partnership that 
receives a grant under this section shall use the grant 
funds to provide professional development to principals 
and other school administrators to enable them to be effec-
tive school leaders and prepare all students to achieve to 
challenging State content and student performance stand-
ards, including professional development on—
‘‘(1) comprehensive school reform; 
‘‘(2) leadership skills; 
‘‘(3) recruitment, assignment, retention, and 
evaluation of teacher and other instructional staff; 
‘‘(4) State content standards;
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‘‘(5) effective instructional practice; 
‘‘(6) using smaller classes effectively; and 
‘‘(7) parental and community involvement. 
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this part, 
$100,000,000 for fiscal year 2004, and such sums as may 
be necessary for each of the 4 succeeding fiscal years.’’.
Subchapter B—National Board Certification 
Program 
SEC. 3431. PURPOSE. 
It is the purpose of this subchapter to assist 105,000 
elementary school or secondary school teachers in becom-
ing board certified by the year 2008. 
SEC. 3432. GRANTS TO EXPAND PARTICIPATION IN THE NA-
TIONAL BOARD CERTIFICATION PROGRAM. 
(a) DEFINITIONS.—The terms used in this section 
have the meanings given the terms in section 9101 of the 
Elementary and Secondary Education Act of 1965 (20 
U.S.C. 7801). 
(b) GRANTS AUTHORIZED.—From amounts appro-
priated under subsection (f), the Secretary shall award 
grants to States to enable such States to provide subsidies 
to elementary school and secondary school teachers who 
enroll in the certification program of the National Board 
for Professional Teaching Standards.
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(c) APPLICATION.—To be eligible to receive a grant 
under subsection (b), a State shall prepare and submit to 
the Secretary an application at such time, in such manner, 
and containing such information as the Secretary may re-
quire. 
(d) AMOUNT OF GRANT.—The amount of a grant 
awarded to a State under subsection (b) shall be deter-
mined by the Secretary. 
(e) USE OF FUNDS.—
(1) IN GENERAL.—A State shall use amounts 
received under a grant under this section to provide 
a subsidy to an eligible teacher who enrolls and com-
pletes the teaching certification program of the Na-
tional Board for Professional Teaching Standards. 
(2) ELIGIBILITY.—
(A) IN GENERAL.—To be eligible to receive 
a subsidy under this section an individual 
shall—
(i) be a teacher in an elementary 
school or secondary school, served by a 
local educational agency that meets the eli-
gibility requirements described in subpara-
graph (B), in the State involved; 
(ii) prepare and submit to the State 
an application at such time, in such man-
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ner, and containing such information as 
the State may require; and 
(iii) certify to the State that the indi-
vidual intends to enroll and complete the 
teaching certification program of the Na-
tional Board for Professional Teaching 
Standards. 
(B) LOCAL
EDUCATIONAL
AGENCY.—A 
local educational agency described in subpara-
graph (A)(i) is a local educational agency 
that—
(i) serves low achieving students as 
measured by low graduation rates or low 
scores on assessment exams; 
(ii) has a low teacher retention rate in 
the schools served by the local educational 
agency; 
(iii) has a high rate of out-of-field 
placement of teachers in the schools served 
by the local educational agency; and 
(iv) has a shortage of teachers of 
mathematics or physical science in the 
schools served by the local educational 
agency.
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(3) AMOUNT
OF
SUBSIDY.—Subject to the 
availability of funds, a State shall provide a teacher 
who has an application approved under paragraph 
(2) with a subsidy in an amount equal to 90 percent 
of the cost of enrollment in the program described 
in paragraph (2)(A)(iii). 
(f) APPROPRIATIONS.—There are authorized to be 
appropriated to carry out this section, $37,800,000 for 
each of the fiscal years 2004 through 2008. 
Subchapter C—Student Loan Forgiveness for 
Teachers 
SEC. 3441. STUDENT LOAN FORGIVENESS FOR TEACHERS. 
(a) GUARANTEED LOANS.—Section 428J of the 
Higher Education Act of 1965 (20 U.S.C. 1078–10) is 
amended to read as follows: 
‘‘SEC. 428J. LOAN FORGIVENESS FOR TEACHERS. 
‘‘(a) STATEMENT OF PURPOSE.—It is the purpose of 
this section to encourage individuals to enter and continue 
in the teaching profession. 
‘‘(b) PROGRAM AUTHORIZED.—The Secretary shall 
carry out a program, through the holder of the loan, of 
assuming the obligation to repay in accordance with sub-
section (c) a qualified loan amount for a loan made under 
section 428 or 428H for any borrower who—
504
‘‘(1) is employed as a full-time teacher during 
the academic year beginning in calendar year 2003 
or during any subsequent academic year—
‘‘(A) in a school that qualifies under sec-
tion 465(a)(2)(A) for loan cancellation for Per-
kins loan recipients who teach in such schools; 
‘‘(B) if employed as a secondary school 
teacher, is teaching—
‘‘(i) a subject area that is relevant to 
the borrower’s academic major as certified 
by the chief administrative officer of the 
public or nonprofit private secondary 
school in which the borrower is employed; 
or 
‘‘(ii) special education or bilingual 
education; 
‘‘(C) if employed as an elementary school 
teacher, has demonstrated, as certified by the 
chief administrative officer of the public or non-
profit private elementary school in which the 
borrower is employed, knowledge and teaching 
skills in reading, writing, mathematics, special 
education, bilingual education, or other areas of 
the elementary school curriculum; and
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‘‘(D) is highly qualified, as such term is 
defined in section 9101 of the Elementary and 
Secondary Education Act of 1965; and 
‘‘(2) is not in default on a loan for which the 
borrower seeks forgiveness. 
‘‘(c) QUALIFIED LOANS AMOUNT.—
‘‘(1) IN GENERAL.—Of the aggregate loan obli-
gations of a borrower on loans made under section 
428 or 428H that are outstanding after the comple-
tion of the first complete school year of teaching de-
scribed in subsection (b)(1) for which the borrower 
applies for repayment under this section, the Sec-
retary shall repay not more than—
‘‘(A) $3,000 for each of the first and sec-
ond such complete school years; 
‘‘(B) $4,000 for the third such complete 
school year; and 
‘‘(C) $5,000 for each of the fourth and 
fifth such complete school years. 
‘‘(2) TREATMENT OF CONSOLIDATION LOANS.—
A loan amount for a loan made under section 428C 
may be a qualified loan amount for the purposes of 
this subsection only to the extent that such loan 
amount was used to repay a Federal Direct Stafford 
Loan, a Federal Direct Unsubsidized Stafford Loan,
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or a loan made under section 428 or 428H for a 
borrower who meets the requirements of subsection 
(b), as determined in accordance with regulations 
prescribed by the Secretary. 
‘‘(d) REGULATIONS.—The Secretary is authorized to 
issue such regulations as may be necessary to carry out 
the provisions of this section. 
‘‘(e) CONSTRUCTION.—Nothing in this section shall 
be construed to authorize any refunding of any repayment 
of a loan. 
‘‘(f) LIST.—If the list of schools in which a teacher 
may perform service pursuant to subsection (b) is not 
available before May 1 of any year, the Secretary may use 
the list for the year preceding the year for which the deter-
mination is made to make such service determination. 
‘‘(g) ADDITIONAL ELIGIBILITY PROVISIONS.—
‘‘(1) CONTINUED
ELIGIBILITY.—Any teacher 
who performs service in a school that—
‘‘(A) meets the requirements of subsection 
(b)(1)(A) 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 
eligible for loan forgiveness pursuant to subsection 
(b).
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‘‘(2) PREVENTION OF DOUBLE BENEFITS.—No 
borrower may, for the same service, receive a benefit 
under both this subsection and subtitle D of title I 
of the National and Community Service Act of 1990 
(42 U.S.C. 12571 et seq.). No borrower may receive 
a reduction of loan obligations under both this sec-
tion and section 460. 
‘‘(h) DEFINITION.—For purposes of this section, the 
term ‘year’, where applied to service as a teacher, means 
an academic year as defined by the Secretary.’’. 
(b) DIRECT LOANS.—Section 460 of such Act (20 
U.S.C. 1087j) is amended to read as follows: 
‘‘SEC. 460. LOAN FORGIVENESS FOR TEACHERS. 
‘‘(a) STATEMENT OF PURPOSE.—It is the purpose of 
this section to encourage individuals to enter and continue 
in the teaching profession. 
‘‘(b) PROGRAM AUTHORIZED.—The Secretary shall 
carry out a program of canceling the obligation to repay 
a qualified loan amount in accordance with subsection (c) 
for Federal Direct Stafford Loans and Federal Direct Un-
subsidized Stafford Loans made under this part for any 
borrower who—
‘‘(1) is employed as a full-time teacher during 
the academic year beginning in calendar year 2003 
or during any subsequent academic year—
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‘‘(A) in a school that qualifies under sec-
tion 465(a)(2)(A) for loan cancellation for Per-
kins loan recipients who teach in such schools; 
‘‘(B) if employed as a secondary school 
teacher, is teaching—
‘‘(i) a subject area that is relevant to 
the borrower’s academic major as certified 
by the chief administrative officer of the 
public or nonprofit private secondary 
school in which the borrower is employed; 
or 
‘‘(ii) special education or bilingual 
education; 
‘‘(C) if employed as an elementary school 
teacher, has demonstrated, as certified by the 
chief administrative officer of the public or non-
profit private elementary school in which the 
borrower is employed, knowledge and teaching 
skills in reading, writing, mathematics, special 
education, bilingual education, and other areas 
of the elementary school curriculum; and 
‘‘(D) is highly qualified, as such term is 
defined in section 9101 of the Elementary and 
Secondary Education Act of 1965; and
509
‘‘(2) is not in default on a loan for which the 
borrower seeks forgiveness. 
‘‘(c) QUALIFIED LOANS AMOUNT.—
‘‘(1) IN GENERAL.—Of the aggregate loan obli-
gations of a borrower on Federal Direct Stafford 
Loans and Federal Direct Unsubsidized Stafford 
Loans made under this part that are outstanding 
after the completion of the first complete school year 
of teaching described in subsection (b)(1) for which 
the borrower applies for cancellation under this sec-
tion, the Secretary shall cancel not more than—
‘‘(A) $3,000 for each of the first and sec-
ond such complete school years; 
‘‘(B) $4,000 for the third such complete 
school year; and 
‘‘(C) $5,000 for each of the fourth and 
fifth such complete school years. 
‘‘(2) TREATMENT OF CONSOLIDATION LOANS.—
A loan amount for a Federal Direct Consolidation 
Loan may be a qualified loan amount for the pur-
poses of this subsection only to the extent that such 
loan amount was used to repay a Federal Direct 
Stafford Loan, a Federal Direct Unsubsidized Staf-
ford Loan, or a loan made under section 428 or 
428H, for a borrower who meets the requirements of
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under both this subsection and subtitle D of title I 
of the National and Community Service Act of 1990 
(42 U.S.C. 12571 et seq.). No borrower may receive 
a reduction of loan obligations under both this sec-
tion and section 428J. 
‘‘(h) DEFINITION.—For purposes of this section, the 
term ‘year’, where applied to service as a teacher, means 
an academic year as defined by the Secretary.’’. 
CHAPTER 4—SCHOOL CONSTRUCTION 
Subchapter A—School Modernization Bonds 
SEC. 3451. SHORT TITLE. 
This subchapter may be cited as the ‘‘America’s Bet-
ter Classroom Act of 2003’’.
SEC. 
3452. 
EXPANSION 
OF 
INCENTIVES 
FOR 
PUBLIC 
SCHOOLS. 
(a) IN GENERAL.—Chapter 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following: 
‘‘Subchapter Z—Public School Modernization 
Provisions
‘‘Sec. 1400M. Credit to holders of qualified public school mod-
ernization bonds. 
‘‘Sec. 1400N. Qualified school construction bonds. 
‘‘Sec. 1400O. Qualified zone academy bonds.
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‘‘SEC. 1400M. CREDIT TO HOLDERS OF QUALIFIED PUBLIC 
SCHOOL MODERNIZATION BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
payer who holds a qualified public school modernization 
bond on a credit allowance date of such bond which occurs 
during the taxable year, there shall be allowed as a credit 
against the tax imposed by this chapter for such taxable 
year an amount equal to the sum of the credits determined 
under subsection (b) with respect to credit allowance dates 
during such year on which the taxpayer holds such bond. 
‘‘(b) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—The amount of the credit 
determined under this subsection with respect to any 
credit allowance date for a qualified public school 
modernization bond is 25 percent of the annual 
credit determined with respect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified public school 
modernization bond is the product of—
‘‘(A) the applicable credit rate, multiplied 
by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) APPLICABLE CREDIT RATE.—For purposes 
of paragraph (1), the applicable credit rate with re-
spect to an issue is the rate equal to an average
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market yield (as of the day before the date of 
issuance of the issue) on outstanding long-term cor-
porate debt obligations (determined under regula-
tions prescribed by the Secretary). 
‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued 
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined 
under this subsection with respect to such credit al-
lowance date shall be a ratable portion of the credit 
otherwise determined based on the portion of the 3-
month period during which the bond is outstanding. 
A similar rule shall apply when the bond is re-
deemed. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of—
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under part IV of subchapter A (other than sub-
part C thereof, relating to refundable credits).
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‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the 
limitation imposed by paragraph (1) for such taxable 
year, such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under 
subsection (a) for such taxable year.
‘‘(d) QUALIFIED PUBLIC SCHOOL MODERNIZATION 
BOND; CREDIT ALLOWANCE DATE.—For purposes of this 
section—
‘‘(1) QUALIFIED PUBLIC SCHOOL MODERNIZA-
TION BOND.—The term ‘qualified public school mod-
ernization bond’ means—
‘‘(A) a qualified zone academy bond, and 
‘‘(B) a qualified school construction bond. 
‘‘(2) CREDIT
ALLOWANCE
DATE.—The term 
‘credit allowance date’ means—
‘‘(A) March 15, 
‘‘(B) June 15, 
‘‘(C) September 15, and 
‘‘(D) December 15. 
Such term includes the last day on which the bond 
is outstanding. 
‘‘(e) OTHER DEFINITIONS.—For purposes of this 
subchapter—
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‘‘(1) LOCAL EDUCATIONAL AGENCY.—The term 
‘local educational agency’ has the meaning given to 
such term by section 9101 of the Elementary and 
Secondary Education Act of 1965. Such term in-
cludes the local educational agency that serves the 
District of Columbia but does not include any other 
State agency. 
‘‘(2) BOND.—The term ‘bond’ includes any ob-
ligation. 
‘‘(3) STATE.—The term ‘State’ includes the 
District of Columbia and any possession of the 
United States. 
‘‘(4) PUBLIC
SCHOOL
FACILITY.—The term 
‘public school facility’ shall not include—
‘‘(A) any stadium or other facility pri-
marily used for athletic contests or exhibitions
or other events for which admission is charged 
to the general public, or 
‘‘(B) any facility which is not owned by a 
State or local government or any agency or in-
strumentality of a State or local government. 
‘‘(f) CREDIT INCLUDED IN GROSS INCOME.—Gross 
income includes the amount of the credit allowed to the 
taxpayer under this section (determined without regard to
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subsection (c)) and the amount so included shall be treat-
ed as interest income. 
‘‘(g) BONDS HELD
BY REGULATED INVESTMENT 
COMPANIES.—If any qualified public school modernization 
bond is held by a regulated investment company, the credit 
determined under subsection (a) shall be allowed to share-
holders of such company under procedures prescribed by 
the Secretary. 
‘‘(h) CREDITS MAY BE STRIPPED.—Under regula-
tions prescribed by the Secretary— 
‘‘(1) IN GENERAL.—There may be a separation 
(including at issuance) of the ownership of a quali-
fied public school modernization bond and the enti-
tlement to the credit under this section with respect 
to such bond. In case of any such separation, the 
credit under this section shall be allowed to the per-
son who on the credit allowance date holds the in-
strument evidencing the entitlement to the credit 
and not to the holder of the bond. 
‘‘(2) CERTAIN RULES TO APPLY.—In the case 
of a separation described in paragraph (1), the rules 
of section 1286 shall apply to the qualified public 
school modernization bond as if it were a stripped 
bond and to the credit under this section as if it 
were a stripped coupon.