To amend the Higher Education Act of 1965 to provide access and equity in higher education, and for other purposes.

March 15, 2005

Mr. ANDREWS (for himself, Mrs. MCCARTHY, Mr. HOLT, Mr. OWENS, Ms. HOOLEY, Mr. FATTAH, Mr. HINOJOSA, Mr. DAVIS of Tennessee, Mr. KANJORSKI, Mr. ROSS, Mr. MCDERMOTT, Mr. CASE, Mr. RUSH, Mr. GORDON, Mr. BERMAN, Mr. MEEKS of New York, Mr. NEAL of Massachusetts, Ms. MCCOLLUM of Minnesota, Mr. MICHAUD, Mr. WEXLER, Mr. CONYERS, Mr. ALLEN, Mr. POMEROY, and Mr. CARDIN) introduced the following bill; which was referred to the Committee on Education and the Workforce

To amend the Higher Education Act of 1965 to provide access and equity in higher education, 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; REFERENCES; EFFECTIVE DATE.

(a) Short Title- This Act may be cited as the `Access and Equity in Higher Education Act'.

(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.).

(c) Effective Date- Except as otherwise provided in this Act, the amendments made by this Act shall apply with respect to any loan for which the first disbursement of principal is made on or after the date of enactment of this Act.

TITLE I--STUDENT ASSISTANCE

SEC. 101. LOAN LIMITS.

(a) FFEL Loans-

(1) INCREASES IN SUBSIDIZED LOAN LIMITS- Section 428(b)(1) (20 U.S.C. 1078(b)(1)) is amended--

(A) in subparagraph (A)(i), by striking `$2,625' in subclause (I) and inserting `$4,000';

(B) in subparagraph (A)(ii), by striking `$3,500' in subclause (I) and inserting `$6,000';

(C) in subparagraph (A)(iii), by striking subclause (I) and inserting the following:

`(I) $20,000 minus any amount previously borrowed during any preceding academic year in such remainder of such program (but excluding amounts borrowed under clause (i) or (ii) for such first and second year); or';

(D) in subparagraph (A)(v), by striking `$8,500' and inserting `$10,000';

(E) in subparagraph (B)(i), by striking `$23,000' and inserting `$30,000'; and

(F) in subparagraph (B)(ii)--

(i) by striking `$65,500' and inserting `$60,000';

(ii) by striking `and (I) including' and inserting `but (I) excluding'; and

(iii) by striking `but (II)' and inserting `and (II)'.

(2) INCREASES IN UNSUBSIDIZED LOAN LIMITS- Section 428H(d)(1) (20 U.S.C. 1078-8(d)(1)) is amended--

(A) in subparagraph (A)(i), by striking `$4,000' and inserting `$5,500';

(B) in subparagraph (B)(i), by striking `$5,000' and inserting `$20,000 minus any amount previously borrowed during any preceding academic year in such remainder of such program (but excluding amounts borrowed under subparagraph (A) for such first and second year)'; and

(C) in subparagraph (C), by striking `$10,000' and inserting `$25,000 minus the amount borrowed for the same academic year in a subsidized loan under section 428 or part D'.

(3) AUTHORITY TO REDUCE LOAN LIMITS- Section 428(a)(2)(D) (20 U.S.C. 1078(a)(2)(D)) is amended by adding at the end the following new sentence: `An eligible institution may, in carrying out such subparagraphs, provide a statement which certifies the eligibility of a student for a loan amount that is less than such maximum amount, and that is less than the amount for which the student shows financial need, if the institution has established a lesser amount than such maximum amount as the loan limit applicable to the students attending such institution.'.

(4) CONFORMING AMENDMENTS TO FISL-

(A) ANNUAL LIMITS- Section 425(a)(1)(A) (20 U.S.C. 1075(a)(1)(A)) is amended--

(i) in clause (i)(I), by striking `$2,625' in subclause (I) and inserting `$4,000';

(ii) in clause (ii)(I), by striking `$3,500' in subclause (I) and inserting `$6,000';

(iii) in clause (iii), by striking subclause (I) and inserting the following:

`(I) $20,000 minus the amount previously borrowed during any preceding academic year in such remainder of such program (and excluding amounts borrowed under clause (i) or (ii) for such first and second year); or'; and

(iv) in clause (iv), by striking `$8,500' and inserting `$10,000'.

(B) AGGREGATE LIMITS- Section 425(a)(2)(A) is amended--

(i) in clause (i), by striking `$23,000' and inserting `$30,000'; and

(ii) in clause (ii)--

(I) by striking `$65,500' and inserting `$60,000';

(II) by striking `and (I) including' and inserting `but (I) excluding'; and

(III) by striking `but (II)' and inserting `and (II)'.

SEC. 102. ORIGINATION FEES.

(a) Federal Family Education Loan Program- Section 438(c) of the Higher Education Act of 1965 (20 U.S.C. 1087-1(c)) is amended by adding at the end the following new paragraph:

`(9) ORIGINATION FEES TERMINATED-

`(A) IN GENERAL- Notwithstanding any other provision of this subsection except for subparagraph (B) of this paragraph, with respect to any loan made, insured, or guaranteed under this part on or after July 1, 2005, other than a loan made under section 428B or 428H--

`(i) no eligible lender may collect directly or indirectly from any borrower any origination fee with respect to such loan; and

`(ii) the Secretary shall not collect such origination fee from the lender under this subsection.

`(B) UNSUBSIDIZED LOANS- Notwithstanding subparagraph (A), with respect to any loan made under section 428H on or after July 1, 2005--

`(i) an eligible lender may collect an origination fee with respect to such loan under paragraph (2), except that such paragraph shall be applied by substituting `1.5 percent' for `3.0 percent'; and

`(ii) the Secretary shall collect any such origination fee from the lender under paragraph (1) of this subsection.'.

(b) Federal Direct Loan Program-

(1) AMENDMENT- Section 455(c) (20 U.S.C. 1087e(c)) is amended to read as follows:

`(c) Loan Fee- The Secretary shall charge--

`(1) the borrower of a Federal Direct Stafford Loan an origination fee of 1.0 percent of the principal amount of the loan;

`(2) the borrower of a Federal Direct Stafford Unsubsidized Stafford Loan an origination fee of 2.5 percent of the principal amount of the loan; and

`(3) the borrower of a Federal Direct PLUS loan an origination fee of 4.0 percent of the principal amount of the loan.'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply with respect to any loan made under part D of title IV on an after July 1, 2005.

SEC. 103. LOAN FLEX.

(a) Amendment- Section 428(b)(9)(A) (20 U.S.C. 1078(b)(9)(A)) is amended by striking clauses (iii) and (iv) and inserting the following:

`(iii) an income-sensitive repayment plan, with income-sensitive repayment amounts paid over an extended period of time prescribed by the Secretary, not to exceed 25 years, except that--

`(I) after 10 years, if the individual has not made adequate progress in repaying the principal of the loan (defined by the Secretary as percentage of principal) the lender may use an alternative formula, to be determined by the Secretary, by which the loan could be expected to be repaid in full within the remaining 15 years;

`(II) after 25 years, if the loan is not repaid, the Secretary shall acquire the loan from the lender and administer the loan under part D of this title; and

`(III) the other terms and conditions of which shall be comparable to the terms and conditions applicable to income contingent repayment under section 455(d)(1)(D) and 455(e); and

`(iv) an extended repayment plan, with a fixed annual or graduated repayment amount paid over an extended period of time, not to exceed 25 years, except that in the first 2 years of repayment, the borrower shall have the option of paying the interest as it accrues or having such interest be added to principal for repayment during the remainder of the repayment period.'.

(b) Conforming Amendment- Clause (i) of section 428(b)(1)(L) (20 U.S.C. 1078(b)(1)(L)) is amended to read as follows:

`(i) except as otherwise provided by a repayment plan selected by the borrower under clause (ii), (iii), or (iv) of paragraph (9)(A), during any year of any repayment period with respect to the aggregate amount of all loans to that borrower which are insured under this part shall not, unless the borrower and the lender otherwise agree, be less than $600 or the balance of all such loans (together with interest thereon), whichever amount is less; and'.

SEC. 104. CONSOLIDATION LOAN INTEREST RATES.

(a) Interest Rate Tied to Income- Paragraph (3) of section 427A(l) (20 U.S.C. 1077a(n)) is amended to read as follows:

`(3) CONSOLIDATION LOANS-

`(A) IN GENERAL- With respect to any consolidation loan under section 428C for which the application is received by an eligible lender on or after the date of enactment of the Access and Equity in Higher Education Act, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

`(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus

`(ii) 2.3 percent,

except that such rate shall not exceed 8.25 percent, and except that for any loan under section 428C that is used exclusively to consolidate loans made under section 428B, clause (ii) shall be applied by substituting `3.1 percent' for `2.3 percent'.

`(B) VARIATION OF INTEREST RATE BASED ON INCOME- In the case of--

`(i) a borrower who demonstrates to the lender, in accordance with regulations prescribed by the Secretary, that during such 12-month period, the sum of the borrower's monthly payments during a year will exceed--

`(I) 8 percent of the borrower total income, subparagraph (A)(ii) shall be applied by substituting `1.0 percent' for `2.3 percent'; or

`(II) 9 percent of the borrower's total income, subparagraph (A)(ii) shall be applied by substituting `0.0 percent' for `2.3 percent'; and

`(ii) a borrower who so demonstrates that the sum of the borrower's monthly payments during a year will exceed--

`(I) 10 percent of the borrower's total income, subparagraph (A) shall be applied by substituting `5 percent' for `8.25 percent';

`(II) 11 percent of the borrower's total income, subparagraph (A) shall be applied by substituting `4 percent' for `8.25 percent'; or

`(III) 12 percent of the borrower's total income, subparagraph (A) shall be applied by substituting `3 percent' for `8.25 percent'.'.

(b) Conforming Amendment- Section 427A(k)(4) is amended by striking `July 1, 2006,' and inserting `the date of enactment of the Access and Equity in Higher Education Act'.

SEC. 105. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

Section 428K (20 U.S.C. 1078-11) is amended to read as follows:

`SEC. 428K. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

`(a) Purposes- The purposes of this section are--

`(1) to reduce the burden of student debt, particularly for Americans who dedicate their careers to meeting certain urgent national needs; and

`(2) to attract more excellent individuals into important public service careers.

`(b) Loan Forgiveness-

`(1) IN GENERAL- The Secretary shall assume the obligation to repay, pursuant to subsection (c), a loan made under section 428, 428C, or 428H, a Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan, a Federal Direct Consolidation Loan, to an individual who--

`(A) has been employed full time in a qualified public service position described in paragraph (2) for at least 8 years;

`(B) has been in an income contingent or income sensitive repayment plan for 15 years; and

`(C) is not in default on a loan for which the borrower seeks forgiveness.

`(2) QUALIFIED PUBLIC SERVICE POSITIONS- For purposes of this section, an individual shall be treated as employed in a qualified public service position if the individual is employed in--

`(A) any Federal, State, or local government agency;

`(B) any corporation which is exempt from income taxation under section 501(c)(3) of the Internal Revenue Code of 1986; or

`(C) in any profession identified by the Secretary of Education, in consultation with the Secretary of Homeland Security and the Secretary of Health and Human Services, to be providing important public service to the United States.

`(c) Loan Repayment-

`(1) IN GENERAL- The Secretary shall assume the obligation to repay the remainder of a qualifying individual's student obligations.

`(2) TREATMENT OF CONSOLIDATION LOANS- A loan amount for a loan made under section 428C or for a Federal Direct Consolidation Loan may be a qualified loan amount for the purposes of this subsection only to the extent that such loan amount was used to repay a loan described in subsection (b)(1) for a borrower who meets the requirements of subsection (b), as determined in accordance with regulations prescribed by the Secretary.

`(3) CONSTRUCTION- Nothing in this section shall be construed to authorize the refunding of any repayment of a described in subsection (b)(1).

`(4) INTEREST- If a portion of a loan is repaid by the Secretary under this section for any year, the proportionate amount of interest on such loan that accrues for such year shall be repaid by the Secretary.

`(5) INELIGIBILITY OF NATIONAL SERVICE AWARD RECIPIENTS- No student borrower may, for the same service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12601 et seq.).

`(6) INELIGIBILITY FOR DOUBLE BENEFITS- No borrower may receive a reduction of loan obligations under both this section and section 428J or 460.

`(d) Repayment to Eligible Lenders and Holders- The Secretary shall pay to each eligible lender or holder for each fiscal year an amount equal to the aggregate amount of the lender's or holder's loans that are subject to repayment pursuant to this section for such year.

`(e) Application for Repayment-

`(1) IN GENERAL- Each eligible individual desiring loan repayment under this section shall submit a complete and accurate application to the Secretary at such time, in such manner, and containing such information as the Secretary may require.

`(2) CONDITIONS- An eligible individual may apply for loan repayment under this section after completing the years of qualifying service described in subsection (c)(2).

`(f) Regulations- The Secretary is authorized to prescribe such regulations as may be necessary to carry out the provisions of this section.'.

TITLE II--REAUTHORIZATION OF HBCU PROGRAMS

SEC. 201. REAUTHORIZATION OF PART B OF TITLE III.

Paragraph (2) of section 399(a) (20 U.S.C. 1068h(a)) is amended to read as follows:

`(2) PART B- There are authorized to be appropriated to carry out part B (other than section 326), $335,000,000 for fiscal year 2005, and such sums as may be necessary for each of the 5 succeeding fiscal years.'.

END