‘‘(1) institutions of higher education; 
‘‘(2) States; 
‘‘(3) nonprofit organizations with demonstrated 
experience in the support, improvement, or operation 
of programs to increase postsecondary completion, 
including— 
‘‘(A) agencies with agreements with the 
Secretary under subsections (b) and (c) of sec-
tion 428 on the date of the enactment of the 
Student Aid and Fiscal Responsibility Act of 
2009; 
‘‘(B) nonprofit subsidiaries of agencies de-
scribed in subparagraph (A), if such subsidi-
aries were established, pursuant to State law, 
on or before January 1, 1998; and 
‘‘(C) eligible not-for-profit servicers, as de-
fined in section 456(d), with an agreement with 
the Secretary under subsection (a)(3) of section 
456, except that such a servicer shall only be el-
igible for a subgrant from the State for which 
the servicer is receiving an allocation under 
such agreement; 
‘‘(4) philanthropic organizations (as such term 
is defined in section 781(i)(1));
‘‘(5) entities receiving a grant under chapter 1 
of subpart 2 of part A of title IV; and 
‘‘(6) consortia of any of the entities described 
in paragraphs (1) through (5). 
‘‘(c) INNOVATION GRANTS.— 
‘‘(1) MINIMUM
AWARD.—A grant awarded 
under subsection (a) shall be not less than 
$1,000,000. 
‘‘(2) GRANTS USES.—The Secretary’s authority 
to award grants under subsection (a) includes— 
‘‘(A) the authority to award to an eligible 
entity a grant in an amount equal to all or part 
of the amount of funds received by such entity 
from philanthropic organizations (as such term 
is defined in section 781(i)(1)) to conduct inno-
vative programs that advance knowledge about, 
and adoption of, policies and practices that in-
crease the number of individuals with postsec-
ondary degrees or certificates; and 
‘‘(B) the authority to award an eligible en-
tity a grant to develop 2-year programs that 
provide supplemental grant or loan benefits to 
students that— 
‘‘(i) are designed to improve student 
outcomes, including degree completion,
graduation without student loan debt, and 
post-completion employment; 
‘‘(ii) are in addition to the student fi-
nancial aid available under title IV of this 
Act; and 
‘‘(iii) do not result in the reduction of 
the amount of that aid or any other stu-
dent financial aid for which a student is 
otherwise eligible under Federal law. 
‘‘(3) APPLICATION.—To be eligible to receive a 
grant under subsection (a), an eligible entity shall 
submit an application at such time, in such manner, 
and containing such information as the Secretary 
shall require. 
‘‘(4) PRIORITIES.—In awarding grants under 
subsection (a), the Secretary shall give priority to 
applications that— 
‘‘(A) are from an eligible entity with dem-
onstrated experience in serving students from 
groups that are underrepresented in postsec-
ondary education, including institutions of high-
er education that are eligible for assistance 
under title III or V, or are from a consortium 
that includes an eligible entity with such experi-
ence;
‘‘(B) are from an eligible entity that is a 
public institution of higher education that does 
not predominantly provide an educational pro-
gram for which it awards a bachelor’s degree 
(or an equivalent degree), or from a consortium 
that includes at least one such institution; 
‘‘(C) include activities to increase degree or 
certificate completion in the fields of science, 
technology, engineering, and mathematics, in-
cluding 
preparation 
for, 
or 
entry 
into, 
postbaccaluareate study, especially for women 
and other groups of students who are underrep-
resented in such fields; 
‘‘(D) include activities to increase degree 
or certificate completion for students who are 
veterans; 
‘‘(E) include activities that enhance the fi-
nancial literacy and awareness of students who 
are potentially eligible for assistance under this 
Act, especially those students from groups that 
are traditionally underrepresented in postsec-
ondary education; 
‘‘(F) include activities to encourage dis-
located workers (as such term is defined in sec-
tion 101(9) of the Workforce Investment Act of
1998 (29 U.S.C. 2801(9)) to complete postsec-
ondary education opportunities; 
‘‘(G) are from an eligible entity that is a 
philanthropic organization with the primary 
purpose of providing scholarships and support 
services to students from groups that are 
underrepresented in postsecondary education, or 
are from a consortium that includes such an or-
ganization; or 
‘‘(H) are from an eligible entity that en-
courages partnerships between institutions of 
higher education with high degree-completion 
rates and institutions of higher education with 
low degree-completion rates from the same cat-
egory of institutions described in section 132(d) 
to facilitate the sharing of information relating 
to, and the implementation of, best practices for 
increasing postsecondary completion. 
‘‘(5) TECHNICAL ASSISTANCE.—The Secretary 
may reserve up to $5,000,000 per year to award 
grants and contracts to provide technical assistance 
to eligible entities receiving a grant under subsection 
(a), including technical assistance on the evaluation 
conducted in accordance with section 784 and estab-
lishing networks of eligible entities receiving grants 
under such subsection. 
‘‘(d) REPORTS.— 
‘‘(1) ANNUAL REPORTS BY ENTITIES.—Each el-
igible entity receiving a grant under subsection (a) 
shall submit to the Secretary an annual report on— 
‘‘(A) the effectiveness of the program car-
ried out with such grant in increasing postsec-
ondary completion, as determined by measur-
able progress in achieving the goals of the pro-
gram, as described in the application for such 
grant; and 
‘‘(B) any other information or assessments 
the Secretary may require. 
‘‘(2) ANNUAL
REPORT
TO
CONGRESS.—The 
Secretary shall submit to the authorizing committees 
an annual report on grants awarded under sub-
section (a), including— 
‘‘(A) the amount awarded to each eligible 
entity receiving a grant under such subsection; 
and 
‘‘(B) a description of the activities con-
ducted by each such eligible entity.
‘‘SEC. 784. EVALUATION. 
‘‘From the amount appropriated under section 
781(a)(2)(D), the Director of the Institute of Education 
Sciences shall evaluate the programs funded under this 
part. Not later than January 30, 2016, the Director shall 
issue a final report on such evaluation to the authorizing 
committees and the Secretary, and shall make such report 
available to the public. 
‘‘SEC. 785. PARTICIPATION OF PRIVATE, NONPROFIT INSTI-
TUTIONS OF HIGHER EDUCATION. 
‘‘(a) VOLUNTARY PARTICIPATION.—A private, non-
profit institution of higher education may voluntarily elect 
to participate in a State’s efforts under this part to in-
crease postsecondary enrollment, persistence, and comple-
tion. A State— 
‘‘(1) shall not require any private, nonprofit in-
stitution to participate in such efforts; and 
‘‘(2) may require such an institution that volun-
tarily elects to participate in such efforts to provide 
appropriate information to allow the State to assess 
the institution’s progress towards the goals described 
in subclauses (I) and (II) of section 782(c)(2)(A)(i). 
‘‘(b) RULE
OF CONSTRUCTION.—Nothing in this 
part, including voluntary participation described in sub-
section (a), shall be construed to—
‘‘(1) authorize the Secretary, a State, or an of-
ficer or employee of the Department or of a State 
to exercise any direction, supervision, or control 
other than that is currently granted over a private, 
nonprofit institution of higher education, including 
control over curriculum, program of instruction, ad-
ministration, governance, personnel, articulation, the 
awarding of credit, graduation or degree require-
ments, or admissions; 
‘‘(2) authorize the Secretary, a State, or an of-
ficer or employee of the Department or of a State 
to require a private, nonprofit institution of higher 
education to participate in a longitudinal data sys-
tem; or 
‘‘(3) limit the application of the General Edu-
cation Provisions Act. 
‘‘(c) ENFORCEMENT.—If any State fails or refuses 
to comply with any provision of this section, the State 
shall no longer be eligible for assistance under this part.’’. 
SEC. 103. INVESTMENT IN HISTORICALLY BLACK COL-
LEGES AND UNIVERSITIES AND OTHER MI-
NORITY-SERVING INSTITUTIONS. 
Section 371 (20 U.S.C. 1067q) is amended— 
(1) in subsection (a)—
(A) in paragraph (2), by striking ‘‘section 
502’’ and inserting ‘‘section 502(a)’’; 
(B) in paragraph (3), by striking ‘‘section 
316’’ and inserting ‘‘section 316(b)’’; 
(C) in paragraph (5), by striking ‘‘in sub-
section (c)’’ and inserting ‘‘in section 318(b)’’; 
(D) in paragraph (6), by striking ‘‘in sub-
section (c)’’ and inserting ‘‘in section 320(b)’’; 
and 
(E) in paragraph (7), by striking ‘‘in sub-
section (c)’’ and inserting ‘‘in section 319(b)’’; 
(2) in subsection (b)— 
(A) in paragraph (1)(A), by striking 
‘‘$255,000,000’’ and all that follows and insert-
ing ‘‘$255,000,000 for each of the fiscal years 
2008 through 2019. The authority to award 
grants under this section shall expire at the end 
of fiscal year 2019.’’; and 
(B) by amending paragraph (2)(B) to read 
as follows: 
‘‘(B) STEM
AND
ARTICULATION
PRO-
GRAMS.—From the amount made available for 
allocation under this subparagraph by subpara-
graph (A)(i) for any fiscal year—
‘‘(i) 90 percent shall be available for 
Hispanic-serving institutions for activities 
described in sections 503 and 513, with a 
priority given to applications that pro-
pose— 
‘‘(I) to increase the number of 
Hispanic and other low-income stu-
dents attaining degrees in the fields of 
science, technology, engineering, or 
mathematics; and 
‘‘(II) to develop model transfer 
and articulation agreements between 
2-year Hispanic-serving institutions 
and 4-year institutions in such fields; 
and 
‘‘(ii) 10 percent shall be available for 
grants under section 355.’’; 
(C) in paragraph (2)(C)(ii), by striking 
‘‘and shall be available for a competitive’’ and 
all that follows and inserting ‘‘and shall be 
made available as grants under section 318 and 
allotted among such institutions under section 
318(e), treating such amount, plus the amount 
appropriated for such fiscal year in a regular or 
supplemental appropriation Act to carry out
section 318, as the amount appropriated to 
carry out section 318 for purposes of allotments 
under section 318(e).’’; and 
(D) in paragraph (2)(D)— 
(i) in clause (iii), by striking ‘‘for ac-
tivities described in section 311(c)’’ and in-
serting ‘‘and shall be made available as 
grants under section 320, treating such 
$5,000,000 as part of the amount appro-
priated for such fiscal year in a regular or 
supplemental appropriation Act to carry 
out 
such 
section 
and 
using 
such 
$5,000,000 for purposes described in sub-
section (c) of such section’’; and 
(ii) in clause (iv), by striking ‘‘de-
scribed in subsection (a)(7)—’’ and all that 
follows and inserting ‘‘and shall be made 
available as grants under section 319, 
treating such $5,000,000 as part of the 
amount appropriated for such fiscal year 
in a regular or supplemental appropriation 
Act to carry out such section and using 
such $5,000,000 for purposes described in 
subsection (c) of such section.’’; and 
(3) by striking subsection (c).
SEC. 104. INVESTMENT IN COOPERATIVE EDUCATION. 
There are authorized to be appropriated, and there 
are appropriated, to carry out part N of title VIII of the 
Higher Education Act of 1965 (20 U.S.C. 1161n) (in ad-
dition to any other amounts appropriated to carry out 
such part and out of any money in the Treasury not other-
wise appropriated), $10,000,000 for fiscal year 2010. The 
authority to award grants under part N of title VIII of 
such Act shall expire at the end of fiscal year 2010. 
SEC. 105. LOAN FORGIVENESS FOR SERVICEMEMBERS AC-
TIVATED FOR DUTY. 
(a) IN GENERAL.—Section 484B(b)(2) (20 U.S.C. 
1091b(b)(2)) is amended by adding at the end the fol-
lowing: 
‘‘(F) TUITION
RELIEF
FOR
STUDENTS 
CALLED TO MILITARY SERVICE.— 
‘‘(i) WAIVER OF REPAYMENT BY STU-
DENTS CALLED TO MILITARY SERVICE.—In 
addition to the waivers authorized by sub-
paragraphs (D) and (E), the Secretary 
shall waive the amounts that students are 
required to return under this section if the 
withdrawals on which the returns are 
based are withdrawals necessitated by rea-
son of service in the uniformed services.
‘‘(ii) LOAN
FORGIVENESS
AUTHOR-
IZED.—Whenever a student’s withdrawal 
from an institution of higher education is 
necessitated by reason of service in the 
uniformed services, the Secretary shall, 
with respect to the payment period or pe-
riod of enrollment for which such student 
did not receive academic credit as a result 
of such withdrawal, carry out a program— 
‘‘(I) through the holder of the 
loan, to assume the obligation to 
repay— 
‘‘(aa) the outstanding prin-
cipal and accrued interest on any 
loan assistance first disbursed to 
the student before July 1, 2010, 
under part B (including to a par-
ent on behalf of the student 
under section 428B) for such 
payment period or period of en-
rollment; minus 
‘‘(bb) any amount of such 
loan assistance returned by the 
institution in accordance with 
paragraph (1) of this subsection
for such payment period or pe-
riod of enrollment; and 
‘‘(II) to cancel— 
‘‘(aa) the outstanding prin-
cipal and accrued interest on the 
loan assistance disbursed to the 
student under part D (including 
a Federal Direct PLUS loan dis-
bursed to a parent on behalf of 
the student), or first disbursed to 
the student under part E before 
July 1, 2010, for such payment 
period or period of enrollment; 
minus 
‘‘(bb) any amount of such 
loan assistance returned by the 
institution in accordance with 
paragraph (1) of this subsection 
for such payment period or pe-
riod of enrollment. 
‘‘(iii) REIMBURSEMENT
FOR
CAN-
CELLATION OF PERKINS LOANS.—The Sec-
retary shall pay to each institution for 
each fiscal year an amount equal to the ag-
gregate of the amounts of Federal Perkins
loans in such institutions’s student loan 
fund which are cancelled pursuant to 
clause (iii)(II) for such fiscal year, minus 
an amount equal to the aggregate of the 
amounts of any such loans so canceled 
which were made from Federal capital con-
tributions to its student loan fund provided 
by the Secretary under section 468. None 
of the funds appropriated pursuant to sec-
tion 461(b) shall be available for payments 
pursuant to this paragraph. To the extent 
feasible, the Secretary shall pay the 
amounts for which any institution qualifies 
under this paragraph not later than 3 
months after the institution files an insti-
tutional 
application 
for 
campus-based 
funds. 
‘‘(iv) LOAN ELIGIBILITY AND LIMITS 
FOR
STUDENTS.—Any amounts that are 
returned by an institution in accordance 
with paragraph (1), or forgiven or waived 
by the Secretary under this subparagraph, 
with respect to a payment period or period 
of enrollment for which a student did not 
receive academic credit as a result of with-
drawal necessitated by reason of service in 
the uniformed services, shall not be in-
cluded in the calculation of the student’s 
annual or aggregate loan limits for assist-
ance under this title, or otherwise affect 
the student’s eligibility for grants or loans 
under this title. 
‘‘(v) DEFINITION.—In this subpara-
graph, the term ‘service in the uniformed 
services’ has the meaning given such term 
in section 484C(a).’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall take effect for periods of service in 
the uniformed services beginning after the date of 
the enactment of this Act. 
(2) DEFINITION.—In this paragraph, the term 
‘‘period of service in the uniformed services’’ means 
the period beginning 30 days prior to the date a stu-
dent is required to report to service in the uniformed 
services (as defined in section 484C(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1091c(a)) and 
ending upon termination of the deployment of such 
student for such service.
SEC. 106. VETERANS RESOURCE OFFICER GRANTS. 
Section 873 (20 U.S.C. 1161t) is amended— 
(1) by amending the header to read as follows: 
‘‘MODEL PROGRAMS FOR CENTERS OF EXCEL-
LENCE FOR VETERAN STUDENT SUCCESS; VET-
ERANS RESOURCE OFFICERS’’; 
(2) in subsection (a), by inserting ‘‘, or Vet-
erans Resource Officers,’’ after ‘‘model programs’’; 
(3) by amending subsection (b) to read as fol-
lows: 
‘‘(b) GRANT AUTHORIZED.— 
‘‘(1) IN GENERAL.—Subject to the availability 
of appropriations under subsection (f), the Secretary 
shall award grants to institutions of higher edu-
cation to— 
‘‘(A) develop model programs to support 
veteran student success in postsecondary edu-
cation; or 
‘‘(B) hire a Veterans Resource Officer to 
increase the college completion rates for veteran 
students enrolled at such institutions of higher 
education. 
‘‘(2) GRANT PERIOD.—A grant awarded under 
this section shall be awarded for a period of 3 
years.’’; and 
(4) in subsection (c)—
(A) in paragraph (1)— 
(i) by amending the header to read as 
follows: ‘‘MODEL PROGRAM REQUIRED AC-
TIVITIES’’; and 
(ii) in the matter preceding subpara-
graph (A), by striking ‘‘under this section’’ 
and inserting ‘‘for the purpose described in 
subsection (b)(1)(A)’’; 
(B) by redesignating paragraph (2) as 
paragraph (3); and 
(C) by inserting after paragraph (1) the 
following: 
‘‘(2) VETERANS RESOURCE OFFICER REQUIRED 
ACTIVITIES.—An institution of higher education re-
ceiving a grant for the purpose described in sub-
section (b)(1)(B) shall use such grant to hire a Vet-
erans Resource Officer whose duties shall include— 
‘‘(A) serving as a liaison between— 
‘‘(i) veteran students; 
‘‘(ii) the faculty and staff of the insti-
tution; 
‘‘(iii) local facilities of the Department 
of Veterans Affairs; and 
‘‘(iv) mental healthcare providers at 
the Department of Veterans Affairs to en-
sure that veteran students are referred to 
such providers if needed; and 
‘‘(B) organizing and advising veteran stu-
dent organizations and hosting veterans-ori-
ented group functions on campus; 
‘‘(C) distributing news and information to 
all veteran students, including through main-
taining newsletters and listserves; and 
‘‘(D) assisting in the training of Depart-
ment of Veterans Affairs certifying officials, 
when applicable.’’. 
SEC. 107. OFFICER DANIEL FAULKNER CHILDREN OF FALL-
EN HEROES SCHOLARSHIP. 
(a) SHORT TITLE.—This section may be cited as the 
‘‘Officer Daniel Faulkner Children of Fallen Heroes 
Scholarship Act of 2009’’. 
(b) CALCULATION OF ELIGIBILITY.—Section 473(b) 
(20 U.S.C. 1087mm(b)(2)) is amended— 
(1) in paragraph (2)— 
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘(in the case of a student who 
meets the requirement of subparagraph (B)(i)), 
or academic year 2010–2011 (in the case of a 
student who meets the requirement of subpara-
graph (B)(ii)),’’ after ‘‘academic year 2009– 
2010’’; and 
(B) by amending subparagraph (B) to read 
as follows: 
‘‘(B) whose parent or guardian was— 
‘‘(i) a member of the Armed Forces of 
the United States and died as a result of 
performing military service in Iraq or Af-
ghanistan after September 11, 2001; or 
‘‘(ii) was actively serving as a public 
safety officer and died in the line of duty 
while performing as a public safety officer; 
and’’; 
(2) in paragraph (3)— 
(A) by striking ‘‘Notwithstanding’’ and in-
serting the following: 
‘‘(A) ARMED FORCES.—Notwithstanding’’; 
(B) by striking ‘‘paragraph (2)’’ and in-
serting ‘‘subparagraphs (A), (B)(i), and (C) of 
paragraph (2)’’; and 
(C) by adding at the end the following: 
‘‘(B) PUBLIC
SAFETY
OFFICERS.—Not-
withstanding any other provision of law, unless 
the Secretary establishes an alternate method 
to adjust the expected family contribution, a fi-
nancial aid administrator shall adjust the ex-
pected family contribution in accordance with 
this subsection for each student who meets the 
requirements of subparagraphs (A), (B)(ii), and 
(C) of paragraph (2).’’; and 
(3) by adding at the end the following: 
‘‘(4) TREATMENT OF PELL AMOUNT.—Notwith-
standing section 1212 of the Omnibus Crime Control 
and Safe Streets Act of 1968, in the case of a stu-
dent who receives an increased Federal Pell Grant 
amount under this section, the total amount of such 
Federal Pell Grant, including the increase under 
subparagraph (A), shall not be considered in calcu-
lating that student’s educational assistance benefits 
under the Public Safety Officer’s Benefits program. 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) the term ‘public safety officer’ means 
an individual serving a public agency in an offi-
cial capacity, with or without compensation, as 
a law enforcement officer, as a firefighter, or as 
a member of a rescue squad or ambulance crew; 
‘‘(B) the term ‘law enforcement officer’ 
means an individual who—
‘‘(i) is authorized by law to engage in 
or supervise the prevention, detection, in-
vestigation, or prosecution of, or the incar-
ceration of any person for, any violation of 
law; and 
‘‘(ii) has statutory powers of arrest or 
apprehension; 
‘‘(C) the term ‘firefighter’ means an indi-
vidual who is trained in the suppression of fire 
or hazardous-materials response and has the 
legal authority to engage in these duties; 
‘‘(D) the term ‘member of a rescue squad 
or ambulance crew’ means an individual who is 
an officially recognized or designated public em-
ployee member of a rescue squad or ambulance 
crew; and 
‘‘(E) the term ‘public agency’ means the 
United States, any State of the United States, 
the District of Columbia, the Commonwealth of 
Puerto Rico, the Virgin Islands of the United 
States, Guam, American Samoa, the Trust Ter-
ritory of the Pacific Islands, the Commonwealth 
of the Northern Mariana Islands, any territory 
or possession of the United States, or any unit 
of local government, department, agency, or in-
strumentality of any of the foregoing, and the 
Amtrak Police and Federal Reserve Police de-
partments.’’. 
SEC. 108. TEACHER EXCELLENCE. 
(a) ESTABLISHMENT.—The Secretary of Education 
may make grants to local educational agencies for the pur-
pose of improving teacher excellence in public elementary 
and secondary schools. 
(b) USE OF FUNDS.—Grants under this section shall 
be used for the establishment, expansion, or improvement 
of— 
(1) professional development activities that are 
aligned to the curriculum and student academic 
needs; 
(2) mentoring and induction programs for new 
teachers and principals; or 
(3) career ladders that allow teachers to take 
on new professional roles, such as career teachers, 
mentor teachers, and master teachers. 
(c) APPLICATION.—A local educational agency desir-
ing a grant under this section shall submit to the Sec-
retary of Education an application at such time, in such 
manner, and accompanied by such information as the Sec-
retary may reasonably require.
(d) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as may be necessary for fiscal year 2010 and 
each of the 5 succeeding fiscal years. 
Subtitle B—Student Financial Aid 
Form Simplification 
SEC. 121. GENERAL EFFECTIVE DATE. 
Except as otherwise provided in this subtitle, amend-
ments made by this subtitle shall be effective with respect 
to determinations of need for assistance under title IV of 
the Higher Education Act of 1965 (20 U.S.C. 1070 et 
seq.) for award years beginning on or after July 1, 2011. 
SEC. 122. TREATMENT OF ASSETS IN NEED ANALYSIS. 
(a) AMOUNT OF NEED.—Section 471 (20 U.S.C. 
1087kk) is amended— 
(1) by striking ‘‘Except’’ and inserting the fol-
lowing: 
‘‘(a) IN GENERAL.—Except’’; 
(2) by inserting ‘‘and subject to subsection (b)’’ 
after ‘‘therein’’; and 
(3) by adding at the end the following: 
‘‘(b) ASSET CAP FOR NEED-BASED AID.—Notwith-
standing any other provision of this title, a student shall 
not be eligible to receive a Federal Pell Grant or a Federal 
Direct Stafford Loan under this title if—
‘‘(1) in the case of a dependent student, the 
combined net assets of the student and the student’s 
parents are equal to an amount greater than 
$150,000 (or a successor amount prescribed by the 
Secretary under section 478(c)); or 
‘‘(2) in the case of an independent student, the 
net assets of the student (and the student’s spouse, 
if applicable) are equal to an amount greater than 
$150,000 (or a successor amount prescribed by the 
Secretary under section 478(c)).’’. 
(b) DATA ELEMENTS.—Section 474(b) (20 U.S.C. 
1087nn(b)) is amended— 
(1) by striking paragraph (4); and 
(2) by redesignating paragraphs (5), (6), and 
(7) as paragraphs (4), (5), and (6), respectively. 
(c) DEPENDENT
STUDENTS.—Section 475 (20 
U.S.C. 1087oo) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1)— 
(i) by striking ‘‘adjusted’’; and 
(ii) by inserting ‘‘and’’ after the semi-
colon; 
(B) in paragraph (2), by striking ‘‘; and’’ 
and inserting a period; and 
(C) by striking paragraph (3);
(2) in subsection (b)— 
(A) in the header, by striking ‘‘AD-
JUSTED’’; 
(B) in the matter preceding paragraph (1), 
by striking ‘‘adjusted’’; 
(C) by striking paragraph (1); 
(D) by redesignating paragraphs (2) and 
(3) as paragraphs (1) and (2), respectively; 
(E) in paragraph (1) (as redesignated by 
subparagraph (D) of this paragraph), by strik-
ing ‘‘adjusted’’; and 
(F) in paragraph (2) (as redesignated by 
subparagraph (D) of this paragraph), by strik-
ing ‘‘paragraph (2)’’ and inserting ‘‘paragraph 
(1)’’; 
(3) by repealing subsection (d); 
(4) in subsection (e)— 
(A) by striking ‘‘The adjusted available’’ 
and inserting ‘‘The available’’; 
(B) by striking ‘‘to as ‘AAI’)’’ and insert-
ing ‘‘to as ‘AI’)’’; 
(C) by striking ‘‘From Adjusted Available 
Income (AAI)’’ and inserting ‘‘From Available 
Income (AI)’’; and 
(D) in the table—
(i) by striking ‘‘If AAI’’ and inserting 
‘‘If AI’’; and 
(ii) by striking ‘‘of AAI’’ each place it 
appears and inserting ‘‘of AI’’; 
(5) in subsection (f)— 
(A) by striking ‘‘and assets’’ each place it 
appears; 
(B) in paragraph (2)(B), by striking ‘‘or 
assets’’; and 
(C) in paragraph (3)— 
(i) by striking ‘‘are taken into’’ and 
inserting ‘‘is taken into’’; and 
(ii) by striking ‘‘adjusted’’; 
(6) in subsection (g)(6), by striking ‘‘exceeds 
the sum of’’ and all that follows and inserting ‘‘ex-
ceeds the parents’ total income (as defined in section 
480).’’; 
(7) by repealing subsection (h); and 
(8) in subsection (i), by striking ‘‘adjusted’’ 
each place it appears. 
(d) FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS
WITHOUT
DEPENDENTS
OTHER
THAN
A 
SPOUSE.—Section 476 (20 U.S.C. 1087pp) is amended— 
(1) in subsection (a)— 
(A) by striking paragraph (1);
(B) by redesignating paragraphs (2) and 
(3) as paragraphs (1) and (2), respectively; 
(C) in paragraph (1) (as redesignated by 
subparagraph (B)), by striking ‘‘the sum result-
ing under paragraph (1)’’ and inserting ‘‘the 
family’s contribution from available income (de-
termined in accordance with subsection (b))’’; 
and 
(D) in paragraph (2)(A) (as redesignated 
by subparagraph (B)), by striking ‘‘paragraph 
(2)’’ and inserting ‘‘paragraph (1)’’; 
(2) by repealing subsection (c); and 
(3) in subsection (d)— 
(A) by striking ‘‘and assets’’; and 
(B) by striking ‘‘or assets’’. 
(e) FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS WITH DEPENDENTS OTHER THAN A SPOUSE.— 
Section 477 (20 U.S.C. 1087qq) is amended— 
(1) in subsection (a)— 
(A) by striking paragraph (1); 
(B) by redesignating paragraphs (2), (3), 
and (4) as paragraphs (1), (2), and (3), respec-
tively; 
(C) in paragraph (1) (as redesignated by 
subparagraph (B)), by striking ‘‘such adjusted
available income’’ and inserting ‘‘the family’s 
available income (determined in accordance with 
subsection (b))’’; 
(D) in paragraph (2) (as redesignated by 
subparagraph (B)), by striking ‘‘paragraph (2)’’ 
and inserting ‘‘paragraph (1)’’; and 
(E) in paragraph (3)(A) (as redesignated 
by subparagraph (B)), by striking ‘‘paragraph 
(3)’’ and inserting ‘‘paragraph (2)’’; 
(2) by repealing subsection (c); and 
(3) in subsection (d)— 
(A) by striking ‘‘The adjusted available’’ 
and inserting ‘‘The available’’; 
(B) by striking ‘‘to as ‘AAI’)’’ and insert-
ing ‘‘to as ‘AI’)’’; 
(C) by striking ‘‘From Adjusted Available 
Income (AAI)’’ and inserting ‘‘From Available 
Income (AI)’’; and 
(D) in the table— 
(i) by striking ‘‘If AAI’’ and inserting 
‘‘If AI’’; and 
(ii) by striking ‘‘of AAI’’ each place it 
appears and inserting ‘‘of AI’’; and 
(E) in subsection (e)— 
(i) by striking ‘‘and assets’’; and
(ii) by striking ‘‘or assets’’. 
(f) REGULATIONS; UPDATED TABLES.—Section 478 
(20 U.S.C. 1087rr) is amended— 
(1) in subsection (a), by inserting ‘‘or amounts, 
as the case may be,’’ after ‘‘tables’’ each place the 
term appears; 
(2) by amending subsection (c) to read as fol-
lows: 
‘‘(c) ASSET CAP FOR NEED-BASED AID.—For each 
award year after award year 2011–2012, the Secretary 
shall publish in the Federal Register a revised net asset 
cap for the purposes of section 471(b). Such revised cap 
shall be determined by increasing the dollar amount in 
such section by a percentage equal to the estimated per-
centage change in the Consumer Price Index (as deter-
mined by the Secretary) between December 2010 and the 
December preceding the beginning of such award year, 
and rounding the result to the nearest $5.’’; 
(3) by repealing subsection (d); and 
(4) in subsection (e), by striking ‘‘adjusted’’ 
both places it appears. 
SEC. 123. CHANGES TO TOTAL INCOME; AID ELIGIBILITY. 
(a) DEFINITION OF UNTAXED INCOME AND BENE-
FITS.—Section 480(b)(1) (20 U.S.C. 1087vv(b)(1)), as
amended by the Higher Education Opportunity Act (Pub-
lic Law 110–315), is amended— 
(1) by striking subparagraphs (A), (B), (C), 
(E), (F), and (I); 
(2) by redesignating subparagraphs (D), (G), 
and (H) as subparagraphs (A), (B), and (C), respec-
tively; 
(3) in subparagraph (B) (as redesignated by 
paragraph (2)), by inserting ‘‘and’’ after the semi-
colon; and 
(4) in subparagraph (C) (as redesignated by 
paragraph (2)), by striking ‘‘; and’’ and inserting a 
period. 
(b) DEFINITION OF ASSETS.—Section 480(f)(2) (20 
U.S.C. 1087vv(f)(2)) is amended— 
(1) by striking ‘‘or’’ at the end of subparagraph 
(B); 
(2) by striking the period at the end of sub-
paragraph (C) and inserting ‘‘; or’’; and 
(3) by adding at the end the following: 
‘‘(D) an employee pension benefit plan (as 
defined in section 3(2) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1002(2))).’’.
(c) FINANCIAL ADMINISTRATOR DISCRETION.—Sec-
tion 479A(b) (20 U.S.C. 1087tt) is amended in the sub-
section heading, by striking ‘‘TO ASSETS’’. 
(d) SUSPENSION
OF ELIGIBILITY
FOR DRUG-RE-
LATED
OFFENSES.—Section 
484(r)(1) 
(20 
U.S.C. 
1091(r)(1)) is amended to read as follows: 
‘‘(1) IN GENERAL.—A student who is convicted 
of any offense under any Federal or State law in-
volving the sale of a controlled substance for conduct 
that occurred during a period of enrollment for 
which the student was receiving any grant, loan, or 
work assistance under this title shall not be eligible 
to receive any grant, loan, or work assistance under 
this title from the date of that conviction for the pe-
riod of time specified in the following subpara-
graphs: 
‘‘(A) For a first offense, the period of in-
eligibility shall be 2 years. 
‘‘(B) For a second offense, the period of 
ineligibility shall be indefinite.’’.
TITLE II—STUDENT LOAN 
REFORM 
Subtitle A—Stafford Loan Reform 
SEC. 201. FEDERAL FAMILY EDUCATION LOAN APPROPRIA-
TIONS. 
Section 421 (20 U.S.C. 1071) is amended— 
(1) in subsection (b), in the matter following 
paragraph (6), by inserting ‘‘, except that no sums 
may be expended after June 30, 2010, with respect 
to loans under this part for which the first disburse-
ment would be made after such date’’ after ‘‘ex-
pended’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(d) TERMINATION OF AUTHORITY TO MAKE OR IN-
SURE NEW LOANS.—Notwithstanding paragraphs (1) 
through (6) of subsection (b) or any other provision of 
law— 
‘‘(1) no new loans (including consolidation 
loans) may be made or insured under this part after 
June 30, 2010; and 
‘‘(2) no funds are authorized to be appro-
priated, or may be expended, under this Act or any 
other Act to make or insure loans under this part
(including consolidation loans) for which the first 
disbursement would be made after June 30, 2010, 
except as expressly authorized by an Act of Congress en-
acted after the date of enactment of the Student Aid and 
Fiscal Responsibility Act of 2009.’’. 
SEC. 202. SCOPE AND DURATION OF FEDERAL LOAN INSUR-
ANCE PROGRAM. 
Section 424(a) (20 U.S.C. 1074(a)) is amended by 
striking ‘‘September 30, 1976,’’ and all that follows and 
inserting ‘‘September 30, 1976, for each of the succeeding 
fiscal years ending prior to October 1, 2009, and for the 
period from October 1, 2009, to June 30, 2010, for loans 
first disbursed on or before June 30, 2010.’’. 
SEC. 203. APPLICABLE INTEREST RATES. 
Section 427A(l) (20 U.S.C. 1077a(l)) is amended— 
(1) in paragraph (1), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘July 1, 2006,’’; 
(2) in paragraph (2), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘July 1, 2006,’’; 
(3) in paragraph (3), by inserting ‘‘and that 
was disbursed before July 1, 2010,’’ after ‘‘July 1, 
2006,’’; and 
(4) in paragraph (4)—
(A) in the matter preceding subparagraph 
(A), by striking ‘‘July 1, 2012’’ and inserting 
‘‘July 1, 2010’’; and 
(B) by repealing subparagraphs (D) and 
(E). 
SEC. 204. FEDERAL PAYMENTS TO REDUCE STUDENT IN-
TEREST COSTS. 
(a) HIGHER EDUCATION ACT OF 1965.—Section 428 
(20 U.S.C. 1078) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1), in the matter pre-
ceding subparagraph (A), by inserting ‘‘for 
which the first disbursement is made before 
July 1, 2010, and’’ after ‘‘eligible institution’’; 
and 
(B) in paragraph (5), by striking ‘‘Sep-
tember 30, 2014,’’ and all that follows through 
the period and inserting ‘‘June 30, 2010.’’; 
(2) in subsection (b)(1)— 
(A) in subparagraph (G)(ii), by inserting 
‘‘and before July 1, 2010,’’ after ‘‘July 1, 
2006,’’; and 
(B) in subparagraph (H)(ii), by inserting 
‘‘and that are first disbursed before July 1, 
2010,’’ after ‘‘July 1, 2006,’’;
(3) in subsection (f)(1)(A)(ii)— 
(A) by striking ‘‘during fiscal years begin-
ning’’; and 
(B) by inserting ‘‘and first disbursed be-
fore July 1, 2010,’’ after ‘‘October 1, 2003,’’; 
and 
(4) in subsection (j)(1), by inserting ‘‘, before 
July 1, 2010,’’ after ‘‘section 435(d)(1)(D) of this 
Act shall’’. 
(b) COLLEGE COST REDUCTION AND ACCESS ACT.— 
Section 303 of the College Cost Reduction and Access Act 
(Public Law 110–84) is repealed. 
SEC. 205. FEDERAL PLUS LOANS. 
Section 428B(a)(1) (20 U.S.C. 1078–2(a)(1)) is 
amended by striking ‘‘A graduate’’ and inserting ‘‘Prior 
to July 1, 2010, a graduate’’. 
SEC. 206. FEDERAL CONSOLIDATION LOAN. 
(a) AMENDMENTS.—Section 428C (20 U.S.C. 1078– 
3) is amended— 
(1) in subsection (a)(4)(A), by inserting ‘‘, and 
first disbursed before July 1, 2010’’ after ‘‘under 
this part’’; 
(2) in subsection (b)—
(A) in paragraph (1)(E), by inserting be-
fore the semicolon ‘‘, and before July 1, 2010’’; 
and 
(B) in paragraph (5), by striking ‘‘In the 
event that’’ and inserting ‘‘If, before July 1, 
2010,’’; 
(3) in subsection (c)(1)— 
(A) in subparagraph (A)(ii), by inserting 
‘‘and that is disbursed before July 1, 2010,’’ 
after ‘‘2006,’’; and 
(B) in subparagraph (C), by inserting 
‘‘and first disbursed before July 1, 2010,’’ after 
‘‘1994,’’; and 
(4) in subsection (e), by striking ‘‘September 
30, 2014.’’ and inserting ‘‘June 30, 2010. No loan 
may be made under this section for which the first 
disbursement would be on or after July 1, 2010.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a)(1)(A) shall be effective at the close of June 
30, 2010. 
SEC. 207. UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE- 
INCOME BORROWERS. 
Section 428H (20 U.S.C. 1078–8) is amended—
(1) in subsection (a), by inserting ‘‘that are 
first disbursed before July 1, 2010,’’ after ‘‘under 
this part’’; 
(2) in subsection (b)— 
(A) by striking ‘‘Any student’’ and insert-
ing ‘‘Prior to July 1, 2010, any student’’; and 
(B) by inserting ‘‘for which the first dis-
bursement is made before such date’’ after ‘‘un-
subsidized Federal Stafford Loan’’; and 
(3) in subsection (h), by inserting ‘‘and that are 
first disbursed before July 1, 2010,’’ after ‘‘July 1, 
2006,’’. 
SEC. 208. LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE 
ATTORNEYS. 
Section 
428L(b)(2)(A) 
(20 
U.S.C. 
1078– 
12(b)(2)(A)) is amended— 
(1) by amending clause (i) to read as follows: 
‘‘(i) subject to clause (ii)— 
‘‘(I) a loan made, insured, or 
guaranteed under this part, and that 
is first disbursed before July 1, 2010; 
or 
‘‘(II) a loan made under part D 
or part E; and’’; and 
(2) in clause (ii)—
(A) by striking ‘‘428C or 455(g)’’ and in-
serting ‘‘428C that is disbursed before July 1, 
2010, or section 455(g)’’; and 
(B) in subclause (II), by inserting ‘‘for 
which the first disbursement is made before 
July 1, 2010’’ after ‘‘or 428H’’. 
SEC. 209. SPECIAL ALLOWANCES. 
Section 438 (20 U.S.C. 1087–1) is amended— 
(1) in subsection (b)(2)(I)— 
(A) in the header, by inserting ‘‘, AND BE-
FORE JULY 1, 2010’’ after ‘‘2000’’; 
(B) in clause (i), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘2000,’’; 
(C) in clause (ii)(II), by inserting ‘‘and be-
fore July 1, 2010,’’ after ‘‘2006,’’; 
(D) in clause (iii), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘2000,’’; 
(E) in clause (iv), by inserting ‘‘and that 
is disbursed before July 1, 2010,’’ after 
‘‘2000,’’; 
(F) in clause (v)(I), by inserting ‘‘and be-
fore July 1, 2010,’’ after ‘‘2006,’’; and 
(G) in clause (vi)— 
(i) in the header, by inserting ‘‘, AND 
BEFORE JULY 1, 2010’’ after ‘‘2007’’; and
(ii) in the matter preceding subclause 
(I), by inserting ‘‘and before July 1, 
2010,’’ after ‘‘2007,’’; 
(2) in subsection (c)— 
(A) in paragraph (2)(B)— 
(i) in clause (iii), by inserting ‘‘and’’ 
after the semicolon; 
(ii) in clause (iv), by striking ‘‘; and’’ 
and inserting a period; and 
(iii) by striking clause (v); and 
(B) in paragraph (6), by inserting ‘‘and 
first disbursed before July 1, 2010,’’ after 
‘‘1992,’’; and 
(3) in subsection (d)(2)(B), by inserting ‘‘, and 
before July 1, 2010’’ after ‘‘2007’’. 
SEC. 210. REVISED SPECIAL ALLOWANCE CALCULATION. 
(a) 
REVISED
CALCULATION
RULE.—Section 
438(b)(2)(I) of the Higher Education Act of 1965 (20 
U.S.C. 1087–1(b)(2)(I)) is amended by adding at the end 
the following new clause: 
‘‘(vii) REVISED
CALCULATION
RULE 
TO REFLECT FINANCIAL MARKET CONDI-
TIONS.— 
‘‘(I) CALCULATION
BASED
ON 
LIBOR.—For the calendar quarter be-
ginning on October 1, 2009, and each 
subsequent calendar quarter, in com-
puting the special allowance paid pur-
suant to this subsection with respect 
to loans described in subclause (II), 
clause (i)(I) of this subparagraph 
shall be applied by substituting ‘of the 
1-month London Inter Bank Offered 
Rate (LIBOR) for United States dol-
lars in effect for each of the days in 
such quarter as compiled and released 
by the British Bankers Association’ 
for ‘of the quotes of the 3-month com-
mercial paper (financial) rates in ef-
fect for each of the days in such quar-
ter as reported by the Federal Reserve 
in Publication H–15 (or its successor) 
for such 3-month period’. 
‘‘(II) 
LOANS
ELIGIBLE
FOR 
LIBOR-BASED
CALCULATION.—The 
special allowance paid pursuant to 
this subsection shall be calculated as 
described in subclause (I) with respect 
to special allowance payments for the 
3-month period ending December 31,
2009, and each succeeding 3-month 
period, on loans for which the first 
disbursement is made— 
‘‘(aa) on or after the date of 
enactment of the Student Aid 
and Fiscal Responsibility Act of 
2009, and before July 1, 2010; 
or 
‘‘(bb) on or after January 1, 
2000, and before the date of en-
actment of the Student Aid and 
Fiscal 
Responsibility 
Act 
of 
2009, if, not later than the last 
day of the second full fiscal quar-
ter after the date of enactment of 
such Act, the holder of the loan 
(or, if the holder acts as eligible 
lender trustee for the beneficial 
owner of the loan, the beneficial 
owner of the loan), affirmatively 
and permanently waives all con-
tractual, statutory or other legal 
rights to a special allowance paid 
pursuant to this subsection that 
is calculated using the formula in
effect at the time the loans were 
first disbursed. 
‘‘(III) TERMS OF WAIVER.— 
‘‘(aa) 
IN
GENERAL.—A 
waiver pursuant to subclause 
(II)(bb) shall be in a form (print-
ed or electronic) prescribed by 
the Secretary, and shall be appli-
cable to— 
‘‘(AA) all loans de-
scribed in such subclause 
that the lender holds solely 
in its own right under any 
lender identification number 
associated with the holder 
(pursuant to section 487B); 
‘‘(BB) all loans de-
scribed in such subclause for 
which the beneficial owner 
has the authority to make 
an election of a waiver under 
such subclause, regardless of 
the 
lender 
identification 
number associated with the 
loan or the lender that holds
the loan as eligible lender 
trustee on behalf of such 
beneficial owner; and 
‘‘(CC) all future cal-
culations of the special al-
lowance on loans that, on 
the date of such waiver, are 
loans described in subitem 
(AA) or (BB), or that, after 
such date, become loans de-
scribed in subitem (AA) or 
(BB). 
‘‘(bb) 
EXCEPTIONS.—Any 
waiver pursuant to subclause 
(II)(bb) that is elected for loans 
described in subitem (AA) or 
(BB) of item (aa) shall not apply 
to any loan described in such 
subitem for which the lender or 
beneficial owner of the loan dem-
onstrates to the satisfaction of 
the Secretary that— 
‘‘(AA) 
in 
accordance 
with an agreement entered 
into before the date of en-
actment of the Student Aid 
and 
Fiscal 
Responsibility 
Act of 2009 by which such 
lender or owner is governed 
and that applies to such 
loans, such lender or owner 
is not legally permitted to 
make an election of such 
waiver with respect to such 
loans without the approval 
of one or more third parties 
with an interest in the loans, 
and that the lender or owner 
followed all available options 
under such agreement to ob-
tain such approval, and was 
unable to do so; or 
‘‘(BB) such lender or 
beneficial owner presented 
the proposal of electing such 
a waiver applicable to such 
loans associated with an ob-
ligation rated by a nationally 
recognized statistical rating 
organization (as defined in
section 3(a)(62) of the Secu-
rities 
Exchange 
Act 
of 
1934), and such rating orga-
nization provided a written 
opinion 
that 
the 
agency 
would downgrade the rating 
applicable to such obligation 
if the lender or owner elect-
ed such a waiver. 
‘‘(IV) PARTICIPANT’S
YIELD.— 
For the calendar quarter beginning on 
October 1, 2009, and each subsequent 
calendar quarter, the Secretary’s par-
ticipant yield in any loan in which the 
Secretary has purchased a participa-
tion interest and for which the first 
disbursement is made on or after Jan-
uary 1, 2000, and before October 1, 
2009, shall be determined by using 
the LIBOR-based rate described in 
subclause (I) as the substitute rate 
(for the commercial paper rate) re-
ferred to in the participation agree-
ment between the Secretary and such 
lender.’’.
(b) 
CONFORMING
AMENDMENT.—Section 
438(b)(2)(I) (20 U.S.C. 1087–1(b)(2)(I)) is further 
amended— 
(1) in clause (i)(II), by striking ‘‘such average 
bond equivalent rate’’ and inserting ‘‘the rate deter-
mined under subclause (I)’’; and 
(2) in clause (v)(III) by striking ‘‘(iv), and (vi)’’ 
and inserting ‘‘(iv), (vi), and (vii)’’. 
SEC. 211. ORIGINATION OF DIRECT LOANS AT INSTITU-
TIONS 
LOCATED 
OUTSIDE 
THE 
UNITED 
STATES. 
(a) LOANS
FOR STUDENTS ATTENDING INSTITU-
TIONS LOCATED OUTSIDE THE UNITED STATES.—Sec-
tion 452 (20 U.S.C. 1087b) is amended by adding at the 
end the following: 
‘‘(d) INSTITUTIONS LOCATED OUTSIDE THE UNITED 
STATES.—Loan funds for students (and parents of stu-
dents) attending institutions located outside the United 
States shall be disbursed through a financial institution 
located in the United States and designated by the Sec-
retary to serve as the agent of such institutions with re-
spect to the receipt of the disbursements of such loan 
funds and the transfer of such funds to such institutions. 
To be eligible to receive funds under this part, an other-
wise eligible institution located outside the United States
shall make arrangements, subject to regulations by the 
Secretary, with the agent designated by the Secretary 
under this subsection to receive funds under this part.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) AMENDMENTS.—Section 102 (20 U.S.C. 
1002), as amended by section 102 of the Higher 
Education Opportunity Act (Public Law 110–315) 
and section 101 of Public Law 111–39, is amend-
ed— 
(A) by striking ‘‘part B’’ each place it ap-
pears and inserting ‘‘part D’’; 
(B) in subsection (a)(1)(C), by inserting ‘‘, 
consistent with the requirements of section 
452(d)’’ before the period at the end; and 
(C) in subsection (a)(2)(A)— 
(i) in the matter preceding clause (i), 
by striking ‘‘made, insured, or guaranteed’’ 
and inserting ‘‘made’’; and 
(ii) in clause (iii)— 
(I) in subclause (III), by striking 
‘‘only Federal Stafford’’ and all that 
follows through ‘‘section 428B’’ and 
inserting ‘‘only Federal Direct Staf-
ford 
Loans 
under 
section 
455(a)(2)(A), Federal Direct Unsub-
sidized Stafford Loans under section 
455(a)(2)(D), 
or 
Federal 
Direct 
PLUS 
Loans 
under 
section 
455(a)(2)(B)’’; and 
(II) in subclause (V), by striking 
‘‘a Federal Stafford’’ and all that fol-
lows through ‘‘section 428B’’ and in-
serting ‘‘a Federal Direct Stafford 
Loan under section 455(a)(2)(A), a 
Federal Direct Unsubsidized Stafford 
Loan under section 455(a)(2)(D), or a 
Federal Direct PLUS Loan under 
section 455(a)(2)(B)’’. 
(2) EFFECTIVE DATE.—The amendments made 
by subparagraph (C) of paragraph (1) shall be effec-
tive as if enacted as part of section 102(a)(1) of the 
Higher Education Opportunity Act, in accordance 
with section 102(e) of such Act, as amended by sec-
tion 101(a)(2) of Public Law 111–39. 
SEC. 212. AGREEMENTS WITH INSTITUTIONS. 
Section 454 (20 U.S.C. 1087d) is amended— 
(1) in subsection (a), by striking paragraph (4) 
and redesignating the succeeding paragraphs accord-
ingly; and
(2) in subsection (b)(2), by striking ‘‘(5), (6), 
and (7)’’ and inserting ‘‘(5), and (6)’’. 
SEC. 213. TERMS AND CONDITIONS OF LOANS. 
(a) AMENDMENTS.—Section 455 (20 U.S.C. 1087e) 
is amended— 
(1) in subsection (a)(1), by inserting ‘‘, and 
first disbursed on June 30, 2010,’’ before ‘‘under 
sections 428’’; and 
(2) in subsection (g)— 
(A) by inserting ‘‘, including any loan 
made under part B and first disbursed before 
July 1, 2010’’ after ‘‘section 428C(a)(4)’’; and 
(B) by striking the third sentence. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a)(1) shall apply with respect to loans first dis-
bursed under part D of title IV of the Higher Education 
Act of 1965 (20 U.S.C. 1087a et seq.) on or after July 
1, 2010. 
SEC. 214. CONTRACTS. 
Section 456 (20 U.S.C. 1087f) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1)— 
(i) in the header, by striking ‘‘IN 
GENERAL’’ and inserting ‘‘AWARDING OF 
CONTRACTS’’;
(ii) by striking ‘‘The Secretary’’ and 
inserting the following: 
‘‘(A) IN GENERAL.—The Secretary’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(B) AWARDING
CONTRACTS
FOR
SERV-
ICING
LOANS.—The Secretary shall, if prac-
ticable, award multiple contracts, through a 
competitive bidding process, to entities, includ-
ing eligible not-for-profit servicers, to service 
loans originated under this part. The competi-
tive bidding process shall take into account 
price, servicing capacity, and capability, and 
may take into account the capacity and capa-
bility to provide default aversion activities and 
outreach services. 
‘‘(C) JOB
RETENTION
INCENTIVE
PAY-
MENT.—(i) In a contract with an entity under 
subparagraph (B) for the servicing of loans, the 
Secretary shall provide a job retention incentive 
payment, in an amount and manner determined 
by the Secretary, if such entity agrees to give 
priority for hiring for positions created as a re-
sult of such a contract to those geographical lo-
cations located in the United States at which
the entity performed student loan origination or 
servicing activities under the Federal Family 
Education Loan Program as of the date of en-
actment of the Student Aid and Fiscal Respon-
sibility Act of 2009. 
‘‘(ii) In determining the allocation of loans 
to be serviced by an entity awarded such a con-
tract, the Secretary shall consider the retention 
of highly qualified employees (employed in the 
United States) of such entity a positive factor 
in determining such allocation.’’; 
(B) in paragraph (2)— 
(i) in the first sentence, by inserting 
‘‘, 
including 
eligible 
not-for-profit 
servicers,’’ after ‘‘The entities’’; 
(ii) by amending the third sentence to 
read as follows: ‘‘The entities with which 
the Secretary may enter into such con-
tracts shall include, where practicable, 
agencies with agreements with the Sec-
retary under sections 428(b) and (c) on 
the date of the enactment of the Student 
Aid and Fiscal Responsibility Act of 2009, 
nonprofit subsidiaries of such an agency, 
and eligible not-for-profit servicers, if such
agencies, subsidiaries, or servicers meet the 
qualifications as determined by the Sec-
retary under this subsection and if those 
agencies, subsidiaries, or servicers have 
such experience and demonstrated effec-
tiveness.’’; and 
(iii) by striking the last sentence and 
inserting the following: ‘‘In awarding con-
tracts to such agencies, subsidiaries, and 
such eligible not-for-profit servicers, the 
Secretary shall, to the extent practicable 
and consistent with the purposes of this 
part, give special consideration to such 
agencies, subsidiaries, and servicers with a 
history of high quality performance and 
demonstrated integrity in conducting oper-
ations with institutions of higher education 
and the Secretary.’’; 
(C) by redesignating paragraph (3) as 
paragraph (4), and by inserting in such para-
graph ‘‘, or of any eligible not-for-profit servicer 
to enter into an agreement for the purposes of 
this section as a member of a consortium of 
such entities’’ before the period at the end; and
(D) by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) SERVICING BY ELIGIBLE NOT-FOR-PROFIT 
SERVICERS.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this section, in each State 
where at least one eligible not-for-profit servicer 
has its principal place of business, the Secretary 
shall contract with each such servicer to service 
loans originated under this part on behalf of 
borrowers attending institutions located within 
such State, provided that the servicer dem-
onstrates that it meets the standards for serv-
icing Federal assets and providing quality serv-
ice and agrees to service the loans at a competi-
tive market rate, as determined by the Sec-
retary. In determining such a competitive mar-
ket rate, the Secretary shall set such rate so 
that (i) the rate is commercially reasonable in 
relation to the volume of loans being serviced by 
the eligible not-for-profit servicers, and (ii) in 
the Secretary’s judgment, the eligible not-for- 
profit servicers can reasonably provide any ad-
ditional services, such as default aversion or 
outreach, provided for in the contracts awarded
under this paragraph. Contracts awarded under 
this paragraph shall be subject to the same re-
quirements for quality, performance, and ac-
countability as contracts awarded under para-
graph (2) for similar activities. 
‘‘(B) 
ALLOCATIONS.—(i) 
ONE 
SERVICER.—In the case of a State with only 
one eligible not-for-profit servicer with a con-
tract described in subparagraph (A), the Sec-
retary shall, at a minimum, allocate to such 
servicer, each year and subject to such contract, 
the servicing rights for the lesser of— 
‘‘(I) the loans of 100,000 borrowers 
(including borrowers who borrowed loans 
in a prior year that were serviced by the 
servicer) attending institutions located 
within the State; or 
‘‘(II) the loans of all the borrowers at-
tending institutions located within the 
State. 
‘‘(ii) MULTIPLE SERVICERS.—In the case 
of a State with more than one eligible not-for- 
profit servicer with a contract described in sub-
paragraph (A), the Secretary shall, at a min-
imum, allocate to each such servicer, each year
and subject to such contract, the servicing 
rights for the lesser of— 
‘‘(I) the loans of 100,000 borrowers 
(including borrowers who borrowed loans 
in a prior year that were serviced by the 
servicer) attending institutions located 
within the State; or 
‘‘(II) an equal share of the loans of all 
borrowers attending institutions located 
within the State, except the Secretary shall 
adjust such shares as necessary to ensure 
that the loans of any single borrower re-
main with a single servicer. 
‘‘(iii) ADDITIONAL ALLOCATION.—The Sec-
retary may allocate additional servicing rights 
to an eligible not-for-profit servicer based on 
the performance of such servicer, as determined 
by the Secretary, including performance in the 
areas of customer service and default aversion. 
‘‘(C) LOAN SERVICING RETENTION.— 
‘‘(i) IN GENERAL.—In addition to any 
new loans allocated to a servicers under 
subparagraph (B)(ii), an eligible not-for- 
profit servicer shall retain the servicing of 
loans allocated to such servicer in previous
years, except as provided in clause (ii), or 
as otherwise provided for in accordance 
with the terms of a contract under this 
paragraph. 
‘‘(ii) 
TRANSFERS
FOR
MULTIPLE 
LOANS.—Notwithstanding clause (i) and 
the allocations required by subparagraph 
(B), the Secretary may transfer loans 
among servicers who are awarded contracts 
to service loans pursuant to this section to 
ensure that the loans of any single bor-
rower remain with a single servicer.’’; 
(2) in subsection (b)— 
(A) in the subsection header, by striking 
‘‘ORIGINATION, SERVICING, AND DATA SYS-
TEMS’’ and inserting ‘‘ORIGINATION, SERV-
ICING, DELINQUENCY PREVENTION
AND DE-
FAULT AVERSION SERVICES, DEFAULT COL-
LECTIONS, OUTREACH, AND DATA SYSTEMS’’; 
(B) in the matter preceding paragraph (1), 
by striking ‘‘The Secretary may’’ and inserting 
‘‘(1) IN GENERAL.—The Secretary may’’; 
(C) 
by 
redesignating 
paragraphs 
(1) 
through (4) as subparagraphs (A) through (D),
and moving such subparagraphs two ems to the 
right; 
(D) in subparagraph (C) (as redesignated 
by subparagraph (C) of this paragraph), by 
striking ‘‘and’’ after the semicolon; 
(E) by redesignating subparagraph (D) (as 
redesignated by subparagraph (C) of this para-
graph) as subparagraph (E); 
(F) by inserting after subparagraph (C) 
(as so redesignated) the following new subpara-
graph: 
‘‘(D) delinquency prevention and default 
aversion services, default collections, financial 
aid counseling, career and education counseling, 
financial literacy, guidance counselor and finan-
cial aid officer training services, and other out-
reach services; and’’; and 
(G) by adding at the end the following: 
‘‘(2) LIMITATION.—The Secretary may enter into 
contracts for the services described in paragraph (1)(D) 
with— 
‘‘(A) agencies with agreements with the Sec-
retary under subsections (b) and (c) of section 428 
on the date of enactment of the Student Aid and 
Fiscal Responsibility Act of 2009, that are providing
such services on such date and that meet the quali-
fications determined by the Secretary; or 
‘‘(B) nonprofit subsidiaries of agencies de-
scribed in subparagraph (A), if such subsidiaries 
were established, pursuant to State law, on or before 
January 1, 1998, and meet the qualifications deter-
mined by the Secretary.’’; and 
(3) by adding at the end the following: 
‘‘(c) REPORT TO CONGRESS.—Not later than 5 years 
after the date of the enactment of the Student Aid and 
Fiscal Responsibility Act of 2009, the Secretary shall pre-
pare and submit to the authorizing committees, a report 
evaluating the performance of all eligible not-for-profit 
servicers awarded a contract under this section to service 
loans originated under this part. Such report shall give 
consideration to— 
‘‘(1) customer satisfaction of borrowers and in-
stitutions with respect to the loan servicing provided 
by the servicers; 
‘‘(2) compliance with applicable regulations by 
the servicers; and 
‘‘(3) the effectiveness of default aversion activi-
ties, and outreach services, including financial lit-
eracy programs, (if any), provided by the servicers. 
‘‘(d) DEFINITIONS.—In this section:
‘‘(1) DEFAULT
AVERSION
ACTIVITIES.—The 
term ‘default aversion activities’ means activities 
that are directly related to providing collection as-
sistance to the Secretary on a delinquent loan, prior 
to the loan being legally in a default status. 
‘‘(2) ELIGIBLE NOT-FOR-PROFIT SERVICER.— 
‘‘(A) IN GENERAL.—The term ‘eligible not- 
for-profit servicer’ means an entity— 
‘‘(i) that is not owned or controlled in 
whole or in part by— 
‘‘(I) a for profit entity; or 
‘‘(II) a nonprofit entity having its 
principal place of business in another 
State; and 
‘‘(ii) that— 
‘‘(I) as of July 1, 2009— 
‘‘(aa) meets the definition of 
an eligible not-for-profit holder 
under section 435(p), except that 
such term does not include eligi-
ble lenders described in para-
graph (1)(D) of such section; and 
‘‘(bb) was performing, or 
had entered into a contract with 
a third party servicer (as such
term is defined in section 481(c)) 
who was performing, student 
loan servicing functions for loans 
made under part B of this title; 
‘‘(II) notwithstanding subclause 
(I), as of July 1, 2009— 
‘‘(aa) is the sole beneficial 
owner of a loan for which the 
special allowance rate is cal-
culated 
under 
section 
438(b)(2)(I)(vi)(II) because the 
loan is held by an eligible lender 
trustee that is an eligible not-for- 
profit holder as defined under 
section 435(p)(1)(D); and 
‘‘(bb) was performing, or 
had entered into a contract with 
a third party servicer (as such 
term is defined in section 481(c)) 
who was performing, student 
loan servicing functions for loans 
made under part B of this title; 
or
‘‘(III) is an affiliated entity of an 
eligible 
not-for-profit 
servicer 
de-
scribed in subclause (I) or (II) that— 
‘‘(aa) directly employs, or 
will directly employ (on or before 
the date the entity begins serv-
icing loans under a contract 
awarded by the Secretary pursu-
ant to subsection (a)(3)(A)), the 
majority of individuals who per-
form borrower-specific student 
loan servicing functions; and 
‘‘(bb) as of July 1, 2009, 
was performing, or had entered 
into a contract with a third party 
servicer (as such term is defined 
in section 481(c)) who was per-
forming, student loan servicing 
functions for loans made under 
part B of this title. 
‘‘(B) AFFILIATED ENTITY.—For the pur-
poses of subparagraph (A), the term ‘affiliated 
entity’—
‘‘(i) means an entity contracted to 
perform services for an eligible not-for- 
profit servicer that— 
‘‘(I) is a nonprofit entity or is 
wholly owned by a nonprofit entity; 
and 
‘‘(II) is not owned or controlled, 
in whole or in part, by— 
‘‘(aa) a for-profit entity; or 
‘‘(bb) an entity having its 
principal place of business in an-
other State; and 
‘‘(ii) may include an affiliated entity 
that is established by an eligible not-for- 
profit servicer after the date of enactment 
of the Student Aid and Fiscal Responsi-
bility Act of 2009, if such affiliated entity 
is otherwise described in subparagraph 
(A)(ii)(III) and clause (i) of this subpara-
graph. 
‘‘(3) OUTREACH
SERVICES.—The term ‘out-
reach services’ means programs offered to students 
and families, including programs delivered in coordi-
nation with institutions of higher education that— 
‘‘(A) encourage—
‘‘(i) students to attend and complete a 
degree or certification program at an insti-
tution of higher education; and 
‘‘(ii) students and families to obtain 
financial aid, but minimize the borrowing 
of education loans; and 
‘‘(B) deliver a wide range of financial lit-
eracy and counseling tools to equip students 
with the information necessary to make prudent 
decisions concerning their educational success 
and financial well-being.’’. 
SEC. 215. INTEREST RATES. 
Section 455(b)(7) (20 U.S.C. 1087e(b)(7)) is amend-
ed by adding at the end the following new subparagraph: 
‘‘(E) 
REDUCED
RATES
FOR
UNDER-
GRADUATE
FDSL
ON
AND
AFTER
JULY
1, 
2012.—Notwithstanding the preceding para-
graphs of this subsection and subparagraph (A) 
of this paragraph, for Federal Direct Stafford 
Loans made to undergraduate students for 
which the first disbursement is made on or 
after July 1, 2012, the applicable rate of inter-
est shall, during any 12-month period beginning 
on July 1 and ending on June 30, be deter-
mined on the preceding June 1 and be equal 
to— 
‘‘(i) the bond equivalent rate of 91- 
day Treasury bills auctioned at the final 
auction held prior to such June 1; plus 
‘‘(ii) 2.5 percent, 
except that such rate shall not exceed 6.8 per-
cent.’’. 
SEC. 216. TECHNICAL ASSISTANCE TO INSTITUTIONS OF 
HIGHER EDUCATION. 
Section 458(a) (20 U.S.C. 1087h(a)) is amended— 
(1) by redesignating paragraph (5) as para-
graph (6); and 
(2) by inserting after paragraph (4) the fol-
lowing new paragraph: 
‘‘(5) TECHNICAL ASSISTANCE TO INSTITUTIONS 
OF HIGHER EDUCATION.— 
‘‘(A) PROVISION
OF
ASSISTANCE.—The 
Secretary shall provide institutions of higher 
education participating, or seeking to partici-
pate, in the loan programs under this part with 
technical assistance in establishing and admin-
istering such programs, including assistance for 
an institution of higher education during such 
institution’s transition into such programs.
Such assistance may include technical support, 
training for personnel, customized assistance to 
individual institutions of higher education, de-
velopment of informational materials, and other 
services the Secretary determines to be appro-
priate. 
‘‘(B) FUNDS.—There are— 
‘‘(i) authorized to be appropriated, 
and there are appropriated, to carry out 
this paragraph (in addition to any other 
amounts appropriated to carry out this 
subparagraph and out of any money in the 
Treasury 
not 
otherwise 
appropriated), 
$50,000,000 for fiscal year 2010; and 
‘‘(ii) authorized to be appropriated 
such sums as may be necessary to carry 
out this paragraph for fiscal years 2011 
through 2014.’’. 
SEC. 217. OUTREACH EFFORTS. 
(a) OUTREACH ACTIVITIES REQUIRED.—The Sec-
retary of Education shall conduct outreach activities in ac-
cordance with this section to inform and educate students 
and their families about the transition to Federal Direct 
lending under the amendments made by this title to title 
IV of the Higher Education Act of 1965.
(b) REQUIRED COMPONENTS OF OUTREACH.—The 
Secretary shall provide for the broad dissemination of in-
formation on such amendments and shall— 
(1) operate and maintain an Internet website 
through which individuals may obtain information 
on changes made to the Federal Family Education 
Loan programs and the Federal Direct Loan pro-
grams; 
(2) develop and disseminate information to high 
school seniors and their parents concerning student 
loans and student aid; 
(3) provide assistance to institutions of higher 
education to educate students on the repayment of 
Federal Direct loans; and 
(4) ensure that all outreach efforts are devel-
oped using plain language and are culturally- and 
language-appropriate. 
(c) USE OF OTHER ENTITIES.—In carrying out this 
subsection, the Secretary may work with other appropriate 
entities to facilitate the dissemination of information 
under this section and to provide assistance as described 
in this section.
Subtitle B—Perkins Loan Reform 
SEC. 221. FEDERAL DIRECT PERKINS LOANS TERMS AND 
CONDITIONS. 
Part D of title IV (20 U.S.C. 1087a et seq.) is 
amended by inserting after section 455 the following new 
section: 
‘‘SEC. 455A. FEDERAL DIRECT PERKINS LOANS. 
‘‘(a) DESIGNATION OF LOANS.—Loans made to bor-
rowers under this section shall be known as ‘Federal Di-
rect Perkins Loans’. 
‘‘(b) IN GENERAL.—It is the purpose of this section 
to authorize loans to be awarded by institutions of higher 
education through agreements established under section 
463(f). Unless otherwise specified in this section, all terms 
and conditions and other requirements applicable to Fed-
eral Direct Unsubsidized Stafford loans established under 
section 455(a)(2)(D) shall apply to loans made pursuant 
to this section. 
‘‘(c) ELIGIBLE BORROWERS.—Any student meeting 
the requirements for student eligibility under section 
464(b) (including graduate and professional students as 
defined in regulations promulgated by the Secretary) shall 
be eligible to borrow a Federal Direct Perkins Loan, pro-
vided the student attends an eligible institution with an 
agreement with the Secretary under section 463(f), and
the institution uses its authority under that agreement to 
award the student a loan. 
‘‘(d) LOAN LIMITS.—The annual and aggregate lim-
its for loans under this section shall be the same as those 
established under section 464, and aggregate limits shall 
include loans made by institutions under agreements 
under section 463(a). 
‘‘(e) APPLICABLE
RATES
OF
INTEREST.—Loans 
made pursuant to this section shall bear interest, on the 
unpaid balance of the loan, at the rate of 5 percent per 
year.’’. 
SEC. 222. AUTHORIZATION OF APPROPRIATIONS. 
Section 461 (20 U.S.C. 1087aa) is amended— 
(1) in subsection (a), by inserting ‘‘, before July 
1, 2010,’’ after ‘‘The Secretary shall’’; 
(2) in subsection (b)— 
(A) in paragraph (1)— 
(i) by striking ‘‘(1) For the purpose’’ 
and inserting ‘‘For the purpose’’; and 
(ii) by striking ‘‘and for each of the 
five succeeding fiscal years’’; and 
(B) by striking paragraph (2); and 
(3) by striking subsection (c). 
SEC. 223. ALLOCATION OF FUNDS. 
Section 462 (20 U.S.C. 1087bb) is amended—
100 
(1) in subsection (a)(1), by striking ‘‘From’’ 
and inserting ‘‘For any fiscal year before fiscal year 
2010, from’’; and 
(2) in subsection (i)(1), by striking ‘‘for any fis-
cal year,’’ and inserting ‘‘for any fiscal year before 
fiscal year 2010,’’. 
SEC. 224. FEDERAL DIRECT PERKINS LOAN ALLOCATION. 
Part E of title IV is further amended by inserting 
after section 462 (20 U.S.C. 1087bb) the following: 
‘‘SEC. 462A. FEDERAL DIRECT PERKINS LOAN ALLOCATION. 
‘‘(a) PURPOSES.—The purposes of this section are— 
‘‘(1) to allocate, among eligible and partici-
pating institutions (as such terms are defined in this 
section), the authority to make Federal Direct Per-
kins Loans under section 455A with a portion of the 
annual loan authority described in subsection (b); 
and 
‘‘(2) to make funds available, in accordance 
with section 452, to each participating institution 
from a portion of the annual loan authority de-
scribed in subsection (b), in an amount not to exceed 
the sum of an institution’s allocation of funds under 
subparagraphs (A), (B), and (C) of subsection (b)(1) 
to enable each such institution to make Federal Di-
101 
rect Perkins Loans to eligible students at the insti-
tution. 
‘‘(b) AVAILABLE DIRECT PERKINS ANNUAL LOAN 
AUTHORITY.— 
‘‘(1) AVAILABILITY AND ALLOCATIONS.—There 
are hereby made available, from funds made avail-
able for loans made under part D, not to exceed 
$6,000,000,000 of annual loan authority for award 
year 2010–2011 and each succeeding award year, to 
be allocated as follows (except as provided in para-
graphs (3) and (4)): 
‘‘(A) The Secretary shall allocate not more 
than 1⁄2 of such funds for each award year by 
allocating to each participating institution an 
amount equal to the adjusted self-help need 
amount of the institution, as determined in ac-
cordance with subsection (c) for such award 
year. 
‘‘(B) The Secretary shall allocate not more 
than 1⁄4 of such funds for each award year by 
allocating to each participating institution an 
amount equal to the low tuition incentive 
amount of the institution, as determined in ac-
cordance with subsection (d).
102 
‘‘(C) The Secretary shall allocate not more 
than 1⁄4 of such funds for each award year by 
allocating to each participating institution an 
amount which bears the same ratio to the funds 
allocated under this subparagraph as the ratio 
determined in accordance with subsection (e) 
for the calculation of the Federal Pell Grant 
and degree recipient amount of the institution. 
‘‘(2) NO FUNDS TO NON-PARTICIPATING INSTI-
TUTIONS.—The Secretary shall not make funds 
available under this subsection to any eligible insti-
tution that is not a participating institution. The ad-
justed self-help need amount (determined in accord-
ance with subsection (c)) of an eligible institution 
that is not a participating institution shall not be 
made available to any other institution. 
‘‘(3) REQUIRED MINIMUM AMOUNT.—Notwith-
standing paragraph (1), in no case shall the sum of 
a participating institution’s allocation of loan au-
thority computed under subsections (c), (d), and (e) 
be less than the average of the institution’s total 
principal amount of loans made under this part for 
each of the academic years 2003–2004 through 
2007–2008.
103 
‘‘(4) ADDITIONAL ADJUSTMENTS.—If the Sec-
retary determines that the sum of a participating in-
stitution’s allocation of loan authority under sub-
sections (c), (d), and (e) is below the minimum 
amount required under paragraph (3), the Secretary 
shall— 
‘‘(A) for each institution for which the 
minimum amount under paragraph (3) is not 
satisfied, increase the amount of such sum to 
the amount of the required minimum under 
such paragraph; and 
‘‘(B) ratably reduce the amount of the sum 
of such loan authority of all participating insti-
tutions not described in subparagraph (A). 
‘‘(c) ADJUSTED SELF-HELP NEED AMOUNT.—For 
the purposes of subsection (b)(1)(A), the Secretary shall 
calculate the adjusted self-help need amount of each eligi-
ble institution for an award year as follows: 
‘‘(1) 
USE
OF
BASE
SELF-HELP
NEED 
AMOUNTS.— 
‘‘(A) IN GENERAL.—Except as provided in 
paragraphs (2), (3), and (4), the adjusted self- 
help need amount of each eligible institution 
shall be the institution’s base self-help need 
amount, which is the sum of—
104 
‘‘(i) the self-help need of the institu-
tion’s eligible undergraduate students for 
such award year; and 
‘‘(ii) the self-help need of the institu-
tion’s eligible graduate and professional 
students for such award year. 
‘‘(B) UNDERGRADUATE
STUDENT
SELF- 
HELP NEED.—To determine the self-help need 
of an institution’s eligible undergraduate stu-
dents, the Secretary shall determine the sum of 
each eligible undergraduate student’s average 
cost of attendance for the second preceding 
award year less each such student’s expected 
family contribution (computed in accordance 
with part F) for the second preceding award 
year, except that, for each such eligible under-
graduate student, the amount computed by 
such subtraction shall not be less than zero or 
more than the lesser of— 
‘‘(i) 25 percent of the average cost of 
attendance with respect to such eligible 
student; or 
‘‘(ii) $5,500. 
‘‘(C) GRADUATE AND PROFESSIONAL STU-
DENT
SELF-HELP
NEED.—To determine the
105 
self-help need of an institution’s eligible grad-
uate and professional students, the Secretary 
shall determine the sum of each eligible grad-
uate and professional student’s average cost of 
attendance for the second preceding award year 
less each such student’s expected family con-
tribution (computed in accordance with part F) 
for such second preceding award year, except 
that, for each such eligible graduate and profes-
sional student, the amount computed by such 
subtraction shall not be less than zero or more 
than $8,000. 
‘‘(2) RATABLE REDUCTION ADJUSTMENTS.—If 
the sum of the base self-help need amounts of all eli-
gible institutions for an award year as determined 
under paragraph (1) exceeds 1⁄2 of the annual loan 
authority under subsection (b) for such award year, 
the Secretary shall ratably reduce the base self-help 
need amounts of all eligible institutions until the 
sum of such amounts is equal to the amount that is 
1⁄2 of the annual loan authority under subsection 
(b). 
‘‘(d) LOW TUITION INCENTIVE AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(b)(1)(B), the Secretary shall determine the low tui-
106 
tion incentive amount for each participating institu-
tion for each award year, by calculating for each 
such institution the sum of— 
‘‘(A) the total amount, if any (but not less 
than zero), by which— 
‘‘(i) the average tuition and required 
fees for the institution’s sector for the sec-
ond preceding award year; exceeds 
‘‘(ii) the tuition and required fees for 
the second preceding award year for each 
undergraduate and graduate student at-
tending the institution who had financial 
need (as determined under part F); plus 
‘‘(B) the total amount, if any (but not less 
than zero), by which— 
‘‘(i) the total amount for the second 
preceding award year of non-Federal grant 
aid provided to meet the financial need of 
all undergraduate students attending the 
institution (as determined without regard 
to financial aid not received under this 
title); exceeds 
‘‘(ii) the total amount for the second 
preceding award year, if any, by which—
107 
‘‘(I) the tuition and required fees 
of each such student with such finan-
cial need; exceeds 
‘‘(II) the average tuition and re-
quired fees for the institution’s sector. 
‘‘(2) RATABLE REDUCTION.—If the sum of the 
low tuition incentive amounts of all participating in-
stitutions for an award year as determined under 
paragraph (1) exceeds 1⁄4 of the annual loan author-
ity under subsection (b) for such award year, the 
Secretary shall ratably reduce the low tuition incen-
tive amounts of all participating institutions until 
the sum of such amounts is equal to the amount 
that is 1⁄4 of the annual loan authority under sub-
section (b). 
‘‘(e) FEDERAL PELL GRANT AND DEGREE RECIPI-
ENT AMOUNT.—For purposes of subsection (b)(1)(C), the 
Secretary shall determine the Federal Pell Grant and de-
gree recipient amount for each participating institution for 
each award year, by calculating for each such institution 
the ratio of— 
‘‘(1) the number of students who, during the 
most recent year for which data are available, ob-
tained an associate’s degree or other postsecondary 
degree from such participating institution and, prior
108 
to obtaining such degree, received a Federal Pell 
Grant for attendance at any institution of higher 
education; to 
‘‘(2) the sum of the number of students who, 
during the most recent year for which data are 
available, obtained an associate’s degree or other 
postsecondary degree from each participating insti-
tution and, prior to obtaining such degree, received 
a Federal Pell Grant for attendance at any institu-
tion of higher education. 
‘‘(f) DEFINITIONS.—As used in this section: 
‘‘(1) ANNUAL
LOAN
AUTHORITY.—The term 
‘annual loan authority’ means the total original prin-
cipal amount of loans that may be allocated and 
made available for an award year to make Federal 
Direct Perkins Loans under section 455A. 
‘‘(2) AVERAGE COST OF ATTENDANCE.— 
‘‘(A) IN
GENERAL.—The term ‘average 
cost of attendance’ means the average of the at-
tendance costs for undergraduate students and 
for graduate and professional students, respec-
tively, for the second preceding award year 
which shall include—
109 
‘‘(i) tuition and required fees deter-
mined in accordance with subparagraph 
(B); 
‘‘(ii) standard living expenses deter-
mined in accordance with subparagraph 
(C); and 
‘‘(iii) books and supplies determined 
in accordance with subparagraph (D). 
‘‘(B) TUITION AND REQUIRED FEES.—The 
average undergraduate and graduate and pro-
fessional tuition and required fees described in 
subparagraph (A)(i) shall be computed on the 
basis of information reported by the institution 
to the Secretary, which shall include— 
‘‘(i) total revenue received by the in-
stitution from undergraduate and graduate 
and professional students, respectively, for 
tuition and required fees for the second 
preceding award year; and 
‘‘(ii) the institution’s full-time equiva-
lent enrollment of undergraduate and 
graduate and professional students, respec-
tively, for such second preceding award 
year.
110 
‘‘(C) STANDARD LIVING EXPENSES.—The 
standard living expense described in subpara-
graph (A)(ii) is equal to the allowance, deter-
mined by an institution, for room and board 
costs incurred by a student, as computed in ac-
cordance with part F for the second preceding 
award year. 
‘‘(D) BOOKS AND SUPPLIES.—The allow-
ance for books and supplies described in sub-
paragraph (A)(iii) is equal to the allowance, de-
termined by an institution, for books, supplies, 
transportation, and miscellaneous personal ex-
penses, including a reasonable allowance for the 
documented rental or purchase of a personal 
computer, as computed in accordance with part 
F for the second preceding award year. 
‘‘(3) AVERAGE TUITION AND REQUIRED FEES 
FOR THE INSTITUTION’S SECTOR.—The term ‘aver-
age tuition and required fees for the institution’s 
sector’ shall be determined by the Secretary for each 
of the categories described in section 132(d). 
‘‘(4) ELIGIBLE INSTITUTION.—The term ‘eligi-
ble institution’ means an institution of higher edu-
cation that participates in the Federal Direct Staf-
ford Loan Program.
111 
‘‘(5) PARTICIPATING INSTITUTION.—The term 
‘participating institution’ means an institution of 
higher education that has an agreement under sec-
tion 463(f). 
‘‘(6) SECTOR.—The term ‘sector’ means each of 
the categories described in section 132(d).’’. 
SEC. 225. AGREEMENTS WITH INSTITUTIONS OF HIGHER 
EDUCATION. 
(a) AMENDMENTS.—Section 463 (20 U.S.C. 1087cc) 
is amended— 
(1) in subsection (a)— 
(A) in the heading, by inserting ‘‘FOR 
LOANS MADE BEFORE JULY 1, 2010’’ after 
‘‘AGREEMENTS’’; 
(B) in paragraph (3)(A), by inserting ‘‘be-
fore July 1, 2010’’ after ‘‘students’’; 
(C) in paragraph (4), by striking ‘‘there-
on—’’ and all that follows and inserting ‘‘there-
on, if the institution has failed to maintain an 
acceptable collection record with respect to such 
loan, as determined by the Secretary in accord-
ance with criteria established by regulation, the 
Secretary may require the institution to assign 
such note or agreement to the Secretary, with-
out recompense;’’; and
112 
(D) in paragraph (5), by striking ‘‘and the 
Secretary shall apportion’’ and all that follows 
through ‘‘in accordance with section 462’’ and 
inserting ‘‘and the Secretary shall return a por-
tion of funds from loan repayments to the insti-
tution as specified in section 466(b)’’; 
(2) by amending subsection (b) to read as fol-
lows: 
‘‘(b) ADMINISTRATIVE EXPENSES.—An institution 
that has entered into an agreement under subsection (a) 
shall be entitled, for each fiscal year during which it serv-
ices student loans from a student loan fund established 
under such agreement, to a payment in lieu of reimburse-
ment for its expenses in servicing student loans made be-
fore July 1, 2010. Such payment shall be equal to 0.50 
percent of the outstanding principal and interest balance 
of such loans being serviced by the institution as of Sep-
tember 30 of each fiscal year.’’; and 
(3) by adding at the end the following: 
‘‘(f) CONTENTS OF AGREEMENTS FOR LOANS MADE 
ON OR AFTER JULY 1, 2010.—An agreement with any 
institution of higher education that elects to participate 
in the Federal Direct Perkins Loan program under section 
455A shall provide—
113 
‘‘(1) for the establishment and maintenance of 
a Direct Perkins Loan program at the institution 
under which the institution shall use loan authority 
allocated under section 462A to make loans to eligi-
ble students attending the institution; 
‘‘(2) that the institution, unless otherwise speci-
fied in this subsection, shall operate the program 
consistent with the requirements of agreements es-
tablished under section 454; 
‘‘(3) that the institution will pay matching 
funds, quarterly, in an amount agreed to by the in-
stitution and the Secretary, to an escrow account 
approved by the Secretary, for the purpose of pro-
viding loan benefits to borrowers; 
‘‘(4) that if the institution fails to meet the re-
quirements of paragraph (3), the Secretary shall 
suspend or terminate the institution’s eligibility to 
make Federal Direct Perkins Loans under section 
455A until such time as the Secretary determines, 
in accordance with section 498, that the institution 
has met the requirements of such paragraph; and 
‘‘(5) that if the institution ceases to be an eligi-
ble institution within the meaning of section 435(a) 
by reason of having a cohort default rate that ex-
ceeds the threshold percentage specified in para-
114 
graph (2) of such section, the Secretary shall sus-
pend or terminate the institution’s eligibility to make 
Federal Direct Perkins Loans under section 455A 
unless and until the institution would qualify for a 
resumption of eligible institution status under such 
section.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
paragraph (2) of subsection (a) shall take effect on Octo-
ber 1, 2010. 
SEC. 226. STUDENT LOAN INFORMATION BY ELIGIBLE IN-
STITUTIONS. 
Section 463A (20 U.S.C. 1087cc–1) is amended— 
(1) in subsection (a), by striking ‘‘Each institu-
tion’’ and inserting ‘‘For loans made before July 1, 
2010, each institution’’; and 
(2) in subsection (b), by striking ‘‘Each institu-
tion’’ and inserting ‘‘For loans made before July 1, 
2010, each institution’’. 
SEC. 227. TERMS OF LOANS. 
Section 464 (20 U.S.C. 1087dd) is amended— 
(1) in subsection (a)(1), by striking ‘‘section 
463’’ and inserting ‘‘section 463(a)’’; 
(2) in subsection (b)(1), by inserting ‘‘made be-
fore July 1, 2010,’’ after ‘‘A loan’’; 
(3) in subsection (c)—
115 
(A) in paragraph (1), by inserting ‘‘made 
before July 1, 2010,’’ after ‘‘a loan’’; 
(B) in paragraph (2)— 
(i) in subparagraph (A), by inserting 
‘‘made before July 1, 2010,’’ after ‘‘any 
loan’’; and 
(ii) in subparagraph (B), by inserting 
‘‘made before July 1, 2010,’’ after ‘‘any 
loan’’; 
(C) in paragraph (3)(B), by inserting ‘‘for 
a loan made before July 1, 2010,’’ after ‘‘dur-
ing the repayment period’’; 
(D) in paragraph (4), by inserting ‘‘before 
July 1, 2010,’’ after ‘‘for a loan made’’; 
(E) in paragraph (5), by striking ‘‘The in-
stitution’’ and inserting ‘‘For loans made before 
July 1, 2010, the institution’’; and 
(F) in paragraph (6), by inserting ‘‘made 
before July 1, 2010,’’ after ‘‘of loans’’; 
(4) in subsection (d), by inserting ‘‘made before 
July 1, 2010,’’ before ‘‘from the student loan fund’’; 
(5) in subsection (e), by inserting ‘‘with respect 
to loans made before July 1, 2010, and’’ before ‘‘as 
documented in accordance with paragraph (2),’’; 
(6) by repealing subsection (f);
116 
(7) in subsection (g)(1), by inserting ‘‘and be-
fore July 1, 2010,’’ after ‘‘January 1, 1986,’’; 
(8) in subsection (h)— 
(A) in paragraph (1)(A) by inserting ‘‘be-
fore July 1, 2010,’’ after ‘‘made under this 
part’’; and 
(B) in paragraph (2), by inserting ‘‘before 
July 1, 2010,’’ after ‘‘under this part’’; and 
(9) in subsection (j)(1), by inserting ‘‘before 
July 1, 2010,’’ after ‘‘under this part’’. 
SEC. 228. DISTRIBUTION OF ASSETS FROM STUDENT LOAN 
FUNDS. 
(a) Section 465 (20 U.S.C. 1087ee) is amended— 
(1) in subsection (a), by inserting ‘‘and before 
July 1, 2010,’’ after ‘‘June 30, 1972,’’; and 
(2) by amending subsection (b) to read as fol-
lows: 
‘‘(b) REIMBURSEMENT FOR CANCELLATIONS.— 
‘‘(1) ASSIGNED LOANS.—In the case of loans 
made under this part before July 1, 2010, and that 
are assigned to the Secretary, the Secretary shall, 
from amounts repaid each quarter on assigned Per-
kins Loans made before July 1, 2010, pay to each 
institution for each quarter an amount equal to—
117 
‘‘(A) the aggregate of the amounts of loans 
from its student loan fund that are canceled 
pursuant to this section for such quarter, minus 
‘‘(B) an amount equal to the aggregate of 
the amounts of any such loans so canceled that 
were made from Federal capital contributions 
to its student loan fund. 
‘‘(2) RETAINED LOANS.—In the case of loans 
made under this part before July 1, 2010, and that 
are retained by the institution for servicing, the in-
stitution shall deduct from loan repayments owed to 
the Secretary under section 466, an amount equal 
to— 
‘‘(A) the aggregate of the amounts of loans 
from its student loan fund that are canceled 
pursuant to this section for such quarter, minus 
‘‘(B) an amount equal to the aggregate of 
the amounts of any such loans so canceled that 
were made from Federal capital contributions 
to its student loan fund.’’. 
(b) Section 466 (20 U.S.C. 1087ff) is amended to 
read as follows:
118 
‘‘SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN 
FUNDS. 
‘‘(a) CAPITAL DISTRIBUTION.—Beginning July 1, 
2010, there shall be a capital distribution of the balance 
of the student loan fund established under this part by 
each institution of higher education as follows: 
‘‘(1) For the quarter beginning July 1, 2010, 
the Secretary shall first be paid, no later than Sep-
tember 30, 2010, an amount that bears the same 
ratio to the cash balance in such fund at the close 
of June 30, 2010, as the total amount of the Fed-
eral capital contributions to such fund by the Sec-
retary under this part bears to— 
‘‘(A) the sum of such Federal contribu-
tions and the institution’s capital contributions 
to such fund, less 
‘‘(B) an amount equal to— 
‘‘(i) the institution’s outstanding ad-
ministrative costs as calculated under sec-
tion 463(b), 
‘‘(ii) outstanding charges assessed 
under section 464(c)(1)(H), and 
‘‘(iii) outstanding loan cancellation 
costs incurred under section 465. 
‘‘(2) At the end of each quarter subsequent to 
the quarter ending September 30, 2010, the Sec-
122 
SEC. 229. IMPLEMENTATION OF NON-TITLE IV REVENUE 
REQUIREMENT. 
Section 487(d) (20 U.S.C. 1094(d)) is amended— 
(1) in paragraph (1)(E), by striking ‘‘July 1, 
2011’’ and inserting ‘‘July 1, 2012’’; 
(2) in paragraph (1)(F)— 
(A) by redesignating clauses (iii), (iv), and 
(v) as clauses (iv), (v), and (vi), respectively; 
and 
(B) by inserting after clause (ii) the fol-
lowing new clause: 
‘‘(iii) for the period beginning July 1, 
2010, and ending July 1, 2012, the 
amount of funds the institution received 
from 
loans 
disbursed 
under 
section 
455A;’’; and 
(3) in paragraph (2), by adding at the end the 
following new subparagraph: 
‘‘(C) EXCEPTION.—Notwithstanding sub-
paragraphs (A) and (B), an institution that 
fails to meet the requirements of subsection 
(a)(24) for two consecutive institutional fiscal 
years, and the second such institutional fiscal 
year ends after July 1, 2008, and before July 
1, 2011, shall not be determined ineligible in 
accordance with subparagraph (A) unless the
123 
institution fails to meet the requirements of 
subsection (a)(24) for a third consecutive insti-
tutional fiscal year.’’. 
SEC. 230. ADMINISTRATIVE EXPENSES. 
Section 489(a) (20 U.S.C. 1096(a)) is amended— 
(1) in the second sentence, by striking ‘‘or 
under part E of this title’’; and 
(2) in the third sentence— 
(A) by inserting ‘‘and’’ after ‘‘subpart 3 of 
part A,’’; and 
(B) by striking ‘‘compensation of stu-
dents,’’ and all that follows through the period 
and inserting ‘‘compensation of students.’’. 
TITLE III—MODERNIZATION, 
RENOVATION, AND REPAIR 
Subtitle A—Elementary and 
Secondary Education 
SEC. 301. DEFINITIONS. 
In this subtitle: 
(1) The term ‘‘Bureau-funded school’’ has the 
meaning given such term in section 1141 of the 
Education Amendments of 1978 (25 U.S.C. 2021). 
(2) The term ‘‘charter school’’ has the meaning 
given such term in section 5210 of the Elementary
124 
and Secondary Education Act of 1965 (20 U.S.C. 
7221i). 
(3) The term ‘‘CHPS Criteria’’ means the 
green building rating program developed by the Col-
laborative for High Performance Schools. 
(4) The term ‘‘Energy Star’’ means the Energy 
Star program of the United States Department of 
Energy and the United States Environmental Pro-
tection Agency. 
(5) The term ‘‘Green Globes’’ means the Green 
Building Initiative environmental design and rating 
system referred to as Green Globes. 
(6) The term ‘‘LEED Green Building Rating 
System’’ means the United States Green Building 
Council Leadership in Energy and Environmental 
Design green building rating standard referred to as 
LEED Green Building Rating System. 
(7) The term ‘‘local educational agency’’— 
(A) has the meaning given such term in 
section 9101 of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7801); 
(B) includes any public charter school that 
constitutes a local educational agency under 
State law; and
125 
(C) includes the Recovery School District 
of Louisiana. 
(8) The term ‘‘outlying area’’— 
(A) means the United States Virgin Is-
lands, Guam, American Samoa, and the Com-
monwealth of the Northern Mariana Islands; 
and 
(B) includes the Republic of Palau. 
(9) The term ‘‘public school facilities’’ means 
existing public elementary or secondary school facili-
ties, including public charter school facilities and 
other existing facilities planned for adaptive reuse as 
public charter school facilities. 
(10) The term ‘‘Secretary’’ means the Secretary 
of Education. 
(11) The term ‘‘State’’ means each of the 50 
States, the District of Columbia, and the Common-
wealth of Puerto Rico. 
CHAPTER 1—GRANTS FOR MODERNIZA-
TION, RENOVATION, OR REPAIR OF 
PUBLIC SCHOOL FACILITIES 
SEC. 311. PURPOSE. 
Grants under this chapter shall be for the purpose 
of modernizing, renovating, or repairing public school fa-
cilities (including early learning facilities, as appropriate),
126 
based on the need of the facilities for such improvements, 
to ensure that public school facilities are safe, healthy, 
high-performing, and technologically up-to-date. 
SEC. 312. ALLOCATION OF FUNDS. 
(a) RESERVATION.— 
(1) IN
GENERAL.—From the amount appro-
priated to carry out this chapter for each fiscal year 
pursuant to section 345(a), the Secretary shall re-
serve 2 percent of such amount, consistent with the 
purpose described in section 311— 
(A) to provide assistance to the outlying 
areas; and 
(B) for payments to the Secretary of the 
Interior to provide assistance to Bureau-funded 
schools. 
(2) USE OF RESERVED FUNDS.—In each fiscal 
year, the amount reserved under paragraph (1) shall 
be divided between the uses described in subpara-
graphs (A) and (B) of such paragraph in the same 
proportion as the amount reserved under section 
1121(a) of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 6331(a)) is divided 
between the uses described in paragraphs (1) and 
(2) of such section 1121(a) in such fiscal year.
127 
(3) DISTRESSED AREAS AND NATURAL DISAS-
TERS.—From the amount appropriated to carry out 
this chapter for each fiscal year pursuant to section 
345(a), the Secretary shall reserve 5 percent of such 
amount for grants to— 
(A) local educational agencies serving geo-
graphic areas with significant economic distress, 
to be used consistent with the purpose de-
scribed in section 311 and the allowable uses of 
funds described in section 313; 
(B) local educational agencies serving geo-
graphic areas recovering from a natural dis-
aster, to be used consistent with the purpose 
described in section 321 and the allowable uses 
of funds described in section 323; and 
(C) local educational agencies serving geo-
graphic areas that contain a military installa-
tion selected for closure under the base closure 
and realignment process pursuant to the De-
fense Base Closure and Realignment Act of 
1990 (part A of title XXIX of Public Law 101– 
510; 10 U.S.C. 2687 note). 
(b) ALLOCATION TO STATES.— 
(1) STATE-BY-STATE
ALLOCATION.—Of the 
amount appropriated to carry out this chapter for
128 
each fiscal year pursuant to section 345(a), and not 
reserved under subsection (a), each State shall be al-
located an amount in proportion to the amount re-
ceived by all local educational agencies in the State 
under part A of title I of the Elementary and Sec-
ondary Education Act of 1965 (20 U.S.C. 6311 et 
seq.) for the previous fiscal year relative to the total 
amount received by all local educational agencies in 
every State under such part for such fiscal year. 
(2) STATE ADMINISTRATION.—A State may re-
serve up to 1 percent of its allocation under para-
graph (1) to carry out its responsibilities under this 
chapter, which include— 
(A) providing technical assistance to local 
educational agencies; 
(B) developing an online, publicly search-
able database that includes an inventory of pub-
lic school facilities in the State, including for 
each such facility, its design, condition, mod-
ernization, renovation and repair needs, utiliza-
tion, energy use, and carbon footprint; and 
(C) creating voluntary guidelines for high- 
performing school buildings, including guide-
lines concerning the following:
129 
(i) Site location, storm water manage-
ment, outdoor surfaces, outdoor lighting, 
and transportation, including public transit 
and pedestrian and bicycle accessability. 
(ii) Outdoor water systems, land-
scaping to minimize water use, including 
elimination of irrigation systems for land-
scaping, and indoor water use reduction. 
(iii) Energy efficiency (including min-
imum and superior standards, such as for 
heating, ventilation, and air conditioning 
systems), use of alternative energy sources, 
commissioning, and training. 
(iv) Use of durable, sustainable mate-
rials, including life-cycle cost effectiveness, 
and waste reduction. 
(v) Indoor environmental quality, such 
as day lighting in classrooms, lighting 
quality, indoor air quality (including with 
reference to reducing the incidence and ef-
fects of asthma and other respiratory ill-
nesses), acoustics, and thermal comfort. 
(vi) Operations and management, 
such as use of energy-efficient equipment,
130 
indoor environmental management plan, 
maintenance plan, and pest management. 
(3) GRANTS
TO
LOCAL
EDUCATIONAL
AGEN-
CIES.—From the amount allocated to a State under 
paragraph (1), each eligible local educational agency 
in the State shall receive an amount in proportion 
to the amount received by such local educational 
agency under part A of title I of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 6311 
et seq.) for the previous fiscal year relative to the 
total amount received by all local educational agen-
cies in the State under such part for such fiscal 
year, except that no local educational agency that re-
ceived funds under such part for such fiscal year 
shall receive a grant of less than $5,000 in any fiscal 
year under this chapter. 
(4) SPECIAL RULE.—Section 1122(c)(3) of the 
Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6332(c)(3)) shall not apply to paragraph 
(1) or (3). 
(c) SPECIAL RULES.— 
(1) DISTRIBUTIONS BY SECRETARY.—The Sec-
retary shall make and distribute the reservations 
and allocations described in subsections (a) and (b)
131 
not later than 120 days after an appropriation of 
funds for this chapter is made. 
(2) DISTRIBUTIONS BY STATES.—A State shall 
make and distribute the allocations described in sub-
section (b)(3) within 90 days of receiving such funds 
from the Secretary. 
SEC. 313. ALLOWABLE USES OF FUNDS. 
A local educational agency receiving a grant under 
this chapter shall use the grant for modernization, renova-
tion, or repair of public school facilities (including early 
learning facilities, as appropriate), including— 
(1) repair, replacement, or installation of roofs, 
including extensive, intensive or semi-intensive green 
roofs, electrical wiring, water supply and plumbing 
systems, sewage systems, storm water runoff sys-
tems, lighting systems, building envelope, windows, 
ceilings, flooring, or doors, including security doors; 
(2) repair, replacement, or installation of heat-
ing, ventilation, or air conditioning systems, includ-
ing insulation, and conducting indoor air quality as-
sessments; 
(3) compliance with fire, health, seismic, and 
safety codes, including professional installation of 
fire and life safety alarms, and modernizations, ren-
ovations, and repairs that ensure that schools are
132 
prepared for emergencies, such as improving build-
ing infrastructure to accommodate security measures 
and installing or upgrading technology to ensure 
that schools are able to respond to emergencies such 
as acts of terrorism, campus violence, and natural 
disasters; 
(4) retrofitting necessary to increase the energy 
efficiency and water efficiency of public school facili-
ties; 
(5) modifications necessary to make facilities 
accessible in compliance with the Americans with 
Disabilities Act of 1990 (42 U.S.C. 12101 et seq.) 
and section 504 of the Rehabilitation Act of 1973 
(29 U.S.C. 794); 
(6) abatement, removal, or interim controls of 
asbestos, polychlorinated biphenyls, mold, mildew, 
lead-based hazards, including lead-based paint haz-
ards, or a proven carcinogen; 
(7) measures designed to reduce or eliminate 
human exposure to classroom noise and environ-
mental noise pollution; 
(8) modernization, renovation, or repair nec-
essary to reduce the consumption of coal, electricity, 
land, natural gas, oil, or water;
133 
(9) installation or upgrading of educational 
technology infrastructure; 
(10) modernization, renovation, or repair of 
science and engineering laboratories, libraries, and 
career and technical education facilities, and im-
provements to building infrastructure to accommo-
date bicycle and pedestrian access; 
(11) installation or upgrading of renewable en-
ergy generation and heating systems, including 
solar, photovoltaic, wind, biomass (including wood 
pellet and woody biomass), waste-to-energy, and 
solar-thermal and geothermal systems, and for en-
ergy audits; 
(12) measures designed to reduce or eliminate 
human exposure to airborne particles such as dust, 
sand, and pollens; 
(13) creating greenhouses, gardens (including 
trees), and other facilities for environmental, sci-
entific, or other educational purposes, or to produce 
energy savings; 
(14) modernizing, renovating, or repairing 
physical education facilities for students, including 
upgrading or installing recreational structures made 
from post-consumer recovered materials in accord-
ance with the comprehensive procurement guidelines
135 
CHAPTER 
2—SUPPLEMENTAL 
GRANTS 
FOR 
LOUISIANA, 
MISSISSIPPI, 
AND 
ALABAMA 
SEC. 321. PURPOSE. 
Grants under this chapter shall be for the purpose 
of modernizing, renovating, repairing, or constructing 
public school facilities, (including early learning facilities, 
as appropriate), based on the need for such improvements 
or construction, to ensure that public school facilities are 
safe, healthy, high-performing, and technologically up-to- 
date. 
SEC. 322. ALLOCATION TO LOCAL EDUCATIONAL AGEN-
CIES. 
(a) IN GENERAL.—Of the amount appropriated to 
carry out this chapter for each fiscal year pursuant to sec-
tion 345(b), the Secretary shall allocate to local edu-
cational agencies in Louisiana, Mississippi, and Alabama 
an amount equal to the infrastructure damage inflicted on 
public school facilities in each such district by Hurricane 
Katrina or Hurricane Rita in 2005 relative to the total 
of such infrastructure damage so inflicted in all such dis-
tricts, combined. 
(b) DISTRIBUTION BY SECRETARY.—The Secretary 
shall determine and distribute the allocations described in
136 
subsection (a) not later than 120 days after an appropria-
tion of funds for this chapter is made. 
SEC. 323. ALLOWABLE USES OF FUNDS. 
A local educational agency receiving a grant under 
this chapter shall use the grant for one or more of the 
activities described in section 313, except that an agency 
receiving a grant under this chapter also may use the 
grant for the construction of new public school facilities. 
CHAPTER 3—GENERAL PROVISIONS 
SEC. 331. IMPERMISSIBLE USES OF FUNDS. 
No funds received under this subtitle may be used 
for— 
(1) payment of maintenance costs, including 
routine repairs classified as current expenditures 
under State or local law; 
(2) stadiums or other facilities primarily used 
for athletic contests or exhibitions or other events 
for which admission is charged to the general public; 
(3) improvement or construction of facilities the 
purpose of which is not the education of children, in-
cluding central office administration or operations or 
logistical support facilities; or 
(4) purchasing carbon offsets.
137 
SEC. 332. SUPPLEMENT, NOT SUPPLANT. 
A local educational agency receiving a grant under 
this subtitle shall use such Federal funds only to supple-
ment and not supplant the amount of funds that would, 
in the absence of such Federal funds, be available for mod-
ernization, renovation, repair, and construction of public 
school facilities. 
SEC. 333. PROHIBITION REGARDING STATE AID. 
A State shall not take into consideration payments 
under this subtitle in determining the eligibility of any 
local educational agency in that State for State aid, or 
the amount of State aid, with respect to free public edu-
cation of children. 
SEC. 334. MAINTENANCE OF EFFORT. 
(a) IN GENERAL.—A local educational agency may 
receive a grant under this subtitle for any fiscal year only 
if either the combined fiscal effort per student or the ag-
gregate expenditures of the agency and the State involved 
with respect to the provision of free public education by 
the agency for the preceding fiscal year was not less than 
90 percent of the combined fiscal effort or aggregate ex-
penditures for the second preceding fiscal year. 
(b) REDUCTION IN CASE OF FAILURE TO MEET 
MAINTENANCE OF EFFORT REQUIREMENT.— 
(1) IN GENERAL.—The State educational agen-
cy shall reduce the amount of a local educational
138 
agency’s grant in any fiscal year in the exact propor-
tion by which a local educational agency fails to 
meet the requirement of subsection (a) by falling 
below 90 percent of both the combined fiscal effort 
per student and aggregate expenditures (using the 
measure most favorable to the local agency). 
(2) SPECIAL
RULE.—No such lesser amount 
shall be used for computing the effort required 
under subsection (a) for subsequent years. 
(c) WAIVER.—The Secretary shall waive the require-
ments of this section if the Secretary determines that a 
waiver would be equitable due to— 
(1) exceptional or uncontrollable circumstances, 
such as a natural disaster; or 
(2) a precipitous decline in the financial re-
sources of the local educational agency. 
SEC. 335. SPECIAL RULE ON CONTRACTING. 
Each local educational agency receiving a grant under 
this subtitle shall ensure that, if the agency carries out 
modernization, renovation, repair, or construction through 
a contract, the process for any such contract ensures the 
maximum number of qualified bidders, including local, 
small, minority, and women- and veteran-owned busi-
nesses, through full and open competition.
139 
SEC. 336. USE OF AMERICAN IRON, STEEL, AND MANUFAC-
TURED GOODS. 
(a) IN GENERAL.—None of the funds appropriated 
or otherwise made available by this subtitle may be used 
for a project for the modernization, renovation, repair, or 
construction of a public school facility unless all of the 
iron, steel, and manufactured goods used in the project 
are produced in the United States. 
(b) EXCEPTIONS.—Subsection (a) shall not apply in 
any case or category of cases in which the Secretary finds 
that— 
(1) applying subsection (a) would be incon-
sistent with the public interest; 
(2) iron, steel, and the relevant manufactured 
goods are not produced in the United States in suffi-
cient and reasonably available quantities and of a 
satisfactory quality; or 
(3) inclusion of iron, steel, and manufactured 
goods produced in the United States will increase 
the cost of the overall project by more than 25 per-
cent. 
(c) PUBLICATION OF JUSTIFICATION.—If the Sec-
retary determines that it is necessary to waive the applica-
tion of subsection (a) based on a finding under subsection 
(b), the Secretary shall publish in the Federal Register 
a detailed written justification of the determination.
140 
(d) CONSTRUCTION.—This section shall be applied in 
a manner consistent with United States obligations under 
international agreements. 
SEC. 337. LABOR STANDARDS. 
The grant programs under this subtitle are applicable 
programs (as that term is defined in section 400 of the 
General Education Provisions Act (20 U.S.C. 1221)) sub-
ject to section 439 of such Act (20 U.S.C. 1232b). 
SEC. 338. CHARTER SCHOOLS. 
(a) IN GENERAL.—A local educational agency receiv-
ing an allocation under this subtitle shall reserve an 
amount of that allocation for charter schools within its ju-
risdiction for modernization, renovation, repair, and con-
struction of charter school facilities (including early learn-
ing facilities, as appropriate). 
(b) DETERMINATION OF RESERVED AMOUNT.—The 
amount to be reserved by a local educational agency under 
subsection (a) shall be determined based on the combined 
percentage of students counted under section 1113(a)(5) 
of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6313(a)(5)) in the schools of the agency who— 
(1) are enrolled in charter schools; and 
(2) the local educational agency, in consultation 
with the authorized public chartering agency, ex-
pects to be enrolled, during the year with respect to
142 
school modernization, renovation, repair, or construction 
that are certified, verified, or consistent with any applica-
ble provisions of— 
(1) the LEED Green Building Rating System; 
(2) Energy Star; 
(3) the CHPS Criteria; 
(4) Green Globes; or 
(5) an equivalent program adopted by the 
State, or another jurisdiction with authority over the 
local educational agency, that includes a verifiable 
method to demonstrate compliance with such pro-
gram. 
(b) APPLICABLE
PERCENTAGES.—The applicable 
percentage described in subsection (a) is— 
(1) for funds appropriated in fiscal year 2010, 
50 percent; and 
(2) for funds appropriated in fiscal year 2011, 
75 percent. 
(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to prohibit a local educational 
agency from using sustainable, domestic hardwood lumber 
as ascertained through the forest inventory and analysis 
program of the Forest Service of the Department of Agri-
culture under the Forest and Rangeland Renewable Re-
sources Research Act of 1978 (16 U.S.C. 1641 et seq.)
143 
for public school modernization, renovation, repairs, or 
construction. 
(d) TECHNICAL ASSISTANCE.—The Secretary, in 
consultation with the Secretary of Energy and the Admin-
istrator of the Environmental Protection Agency, shall 
provide outreach and technical assistance to States and 
local educational agencies concerning the best practices in 
school modernization, renovation, repair, and construc-
tion, including those related to student academic achieve-
ment, student and staff health, energy efficiency, and envi-
ronmental protection. 
SEC. 340. REPORTING. 
(a) REPORTS BY LOCAL EDUCATIONAL AGENCIES.— 
Local educational agencies receiving a grant under this 
subtitle shall annually compile a report describing the 
projects for which such funds were used, including— 
(1) the number and identity of public schools in 
the agency, including the number of charter schools, 
and for each school, the total number of students, 
and the number of students counted under section 
1113(a)(5) of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 6313(a)(5)); 
(2) the total amount of funds received by the 
local educational agency under this subtitle, and for 
each public school in the agency, including each
144 
charter school, the amount of such funds expended, 
and the types of modernization, renovation, repair, 
or construction projects for which such funds were 
used; 
(3) the number of students impacted by such 
projects, including the number of students so im-
pacted who are counted under section 1113(a)(5) of 
the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 6313(a)(5)); 
(4) the number of public schools in the agency 
with a metro-centric locale code of 41, 42, or 43 as 
determined by the National Center for Education 
Statistics and the percentage of funds received by 
the agency under chapter 1 or chapter 2 of this sub-
title that were used for projects at such schools; 
(5) the number of public schools in the agency 
that are eligible for schoolwide programs under sec-
tion 1114 of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 6314) and the per-
centage of funds received by the agency under chap-
ter 1 or chapter 2 of this subtitle that were used for 
projects at such schools; 
(6) for each project— 
(A) the cost;
145 
(B) the standard described in section 
339(a) with which the use of the funds com-
plied or, if the use of funds did not comply with 
a standard described in section 339(a), the rea-
son such funds were not able to be used in com-
pliance with such standards and the agency’s 
efforts to use such funds in an environmentally 
sound manner; and 
(C) any demonstrable or expected benefits 
as a result of the project (such as energy sav-
ings, improved indoor environmental quality, 
student and staff health, including the reduc-
tion of the incidence and effects of asthma and 
other respiratory illnesses, and improved cli-
mate for teaching and learning); and 
(7) the total number and amount of contracts 
awarded, and the number and amount of contracts 
awarded to local, small, minority, women, and vet-
eran-owned businesses. 
(b) AVAILABILITY OF REPORTS.—A local educational 
agency shall— 
(1) submit the report described in subsection 
(a) to the State educational agency, which shall com-
pile such information and report it annually to the 
Secretary; and
146 
(2) make the report described in subsection (a) 
publicly available, including on the agency’s website. 
(c) REPORTS BY SECRETARY.—Not later than March 
31 of each fiscal year, the Secretary shall submit to the 
Committee on Education and Labor of the House of Rep-
resentatives and the Committee on Health, Education, 
Labor and Pensions of the Senate, and make available on 
the Department of Education’s website, a report on grants 
made under this subtitle, including the information from 
the reports described in subsection (b)(1). 
SEC. 341. SPECIAL RULES. 
Notwithstanding any other provision of this subtitle, 
none of the funds authorized by this subtitle may be— 
(1) used to employ workers in violation of sec-
tion 274A of the Immigration and Nationality Act 
(8 U.S.C. 1324a); or 
(2) distributed to a local educational agency 
that does not have a policy that requires a criminal 
background check on all employees of the agency. 
SEC. 342. PROMOTION OF EMPLOYMENT EXPERIENCES. 
The Secretary of Education, in consultation with the 
Secretary of Labor, shall work with recipients of funds 
under this subtitle to promote appropriate opportunities 
to gain employment experience working on modernization,
147 
renovation, repair, and construction projects funded under 
this subtitle for— 
(1) participants in a YouthBuild program (as 
defined in section 173A of the Workforce Investment 
Act of 1998 (29 U.S.C. 2918a)); 
(2) individuals enrolled in the Job Corps pro-
gram carried out under subtitle C of title I of the 
Workforce Investment Act of 1998 (29 U.S.C. 2881 
et seq.); 
(3) individuals enrolled in a junior or commu-
nity college (as defined in section 312(f) of the 
Higher Education Act of 1965 (20 U.S.C. 1088(f))) 
certificate or degree program relating to projects de-
scribed in section 339(a); and 
(4) participants in preapprenticeship programs 
that have direct linkages with apprenticeship pro-
grams that are registered with the Department of 
Labor or a State Apprenticeship Agency under the 
National Apprenticeship Act of 1937 (29 U.S.C. 50 
et seq.). 
SEC. 343. ADVISORY COUNCIL ON GREEN, HIGH-PER-
FORMING PUBLIC SCHOOL FACILITIES. 
(a) ESTABLISHMENT OF ADVISORY COUNCIL.—The 
Secretary shall establish an advisory council to be known 
as the ‘‘Advisory Council on Green, High-Performing Pub-
148 
lic School Facilities’’ (in this section referred to as the 
‘‘Advisory Council’’) which shall be composed of— 
(1) appropriate officials from the Department 
of Education; 
(2) representatives of the academic, architec-
tural, business, education, engineering, environ-
mental, labor, and scientific communities; and 
(3) such other representatives as the Secretary 
deems appropriate. 
(b) DUTIES OF ADVISORY COUNCIL.— 
(1) ADVISORY DUTIES.—The Advisory Council 
shall advise the Secretary on the impact of green, 
high-performing schools, on— 
(A) teaching and learning; 
(B) health; 
(C) energy costs; 
(D) environmental impact; and 
(E) other areas that the Secretary and the 
Advisory Council deem appropriate. 
(2) OTHER
DUTIES.—The Advisory Council 
shall assist the Secretary in— 
(A) making recommendations on Federal 
policies to increase the number of green, high- 
performing schools;
149 
(B) identifying Federal policies that are 
barriers to helping States and local educational 
agencies make green, high-performing schools; 
(C) providing technical assistance and out-
reach to States and local educational agencies 
under section 339(d); and 
(D) providing the Secretary such other as-
sistance as the Secretary deems appropriate. 
(c) CONSULTATION.—In carrying out its duties under 
subsection (b), the Advisory Council shall consult with the 
Chair of the Council on Environmental Quality and the 
heads of appropriate Federal agencies, including the Sec-
retary of Commerce, the Secretary of Energy, the Sec-
retary of Health and Human Services, the Secretary of 
Labor, the Administrator of the Environmental Protection 
Agency, and the Administrator of the General Services 
Administration (through the Office of Federal High-Per-
formance Green Buildings). 
(d) TERMINATION.—The authority to establish and 
maintain the Advisory Council under this section shall ex-
pire at the close of September 30, 2011. 
SEC. 344. EDUCATION REGARDING PROJECTS. 
A local educational agency receiving funds under this 
subtitle may encourage schools at which projects are un-
dertaken with such funds to educate students about the
150 
project, including, as appropriate, the functioning of the 
project and its environmental, energy, sustainability, and 
other benefits. 
SEC. 345. AVAILABILITY OF FUNDS. 
(a) CHAPTER 1.—There are authorized to be appro-
priated, and there are appropriated, to carry out chapter 
1 of this subtitle (in addition to any other amounts appro-
priated to carry out such chapter and out of any money 
in 
the 
Treasury 
not 
otherwise 
appropriated), 
$2,020,000,000 for each of fiscal years 2010 and 2011. 
(b) CHAPTER 2.—There are authorized to be appro-
priated, and there are appropriated, to carry out chapter 
2 of this subtitle (in addition to any other amounts appro-
priated to carry out such chapter and out of any money 
in the Treasury not otherwise appropriated), $30,000,000 
for each of fiscal years 2010 and 2011. 
(c) PROHIBITION ON EARMARKS.—None of the funds 
appropriated under this section may be used for a Con-
gressional earmark as defined in clause 9(d) of rule XXI 
of the Rules of the House of Representatives. 
(d) SUNSET.—The authority to award grants under 
this subtitle shall expire at the end of fiscal year 2011.
151 
Subtitle B—Higher Education 
SEC. 351. FEDERAL ASSISTANCE FOR COMMUNITY COL-
LEGE MODERNIZATION AND CONSTRUCTION. 
(a) IN GENERAL.— 
(1) GRANT
PROGRAM.—From the amounts 
made available under subsection (i), the Secretary 
shall award grants to States for the purposes of con-
structing new community college facilities and mod-
ernizing, renovating, and repairing existing commu-
nity college facilities. Grants awarded under this sec-
tion shall be used by a State for one or more of the 
following: 
(A) To reduce financing costs of loans for 
new construction, modernization, renovation, or 
repair projects at community colleges (such as 
paying interest or points on such loans). 
(B) To provide matching funds for a com-
munity college capital campaign to attract pri-
vate donations of funds for new construction, 
modernization, renovation, or repair projects at 
the community college. 
(C) To capitalize a revolving loan fund to 
finance new construction, modernization, ren-
ovation, and repair projects at community col-
leges.
152 
(2) ALLOCATION.— 
(A) 
DETERMINATION
OF
AVAILABLE 
AMOUNT.—The Secretary shall determine the 
amount available for allocation to each State by 
determining the amount equal to the total num-
ber of students in the State who are enrolled in 
community colleges and who are pursuing a de-
gree or certificate that is not a bachelor’s, mas-
ter’s, professional, or other advanced degree, 
relative to the total number of such students in 
all States, combined. 
(B) ALLOCATION.—The Secretary shall al-
locate to each State selected by the Secretary to 
receive a grant under this section an amount 
equal to the amount determined to be available 
for allocation to such State under subparagraph 
(A), less any portion of that amount that is 
subject to a limitation under paragraph (3). 
(C) REALLOCATION.—Amounts not allo-
cated under this section to a State because— 
(i) the State did not submit an appli-
cation under subsection (b); 
(ii) the State submitted an application 
that the Secretary determined did not meet 
the requirements of such subsection; or
153 
(iii) the State is subject to a limita-
tion under paragraph (3) that prevents the 
State from using a portion of the alloca-
tion, 
shall be proportionately reallocated under this 
paragraph to the States that are not described 
in clause (i), (ii), or (iii) of this subparagraph. 
(3) GRANT
AMOUNT
LIMITATIONS.—A grant 
awarded to a State under this section— 
(A) to reduce financing costs of loans for 
new construction, modernization, renovation, or 
repair projects at community colleges under 
paragraph (1)(A) shall be for an amount that 
is not more than 25 percent of the total prin-
cipal amount of the loans for which financing 
costs are being reduced; and 
(B) to provide matching funds for a com-
munity college capital campaign under para-
graph (1)(B) shall be for an amount that is not 
more than 25 percent of the total amount of 
the private donations of funds raised through 
such campaign over the duration of such cam-
paign, as such duration is determined by the 
State in the application submitted under sub-
section (b).
154 
(4) SUPPLEMENT, 
NOT
SUPPLANT.—Funds 
made available under this section shall be used to 
supplement, and not supplant, other Federal, State, 
and local funds that would otherwise be expended to 
construct new community college facilities or mod-
ernize, renovate, or repair existing community col-
lege facilities. 
(b) APPLICATION.—A State that desires to receive a 
grant under this section shall submit an application to the 
Secretary at such time, in such manner, and containing 
such information and assurances as the Secretary may re-
quire. Such application shall include a certification by the 
State that the funds provided under this section for the 
construction of new community college facilities and the 
modernization, renovation, and repair of existing commu-
nity college facilities will improve instruction at such col-
leges and will improve the ability of such colleges to edu-
cate and train students to meet the workforce needs of 
employers in the State. 
(c) USE OF FUNDS BY COMMUNITY COLLEGES.— 
(1) PERMISSIBLE
USES
OF
FUNDS.—Funds 
made available to community colleges through a loan 
described in subsection (a)(1)(A), a capital campaign 
described in subsection (a)(1)(B), or a loan from a 
revolving loan fund described in subsection (a)(1)(C)