Title: Pell Grant Preservation and Expansion Act of 2021
Policy area: Education

Summary:
Pell Grant Preservation and Expansion Act of 2021
This bill makes various changes to the Federal Pell Grant program, including by expanding student eligibility for Pell Grants. The bill also revises student eligibility for federal student-aid programs.
Specifically, the bill provides funding to increase the maximum Pell Grant award for each eligible student. Further, the bill requires the award amount to be adjusted for inflation.
Next, the bill allows students who receive means-tested federal benefits (e.g., Medicaid) to automatically qualify for the maximum Pell Grant award plus an additional award amount.
In addition, the bill moves the Iraq and Afghanistan Service Grant program into the Pell Grant program.
Next, the bill raises from 12 to 18 the total number of semesters during which a student may receive a Pell Grant.
The bill makes Dreamer students (i.e., students who have been granted Deferred Action for Childhood Arrivals status) who entered the United States before the age of 18 and who meet certain educational criteria eligible for federal financial aid.
The bill also revises satisfactory academic progress requirements for federal student-aid programs, including by allowing a student who has not been enrolled in an institution of higher education for two years to regain eligibility for federal student aid.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3946 Introduced in House (IH)]

<DOC>






117th CONGRESS
  1st Session
                                H. R. 3946

  To improve the structure of the Federal Pell Grant program, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 16, 2021

Mr. Pocan (for himself, Mr. Scott of Virginia, Mr. Kilmer, Mr. Suozzi, 
  Mr. Smith of Washington, Mr. Michael F. Doyle of Pennsylvania, Mr. 
   Tonko, Ms. Norton, Mrs. Demings, Mr. Carson, Ms. Bush, Ms. Lee of 
California, Mr. Morelle, Mr. Welch, Mr. Lawson of Florida, Mr. Khanna, 
  Mrs. Beatty, Ms. Ross, Mr. Auchincloss, Mr. Takano, Ms. Omar, Mrs. 
Hayes, Ms. Tlaib, Mr. DeSaulnier, Mr. Langevin, Ms. Matsui, Mr. Nadler, 
Mr. Espaillat, Mr. Thompson of Mississippi, Ms. Wilson of Florida, Mr. 
 Levin of Michigan, Mr. Gallego, Ms. Bonamici, Ms. Meng, Mrs. McBath, 
 Mr. Sablan, Mr. Cardenas, Ms. Schakowsky, Mr. Raskin, Mr. Mfume, Mr. 
   Jones, Ms. Roybal-Allard, Mrs. Watson Coleman, Mr. Swalwell, Mr. 
Grijalva, Mr. Brendan F. Boyle of Pennsylvania, Ms. Newman, Ms. Johnson 
   of Texas, Mr. Blumenauer, Mr. Garamendi, Mr. Courtney, Ms. Leger 
Fernandez, Ms. Jayapal, Mr. Evans, Mr. Sires, Mr. Cicilline, Mr. Danny 
K. Davis of Illinois, and Mr. Lowenthal) introduced the following bill; 
  which was referred to the Committee on Education and Labor, and in 
      addition to the Committee on the Budget, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
  To improve the structure of the Federal Pell Grant program, 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 ``Pell Grant Preservation and 
Expansion Act of 2021''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The United States needs individuals with the knowledge, 
        skills, and abilities that enable them to thrive as educated 
        citizens in society and successfully participate in an 
        interconnected economy.
            (2) Investments in higher education through student aid 
        such as the Federal Pell Grant program under section 401 of the 
        Higher Education Act of 1965 (20 U.S.C. 1070a) help students 
        and families reach, afford, and complete education and training 
        opportunities beyond high school.
            (3) The Federal Pell Grant program is the largest source of 
        federally funded grant aid for postsecondary education.
            (4) The Federal Pell Grant program allows millions of 
        people of the United States to attend college and is especially 
        vital for students of color. Three in 5 African American 
        undergraduate students, and one-half of all Latino 
        undergraduate students, rely on the Federal Pell Grant program.
            (5) The Federal Pell Grant program should continue to be a 
        reliable source of funding for aspiring students, their 
        families, and future generations that they can count on to be 
        there for them when they seek higher education.
            (6) To stabilize Federal Pell Grant funding and ensure the 
        grant will continue to serve millions of students now and in 
        the future, the program should become a fully mandatory program 
        that grows with inflation.
            (7) Restoring prior eligibility cuts and expanding access 
        to underserved students will give millions of students and 
        families the critical student aid support they need and 
        deserve.

SEC. 3. TABLE OF CONTENTS; REFERENCES.

    (a) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title.
Sec. 2. Findings.
Sec. 3. Table of contents; references.
Sec. 4. Doubling Federal Pell Grants and providing all Federal Pell 
                            Grants through mandatory funding.
Sec. 5. Providing increased Federal Pell Grants and other assistance 
                            for recipients of means-tested benefits.
Sec. 6. Federal Pell Grant eligibility for dreamer students.
Sec. 7. Providing Federal Pell Grants for dependents of fallen heroes.
Sec. 8. Restoring the total semesters of Federal Pell Grant 
                            eligibility.
Sec. 9. Reducing financial aid penalties from satisfactory academic 
                            progress determinations.
Sec. 10. Conforming amendments.
Sec. 11. Effective date.
    (b) References.--Except as otherwise expressly provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

SEC. 4. DOUBLING FEDERAL PELL GRANTS AND PROVIDING ALL FEDERAL PELL 
              GRANTS THROUGH MANDATORY FUNDING.

    (a) Amount of Minimum Federal Pell Grants.--Section 401 (20 U.S.C. 
1070a), as amended by section 703 of the FAFSA Simplification Act 
(title VII of division FF of Public Law 116-260) (referred to in this 
Act as the ``FAFSA Simplification Act''), is further amended--
            (1) in subsection (a)(2)(F), by striking ``10 percent'' and 
        inserting ``5 percent'';
            (2) in subsection (b)--
                    (A) in paragraph (1)(B)(i), by striking ``paragraph 
                (5)(A)'' and inserting ``paragraph (5)'';
                    (B) by striking paragraph (5) and inserting the 
                following:
            ``(5) Maximum federal pell grant.--
                    ``(A) Award year 2023-2024.--For award year 2023-
                2024, the total maximum Federal Pell Grant award shall 
                be $9,000.
                    ``(B) Award year 2024-2025.--For award year 2024-
                2025, the total maximum Federal Pell Grant award shall 
                be $10,000.
                    ``(C) Award year 2025-2026.--For award year 2025-
                2026, the total maximum Federal Pell Grant award shall 
                be $11,000.
                    ``(D) Award year 2026-2027.--For award year 2026-
                2027, the total maximum Federal Pell Grant award shall 
                be $12,000.
                    ``(E) Award year 2027-2028.--For award year 2027-
                2028, the total maximum Federal Pell Grant award shall 
                be $13,000.
                    ``(F) Award year 2028-2029 and subsequent years.--
                For award year 2028-2029, and each subsequent award 
                year, the total maximum Federal Pell Grant award shall 
                be $13,000--
                            ``(i) increased by the adjustment 
                        percentage for the award year for which the 
                        amount under this subparagraph is being 
                        determined; and
                            ``(ii) rounded to the nearest $50.
                    ``(G) Definition of adjustment percentage.--In this 
                paragraph, the term `adjustment percentage,' as applied 
                to an award year, is equal to the percentage increase 
                in the Consumer Price Index, as defined in section 
                478(f), between April 2026 and the April in the year 
                prior to the beginning of the award year.'';
                    (C) by striking paragraphs (6) and (7) and 
                inserting the following:
            ``(6) Appropriation of funds.--There are authorized to be 
        appropriated, and there are appropriated, out of any money in 
        the Treasury not otherwise appropriated, such sums as may be 
        necessary for fiscal year 2023 and each subsequent fiscal year 
        to provide the total maximum Federal Pell Grant for which a 
        student shall be eligible under this section during an award 
        year.''; and
                    (D) by redesignating paragraphs (8) and (9) as 
                paragraphs (7) and (8), respectively;
            (3) in subsection (d)(5)(B)(ii)--
                    (A) in subclause (I)(bb), by striking ``or'' after 
                the semicolon;
                    (B) in subclause (II)(bb)(CC), by striking the 
                period and inserting ``; or''; and
                    (C) by adding at the end the following:
                                    ``(III) during a period for which 
                                the student did not receive a loan 
                                under this title but for which, if the 
                                student had received such a loan, the 
                                student would have qualified for loan 
                                forgiveness under subclause 
                                (II)(bb)(CC).'';
            (4) by striking subsections (g) and (h); and
            (5) by redesignating subsections (i) and (j) as subsections 
        (g) and (h), respectively.
    (b) Repeal of Scoring Requirement.--
            (1) In general.--Section 406 of H. Con. Res. 95 (109th 
        Congress) is amended--
                    (A) by striking subsection (b); and
                    (B) by striking ``(a) In General.--Upon'' and 
                inserting the following: ``Upon''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect beginning on July 1, 2023.
    (c) Adjustment for Award Year 2022-2023.--Notwithstanding section 
401(b)(7)(C)(iii) of the Higher Education Act of 1965 (20 U.S.C. 
1070a(b)(7)(C)(iii)), the amount determined under such clause for 
purposes of section 401(b)(7)(B)(iii) of such Act for award year 2022-
2023 shall be $2,535.

SEC. 5. PROVIDING INCREASED FEDERAL PELL GRANTS AND OTHER ASSISTANCE 
              FOR RECIPIENTS OF MEANS-TESTED BENEFITS.

    (a) Increased Amount of Maximum Federal Pell Grants for Students 
With Negative Student Aid Indexes.--Section 401(b)(1) (20 U.S.C. 
1070a(b)(1)), as amended by section 4 and section 703 of the FAFSA 
Simplification Act, is further amended--
            (1) in subparagraph (A)--
                    (A) in the matter preceding clause (i), by striking 
                ``A student'' and inserting ``Except in the case of a 
                student with a student aid index of less than zero, a 
                student'';
                    (B) by striking clause (i); and
                    (C) by redesignating clauses (ii) and (iii) as 
                clauses (i) and (ii), respectively;
            (2) by redesignating subparagraphs (B) through (E) as 
        subparagraphs (C) through (F), respectively;
            (3) by inserting after subparagraph (A) the following:
                    ``(B) A student with a student aid index of less 
                than zero shall receive a Federal Pell Grant award that 
                exceeds the total maximum Federal Pell Grant by an 
                amount equal to the amount by which the student's 
                student aid index is less than zero.'';
            (4) in subparagraph (C), as redesignated by paragraph (2)--
                    (A) in the matter preceding clause (i), by striking 
                ``subparagraph (A) for an academic year,'' and 
                inserting ``subparagraph (A), or an increased Federal 
                Pell Grant under subparagraph (B), for an academic 
                year,''; and
                    (B) in clause (ii), by striking ``, except that a 
                student aid index of less than zero shall be considered 
                to be zero for the purposes of this clause'';
            (5) in subparagraph (D), as redesignated by paragraph (2), 
        by striking ``(A) or (B)'' and inserting ``(A), (B), or (C)'';
            (6) in subparagraph (E), as redesignated by paragraph (2), 
        by inserting ``or an increased Federal Pell Grant under 
        subparagraph (B)'' after ``subparagraph (A)''; or
            (7) in subparagraph (F), as redesignated by paragraph (2), 
        by striking ``or a minimum Federal Pell Grant under 
        subparagraph (C)'' and inserting ``an increased Federal Pell 
        Grant under subparagraph (B), or a minimum Federal Pell Grant 
        under subparagraph (D)''.
    (b) Special Student Aid Index Rule for Recipients of Means-Tested 
Benefits.--Section 473 (20 U.S.C. 1087mm), as amended by section 702(b) 
of the FAFSA Simplification Act, is further amended by adding at the 
end the following:
    ``(d) Special Rule for Means-Tested Benefit Recipients.--
Notwithstanding subsection (b), for an applicant (or, as applicable, an 
applicant and spouse, or an applicant's parents) who, at any time 
during the previous 24-month period, received a benefit under a means-
tested Federal benefit program (or whose parent or spouse received such 
a benefit, as applicable), the Secretary shall for the purposes of this 
title consider the student aid index as equal to -$1,500 for the 
applicant.''.

SEC. 6. FEDERAL PELL GRANT ELIGIBILITY FOR DREAMER STUDENTS.

    Section 484 (20 U.S.C. 1091), as amended by section 702(n) of the 
FAFSA Simplification Act, is further 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)(i) is not a citizen or national of the United 
                States; and
                    ``(ii) is inadmissible or deportable under the 
                Immigration and Nationality Act (8 U.S.C. 1101 et 
                seq.)); and
                    ``(B)(i) in the case of such an individual who was 
                younger than 18 years of age on the date on which the 
                individual initially entered the United States--
                            ``(I) has earned a high school diploma, the 
                        recognized equivalent of such diploma from a 
                        secondary school, or a high school equivalency 
                        diploma recognized by State law, or is 
                        scheduled to complete the requirements for such 
                        a diploma or equivalent before the next 
                        academic year begins;
                            ``(II) is enrolled at an institution of 
                        higher education pursuant to subsection (d);
                            ``(III) has served in the uniformed 
                        services (as such term is defined in section 
                        101 of title 10, United States Code) for not 
                        less than 2 years and, if discharged, received 
                        an honorable discharge;
                            ``(IV) has acquired a degree, certificate, 
                        or recognized postsecondary credential from an 
                        institution of higher education or area career 
                        and technical education school (as such term is 
                        defined in section 3 of the Carl D. Perkins 
                        Career and Technical Education Act of 2006 (20 
                        U.S.C. 2302)); or
                            ``(V) has completed not less than 2 years 
                        in a postsecondary program at an institution of 
                        higher education, or area career and technical 
                        education school, in the United States and has 
                        made satisfactory academic progress, as defined 
                        in subsection (c), during such time period; or
                    ``(ii)(I) is, or at any time was, eligible for a 
                grant of deferred action pursuant to--
                            ``(aa) the memorandum of the Department of 
                        Homeland Security entitled `Exercising 
                        Prosecutorial Discretion with Respect to 
                        Individuals Who Came to the United States as 
                        Children' issued on June 15, 2012; or
                            ``(bb) the memorandum of the Department 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' issued on 
                        November 20, 2014; or
                    ``(II) would have been eligible for such a grant of 
                deferred action if the applicable memorandum described 
                in subclause (I) had been fully in effect since the 
                date on which it was issued.
            ``(2) Hardship exception.--The Secretary shall issue 
        regulations that direct when the Department shall waive the age 
        requirement of paragraph (1)(B)(i) for an individual to qualify 
        as a Dreamer student under such paragraph, if the individual 
        demonstrates compelling circumstances.''.

SEC. 7. PROVIDING FEDERAL PELL GRANTS FOR DEPENDENTS OF FALLEN HEROES.

    (a) In General.--Part A of title IV (20 U.S.C. 1070 et seq.), as 
amended by section 703 of the FAFSA Simplification Act, is amended--
            (1) in section 401--
                    (A) in subsection (c)--
                            (i) in paragraph (2)--
                                    (I) by striking subparagraph (A); 
                                and
                                    (II) by redesignating subparagraphs 
                                (B) and (C) as subparagraphs (A) and 
                                (B), respectively;
                            (ii) in paragraph (3), by striking 
                        ``(2)(B)(i)'' and inserting ``(2)(A)(i)'';
                            (iii) by redesignating paragraph (5) as 
                        paragraph (7); and
                            (iv) by inserting after paragraph (4) the 
                        following:
            ``(5) Prevention of double benefits.--No eligible student 
        described in paragraph (2) may receive a grant under both this 
        subsection and subsection (b) concurrently.
            ``(6) Terms and conditions.--The Secretary shall award 
        grants under this subsection in the same manner and with the 
        same terms and conditions, including the length of the period 
        of eligibility, as the Secretary awards Federal Pell Grants 
        under subsection (b), except that--
                    ``(A) the award rules and determination of need 
                applicable to the calculation of Federal Pell Grants 
                under subsection (b)(1) shall not apply to grants made 
                under this subsection; and
                    ``(B) the maximum period determined under 
                subsection (d)(5) shall be determined by including all 
                grants made under this section received by the eligible 
                student and all grants so received under subpart 10 
                before the effective date of this subsection.''; and
            (2) by striking subpart 10 of part A (20 U.S.C. 1070h).
    (b) Transition.--The Secretary shall take such steps as are 
necessary to transition from the Iraq and Afghanistan Service Grants 
program under subpart 10 of part A of title IV of the Higher Education 
Act of 1965 (20 U.S.C. 1070h), as in effect on the day before the 
effective date of this section, and the provision of Federal Pell 
Grants under section 401(c) of the Higher Education Act of 1965 (20 
U.S.C. 1070a(c)), as amended by the FAFSA Simplification Act and this 
section.

SEC. 8. RESTORING THE TOTAL SEMESTERS OF FEDERAL PELL GRANT 
              ELIGIBILITY.

    Section 401(c)(5)(A), as added by section 703 of the FAFSA 
Simplification Act, is amended by striking ``12'' each place the term 
appears and inserting ``18''.

SEC. 9. REDUCING FINANCIAL AID PENALTIES FROM SATISFACTORY ACADEMIC 
              PROGRESS DETERMINATIONS.

    Section 484(c) of the Higher Education Act of 1965 (20 U.S.C. 
1091(c)) is amended to read as follows:
    ``(c) Satisfactory Progress.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Appeal.--The term `appeal' means a process by 
                which a student who is not meeting the institution's 
                satisfactory academic progress standards petitions the 
                institution for reconsideration of the student's 
                eligibility for assistance under this title.
                    ``(B) Financial aid probation.--The term `financial 
                aid probation' means a status assigned by an 
                institution to a student who fails to make satisfactory 
                academic progress and who has appealed and has had 
                eligibility for aid reinstated.
                    ``(C) Financial aid warning.--The term `financial 
                aid warning' means a status assigned to a student who 
                fails to make satisfactory academic progress at the end 
                of the semester or equivalent period in which the 
                student first fails to make such progress.
                    ``(D) Payment period.--The term `payment period' 
                means the applicable payment period described in 
                section 668.4 of title 34, Code of Federal Regulations, 
                or any successor regulation.
            ``(2) Satisfactory academic progress policy.--An 
        institution shall establish a reasonable satisfactory academic 
        progress policy for determining whether an otherwise eligible 
        student is making satisfactory academic progress in the 
        student's educational program and may receive assistance under 
        this title. The Secretary shall consider the institution's 
        policy to be reasonable if--
                    ``(A) the policy is at least as strict as the 
                policy the institution applies to a student who is not 
                receiving assistance under this title;
                    ``(B) the policy provides for consistent 
                application of standards to all students, including 
                full-time, part-time, undergraduate, and graduate 
                students, and all educational programs established by 
                the institution;
                    ``(C)(i) the policy specifies the grade point 
                average that a student must achieve at each evaluation, 
                or if a grade point average is not an appropriate 
                qualitative measure, a comparable assessment measured 
                against a norm; and
                    ``(ii) if a student is enrolled in an educational 
                program of more than 2 academic years, the policy 
                specifies that at the end of the second academic year, 
                the student must have a grade point average of at least 
                a `C' or its equivalent, or have academic standing 
                consistent with the institution's requirements for 
                graduation;
                    ``(D) the policy provides for measurement of the 
                student's progress at each evaluation;
                    ``(E) the policy describes--
                            ``(i) how a student's grade point average 
                        and the pace at which the student progresses 
                        toward completion are affected by course 
                        incompletes, withdrawals, or repetitions, or 
                        transfers of credit from other institutions, 
                        including that credit hours from another 
                        institution that are accepted toward the 
                        student's educational program are counted as 
                        both attempted and completed hours; and
                            ``(ii) how after a student reenrolls after 
                        the student's satisfactory academic progress 
                        was reset pursuant to paragraph (3)(B), the 
                        student may have any credits that were earned 
                        before the student was determined not to be 
                        making satisfactory academic progress counted 
                        for purposes of determining progress when the 
                        student reenrolls, but any attempted hours that 
                        were not earned by the student (including 
                        incompletes, withdrawn courses, and failed 
                        courses) before the student was determined not 
                        to be making satisfactory academic progress 
                        will not negatively impact the determination of 
                        whether the student made satisfactory academic 
                        progress after such reset;
                    ``(F) the policy provides that, except as provided 
                in subparagraph (G) with respect to a student placed on 
                financial aid warning or financial aid probation and 
                paragraph (3), a student is no longer eligible to 
                receive assistance under this title if the student has 
                not achieved the required grade point average or who is 
                not making progress toward completion in the student's 
                educational program--
                            ``(i) at the time of each evaluation with 
                        respect to a student who is in an educational 
                        program of 2 academic years or less in length; 
                        or
                            ``(ii) at the end of the second academic 
                        year with respect to a student who is in an 
                        educational program of more than 2 academic 
                        years in length;
                    ``(G) the policy describes when students will be 
                placed on financial aid warning or financial aid 
                probation, in accordance with paragraph (4), and 
                provides that--
                            ``(i) a student on financial aid warning--
                                    ``(I) may receive assistance under 
                                this title for one payment period 
                                despite a determination that the 
                                student is not making satisfactory 
                                academic progress; and
                                    ``(II) may be assigned such status 
                                without an appeal or other action by 
                                the student; and
                            ``(ii)(I) a student on financial aid 
                        probation may receive assistance under this 
                        title for one payment period and the 
                        institution may require the student to fulfill 
                        specific terms and conditions, such as taking a 
                        reduced course load or enrolling in specific 
                        courses; and
                            ``(II) at the end of such one payment 
                        period, the student is required to meet the 
                        institution's satisfactory academic progress 
                        standards, or meet the requirements of the 
                        academic plan developed by the institution and 
                        the student, in order to qualify for continued 
                        assistance under this title;
                    ``(H) if the institution permits a student to 
                appeal a determination by the institution that the 
                student is not making satisfactory academic progress, 
                the policy describes--
                            ``(i) how the student may reestablish the 
                        student's eligibility to receive assistance 
                        under this title;
                            ``(ii) the basis on which the student may 
                        file an appeal, including because of the death 
                        of a relative, an injury or illness of the 
                        student, or another special circumstance; and
                            ``(iii) information the student is required 
                        to submit regarding why the student failed to 
                        make satisfactory academic progress, and what 
                        has changed in the student's situation that 
                        will allow the student to demonstrate 
                        satisfactory academic progress at the next 
                        evaluation;
                    ``(I) if the institution does not permit a student 
                to appeal a determination by the institution that the 
                student is not making satisfactory academic progress, 
                the policy describes how the student may reestablish 
                the student's eligibility to receive assistance under 
                this title;
                    ``(J) the policy provides for notification to 
                students of the results of an evaluation that impacts 
                the student's eligibility for assistance under this 
                title; and
                    ``(K) the policy does not impose satisfactory 
                progress limitations on need-based institutional aid 
                that are more stringent than the standard applied under 
                this subsection without demonstrating to the Secretary 
                the effectiveness of such limitations on improving 
                student persistence in, and completion of, 
                postsecondary study.
            ``(3) Regaining eligibility.--
                    ``(A) Students who remain in school.--Whenever a 
                student fails to meet the eligibility requirements of 
                subsection (a)(2) as a result of the application of 
                this subsection and, subsequent to that failure, the 
                student has academic standing for any grading period 
                consistent with the requirements for staying on track 
                to graduate within 150 percent of the published length 
                of the educational program, as determined by the 
                institution, the student shall again be eligible under 
                subsection (a)(2) for a grant, loan, or work assistance 
                under this title, as long as the student maintains 
                satisfactory academic progress under paragraph (2) 
                beginning on and after the date that the student 
                regains eligibility.
                    ``(B) Students who leave school.--
                            ``(i) In general.--If a student has not 
                        been enrolled in any institution of higher 
                        education for the immediately preceding 2 
                        years, any previous failure to meet the 
                        eligibility requirements of subsection (a)(2) 
                        shall not be used in any determination of 
                        eligibility of such student under such 
                        subsection. Such student shall, on the date of 
                        enrollment subsequent to such 2-year period, 
                        have the student's eligibility for a grant, 
                        loan, or work assistance under this title reset 
                        and be deemed as meeting the requirements 
                        described in paragraph (2). Beginning on and 
                        after such date, the student's satisfactory 
                        academic progress shall be determined in 
                        accordance with paragraph (2)(E)(ii).
                            ``(ii) Maximum number of resets.--A student 
                        shall be eligible for a reset of eligibility 
                        pursuant to this subparagraph not more than 2 
                        times.
                    ``(C) Duties of the secretary.--The Secretary 
                shall--
                            ``(i) send, to each student who failed to 
                        meet the eligibility requirements of subsection 
                        (a)(2) and who has not regained eligibility for 
                        a grant, loan, or work assistance under 
                        subparagraph (A), a notice, two years after 
                        such failure, that includes--
                                    ``(I) a notification that, if the 
                                student has not been enrolled in any 
                                institution of higher education for the 
                                preceding two years and has not 
                                received two resets of eligibility 
                                under subparagraph (B), the student may 
                                use grant, loan, or work assistance 
                                under this title for enrollment at any 
                                eligible institution, including an 
                                institution other than the institution 
                                in which the student was previously 
                                enrolled;
                                    ``(II) a notification that, if the 
                                student has remained enrolled, or 
                                resumed enrollment, at an institution 
                                of higher education, the student may be 
                                eligible for a grant, loan, or work 
                                assistance under this title subject to 
                                the requirements of subparagraph (A);
                                    ``(III) information on how many 
                                semesters of eligibility for a grant, 
                                loan, or work assistance under this 
                                title to which the student still has 
                                access; and
                                    ``(IV) a notification that the 
                                student should ask any prospective 
                                eligible institution how many of the 
                                student's previously completed credits 
                                the student would be able to transfer; 
                                and
                            ``(ii) submit an annual report to Congress 
                        on the outcomes of students who have received a 
                        reset of eligibility pursuant to this 
                        paragraph, including--
                                    ``(I) the number of students who 
                                reenroll in an eligible institution 
                                after such reset, disaggregated by race 
                                or ethnicity, sex, age, socioeconomic 
                                status, and disability status;
                                    ``(II) the 250 eligible 
                                institutions with the highest numbers 
                                of enrolled students receiving grant, 
                                loan, or work assistance under this 
                                title after such a reset;
                                    ``(III) the 250 eligible 
                                institutions with the highest share of 
                                enrolled students receiving grant, 
                                loan, or work assistance under this 
                                title after such a reset; and
                                    ``(IV) the average completion rate 
                                and time to completion for students who 
                                reenroll in an eligible institution 
                                after such reset, disaggregated by 
                                institution.
            ``(4) Evaluation of academic progress.--
                    ``(A) In general.--An institution that determines 
                that a student is not making satisfactory academic 
                progress under its policy may disburse funds provided 
                through student financial assistance programs under 
                this title (including work-study programs under 
                subtitle C) to the student in accordance with 
                subparagraphs (B), (C), and (D).
                    ``(B) Payment period following not making 
                satisfactory academic progress.--For the payment period 
                following the payment period in which a student did not 
                make satisfactory academic progress, the institution 
                shall place the student on financial aid warning and 
                disburse funds under this title to the student.
                    ``(C) Payment period following financial aid 
                warning.--For the payment period following a payment 
                period during which a student was on financial aid 
                warning, the institution may place the student on 
                financial aid probation, and disburse funds under this 
                title to the student if--
                            ``(i) the institution evaluates the 
                        student's progress and determines that student 
                        did not make satisfactory academic progress 
                        during the payment period the student was on 
                        financial aid warning;
                            ``(ii) the student appeals the 
                        determination; and
                            ``(iii)(I) the institution determines that 
                        the student should be able to meet the 
                        institution's satisfactory academic progress 
                        standards by the end of the subsequent payment 
                        period; or
                            ``(II) the institution develops an academic 
                        plan for the student that, if followed, will 
                        ensure that the student is able to meet the 
                        institution's satisfactory academic progress 
                        standards by a specific point in time.
                    ``(D) Payment period following financial aid 
                probation.--A student on financial aid probation for a 
                payment period may not receive funds under this title 
                for the subsequent payment period unless the student 
                makes satisfactory academic progress or the institution 
                determines that the student met the requirements 
                specified by the institution in the academic plan for 
                the student developed under subparagraph (C)(iii)(II).
                    ``(E) Frequency of academic progress evaluation and 
                communication.--
                            ``(i) In general.--Subject to clause (ii), 
                        for the purpose of determining whether 
                        presently enrolled students are maintaining 
                        satisfactory progress, each institution of 
                        higher education that enrolls students who 
                        receive any grant, loan, or work assistance 
                        under this title shall review the progress of 
                        such students at the end of each payment 
                        period.
                            ``(ii) Shorter payment periods.--For each 
                        institution described in clause (i) that has 
                        payment periods that are shorter than on the 
                        semester system basis (such as on a quarterly 
                        or trimester system basis or by clock hour 
                        program or non-term program), such institution 
                        shall review the progress of presently enrolled 
                        students at the end of each semester or 
                        equivalent period of 12 to 18 weeks.
                            ``(iii) Financial aid warning.--At the end 
                        of each payment period (or, in the case of an 
                        institution described in clause (ii), at the 
                        end of each semester or equivalent period), 
                        each institution shall send a financial aid 
                        warning to presently enrolled students that do 
                        not meet the grade point average requirement 
                        described in paragraph (2), or its equivalent 
                        or academic standing consistent with the 
                        requirements for graduation, as determined by 
                        the institution, that informs the students of 
                        their risk of being determined to not be 
                        maintaining satisfactory progress and therefore 
                        losing eligibility for grant, loan, or work 
                        assistance under this title and provides 
                        information on--
                                    ``(I) the specific criteria of the 
                                institution's academic requirements 
                                that the student is not meeting and the 
                                specific improvements needed to meet 
                                the requirements; and
                                    ``(II) how to meet with the 
                                student's academic advisor to get the 
                                academic support the student needs.
            ``(5) Detailing requirements to students.--Each institution 
        of higher education that enrolls students who receive any 
        grant, loan, or work assistance under this title shall detail 
        the institution's requirements regarding students maintaining 
        satisfactory academic progress--
                    ``(A) to such students before the students begin 
                classes at the institution through a detailed 
                communication that may be separate from a financial aid 
                offer; and
                    ``(B) on the financial aid webpage of the website 
                of the institution.
            ``(6) Consumer testing.--The Secretary--
                    ``(A) shall conduct consumer testing to develop 
                exemplary practices and templates--
                            ``(i) to support institutions of higher 
                        education in carrying out paragraph (5); and
                            ``(ii) which shall be available as 
                        resources for institutions of higher education; 
                        and
                    ``(B) shall not require the use of such practices 
                and templates by institutions of higher education.''.

SEC. 10. CONFORMING AMENDMENTS.

    The Act (20 U.S.C. 1001 et seq.) is amended--
            (1) in section 401A(d)(1)(B)(i) (20 U.S.C. 1070a-
        1(d)(1)(B)(i)), by striking ``section 401(b)(2)(B)'' and 
        inserting ``section 401(b)(2)'';
            (2) in section 402D(d)(1) (20 U.S.C. 1070a-14(d)(1))--
                    (A) by striking ``section 401(b)(2)(A)'' and 
                inserting ``section 401(b)(1)''; and
                    (B) by striking ``described in section 401(b)(4)'' 
                and inserting ``as defined in section 401(a)'';
            (3) in section 435(a)(5)(A)(i)(I) (20 U.S.C. 
        1085(a)(5)(A)(i)(I)), by striking ``under section 
        401(b)(2)(A)'' and inserting ``, as appropriate, under section 
        401(b)(2)(A) (as in effect on the day before the effective date 
        under section 701(b) of the FAFSA Simplification Act (title VII 
        of division FF of Public Law 116-260)) or section 401(b)(1)'';
            (4) in section 485E(b)(1)(A) (20 U.S.C. 1092f(b)(1)(A)), by 
        striking ``section 401(b)(2)(A)'' and inserting ``section 
        401(b)(1)''; and
            (5) in section 894(f)(2)(C)(ii)(I) (20 U.S.C. 
        1161y(f)(2)(C)(ii)(I)), by striking ``section 401(b)(2)(A)'' 
        and inserting ``section 401(b)(1)''.

SEC. 11. EFFECTIVE DATE.

    Except as otherwise provided, the amendments made by this Act shall 
take effect and apply as if included in section 703 of the FAFSA 
Simplification Act and in accordance with section 701(b) of such Act.
                                 <all>