H.R.2669
7-11-07, Bill Passed House 273-149
7-20-07, Passed Senate on Yea-Nay Vote
9-7-07, House Agreed to Conference Report 292-97
9-27-07, Became Public Law 110-84
One Hundred Tenth Congress
of the
United States of America
Begun and held at the City of Washington on Thursday,
the fourth day of January, two thousand and seven
An Act
To provide for reconciliation pursuant to section 601 of the concurrent
resolution on the budget for fiscal year 2008.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES.
(a) Short Title- This Act may be cited as the `College Cost Reduction and
Access 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 expressly provided, the amendments
made by this Act shall be effective on October 1, 2007.
TITLE I--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER EDUCATION
SEC. 101. TUITION SENSITIVITY.
(a) Amendment- Section 401(b) (20 U.S.C. 1070a(b)) is amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraphs (4) through (9) as paragraphs (3) through
(8), respectively.
(b) Effective Date- The amendments made by subsection (a) shall be effective
with respect to determinations of Federal Pell Grant amounts for award years
beginning on or after July 1, 2007.
(c) Authorization and Appropriation of Funds- There is authorized to be
appropriated, and there is appropriated, out of any money in the Treasury
not otherwise appropriated, for the Department of Education to carry out
the amendment made by subsection (a), $11,000,000 for fiscal year 2008.
SEC. 102. MANDATORY PELL GRANT INCREASES.
(a) Extension of Authority- Section 401(a) (20 U.S.C. 1070a(a)) is amended
by striking `fiscal year 2004' and inserting `fiscal year 2017'.
(b) Funding for Increases- Section 401(b) (20 U.S.C. 1070a(b)) is amended
by adding at the end the following new paragraph:
`(A) IN GENERAL- There are authorized to be appropriated, and there
are appropriated, to carry out subparagraph (B) of this paragraph (in
addition to any other amounts appropriated to carry out this section
and out of any money in the Treasury not otherwise appropriated) the
following amounts--
`(i) $2,030,000,000 for fiscal year 2008;
`(ii) $2,090,000,000 for fiscal year 2009;
`(iii) $3,030,000,000 for fiscal year 2010;
`(iv) $3,090,000,000 for fiscal year 2011;
`(v) $5,050,000,000 for fiscal year 2012;
`(vi) $105,000,000 for fiscal year 2013;
`(vii) $4,305,000,000 for fiscal year 2014;
`(viii) $4,400,000,000 for fiscal year 2015;
`(ix) $4,600,000,000 for fiscal year 2016; and
`(x) $4,900,000,000 for fiscal year 2017.
`(B) INCREASE IN FEDERAL PELL GRANTS- The amounts made available pursuant
to subparagraph (A) of this paragraph shall be used to increase the
amount of the maximum Federal Pell Grant for which a student shall be
eligible during an award year, as specified in the last enacted appropriation
Act applicable to that award year, by--
`(i) $490 for each of the award years 2008-2009 and 2009-2010;
`(ii) $690 for each of the award years 2010-2011 and 2011-2012; and
`(iii) $1,090 for award year 2012-2013.
`(C) ELIGIBILITY- The Secretary shall only award an increased amount
of a Federal Pell Grant under this section for any award year pursuant
to the provisions of this paragraph to students who qualify for a Federal
Pell Grant award under the maximum grant award enacted in the annual
appropriation Act for such award year without regard to the provisions
of this paragraph.
`(D) FORMULA OTHERWISE UNAFFECTED- Except as provided in subparagraphs
(B) and (C), nothing in this paragraph shall be construed to alter the
requirements of this section, or authorize the imposition of additional
requirements, for the determination and allocation of Federal Pell Grants
under this section.
`(E) RATABLE INCREASES AND DECREASES- The amounts specified in subparagraph
(B) shall be ratably increased or decreased to the extent that funds
available under subparagraph (A) exceed or are less than (respectively)
the amount required to provide the amounts specified in subparagraph
(B).
`(F) USE OF FISCAL YEAR FUNDS FOR AWARD YEARS- The amounts made available
by subparagraph (A) for any fiscal year shall be available and remain
available for use under subparagraph (B) for the award year that begins
in such fiscal year.'.
SEC. 103. UPWARD BOUND.
Section 402C is further amended by adding at the end the following new subsection:
`(1) AUTHORIZATION AND APPROPRIATION- There are authorized to be appropriated,
and there are appropriated to the Secretary, from funds not otherwise
appropriated, $57,000,000 for each of the fiscal years 2008 through 2011
to carry out paragraph (2), except that any amounts that remain unexpended
for such purpose for each of such fiscal years may be available for technical
assistance and administration costs for the Upward Bound program. The
authority to award grants under this subsection shall expire at the end
of fiscal year 2011.
`(2) USE OF FUNDS- The amounts made available by paragraph (1) shall be
available to provide assistance to all Upward Bound projects that did
not receive assistance in fiscal year 2007 and that have a grant score
above 70. Such assistance shall be made available in the form of 4-year
grants.'.
SEC. 104. TEACH GRANTS.
Part A of title IV (20 U.S.C. 1070 et seq.) is amended by adding at the
end the following new subpart:
`Subpart 9--TEACH Grants
`SEC. 420L. DEFINITIONS.
`For the purposes of this subpart:
`(1) ELIGIBLE INSTITUTION- The term `eligible institution' means an institution
of higher education, as defined in section 102, that the Secretary determines--
`(A) provides high quality teacher preparation and professional development
services, including extensive clinical experience as a part of pre-service
preparation;
`(B) is financially sound;
`(C) provides pedagogical course work, or assistance in the provision
of such coursework, including the monitoring of student performance,
and formal instruction related to the theory and practices of teaching;
and
`(D) provides supervision and support services to teachers, or assistance
in the provision of such services, including mentoring focused on developing
effective teaching skills and strategies.
`(2) POST-BACCALAUREATE- The term `post-baccalaureate' means a program
of instruction for individuals who have completed a baccalaureate degree,
that does not lead to a graduate degree, and that consists of courses
required by a State in order for a teacher candidate to receive a professional
certification or licensing credential that is required for employment
as a teacher in an elementary school or secondary school in that State,
except that such term shall not include any program of instruction offered
by an eligible institution that offers a baccalaureate degree in education.
`(3) TEACHER CANDIDATE- The term `teacher candidate' means a student or
teacher described in subparagraph (A) or (B) of section 420N(a)(2).
`SEC. 420M. PROGRAM ESTABLISHED.
`(1) PAYMENTS REQUIRED- The Secretary shall pay to each eligible institution
such sums as may be necessary to pay to each teacher candidate who files
an application and agreement in accordance with section 420N, and who
qualifies under paragraph (2) of section 420N(a), a TEACH Grant in the
amount of $4,000 for each academic year during which that teacher candidate
is in attendance at the institution.
`(2) REFERENCES- Grants made under paragraph (1) shall be known as `Teacher
Education Assistance for College and Higher Education Grants' or `TEACH
Grants'.
`(b) Payment Methodology-
`(1) PREPAYMENT- Not less than 85 percent of any funds provided to an
eligible institution under subsection (a) shall be advanced to the eligible
institution prior to the start of each payment period and shall be based
upon an amount requested by the institution as needed to pay teacher candidates
until such time as the Secretary determines and publishes in the Federal
Register with an opportunity for comment, an alternative payment system
that provides payments to institutions in an accurate and timely manner,
except that this sentence shall not be construed to limit the authority
of the Secretary to place an institution on a reimbursement system of
payment.
`(2) DIRECT PAYMENT- Nothing in this section shall be interpreted to prohibit
the Secretary from paying directly to teacher candidates, in advance of
the beginning of the academic term, an amount for which teacher candidates
are eligible, in cases where the eligible institution elects not to participate
in the disbursement system required by paragraph (1).
`(3) DISTRIBUTION OF GRANTS TO TEACHER CANDIDATES- Payments under this
subpart shall be made, in accordance with regulations promulgated by the
Secretary for such purpose, in such manner as will best accomplish the
purposes of this subpart. Any disbursement allowed to be made by crediting
the teacher candidate's account shall be limited to tuition and fees and,
in the case of institutionally-owned housing, room and board. The teacher
candidate may elect to have the institution provide other such goods and
services by crediting the teacher candidate's account.
`(c) Reductions in Amount-
`(1) PART-TIME STUDENTS- In any case where a teacher candidate attends
an eligible institution on less than a full-time basis (including a teacher
candidate who attends an eligible institution on less than a half-time
basis) during any academic year, the amount of a grant under this subpart
for which that teacher candidate is eligible shall be reduced in proportion
to the degree to which that teacher candidate is not attending on a full-time
basis, in accordance with a schedule of reductions established by the
Secretary for the purposes of this subpart, computed in accordance with
this subpart. Such schedule of reductions shall be established by regulation
and published in the Federal Register in accordance with section 482 of
this Act.
`(2) NO EXCEEDING COST- The amount of a grant awarded under this subpart,
in combination with Federal assistance and other student assistance, shall
not exceed the cost of attendance (as defined in section 472) at the eligible
institution at which that teacher candidate is in attendance. If, with
respect to any teacher candidate for any academic year, it is determined
that the amount of a TEACH Grant exceeds the cost of attendance for that
year, the amount of the TEACH Grant shall be reduced until such grant
does not exceed the cost of attendance at the eligible institution.
`(d) Period of Eligibility for Grants-
`(1) UNDERGRADUATE AND POST-BACCALAUREATE STUDENTS- The period during
which an undergraduate or post-baccalaureate student may receive grants
under this subpart shall be the period required for the completion of
the first undergraduate baccalaureate or post-baccalaureate course of
study being pursued by the teacher candidate at the eligible institution
at which the teacher candidate is in attendance, except that--
`(A) any period during which the teacher candidate is enrolled in a
noncredit or remedial course of study as described in paragraph (3)
shall not be counted for the purpose of this paragraph; and
`(B) the total amount that a teacher candidate may receive under this
subpart for undergraduate or post-baccalaureate study shall not exceed
$16,000.
`(2) GRADUATE STUDENTS- The period during which a graduate student may
receive grants under this subpart shall be the period required for the
completion of a master's degree course of study pursued by the teacher
candidate at the eligible institution at which the teacher candidate is
in attendance, except that the total amount that a teacher candidate may
receive under this subpart for graduate study shall not exceed $8,000.
`(3) REMEDIAL COURSE; STUDY ABROAD- Nothing in this section shall be construed
to exclude from eligibility courses of study which are noncredit or remedial
in nature (including courses in English language acquisition) which are
determined by the eligible institution to be necessary to help the teacher
candidate be prepared for the pursuit of a first undergraduate baccalaureate
or post-baccalaureate degree or certificate or, in the case of courses
in English language instruction, to be necessary to enable the teacher
candidate to utilize already existing knowledge, training, or skills.
Nothing in this section shall be construed to exclude from eligibility
programs of study abroad that are approved for credit by the home institution
at which the teacher candidate is enrolled.
`SEC. 420N. APPLICATIONS; ELIGIBILITY.
`(a) Applications; Demonstration of Eligibility-
`(1) FILING REQUIRED- The Secretary shall periodically set dates by which
teacher candidates shall file applications for grants under this subpart.
Each teacher candidate desiring a grant under this subpart for any year
shall file an application containing such information and assurances as
the Secretary may determine necessary to enable the Secretary to carry
out the functions and responsibilities of this subpart.
`(2) DEMONSTRATION OF TEACH GRANT ELIGIBILITY- Each application submitted
under paragraph (1) shall contain such information as is necessary to
demonstrate that--
`(A) if the applicant is an enrolled student--
`(i) the student is an eligible student for purposes of section 484;
`(I) has a grade point average that is determined, under standards
prescribed by the Secretary, to be comparable to a 3.25 average
on a zero to 4.0 scale, except that, if the student is in the first
year of a program of undergraduate education, such grade point average
shall be determined on the basis of the student's cumulative secondary
school grade point average; or
`(II) displayed high academic aptitude by receiving a score above
the 75th percentile on at least one of the batteries in an undergraduate,
post-baccalaureate, or graduate school admissions test; and
`(iii) the student is completing coursework and other requirements
necessary to begin a career in teaching, or plans to complete such
coursework and requirements prior to graduating; or
`(B) if the applicant is a current or prospective teacher applying for
a grant to obtain a graduate degree--
`(i) the applicant is a teacher or a retiree from another occupation
with expertise in a field in which there is a shortage of teachers,
such as mathematics, science, special education, English language
acquisition, or another high-need subject; or
`(ii) the applicant is or was a teacher who is using high-quality
alternative certification routes, such as Teach for America, to get
certified.
`(b) Agreements to Serve- Each application under subsection (a) shall contain
or be accompanied by an agreement by the applicant that--
`(1) the applicant will--
`(A) serve as a full-time teacher for a total of not less than 4 academic
years within 8 years after completing the course of study for which
the applicant received a TEACH Grant under this subpart;
`(B) teach in a school described in section 465(a)(2)(A);
`(C) teach in any of the following fields--
`(iii) a foreign language;
`(iv) bilingual education;
`(vi) as a reading specialist; or
`(vii) another field documented as high-need by the Federal Government,
State government, or local educational agency, and approved by the
Secretary;
`(D) submit evidence of such employment in the form of a certification
by the chief administrative officer of the school upon completion of
each year of such service; and
`(E) comply with the requirements for being a highly qualified teacher
as defined in section 9101 of the Elementary and Secondary Education
Act of 1965; and
`(2) in the event that the applicant is determined to have failed or refused
to carry out such service obligation, the sum of the amounts of any TEACH
Grants received by such applicant will be treated as a loan and collected
from the applicant in accordance with subsection (c) and the regulations
thereunder.
`(c) Repayment for Failure to Complete Service- In the event that any recipient
of a grant under this subpart fails or refuses to comply with the service
obligation in the agreement under subsection (b), the sum of the amounts
of any TEACH Grants received by such recipient shall, upon a determination
of such a failure or refusal in such service obligation, be treated as a
Federal Direct Unsubsidized Stafford Loan under part D of title IV, and
shall be subject to repayment, together with interest thereon accruing from
the date of the grant award, in accordance with terms and conditions specified
by the Secretary in regulations under this subpart.
`SEC. 420O. PROGRAM PERIOD AND FUNDING.
`Beginning on July 1, 2008, there shall be available to the Secretary to
carry out this subpart, from funds not otherwise appropriated, such sums
as may be necessary to provide TEACH Grants in accordance with this subpart
to each eligible applicant.'.
TITLE II--STUDENT LOAN BENEFITS, TERMS, AND CONDITIONS
SEC. 201. INTEREST RATE REDUCTIONS.
(1) Section 427A(l) (20 U.S.C. 1077a(l)) is amended by adding at the end
the following new paragraph:
`(4) REDUCED RATES FOR UNDERGRADUATE SUBSIDIZED LOANS- Notwithstanding
subsection (h) and paragraph (1) of this subsection, with respect to any
loan to an undergraduate student made, insured, or guaranteed under this
part (other than a loan made pursuant to section 428B, 428C, or 428H)
for which the first disbursement is made on or after July 1, 2006, and
before July 1, 2012, the applicable rate of interest shall be as follows:
`(A) For a loan for which the first disbursement is made on or after
July 1, 2006, and before July 1, 2008, 6.8 percent on the unpaid principal
balance of the loan.
`(B) For a loan for which the first disbursement is made on or after
July 1, 2008, and before July 1, 2009, 6.0 percent on the unpaid principal
balance of the loan.
`(C) For a loan for which the first disbursement is made on or after
July 1, 2009, and before July 1, 2010, 5.6 percent on the unpaid principal
balance of the loan.
`(D) For a loan for which the first disbursement is made on or after
July 1, 2010, and before July 1, 2011, 4.5 percent on the unpaid principal
balance of the loan.
`(E) For a loan for which the first disbursement is made on or after
July 1, 2011, and before July 1, 2012, 3.4 percent on the unpaid principal
balance of the loan.'.
(2) SPECIAL ALLOWANCE CROSS REFERENCE- Section 438(b)(2)(I)(ii)(II) (20
U.S.C. 1087-1(b)(2)(I)(ii)(II)) is amended by striking `section 427A(l)(1)'
and inserting `section 427A(l)(1) or (l)(4)'.
(b) Direct Loan Interest Rates- Section 455(b)(7) (20 U.S.C. 1087e(b)(7))
is amended by adding at the end the following new subparagraph:
`(D) REDUCED RATES FOR UNDERGRADUATE FDSL- Notwithstanding the preceding
paragraphs of this subsection and subparagraph (A) of this paragraph,
for Federal Direct Stafford Loans made to undergraduate students for
which the first disbursement is made on or after July 1, 2006, and before
July 1, 2012, the applicable rate of interest shall be as follows:
`(i) For a loan for which the first disbursement is made on or after
July 1, 2006, and before July 1, 2008, 6.8 percent on the unpaid principal
balance of the loan.
`(ii) For a loan for which the first disbursement is made on or after
July 1, 2008, and before July 1, 2009, 6.0 percent on the unpaid principal
balance of the loan.
`(iii) For a loan for which the first disbursement is made on or after
July 1, 2009, and before July 1, 2010, 5.6 percent on the unpaid principal
balance of the loan.
`(iv) For a loan for which the first disbursement is made on or after
July 1, 2010, and before July 1, 2011, 4.5 percent on the unpaid principal
balance of the loan.
`(v) For a loan for which the first disbursement is made on or after
July 1, 2011, and before July 1, 2012, 3.4 percent on the unpaid principal
balance of the loan.'.
SEC. 202. STUDENT LOAN DEFERMENT FOR CERTAIN MEMBERS OF THE ARMED FORCES.
(a) Federal Family Education Loans- Section 428(b)(1)(M)(iii) (20 U.S.C.
1078(b)(1)(M)(iii)) is amended--
(1) in the matter preceding subclause (I), by striking `not in excess
of 3 years';
(2) in subclause (II), by striking `; or' and inserting a comma; and
(3) by adding at the end the following:
`and for the 180-day period following the demobilization date for
the service described in subclause (I) or (II); or'.
(b) Direct Loans- Section 455(f)(2)(C) (20 U.S.C. 1087e(f)(2)(C)) is amended--
(1) in the matter preceding clause (i), by striking `not in excess of
3 years';
(2) in clause (ii), by striking `; or' and inserting a comma; and
(3) by adding at the end the following:
`and for the 180-day period following the demobilization date for the
service described in clause (i) or (ii); or'.
(c) Perkins Loans- Section 464(c)(2)(A)(iii) (20 U.S.C. 1087dd(c)(2)(A)(iii))
is amended--
(1) in the matter preceding subclause (I), by striking `not in excess
of 3 years';
(2) in subclause (II), by striking the semicolon and inserting a comma;
and
(3) by adding at the end the following:
`and for the 180-day period following the demobilization date for the service
described in subclause (I) or (II);'.
(d) Applicability- Section 8007(f) of the Higher Education Reconciliation
Act of 2005 (20 U.S.C. 1078 note) is amended by striking `loans for which'
and all that follows through the period at the end and inserting `all loans
under title IV of the Higher Education Act of 1965.'.
SEC. 203. INCOME-BASED REPAYMENT.
(a) Amendment- Part G of title IV (20 U.S.C. 1088 et seq.) is amended by
adding at the end the following:
`SEC. 493C. INCOME-BASED REPAYMENT.
`(a) Definitions- In this section:
`(1) EXCEPTED PLUS LOAN- The term `excepted PLUS loan' means a loan under
section 428B, or a Federal Direct PLUS Loan, that is made, insured, or
guaranteed on behalf of a dependent student.
`(2) EXCEPTED CONSOLIDATION LOAN- The term `excepted consolidation loan'
means a consolidation loan under section 428C, or a Federal Direct Consolidation
Loan, if the proceeds of such loan were used to the discharge the liability
on an excepted PLUS loan.
`(3) PARTIAL FINANCIAL HARDSHIP- The term `partial financial hardship',
when used with respect to a borrower, means that for such borrower--
`(A) the annual amount due on the total amount of loans made, insured,
or guaranteed under part B or D (other than an excepted PLUS loan or
excepted consolidation loan) to a borrower as calculated under the standard
repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A), based
on a 10-year repayment period; exceeds
`(B) 15 percent of the result obtained by calculating, on at least an
annual basis, the amount by which--
`(i) the borrower's, and the borrower's spouse's (if applicable),
adjusted gross income; exceeds
`(ii) 150 percent of the poverty line applicable to the borrower's
family size as determined under section 673(2) of the Community Services
Block Grant Act (42 U.S.C. 9902(2)).
`(b) Income-Based Repayment Program Authorized- Notwithstanding any other
provision of this Act, the Secretary shall carry out a program under which--
`(1) a borrower of any loan made, insured, or guaranteed under part B
or D (other than an excepted PLUS loan or excepted consolidation loan)
who has a partial financial hardship (whether or not the borrower's loan
has been submitted to a guaranty agency for default aversion or is already
in default) may elect, during any period the borrower has the partial
financial hardship, to have the borrower's aggregate monthly payment for
all such loans not exceed the result described in subsection (a)(3)(B)
divided by 12;
`(2) the holder of such a loan shall apply the borrower's monthly payment
under this subsection first toward interest due on the loan, next toward
any fees due on the loan, and then toward the principal of the loan;
`(3) any interest due and not paid under paragraph (2)--
`(A) shall, on subsidized loans, be paid by the Secretary for a period
of not more than 3 years after the date of the borrower's election under
paragraph (1), except that such period shall not include any period
during which the borrower is in deferment due to an economic hardship
described in section 435(o); and
`(i) in the case of a subsidized loan, subject to subparagraph (A),
at the time the borrower--
`(I) ends the election to make income-based repayment under this
subsection; or
`(II) begins making payments of not less than the amount specified
in paragraph (6)(A); or
`(ii) in the case of an unsubsidized loan, at the time the borrower--
`(I) ends the election to make income-based repayment under this
subsection; or
`(II) begins making payments of not less than the amount specified
in paragraph (6)(A);
`(4) any principal due and not paid under paragraph (2) shall be deferred;
`(5) the amount of time the borrower makes monthly payments under paragraph
(1) may exceed 10 years;
`(6) if the borrower no longer has a partial financial hardship or no
longer wishes to continue the election under this subsection, then--
`(A) the maximum monthly payment required to be paid for all loans made
to the borrower under part B or D (other than an excepted PLUS loan
or excepted consolidation loan) shall not exceed the monthly amount
calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a
10-year repayment period, when the borrower first made the election
described in this subsection; and
`(B) the amount of time the borrower is permitted to repay such loans
may exceed 10 years;
`(7) the Secretary shall repay or cancel any outstanding balance of principal
and interest due on all loans made under part B or D (other than a loan
under section 428B or a Federal Direct PLUS Loan) to a borrower who--
`(A) at any time, elected to participate in income-based repayment under
paragraph (1); and
`(B) for a period of time prescribed by the Secretary, not to exceed
25 years, meets 1 or more of the following requirements--
`(i) has made reduced monthly payments under paragraph (1) or paragraph
(6);
`(ii) has made monthly payments of not less than the monthly amount
calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on
a 10-year repayment period, when the borrower first made the election
described in this subsection;
`(iii) has made payments of not less than the payments required under
a standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A)
with a repayment period of 10 years;
`(iv) has made payments under an income-contingent repayment plan
under section 455(d)(1)(D); or
`(v) has been in deferment due to an economic hardship described in
section 435(o);
`(8) a borrower who is repaying a loan made under part B or D pursuant
to income-based repayment may elect, at any time, to terminate repayment
pursuant to income-based repayment and repay such loan under the standard
repayment plan; and
`(9) the special allowance payment to a lender calculated under section
438(b)(2)(I), when calculated for a loan in repayment under this section,
shall be calculated on the principal balance of the loan and on any accrued
interest unpaid by the borrower in accordance with this section.
`(c) Eligibility Determinations- The Secretary shall establish procedures
for annually determining the borrower's eligibility for income-based repayment,
including verification of a borrower's annual income and the annual amount
due on the total amount of loans made, insured, or guaranteed under part
B or D (other than an excepted PLUS loan or excepted consolidation loan),
and such other procedures as are necessary to effectively implement income-based
repayment under this section. The Secretary shall consider, but is not limited
to, the procedures established in accordance with section 455(e)(1) or in
connection with income sensitive repayment schedules under section 428(b)(9)(A)(iii)
or 428C(b)(1)(E).'.
(b) Conforming Amendments-
(1) Section 428C (20 U.S.C. 1078-3) is amended--
(A) in subsection (a)(3)(B)(i), by amending subclause (V) to read as
follows:
`(V) an individual may obtain a subsequent consolidation loan under
section 455(g) only--
`(aa) for the purposes of obtaining an income contingent repayment
plan, and only if the loan has been submitted to the guaranty agency for
default aversion; or
`(bb) for the purposes of using the public service loan forgiveness
program under section 455(m).';
(B) in the first sentence of subsection (b)(5), by inserting `or chooses
to obtain a consolidation loan for the purposes of using the public
service loan forgiveness program offered under section 455(m),' after
`from such a lender,'; and
(C) in the second sentence of such subsection, by inserting before the
period the following: `, except that if a borrower intends to be eligible
to use the public service loan forgiveness program under section 455(m),
such loan shall be repaid using one of the repayment options described
in section 455(m)(1)(A)'.
(2) Section 428C (20 U.S.C. 1078-3) (as amended by paragraph (1) of this
subsection) is amended--
(A) in subsection (a)(3)(B)(i)(V)(aa)--
(i) by striking `an income contingent repayment plan,' and inserting
`income contingent repayment or income-based repayment,'; and
(ii) by inserting `or if the loan is already in default' before the
semicolon;
(B) in the first sentence of subsection (b)(5), by inserting `or income-based
repayment terms' after `income-sensitive repayment terms'; and
(C) in the second sentence of such subsection, by inserting `, pursuant
to income-based repayment under section 493C,' after `part D of this
title'.
(3) Section 455(d)(1)(D) (20 U.S.C. 1087e(d)(1)(D)) is amended by inserting
`made on behalf of a dependent student' after `PLUS loan'.
(1) IN GENERAL- Except as provided in paragraph (2), the amendments made
by this section shall be effective on July 1, 2009.
(2) EXCEPTION- The amendments made by subsection (b)(1) shall be effective
on July 1, 2008.
SEC. 204. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.
Part G of title IV is further amended by adding after section 493C (as added
by section 203 of this Act) the following new section:
`SEC. 493D. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.
`(a) Deferral of Loan Repayment Following Active Duty- In addition to any
deferral of repayment of a loan made under this title pursuant to section
428(b)(1)(M)(iii), 455(f)(2)(C), or 464(c)(2)(A)(iii), a borrower of a loan
under this title who is a member of the National Guard or other reserve
component of the Armed Forces of the United States, or a member of such
Armed Forces in a retired status, is called or ordered to active duty, and
is enrolled, or was enrolled within six months prior to the activation,
in a program of instruction at an eligible institution, shall be eligible
for a deferment during the 13 months following the conclusion of such service,
except that a deferment under this subsection shall expire upon the borrower's
return to enrolled student status.
`(b) Active Duty- Notwithstanding section 481(d), in this section, the term
`active duty' has the meaning given such term in section 101(d)(1) of title
10, United States Code, except that such term--
`(1) does not include active duty for training or attendance at a service
school; but
`(2) includes, in the case of members of the National Guard, active State
duty.'.
SEC. 205. MAXIMUM REPAYMENT PERIOD.
Section 455(e) (20 U.S.C. 1087e(e)) is amended by adding at the end the
following:
`(7) MAXIMUM REPAYMENT PERIOD- In calculating the extended period of time
for which an income contingent repayment plan under this subsection may
be in effect for a borrower, the Secretary shall include all time periods
during which a borrower of loans under part B, part D, or part E--
`(A) is not in default on any loan that is included in the income contingent
repayment plan; and
`(B)(i) is in deferment due to an economic hardship described in section
435(o);
`(ii) makes monthly payments under paragraph (1) or (6) of section 493C(b);
`(iii) makes monthly payments of not less than the monthly amount calculated
under section 428(b)(9)(A)(i) or subsection (d)(1)(A), based on a 10-year
repayment period, when the borrower first made the election described
in section 493C(b)(1);
`(iv) makes payments of not less than the payments required under a
standard repayment plan under section 428(b)(9)(A)(i) or subsection
(d)(1)(A) with a repayment period of 10 years; or
`(v) makes payments under an income contingent repayment plan under
subsection (d)(1)(D).'.
TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM
SEC. 301. GUARANTY AGENCY COLLECTION RETENTION.
Clause (ii) of section 428(c)(6)(A) (20 U.S.C. 1078(c)(6)(A)(ii)) is amended
to read as follows:
`(ii) an amount equal to 24 percent of such payments for use in accordance
with section 422B, except that--
`(I) beginning October 1, 2003 and ending September 30, 2007, this
clause shall be applied by substituting `23 percent' for `24 percent';
and
`(II) beginning October 1, 2007, this clause shall be applied by
substituting `16 percent' for `24 percent'.'.
SEC. 302. ELIMINATION OF EXCEPTIONAL PERFORMER STATUS FOR LENDERS.
(a) Elimination of Status- Part B of title IV (20 U.S.C. 1071 et seq.) is
amended by striking section 428I (20 U.S.C. 1078-9).
(b) Conforming Amendments- Part B of title IV is further amended--
(1) in section 428(c)(1) (20 U.S.C. 1078(c)(1))--
(A) by striking subparagraph (D); and
(B) by redesignating subparagraphs (E) through (H) as subparagraphs
(D) through (G), respectively; and
(2) in section 438(b)(5) (20 U.S.C. 1087-1(b)(5)), by striking the matter
following subparagraph (B).
(c) Effective Date- The amendments made by subsections (a) and (b) shall
be effective on October 1, 2007, except that section 428I of the Higher
Education Act of 1965 (as in effect on the day before the date of enactment
of this Act) shall apply to eligible lenders that received a designation
under subsection (a) of such section prior to October 1, 2007, for the remainder
of the year for which the designation was made.
SEC. 303. REDUCTION OF LENDER INSURANCE PERCENTAGE.
(a) Amendment- Subparagraph (G) of section 428(b)(1) (20 U.S.C. 1078(b)(1)(G))
is amended to read as follows:
`(G) insures 95 percent of the unpaid principal of loans insured under
the program, except that--
`(i) such program shall insure 100 percent of the unpaid principal
of loans made with funds advanced pursuant to section 428(j) or 439(q);
and
`(ii) notwithstanding the preceding provisions of this subparagraph,
such program shall insure 100 percent of the unpaid principal amount
of exempt claims as defined in subsection (c)(1)(G);'.
(b) Effective Date- The amendment made by subsection (a) shall be effective
on October 1, 2012, and shall apply with respect to loans made on or after
such date.
SEC. 304. DEFINITIONS.
Section 435 (20 U.S.C. 1085) is amended--
(1) in subsection (o)(1)--
(A) in subparagraph (A)(ii)--
(i) by striking `100 percent of the poverty line for a family of 2'
and inserting `150 percent of the poverty line applicable to the borrower's
family size'; and
(ii) by inserting `or' after the semicolon;
(B) by striking subparagraph (B); and
(C) by redesignating subparagraph (C) as subparagraph (B);
(2) in subsection (o)(2), by striking `(1)(C)' and inserting `(1)(B)';
and
(3) by adding at the end the following:
`(p) Eligible Not-for-Profit Holder-
`(1) DEFINITION- Subject to the limitations in paragraph (2) and the prohibition
in paragraph (3), the term `eligible not-for-profit holder' means an eligible
lender under subsection (d) (except for an eligible lender described in
subsection (d)(1)(E)) that requests a special allowance payment under
section 438(b)(2)(I)(vi)(II) or a payment under section 771 and that is--
`(A) a State, or a political subdivision, authority, agency, or other
instrumentality thereof, including such entities that are eligible to
issue bonds described in section 1.103-1 of title 26, Code of Federal
Regulations, or section 144(b) of the Internal Revenue Code of 1986;
`(B) an entity described in section 150(d)(2) of such Code that has
not made the election described in section 150(d)(3) of such Code;
`(C) an entity described in section 501(c)(3) of such Code; or
`(D) a trustee acting as an eligible lender on behalf of a State, political
subdivision, authority, agency, instrumentality, or other entity described
in subparagraph (A), (B), or (C).
`(A) EXISTING ON DATE OF ENACTMENT-
`(i) IN GENERAL- An eligible lender shall not be an eligible not-for-profit
holder under this Act unless such lender--
`(I) was a State, political subdivision, authority, agency, instrumentality,
or other entity described in paragraph (1)(A), (B), or (C) that
was, on the date of the enactment of the College Cost Reduction
and Access Act, acting as an eligible lender under subsection (d)
(other than an eligible lender described in subsection (d)(1)(E));
or
`(II) is a trustee acting as an eligible lender under this Act on
behalf of such a State, political subdivision, authority, agency,
instrumentality, or other entity described in subclause (I) of this
clause.
`(ii) EXCEPTION- Notwithstanding clause (i), a State may elect, in
accordance with regulations of the Secretary, to waive the requirements
this subparagraph for a new not-for-profit holder determined by the
State to be necessary to carry out a public purpose of such State,
except that a State may not make such election with respect the requirements
of clause (i)(II).
`(B) NO FOR-PROFIT OWNERSHIP OR CONTROL- No political subdivision, authority,
agency, instrumentality, or other entity described in paragraph (1)(A),
(B), or (C) shall be an eligible not-for-profit holder under this Act
if such entity is owned or controlled, in whole or in part, by a for-profit
entity.
`(C) SOLE OWNERSHIP OF LOANS AND INCOME- No State, political subdivision,
authority, agency, instrumentality, or other entity described in paragraph
(1)(A), (B), or (C) shall be an eligible not-for-profit holder under
this Act with respect to any loan, or income from any loan, unless the
State, political subdivision, authority, agency, instrumentality, or
other entity described in paragraph (1)(A), (B), or (C) is the sole
owner of the beneficial interest in such loan and the income from such
loan.
`(D) TRUSTEE COMPENSATION LIMITATIONS- A trustee described in paragraph
(1)(D) shall not receive compensation as consideration for acting as
an eligible lender on behalf of an entity described in described in
paragraph (1)(A), (B), or (C) in excess of reasonable and customary
fees.
`(E) RULE OF CONSTRUCTION- For purposes of subparagraphs (B), (C), and
(D) of this paragraph, a State, political subdivision, authority, agency,
instrumentality, or other entity described in paragraph (1)(A), (B),
or (C) shall not--
`(i) be deemed to be owned or controlled, in whole or in part, by
a for-profit entity, or
`(ii) lose its status as the sole owner of a beneficial interest in
a loan and the income from a loan by that political subdivision, authority,
agency, instrumentality, or other entity,
by granting a security interest in, or otherwise pledging as collateral,
such loan, or the income from such loan, to secure a debt obligation
in the operation of an arrangement described in paragraph (1)(D).
`(3) PROHIBITION- In the case of a loan for which the special allowance
payment is calculated under section 438(b)(2)(I)(vi)(II) and that is sold
by the eligible not-for-profit holder holding the loan to an entity that
is not an eligible not-for-profit holder under this Act, the special allowance
payment for such loan shall, beginning on the date of the sale, no longer
be calculated under section 438(b)(2)(I)(vi)(II) and shall be calculated
under section 438(b)(2)(I)(vi)(I) instead.
`(4) REGULATIONS- Not later than 1 year after the date of enactment of
the College Cost Reduction and Access Act, the Secretary shall promulgate
regulations in accordance with the provisions of this subsection.'.
SEC. 305. SPECIAL ALLOWANCES.
(a) Reduction of Lender Special Allowance Payments- Section 438(b)(2)(I)
(20 U.S.C. 1087-1(b)(2)(I)) is amended--
(1) in clause (i), by striking `clauses (ii), (iii), and (iv)' and inserting
`the following clauses';
(2) in clause (v)(III), by striking `clauses (ii), (iii), and (iv)' and
inserting `clauses (ii), (iii), (iv), and (vi)'; and
(3) by adding at the end the following:
`(vi) REDUCTION FOR LOANS DISBURSED ON OR AFTER OCTOBER 1, 2007- With
respect to a loan on which the applicable interest rate is determined
under section 427A(l) and for which the first disbursement of principal
is made on or after October 1, 2007, the special allowance payment
computed pursuant to this subparagraph shall be computed--
`(I) for loans held by an eligible lender not described in subclause
(II)--
`(aa) by substituting `1.79 percent' for `2.34 percent' each place
the term appears in this subparagraph;
`(bb) by substituting `1.19 percent' for `1.74 percent' in clause
(ii);
`(cc) by substituting `1.79 percent' for `2.64 percent' in clause
(iii); and
`(dd) by substituting `2.09 percent' for `2.64 percent' in clause
(iv); and
`(II) for loans held by an eligible not-for-profit holder--
`(aa) by substituting `1.94 percent' for `2.34 percent' each place
the term appears in this subparagraph;
`(bb) by substituting `1.34 percent' for `1.74 percent' in clause
(ii);
`(cc) by substituting `1.94 percent' for `2.64 percent' in clause
(iii); and
`(dd) by substituting `2.24 percent' for `2.64 percent' in clause
(iv).'.
(b) Increased Loan Fees From Lenders- Paragraph (2) of section 438(d) (20
U.S.C. 1087-1(d)(2)) is amended to read as follows:
`(2) AMOUNT OF LOAN FEES- The amount of the loan fee which shall be deducted
under paragraph (1), but which may not be collected from the borrower,
shall be equal to--
`(A) except as provided in subparagraph (B), 0.50 percent of the principal
amount of the loan with respect to any loan under this part for which
the first disbursement was made on or after October 1, 1993; and
`(B) 1.0 percent of the principal amount of the loan with respect to
any loan under this part for which the first disbursement was made on
or after October 1, 2007.'.
SEC. 306. ACCOUNT MAINTENANCE FEES.
Section 458(b) (20 U.S.C. 1087h(b)) is amended by striking `0.10 percent'
and inserting `0.06 percent'.
TITLE IV--LOAN FORGIVENESS
SEC. 401. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.
Section 455 (20 U.S.C. 1087e) is further amended by adding at the end the
following:
`(m) Repayment Plan for Public Service Employees-
`(1) IN GENERAL- The Secretary shall cancel the balance of interest and
principal due, in accordance with paragraph (2), on any eligible Federal
Direct Loan not in default for a borrower who--
`(A) has made 120 monthly payments on the eligible Federal Direct Loan
after October 1, 2007, pursuant to any one or a combination of the following--
`(i) payments under an income-based repayment plan under section 493C;
`(ii) payments under a standard repayment plan under subsection (d)(1)(A),
based on a 10-year repayment period;
`(iii) monthly payments under a repayment plan under subsection (d)(1)
or (g) of not less than the monthly amount calculated under subsection
(d)(1)(A), based on a 10-year repayment period; or
`(iv) payments under an income contingent repayment plan under subsection
(d)(1)(D); and
`(B)(i) is employed in a public service job at the time of such forgiveness;
and
`(ii) has been employed in a public service job during the period in
which the borrower makes each of the 120 payments described in subparagraph
(A).
`(2) LOAN CANCELLATION AMOUNT- After the conclusion of the employment
period described in paragraph (1), the Secretary shall cancel the obligation
to repay the balance of principal and interest due as of the time of such
cancellation, on the eligible Federal Direct Loans made to the borrower
under this part.
`(3) DEFINITIONS- In this subsection:
`(A) ELIGIBLE FEDERAL DIRECT LOAN- The term `eligible Federal Direct
Loan' means a Federal Direct Stafford Loan, Federal Direct PLUS Loan,
or Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation
Loan.
`(B) PUBLIC SERVICE JOB- The term `public service job' means--
`(i) a full-time job in emergency management, government, military
service, public safety, law enforcement, public health, public education
(including early childhood education), social work in a public child
or family service agency, public interest law services (including
prosecution or public defense or legal advocacy in low-income communities
at a nonprofit organization), public child care, public service for
individuals with disabilities, public service for the elderly, public
library sciences, school-based library sciences and other school-based
services, or at an organization that is described in section 501(c)(3)
of the Internal Revenue Code of 1986 and exempt from taxation under
section 501(a) of such Code; or
`(ii) teaching as a full-time faculty member at a Tribal College or
University as defined in section 316(b) and other faculty teaching
in high-needs areas, as determined by the Secretary.'.
TITLE V--FEDERAL PERKINS LOANS
SEC. 501. DISTRIBUTION OF LATE COLLECTIONS.
Section 466(b) (20 U.S.C. 1087ff(b)) is amended by striking `March 31, 2012'
and inserting `October 1, 2012'.
TITLE VI--NEED ANALYSIS
SEC. 601. SUPPORT FOR WORKING STUDENTS.
(a) Dependent Students- Subparagraph (D) of section 475(g)(2) (20 U.S.C.
1087oo(g)(2)(D)) is amended to read as follows:
`(D) an income protection allowance of the following amount (or a successor
amount prescribed by the Secretary under section 478)--
`(i) for academic year 2009-2010, $3,750;
`(ii) for academic year 2010-2011, $4,500;
`(iii) for academic year 2011-2012, $5,250; and
`(iv) for academic year 2012-2013, $6,000;'.
(b) Independent Students Without Dependents Other Than a Spouse- Clause
(iv) of section 476(b)(1)(A) (20 U.S.C. 1087pp(b)(1)(A)) is amended to read
as follows:
`(iv) an income protection allowance of the following amount (or a
successor amount prescribed by the Secretary under section 478)--
`(I) for single or separated students, or married students where
both are enrolled pursuant to subsection (a)(2)--
`(aa) for academic year 2009-2010, $7,000;
`(bb) for academic year 2010-2011, $7,780;
`(cc) for academic year 2011-2012, $8,550; and
`(dd) for academic year 2012-2013, $9,330; and
`(II) for married students where 1 is enrolled pursuant to subsection
(a)(2)--
`(aa) for academic year 2009-2010, $11,220;
`(bb) for academic year 2010-2011, $12,460;
`(cc) for academic year 2011-2012, $13,710; and
`(dd) for academic year 2012-2013, $14,960;'.
(c) Independent Students With Dependents Other Than a Spouse- Paragraph
(4) of section 477(b) (20 U.S.C. 1087qq(b)) is amended to read as follows:
`(4) INCOME PROTECTION ALLOWANCE- The income protection allowance is determined
by the tables described in subparagraphs (A) through (D) (or a successor
table prescribed by the Secretary under section 478).
`(A) ACADEMIC YEAR 2009-2010- For academic year 2009-2010, the income
protection allowance is determined by the following table:
`Income Protection Allowance
----------------------------------------------------------------------------------------------------
Family Size Number in College
(including student) 1 2 3 4 5 For each additional subtract:
----------------------------------------------------------------------------------------------------
2 $17,720 $14,690
3 22,060 19,050 $16,020
4 27,250 24,220 21,210 $18,170
5 32,150 29,120 26,100 23,070 $20,060
6 37,600 34,570 31,570 28,520 25,520 $3,020
For each
additional
add: 4,240 4,240 4,240 4,240 4,240
----------------------------------------------------------------------------------------------------
`(B) ACADEMIC YEAR 2010-2011- For academic year 2010-2011, the income
protection allowance is determined by the following table:
`Income Protection Allowance
----------------------------------------------------------------------------------------------------
Family Size Number in College
(including student) 1 2 3 4 5 For each additional subtract:
----------------------------------------------------------------------------------------------------
2 $19,690 $16,330
3 24,510 21,160 $17,800
4 30,280 26,910 23,560 $20,190
5 35,730 32,350 29,000 25,640 $22,290
6 41,780 38,410 35,080 31,690 28,350 $3,350
For each
additional
add: 4,710 4,710 4,710 4,710 4,710
----------------------------------------------------------------------------------------------------
`(C) ACADEMIC YEAR 2011-2012- For academic year 2011-2012, the income
protection allowance is determined by the following table:
`Income Protection Allowance
----------------------------------------------------------------------------------------------------
Family Size Number in College
(including student) 1 2 3 4 5 For each additional subtract:
----------------------------------------------------------------------------------------------------
2 $21,660 $17,960
3 26,960 23,280 $19,580
4 33,300 29,600 25,920 $22,210
5 39,300 35,590 31,900 28,200 $24,520
6 45,950 42,250 38,580 34,860 31,190 $3,690
For each
additional
add: 5,180 5,180 5,180 5,180 5,180
----------------------------------------------------------------------------------------------------
`(D) ACADEMIC YEAR 2012-2013- For academic year 2012-2013, the income
protection allowance is determined by the following table:
`Income Protection Allowance
----------------------------------------------------------------------------------------------------
Family Size Number in College
(including student) 1 2 3 4 5 For each additional subtract:
----------------------------------------------------------------------------------------------------
2 $23,630 $19,590
3 29,420 25,400 $21,360
4 36,330 32,300 28,280 $24,230
5 42,870 38,820 34,800 30,770 $26,750
6 50,130 46,100 42,090 38,030 34,020 $4,020
For each
additional
add: 5,660 5,660 5,660 5,660 5,660 '.
----------------------------------------------------------------------------------------------------
'.
(d) Updated Tables and Amounts- Section 478(b) (20 U.S.C. 1087rr(b)) is
amended--
(1) by striking paragraph (1) and inserting the following:
`(A) IN GENERAL- For each academic year after academic year 2008-2009,
the Secretary shall publish in the Federal Register a revised table
of income protection allowances for the purpose of sections 475(c)(4)
and 477(b)(4), subject to subparagraphs (B) and (C).
`(B) TABLE FOR INDEPENDENT STUDENTS-
`(i) ACADEMIC YEARS 2009-2010 THROUGH 2012-2013- For each of the academic
years 2009-2010 through 2012-2013, the Secretary shall not develop
a revised table of income protection allowances under section 477(b)(4)
and the table specified for such academic year under subparagraphs
(A) through (D) of such section shall apply.
`(ii) OTHER ACADEMIC YEARS- For each academic year after academic
year 2012-2013, the Secretary shall develop the revised table of income
protection allowances by increasing each of the dollar amounts contained
in the table of income protection allowances under section 477(b)(4)(D)
by a percentage equal to the estimated percentage increase in the
Consumer Price Index (as determined by the Secretary) between December
2011 and the December next preceding the beginning of such academic
year, and rounding the result to the nearest $10.
`(C) TABLE FOR PARENTS- For each academic year after academic year 2008-2009,
the Secretary shall develop the revised table of income protection allowances
under section 475(c)(4) by increasing each of the dollar amounts contained
in the table by a percentage equal to the estimated percentage increase
in the Consumer Price Index (as determined by the Secretary) between
December 1992 and the December next preceding the beginning of such
academic year, and rounding the result to the nearest $10.'; and
(2) in paragraph (2), by striking `shall be developed' and all that follows
through the period at the end and inserting `shall be developed for each
academic year after academic year 2012-2013, by increasing each of the
dollar amounts contained in such section for academic year 2012-2013 by
a percentage equal to the estimated percentage increase in the Consumer
Price Index (as determined by the Secretary) between December 2011 and
the December next preceding the beginning of such academic year, and rounding
the result to the nearest $10.'.
(e) Effective Date- The amendments made by this section shall be effective
on July 1, 2009.
SEC. 602. SIMPLIFIED NEEDS TEST AND AUTOMATIC ZERO IMPROVEMENTS.
(a) Simplified Needs Test- Section 479 (20 U.S.C. 1087ss) is amended--
(A) in paragraph (1)(A)(i)--
(i) in subclause (II), by striking `or' after the semicolon;
(ii) by redesignating subclause (III) as subclause (IV);
(iii) by inserting after subclause (II) the following:
`(III) 1 of whom is a dislocated worker; or'; and
(iv) in subclause (IV) (as redesignated by clause (ii)), by striking
`12-month' and inserting `24-month'; and
(B) in paragraph (1)(B)(i)--
(i) in subclause (II), by striking `or' after the semicolon;
(ii) by redesignating subclause (III) as subclause (IV);
(iii) by inserting after subclause (II) the following:
`(III) 1 of whom is a dislocated worker; or'; and
(iv) in subclause (IV) (as redesignated by clause (ii)), by striking
`12-month' and inserting `24-month';
(i) in subparagraph (A)--
(I) in clause (ii), by striking `or' after the semicolon;
(II) by redesignating clause (iii) as clause (iv);
(III) by inserting after clause (ii) the following:
`(iii) 1 of whom is a dislocated worker; or'; and
(IV) in clause (iv) (as redesignated by subclause (II)), by striking
`12-month' and inserting `24-month'; and
(ii) in subparagraph (B), by striking `$20,000' and inserting `$30,000';
and
(i) in subparagraph (A)--
(I) in clause (ii), by striking `or' after the semicolon;
(II) by redesignating clause (iii) as clause (iv);
(III) by inserting after clause (ii) the following:
`(iii) 1 of whom is a dislocated worker; or'; and
(IV) in clause (iv) (as redesignated by subclause (II)), by striking
`12-month' and inserting `24-month'; and
(ii) in subparagraph (B), by striking `$20,000' and inserting `$30,000';
and
(C) in the flush matter following paragraph (2)(B), by adding at the
end the following: `The Secretary shall annually adjust the income level
necessary to qualify an applicant for the zero expected family contribution.
The income level shall be adjusted according to increases in the Consumer
Price Index, as defined in section 478(f).'; and
(A) by redesignating paragraphs (1) through (6) as subparagraphs (A)
through (F), respectively and moving the margins of such subparagraphs
2 ems to the right; and
(B) by striking `(d) Definition' and all that follows through `the term'
and inserting the following:
`(d) Definitions- In this section:
`(1) DISLOCATED WORKER- The term `dislocated worker' has the meaning given
the term in section 101 of the Workforce Investment Act of 1998 (29 U.S.C.
2801).
`(2) MEANS-TESTED FEDERAL BENEFIT PROGRAM- The term'.
(b) Effective Date- The amendments made by this section shall be effective
on July 1, 2009.
SEC. 603. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.
(a) Amendments- The third sentence of section 479A(a) (20 U.S.C. 1087tt(a))
is amended--
(1) by inserting `or an independent student' after `family member';
(2) by inserting `a family member who is a dislocated worker (as defined
in section 101 of the Workforce Investment Act of 1998),' before `the
number of parents'; and
(3) by inserting `a change in housing status that results in an individual
being homeless (as defined in section 103 of the McKinney-Vento Homeless
Assistance Act),' after `under section 487,'.
(b) Effective Date- The amendments made by this section shall take effect
on July 1, 2009.
SEC. 604. DEFINITIONS.
(a) In General- Section 480 (20 U.S.C. 1087vv) is amended--
(1) in subsection (a)(2)--
(A) by striking `and no portion' and inserting `no portion'; and
(B) by inserting `and no distribution from any qualified education benefit
described in subsection (f)(3) that is not subject to Federal income
tax,' after `1986,';
(2) by striking subsection (b) and inserting the following:
`(b) Untaxed Income and Benefits-
`(1) The term `untaxed income and benefits' means--
`(A) child support received;
`(B) workman's compensation;
`(C) veteran's benefits such as death pension, dependency, and indemnity
compensation, but excluding veterans' education benefits as defined
in subsection (c);
`(D) interest on tax-free bonds;
`(E) housing, food, and other allowances (excluding rent subsidies for
low-income housing) for military, clergy, and others (including cash
payments and cash value of benefits);
`(F) cash support or any money paid on the student`s behalf, except,
for dependent students, funds provided by the student's parents;
`(G) untaxed portion of pensions;
`(H) payments to individual retirement accounts and Keogh accounts excluded
from income for Federal income tax purposes; and
`(I) any other untaxed income and benefits, such as Black Lung Benefits,
Refugee Assistance, or railroad retirement benefits, or benefits received
through participation in employment and training activities under title
I of the Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.).
`(2) The term `untaxed income and benefits' shall not include the amount
of additional child tax credit claimed for Federal income tax purposes.';
(A) by redesignating paragraphs (1), (2), (3) through (6), and (7) as
subparagraphs (A), (B), (D) through (G), and (I), respectively, and
indenting appropriately;
(B) by striking `The term' and inserting the following:
`(1) DEFINITION- The term';
(C) by striking subparagraph (B) (as redesignated by subparagraph (A))
and inserting the following:
`(B) is an orphan, in foster care, or a ward of the court, at any time
when the individual is 13 years of age or older;
`(C) is an emancipated minor or is in legal guardianship as determined
by a court of competent jurisdiction in the individual's State of legal
residence;';
(D) in subparagraph (G) (as redesignated by subparagraph (A)), by striking
`or' after the semicolon;
(E) by inserting after subparagraph (G) (as redesignated by subparagraph
(A)) the following:
`(H) has been verified during the school year in which the application
is submitted as either an unaccompanied youth who is a homeless child
or youth (as such terms are defined in section 725 of the McKinney-Vento
Homeless Assistance Act), or as unaccompanied, at risk of homelessness,
and self-supporting, by--
`(i) a local educational agency homeless liaison, designated pursuant
to section 722(g)(1)(J)(ii) of the McKinney-Vento Homeless Assistance
Act;
`(ii) the director of a program funded under the Runaway and Homeless
Youth Act or a designee of the director;
`(iii) the director of a program funded under subtitle B of title
IV of the McKinney-Vento Homeless Assistance Act (relating to emergency
shelter grants) or a designee of the director; or
`(iv) a financial aid administrator; or'; and
(F) by adding at the end the following:
`(2) SIMPLIFYING THE DEPENDENCY OVERRIDE PROCESS- A financial aid administrator
may make a determination of independence under paragraph (1)(I) based
upon a documented determination of independence that was previously made
by another financial aid administrator under such paragraph in the same
award year.';
(A) in paragraph (3), by striking `and' after the semicolon;
(B) in paragraph (4), by striking the period at the end and inserting
`; and'; and
(C) by adding at the end the following:
`(5) special combat pay.';
(5) in subsection (f), by striking paragraph (3) and inserting the following:
`(3) A qualified education benefit shall be considered an asset of--
`(A) the student if the student is an independent student; or
`(B) the parent if the student is a dependent student, regardless of
whether the owner of the account is the student or the parent.';
(A) in paragraph (2), by inserting `, or a distribution that is not
includable in gross income under section 529 of such Code, under another
prepaid tuition plan offered by a State, or under a Coverdell education
savings account under section 530 of such Code,' after `1986'; and
(B) by adding at the end the following:
`(4) Notwithstanding paragraph (1), special combat pay shall not be treated
as estimated financial assistance for purposes of section 471(3).'; and
(7) by adding at the end the following:
`(n) Special Combat Pay- The term `special combat pay' means pay received
by a member of the Armed Forces because of exposure to a hazardous situation.'.
(b) Effective Date- The amendments made by this section shall be effective
on July 1, 2009.
TITLE VII--COMPETITIVE LOAN AUCTION PILOT PROGRAM
SEC. 701. COMPETITIVE LOAN AUCTION PILOT PROGRAM.
Title IV (20 U.S.C. 1070 et seq.) is further amended by adding at the end
the following:
`PART I--COMPETITIVE LOAN AUCTION PILOT PROGRAM
`SEC. 499. COMPETITIVE LOAN AUCTION PILOT PROGRAM.
`(a) Definitions- In this section:
`(1) ELIGIBLE FEDERAL PLUS LOAN- The term `eligible Federal PLUS Loan'
means a loan described in section 428B made to a parent of a dependent
student who is a new borrower on or after July 1, 2009.
`(2) ELIGIBLE LENDER- The term `eligible lender' has the meaning given
the term in section 435.
`(b) Pilot Program- The Secretary shall carry out a pilot program under
which the Secretary establishes a mechanism for an auction of eligible Federal
PLUS Loans in accordance with this subsection. The pilot program shall meet
the following requirements:
`(1) PLANNING AND IMPLEMENTATION- During the period beginning on the date
of enactment of this section and ending on June 30, 2009, the Secretary
shall plan and implement the pilot program under this subsection. During
the planning and implementation, the Secretary shall consult with other
Federal agencies with knowledge of, and experience with, auction programs,
including the Federal Communication Commission and the Department of the
Treasury.
`(2) ORIGINATION AND DISBURSEMENT; APPLICABILITY OF SECTION 428B- Beginning
on July 1, 2009, the Secretary shall arrange for the origination and disbursement
of all eligible Federal PLUS Loans in accordance with the provisions of
this subsection and the provisions of section 428B that are not inconsistent
with this subsection.
`(3) LOAN ORIGINATION MECHANISM- The Secretary shall establish a loan
origination auction mechanism that meets the following requirements:
`(A) AUCTION FOR EACH STATE- The Secretary administers an auction under
this paragraph for each State, under which eligible lenders compete
to originate eligible Federal PLUS Loans under this paragraph at all
institutions of higher education within such State.
`(B) PREQUALIFICATION PROCESS- The Secretary establishes a prequalification
process for eligible lenders desiring to participate in an auction under
this paragraph that contains, at a minimum--
`(i) a set of borrower benefits and servicing requirements each eligible
lender shall meet in order to participate in such an auction; and
`(ii) an assessment of each such eligible lender's capacity, including
capital capacity, to participate effectively.
`(C) TIMING AND ORIGINATION- Each State auction takes place every 2
years, and the eligible lenders with the winning bids for the State
are the only eligible lenders permitted to originate eligible Federal
PLUS Loans made under this paragraph for the cohort of students at the
institutions of higher education within the State until the students
graduate from or leave the institutions of higher education.
`(D) BIDS- Each eligible lender's bid consists of the amount of the
special allowance payment (after the application of section 438(b)(2)(I)(v))
the eligible lender proposes to accept from the Secretary with respect
to the eligible Federal PLUS Loans made under this paragraph in lieu
of the amount determined under section 438(b)(2)(I).
`(E) MAXIMUM BID- The maximum bid allowable under this paragraph shall
not exceed the amount of the special allowance payable on eligible Federal
PLUS Loans made under this paragraph computed under section 438(b)(2)(I)
(other than clauses (ii), (iii), (iv), and (vi) of such section), except
that for purposes of the computation under this subparagraph, section
438(b)(2)(I)(i)(III) shall be applied by substituting `1.79 percent'
for `2.34 percent'.
`(F) WINNING BIDS- The winning bids for each State auction shall be
the 2 bids containing the lowest and the second lowest proposed special
allowance payments, subject to subparagraph (E).
`(G) AGREEMENT WITH SECRETARY- Each eligible lender having a winning
bid under subparagraph (F) enters into an agreement with the Secretary
under which the eligible lender--
`(i) agrees to originate eligible Federal PLUS Loans under this paragraph
to each borrower who--
`(I) seeks an eligible Federal PLUS Loan under this paragraph to
enable a dependent student to attend an institution of higher education
within the State;
`(II) is eligible for an eligible Federal PLUS Loan; and
`(III) elects to borrow from the eligible lender; and
`(ii) agrees to accept a special allowance payment (after the application
of section 438(b)(2)(I)(v)) from the Secretary with respect to the
eligible Federal PLUS Loans originated under clause (i) in the amount
proposed in the second lowest winning bid described in subparagraph
(F) for the applicable State auction.
`(H) SEALED BIDS; CONFIDENTIALITY- All bids are sealed and the Secretary
keeps the bids confidential, including following the announcement of
the winning bids.
`(I) ELIGIBLE LENDER OF LAST RESORT-
`(i) IN GENERAL- In the event that there is no winning bid under subparagraph
(F), the students at the institutions of higher education within the
State that was the subject of the auction shall be served by an eligible
lender of last resort, as determined by the Secretary.
`(ii) DETERMINATION OF ELIGIBLE LENDER OF LAST RESORT- Prior to the
start of any auction under this paragraph, eligible lenders that desire
to serve as an eligible lender of last resort shall submit an application
to the Secretary at such time and in such manner as the Secretary
may determine. Such application shall include an assurance that the
eligible lender will meet the prequalification requirements described
in subparagraph (B).
`(iii) GEOGRAPHIC LOCATION- The Secretary shall identify an eligible
lender of last resort for each State.
`(iv) NOTIFICATION TIMING- The Secretary shall not identify any eligible
lender of last resort until after the announcement of all the winning
bids for a State auction for any year.
`(v) MAXIMUM SPECIAL ALLOWANCE- The Secretary is authorized to set
a special allowance payment that shall be payable to a lender of last
resort for a State under this subparagraph, which special allowance
payment shall be kept confidential, including following the announcement
of winning bids. The Secretary shall set such special allowance payment
so that it incurs the lowest possible cost to the Federal Government,
taking into consideration the lowest bid that was submitted in an
auction for such State and the lowest bid submitted in a similar State,
as determined by the Secretary.
`(J) GUARANTEE AGAINST LOSSES- The Secretary guarantees the eligible
Federal PLUS Loans made under this paragraph against losses resulting
from the default of a parent borrower in an amount equal to 99 percent
of the unpaid principal and interest due on the loan.
`(K) LOAN FEES- The Secretary shall not collect a loan fee under section
438(d) with respect to an eligible Federal Plus Loan originated under
this paragraph.
`(i) IN GENERAL- An eligible lender who is permitted to originate
eligible Federal PLUS Loans for a borrower under this paragraph shall
have the option to consolidate such loans into 1 loan.
`(ii) NOTIFICATION- In the event a borrower with eligible Federal
PLUS Loans made under this paragraph wishes to consolidate the loans,
the borrower shall notify the eligible lender who originated the loans
under this paragraph.
`(iii) LIMITATION ON ELIGIBLE LENDER OPTION TO CONSOLIDATE- The option
described in clause (i) shall not apply if--
