Debt-Free College Act of 2021
Bill: S.1263 | Sponsor: Sen. Schatz, Brian (D-HI)
Policy area: Education

Summary:
Debt-Free College Act of 2021
This bill establishes measures to cover the unmet financial need of students who are enrolled at certain institutions of higher education (IHEs). Unmet financial need refers to the difference between a student's cost of attendance and the student's expected family contribution, plus any federal, state, and local sources of grant aid. In addition, the bill makes certain Dreamer students (i.e., students who have been granted Deferred Action for Childhood Arrivals status) eligible for federal financial aid.
First, the bill requires the Department of Education (ED) to award grants for state-federal partnerships with a goal of providing debt-free college for all eligible students at in-state public IHEs. Eligible student refers to an individual who (1) is enrolled or is eligible to enroll in an in-state public IHE, (2) completes a Free Application for Federal Student Aid or demonstrates eligibility for a Federal Pell Grant through institutional financial-aid eligibility forms, and (3) demonstrates satisfactory academic progress.
Next, the bill requires ED to award grants to historically Black colleges and universities and minority-serving institutions to cover the unmet financial need of enrolled students.
ED must establish an office to administer grants and provide oversight.
In addition, the bill makes Dreamer students who entered the United States before the age of 16 and who meet certain educational criteria eligible for federal student aid.

To establish State-Federal partnerships to provide students the 
opportunity to attain higher education at in-State public institutions 
    of higher education without debt, to provide Federal Pell Grant 
        eligibility to DREAMer students, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Debt-Free College Act of 2021''.

SEC. 2. DEBT-FREE COLLEGE PARTNERSHIP.

    Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et 
seq.) is amended by adding at the end the following:

                ``PART J--DEBT-FREE COLLEGE PARTNERSHIP

``SEC. 499A-1. PURPOSE.

    ``The purpose of this part is to establish State-Federal 
partnerships that will--
            ``(1) increase investment in public higher education; and
            ``(2) provide students the opportunity to attain higher 
        education at in-State public institutions of higher education 
        without debt (`debt-free college').

``SEC. 499A-2. DEFINITIONS.

    ``In this part:
            ``(1) College completion program.--The term `college 
        completion program' means a program or service at an 
        institution of higher education that is dedicated to addressing 
        barriers to degree attainment, particularly for low-income 
        students, for the purpose of increasing the percentage of 
        students completing programs of study in their entirety and 
        attaining related degrees.
            ``(2) Cost of attendance.--The term `cost of attendance' 
        means--
                    ``(A) tuition and fees normally assessed a student 
                carrying the same academic workload as determined by 
                the institution, and including costs for rental or 
                purchase of any equipment, materials, or supplies 
                required of all students in the same course of study;
                    ``(B) an allowance for books, supplies, 
                transportation, and miscellaneous personal expenses, 
                including a reasonable allowance for the documented 
                rental or purchase of a personal computer, for a 
                student attending the institution on at least a half-
                time basis, as determined by the institution; and
                    ``(C) an allowance (determined by the institution) 
                for room and board costs incurred by the student 
                which--
                            ``(i) shall be an allowance determined by 
                        the institution for a student without 
                        dependents residing at home with parents;
                            ``(ii) for students without dependents 
                        residing in institutionally owned or operated 
                        housing, shall be a standard allowance 
                        determined by the institution based on the 
                        amount normally assessed most of its residents 
                        for room and board;
                            ``(iii) for students who live in housing 
                        located on a military base or for which a basic 
                        allowance is provided under section 403(b) of 
                        title 37, United States Code, shall be an 
                        allowance based on the expenses reasonably 
                        incurred by such students for board but not for 
                        room; and
                            ``(iv) for all other students shall be an 
                        allowance based on the expenses reasonably 
                        incurred by such students for room and board.
            ``(3) Debt-free college commitment.--The term `debt-free 
        college commitment' means a commitment by a State participating 
        in the State-Federal partnership under this part to cover the 
        unmet financial need for all eligible students.
            ``(4) Eligible student.--The term `eligible student' means 
        an individual who--
                    ``(A) is enrolled, or is eligible to enroll, in a 
                public institution of higher education in the State in 
                which the individual resides;
                    ``(B) completes a Free Application for Federal 
                Student Aid or demonstrates eligibility for a Federal 
                Pell Grant through institutional financial aid 
                eligibility forms; and
                    ``(C) demonstrates satisfactory academic progress, 
                as defined under the Federal Pell Grant program under 
                subpart 1 of part A, once enrolled in a public 
                institution of higher education in the State in which 
                the individual resides.
            ``(5) Full-time equivalent students.--The term `full-time 
        equivalent students' means the sum of the number of students 
        enrolled full time at an institution, plus the full-time 
        equivalent of the number of students enrolled part time, which 
        shall be defined and calculated in the manner determined most 
        appropriate by the Secretary.
            ``(6) Net state operating support.--The term `net State 
        operating support' means an amount that is equal to the amount 
        of State funds and local government appropriations used to 
        support public higher education annual operating expenses in 
        the State, calculated in accordance with subparagraphs (A) and 
        (B).
                    ``(A) Calculation.--A State's net State operating 
                support shall, for a fiscal year, be an amount that is 
                equal to the difference resulting from the gross amount 
                of State funds appropriated and disbursed by the State 
                and expended by the recipient institutions in the 
                fiscal year for public higher education operating 
                expenses in the State, minus--
                            ``(i) such appropriations that are returned 
                        to the State;
                            ``(ii) State-appropriated funds derived 
                        from Federal sources, including funds provided 
                        under this part;
                            ``(iii) local government funds not 
                        appropriated for operating support for public 
                        higher education;
                            ``(iv) amounts that are portions of multi-
                        year appropriations to be distributed over 
                        multiple years that are not to be spent for the 
                        year for which the calculation is being made;
                            ``(v) tuition charges remitted to the State 
                        to offset State appropriations;
                            ``(vi) State funding for students in non-
                        credit continuing or adult education courses 
                        and non-credit extension courses;
                            ``(vii) sums appropriated to private 
                        nonprofit institutions of higher education, or 
                        to proprietary institutions of higher 
                        education, for capital outlay or operating 
                        expenses; and
                            ``(viii) any other funds excluded under 
                        subparagraph (B).
                    ``(B) Exclusions.--Net State operating support does 
                not include--
                            ``(i) funds for--
                                    ``(I) student aid programs that 
                                provide grants to students attending 
                                in-State private nonprofit institutions 
                                of higher education, in-State 
                                proprietary institutions of higher 
                                education, independent institutions, 
                                and out-of-State institutions;
                                    ``(II) capital outlay;
                                    ``(III) deferred maintenance; or
                                    ``(IV) research and development; or
                            ``(ii) any other funds that the Secretary 
                        may exclude.
            ``(7) Net state operating support per fte student.--The 
        term `net State operating support per FTE student' means, for a 
        fiscal year--
                    ``(A) the net State operating support for the 
                previous fiscal year; divided by
                    ``(B) the full-time equivalent students for the 
                previous fiscal year.
            ``(8) Partnership office.--The term `Partnership Office' 
        means the Office created under section 499A-4(a).
            ``(9) Public institution of higher education.--The term 
        `public institution of higher education' means an educational 
        institution in any State that--
                    ``(A) admits as regular students only persons 
                having a certificate of graduation from a school 
                providing secondary education, or the recognized 
                equivalent of such a certificate, or persons who are 
                eligible students;
                    ``(B) is legally authorized within such State to 
                provide a program of education beyond secondary 
                education;
                    ``(C) provides an educational program for which the 
                institution awards a bachelor's degree or provides not 
                less than a 2-year program that is acceptable for full 
                credit toward such a degree, or awards a degree that is 
                acceptable for admission to a graduate or professional 
                degree program, subject to review and approval by the 
                Secretary;
                    ``(D) has the full faith and credit of the State; 
                and
                    ``(E) is accredited by a nationally recognized 
                accrediting agency or association, or if not so 
                accredited, is an institution that has been granted 
                preaccreditation status by such an agency or 
                association that has been recognized by the Secretary 
                for the granting of preaccreditation status, and the 
                Secretary has determined that there is satisfactory 
                assurance that the institution will meet the 
                accreditation standards of such an agency or 
                association within a reasonable time.
            ``(10) Relevant committees of congress.--The term `relevant 
        committees of Congress' means the Committee on Health, 
        Education, Labor, and Pensions and the Committee on 
        Appropriations of the Senate and the Committee on Education and 
        Labor and the Committee on Appropriations of the House of 
        Representatives.
            ``(11) Unmet need.--The term `unmet need' means the 
        difference between a student's cost of attendance to attend an 
        in-State public institution of higher education and the 
        student's expected family contribution plus any Federal, State, 
        or local sources of grant aid.

``SEC. 499A-3. ESTABLISHMENT OF A STATE-FEDERAL PARTNERSHIP GRANT 
              PROGRAM.

    ``(a) Grants Authorized.--The Secretary shall award grants to 
States to establish State-Federal partnerships with a goal of providing 
debt-free college for all eligible students at in-State public 
institutions of higher education.
    ``(b) Application.--A State that desires to participate in the 
State-Federal partnership under this part shall submit an application 
to the Secretary at such time, in such manner, and accompanied by such 
information as the Secretary may require.
    ``(c) Amount of Grants.--
            ``(1) In general.--The Secretary shall award a grant to a 
        State that submits an application under subsection (b) for a 
        fiscal year in an amount that is equal to State's net State 
        operating support.
            ``(2) Ratable reduction.--If the amount appropriated to 
        carry out this part for a fiscal year is insufficient to award 
        each State the State's full grant amount pursuant to paragraph 
        (1), the Secretary shall establish procedures for ratably 
        reducing each State's award amount for such fiscal year.
    ``(d) Amounts Not Expended.--Any amount of a grant awarded under 
this part that is not expended on allowable expenditures by the end of 
the fiscal year for which the grant was awarded shall be applied to the 
following year's grant award amount, if the State remains eligible to 
receive a grant under this part for such following year. If such State 
is not eligible to receive a grant under this part for such following 
year, the State shall return the unexpended balance amount to the 
Federal Government.

``SEC. 499A-4. STATE-FEDERAL PARTNERSHIP RESPONSIBILITIES.

    ``(a) Federal.--
            ``(1) In general.--The Secretary shall create an office in 
        the Department of Education to administer the State-Federal 
        partnerships established under this part. Such Partnership 
        Office shall be responsible for--
                    ``(A) administering grant awards;
                    ``(B) monitoring compliance with partnership 
                requirements;
                    ``(C) providing technical assistance to States in 
                applying for participation in, and implementing, a 
                partnership; and
                    ``(D) providing information to students in 
                participating States.
            ``(2) Evaluations.--The Partnership Office shall develop 
        metrics of evaluation and perform an annual evaluation of each 
        State participating in a State-Federal partnership under this 
        part. The evaluation shall assess the State's success in 
        meeting the partnership's goals, including--
                    ``(A) providing debt-free college for all eligible 
                students;
                    ``(B) increasing State investment in higher 
                education;
                    ``(C) maintaining access to in-State public 
                institutions of higher education for low-income and 
                underserved students;
                    ``(D) maintaining and improving rates of college 
                completion and academic quality;
                    ``(E) maintaining or reducing the cost of public 
                higher education and the price charged to students; and
                    ``(F) investing in improving capacity, access, 
                quality, and student achievement of in-State public 
                institutions of higher education.
            ``(3) Annual report.--The Partnership Office shall submit 
        an annual report to the relevant committees of Congress and 
        include information gained from the annual evaluation under 
        paragraph (2).
            ``(4) Website.--The Partnership Office shall create a 
        public, consumer-oriented website with information about State-
        Federal partnerships established under this part, including 
        information from the annual evaluation under paragraph (2).
    ``(b) State.--
            ``(1) In general.--A State that receives a grant under this 
        part to establish a State-Federal partnership shall--
                    ``(A) distribute the grant funds according to the 
                allowable uses of funds described in section 499A-5 in 
                a manner designed to best achieve the partnership's 
                goal of providing debt-free college for all eligible 
                students at in-State public institutions of higher 
                education;
                    ``(B) maintain access at each in-State public 
                institution of higher education for low-income and 
                underserved students;
                    ``(C) cap tuition and fees at public institutions 
                of higher education in the State at levels as of the 
                date of enactment of the Debt-Free College Act of 2021, 
                with a yearly increase allowed based on the Consumer 
                Price Index (as determined by the Secretary);
                    ``(D) commit to working with in-State public 
                institutions of higher education to reduce tuition and 
                fees as the net State operating support increases;
                    ``(E) maintain State need-based financial aid 
                programs in effect on the date of enactment of the 
                Debt-Free College Act of 2021 or use State funds for 
                such programs to further the debt-free commitment made 
                under the State-Federal partnership;
                    ``(F) maintain or increase levels of net State 
                operating support in effect on the date of enactment of 
                the Debt-Free College Act of 2021, subject to the 
                maintenance of effort provisions contained in this 
                part;
                    ``(G) develop, adopt, and implement a State formula 
                for calculating the cost of attendance at in-State 
                public institutions of higher education;
                    ``(H) develop statewide credit transfer policies 
                to--
                            ``(i) facilitate credit transfers among in-
                        State public institutions of higher education; 
                        and
                            ``(ii) provide students with clear and 
                        timely information about credit transfer 
                        policies at in-State public institutions of 
                        higher education; and
                    ``(I) clearly communicate to prospective students, 
                their families, and the general public how the State 
                plans to implement the State-Federal partnership and 
                how eligible students can attend a public institution 
                of higher education in the State without debt, 
                including early notification for students of their 
                eligibility for financial aid under the partnership.
            ``(2) 5-year plan.--
                    ``(A) In general.--In order to receive a grant 
                under this part, a State shall provide to the Secretary 
                a 5-year plan for achieving the goals of the State-
                Federal partnership. A State shall update and resubmit 
                a plan every 5 years thereafter.
                    ``(B) Plan to meet goals.--The 5-year plan shall 
                detail how the State plans to meet the goal of 
                providing debt-free college for all eligible students 
                at in-State public institutions of higher education 
                within 5 years and increase the State's investment in 
                higher education, with specific benchmarks detailed for 
                each year.
                    ``(C) Approved by the secretary.--The 5-year plan, 
                and the State's annual progress, shall be approved by 
                the Secretary in order for the State to be eligible to 
                receive, or continue receiving, grant funds under the 
                State-Federal Partnership award.
                    ``(D) Waiver of 5-year deadline.--A State may apply 
                for a waiver from the deadline of meeting all of the 
                State-Federal partnership's goals within 5 years if the 
                State--
                            ``(i) provides a credible plan for making 
                        progress towards the goals; and
                            ``(ii) is able to demonstrate that the 
                        State will, at a minimum, provide debt-free 
                        college within 5 years to eligible students who 
                        are Federal Pell Grant recipients under subpart 
                        1 of part A.
            ``(3) No additional eligibility requirements.--A State that 
        receives a grant under this part to establish a State-Federal 
        partnership may not impose additional eligibility requirements 
        on students other than those contained in this part.

``SEC. 499A-5. USES OF FUNDS.

    ``(a) In General.--
            ``(1) Need-based aid for pell recipients.--A State that 
        receives a grant under this part to establish a State-Federal 
        partnership shall disburse funds from the net State operating 
        support and the partnership grant funds on the basis of need, 
        as determined by the Free Application for Federal Student Aid 
        or an institutional financial aid eligibility form, to cover 
        the unmet need for each eligible student who receives a Federal 
        Pell Grant under subpart 1 of part A.
            ``(2) Disbursement of remaining funds.--Any funds that 
        remain after a State disburses funds in accordance with 
        paragraph (1) shall be used by the State to cover part or all 
        of the unmet need for eligible students who do not receive a 
        Federal Pell Grant under subpart 1 of part A, with priority 
        based on student financial need, in a manner determined by the 
        State.
            ``(3) No funds in excess of cost of attendance.--An 
        eligible student shall not receive funds under this part in 
        excess of the student's actual cost of attendance.
            ``(4) Private aid not taken into account.--In disbursing 
        funds under this paragraph, the State shall not take into 
        account any private sources of aid or loans available to an 
        eligible student.
    ``(b) College Completion Programs.--
            ``(1) In general.--A State that receives a grant under this 
        part for a fiscal year to establish a State-Federal partnership 
        shall use 4 percent of the grant funds for such fiscal year to 
        establish or increase funding for college completion programs.
            ``(2) Distribution.--From the total amount of grant funds 
        available under paragraph (1) for a fiscal year, the State 
        shall provide to each public institution of higher education in 
        the State that is eligible to participate in programs under 
        this title for such fiscal year an amount that bears the same 
        relation to such total amount as the number of students 
        enrolled in such institution of higher education who are 
        eligible to receive a Federal Pell Grant bears to the number of 
        students enrolled in all public institutions of higher 
        education in the State who are eligible to receive a Federal 
        Pell Grant.
            ``(3) Allowable uses.--An institution of higher education 
        that receives funds under paragraph (2) shall use such funds to 
        establish, implement, or expand a college completion program, 
        including for the following purposes:
                    ``(A) Providing information to prospective and 
                current students to assist and improve completion, 
                including creating materials clarifying different 
                program completion requirements and costs, holding 
                seminars for prospective or current students on course 
                schedules and program costs, and updating school 
                websites to make information publically available.
                    ``(B) Hiring additional counselors and advisors to 
                focus on student completion support and training 
                existing personnel to implement the college completion 
                program.
                    ``(C) Increasing academic support programs, such as 
                writing coaches, tutors, prerequisite skill courses, 
                and study materials, and enhancing academic facilities 
                for students.
                    ``(D) Providing microgrants for students 
                participating in the college completion program who 
                maintain good academic standing and progress toward on-
                time graduation.
            ``(4) Reporting.--
                    ``(A) Reports from institutions.--An institution of 
                higher education that receives funds under paragraph 
                (2) shall submit to the State in which the institution 
                is located at the end of each fiscal year a report that 
                details the uses of funds, changes in the ratios of 
                students to counselors, and 2-year and 4-year degree 
                attainment rates, disaggregated by race and Federal 
                Pell Grant recipient status.
                    ``(B) Suspension.--If a State determines that an 
                institution of higher education that receives funds 
                under paragraph (2) for a fiscal year used such funds 
                for activities that were not allowable uses under 
                paragraph (3), the State may suspend distribution of 
                funds to the institution for the following fiscal year 
                and require the institution to submit proposed 
                expenditures for approval before receiving funds again 
                under paragraph (2).
                    ``(C) Report from state.--A State that receives a 
                grant under this part for a fiscal year to establish a 
                State-Federal partnership shall submit to the Secretary 
                at the end of each fiscal year a report that details 
                the uses of grant funds under this subsection in public 
                institutions of higher education in the State that are 
                eligible to participate in programs under this title, 
                changes in the ratio of students to counselors in such 
                institutions in the State, and 2-year and 4-year degree 
                attainment rates in such institutions in the State, 
                disaggregated by race and Federal Pell Grant recipient 
                status.
    ``(c) Higher Education Related Activities.--A State that receives a 
grant under this part to establish a State-Federal partnership may use 
not more than 5 percent of the grant funds for the following higher 
education related activities:
            ``(1) Increasing the capacity within the public higher 
        education system of the State, including through the following:
                    ``(A) Construction of new facilities.
                    ``(B) Renovation of existing facilities.
                    ``(C) Hiring of faculty.
                    ``(D) Student support services.
            ``(2) Increasing the enrollment of low-income and 
        underserved students.
            ``(3) Improving student outcomes, including meeting student 
        learning goals, increasing completion rates, and improving 
        post-graduate job placement, in consultation with faculty and 
        staff at in-State public institutions of higher education.
            ``(4) Providing information to prospective students and 
        families.
            ``(5) Developing new higher education programs to meet the 
        State's workforce needs, in consultation with faculty and staff 
        at in-State public institutions of higher education, employers, 
        and other relevant stakeholders.
            ``(6) Programs and student support services at public 
        secondary schools if those programs and services directly 
        support an activity described in any of paragraphs (1) through 
        (5).
            ``(7) Other activities as approved by the Secretary to 
        improve the State's public higher education system, 
        particularly for low-income and underserved students.
    ``(d) Administration and Other Uses.--A State that receives a grant 
under this part to establish a State-Federal partnership may use not 
more than 1 percent of the grant funds--
            ``(1) to administer the partnership; and
            ``(2) for--
                    ``(A) higher education research and data tools, 
                such as those that link education and employment data 
                systems;
                    ``(B) forming agreements with other States 
                participating in the partnership for reciprocal student 
                eligibility; and
                    ``(C) developing and implementing systems to 
                provide early notification to students and families of 
                their eligibility for financial aid.
    ``(e) Prohibition on Use of Funds.--A State that receives a grant 
under this part to establish a State-Federal partnership may not use 
grant funds for--
            ``(1) endowments; or
            ``(2) the construction of athletic or commercial venues.

``SEC. 499A-6. MAINTAINING NET STATE OPERATING SUPPORT FOR HIGHER 
              EDUCATION.

    ``(a) In General.--A State that receives a grant under this part to 
establish a State-Federal partnership shall maintain net State 
operating support for a fiscal year at a level that is not less than 
the level that is equal to the average of such net State operating 
support for the 3 fiscal years preceding such fiscal year.
    ``(b) Waivers.--
            ``(1) In general.--The Secretary may grant a waiver to a 
        State from the requirement under subsection (a) for a fiscal 
        year, if the State demonstrates that--
                    ``(A) the net State operating support for such 
                fiscal year as a percentage of total revenue available 
                to the State that will fund higher education for such 
                fiscal year is not less than such percentage for the 
                previous fiscal year; and
                    ``(B) unexpected or uncontrollable circumstances 
                prevent the State from maintaining such State support.
            ``(2) No reduction for subsequent fiscal year.--If the 
        Secretary grants a State a waiver under paragraph (1) for a 
        fiscal year, a determination of the required level of net State 
        operating support for subsequent fiscal years shall exclude the 
        fiscal year for which the waiver was granted.

``SEC. 499A-7. OVERSIGHT.

    ``(a) In General.--If a State that receives a grant under this part 
to establish a State-Federal partnership breaches a term of the 
partnership, the Partnership Office shall notify the State and provide 
the State an opportunity to correct the record or cure the breach 
within 30 days of the notification.
    ``(b) Recommendation.--Based on the State's response to a 
notification under subsection (a), the Partnership Office shall 
recommend that the Secretary--
            ``(1) take no action;
            ``(2) place the State on probation; or
            ``(3) deem the State ineligible to continue to participate 
        in the partnership.
    ``(c) Implementation.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall implement the recommendation of the Partnership 
        Office under subsection (b).
            ``(2) Exception.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary may choose not to implement the 
                recommendation of the Partnership Office under 
                subsection (b).
                    ``(B) Reasons and report.--If the Secretary chooses 
                not to implement the recommendation of the Partnership 
                Office under subsection (b), the Secretary shall--
                            ``(i) provide an explanation for such 
                        decision; and
                            ``(ii) notify the relevant committees of 
                        Congress in a report.
    ``(d) Probation.--
            ``(1) In general.--If a State is placed on probation by the 
        Secretary due to a breach of a term of the partnership, the 
        State shall develop a plan to remedy the breach.
            ``(2) Withholding.--With respect to a State that is placed 
        on probation by the Secretary due to a breach of a term of the 
        partnership, the Secretary shall withhold half of the State's 
        partnership grant award until the breach has been remedied or 
        the State has demonstrated credible progress towards remedying 
        the breach.
    ``(e) Ineligibility.--
            ``(1) In general.--If a State is deemed ineligible to 
        continue to participate in a partnership due to a breach of a 
        term of the partnership, the State shall not receive its 
        partnership grant award for the subsequent year.
            ``(2) Remaining ineligible.--A State that is deemed 
        ineligible to continue to participate in a partnership due to a 
        breach of a term of the partnership, shall remain ineligible 
        for participation until the State has demonstrated that the 
        State meets the partnership's requirements.

``SEC. 499A-8. STATE WITHDRAWAL OR INELIGIBILITY.

    ``(a) In General.--If a State that receives a grant under this part 
to establish a State-Federal partnership intends to withdraw from the 
partnership or becomes ineligible to continue participation under this 
part, the State shall comply with the requirements of this section, 
including, if the State intends to withdraw, notifying the Secretary 
and the Partnership Office 60 days prior to the withdrawal.
    ``(b) Continued Coverage.--
            ``(1) In general.--Any unexpended balance from a State-
        Federal partnership grant award that remains after a State 
        notifies the Partnership Office of the State intention to 
        withdraw from the partnership or becomes ineligible to continue 
        participation under this part shall be placed into an escrow 
        account at the Department and used solely to provide need-based 
        grant aid to an eligible student who has received a Federal 
        Pell Grant under subpart 1 of part A and who was enrolled 
        before the State notified the Partnership Office of the State's 
        intention to withdraw from the partnership or the State became 
        ineligible.
            ``(2) Coverage until students finish program.--
                    ``(A) In general.--A State that withdraws from a 
                State-Federal partnership or becomes ineligible to 
                continue participation under this part shall continue 
                to cover the unmet need for each eligible student who 
                received a Federal Pell Grant under subpart 1 of part A 
                and who was enrolled before the State notified the 
                Partnership Office of the State's intention to withdraw 
                from the partnership or became ineligible until each 
                such student completes the student's program of study 
                at the institution or until the allotted time for 
                completion of such program of study expires.
                    ``(B) Priority.--In carrying out subparagraph (A), 
                a State shall prioritize funding based on students' 
                financial need.
            ``(3) Communication of information.--A State that withdraws 
        from a State-Federal partnership or becomes ineligible to 
        continue participation under this part shall communicate its 
        withdrawal or ineligibility, as appropriate, to students and 
        families in the State and provide clear information to eligible 
        students described in paragraph (2)(A) that the students may 
        continue to have their cost of attendance at an in-State public 
        institution of higher education covered.

``SEC. 499A-9. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated to carry 
out this part--
            ``(1) $84,000,000,000 for fiscal year 2021; and
            ``(2) such sums as may be necessary for each fiscal years 
        2022 through 2031.
    ``(b) Availability.--Funds made available under subsection (a) 
shall be available for obligation through September 30 of the fiscal 
year succeeding the fiscal year for which such sums were 
appropriated.''.

SEC. 3. DEBT-FREE COLLEGE GRANT PROGRAM FOR HBCUS AND MSIS.

    Part F of title III of the Higher Education Act of 1965 (20 U.S.C. 
1067q et seq.) is amended by adding at the end the following:

``SEC. 372. DEBT-FREE COLLEGE GRANT PROGRAM FOR HBCUS AND MSIS.

    ``(a) Definition of Eligible Institution.--
            ``(1) In general.--In this section, except as provided in 
        paragraph (2), the term `eligible institution' means an 
        institution of higher education that is--
                    ``(A) a private, nonprofit 2-year or 4-year part B 
                institution (as defined in section 322);
                    ``(B) a Tribal College or University (as defined in 
                section 316); or
                    ``(C) a private, nonprofit 2-year or 4-year 
                institution--
                            ``(i) that is--
                                    ``(I) a Hispanic-serving 
                                institution (as defined in section 
                                502);
                                    ``(II) an Alaska Native-serving 
                                institution (as defined in section 
                                317(b));
                                    ``(III) a Native Hawaiian-serving 
                                institution (as defined in section 
                                317(b));
                                    ``(IV) a Predominantly Black 
                                Institution (as defined in section 
                                318);
                                    ``(V) an Asian American and Native 
                                American Pacific Islander-serving 
                                institution (as defined in section 
                                320(b)); or
                                    ``(VI) a Native American-serving, 
                                nontribal institution (as defined in 
                                section 319); and
                            ``(ii) in which not less than 35 percent of 
                        the students enrolled at the institution are 
                        eligible to receive a Federal Pell Grant.
            ``(2) For-profit institution that converted to a nonprofit 
        institution.--Notwithstanding paragraph (1), an institution of 
        higher education is not an eligible institution if the 
        institution was a for-profit institution of higher education 
        that converted to a nonprofit institution of higher education 
        and less than 25 years have passed since the date of such 
        conversion.
    ``(b) Grant Program Authorized.--
            ``(1) In general.--The Secretary shall award grants to 
        eligible institutions to enable the institutions to provide 
        need-based financial aid to cover unmet need for students 
        enrolled at the institutions.
            ``(2) Duration.--Grants awarded under this section shall be 
        for a period of 5 years.
    ``(c) Application.--An eligible institution that desires a grant 
under this section shall submit an application to the Secretary at such 
time, in such manner, and accompanied by such information as the 
Secretary may require, including a plan detailing how--
            ``(1) the eligible institution will use grant funds to 
        provide debt-free college to the students enrolled at the 
        institution; and
            ``(2) the institution plans to meet the requirements of the 
        grant program.
    ``(d) Awarding of Grants.--
            ``(1) In general.--
                    ``(A) In general.--A grant amount awarded to an 
                eligible institution under this section for a year--
                            ``(i) shall be in an amount equal to the 
                        amount of the institution's expenditures on 
                        student undergraduate instruction and academic 
                        support for the year; and
                            ``(ii) shall not be disbursed for the year 
                        until the Partnership Office created under 
                        section 499A-4(a) reviews and approves the 
                        annual update submitted by the institution 
                        pursuant to subsection (f).
                    ``(B) Ratable reduction.--If the amount 
                appropriated to carry out this section for a fiscal 
                year is insufficient to award each eligible institution 
                the institution's full grant amount pursuant to 
                subparagraph (A), the Secretary shall establish 
                procedures for ratably reducing each institution's 
                award amount for such fiscal year.
            ``(2) Waivers.--
                    ``(A) In general.--Subject to subparagraph (B), if 
                the percentage of students eligible to receive a 
                Federal Pell Grant who are enrolled at an eligible 
                institution that receives a grant under this section 
                decreases to less than 35 percent after the first year 
                of the grant award, such institution may apply to the 
                Secretary for a waiver of the requirement that an 
                institution to be eligible to receive a grant under 
                this section have not less than 35 percent of the 
                students enrolled at the institution eligible to 
                receive a Federal Pell Grant.
                    ``(B) Restrictions on waiver.--The Secretary shall 
                grant a waiver under subparagraph (A)--
                            ``(i) only if the decrease in percentage 
                        is--
                                    ``(I) small relative to the size of 
                                the student body; or
                                    ``(II) the result of unexpected or 
                                uncontrollable circumstances; and
                            ``(ii) not more than 2 times during the 5-
                        year grant period.
    ``(e) Use of Grant Funds.--
            ``(1) In general.--An eligible institution that receives a 
        grant under this section shall use the grant funds as follows:
                    ``(A) 95 percent of the grant funds shall be--
                            ``(i) used to cover the unmet need for 
                        financial assistance to attend the institution 
                        of students who have not yet earned a 
                        bachelor's degree; and
                            ``(ii) disbursed according to financial 
                        need.
                    ``(B) 5 percent of the grant funds shall be used 
                for the following activities:
                            ``(i) Increasing capacity through 
                        construction or renovation of facilities.
                            ``(ii) Hiring faculty.
                            ``(iii) Student support services.
                            ``(iv) Other activities to increase 
                        enrollment of low-income and underserved 
                        students, improve student outcomes, and provide 
                        information to prospective students and 
                        families, and other activities as approved by 
                        the Secretary to improve access, affordability, 
                        or quality of the education provided by the 
                        institution.
            ``(2) Prohibition on use of funds.--An eligible institution 
        that receives a grant under this section may not use grant 
        funds for endowments or the construction of athletic or 
        commercial venues.
    ``(f) Annual Update.--An eligible institution that receives a grant 
under this section shall submit to the Secretary an annual update--
            ``(1) with any changes to the institution's expenditures on 
        student instruction and academic support; and
            ``(2) on how the institution is fulfilling the terms of the 
        grant.
    ``(g) Terms of the Grant.--
            ``(1) Grantee commitment.--An eligible institution that 
        receives a grant under this section shall carry out the 
        following:
                    ``(A) Cap tuition and fees at the institution at 
                the level as of the date of enactment of the Debt-Free 
                College Act of 2021, with a yearly increase allowed 
                based on the Consumer Price Index (as determined by the 
                Secretary).
                    ``(B) Maintain expenditures on instruction and 
                academic support at the institution at a level that is 
                not less than the average of such expenditures at the 
                institution over the period of 3 years preceding the 
                date of enactment of the Debt-Free College Act of 2021.
                    ``(C) Maintain the enrollment of low-income 
                students, as defined by the Secretary, at the 
                institution at a level that is not less than the level 
                of such enrollment as of the date of enactment of the 
                Debt-Free College Act of 2021.
                    ``(D) Maintain institutional aid at a level that is 
                not less than the average of such aid over the period 
                of 3 years preceding the date of enactment of the Debt-
                Free College Act of 2021.
                    ``(E) Submit to the Secretary for approval the 
                institution's calculation of the cost of attendance at 
                such institution.
                    ``(F) Clearly communicate to prospective students 
                and their families the following:
                            ``(i) How students can attend the 
                        institution without debt.
                            ``(ii) That a debt-free college education 
                        provided pursuant to this section is 
                        conditioned upon institutional eligibility and 
                        participation under this section and may not 
                        apply for each year that the student is 
                        enrolled at the institution.
            ``(2) Breach of terms of grant.--
                    ``(A) In general.--If an eligible institution that 
                receives a grant under this section breaches a term of 
                the grant, the Partnership Office created under section 
                499A-4(a) shall notify the institution and provide the 
                institution with an opportunity to correct the record 
                or cure the breach not later than 30 days after the 
                date of the notification.
                    ``(B) Recommendation.--The Partnership Office 
                created under section 499A-4(a) shall, after 
                considering the eligible institution's response to a 
                notification under subparagraph (A) or lack of 
                response, make a recommendation to the Secretary that 
                the Secretary--
                            ``(i) take no action with respect to the 
                        eligible institution;
                            ``(ii) place the eligible institution on 
                        probation; or
                            ``(iii) revoke the eligible institution's 
                        eligibility for the grant program under this 
                        section.
                    ``(C) Probation.--An eligible institution that is 
                placed on probation by the Secretary shall develop a 
                plan to remedy the breach of the term of the grant. If 
                the eligible institution does not remedy the breach, 
                the Secretary may levy a fine against the institution 
                of an amount not to exceed 1 percent of the annual 
                grant amount.
                    ``(D) Ineligibility.--If an eligible institution's 
                eligibility for the grant program under this section 
                has been revoked by the Secretary, such institution 
                shall--
                            ``(i) place into escrow any unexpended 
                        grant funds described in subsection (e)(1)(A) 
                        to be disbursed directly to students enrolled 
                        at the institution;
                            ``(ii) return to the Secretary any 
                        unexpended funds described in subsection 
                        (e)(1)(B);
                            ``(iii) remain ineligible to receive a 
                        grant under this section during the 3-year 
                        period after the date eligibility was revoked; 
                        and
                            ``(iv) notify prospective and enrolled 
                        students at the institution and their families 
                        of such ineligibility for participation in the 
                        grant program under this section.
    ``(h) Withdrawal.--An eligible institution that receives a grant 
under this section that intends to withdraw from the grant program 
under this section shall--
            ``(1) notify the Partnership Office created under section 
        499A-4(a) not less than 60 days prior to the withdrawal;
            ``(2) place into escrow any unexpended grant funds to be 
        disbursed directly to students enrolled at the institution; and
            ``(3) notify prospective and enrolled students at the 
        institution and their families of such withdrawal.
    ``(i) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        to carry out this section--
                    ``(A) $3,000,000,000 for fiscal year 2021; and
                    ``(B) such sums as may be necessary for each fiscal 
                years 2022 through 2031.
            ``(2) Availability.--Funds made available under paragraph 
        (1) shall be available for obligation through September 30 of 
        the fiscal year succeeding the fiscal year for which such sums 
        were appropriated.''.

SEC. 4. TITLE IV ELIGIBILITY FOR DREAMER STUDENTS.

    Section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) is 
amended--
            (1) in subsection (a)(5), by inserting ``, or be a Dreamer 
        student, as defined in subsection (u)'' after ``becoming a 
        citizen or permanent resident''; and
            (2) by adding at the end the following:
    ``(u) Dreamer Students.--
            ``(1) In general.--In this section, the term `Dreamer 
        student' means an individual who--
                    ``(A) was younger than 16 years of age on the date 
                on which the individual initially entered the United 
                States;
                    ``(B) has provided a list of each secondary school 
                that the student attended in the United States; and
                    ``(C)(i) has earned a high school diploma, the 
                recognized equivalent of such diploma from a secondary 
                school, or a high school equivalency diploma in the 
                United States or is scheduled to complete the 
                requirements for such a diploma or equivalent before 
                the next academic year begins;
                    ``(ii) has acquired a degree from an institution of 
                higher education or has completed not less than 2 years 
                in a program for a baccalaureate degree or higher 
                degree at an institution of higher education in the 
                United States and has made satisfactory academic 
                progress, as defined in subsection (c), during such 
                time period;
                    ``(iii) at any time was eligible for a grant of 
                deferred action under--
                            ``(I) the June 15, 2012, memorandum from 
                        the Secretary of Homeland Security entitled 
                        `Exercising Prosecutorial Discretion with 
                        Respect to Individuals Who Came to the United 
                        States as Children'; or
                            ``(II) the November 20, 2014, memorandum 
                        from the Secretary of Homeland Security 
                        entitled `Exercising Prosecutorial Discretion 
                        with Respect to Individuals Who Came to the 
                        United States as Children and with Respect to 
                        Certain Individuals Who Are the Parents of U.S. 
                        Citizens or Permanent Residents'; or
                    ``(iv) has served in the uniformed services, as 
                defined in section 101 of title 10, United States Code, 
                for not less than 4 years and, if discharged, received 
                an honorable discharge.
            ``(2) Hardship exception.--The Secretary shall issue 
        regulations that direct when the Department shall waive the 
        requirement of subparagraph (A) or (B), or both, of paragraph 
        (1) for an individual to qualify as a Dreamer student under 
        such paragraph, if the individual--
                    ``(A) demonstrates compelling circumstances for the 
                inability to satisfy the requirement of such 
                subparagraph (A) or (B), or both; and
                    ``(B) satisfies the requirement of paragraph 
                (1)(C).''.
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