HR 5186 RDS 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Taxpayer-Teacher Pro-
tection Act of 2004’’. 
SEC. 2. REDUCTION OF SPECIAL ALLOWANCE PAYMENTS 
FOR LOANS FROM THE PROCEEDS OF TAX EX-
EMPT ISSUES. 
Section 438(b)(2)(B) (20 U.S.C. 1087–1(b)(2)(B)) is 
amended— 
(1) in clause (i), by striking ‘‘this division’’ and 
inserting ‘‘this clause’’; 
(2) in clause (ii), by striking ‘‘division (i) of this 
subparagraph’’ and inserting ‘‘clause (i) of this sub-
paragraph’’; 
(3) in clause (iv), by inserting ‘‘or refunded 
after September 30, 2004, and before January 1, 
2006,’’ after ‘‘October 1, 1993,’’; and 
(4) by adding at the end the following new 
clause: 
‘‘(v) Notwithstanding clauses (i) and (ii), the 
quarterly rate of the special allowance shall be the 
rate determined under subparagraph (A), (E), (F), 
(G), (H), or (I) of this paragraph, or paragraph (4), 
as the case may be, for a holder of loans that— 
‘‘(I) were made or purchased with funds— 
‘‘(aa) obtained from the issuance of 
obligations the income from which is ex-
HR 5186 RDS 
cluded from gross income under the Inter-
nal Revenue Code of 1986 and which obli-
gations were originally issued before Octo-
ber 1, 1993; or 
‘‘(bb) obtained from collections or de-
fault reimbursements on, or interest or 
other income pertaining to, eligible loans 
made or purchased with funds described in 
division (aa), or from income on the invest-
ment of such funds; and 
‘‘(II) are— 
‘‘(aa) financed by such an obligation 
that, after September 30, 2004, and before 
January 1, 2006, has matured or been re-
tired or defeased; 
‘‘(bb) refinanced after September 30, 
2004, and before January 1, 2006, with 
funds obtained from a source other than 
funds described in subclause (I) of this 
clause; or 
‘‘(cc) sold or transferred to any other 
holder after September 30, 2004, and be-
fore January 1, 2006.’’.
HR 5186 RDS 
SEC. 3. LOAN FORGIVENESS FOR TEACHERS. 
(a) IMPLEMENTING HIGHLY QUALIFIED TEACHER 
REQUIREMENTS.— 
(1) AMENDMENTS.— 
(A) FFEL LOANS.—Section 428J(b)(1) of 
the Higher Education Act of 1965 (20 U.S.C. 
1078–10(b)(1)) is amended— 
(i) in subparagraph (A), by inserting 
‘‘and’’ after the semicolon; and 
(ii) by striking subparagraphs (B) and 
(C) and inserting the following: 
‘‘(B) if employed as an elementary school 
or secondary school teacher, is highly qualified 
as defined in section 9101 of the Elementary 
Secondary Education Act of 1965; and’’. 
(B) DIRECT LOANS.—Section 460(b)(1)(A) 
of such Act (20 U.S.C. 1087j(b)(1)(A)) is 
amended— 
(i) in clause (i), by inserting ‘‘and’’ 
after the semicolon; and 
(ii) by striking clauses (ii) and (iii) 
and inserting the following: 
‘‘(ii) if employed as an elementary 
school or secondary school teacher, is high-
ly qualified as defined in section 9101 of
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the Elementary and Secondary Education 
Act of 1965; and’’. 
(2) TRANSITION RULE.— 
(A) RULE.—The amendments made by 
paragraph (1) of this subsection to sections 
428J(b)(1) and 460(b)(1)(A) of the Higher 
Education Act of 1965 shall not be applied to 
disqualify any individual who, before the date of 
enactment of this Act, commenced service that 
met and continues to meet the requirements of 
such sections as such sections were in effect on 
the day before the date of enactment of this 
Act. 
(B) RULE NOT APPLICABLE TO INCREASED 
QUALIFIED
LOAN
AMOUNTS.—Subparagraph 
(A) of this paragraph shall not apply for pur-
poses of obtaining increased qualified loan 
amounts 
under 
sections 
428J(c)(3) 
and 
460(c)(3) of the Higher Education Act of 1965 
as added by subsection (b) of this section. 
(b) ADDITIONAL AMOUNTS ELIGIBLE TO BE RE-
PAID.— 
(1) FFEL LOANS.—Section 428J(c) of the 
Higher Education Act of 1965 (20 U.S.C. 1078–