‘‘(C) The Secretary shall waive the require-
ments of subparagraph (A), and of the binding com-
mitment made therender, if the institution dem-
onstrates to the Secretary that the institution is un-
able to comply because of the occurrence of one or 
more events causing the institution severe economic 
distress.’’. 
SEC. 4. INCENTIVES AND REWARDS FOR LOW TUITION. 
(a) REWARDS FOR LOW TUITION.— 
(1) COMPETITIVE GRANTS.—The Secretary of 
Education shall award grants on a competitive basis 
to institutions of higher education that, for academic 
year 2008–2009 or any succeeding academic year, 
have an annual net tuition increase (expressed as a 
percentage) for the most recent academic year for 
which satisfactory data is available that is equal to 
or less than the percentage change in the higher 
education price index for such academic year. 
(2) USE OF FUNDS.—Funds awarded to an in-
stitution of higher education under paragraph (1) 
shall be distributed by the institution in the form of 
need-based grant aid to students who are eligible for 
Federal Pell Grants, except that no student shall re-
ceive an amount under this section that would cause 
the amount of total financial aid received by such 
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student to exceed the cost of attendance of the insti-
tution. 
(b) REWARDS FOR GUARANTEED TUITION.— 
(1) BONUS.—For each institution of higher 
education that the Secretary of Education of Edu-
cation determines complies with the requirements of 
paragraph (2) or (3) of this subsection, the Sec-
retary of Education shall provide to such institution 
a bonus amount. Such institution shall award the 
bonus amount first to students who are eligible for 
Federal Pell Grants who were in attendance at the 
institution during the award year that such institu-
tion satisfied the eligibility criteria for maintaining 
low tuition and fees, then to students who are eligi-
ble for Federal Pell Grants who were not in attend-
ance at the institution during such award year, in 
the form of need-based aid. 
(2) 4-YEAR
INSTITUTIONS.—An institution of 
higher education that provides a program of instruc-
tion for which it awards a bachelor’s degree complies 
with the requirements of this paragraph if such in-
stitution guarantees that for any academic year be-
ginning on or after July 1, 2008, and for each of the 
4 succeeding continuous academic years, the net tui-
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tion charged to an undergraduate student will not 
exceed— 
(A) the amount that the student was 
charged for an academic year at the time he or 
she first enrolled in the institution of higher 
education, plus 
(B) the product of the percentage increase 
in the higher education price index for the prior 
academic year, or the most recent prior aca-
demic year for which data is available, multi-
plied by the amount determined under subpara-
graph (A). 
(3) LESS-THAN 4-YEAR INSTITUTIONS.—An in-
stitution of higher education that does not provide a 
program of instruction for which it awards a bach-
elor’s degree complies with the requirements of this 
paragraph if such institution guarantees that for 
any academic year (or the equivalent) beginning on 
or after July 1, 2008, and for each of the 1.5 suc-
ceeding continuous academic years, the net tuition 
charged to an undergraduate student will not ex-
ceed— 
(A) the amount that the student was 
charged for an academic year at the time he or 
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she first enrolled in the institution of higher 
education, plus 
(B) the product of the percentage increase 
in the higher education price index for the prior 
academic year, or the most recent prior aca-
demic year for which data is available, multi-
plied by the amount determined under subpara-
graph (A). 
(c) MAINTAINING AFFORDABLE TUITION.— 
(1) INSTITUTION REPORTS.—If an institution 
of higher education has an increase in annual net 
tuition (expressed as a percentage), for the most re-
cent academic year for which satisfactory data is 
available, that is greater than the percentage in-
crease in the higher education price index for such 
academic year, the institution or a representative as-
sociation is required to submit to the Secretary of 
Education the following information, within 6 
months of such determination— 
(A) a report on the factors contributing to 
the increase in the institution’s costs and the 
increase in net tuition and fees charged to stu-
dents, including identification of the major 
areas in the institution’s budget with the great-
est cost increases; 
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(B) the institution’s 3 most recent Form 
990s submitted to the Internal Revenue Serv-
ice, as required under section 6033 of the Inter-
nal Revenue Code of 1986; 
(C) a description of the major areas of ex-
penditures in the institution’s budget with the 
greatest increase for such academic year; and 
(D) actions being taken by the institution 
to reduce net tuition. 
(2) REPORT TO CONGRESS.—The Secretary of 
Education shall compile the information submitted 
under this subsection and shall provide to the rel-
evant authorizing committees an annual report relat-
ing to such information. 
(d) DEFINITIONS.—In this section: 
(1) NET
TUITION.—The term ‘‘net tuition’’ 
means the average tuition and fees charged to a full- 
time undergraduate student by an institution of 
higher education for an academic year, minus the 
average grant amount received by such a student for 
such academic year. 
(2) HIGHER
EDUCATION
PRICE
INDEX.—The 
term ‘‘higher education price index’’ means the high-
er education price index developed pursuant to sec-
tion 133(b). 
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(3) INSTITUTION OF HIGHER EDUCATION.—The 
term ‘‘institution of higher education’’ has the 
meaning provided in section 102 of Higher Edu-
cation Act of 1965 (20 U.S.C. 1002). 
Æ 
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