Title: American Dream Accounts Act
Policy area: Education

Summary:
American Dream Accounts Act
This bill authorizes the Department of Education to award competitive grants to eligible entities for establishing and administering American Dream Accounts for a group of at least 30 low-income public school students who, at the time of the grant application, are attending a grade no higher than ninth grade. An American dream account is a personal online account for low-income students that: (1) monitors their progress toward higher education; (2) includes a college savings account; and (3) provides students with opportunities to attain financial literacy, learn about preparing for enrollment in an institute of higher education (IHE), and identify their skills or interests.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1205 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 1205

       To authorize the establishment of American Dream Accounts.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 23, 2017

 Mr. Coons (for himself and Mr. Rubio) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
       To authorize the establishment of American Dream Accounts.

    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 ``American Dream Accounts Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Only 9.8 out of every 100 individuals from low-income 
        families will graduate from an institution of higher education 
        before reaching the age of 24.
            (2) Lack of knowledge about how to apply to, and pay for, 
        an institution of higher education is a barrier for many low-
        income students and students who would be in the first 
        generation in their families to attend an institution of higher 
        education.
            (3) According to Public Agenda, most young adults give 
        secondary school counselors fair or poor ratings for advice 
        about attending an institution of higher education, including 
        advice about how to decide what institution of higher education 
        to attend, how to pay for higher education, what careers to 
        pursue, and how to apply to an institution of higher education.
            (4) More than 1,700,000 students fail to file the Free 
        Application for Federal Student Aid (FAFSA), and about one-
        third of such students would qualify for a Federal Pell Grant.
            (5) During the last 2 decades, costs of attending 
        institutions of higher education have increased dramatically, 
        but need-based financial aid has not kept pace with such 
        increasing costs.
            (6) CollegeBoard reports that the maximum Federal Pell 
        Grant covered 87 percent of the average tuition and fees for a 
        public 4-year institution of higher education in academic year 
        2003-2004 but only 60 percent in academic year 2016-2017.
            (7) Parental and youth college savings are strong 
        predictors of a youth's expectations about attendance at an 
        institution of higher education.
            (8) Only 32 percent of parents who earn less than $35,000 a 
        year are saving for their child's education at an institution 
        of higher education.
            (9) According to the Center for Social Development, 
        ``wilt'' occurs when a young person who expects to graduate 
        from a 4-year institution of higher education has not yet 
        attended such institution by the ages of 19 to 22.
            (10) Children who have savings dedicated for attendance at 
        an institution of higher education are 4 times more likely to 
        attend a 4-year institution of higher education and avoid 
        ``wilt''.
            (11) In 2013, only 2.5 percent of all families had a 529 
        college savings account and the majority of these families had 
        higher incomes. Only 0.3 percent of families with incomes in 
        the 0-49.9 percentile had a 529 college savings account.
            (12) According to the Center for Social Development, 
        compared to those without college savings, children from low- 
        and moderate-income households with college savings from $1 to 
        $499 were more than three times more likely to attend college 
        and more than four times more likely to graduate from college.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) American dream account.--The term ``American Dream 
        Account'' means a personal online account for low-income 
        students that monitors higher education readiness and includes 
        a college savings account.
            (2) Appropriate committees of congress.--The term 
        ``appropriate committees of Congress'' means the Committee on 
        Health, Education, Labor, and Pensions, the Committee on 
        Appropriations, and the Committee on Finance of the Senate, and 
        the Committee on Education and the Workforce, the Committee on 
        Appropriations, and the Committee on Ways and Means of the 
        House of Representatives, as well as any other committee of the 
        Senate or House of Representatives that the Secretary 
        determines appropriate.
            (3) Charter school.--The term ``charter school'' has the 
        meaning given such term in section 4310 of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 7221i).
            (4) College savings account.--The term ``college savings 
        account'' means a trust created or organized exclusively for 
        the purpose of paying the qualified expenses of only an 
        individual who, when the trust is created or organized, has not 
        obtained 18 years of age, if the written governing instrument 
        creating the trust contains the following requirements:
                    (A) The trustee is a federally insured financial 
                institution, or a State insured financial institution 
                if a federally insured financial institution is not 
                available.
                    (B) The assets of the trust will be invested in 
                accordance with the direction of the individual or of a 
                parent or guardian of the individual, after 
                consultation with the entity providing the initial 
                contribution to the trust or, if applicable, a matching 
                or other contribution for the individual.
                    (C) The assets of the trust will not be commingled 
                with other property except in a common trust fund or 
                common investment fund.
                    (D) Any amount in the trust that is attributable to 
                an account seed or matched deposit may be paid or 
                distributed from the trust only for the purpose of 
                paying qualified expenses of the individual.
            (5) Dual or concurrent enrollment program.--The term ``dual 
        or concurrent enrollment program'' has the meaning given such 
        term in section 8101 of the Elementary and Secondary Education 
        Act of 1965 (20 U.S.C. 7801).
            (6) Early college high school.--The term ``early college 
        high school'' has the meaning given such term in section 8101 
        of the Elementary and Secondary Education Act of 1965 (20 
        U.S.C. 7801).
            (7) Eligible entity.--The term ``eligible entity'' means--
                    (A) a State educational agency;
                    (B) a local educational agency, including a charter 
                school that operates as its own local educational 
                agency;
                    (C) a charter management organization or charter 
                school authorizer;
                    (D) an institution of higher education or a Tribal 
                College or University;
                    (E) a nonprofit organization;
                    (F) an entity with demonstrated experience in 
                educational savings or in assisting low-income students 
                to prepare for, and attend, an institution of higher 
                education;
                    (G) a consortium of 2 or more of the entities 
                described in subparagraphs (A) through (F); or
                    (H) a consortium of 1 or more of the entities 
                described in subparagraphs (A) through (F) and a public 
                school, a charter school, a school operated by the 
                Bureau of Indian Affairs, or a tribally controlled 
                school.
            (8) Institution of higher education.--The term 
        ``institution of higher education'' has the meaning given such 
        term in section 101(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1001(a)).
            (9) Local educational agency.--The term ``local educational 
        agency'' has the meaning given such term in section 8101 of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        7801).
            (10) Low-income student.--The term ``low-income student'' 
        means a student who is eligible to receive a free or reduced 
        price lunch under the Richard B. Russell National School Lunch 
        Act (42 U.S.C. 1751 et seq.).
            (11) Parent.--The term ``parent'' has the meaning given 
        such term in section 8101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 7801).
            (12) Qualified expenses.--The term ``qualified expenses'' 
        means, with respect to an individual, expenses that--
                    (A) are incurred after the individual receives a 
                secondary school diploma or its recognized equivalent; 
                and
                    (B) are associated with attending an institution of 
                higher education, including--
                            (i) tuition and fees;
                            (ii) room and board;
                            (iii) textbooks;
                            (iv) supplies and equipment; and
                            (v) Internet access.
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.
            (14) State educational agency.--The term ``State 
        educational agency'' has the meaning given such term in section 
        8101 of the Elementary and Secondary Education Act of 1965 (20 
        U.S.C. 7801).
            (15) Tribal college or university.--The term ``Tribal 
        College or University'' has the meaning given such term in 
        section 316(b) of the Higher Education Act of 1965 (20 U.S.C. 
        1059c(b)).
            (16) Tribally controlled school.--The term ``tribally 
        controlled school'' has the meaning given such term in section 
        5212 of the Tribally Controlled Schools Act of 1988 (25 U.S.C. 
        2511).

SEC. 4. GRANT PROGRAM.

    (a) Program Authorized.--The Secretary is authorized to award 
grants, on a competitive basis, to eligible entities to enable such 
eligible entities to establish and administer American Dream Accounts 
for a group of low-income students.
    (b) Reservation.--From the amounts appropriated each fiscal year to 
carry out this Act, the Secretary shall reserve not more than 5 percent 
of such amount to carry out the evaluation activities described in 
section 7.
    (c) Duration.--A grant awarded under this Act shall be for a period 
of not more than 3 years. The Secretary may extend such grant for an 
additional 2-year period if the Secretary determines that the eligible 
entity has demonstrated significant progress, based on the factors 
described in section 5(b)(11).

SEC. 5. APPLICATIONS; PRIORITY.

    (a) In General.--Each eligible entity desiring a grant under this 
Act shall submit an application to the Secretary at such time, in such 
manner, and containing such information as the Secretary may require.
    (b) Contents.--At a minimum, the application described in 
subsection (a) shall include the following:
            (1) A description of the characteristics of a group of not 
        less than 30 low-income public school students who--
                    (A) are, at the time of the application, attending 
                a grade not higher than grade 9; and
                    (B) will, under the grant, receive an American 
                Dream Account.
            (2) A description of how the eligible entity will engage, 
        and provide support (such as tutoring and mentoring for 
        students, and training for teachers and other stakeholders) 
        either online or in person, to--
                    (A) the students in the group described in 
                paragraph (1);
                    (B) the family members and teachers of such 
                students; and
                    (C) other stakeholders such as school 
                administrators and school counselors.
            (3) An identification of partners who will assist the 
        eligible entity in establishing and sustaining American Dream 
        Accounts.
            (4) A description of what experience the eligible entity or 
        the partners of the eligible entity have in managing college 
        savings accounts, preparing low-income students for 
        postsecondary education, managing online systems, and building 
        financial capability.
            (5) A demonstration that the eligible entity has sufficient 
        resources to provide an initial deposit into the college 
        savings account portion of each American Dream Account.
            (6) A description of how the eligible entity will help 
        increase the value of the college savings account portion of 
        each American Dream Account, such as by providing matching 
        funds or incentives for academic achievement.
            (7) A description of how the eligible entity will notify 
        each participating student in the group described in paragraph 
        (1), on a semiannual basis, of the current balance and status 
        of the college savings account portion of the American Dream 
        Account of the student.
            (8) A plan that describes how the eligible entity will 
        monitor participating students in the group described in 
        paragraph (1) to ensure that the American Dream Account of each 
        student will be maintained if a student in such group changes 
        schools before graduating from secondary school.
            (9) A plan that describes how the American Dream Accounts 
        will be managed for not less than 1 year after a majority of 
        the students in the group described in paragraph (1) graduate 
        from secondary school.
            (10) A description of how the eligible entity will 
        encourage students in the group described in paragraph (1) who 
        fail to graduate from secondary school to continue their 
        education.
            (11) A description of how the eligible entity will evaluate 
        the grant program, including by collecting, as applicable, the 
        following data about the students in the group described in 
        paragraph (1) during the grant period, or until the time of 
        graduation from a secondary school, whichever comes first, and, 
        if sufficient grant funds are available, after the grant 
        period:
                    (A) Attendance rates.
                    (B) Progress reports.
                    (C) Grades and course selections.
                    (D) The four-year adjusted cohort graduation rate, 
                as defined in section in section 8101 of the Elementary 
                and Secondary Education Act of 1965 (20 U.S.C. 7801).
                    (E) Rates of student completion of the Free 
                Application for Federal Student Aid described in 
                section 483 of the Higher Education Act of 1965 (20 
                U.S.C. 1090).
                    (F) Rates of enrollment in an institution of higher 
                education.
                    (G) Rates of completion at an institution of higher 
                education.
            (12) A description of what will happen to the funds in the 
        college savings account portion of the American Dream Accounts 
        that are dedicated to participating students described in 
        paragraph (1) who have not matriculated at an institution of 
        higher education at the time of the conclusion of the period of 
        American Dream Account management described in paragraph (9), 
        including how the eligible entity will give students this 
        information.
            (13) A description of how the eligible entity will ensure 
        that participating students described in paragraph (1) will 
        have access to the Internet.
            (14) A description of how the eligible entity will take 
        into consideration how funds in the college savings account 
        portion of American Dream Accounts will affect participating 
        families' eligibility for public assistance.
    (c) Priority.--In awarding grants under this Act, the Secretary 
shall give priority to applications from eligible entities that--
            (1) are described in subparagraph (G) or (H) of section 
        3(7);
            (2) serve the largest number of low-income students;
            (3) in the case of an eligible entity described in 
        subparagraph (A) or (B) of section 3(7), provide opportunities 
        for participating students described in subsection (b)(1) to 
        participate in a dual or concurrent enrollment program or early 
        college high school program at no cost to the student or the 
        student's family; or
            (4) as of the time of application, have been awarded a 
        grant under chapter 2 of subpart 2 of part A of title IV of the 
        Higher Education Act of 1965 (20 U.S.C. 1070a-21 et seq.) 
        (commonly referred to as the ``GEAR UP program'').

SEC. 6. AUTHORIZED ACTIVITIES.

    (a) In General.--An eligible entity that receives a grant under 
this Act shall use such grant funds to establish an American Dream 
Account for each participating student described in section 5(b)(1), 
that will be used to--
            (1) open a college savings account for such student;
            (2) monitor the progress of such student online, which--
                    (A) shall include monitoring student data relating 
                to--
                            (i) grades and course selections;
                            (ii) progress reports; and
                            (iii) attendance and disciplinary records; 
                        and
                    (B) may also include monitoring student data 
                relating to a broad range of information, provided by 
                teachers and family members, related to postsecondary 
                education readiness, access, and completion;
            (3) provide opportunities for such students, either online 
        or in person, to build financial capability, including by--
                    (A) assisting such students in financial planning 
                for enrollment in an institution of higher education;
                    (B) assisting such students in identifying and 
                applying for financial aid (such as loans, grants, and 
                scholarships) for an institution of higher education; 
                and
                    (C) enhancing student understanding of consumer, 
                economic, and personal finance concepts;
            (4) provide opportunities for such students, either online 
        or in person, to learn about preparing for enrollment in an 
        institution of higher education, including by providing 
        instruction to students about--
                    (A) choosing the appropriate courses to prepare for 
                postsecondary education;
                    (B) applying to an institution of higher education;
                    (C) building a student portfolio, which may be used 
                when applying to an institution of higher education;
                    (D) selecting an institution of higher education;
                    (E) choosing a major for the student's 
                postsecondary program of education or a career path; 
                and
                    (F) adapting to life at an institution of higher 
                education; and
            (5) provide opportunities for such students, either online 
        or in person, to identify skills or interests, including career 
        interests.
    (b) Access to American Dream Account.--
            (1) In general.--Subject to paragraphs (3) and (4), and in 
        accordance with applicable Federal laws and regulations 
        relating to privacy of information and the privacy of children, 
        an eligible entity that receives a grant under this Act shall 
        allow vested stakeholders, as described in paragraph (2), to 
        have secure access, through an Internet website, to an American 
        Dream Account.
            (2) Vested stakeholders.--The vested stakeholders that an 
        eligible entity shall permit to access an American Dream 
        Account are individuals (such as the student's teachers, school 
        counselors, school administrators, or other individuals) that 
        are designated, in accordance with section 444 of the General 
        Education Provisions Act (20 U.S.C. 1232g, commonly known as 
        the ``Family Educational Rights and Privacy Act of 1974''), by 
        the parent of a participating student in whose name such 
        American Dream Account is held, as having permission to access 
        the account. A student's parent may withdraw such designation 
        from an individual at any time.
            (3) Exception for college savings account.--An eligible 
        entity that receives a grant under this Act shall not be 
        required to give vested stakeholders, as described in paragraph 
        (2), access to the college savings account portion of a 
        student's American Dream Account.
            (4) Adult students.--Notwithstanding paragraphs (1), (2), 
        and (3), if a participating student is age 18 or older, an 
        eligible entity that receives a grant under this Act shall not 
        provide access to such participating student's American Dream 
        Account without the student's consent, in accordance with 
        section 444 of the General Education Provisions Act (20 U.S.C. 
        1232g, commonly known as the ``Family Educational Rights and 
        Privacy Act of 1974'').
            (5) Input of student information.--Student data collected 
        pursuant to subsection (a)(2)(A) shall be entered into an 
        American Dream Account only by a school administrator or the 
        designee of such administrator.
    (c) Prohibition on Use of Student Information.--An eligible entity 
that receives a grant under this Act shall not use any student-level 
information or data for the purpose of soliciting, advertising, or 
marketing any financial or non-financial consumer product or service 
that is offered by such eligible entity, or on behalf of any other 
person.
    (d) Prohibition on the Use of Grant Funds.--An eligible entity 
shall not use grant funds provided under this Act to provide the 
initial deposit into a college savings account portion of a student's 
American Dream Account.

SEC. 7. REPORTS AND EVALUATIONS.

    (a) In General.--Not later than 1 year after the Secretary has 
disbursed grants under this Act, and annually thereafter until each 
grant disbursed under this Act has ended, the Secretary shall prepare 
and submit a report to the appropriate committees of Congress, which 
shall include an evaluation of the effectiveness of the grant program 
established under this Act, including in building financial capability.
    (b) Contents.--The report described in subsection (a) shall--
            (1) list the grants that have been awarded under section 
        4(a);
            (2) include the number of students who have an American 
        Dream Account established through a grant awarded under section 
        4(a);
            (3) provide data (including the interest accrued on college 
        savings accounts that are part of an American Dream Account) in 
        the aggregate, regarding students who have an American Dream 
        Account established through a grant awarded under section 4(a), 
        as compared to similarly situated students who do not have an 
        American Dream Account;
            (4) identify best practices developed by the eligible 
        entities receiving grants under this Act;
            (5) identify any issues related to student privacy and 
        stakeholder accessibility to American Dream Accounts;
            (6) provide feedback from participating students and the 
        parents of such students about the grant program, including--
                    (A) the impact of the program;
                    (B) aspects of the program that are successful;
                    (C) aspects of the program that are not successful; 
                and
                    (D) any other data required by the Secretary; and
            (7) provide recommendations for expanding the American 
        Dream Accounts program.

SEC. 8. ELIGIBILITY TO RECEIVE FEDERAL STUDENT FINANCIAL AID.

    Notwithstanding any other provision of law, any funds that are in 
the college savings account portion of a student's American Dream 
Account shall not affect such student's eligibility to receive Federal 
student financial aid, including any Federal student financial aid 
under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), and 
shall not be considered in determining the amount of any such Federal 
student aid.

SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this Act such 
sums as may be necessary for fiscal year 2018 and each of the 4 
succeeding fiscal years.
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