To amend the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 to permit States to determine state residency for higher education purposes and to amend the Immigration and Nationality Act to cancel the removal and adjust the status of certain alien college-bound students who are long-term U.S. residents.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Adjustment Act of 2001''.

SEC. 2. RESTORATION OF STATE OPTION TO DETERMINE RESIDENCY FOR PURPOSES 
              OF HIGHER EDUCATION BENEFITS.

    (a) In General.--Section 505 of the Illegal Immigration Reform and 
Immigrant Responsibility Act of 1996 (division C of Public Law 104-208; 
110 Stat 3009-672; 8 U.S.C. 1623) is repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall take 
effect as if included in the enactment of the Illegal Immigration 
Reform and Immigrant Responsibility Act of 1996.

SEC. 3. ADJUSTMENT OF STATUS OF CERTAIN LONG-TERM RESIDENT STUDENTS.

    (a) In General.--Section 240A of the Immigration and Nationality 
Act (8 U.S.C. 1229b) is amended--
            (1) in paragraph (3) of subsection (b)--
                    (A) by striking ``paragraph (1) or (2)'' and 
                inserting ``paragraph (1), (2), or (3)'' each place it 
                appears;
                    (B) by redesignating such paragraph as paragraph 
                (5); and
                    (C) by moving such paragraph to follow paragraph 
                (4);
            (2) by inserting after paragraph (2) of subsection (b) the 
        following new paragraph:
            ``(3) Special rule for children in middle or secondary 
        school.--
                    ``(A) Authority.--Subject to subparagraph (B), the 
                Attorney General shall cancel removal of, and adjust to 
                the status of an alien lawfully admitted for permanent 
                residence, an alien who is inadmissible or deportable 
                from the United States if the alien demonstrates that--
                            ``(i) the alien has not, at the time of 
                        application, attained the age of 21;
                            ``(ii) the alien was physically present in 
                        the United States on the date of the enactment 
                        of the Student Adjustment Act of 2001 and has 
                        been physically present in the United States 
                        for a continuous period of not less than five 
                        years immediately preceding the date of such 
                        application;
                            ``(iii) the alien has been a person of good 
                        moral character during such period; and
                            ``(iv) the alien, at the time of 
                        application, is enrolled at or above the 7th 
                        grade level in a school in the United States or 
                        is enrolled in or actively pursuing admission 
                        to an institution of higher education in the 
                        United States as defined in section 101 of the 
                        Higher Education Act of 1965 (20 U.S.C. 1001).
                The Attorney General shall provide a procedure by 
                regulation allowing eligible individuals to apply 
                affirmatively for the relief available under this 
                paragraph without being placed in removal proceedings. 
                An alien shall not be considered to have failed to 
                maintain continuous physical presence in the United 
                States for purposes of clause (ii) by virtue of brief, 
                casual, and innocent absences from the United States.
                    ``(B) Restrictions on authority.--The provisions of 
                this paragraph shall not apply to any of the following 
                aliens:
                            ``(i) An alien who is inadmissible under 
                        section 212(a)(2)(A)(i)(I) or is deportable 
                        under section 237(a)(2)(A)(i) (relating to 
                        crimes of moral turpitude), unless the Attorney 
                        General determines that the alien's removal 
                        would result in extreme hardship to the alien, 
                        the alien's child, or (in the case of an alien 
who is a child) to the alien's parent.
                            ``(ii) An alien who is inadmissible under 
                        section 212(a)(3) or is deportable under 
                        section 237(a)(2)(D)(i) or 237(a)(2)(D)(ii) 
                        (relating to security and related grounds).''; 
                        and
            (3) in subsection (d)(1)(A), by inserting ``or (b)(3)'' 
        after ``subsection (b)(2)''.
    (b) Exemption From Numerical Limitations.--Section 240A(e)(3) of 
such Act (8 U.S.C. 1229b(e)(3)) is amended by adding at the end the 
following new subparagraph:
                    ``(C) Aliens described in subsection (b)(3).''.
    (c) Grandfather Provisions.--For purpose of applying section 
240A(b)(3) of the Immigration and Nationality Act (as inserted by 
subsection (a)) with respect to an application filed under such section 
not later than 120 days after the effective date of regulations 
implementing this section--
            (1) an individual shall be considered to be under the age 
        of 21 if the individual's 21st birthday occurs after the date 
        of the enactment of this Act but no more than 120 days after 
        the effective date of such regulations; and
            (2) an individual shall be treated as meeting the 
        requirements of clauses (i), (ii), and (iv) of subparagraph (A) 
        of such section if--
                    (A) the individual would have met such requirements 
                based upon an application filed at any time during the 
                4-year period ending on the date of the enactment of 
                this Act; and
                    (B) the individual has graduated from, or is at the 
                time of application enrolled in, an institution of 
                higher education in the United States (described in 
                clause (iv) of such subparagraph).
    (d) Confidentiality of Information.--Neither the Attorney General, 
nor any other official or employee of the Department of Justice, or 
bureau or agency thereof, may--
            (1) use the information furnished by the applicant pursuant 
        to an application filed under the amendments made by this 
        section for any purpose other than to make a determination on 
        the application;
            (2) make any publication whereby the information furnished 
        by any particular individual can be identified; or
            (3) permit anyone other than the sworn officers and 
        employees of the Department or bureau or agency or, with 
        respect to applications filed with a designated entity, that 
        designated entity, to examine individual applications.
Whoever knowingly uses, publishes, or permits information to be 
examined in violation of this subsection shall be fined not more than 
$10,000.
    (e) Eligibility of Cancellation Applicants for Federal Educational 
Assistance.--Section 431(b) of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996 (8 U.S.C. 1641(b)) is amended--
            (1) by striking ``; or'' at the end of paragraph (6) and 
        inserting a comma;
            (2) by striking the period at the end of paragraph (7) and 
        inserting ``, or''; and
            (3) by adding at the end the following new paragraph:
            ``(8) an alien who has been granted relief under section 
        240A(b)(3) of the Immigration and Nationality Act, or with 
        respect to whom an application under such section has been 
        filed but not finally been adjudicated.''.
    (f) Regulations.--
            (1) Proposed regulations.--Not later than 60 days after the 
        date of the enactment of this Act, the Attorney General shall 
        publish proposed regulations implementing this section.
            (2) Interim, final regulations.--Not later than 120 days 
        after the date of the enactment of this Act, the Attorney 
        General shall publish final regulations implementing this 
        section. Such regulations shall be effective immediately on an 
        interim basis, but are subject to change and revision after 
        public notice and opportunity for a period for public comment.

Summary: Student Adjustment Act of 2001 - Amends the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 to repeal the provision prohibiting an unlawful alien's eligibility for higher education benefits based on State residence unless a U.S. national is similarly eligible without regard to such State residence. Amends the Immigration and Nationality Act to direct the Attorney General to cancel the removal of, and adjust to permanent resident status, certain (inadmissible or deportable) alien middle or secondary students with qualifying years of U.S. residency. Makes such aliens eligible for Federal and State higher education assistance during the pendency of their application for cancellation of removal.