2122 
‘‘(2) the effectiveness of such activities and 
services in increasing postsecondary persistence and 
completion, as determined by measurable progress in 
achieving the State’s goals for persistence and com-
pletion described in the Access and Completion Plan 
submitted by the State under subsection (c)(2)(A), 
if such plan has been submitted; and 
‘‘(3) any other information or assessments the 
Secretary may require. 
‘‘(f) DEFINITIONS.—In this section: 
‘‘(1) INDUSTRY
OR
SECTOR
PARTNERSHIP.— 
The term ‘industry or sector partnership’ means a 
workforce collaborative that organizes key stake-
holders in a targeted industry cluster into a working 
group that focuses on the human capital needs of a 
targeted industry cluster and that includes, at the 
appropriate stage of development of the partner-
ship— 
‘‘(A) representatives of multiple firms or 
employers (including workers) in a targeted in-
dustry cluster, including small- and medium- 
sized employers when practicable; 
‘‘(B) 1 or more representatives of State 
labor organizations, central labor coalitions, or 
other labor organizations; 
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‘‘(C) 1 or more representatives of local 
workforce investment boards; 
‘‘(D) 1 or more representatives of postsec-
ondary educational institutions or other train-
ing providers; and 
‘‘(E) 1 or more representatives of State 
workforce agencies or other entities providing 
employment services. 
‘‘(2) STATE PUBLIC EMPLOYMENT SERVICE.— 
The term ‘State public employment service’ has the 
meaning given such term in section 502(a)(9) of the 
Student Aid and Fiscal Responsibility Act of 2009. 
‘‘(3) STATE WORKFORCE INVESTMENT BOARD; 
LOCAL
WORKFORCE
INVESTMENT
BOARD.—The 
terms ‘State workforce investment board’ and ‘local 
workforce investment board’ have the meanings 
given such terms in section 502(a)(10) of the Stu-
dent Aid and Fiscal Responsibility Act of 2009. 
‘‘SEC. 783. INNOVATION IN COLLEGE ACCESS AND COMPLE-
TION NATIONAL ACTIVITIES. 
‘‘(a) PROGRAMS AUTHORIZED.—From the amount 
appropriated under section 781(a)(2)(C) to carry out this 
section, the Secretary shall award grants, on a competitive 
basis, to eligible entities in accordance with this section 
to conduct innovative programs that advance knowledge 
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about, and adoption of, policies and practices that increase 
the number of individuals with postsecondary degrees or 
certificates. 
‘‘(b) ELIGIBLE ENTITIES.—The Secretary is author-
ized to award grants under subsection (a) to— 
‘‘(1) institutions of higher education; 
‘‘(2) States; 
‘‘(3) nonprofit organizations with demonstrated 
experience in the operation of programs to increase 
postsecondary completion; 
‘‘(4) philanthropic organizations (as such term 
is defined in section 781(i)(1)); 
‘‘(5) entities receiving a grant under chapter 1 
of subpart 2 of part A of title IV; and 
‘‘(6) consortia of any of the entities described 
in paragraphs (1) through (5). 
‘‘(c) INNOVATION GRANTS.— 
‘‘(1) MINIMUM
AWARD.—A grant awarded 
under subsection (a) shall be not less than 
$1,000,000. 
‘‘(2) GRANTS USES.—The Secretary’s authority 
to award grants under subsection (a) includes— 
‘‘(A) the authority to award to an eligible 
entity a grant in an amount equal to all or part 
of the amount of funds received by such entity 
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from philanthropic organizations (as such term 
is defined in section 781(i)(1)) to conduct inno-
vative programs that advance knowledge about, 
and adoption of, policies and practices that in-
crease the number of individuals with postsec-
ondary degrees or certificates; and 
‘‘(B) the authority to award an eligible en-
tity a grant to develop 2-year programs that 
provide supplemental grant or loan benefits to 
students that— 
‘‘(i) are designed to improve student 
outcomes, including degree completion, 
graduation without student loan debt, and 
post-completion employment; 
‘‘(ii) are in addition to the student fi-
nancial aid available under title IV of this 
Act; and 
‘‘(iii) do not result in the reduction of 
the amount of that aid or any other stu-
dent financial aid for which a student is 
otherwise eligible under Federal law. 
‘‘(3) APPLICATION.—To be eligible to receive a 
grant under subsection (a), an eligible entity shall 
submit an application at such time, in such manner, 
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and containing such information as the Secretary 
shall require. 
‘‘(4) PRIORITIES.—In awarding grants under 
subsection (a), the Secretary shall give priority to 
applications that— 
‘‘(A) are from an eligible entity with dem-
onstrated experience in serving students from 
groups that are underrepresented in postsec-
ondary education, including institutions of high-
er education that are eligible for assistance 
under title III or V, or are from a consortium 
that includes an eligible entity with such experi-
ence; 
‘‘(B) are from an eligible entity that is a 
public institution of higher education that does 
not predominantly provide an educational pro-
gram for which it awards a bachelor’s degree 
(or an equivalent degree), or from a consortium 
that includes at least one such institution; 
‘‘(C) include activities to increase degree or 
certificate completion in the fields of science, 
technology, engineering, and mathematics, in-
cluding 
preparation 
for, 
or 
entry 
into, 
postbaccaluareate study, especially for women 
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and other groups of students who are underrep-
resented in such fields; 
‘‘(D) are from an eligible entity that is a 
philanthropic organization with the primary 
purpose of providing scholarships and support 
services to students from groups that are 
underrepresented in postsecondary education, or 
are from a consortium that includes such an or-
ganization; or 
‘‘(E) are from an eligible entity that en-
courages partnerships between institutions of 
higher education with high degree-completion 
rates and institutions of higher education with 
low degree-completion rates from the same cat-
egory of institutions described in section 132(d) 
to facilitate the sharing of information relating 
to, and the implementation of, best practices for 
increasing postsecondary completion. 
‘‘(5) TECHNICAL ASSISTANCE.—The Secretary 
may reserve up to $5,000,000 per year to award 
grants and contracts to provide technical assistance 
to eligible entities receiving a grant under subsection 
(a), including technical assistance on the evaluation 
conducted in accordance with section 784 and estab-
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lishing networks of eligible entities receiving grants 
under such subsection. 
‘‘(d) REPORTS.— 
‘‘(1) ANNUAL REPORTS BY ENTITIES.—Each el-
igible entity receiving a grant under subsection (a) 
shall submit to the Secretary an annual report on— 
‘‘(A) the effectiveness of the program car-
ried out with such grant in increasing postsec-
ondary completion, as determined by measur-
able progress in achieving the goals of the pro-
gram, as described in the application for such 
grant; and 
‘‘(B) any other information or assessments 
the Secretary may require. 
‘‘(2) ANNUAL
REPORT
TO
CONGRESS.—The 
Secretary shall submit to the authorizing committees 
an annual report on grants awarded under sub-
section (a), including— 
‘‘(A) the amount awarded to each eligible 
entity receiving a grant under such subsection; 
and 
‘‘(B) a description of the activities con-
ducted by each such eligible entity. 
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‘‘SEC. 784. EVALUATION. 
‘‘From the amount appropriated under section 
781(a)(2)(D), the Director of the Institute of Education 
Sciences shall evaluate the programs funded under this 
part. Not later than January 30, 2016, the Director shall 
issue a final report on such evaluation to the authorizing 
committees and the Secretary, and shall make such report 
available to the public. 
‘‘SEC. 785. VETERANS RESOURCE OFFICER GRANTS. 
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall 
award grants, on a competitive basis, to eligible institu-
tions of higher education to hire a Veterans Resource Offi-
cer to increase the college completion rates for veterans 
enrolled at such institutions. 
‘‘(b) DEFINITIONS.—In this section: 
‘‘(1) ELIGIBLE INSTITUTION OF HIGHER EDU-
CATION.—The term ‘eligible institution of higher 
education’ means an institution of higher education 
that has an enrollment of at least 100 full-time 
equivalent students who are veterans. 
‘‘(2) FULL-TIME EQUIVALENT STUDENTS.—The 
term ‘full-time equivalent students’ has the meaning 
given such term in section 312(e). 
‘‘(3) VETERAN.—The term ‘veteran’ has the 
meaning give such term in section 480(c). 
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‘‘(c) APPLICATION.—To be eligible to receive a grant 
under this section, an eligible institution of higher edu-
cation shall submit an application at such time, in such 
manner, and containing such information as the Secretary 
shall require. 
‘‘(d) USES OF FUNDS.— 
‘‘(1) IN GENERAL.—An eligible institution of 
higher education receiving a grant under this section 
shall use such grant to hire 1 or 2 Veterans Re-
source Officers (in the case of an institution that 
has an enrollment of at least 200 full-time equiva-
lent students who are veterans) to serve in the office 
of campus programs, or a similar office, at such in-
stitution and carry out the activities described in 
paragraph (2). 
‘‘(2) ACTIVITIES.—A Veterans Resource Officer 
shall carry out activities at an eligible institution of 
higher education to help increase the completion 
rates for veterans enrolled at such institution, which 
shall include the following activities: 
‘‘(A) Serving as a link between student 
veterans and the staff of the institution. 
‘‘(B) Serving as a link between student 
veterans and local facilities of the Department 
of Veterans Affairs. 
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‘‘(C) Organizing and advising student vet-
erans organization. 
‘‘(D) Organizing veterans oriented group 
functions and events. 
‘‘(E) 
Maintaining 
newsletters 
and 
listserves to distribute news and information to 
all student veterans. 
‘‘(F) Organizing new student veterans 
campus orientation. 
‘‘(G) Ensuring that the Department of 
Veterans Affairs certifying official at such insti-
tution is properly trained. 
‘‘(3) PRIORITY.—To the extent practicable, 
each institution described in paragraph (1) shall give 
priority to hiring a veteran to serve as a Veterans 
Resource Officer. 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as may be necessary for fiscal year 2010 and 
each succeeding fiscal year.’’. 
SEC. 103. INVESTMENT IN HISTORICALLY BLACK COL-
LEGES AND UNIVERSITIES AND OTHER MI-
NORITY-SERVING INSTITUTIONS. 
Section 371 (20 U.S.C. 1067q) is amended— 
(1) in subsection (a)— 
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(A) in paragraph (2), by striking ‘‘section 
502’’ and inserting ‘‘section 502(a)’’; 
(B) in paragraph (3), by striking ‘‘section 
316’’ and inserting ‘‘section 316(b)’’; 
(C) in paragraph (5), by striking ‘‘in sub-
section (c)’’ and inserting ‘‘in section 318(b)’’; 
(D) in paragraph (6), by striking ‘‘in sub-
section (c)’’ and inserting ‘‘in section 320(b)’’; 
and 
(E) in paragraph (7), by striking ‘‘in sub-
section (c)’’ and inserting ‘‘in section 319(b)’’; 
(2) in subsection (b)— 
(A) in paragraph (1)(A), by striking 
‘‘$255,000,000’’ and all that follows and insert-
ing ‘‘$255,000,000 for each of the fiscal years 
2008 through 2019.’’; and 
(B) by amending paragraph (2)(B) to read 
as follows: 
‘‘(B) STEM
AND
ARTICULATION
PRO-
GRAMS.—From the amount made available for 
allocation under this subparagraph by subpara-
graph (A)(i) for any fiscal year— 
‘‘(i) 90 percent shall be available for 
Hispanic-serving institutions for activities 
described in sections 503 and 513, with a 
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priority given to applications that pro-
pose— 
‘‘(I) to increase the number of 
Hispanic and other low-income stu-
dents attaining degrees in the fields of 
science, technology, engineering, or 
mathematics; and 
‘‘(II) to develop model transfer 
and articulation agreements between 
2-year Hispanic-serving institutions 
and 4-year institutions in such fields; 
and 
‘‘(ii) 10 percent shall be available for 
grants under section 355.’’; 
(C) in paragraph (2)(C)(ii), by striking 
‘‘and shall be available for a competitive’’ and 
all that follows and inserting ‘‘and shall be 
made available as grants under section 318 and 
allotted among such institutions under section 
318(e), treating such amount, plus the amount 
appropriated for such fiscal year in a regular or 
supplemental appropriation Act to carry out 
section 318, as the amount appropriated to 
carry out section 318 for purposes of allotments 
under section 318(e)’’; and 
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(D) in paragraph (2)(D)— 
(i) in clause (iii), by striking ‘‘for ac-
tivities described in section 311(c)’’ and in-
serting ‘‘and shall be made available as 
grants under section 320, treating such 
$5,000,000 as part of the amount appro-
priated for such fiscal year in a regular or 
supplemental appropriation Act to carry 
out 
such 
section 
and 
using 
such 
$5,000,000 for purposes described in sub-
section (c) of such section’’; and 
(ii) in clause (iv), by striking ‘‘de-
scribed in subsection (a)(7)—’’ and all that 
follows and inserting ‘‘and shall be made 
available as grants under section 319, 
treating such $5,000,000 as part of the 
amount appropriated for such fiscal year 
in a regular or supplemental appropriation 
Act to carry out such section and using 
such $5,000,000 for purposes described in 
subsection (c) of such section’’; and 
(3) by striking subsection (c). 
SEC. 104. INVESTMENT IN COOPERATIVE EDUCATION. 
There are authorized to be appropriated, and there 
are appropriated, to carry out part N of title VIII of the 
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Higher Education Act of 1965 (20 U.S.C. 1161n) (in ad-
dition to any other amounts appropriated to carry out 
such part and out of any money in the Treasury not other-
wise appropriated), $10,000,000 for fiscal year 2010. 
SEC. 105. LOAN FORGIVENESS FOR SERVICEMEMBERS AC-
TIVATED FOR DUTY. 
(a) IN GENERAL.—Section 484B(b)(2) (20 U.S.C. 
1091b(b)(2)) is amended by adding at the end the fol-
lowing: 
‘‘(F) TUITION
RELIEF
FOR
STUDENTS 
CALLED TO MILITARY SERVICE.— 
‘‘(i) WAIVER OF REPAYMENT BY STU-
DENTS CALLED TO MILITARY SERVICE.—In 
addition to the waivers authorized by sub-
paragraphs (D) and (E), the Secretary 
shall waive the amounts that students are 
required to return under this section if the 
withdrawals on which the returns are 
based are withdrawals necessitated by rea-
son of service in the uniformed services. 
‘‘(ii) LOAN
FORGIVENESS
AUTHOR-
IZED.—Whenever a student’s withdrawal 
from an institution of higher education is 
necessitated by reason of service in the 
uniformed services, the Secretary shall, 
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with respect to the payment period or pe-
riod of enrollment for which such student 
did not receive academic credit as a result 
of such withdrawal, carry out a program— 
‘‘(I) through the holder of the 
loan, to assume the obligation to 
repay— 
‘‘(aa) the outstanding prin-
cipal and accrued interest on any 
loan assistance awarded to the 
student under part B (including 
to a parent on behalf of the stu-
dent under section 428B) for 
such payment period or period of 
enrollment; minus 
‘‘(bb) any amount of such 
loan assistance returned by the 
institution in accordance with 
paragraph (1) of this subsection 
for such payment period or pe-
riod of enrollment; and 
‘‘(II) to cancel— 
‘‘(aa) the outstanding prin-
cipal and accrued interest on the 
loan assistance awarded to the 
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student under part D or E (in-
cluding a Federal Direct PLUS 
loan awarded to a parent on be-
half of the student) for such pay-
ment period or period of enroll-
ment; minus 
‘‘(bb) any amount of such 
loan assistance returned by the 
institution in accordance with 
paragraph (1) of this subsection 
for such payment period or pe-
riod of enrollment. 
‘‘(iii) REIMBURSEMENT
FOR
CAN-
CELLATION OF PERKINS LOANS.—The Sec-
retary shall pay to each institution for 
each fiscal year an amount equal to the ag-
gregate of the amounts of Federal Perkins 
loans in such institutions’s student loan 
fund which are cancelled pursuant to 
clause (iii)(II) for such fiscal year, minus 
an amount equal to the aggregate of the 
amounts of any such loans so canceled 
which were made from Federal capital con-
tributions to its student loan fund provided 
by the Secretary under section 468. None 
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of the funds appropriated pursuant to sec-
tion 461(b) shall be available for payments 
pursuant to this paragraph. To the extent 
feasible, the Secretary shall pay the 
amounts for which any institution qualifies 
under this paragraph not later than 3 
months after the institution files an insti-
tutional 
application 
for 
campus-based 
funds. 
‘‘(iv) LOAN ELIGIBILITY AND LIMITS 
FOR
STUDENTS.—Any amounts that are 
returned by an institution in accordance 
with paragraph (1), or forgiven or waived 
by the Secretary under this subparagraph, 
with respect to a payment period or period 
of enrollment for which a student did not 
receive academic credit as a result of with-
drawal necessitated by reason of service in 
the uniformed services, shall not be in-
cluded in the calculation of the student’s 
annual or aggregate loan limits for assist-
ance under this title, or otherwise affect 
the student’s eligibility for grants or loans 
under this title. 
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‘‘(v) DEFINITION.—In this subpara-
graph, the term ‘service in the uniformed 
services’ has the meaning given such term 
in section 484C(a).’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall take effect for periods of service in 
the uniformed services beginning after the date of 
the enactment of this Act. 
(2) DEFINITION.—In this paragraph, the term 
‘‘period of service in the uniformed services’’ means 
the period beginning 30 days prior to the date a stu-
dent is required to report to service in the uniformed 
services (as defined in section 484C(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1091c(a)) and 
ending when such student returns from such service. 
SEC. 
106. 
VETERANS 
EDUCATIONAL 
EQUITY 
SUPPLE-
MENTAL GRANT PROGRAM. 
(a) VETERANS
EDUCATIONAL
EQUITY
SUPPLE-
MENTAL GRANT PROGRAM.—Subpart 1 of part A of title 
IV (20 U.S.C. 1070a et seq.) is amended by adding at 
the end the following: 
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‘‘SEC. 401B. VETERANS EDUCATIONAL EQUITY SUPPLE-
MENTAL GRANT PROGRAM. 
‘‘(a) VETERANS EDUCATIONAL EQUITY SUPPLE-
MENTAL GRANTS AUTHORIZED.—The Secretary shall 
award a grant to each eligible student, in an amount de-
termined in accordance with subsection (c), to assist such 
student with paying the cost of tuition incurred by the 
student for a program of education at an institution of 
higher education. 
‘‘(b) DEFINITIONS.—In this section— 
‘‘(1) ELIGIBLE STUDENT.—The term ‘eligible 
student’ means a student who— 
‘‘(A) is a covered individual, as such term 
is defined in section 3311(b) of title 38, United 
States Code; 
‘‘(B) is enrolled at an institution of higher 
education that— 
‘‘(i) is not a public institution of high-
er education; and 
‘‘(ii) is located in a State with a zero, 
or very low, maximum tuition charge per 
credit hour compared to the maximum tui-
tion charge per credit hour in all other 
States, as determined by the Secretary of 
Veterans Affairs (based on the determina-
tions of maximum tuition charged per 
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credit hour in each State for the purposes 
of chapter 33 of title 38, United States 
Code); and 
‘‘(C) is eligible for educational assistance 
for an academic year, and will receive an 
amount of such assistance for such year for fees 
charged the individual that is less than the 
maximum amount of such assistance available 
for fees charged for such year in such State. 
‘‘(2) EDUCATIONAL
ASSISTANCE.—The term 
‘educational assistance’ means the amount of edu-
cational assistance from the Secretary of Veterans 
Affairs an eligible student receives or will receive 
under section 3313(c)(1)(A) of title 38, United 
States Code, or a similar amount of such assistance 
under paragraphs (2) through (7) of such section 
3313(c). 
‘‘(c) GRANT AMOUNT.—A grant to an eligible student 
under this section be equal to an amount that is— 
‘‘(1) the maximum amount of educational as-
sistance for fees charged that the eligible student 
would receive, in accordance with section 3313(c) of 
title 38, United States Code, if such student at-
tended the public institution of higher education in 
the State in which the eligible student is enrolled 
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that has the highest fees charged to an individual 
for a year in such State (as determined by the Sec-
retary of Veterans Affairs for the purposes of chap-
ter 33 of such title 38), less 
‘‘(2) the educational assistance the eligible stu-
dent will receive, in accordance with such section, for 
fees charged to the student for such year at the in-
stitution of higher education at which the student is 
enrolled. 
‘‘(d) USES OF FUNDS.—An eligible student who re-
ceives a grant under this section shall use such grant to 
pay tuition incurred by the student for a program of edu-
cation at an institution of higher education. 
‘‘(e) NOTIFICATION.—The Secretary, in coordination 
with Secretary of Veterans Affairs, shall establish a sys-
tem of notification to ensure the timely delivery to each 
eligible student of— 
‘‘(1) educational assistance received by the stu-
dent; and 
‘‘(2) grants awarded to the student under this 
section. 
‘‘(f) AUTHORIZATION AND APPROPRIATION.—There 
are authorized to be appropriated, and there are appro-
priated, such sums as may be necessary to carry out this 
section (in addition to any other amounts appropriated to 
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carry out this section and out of any money in the Treas-
ury not otherwise appropriated).’’. 
(b) CONFORMING AMENDMENT.—The header for 
subpart 1 of part A of title IV (20 U.S.C. 1070a et seq.) 
is amended by inserting ‘‘; Veterans Educational 
Equity 
Supplemental 
Grants’’ 
after 
‘‘Pell 
Grants’’. 
Subtitle B—Student Financial Aid 
Form Simplification 
SEC. 121. GENERAL EFFECTIVE DATE. 
Except as otherwise provided in this subtitle, amend-
ments made by this subtitle shall be effective with respect 
to determinations of need for assistance under title IV of 
the Higher Education Act of 1965 (20 U.S.C. 1070 et 
seq.) for award years beginning on or after July 1, 2011. 
SEC. 122. TREATMENT OF ASSETS IN NEED ANALYSIS. 
(a) AMOUNT OF NEED.—Section 471 (20 U.S.C. 
1087kk) is amended— 
(1) by striking ‘‘Except’’ and inserting the fol-
lowing: 
‘‘(a) IN GENERAL.—Except’’; 
(2) by inserting ‘‘and subject to subsection (b)’’ 
after ‘‘therein’’; and 
(3) by adding at the end the following: 
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‘‘(b) ASSET CAP FOR NEED-BASED AID.—Notwith-
standing any other provision of this title, a student shall 
not be eligible to receive a Federal Pell Grant, a Federal 
Direct Stafford Loan, or work assistance under this title 
if— 
‘‘(1) in the case of a dependent student, the 
combined net assets of the student and the student’s 
parents are equal to an amount greater than 
$150,000 (or a successor amount prescribed by the 
Secretary under section 478(c)); or 
‘‘(2) in the case of an independent student, the 
net assets of the student (and the student’s spouse, 
if applicable) are equal to an amount greater than 
$150,000 (or a successor amount prescribed by the 
Secretary under section 478(c)).’’. 
(b) DATA ELEMENTS.—Section 474(b) (20 U.S.C. 
1087nn(b)) is amended— 
(1) by striking paragraph (4); and 
(2) by redesignating paragraphs (5), (6), and 
(7) as paragraphs (4), (5), and (6), respectively. 
(c) DEPENDENT
STUDENTS.—Section 475 (20 
U.S.C. 1087oo) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1)— 
(i) by striking ‘‘adjusted’’; and 
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(ii) by inserting ‘‘and’’ after the semi-
colon; 
(B) in paragraph (2), by striking ‘‘; and’’ 
and inserting a period; and 
(C) by striking paragraph (3); 
(2) in subsection (b)— 
(A) in the header, by striking ‘‘AD-
JUSTED’’; 
(B) in the matter preceding paragraph (1), 
by striking ‘‘adjusted’’; 
(C) by striking paragraph (1); 
(D) by redesignating paragraphs (2) and 
(3) as paragraphs (1) and (2), respectively; 
(E) in paragraph (1) (as redesignated by 
subparagraph (D) of this paragraph), by strik-
ing ‘‘adjusted’’; and 
(F) in paragraph (2) (as redesignated by 
subparagraph (D) of this paragraph), by strik-
ing ‘‘paragraph (2)’’ and inserting ‘‘paragraph 
(1)’’; 
(3) by repealing subsection (d); 
(4) in subsection (e)— 
(A) by striking ‘‘The adjusted available’’ 
and inserting ‘‘The available’’; 
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(B) by striking ‘‘to as ‘AAI’)’’ and insert-
ing ‘‘to as ‘AI’)’’; 
(C) by striking ‘‘From Adjusted Available 
Income (AAI)’’ and inserting ‘‘From Available 
Income (AI)’’; and 
(D) in the table— 
(i) by striking ‘‘If AAI’’ and inserting 
‘‘If AI’’; and 
(ii) by striking ‘‘of AAI’’ each place it 
appears and inserting ‘‘of AI’’; 
(5) in subsection (f)— 
(A) by striking ‘‘and assets’’ each place it 
appears; 
(B) in paragraph (2)(B), by striking ‘‘or 
assets’’; and 
(C) in paragraph (3)— 
(i) by striking ‘‘are taken into’’ and 
inserting ‘‘is taken into’’; and 
(ii) by striking ‘‘adjusted’’; 
(6) in subsection (g)(6), by striking ‘‘exceeds 
the sum of’’ and all that follows and inserting ‘‘ex-
ceeds the parents’ total income (as defined in section 
480)’’; 
(7) by repealing subsection (h); and 
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(8) in subsection (i), by striking ‘‘adjusted’’ 
each place it appears. 
(d) FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS
WITHOUT
DEPENDENTS
OTHER
THAN
A 
SPOUSE.—Section 476 (20 U.S.C. 1087pp) is amended— 
(1) in subsection (a)— 
(A) by striking paragraph (1); 
(B) by redesignating paragraphs (2) and 
(3) as paragraphs (1) and (2), respectively; 
(C) in paragraph (1) (as redesignated by 
subparagraph (B)), by striking ‘‘the sum result-
ing under paragraph (1)’’ and inserting ‘‘the 
family’s contribution from available income (de-
termined in accordance with subsection (b))’’; 
and 
(D) in paragraph (2)(A) (as redesignated 
by subparagraph (B)), by striking ‘‘paragraph 
(2)’’ and inserting ‘‘paragraph (1)’’; 
(2) by repealing subsection (c); and 
(3) in subsection (d)— 
(A) by striking ‘‘and assets’’; and 
(B) by striking ‘‘or assets’’. 
(e) FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS WITH DEPENDENTS OTHER THAN A SPOUSE.— 
Section 477 (20 U.S.C. 1087qq) is amended— 
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(1) in subsection (a)— 
(A) by striking paragraph (1); 
(B) by redesignating paragraphs (2), (3), 
and (4) as paragraphs (1), (2), and (3), respec-
tively; 
(C) in paragraph (1) (as redesignated by 
subparagraph (B)), by striking ‘‘such adjusted 
available income’’ and inserting ‘‘the family’s 
available income (determined in accordance with 
subsection (b))’’; 
(D) in paragraph (2) (as redesignated by 
subparagraph (B)), by striking ‘‘paragraph (2)’’ 
and inserting ‘‘paragraph (1)’’; and 
(E) in paragraph (3)(A) (as redesignated 
by subparagraph (B)), by striking ‘‘paragraph 
(3)’’ and inserting ‘‘paragraph (2)’’; 
(2) by repealing subsection (c); and 
(3) in subsection (d)— 
(A) by striking ‘‘The adjusted available’’ 
and inserting ‘‘The available’’; 
(B) by striking ‘‘to as ‘AAI’)’’ and insert-
ing ‘‘to as ‘AI’)’’; 
(C) by striking ‘‘From Adjusted Available 
Income (AAI)’’ and inserting ‘‘From Available 
Income (AI)’’; and 
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(D) in the table— 
(i) by striking ‘‘If AAI’’ and inserting 
‘‘If AI’’; and 
(ii) by striking ‘‘of AAI’’ each place it 
appears and inserting ‘‘of AI’’; and 
(E) in subsection (e)— 
(i) by striking ‘‘and assets’’; and 
(ii) by striking ‘‘or assets’’. 
(f) REGULATIONS; UPDATED TABLES.—Section 478 
(20 U.S.C. 1087rr) is amended— 
(1) in subsection (a), by inserting ‘‘or amounts, 
as the case may be,’’ after ‘‘tables’’ each place the 
term appears; 
(2) by amending subsection (c) to read as fol-
lows: 
‘‘(c) ASSET CAP FOR NEED-BASED AID.—For each 
award year after award year 2011–2012, the Secretary 
shall publish in the Federal Register a revised net asset 
cap for the purposes of section 471(b). Such revised cap 
shall be determined by increasing the dollar amount in 
such section by a percentage equal to the estimated per-
centage change in the Consumer Price Index (as deter-
mined by the Secretary) between December 2010 and the 
December preceding the beginning of such award year, 
and rounding the result to the nearest $5.’’; 
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(3) by adding at the end the following: 
‘‘(D) an employee pension benefit plan (as 
defined in section 3(2) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1002(2))).’’. 
(c) FINANCIAL ADMINISTRATOR DISCRETION.—Sec-
tion 479A(b) (20 U.S.C. 1087tt) is amended in the sub-
section heading, by striking ‘‘TO ASSETS’’. 
(d) SUSPENSION
OF ELIGIBILITY
FOR DRUG-RE-
LATED
OFFENSES.—Section 
484(r)(1) 
(20 
U.S.C. 
1091(r)(1)) is amended to read as follows: 
‘‘(1) IN GENERAL.—A student who is convicted 
of any offense under any Federal or State law in-
volving the sale of a controlled substance for conduct 
that occurred during a period of enrollment for 
which the student was receiving any grant, loan, or 
work assistance under this title shall not be eligible 
to receive any grant, loan, or work assistance under 
this title from the date of that conviction for the pe-
riod of time specified in the following subpara-
graphs: 
‘‘(A) For a first offense, the period of in-
eligibility shall be 2 years. 
‘‘(B) For a second offense, the period of 
ineligibility shall be indefinite.’’. 
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2152 
TITLE II—STUDENT LOAN 
REFORM 
Subtitle A—Stafford Loan Reform 
SEC. 201. FEDERAL FAMILY EDUCATION LOAN APPROPRIA-
TIONS. 
Section 421 (20 U.S.C. 1071) is amended— 
(1) in subsection (b), in the matter following 
paragraph (6), by inserting ‘‘, except that no sums 
may be expended after June 30, 2010, with respect 
to loans under this part for which the first disburse-
ment would be made after such date’’ after ‘‘ex-
pended’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(d) TERMINATION OF AUTHORITY TO MAKE OR IN-
SURE NEW LOANS.—Notwithstanding paragraphs (1) 
through (6) of subsection (b) or any other provision of 
law— 
‘‘(1) no new loans (including consolidation 
loans) may be made or insured under this part after 
June 30, 2010; and 
‘‘(2) no funds are authorized to be appro-
priated, or may be expended, under this Act or any 
other Act to make or insure loans under this part 
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(including consolidation loans) for which the first 
disbursement would be made after June 30, 2010, 
except as expressly authorized by an Act of Congress en-
acted after the date of enactment of Student Aid and Fis-
cal Responsibility Act of 2009.’’. 
SEC. 202. SCOPE AND DURATION OF FEDERAL LOAN INSUR-
ANCE PROGRAM. 
Section 424(a) (20 U.S.C. 1074(a)) is amended by 
striking ‘‘September 30, 1976,’’ and all that follows and 
inserting ‘‘September 30, 1976, for each of the succeeding 
fiscal years ending prior to October 1, 2009, and for the 
period from October 1, 2009, to June 30, 2010, for loans 
first disbursed on or before June 30, 2010.’’. 
SEC. 203. APPLICABLE INTEREST RATES. 
Section 427A(l) (20 U.S.C. 1077a(l)) is amended— 
(1) in paragraph (1), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘July 1, 2006,’’; 
(2) in paragraph (2), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘July 1, 2006,’’; 
(3) in paragraph (3), by inserting ‘‘and that 
was disbursed before July 1, 2010,’’ after ‘‘July 1, 
2006,’’; and 
(4) in paragraph (4)— 
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(A) in the matter preceding subparagraph 
(A), by striking ‘‘July 1, 2012’’ and inserting 
‘‘July 1, 2010’’; and 
(B) by repealing subparagraphs (D) and 
(E). 
SEC. 204. FEDERAL PAYMENTS TO REDUCE STUDENT IN-
TEREST COSTS. 
(a) HIGHER EDUCATION ACT OF 1965.—Section 428 
(20 U.S.C. 1078) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1), in the matter pre-
ceding subparagraph (A), by inserting ‘‘for 
which the first disbursement is made before 
July 1, 2010, and’’ after ‘‘eligible institution’’; 
and 
(B) in paragraph (5), by striking ‘‘Sep-
tember 30, 2014,’’ and all that follows through 
the period and inserting ‘‘June 30, 2010.’’; 
(2) in subsection (b)(1)— 
(A) in subparagraph (G)(ii), by inserting 
‘‘and before July 1, 2010,’’ after ‘‘July 1, 
2006,’’; and 
(B) in subparagraph (H)(ii), by inserting 
‘‘and that are first disbursed before July 1, 
2010,’’ after ‘‘July 1, 2006,’’; 
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(3) in subsection (f)(1)(A)(ii)— 
(A) by striking ‘‘during fiscal years begin-
ning’’; and 
(B) by inserting ‘‘and first disbursed be-
fore July 1, 2010,’’ after ‘‘October 1, 2003,’’; 
and 
(4) in subsection (j)(1), by inserting ‘‘, before 
July 1, 2010,’’ after ‘‘section 435(d)(1)(D) of this 
Act shall’’. 
(b) COLLEGE COST REDUCTION AND ACCESS ACT.— 
Section 303 of the College Cost Reduction and Access Act 
(Public Law 110–84) is repealed. 
SEC. 205. FEDERAL PLUS LOANS. 
Section 428B(a)(1) (20 U.S.C. 1078–2(a)(1)) is 
amended by striking ‘‘A graduate’’ and inserting ‘‘Prior 
to July 1, 2010, a graduate’’. 
SEC. 206. FEDERAL CONSOLIDATION LOAN. 
(a) AMENDMENTS.—Section 428C (20 U.S.C. 1078– 
3) is amended— 
(1) in subsection (a)— 
(A) by amending paragraph (3)(B)(i)(V) to 
read as follows: 
‘‘(V) an individual who has a consoli-
dation loan under this section and does not 
have a consolidation loan under section 
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455(g) may obtain a subsequent consolida-
tion loan under section 455(g).’’; and 
(B) in paragraph (4)(A), by inserting ‘‘, 
and first disbursed before July 1, 2010’’ after 
‘‘under this part’’; 
(2) in subsection (b)— 
(A) in paragraph (1)(E), by inserting be-
fore the semicolon ‘‘, and before July 1, 2010’’; 
and 
(B) in paragraph (5), by striking ‘‘In the 
event that’’ and inserting ‘‘If, before July 1, 
2010,’’; 
(3) in subsection (c)(1)— 
(A) in subparagraph (A)(ii), by inserting 
‘‘and that is disbursed before July 1, 2010,’’ 
after ‘‘2006,’’; and 
(B) in subparagraph (C), by inserting 
‘‘and first disbursed before July 1, 2010,’’ after 
‘‘1994,’’; and 
(4) in subsection (e), by striking ‘‘September 
30, 2014.’’ and inserting ‘‘June 30, 2010. No loan 
may be made under this section for which the first 
disbursement would be on or after July 1, 2010.’’. 
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2157 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a)(1)(A) shall be effective at the close of June 
30, 2010. 
SEC. 207. UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE- 
INCOME BORROWERS. 
Section 428H (20 U.S.C. 1078–8) is amended— 
(1) in subsection (a), by inserting ‘‘that are 
first disbursed before July 1, 2010,’’ after ‘‘under 
this part’’; 
(2) in subsection (b)— 
(A) by striking ‘‘Any student’’ and insert-
ing ‘‘Prior to July 1, 2010, any student’’; and 
(B) by inserting ‘‘for which the first dis-
bursement is made before such date’’ after ‘‘un-
subsidized Federal Stafford Loan’’; and 
(3) in subsection (h), by inserting ‘‘and that are 
first disbursed before July 1, 2010,’’ after ‘‘July 1, 
2006,’’. 
SEC. 208. LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE 
ATTORNEYS. 
Section 
428L(b)(2)(A) 
(20 
U.S.C. 
1078– 
12(b)(2)(A)) is amended— 
(1) by amending clause (i) to read as follows: 
‘‘(i) subject to clause (ii)— 
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‘‘(I) a loan made, insured, or 
guaranteed under this part, and that 
is first disbursed before July 1, 2010; 
or 
‘‘(II) a loan made under part D 
or part E; and’’; and 
(2) in clause (ii)— 
(A) by striking ‘‘428C or 455(g)’’ and in-
serting ‘‘428C, that is disbursed before July 1, 
2010, or section 455(g)’’; and 
(B) in subclause (II), by inserting ‘‘for 
which the first disbursement is made before 
July 1, 2010,’’ after ‘‘or 428H’’. 
SEC. 209. SPECIAL ALLOWANCES. 
Section 438 (20 U.S.C. 1087–1) is amended— 
(1) in subsection (b)(2)(I)— 
(A) in the header, by inserting ‘‘, AND BE-
FORE JULY 1, 2010’’ after ‘‘2000’’; 
(B) in clause (i), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘2000,’’; 
(C) in clause (ii)(II), by inserting ‘‘and be-
fore July 1, 2010,’’ after ‘‘2006,’’; 
(D) in clause (iii), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘2000,’’; 
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(E) in clause (iv), by inserting ‘‘and that 
is disbursed before July 1, 2010,’’ after 
‘‘2000,’’; 
(F) in clause (v)(I), by inserting ‘‘and be-
fore July 1, 2010,’’ after ‘‘2006,’’; and 
(G) in clause (vi)— 
(i) in the header, by inserting ‘‘, AND 
BEFORE JULY 1, 2010’’ after ‘‘2007’’; and 
(ii) in the matter preceding subclause 
(I), by inserting ‘‘and before July 1, 
2010,’’ after ‘‘2007,’’; 
(2) in subsection (c)— 
(A) in paragraph (2)(B)— 
(i) in clause (iii), by inserting ‘‘and’’ 
after the semicolon; 
(ii) in clause (iv), by striking ‘‘; and’’ 
and inserting a period; and 
(iii) by striking clause (v); and 
(B) in paragraph (6), by inserting ‘‘and 
first disbursed before July 1, 2010,’’ after 
‘‘1992,’’; and 
(3) in subsection (d)(2)(B), by inserting ‘‘, and 
before July 1, 2010’’ after ‘‘2007’’. 
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2160 
SEC. 210. REVISED SPECIAL ALLOWANCE CALCULATION. 
(a) 
REVISED
CALCULATION
RULE.—Section 
438(b)(2)(I) of the Higher Education Act of 1965 (20 
U.S.C. 1087–1(b)(2)(I)) is amended by adding at the end 
the following new clause: 
‘‘(vii) REVISED
CALCULATION
RULE 
TO REFLECT FINANCIAL MARKET CONDI-
TIONS.— 
‘‘(I) CALCULATION
BASED
ON 
LIBOR.—For the calendar quarter be-
ginning on October 1, 2009, and each 
subsequent calendar quarter, in com-
puting the special allowance paid pur-
suant to this subsection with respect 
to loans described in subclause (II), 
clause (i)(I) of this subparagraph 
shall be applied by substituting ‘of the 
1-month London Inter Bank Offered 
Rate (LIBOR) for United States dol-
lars in effect for each of the days in 
such quarter as compiled and released 
by the British Bankers Association’ 
for ‘of the quotes of the 3-month com-
mercial paper (financial) rates in ef-
fect for each of the days in such quar-
ter as reported by the Federal Reserve 
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2161 
in Publication H–15 (or its successor) 
for such 3-month period’. 
‘‘(II) 
LOANS
ELIGIBLE
FOR 
LIBOR-BASED
CALCULATION.—The 
special allowance paid pursuant to 
this subsection shall be calculated as 
described in subclause (I) with respect 
to special allowance payments for the 
3-month period ending December 31, 
2009, and each succeeding 3-month 
period, on loans for which the first 
disbursement is made— 
‘‘(aa) on or after the date of 
enactment of the Student Aid 
and Fiscal Responsibility Act of 
2009, and before July 1, 2010; 
and 
‘‘(bb) on or after January 1, 
2000, and before the date of en-
actment of the Student Aid and 
Fiscal 
Responsibility 
Act 
of 
2009, if, not later than the last 
day of the second full fiscal quar-
ter after the date of enactment of 
such Act, the holder of the loan 
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2162 
affirmatively 
and 
permanently 
waives all contractual, statutory 
or other legal rights to a special 
allowance paid pursuant to this 
subsection 
that 
is 
calculated 
using the formula in effect at the 
time the loans were first dis-
bursed. 
‘‘(III) TERMS
OF
WAIVER.—A 
waiver pursuant to subclause (II)(bb) 
shall— 
‘‘(aa) be applicable to all 
loans described in such subclause 
that are held under any lender 
identification number associated 
with the holder (pursuant to sec-
tion 487B); and 
‘‘(bb) apply with respect to 
all future calculations of the spe-
cial allowance on loans described 
in such subclause that are held 
on the date of such waiver or 
that are acquired by the holder 
after such date. 
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2163 
‘‘(IV) PARTICIPANT’S
YIELD.— 
For the calendar quarter beginning on 
October 1, 2009, and each subsequent 
calendar quarter, the Secretary’s par-
ticipant yield in any loan for which 
the first disbursement is made on or 
after January 1, 2000, and before Oc-
tober 1, 2009, and that is held by a 
lender that has sold any participation 
interest in such loan to the Secretary 
shall be determined by using the 
LIBOR-based rate described in sub-
clause (I) as the substitute rate (for 
the commercial paper rate) referred to 
in the participation agreement be-
tween the Secretary and such lend-
er.’’; 
(b) 
CONFORMING
AMENDMENT.—Section 
438(b)(2)(I) (20 U.S.C. 1087–1(b)(2)(I)) is further 
amended— 
(1) in clause (i)(II), by striking ‘‘such average 
bond equivalent rate’’ and inserting ‘‘the rate deter-
mined under subclause (I)’’; and 
(2) in clause (v)(III) by striking ‘‘(iv), and (vi)’’ 
and inserting ‘‘(iv), (vi), and (vii)’’. 
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2164 
SEC. 211. ORIGINATION OF DIRECT LOANS AT INSTITU-
TIONS 
LOCATED 
OUTSIDE 
THE 
UNITED 
STATES. 
(a) LOANS
FOR STUDENTS ATTENDING INSTITU-
TIONS LOCATED OUTSIDE THE UNITED STATES.—Sec-
tion 452 (20 U.S.C. 1087b) is amended by adding at the 
end the following: 
‘‘(d) INSTITUTIONS LOCATED OUTSIDE THE UNITED 
STATES.—Loan funds for students (and parents of stu-
dents) attending institutions located outside the United 
States shall be disbursed through a financial institution 
located in the United States and designated by the Sec-
retary to serve as the agent of such institutions with re-
spect to the receipt of the disbursements of such loan 
funds and the transfer of such funds to such institutions. 
To be eligible to receive funds under this part, an other-
wise eligible institution located outside the United States 
shall make arrangements, subject to regulations by the 
Secretary, with the agent designated by the Secretary 
under this subsection to receive funds under this part.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) AMENDMENTS.—Section 102 (20 U.S.C. 
1002), as amended by section 102 of the Higher 
Education Opportunity Act (Public Law 110–315) 
and section 101 of Public Law 111–39, is amend-
ed— 
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(A) by striking ‘‘part B’’ each place it ap-
pears and inserting ‘‘part D’’; 
(B) in subsection (a)(1)(C), by inserting ‘‘, 
consistent with the requirements of section 
452(d)’’ before the period at the end; and 
(C) in subsection (a)(2)(A)— 
(i) in the matter preceding clause (i), 
by striking ‘‘made, insured, or guaranteed’’ 
and inserting ‘‘made’’; and 
(ii) in clause (iii)— 
(I) in subclause (III), by striking 
‘‘only Federal Stafford’’ and all that 
follows through ‘‘section 428B’’ and 
inserting ‘‘only Federal Direct Staf-
ford 
Loans 
under 
section 
455(a)(2)(A), Federal Direct Unsub-
sidized Stafford Loans under section 
455(a)(2)(D), 
or 
Federal 
Direct 
PLUS 
Loans 
under 
section 
455(a)(2)(B)’’; and 
(II) in subclause (V), by striking 
‘‘a Federal Stafford’’ and all that fol-
lows through ‘‘section 428B’’ and in-
serting ‘‘a Federal Direct Stafford 
Loan under section 455(a)(2)(A), a 
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Federal Direct Unsubsidized Stafford 
Loan under section 455(a)(2)(D), or a 
Federal Direct PLUS Loan under 
section 455(a)(2)(B)’’. 
(2) EFFECTIVE DATE.—The amendments made 
by subparagraph (C) of paragraph (1) shall be effec-
tive on July 1, 2010, as if enacted as part of section 
102(a)(1) of the Higher Education Opportunity Act 
(Public Law 110–315). 
SEC. 212. AGREEMENTS WITH INSTITUTIONS. 
Section 454 (20 U.S.C. 1087d) is amended— 
(1) in subsection (a), by striking paragraph (4) 
and redesignating the succeeding paragraphs accord-
ingly; and 
(2) in subsection (b)(2), by striking ‘‘(5), (6), 
and (7)’’ and inserting ‘‘(5), and (6)’’. 
SEC. 213. TERMS AND CONDITIONS OF LOANS. 
(a) AMENDMENTS.—Section 455 (20 U.S.C. 1087e) 
is amended— 
(1) in subsection (a)(1), by inserting ‘‘, and 
first disbursed on June 30, 2010,’’ before ‘‘under 
sections 428’’; and 
(2) in subsection (g)— 
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(A) by inserting ‘‘, including any loan 
made under part B and first disbursed before 
July 1, 2010’’ after ‘‘section 428C(a)(4)’’; and 
(B) by striking the third sentence. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a)(1) shall apply with respect to loans first dis-
bursed under part D of title IV of the Higher Education 
Act of 1965 (20 U.S.C. 1087a et seq.) on or after July 
1, 2010. 
SEC. 214. CONTRACTS. 
Section 456 (20 U.S.C. 1087f) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1)— 
(i) in the header, by striking ‘‘IN 
GENERAL’’ and inserting ‘‘AWARDING OF 
CONTRACTS’’; 
(ii) by striking ‘‘The Secretary’’ and 
inserting the following: 
‘‘(A) IN GENERAL.—The Secretary’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(B) AWARDING
CONTRACTS
FOR
SERV-
ICING
LOANS.—The Secretary shall, if prac-
ticable, award multiple contracts, through a 
competitive bidding process, to entities, includ-
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ing eligible not-for-profit servicers, to service 
loans originated under this part. The competi-
tive bidding process shall take into account 
price, servicing capacity, and capability, and 
may take into account the capacity and capa-
bility to provide default aversion activities and 
outreach services. 
‘‘(C) JOB
RETENTION
INCENTIVE
PAY-
MENT.—(i) In a contract with an entity under 
subparagraph (B) for the servicing of loans, the 
Secretary shall provide a job retention incentive 
payment, in an amount and manner determined 
by the Secretary, if such entity agrees to give 
priority for hiring for positions created as a re-
sult of such a contract to those geographical lo-
cations at which the entity performed student 
loan origination or servicing activities under the 
Federal Family Education Loan Program as of 
the date of enactment of the Student Aid and 
Fiscal Responsibility Act of 2009. 
‘‘(ii) In determining the allocation of loans 
to be serviced by an entity awarded such a con-
tract, the Secretary shall consider the retention 
of highly qualified employees of such entity a 
positive factor in determining such allocation.’’; 
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(B) in paragraph (2)— 
(i) in the first sentence, by inserting 
‘‘, 
including 
eligible 
not-for-profit 
servicers,’’ after ‘‘The entities’’; 
(ii) by amending the third sentence to 
read as follows: ‘‘The entities with which 
the Secretary may enter into such con-
tracts shall include, where practicable, 
agencies with agreements with the Sec-
retary under sections 428(b) and (c) on 
the date of the enactment of the Student 
Aid and Fiscal Responsibility Act of 2009, 
and eligible not-for-profit servicers, if such 
agencies or servicers meet the qualifica-
tions as determined by the Secretary under 
this subsection and if those agencies or 
servicers have such experience and dem-
onstrated effectiveness.’’; and 
(iii) by striking the last sentence and 
inserting the following: ‘‘In awarding con-
tracts to such State agencies, and such eli-
gible not-for-profit servicers, the Secretary 
shall, to the extent practicable and con-
sistent with the purposes of this part, give 
special consideration to State agencies and 
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such servicers with a history of high qual-
ity performance and demonstrated integ-
rity in conducting operations with institu-
tions of higher education and the Sec-
retary.’’; 
(C) by redesignating paragraph (3) as 
paragraph (4), and by inserting in such para-
graph ‘‘, or of any eligible not-for-profit servicer 
to enter into an agreement for the purposes of 
this section as a member of a consortium of 
such entities’’ before the period at the end; and 
(D) by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) SERVICING BY ELIGIBLE NOT-FOR-PROFIT 
SERVICERS.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this section, in each State 
where one or more eligible not-for-profit 
servicer has its principal place of business, the 
Secretary shall contract with each such servicer 
to service loans originated under this part on 
behalf of borrowers attending institutions lo-
cated within such State, provided that the 
servicer demonstrates that it meets the stand-
ards for servicing Federal assets and providing 
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quality service and agrees to service the loans 
at a competitive market rate, as determined by 
the Secretary. In determining such a competi-
tive market rate, the Secretary may take into 
account the volume of loans serviced by the 
servicer. Contracts awarded under this para-
graph shall be subject to the same requirements 
for quality, performance, and accountability as 
contracts awarded under paragraph (2) for 
similar activities. 
‘‘(B) 
ALLOCATIONS.—(i) 
ONE 
SERVICER.—In the case of a State with only 
one eligible not-for-profit servicer with a con-
tract described in subparagraph (A), the Sec-
retary shall, at a minimum, allocate to such 
servicer, on an annual basis and subject to such 
contract, the servicing rights for the lesser of— 
‘‘(I) the loans of 100,000 borrowers 
(including borrowers who borrowed loans 
in a prior year that were serviced by the 
servicer) attending institutions located 
within the State; or 
‘‘(II) the loans of all the borrowers at-
tending institutions located within the 
State. 
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‘‘(ii) MULTIPLE SERVICERS.—In the case 
of a State with more than one eligible not-for- 
profit servicer with a contract described in sub-
paragraph (A), the Secretary shall, at a min-
imum, allocate to each such servicer, on an an-
nual basis and subject to such contract, the 
servicing rights for the lesser of— 
‘‘(I) the loans of 100,000 borrowers 
(including borrowers who borrowed loans 
in a prior year that were serviced by the 
servicer) attending institutions located 
within the State; or 
‘‘(II) an equal share of the loans of all 
borrowers attending institutions located 
within the State, except the Secretary shall 
adjust such shares as necessary to ensure 
that the loans of any single borrower re-
main with a single servicer. 
‘‘(iii) ADDITIONAL ALLOCATION.—The Sec-
retary may allocate additional servicing rights 
to an eligible not-for-profit servicer based on 
the performance of such servicer, as determined 
by the Secretary, including performance in the 
areas of customer service and default aversion. 
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‘‘(C) MULTIPLE LOANS.—Notwithstanding 
the allocations required by subparagraph (B), 
the Secretary may transfer loans among 
servicers who are awarded contracts to service 
loans pursuant to this section to ensure that 
the loans of any single borrower remain with a 
single servicer.’’; and 
(2) by adding at the end the following: 
‘‘(c) REPORT TO CONGRESS.—Not later than 3 years 
after the date of the enactment of the Student Aid and 
Fiscal Responsibility Act of 2009, the Secretary shall pre-
pare and submit to the authorizing committees, a report 
evaluating the performance of all eligible not-for-profit 
servicers awarded a contract under this section to service 
loans originated under this part. Such report shall give 
consideration to— 
‘‘(1) customer satisfaction of borrowers and in-
stitutions with respect to the loan servicing provided 
by the servicers; 
‘‘(2) compliance with applicable regulations by 
the servicers; and 
‘‘(3) the effectiveness of default aversion activi-
ties, and outreach services (if any), provided by the 
servicers. 
‘‘(d) DEFINITIONS.—In this section: 
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‘‘(1) DEFAULT
AVERSION
ACTIVITIES.—The 
term ‘default aversion activities’ means activities 
that are directly related to providing collection as-
sistance to the Secretary on a delinquent loan, prior 
to the loan being legally in a default status, includ-
ing due diligence activities required pursuant to reg-
ulations. 
‘‘(2) ELIGIBLE NOT-FOR-PROFIT SERVICER.— 
‘‘(A) IN GENERAL.—The term ‘eligible not- 
for-profit servicer’ means an entity that, on the 
date of enactment of the Student Aid and Fis-
cal Responsibility Act of 2009— 
‘‘(i) meets the definition of an eligible 
not-for-profit holder under section 435(p), 
except that such term does not include eli-
gible 
lenders 
described 
in 
paragraph 
(1)(D) of such section; 
‘‘(ii) notwithstanding clause (i), is the 
sole beneficial owner of a loan for which 
the special allowance rate is calculated 
under section 438(b)(2)(I)(vi)(II) because 
the loan is held by an eligible lender trust-
ee that is an eligible not-for-profit holder 
as defined under section 435(p)(1)(D); or 
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‘‘(iii) is an affiliated entity of an eligi-
ble not-for-profit servicer described in 
clause (i) or (ii) that— 
‘‘(I) directly employs, or will di-
rectly employ (on or before the date 
the entity begins servicing loans under 
a contract awarded by the Secretary 
pursuant to subsection (a)(3)(A)), the 
majority of individuals who perform 
student loan servicing functions; and 
‘‘(II) on such date of enactment, 
was performing, or had entered into a 
contract with a third party servicer 
(as such term is defined in section 
481(c)) who was performing, student 
loan servicing functions for loans 
made under part B of this title. 
‘‘(B) AFFILIATED ENTITY.—For the pur-
poses of subparagraph (A), the term ‘affiliated 
entity’ means an entity contracted to perform 
services for an eligible not-for-profit servicer 
that— 
‘‘(i) is a nonprofit entity or is wholly 
owned by a nonprofit entity; and 
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‘‘(ii) is not owned or controlled, in 
whole or in part, by— 
‘‘(I) a for-profit entity; or 
‘‘(II) an entity having its prin-
cipal place of business in another 
State. 
‘‘(3) OUTREACH
SERVICES.—The term ‘out-
reach services’ means programs offered to students 
and families, including programs delivered in coordi-
nation with institutions of higher education that— 
‘‘(A) encourage— 
‘‘(i) students to attend and complete a 
degree or certification program at an insti-
tution of higher education; and 
‘‘(ii) students and families to obtain 
financial aid, but minimize the borrowing 
of education loans; and 
‘‘(B) deliver financial literacy and coun-
seling tools.’’. 
SEC. 215. INTEREST RATES. 
Section 455(b)(7) (20 U.S.C. 1087e(b)(7)) is amend-
ed by adding at the end the following new subparagraph: 
‘‘(E) 
REDUCED
RATES
FOR
UNDER-
GRADUATE
FDSL
ON
AND
AFTER
JULY
1, 
2012.—Notwithstanding the preceding para-
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graphs of this subsection and subparagraph (A) 
of this paragraph, for Federal Direct Stafford 
Loans made to undergraduate students for 
which the first disbursement is made on or 
after July 1, 2012, the applicable rate of inter-
est shall, during any 12-month period beginning 
on July 1 and ending on June 30, be deter-
mined on the preceding June 1 and be equal 
to— 
‘‘(i) the bond equivalent rate of 91- 
day Treasury bills auctioned at the final 
auction held prior to such June 1; plus 
‘‘(ii) 2.5 percent, 
except that such rate shall not exceed 6.8 per-
cent.’’. 
Subtitle B—Perkins Loan Reform 
SEC. 221. FEDERAL DIRECT PERKINS LOANS TERMS AND 
CONDITIONS. 
Part D of title IV (20 U.S.C. 1087a et seq.) is 
amended by inserting after section 455 the following new 
section: 
‘‘SEC. 455A. FEDERAL DIRECT PERKINS LOANS. 
‘‘(a) DESIGNATION OF LOANS.—Loans made to bor-
rowers under this section shall be known as ‘Federal Di-
rect Perkins Loans’. 
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‘‘(b) IN GENERAL.—It is the purpose of this section 
to authorize loans to be awarded by institutions of higher 
education through agreements established under section 
463(f). Unless otherwise specified in this section, all terms 
and conditions and other requirements applicable to Fed-
eral Direct Unsubsidized Stafford loans established under 
section 455(a)(2)(D) shall apply to loans made pursuant 
to this section. 
‘‘(c) ELIGIBLE BORROWERS.—Any student meeting 
the requirements for student eligibility under section 
464(b) (including graduate and professional students as 
defined in regulations promulgated by the Secretary) shall 
be eligible to borrow a Federal Direct Perkins Loan, pro-
vided the student attends an eligible institution with an 
agreement with the Secretary under section 463(f), and 
the institution uses its authority under that agreement to 
award the student a loan. 
‘‘(d) LOAN LIMITS.—The annual and aggregate lim-
its for loans under this section shall be the same as those 
established under section 464, and aggregate limits shall 
include loans made by institutions under agreements 
under section 463(a). 
‘‘(e) APPLICABLE
RATES
OF
INTEREST.—Loans 
made pursuant to this section shall bear interest, on the 
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unpaid balance of the loan, at the rate of 5 percent per 
year.’’. 
SEC. 222. AUTHORIZATION OF APPROPRIATIONS. 
Section 461 (20 U.S.C. 1087aa) is amended— 
(1) in subsection (a), by inserting ‘‘, before July 
1, 2010,’’ after ‘‘The Secretary shall’’; 
(2) in subsection (b)— 
(A) in paragraph (1)— 
(i) by striking ‘‘(1) For the purpose’’ 
and inserting ‘‘For the purpose’’; and 
(ii) by striking ‘‘and for each of the 
five succeeding fiscal years’’; and 
(B) by striking paragraph (2); and 
(3) by striking subsection (c). 
SEC. 223. ALLOCATION OF FUNDS. 
Section 462 (20 U.S.C. 1087bb) is amended— 
(1) in subsection (a)(1), by striking ‘‘From’’ 
and inserting ‘‘For any fiscal year before fiscal year 
2010, from’’; and 
(2) in subsection (i)(1), by striking ‘‘for any fis-
cal year,’’ and inserting ‘‘for any fiscal year before 
fiscal year 2010,’’. 
SEC. 224. FEDERAL DIRECT PERKINS LOAN ALLOCATION. 
Part E of title IV is further amended by inserting 
after section 462 (20 U.S.C. 1087bb) the following: 
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‘‘SEC. 462A. FEDERAL DIRECT PERKINS LOAN ALLOCATION. 
‘‘(a) PURPOSES.—The purposes of this section are— 
‘‘(1) to allocate, among eligible and partici-
pating institutions (as such terms are defined in this 
section), the authority to make Federal Direct Per-
kins Loans under section 455A with a portion of the 
annual loan authority described in subsection (b); 
and 
‘‘(2) to make funds available, in accordance 
with section 452, to each participating institution 
from a portion of the annual loan authority de-
scribed in subsection (b), in an amount not to exceed 
the sum of an institution’s allocation of funds under 
subparagraphs (A), (B), and (C) of subsection (b)(1) 
to enable each such institution to make Federal Di-
rect Perkins Loans to eligible students at the insti-
tution. 
‘‘(b) AVAILABLE DIRECT PERKINS ANNUAL LOAN 
AUTHORITY.— 
‘‘(1) AVAILABILITY AND ALLOCATIONS.—There 
are hereby made available, from funds made avail-
able for loans made under part D, not to exceed 
$6,000,000,000 of annual loan authority for award 
year 2010–2011 and each succeeding award year, to 
be allocated as follows: 
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‘‘(A) The Secretary shall allocate not more 
than 1⁄2 of such funds for each award year by 
allocating to each participating institution an 
amount equal to the adjusted self-help need 
amount of the institution, as determined in ac-
cordance with subsection (c) for such award 
year. 
‘‘(B) The Secretary shall allocate not more 
than 1⁄4 of such funds for each award year by 
allocating to each participating institution an 
amount equal to the low tuition incentive 
amount of the institution, as determined in ac-
cordance with subsection (d). 
‘‘(C) The Secretary shall allocate not more 
than 1⁄4 of such funds for each award year by 
allocating to each participating institution an 
amount which bears the same ratio to the funds 
allocated under this subparagraph as the ratio 
determined in accordance with subsection (e) 
for the calculation of the Federal Pell Grant 
and degree recipient amount of the institution. 
‘‘(2) NO FUNDS TO NON-PARTICIPATING INSTI-
TUTIONS.—The Secretary shall not make funds 
available under this subsection to any eligible insti-
tution that is not a participating institution. The ad-
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justed self-help need amount (determined in accord-
ance with subsection (c)) of an eligible institution 
that is not a participating institution shall not be 
made available to any other institution. 
‘‘(c) ADJUSTED SELF-HELP NEED AMOUNT.—For 
the purposes of subsection (b)(1)(A), the Secretary shall 
calculate the adjusted self-help need amount of each eligi-
ble institution for an award year as follows: 
‘‘(1) 
USE
OF
BASE
SELF-HELP
NEED 
AMOUNTS.— 
‘‘(A) IN GENERAL.—Except as provided in 
paragraphs (2), (3), and (4), the adjusted self- 
help need amount of each eligible institution 
shall be the institution’s base self-help need 
amount, which is the sum of— 
‘‘(i) the self-help need of the institu-
tion’s eligible undergraduate students for 
such award year; and 
‘‘(ii) the self-help need of the institu-
tion’s eligible graduate and professional 
students for such award year. 
‘‘(B) UNDERGRADUATE
STUDENT
SELF- 
HELP NEED.—To determine the self-help need 
of an institution’s eligible undergraduate stu-
dents, the Secretary shall determine the sum of 
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‘‘(A) for each institution for which the 
minimum amount under paragraph (3) is not 
satisfied, increase the adjusted self-help need 
amount to the amount of the required minimum 
under such subparagraph; and 
‘‘(B) ratably reduce the adjusted self-help 
need amounts of all eligible institutions not de-
scribed in subparagraph (A) until the sum of 
the adjusted self-help need amounts of all eligi-
ble institutions is equal to the amount that is 
1⁄2 of the annual loan authority under sub-
section (b). 
‘‘(d) LOW TUITION INCENTIVE AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(b)(1)(B), the Secretary shall determine the low tui-
tion incentive amount for each participating institu-
tion for each award year, by calculating for each 
such institution the sum of— 
‘‘(A) the total amount, if any (but not less 
than zero), by which— 
‘‘(i) the average tuition and required 
fees for the institution’s sector for the sec-
ond preceding award year; exceeds 
‘‘(ii) the tuition and required fees for 
the second preceding award year for each 
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undergraduate and graduate student at-
tending the institution who had financial 
need (as determined under part F); plus 
‘‘(B) the total amount, if any (but not less 
than zero), by which— 
‘‘(i) the total amount for the second 
preceding award year of non-Federal grant 
aid provided to meet the financial need of 
all undergraduate students attending the 
institution (as determined without regard 
to financial aid not received under this 
title); exceeds 
‘‘(ii) the total amount for the second 
preceding award year, if any, by which— 
‘‘(I) the tuition and required fees 
of each such student with such finan-
cial need; exceeds 
‘‘(II) the average tuition and re-
quired fees for the institution’s sector. 
‘‘(2) RATABLE REDUCTION.—If the sum of the 
low tuition incentive amounts of all participating in-
stitutions for an award year as determined under 
paragraph (1) exceeds 1⁄4 of the annual loan author-
ity under subsection (b) for such award year, the 
Secretary shall ratably reduce the low tuition incen-
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tive amounts of all participating institutions until 
the sum of such amounts is equal to the amount 
that is 1⁄4 of the annual loan authority under sub-
section (b). 
‘‘(e) FEDERAL PELL GRANT AND DEGREE RECIPI-
ENT AMOUNT.—For purposes of subsection (b)(1)(C), the 
Secretary shall determine the Federal Pell Grant and de-
gree recipient amount for each participating institution for 
each award year, by calculating for each such institution 
the ratio of— 
‘‘(1) the number of students who, during the 
most recent year for which data are available, ob-
tained an associate’s degree or other postsecondary 
degree from such participating institution and, prior 
to obtaining such degree, received a Federal Pell 
Grant for attendance at any institution of higher 
education; to 
‘‘(2) the sum of the number of students who, 
during the most recent year for which data are 
available, obtained an associate’s degree or other 
postsecondary degree from each participating insti-
tution and, prior to obtaining such degree, received 
a Federal Pell Grant for attendance at any institu-
tion of higher education. 
‘‘(f) DEFINITIONS.—As used in this section: 
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‘‘(1) ANNUAL
LOAN
AUTHORITY.—The term 
‘annual loan authority’ means the total original prin-
cipal amount of loans that may be allocated and 
made available for an award year to make Federal 
Direct Perkins Loans under section 455A. 
‘‘(2) AVERAGE COST OF ATTENDANCE.— 
‘‘(A) IN
GENERAL.—The term ‘average 
cost of attendance’ means the average of the at-
tendance costs for undergraduate students and 
for graduate and professional students, respec-
tively, for the second preceding award year 
which shall include— 
‘‘(i) tuition and required fees deter-
mined in accordance with subparagraph 
(B); 
‘‘(ii) standard living expenses deter-
mined in accordance with subparagraph 
(C); and 
‘‘(iii) books and supplies determined 
in accordance with subparagraph (D). 
‘‘(B) TUITION AND REQUIRED FEES.—The 
average undergraduate and graduate and pro-
fessional tuition and required fees described in 
subparagraph (A)(i) shall be computed on the 
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basis of information reported by the institution 
to the Secretary, which shall include— 
‘‘(i) total revenue received by the in-
stitution from undergraduate and graduate 
and professional students, respectively, for 
tuition and required fees for the second 
preceding award year; and 
‘‘(ii) the institution’s full-time equiva-
lent enrollment of undergraduate and 
graduate and professional students, respec-
tively, for such second preceding award 
year. 
‘‘(C) STANDARD LIVING EXPENSES.—The 
standard living expense described in subpara-
graph (A)(ii) is equal to the allowance, deter-
mined by an institution, for room and board 
costs incurred by a student, as computed in ac-
cordance with part F for the second preceding 
award year. 
‘‘(D) BOOKS AND SUPPLIES.—The allow-
ance for books and supplies described in sub-
paragraph (A)(iii) is equal to the allowance, de-
termined by an institution, for books, supplies, 
transportation, and miscellaneous personal ex-
penses, including a reasonable allowance for the 
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documented rental or purchase of a personal 
computer, as computed in accordance with part 
F for the second preceding award year. 
‘‘(3) AVERAGE TUITION AND REQUIRED FEES 
FOR THE INSTITUTION’S SECTOR.—The term ‘aver-
age tuition and required fees for the institution’s 
sector’ shall be determined by the Secretary for each 
of the categories described in section 132(d). 
‘‘(4) ELIGIBLE INSTITUTION.—The term ‘eligi-
ble institution’ means an institution of higher edu-
cation that participates in the Federal Direct Staf-
ford Loan Program. 
‘‘(5) PARTICIPATING INSTITUTION.—The term 
‘participating institution’ means an institution of 
higher education that has an agreement under sec-
tion 463(f). 
‘‘(6) SECTOR.—The term ‘sector’ means each of 
the categories described in section 132(d).’’. 
SEC. 225. AGREEMENTS WITH INSTITUTIONS OF HIGHER 
EDUCATION. 
(a) AMENDMENTS.—Section 463 (20 U.S.C. 1087cc) 
is amended— 
(1) in subsection (a)— 
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(A) in the heading, by inserting ‘‘FOR 
LOANS MADE BEFORE JULY 1, 2010’’ after 
‘‘AGREEMENTS’’; 
(B) in paragraph (3)(A), by inserting ‘‘be-
fore July 1, 2010’’ after ‘‘students’’; 
(C) in paragraph (4), by striking ‘‘there-
on—’’ and all that follows and inserting ‘‘there-
on, if the institution has failed to maintain an 
acceptable collection record with respect to such 
loan, as determined by the Secretary in accord-
ance with criteria established by regulation, the 
Secretary may require the institution to assign 
such note or agreement to the Secretary, with-
out recompense;’’; and 
(D) in paragraph (5), by striking ‘‘and the 
Secretary shall apportion’’ and all that follows 
through ‘‘in accordance with section 462’’ and 
inserting ‘‘and the Secretary shall return a por-
tion of funds from loan repayments to the insti-
tution as specified in section 466(b)’’; 
(2) by amending subsection (b) to read as fol-
lows: 
‘‘(b) ADMINISTRATIVE EXPENSES.—An institution 
that has entered into an agreement under subsection (a) 
shall be entitled, for each fiscal year during which it serv-
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ices student loans from a student loan fund established 
under such agreement, to a payment in lieu of reimburse-
ment for its expenses in servicing student loans made be-
fore July 1, 2010. Such payment shall be equal to 0.50 
percent of the outstanding principal and interest balance 
of such loans being serviced by the institution as of Sep-
tember 30 of each fiscal year.’’; and 
(3) by adding at the end the following: 
‘‘(f) CONTENTS OF AGREEMENTS FOR LOANS MADE 
ON OR AFTER JULY 1, 2010.—An agreement with any 
institution of higher education that elects to participate 
in the Federal Direct Perkins Loan program under section 
455A shall provide— 
‘‘(1) for the establishment and maintenance of 
a Direct Perkins Loan program at the institution 
under which the institution shall use loan authority 
allocated under section 462A to make loans to eligi-
ble students attending the institution; 
‘‘(2) that the institution, unless otherwise speci-
fied in this subsection, shall operate the program 
consistent with the requirements of agreements es-
tablished under section 454; 
‘‘(3) that the institution will pay matching 
funds, quarterly, in an amount agreed to by the in-
stitution and the Secretary, to an escrow account 
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approved by the Secretary, for the purpose of pro-
viding loan benefits to borrowers; 
‘‘(4) that if the institution fails to meet the re-
quirements of paragraph (3), the Secretary shall 
suspend or terminate the institution’s eligibility to 
make Federal Direct Perkins Loans under section 
455A until such time as the Secretary determines, 
in accordance with section 498, that the institution 
has met the requirements of such paragraph; and 
‘‘(5) that if the institution ceases to be an eligi-
ble institution within the meaning of section 435(a) 
by reason of having a cohort default rate that ex-
ceeds the threshold percentage specified paragraph 
(2) of such section, the Secretary shall suspend or 
terminate the institution’s eligibility to make Fed-
eral Direct Perkins Loans under section 455A un-
less and until the institution would qualify for a re-
sumption of eligible institution status under such 
section.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
paragraph (2) of subsection (a) shall take effect on Octo-
ber 1, 2010. 
SEC. 226. STUDENT LOAN INFORMATION BY ELIGIBLE IN-
STITUTIONS. 
Section 463A (20 U.S.C. 1087cc–1) is amended— 
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(1) in subsection (a), by striking ‘‘Each institu-
tion’’ and inserting ‘‘For loans made before July 1, 
2010, each institution’’; and 
(2) in subsection (b), by striking ‘‘Each institu-
tion’’ and inserting ‘‘For loans made before July 1, 
2010, each institution’’. 
SEC. 227. TERMS OF LOANS. 
(a) Section 464 (20 U.S.C. 1087dd) is amended— 
(1) in subsection (a)(1), by striking ‘‘section 
463’’ and inserting ‘‘section 463(a)’’; 
(2) in subsection (b)(1), by inserting ‘‘made be-
fore July 1, 2010,’’ after ‘‘A loan’’; 
(3) in subsection (c)— 
(A) in paragraph (1), by inserting ‘‘made 
before July 1, 2010,’’ after ‘‘a loan’’; 
(B) in paragraph (2)— 
(i) in subparagraph (A), by inserting 
‘‘made before July 1, 2010,’’ after ‘‘any 
loan’’; and 
(ii) in subparagraph (B), by inserting 
‘‘made before July 1, 2010,’’ after ‘‘any 
loan’’; 
(C) in paragraph (3)(B), by inserting ‘‘for 
a loan made before July 1, 2010,’’ after ‘‘dur-
ing the repayment period’’; 
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(D) in paragraph (4), by inserting ‘‘before 
July 1, 2010,’’ after ‘‘for a loan made’’; 
(E) in paragraph (5), by striking ‘‘The in-
stitution’’ and inserting ‘‘For loans made before 
July 1, 2010, the institution’’; and 
(F) in paragraph (6), by inserting ‘‘made 
before July 1, 2010,’’ after ‘‘of loans’’; 
(4) in subsection (d), by inserting ‘‘made before 
July 1, 2010,’’ before ‘‘from the student loan fund’’; 
(5) in subsection (e), by inserting ‘‘with respect 
to loans made before July 1, 2010, and’’ before ‘‘as 
documented in accordance with paragraph (2),’’; 
(6) by repealing subsection (f); 
(7) in subsection (g)(1), by inserting ‘‘and be-
fore July 1, 2010,’’ after ‘‘January 1, 1986,’’; 
(8) in subsection (h)— 
(A) in paragraph (1)(A) by inserting ‘‘be-
fore July 1, 2010,’’ after ‘‘made under this 
part’’; and 
(B) in paragraph (2), by inserting ‘‘before 
July 1, 2010,’’ after ‘‘under this part’’; and 
(9) in subsection (j)(1), by inserting ‘‘before 
July 1, 2010,’’ after ‘‘under this part’’. 
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SEC. 228. DISTRIBUTION OF ASSETS FROM STUDENT LOAN 
FUNDS. 
(a) Section 465 (20 U.S.C. 1087ee) is amended— 
(1) in subsection (a), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘June 30, 1972,’’; and 
(2) by amending subsection (b) to read as fol-
lows: 
‘‘(b) REIMBURSEMENT FOR CANCELLATIONS.— 
‘‘(1) ASSIGNED LOANS.—In the case of loans 
made under this part before July 1, 2010, and that 
are assigned to the Secretary, the Secretary shall, 
from amounts repaid each quarter on assigned Per-
kins Loans made before July 1, 2010, pay to each 
institution for each quarter an amount equal to— 
‘‘(A) the aggregate of the amounts of loans 
from its student loan fund that are canceled 
pursuant to this section for such quarter, minus 
‘‘(B) an amount equal to the aggregate of 
the amounts of any such loans so canceled that 
were made from Federal capital contributions 
to its student loan fund. 
‘‘(2) RETAINED LOANS.—In the case of loans 
made under this part before July 1, 2010, and that 
are retained by the institution for servicing, the in-
stitution shall deduct from loan repayments owed to 
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the Secretary under section 466, an amount equal 
to— 
‘‘(A) the aggregate of the amounts of loans 
from its student loan fund that are canceled 
pursuant to this section for such quarter, minus 
‘‘(B) an amount equal to the aggregate of 
the amounts of any such loans so canceled that 
were made from Federal capital contributions 
to its student loan fund.’’. 
(b) Section 466 (20 U.S.C. 1087ff) is amended to 
read as follows: 
‘‘SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN 
FUNDS. 
‘‘(a) CAPITAL DISTRIBUTION.—Beginning July 1, 
2010, there shall be a capital distribution of the balance 
of the student loan fund established under this part by 
each institution of higher education as follows: 
‘‘(1) For the quarter beginning July 1, 2010, 
the Secretary shall first be paid, no later than Sep-
tember 30, 2010, an amount that bears the same 
ratio to the cash balance in such fund at the close 
of June 30, 2010, as the total amount of the Fed-
eral capital contributions to such fund by the Sec-
retary under this part bears to— 
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‘‘(A) the sum of such Federal contribu-
tions and the institution’s capital contributions 
to such fund, less 
‘‘(B) an amount equal to— 
‘‘(i) the institution’s outstanding ad-
ministrative costs as calculated under sec-
tion 463(b), 
‘‘(ii) outstanding charges assessed 
under section 464(c)(1)(H), and 
‘‘(iii) outstanding loan cancellation 
costs incurred under section 465. 
‘‘(2) At the end of each quarter subsequent to 
the quarter ending September 30, 2010, the Sec-
retary shall first be paid an amount that bears the 
same ratio to the cash balance in such fund at the 
close of the preceding quarter, as the total amount 
of the Federal capital contributions to such fund by 
the Secretary under this part bears to— 
‘‘(A) the sum of such Federal contribu-
tions and the institution’s capital contributions 
to such fund, less 
‘‘(B) an amount equal to— 
‘‘(i) the institution’s administrative 
costs incurred for that quarter as cal-
culated under section 463(b), 
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‘‘(ii) charges assessed for that quarter 
under section 464(c)(1)(H), and 
‘‘(iii) loan cancellation costs incurred 
for that quarter under section 465. 
‘‘(3)(A) The Secretary shall calculate the 
amounts due to the Secretary under paragraph (1) 
(adjusted in accordance with subparagraph (B), as 
appropriate) and paragraph (2) and shall promptly 
inform the institution of such calculated amounts. 
‘‘(B) In the event that, prior to the date of en-
actment of the Student Aid and Fiscal Responsi-
bility Act of 2009, an institution made a short-term, 
interest-free loan to the institution’s student loan 
fund established under this part in anticipation of 
collections or receipt of Federal capital contribu-
tions, and the institution demonstrates to the Sec-
retary, on or before June 30, 2010, that such loan 
will still be outstanding after June 30, 2010, the 
Secretary shall subtract the amount of such out-
standing loan from the cash balance of the institu-
tion’s student loan fund that is used to calculate the 
amount due to the Secretary under paragraph (1). 
An adjustment of an amount due to the Secretary 
under this subparagraph shall be made by the Sec-
retary on a case-by-case basis. 
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‘‘(4) Any remaining balance at the end of a 
quarter after a payment under paragraph (1) or (2) 
shall be retained by the institution for use at its dis-
cretion. Any balance so retained shall be withdrawn 
from the student loan fund and shall not be counted 
in calculating amounts owed to the Secretary for 
subsequent quarters. 
‘‘(5) Each institution shall make the quarterly 
payments to the Secretary described in paragraph 
(2) until all outstanding Federal Perkins Loans at 
that institution have been assigned to the Secretary 
and there are no funds remaining in the institution’s 
student loan fund. 
‘‘(6) In the event that the institution’s adminis-
trative costs, charges, and cancellation costs de-
scribed in paragraph (2) for a quarter exceed the 
amount owed to the Secretary under paragraphs (1) 
and (2) for that quarter, no payment shall be due 
to the Secretary from the institution for that quarter 
and the Secretary shall pay the institution, from 
funds realized from the collection of assigned Fed-
eral Perkins Loans made before July 1, 2010, an 
amount that, when combined with the amount re-
tained by the institution under paragraphs (1) and 
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(2), equals the full amount of such administrative 
costs, charges, and cancellation costs. 
‘‘(b) ASSIGNMENT OF OUTSTANDING LOANS.—Be-
ginning July 1, 2010, an institution of higher education 
may assign all outstanding loans made under this part be-
fore July 1, 2010, to the Secretary, consistent with the 
requirements of section 463(a)(5). In collecting loans so 
assigned, the Secretary shall pay an institution an amount 
that constitutes the same fraction of such collections as 
the fraction of the cash balance that the institution retains 
under subsection (a)(2), but determining such fraction 
without regard to subparagraph (B)(i) of such sub-
section.’’. 
SEC. 229. IMPLEMENTATION OF NON-TITLE IV REVENUE 
REQUIREMENT. 
(a) AMENDMENTS.—Section 487(d) (20 U.S.C. 
1094(d)) is amended— 
(1) in paragraph (1)(E), by striking ‘‘July 1, 
2011’’ and inserting ‘‘July 1, 2012’’; 
(2) in paragraph (1)(F)— 
(A) by redesignating clauses (iii), (iv), and 
(v) as clauses (iv), (v), and (vi), respectively; 
and 
(B) by inserting after clause (ii) the fol-
lowing new clause: 
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‘‘(iii) for the period beginning July 1, 
2010, and ending July 1, 2012, the 
amount of funds the institution received 
from 
loans 
disbursed 
under 
section 
455A;’’;. 
(3) in paragraph (2)(A), by striking ‘‘two con-
secutive’’ and inserting ‘‘three consecutive’’; and 
(4) in paragraph (2)(B)— 
(A) by striking ‘‘any institutional fiscal 
year’’ and inserting ‘‘two consecutive institu-
tional fiscal years’’; 
(B) by striking ‘‘the two institutional fiscal 
years after the institutional fiscal year’’ and in-
serting ‘‘the institutional fiscal year after the 
second consecutive institutional fiscal year’’; 
and 
(C) by striking ‘‘two consecutive’’ in clause 
(ii) of such paragraph and inserting ‘‘three con-
secutive’’. 
(b) TEMPORARY EFFECT.—The amendments made 
by paragraphs (3) and (4) of subsection (a)— 
(1) shall take effect on the date of enactment 
of this Act; and 
(2) shall cease to be effective on July 1, 2012. 
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SEC. 230. ADMINISTRATIVE EXPENSES. 
Section 489(a) (20 U.S.C. 1096(a)) is amended— 
(1) in the second sentence, by striking ‘‘or 
under part E of this title’’; and 
(2) in the third sentence— 
(A) by inserting ‘‘and’’ after ‘‘subpart 3 of 
part A,’’; and 
(B) by striking ‘‘compensation of stu-
dents,’’ and all that follows through the period 
and inserting ‘‘compensation of students.’’. 
TITLE III—MODERNIZATION, 
RENOVATION, AND REPAIR 
Subtitle A—Elementary and 
Secondary Education 
SEC. 301. DEFINITIONS. 
In this subtitle: 
(1) The term ‘‘Bureau-funded school’’ has the 
meaning given such term in section 1141 of the 
Education Amendments of 1978 (25 U.S.C. 2021). 
(2) The term ‘‘charter school’’ has the meaning 
given such term in section 5210 of the Elementary 
and Secondary Education Act of 1965 (20 U.S.C. 
7221i). 
(3) The term ‘‘CHPS Criteria’’ means the 
green building rating program developed by the Col-
laborative for High Performance Schools. 
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(4) The term ‘‘Energy Star’’ means the Energy 
Star program of the United States Department of 
Energy and the United States Environmental Pro-
tection Agency. 
(5) The term ‘‘Green Globes’’ means the Green 
Building Initiative environmental design and rating 
system referred to as Green Globes. 
(6) The term ‘‘LEED Green Building Rating 
System’’ means the United States Green Building 
Council Leadership in Energy and Environmental 
Design green building rating standard referred to as 
LEED Green Building Rating System. 
(7) The term ‘‘local educational agency’’— 
(A) has the meaning given such term in 
section 9101 of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7801); 
(B) includes any public charter school that 
constitutes a local educational agency under 
State law; and 
(C) includes the Recovery School District 
of Louisiana. 
(8) The term ‘‘outlying area’’— 
(A) means the United States Virgin Is-
lands, Guam, American Samoa, and the Com-
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monwealth of the Northern Mariana Islands; 
and 
(B) includes the Republic of Palau. 
(9) The term ‘‘public school facilities’’ means 
existing public elementary or secondary school facili-
ties, including public charter school facilities and 
other existing facilities planned for adaptive reuse as 
public charter school facilities. 
(10) The term ‘‘Secretary’’ means the Secretary 
of Education. 
(11) The term ‘‘State’’ means each of the 50 
States, the District of Columbia, and the Common-
wealth of Puerto Rico. 
CHAPTER 1—GRANTS FOR MODERNIZA-
TION, RENOVATION, OR REPAIR OF 
PUBLIC SCHOOL FACILITIES 
SEC. 311. PURPOSE. 
Grants under this chapter shall be for the purpose 
of modernizing, renovating, or repairing public school fa-
cilities (including early learning facilities, as appropriate), 
based on the need of the facilities for such improvements, 
to ensure that public school facilities are safe, healthy, 
high-performing, and technologically up-to-date. 
SEC. 312. ALLOCATION OF FUNDS. 
(a) RESERVATION.— 
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(1) IN
GENERAL.—From the amount appro-
priated to carry out this chapter for each fiscal year 
pursuant to section 345(a), the Secretary shall re-
serve 2 percent of such amount, consistent with the 
purpose described in section 311— 
(A) to provide assistance to the outlying 
areas; and 
(B) for payments to the Secretary of the 
Interior to provide assistance to Bureau-funded 
schools. 
(2) USE OF RESERVED FUNDS.—In each fiscal 
year, the amount reserved under paragraph (1) shall 
be divided between the uses described in subpara-
graphs (A) and (B) of such paragraph in the same 
proportion as the amount reserved under section 
1121(a) of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 6331(a)) is divided 
between the uses described in paragraphs (1) and 
(2) of such section 1121(a) in such fiscal year. 
(3) DISTRESSED AREAS AND NATURAL DISAS-
TERS.—From the amount appropriated to carry out 
this chapter for each fiscal year pursuant to section 
345(a), the Secretary shall reserve 5 percent of such 
amount for grants to— 
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(A) local educational agencies serving geo-
graphic areas with significant economic distress, 
to be used consistent with the purpose de-
scribed in section 311 and the allowable uses of 
funds described in section 313; and 
(B) local educational agencies serving geo-
graphic areas recovering from a natural dis-
aster, to be used consistent with the purpose 
described in section 321 and the allowable uses 
of funds described in section 323. 
(b) ALLOCATION TO STATES.— 
(1) STATE-BY-STATE
ALLOCATION.—Of the 
amount appropriated to carry out this chapter for 
each fiscal year pursuant to section 345(a), and not 
reserved under subsection (a), each State shall be al-
located an amount in proportion to the amount re-
ceived by all local educational agencies in the State 
under part A of title I of the Elementary and Sec-
ondary Education Act of 1965 (20 U.S.C. 6311 et 
seq.) for the previous fiscal year relative to the total 
amount received by all local educational agencies in 
every State under such part for such fiscal year. 
(2) STATE ADMINISTRATION.—A State may re-
serve up to 1 percent of its allocation under para-
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graph (1) to carry out its responsibilities under this 
chapter, which include— 
(A) providing technical assistance to local 
educational agencies; 
(B) developing an online, publicly search-
able database that includes an inventory of pub-
lic school facilities in the State, including for 
each such facility, its design, condition, mod-
ernization, renovation and repair needs, utiliza-
tion, energy use, and carbon footprint; and 
(C) creating voluntary guidelines for high- 
performing school buildings, including guide-
lines concerning the following: 
(i) Site location, storm water manage-
ment, outdoor surfaces, outdoor lighting, 
and transportation, including public transit 
and pedestrian and bicycle accessability. 
(ii) Outdoor water systems, land-
scaping to minimize water use, including 
elimination of irrigation systems for land-
scaping, and indoor water use reduction. 
(iii) Energy efficiency (including min-
imum and superior standards, such as for 
heating, ventilation, and air conditioning 
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systems), use of alternative energy sources, 
commissioning, and training. 
(iv) Use of durable, sustainable mate-
rials and waste reduction. 
(v) Indoor environmental quality, such 
as day lighting in classrooms, lighting 
quality, indoor air quality (including with 
reference to reducing the incidence and ef-
fects of asthma and other respiratory ill-
nesses), acoustics, and thermal comfort. 
(vi) Operations and management, 
such as use of energy-efficient equipment, 
indoor environmental management plan, 
maintenance plan, and pest management. 
(3) GRANTS
TO
LOCAL
EDUCATIONAL
AGEN-
CIES.—From the amount allocated to a State under 
paragraph (1), each eligible local educational agency 
in the State shall receive an amount in proportion 
to the amount received by such local educational 
agency under part A of title I of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 6311 
et seq.) for the previous fiscal year relative to the 
total amount received by all local educational agen-
cies in the State under such part for such fiscal 
year, except that no local educational agency that re-
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ceived funds under such part for such fiscal year 
shall receive a grant of less than $5,000 in any fiscal 
year under this chapter. 
(4) SPECIAL RULE.—Section 1122(c)(3) of the 
Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6332(c)(3)) shall not apply to paragraph 
(1) or (3). 
(c) SPECIAL RULES.— 
(1) DISTRIBUTIONS BY SECRETARY.—The Sec-
retary shall make and distribute the reservations 
and allocations described in subsections (a) and (b) 
not later than 120 days after an appropriation of 
funds for this chapter is made. 
(2) DISTRIBUTIONS BY STATES.—A State shall 
make and distribute the allocations described in sub-
section (b)(3) within 90 days of receiving such funds 
from the Secretary. 
SEC. 313. ALLOWABLE USES OF FUNDS. 
A local educational agency receiving a grant under 
this chapter shall use the grant for modernization, renova-
tion, or repair of public school facilities (including early 
learning facilities, as appropriate), including— 
(1) repair, replacement, or installation of roofs, 
including extensive, intensive or semi-intensive green 
roofs, electrical wiring, water supply and plumbing 
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systems, sewage systems, storm water runoff sys-
tems, lighting systems, building envelope, windows, 
ceilings, flooring, or doors, including security doors; 
(2) repair, replacement, or installation of heat-
ing, ventilation, or air conditioning systems, includ-
ing insulation, and conducting indoor air quality as-
sessments; 
(3) compliance with fire, health, seismic, and 
safety codes, including professional installation of 
fire and life safety alarms, and modernizations, ren-
ovations, and repairs that ensure that schools are 
prepared for emergencies, such as improving build-
ing infrastructure to accommodate security measures 
and installing or upgrading technology to ensure 
that schools are able to respond to emergencies such 
as acts of terrorism, campus violence, and natural 
disasters; 
(4) retrofitting necessary to increase the energy 
efficiency and water efficiency of public school facili-
ties; 
(5) modifications necessary to make facilities 
accessible in compliance with the Americans with 
Disabilities Act of 1990 (42 U.S.C. 12101 et seq.) 
and section 504 of the Rehabilitation Act of 1973 
(29 U.S.C. 794); 
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(6) abatement, removal, or interim controls of 
asbestos, polychlorinated biphenyls, mold, mildew, 
lead-based hazards, including lead-based paint haz-
ards, or a proven carcinogen; 
(7) measures designed to reduce or eliminate 
human exposure to classroom noise and environ-
mental noise pollution; 
(8) modernization, renovation, or repair nec-
essary to reduce the consumption of coal, electricity, 
land, natural gas, oil, or water; 
(9) installation or upgrading of educational 
technology infrastructure; 
(10) modernization, renovation, or repair of 
science and engineering laboratories, libraries, and 
career and technical education facilities, and im-
provements to building infrastructure to accommo-
date bicycle and pedestrian access; 
(11) installation or upgrading of renewable en-
ergy generation and heating systems, including 
solar, photovoltaic, wind, biomass (including wood 
pellet and woody biomass), waste-to-energy, and 
solar-thermal and geothermal systems, and for en-
ergy audits; 
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(12) measures designed to reduce or eliminate 
human exposure to airborne particles such as dust, 
sand, and pollens; 
(13) creating greenhouses, gardens (including 
trees), and other facilities for environmental, sci-
entific, or other educational purposes, or to produce 
energy savings; 
(14) modernizing, renovating, or repairing 
physical education facilities for students, including 
upgrading or installing recreational structures made 
from post-consumer recovered materials in accord-
ance with the comprehensive procurement guidelines 
prepared by the Administrator of the Environmental 
Protection Agency under section 6002(e) of the 
Solid Waste Disposal Act (42 U.S.C. 6962(e)); 
(15) other modernization, renovation, or repair 
of public school facilities to— 
(A) improve teachers’ ability to teach and 
students’ ability to learn; 
(B) ensure the health and safety of stu-
dents and staff; 
(C) make them more energy efficient; or 
(D) reduce class size; and 
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(16) required environmental remediation related 
to modernization, renovation, or repair described in 
paragraphs (1) through (15). 
SEC. 314. PRIORITY PROJECTS. 
In selecting a project under section 313, a local edu-
cational agency may give priority to projects involving the 
abatement, removal, or interim controls of asbestos, poly-
chlorinated biphenyls, mold, mildew, lead-based hazards, 
including lead-based paint hazards, or a proven car-
cinogen. 
CHAPTER 
2—SUPPLEMENTAL 
GRANTS 
FOR 
LOUISIANA, 
MISSISSIPPI, 
AND 
ALABAMA 
SEC. 321. PURPOSE. 
Grants under this chapter shall be for the purpose 
of modernizing, renovating, repairing, or constructing 
public school facilities, including, where applicable, early 
learning facilities, based on the need for such improve-
ments or construction, to ensure that public school facili-
ties are safe, healthy, high-performing, and technologically 
up-to-date. 
SEC. 322. ALLOCATION TO LOCAL EDUCATIONAL AGEN-
CIES. 
(a) IN GENERAL.—Of the amount appropriated to 
carry out this chapter for each fiscal year pursuant to sec-
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tion 345(b), the Secretary shall allocate to local edu-
cational agencies in Louisiana, Mississippi, and Alabama 
an amount equal to the infrastructure damage inflicted on 
public school facilities in each such district by Hurricane 
Katrina or Hurricane Rita in 2005 relative to the total 
of such infrastructure damage so inflicted in all such dis-
tricts, combined. 
(b) DISTRIBUTION BY SECRETARY.—The Secretary 
shall determine and distribute the allocations described in 
subsection (a) not later than 120 days after an appropria-
tion of funds for this chapter is made. 
SEC. 323. ALLOWABLE USES OF FUNDS. 
A local educational agency receiving a grant under 
this chapter shall use the grant for one or more of the 
activities described in section 313, except that an agency 
receiving a grant under this chapter also may use the 
grant for the construction of new public school facilities. 
CHAPTER 3—GENERAL PROVISIONS 
SEC. 331. IMPERMISSIBLE USES OF FUNDS. 
No funds received under this subtitle may be used 
for— 
(1) payment of maintenance costs, including 
routine repairs classified as current expenditures 
under State or local law; 
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(2) stadiums or other facilities primarily used 
for athletic contests or exhibitions or other events 
for which admission is charged to the general public; 
(3) improvement or construction of facilities the 
purpose of which is not the education of children, in-
cluding central office administration or operations or 
logistical support facilities; or 
(4) purchasing carbon offsets. 
SEC. 332. SUPPLEMENT, NOT SUPPLANT. 
A local educational agency receiving a grant under 
this subtitle shall use such Federal funds only to supple-
ment and not supplant the amount of funds that would, 
in the absence of such Federal funds, be available for mod-
ernization, renovation, repair, and construction of public 
school facilities. 
SEC. 333. PROHIBITION REGARDING STATE AID. 
A State shall not take into consideration payments 
under this subtitle in determining the eligibility of any 
local educational agency in that State for State aid, or 
the amount of State aid, with respect to free public edu-
cation of children. 
SEC. 334. MAINTENANCE OF EFFORT. 
(a) IN GENERAL.—A local educational agency may 
receive a grant under this subtitle for any fiscal year only 
if either the combined fiscal effort per student or the ag-
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gregate expenditures of the agency and the State involved 
with respect to the provision of free public education by 
the agency for the preceding fiscal year was not less than 
90 percent of the combined fiscal effort or aggregate ex-
penditures for the second preceding fiscal year. 
(b) REDUCTION IN CASE OF FAILURE TO MEET 
MAINTENANCE OF EFFORT REQUIREMENT.— 
(1) IN GENERAL.—The State educational agen-
cy shall reduce the amount of a local educational 
agency’s grant in any fiscal year in the exact propor-
tion by which a local educational agency fails to 
meet the requirement of subsection (a) by falling 
below 90 percent of both the combined fiscal effort 
per student and aggregate expenditures (using the 
measure most favorable to the local agency). 
(2) SPECIAL
RULE.—No such lesser amount 
shall be used for computing the effort required 
under subsection (a) for subsequent years. 
(c) WAIVER.—The Secretary shall waive the require-
ments of this section if the Secretary determines that a 
waiver would be equitable due to— 
(1) exceptional or uncontrollable circumstances, 
such as a natural disaster; or 
(2) a precipitous decline in the financial re-
sources of the local educational agency. 
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SEC. 335. SPECIAL RULE ON CONTRACTING. 
Each local educational agency receiving a grant under 
this subtitle shall ensure that, if the agency carries out 
modernization, renovation, repair, or construction through 
a contract, the process for any such contract ensures the 
maximum number of qualified bidders, including local, 
small, minority, and women- and veteran-owned busi-
nesses, through full and open competition. 
SEC. 336. USE OF AMERICAN IRON, STEEL, AND MANUFAC-
TURED GOODS. 
(a) IN GENERAL.—None of the funds appropriated 
or otherwise made available by this subtitle may be used 
for a project for the modernization, renovation, repair, or 
construction of a public school facility unless all of the 
iron, steel, and manufactured goods used in the project 
are produced in the United States. 
(b) EXCEPTIONS.—Subsection (a) shall not apply in 
any case or category of cases in which the Secretary finds 
that— 
(1) applying subsection (a) would be incon-
sistent with the public interest; 
(2) iron, steel, and the relevant manufactured 
goods are not produced in the United States in suffi-
cient and reasonably available quantities and of a 
satisfactory quality; or 
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(3) inclusion of iron, steel, and manufactured 
goods produced in the United States will increase 
the cost of the overall project by more than 25 per-
cent. 
(c) PUBLICATION OF JUSTIFICATION.—If the Sec-
retary determines that it is necessary to waive the applica-
tion of subsection (a) based on a finding under subsection 
(b), the Secretary shall publish in the Federal Register 
a detailed written justification of the determination. 
(d) CONSTRUCTION.—This section shall be applied in 
a manner consistent with United States obligations under 
international agreements. 
SEC. 337. LABOR STANDARDS. 
The grant programs under this subtitle are applicable 
programs (as that term is defined in section 400 of the 
General Education Provisions Act (20 U.S.C. 1221)) sub-
ject to section 439 of such Act (20 U.S.C. 1232b). 
SEC. 338. CHARTER SCHOOLS. 
(a) IN GENERAL.—A local educational agency receiv-
ing an allocation under this subtitle shall reserve an 
amount of that allocation for charter schools within its ju-
risdiction for modernization, renovation, repair, and con-
struction of charter school facilities. 
(b) DETERMINATION OF RESERVED AMOUNT.—The 
amount to be reserved by a local educational agency under 
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subsection (a) shall be determined based on the combined 
percentage of students counted under section 1113(a)(5) 
of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6313(a)(5)) in the schools of the agency who— 
(1) are enrolled in charter schools; and 
(2) the local educational agency, in consultation 
with the authorized public chartering agency, ex-
pects to be enrolled, during the year with respect to 
which the reservation is made, in charter schools 
that are scheduled to commence operation during 
such year. 
(c) SCHOOL SHARE.—Individual charter schools shall 
receive a share of the amount reserved under subsection 
(a) based on the need of each school for modernization, 
renovation, repair, or construction, as determined by the 
local educational agency in consultation with charter 
school administrators. 
(d) EXCESS FUNDS.—After the consultation de-
scribed in subsection (c), if the local educational agency 
determines that the amount of funds reserved under sub-
section (a) exceeds the modernization, renovation, repair, 
and construction needs of charter schools within the local 
educational agency’s jurisdiction, the agency may use the 
excess funds for other public school facility modernization, 
renovation, repair, or construction consistent with this 
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subtitle and is not required to carry over such funds to 
the following fiscal year for use for charter schools. 
SEC. 339. GREEN SCHOOLS. 
(a) IN GENERAL.—Of the funds appropriated for a 
given fiscal year and made available to a local educational 
agency to carry out this subtitle, the local educational 
agency shall use not less than the applicable percentage 
(described in subsection (b)) of such funds for public 
school modernization, renovation, repair, or construction 
that are certified, verified, or consistent with any applica-
ble provisions of— 
(1) the LEED Green Building Rating System; 
(2) Energy Star; 
(3) the CHPS Criteria; 
(4) Green Globes; or 
(5) an equivalent program adopted by the 
State, or another jurisdiction with authority over the 
local educational agency, that includes a verifiable 
method to demonstrate compliance with such pro-
gram. 
(b) APPLICABLE
PERCENTAGES.—The applicable 
percentage described in subsection (a) is— 
(1) for funds appropriated in fiscal year 2010, 
50 percent; and 
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(2) for funds appropriated in fiscal year 2011, 
75 percent. 
(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to prohibit a local educational 
agency from using sustainable, domestic hardwood lumber 
as ascertained through the forest inventory and analysis 
program of the Forest Service of the Department of Agri-
culture under the Forest and Rangeland Renewable Re-
sources Research Act of 1978 (16 U.S.C. 1641 et seq.) 
for public school modernization, renovation, repairs, or 
construction. 
(d) TECHNICAL ASSISTANCE.—The Secretary, in 
consultation with the Secretary of Energy and the Admin-
istrator of the Environmental Protection Agency, shall 
provide outreach and technical assistance to States and 
local educational agencies concerning the best practices in 
school modernization, renovation, repair, and construc-
tion, including those related to student academic achieve-
ment, student and staff health, energy efficiency, and envi-
ronmental protection. 
SEC. 340. REPORTING. 
(a) REPORTS BY LOCAL EDUCATIONAL AGENCIES.— 
Local educational agencies receiving a grant under this 
subtitle shall annually compile a report describing the 
projects for which such funds were used, including— 
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(1) the number and identity of public schools in 
the agency, including the number of charter schools, 
and for each school, the total number of students, 
and the number of students counted under section 
1113(a)(5) of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 6313(a)(5)); 
(2) the total amount of funds received by the 
local educational agency under this subtitle, and for 
each public school in the agency, including each 
charter school, the amount of such funds expended, 
and the types of modernization, renovation, repair, 
or construction projects for which such funds were 
used; 
(3) the number of students impacted by such 
projects, including the number of students so im-
pacted who are counted under section 1113(a)(5) of 
the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 6313(a)(5)); 
(4) the number of public schools in the agency 
with a metro-centric locale code of 41, 42, or 43 as 
determined by the National Center for Education 
Statistics and the percentage of funds received by 
the agency under chapter 1 or chapter 2 of this sub-
title that were used for projects at such schools; 
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(5) the number of public schools in the agency 
that are eligible for schoolwide programs under sec-
tion 1114 of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 6314) and the per-
centage of funds received by the agency under chap-
ter 1 or chapter 2 of this subtitle that were used for 
projects at such schools; 
(6) for each project— 
(A) the cost; 
(B) the standard described in section 
339(a) with which the use of the funds com-
plied or, if the use of funds did not comply with 
a standard described in section 339(a), the rea-
son such funds were not able to be used in com-
pliance with such standards and the agency’s 
efforts to use such funds in an environmentally 
sound manner; and 
(C) any demonstrable or expected benefits 
as a result of the project (such as energy sav-
ings, improved indoor environmental quality, 
student and staff health, including the reduc-
tion of the incidence and effects of asthma and 
other respiratory illnesses, and improved cli-
mate for teaching and learning); and 
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(7) the total number and amount of contracts 
awarded, and the number and amount of contracts 
awarded to local, small, minority, women, and vet-
eran-owned businesses. 
(b) AVAILABILITY OF REPORTS.—A local educational 
agency shall— 
(1) submit the report described in subsection 
(a) to the State educational agency, which shall com-
pile such information and report it annually to the 
Secretary; and 
(2) make the report described in subsection (a) 
publicly available, including on the agency’s website. 
(c) REPORTS BY SECRETARY.—Not later than March 
31 of each fiscal year, the Secretary shall submit to the 
Committee on Education and Labor of the House of Rep-
resentatives and the Committee on Health, Education, 
Labor and Pensions of the Senate, and make available on 
the Department of Education’s website, a report on grants 
made under this subtitle, including the information from 
the reports described in subsection (b)(1). 
SEC. 341. SPECIAL RULES. 
Notwithstanding any other provision of this subtitle, 
none of the funds authorized by this subtitle may be— 
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(1) used to employ workers in violation of sec-
tion 274A of the Immigration and Nationality Act 
(8 U.S.C. 1324a); or 
(2) distributed to a local educational agency 
that does not have a policy that requires a criminal 
background check on all employees of the agency. 
SEC. 342. PROMOTION OF EMPLOYMENT EXPERIENCES. 
The Secretary of Education, in consultation with the 
Secretary of Labor, shall work with recipients of funds 
under this subtitle to promote appropriate opportunities 
to gain employment experience working on modernization, 
renovation, repair, and construction projects funded under 
this subtitle for— 
(1) participants in a YouthBuild program (as 
defined in section 173A of the Workforce Investment 
Act of 1998 (29 U.S.C. 2918a)); 
(2) individuals enrolled in the Job Corps pro-
gram carried out under subtitle C of title I of the 
Workforce Investment Act of 1998 (29 U.S.C. 2881 
et seq.); 
(3) individuals enrolled in a junior or commu-
nity college (as defined in section 312(f) of the 
Higher Education Act of 1965 (20 U.S.C. 1088(f))) 
certificate or degree program relating to projects de-
scribed in section 339(a); and 
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(4) participants in preapprenticeship programs 
that have direct linkages with apprenticeship pro-
grams that are registered with the Department of 
Labor or a State Apprenticeship Agency under the 
National Apprenticeship Act of 1937 (29 U.S.C. 50 
et seq.). 
SEC. 343. ADVISORY COUNCIL ON GREEN, HIGH-PER-
FORMING PUBLIC SCHOOL FACILITIES. 
(a) ESTABLISHMENT OF ADVISORY COUNCIL.—The 
Secretary shall establish an advisory council to be known 
as the ‘‘Advisory Council on Green, High-Performing Pub-
lic School Facilities’’ (in this section referred to as the 
‘‘Advisory Council’’) which shall be composed of— 
(1) appropriate officials from the Department 
of Education; 
(2) representatives of the academic, architec-
tural, business, education, engineering, environ-
mental, labor, and scientific communities; and 
(3) such other representatives as the Secretary 
deems appropriate. 
(b) DUTIES OF ADVISORY COUNCIL.— 
(1) ADVISORY DUTIES.—The Advisory Council 
shall advise the Secretary on the impact of green, 
high-performing schools, on— 
(A) teaching and learning; 
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(B) health; 
(C) energy costs; 
(D) environmental impact; and 
(E) other areas that the Secretary and the 
Advisory Council deem appropriate. 
(2) OTHER
DUTIES.—The Advisory Council 
shall assist the Secretary in— 
(A) making recommendations on Federal 
policies to increase the number of green, high- 
performing schools; 
(B) identifying Federal policies that are 
barriers to helping States and local educational 
agencies make green, high-performing schools; 
(C) providing technical assistance and out-
reach to States and local educational agencies 
under section 339(d); and 
(D) providing the Secretary such other as-
sistance as the Secretary deems appropriate. 
(c) CONSULTATION.—In carrying out its duties under 
subsection (b), the Advisory Council shall consult with the 
Chair of the Council on Environmental Quality and the 
heads of appropriate Federal agencies, including the Sec-
retary of Commerce, the Secretary of Energy, the Sec-
retary of Health and Human Services, the Secretary of 
Labor, the Administrator of the Environmental Protection 
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Agency, and the Administrator of the General Services 
Administration (through the Office of Federal High-Per-
formance Green Buildings). 
SEC. 344. EDUCATION REGARDING PROJECTS. 
A local educational agency receiving funds under this 
subtitle may encourage schools at which projects are un-
dertaken with such funds to educate students about the 
project, including, as appropriate, the functioning of the 
project and its environmental, energy, sustainability, and 
other benefits. 
SEC. 345. AVAILABILITY OF FUNDS. 
(a) CHAPTER 1.—There are authorized to be appro-
priated, and there are appropriated, to carry out chapter 
1 of this subtitle (in addition to any other amounts appro-
priated to carry out such chapter and out of any money 
in 
the 
Treasury 
not 
otherwise 
appropriated), 
$2,020,000,000 for each of fiscal years 2010 and 2011. 
(b) CHAPTER 2.—There are authorized to be appro-
priated, and there are appropriated, to carry out chapter 
2 of this subtitle (in addition to any other amounts appro-
priated to carry out such chapter and out of any money 
in the Treasury not otherwise appropriated), $30,000,000 
for each of fiscal years 2010 and 2011. 
(c) PROHIBITION ON EARMARKS.—None of the funds 
appropriated under this section may be used for a Con-
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gressional earmark as defined in clause 9(d) of rule XXI 
of the Rules of the House of Representatives. 
Subtitle B—Higher Education 
SEC. 351. FEDERAL ASSISTANCE FOR COMMUNITY COL-
LEGE MODERNIZATION AND CONSTRUCTION. 
(a) IN GENERAL.— 
(1) GRANT
PROGRAM.—From the amounts 
made available under subsection (i), the Secretary 
shall award grants to States for the purposes of con-
structing new community college facilities and mod-
ernizing, renovating, and repairing existing commu-
nity college facilities. Grants awarded under this sec-
tion shall be used by a State for one or more of the 
following: 
(A) To reduce financing costs of loans for 
new construction, modernization, renovation, or 
repair projects at community colleges (such as 
paying interest or points on such loans). 
(B) To provide matching funds for a com-
munity college capital campaign to attract pri-
vate donations of funds for new construction, 
modernization, renovation, or repair projects at 
the community college. 
(C) To capitalize a revolving loan fund to 
finance new construction, modernization, ren-
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ovation, and repair projects at community col-
leges. 
(2) ALLOCATION.— 
(A) 
DETERMINATION
OF
AVAILABLE 
AMOUNT.—The Secretary shall determine the 
amount available for allocation to each State by 
determining the amount equal to the total num-
ber of students in the State who are enrolled in 
community colleges and who are pursuing a de-
gree or certificate that is not a bachelor’s, mas-
ter’s, professional, or other advanced degree, 
relative to the total number of such students in 
all States, combined. 
(B) ALLOCATION.—The Secretary shall al-
locate to each State selected by the Secretary to 
receive a grant under this section an amount 
equal to the amount determined to be available 
for allocation to such State under subparagraph 
(A), less any portion of that amount that is 
subject to a limitation under paragraph (3). 
(C) REALLOCATION.—Amounts not allo-
cated under this section to a State because— 
(i) the State did not submit an appli-
cation under subsection (b); 
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(ii) the State submitted an application 
that the Secretary determined did not meet 
the requirements of such subsection; or 
(iii) the State is subject to a limita-
tion under paragraph (3) that prevents the 
State from using a portion of the alloca-
tion, 
shall be proportionately reallocated under this 
paragraph to the States that are not described 
in clause (i), (ii), or (iii) of this subparagraph. 
(3) GRANT
AMOUNT
LIMITATIONS.—A grant 
awarded to a State under this section— 
(A) to reduce financing costs of loans for 
new construction, modernization, renovation, or 
repair projects at community colleges under 
paragraph (1)(A) shall be for an amount that 
is not more than 25 percent of the total prin-
cipal amount of the loans for which financing 
costs are being reduced; and 
(B) to provide matching funds for a com-
munity college capital campaign under para-
graph (1)(B) shall be for an amount that is not 
more than 25 percent of the total amount of 
the private donations of funds raised through 
such campaign over the duration of such cam-
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paign, as such duration is determined by the 
State in the application submitted under sub-
section (b). 
(4) SUPPLEMENT, 
NOT
SUPPLANT.—Funds 
made available under this section shall be used to 
supplement, and not supplant, other Federal, State, 
and local funds that would otherwise be expended to 
construct new community college facilities or mod-
ernize, renovate, or repair existing community col-
lege facilities. 
(b) APPLICATION.—A State that desires to receive a 
grant under this section shall submit an application to the 
Secretary at such time, in such manner, and containing 
such information and assurances as the Secretary may re-
quire. Such application shall include a certification by the 
State that the funds provided under this section for the 
construction of new community college facilities and the 
modernization, renovation, and repair of existing commu-
nity college facilities will improve instruction at such col-
leges and will improve the ability of such colleges to edu-
cate and train students to meet the workforce needs of 
employers in the State. 
(c) USE OF FUNDS BY COMMUNITY COLLEGES.— 
(1) PERMISSIBLE
USES
OF
FUNDS.—Funds 
made available to community colleges through a loan 
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described in subsection (a)(1)(A), a capital campaign 
described in subsection (a)(1)(B), or a loan from a 
revolving loan fund described in subsection (a)(1)(C) 
shall be used only for the construction, moderniza-
tion, renovation, or repair of community college fa-
cilities that are primarily used for instruction, re-
search, or student housing, which may include any 
of the following: 
(A) Repair, replacement, or installation of 
roofs, including extensive, intensive, or semi-in-
tensive green roofs, electrical wiring, water sup-
ply and plumbing systems, sewage systems, 
storm water runoff systems, lighting systems, 
building envelope, windows, ceilings, flooring, or 
doors, including security doors. 
(B) Repair, replacement, or installation of 
heating, ventilation, or air conditioning systems, 
including insulation, and conducting indoor air 
quality assessments. 
(C) Compliance with fire, health, seismic, 
and safety codes, including professional installa-
tion of fire and life safety alarms, and mod-
ernizations, renovations, and repairs that en-
sure that the community college’s facilities are 
prepared for emergencies, such as improving 
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building infrastructure to accommodate security 
measures and installing or upgrading tech-
nology to ensure that the community college is 
able to respond to emergencies such as acts of 
terrorism, campus violence, and natural disas-
ters. 
(D) Retrofitting necessary to increase the 
energy efficiency of the community college’s fa-
cilities. 
(E) Modifications necessary to make facili-
ties accessible in compliance with the Americans 
with Disabilities Act of 1990 (42 U.S.C. 12101 
et seq.) and section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794). 
(F) Abatement, removal, or interim con-
trols of asbestos, polychlorinated biphenyls, 
mold, mildew, or lead-based hazards, including 
lead-based paint hazards from the community 
college’s facilities. 
(G) Modernization, renovation, or repair 
necessary to reduce the consumption of coal, 
electricity, land, natural gas, oil, or water. 
(H) Modernization, renovation, and repair 
relating to improving science and engineering 
laboratories, libraries, or instructional facilities. 
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(I) Installation or upgrading of educational 
technology infrastructure. 
(J) Installation or upgrading of renewable 
energy generation and heating systems, includ-
ing solar, photovoltaic, wind, biomass (including 
wood pellet and woody biomass), waste-to-en-
ergy, solar-thermal and geothermal systems, 
and energy audits. 
(K) Other modernization, renovation, or 
repair projects that are primarily for instruc-
tion, research, or student housing. 
(L) Required environmental remediation 
related to modernization, renovation, or repair 
described in subparagraphs (A) through (K). 
(2) GREEN SCHOOL REQUIREMENT.—A commu-
nity college receiving assistance through a loan de-
scribed in subsection (a)(1)(A), a capital campaign 
described in subsection (a)(1)(B), or a loan from a 
revolving loan fund described in subsection (a)(1)(C) 
shall use not less than 50 percent of such assistance 
to carry out projects for construction, moderniza-
tion, renovation, or repair that are certified, verified, 
or consistent with the applicable provisions of— 
(A) the LEED Green Building Rating Sys-
tem; 
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(B) Energy Star; 
(C) the CHPS Criteria, as applicable; 
(D) Green Globes; or 
(E) an equivalent program adopted by the 
State or the State higher education agency that 
includes a verifiable method to demonstrate 
compliance with such program. 
(3) PROHIBITED USES OF FUNDS.— 
(A) IN
GENERAL.—No funds awarded 
under this section may be used for— 
(i) payment of maintenance costs; 
(ii) construction, modernization, ren-
ovation, or repair of stadiums or other fa-
cilities primarily used for athletic contests 
or exhibitions or other events for which ad-
mission is charged to the general public; or 
(iii) construction, modernization, ren-
ovation, or repair of facilities— 
(I) used for sectarian instruction, 
religious worship, or a school or de-
partment of divinity; or 
(II) in which a substantial por-
tion of the functions of the facilities 
are subsumed in a religious mission. 
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(B) FOUR-YEAR INSTITUTIONS.—No funds 
awarded to a four-year public institution of 
higher education under this section may be 
used for any facility, service, or program of the 
institution that is not available to students who 
are pursuing a degree or certificate that is not 
a bachelor’s, master’s, professional, or other ad-
vanced degree. 
(d) APPLICATION OF GEPA.—The grant program 
authorized in this section is an applicable program (as 
that term is defined in section 400 of the General Edu-
cation Provisions Act (20 U.S.C. 1221)) subject to section 
439 of such Act (20 U.S.C. 1232b). The Secretary shall, 
notwithstanding section 437 of such Act (20 U.S.C. 1232) 
and section 553 of title 5, United States Code, establish 
such program rules as may be necessary to implement 
such grant program by notice in the Federal Register. 
(e) CONCURRENT FUNDING.—Funds made available 
under this section shall not be used to assist any commu-
nity college that receives funding for the construction, 
modernization, renovation, and repair of facilities under 
any other program under this division, the Higher Edu-
cation Act of 1965, or the American Recovery and Rein-
vestment Act of 2009. 
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(f) REPORTS BY THE STATES.—Each State that re-
ceives a grant under this section shall, not later than Sep-
tember 30, 2012, and annually thereafter for each fiscal 
year in which the State expends funds received under this 
section, submit to the Secretary a report that includes— 
(1) a description the projects for which the 
grant funding was, or will be, used; 
(2) a list of the community colleges that have 
received, or will receive, assistance from the grant 
through a loan described in subsection (a)(1)(A), a 
capital campaign described in subsection (a)(1)(B), 
or a loan from a revolving loan fund described in 
subsection (a)(1)(C); and 
(3) a description of the amount and nature of 
the assistance provided to each such college. 
(g) REPORT BY THE SECRETARY.—The Secretary 
shall submit to the authorizing committees (as defined in 
section 103 of the Higher Education Act of 1965) an an-
nual report on the grants made under this section, includ-
ing the information described in subsection (f). 
(h) DEFINITIONS.— 
(1) COMMUNITY
COLLEGE.—As used in this 
section, the term ‘‘community college’’ means— 
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(A) a junior or community college, as such 
term is defined in section 312(f) of the Higher 
Education Act of 1965 (20 U.S.C. 1085(f)); or 
(B) a four-year public institution of higher 
education (as defined in section 101 of the 
Higher Education Act of 1965) that awards a 
significant number of degrees and certificates 
that are not— 
(i) bachelor’s degrees (or an equiva-
lent); or 
(ii) master’s, professional, or other 
advanced degrees. 
(2) CHPS CRITERIA.—The term ‘‘CHPS Cri-
teria’’ means the green building rating program de-
veloped by the Collaborative for High Performance 
Schools. 
(3) ENERGY STAR.—The term ‘‘Energy Star’’ 
means the Energy Star program of the United 
States Department of Energy and the United States 
Environmental Protection Agency. 
(4) 
GREEN
GLOBES.—The 
term 
‘‘Green 
Globes’’ means the Green Building Initiative envi-
ronmental design and rating system referred to as 
Green Globes. 
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(5) LEED GREEN BUILDING RATING SYSTEM.— 
The term ‘‘LEED Green Building Rating System’’ 
means the United States Green Building Council 
Leadership in Energy and Environmental Design 
green building rating standard referred to as the 
LEED Green Building Rating System. 
(6) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Education. 
(7) STATE.—The term ‘‘State’’ has the mean-
ing given such term in section 103 of the Higher 
Education Act of 1965 (20 U.S.C. 1003). 
(i) AVAILABILITY OF FUNDS.—There are authorized 
to be appropriated, and there are appropriated, to carry 
out this section (in addition to any other amounts appro-
priated to carry out this section and out of any money 
in 
the 
Treasury 
not 
otherwise 
appropriated), 
$2,500,000,000 for fiscal year 2011, which shall remain 
available until expended. 
TITLE IV—EARLY LEARNING 
CHALLENGE FUND 
SEC. 401. PURPOSE. 
The purpose of this title is to provide grants on a 
competitive basis to States for the following: 
(1) To promote standards reform of State early 
learning programs serving children from birth 
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through age 5 in order to support the healthy devel-
opment and improve the school readiness outcomes 
of young children. 
(2) To establish a high standard of quality in 
early learning programs that integrates appropriate 
early learning and development standards across 
early learning settings. 
(3) To fund and implement quality initiatives 
that improve the skills and effectiveness of early 
learning providers, and improve the quality of exist-
ing early learning programs, in order to increase the 
number of disadvantaged children who participate in 
comprehensive and high-quality early learning pro-
grams. 
(4) To ensure that a greater number of dis-
advantaged children enter kindergarten with the cog-
nitive, social, emotional, and physical skills and abili-
ties needed to be successful in school. 
(5) To increase parents’ abilities to access com-
prehensive and high quality early learning programs 
across settings for their children. 
SEC. 402. PROGRAMS AUTHORIZED. 
(a) QUALITY PATHWAYS GRANTS.—The Secretary 
shall use funds made available to carry out this title for 
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a fiscal year to award grants on a competitive basis to 
States in accordance with section 403. 
(b) DEVELOPMENT GRANTS.—The Secretary shall 
use funds made available to carry out this title for a fiscal 
year to award grants in accordance with section 404 on 
a competitive basis to States that demonstrate a commit-
ment to establishing a system of early learning that will 
include the components described in section 403(c)(3) but 
are not— 
(1) eligible to be awarded a grant under sub-
section (a); or 
(2) are not awarded such a grant after applica-
tion. 
(c) RESERVATIONS OF FEDERAL FUNDS.— 
(1) RESEARCH, EVALUATION, AND ADMINISTRA-
TION.—From the amount made available to carry 
out this title for a fiscal year, the Secretary— 
(A) shall reserve up to 2 percent jointly to 
administer this title with the Secretary of 
Health and Human Services; and 
(B) shall reserve up to 3 percent to carry 
out activities under section 405. 
(2) TRIBAL
SCHOOL
READINESS
PLANNING 
DEMONSTRATION.—After making the reservations 
under paragraph (1), the Secretary shall reserve 
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0.25 percent for a competitive grant program for In-
dian tribes to develop and implement school readi-
ness plans that— 
(A) are coordinated with local educational 
agencies serving children who are members of 
the tribe; and 
(B) include American Indian and Alaska 
Native Head Start and Early Head Start pro-
grams, tribal child care programs, Indian 
Health Service programs, and other tribal pro-
grams serving children. 
(3) QUALITY PATHWAYS GRANTS.— 
(A) IN GENERAL.—From the amount made 
available to carry out this title for a fiscal year 
and not reserved under paragraph (1) or (2), 
the Secretary shall reserve a percent (which 
shall be not greater than 65 percent for fiscal 
years 2010 through 2012 and not greater than 
85 percent for fiscal year 2013 and each suc-
ceeding fiscal year) determined under subpara-
graph (B) to carry out subsection (a). 
(B) DETERMINATION OF AMOUNT.—In de-
termining the amount to reserve under subpara-
graph (A), the Secretary, consistent with sec-
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tion 403(e), shall take into account the fol-
lowing: 
(i) The total number of States deter-
mined by the Secretary to qualify for re-
ceipt of a grant under this title for the 
year. 
(ii) The number of children under age 
5 from low-income families in each State 
with an approved application under section 
403 for the year. 
(C) REALLOCATION.—For fiscal year 2013 
and subsequent fiscal years, the Secretary may 
reallocate funds allocated for development 
grants under subsection (b) for the purpose of 
providing additional grants under subsection 
(a), if the Secretary determines that there is an 
insufficient number of applications that meet 
the requirements for a grant under subsection 
(b). 
(d) STATE APPLICATIONS.—In applying for a grant 
under this title, a State— 
(1) shall designate a State-level entity for ad-
ministration of the grant; 
(2) shall coordinate proposed activities with the 
State Advisory Council on Early Childhood Edu-
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cation and Care (established pursuant to section 
642B(b)(1)(A) of the Head Start Act (42 U.S.C. 
9837b(b)(1)(A))) and shall incorporate plans and 
recommendations from such Council in the applica-
tion, where applicable; and 
(3) otherwise shall submit the application to the 
Secretary at such time, in such manner, and con-
taining such information as the Secretary may rea-
sonably require. 
(e) PRIORITY IN AWARDING GRANTS.—In awarding 
grants under this title, the Secretary shall give priority 
to States— 
(1) whose applications contain assurances that 
the State will use, in part, funds reserved under sec-
tion 658G of the Child Care and Development Block 
Grant Act of 1990 (42 U.S.C. 9858e) for activities 
described in section 403(f); 
(2) that will commit to dedicating a significant 
increase, in comparison to recent fiscal years, in 
State expenditures on early learning programs and 
services; and 
(3) that demonstrate efforts to build public-pri-
vate partnerships designed to accomplish the pur-
poses of this title. 
(f) MAINTENANCE OF EFFORT.— 
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(1) IN GENERAL.—With respect to each period 
for which a State is awarded a grant under this 
title, the aggregate expenditures by the State and its 
political subdivisions on early learning programs and 
services shall be not less than the level of the ex-
penditures for such programs and services by the 
State and its political subdivisions for fiscal year 
2006. 
(2) STATE EXPENDITURES.—For purposes of 
paragraph (1), expenditures by the State on early 
learning programs and services shall include, at a 
minimum, the following: 
(A) State matching and maintenance of ef-
fort funds for the Child Care and Development 
Block Grant Act of 1990 (42 U.S.C. 9858 et 
seq.). 
(B) State matching funds for the State 
Advisory Council on Early Childhood Education 
and Care (established pursuant to section 
642B(b)(1)(A) of the Head Start Act (42 
U.S.C. 9837b(b)(1)(A))). 
(C) State expenditures on public pre-kin-
dergarten, Head Start (including Early Head 
Start), and other State early learning programs 
and services dedicated to children (including 
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State expenditures under part C of the Individ-
uals with Disabilities Education Act (20 U.S.C. 
1431 et seq.)). 
(g) PROHIBITIONS
ON USE
OF FUNDS.—Funds 
under this title may not be used for any of the following: 
(1) Assessments that provide rewards or sanc-
tions for individual children or teachers. 
(2) A single assessment used as the primary or 
sole method for assessing program effectiveness. 
(3) Evaluating children other than for— 
(A) improving instruction or classroom en-
vironment; 
(B) targeting professional development; 
(C) determining the need for health, men-
tal health, disability, or family support services; 
(D) informing the quality improvement 
process at the State level; 
(E) program evaluation for the purposes of 
program improvement and parent information; 
or 
(F) research conducted as part of the na-
tional evaluation required by section 405(2). 
(h) FEDERAL ADMINISTRATION.— 
(1) IN GENERAL.—With respect to this title, 
the Secretary shall bear responsibility for obligating 
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and disbursing funds and ensuring compliance with 
applicable laws and administrative requirements, 
subject to paragraph (2). 
(2) INTERAGENCY AGREEMENT.—The Secretary 
of Education and the Secretary of Health and 
Human Services shall jointly administer this title on 
such terms as such secretaries shall set forth in an 
interagency agreement. 
SEC. 403. QUALITY PATHWAYS GRANTS. 
(a) GRANT PERIOD.—Grants under section 402(a)— 
(1) may be awarded for a period not to exceed 
5 years; and 
(2) may be renewed, subject to approval by the 
Secretary, and based on the State’s progress in— 
(A) increasing the percentage of disadvan-
taged children in each age group (infants, tod-
dlers, and preschoolers) who participate in high- 
quality early learning programs; 
(B) increasing the number of high-quality 
early learning programs in low-income commu-
nities; 
(C) implementing an early learning system 
that includes the components described in sub-
section (c)(3); and 
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(D) incorporating the findings and rec-
ommendations reported by the commission es-
tablished under section 405(1) into the State 
system of early learning. 
(b) MATCHING REQUIREMENT.— 
(1) IN GENERAL.—Subject to subsection (g), to 
be eligible to receive a grant under section 402(a), 
a State shall contribute to the activities assisted 
under the grant non-Federal matching funds in an 
amount equal to not less than the applicable percent 
of the amount of the grant. 
(2) APPLICABLE
PERCENT.—For purposes of 
paragraph (1), the applicable percent means— 
(A) 10 percent in the first fiscal year of 
the grant; 
(B) 10 percent in the second fiscal year of 
the grant; 
(C) 15 percent in the third fiscal year of 
the grant; and 
(D) 20 percent in the fourth fiscal year of 
the grant and subsequent fiscal years. 
(3) NON-FEDERAL FUNDS.—A State may use 
the following to satisfy the requirement of paragraph 
(1): 
(A) Cash. 
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(B) In-kind contributions for the acquisi-
tion, construction, or improvement of early 
learning program facilities serving disadvan-
taged children. 
(C) Technical assistance related to sub-
paragraph (B). 
(4) PRIVATE
CONTRIBUTIONS.—Private con-
tributions made as part of public-private partner-
ships to increase the number of low-income children 
in high-quality early learning programs in a State 
may be used by the State to satisfy the requirement 
of paragraph (1). 
(5) FINANCIAL HARDSHIP WAIVER.—The Sec-
retary may waive or reduce the non-Federal share of 
a State that has submitted an application for a 
grant under section 402(a) if the State demonstrates 
a need for such waiver or reduction due to extreme 
financial hardship, as defined by the Secretary by 
regulation. 
(c) STATE APPLICATIONS.—In order to be considered 
for a grant under section 402(a), a State’s application 
under section 402(d) shall include the following: 
(1) A description of how the State will use the 
grant to implement quality initiatives to improve 
early learning programs serving disadvantaged chil-
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dren from birth to age 5 to lead to a greater per-
centage of such children participating in higher 
quality early learning programs. 
(2) A description of the goals and benchmarks 
the State will establish to lead to a greater percent-
age of disadvantaged children participating in higher 
quality early learning programs to improve school 
readiness outcomes, including an established baseline 
of the number of disadvantaged children in high- 
quality early learning programs. 
(3) A description of how the State will imple-
ment a governance structure and a system of early 
learning programs and services that includes the fol-
lowing components: 
(A) Not later than 12 months after receiv-
ing notice of an award of the grant, complete 
State early learning and development standards 
that include social and emotional, cognitive, and 
physical development domains, and approaches 
to learning that are developmentally appro-
priate (including culturally and linguistically 
appropriate) for all children. 
(B) A process to ensure that State early 
learning and development standards are inte-
grated into the instructional and programmatic 
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practices of early learning programs and serv-
ices, including services provided to children 
under section 619 and part C of the Individuals 
with Disabilities Education Act (20 U.S.C. 
1419, 1431 et seq.). 
(C) A program rating system that builds 
on licensing requirements, as appropriate, and 
other State regulatory standards and that— 
(i) is designed to improve quality and 
effectiveness across different types of early 
learning settings; 
(ii) integrates evidence-based program 
quality standards that reflect standard lev-
els of quality and has progressively higher 
levels of program quality; 
(iii) integrates the State’s early learn-
ing and development standards for the 
purpose of improving instructional and 
programmatic practices; 
(iv) addresses quality and effective in-
clusion of children with disabilities or de-
velopmental delays across different types of 
early learning settings; 
(v) addresses staff qualifications and 
professional development; 
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(vi) provides financial incentives and 
other supports to help programs meet and 
sustain higher levels of quality; 
(vii) includes mechanisms for evalu-
ating how programs are meeting those 
standards and progressively higher levels 
of quality; and 
(viii) includes a mechanism for public 
awareness and understanding of the pro-
gram rating system, including rating levels 
of individual programs. 
(D) A system of program review and moni-
toring that is designed to rate providers using 
the system described in subparagraph (C) and 
to assess and improve programmatic practices, 
instructional practices, and classroom environ-
ment. 
(E) A process to support early learning 
programs integrating instructional and pro-
grammatic practices that— 
(i) include developmentally appro-
priate (including culturally and linguis-
tically appropriate), ongoing, classroom- 
based instructional assessments for each 
domain of child development and learning 
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(including social and emotional, cognitive, 
and physical development domains and ap-
proaches to learning) to guide and improve 
instructional practice, professional develop-
ment of staff, and services; and 
(ii) are aligned with the curricula used 
in the early learning program and with the 
State early learning and development 
standards or the Head Start Child Out-
comes Framework (as described in the 
Head Start Act), as applicable. 
(F) Minimum preservice early childhood 
development and education training require-
ments for providers in early learning programs. 
(G) A comprehensive plan for supporting 
the professional preparation and the ongoing 
professional development of an effective, well- 
compensated early learning workforce, which 
plan includes training and education that is 
sustained, intensive, and classroom-focused and 
leads toward a credential or degree and is tied 
to improved compensation. 
(H) An outreach strategy to promote un-
derstanding by parents and families of— 
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(i) how to support their child’s early 
development and learning; 
(ii) the State’s program rating sys-
tem, as described in subparagraph (C); 
and 
(iii) the rating of the program in 
which their child is enrolled. 
(I) A coordinated system to facilitate 
screening, referral, and provision of services re-
lated to health, mental health, disability, and 
family support for children participating in 
early learning programs. 
(J) A process for evaluating school readi-
ness in children that reflects all of the major 
domains of development, and that is used to 
guide practice and improve early learning pro-
grams. 
(K) A coordinated data infrastructure that 
facilitates— 
(i) uniform data collection about the 
quality of early learning programs, essen-
tial information about the children and 
families that participate in such programs, 
and the qualifications and compensation of 
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the early learning workforce in such pro-
grams; and 
(ii) alignment and interoperability be-
tween the data system for early learning 
programs for children and data systems for 
elementary and secondary education. 
(4) A description of how the funds provided 
under the grant will be targeted to prioritize increas-
ing the number and percentage of low-income chil-
dren in high-quality early learning programs, includ-
ing children— 
(A) in each age group (infants, toddlers, 
and preschoolers); 
(B) with developmental delays and disabil-
ities; 
(C) with limited English proficiency; and 
(D) living in rural areas. 
(5) An assurance that the grant will be used to 
improve the quality of early learning programs 
across a range of types of settings and providers of 
such programs. 
(6) A description of the steps the State will 
take to make progress toward including all center- 
based child care programs, family child care pro-
grams, State-funded prekindergarten, Head Start 
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programs, and other early learning programs, such 
as those funded under title I of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 6301 
et seq.) or receiving funds under section 619 or part 
C of the Individuals with Disabilities Education Act 
(20 U.S.C. 1419, 1431 et seq.) in the State program 
rating system described in paragraph (3)(C). 
(7) An assurance that the State, not later than 
18 months after receiving notice of an award of the 
grant, will conduct an analysis of the alignment of 
the State’s early learning and development stand-
ards with— 
(A) appropriate academic content stand-
ards for grades kindergarten through 3; and 
(B) elements of program quality standards 
for early learning programs. 
(8) An assurance that the grant will be used 
only to supplement, and not to supplant, Federal, 
State, and local funds otherwise available to support 
existing early learning programs and services. 
(9) A description of any disparity by age group 
(infants, toddlers, and preschoolers) of available 
high-quality early learning programs in low-income 
communities and the steps the State will take to de-
crease such disparity, if applicable. 
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(10) A description of how the State early learn-
ing and development standards will address the 
needs of children with limited English proficiency, 
including by incorporating benchmarks related to 
English language development. 
(11) A description of how the State’s profes-
sional development plan will prepare the early learn-
ing workforce to support the early learning needs of 
children with limited English proficiency. 
(12) A description of how the State will im-
prove interagency collaboration and coordinate the 
purposes of this title with the activities funded 
under— 
(A) section 658G of the Child Care and 
Development Block Grant Act of 1990 (42 
U.S.C. 9858e); 
(B) section 619 and part C of the Individ-
uals with Disabilities Education Act (20 U.S.C. 
1419, 1431 et seq.); 
(C) title I of the Elementary and Sec-
ondary Education Act of 1965 (20 U.S.C. 6301 
et seq.); 
(D) State-funded pre-kindergarten pro-
grams (where applicable); 
(E) Head Start programs; and 
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(F) other early childhood programs and 
services. 
(13) A description of how the State’s early 
learning policies, including child care policies, facili-
tate access to high-quality early learning programs 
for children from low-income families. 
(14) An assurance that the State will continue 
to participate in part C of the Individuals with Dis-
abilities Education Act (20 U.S.C. 1431 et seq.) for 
the duration of the grant. 
(d) CRITERIA USED
IN AWARDING GRANTS.—In 
awarding grants under section 402(a), the Secretary shall 
evaluate the applications, and award grants under such 
section on a competitive basis, based on— 
(1) the quality of the application submitted pur-
suant to section 402(d); 
(2) the priority factors described in section 
402(e); 
(3) evidence of significant progress in estab-
lishing a system of early learning for children that 
includes the components described in subsection 
(c)(3); and 
(4) the State’s capacity to fully complete imple-
mentation of such a system. 
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2261 
(e) CRITERION USED IN DETERMINING AMOUNT OF 
AWARD.—In determining the amount to award a State 
under section 402(a), the Secretary shall take into ac-
count— 
(1) the proportion of children under age 5 from 
low-income families in the State relative to such pro-
portion in other States; and 
(2) the State plan and capacity to implement 
the criteria described in paragraphs (3) and (4) of 
subsection (d). 
(f) STATE USES OF FUNDS.— 
(1) IN GENERAL.—A State receiving a grant 
under section 402(a) shall use the grant as follows: 
(A) Not less than 65 percent of the grant 
amount shall be used for two or more of the fol-
lowing activities to improve the quality of early 
learning programs serving disadvantaged chil-
dren: 
(i) Initiatives that improve the creden-
tials of early learning providers and are 
tied to increased compensation. 
(ii) Initiatives that help early learning 
programs meet and sustain higher pro-
gram quality standards, such as— 
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(I) improving the ratio of early 
learning provider to children in early 
learning settings; 
(II) reducing group size; 
(III) improving the qualifications 
of early learning providers; and 
(IV) supporting effective edu-
cation and training for early learning 
providers. 
(iii) Implementing classroom observa-
tion assessments and data-driven decisions 
(which may include implementation of a 
research-based prevention and intervention 
framework designed to build social com-
petence and prevent challenging behaviors) 
tied to activities that improve instructional 
practices, programmatic practices, or class-
room environment and promote school 
readiness. 
(iv) Providing financial incentives to 
early learning programs— 
(I) for undertaking quality im-
provements that promote healthy de-
velopment and school readiness; and 
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(II) maintaining quality improve-
ments that promote healthy develop-
ment and school readiness. 
(v) Integrating State early learning 
and development standards into instruc-
tional and programmatic practices in early 
learning programs. 
(vi) Providing high-quality, sustained, 
intensive, and classroom-focused profes-
sional development that improves the 
knowledge and skills of early learning pro-
viders, including professional development 
related to meeting the needs of diverse 
populations. 
(vii) Building the capacity of early 
learning programs and communities to pro-
mote the understanding of parents and 
families of the State’s early learning sys-
tem and the rating of the program in 
which their child is enrolled and to encour-
age the active involvement and engagement 
of parents and families in the learning and 
development of their children. 
(viii) Building the capacity of early 
learning programs and communities to fa-
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cilitate screening, referral, and provision of 
services related to health, mental health, 
disability, and family support for children 
participating in early learning programs. 
(ix) Other innovative activities, pro-
posed by the State and approved in ad-
vance by the Secretary that are— 
(I) based on successful practices; 
(II) designed to improve the 
quality of early learning programs and 
services; and 
(III) advance the system compo-
nents described in subsection (c)(3). 
(B) The remainder of the grant amount 
may be used for one or more of the following: 
(i) Implementation or enhancement of 
the State’s data system described in sub-
section (c)(3)(K), including interoperability 
across agencies serving children, and 
unique child and program identifiers. 
(ii) Enhancement of the State’s over-
sight system for early learning programs, 
including the implementation of a program 
rating system. 
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(iii) The development and implemen-
tation of measures of school readiness of 
children that reflect all of the major do-
mains of child development and that in-
form the quality improvement process. 
(2) PRIORITY.—A State receiving a grant under 
section 402(a) shall use the grant so as to prioritize 
improving the quality of early learning programs 
serving children from low-income families. 
(g) SPECIAL RULE.— 
(1) IN GENERAL.—Beginning with the second 
fiscal year of a grant under section 402(a), a State 
with respect to which the Secretary certifies that the 
State has made sufficient progress in implementing 
the requirements of the grant may apply to the Sec-
retary to reserve up to 25 percent of the amount of 
the grant to expand access for children from low-in-
come families to the highest quality early learning 
programs that offer full-day services, except that the 
State must agree to contribute for such purpose 
non-Federal matching funds in an amount equal to 
not less than 20 percent of the amount reserved 
under this subsection. One-half of such non-Federal 
matching funds may be provided by a private entity. 
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(2) NON-FEDERAL FUNDS.—A State may use 
the following to satisfy the matching requirement of 
paragraph (1): 
(A) Cash. 
(B) In-kind contributions for the acquisi-
tion, construction, or improvement of early 
learning program facilities serving disadvan-
taged children. 
(C) Technical assistance related to sub-
paragraph (B). 
(3) FINANCIAL HARDSHIP WAIVER.—The Sec-
retary may waive or reduce the non-Federal share of 
a State under paragraph (1) if the State dem-
onstrates a need for such waiver or reduction due to 
extreme financial hardship, as defined by the Sec-
retary by regulation. 
(h) IMPROVEMENT PLAN.—If the Secretary deter-
mines that a State receiving a grant under section 402(a) 
is encountering barriers to reaching goals described in 
subsection (c)(2), the State shall develop a plan for im-
provement in consultation with, and subject to approval 
by, the Secretary. 
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SEC. 404. DEVELOPMENT GRANTS. 
(a) GRANT PERIOD.—Grants under section 402(b) 
may be awarded for a period not to exceed 3 years, and 
may not be renewed. 
(b) STATE USES OF FUNDS.— 
(1) IN GENERAL.—A State receiving a grant 
under section 402(b) shall use the grant to under-
take activities to develop the early learning system 
components described in section 403(c)(3) and that 
will allow a State to become eligible and competitive 
for a grant described in section 402(a). 
(2) PRIORITY.—A State receiving a grant under 
section 402(b) shall use the grant so as to prioritize 
improving the quality of early learning programs 
serving low-income children. 
(c) MATCHING REQUIREMENT.— 
(1) IN GENERAL.—To be eligible to receive a 
grant under section 402(b), a State shall contribute 
to the activities assisted under the grant non-Fed-
eral matching funds in an amount equal to not less 
than the applicable percent of the amount of the 
grant. 
(2) APPLICABLE
PERCENT.—For purposes of 
paragraph (1), the applicable percent means— 
(A) 20 percent in the first fiscal year of 
the grant; 
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(B) 25 percent in the second fiscal year of 
the grant; and 
(C) 30 percent in the third fiscal year of 
the grant. 
(3) NON-FEDERAL FUNDS.—A State may use 
the following to satisfy the requirement of paragraph 
(1): 
(A) Cash. 
(B) In-kind contributions for the acquisi-
tion, construction, or improvement of early 
learning program facilities serving disadvan-
taged children. 
(C) Technical assistance related to sub-
paragraph (B). 
(4) PRIVATE
CONTRIBUTIONS.—Private con-
tributions made as part of public-private partner-
ships to increase the number of low-income children 
in high-quality early learning programs in a State 
may be used by the State to satisfy the requirement 
of paragraph (1). 
(5) FINANCIAL HARDSHIP WAIVER.—The Sec-
retary may waive or reduce the non-Federal share of 
a State that has submitted an application for a 
grant under section 402(b) if the State demonstrates 
a need for such waiver or reduction due to extreme 
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financial hardship, as defined by the Secretary by 
regulation. 
SEC. 405. RESEARCH AND EVALUATION. 
From funds reserved under section 402(c)(1), the 
Secretary of Education and the Secretary of Health and 
Human Services, acting jointly, shall carry out the fol-
lowing activities: 
(1) Establishing a national commission whose 
duties shall include— 
(A) reviewing the status of State and Fed-
eral early learning program quality standards 
and early learning and development standards; 
(B) recommending benchmarks for pro-
gram quality standards and early learning and 
development standards, including taking into 
consideration the school readiness needs of chil-
dren with limited English proficiency; and 
(C) reporting to the Secretaries of Edu-
cation and Health and Human Services not 
later than 2 years after the date of the enact-
ment of this Act on the commission’s findings 
and recommendations. 
(2) Conducting a national evaluation of the 
grants made under this title through the Institute of 
Education Science in collaboration with the appro-
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priate research divisions within the Department of 
Health and Human Services. 
(3) Supporting a research collaborative among 
the Institute of Education Sciences, the National In-
stitute of Child Health and Human Development, 
the Office of Planning, Research, and Evaluation 
within the Administration for Children and Families 
in the Department of Health and Human Services, 
and, as appropriate, other Federal entities to sup-
port research on early learning that can inform im-
proved State and other standards and licensing re-
quirements and improved child outcomes, which col-
laborative shall— 
(A) biennially prepare and publish for pub-
lic comment a detailed research plan; 
(B) support early learning research activi-
ties that could include determining— 
(i) the characteristics of early learning 
programs that produce positive develop-
mental outcomes for children; 
(ii) the effects of program quality 
standards on child outcomes; 
(iii) the relationships between specific 
interventions and types of child and family 
outcomes; 
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(iv) the effectiveness of early learning 
provider training in raising program qual-
ity and improving child outcomes; 
(v) the effectiveness of professional 
development strategies in raising program 
quality and improving child outcomes; and 
(vi) how to improve the school readi-
ness outcomes of children with limited 
English proficiency, special needs, and 
homeless children, including evaluation of 
professional development programs for 
working with such children; and 
(C) disseminate relevant research findings 
and best practices. 
(4) Evaluating barriers to improving the quality 
of early learning programs serving low-income chil-
dren, including evaluating barriers to successful 
interagency collaboration and coordination, by con-
ducting a review of the statewide strategic reports 
developed by the State Advisory Councils on Early 
Care and Education and other relevant reports, re-
porting the findings of such review to Congress, and 
disseminating relevant research findings and best 
practices. 
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SEC. 406. REPORTING REQUIREMENTS. 
(a) REPORTS TO CONGRESS.—For each year in which 
funding is provided under this title, the Secretary shall 
submit an annual report to the Committee on Education 
and Labor of the House of Representatives and the Com-
mittee on Health, Education, Labor and Pensions of the 
Senate on the activities carried out under this title, includ-
ing, at a minimum, information on the following: 
(1) The activities undertaken by States to in-
crease the availability of high-quality early learning 
programs. 
(2) The number of children in high-quality 
early learning programs, and the change from the 
prior year, disaggregated by State, age, and race. 
(3) The number of early learning providers en-
rolled, with assistance from funds under this title, in 
a program to obtain a credential or degree in early 
childhood education and the settings in which such 
providers work. 
(4) A summary of State progress in imple-
menting a system of early learning with the compo-
nents described in section 403(c)(3). 
(5) A summary of the research activities being 
conducted under section 405 and the findings of 
such research. 
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(b) REPORTS TO SECRETARY.—Each State that re-
ceives a grant under this title shall submit to the Secretary 
an annual report that includes, at a minimum, information 
on the activities carried out by the State under this title, 
including the following: 
(1) The progress on fully implementing and in-
tegrating into a system of early learning each of the 
components described in section 403(c)(3). 
(2) The State’s progress in meeting its goals 
for increasing the number of disadvantaged children 
participating in high-quality early learning pro-
grams, disaggregated by child age. 
(3) The number and percentage of disadvan-
taged children participating in early learning pro-
grams at each level of quality, disaggregated by 
race, family income, child age, disability, and limited 
English proficiency status. 
(4) The number of providers participating in 
the State quality rating system, disaggregated by 
setting, rating, and the number of high-quality pro-
viders available in low-income communities. 
(5) Information on how the funds provided 
under this title were used to increase the availability 
of high-quality early learning programs for each age 
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group, disaggregated by race and limited English 
proficient status, to the maximum extent practicable. 
(6) Information on professional development 
and training expenditures, including— 
(A) the number of early learning providers 
engaged in such activities; and 
(B) the number of early learning providers 
enrolled in programs to obtain a credential or 
degree 
in 
early 
childhood 
education, 
disaggregated by the type of credential and de-
gree. 
(7) The change in the number and percentage 
of early learning providers with appropriate creden-
tials or degrees in early childhood education, includ-
ing the change in compensation given to such pro-
viders, in comparison to the prior fiscal year, 
disaggregated by early learning setting and the type 
of credential or degree. 
(8) In the case of a State receiving a grant 
under section 402(a), the percentage of children re-
ceiving assistance under the Child Care and Devel-
opment Block Grant Act of 1990 (42 U.S.C. 9858 
et seq.) who participate in the highest quality early 
learning programs, disaggregated by program set-
ting and child age. 
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(9) Barriers to expanding access to high-quality 
early learning programs for disadvantaged children. 
SEC. 407. CONSTRUCTION. 
Nothing in this title— 
(1) shall be construed to require a child to par-
ticipate in an early learning program; or 
(2) shall be used to deny entry to kindergarten 
for any individual if the individual is legally eligible, 
as defined by State or local law. 
SEC. 408. DEFINITIONS. 
For purposes of this title: 
(1) CHILD.—The term ‘‘child’’ refers to an in-
dividual from birth through the day the individual 
enters kindergarten. 
(2) DISADVANTAGED.—The term ‘‘disadvan-
taged’’, when used with respect to a child, means a 
child whose family income is described in section 
658P(4)(B) of the Child Care and Development 
Block Grant Act of 1990 (42 U.S.C. 9858n(4)(B)). 
(3) INDIAN TRIBE.—The term ‘‘Indian tribe’’ 
has the meaning given such term in section 637 of 
the Head Start Act (42 U.S.C. 9832). 
(4) LIMITED ENGLISH PROFICIENT.—The term 
‘‘limited English proficient’’ has the meaning given 
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such term in section 637 of the Head Start Act (42 
U.S.C. 9832). 
(5) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Education. 
(6) STATE.—The term ‘‘State’’ has the mean-
ing given such term in section 9101 of the Elemen-
tary and Secondary Education Act of 1965 (20 
U.S.C. 7801). 
SEC. 409. AVAILABILITY OF FUNDS. 
There are authorized to be appropriated, and there 
are appropriated, to carry out this title (in addition to any 
other amounts appropriated to carry out this title and out 
of any money in the Treasury not otherwise appropriated) 
$1,000,000,000 for each of fiscal years 2010 through 
2017. 
TITLE V—AMERICAN 
GRADUATION INITIATIVE 
SEC. 501. AUTHORIZATION AND APPROPRIATION. 
(a) AUTHORIZATION
AND APPROPRIATION.—There 
are authorized to be appropriated, and there are appro-
priated, to carry out this title (in addition to any other 
amounts appropriated to carry out this title and out of 
any money in the Treasury not otherwise appropriated), 
$730,000,000 for each of the fiscal years 2010 through 
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2013, and $680,000,000 for each of the fiscal years 2014 
through 2019. 
(b) ALLOCATIONS.—Of the amount appropriated 
under subsection (a)— 
(1) $630,000,000 shall be made available for 
each of the fiscal years 2010 through 2013 to carry 
out section 503; 
(2) $630,000,000 shall be made available for 
each of the fiscal years 2014 through 2019 to carry 
out section 504; 
(3) $50,000,000 shall be made available for 
each of the fiscal years 2010 through 2019 to carry 
out subsection (a) of section 505; and 
(4) $50,000,000 shall be made available for 
each of the fiscal years 2010 through 2013 to carry 
out subsections (b) and (c) of section 505. 
(c) RESPONSIBILITY.— 
(1) IN GENERAL.—With respect to sections 503 
and 504, the Secretary of Education shall bear the 
responsibility for obligating and disbursing funds 
under such sections and ensuring compliance with 
applicable law and administrative requirements, sub-
ject to paragraph (2). 
(2) INTERAGENCY AGREEMENT.—The Secretary 
of Education and the Secretary of Labor shall joint-
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ly administer sections 503 and 504 on such terms 
as such Secretaries shall set forth in an interagency 
agreement. 
SEC. 502. DEFINITIONS; GRANT PRIORITY. 
(a) DEFINITIONS.—In this title: 
(1) AREA CAREER AND TECHNICAL EDUCATION 
SCHOOL.—The term ‘‘area career and technical edu-
cation school’’ has the meaning given such term in 
section 3 of the Carl D. Perkins Career and Tech-
nical Education Act of 2006 (20 U.S.C. 2302). 
(2) COMMUNITY COLLEGE.—The term ‘‘commu-
nity college’’ means a public institution of higher 
education at which the highest degree that is pre-
dominantly awarded to students is an associate’s de-
gree. 
(3) ELIGIBLE ENTITY.—The term ‘‘eligible enti-
ty’’ means— 
(A) a community college or community col-
lege district; 
(B) an area career and technical education 
school; 
(C) a public four-year institution of higher 
education that— 
(i) offers two-year degrees; 
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(ii) will use funds provided under this 
section for activities at the certificate and 
associate degree levels; and 
(iii) is not reasonably close, as deter-
mined by the Secretary, to a community 
college; 
(D) a public four-year institution of higher 
education that is in partnership with an eligible 
entity described in subparagraph (A), (B), or 
(C); 
(E) a State that— 
(i) is in compliance with section 137 
of the Higher Education Act of 1965 (20 
U.S.C. 1015f); 
(ii) has an articulation agreement 
pursuant to section 486A of such Act (20 
U.S.C. 1093a); and 
(iii) is in partnership with an eligible 
entity described in subparagraph (A), (B), 
(C), or (D); or 
(F) a consortium of at least 2 entities de-
scribed in subparagraphs (A) through (E). 
(4) INDUSTRY OR SECTOR PARTNERSHIP.—The 
term ‘‘industry or sector partnership’’ has the mean-
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ing given such term in section 782(f) of the Higher 
Education Act of 1965. 
(5) INSTITUTION OF HIGHER EDUCATION.—The 
term ‘‘institution of higher education’’ has the 
meaning given such term in section 101 of the High-
er Education Act of 1965 (20 U.S.C. 1001). 
(6) PHILANTHROPIC ORGANIZATION.—The term 
‘‘philanthropic organization’’ has the meaning given 
such term in section 781(i) of the Higher Education 
Act of 1965 (20 U.S.C. 1141(i)). 
(7) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Education. 
(8) STATE.—The term ‘‘State’’ has the mean-
ing given such term in section 103 of the Higher 
Education Act of 1965 (20 U.S.C. 1003). 
(9) STATE
PUBLIC
EMPLOYMENT
SERVICE.— 
The term ‘‘State public employment service’’ refers 
to a State public employment service established 
under the Wagner-Peyser Act (29 U.S.C. 49 et 
seq.). 
(10) STATE WORKFORCE INVESTMENT BOARD; 
LOCAL
WORKFORCE
INVESTMENT
BOARD.—The 
terms ‘‘State workforce investment board’’ and 
‘‘local workforce investment board’’ refer to a State 
workforce investment board established under sec-
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(3) how such programs, services, and policies, 
and the resources of the eligible entity, will enable 
the eligible entity to meet the benchmarks developed 
pursuant to subsection (g), and how the eligible enti-
ty will track and report the entity’s progress in 
reaching such benchmarks; 
(4) how the eligible entity will use such pro-
grams, services, and policies to establish quantifiable 
targets for improving graduation rates and employ-
ment-related outcomes; 
(5) how the eligible entity will serve high-need 
populations through such programs, services, and 
policies; 
(6) how the eligible entity will partner with in-
dustry or sector partnerships in the State, the State 
public employment service, and State or local work-
force investment boards in carrying out such pro-
grams, services, and policies; 
(7) an assurance that the eligible entity will 
share information with the Learning and Earning 
Research Center established under section 505(b), 
once such Center is established; 
(8) an assurance that the eligible entity will 
participate in the evaluation of such programs, serv-
ices, and policies under subsection (i); and 
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force investment boards in carrying out such pro-
grams, services, and policies; 
(7) how the State will evaluate such programs, 
services, and policies, which may include participa-
tion in national evaluations; and 
(8) how the State will involve community col-
leges and community college faculty in the planning, 
implementation, and evaluation of such programs, 
services, and policies. 
(f) USES OF FUNDS.—An eligible State receiving a 
grant under this section shall use the grant funds to im-
plement the systematic reform of community colleges lo-
cated in the State by carrying out programs, services, and 
policies that the Secretary has determined to have dem-
onstrated effectiveness based on the results of the evalua-
tion described in section 503(i). States shall allocate not 
less than 90 percent of such grant funds to community 
colleges within the State. 
(g) BENCHMARKS.— 
(1) IN GENERAL.—Each eligible State receiving 
a grant under this section shall, in consultation with 
the Secretary, develop quantifiable benchmarks on 
the indicators identified in section 503(f)(1). 
(2) PROGRESS.—An eligible State receiving 
such a grant shall annually measure and report to 
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