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‘‘(ii) an eligible institution that is a 2-
year institution may receive an allocation 
under subparagraph (A) if more than 50 
percent of the students who are degree-
seeking Pell Grant recipients attending 
such institution graduate within 2 calendar 
years of the first day of enrollment.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply with respect to any amounts ap-
propriated under section 441(b) of the Higher Education 
Act of 1965 (42 U.S.C. 2751(b)) for fiscal year 2007 or 
any succeeding fiscal year. 
SEC. 444. BOOKS AND SUPPLIES. 
Section 442(c)(4)(D) (42 U.S.C. 2752(c)(4)(D)) is 
amended by striking ‘‘$450’’ and inserting ‘‘$600’’. 
SEC. 445. JOB LOCATION AND DEVELOPMENT. 
Section 446(a)(1) (42 U.S.C. 2756(a)(1)) is amend-
ed—
(1) by striking ‘‘10 percent or $50,000’’ and in-
serting ‘‘15 percent or $75,000’’; and 
(2) by inserting before the period at the end the 
following: ‘‘, except that not less than one-third of 
such amount shall be specifically allocated to locate 
and develop community service jobs’’.
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SEC. 446. WORK COLLEGES. 
Section 448 (42 U.S.C. 2756b) is amended—
(1) by striking ‘‘work-learning’’ each place it 
appears and inserting ‘‘work-learning-service’’; 
(2) by striking ‘‘work-service’’ each place it ap-
pears and inserting ‘‘work-learning-service’’; 
(3) by amending subparagraph (C) of sub-
section (e)(1) to read as follows: 
‘‘(C) requires all resident students, includ-
ing at least one-half of all students who are en-
rolled on a full-time basis, to participate in a 
comprehensive work-learning-service program 
for at least 5 hours each week, or at least 80 
hours during each period of enrollment, unless 
the student is engaged in an institutionally or-
ganized or approved study abroad or externship 
program; and’’; 
(4) by amending paragraph (2) of subsection 
(e) to read as follows: 
‘‘(2) the term ‘comprehensive student work-
learning-service program’—
‘‘(A) means a student work-learning-serv-
ice program that is an integral and stated part 
of the institution’s educational philosophy and 
program;
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‘‘(B) requires participation of all resident 
students for enrollment and graduation; 
‘‘(C) includes learning objectives, evalua-
tion, and a record of work performance as part 
of the student’s college record; 
‘‘(D) provides programmatic leadership by 
college personnel at levels comparable to tradi-
tional academic programs; 
‘‘(E) recognizes the educational role of 
work-learning-service supervisors; and 
‘‘(F) 
includes 
consequences 
for 
non-
performance or failure in the work-learning-
service program similar to the consequences for 
failure in the regular academic program.’’; and 
(5) in subsection (f), by striking ‘‘1999 and 
such sums as may be necessary for each of the 4 
succeeding fiscal years’’ and inserting ‘‘2006 and 
such sums as may be necessary for the 5 succeeding 
fiscal years’’. 
PART D—FEDERAL DIRECT LOAN PROGRAM 
SEC. 451. REAUTHORIZATION OF THE DIRECT LOAN PRO-
GRAM. 
(a) ADMINISTRATIVE EXPENSES.—Section 458(a)(1) 
(20 U.S.C. 1087h(a)(1)) is amended by striking 
‘‘$617,000,000’’ and all that follows through ‘‘fiscal year
157
2003’’ and inserting ‘‘$820,000,000 in fiscal year 2006, 
$833,000,000 in fiscal year 2007, $847,000,000 in fiscal 
year 2008, $862,000,000 in fiscal year 2009, and 
$878,000,000 in fiscal year 2010, and $894,000,000 in 
fiscal year 2011’’. 
(b) CALCULATION BASIS.—Subsection (b) of section 
458 (20 U.S.C. 1087h(b)) is amended by striking ‘‘shall 
be calculated—’’ and all that follows through the end of 
such subsection and inserting ‘‘shall 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.’’. 
(c) SPECIAL RULES: FEE CAP.—Section 458(c)(1) 
(20 U.S.C. 1087h(c)(1)) is amended by striking subpara-
graphs (A) through (E) and inserting the following: 
‘‘(A) for fiscal year 2006, shall not exceed 
$220,000,000; 
‘‘(B) for fiscal year 2007, shall not exceed 
$233,000,000; 
‘‘(C) for fiscal year 2008, shall not exceed 
$247,000,000; 
‘‘(D) for fiscal year 2009, shall not exceed 
$262,000,000; 
‘‘(E) for fiscal year 2010, shall not exceed 
$278,000,000; and
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‘‘(F) for fiscal year 2011, shall not exceed 
$294,000,000.’’. 
(d) CONSOLIDATION LOAN ELIGIBILITY.—Section 
455(g) (20 U.S.C. 1087e(g)) is amended by adding at the 
end (after the sentence added by 425(c)(2) of this Act) 
the following new sentence: ‘‘To be eligible for a consolida-
tion loan under this part, a borrower must meet all the 
eligibility criteria set forth in section 428C(a)(3).’’. 
PART E—FEDERAL PERKINS LOAN PROGRAM 
SEC. 461. REAUTHORIZATION OF PROGRAM. 
(a) PROGRAM AUTHORIZATION.—
(1) AUTHORIZATION
OF
APPROPRIATIONS.—
Section 461(b) (20 U.S.C. 1087aa(b)) is amended—
(A) in paragraph (1)—
(i) by striking ‘‘1999’’ and inserting 
‘‘2006’’; and 
(ii) by striking ‘‘4 succeeding’’ and in-
serting ‘‘5 succeeding’’; and 
(B) in paragraph (2), by striking ‘‘2003’’ 
each place it appears and inserting ‘‘2012’’. 
(2) FEDERAL CAPITAL CONTRIBUTION RECOV-
ERY.—Section 466 (20 U.S.C. 1087ff) is amended—
(A) by striking ‘‘2004’’ each place it ap-
pears in subsections (a), (b), and (c) and insert-
ing ‘‘2012’’;
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(B) in subsection (a), by striking ‘‘2003’’ 
each place it appears and inserting ‘‘2011’’; and 
(C) in subsection (b), by striking ‘‘2012’’ 
and inserting ‘‘2020’’. 
(b) PHASEOUT OF ALLOCATION BASED ON PREVIOUS 
ALLOCATIONS.—
(1) AMENDMENT.—Subsection (a) of section 
462 (20 U.S.C. 1087bb(a)) is amended to read as 
follows: 
‘‘(a) ALLOCATION BASED
ON PREVIOUS ALLOCA-
TION.—
‘‘(1) BASE GUARANTEE.—From the amount ap-
propriated pursuant to section 461(b) for each fiscal 
year after fiscal year 2007, the Secretary shall, sub-
ject to paragraphs (2) and (3), first allocate to each 
eligible institution an amount equal to—
‘‘(A) 100 percent of the amount such insti-
tution received under subsection (a) of this sec-
tion for fiscal year 2007 (as such subsection 
was in effect with respect to allocations for such 
fiscal year), multiplied by 
‘‘(B) the institution’s default penalty, as 
determined under subsection (e), except that if 
the institution has a cohort default rate in ex-
cess of the applicable maximum cohort default