‘‘(5) INELIGIBILITY
OF
NATIONAL
SERVICE 
AWARD RECIPIENTS.—No student borrower may, for 
the same 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. 12601 
et seq.). 
‘‘(6) INELIGIBILITY FOR DOUBLE BENEFITS.—
No borrower may receive a reduction of loan obliga-
tions under both this section and section 428J or 
460. 
‘‘(7) CONTINUED ELIGIBILITY OF TEACHERS.—
Any teacher who performs service in a school that—
‘‘(A) meets the requirements of subsection 
(b)(2)(A)(ii)(I) in any year during such service; 
and 
‘‘(B) in a subsequent year fails to meet the 
requirements of such subsection, 
may continue to teach in such school and shall be 
eligible for loan forgiveness pursuant to subsection 
(b). 
‘‘(d) REPAYMENT
TO
ELIGIBLE
LENDERS
AND 
HOLDERS.—The Secretary shall pay to each eligible lend-
er or holder for each fiscal year an amount equal to the 
aggregate amount of the lender’s or holder’s loans that
are subject to repayment pursuant to this section 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 of the consecutive years of quali-
fying service described in subsection (c)(1). The bor-
rower may elect to receive forbearance while engaged 
in qualifying service described in subsection (c)(1) 
unless the borrower is in deferment while so en-
gaged. 
‘‘(f) REGULATIONS.—The Secretary is authorized to 
prescribe such regulations as may be necessary to carry 
out the provisions of this section. 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) CHILD
WELFARE
SERVICES.—The term 
‘child welfare services’ has the meaning given the 
term in section 425 of the Social Security Act.
‘‘(2) DEGREE.—The term ‘degree’ means an as-
sociate’s or bachelor’s degree awarded by an institu-
tion of higher education. 
‘‘(3) ELIGIBLE
NURSE.—The term ‘eligible 
nurse’ means a nurse who meets all of the following: 
‘‘(A) The nurse graduated from—
‘‘(i) an accredited school of nursing 
(as those terms are defined in section 801 
of the Public Health Service Act (42 
U.S.C. 296)); 
‘‘(ii) a nursing center; or 
‘‘(iii) an academic health center that 
provides nurse training. 
‘‘(B) The nurse holds a valid and unre-
stricted license to practice nursing in the State 
in which the nurse practices in a clinical set-
ting. 
‘‘(C) The nurse holds 1 or more of the fol-
lowing: 
‘‘(i) A graduate degree in nursing, or 
an equivalent degree. 
‘‘(ii) A nursing degree from a colle-
giate school of nursing (as defined in sec-
tion 801 of the Public Health Service Act 
(42 U.S.C. 296)).
‘‘(iii) A nursing degree from an asso-
ciate degree school of nursing (as defined 
in section 801 of the Public Health Service 
Act (42 U.S.C. 296)). 
‘‘(iv) A nursing degree from a diploma 
school of nursing (as defined in section 
801 of the Public Health Service Act (42 
U.S.C. 296)). 
‘‘(4) LOW-INCOME COMMUNITY.—In this sub-
section, the term ‘low-income community’ means a 
community in which 70 percent of households earn 
less than 85 percent of the State median household 
income. 
‘‘(5) YEAR.—The term ‘year’, where applied to 
service as a teacher (or service as a member of an 
accredited school of nursing (as those terms are de-
fined in section 801 of the Public Health Service Act 
(42 U.S.C. 296))), means an academic year as de-
fined by the Secretary.’’. 
SEC. 4. YEAR-ROUND PELL GRANTS. 
Section 401(b)(6) (20 U.S.C. 1070a(b)(6)) is amend-
ed by striking ‘‘may allow, on a case-by-case basis,’’ and 
inserting ‘‘shall allow’’.
SEC. 5. TREATMENT OF PREPAYMENT AND SAVINGS PLANS 
UNDER 
STUDENT 
FINANCIAL 
AID 
NEEDS 
ANALYSIS. 
(a) DEFINITION OF ASSETS.—Subsection (f) of sec-
tion 480 of the Higher Education Act of 1965 (20 U.S.C. 
1087vv(j)) is amended—
(1) in paragraph (1), by inserting ‘‘qualified 
education benefit (except as provided in paragraph 
(3)),’’ after ‘‘tax shelters,’’; and 
(2) by adding at the end the following new 
paragraphs: 
‘‘(3) A qualified education benefit shall not be consid-
ered an asset of the student under section 475 of this part. 
‘‘(4) For purposes of this subsection, the term ‘quali-
fied education benefit’ means—
‘‘(A) a program which is described in clause (i) 
of section 529(b)(1)(A) of the Internal Revenue 
Code of 1986 and which meets the requirements of 
section 529(b)(1)(B) of such Code; 
‘‘(B) a State tuition program described in 
clause (ii) of section 529(b)(1)(A) of the Internal 
Revenue Code of 1986 which meets the requirements 
of section 529(b)(1)(B) of such Code; and 
‘‘(C) a Coverdell education savings account (as 
defined in section 530(b)(1) of the Internal Revenue 
Code of 1986).’’.