188
has provided the lender with a statement evidencing
a determination of need for a loan (as determined
under part F of this title) and the amount of such
need, subject to the provisions of subparagraph
(D).’’.
(b) DURATION OF AUTHORITY.—Section 428(a)(5) is
amended—
(1) by striking ‘‘September 30, 2002’’ and in-
serting ‘‘September 30, 2004’’; and
(2) by striking ‘‘September 30, 2006’’ and in-
serting ‘‘September 30, 2008’’.
(c) ANNUAL LOAN LIMITS.—Section 428(b)(1)(A) is
amended—
(1) in clause (i)—
(A) by inserting ‘‘and’’ after the semicolon
at the end of subclause (I); and
(B) by striking subclauses (II) and (III)
and inserting the following:
‘‘(II) if such student is enrolled
in a program of undergraduate edu-
cation which is less than one academic
year, the maximum annual loan
amount that such student may receive
may not exceed the amount that bears
the same ratio to the amount specified
189
in subclause (I) as the length of such
program measured in semester, tri-
mester, quarter, or clock hours bears
to one academic year;’’; and
(2) by inserting ‘‘and’’ after the semicolon at
the end of clause (iii).
(d) SELECTION
OF REPAYMENT PLANS.—Section
428(b)(1)(D) is amended by striking ‘‘and (iii)’’ and in-
serting the following: ‘‘(iii) the student borrower may an-
nually change the selection of a repayment plan under this
part, and (iv)’’.
(e) COINSURANCE.—Section 428(b)(1)(G) is amend-
ed by striking ‘‘not less than’’.
(f ) DEFERMENTS.—Section 428(b)(1)(M) is amend-
ed—
(1) in clause (i)(I), by inserting before the semi-
colon the following: ‘‘, except that no borrower, not-
withstanding the provisions of the promissory note,
shall be required to borrow an additional loan under
this title in order to be eligible to receive a
deferment under this clause’’; and
(2) in clause (ii), by inserting before the semi-
colon the following: ‘‘, except that no borrower who
qualifies for unemployment benefits shall be required
190
to provide any additional paperwork for a deferment
under this clause’’.
(g) LIMITATION, SUSPENSION, AND TERMINATION.—
Section 428(b)(1)(U) is amended—
(1) by striking ‘‘emergency action,,’’ each place
it appears and inserting ‘‘emergency action,’’; and
(2) by striking ‘‘a compliance audit of each
lender’’ and inserting the following: ‘‘in the case of
any lender that originates or holds more than
$5,000,000 in loans made under this title during an
annual audit period, a compliance audit of such
lender’’.
(h) ADDITIONAL INSURANCE PROGRAM REQUIRE-
MENTS.—Section 428(b)(1) is further amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (W);
(2) in subparagraph (X)—
(A) by striking ‘‘428(c)(10)’’ and inserting
‘‘428(c)(9)’’; and
(B) by striking the period at the end and
inserting ‘‘; and’’;
(3) by adding at the end the following new sub-
paragraph:
‘‘(Y) provides that the lender shall deter-
mine the eligibility of a borrower for a
191
deferment described in subparagraph (M)(i)
based on receipt of (i) a request for deferment
from the borrower, (ii) a newly completed loan
application that documents the borrower’s eligi-
bility for a deferment, or (iii) student status in-
formation received by the lender that the bor-
rower is enrolled on at least a half-time basis.’’.
(i) 
RESTRICTIONS
ON
INDUCEMENTS.—Section
428(b)(3) is amended—
(1) by striking subparagraph (C) and inserting
the following:
‘‘(C) conduct unsolicited mailings of stu-
dent loan application forms to students enrolled
in secondary school or a postsecondary institu-
tion, or to parents of such students, except that
applications may be mailed to students who
have previously received loans guaranteed under
this part by the guaranty agency; or’’; and
(2) by adding at the end the following new sen-
tence:
‘‘It shall not be a violation of this paragraph for a
guaranty agency to provide assistance to institutions
of higher education comparable to the kinds of as-
sistance provided to institutions of higher education
by the Department of Education.’’.
192
(j) DELAY IN COMMENCEMENT OF REPAYMENT PE-
RIOD.—Section 428(b)(7) is amended by inserting after
subparagraph (C) the following new subparagraph:
‘‘(D) There shall be excluded from the 6
months determined under subparagraph (A)(i) any
period during which the student was called or or-
dered to active duty in a reserve component of the
Armed Forces of the United States.’’.
(k) GUARANTY AGENCY INFORMATION TO ELIGIBLE
INSTITUTIONS.—Section 428(c)(2)(H)(ii) is amended to
read as follows:
‘‘(ii) the guaranty agency shall not re-
quire the payment from the institution of
any fee for such information; and’’.
(l) FORBEARANCE.—Section 428(c)(3) is amended—
(1) in subparagraph (A)(i), by striking ‘‘writ-
ten’’;
(2) in subparagraph (B), by inserting before
the semicolon the following: ‘‘, including forbearance
granted after consideration of a borrower’s total
debt burden’’; and
(3) in the last sentence—
(A) by striking ‘‘and (ii)’’ and inserting
‘‘(ii)’’; and
193
(B) by inserting before the period at the
end the following: ‘‘, and (iii) forbearance for
periods not to exceed 60 days if the lender rea-
sonably determines that such suspensions are
necessary to research or process information
relative to such loan or to collect appropriate
documentation relating to the borrower’s re-
quest for a deferment or forbearance’’.
(m) ASSIGNMENT.—Section 428(c)(8) is amended—
(1) by striking ‘‘(A)’’; and
(2) by striking subparagraph (B).
(n) AGENCY TERMINATION.—Section 428(c)(9) is
amended—
(1) in subparagraph (E)—
(A) by inserting ‘‘or’’ at the end of clause
(iv);
(B) by striking ‘‘; or’’ at the end of clause
(v) and inserting a period; and
(C) by striking clause (vi);
(2) in subparagraph (F)(vii), by striking ‘‘to
avoid disruption’’ and everything that follows and in-
serting ‘‘and to avoid disruption of the student loan
program.’’;
(3) in subparagraph (I), by inserting ‘‘on the
record’’ after ‘‘for a hearing’’; and
194
(4) in subparagraph (K)—
(A) by striking ‘‘and Labor’’ and inserting
‘‘and the Workforce’’; and
(B) by striking everything after ‘‘guaranty
agency system’’ and inserting a period.
(o) LENDER REFERRAL.—Section 428(e) is amend-
ed—
(1) in paragraph (1)(B)(ii), by striking ‘‘during
the transition’’ and everything that follows through
‘‘part D of this title’’; and
(2) in paragraph (3), by striking ‘‘for costs of
transition’’.
(p) ACTION ON AGREEMENTS.—Section 428(g) is
amended by striking ‘‘and Labor’’ and inserting ‘‘and the
Workforce’’.
(q) LENDERS-OF-LAST-RESORT.—Section 428(j)(3)
is amended—
(1) in subparagraph (A)—
(A) in the heading thereof, by striking
‘‘DURING
TRANSITION
TO
DIRECT
LEND-
ING’’;
(B) by striking out ‘‘during the transition
from the Federal Family Education Loan Pro-
gram under this part ot the Federal Direct Stu-
195
dent Loan Program under part D of this title,’’
and inserting a comma;
(C) by inserting ‘‘designated for a State’’
immediately after ‘‘a guaranty agency’’; and
(D) by inserting ‘‘subparagraph (C) and’’
immediately before ‘‘section 422(c)(7),’’; and
(2) by adding at the end thereof the following
new subparagraph:
‘‘(C) The Secretary shall exercise the authority
described in subparagraph (A) only if the Secretary
determines that eligible borrowers are seeking and
are unable to obtain loans under this part, and that
the guaranty agency designated for that State has
the capability to provide lender-of-last-resort loans in
a timely manner, in accordance with its obligations
under paragraph (1), but cannot do so without ad-
vances provided by the Secretary under this para-
graph. If the Secretary makes the determinations
described in the preceding sentence and determines
that it would be cost-effective to do so, the Secretary
may provide advances under this paragraph to that
guaranty agency. If the Secretary determines that
guaranty agency does not have such capability, or
will not provide such loans in a timely fashion, the
Secretary may provide such advances to enable an-
196
other guaranty agency, that the Secretary deter-
mines to have such capability, to make lender-of-
last-resort loans to eligible borrowers in that State
who are experiencing loan access problems.’’.
(r) INCOME
CONTINGENT
REPAYMENT.—Section
428(m) is amended by striking ‘‘shall require at least 10
percent of the borrowers’’ and inserting ‘‘may require bor-
rowers’’.
(s) STATE SHARE OF DEFAULT COSTS.—Subsection
(n) of section 428 is repealed.
(t) BLANKET CERTIFICATE OF GUARANTY.—Section
428 of the Act is amended by adding at the end the follow-
ing new subsection:
‘‘(n) BLANKET CERTIFICATE OF LOAN GUARANTY.—
‘‘(1) IN GENERAL.—Any guaranty agency that
has or enters into any insurance program agreement
with the Secretary under this part may—
‘‘(A) offer eligible lenders participating in
the agency’s guaranty program blanket certifi-
cates of loan guaranty that permit the lender to
make loans without receiving prior approval
from the guaranty agency of individual loans
for eligible borrowers enrolled in eligible pro-
grams at eligible institutions; and
197
‘‘(B) provide eligible lenders with the abil-
ity to transmit electronically data to the agency
concerning loans the lender has elected to make
under the agency’s insurance program via
standard reporting formats, such reporting to
occur at reasonable, mutually acceptable inter-
vals.
‘‘(2) LIMITATIONS ON BLANKET CERTIFICATE
OF
GUARANTY.—(A) An eligible lender may not
make a loan to a borrower under this section after
such lender receives a notification from the guaranty
agency that the borrower is not an eligible borrower.
‘‘(B) A guaranty agency and eligible lender may
establish by mutual agreement limitations or restric-
tions on the number or volume of loans issued by a
lender under the blanket certificate of guaranty.’’.
(u) NOTICE OF AVAILABILITY OF INCOME-SENSITIVE
REPAYMENT OPTION.—
(1) AMENDMENT.—Section 428 is further
amended by adding at the end the following new
subsection:
‘‘(o) NOTICE
OF AVAILABILITY
OF INCOME-SEN-
SITIVE REPAYMENT OPTION.—At the time of offering a
borrower a loan under this part, and at the time of offer-
ing the borrower the option of repaying a loan in accord-
198
ance with this subsection, the lender shall provided the
borrower with a notice that informs the borrower, in a
form prescribed by the Secretary by regulation—
‘‘(1) that all borrowers are eligible for income-
sensitive repayment through loan consolidation
under section 428C;
‘‘(2) the procedures by which the borrower may
elect income-sensitive repayment; and
‘‘(3) where and how the borrower may obtain
additional information concerning income-sensitive
repayment.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 428(b)(1)(E)(i) is amended by
inserting before the semicolon the following: ‘‘or
of repaying the loan in accordance with an in-
come-sensitive repayment schedule offered pur-
suant to section 428C’’.
(B) Section 485(b)(1)(A) is amended—
(i) by striking ‘‘and’’ at the end of
clause (i);
(ii) by striking the period at the end
of clause (ii) and inserting ‘‘; and’’; and
(iii) by adding at the end the follow-
ing new clause:
199
‘‘(iii) the information required to be disclosed
by lenders pursuant to section 428(o).’’.
(v) NOTICE TO INSTITUTIONS OF DEFAULTS.—
(1) ADMINISTRATIVE
AND
FISCAL
PROCE-
DURES.—Section 428(c)(2)(A) is amended by strik-
ing ‘‘proof that reasonable attempts were made’’ and
inserting ‘‘proof that the institution was contacted
and other reasonable attempts were made’’.
(2) REIMBURSEMENT.—Section 428(c)(2)(G)
(20 U.S.C. 1078(c)(2)(G)) is amended by striking
‘‘certifies to the Secretary that diligent attempts
have been made’’ and inserting ‘‘demonstrates to the
Secretary that diligent attempts, including direct
contact with the institution, have been made.’’.
(3) NOTICE TO SECRETARY AND PAYMENT OF
LOSS.—The third sentence of section 430(a) (20
U.S.C. 1080(a)) is amended by inserting ‘‘the insti-
tution was contacted and other’’ after ‘‘submit proof
that’’.
SEC. 418. VOLUNTARY AGREEMENTS WITH GUARANTY
AGENCIES.
Part B of title IV is amended by inserting after sec-
tion 428 (20 U.S.C. 1078) the following new section:
200
‘‘SEC. 428A. VOLUNTARY FLEXIBLE AGREEMENTS WITH
GUARANTY AGENCIES.
‘‘(a) VOLUNTARY AGREEMENTS.—
‘‘(1) AUTHORITY.—Notwithstanding any other
provision of law, the Secretary may enter into a vol-
untary, flexible agreement with not more than 6
guaranty agencies under this section, in lieu of
agreements with a guaranty agency under sub-
sections (b) and (c) of section 428, under which the
Secretary may waive or modify any requirement
under this title applicable to the responsibilities of
the Secretary and a guaranty agency.
‘‘(2) ELIGIBILITY.—Any guaranty agency that
had one or more agreements with the Secretary
under subsections (b) and (c) of section 428 as of
the day before the date of enactment of this section
may enter into an agreement with the Secretary
under this subsection.
‘‘(b) TERMS
OF AGREEMENT.—An agreement be-
tween the Secretary and a guaranty agency under this sec-
tion—
‘‘(1) shall be developed by the Secretary, in con-
sultation with the guaranty agency;
‘‘(2) shall be for a period not to exceed five
years, and may be renewed upon the agreement of
the parties;
201
‘‘(3) may include provisions—
‘‘(A) specifying the responsibilities of the
guaranty agency under the agreement, such
as—
‘‘(i) administering the issuance of in-
surance on loans made under this part on
behalf of the Secretary;
‘‘(ii) monitoring insurance commit-
ments made under this part;
‘‘(iii) default prevention activities;
‘‘(iv) review of default claims made by
lenders;
‘‘(v) payment of default claims;
‘‘(vi) collection of defaulted loans;
‘‘(vii) adoption of internal systems of
accounting and auditing that are accept-
able to the Secretary, and reporting the re-
sult thereof to the Secretary on a timely,
accurate, and auditable basis;
‘‘(viii) timely and accurate collection
and reporting of such other data as the
Secretary may require to carry out the
purposes of the programs under this title;
202
‘‘(ix) monitoring of institutions and
lenders participating in the program under
this part; and
‘‘(x) the performance of other pro-
gram functions by the guaranty agency.
‘‘(B) regarding the fees the Secretary shall
pay, in lieu of revenues that the guaranty agen-
cy may otherwise receive under this part, to the
guaranty agency under the agreement, and
other funds that the guaranty agency may re-
ceive or retain under the agreement, except that
in no case may the cost to the Secretary of the
agreement, as reasonably projected by the Sec-
retary, exceed the cost to the Secretary, as
similarly projected, in the absence of the agree-
ment;
‘‘(C) regarding the use of net revenues, as
described in the agreement under this section,
for such other activities in support of post-
secondary education as may be agreed to by the
Secretary and the guaranty agency;
‘‘(D) regarding the standards by which the
guaranty agency’s performance of its respon-
sibilities under the agreement will be assessed,
and the consequences for a guaranty agency’s
203
failure to achieve a specified level of perform-
ance on 1 or more performance standards;
‘‘(E) regarding the circumstances in which
a guaranty agency’s agreement under this sec-
tion may be ended in advance of its expiration
date;
‘‘(F) regarding such other businesses, pre-
viously purchased or developed with reserve
funds, that relate to the program under this
part and in which the Secretary permits the
guaranty agency to engage; and
‘‘(G) such other provisions as the Sec-
retary may determine to be necessary to protect
the United States from the risk of unreasonable
loss and to promote the purposes of this part;
and
‘‘(4) shall provide for uniform lender participa-
tion with the guaranty agency under the terms of
the agreement.
‘‘(c) TERMINATION.—At the expiration or early ter-
mination of an agreement under this section, the Sec-
retary shall reinstate the guaranty agency’s prior agree-
ments under subsections (b) and (c) of section 428, sub-
ject only to such additional requirements as the Secretary
determines to be necessary in order to ensure the efficient
204
transfer of responsibilities between the agreement under
this section and the agreements under subsections (b) and
(c) of section 428, including the guaranty agency’s compli-
ance with reserve requirements under sections 422 and
428.’’.
SEC. 419. FEDERAL CONSOLIDATION LOANS.
(a) AGREEMENTS WITH LENDERS.—Section 428C(a)
(20 U.S.C. 1078–3(a)) is amended—
(1) by striking subclause (II) of paragraph
(3)(B)(i) and inserting the following:
‘‘(II) that loans received during the 180-
day period following the making of the consoli-
dation loan may be added to the consolidation
loan.’’; and
(2) by striking subparagraph (C) of paragraph
(4) and inserting the following:
‘‘(C) made under part D of this title;’’.
(b) CONTENTS OF AGREEMENTS.—Section 428C(b)
is amended—
(1) in paragraph (1)(A), by striking ‘‘under this
section and (i)’’ and everything that follows and in-
serting ‘‘under this section;’’;
(2) in paragraph (4)(C)(ii)—
(A) by redesignating subclause (III) as
subclause (IV);
205
(B) by inserting after subclause (II) the
following new clause:
‘‘(III) by the Secretary, in the case of
a consolidation loan for which the applica-
tion is received by an eligible lender on or
after October 1, 1998, except that the Sec-
retary shall pay such interest only on that
portion of the loan that repays Federal
Stafford Loans for which the student bor-
rower received an interest subsidy under
section 428 or Federal Direct Stafford
Loans for which the borrower received an
interest subsidy under section 455; or’’;
and
(C) in subclause (IV) (as redesignated), by
striking ‘‘subclause (I) or (II)’’ and inserting
‘‘subclause (I), (II), or (III)’’; and
(3) in paragraph (6)(A), by inserting before the
semicolon at the end the following: ‘‘except that (i)
a lender is not required to consolidate loans de-
scribed in subparagraph (D) or (E) of subsection
(a)(4); and (ii) a lender is not prohibited from estab-
lishing a minimum loan balance for which it will
process a consolidation loan application’’.
206
(c) EXTENSION OF AUTHORITY.—Section 428C(e) is
amended by striking ‘‘September 30, 2002’’ and inserting
‘‘September 30, 2004’’.
SEC. 420. DISBURSEMENT.
(a) REQUIREMENTS.—Section 428G(a)(1) (20 U.S.C.
1078–7(a)(1)) is amended by inserting ‘‘greater than one
semester, one trimester, one quarter, or four months’’
after ‘‘period of enrollment’’.
(b) DISBURSEMENT.—Section 428G(b)(1) is amend-
ed by adding at the end the following new sentence: ‘‘An
institution whose cohort default rate (as determined under
section 435(a)) for each of the three most recent fiscal
years for which data are available is less than 10 percent
shall be exempt from the requirements of this para-
graph.’’.
(c) WITHHOLDING OF SECOND DISBURSEMENT.—
Section 428G(d)(2) is amended by inserting ‘‘by more
than $300’’ after ‘‘under this title’’.
SEC. 421. UNSUBSIDIZED STAFFORD LOANS.
(a) ELIGIBLE BORROWERS.—Section 428H(b) (20
U.S.C. 1078–8(b)) is amended by striking ‘‘which—’’ and
everything that follows and inserting the following:
‘‘which certifies the eligibility of the student to receive a
loan under this part and the amount of the loan for which
such student is eligible. A student shall qualify for a loan
207
if the eligible institution has provided the lender with a
statement that sets forth a schedule for disbursement of
the proceeds of the loan in installments, consistent with
the requirements of section 428G.’’.
(b) LOAN LIMITS.—Section 428H(d)(2)(A) is amend-
ed—
(1) by inserting ‘‘and’’ after the semicolon at
the end of clause (i); and
(2) by striking clauses (ii) and (iii) and insert-
ing the following:
‘‘(ii) if such student is enrolled in a
program of undergraduate education which
is less than one academic year, the maxi-
mum annual loan amount that such stu-
dent may receive may not exceed the
amount that bears the same ratio to the
amount specified in clause (i) as the length
of such program measured in semester, tri-
mester, quarter, or clock hours bears to
one academic year;’’.
(c) 
CAPITALIZATION
OF
INTEREST.—Section
428H(e)(2) is amended to read as follows:
‘‘(2) CAPITALIZATION OF INTEREST.—Interest
on loans made under this section for which pay-
ments of principal are not required during the in-
208
school and grace periods or for which payments are
deferred 
under 
sections 
427(a)(2)(C) 
and
428(b)(1)(M) shall, if agreed upon by the borrower
and the lender—
‘‘(A) be paid monthly or quarterly; or
‘‘(B) be added to the principal amount of
the loan by the lender only—
‘‘(i) when the loan enters repayment;
‘‘(ii) at the expiration of a grace pe-
riod, in the case of a loan that qualifies for
a grace period;
‘‘(iii) at the expiration of a period of
deferment; and
‘‘(iv) when the borrower defaults.
Such capitalization of interest shall not be
deemed to exceed the annual insurable limit on
account of the student.’’.
(d) QUALIFICATION.—Section 428H(e) is amended
by adding at the end the following new paragraph:
‘‘(7) 
QUALIFICATION
FOR
FORBEARANCE,
DEFERMENT, 
AND
INCOME-SENSITIVE
REPAY-
MENT.—A borrower of a loan made under this sec-
tion may qualify for a forbearance or deferment, or
an income-sensitive repayment plan for which the
borrower is eligible, immediately upon receipt by the
209
lender or holder of a request from the borrower. Any
necessary supporting documentation shall be secured
by the lender or holder within 30 days of the request
in order to continue the forbearance, deferment, or
income-sensitive repayment plan.’’.
(e) REPEAL.—Section 428H(f ) is repealed.
SEC. 422. REPEAL OF LOAN FORGIVENESS.
Section 428J (20 U.S.C. 1078–10) is repealed.
SEC. 423. LEGAL POWERS AND RESPONSIBILITIES.
(a) GENERAL
POWERS.—Section 432(a)(2) (20
U.S.C. 1082(a)(2)) is amended by inserting ‘‘except that
this section shall not be deemed to limit court review
under chapter 7 of title 5, United States Code’’ after ‘‘Sec-
retary’s control’’.
(b) AUDIT OF FINANCIAL TRANSACTIONS.—Section
432(f )(1) is amended—
(1) in subparagraph (B), by striking ‘‘section
435(d)(1) (D), (F), or (H);’’ and inserting ‘‘section
435(d)(1); and’’;
(2) in subparagraph (C)—
(A) by striking ‘‘and Labor’’ and inserting
‘‘and the Workforce’’; and
(B) by striking ‘‘; and’’ inserting a period;
and
(3) by striking subparagraph (D).
210
(c) PROGRAM OF ASSISTANCE.—Section 432(k)(3) is
amended by striking ‘‘Within 1 year’’ and everything that
follows through ‘‘1992, the’’ and inserting ‘‘The’’.
(d) 
COMMON
FORMS
AND
FORMATS.—Section
432(m) is amended—
(1) in paragraph (1)(A), by striking ‘‘The Sec-
retary’’ and inserting ‘‘Subject to paragraph (2), the
Secretary’’;
(2) by striking subparagraph (C) of paragraph
(1);
(3) in subparagraph (D), by striking ‘‘Nothing’’
and inserting ‘‘Subject to paragraph (2), nothing’’;
(4) by redesignating subparagraph (D) of such
paragraph as subparagraph (C);
(5) by redesignating paragraphs (2) and (3) as
paragraphs (3) and (4), respectively;
(6) by inserting after paragraph (1) the follow-
ing new paragraph:
‘‘(2) FREE APPLICATION FOR FEDERAL STU-
DENT
AID.—For academic year 1999–2000 and
thereafter, the Secretary shall prescribe the Free
Application for Federal Student Aid as the applica-
tion form under this part (other than sections 428B
and 428C).’’; and
211
(7) by adding at the end the following new
paragraph:
‘‘(5) MASTER PROMISSORY NOTE.—
‘‘(A) DEVELOPMENT
AND
APPROVAL.—
Within 180 days of enactment of this Act, the
Secretary, in cooperation with representatives of
guaranty agencies, eligible lenders, institutions,
students, and organizations involved in student
financial assistance, shall develop and approve a
master promissory note that will allow for a
multiyear line of credit. Such note shall address
the needs of participants in the programs under
this part. The Secretary shall also develop and
approve a corresponding master promissory
note for use under part D of this title that ad-
dresses the needs of participants in the pro-
grams under such part.
‘‘(B) SALE AND ASSIGNMENT; ENFORCE-
MENT.—Notwithstanding the preceding provi-
sions of this section, each loan made under a
master promissory note providing for a line of
credit may be sold and assigned independently
of any other loan made under the same promis-
sory note, and each such loan shall be sepa-
rately enforceable in all State and Federal
212
courts on the basis of an original or copy of the
master promissory note in accordance with its
terms.’’.
(e) DEFAULT REDUCTION MANAGEMENT.—Section
432(n) is amended—
(1) in paragraph (1), by striking ‘‘1993’’ and
inserting ‘‘1999’’; and
(2) in paragraph (3), by striking ‘‘and Labor’’
and inserting ‘‘and the Workforce’’.
(f ) REPORTING REQUIREMENT.—Section 432(p) is
amended by striking ‘‘State postsecondary reviewing enti-
ties designated under subpart 1 of part H,’’.
SEC. 424. STUDENT LOAN INFORMATION.
Section 433 (20 U.S.C. 1083) is amended—
(1) in the first sentence of subsection (a), by in-
serting ‘‘in simple and understandable terms’’ after
‘‘to the borrower’’; and
(2) in the first sentence of subsection (b), by in-
serting ‘‘in simple and understandable terms’’ after
‘‘under this subsection’’.
SEC. 425. DEFINITIONS.
(a) COHORT DEFAULT RATE.—Section 435(a) (20
U.S.C. 1085(a)) is amended—
(1) in subparagraph (A) of paragraph (2)—
213
(A) by striking ‘‘or’’ at the end of clause
(i); and
(B) by striking clause (ii) and inserting the
following:
‘‘(ii) there are exceptional mitigating cir-
cumstances within the meaning of paragraph
(4); or
‘‘(iii) there are, in the judgment of the
Secretary, other exceptional mitigating cir-
cumstances that would make the application of
this paragraph inequitable.’’;
(2) in subparagraph (C) of paragraph (2), by
striking ‘‘July 1, 1998,’’ and inserting ‘‘July 1,
1999,’’;
(3) in paragraph (3), by inserting ‘‘or, at the
request of the institution, a complete copy of the
records for loans made under this part or of the di-
rect loan servicer for loans made under part D’’
after ‘‘and loan servicers’’; and
(4) by adding at the end the following new
paragraphs:
‘‘(4) 
DEFINITION
OF
MITIGATING
CIR-
CUMSTANCES.—For purposes of paragraph (2), an
institution shall be treated as having exceptional
mitigating circumstances that make application of
214
that paragraph inequitable if such institution is cer-
tified by a certified public accountant to meet each
of the following criteria:
‘‘(A) at least two-thirds of the students en-
rolled on at least a half-time basis at the insti-
tution—
‘‘(i) are eligible to receive a Federal
Pell Grant award that is at least equal to
one-half the maximum Federal Pell Grant
award for which the student would be eligi-
ble based on his or her enrollment status;
or
‘‘(ii) have an adjusted gross income of
the student, and his or her parents (unless
the student is an independent student), of
less than the poverty level, as determined
under criteria established by the Depart-
ment of Health and Human Services;
‘‘(B) at least two-thirds of the students en-
rolled on a full-time basis at the institution in
any 12-month period ending not more than six
months prior to the date the institution submits
its appeal, and who remain enrolled beyond the
point at which the student would be entitled to
a tuition refund of 100 percent—
215
‘‘(i) complete the educational program
in which they are enrolled within the time
normally required to complete that pro-
gram, as specified in the institution’s en-
rollment contract, catalog, or other mate-
rials; or
‘‘(ii) continue to be enrolled and are
making satisfactory academic progress to-
ward completion of their program; or
‘‘(iii) have entered active duty in the
armed forces of the United States; and
‘‘(C) at least two-thirds of the students en-
rolled on a full-time basis at the institution who
complete the educational program in which they
are enrolled within any 12-month period ending
not more than six months prior to the date the
institution submits its appeal are placed for at
least 13 weeks in an employment position for
which they have been trained, or are enrolled
for at least 13 weeks in higher level education
program for which the educational program of
the institution provided substantial preparation,
or have entered active duty in the armed forces
of the United States.
216
‘‘(5) REDUCTION OF DEFAULT RATES AT CER-
TAIN MINORITY INSTITUTIONS.—
‘‘(A) BENEFICIARIES OF EXCEPTION RE-
QUIRED TO ESTABLISH MANAGEMENT PLAN.—
After July 1, 1998, any institution that has a
cohort default rate that equals or exceeds 25
percent for each of the three most recent fiscal
years for which data are available and that re-
lies on the exception in paragraph (2)(C) of this
subsection to continue to be an eligible institu-
tion shall—
‘‘(i) submit to the Secretary a default
management plan which the Secretary, in
his discretion, after consideration of the in-
stitution’s history, resources, dollars in de-
fault, and targets for default reduction, de-
termines is acceptable and provides reason-
able assurance that the institution will, by
July 1, 2001, have a cohort default rate
that is less than 25 percent;
‘‘(ii) engage an independent third
party (which may be paid with funds re-
ceived under part B of title III) to provide
technical assistance in implementing such
default management plan; and
217
‘‘(iii) provide to the Secretary, on an
annual basis or at such other intervals as
the Secretary may require, evidence of co-
hort default rate improvement and success-
ful implementation of such default man-
agement plan.
‘‘(B) DISCRETIONARY ELIGIBILITY CONDI-
TIONED
ON
IMPROVEMENT.—Notwithstanding
the expiration of the exception in paragraph
(2)(C), the Secretary may, in his discretion,
continue to treat an institution described in
subparagraph (A) of this paragraph as an eligi-
ble institution for each of the one-year periods
beginning on July 1, 1999, and July 1, 2000,
only if the institution submits by the beginning
of such period evidence satisfactory to the Sec-
retary that—
‘‘(i) such institution has complied and
is continuing to comply with the require-
ments of subparagraph (A); and
‘‘(ii) such institution has made sub-
stantial improvement, during each of the
preceding one-year periods, in its cohort
default rate.
218
‘‘(6) SPECIAL RULE BASED ON PARTICIPATION
RATE
INDICES.—(A) An institution that dem-
onstrates to the Secretary that its participation rate
index (as defined in regulations in effect on July 1,
1996) is equal to or less than .0375 for any of the
three most recent fiscal years for which data are
available shall not be subject to paragraph (2).
‘‘(B) An institution shall provide the Secretary
with sufficient data to determine its participation
rate index within 30 days after receiving an initial
notification of its draft cohort default rate.
‘‘(C) Prior to publication of a final cohort de-
fault rate for an institution that provides the data
under subparagraph (B), the Secretary shall notify
the institution of its compliance or noncompliance
with subparagraph (A).
‘‘(7) AUTHORITY OF THE SECRETARY TO AS-
SIST DISTRESSED INSTITUTIONS.—The Secretary is
authorized pursuant to section 326(c)(7) to provide
administrative, fiscal, management, strategic plan-
ning, and technical assistance through a qualified
third-party consultant identified by the institution or
an organization representing such institutions. Insti-
tutions eligible for such assistance include those in-
stitutions which qualify for the exemption in para-
219
graph (2)(C)(i), (ii), and (iii) of this subsection, or
which have submitted a default management plan
under paragraph (5) which has been accepted by the
Secretary.’’.
(b) ELIGIBLE LENDER.—Section 435(d) is amend-
ed—
(1) in paragraph (1)(A)(ii)—
(A) by striking ‘‘or’’ at the end of sub-
clause (I); and
(B) by inserting before the semicolon at
the end of subclause (II) the following: ‘‘, or
(III) it is a bank that is a wholly owned sub-
sidiary of a nonprofit foundation, the founda-
tion is described in section 501(c)(3) of the In-
ternal Revenue Code of 1986 and exempt from
taxation under section 501(a) of such Code and
has been participating in the program author-
ized by this part for three years as of the date
of enactment of the Higher Education Amend-
ments of 1998 and only makes loans to under-
graduate students who are 22 years of age or
younger and has a portfolio of not more than
$10,000,000; and in determining whether the
making or holding of loans to students and par-
ents under this part is the primary consumer
220
credit function of the eligible lender, all loans
(including student loans and other consumer
loans) made or held as trustee or in a trust ca-
pacity for the benefit of a third party shall be
considered’’;
(2) in paragraph (1)—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (I);
(B) by striking the period at the end of
subparagraph (J) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(K) a wholly owned subsidiary of a pub-
licly held holding company which, for the three
years preceding the date of enactment of this
subparagraph, through one or more subsidiaries
(i) acts as a finance company, and (ii) partici-
pates in the program authorized by this part
pursuant to subparagraph (C).’’; and
(3) in paragraph (5), by adding at the end the
following new sentence:
‘‘It shall not be a violation of this paragraph for a
lender to provide assistance to institutions of higher
education comparable to the kinds of assistance pro-
221
vided to institutions of higher education by the De-
partment of Education.’’.
(c) LINE OF CREDIT.—Section 435(e) is amended to
read as follows:
‘‘(e) LINE OF CREDIT.—The term ‘line of credit’
means an agreement between the lender and the borrower
pursuant to a master promissory note under which the
lender may make and disburse, in addition to the initial
loan, additional loans in subsequent years.’’.
(d) DEFINITION OF DEFAULT.—
(1) AMENDMENT.—Section 435(l) is amend-
ed—
(A) by striking ‘‘180 days’’ and inserting
‘‘270 days’’; and
(B) by striking ‘‘240 days’’ and inserting
‘‘330 days’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply with respect to loans
for which the first day of delinquency occurs on or
after the date of enactment of this Act.
(e) COHORT DEFAULT RATE: REHABILITATION.—
Section 435(m)(2)(C) is amended by adding at the end
the following new sentences: ‘‘Within 2 years after the
date of enactment of the Higher Education Amendments
of 1998, the Secretary shall, by regulation, require guar-
222
anty agencies to collect data with respect to defaulted
loans in a manner that will permit the identification of
any defaulted loan for which (i) the borrower is currently
making payments and has made not less than 6 consecu-
tive on-time payments by the end of such following fiscal
year, and (ii) a guaranty agency has renewed the borrow-
er’s title IV eligibility as provided in section 428F(b).
Upon a determination by the Secretary that such data is
available, the Secretary shall, by regulation, prescribe the
extent to which any such defaulted loan may be excluded
from the calculation of the cohort default rate under this
subsection.’’.
SEC. 426. DISCHARGE.
Section 437(c)(1) is amended—
(1) by inserting after ‘‘falsely certified by the
eligible institution,’’ the following: ‘‘or if the institu-
tion failed to make a refund of loan proceeds which
it owed to such student’s lender,’’; and
(2) by adding at the end the following new sen-
tences: ‘‘In the case of a discharge based upon a
failure to refund, the amount of the discharge shall
not exceed that portion of the loan which should
have been refunded. The Secretary shall report to
the Committee on Education and the Workforce of
the House of Representatives and the Committee on
223
Labor and Human Resources of the Senate annually
as to the dollar amount of loan discharges attrib-
utable to failures to make refunds.’’.
SEC. 427. CANCELLATION OF LOANS FOR CERTAIN PUBLIC
SERVICE.
Section 437 is further amended—
(1) in the section heading, by striking out the
period at the end thereof and inserting in lieu there-
of a semicolon and ‘‘LOAN
FORGIVENESS
FOR
TEACHING.’’;
(2) by amending the heading for subsection (c)
to read as follows: ‘‘DISCHARGE
RELATED
TO
SCHOOL CLOSURE OR FALSE CERTIFICATION.—’’;
and
(3) by adding at the end thereof the following
new subsection:
‘‘(e) CANCELLATION OF LOANS FOR TEACHING.—
‘‘(1) FUNCTIONS
OF
SECRETARY.—The Sec-
retary shall discharge the liability of a borrower of
a qualifying loan by repaying the amount owed on
the loan, to the extent specified in paragraph (4),
for service described in paragraph (3).
‘‘(2) QUALIFYING LOANS.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, a loan is a qualifying loan if—
224
‘‘(i) the loan was made under section
428 on or after the date of enactment of
the Higher Education Amendments of
1998 to a borrower who, on the date of en-
tering into the note or other written evi-
dence of the loan, had no outstanding bal-
ance of principal or interest on any loan
made before such date; and
‘‘(ii) the loan was obtained to cover
the cost of instruction for an academic
year after the first and second year of un-
dergraduate education.
‘‘(B) LIMITATION.—The Secretary may
not repay loans described in subparagraph (A)
to cover the costs of instruction for more than
two academic years, or three academic years in
the case of a program of instruction normally
requiring five years.
‘‘(C) 
TREATMENT
OF
CONSOLIDATION
LOANS.—A loan made under section 428C may
be a qualifying loan for the purposes of this
subsection only to the extent that such loan was
used to repay a loan or loans that meet the re-
quirements of subparagraphs (A) and (B), as
225
determined in accordance with regulations pre-
scribed by the Secretary.
‘‘(3) QUALIFYING
SERVICE.—A loan shall be
discharged under paragraph (1) for service by the
borrower as a full-time teacher for each complete
academic year of service, after completion of the sec-
ond academic year of service, in a public or other
nonprofit private elementary or secondary school—
‘‘(A) which is in the school district of a
local educational agency which is eligible in
such year for assistance pursuant to title I of
the Elementary and Secondary Education Act
of 1965; and
‘‘(B) which for the purpose of this para-
graph and for that year has been determined by
the State educational agency of the State in
which the school is located to be a school in
which the enrollment of children counted under
section 1124(c) of the Elementary and Second-
ary Education Act of 1965 exceeds 30 percent
of the total enrollment of that school.
‘‘(4) RATE OF DISCHARGE.—(A) Loans shall be
discharged under this subsection at the rate of—
‘‘(i) 30 percent for the first or second com-
plete academic year of qualifying service as de-
226
scribed in paragraph (3) (after completion of
two years of service); and
‘‘(ii) 40 percent for the third complete year
of such qualifying service.
‘‘(B) The total amount that may be discharged
under this subsection for any borrower shall not ex-
ceed $17,750.
‘‘(C) If a portion of a loan is discharged under
subparagraph (A) for any year, the entire amount of
interest on that loan that accrues for that year shall
also be discharged by the Secretary.
‘‘(D) Nothing in this section shall be construed
to authorize refunding of any repayment of a loan.
‘‘(5) LIMITATION ON TEACHER ELIGIBILITY.—
‘‘(A) SECONDARY SCHOOL TEACHERS.—A
borrower may not receive assistance under this
subsection by virtue of teaching in a secondary
school unless such borrower majored in the sub-
ject area in which they are teaching.
‘‘(B) ELEMENTARY SCHOOL TEACHERS.—
A borrower may not receive assistance under
this subsection by virtue of teaching in a ele-
mentary school unless such borrower dem-
onstrates, in accordance with State teacher cer-
tification or licensing requirements, subject
227
matter knowledge and teaching skills in read-
ing, writing, mathematics, and other subjects
taught in elementary schools.
‘‘(6) PREVENTION OF DOUBLE BENEFITS.—No
borrower may, for the same service, receive a benefit
under both this subsection and subtitle D of title I
of the National and Community Service Act of 1990
(42 U.S.C. 12571 et seq.).
‘‘(7) METHOD
OF
PAYMENT.—The Secretary
shall specify in regulations the manner in which
lenders shall be reimbursed for loans made under
this part, or portions thereof, that are discharged
under this subsection.
‘‘(8) LIST.—If the list of schools in which a
teacher may perform service pursuant to paragraph
(3) is not available before May 1 of any year, the
Secretary may use the list for the year preceding the
year for which the determination is made to make
such service determination.
‘‘(9) CONTINUING
ELIGIBILITY.—Any teacher
who performs service in a school which—
‘‘(A) meets the requirements of paragraph
(3) in any year during such service; and
‘‘(B) in a subsequent year fails to meet the
requirements of such subsection,
228
may continue to teach in such school and shall be
eligible for loan cancellation pursuant to this sub-
section with respect to such subsequent years.’’.
SEC. 428. DEBT MANAGEMENT OPTIONS.
Section 437A (20 U.S.C. 1087–O) is repealed.
SEC. 429. SPECIAL ALLOWANCES.
(a) COMPUTATION.—Section 438(b)(2) (20 U.S.C.
1087–1(b)(2)) is amended—
(1) in subparagraph (A), by striking ‘‘(E), and
(F)’’ and inserting ‘‘and (E)’’; and
(2) in subparagraph (B)(iv), by striking ‘‘, (E),
or (F)’’ and inserting ‘‘or (E)’’.
(b) ORIGINATION FEES.—Section 438(c) is amend-
ed—
(1) in paragraph (2)—
(A) by striking ‘‘(other than’’ and inserting
‘‘(including loans made under section 428H,
but excluding’’; and
(B) by adding at the end the following new
sentence: ‘‘Except as provided in paragraph (8),
a lender is not authorized to assess an origina-
tion fee under this paragraph unless the lender
assesses the same fee to all student borrow-
ers.’’; and
229
(2) by adding at the end the following new
paragraph:
‘‘(8) EXCEPTION.—Notwithstanding paragraph
(2), a lender may assess a lesser origination fee for
a borrower demonstrating greater financial need as
determined by such borrower’s adjusted gross family
income.’’.
(c) LENDING FROM PROCEEDS OF TAX EXEMPT OB-
LIGATIONS.—Section 438 is amended—
(1) by striking subsection (e); and
(2) by redesignating subsection (f ) as sub-
section (e).
(d) STUDY.—Section 438 is amended by adding at
the end the following new subsection:
‘‘(f ) STUDY.—The Comptroller General shall conduct
a statistical analysis of the subsidized and unsubsidized
student loan programs under part B to gather data on
lenders’ policies on charging origination fees and to deter-
mine if there are any anomalies that would indicate any
institutional, programmatic, or socioeconomic discrimina-
tion in the assessing or waiving of such fees. The Comp-
troller General shall report to the appropriate committees
of Congress within two years after the date of enactment
of the Higher Education Amendments of 1998.’’.
231
through age 5 by an individual who has a degree in
early childhood education.
‘‘(3) DEGREE.—The term ‘degree’ means an as-
sociate’s or bachelor’s degree awarded by an institu-
tion of higher education.
‘‘(4) EARLY
CHILDHOOD
EDUCATION.—The
term ‘early childhood education’ means education in
the areas of early child education, child care, or any
other educational area related to child care that the
Secretary determines appropriate.
‘‘(b) DEMONSTRATION PROGRAM.—
‘‘(1) IN GENERAL.—The Secretary may carry
out a demonstration program of assuming the obli-
gation to repay, pursuant to subsection (c), a loan
made, insured or guaranteed under this part or part
D (excluding loans made under sections 428B and
428C) for any new borrower after the date of enact-
ment of the Higher Education Amendments of 1998,
who—
‘‘(A) completes a degree in early childhood
education; and
‘‘(B) obtains employment in a child care
facility.
‘‘(2) AWARD BASIS; PRIORITY.—
232
‘‘(A) AWARD BASIS.—Subject to subpara-
graph (B), loan repayment under this section
shall be on a first-come, first-served basis and
subject to the availability of appropriations.
‘‘(B) PRIORITY.—The Secretary shall give
priority in providing loan repayment under this
section for a fiscal year to student borrowers
who received loan repayment under this section
for the preceding fiscal year.
‘‘(3) REGULATIONS.—The Secretary is author-
ized to prescribe such regulations as may be nec-
essary to carry out the provisions of this section.
‘‘(c) LOAN REPAYMENT.—
‘‘(1) IN GENERAL.—The Secretary shall assume
the obligation to repay—
‘‘(A) after the second year of employment
described in subparagraphs (B) and (C) of sub-
section (b)(1), 20 percent of the total amount
of all loans made after date of enactment of the
Higher Education Amendments of 1998, to a
student under this part or part D;
‘‘(B) after the third year of such employ-
ment, 20 percent of the total amount of all such
loans; and
233
‘‘(C) after each of the fourth and fifth
years of such employment, 30 percent of the
total amount of all such loans.
‘‘(2) CONSTRUCTION.—Nothing in this section
shall be construed to authorize the refunding of any
repayment of a loan made under this part or part
D.
‘‘(3) INTEREST.—If a portion of a loan is re-
paid by the Secretary under this section for any
year, the proportionate amount of interest on such
loan which accrues for such year shall be repaid by
the Secretary.
‘‘(4) SPECIAL RULE.—In the case where a stu-
dent borrower who is not participating in loan repay-
ment pursuant to this section returns to an institu-
tion of higher education after graduation from an in-
stitution of higher education for the purpose of ob-
taining a degree in early childhood education, the
Secretary is authorized to assume the obligation to
repay the total amount of loans made under this
part or part D incurred for a maximum of two aca-
demic years in returning to an institution of higher
education for the purpose of obtaining a degree in
early childhood education. Such loans shall only be
repaid for borrowers who qualify for loan repayment
234
pursuant to the provisions of this section, and shall
be repaid in accordance with the provisions of para-
graph (1).
‘‘(5) INELIGIBILITY
OF
NATIONAL
SERVICE
AWARD RECIPIENTS.—No student borrower may, for
the same volunteer service, receive a benefit under
both this section and subtitle D of title I of the Na-
tional and Community Service Act of 1990 (42
U.S.C. 12601 et seq.).
‘‘(d) REPAYMENT TO ELIGIBLE LENDERS.—The Sec-
retary shall pay to each eligible lender or holder for each
fiscal year an amount equal to the aggregate amount of
loans which are subject to repayment pursuant to this sec-
tion for such year.
‘‘(e) APPLICATION FOR REPAYMENT.—
‘‘(1) IN GENERAL.—Each eligible individual de-
siring loan repayment under this section shall sub-
mit a complete and accurate application to the Sec-
retary at such time, in such manner, and containing
such information as the Secretary may require.
‘‘(2) CONDITIONS.—An eligible individual may
apply for loan repayment under this section after
completing each year of qualifying employment. The
borrower shall receive forbearance while engaged in
235
qualifying employment unless the borrower is in
deferment while so engaged.
‘‘(f ) EVALUATION.—
‘‘(1) IN GENERAL.—The Secretary shall con-
duct, by grant or contract, an independent national
evaluation of the impact of the demonstration pro-
gram assisted under this section on the field of early
childhood education.
‘‘(2) COMPETITIVE BASIS.—The grant or con-
tract described in subsection (a) shall be awarded on
a competitive basis.
‘‘(3) CONTENTS.—The evaluation described in
this subsection shall—
‘‘(A) determine the number of individuals
who were encouraged by the demonstration pro-
gram assisted under this section to pursue early
childhood education;
‘‘(B) determine the number of individuals
who remain employed in a child care facility as
a result of participation in the program;
‘‘(C) identify the barriers to the effective-
ness of the program;
‘‘(D) assess the cost-effectiveness of the
program in improving the quality of—
‘‘(i) early childhood education; and
236
‘‘(ii) child care services;
‘‘(E) identify the reasons why participants
in the program have chosen to take part in the
program;
‘‘(F) identify the number of individuals
participating in the program who received an
associate’s degree and the number of such indi-
viduals who received a bachelor’s degree; and
‘‘(G) identify the number of years each in-
dividual participates in the program.
‘‘(4) INTERIM
AND
FINAL
EVALUATION
RE-
PORTS.—The Secretary shall prepare and submit to
the President and the Congress such interim reports
regarding the evaluation described in this subsection
as the Secretary deems appropriate, and shall pre-
pare and so submit a final report regarding the eval-
uation by January 1, 2002.
‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out this section
$10,000,000 for fiscal year 1999, and such sums as may
be necessary for each of the 4 succeeding fiscal years.’’.
PART C—FEDERAL WORK-STUDY PROGRAMS
SEC. 435. AMENDMENTS TO PART C.
(a) EXTENSION OF AUTHORITY; DEFINITION.—
237
(1) ELIGIBLE STUDENTS.—Section 441(a) (20
U.S.C. 2751(a)) is amended by inserting after ‘‘pro-
fessional students’’ the following: ‘‘, including stu-
dents participating in an internship or practicum, or
as a research assistant, as determined by the Sec-
retary,’’.
(2) 
EXTENSION
OF
AUTHORITY.—Section
441(b) is amended by striking ‘‘$800,000,000 for
fiscal year 1993’’ and inserting ‘‘$1,000,000,000 for
fiscal year 1999’’.
(3) DEFINITION
OF
COMMUNITY
SERVICE.—
Section 441(c) is amended by striking ‘‘which are’’
and inserting ‘‘that are performed off-campus or on-
campus and that are’’.
(b) ALLOCATION
OF
FUNDS.—Section 442 (42
U.S.C. 2752) is amended—
(1) by striking subsection (b);
(2) in subsection (c)(1), by striking ‘‘three-
quarters of the remainder’’ and inserting ‘‘the re-
mainder’’;
(3) in subsection (c)(2)(A)(i), by striking ‘‘sub-
section (d)’’ and inserting ‘‘subsection (c)’’;
(4) in subsection (e)(1), by striking ‘‘subsection
(c)’’ and inserting ‘‘subsection (b)’’; and
238
(5) by redesignating subsections (c), (d), (e),
and (f ) as subsections (b), (c), (d), and (e), respec-
tively.
(c) TUTORING AND LITERACY ACTIVITIES.—
Section 443 of the Higher Education Act of 1965 (42
U.S.C. 2753) is amended—
(1) in subsection (b)(2)—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (A);
(B) by redesignating subparagraph (B) as
subparagraph (C); and
(C) by inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) in academic year 1999 and succeed-
ing academic years, an institution shall use at
least 2 percent of the total amount of funds
granted to such institution under this section
for such academic year in accordance with sub-
section (d); and’’;
(2) by adding at the end the following new sub-
section:
‘‘(d) TUTORING AND LITERACY ACTIVITIES.—
‘‘(1) USE OF FUNDS.—In any academic year to
which subsection (b)(2)(B) applies, an institution
shall use the amount required to be used in accord-
239
ance with this subsection to compensate (including
compensation for time spent in directly related train-
ing and travel) students—
‘‘(A) employed as a reading tutor for chil-
dren who are in preschool through elementary
school; or
‘‘(B) employed in family literacy projects.
‘‘(2) PRIORITY FOR SCHOOLS.—An institution
shall—
‘‘(A) give priority, in using such funds, to
the employment of students in the provision of
tutoring services in schools that—
‘‘(i) are identified for school improve-
ment under section 1116(c) of the Elemen-
tary and Secondary Education Act of
1965; or
‘‘(ii) are selected by a local edu-
cational agency under section 15104(a)(2)
of such Act; and
‘‘(B) ensure that any student compensated
with such funds who is employed in a school se-
lected under section 15104(a)(2) of the Ele-
mentary and Secondary Education Act of 1965
is trained in the instructional practices based
240
on reliable, replicable research on reading used
by the school pursuant to such section 15104.
‘‘(3) FEDERAL SHARE.—The Federal share of
the compensation of work study students com-
pensated under this subsection may exceed 75 per-
cent.
‘‘(4) WAIVER.—The Secretary may waive the
requirements of this subsection if the Secretary de-
termines that enforcing such requirements would
cause a hardship for students at the institution.
‘‘(5) RETURN OF FUNDS.—Any institution that
does not use the amount required under this sub-
section, and that does not request and receive a
waiver from the Secretary under paragraph (4),
shall return to the Secretary, at such time as the
Secretary may require for reallocation under para-
graph (6), any balance of such amount that is not
used as so required.
‘‘(6) 
REALLOCATION.—The 
Secretary 
shall
reallot any amounts returned pursuant to paragraph
(5) among institutions that used at least 4 percent
of the total amount of funds granted to such institu-
tion under this section to compensate students em-
ployed in tutoring and literacy activities in the pre-
ceding academic year. Such funds shall be reallotted
241
among such institutions on the same basis as excess
eligible amounts are allocated to institutions pursu-
ant to section 442(c). Funds received by institutions
pursuant to this paragraph shall be used in the
same manner as amounts required to be used in ac-
cordance with this subsection.’’.
(d) GRANT REQUIREMENTS.—
(1) 
COMMUNITY
SERVICE.—Section
443(b)(2)(A) (42 U.S.C. 2753(b)(2)(A)) is amend-
ed—
(A) by striking ‘‘in fiscal year 1994 and
succeeding fiscal years,’’; and
(B) by inserting ‘‘(including time spent in
travel or training, or both, directly related to
such community service)’’ after ‘‘community
service’’.
(2) 
USE
OF
FUNDS
FOR
INDEPENDENT
AND
LESS-THAN-FULL-TIME
STUDENTS.—Section
443(b)(3) (42 U.S.C. 2753(b)(3)) is amended to
read as follows:
‘‘(3) provide that in the selection of students
for employment under such work-study program,
only students, who demonstrate financial need in ac-
cordance with part F of this title, and who meet the
requirements of section 484 will be assisted, except
242
that if the institution’s grant under this part is di-
rectly or indirectly based in part on the financial
need demonstrated by students who are (A) attend-
ing the institution less than full time, or (B) inde-
pendent students, then grant funds shall be made
available to such less than full-time and independent
students;’’.
(3) AVAILABILITY
OF
EMPLOYMENT.—Section
443(b)(6) is amended by striking everything after
‘‘in need thereof’’ and inserting a semicolon.
(4) ACADEMIC RELEVANCE.—Section 443(c)(4)
is amended by inserting before the semicolon at the
end the following: ‘‘, to the maximum extent prac-
ticable’’.
(e) FLEXIBLE USE OF FUNDS.—Section 445(b) (42
U.S.C. 2755(b)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(3) An eligible institution may, with the permission
of a student, make payments to the student under this
part by crediting the student’s account at the institution
or by making a direct deposit to the student’s account at
a depository institution. An eligible institution may only
credit the student’s account at the institution for (A) tui-
tion and fees, (B) in the case of institutionally owned
243
housing, room and board, and (C) other institutionally
provided goods and services.’’.
(f ) JOB
LOCATION
AND
DEVELOPMENT
PRO-
GRAMS.—Section 446 (42 U.S.C. 2756) is amended—
(1) in subsection (a)(1)—
(A) by striking ‘‘$50,000’’ and inserting
‘‘$60,000’’; and
(B) by striking ‘‘community service jobs,
for currently enrolled students’’ and inserting
‘‘community service jobs and cooperative edu-
cation jobs, for currently enrolled students, in-
cluding students participating in work-study
programs under this part’’; and
(2) in subsection (b)—
(A) 
by 
redesignating 
paragraphs 
(4)
through (6) as paragraphs (5) through (7); and
(B) by inserting after paragraph (3) the
following new paragraph:
‘‘(4) provide that the institution will notify the
Secretary if the institution will use funds under this
section to develop cooperative education jobs and will
provide assurances that—
‘‘(A) the funds provided under this para-
graph will supplement and not supplant any co-
244
operative education funds available to the insti-
tution;
‘‘(B) in the case of 2-year programs, funds
will be used to develop and expand cooperative
education, jobs for associate degree or certifi-
cate students only;
‘‘(C) the work portion of a cooperative edu-
cation job developed or expanded under this
paragraph will be related to a student’s aca-
demic program; and
‘‘(D) the institution will furnish the Sec-
retary a report on cooperative education jobs
expanded and developed under this paragraph,
including—
‘‘(i) how the funds were used;
‘‘(ii) a list of employers and whether
the employer is a for-profit or not-for-prof-
it entity; and
‘‘(iii) the employers’ role in the coop-
erative education job.’’.
(g) WORK COLLEGES EXTENSION OF AUTHORITY.—
Section 448(f ) (42 U.S.C. 2756b(f )) is amended by strik-
ing ‘‘1993’’ and inserting ‘‘1999’’.
245
PART D—WILLIAM D. FORD FEDERAL DIRECT
LOAN PROGRAM
SEC. 436. SELECTION OF INSTITUTIONS.
(a) GENERAL
AUTHORITY.—Section 453(a) (20
U.S.C. 1087c(a)) is amended—
(1) by striking ‘‘PHASE-IN’’ and everything that
follows through ‘‘GENERAL AUTHORITY.—’’ and in-
serting ‘‘GENERAL AUTHORITY.—’’; and
(2) by striking paragraphs (2), (3), and (4).
(b) SELECTION CRITERIA.—Section 453(b)(2) is
amended by striking ‘‘prescribe,’’ and everything that fol-
lows through the end of subparagraph (B) and inserting
‘‘prescribe.’’.
(c) ORIGINATION.—Section 453(c) is amended—
(1) in paragraph (2)—
(A) in the heading, by striking ‘‘TRANSI-
TION SELECTION CRITERIA’’ and inserting ‘‘SE-
LECTION CRITERIA’’;
(B) by striking ‘‘For academic year 1994–
1995, the Secretary’’ and inserting ‘‘The Sec-
retary’’;
(C) by striking subparagraph (A); and
(D) in subparagraph (E), by striking ev-
erything after ‘‘deficiencies’’ and inserting a
semicolon; and
246
(E) by redesignating subparagraphs (B)
through (H) as subparagraphs (A) through (G);
and
(2) in paragraph (3)—
(A) in the heading, by striking ‘‘AFTER
TRANSITION’’; and
(B) by striking ‘‘For academic year 1995–
1996 and subsequent academic years, the Sec-
retary’’ and inserting ‘‘The Secretary’’.
SEC. 437. TERMS AND CONDITIONS.
(a) INTEREST RATES.—
(1) AMENDMENT.—Section 455(b) (20 U.S.C.
1087e(b)) is amended to read as follows:
‘‘(b) INTEREST RATE.—
‘‘(1) RATES FOR FDSL AND FDUSL.—For Fed-
eral Direct Stafford Loans and Federal Direct Un-
subsidized Stafford Loans for which the first dis-
bursement is made on or after July 1, 1998, the ap-
plicable rate of interest shall, during any 12-month
period beginning on July 1 and ending on June 30,
be determined on the preceding June 1 and be equal
to—
‘‘(A) the bond equivalent rate of 91-day
Treasury bills auctioned at the final auction
held prior to such June 1; plus
247
‘‘(B) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
‘‘(2) IN SCHOOL AND GRACE PERIOD RULES.—
With respect to any Federal Direct Stafford Loan or
Federal Direct Unsubsidized Stafford Loan for
which the first disbursement is made on or after
July 1, 1995, the applicable rate of interest for in-
terest which accrues—
‘‘(A) prior to the beginning of the repay-
ment period of the loan; or
‘‘(B) during the period in which principal
need not be paid (whether or not such principal
is in fact paid) by reason of a provision de-
scribed 
in 
section 
428(b)(1)(M) 
or
427(a)(2)(C),
shall be determined under paragraph (1) by sub-
stituting ‘1.7 percent’ for ‘2.3 percent’.
‘‘(3) PLUS LOANS.—With respect to Federal
Direct PLUS Loan for which the first disbursement
is made on or after July 1, 1998, the applicable rate
of interest shall be determined under paragraph
(1)—
‘‘(A) by substituting ‘3.1 percent’ for ‘2.3
percent’; and
248
‘‘(B) by substituting ‘9.0 percent’ for ‘8.25
percent’.
‘‘(4) CONSOLIDATION LOANS.—Any Federal Di-
rect Consolidation loan for which the application is
received on or after October 1, 1998, shall bear in-
terest at an annual rate on the unpaid principal bal-
ance of the loan that is equal to the lesser of—
‘‘(i) the weighted average of the interest
rates on the loans consolidated, rounded to the
nearest higher one-eighth of one percent; or
‘‘(ii) 8.25 percent.
‘‘(5) REPAYMENT INCENTIVES.—Notwithstand-
ing any other provision of this part, the Secretary is
authorized to prescribe in regulation such reductions
in the interest rate paid by a borrower of a loan
made under this part as the Secretary determines
appropriate to encourage on-time repayment. Such
reductions may be offered only if the Secretary de-
termines they are both cost neutral and in the best
financial interest of the Federal Government. Any
increase in subsidy costs resulting from such reduc-
tions must be completely offset by corresponding
savings in funds available for the Direct Loan Pro-
gram in that fiscal year from section 458 and other
administrative accounts.
249
‘‘(6) PUBLICATION.—The Secretary shall deter-
mine the applicable rates of interest under this sub-
section after consultation with the Secretary of the
Treasury and shall publish such rate in the Federal
Register as soon as practicable after the date of de-
termination.’’.
(2) EFFECTIVE
DATE.—Except as otherwise
provided therein, the amendments made by this sec-
tion shall apply with respect to any loan made under
part D of title IV of the Higher Education Act of
1965 for which the first disbursement is made on or
after July 1, 1998.
(b) CONSOLIDATION LOANS.—The first sentence of
section 455(g) is amended by striking everything after
‘‘section 428C(a)(4)’’ and inserting a period.
SEC. 438. CONTRACTS.
Section 456(b) (20 U.S.C. 1087f(b)) is amended—
(1) by inserting ‘‘and’’ after the semicolon at
the end of paragraph (3);
(2) by striking paragraph (4); and
(3) by redesignating paragraph (5) as para-
graph (4).
SEC. 439. FUNDS FOR ADMINISTRATIVE EXPENSES.
Section 458 (20 U.S.C. 1087h) is amended—
250
(1) in subsection (a)(1), by striking subpara-
graph (B) and everything that follows and inserting
the following:
‘‘(B) account maintenance fees payable to
guaranty agencies under part B and calculated
in accordance with paragraph (2),
not to exceed (from such funds not otherwise appro-
priated) 
$626,000,000 
in 
fiscal 
year 
1999,
$726,000,000 in fiscal year 2000, $770,000,000 in
fiscal year 2001, $780,000,000 in fiscal year 2002,
and $795,000,000 in fiscal year 2003. Account
maintenance fees under subparagraph (B) of this
paragraph shall be paid quarterly and deposited in
the Operating Fund established under 422B. The
Secretary may carry over funds available under this
section to a subsequent fiscal year.’’;
(2) by striking paragraph (2) of subsection (a)
and inserting the following:
‘‘(2) CALCULATION
BASIS.—Account mainte-
nance fees payable to guaranty agencies under para-
graph (1)(B) shall be calculated for fiscal year 1999
and fiscal year 2000, on the basis of 0.12 percent
of the original principal amount of outstanding loans
on which insurance was issued under part B, and for
fiscal years 2001 and succeeding fiscal years, shall
251
be calculated on the basis of 0.10 percent of the
original principal amount of outstanding loans on
which insurance was issued under part B.’’; and
(3) by striking subsection (d).
SEC. 440. AUTHORITY TO SELL LOANS.
Part D of title IV (20 U.S.C. 1087a et seq.) is
amended by adding at the end the following new section:
‘‘SEC. 459. AUTHORITY TO SELL LOANS.
‘‘The Secretary, in consultation with the Secretary of
the Treasury, is authorized to sell loans made under this
part on such terms as the Secretary determines are in the
best interest of the United States, except that any such
sale shall not result in any cost to the Federal Govern-
ment. Notwithstanding any other provision of law, the pro-
ceeds of any such sale may be used by the Secretary to
offer reductions in the interest rate paid by a borrower
of a loan made under this part as the Secretary deter-
mines appropriate to encourage on-time repayment. Such
reductions may be offered only if the Secretary determines
they are in the best financial interests of the Federal Gov-
ernment.’’.
252
SEC. 441. CANCELLATION OF LOANS FOR CERTAIN PUBLIC
SERVICE.
Part D of title IV is amended by inserting after sec-
tion 459, as added by section 440, the following new sec-
tion:
‘‘SEC. 459A. CANCELLATION OF LOANS FOR CERTAIN PUB-
LIC SERVICE.
‘‘(a) CANCELLATION
OF PERCENTAGE
OF DEBT
BASED ON YEARS OF QUALIFYING SERVICE.—
‘‘(1) FUNCTIONS OF SECRETARY.—The percent
specified in paragraph (4) of the total amount of
any qualifying loan shall be canceled for each com-
plete year of service by the borrower described in
paragraph (3).
‘‘(2) QUALIFYING LOANS.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, a loan is a qualifying loan if—
‘‘(i) the loan was a Federal Direct
Stafford Loan made on or after the date of
enactment 
of 
the 
Higher 
Education
Amendments of 1998 to a borrower who,
on the date of entering into the note or
other written evidence of the loan, had no
outstanding balance of principal or interest
on any loan made before such date; and
253
‘‘(ii) the loan was obtained to cover
the cost of instruction for an academic
year after the first and second year of un-
dergraduate education.
‘‘(B) LIMITATION.—The Secretary may
not repay loans described in subparagraph (A)
to cover the costs of instruction for more than
two academic years, or three academic years in
the case of a program of instruction normally
requiring five years.
‘‘(C) 
TREATMENT
OF
CONSOLIDATION
LOANS.—A Federal Direct Consolidation Loan
may be a qualifying loan for the purposes of
this subsection only to the extent that such loan
was used to repay a loan or loans that meet the
requirements of subparagraphs (A) and (B), as
determined in accordance with regulations pre-
scribed by the Secretary.
‘‘(3) QUALIFYING
SERVICE.—A loan shall be
cancelled under paragraph (1) for service by the bor-
rower as a full-time teacher for each complete aca-
demic year of service, after completion of the second
academic year of service, in a public or other non-
profit private elementary or secondary school—
254
‘‘(A) which is in the school district of a
local educational agency which is eligible in
such year for assistance pursuant to title I of
the Elementary and Secondary Education Act
of 1965; and
‘‘(B) which for the purpose of this para-
graph and for that year has been determined by
the State educational agency of the State in
which the school is located to be a school in
which the enrollment of children counted under
section 1124(c) of the Elementary and Second-
ary Education Act of 1965 exceeds 30 percent
of the total enrollment of that school.
‘‘(4) PERCENTAGE
OF
CANCELLATION.—(A)
The percent of a loan which shall be canceled under
paragraph (1) of this subsection is at the rate of—
‘‘(i) 30 percent for the first or second com-
plete academic year of qualifying service as de-
scribed in paragraph (3) (after completion of
two years of service); and
‘‘(ii) 40 percent for the third complete year
of such qualifying service.
‘‘(B) The total amount that may be canceled
under this subsection for any borrower shall not ex-
ceed $17,750.
255
‘‘(C) If a portion of a loan is canceled under
this subsection for any year, the entire amount of in-
terest on such loan which accrues for such year shall
be canceled.
‘‘(D) Nothing in this section shall be construed
to authorize refunding of any repayment of a loan.
‘‘(5) LIMITATION ON TEACHER ELIGIBILITY.—
‘‘(A) SECONDARY SCHOOL TEACHERS.—A
borrower may not receive assistance under this
subsection by virtue of teaching in a secondary
school unless such borrower majored in the sub-
ject area in which they are teaching.
‘‘(B) ELEMENTARY SCHOOL TEACHERS.—
A borrower may not receive assistance under
this subsection by virtue of teaching in a ele-
mentary school unless such borrower dem-
onstrates, in accordance with State teacher cer-
tification or licensing requirements, subject
matter knowledge and teaching skills in read-
ing, writing, mathematics, and other subjects
taught in elementary schools.
‘‘(6) DEFINITION.—For the purpose of this sec-
tion, the term ‘year’ where applied to service as a
teacher means an academic year as defined by the
Secretary.
256
‘‘(7) PREVENTION OF DOUBLE BENEFITS.—No
borrower may, for the same volunteer service, receive
a benefit under both this section and subtitle D of
title I of the National and Community Service Act
of 1990 (42 U.S.C. 12571 et seq.).
‘‘(b) SPECIAL RULES.—
‘‘(1) LIST.—If the list of schools in which a
teacher may perform service pursuant to subsection
(a)(3) is not available before May 1 of any year, the
Secretary may use the list for the year preceding the
year for which the determination is made to make
such service determination.
‘‘(2) CONTINUING
ELIGIBILITY.—Any teacher
who performs service in a school which—
‘‘(A) meets the requirements of subsection
(a)(3) in any year during such service; and
‘‘(B) in a subsequent year fails to meet the
requirements of such subsection,
may continue to teach in such school and shall be
eligible for loan cancellation pursuant to subsection
(a)(1) with respect to such subsequent years.’’.
PART E—FEDERAL PERKINS LOANS
SEC. 445. AMENDMENTS TO PART E.
(a) EXTENSION OF AUTHORITY.—Section 461(b) (20
U.S.C. 1087aa(b)) is amended—
257
(1) in paragraph (1), by striking ‘‘1993’’ and
inserting ‘‘1999’’; and
(2) in paragraph (2), by striking ‘‘1997’’ each
place it appears and inserting ‘‘2003’’.
(b) ALLOCATION
OF
FUNDS.—Section 462 (20
U.S.C. 1087bb) is amended—
(1) by striking subsection (b);
(2) in subsection (c)(1), by striking ‘‘three-
quarters of the remainder’’ and inserting ‘‘the re-
mainder’’;
(3) in subsection (c)(2), by striking ‘‘subsection
(g)’’ and inserting ‘‘subsection (f )’’;
(4) in subsection (c)(3)—
(A) by striking ‘‘subsection (d)’’ and in-
serting ‘‘subsection (c)’’;
(B) by striking ‘‘subsection (f )’’ and in-
serting ‘‘subsection (e)’’; and
(C) by striking ‘‘subsection (g)’’ and in-
serting ‘‘subsection (f )’’;
(5) in subsection (f )(1), by striking ‘‘subsection
(g)’’ and inserting ‘‘subsection (f )’’;
(6) in subsection (j)(2)—
(A) by striking ‘‘subsection (c)’’ and in-
serting ‘‘subsection (b)’’; and
258
(B) by striking ‘‘subsection (c) of section
462’’ and inserting ‘‘subsection (b)’’; and
(7) by redesignating subsections (c) through (j)
as subsections (b) through (i), respectively.
(c) DEFAULT
REDUCTION
PENALTIES.—Section
462(e)(2)(A) (as redesignated by subsection (b)(7) of this
section) is amended by inserting before the semicolon at
the end the following: ‘‘, except that a plan shall not be
required with respect to any such institution that has a
default rate of less than 20 percent and has less than 100
students who have loans under this part in any academic
year’’.
(d) DEFINITIONS
FOR DEFAULT RATE CALCULA-
TIONS.—Section 462(g) (as redesignated by subsection
(b)(7) of this section) is amended by adding at the end
the following new paragraph:
‘‘(5) For the purpose of this subsection, the term
‘satisfactory arrangements to resume payment’ includes—
‘‘(A) receipt of voluntary monthly payments for
three consecutive months after the time periods
specified in paragraph (4);
‘‘(B) receipt of voluntary payments sufficient to
bring the loan current prior to the calculation being
made for any award year under paragraph (3);
259
‘‘(C) obtaining any deferment, postponement,
rehabilitation, forbearance, or cancellation of the
loan after the time periods specified in paragraph
(4), but prior to the calculation being made for any
award year under paragraph (3);
‘‘(D) receipt of the full amount due on the loan
after the time periods specified in paragraph (4),
but prior to the calculation being made for any
award year under paragraph (3); or
‘‘(E) any other arrangements to resume pay-
ment which the Secretary determines to be satisfac-
tory.’’.
(e) REPORTS TO CREDIT BUREAUS OF PAYMENT RE-
SUMPTIONS.—Section 463(c) (20 U.S.C. 1087cc(c)) is
amended by adding at the end the following new para-
graph:
‘‘(5) Each institution of higher education shall notify
the appropriate credit bureau organizations whenever a
borrower of a loan that is made and held by the institution
and that is in default makes 12 consecutive monthly pay-
ments on such loan, for the purpose of encouraging such
organizations to update the status of information main-
tained with respect to that borrower.’’.
260
(f ) INCENTIVE REPAYMENT PROGRAMS.—Section
463 is amended by adding at the end the following new
subsection:
‘‘(f ) INCENTIVE REPAYMENT PROGRAMS.—
‘‘(1) PROGRAM AUTHORIZED.—Any institution
of higher education participating in the program
under this part may establish, with the approval of
the Secretary, an incentive repayment program de-
signed to reduce defaults on loans under this part
and to assist in replenishing the student loan fund
established under this part.
‘‘(2) CONTENTS
OF
PROGRAM.—An incentive
repayment program under this part may contain
provisions that—
‘‘(A) offer a reduction in the interest rate
on a loan on which the borrower has made 48
consecutive monthly payments, but in no event
may the interest rate be reduced by more than
one percent;
‘‘(B) provide for a discount on the balance
owed on a loan on which the borrower pays the
principal and interest in full prior to the end of
the applicable repayment period, but in no
event shall such discount exceed 5 percent of
261
the unpaid principal balance due on the loan at
the time the early repayment is made; and
‘‘(C) include such other incentive repay-
ment options as the institution determines, with
the approval of the Secretary, will carry out the
objectives of this subsection.
‘‘(3) NO NET COST TO THE GOVERNMENT.—No
incentive option contained in a program authorized
by this subsection may be charged to the Federal
Government.’’.
(g) TERMS OF LOANS.—
(1) 
AGGREGATE
AMOUNT.—Section
464(a)(2)(B) 
(20 
U.S.C. 
1087dd(a)(2)(B)) 
is
amended by striking ‘‘the aggregate of the loans for
all years’’ and inserting ‘‘the aggregate unpaid prin-
cipal amount for all loans’’.
(2) ALLOCATION
TO
LESS-THAN-FULL-TIME
STUDENTS.—Section 464(b) is amended—
(A) by striking ‘‘(1)’’; and
(B) by striking paragraph (2).
(3) QUALIFICATION
FOR
DEFERMENTS.—Sec-
tion 464(c)(2) is amended by adding at the end the
following new subparagraph:
‘‘(C) An individual with an outstanding loan balance
who meets the eligibility criteria for a deferment described
262
in subparagraph (A) as in effect on the date of enactment
of this subparagraph shall be eligible for deferment under
this paragraph notwithstanding any contrary provision of
the promissory note under which the loan or loans were
made, and notwithstanding any amendment (or effective
date provision relating to any amendment) to this section
made prior to the date of such deferment.’’.
(4) CLERICAL AMENDMENT.—The matter fol-
lowing clause (iv) of section 464(c)(2)(A) is amend-
ed by striking ‘‘subparagraph (B)’’ and inserting
‘‘subparagraph (A) of paragraph (1)’’.
(h) REHABILITATION AND DISCHARGE OF LOANS.—
Section 464 is further amended by adding at the end the
following new subsections:
‘‘(g) REHABILITATION OF LOANS.—(1)(A) If the bor-
rower of a loan made under this part who has defaulted
on the loan makes 12 on-time, consecutive, monthly pay-
ments of amounts owed on the loan, the loan shall be con-
sidered rehabilitated, and the institution that made the
loan (or the Secretary, in the case of a loan held by the
Secretary) shall instruct any credit reporting organization
to which the default was reported to remove the default
from the borrower’s credit history.
‘‘(B) As long as the borrower continues to make
scheduled repayments on a loan rehabilitated under this
263
paragraph, the rehabilitated loan shall be subject to the
same terms and conditions, and qualify for the same bene-
fits and privileges, as other loans made under this part.
‘‘(C) The borrower of a rehabilitated loan shall not
be precluded by section 484 from receiving additional
grant, loan, or work assistance under this title (for which
he or she is otherwise eligible) on the basis of defaulting
on the loan prior to such rehabilitation.
‘‘(D) A borrower may obtain the benefit of this para-
graph with respect to rehabilitating the loan only once.
‘‘(2) If the borrower of loan made under this part
who has defaulted on that loan makes 6 on-time, consecu-
tive, monthly payments of amounts owed on such loan, the
borrower’s eligibility for grant, loan, or work assistance
under this title shall be restored. A borrower may obtain
the benefit of this paragraph with respect to restored eligi-
bility only once.
‘‘(h) DISCHARGE.—
‘‘(1) IN GENERAL.—If a student borrower who
received a loan made under this part on or after
January 1, 1986, is unable to complete the program
in which such student is enrolled due to the closure
of the institution, then the Secretary shall discharge
the borrower’s liability on the loan (including inter-
est and collection fees) by repaying the amount owed
264
on the loan and shall subsequently pursue any claim
available to such borrower against the institution
and its affiliates and principals, or settle the loan
obligation.
‘‘(2) ASSIGNMENT.—A borrower whose loan has
been discharged pursuant to this subsection shall be
deemed to have assigned to the United States the
right to a loan refund up to the amount discharged
against the institution and its affiliates and prin-
cipals.
‘‘(3) ELIGIBILITY
FOR
ADDITIONAL
ASSIST-
ANCE.—The period of a student’s assistance at an
institution at which the student was unable to com-
plete a course of study due to the closing of the in-
stitution shall not be considered for purposes of cal-
culating the student’s period of eligibility for addi-
tional assistance under this title.
‘‘(4) SPECIAL RULE.—A borrower whose loan
has been discharged pursuant to this subsection
shall not be precluded, because of that discharge,
from receiving additional grant, loan, or work assist-
ance under this title for which the borrower would
be otherwise eligible (but for the default on the dis-
charged loan). The amount discharged under this
265
subsection shall be treated the same as loans under
section 465(a)(5).
‘‘(5) REPORTING.—The Secretary or institu-
tion, as the case may be, shall report to credit bu-
reaus with respect to loans that have been dis-
charged pursuant to this subsection.’’.
(i) CANCELLATION.—Section 465 (20 U.S.C. 1087ee)
is amended—
(1) in subsection (a)—
(A) in paragraph (2)(C), by striking ‘‘sec-
tion 
676(b)(9)’’ 
and 
inserting 
‘‘section
635(a)(10)’’;
(B) by striking subparagraph (H) of para-
graph (2) and inserting the following:
‘‘(H) as a full-time nurse or medical technician
providing health care services;’’;
(C) by striking the period at the end of
subparagraph (I) of such paragraph and insert-
ing a semicolon;
(D) by adding at the end of such para-
graph the following new subparagraphs:
‘‘(J) as a member of the Commissioned Corps
of the Public Health Service of the United States;
or
266
‘‘(K) as a non-physician mental health profes-
sional providing health care services in a health pro-
fessional shortage area designated under section 332
of the Public Health Service Act.’’;
(E) in the last sentence of paragraph (2),
by striking ‘‘section 602(a)(1)’’ and inserting
‘‘section 602(3)’’;
(F) in paragraph (3)(A)(i), by striking
‘‘(H), or (I)’’ and inserting ‘‘(H), (I), (J), or
(K)’’; and
(G) by adding at the end the following new
paragraph:
‘‘(7) An individual with an outstanding loan obliga-
tion who performs service of any type that is described
in paragraph (2) as in effect on the date of enactment
of this paragraph shall be eligible for cancellation under
this section for such service notwithstanding any contrary
provision of the promissory note under which the loan or
loans were made, and notwithstanding any amendment (or
effective date provision relating to any amendment) to this
section made prior to the date of such service.’’; and
(2) in subsection (b), by adding at the end the
following new sentence: ‘‘To the extent feasible, the
Secretary shall pay the amounts for which any insti-
tution qualifies under this subsection no later than
267
three months after the institution files an institu-
tional application for campus-based funds.’’.
(j) DISTRIBUTION
OF ASSETS.—Section 466 (20
U.S.C. 1087ff) is amended—
(1) by striking ‘‘1996’’ each place it appears
and inserting ‘‘2003’’; and
(2) by striking ‘‘1997’’ each place it appears
and inserting ‘‘2004’’.
(k) COLLECTION OF DEFAULTED LOANS.—
(1) REPEAL.—Subsection (c) of section 467 (20
U.S.C. 1087gg(c)) is repealed.
(2) DEPOSIT.—Any funds in the Perkins Re-
volving Loan Fund on the date of enactment of this
Act shall be deposited in the general fund of the
Treasury.
(l) STATUS CONFIRMATION REPORTS.—Section 468
(20 U.S.C. 1087hh) is amended—
(1) by inserting ‘‘(a) IN GENERAL.—’’ before
‘‘In carrying out’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) STUDENT STATUS CONFIRMATION REPORTS.—
The Secretary shall ensure that borrowers under this part
are included in the student status confirmation report re-
268
quired by the Secretary in the same manner as borrowers
under parts B and D of this title.’’.
PART F—NEED ANALYSIS
SEC. 446. COST OF ATTENDANCE.
Section 472 (20 U.S.C. 1087ll) is amended—
(1) in paragraph (2), by inserting after ‘‘per-
sonal expenses’’ the following: ‘‘, including a reason-
able allowance for the rental or purchase of a per-
sonal computer,’’; and
(2) in paragraph (10), by striking everything
after ‘‘determining costs’’ and inserting a semicolon.
SEC. 447. DATA ELEMENTS.
Section 474(b)(3) (20 U.S.C. 1087nn(b)(3)) is
amended by inserting ‘‘, excluding the student’s parents,’’
after ‘‘family of the student’’.
SEC. 448. FAMILY CONTRIBUTION FOR DEPENDENT STU-
DENTS.
(a) PARENTS’ CONTRIBUTION
FROM
ADJUSTED
AVAILABLE
INCOME.—Section 475(b)(3) (20 U.S.C.
1087oo(b)(3)) is amended by inserting ‘‘, excluding the
student’s parents,’’ after ‘‘number of the family mem-
bers’’.
(b) FAMILY CONTRIBUTION FROM ASSETS.—Section
475 is amended—
269
(1) in subsection (b)(1)(B), by striking ‘‘par-
ents’ contribution’’ and inserting ‘‘family contribu-
tion’’;
(2) in the heading of subsection (d), by striking
‘‘PARENTS’ CONTRIBUTION’’ and inserting ‘‘FAMILY
CONTRIBUTION’’;
(3) in subsection (d)(1)—
(A) by striking ‘‘parents’ contribution’’
and inserting ‘‘family contribution’’; and
(B) by striking ‘‘parental net worth’’ in
subparagraph (A) and inserting ‘‘family net
worth’’;
(4) in subsection (d)(2)—
(A) by striking ‘‘PARENTAL’’ in the head-
ing and inserting ‘‘FAMILY’’;
(B) by striking ‘‘parental net worth’’ and
inserting ‘‘family net worth’’; and
(C) by inserting ‘‘, for both the parents
and the dependent student’’ after ‘‘by adding’’;
(5) by striking subsection (h); and
(6) by redesignating subsection (i) as subsection
(h).
(c) STUDENT CONTRIBUTION FROM AVAILABLE IN-
COME.—Section 475(g) is amended—
(1) in paragraph (2)—
270
(A) in subparagraph (D), by striking
‘‘$1,750; and’’ and inserting ‘‘$3,000, or a suc-
cessor amount prescribed by the Secretary
under section 478;’’;
(B) by striking the period at the end of
subparagraph (E) and inserting ‘‘; and’’; and
(C) by inserting after subparagraph (E)
the following new subparagraph:
‘‘(F) an allowance for parents’ negative
available income, determined in accordance with
paragraph (6).’’; and
(2) by adding at the end the following new
paragraph:
‘‘(6) ALLOWANCE FOR PARENTS’ NEGATIVE AD-
JUSTED
AVAILABLE
INCOME.—The allowance for
parents’ negative adjusted available income is the
amount, if any, by which the sum of the amounts
deducted under subparagraphs (A) through (F) of
paragraph (2) exceeds the sum of the parents’ total
income (as defined in section 480) and the family
contribution from assets (as determined in accord-
ance with subsection (c).’’.
(e) ADJUSTMENTS
TO STUDENTS CONTRIBUTION
FOR
ENROLLMENT
PERIODS
OTHER
THAN
NINE
271
MONTHS.—Section 475 is amended by adding at the end
the following new subsection:
‘‘(i) ADJUSTMENTS
TO STUDENTS CONTRIBUTION
FOR
ENROLLMENT
PERIODS
OF
LESS
THAN
NINE
MONTHS.—For periods of enrollment of less than nine
months, the student’s contribution from adjusted available
income (as determined under subsection (g)) is deter-
mined, for purposes other than subpart 2 of part A, by
dividing amount determined under such subsection by
nine, and multiplying the result by the number of months
in the period of enrollment.’’.
SEC. 449. FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS WITHOUT DEPENDENTS OTHER THAN
A SPOUSE.
(a) ADJUSTMENTS
FOR
ENROLLMENT
PERIODS
OTHER
THAN
NINE
MONTHS.—Section 476(a) (20
U.S.C. 1087pp(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(1)(B);
(2) by inserting ‘‘and’’ after the semicolon at
the end of paragraph (2); and
(3) by inserting after paragraph (2) the follow-
ing new paragraph:
272
‘‘(3) for periods of enrollment of other than 9
months, for purposes other than subpart 2 of part
A—
‘‘(A) dividing the quotient resulting under
paragraph (2) by nine; and
‘‘(B) multiplying the result by the number
of months in the period of enrollment;’’.
(b) CONTRIBUTION FROM AVAILABLE INCOME.—Sec-
tion 476(b)(1)(A)(iv) is amended—
(1) by striking ‘‘allowance of—’’ and inserting
‘‘allowance of the following amount (or a successor
amount prescribed by the Secretary under section
478)—’’;
(2) by striking ‘‘$3,000’’ each place it appears
in subclauses (I) and (II) and inserting ‘‘$5,500’’;
and
(3) by striking ‘‘$6,000’’ in subclause (III) and
inserting ‘‘$8,500’’.
SEC. 450. FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS WITH DEPENDENTS OTHER THAN A
SPOUSE.
Section 477(a) (20 U.S.C. 1087qq(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(2);
273
(2) by inserting ‘‘and’’ after the semicolon at
the end of paragraph (3); and
(3) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4) for periods of enrollment of other than 9
months, for purposes other than subpart 2 of part
A—
‘‘(A) dividing the quotient resulting under
paragraph (3) by nine; and
‘‘(B) multiplying the result by the number
of months in the period of enrollment;’’.
SEC. 451. REGULATIONS; UPDATED TABLES AND AMOUNTS.
Section 478(b) (20 U.S.C. 1087rr(b)) is amended—
(1) by striking ‘‘For each academic year’’ and
inserting the following:
‘‘(1) REVISED
TABLES.—For each academic
year’’; and
(2) by adding at the end the following new
paragraph:
‘‘(2) REVISED AMOUNTS.—For each academic
year after academic year 1999–2000, the Secretary
shall publish in the Federal Register revised income
protection allowances for the purpose of sections
475(g)(2)(D) and 476(b)(1)(A)(iv). Such revised al-
lowances shall be developed by increasing each of the
274
dollar amounts contained in such section by a per-
centage equal to the estimated percentage increase
in the Consumer Price Index (as determined by the
Secretary) between December 1998 and the Decem-
ber next preceding the beginning of such academic
year, and rounding the result to the nearest $10.’’.
SEC. 452. SIMPLIFIED NEEDS TEST; ZERO EXPECTED FAM-
ILY CONTRIBUTION.
Section 479 is amended—
(1) in subsection (b)(3)—
(A) in the matter preceding subparagraph
(A), by striking ‘‘this paragraph’’ and inserting
‘‘this subsection, or subsection (c), as the case
may be,’’;
(B) in subparagraph (A), by striking ‘‘or’’
at the end thereof;
(C) by redesignating subparagraph (B) as
subparagraph (C); and
(D) by inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) a form 1040 (including any prepared
or electronic version of such form) required
pursuant to the Internal Revenue Code of 1986,
except that such form shall be considered a
qualifying form only if the student or family
275
files such form in order to take a tax credit
under section 25A of the Internal Revenue
Code of 1986, and would otherwise be eligible
to file a form described in subparagraph(A);
or’’;
(2) in subsection (c)—
(A) by amending paragraph (1)(A) to read
as follows:
‘‘(A) the student’s parents file, or are eligi-
ble to file, a form described in subsection
(b)(3), or certify that they are not required to
file an income tax return and the student files,
or is eligible to file, such a form, or certifies
that the student is not required to file an in-
come tax return; and’’; and
(B) by amending paragraph (2)(A) to read
as follows:
‘‘(A) the student (and the student’s
spouse, if any) files, or is eligible to file, a form
described in subsection (b)(3), or certifies that
the student (and the student’s spouse, if any)
is not required to file an income tax return;
and’’.
276
SEC. 453. DISCRETION OF STUDENT FINANCIAL AID ADMIN-
ISTRATORS.
(a) SPECIAL CIRCUMSTANCES.—Section 479A(a) (20
U.S.C. 1087tt(a)) is amended—
(1) in the first sentence, by inserting after ‘‘(or
both)’’ the following: ‘‘or, in extraordinary cir-
cumstances, the amount of the expected family con-
tribution,’’; and
(2) by inserting after the second sentence the
following new sentence: ‘‘Special circumstances may
include tuition expenses at an elementary or second-
ary school, medical or dental expenses not covered
by insurance, unusually high child care costs, recent
unemployment of a family member, or other changes
in a family’s income or assets or a student’s status.
Extraordinary circumstances shall be defined by the
Secretary by regulation.’’.
(b) REFUSAL OR ADJUSTMENT OF LOAN CERTIFI-
CATIONS.—Section 479A is amended by striking sub-
section (c) and inserting the following:
‘‘(c) REFUSAL OR ADJUSTMENT OF LOAN CERTIFI-
CATIONS.—On a case-by-case basis, an eligible institution
may refuse to certify a statement which permits a student
to receive a loan under part B, or refuse to make a loan
under part D, or may certify a loan amount or make a
loan that is less than the student’s determination of need
277
(as determined under this part), if the reason for the ac-
tion is documented and provided in written form to the
student and the student is afforded an opportunity to ap-
peal the action in a timely fashion. No eligible institution
shall discriminate against any borrower or applicant in ob-
taining a loan on the basis of race, national origin, reli-
gion, sex, marital status, age, or handicapped status.’’.
SEC. 454. TREATMENT OF OTHER FINANCIAL ASSISTANCE.
Section 480(j)(3) (20 U.S.C. 1087vv(j)(3)) is amend-
ed by inserting after ‘‘paragraph (1),’’ the following: ‘‘a
post-service benefit under chapter 30 of title 38, United
States Code, or’’.
PART G—GENERAL PROVISIONS
SEC. 461. DEFINITIONS.
Section 481 (20 U.S.C. 1088), as amended by section
102(b), is further amended by adding at the end the fol-
lowing new subsection:
‘‘(d) DISTANCE LEARNING.—For the purpose of any
program under this title, the term ‘distance learning’
means an educational process that is characterized by the
separation, in time or place, between instructor and stu-
dent. Distance learning may include courses offered prin-
cipally through the use of—
278
‘‘(1) television, audio, or computer trans-
mission, such as open broadcast, closed circuit,
cable, microwave, or satellite transmission;
‘‘(2) audio or computer conferencing;
‘‘(3) video cassettes or discs; or
‘‘(4) correspondence.’’.
SEC. 462. MASTER CALENDAR.
(a) REQUIRED
SCHEDULE.—Section 482(a) (20
U.S.C. 1089(a)) is amended by adding at the end the fol-
lowing new paragraphs:
‘‘(3) The Secretary shall, to the extent prac-
ticable, notify eligible institutions, guaranty agen-
cies, lenders, interested software providers, and,
upon request, other interested parties, by December
1 prior to the start of an award year of minimal
hardware and software requirements necessary to
administer programs under this title.
‘‘(4) The Secretary shall attempt to conduct
training activities for financial aid administrators
and others in an expeditious and timely manner
prior to the start of such award year in order to en-
sure that all participants are informed of all admin-
istrative requirements.’’.
(b) DELAY OF EFFECTIVE DATE.—Section 482(c) is
amended by striking the second sentence and inserting the
279
following: ‘‘The Secretary shall provide a period for public
comment of not less than 60 days after publication of any
notice of proposed rulemaking affecting programs under
this title.’’.
SEC. 463. FORMS AND REGULATIONS.
(a) COMMON FINANCIAL AID FORM.—Section 483(a)
(20 U.S.C. 1090(a)) is amended—
(1) in paragraph (1)—
(A) by striking ‘‘A, C, D, and E’’ and in-
serting ‘‘A through E’’;
(B) by striking ‘‘and to determine the need
of a student for the purpose of part B of this
title’’;
(C) by striking the second sentence and in-
serting the following: ‘‘The Secretary shall in-
clude on the form developed under this sub-
section such data items as the Secretary deter-
mines are appropriate for inclusion, selected in
consultation with States to assist in the award-
ing of State financial assistance, except that in
no case shall the number of such data items be
less than the number included on the form on
the date of enactment of the Higher Education
Amendments of 1998.’’; and
280
(D) by striking the last sentence and in-
serting the following: ‘‘The Secretary shall in-
clude, on the first page of the form, a promi-
nently displayed notice to students and parents
advising them to check with the college finan-
cial aid office in the event that they have un-
usual circumstances which may affect their eli-
gibility for financial aid.’’;
(2) in paragraph (2)—
(A) by striking ‘‘A, C, D, and E’’ each
place it appears and inserting ‘‘A through E’’;
(B) by striking ‘‘and the need of a student
for the purpose of part B of this title,’’; and
(C) by striking ‘‘or have the student’s need
established for the purpose of part B of this
title’’;
(3) in the first sentence of paragraph (3), by
inserting ‘‘processing loan applications and’’ after
‘‘for the purposes of’’; and
(4) by adding at the end the following new
paragraphs:
‘‘(5) ELECTRONIC FORMS.—(A) The Secretary,
in cooperation with representatives of agencies and
organizations involved in student financial assist-
ance, including private computer software providers,
281
shall develop an electronic version of the form de-
scribed in paragraph (1). Such an electronic version
shall not require a signature to be collected at the
time such version is submitted, as permitted by the
Secretary. The Secretary shall prescribe such version
no later than 120 days after the date of enactment
of the Higher Education Amendments of 1998.
‘‘(B) Nothing in this section shall prohibit the
use of the version of the form developed by the Sec-
retary pursuant to subparagraph (A) by an eligible
institution, eligible lender, guaranty agency, State
grant agency, private computer software providers, a
consortium thereof, or such other entities as the Sec-
retary may designate.
‘‘(C) No fee shall be charged to students in con-
nection with the use of the electronic form, or of any
other electronic forms used in conjunction with such
form in applying for Federal or State student finan-
cial assistance.
‘‘(D) The Secretary shall ensure that data col-
lection complies with section 552a of title 5, United
States Code, and that any entity using the version
of the form developed by the Secretary pursuant to
subparagraph (A) shall maintain reasonable and ap-
propriate administrative, technical, and physical
282
safeguards to ensure the integrity and confidentiality
of the information, and to protect against security
threats, or unauthorized uses or disclosures of the
information provided on the version of the form.
Data collected by such version of the form shall be
used only for the application, award, and adminis-
tration of aid awarded under this title, State aid, or
aid awarded by eligible institutions or such entities
as the Secretary may designate. No data collected by
such version of the form shall be used for making
final aid awards under this title until such data have
been processed by the Secretary or a contractor or
designee of the Secretary.
‘‘(6) SUPPORT
TO
THIRD
PARTY
SERVICERS
AND
PRIVATE
SOFTWARE
PROVIDERS.—The Sec-
retary shall support private organizations and con-
sortia thereof in the development of software used by
eligible institutions for the administration of funds
under this title. The Secretary shall provide in a
timely manner to such organizations and consortia
all necessary specifications that data and software
developed, produced, and distributed (including any
diskette, modem, or network communications) must
meet. These specifications shall contain record lay-
outs for required data and test cases that such orga-
283
nizations or consortia may use to test the accuracy
of its software. The Secretary shall develop in ad-
vance of each processing cycle an annual schedule
for providing such specifications. The Secretary
shall, to the extent practicable, use means of provid-
ing such support, including conferences and other
meetings, outreach, and technical support mecha-
nisms (including telephone support, training and
printed reference materials). The Secretary shall,
from time to time, solicit from such organizations
and consortia means of improving the support pro-
vided by the Secretary.’’.
(b) STREAMLINED REAPPLICATION PROCESS.—Sec-
tion 483(b)(1) is amended by striking ‘‘, within 240 days’’
and everything that follows through ‘‘of 1992,’’.
(c) INFORMATION TO COMMITTEES.—Section 483(c)
is amended by striking ‘‘and Labor’’ and inserting ‘‘and
the Workforce’’.
(d) TOLL-FREE INFORMATION.—Section 483(d) is
amended by striking ‘‘section 633(c)’’ and inserting ‘‘sec-
tion 685(d)(2)(C)’’.
(e) REPEAL.—Subsection (f ) of section 483 is re-
pealed.
284
SEC. 464. STUDENT ELIGIBILITY.
(a) IN
GENERAL.—Section 484(a) (20 U.S.C.
1091(a))—
(1) in paragraph (4), by striking ‘‘the institu-
tion’’ and everything that follows through ‘‘lender),
a document’’ and inserting ‘‘the Federal Govern-
ment, as part of the original financial aid application
process, a certification’’;
(2) in paragraph (4)(B), by inserting after ‘‘so-
cial security number,’’ the following: ‘‘and if a de-
pendent student, the social security number of any
parent of such student whose income information is
required to be included on the form,’’; and
(3) in paragraph (5), by striking ‘‘Trust Terri-
tory of the Pacific Islands’’ and inserting ‘‘the Fed-
erated States of Micronesia, the Republic of the
Marshall Islands, or the Republic of Palau’’.
(b) TERMINATION OF ELIGIBILITY.—Section 484(j)
is amended to read as follows:
‘‘(j) ASSISTANCE UNDER SUBPARTS 1 AND 3, OF
PART A, AND PART C.—Notwithstanding any other provi-
sion of law, a student shall be eligible until September 30,
2001, if otherwise qualified, for assistance under subparts
1 and 3 of part A, and part C, of this title, if the student
is otherwise qualified and—
285
‘‘(1) is a citizen of the Federated States of Mi-
cronesia, the Republic of the Marshall Islands, or
the Republic of Palau, and attends an institution of
higher education in Guam or a public or nonprofit
private institution of higher education in the Fed-
erated States of Micronesia, the Republic of the
Marshall Islands, or the Republic of Palau; or
‘‘(2) meets the requirements of subsection
(a)(5) and attends a public or nonprofit private in-
stitution of higher education in the Federated States
of Micronesia, the Republic of the Marshall Islands,
or the Republic of Palau.’’.
(c) VERIFICATION OF INCOME DATA.—Section 484
is amended by adding at the end the following new sub-
section:
‘‘(q) VERIFICATION OF INCOME DATA.—
‘‘(1) CONFIRMATION WITH IRS.—The Secretary
of Education, in cooperation with the Secretary of
the Treasury, is authorized to confirm with the In-
ternal Revenue Service the adjusted gross income,
Federal income taxes paid, filing status, and exemp-
tions reported by applicants (including parents)
under this title on their Federal income tax returns
for the purpose of verifying the information reported
by applicants on student financial aid applications.
286
‘‘(2) NOTIFICATION.—The Secretary shall es-
tablish procedures under which an applicant is noti-
fied that the Internal Revenue Service will disclose
to the Secretary tax return information as author-
ized under section 6103(l)(13) of the Internal Reve-
nue Code of 1986.’’.
(d) SUSPENSION OF ELIGIBILITY FOR DRUG-RELAT-
ED OFFENSES.—
(1) AMENDMENT.—Section 484 is further
amended by adding at the end thereof the following
new subsection:
‘‘(r) SUSPENSION OF ELIGIBILITY FOR DRUG-RE-
LATED OFFENSES.—
‘‘(1) IN GENERAL.—An individual student who
has been convicted of any offense under any Federal
or State law involving the possession or sale of a
controlled substance shall not be eligible to receive
any grant, loan, or work assistance under this title
during the period beginning on the date of such con-
viction and ending after the interval specified in the
following table:
‘‘If convicted of an offense involving:
The possession of a controlled substance:
Ineligibility period is:
First offense ..............................................
1 year
Second offense ..........................................
2 years
Third offense .............................................
indefinite
The sale of a controlled substance:
First offense ..............................................
2 years
Second offense ..........................................
indefinite
287
‘‘(2) REHABILITATION.—A student whose eligi-
bility has been suspended under paragraph (1) may
resume eligibility before the end of the period deter-
mined under such paragraph if the student satisfac-
torily completes a drug rehabilitation program that
complies with such criteria as the Secretary shall
prescribe for purposes of this paragraph and that in-
cludes two unannounced drug tests.
‘‘(3) DEFINITIONS.—As used in this subsection,
the term ‘controlled substance’ has the meaning
given in section 102(6) of the Controlled Substances
Act (21 U.S.C. 802(6)).’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply with respect to finan-
cial assistance to cover the costs of attendance for
periods of enrollment beginning after the date of en-
actment of this Act.
SEC. 465. STATE COURT JUDGMENTS.
Section 484A (20 U.S.C. 1091a) is amended by add-
ing at the end the following new subsection:
‘‘(c) STATE COURT JUDGMENTS.—A judgment of a
State court for the recovery of money provided as grant,
loan, or work assistance under this title that has been as-
signed or transferred to the Secretary under this title may
be registered in any district court by filing a certified copy
288
of the judgment and the assignment or other transfer to
the Secretary. A judgment so registered shall have the
same force and effect, and may be enforced in the same
manner, as a judgment of the district court of the district
in which the judgment is registered.’’.
SEC. 466. INFORMATION FOR STUDENTS.
(a) INFORMATION DISSEMINATION.—Section 485(a)
(20 U.S.C. 1092(a)) is amended—
(1) in paragraph (1), by striking the second
sentence and inserting the following: ‘‘The informa-
tion required by this section shall be produced and
be made readily available upon request, through ap-
propriate publications, mailings, and electronic
media to all current students and to any prospective
student. Each eligible institution shall, on an annual
basis, provide to all enrolled students a list of the in-
formation that is required to be provided by institu-
tions to students by this Act and section 444 of the
General Education Provisions Act (also referred to
as the Family Educational Rights and Privacy Act
of 1974), together with a statement of the proce-
dures required to obtain such information.’’;
(2) in paragraph (3)—
(A) in the first sentence, by striking ‘‘, or
enrolled in any program of an eligible institu-
289
tion for which the prior program provides sub-
stantial preparation’’; and
(B) by striking subparagraph (A) and in-
serting the following:
‘‘(A) shall be made available by July 1 each
year to current and prospective students prior to en-
rolling or entering into any financial obligation;
and’’; and
(3) by adding at the end the following new
paragraph:
‘‘(6) Each institution may, but is not required to,
provide supplemental information to enrolled and prospec-
tive students showing the completion or graduation rate
for students transferring into the institution or informa-
tion showing the rate at which students transfer out of
the institution.’’.
(b) 
DEPARTMENTAL
PUBLICATIONS.—Section
485(d) is amended—
(1) by striking ‘‘(1) assist’’ and inserting ‘‘(A)
assist’’;
(2) by striking ‘‘(2) assist’’ and inserting ‘‘(B)
assist’’;
(3) by inserting ‘‘(1)’’ before ‘‘The Secretary’’
the first place it appears; and
290
(4) by adding at the end the following new
paragraphs:
‘‘(2) The Secretary shall, to the extent such informa-
tion is available, compile information describing State pre-
paid tuition programs and disseminate such information
to States, eligible institutions, students, and parents in de-
partmental publications.
‘‘(3) The Secretary shall, to the extent practicable,
update the Department’s Internet site to include direct
links to databases which contain information on public
and private financial assistance programs. The Secretary
shall only provide direct links to databases which can be
accessed without charge and shall verify with appropriate
parties that the databases included in the direct link are
not in any way providing fraudulent information. The Sec-
retary shall prominently display adjacent to the direct link
a disclaimer indicating that a direct link to a database
does not constitute an endorsement or recommendation of
the database or its provider or any services or products
of such provider. The Secretary shall provide additional
direct links to information resources from which students
may obtain information about fraudulent and deceptive
practices in the provision of services related to student fi-
nancial aid.’’.
(c) DISCLOSURES.—Section 485(e) is amended—
291
(1) in paragraph (2)—
(A) by striking ‘‘his parents, his guidance’’
and inserting ‘‘the student’s parents, guid-
ance’’; and
(B) by adding at the end the following new
sentence: ‘‘If the institution is a member of a
national collegiate athletic association that com-
piles graduation rate data on behalf of its mem-
ber institutions that the Secretary determines is
substantially comparable to the information de-
scribed in paragraph (1), the distribution of the
compilation of such data to all secondary
schools in the United States shall fulfill the re-
sponsibility of the institution to provide infor-
mation to a prospective student athlete’s guid-
ance counselor and coach.’’;
(2) in paragraph (4), by striking ‘‘when such
completion or graduation rate includes students
transferring into and out of such institution’’ and
inserting ‘‘for students transferring into the institu-
tion or information showing the rate at which stu-
dents transfer out of the institution’’; and
(3) by striking paragraph (9) and inserting the
following:
292
‘‘(9) The reports required by this subsection shall be
due on each July 1 and shall cover the 1-year period end-
ing August 31 of the preceding year.’’.
(d) CAMPUS CRIME REPORTING AND DISCLOSURE.—
Section 485(f ) is amended—
(1) in paragraph (1)—
(A) by striking subparagraph (F) and in-
serting the following:
‘‘(F) Statistics concerning the occurrence on
campus, during the most recent calendar year, and
during the 2 preceding calendar years, of the follow-
ing criminal offenses or arrests reported to campus
security authorities, campus officials who have direct
administrative responsibility for student or campus
activities, disciplinary officers and other officials re-
sponsible for resolving student disciplinary matters,
athletic department officials, or local police agencies
(including offenses handled through the campus dis-
ciplinary system):
‘‘(i) murder;
‘‘(ii) sex offenses, forcible or nonforcible;
‘‘(iii) robbery;
‘‘(iv) aggravated assault;
‘‘(v) burglary;
‘‘(vi) motor vehicle theft;
293
‘‘(vii) manslaughter;
‘‘(viii) larceny;
‘‘(ix) arson; and
‘‘(x) arrests or persons referred for campus
disciplinary action for liquor law violations,
drug-related violations, and weapons posses-
sion.’’;
(B) by striking subparagraph (H); and
(C) by redesignating subparagraph (I) as
subparagraph (H);
(2) in paragraph (4)—
(A) by striking ‘‘Upon request of the Sec-
retary, each’’ and inserting ‘‘On an annual
basis, each’’;
(B) by striking ‘‘paragraphs (1)(F) and
(1)(H)’’ and inserting ‘‘paragraph (1)(F)’’;
(C) by striking ‘‘and Labor’’ and inserting
‘‘and the Workforce’’;
(D) by striking ‘‘1995’’ and inserting
‘‘2000’’;
(E) by striking ‘‘and’’ at the end of sub-
paragraph (A);
(F) by redesignating subparagraph (B) as
subparagraph (C); and
294
(G) by inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) make copies of the statistics submitted to
the Secretary available to the public; and’’;
(3) in paragraph (6)—
(A) by striking ‘‘paragraphs (1)(F) and
(1)(H)’’ and inserting ‘‘paragraph (1)(F)’’; and
(B) by adding at the end the following new
sentence: ‘‘Such statistics shall not identify vic-
tims of crimes or persons accused of crimes.’’;
and
(4) by adding at the end the following new
paragraphs:
‘‘(8)(A) Each institution participating in any pro-
gram under this title that maintains either a police or se-
curity department of any kind shall make, keep, and main-
tain a daily log, written in a form that can be easily under-
stood, recording in chronological order all crimes reported
to such police or security department, including the na-
ture, date, time, and general location of each crime and
the disposition of the complaint, if known.
‘‘(B) All entries that are required by this paragraph
shall be open to public inspection during normal business
hours within two business days of the initial report being
made to the department, unless—
295
‘‘(i) disclosure of such information is prohibited
by law; or
‘‘(ii) the release of such information is likely to
jeopardize an ongoing criminal investigation or the
safety of an individual, cause a suspect to flee or
evade detection, or result in the destruction of evi-
dence.
Any information withheld under clause (ii) shall be open
to public inspection as soon as the damage that is the
basis for such withholding is no longer likely to occur.
‘‘(9) The Secretary shall provide technical assistance
in complying with the provisions of this section to an insti-
tution of higher education who requests such assistance.
‘‘(10) Nothing in this section shall require the report-
ing or disclosure of privileged information.’’.
(e) DATA REQUIRED.—Section 485(g) is amended—
(1) in paragraph (1), by adding at the end the
following new subparagraphs:
‘‘(I)(i) The total revenues, and the reve-
nues from football, men’s basketball, women’s
basketball, all other men’s sports combined and
all other women’s sports combined, derived by
the institution from its intercollegiate athletics
activities.
296
‘‘(ii) For the purpose of clause (i), reve-
nues from intercollegiate athletics activities allo-
cable to a sport shall include (without limita-
tion) gate receipts, broadcast revenues, appear-
ance guarantees and options, concessions, and
advertising, but revenues such as student activi-
ties fees or alumni contributions not so alloca-
ble shall be included in the calculation of total
revenues only.
‘‘(J)(i) The total expenses, and the ex-
penses attributable to football, men’s basketball,
women’s basketball, all other men’s sports com-
bined, and all other women’s sports combined,
made by the institution for its intercollegiate
athletics activities.
‘‘(ii) For the purpose of clause (i) expenses
for intercollegiate athletics activities allocable to
a sport shall include (without limitation)
grants-in-aid, salaries, travel, equipment, and
supplies, but expenses such as general and ad-
ministrative overhead not so allocable shall be
included in the calculation of total expenses
only.
‘‘(K) A statement of any reduction that
may or is likely to occur during the ensuing 4
297
academic years in the number of athletes that
will be permitted to participate in any collegiate
sport, or in the financial resources that the in-
stitution will make available to any such sport,
and the reasons for any such reduction.’’; and
(2) by striking paragraph (5).
SEC. 467. NATIONAL STUDENT LOAN DATA SYSTEM.
Section 485B(a) (20 U.S.C. 1092b(a)) is amended by
inserting before the period at the end of the third sentence
the following: ‘‘no later than one year after the date of
enactment of the Higher Education Amendments of
1997’’.
SEC. 468. PROGRAM PARTICIPATION AGREEMENTS.
(a) REQUIRED
CONTENT.—Section 487(a) (20
U.S.C. 1094(a)) is amended—
(1) in the first sentence, by striking ‘‘, except
with respect to a program under subpart 4 of part
A,’’;
(2) in paragraph (3), by striking subparagraph
(B) and inserting the following:
‘‘(B) the appropriate State agency;’’;
(3) in paragraph (4), by striking ‘‘subsection
(b)’’ and inserting ‘‘subsection (c)’’;
298
(4) in paragraph (15), by striking ‘‘State review
entities under subpart 1 of part H’’ and inserting
‘‘appropriate State agencies’’;
(5) by striking paragraph (18) and inserting
the following:
‘‘(18) The institution will meet the require-
ments established pursuant to section 485(g).’’;
(6) by striking paragraph (21) and inserting
the following:
‘‘(21) The institution will meet the require-
ments established by the Secretary, appropriate
State agencies, and accrediting agencies, pursuant to
part H of this title.’’; and
(7) by adding at the end the following new
paragraph:
‘‘(23) The institution will distribute to each stu-
dent, during registration for enrollment in its in-
structional program, the mail voter registration ap-
plication form described in section 9(a)(2) of the
National Voter Registration Act of 1993, unless the
student, in writing, declines to receive such form.’’.
(b) AUDITS; FINANCIAL RESPONSIBILITY.—Section
487(c) is amended—
(1) in paragraph (1)(A)(i), by striking ‘‘State
agencies’’ and everything that follows through the
299
semicolon and inserting ‘‘and appropriate State
agencies;’’;
(2) in paragraph (2), by striking ‘‘subpart 3’’
and inserting ‘‘subpart 2’’;
(3) in paragraph (4), by striking ‘‘, after con-
sultation’’ and everything that follows through ‘‘part
H,’’; and
(4) in paragraph (5), by striking ‘‘State review’’
and everything that follows through ‘‘part H’’ and
inserting ‘‘appropriate State agencies’’.
SEC. 469. QUALITY ASSURANCE AND REGULATORY SIM-
PLIFICATION.
Section 487A (20 U.S.C. 1094a) is amended to read
as follows:
‘‘SEC. 487A. QUALITY ASSURANCE AND REGULATORY SIM-
PLIFICATION PROGRAM.
‘‘(a) IN GENERAL.—The Secretary is authorized to
select institutions for voluntary participation in a Regu-
latory Simplification Program that provides participating
institutions with the opportunity to develop and implement
an alternative management program that—
‘‘(1) shall allow alternative methods of comply-
ing with regulations issued with respect to parts A
through E and G of this title;
300
‘‘(2) shall not modify or waive the application
of any requirement or other provision of this Act;
and
‘‘(3) may include a Quality Assurance Program
through which individual schools develop and imple-
ment their own comprehensive systems to verify stu-
dent financial aid application data, thereby enhanc-
ing program integrity within the student aid delivery
system.
‘‘(b) SELECTION CRITERIA.—The criteria for select-
ing institutions for participation in the Regulatory Sim-
plification Program shall be based on criteria that include
demonstrated institutional performance, as determined by
the Secretary, and shall take into consideration regulatory
simplification goals, as determined by the Secretary. The
selection criteria shall ensure the participation of rep-
resentatives of institutions of higher education according
to size, mission, and geographical distribution.
‘‘(c) REMOVAL FROM
THE PROGRAM.—The Sec-
retary is authorized to determine—
‘‘(1) when an institution that is unable to ad-
minister the Regulatory Simplification Program
must be removed from such program; and
‘‘(2) when institutions desiring to cease partici-
pation in such Program will be required to complete
301
the current award year under the requirements of
the Program.
‘‘(d) EXPERIMENTAL SITES.—The Secretary is au-
thorized to designate institutions selected for participation
in the Regulatory Simplification Program as Experimental
Sites.
‘‘(e) DEFINITIONS.—For purposes of this section, the
term ‘current award year’ means the award year during
which the participating institution indicates its intention
to cease participation.’’.
SEC. 470. DISTANCE EDUCATION DEMONSTRATION PRO-
GRAMS.
Part G of title IV is amended—
(1) by redesignating section 487B (20 U.S.C.
1094b) as section 487C; and
(2) by inserting after section 487A (as amended
by section 469) the following new section:
‘‘SEC. 487B. DISTANCE EDUCATION DEMONSTRATION PRO-
GRAMS.
‘‘(a) PURPOSE.—It is the purpose of this section—
‘‘(1) to allow demonstration programs that are
strictly monitored by the Department of Education
to test the quality and viability of expanded distance
education programs currently restricted under this
Act;
302
‘‘(2) to provide for increased student access to
higher education through distance education pro-
grams;
‘‘(3) to help determine the most effective means
of delivering quality education via distance education
course offerings; and
‘‘(4) to help determine the appropriate level of
Federal assistance for students enrolled in distance
education programs.
‘‘(b) DEMONSTRATION PROGRAMS AUTHORIZED.—
‘‘(1) IN GENERAL.—The Secretary is authorized
to select institutions or a consortia of institutions for
voluntary participation in a Distance Education
Demonstration Program that provides participating
institutions with the ability to offer distance edu-
cation programs without regard to the current re-
strictions in part F or G of this title or part A of
title I.
‘‘(2) EXEMPTIONS.—The Secretary is author-
ized to exempt any institution or consortia partici-
pating in a Distance Education Demonstration Pro-
gram from any of the requirements of parts F or G
of this title, or part A of title I, or the regulations
prescribed under such parts.
303
‘‘(c) APPLICATION.—Each institution or consortia of
institutions desiring to participate in a demonstration pro-
gram under this section shall submit an application to the
Secretary at such time, in such manner, and accompanied
by such information as the Secretary may require. Each
application shall include—
‘‘(1) a description of the institution or consor-
tium’s consultation with a recognized accrediting
agency or association with respect to quality assur-
ances for the distance education programs to be of-
fered;
‘‘(2) a description of the statutory and regu-
latory requirements described in subsection (b)(2)
for which a waiver is sought and the reasons for
which the waiver is sought;
‘‘(3) a description of the distance education
programs to be offered;
‘‘(4) a description of the students to whom dis-
tance education programs will be offered;
‘‘(5) an assurance that the institution or con-
sortium will offer full cooperation with the ongoing
evaluations of the demonstration program provided
for in this section; and
‘‘(6) such other information as the Secretary
may require.
304
‘‘(d) SELECTION.—To the extent feasible, the Sec-
retary shall select a representative sample of institutions
for participation in the demonstration program authorized
under this section. In selecting institutions for participa-
tion, the Secretary shall take into consideration the insti-
tution’s financial and administrative capability and the
type of program or programs being offered via distance
education course offerings. The Secretary shall, in the ex-
ercise of his discretion, determine the number of dem-
onstration programs to be allowed based on the number
and quality of applications received and the Department’s
capacity to oversee and monitor each demonstration pro-
gram.
‘‘(e) EVALUATION AND REPORT.—
‘‘(1) EVALUATION.—The Secretary shall, on an
annual basis, evaluate the demonstration programs
authorized under this section. Such evaluations shall
specifically review—
‘‘(A) the extent to which the institution or
consortia of institutions has met the goals set
forth in its application to the Secretary, includ-
ing the measures of program quality assurance;
‘‘(B) issues related to student financial as-
sistance for distance education; and
305
‘‘(C) effective technologies for delivering
distance education course offerings.
‘‘(2) POLICY ANALYSIS.—In addition, the Sec-
retary shall review current policies and identify those
policies which present impediments to the develop-
ment and use of distance learning and other non-
traditional methods of expanding access to edu-
cation.
‘‘(3) REPORT.—The Secretary shall report to
the appropriate committees of Congress with respect
to—
‘‘(A) the evaluations of the demonstration
programs authorized under this section; and
‘‘(B) any proposed legislative changes de-
signed to enhance the use of distance edu-
cation.’’.
SEC. 471. GARNISHMENT REQUIREMENTS.
(a) MAXIMUM PERCENTAGE.—Section 488A(a)(1)
(20 U.S.C. 1095a(a)(1)) is amended by striking ‘‘10 per-
cent’’ and inserting ‘‘15 percent’’.
(b) NO ATTACHMENT OF STUDENT ASSISTANCE.—
Section 488A is further amended—
(1) by redesignating subsection (d) as sub-
section (e); and
306
(2) by inserting after subsection (c) the follow-
ing new subsection:
‘‘(d) NO ATTACHMENT OF STUDENT ASSISTANCE.—
Except as authorized in this section, notwithstanding any
other provision of Federal or State law, no grant, loan,
or work assistance awarded under this title, or property
traceable to such assistance, shall be subject to garnish-
ment or attachment in order to satisfy any debt owed by
the student awarded such assistance, other than a debt
owed to the Secretary and arising under this title.’’.
SEC. 472. ADMINISTRATIVE SUBPOENA AUTHORITY.
Part G of title IV of the Act is further amended by
inserting immediately after section 490 (20 U.S.C. 1097)
the following new section:
‘‘SEC. 490A. ADMINISTRATIVE SUBPOENAS.
‘‘(a) AUTHORITY.—To assist the Secretary in the
conduct of investigations of possible violations of the provi-
sions of this title, the Secretary is authorized to require
by subpoena the production of information, documents, re-
ports, answers, records, accounts, papers, and other docu-
mentary evidence pertaining to participation in any pro-
gram under this title. The production of any such records
may be required from any place in a State.
‘‘(b) ENFORCEMENT.—In case of contumacy by, or
refusal to obey a subpoena issued to, any person, the Sec-
307
retary may request the Attorney General to invoke the aid
of any court of the United States where such person re-
sides or transacts business for a court order for the en-
forcement of this section.’’.
SEC. 473. ADVISORY COMMITTEE ON STUDENT FINANCIAL
ASSISTANCE.
Section 491 (20 U.S.C. 1098) is amended—
(1) in subsection (b)—
(A) by inserting ‘‘staffing levels,’’ after
‘‘allocations and expenditures,’’ the first place it
appears; and
(B) by striking the fourth and fifth sen-
tences and inserting the following: ‘‘Reports,
publications, and other documents, including
documents in electronic form, shall not be sub-
ject to review by the Secretary.’’;
(2) in subsection (c)(1)—
(A) by striking ‘‘11 members’’ and insert-
ing ‘‘15 members’’; and
(B) by striking ‘‘3 members’’ each place it
appears in subparagraphs (A) and (B) and in-
serting ‘‘5 members’’;
(3) in subsection (c)(2), by striking ‘‘7 mem-
bers’’ and inserting ‘‘11 members’’;
(4) in subsection (e)—
308
(A) by striking everything after ‘‘except
that,’’ in paragraph (1) and inserting the fol-
lowing:
‘‘within 90 days after the date of enactment of the Higher
Education Amendments of 1998, 2 additional members
shall be appointed by the President pro tempore of the
Senate (one upon the recommendation of the Majority
Leader and one upon the recommendation of the Minority
Leader) and 2 additional members shall be appointed by
the Speaker of the House (one upon the recommendation
of the Majority Leader and one upon the recommendation
of the Minority Leader). Of the additional members—
‘‘(A) 2 shall be appointed for a term of 1 year;
‘‘(B) 1 shall be appointed for a term of 2 years;
and
‘‘(C) 1 shall be appointed for a term of 3
years.’’;
(B) by striking ‘‘Six members’’ in para-
graph (4) and inserting ‘‘Eight members’’; and
(C) by adding at the end the following new
paragraph:
‘‘(6) No officer or full-time employee of the United
States shall serve as members of the Advisory Commit-
tee.’’;
309
(5) by striking subsection (g) and inserting the
following:
‘‘(g) COMPENSATION AND EXPENSES.—Members of
the Advisory Committee may each receive reimbursement
for travel expenses incident to attending Advisory Com-
mittee meetings, including per diem in lieu of subsistence,
as authorized by section 5703 of title 5, United States
Code, for persons in the Government service employed
intermittently.’’;
(6) in subsection (h)(1), by striking ‘‘may be
necessary by the Chairman without regard to’’ and
inserting ‘‘may be deemed necessary by the Chair-
man without regard to personnel ceilings or’’;
(7) in subsection (i), by striking ‘‘$750,000’’
and inserting ‘‘$850,000’’;
(8) by striking subsection (j) and inserting the
following:
‘‘(j) SPECIAL ANALYSES AND ACTIVITIES.—The com-
mittee shall—
‘‘(1) monitor and evaluate the modernization of
student financial aid systems and delivery processes;
‘‘(2) monitor and evaluate the implementation
of a performance-based organization within the De-
partment of Education and report to Congress, on
310
not less than an annual basis, including rec-
ommendations for improvements; and
‘‘(3) assess the adequacy of current methods for
disseminating information about programs under
this title and recommend improvements, as appro-
priate, regarding early needs assessment and infor-
mation for first-year high school students.’’;
(9) in subsection (k), by striking ‘‘1998’’ and
inserting ‘‘2004’’; and
(10) by striking subsection (l).
SEC. 474. MEETINGS AND NEGOTIATED RULEMAKING.
Section 492 (20 U.S.C. 1098a) is amended to read
as follows:
‘‘SEC. 492. NEGOTIATED RULEMAKING.
‘‘(a) IN GENERAL.—
‘‘(1) REGULATION DEVELOPMENT.—In develop-
ing regulations and revisions thereof under this title,
the Secretary shall obtain the advice and rec-
ommendations of individuals and representatives of
the groups involved in student financial assistance
programs under this title, such as students, legal as-
sistance organizations that represent students, insti-
tutions of higher education, guaranty agencies, lend-
ers, secondary markets, loan servicers, guaranty
agency servicers, and collection agencies.
311
‘‘(2) INPUT.—Such advice and recommenda-
tions may be obtained through such mechanisms as
national meetings and electronic exchanges of infor-
mation.
‘‘(b) PROPOSED
REGULATIONS.—After obtaining
such advice and recommendations, and prior to publishing
any proposed regulations and revisions thereof under this
title in the Federal Register, the Secretary shall prepare
draft regulations and submit such regulations to a nego-
tiated rulemaking process. In establishing the negotiated
rulemaking process under this section, the Secretary
shall—
‘‘(1) follow the procedural requirements used in
implementing section 1601(b) of the Elementary and
Secondary Education Act of 1965;
‘‘(2) select participants in the negotiations proc-
ess from individuals and groups participating in the
exchanges described in subsection (a)(1), including
both representatives of such groups from the Dis-
trict of Columbia, and industry participants, and to
the extent possible, the Secretary shall select individ-
uals reflecting the diversity in the industry, rep-
resenting both large and small participants, as well
as individuals serving local areas and national mar-
kets;
312
‘‘(3) conduct the negotiations process in a time-
ly manner in order that final regulations may be
issued by the Secretary within the 240-day period
described in section 431(g) of the General Education
Provisions Act, and any subsequent revisions to reg-
ulations under this title may be issued in accordance
with the master calendar provisions of section 482
of this title; and
‘‘(4) prepare a transcript of the negotiated rule-
making proceedings that shall be available to the
public prior to the issuance of any final regulations.
‘‘(c) FEDERAL ADVISORY COMMITTEE ACT.—The
Federal Advisory Committee Act shall not apply to activi-
ties carried out under this section.’’.
PART H—PROGRAM INTEGRITY
SEC. 476. STATE POSTSECONDARY REVIEW PROGRAM.
(a) AMENDMENTS.—Part H of title IV is amended—
(1) in the heading of the part, by striking
‘‘TRIAD’’;
(2) by striking subpart 1 (20 U.S.C. 1099a
through 1099a–3); and
(3) by redesignating subparts 2 and 3 as sub-
parts 1 and 2, respectively.
(b) CONFORMING AMENDMENTS.—Section 496 (20
U.S.C. 1099b) is amended by striking ‘‘subpart 3’’ each
313
place it appears in subsections (j) and (k) and inserting
‘‘subpart 2’’.
SEC. 477. ACCREDITING AGENCY RECOGNITION.
(a) RECOGNITION.—
(1) The heading of subpart 1 of part H (as re-
designated by section 476(a)(3)) is amended by
striking ‘‘Approval’’ and inserting ‘‘Recogni-
tion’’.
(2) The heading of section 496 is amended by
striking ‘‘APPROVAL’’ and inserting ‘‘RECOGNI-
TION’’.
(b) STANDARDS.—Section 496(a) is amended—
(1) by striking ‘‘STANDARDS’’ and inserting
‘‘CRITERIA’’;
(2) by striking ‘‘standards’’ each place it ap-
pears and inserting ‘‘criteria’’;
(3) in paragraph (5)—
(A) by striking ‘‘of accreditation’’ and in-
serting ‘‘for accreditation’’;
(B) by inserting ‘‘the quality (including the
quality of distance learning programs or
courses) of’’ before ‘‘the institution’s’’;
(C) in subparagraph (G), by striking ‘‘pro-
gram length and tuition and fees in relation to
314
the subject matters taught’’ and inserting
‘‘measures of program length’’;
(D) by striking subparagraph (J);
(E) in subparagraph (L), by inserting ‘‘the
most recent student loan default rate data pro-
vided by the Secretary and’’ after ‘‘including’’;
(F) by striking ‘‘and’’ at the end of sub-
paragraph (K);
(G) by inserting ‘‘and’’ after the semicolon
at the end of subparagraph (L);
(H) by redesignating subparagraphs (K)
and (L) as subparagraphs (J) and (K), respec-
tively; and
(I) by striking ‘‘(J), and (L)’’ and insert-
ing ‘‘and (K)’’;
(4) in paragraph (7), by striking ‘‘State post-
secondary review entity’’ and inserting ‘‘State licens-
ing or authorizing agency’’; and
(5) in paragraph (8), by striking ‘‘State post-
secondary’’ and everything that follows through ‘‘is
located’’ and inserting ‘‘State licensing or authoriz-
ing agency’’.
(c) OPERATING PROCEDURES.—Section 496(c) is
amended—
315
(1) by striking ‘‘approved by the Secretary’’
and inserting ‘‘recognized by the Secretary’’;
(2) in paragraph (1), by striking ‘‘(at least’’
and 
everything 
that 
follows 
through 
‘‘unan-
nounced),’’ and inserting ‘‘(which may include unan-
nounced site visits)’’; and
(3) in paragraph (3), by inserting before the
semicolon at the end the following: ‘‘, except that
new sites offered through telecommunications for
programs previously included in the scope of accredi-
tation approval need not be subject to such on-site
visits’’.
(d) CONFORMING AMENDMENTS.—Section 496 is
further amended—
(1) in subsection (d)—
(A) by striking ‘‘APPROVAL’’ in the head-
ing of such subsection and inserting ‘‘RECOGNI-
TION’’; and
(B) by striking ‘‘approved’’ and inserting
‘‘recognized’’;
(2) in subsection (f ), by striking ‘‘approved’’
and inserting ‘‘recognized’’;
(3) in subsection (g)—
(A) by striking ‘‘STANDARDS’’ and insert-
ing ‘‘CRITERIA’’; and
316
(B) by striking ‘‘standards’’ and inserting
‘‘criteria’’;
(4) in subsection (k)(2), by striking ‘‘stand-
ards’’ and inserting ‘‘criteria’’;
(5) in subsection (l)—
(A) by striking ‘‘APPROVAL’’ in the head-
ing of such subsection and inserting ‘‘RECOGNI-
TION’’;
(B) by striking ‘‘the standards’’ each place
it appears and inserting ‘‘its standards’’; and
(C) by striking ‘‘approval’’ and inserting
‘‘recognition’’; and
(6) in subsection (n)—
(A) by striking ‘‘standards’’ each place it
appears and inserting ‘‘criteria’’;
(B) in paragraph (3)—
(i) by striking ‘‘approval or dis-
approval’’ and inserting ‘‘recognition or de-
nial of recognition’’; and
(ii) by striking ‘‘approval process’’
and inserting ‘‘recognition process’’; and
(C) by striking paragraph (4) and insert-
ing the following:
‘‘(4) The Secretary shall maintain sufficient docu-
mentation to support the conclusions reached in the rec-
317
ognition process, and, if the Secretary does not recognize
any accreditation agency or association, shall make pub-
licly available the reason for denying recognition, including
reference to the specific criteria under this section which
have not been fulfilled.’’.
SEC. 478. ELIGIBILITY AND CERTIFICATION PROCEDURES.
(a) SINGLE APPLICATION FORM.—Section 498(b)(1)
(20 U.S.C. 1099c(b)(1)) is amended by striking ‘‘accredi-
tation, and capability’’ and inserting ‘‘accreditation, finan-
cial responsibility, and administrative capacity’’.
(b) FINANCIAL RESPONSIBILITY STANDARDS.—Sec-
tion 498(c) is amended—
(1) in paragraph (1), in the matter preceding
subparagraph (A), by striking ‘‘is able’’ and insert-
ing ‘‘has sufficient resources to ensure against the
precipitous closure of the institution and is able’’;
(2) in paragraph (2)—
(A) in the first sentence, by striking ‘‘oper-
ating losses, net worth, asset-to-liabilities ratios,
or operating fund deficits’’ and inserting ‘‘to ra-
tios that demonstrate financial responsibility,’’;
(B) in the second sentence, by inserting ‘‘,
public,’’ after ‘‘for profit’’; and
(C) by inserting before the period at the
end the following: ‘‘, and develop an appropriate
318
and cost effective process under this subpart
that does not duplicate other reporting require-
ments for assessing and reviewing financial re-
sponsibility’’; and
(3) in paragraph (4)—
(A) in the first sentence, by striking ‘‘ratio
of current assets to current liabilities’’ and in-
serting ‘‘criteria’’; and
(B) in subparagraph (C), by striking ‘‘cur-
rent operating ratio requirement’’ and inserting
‘‘criteria imposed by the Secretary pursuant to
paragraph (2)’’.
(c) ADMINISTRATIVE CAPACITY.—Section 498(d)(1)
is amended—
(1) in subparagraph (A), by striking ‘‘student
aid programs; and’’ and inserting ‘‘student financial
assistance under this title;’’;
(2) by redesignating subparagraph (B) as sub-
paragraph (D); and
(3) by inserting after subparagraph (A) the fol-
lowing new subparagraphs:
‘‘(B) written procedures for, or written in-
formation relating to, each office with respect
to, the approval, disbursement, and delivery of
student financial assistance under this title;
319
‘‘(C)(i) a division of functions for authoriz-
ing payments of student financial assistance
under this title and the disbursement or deliv-
ery of such assistance, so that no office at the
institution has responsibility for both functions;
and
‘‘(ii) an adequate system of checks and
balances for internal control at the institution
with respect to student financial assistance
under this title; and’’.
(d) FINANCIAL RESPONSIBILITY FOR REFUNDS DUR-
ING PROVISIONAL CERTIFICATION.—
(1) AMENDMENT.—Section 498(e) is amended
by adding at the end the following new paragraph:
‘‘(6) Notwithstanding any other provision of
law, any person required to pay, on behalf of a stu-
dent or borrower, a refund of unearned institutional
charges to a lender, or the Secretary, who willfully
fails to pay such refund or willfully attempts in any
manner to evade payment of such refund, shall, in
addition to other penalties provided by law, be liable
to the Secretary for the amount of the refund not
paid, to the same extent with respect to such refund
that such an individual would be liable as a respon-
sible person for a penalty under section 6672(a) of
320
title 26, United States Code, with respect to the
nonpayment of taxes.’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall be effective with respect to
any unpaid refunds that were first required to be
paid to a lender or to the Secretary on or after 90
days after the date of enactment of this Act.
(e) ACTIONS ON APPLICATIONS.—Section 498(f ) is
amended—
(1) by striking ‘‘shall conduct’’ and inserting
‘‘may conduct’’;
(2) by striking ‘‘may establish’’ and inserting
‘‘shall establish’’;
(3) by striking ‘‘may coordinate’’ and inserting
‘‘shall, to the extent practicable, coordinate’’; and
(4) by adding at the end the following new sen-
tence: ‘‘The Secretary may exempt from the site
visit requirement any institution that is participating
in the Quality Assurance Program established under
section 487A at the time such site visit would be re-
quired under this subsection.’’.
(f) TIME LIMITATIONS.—Section 498(g) is amended
to read as follows:
‘‘(g) TIME LIMITATIONS.—(1) After the expiration of
the certification of any institution or upon request for ini-
321
tial certification from an institution not previously cer-
tified, the Secretary may certify the eligibility for the pur-
poses of any program authorized under this title of each
such institution for a period not to exceed 6 years.
‘‘(2) The Secretary shall notify each institution of the
expiration of its eligibility no later than six months prior
to such expiration.’’.
(g) CONFORMING AMENDMENT.—Section 498(h)(2)
is amended by striking ‘‘approval’’ and inserting ‘‘recogni-
tion’’.
(h) PROVISIONAL CERTIFICATION.—Section 498(i) is
amended by adding at the end the following new para-
graph:
‘‘(4)(A) The Secretary may provisionally certify an
institution seeking approval of a change in ownership
based on the preliminary review by the Secretary of a ma-
terially complete application that is received by the Sec-
retary within 10 business days of the transaction for which
the approval is sought.
‘‘(B) A provisional certification under this paragraph
shall expire no later than the end of the month following
the month in which the transaction occurred, except that
if the Secretary has not issued a decision on the applica-
tion for the change of ownership within that period, the
Secretary may continue such provisional certification on
322
a month-to-month basis until such decision has been
issued.’’.
SEC. 479. PROGRAM REVIEW AND DATA.
(a) GENERAL AUTHORITY.—Section 498A(a) (20
U.S.C. 1099c–1(a)) is amended—
(1) in paragraph (2)—
(A) by striking ‘‘may give’’ and inserting
‘‘shall give’’;
(B) by inserting before the semicolon at
the end of subparagraph (C) the following: ‘‘,
that are not accounted for by changes in those
programs’’;
(C) in subparagraph (D), by striking ‘‘the
appropriate’’ 
and 
everything 
that 
follows
through ‘‘of this part’’ and inserting ‘‘the State
licensing or authorizing agency’’;
(D) by striking subparagraph (F); and
(E) by redesignating subparagraph (G) as
subparagraph (F); and
(2) in paragraph (3)(A), by inserting ‘‘relevant’’
after ‘‘all’’.
(b) SPECIAL
ADMINISTRATIVE
RULES.—Section
498A(b) is amended to read as follows:
323
‘‘(b) SPECIAL ADMINISTRATIVE RULES.—(1) In car-
rying out paragraphs (1) and (2) of subsection (a), the
Secretary shall—
‘‘(A) establish guidelines designed to ensure
uniformity of practice in the conduct of program re-
views of institutions; and
‘‘(B) inform the appropriate State agency and
accrediting agency or association whenever taking
action against an institution under this section, sec-
tion 498, or section 432.
‘‘(2) The Secretary shall review the regulations of the
Department and the application of such regulations to en-
sure the uniformity of interpretation and application of
the regulations. In conducting such review, the Secretary
shall consult with relevant representatives of institutions
participating in the programs authorized by this title.’’.
TITLE V—DEVELOPING
INSTITUTIONS
SEC. 501. ESTABLISHMENT OF NEW TITLE V.
Title V is amended to read as follows:
324
‘‘TITLE V—DEVELOPING
INSTITUTIONS
‘‘PART A—HISPANIC-SERVING INSTITUTIONS
‘‘SEC. 501. PROGRAM AUTHORIZED.
‘‘The Secretary shall provide grants and related as-
sistance to Hispanic-serving institutions to enable such in-
stitutions to improve and expand their capacity to serve
Hispanic and other low-income students.
‘‘SEC. 502. ELIGIBILITY; DEFINITIONS.
‘‘(a) DEFINITIONS.—For the purpose of this part:
‘‘(1) 
HISPANIC-SERVING
INSTITUTION.—The
term ‘Hispanic-serving institution’ means an institu-
tion of higher education which—
‘‘(A)(i) is an eligible institution; or
‘‘(ii) is an institution of higher education
(as such term is defined in section 101(a)(2))
that provides a 4-year baccalaureate program,
is regionally accredited, and serves at least
1,500 Hispanic students;
‘‘(B) at the time of application, has an en-
rollment of undergraduate full-time equivalent
students that is at least 25 percent Hispanic
students; and
325
‘‘(C) provides assurances that not less than
50 percent of its Hispanic students are low-in-
come individuals.
‘‘(2) ELIGIBLE INSTITUTION.—The term ‘eligi-
ble institution’ means—
‘‘(A) an institution of higher education—
‘‘(i) which has an enrollment of needy
students as required by subsection (b) of
this section;
‘‘(ii) except as provided in section
522(b), the average educational and gen-
eral expenditures of which are low, per
full-time equivalent undergraduate student,
in comparison with the average educational
and general expenditures per full-time
equivalent undergraduate student of insti-
tutions that offer similar instruction;
‘‘(iii) which is—
‘‘(I) legally authorized to provide,
and provides within the State, an edu-
cational program for which such insti-
tution awards a bachelor’s degree; or
‘‘(II) a junior or community col-
lege;
326
‘‘(iv) which is accredited by a nation-
ally recognized accrediting agency or asso-
ciation determined by the Secretary to be
reliable authority as to the quality of train-
ing offered or which is, according to such
an agency or association, making reason-
able progress toward accreditation;
‘‘(v) which meets such other require-
ments as the Secretary may prescribe; and
‘‘(vi) which is located in a State; and
‘‘(B) any branch of any institution of high-
er education described under subparagraph (A)
which by itself satisfies the requirements con-
tained in clauses (i) and (ii) of such subpara-
graph.
For purposes of the determination of whether an in-
stitution is an eligible institution under this para-
graph, the factor described under subparagraph
(A)(i) shall be given twice the weight of the factor
described under subparagraph (A)(ii).
‘‘(3) LOW-INCOME
INDIVIDUAL.—The term
‘low-income individual’ means an individual from a
family whose taxable income for the preceding year
did not exceed 150 percent of an amount equal to
327
the poverty level determined by using criteria of pov-
erty established by the Bureau of the Census.
‘‘(4) FULL-TIME EQUIVALENT STUDENTS.—The
term ‘full-time equivalent students’ means the sum
of the number of students enrolled full time at an
institution, plus the full-time equivalent of the num-
ber of students enrolled part time (determined on
the basis of the quotient of the sum of the credit
hours of all part-time students divided by 12) at
such institution.
‘‘(5) JUNIOR OR COMMUNITY COLLEGE.—The
term ‘junior or community college’ means an institu-
tion of higher education—
‘‘(A) that admits as regular students per-
sons who are beyond the age of compulsory
school attendance in the State in which the in-
stitution is located and who have the ability to
benefit from the training offered by the institu-
tion;
‘‘(B) that does not provide an educational
program for which it awards a bachelor’s degree
(or an equivalent degree); and
‘‘(C) that—
328
‘‘(i) provides an educational program
of not less than 2 years that is acceptable
for full credit toward such a degree; or
‘‘(ii) offers a 2-year program in engi-
neering, mathematics, or the physical or
biological sciences, designed to prepare a
student to work as a technician or at the
semiprofessional level in engineering, sci-
entific, or other technological fields requir-
ing the understanding and application of
basic engineering, scientific, or mathemati-
cal principles of knowledge.
‘‘(6) EDUCATIONAL
AND
GENERAL
EXPENDI-
TURES.—For the purpose of this part, the term
‘educational and general expenditures’ means the
total amount expended by an institution of higher
education for instruction, research, public service,
academic support (including library expenditures),
student services, institutional support, scholarships
and fellowships, operation and maintenance expendi-
tures for the physical plant, and any mandatory
transfers which the institution is required to pay by
law.
329
‘‘(7) ENDOWMENT FUND.—For the purpose of
this part, the term ‘endowment fund’ means a fund
that—
‘‘(A) is established by State law, by an in-
stitution of higher education, or by a founda-
tion that is exempt from Federal income tax-
ation;
‘‘(B) is maintained for the purpose of gen-
erating income for the support of the institu-
tion; and
‘‘(C) does not include real estate.
‘‘(b) ENROLLMENT OF NEEDY STUDENTS.—For the
purpose of this part, the term ‘enrollment of needy stu-
dents’ means an enrollment at an institution of higher
education or a junior or community college which in-
cludes—
‘‘(1) at least 50 percent of the degree students
so enrolled who are receiving need-based assistance
under title IV of this Act in the second fiscal year
preceding the fiscal year for which the determination
is being made (other than loans for which an inter-
est subsidy is paid pursuant to section 428); or
‘‘(2) a substantial percentage of students re-
ceiving Pell Grants in the second fiscal year preced-
ing the fiscal year for which determination is being
330
made, in comparison with the percentage of students
receiving Pell Grants at all such institutions in the
second fiscal year preceding the fiscal year for which
the determination is made, unless the requirement of
this subdivision is waived under section 522(a).
‘‘SEC. 503. AUTHORIZED ACTIVITIES.
‘‘(a) TYPES OF ACTIVITIES AUTHORIZED.—Grants
awarded under this part shall be used by Hispanic-serving
institutions of higher education to assist such institutions
to plan, develop, undertake, and carry out programs.
‘‘(b) AUTHORIZED
ACTIVITIES.—Grants awarded
under this section shall be used for one or more of the
following activities:
‘‘(1) purchase, rental, or lease of scientific or
laboratory equipment for educational purposes, in-
cluding instructional and research purposes;
‘‘(2) construction, maintenance, renovation, and
improvement in classrooms, libraries, laboratories,
and other instructional facilities;
‘‘(3) support of faculty exchanges, faculty devel-
opment, curriculum development, academic instruc-
tion, and faculty fellowships to assist in attaining
advanced degrees in their field of instruction;
331
‘‘(4) purchase of library books, periodicals, and
other educational materials, including telecommuni-
cations program material;
‘‘(5) tutoring, counseling, and student service
programs designed to improve academic success;
‘‘(6) funds management, administrative man-
agement, and acquisition of equipment for use in
strengthening funds management;
‘‘(7) joint use of facilities, such as laboratories
and libraries;
‘‘(8) establishing or improving a development
office to strengthen or improve contributions from
alumni and the private sector;
‘‘(9) establishing or improving an endowment
fund;
‘‘(10) creating or improving facilities for Inter-
net or other distance learning academic instruction
capabilities, including purchase or rental of tele-
communications technology equipment or services;
‘‘(11) establishing or enhancing a program of
teacher education designed to qualify students to
teach in public elementary and secondary schools;
‘‘(12) establishing community outreach pro-
grams which will encourage elementary and second-
332
ary school students to develop academic skills and
the interest to pursue postsecondary education;
‘‘(13) improving and expanding graduate and
professional opportunities for Hispanic students; and
‘‘(14) other activities proposed in the applica-
tion submitted pursuant to section 504 that—
‘‘(A) contribute to carrying out the pur-
poses of this section; and
‘‘(B) are approved by the Secretary as part
of the review and acceptance of such applica-
tion.
‘‘(c) ENDOWMENT FUND LIMITATIONS.—
‘‘(1) PORTION OF GRANT.—An institution may
not use more than 20 percent of its grant under this
part for any fiscal year for establishing or improving
an endowment fund.
‘‘(2) MATCHING
REQUIRED.—An institution
that uses any portion of its grant under this part for
any fiscal year for establishing or improving an en-
dowment fund shall provide an equal or greater
amount for such purposes from non-Federal funds.
‘‘(3) REGULATIONS.—The Secretary shall pub-
lish rules and regulations specifically governing the
use of funds for establishing or improving an endow-
ment fund.
333
‘‘SEC. 504. APPLICATION PROCESS.
‘‘(a) INSTITUTIONAL ELIGIBILITY.—Each Hispanic-
serving institution desiring to receive assistance under this
part shall submit to the Secretary such enrollment data
as may be necessary to demonstrate that it is a Hispanic-
serving institution, along with such other information and
data as the Secretary may by regulation require.
‘‘(b) APPLICATIONS.—Any institution which is deter-
mined by the Secretary to be a Hispanic-serving institu-
tion (on the basis of the information and data submitted
under subsection (a)) may submit an application for as-
sistance under this section to the Secretary. Such applica-
tion shall include—
‘‘(1) a 5-year plan for improving the assistance
provided by the Hispanic-serving institution to His-
panic and other low-income students; and
‘‘(2) such other information and assurance as
the Secretary may require.
‘‘(c) PRIORITY.—The Secretary shall give priority to
applications that contain satisfactory evidence that such
institution has entered into or will enter into a collabo-
rative arrangement with at least one local educational
agency or community-based organization having dem-
onstrated effectiveness to provide such agency with assist-
ance (from funds other than funds provided under this
part) in reducing Hispanic dropout rates, improving His-
334
panic rates of academic achievement, and increasing the
rates at which Hispanic high school graduates enroll in
higher education.
‘‘(d) SPECIAL RULE.—For the purposes of this part,
no Hispanic-serving college or university which is eligible
for and receives funds under this part may concurrently
receive other funds under title III.
‘‘SEC. 505. DURATION OF GRANT.
‘‘(a) AWARD PERIOD.—The Secretary may award a
grant to an eligible institution under this part for 5 years,
except that no institution shall be eligible to secure a sub-
sequent 5-year grant award under this part until two years
have elapsed since the expiration of its most recent 5-year
grant award.
‘‘(b) LIMITATIONS.—In awarding grants under this
part the Secretary shall give priority to applicants who are
not already receiving a grant under this part, except that
for the purpose of this subsection a grant under section
524(a)(1) shall not be considered a grant under this part.
‘‘(c) PLANNING
GRANTS.—Notwithstanding sub-
section (a), the Secretary may award a grant to an eligible
institution under this part for a period of one year for
the purpose of preparation of plans and applications for
a grant under this part.
335
‘‘PART B—GENERAL PROVISIONS
‘‘SEC. 521. APPLICATIONS FOR ASSISTANCE.
‘‘(a) APPLICATIONS.—
‘‘(1) APPLICATIONS REQUIRED.—Any institu-
tion which is eligible for assistance under this title
shall submit to the Secretary an application for as-
sistance at such time, in such form, and containing
such information, as may be necessary to enable the
Secretary to evaluate its need for assistance. Subject
to the availability of appropriations to carry out this
title, the Secretary may approve an application for
a grant under this title only if the Secretary deter-
mines that—
‘‘(A) the application meets the require-
ments of subsection (b);
‘‘(B) the applicant is eligible for assistance
in accordance with the part of this title under
which the assistance is sought; and
‘‘(C) the applicant’s performance goals are
sufficiently rigorous as to meet the purposes of
this title and the performance objectives and in-
dicators for this title established by the Sec-
retary pursuant to the Government Perform-
ance and Results Act.
‘‘(2) PRELIMINARY APPLICATIONS.—In carrying
out paragraph (1), the Secretary shall develop a pre-
336
liminary application for use by eligible institutions
applying under part A prior to the submission of the
principal application.
‘‘(b) CONTENTS.—An institution, in its application
for a grant, shall—
‘‘(1) set forth, or describe how the institution
will develop, a comprehensive development plan to
strengthen the institution’s academic quality and in-
stitutional management, and otherwise provide for
institutional self-sufficiency and growth (including
measurable objectives for the institution and the
Secretary to use in monitoring the effectiveness of
activities under this title);
‘‘(2) set forth policies and procedures to ensure
that Federal funds made available under this title
for any fiscal year will be used to supplement and,
to the extent practical, increase the funds that would
otherwise be made available for the purposes of sec-
tion 503, and in no case supplant those funds;
‘‘(3) set forth policies and procedures for evalu-
ating the effectiveness in accomplishing the purpose
of the activities for which a grant is sought under
this title;
‘‘(4) provide for such fiscal control and fund ac-
counting procedures as may be necessary to ensure
337
proper disbursement of and accounting for funds
made available to the applicant under this title;
‘‘(5) provide (A) for making such reports, in
such form and containing such information, as the
Secretary may require to carry out the functions
under this title and the Government Performance
and Results Act, including not less than one report
annually setting forth the institution’s progress to-
ward achieving the objectives for which the funds
were awarded, and (B) for keeping such records and
affording such access thereto, as the Secretary may
find necessary to assure the correctness and verifica-
tion of such reports;
‘‘(6) provide that the institution will comply
with the limitations set forth in section 526;
‘‘(7) describe in a comprehensive manner any
proposed project for which funds are sought under
the application and include—
‘‘(A) a description of the various compo-
nents of the proposed project, including the es-
timated time required to complete each such
component;
‘‘(B) in the case of any development
project which consists of several components (as
described by the applicant pursuant to subpara-
338
graph (A)), a statement identifying those com-
ponents which, if separately funded, would be
sound investments of Federal funds and those
components which would be sound investments
of Federal funds only if funded under this title
in conjunction with other parts of the develop-
ment project (as specified by the applicant);
‘‘(C) an evaluation by the applicant of the
priority given any proposed project for which
funds are sought in relation to any other
projects for which funds are sought by the ap-
plicant under this title, and a similar evaluation
regarding priorities among the components of
any single proposed project (as described by the
applicant pursuant to subparagraph (A));
‘‘(D) a detailed budget showing the man-
ner in which funds for any proposed project
would be spent by the applicant; and
‘‘(E) a detailed description of any activity
which involves the expenditure of more than
$25,000, as identified in the budget referred to
in subparagraph (D); and
‘‘(8) include such other information as the Sec-
retary may prescribe.
339
‘‘(c) 
PRIORITY
CRITERIA
PUBLICATION
RE-
QUIRED.—The Secretary shall publish in the Federal Reg-
ister, pursuant to chapter 5 of title 5, United States Code,
all policies and procedures required to exercise the author-
ity set forth in subsection (a). No other criteria, policies,
or procedures shall apply.
‘‘(d) ELIGIBILITY DATA.—The Secretary shall use
the most recent and relevant data concerning the number
and percentage of students receiving need-based assist-
ance under title IV of this Act in making eligibility deter-
minations and shall advance the base-year forward follow-
ing each annual grant cycle.
‘‘SEC. 522. WAIVER AUTHORITY AND REPORTING REQUIRE-
MENT.
‘‘(a) WAIVER REQUIREMENTS; NEED-BASED ASSIST-
ANCE STUDENTS.—The Secretary may waive the require-
ments set forth in section 502(a)(2)(A)(i) in the case of
an institution—
‘‘(1) which is extensively subsidized by the
State in which it is located and charges low or no
tuition;
‘‘(2) which serves a substantial number of low-
income students as a percentage of its total student
population;
340
‘‘(3) which is contributing substantially to in-
creasing higher education opportunities for educa-
tionally disadvantaged, underrepresented, or minor-
ity students, who are low-income individuals;
‘‘(4) which is substantially increasing higher
educational opportunities for individuals in rural or
other isolated areas which are unserved by post-
secondary institutions; or
‘‘(5) wherever located, if the Secretary deter-
mines that the waiver will substantially increase
higher education opportunities appropriate to the
needs of Hispanic Americans.
‘‘(b) WAIVER DETERMINATIONS; EXPENDITURES.—
(1) The Secretary may waive the requirements set forth
in section 502(a)(2)(A)(ii) if the Secretary determines,
based on persuasive evidence submitted by the institution,
that the institution’s failure to meet that criterion is due
to factors which, when used in the determination of com-
pliance with such criterion, distort such determination,
and that the institution’s designation as an eligible institu-
tion under part A is otherwise consistent with the pur-
poses of such part.
‘‘(2) The Secretary shall submit to the Congress
every other year a report concerning the institutions
which, although not satisfying the criterion contained in
341
section 502(a)(2)(A)(ii), have been determined to be eligi-
ble institutions under part A institutions which enroll sig-
nificant numbers of Black American, Hispanic, Native
American, Asian American, or Native Hawaiian students
under part A, as the case may be. Such report shall—
‘‘(A) identify the factors referred to in para-
graph (1) which were considered by the Secretary as
factors that distorted the determination of compli-
ance with section 502(a)(2)(A)(ii); and
‘‘(B) contain a list of each institution deter-
mined to be an eligible institution under part A in-
cluding a statement of the reasons for each such de-
termination.
‘‘SEC. 523. APPLICATION REVIEW PROCESS.
‘‘(a) REVIEW PANEL.—All applications submitted
under this title by institutions of higher education shall
be read by a panel of readers composed of individuals se-
lected by the Secretary. The Secretary shall assure that
no individual assigned under this section to review any ap-
plication has any conflict of interest with regard to the
application which might impair the impartiality with which
the individual conducts the review under this section.
‘‘(2) All readers selected by the Secretary shall re-
ceive thorough instruction from the Secretary regarding
the evaluation process for applications submitted under
342
this title and consistent with the provisions of this title,
including—
‘‘(A) an enumeration of the factors to be used
to determine the quality of applications submitted
under this title; and
‘‘(B) an enumeration of the factors to be used
to determine whether a grant should be awarded for
a project under this title, the amount of any such
grant, and the duration of any such grant.
‘‘(b) RECOMMENDATIONS OF PANEL.—In awarding
grants under this title, the Secretary shall take into con-
sideration the recommendations of the panel made under
subsection (a).
‘‘(c) NOTIFICATION.—Not later than June 30 of each
year, the Secretary shall notify each institution of higher
education making an application under this title of—
‘‘(1) the scores given the applicant by the panel
pursuant to this section;
‘‘(2) the recommendations of the panel with re-
spect to such application; and
‘‘(3) the reasons for the decision of the Sec-
retary in awarding or refusing to award a grant
under this title, and any modifications, if any, in the
recommendations of the panel made by the Sec-
retary.
343
‘‘SEC. 524. COOPERATIVE ARRANGEMENTS.
‘‘(a) GENERAL AUTHORITY.—The Secretary may
make grants to encourage cooperative arrangements with
funds available to carry out part A, between institutions
eligible for assistance under part A and between such in-
stitutions and institutions not receiving assistance under
this title for the activities described in section 503 so that
the resources of the cooperating institutions might be com-
bined and shared to achieve the purposes of such part and
avoid costly duplicative efforts and to enhance the develop-
ment of part A eligible institutions.
‘‘(b) PRIORITY.—The Secretary shall give priority to
grants for the purposes described under subsection (a)
whenever the Secretary determines that the cooperative
arrangement is geographically and economically sound or
will benefit the applicant institution.
‘‘(c) DURATION.—Grants to institutions having a co-
operative arrangement may be made under this section for
a period as determined under section 505.
‘‘SEC. 525. ASSISTANCE TO INSTITUTIONS UNDER OTHER
PROGRAMS.
‘‘(a) ASSISTANCE
ELIGIBILITY.—Each institution
which the Secretary determines to be an institution eligible
under part A may be eligible for waivers in accordance
with subsection (b).
344
‘‘(b) WAIVER APPLICABILITY.—(1) Subject to, and in
accordance with, regulations promulgated for the purpose
of this section, in the case of any application by an institu-
tion referred to in subsection (a) for assistance under any
programs specified in paragraph (2), the Secretary is au-
thorized, if such application is otherwise approvable, to
waive any requirement for a non-Federal share of the cost
of the program or project, or, to the extent not inconsist-
ent with other law, to give, or require to be given, priority
consideration of the application in relation to applications
from other institutions.
‘‘(2) The provisions of this section shall apply to any
program authorized by title IV or VII of this Act.
‘‘(c) LIMITATION.—The Secretary shall not waive,
under subsection (b), the non-Federal share requirement
for any program for applications which, if approved, would
require the expenditure of more than 10 percent of the
appropriations for the program for any fiscal year.
‘‘SEC. 526. LIMITATIONS.
The funds appropriated under section 528 may not
be used—
‘‘(1) for a school or department of divinity or
any religious worship or sectarian activity;
345
‘‘(2) for an activity that is inconsistent with a
State plan for desegregation of higher education ap-
plicable to such institution;
‘‘(3) for an activity that is inconsistent with a
State plan of higher education applicable to such in-
stitution; or
‘‘(4) for purposes other than the purposes set
forth in the approved application under which the
funds were made available to the institution.
‘‘SEC. 527. PENALTIES.
Whoever, being an officer, director, agent, or em-
ployee of, or connected in any capacity with, any recipient
of Federal financial assistance or grant pursuant to this
title embezzles, willfully misapplies, steals, or obtains by
fraud any of the funds which are the subject of such grant
or assistance, shall be fined not more than $10,000 or im-
prisoned for not more than 2 years, or both.
‘‘SEC. 528. AUTHORIZATIONS OF APPROPRIATIONS.
‘‘(a) AUTHORIZATIONS.—There are authorized to be
appropriated to carry out part A, $80,000,000 for fiscal
year 1999, and such sums as may be necessary for each
of the 4 succeeding fiscal years.
‘‘(b) USE
OF MULTIPLE YEAR AWARDS.—In the
event of a multiple year award to any institution under
this title, the Secretary shall make funds available for such
346
award from funds appropriated for this title for the fiscal
year in which such funds are to be used by the recipient.’’.
TITLE VI—INTERNATIONAL AND
GRADUATE EDUCATION PRO-
GRAMS
SEC. 
601. 
INTERNATIONAL 
AND 
FOREIGN 
LANGUAGE
STUDIES.
(a) STATUTORY STRUCTURE.—Title VI is amended—
(1) by striking
‘‘PART A—INTERNATIONAL AND FOREIGN
LANGUAGE STUDIES’’
and inserting the following:
‘‘PART A—INTERNATIONAL EDUCATION
‘‘Subpart 1—International and Foreign Language
Studies’’;
(2) by striking
‘‘PART B—BUSINESS AND INTERNATIONAL
EDUCATION PROGRAMS’’
and inserting the following:
‘‘Subpart 2—Business and International Education
Programs’’;
(3) by striking
‘‘PART C—INSTITUTE FOR INTERNATIONAL
PUBLIC POLICY’’
and inserting the following:
347
‘‘Subpart 3—Institute for International Public
Policy’’; and
(4) by striking
‘‘PART D—GENERAL PROVISIONS’’
and inserting the following:
‘‘Subpart 4—General Provisions’’.
(b) FINDINGS
AND PURPOSES.—Section 601 (20
U.S.C. 1121) is amended to read as follows:
‘‘SEC. 601. FINDINGS AND PURPOSES.
‘‘(a) FINDINGS.—The Congress finds as follows:
‘‘(1) The security, stability, and economic vital-
ity of the United States in a complex global era de-
pend upon American experts in and citizens knowl-
edgeable about world regions, foreign languages and
international affairs, as well as on a strong research
base in these areas.
‘‘(2) Advances in communications technology
and the growth of regional and global problems
make knowledge of other countries and the ability to
communicate in other languages more essential to
the promotion of mutual understanding and coopera-
tion among nations and their peoples.
‘‘(3) Dramatic post-Cold War changes in the
world’s geopolitical and economic landscapes are cre-
ating needs for American expertise and knowledge
348
about a greater diversity of less commonly taught
foreign languages and nations of the world.
‘‘(4) Systematic efforts are necessary to en-
hance the capacity of institutions of higher edu-
cation in the United States and to encourage a
broader cross-section of institutions of higher edu-
cation to develop and expand programs for produc-
ing graduates with international and foreign lan-
guage expertise and knowledge, and research on
such areas, in a variety of disciplines and at all lev-
els of graduate and undergraduate education.
‘‘(5) Cooperative efforts among the Federal
Government, institutions of higher education, and
the private sector are necessary to promote the gen-
eration and dissemination of information about
world regions, foreign languages, and international
affairs throughout education, government, business,
civic, and nonprofit sectors in the United States.
‘‘(b) PURPOSES.—The purposes of this part are—
‘‘(1)(A) to support centers, programs and fel-
lowships in institutions of higher education in the
United States for producing increased numbers of
trained personnel and research in foreign languages,
area and other international studies;
349
‘‘(B) to develop a pool of international experts
to meet national needs;
‘‘(C) to develop and validate specialized mate-
rials and techniques for foreign language acquisition
and fluency, emphasizing (but not limited to) the
less commonly taught languages;
‘‘(D) to promote access to research and training
overseas; and
‘‘(E) to advance the internationalization of a
variety of disciplines throughout undergraduate and
graduate education;
‘‘(2) to support cooperative efforts promoting
access to and the dissemination of international and
foreign language knowledge, teaching materials and
research throughout education, government, busi-
ness, civic and nonprofit sectors in the United States
through the use of advanced technologies; and
‘‘(3) to coordinate the programs of the Federal
Government in the areas of foreign language, area
and other international studies, including profes-
sional international affairs education and research.’’.
(c) GRADUATE
AND UNDERGRADUATE NATIONAL
RESOURCE CENTERS.—
(1) NATIONAL
RESOURCE
CENTERS.—Section
602(a) (20 U.S.C. 1122(a)) is amended—
350
(A) in the heading, by striking ‘‘NATIONAL
LANGUAGE AND AREA CENTERS AUTHORIZED’’
and inserting ‘‘NATIONAL RESOURCE CENTERS
FOR
FOREIGN
LANGUAGE
AND
AREA
OR
INTERNATIONAL STUDIES AUTHORIZED’’;
(B) in paragraph (1)(A), by striking ‘‘com-
prehensive language and area centers’’ and in-
serting ‘‘comprehensive foreign language and
area or international studies centers’’;
(C) in paragraph (1)(B), by striking ‘‘lan-
guage and area centers’’ and inserting ‘‘foreign
language and area or international studies cen-
ters’’; and
(D) by striking paragraph (2) and insert-
ing the following:
‘‘(2) AUTHORIZED ACTIVITIES.—
‘‘(A) IN
GENERAL.—Any grant made
under paragraph (1) may be used to pay all or
part of the cost of establishing or operating a
center or program, in accordance with this sub-
section.
‘‘(B) MANDATORY ACTIVITIES.—Activities
to be conducted by centers assisted under this
subsection shall include—
351
‘‘(i) support for the instruction of for-
eign languages and the offering of courses
in a variety of nonlanguage disciplines that
cover the center’s subject area or topic,
and the incorporation of such instruction
in baccalaureate and graduate programs of
study in a variety of disciplinary, inter-
disciplinary, or professional fields;
‘‘(ii) support for teaching and re-
search materials, including library acquisi-
tions, in the center’s subject area or topic;
‘‘(iii) programs of outreach or linkage
with State and local educational agencies,
postsecondary education institutions at all
levels, professional schools, government,
business, media, or the general public; and
‘‘(iv) program coordination and devel-
opment, curriculum planning and develop-
ment, and student advisement.
‘‘(C) PERMISSIBLE ACTIVITIES.—Activities
to be conducted by centers assisted under this
subsection may include—
‘‘(i) support for the creation of faculty
positions in disciplines that are underrep-
352
resented in the center’s instructional pro-
gram;
‘‘(ii) establishment and maintenance
of linkages with overseas institutions of
higher education for the purpose of con-
tributing to the teaching and research of
the center;
‘‘(iii) support for bringing visiting
scholars and faculty to the center to teach
or conduct research;
‘‘(iv) professional development of the
center’s faculty and staff;
‘‘(v) projects conducted in cooperation
with other National Resource Centers ad-
dressing themes of world regional, cross-re-
gional, international, or global importance;
‘‘(vi) summer institutes in the United
States or abroad designed to provide lan-
guage and area training in the center’s
field or topic; and
‘‘(vii) support for faculty, staff, and
student travel in foreign areas, regions, or
countries, and for the development and
support of educational programs abroad
for students.’’.
353
(2) GRADUATE FELLOWSHIPS; EXPENSE LIMI-
TATIONS.—Section 602 is further amended by strik-
ing subsections (b) and (c) and inserting the follow-
ing:
‘‘(b) GRADUATE FELLOWSHIPS FOR FOREIGN LAN-
GUAGE AND AREA OR INTERNATIONAL STUDIES.—
‘‘(1) AUTHORITY.—The Secretary is authorized
to make grants to institutions of higher education or
combinations of such institutions for the purpose of
paying fellowships to individuals undergoing ad-
vanced training in any center or program approved
by the Secretary under this part.
‘‘(2) ELIGIBLE STUDENTS.—Students receiving
fellowships described in paragraph (1) shall be indi-
viduals who are engaged in an instructional program
with stated performance goals for functional foreign
language use or in a program developing such per-
formance goals, in combination with area studies,
international studies, or the international aspects of
a 
professional 
studies 
program, 
including
predissertation level studies, preparation for dis-
sertation research, dissertation research abroad, and
dissertation writing.
‘‘(c) RULES WITH RESPECT TO EXPENSES.—
354
‘‘(1) UNDERGRADUATE
TRAVEL.—No funds
may be expended under this part for undergraduate
travel except in accordance with rules prescribed by
the Secretary setting forth policies and procedures
to assure that Federal funds made available for such
travel are expended as part of a formal program of
supervised study.
‘‘(2) GRADUATE DEPENDENT AND TRAVEL EX-
PENSES.—Fellowships awarded to graduate level re-
cipients may include allowances for dependents and
for travel for research and study in the United
States and abroad.’’.
(d) 
LANGUAGE
RESOURCE
CENTERS.—Section
603(a) (20 U.S.C. 1123(a)) is amended—
(1) by striking paragraph (5) and inserting the
following:
‘‘(5) a significant focus on the teaching and
learning needs of the less commonly taught lan-
guages, including an assessment of the strategic
needs, the determination of ways to meet those
needs nationally, and the publication and dissemina-
tion of instructional materials in the less commonly
taught languages;’’;
(2) by striking the period at the end of para-
graph (6) and inserting ‘‘; and’’; and
355
(3) by inserting after paragraph (6) the follow-
ing new paragraph:
‘‘(7) the operation of intensive summer lan-
guage institutes to train advanced foreign language
students, provide professional development, and im-
prove language instruction through preservice and
inservice language training for teachers.’’.
(e) UNDERGRADUATE INTERNATIONAL STUDIES AND
FOREIGN
LANGUAGE
PROGRAMS.—Section 604 (20
U.S.C. 1124) is amended—
(1) in the heading of subsection (a), by striking
‘‘INCENTIVES’’ and all that follows through ‘‘PRO-
GRAMS’’ and inserting ‘‘PROGRAM INCENTIVES’’;
(2) in subsection (a)(1)—
(A) by striking ‘‘or combinations of such
institutions’’ in the first sentence and inserting
‘‘, combinations of such institutions, or partner-
ships between nonprofit educational organiza-
tions and such institutions,’’;
(B) by striking ‘‘a program’’ and inserting
‘‘programs’’; and
(C) by striking the second sentence and in-
serting the following: ‘‘Such grants shall be
awarded for the purpose of seeking to create
new programs or to strengthen existing pro-
356
grams in undergraduate area studies, foreign
languages, and other international fields.’’;
(3) by striking paragraphs (2) and (3) and in-
serting the following:
‘‘(2) USE OF FUNDS.—Grants made under this
section may be used for Federal share of the cost of
projects and activities which are an integral part of
such a program, such as—
‘‘(A) planning for the development and ex-
pansion of programs in undergraduate inter-
national studies, and foreign languages and the
internationalization of undergraduate education;
‘‘(B) teaching, research, curriculum devel-
opment, and other related activities;
‘‘(C) training of faculty members in for-
eign countries;
‘‘(D) expansion of existing and develop-
ment of new opportunities for learning foreign
languages, including the less commonly taught
languages;
‘‘(E) programs under which foreign teach-
ers and scholars may visit institutions as visit-
ing faculty;
‘‘(F) international education programs de-
signed to develop or enhance linkages between
357
two- and four-year institutions of higher edu-
cation, or baccalaureate and postbaccalaureate
programs or institutions;
‘‘(G) the development of an international
dimension in preservice and inservice teacher
training;
‘‘(H) the development of undergraduate
educational programs in locations abroad where
such opportunities are not otherwise available
or which serve students for whom such opportu-
nities are not otherwise available and which
provide courses that are closely related to on-
campus foreign language and international cur-
ricula;
‘‘(I) the integration of new and continuing
education abroad opportunities for undergradu-
ate students into curricula of specific degree
programs;
‘‘(J) the development of model programs to
enrich or enhance the effectiveness of edu-
cational 
programs 
abroad, 
including
predeparture and postreturn programs, and the
integration of educational programs abroad into
the curriculum of the home institution;
358
‘‘(K) the expansion of library and teaching
resources;
‘‘(L) the development of programs de-
signed to integrate professional and technical
education with area studies, foreign languages,
and other international fields;
‘‘(M) the establishment of linkages over-
seas with institutions of higher education and
organizations that contribute to the educational
objectives of this subsection;
‘‘(N) the conduct of summer institutes in
foreign area and other international fields to
provide faculty and curriculum development, in-
cluding the integration of professional and tech-
nical education with foreign area and other
international studies, and to provide foreign
area and other international knowledge or skills
to government personnel or private sector pro-
fessionals in international activities;
‘‘(O) the development of partnerships be-
tween institutions of higher education and the
private sector, government, and elementary and
secondary education institutions to enhance
international knowledge and skills; and
359
‘‘(P) the use of innovative technology to in-
crease access to international education pro-
grams.
‘‘(3) NON-FEDERAL SHARE.—The non-Federal
share of the cost of the programs assisted under this
subsection may be provided in cash from the private
sector corporations or foundations in an amount
equal to one-third of the total requested grant
amount, or may be provided as in-cash or in-kind
contribution from institutional and noninstitutional
funds, including State and private sector corporation
or foundation contributions, equal to one-half of the
total requested grant amount.’’;
(4) by adding at the end of subsection (a) the
following new paragraphs:
‘‘(5) SPECIAL RULE.—The Secretary may waive
or reduce the required non-Federal share for title
III-eligible institutions which have submitted a grant
application under this section.
‘‘(6) EVALUATION CRITERIA AND REPORT.—As
a condition for the award of any grant under this
subsection, the Secretary may establish criteria for
evaluating programs and require an annual report
which evaluates the progress and performance of
students in such programs.’’.
360
(5) by striking subsection (b);
(6) by redesignating subsection (c) as sub-
section (b); and
(7) by adding at the end the following new sub-
section:
‘‘(c) FUNDING SUPPORT.—The Secretary may use no
more than 10 percent of the total amount appropriated
for this part for carrying out the purposes of this sec-
tion.’’.
(f ) INTENSIVE SUMMER LANGUAGE INSTITUTES.—
Section 605 (20 U.S.C. 1124a) is repealed.
(g) RESEARCH; STUDIES; ANNUAL REPORT.—Section
606(a) (20 U.S.C. 1125(a)) is amended—
(1) in paragraph (4), by inserting before the
semicolon at the end the following: ‘‘, area studies,
or other international fields’’;
(2) by striking ‘‘and’’ at the end of paragraph
(5);
(3) by striking the period at the end of para-
graph (6) and inserting ‘‘; and’’; and
(4) by inserting after paragraph (6) the follow-
ing new paragraph:
‘‘(7) studies and surveys of the uses of tech-
nology in foreign language, area and international
studies programs.’’.
361
(h) PERIODICALS.—Section 607 (20 U.S.C. 1125a)
is amended to read as follows:
‘‘SEC. 607. TECHNOLOGICAL INNOVATION AND COOPERA-
TION FOR FOREIGN INFORMATION ACCESS.
‘‘(a) AUTHORITY.—The Secretary is authorized to
make grants to institutions of higher education, public or
nonprofit private library institutions, or consortia of such
institutions, to develop innovative techniques or programs
using new electronic technologies to collect, organize, pre-
serve and widely disseminate information on world regions
and countries other than the United States that address
the nation’s teaching and research needs in international
education and foreign languages.
‘‘(b) AUTHORIZED ACTIVITIES.—Grants under this
section may be used—
‘‘(1) to facilitate access to or preserve foreign
information resources in print or electronic forms;
‘‘(2) to develop new means of immediate, full-
text document delivery for information and scholar-
ship from abroad;
‘‘(3) to develop new means of shared electronic
access to international data;
‘‘(4) to support collaborative projects of index-
ing, cataloging, and other means of bibliographic ac-
362
cess for scholars to important research materials
published or distributed outside the United States;
‘‘(5) to develop methods for the wide dissemina-
tion of resources written in non-Roman language
alphabets;
‘‘(6) to assist teachers of less commonly taught
languages in acquiring, via electronic and other
means, materials suitable for classroom use; and
‘‘(7) to promote collaborative technology based
projects in foreign languages, area and international
studies among grant recipients under this title.
‘‘(c) APPLICATION.—Each institution or consortium
desiring a grant under this section shall submit an appli-
cation to the Secretary at such time, in such manner, and
accompanied by such information and assurances as the
Secretary may reasonably require.
‘‘(d) MATCH REQUIRED.—The Federal share of the
total cost of carrying out a program supported by a grant
under this section shall not be more than 662⁄3 percent.
The non-Federal share of such cost may be provided either
in-kind or in cash, and may include contributions from pri-
vate sector corporations or foundations.’’.
(i) DEVELOPMENT GRANTS.—Section 610 (20 U.S.C.
1127) is amended by adding at the end the following new
subsection:
363
‘‘(d) DEVELOPMENT GRANTS AUTHORIZED.—The
Secretary is encouraged to consider the establishment of
new centers, and may use at least 10 percent of the funds
available for this section to make grants for the establish-
ment of such new centers.’’.
(j) AUTHORIZATION OF APPROPRIATIONS.—Section
610A (20 U.S.C. 1128) is amended by striking ‘‘1993’’
and inserting ‘‘1999’’.
(k) CONFORMING AMENDMENT.—Title VI is further
amended by redesignating sections 606, 607, 608, 609,
610, and 610A as sections 605 through 610, respectively.
SEC. 602. BUSINESS AND INTERNATIONAL EDUCATION PRO-
GRAMS.
(a) CENTERS FOR INTERNATIONAL BUSINESS EDU-
CATION.—Section 612 (20 U.S.C. 1130–1) is amended—
(1) in subsection (c)(1)(B), by striking ‘‘ad-
vanced’’;
(2) in subsection (c)(1)(C), by striking ‘‘evening
or summer programs,’’ and inserting ‘‘programs’’;
(3) in subsection (c)(2)—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (E);
(B) by redesignating subparagraph (F) as
subparagraph (G); and
364
(C) by inserting after subparagraph (E)
the following new subparagraph:
‘‘(F) professional graduate degrees in
translation and interpretation; and’’; and
(4) in subsection (d)(2)(G), by inserting before
the period at the end the following: ‘‘, such as a rep-
resentative of a community college in the region
served by the center’’.
(b) AUTHORIZATION OF APPROPRIATIONS.—Section
614 (20 U.S.C. 1130b) is amended by striking ‘‘1993’’
each place it appears and inserting ‘‘1999’’.
(c) TECHNICAL AMENDMENT.—The heading of sec-
tion 611 (20 U.S.C. 1130) is amended to read as follows:
‘‘SEC. 611. FINDINGS AND PURPOSES.’’.
SEC. 603. INSTITUTE FOR INTERNATIONAL PUBLIC POLICY.
(a) MINORITY FOREIGN SERVICE PROFESSIONAL
DEVELOPMENT PROGRAM.—Section 621(e) (20 U.S.C.
1131(e)) is amended by striking ‘‘one-fourth’’ and insert-
ing ‘‘one-half’’.
(b) JUNIOR YEAR
AND SUMMER ABROAD PRO-
GRAM.—Section 622 (20 U.S.C. 1131a) is amended—
(1) in the heading of such section, by inserting
‘‘AND SUMMER’’ after ‘‘YEAR’’;
(2) in subsection (a)—
365
(A) by striking ‘‘shall conduct’’ and insert-
ing ‘‘is authorized to conduct’’;
(B) by inserting ‘‘and summer’’ after ‘‘jun-
ior year’’ each place it appears in the first and
second sentences;
(C) by inserting ‘‘in a junior year abroad
program’’ after ‘‘Each student’’ in the last sen-
tence;
(3) in subsection (b)(2), by inserting ‘‘or sum-
mer’’ after ‘‘junior year’’; and
(4) in subsection (c)—
(A) by inserting ‘‘or summer abroad pro-
gram’’ after ‘‘junior year abroad program’’ each
place it appears; and
(B) by striking ‘‘abroad or internship’’ and
inserting ‘‘abroad, summer abroad, or intern-
ship’’.
(c) INTERNSHIPS.—Section 624 (20 U.S.C. 1132c)
is amended—
(1) by striking ‘‘The Institute’’ and inserting
‘‘(a) IN GENERAL.—The Institute’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) POSTBACCALAUREATE INTERNSHIPS.—The In-
stitute shall enter into agreements with institutions of
366
higher education described in the first sentence of sub-
section (a) to conduct internships in Washington, D.C.,
for students who have completed study for the bacca-
laureate degree. The Internship program authorized by
this subsection shall—
‘‘(1) be designated to assist the students to pre-
pare for a master’s degree program;
‘‘(2) be carried out with the assistance of the
Woodrow Wilson Fellowship program;
‘‘(3) contain work experience for the students
designated to contribute to the objectives set forth in
paragraph (1); and
‘‘(4) contain such other elements as the Insti-
tute determines will carry out the objectives of this
subsection.’’.
(d) NEW PROGRAMS.—Title VI is further amended—
(1) by redesignating sections 625 through 627
(20 U.S.C. 1131d–1131f) as sections 627 through
629; and
(2) by inserting after section 624 the following
new sections:
‘‘SEC. 625. INSTITUTIONAL DEVELOPMENT.
‘‘(a) IN GENERAL.—The Institute shall make grants,
from amounts available to it in each fiscal year, to Histori-
cally Black Colleges and Universities, Hispanic-serving In-
367
stitutions, Tribally Controlled Indian Community Colleges,
and minority institutions, to enable such colleges, univer-
sities, and institutions to strengthen international affairs
programs.
‘‘(b) APPLICATION.—No grant may be made by the
Institute under this section unless an application is made
by the college, university, or institution at such time, in
such manner, and accompanied by such information as the
Institute may require.
‘‘(c) DEFINITIONS.—As used in this section—
‘‘(1) the term ‘Historically Black College and
University’ has the same meaning given the term by
section 322(2) of this Act;
‘‘(2) the term ‘Hispanic-serving Institution’ has
the same meaning given the term by section
316(b)(1) of this Act;
‘‘(3) the term ‘Tribally controlled Indian com-
munity college’ has the same meaning given that
term by the Tribally Controlled Community College
Assistance Act of 1978; and
‘‘(4) the term ‘minority institution’ has the
same meaning given that term in section 347 of this
Act.
368
‘‘SEC. 626. INTERAGENCY COMMITTEE ON MINORITY CA-
REERS IN INTERNATIONAL AFFAIRS.
‘‘(a) ESTABLISHMENT.—There is established in the
executive branch of the Federal Government an Inter-
agency Committee on Minority Careers in International
Affairs composed of 7 members. The members of the Com-
mittee shall be—
‘‘(1) the Undersecretary for International Af-
fairs and Commodity Programs of the Department
of Agriculture, appointed by the Secretary of Agri-
culture;
‘‘(2) the Assistant Secretary and Director Gen-
eral, the Commercial Service of the Department of
Commerce, appointed by the Secretary of Commerce;
‘‘(3) the Undersecretary of Defense for Person-
nel and Readiness of the Department of Defense,
appointed by the Secretary of Defense;
‘‘(4) the Assistant Secretary for Postsecondary
Education in the Department of Education, ap-
pointed by the Secretary of Education;
‘‘(5) the Director General of the Foreign Serv-
ice of the Department of State, appointed by the
Secretary of State;
‘‘(6) the General Counsel of the Agency for
International Development, appointed by the Admin-
istrator; and
369
‘‘(7) the Associate Director for Educational and
Cultural Affairs of the United States Information
Agency, appointed by the Director.
‘‘(b) FUNCTIONS.—The Interagency Committee es-
tablished by this section shall—
‘‘(1) advise the Secretary and the Institute with
respect to programs authorized by this part; and
‘‘(2) promote policies in each department and
agency participating on the Committee that are de-
signed to carry out the objectives of this part.’’.
(e) AUTHORIZATION.—Section 629 (20 U.S.C.
1131f) (as redesignated by subsection (d)) is amended by
striking ‘‘1993’’ and inserting ‘‘1999’’.
SEC. 604. GENERAL PROVISIONS.
(a) DEFINITIONS.—Section 631(a) (20 U.S.C.
1132(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(7);
(2) by striking the period at the end of para-
graph (8) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (8) the follow-
ing new paragraphs:
‘‘(9) the term ‘internationalization of under-
graduate education’ means the incorporation of for-
eign languages and area and international studies
370
perspectives in any undergraduate course or curricu-
lum in order to provide international content for
that course of study; and
‘‘(10) the term ‘educational programs abroad’
means programs of study, internships, or service
learning outside the United States which are part of
a foreign language or other international curriculum
at the undergraduate or graduate education levels.’’.
(b) REPEAL.—Section 632 (20 U.S.C. 1132–1) is re-
pealed.
SEC. 605. TRANSFER AND REAUTHORIZATION OF GRAD-
UATE ASSISTANCE IN AREAS OF NATIONAL
NEED PROGRAM.
(a) AMENDMENT.—Title VI is amended by adding at
the end the following new part:
‘‘PART B—GRADUATE ASSISTANCE IN AREAS OF
NATIONAL NEED
‘‘SEC. 651. PURPOSE.
‘‘In order to sustain and enhance the capacity for
graduate education in areas of national need, it is the pur-
pose of this part to provide, through academic depart-
ments and programs of institutions of higher education,
a fellowship program to assist graduate students of supe-
rior ability who demonstrate financial need.
371
‘‘SEC. 652. GRANTS TO ACADEMIC DEPARTMENTS AND PRO-
GRAMS OF INSTITUTIONS.
‘‘(a) GRANT AUTHORITY.—
‘‘(1) IN GENERAL.—The Secretary shall make
grants to academic departments and programs and
other academic units of institutions of higher edu-
cation that provide courses of study leading to a
graduate degree in order to enable such institutions
to provide assistance to graduate students in accord-
ance with this part. The Secretary shall coordinate
the administration and regulation of programs under
this part with other Federal programs providing
graduate assistance to minimize duplication and im-
prove efficiency.
‘‘(2) ADDITIONAL GRANTS.—The Secretary may
also make grants to such departments and programs
and to other units of institutions of higher education
granting graduate degrees which submit joint pro-
posals involving nondegree granting institutions
which have formal arrangements for the support of
doctoral dissertation research with degree-granting
institutions. Nondegree granting institutions eligible
for awards as part of such joint proposals include
any organization which—
‘‘(A) is described in section 501(c)(3) of
the Internal Revenue Code of 1986, and is ex-
372
empt from tax under section 501(a) of such
Code;
‘‘(B) is organized and operated substan-
tially to conduct scientific and cultural research
and graduate training programs;
‘‘(C) is not a private foundation;
‘‘(D) has academic personnel for instruc-
tion and counseling who meet the standards of
the institution of higher education in which the
students are enrolled; and
‘‘(E) has necessary research resources not
otherwise readily available in such institutions
to such students.
‘‘(b) AWARD AND DURATION OF GRANTS.—
‘‘(1) AWARDS.—The principal criterion for the
allocation of awards shall be the relative quality of
the graduate programs presented in competing appli-
cations. Consistent with an allocation of awards
based on quality of competing applications, the Sec-
retary shall, in making such grants, promote an eq-
uitable geographic distribution among eligible public
and private institutions of higher education.
‘‘(2) DURATION.—The Secretary shall approve
a grant recipient under this part for a 3-year period.
From the sums appropriated under this part for any
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fiscal year, the Secretary shall not make a grant to
any academic department or program of an institu-
tion of higher education of less than $125,000 or
greater than $750,000 per fiscal year.
‘‘(3) REALLOTMENT.—Whenever the Secretary
determines that an academic department or program
of an institution of higher education is unable to use
all of the amounts available to it under this part, the
Secretary shall, on such dates during each fiscal
year as the Secretary may fix, reallot the amounts
not needed to academic departments and programs
of institutions which can use the grants authorized
by this part.
‘‘SEC. 653. INSTITUTIONAL ELIGIBILITY.
‘‘(a) ELIGIBILITY CRITERIA.—Any academic depart-
ment or program of an institution of higher education that
offers a program of postbaccalaureate study leading to a
graduate degree in an area of national need (as designated
under subsection (b)) may apply for a grant under this
part. No department or program shall be eligible for a
grant unless the program of postbaccalaureate study has
been in existence for at least 4 years at the time of appli-
cation for assistance under this part.
‘‘(b) DESIGNATION
OF
AREAS
OF
NATIONAL
NEED.—After consultation with appropriate Federal and
374
nonprofit agencies and organizations, the Secretary shall
designate areas of national need. In making such designa-
tions, the Secretary shall take into account the extent to
which the interest is compelling, the extent to which other
Federal programs support postbaccalaureate study in the
area concerned, and an assessment of how the program
could achieve the most significant impact with available
resources.
‘‘SEC. 654. CRITERIA FOR APPLICATIONS.
‘‘(a) SELECTION OF APPLICATIONS.—The Secretary
shall make grants to academic departments and programs
of institutions of higher education on the basis of applica-
tions submitted in accordance with subsection (b). Appli-
cations shall be ranked on program quality by review pan-
els of nationally recognized scholars and evaluated on the
quality and effectiveness of the academic program and the
achievement and promise of the students to be served. To
the extent possible (consistent with other provisions of this
section), the Secretary shall make awards that are consist-
ent with recommendations of the review panels.
‘‘(b) CONTENTS
OF APPLICATIONS.—An academic
department or program of an institution of higher edu-
cation, in its application for a grant, shall—
‘‘(1) describe the current academic program of
the applicant for which the grant is sought;
375
‘‘(2) provide assurances that the applicant will
provide, from other non-Federal funds, for the pur-
poses of the fellowship program under this part an
amount equal to at least 25 percent of the amount
of the grant received under this part, which con-
tribution may be in cash or in kind fairly valued;
‘‘(3) describe the number, types, and amounts
of the fellowships that the applicant intends to offer
under the grant;
‘‘(4) set forth policies and procedures to assure
that, in making fellowship awards under this part,
the institution will make awards to individuals
who—
‘‘(A) have financial need, as determined
under part F of title IV;
‘‘(B) have excellent academic records in
their previous programs of study; and
‘‘(C) plan to pursue the highest possible
degree available in their course of study;
‘‘(5) set forth policies and procedures to ensure
that Federal funds made available under this part
for any fiscal year will be used to supplement and,
to the extent practical, increase the funds that would
otherwise be made available for the purpose of this
part and in no case to supplant those funds;
376
‘‘(6) provide assurances that, in the event that
funds made available to the academic department or
program under this part are insufficient to provide
the assistance due a student under the commitment
entered into between the academic department or
program and the student, the academic department
or program will, from any funds available to it, ful-
fill the commitment to the student;
‘‘(7) provide that the applicant will comply with
the limitations set forth in section 655;
‘‘(8) provide assurances that the academic de-
partment will provide at least 1 year of supervised
training in instruction for students; and
‘‘(9) include such other information as the Sec-
retary may prescribe.
‘‘SEC. 655. AWARDS TO GRADUATE STUDENTS.
‘‘(a) COMMITMENTS TO GRADUATE STUDENTS.—
‘‘(1) IN GENERAL.—An academic department or
program of an institution of higher education shall
make commitments to eligible graduate students as
defined in section 484 (including students pursuing
a doctoral degree after having completed a master’s
degree program at an institution of higher edu-
cation) at any point in their graduate study to pro-
vide stipends for the length of time necessary for a
377
student to complete the course of graduate study,
but in no case longer than 3 years.
‘‘(2) SPECIAL
RULE.—No such commitments
shall be made to students under this part unless the
academic department or program has determined
adequate funds are available to fulfill the commit-
ment either from funds received or anticipated under
this part, or from institutional funds.
‘‘(b) AMOUNT OF STIPENDS.—The Secretary shall
make payments to institutions of higher education for the
purpose of paying stipends to individuals who are awarded
fellowships under this part. The stipends the Secretary es-
tablishes shall reflect the purpose of this program to en-
courage highly talented students to undertake graduate
study as described in this part. In the case of an individual
who receives such individual’s first stipend under this part
in academic year 1999–2000 or any succeeding academic
year, such stipend shall be set at a level of support equal
to that provided by the National Science Foundation grad-
uate fellowships, except such amount shall be adjusted as
necessary so as not to exceed the fellow’s demonstrated
level of need as determined under part F of title IV.
‘‘(c) TREATMENT OF INSTITUTIONAL PAYMENTS.—
An institution of higher education that makes institutional
payments for tuition and fees on behalf of individuals sup-