A bill to amend the Higher Education Act of 1965 to provide interest rate reductions, to authorize and appropriate amounts for the Federal Pell Grant program, to allow for in-school consolidation, to provide the administrative account for the Federal Direct Loan Program as a mandatory program, to strike the single holder rule, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Reverse the Raid on Student Aid Act 
of 2006''.

SEC. 2. INTEREST RATE REDUCTIONS.

    (a) FFEL Interest Rates.--Section 427A(l) (20 U.S.C. 1077a(l)) is 
amended--
            (1) in paragraph (1)--
                    (A) by striking ``6.8 percent'' and inserting ``3.4 
                percent''; and
                    (B) by inserting before the period at the end the 
                following: ``, except that for any loan made pursuant 
                to section 428H for which the first disbursement is 
                made on or after July 1, 2006, the applicable rate of 
                interest shall be 6.8 percent on the unpaid principal 
                balance of the loan''; and
            (2) in paragraph (2), by striking ``8.5 percent'' and 
        inserting ``4.25 percent''.
    (b) Direct Loans.--Section 455(b)(7) (20 U.S.C. 1087e(b)(7)) is 
amended--
            (1) in subparagraph (A)--
                    (A) by striking ``and Federal Direct Unsubsidized 
                Stafford Loans'';
                    (B) by striking ``6.8 percent'' and inserting ``3.4 
                percent''; and
                    (C) by inserting before the period at the end the 
                following: ``, and for any Federal Direct Unsubsidized 
                Stafford Loan made for which the first disbursement is 
                made on or after July 1, 2006, the applicable rate of 
                interest shall be 6.8 percent on the unpaid principal 
                balance of the loan''; and
            (2) in subparagraph (B), by striking ``7.9 percent'' and 
        inserting ``4.25 percent''.

SEC. 3. FEDERAL PELL GRANT AWARDS.

    Section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) 
is amended--
            (1) in subsection (b)--
                    (A) in paragraph (2)(A), by striking clauses (i) 
                through (v) and inserting the following:
            ``(i) $4,500 for academic year 2007-2008;
            ``(ii) $4,800 for academic year 2008-2009;
            ``(iii) $5,200 for academic year 2009-2010;
            ``(iv) $5,600 for academic year 2010-2011; and
            ``(v) $6,000 for academic year 2011-2012,'';
                    (B) in paragraph (3)(A), by striking ``an 
                appropriation Act'' and inserting ``this section''; and
                    (C) in paragraph (7), by striking ``the appropriate 
                Appropriation Act for this subpart'' and inserting 
                ``this section'';
            (2) by striking subsection (g);
            (3) by redesignating subsections (h), (i), and (j), as 
        subsections (g), (h), and (i), respectively; and
            (4) by adding at the end the following:
    ``(j) Authorization and Appropriation of Funds.--There are 
authorized to be appropriated, and there are appropriated, to carry out 
this section--
            ``(1) for academic year 2007-2008, such sums as may be 
        necessary to award each student eligible for a Federal Pell 
        Grant for such academic year not more than $4,500;
            ``(2) for academic year 2008-2009, such sums as may be 
        necessary to award each student eligible for a Federal Pell 
        Grant for such academic year not more than $4,800;
            ``(3) for academic year 2009-2010, such sums as may be 
        necessary to award each student eligible for a Federal Pell 
        Grant for such academic year not more than $5,200;
            ``(4) for academic year 2010-2011, such sums as may be 
        necessary to award each student eligible for a Federal Pell 
        Grant for such academic year not more than $5,600;
            ``(5) for academic year 2011-2012, such sums as may be 
        necessary to award each student eligible for a Federal Pell 
        Grant for such academic year not more than $6,000; and
            ``(6) for each subsequent academic year, such sums as may 
        be necessary to award each student eligible for a Federal Pell 
        Grant for such subsequent academic year not more than the 
        amount that is equal to the maximum award amount for the 
        previous academic year increased by a percentage equal to the 
        estimated percentage increase in the Consumer Price Index (as 
        determined by the Secretary) between such previous academic 
        year and such subsequent academic year.''.

SEC. 4. IN-SCHOOL CONSOLIDATION.

    Section 428(b)(7)(A) of the Higher Education Act of 1965 (20 U.S.C. 
1078(b)(7)(A)) is amended by striking ``shall begin'' and all that 
follows through the period and inserting ``shall begin--
                    ``(i) the day after 6 months after the date the 
                student ceases to carry at least one-half the normal 
                full-time academic workload (as determined by the 
                institution); or
                    ``(ii) on an earlier date if the borrower requests 
                and is granted a repayment schedule that provides for 
                repayment to commence at an earlier date.''.

SEC. 5. ADMINISTRATIVE ACCOUNT FOR DIRECT LOAN PROGRAM.

    Section 458 of the Higher Education Act of 1965 (20 U.S.C. 1087h) 
is amended to read as follows:

``SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES.

    ``(a) Administrative Expenses.--
            ``(1) In general.--Each fiscal year there shall be 
        available to the Secretary, from funds not otherwise 
        appropriated, funds to be obligated for--
                    ``(A) administrative costs under this part and part 
                B, including the costs of the direct student loan 
                programs under this part; and
                    ``(B) account maintenance fees payable to guaranty 
                agencies under part B and calculated in accordance with 
                subsection (b),
        not to exceed (from such funds not otherwise appropriated) 
        $904,000,000 in fiscal year 2007, $943,000,000 in fiscal year 
        2008, $983,000,000 in fiscal year 2009, $1,023,000,000 in 
        fiscal year 2010, $1,064,000,000 in fiscal year 2011, and 
        $1,106,000,000 in fiscal year 2012.
            ``(2) Account maintenance fees.--Account maintenance fees 
        under paragraph (1)(B) shall be paid quarterly and deposited in 
        the Agency Operating Fund established under section 422B.
            ``(3) Carryover.--The Secretary may carry over funds made 
        available under this section to a subsequent fiscal year.
    ``(b) Calculation Basis.--Account maintenance fees payable to 
guaranty agencies under subsection (a)(1)(B) shall not exceed the basis 
of 0.10 percent of the original principal amount of outstanding loans 
on which insurance was issued under part B.
    ``(c) Budget Justification.--No funds may be expended under this 
section unless the Secretary includes in the Department of Education's 
annual budget justification to Congress a detailed description of the 
specific activities for which the funds made available by this section 
have been used in the prior and current years (if applicable), the 
activities and costs planned for the budget year, and the projection of 
activities and costs for each remaining year for which administrative 
expenses under this section are made available.''.

SEC. 6. SINGLE HOLDER RULE.

    Subparagraph (A) of section 428C(b)(1) of the Higher Education Act 
of 1965 (20 U.S.C. 1078-3(b)(1)) is amended by striking ``and (i)'' and 
all that follows through ``so selected for consolidation)''.

Summary: Reverse the Raid on Student Aid Act of 2006 - Amends the Higher Education Act of 1965 to cut student loan interest rates to 3.4% for student borrowers and 4.25% for parent borrowers under the Federal Family Education Loan (FFEL) and William D. Ford Direct Loan programs for loans whose first disbursement is made on or after July 1, 2006. Maintains the current 6.8% interest rate, however, for unsubsidized Stafford loans for middle-income borrowers under such programs.

Authorizes and appropriates the funds necessary to award eligible students with Pell Grants up to specified maximum increasing amounts from academic year 2007 to 2012, with increases thereafter gauged to the Consumer Price Index.

Allows students to consolidate loans under the FFEL program while still in school.

Sets limits on funds available for administrative expenses under the FFEL and Direct Loan programs for FY2007-2012. Eliminates the current FY2007-2011 authorization of appropriations for the administrative costs of such programs.

Repeals the single holder rule which requires borrowers to apply to their current lenders for FFEL consolidation loans.