Text: H.R.6 — 105th Congress (1997-1998)All Information (Except Text)

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Public Law No: 105-244 (10/07/1998)

 
[105th Congress Public Law 244]
[From the U.S. Government Printing Office]


<DOC>
[DOCID: f:publ244.105]


[[Page 112 STAT. 1581]]

Public Law 105-244
105th Congress

                                 An Act


 
 To extend the authorization of programs under the Higher Education Act 
  of 1965, and for other purposes. <<NOTE: Oct. 7, 1998 -  [H.R. 6]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Higher Education 
Amendments of 1998. Grants. Inter- governmental relations. Loans.>> 

SECTION 1. <<NOTE: 20 USC 1001 note.>> SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Higher 
Education Amendments of 1998''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. References.
Sec. 3. General effective date.

                       TITLE I--GENERAL PROVISIONS

Sec. 101. Revision of title I.
Sec. 102. Conforming amendments.

                        TITLE II--TEACHER QUALITY

Sec. 201. Teacher quality enhancement grants.

                      TITLE III--INSTITUTIONAL AID

Sec. 301. Transfers and redesignations.
Sec. 302. Findings.
Sec. 303. Strengthening institutions.
Sec. 304. Strengthening HBCU's.
Sec. 305. Endowment challenge grants.
Sec. 306. HBCU capital financing.
Sec. 307. Minority science and engineering improvement program.
Sec. 308. General provisions.

                      TITLE IV--STUDENT ASSISTANCE

                       Part A--Grants to Students

Sec. 401. Federal Pell Grants.
Sec. 402. Federal TRIO programs.
Sec. 403. Gear up program.
Sec. 404. Academic achievement incentive scholarships.
Sec. 405. Repeals.
Sec. 406. Federal supplemental educational opportunity grants.
Sec. 407. Leveraging educational assistance partnership program.
Sec. 408. Special programs for students whose families are engaged in 
           migrant and seasonal farmwork.
Sec. 409. Robert C. Byrd Honors Scholarship Program.
Sec. 410. Child care access means parents in school.
Sec. 410A. Learning anytime anywhere partnerships.

              Part B--Federal Family Education Loan Program

Sec. 411. Limitation repealed.
Sec. 412. Advances to reserve funds.
Sec. 413. Guaranty agency reforms.
Sec. 414. Scope and duration of Federal loan insurance program.

[[Page 112 STAT. 1582]]

Sec. 415. Limitations on individual federally insured loans and Federal 
           loan insurance.
Sec. 416. Applicable interest rates.
Sec. 417. Federal payments to reduce student interest costs.
Sec. 418. Voluntary flexible agreements with guaranty agencies.
Sec. 419. Federal PLUS loans.
Sec. 420. Federal consolidation loans.
Sec. 421. Default reduction program.
Sec. 422. Requirements for disbursements of student loans.
Sec. 423. Unsubsidized loans.
Sec. 424. Loan forgiveness for teachers.
Sec. 425. Loan forgiveness for child care providers.
Sec. 426. Notice to Secretary and payment of loss.
Sec. 427. Legal powers and responsibilities.
Sec. 428. Student loan information by eligible lenders.
Sec. 429. Definitions.
Sec. 430. Delegation of functions.
Sec. 431. Discharge.
Sec. 432. Debt management options.
Sec. 433. Special allowances.
Sec. 434. Federal family education loan insurance fund.

                   Part C--Federal Work-study Programs

Sec. 441. Authorization of appropriations; community services.
Sec. 442. Allocation of funds.
Sec. 443. Grants for Federal work-study programs.
Sec. 444. Flexible use of funds.
Sec. 445. Work colleges.

           Part D--William D. Ford Federal Direct Loan Program

Sec. 451. Selection of institutions.
Sec. 452. Terms and conditions.
Sec. 453. Contracts.
Sec. 454. Funds for administrative expenses.
Sec. 455. Authority to sell loans.
Sec. 456. Loan cancellation for teachers.

                      Part E--Federal Perkins Loans

Sec. 461. Authorization of appropriations.
Sec. 462. Allocation of funds.
Sec. 463. Agreements with institutions of higher education.
Sec. 464. Terms of loans.
Sec. 465. Cancellation for public service.
Sec. 466. Distribution of assets from student loan funds.
Sec. 467. Perkins Loan Revolving Fund.

                          Part F--Need Analysis

Sec. 471. Cost of attendance.
Sec. 472. Data elements.
Sec. 473. Family contribution for dependent students.
Sec. 474. Family contribution for independent students without 
           dependents other than a spouse.
Sec. 475. Family contribution for independent students with dependents 
           other than a spouse.
Sec. 476. Regulations; updated tables and amounts.
Sec. 477. Simplified needs test; zero expected family contribution.
Sec. 478. Discretion of student financial aid administrators.
Sec. 479. Treatment of other financial assistance.
Sec. 480. Clerical amendments.
Sec. 480A. Effective dates.

                       Part G--General Provisions

Sec. 481. Master calendar.
Sec. 482. Forms and regulations.
Sec. 483. Student eligibility.
Sec. 484. State court judgments.
Sec. 485. Institutional refunds.
Sec. 486. Institutional and financial assistance information for 
           students.
Sec. 487. National student loan data system.
Sec. 488. Distance education demonstration programs.

[[Page 112 STAT. 1583]]

Sec. 489. Program participation agreements.
Sec. 490. Regulatory relief and improvement.
Sec. 490A. Garnishment requirements.
Sec. 490B. Administrative subpoena authority.
Sec. 490C. Advisory Committee on Student Financial Assistance.
Sec. 490D. Meetings and negotiated rulemaking.
Sec. 490E. Year 2000 requirements at the Department of Education.
Sec. 490F. Procedures for cancellations and deferments for eligible 
           disabled veterans.

                        Part H--Program Integrity

Sec. 491. State role and responsibilities.
Sec. 492. Accrediting agency recognition.
Sec. 493. Eligibility and certification procedures.
Sec. 494. Program review and data.
Sec. 495. Review of regulations.

                    TITLE V--DEVELOPING INSTITUTIONS

Sec. 501. Establishment of new title V.

               TITLE VI--INTERNATIONAL EDUCATION PROGRAMS

Sec. 601. International and foreign language studies.
Sec. 602. Business and international education programs.
Sec. 603. Institute for International Public Policy.
Sec. 604. General provisions.

       TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

Sec. 701. Revision of title VII.
Sec. 702. Repeals.

           TITLE VIII--STUDIES, REPORTS, AND RELATED PROGRAMS

                             Part A--Studies

Sec. 801. Study of market mechanisms in Federal student loan programs.
Sec. 802. Study of the feasibility of alternative financial instruments 
           for determining lender yields.
Sec. 803. Student-related debt study required.
Sec. 804. Study of transfer of credits.
Sec. 805. Study of opportunities for participation in athletics 
           programs.
Sec. 806. Study of the effectiveness of cohort default rates for 
           institutions with few student loan borrowers.

              Part B--Advanced Placement Incentive Program

Sec. 810. Advanced placement incentive program.

               Part C--Community Scholarship Mobilization

Sec. 811. Short title.
Sec. 812. Findings.
Sec. 813. Definitions.
Sec. 814. Purpose; endowment grant authority.
Sec. 815. Grant agreement and requirements.
Sec. 816. Authorization of appropriations.

Part D--Grants to States for Workplace and Community Transition Training 
                    for Incarcerated Youth Offenders

Sec. 821. Grants to States for workplace and community transition 
           training for incarcerated youth offenders.

    Part E--Grants to Combat Violent Crimes Against Women on Campuses

Sec. 826. Grants to combat violent crimes against women on campuses.
Sec. 827. Study of institutional procedures to report sexual assaults.

 Part F--Improving United States Understanding of Science, Engineering, 
                       and Technology in East Asia

Sec. 831. Improving United States understanding of science, engineering, 
           and technology in East Asia.

                      Part G--Olympic Scholarships

Sec. 836. Extension of authorization.

[[Page 112 STAT. 1584]]

                      Part H--Underground Railroad

Sec. 841. Underground Railroad educational and cultural program.

                 Part I--Summer Travel and Work Programs

Sec. 846. Authority to administer summer travel and work programs.

                 Part J--Web-based Education Commission

Sec. 851. Short title; definitions.
Sec. 852. Establishment of Web-Based Education Commission.
Sec. 853. Duties of the Commission.
Sec. 854. Powers of the Commission.
Sec. 855. Commission personnel matters.
Sec. 856. Termination of the Commission.
Sec. 857. Authorization of appropriations.

                          Part K--Miscellaneous

Sec. 861. Education-welfare study.
Sec. 862. Release of conditions, covenants, and reversionary interests, 
           Guam Community College conveyance, Barrigada, Guam.
Sec. 863. Sense of Congress regarding good character.
Sec. 864. Educational merchandise licensing codes of conduct.

                   TITLE IX--AMENDMENTS TO OTHER LAWS

   Part A--Extension and Revision of Indian Higher Education Programs

Sec. 901. Tribally controlled colleges and universities.
Sec. 902. Reauthorization of Navajo Community College Act.

                      Part B--Education of the Deaf

Sec. 911. Short title.
Sec. 912. Elementary and secondary education programs.
Sec. 913. Agreement with Gallaudet University.
Sec. 914. Agreement for the National Technical Institute for the Deaf.
Sec. 915. Definitions.
Sec. 916. Gifts.
Sec. 917. Reports.
Sec. 918. Monitoring, evaluation, and reporting.
Sec. 919. Federal endowment programs.
Sec. 920. Scholarship program.
Sec. 921. Oversight and effect of agreements.
Sec. 922. International students.
Sec. 923. Research priorities.
Sec. 924. National Study on the Education of the Deaf.
Sec. 925. Authorization of appropriations.

                Part C--United States Institute of Peace

Sec. 931. Authorities of the United States Institute of Peace.

              Part D--Voluntary Retirement Incentive Plans

Sec. 941. Voluntary retirement incentive plans.

           Part E--General Education Provisions Act Amendment

Sec. 951. Amendment to Family Educational Rights and Privacy Act of 
           1974.
Sec. 952. Alcohol or drug possession disclosure.

    Part F--Liaison for Proprietary Institutions of Higher Education

Sec. 961. Liaison for proprietary institutions of higher education.

                  Part G--Amendments to Other Statutes

Sec. 971. Nondischareability of certain claims for educational benefits 
           provided to obtain higher education.
Sec. 972. GNMA guarantee fee.

                             Part H--Repeals

Sec. 981. Repeals.
Sec. 982. Repeals of previous higher education amendments provisions.

SEC. 2. REFERENCES.

    Except as otherwise expressly provided, whenever in this Act an 
amendment or repeal is expressed in terms of an amendment

[[Page 112 STAT. 1585]]

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. 3. GENERAL EFFECTIVE DATE. <<NOTE: 20 USC 1001 note.>> 

    Except as otherwise provided in this Act or the amendments made by 
this Act, the amendments made by this Act shall take effect on October 
1, 1998.

                       TITLE I--GENERAL PROVISIONS

SEC. 101. REVISION OF TITLE I.

    (a) General Provisions.--Title I (20 U.S.C. 1001 et seq.) is amended 
to read as follows:

                      ``TITLE I--GENERAL PROVISIONS

                          ``PART A--DEFINITIONS

``SEC. 101. <<NOTE: 20 USC 1001.>> GENERAL DEFINITION OF INSTITUTION OF 
            HIGHER EDUCATION.

    ``(a) Institution of Higher Education.--For purposes of this Act, 
other than title IV, the term `institution of higher education' means an 
educational institution in any State that--
            ``(1) admits as regular students only persons having a 
        certificate of graduation from a school providing secondary 
        education, or the recognized equivalent of such a certificate;
            ``(2) is legally authorized within such State to provide a 
        program of education beyond secondary education;
            ``(3) provides an educational program for which the 
        institution awards a bachelor's degree or provides not less than 
        a 2-year program that is acceptable for full credit toward such 
        a degree;
            ``(4) is a public or other nonprofit institution; and
            ``(5) is accredited by a nationally recognized accrediting 
        agency or association, or if not so accredited, is an 
        institution that has been granted preaccreditation status by 
        such an agency or association that has been recognized by the 
        Secretary for the granting of preaccreditation status, and the 
        Secretary has determined that there is satisfactory assurance 
        that the institution will meet the accreditation standards of 
        such an agency or association within a reasonable time.

    ``(b) Additional Institutions Included.--For purposes of this Act, 
other than title IV, the term `institution of higher education' also 
includes--
            ``(1) any school that provides not less than a 1-year 
        program of training to prepare students for gainful employment 
        in a recognized occupation and that meets the provision of 
        paragraphs (1), (2), (4), and (5) of subsection (a); and
            ``(2) a public or nonprofit private educational institution 
        in any State that, in lieu of the requirement in subsection 
        (a)(1), admits as regular students persons who are beyond the 
        age of compulsory school attendance in the State in which the 
        institution is located.

    ``(c) <<NOTE: Publication.>>  List of Accrediting Agencies.--For 
purposes of this section and section 102, the Secretary shall publish a 
list of nationally

[[Page 112 STAT. 1586]]

recognized accrediting agencies or associations that the Secretary 
determines, pursuant to subpart 2 of part H of title IV, to be reliable 
authority as to the quality of the education or training offered.

``SEC. 102. <<NOTE: 20 USC 1002.>> DEFINITION OF INSTITUTION OF HIGHER 
            EDUCATION FOR PURPOSES OF TITLE IV PROGRAMS.

    ``(a) Definition of Institution of Higher Education for Purposes of 
Title IV Programs.--
            ``(1) Inclusion of additional institutions.--Subject to 
        paragraphs (2) through (4) of this subsection, the term 
        `institution of higher education' for purposes of title IV 
        includes, in addition to the institutions covered by the 
        definition in section 101--
                    ``(A) a proprietary institution of higher education 
                (as defined in subsection (b) of this section);
                    ``(B) a postsecondary vocational institution (as 
                defined in subsection (c) of this section); and
                    ``(C) only for the purposes of part B of title IV, 
                an institution outside the United States that is 
                comparable to an institution of higher education as 
                defined in section 101 and that has been approved by the 
                Secretary for the purpose of part B of title IV.
            ``(2) Institutions outside the united states.--
                    ``(A) <<NOTE: Regulations.>> In general.--For the 
                purpose of qualifying as an institution under paragraph 
                (1)(C), the Secretary shall establish criteria by 
                regulation for the approval of institutions outside the 
                United States and for the determination that such 
                institutions are comparable to an institution of higher 
                education as defined in section 101. In the case of a 
                graduate medical or veterinary school outside the United 
                States, such criteria shall include a requirement that a 
                student attending such school outside the United States 
                is ineligible for loans made, insured, or guaranteed 
                under part B unless--
                          ``(i)(I) at least 60 percent of those enrolled 
                      in, and at least 60 percent of the graduates of, 
                      the graduate medical school outside the United 
                      States were not persons described in section 
                      484(a)(5) in the year preceding the year for which 
                      a student is seeking a loan under part B of title 
                      IV; and
                          ``(II) at least 60 percent of the individuals 
                      who were students or graduates of the graduate 
                      medical school outside the United States (both 
                      nationals of the United States and others) taking 
                      the examinations administered by the Educational 
                      Commission for Foreign Medical Graduates received 
                      a passing score in the year preceding the year for 
                      which a student is seeking a loan under part B of 
                      title IV; or
                          ``(ii) the institution has a clinical training 
                      program that was approved by a State as of January 
                      1, 1992, or the institution's students complete 
                      their clinical training at an approved veterinary 
                      school located in the United States.
                    ``(B) <<NOTE: Establishment.>> Advisory panel.--

[[Page 112 STAT. 1587]]

                          ``(i) In general.--For the purpose of 
                      qualifying as an institution under paragraph 
                      (1)(C) of this subsection, the Secretary shall 
                      establish an advisory panel of medical experts 
                      that shall--
                                    ``(I) evaluate the standards of 
                                accreditation applied to applicant 
                                foreign medical schools; and
                                    ``(II) determine the comparability 
                                of those standards to standards for 
                                accreditation applied to United States 
                                medical schools.
                          ``(ii) Special rule.--If the accreditation 
                      standards described in clause (i) are determined 
                      not to be comparable, the foreign medical school 
                      shall be required to meet the requirements of 
                      section 101.
                    ``(C) Failure to release information.--The failure 
                of an institution outside the United States to provide, 
                release, or authorize release to the Secretary of such 
                information as may be required by subparagraph (A) shall 
                render such institution ineligible for the purpose of 
                part B of title IV.
                    ``(D) Special rule.--If, pursuant to this paragraph, 
                an institution loses eligibility to participate in the 
                programs under title IV, then a student enrolled at such 
                institution may, notwithstanding such loss of 
                eligibility, continue to be eligible to receive a loan 
                under part B while attending such institution for the 
                academic year succeeding the academic year in which such 
                loss of eligibility occurred.
            ``(3) Limitations based on course of study or enrollment.--
        An institution shall not be considered to meet the definition of 
        an institution of higher education in paragraph (1) if such 
        institution--
                    ``(A) offers more than 50 percent of such 
                institution's courses by correspondence, unless the 
                institution is an institution that meets the definition 
                in section 521(4)(C) of the Carl D. Perkins Vocational 
                and Applied Technology Education Act;
                    ``(B) enrolls 50 percent or more of the 
                institution's students in correspondence courses, unless 
                the institution is an institution that meets the 
                definition in such section, except that the Secretary, 
                at the request of such institution, may waive the 
                applicability of this subparagraph to such institution 
                for good cause, as determined by the Secretary in the 
                case of an institution of higher education that provides 
                a 2- or 4-year program of instruction (or both) for 
                which the institution awards an associate or 
                baccalaureate degree, respectively;
                    ``(C) has a student enrollment in which more than 25 
                percent of the students are incarcerated, except that 
                the Secretary may waive the limitation contained in this 
                subparagraph for a nonprofit institution that provides a 
                2- or 4-year program of instruction (or both) for which 
                the institution awards a bachelor's degree, or an 
                associate's degree or a postsecondary diploma, 
                respectively; or
                    ``(D) has a student enrollment in which more than 50 
                percent of the students do not have a secondary school 
                diploma or its recognized equivalent, and does not 
                provide a 2- or 4-year program of instruction (or both) 
                for which the institution awards a bachelor's degree or 
                an associate's

[[Page 112 STAT. 1588]]

                degree, respectively, except that the Secretary may 
                waive the limitation contained in this subparagraph if a 
                nonprofit institution demonstrates to the satisfaction 
                of the Secretary that the institution exceeds such 
                limitation because the institution serves, through 
                contracts with Federal, State, or local government 
                agencies, significant numbers of students who do not 
                have a secondary school diploma or its recognized 
                equivalent.
            ``(4) Limitations based on management.--An institution shall 
        not be considered to meet the definition of an institution of 
        higher education in paragraph (1) if--
                    ``(A) the institution, or an affiliate of the 
                institution that has the power, by contract or ownership 
                interest, to direct or cause the direction of the 
                management or policies of the institution, has filed for 
                bankruptcy, except that this paragraph shall not apply 
                to a nonprofit institution, the primary function of 
                which is to provide health care educational services (or 
                an affiliate of such an institution that has the power, 
                by contract or ownership interest, to direct or cause 
                the direction of the institution's management or 
                policies) that files for bankruptcy under chapter 11 of 
                title 11, United States Code, between July 1, 1998, and 
                December 1, 1998; or
                    ``(B) the institution, the institution's owner, or 
                the institution's chief executive officer has been 
                convicted of, or has pled nolo contendere or guilty to, 
                a crime involving the acquisition, use, or expenditure 
                of funds under title IV, or has been judicially 
                determined to have committed fraud involving funds under 
                title IV.
            ``(5) Certification.--The Secretary shall certify an 
        institution's qualification as an institution of higher 
        education in accordance with the requirements of subpart 3 of 
        part H of title IV.
            ``(6) Loss of eligibility.--An institution of higher 
        education shall not be considered to meet the definition of an 
        institution of higher education in paragraph (1) if such 
        institution is removed from eligibility for funds under title IV 
        as a result of an action pursuant to part H of title IV.

    ``(b) Proprietary Institution of Higher Education.--
            ``(1) Principal criteria.--For the purpose of this section, 
        the term `proprietary institution of higher education' means a 
        school that--
                    ``(A) provides an eligible program of training to 
                prepare students for gainful employment in a recognized 
                occupation;
                    ``(B) meets the requirements of paragraphs (1) and 
                (2) of section 101(a);
                    ``(C) does not meet the requirement of paragraph (4) 
                of section 101(a);
                    ``(D) is accredited by a nationally recognized 
                accrediting agency or association recognized by the 
                Secretary pursuant to part H of title IV;
                    ``(E) has been in existence for at least 2 years; 
                and
                    ``(F) <<NOTE: Regulations.>> has at least 10 percent 
                of the school's revenues from sources that are not 
                derived from funds provided under title IV, as 
                determined in accordance with regulations prescribed by 
                the Secretary.

[[Page 112 STAT. 1589]]

            ``(2) Additional institutions.--The term `proprietary 
        institution of higher education' also includes a proprietary 
        educational institution in any State that, in lieu of the 
        requirement in paragraph (1) of section 101(a), admits as 
        regular students persons who are beyond the age of compulsory 
        school attendance in the State in which the institution is 
        located.

    ``(c) Postsecondary Vocational Institution.--
            ``(1) Principal criteria.--For the purpose of this section, 
        the term `postsecondary vocational institution' means a school 
        that--
                    ``(A) provides an eligible program of training to 
                prepare students for gainful employment in a recognized 
                occupation;
                    ``(B) meets the requirements of paragraphs (1), (2), 
                (4), and (5) of section 101(a); and
                    ``(C) has been in existence for at least 2 years.
            ``(2) Additional institutions.--The term `postsecondary 
        vocational institution' also includes an educational institution 
        in any State that, in lieu of the requirement in paragraph (1) 
        of section 101(a), admits as regular students persons who are 
        beyond the age of compulsory school attendance in the State in 
        which the institution is located.

``SEC. 103. ADDITIONAL DEFINITIONS. <<NOTE: 20 USC 1003.>> 

    ``In this Act:
            ``(1) Combination of institutions of higher education.--The 
        term `combination of institutions of higher education' means a 
        group of institutions of higher education that have entered into 
        a cooperative arrangement for the purpose of carrying out a 
        common objective, or a public or private nonprofit agency, 
        organization, or institution designated or created by a group of 
        institutions of higher education for the purpose of carrying out 
        a common objective on the group's behalf.
            ``(2) Department.--The term `Department' means the 
        Department of Education.
            ``(3) Disability.--The term `disability' has the same 
        meaning given that term under section 3(2) of the Americans With 
        Disabilities Act of 1990.
            ``(4) Elementary school.--The term `elementary school' has 
        the same meaning given that term under section 14101 of the 
        Elementary and Secondary Education Act of 1965.
            ``(5) Gifted and talented.--The term `gifted and talented' 
        has the same meaning given that term under section 14101 of the 
        Elementary and Secondary Education Act of 1965.
            ``(6) Local educational agency.--The term `local educational 
        agency' has the same meaning given that term under section 14101 
        of the Elementary and Secondary Education Act of 1965.
            ``(7) New borrower.--The term `new borrower' when used with 
        respect to any date means an individual who on that date has no 
        outstanding balance of principal or interest owing on any loan 
        made, insured, or guaranteed under title IV.
            ``(8) Nonprofit.--The term `nonprofit' as applied to a 
        school, agency, organization, or institution means a school, 
        agency, organization, or institution owned and operated by one 
        or more nonprofit corporations or associations, no part

[[Page 112 STAT. 1590]]

        of the net earnings of which inures, or may lawfully inure, to 
        the benefit of any private shareholder or individual.
            ``(9) School or department of divinity.--The term `school or 
        department of divinity' means an institution, or a department or 
        a branch of an institution, the program of instruction of which 
        is designed for the education of students--
                    ``(A) to prepare the students to become ministers of 
                religion or to enter upon some other religious vocation 
                (or to provide continuing training for any such 
                vocation); or
                    ``(B) to prepare the students to teach theological 
                subjects.
            ``(10) Secondary school.--The term `secondary school' has 
        the same meaning given that term under section 14101 of the 
        Elementary and Secondary Education Act of 1965.
            ``(11) Secretary.--The term `Secretary' means the Secretary 
        of Education.
            ``(12) Service-learning.--The term `service-learning' has 
        the same meaning given that term under section 101(23) of the 
        National and Community Service Act of 1990.
            ``(13) Special education teacher.--The term `special 
        education teacher' means teachers who teach children with 
        disabilities as defined in section 602 of the Individuals with 
        Disabilities Education Act.
            ``(14) State educational agency.--The term `State 
        educational agency' has the same meaning given that term under 
        section 14101 of the Elementary and Secondary Education Act of 
        1965.
            ``(15) State higher education agency.--The term `State 
        higher education agency' means the officer or agency primarily 
        responsible for the State supervision of higher education.
            ``(16) State; freely associated states.--
                    ``(A) State.--The term `State' includes, in addition 
                to the several States of the United States, the 
                Commonwealth of Puerto Rico, the District of Columbia, 
                Guam, American Samoa, the United States Virgin Islands, 
                the Commonwealth of the Northern Mariana Islands, and 
                the Freely Associated States.
                    ``(B) Freely associated states.--The term `Freely 
                Associated States' means the Republic of the Marshall 
                Islands, the Federated States of Micronesia, and the 
                Republic of Palau.

                 ``PART B--ADDITIONAL GENERAL PROVISIONS

``SEC. 111. ANTIDISCRIMINATION. <<NOTE: 20 USC 1011.>> 

    ``(a) In General.--Institutions of higher education receiving 
Federal financial assistance may not use such financial assistance, 
directly or indirectly, to undertake any study or project or fulfill the 
terms of any contract containing an express or implied provision that 
any person or persons of a particular race, religion, sex, or national 
origin be barred from performing such study, project, or contract, 
except that nothing in this subsection shall be construed to prohibit an 
institution from conducting objective studies or projects concerning the 
nature, effects, or prevention of discrimination, or to have the 
institution's curriculum restricted on the subject of discrimination.

[[Page 112 STAT. 1591]]

    ``(b) Limitations on Statutory Construction.--Nothing in this Act 
shall be construed to limit the rights or responsibilities of any 
individual under the Americans With Disabilities Act of 1990, the 
Rehabilitation Act of 1973, or any other law.

``SEC. 112. <<NOTE: 20 USC 1011a.>> PROTECTION OF STUDENT SPEECH AND 
            ASSOCIATION RIGHTS.

    ``(a) Protection of Rights.--It is the sense of Congress that no 
student attending an institution of higher education on a full- or part-
time basis should, on the basis of participation in protected speech or 
protected association, be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination or official sanction 
under any education program, activity, or division of the institution 
directly or indirectly receiving financial assistance under this Act, 
whether or not such program, activity, or division is sponsored or 
officially sanctioned by the institution.
    ``(b) Construction.--Nothing in this section shall be construed--
            ``(1) to discourage the imposition of an official sanction 
        on a student that has willfully participated in the disruption 
        or attempted disruption of a lecture, class, speech, 
        presentation, or performance made or scheduled to be made under 
        the auspices of the institution of higher education; or
            ``(2) to prevent an institution of higher education from 
        taking appropriate and effective action to prevent violations of 
        State liquor laws, to discourage binge drinking and other 
        alcohol abuse, to protect students from sexual harassment 
        including assault and date rape, to prevent hazing, or to 
        regulate unsanitary or unsafe conditions in any student 
        residence.

    ``(c) Definitions.--For the purposes of this section:
            ``(1) Official sanction.--The term `official sanction'--
                    ``(A) means expulsion, suspension, probation, 
                censure, condemnation, reprimand, or any other 
                disciplinary, coercive, or adverse action taken by an 
                institution of higher education or administrative unit 
                of the institution; and
                    ``(B) includes an oral or written warning made by an 
                official of an institution of higher education acting in 
                the official capacity of the official.
            ``(2) Protected association.--The term `protected 
        association' means the joining, assembling, and residing with 
        others that is protected under the first and 14th amendments to 
        the Constitution, or would be protected if the institution of 
        higher education involved were subject to those amendments.
            ``(3) Protected speech.--The term `protected speech' means 
        speech that is protected under the first and 14th amendments to 
        the Constitution, or would be protected if the institution of 
        higher education involved were subject to those amendments.

``SEC. 113. <<NOTE: 20 USC 1011b.>>  TREATMENT OF TERRITORIES AND 
            TERRITORIAL STUDENT ASSISTANCE.

    ``(a) Waiver Authority.--The Secretary is required to waive the 
eligibility criteria of any postsecondary education program administered 
by the Department where such criteria do not take into account the 
unique circumstances in Guam, the United States Virgin Islands, American 
Samoa, the Commonwealth of the Northern Mariana Islands, and the Freely 
Associated States.

[[Page 112 STAT. 1592]]

    ``(b) Eligibility.--Notwithstanding any other provision of law, an 
institution of higher education that is located in any of the Freely 
Associated States, rather than in another State, shall be eligible, if 
otherwise qualified, for assistance under chapter 1 of subpart 2 of part 
A of title IV. <<NOTE: Termination date.>> This subsection shall cease 
to be effective on September 30, 2004.

``SEC. 114. <<NOTE: 20 USC 1011c.>> NATIONAL ADVISORY COMMITTEE ON 
            INSTITUTIONAL QUALITY AND INTEGRITY.

    ``(a) Establishment.--There is established in the Department a 
National Advisory Committee on Institutional Quality and Integrity 
(hereafter in this section referred to as the `Committee'), which shall 
be composed of 15 members appointed by the Secretary from among 
individuals who are representatives of, or knowledgeable concerning, 
education and training beyond secondary education, including 
representatives of all sectors and types of institutions of higher 
education (as defined in section 102), to assess the process of 
eligibility and certification of such institutions under title IV and 
the provision of financial aid under title IV.
    ``(b) Terms of Members.--Terms of office of each member of the 
Committee shall be 3 years, except that any member appointed to fill a 
vacancy occurring prior to the expiration of the term for which the 
member's predecessor was appointed shall be appointed for the remainder 
of such term.
    ``(c) Public Notice.--The Secretary shall--
            ``(1) <<NOTE: Federal Register, 
        publication. Records.>> annually publish in the Federal Register 
        a list containing the name of each member of the Committee and 
        the date of the expiration of the term of office of the member; 
        and
            ``(2) publicly solicit nominations for each vacant position 
        or expiring term of office on the Committee.

    ``(d) Functions.--The Committee shall--
            ``(1) advise the Secretary with respect to establishment and 
        enforcement of the standards of accrediting agencies or 
        associations under subpart 2 of part H of title IV;
            ``(2) advise the Secretary with respect to the recognition 
        of a specific accrediting agency or association;
            ``(3) advise the Secretary with respect to the preparation 
        and publication of the list of nationally recognized accrediting 
        agencies and associations;
            ``(4) develop and recommend to the Secretary standards and 
        criteria for specific categories of vocational training 
        institutions and institutions of higher education for which 
        there are no recognized accrediting agencies, associations, or 
        State agencies, in order to establish the eligibility of such 
        institutions on an interim basis for participation in federally 
        funded programs;
            ``(5) advise the Secretary with respect to the eligibility 
        and certification process for institutions of higher education 
        under title IV, together with recommendations for improvements 
        in such process;
            ``(6) advise the Secretary with respect to the relationship 
        between--
                    ``(A) accreditation of institutions of higher 
                education and the certification and eligibility of such 
                institutions; and
                    ``(B) State licensing responsibilities with respect 
                to such institutions; and

[[Page 112 STAT. 1593]]

            ``(7) carry out such other advisory functions relating to 
        accreditation and institutional eligibility as the Secretary may 
        prescribe.

    ``(e) Meeting Procedures.--The Committee shall meet not less than 
twice each year at the call of the Chairperson. The date of, and agenda 
for, each meeting of the Committee shall be submitted in advance to the 
Secretary for approval. A representative of the Secretary shall be 
present at all meetings of the Committee.
    ``(f ) <<NOTE: Deadline. Records.>> Report.--Not later than November 
30 of each year, the Committee shall make an annual report through the 
Secretary to Congress. The annual report shall contain--
            ``(1) a list of the members of the Committee and their 
        addresses;
            ``(2) a list of the functions of the Committee;
            ``(3) a list of dates and places of each meeting during the 
        preceding fiscal year; and
            ``(4) a summary of the activities, findings and 
        recommendations made by the Committee during the preceding 
        fiscal year.

    ``(g) Termination.--The Committee shall cease to exist on September 
30, 2004.

``SEC. 115. STUDENT REPRESENTATION. <<NOTE: 20 USC 1011d.>> 

    ``The Secretary shall, in appointing individuals to any commission, 
committee, board, panel, or other body in connection with the 
administration of this Act, include individuals who are, at the time of 
appointment, attending an institution of higher education.

``SEC. 116. FINANCIAL RESPONSIBILITY OF FOREIGN STUDENTS. <<NOTE: 20 USC 
            1011e.>> 

    ``Nothing in this Act or any other Federal law shall be construed to 
prohibit any institution of higher education from requiring a student 
who is a foreign national (and not admitted to permanent residence in 
the United States) to guarantee the future payment of tuition and fees 
to such institution by--
            ``(1) making advance payment of such tuition and fees;
            ``(2) making deposits in an escrow account administered by 
        such institution for such payments; or
            ``(3) obtaining a bond or other insurance that such payments 
        will be made.

``SEC. 117. DISCLOSURES OF FOREIGN GIFTS. <<NOTE: 20 USC 1011f.>> 

    ``(a) <<NOTE: Deadline.>> Disclosure Report.--Whenever any 
institution is owned or controlled by a foreign source or receives a 
gift from or enters into a contract with a foreign source, the value of 
which is $250,000 or more, considered alone or in combination with all 
other gifts from or contracts with that foreign source within a calendar 
year, the institution shall file a disclosure report with the Secretary 
on January 31 or July 31, whichever is sooner.

    ``(b) Contents of Report.--Each report to the Secretary required by 
this section shall contain the following:
            ``(1) For gifts received from or contracts entered into with 
        a foreign source other than a foreign government, the aggregate 
        dollar amount of such gifts and contracts attributable to a 
        particular country. The country to which a gift is attributable 
        is the country of citizenship, or if unknown, the principal 
        residence for a foreign source who is a natural person, and the

[[Page 112 STAT. 1594]]

        country of incorporation, or if unknown, the principal place of 
        business, for a foreign source which is a legal entity.
            ``(2) For gifts received from or contracts entered into with 
        a foreign government, the aggregate amount of such gifts and 
        contracts received from each foreign government.
            ``(3) In the case of an institution which is owned or 
        controlled by a foreign source, the identity of the foreign 
        source, the date on which the foreign source assumed ownership 
        or control, and any changes in program or structure resulting 
        from the change in ownership or control.

    ``(c) Additional Disclosures for Restricted and Conditional Gifts.--
Notwithstanding the provisions of subsection (b), whenever any 
institution receives a restricted or conditional gift or contract from a 
foreign source, the institution shall disclose the following:
            ``(1) For such gifts received from or contracts entered into 
        with a foreign source other than a foreign government, the 
        amount, the date, and a description of such conditions or 
        restrictions. The report shall also disclose the country of 
        citizenship, or if unknown, the principal residence for a 
        foreign source which is a natural person, and the country of 
        incorporation, or if unknown, the principal place of business 
        for a foreign source which is a legal entity.
            ``(2) For gifts received from or contracts entered into with 
        a foreign government, the amount, the date, a description of 
        such conditions or restrictions, and the name of the foreign 
        government.

    ``(d) Relation to Other Reporting Requirements.--
            ``(1) State requirements.--If an institution described under 
        subsection (a) is within a State which has enacted requirements 
        for public disclosure of gifts from or contracts with a foreign 
        source that are substantially similar to the requirements of 
        this section, a copy of the disclosure report filed with the 
        State may be filed with the Secretary in lieu of a report 
        required under subsection (a). The State in which the 
        institution is located shall provide to the Secretary such 
        assurances as the Secretary may require to establish that the 
        institution has met the requirements for public disclosure under 
        State law if the State report is filed.
            ``(2) Use of other federal reports.--If an institution 
        receives a gift from, or enters into a contract with, a foreign 
        source, where any other department, agency, or bureau of the 
        executive branch requires a report containing requirements 
        substantially similar to those required under this section, a 
        copy of the report may be filed with the Secretary in lieu of a 
        report required under subsection (a).

    ``(e) Public Inspection.--All disclosure reports required by this 
section shall be public records open to inspection and copying during 
business hours.
    ``(f ) Enforcement.--
            ``(1) Court orders.--Whenever it appears that an institution 
        has failed to comply with the requirements of this section, 
        including any rule or regulation promulgated under this section, 
        a civil action may be brought by the Attorney General, at the 
        request of the Secretary, in an appropriate district court of 
        the United States, or the appropriate United States court of any 
        territory or other place subject to the jurisdiction of

[[Page 112 STAT. 1595]]

        the United States, to request such court to compel compliance 
        with the requirements of this section.
            ``(2) Costs.--For knowing or willful failure to comply with 
        the requirements of this section, including any rule or 
        regulation promulgated thereunder, an institution shall pay to 
        the Treasury of the United States the full costs to the United 
        States of obtaining compliance, including all associated costs 
        of investigation and enforcement.

    ``(g) Regulations.--The Secretary may promulgate regulations to 
carry out this section.
    ``(h) Definitions.--For the purpose of this section--
            ``(1) the term `contract' means any agreement for the 
        acquisition by purchase, lease, or barter of property or 
        services by the foreign source, for the direct benefit or use of 
        either of the parties;
            ``(2) the term `foreign source' means--
                    ``(A) a foreign government, including an agency of a 
                foreign government;
                    ``(B) a legal entity, governmental or otherwise, 
                created solely under the laws of a foreign state or 
                states;
                    ``(C) an individual who is not a citizen or a 
                national of the United States or a trust territory or 
                protectorate thereof; and
                    ``(D) an agent, including a subsidiary or affiliate 
                of a foreign legal entity, acting on behalf of a foreign 
                source;
            ``(3) the term `gift' means any gift of money or property;
            ``(4) the term `institution' means any institution, public 
        or private, or, if a multicampus institution, any single campus 
        of such institution, in any State, that--
                    ``(A) is legally authorized within such State to 
                provide a program of education beyond secondary school;
                    ``(B) provides a program for which the institution 
                awards a bachelor's degree (or provides not less than a 
                2-year program which is acceptable for full credit 
                toward such a degree) or more advanced degrees; and
                    ``(C) is accredited by a nationally recognized 
                accrediting agency or association and to which 
                institution Federal financial assistance is extended 
                (directly or indirectly through another entity or 
                person), or which institution receives support from the 
                extension of Federal financial assistance to any of the 
                institution's subunits; and
            ``(5) the term `restricted or conditional gift or contract' 
        means any endowment, gift, grant, contract, award, present, or 
        property of any kind which includes provisions regarding--
                    ``(A) the employment, assignment, or termination of 
                faculty;
                    ``(B) the establishment of departments, centers, 
                research or lecture programs, or new faculty positions;
                    ``(C) the selection or admission of students; or
                    ``(D) the award of grants, loans, scholarships, 
                fellowships, or other forms of financial aid restricted 
                to students of a specified country, religion, sex, 
                ethnic origin, or political opinion.

``SEC. 118. APPLICATION OF PEER REVIEW PROCESS. <<NOTE: 20 USC 1011g.>> 

    ``All applications submitted under the provisions of this Act which 
require peer review shall be read by a panel of readers

[[Page 112 STAT. 1596]]

composed of individuals selected by the Secretary, which shall include 
outside readers who are not employees of the Federal Government. The 
Secretary shall ensure that no individual assigned under this section to 
review any application has any conflict of interest with regard to that 
application which might impair the impartiality with which that 
individual conducts the review under this section.

``SEC. 119. BINGE DRINKING ON COLLEGE CAMPUSES. <<NOTE: Collegiate 
            Initiative To Reduce Binge Drinking and Illegal Alcohol 
            Consumption. 20 USC 1011h.>> 

    ``(a) Short Title.--This section may be cited as the `Collegiate 
Initiative To Reduce Binge Drinking and Illegal Alcohol Consumption'.
    ``(b) Sense of Congress.--It is the sense of Congress that, in an 
effort to change the culture of alcohol consumption on college campuses, 
all institutions of higher education should carry out the following:
            ``(1) The president of the institution should appoint a task 
        force consisting of school administrators, faculty, students, 
        Greek system representatives, and others to conduct a full 
        examination of student and academic life at the institution. The 
        task force should make recommendations for a broad range of 
        policy and program changes that would serve to reduce alcohol 
        and other drug-related problems. The institution should provide 
        resources to assist the task force in promoting the campus 
        policies and proposed environmental changes that have been 
        identified.
            ``(2) The institution should provide maximum opportunities 
        for students to live in an alcohol-free environment and to 
        engage in stimulating, alcohol-free recreational and leisure 
        activities.
            ``(3) The institution should enforce a `zero tolerance' 
        policy on the illegal consumption of alcohol by students at the 
        institution.
            ``(4) The institution should vigorously enforce the 
        institution's code of disciplinary sanctions for those who 
        violate campus alcohol policies. Students with alcohol or other 
        drug-related problems should be referred for assistance, 
        including on-campus counseling programs if appropriate.
            ``(5) The institution should adopt a policy to discourage 
        alcoholic beverage-related sponsorship of on-campus activities. 
        It should adopt policies limiting the advertisement and 
        promotion of alcoholic beverages on campus.
            ``(6) The institution should work with the local community, 
        including local businesses, in a `Town/Gown' alliance to 
        encourage responsible policies toward alcohol consumption and to 
        address illegal alcohol use by students.

``SEC. 120. DRUG AND ALCOHOL ABUSE PREVENTION. <<NOTE: 20 USC 1011i.>> 

    ``(a) <<NOTE: Certification.>> Restriction on Eligibility.--
Notwithstanding any other provision of law, no institution of higher 
education shall be eligible to receive funds or any other form of 
financial assistance under any Federal program, including participation 
in any federally funded or guaranteed student loan program, unless the 
institution certifies to the Secretary that the institution has adopted 
and has implemented a program to prevent the use of illicit drugs and 
the abuse of alcohol by students and employees that, at a minimum, 
includes--
            ``(1) the annual distribution to each student and employee 
        of--

[[Page 112 STAT. 1597]]

                    ``(A) standards of conduct that clearly prohibit, at 
                a minimum, the unlawful possession, use, or distribution 
                of illicit drugs and alcohol by students and employees 
                on the institution's property or as part of any of the 
                institution's activities;
                    ``(B) a description of the applicable legal 
                sanctions under local, State, or Federal law for the 
                unlawful possession or distribution of illicit drugs and 
                alcohol;
                    ``(C) a description of the health-risks associated 
                with the use of illicit drugs and the abuse of alcohol;
                    ``(D) a description of any drug or alcohol 
                counseling, treatment, or rehabilitation or re-entry 
                programs that are available to employees or students; 
                and
                    ``(E) a clear statement that the institution will 
                impose sanctions on students and employees (consistent 
                with local, State, and Federal law), and a description 
                of those sanctions, up to and including expulsion or 
                termination of employment and referral for prosecution, 
                for violations of the standards of conduct required by 
                subparagraph (A); and
            ``(2) a biennial review by the institution of the 
        institution's program to--
                    ``(A) determine the program's effectiveness and 
                implement changes to the program if the changes are 
                needed; and
                    ``(B) ensure that the sanctions required by 
                paragraph (1)(E) are consistently enforced.

    ``(b) Information Availability.--Each institution of higher 
education that provides the certification required by subsection (a) 
shall, upon request, make available to the Secretary and to the public a 
copy of each item required by subsection (a)(1) as well as the results 
of the biennial review required by subsection (a)(2).
    ``(c) Regulations.--
            ``(1) In general.--The Secretary shall publish regulations 
        to implement and enforce the provisions of this section, 
        including regulations that provide for--
                    ``(A) the periodic review of a representative sample 
                of programs required by subsection (a); and
                    ``(B) a range of responses and sanctions for 
                institutions of higher education that fail to implement 
                their programs or to consistently enforce their 
                sanctions, including information and technical 
                assistance, the development of a compliance agreement, 
                and the termination of any form of Federal financial 
                assistance.
            ``(2) Rehabilitation program.--The sanctions required by 
        subsection (a)(1)(E) may include the completion of an 
        appropriate rehabilitation program.

    ``(d) Appeals.--Upon determination by the Secretary to terminate 
financial assistance to any institution of higher education under this 
section, the institution may file an appeal with an administrative law 
judge before the expiration of the 30-day period beginning on the date 
such institution is notified of the decision to terminate financial 
assistance under this section. Such judge shall hold a hearing with 
respect to such termination of assistance before the expiration of the 
45-day period beginning on the date that such appeal is filed. Such 
judge may extend such 45-day

[[Page 112 STAT. 1598]]

period upon a motion by the institution concerned. The decision of the 
judge with respect to such termination shall be considered to be a final 
agency action.
    ``(e) Alcohol and Drug Abuse Prevention Grants.--
            ``(1) Program authority.--The Secretary may make grants to 
        institutions of higher education or consortia of such 
        institutions, and enter into contracts with such institutions, 
        consortia, and other organizations, to develop, implement, 
        operate, improve, and disseminate programs of prevention, and 
        education (including treatment-referral) to reduce and eliminate 
        the illegal use of drugs and alcohol and the violence associated 
        with such use. Such grants or contracts may also be used for the 
        support of a higher education center for alcohol and drug abuse 
        prevention that will provide training, technical assistance, 
        evaluation, dissemination, and associated services and 
        assistance to the higher education community as determined by 
        the Secretary and institutions of higher education.
            ``(2) Awards.--Grants and contracts shall be awarded under 
        paragraph (1) on a competitive basis.
            ``(3) Applications.--An institution of higher education, a 
        consortium of such institutions, or another organization that 
        desires to receive a grant or contract under paragraph (1) shall 
        submit an application to the Secretary at such time, in such 
        manner, and containing or accompanied by such information as the 
        Secretary may reasonably require by regulation.
            ``(4) Additional requirements.--
                    ``(A) Participation.--In awarding grants and 
                contracts under this subsection the Secretary shall make 
                every effort to ensure--
                          ``(i) the equitable participation of private 
                      and public institutions of higher education 
                      (including community and junior colleges); and
                          ``(ii) the equitable geographic participation 
                      of such institutions.
                    ``(B) Consideration.--In awarding grants and 
                contracts under this subsection the Secretary shall give 
                appropriate consideration to institutions of higher 
                education with limited enrollment.
            ``(5) Authorization of appropriations.--There are authorized 
        to be appropriated to carry out this subsection $5,000,000 for 
        fiscal year 1999 and such sums as may be necessary for each of 
        the 4 succeeding fiscal years.

    ``(f ) National Recognition Awards.--
            ``(1) Purpose.--It is the purpose of this subsection to 
        provide models of innovative and effective alcohol and drug 
        abuse prevention programs in higher education and to focus 
        national attention on exemplary alcohol and drug abuse 
        prevention efforts.
            ``(2) Awards.--
                    ``(A) In general.--The Secretary shall make 5 
                National Recognition Awards for outstanding alcohol 
                prevention programs and 5 National Recognition Awards 
                for outstanding drug abuse prevention programs, on an 
                annual basis, to institutions of higher education that--

[[Page 112 STAT. 1599]]

                          ``(i) have developed and implemented 
                      innovative and effective alcohol prevention 
                      programs or drug abuse prevention programs; and
                          ``(ii) with respect to an application for an 
                      alcohol prevention program award, demonstrate in 
                      the application submitted under paragraph (3) that 
                      the institution has undertaken efforts designed to 
                      change the culture of college drinking consistent 
                      with the review criteria described in paragraph 
                      (3)(C)(iii).
                    ``(B) <<NOTE: District of Columbia.>> Ceremony.--The 
                awards shall be made at a ceremony in Washington, D.C.
                    ``(C) <<NOTE: Publication.>> Document.--The 
                Secretary shall publish a document describing the 
                alcohol and drug abuse prevention programs of 
                institutions of higher education that receive the awards 
                under this subsection and disseminate the document 
                nationally to all public and private secondary school 
                guidance counselors for use by secondary school juniors 
                and seniors preparing to enter an institution of higher 
                education. <<NOTE: Deadline.>> The document shall be 
                disseminated not later than January 1 of each academic 
                year.
                    ``(D) Amount and use.--Each institution of higher 
                education selected to receive an award under this 
                subsection shall receive an award in the amount of 
                $50,000. Such award shall be used for the maintenance 
                and improvement of the institution's outstanding 
                prevention program for the academic year following the 
                academic year for which the award is made.
            ``(3) Application.--
                    ``(A) In general.--Each institution of higher 
                education desiring an award under this subsection shall 
                submit an application to the Secretary at such time, in 
                such manner, and accompanied by such information as the 
                Secretary may require. Each such application shall 
                contain--
                          ``(i) a clear description of the goals and 
                      objectives of the prevention program of the 
                      institution;
                          ``(ii) a description of program activities 
                      that focus on alcohol or drug policy issues, 
                      policy development, modification, or refinement, 
                      policy dissemination and implementation, and 
                      policy enforcement;
                          ``(iii) a description of activities that 
                      encourage student and employee participation and 
                      involvement in activity development and 
                      implementation;
                          ``(iv) the objective criteria used to 
                      determine the effectiveness of the methods used in 
                      such programs and the means used to evaluate and 
                      improve the programs' efforts;
                          ``(v) a description of special initiatives 
                      used to reduce high-risk behavior or increase low-
                      risk behavior; and
                          ``(vi) a description of coordination and 
                      networking efforts that exist in the community in 
                      which the institution is located for purposes of 
                      such programs.
                    ``(B) Application review.--The Secretary shall 
                appoint a committee to review applications submitted

[[Page 112 STAT. 1600]]

                under this paragraph. The committee may include 
                representatives of Federal departments or agencies the 
                programs of which include alcohol abuse prevention and 
                education efforts and drug abuse prevention and 
                education efforts, directors or heads (or their 
                representatives) of professional associations that focus 
                on alcohol and drug abuse prevention efforts, and non-
                Federal scientists who have backgrounds in social 
                science evaluation and research methodology and in 
                education. Decisions of the committee shall be made 
                directly to the Secretary without review by any other 
                entity in the Department.
                    ``(C) Review criteria.--The committee described in 
                subparagraph (B) shall develop specific review criteria 
                for reviewing and evaluating applications submitted 
                under this paragraph. The review criteria shall 
                include--
                          ``(i) measures of the effectiveness of the 
                      program of the institution, that includes changes 
                      in the campus alcohol or other drug environment or 
                      the climate and changes in alcohol or other drug 
                      use before and after the initiation of the 
                      program;
                          ``(ii) measures of program 
                      institutionalization, including--
                                    ``(I) an assessment of needs of the 
                                institution;
                                    ``(II) the institution's alcohol and 
                                drug policies, staff and faculty 
                                development activities, drug prevention 
                                criteria, student, faculty, and campus 
                                community involvement; and
                                    ``(III) whether the program will be 
                                continued after the cessation of Federal 
                                funding; and
                          ``(iii) with respect to an application for an 
                      alcohol prevention program award, criteria for 
                      determining whether the institution has policies 
                      in effect that--
                                    ``(I) prohibit alcoholic beverage 
                                sponsorship of athletic events, and 
                                prohibit alcoholic beverage advertising 
                                inside athletic facilities;
                                    ``(II) prohibit alcoholic beverage 
                                marketing on campus, which may include 
                                efforts to ban alcohol advertising in 
                                institutional publications or efforts to 
                                prohibit alcohol-related advertisements 
                                at campus events;
                                    ``(III) establish or expand upon 
                                alcohol-free living arrangements for all 
                                college students;
                                    ``(IV) establish partnerships with 
                                community members and organizations to 
                                further alcohol prevention efforts on 
                                campus and the areas surrounding campus; 
                                and
                                    ``(V) establish innovative 
                                communications programs involving 
                                students and faculty in an effort to 
                                educate students about alcohol-related 
                                risks.
            ``(4) Eligibility.--In order to be eligible to receive a 
        National Recognition Award an institution of higher education 
        shall--
                    ``(A) offer an associate or baccalaureate degree;
                    ``(B) have established an alcohol abuse prevention 
                and education program or a drug abuse prevention and 
                education program;

[[Page 112 STAT. 1601]]

                    ``(C) nominate itself or be nominated by others, 
                such as professional associations or student 
                organizations, to receive the award; and
                    ``(D) not have received an award under this 
                subsection during the 5 academic years preceding the 
                academic year for which the determination is made.
            ``(5) Authorization of appropriations.--
                    ``(A) In general.--There is authorized to be 
                appropriated to carry out this subsection $750,000 for 
                fiscal year 1999.
                    ``(B) Availability.--Funds appropriated under 
                subparagraph (A) shall remain available until expended.

``SEC. 121. PRIOR RIGHTS AND OBLIGATIONS. <<NOTE: 20 USC 1011j.>> 

    ``(a) Authorization of Appropriations.--
            ``(1) Pre-1987 parts c and d of title vii.--There are 
        authorized to be appropriated such sums as may be necessary for 
        fiscal year 1999 and for each of the 4 succeeding fiscal years 
        to pay obligations incurred prior to 1987 under parts C and D of 
        title VII, as such parts were in effect before the effective 
        date of the Higher Education Amendments of 1992.
            ``(2) Post-1992 and pre-1998 part c of title vii.--There are 
        authorized to be appropriated such sums as may be necessary for 
        fiscal year 1999 and for each of the 4 succeeding fiscal years 
        to pay obligations incurred prior to the date of enactment of 
        the Higher Education Amendments of 1998 under part C of title 
        VII, as such part was in effect during the period--
                    ``(A) after the effective date of the Higher 
                Education Amendments of 1992; and
                    ``(B) prior to the date of enactment of the Higher 
                Education Amendments of 1998.

    ``(b) Legal Responsibilities.--
            ``(1) Pre-1987 title vii.--All entities with continuing 
        obligations incurred under parts A, B, C, and D of title VII, as 
        such parts were in effect before the effective date of the 
        Higher Education Amendments of 1992, shall be subject to the 
        requirements of such part as in effect before the effective date 
        of the Higher Education Amendments of 1992.
            ``(2) Post-1992 and pre-1998 part c of title vii.--All 
        entities with continuing obligations incurred under part C of 
        title VII, as such part was in effect during the period--
                    ``(A) after the effective date of the Higher 
                Education Amendments of 1992; and
                    ``(B) prior to the date of enactment of the Higher 
                Education Amendments of 1998,
        shall be subject to the requirements of such part as such part 
        was in effect during such period.

``SEC. 122. RECOVERY OF PAYMENTS. <<NOTE: 20 USC 1011k.>> 

    ``(a) Public Benefit.--Congress declares that, if a facility 
constructed with the aid of a grant under part A of title VII as such 
part A was in effect prior to the date of enactment of the Higher 
Education Amendments of 1998, or part B of such title as part B was in 
effect prior to the date of enactment of the Higher Education Amendments 
of 1992, is used as an academic facility for 20 years following 
completion of such construction, the public benefit accruing to the 
United States will equal in value

[[Page 112 STAT. 1602]]

the amount of the grant. The period of 20 years after completion of such 
construction shall therefore be deemed to be the period of Federal 
interest in such facility for the purposes of such title as so in 
effect.
    ``(b) Recovery Upon Cessation of Public Benefit.--If, within 20 
years after completion of construction of an academic facility which has 
been constructed, in part with a grant under part A of title VII as such 
part A was in effect prior to the date of enactment of the Higher 
Education Amendments of 1998, or part B of title VII as such part B was 
in effect prior to the date of enactment of the Higher Education 
Amendments of 1992--
            ``(1) the applicant under such parts as so in effect (or the 
        applicant's successor in title or possession) ceases or fails to 
        be a public or nonprofit institution; or
            ``(2) the facility ceases to be used as an academic 
        facility, or the facility is used as a facility excluded from 
        the term `academic facility' (as such term was defined under 
        title VII, as so in effect), unless the Secretary determines 
        that there is good cause for releasing the institution from its 
        obligation,

the United States shall be entitled to recover from such applicant (or 
successor) an amount which bears to the value of the facility at that 
time (or so much thereof as constituted an approved project or projects) 
the same ratio as the amount of Federal grant bore to the cost of the 
facility financed with the aid of such grant. The value shall be 
determined by agreement of the parties or by action brought in the 
United States district court for the district in which such facility is 
situated.
    ``(c) Prohibition on Use for Religion.--Notwithstanding the 
provisions of subsections (a) and (b), no project assisted with funds 
under title VII (as in effect prior to the date of enactment of the 
Higher Education Amendments of 1998) shall ever be used for religious 
worship or a sectarian activity or for a school or department of 
divinity.

                   ``PART C--COST OF HIGHER EDUCATION

``SEC. 131. <<NOTE: 20 USC 1015.>> IMPROVEMENTS IN MARKET INFORMATION 
            AND PUBLIC ACCOUNTABILITY IN HIGHER EDUCATION.

    ``(a) Improved Data Collection.--
            ``(1) Development of uniform methodology.--The Secretary 
        shall direct the Commissioner of Education Statistics to convene 
        a series of forums to develop nationally consistent 
        methodologies for reporting costs incurred by postsecondary 
        institutions in providing postsecondary education.
            ``(2) Redesign of data systems.--On the basis of the 
        methodologies developed pursuant to paragraph (1), the Secretary 
        shall redesign relevant parts of the postsecondary education 
        data systems to improve the usefulness and timeliness of the 
        data collected by such systems.
            ``(3) Information to institutions.--The Commissioner of 
        Education Statistics shall--
                    ``(A) develop a standard definition for the 
                following data elements:
                          ``(i) tuition and fees for a full-time 
                      undergraduate student;

[[Page 112 STAT. 1603]]

                          ``(ii) cost of attendance for a full-time 
                      undergraduate student, consistent with the 
                      provisions of section 472;
                          ``(iii) average amount of financial assistance 
                      received by an undergraduate student who attends 
                      an institution of higher education, including--
                                    ``(I) each type of assistance or 
                                benefit described in section 
                                428(a)(2)(C)(i);
                                    ``(II) fellowships; and
                                    ``(III) institutional and other 
                                assistance; and
                          ``(iv) number of students receiving financial 
                      assistance described in each of subclauses (I), 
                      (II), and (III) of clause (iii);
                    ``(B) <<NOTE: Deadline. Reports.>> not later than 90 
                days after the date of enactment of the Higher Education 
                Amendments of 1998, report the definitions to each 
                institution of higher education and within a reasonable 
                period of time thereafter inform the Committee on Labor 
                and Human Resources of the Senate and the Committee on 
                Education and the Workforce of the House of 
                Representatives of those definitions; and
                    ``(C) collect information regarding the data 
                elements described in subparagraph (A) with respect to 
                at least all institutions of higher education 
                participating in programs under title IV, beginning with 
                the information from academic year 2000-2001 and 
                annually thereafter.

    ``(b) Data Dissemination.--The Secretary shall make available the 
data collected pursuant to subsection (a). Such data shall be available 
in a form that permits the review and comparison of the data submissions 
of individual institutions of higher education. Such data shall be 
presented in a form that is easily understandable and allows parents and 
students to make informed decisions based on the costs for typical full-
time undergraduate students.
    ``(c) Study.--
            ``(1) In general.--The Commissioner of Education Statistics 
        shall conduct a national study of expenditures at institutions 
        of higher education. Such study shall include information with 
        respect to--
                    ``(A) the change in tuition and fees compared with 
                the consumer price index and other appropriate measures 
                of inflation;
                    ``(B) faculty salaries and benefits;
                    ``(C) administrative salaries, benefits and 
                expenses;
                    ``(D) academic support services;
                    ``(E) research;
                    ``(F) operations and maintenance; and
                    ``(G) institutional expenditures for construction 
                and technology and the potential cost of replacing 
                instructional buildings and equipment.
            ``(2) Evaluation.--The study shall include an evaluation 
        of--
                    ``(A) changes over time in the expenditures 
                identified in paragraph (1);
                    ``(B) the relationship of the expenditures 
                identified in paragraph (1) to college costs; and
                    ``(C) the extent to which increases in institutional 
                financial aid and tuition discounting practices affect 
                tuition increases, including the demographics of 
                students receiving

[[Page 112 STAT. 1604]]

                such discounts, the extent to which financial aid is 
                provided to students with limited need in order to 
                attract a student to a particular institution, and the 
                extent to which Federal financial aid, including loan 
                aid, has been used to offset the costs of such 
                practices.
            ``(3) <<NOTE: Deadline.>> Final report.--The Commissioner of 
        Education Statistics shall submit a report regarding the 
        findings of the study required by paragraph (1) to the 
        appropriate committees of Congress not later than September 30, 
        2002.
            ``(4) Higher education market basket.--The Bureau of Labor 
        Statistics, in consultation with the Commissioner of Education 
        Statistics, shall develop a higher education market basket that 
        identifies the items that comprise the costs of higher 
        education. <<NOTE: Reports. Deadline.>> The Bureau of Labor 
        Statistics shall provide a report on the market basket to the 
        Committee on Labor and Human Resources of the Senate and the 
        Committee on Education and the Workforce of the House of 
        Representatives not later than September 30, 2002.
            ``(5) Fines.--In addition to actions authorized in section 
        487(c), the Secretary may impose a fine in an amount not to 
        exceed $25,000 on an institution of higher education for failing 
        to provide the information described in paragraph (1) in a 
        timely and accurate manner, or for failing to otherwise 
        cooperate with the National Center for Education Statistics 
        regarding efforts to obtain data on the cost of higher education 
        under this section and pursuant to the program participation 
        agreement entered into under section 487.

    ``(d) Student Aid Recipient Survey.--(1) The Secretary shall survey 
student aid recipients on a regular cycle, but not less than once every 
3 years--
            ``(A) to identify the population of students receiving 
        Federal student aid;
            ``(B) to determine the income distribution and other 
        socioeconomic characteristics of federally aided students;
            ``(C) to describe the combinations of aid from State, 
        Federal, and private sources received by students from all 
        income groups;
            ``(D) to describe the debt burden of loan recipients and 
        their capacity to repay their education debts; and
            ``(E) to disseminate such information in both published and 
        machine readable form.

    ``(2) The survey shall be representative of full-time and part-time, 
undergraduate, graduate, and professional and current and former 
students in all types of institutions, and should be designed and 
administered in consultation with the Congress and the postsecondary 
education community.

 ``PART D--ADMINISTRATIVE PROVISIONS FOR DELIVERY OF STUDENT FINANCIAL 
                               ASSISTANCE

``SEC. 141. <<NOTE: 20 USC 1018.>>  PERFORMANCE-BASED ORGANIZATION FOR 
            THE DELIVERY OF FEDERAL STUDENT FINANCIAL ASSISTANCE.

    ``(a) Establishment and Purpose.--
            ``(1) Establishment.--There is established in the Department 
        a Performance-Based Organization (hereafter referred to

[[Page 112 STAT. 1605]]

        as the `PBO') which shall be a discrete management unit 
        responsible for managing the operational functions supporting 
        the programs authorized under title IV of this Act, as specified 
        in subsection (b).
            ``(2) Purposes.--The purposes of the PBO are--
                    ``(A) to improve service to students and other 
                participants in the student financial assistance 
                programs authorized under title IV, including making 
                those programs more understandable to students and their 
                parents;
                    ``(B) to reduce the costs of administering those 
                programs;
                    ``(C) to increase the accountability of the 
                officials responsible for administering the operational 
                aspects of these programs;
                    ``(D) to provide greater flexibility in the 
                management of the operational functions of the Federal 
                student financial assistance programs;
                    ``(E) to integrate the information systems 
                supporting the Federal student financial assistance 
                programs;
                    ``(F) to implement an open, common, integrated 
                system for the delivery of student financial assistance 
                under title IV; and
                    ``(G) to develop and maintain a student financial 
                assistance system that contains complete, accurate, and 
                timely data to ensure program integrity.

    ``(b) General Authority.--
            ``(1) Authority of secretary.--Notwithstanding any other 
        provision of this part, the Secretary shall maintain 
        responsibility for the development and promulgation of policy 
        and regulations relating to the programs of student financial 
        assistance under title IV. In the exercise of its functions, the 
        PBO shall be subject to the direction of the Secretary. The 
        Secretary shall--
                    ``(A) request the advice of, and work in cooperation 
                with, the Chief Operating Officer in developing 
                regulations, policies, administrative guidance, or 
                procedures affecting the information systems 
                administered by the PBO, and other functions performed 
                by the PBO;
                    ``(B) request cost estimates from the Chief 
                Operating Officer for system changes required by 
                specific policies proposed by the Secretary; and
                    ``(C) assist the Chief Operating Officer in 
                identifying goals for the administration and 
                modernization of the delivery system for student 
                financial assistance under title IV.
            ``(2) PBO functions.--Subject to paragraph (1), the PBO 
        shall be responsible for administration of the information and 
        financial systems that support student financial assistance 
        programs authorized under this title, excluding the development 
        of policy relating to such programs but including the following:
                    ``(A) The administrative, accounting, and financial 
                management functions of the delivery system for Federal 
                student assistance, including--
                          ``(i) the collection, processing and 
                      transmission of applicant data to students, 
                      institutions and authorized third parties, as 
                      provided for in section 483;

[[Page 112 STAT. 1606]]

                          ``(ii) design and technical specifications for 
                      software development and systems supporting the 
                      delivery of student financial assistance under 
                      title IV;
                          ``(iii) all software and hardware acquisitions 
                      and all information technology contracts related 
                      to the delivery and management of student 
                      financial assistance under title IV;
                          ``(iv) all aspects of contracting for the 
                      information and financial systems supporting 
                      student financial assistance programs under this 
                      title; and
                          ``(v) providing all customer service, 
                      training, and user support related to systems that 
                      support those programs.
                    ``(B) Annual development of a budget for the 
                operations and services of the PBO, in consultation with 
                the Secretary, and for consideration and inclusion in 
                the Department's annual budget submission.
            ``(3) Additional functions.--The Secretary may allocate to 
        the PBO such additional functions as the Secretary and the Chief 
        Operating Officer determine are necessary or appropriate to 
        achieve the purposes of the PBO.
            ``(4) Independence.--Subject to paragraph (1), in carrying 
        out its functions, the PBO shall exercise independent control of 
        its budget allocations and expenditures, personnel decisions and 
        processes, procurements, and other administrative and management 
        functions.
            ``(5) Audits and review.--The PBO shall be subject to the 
        usual and customary Federal audit procedures and to review by 
        the Inspector General of the Department.
            ``(6) Changes.--
                    ``(A) In general.--The Secretary and the Chief 
                Operating Officer shall consult concerning the effects 
                of policy, market, or other changes on the ability of 
                the PBO to achieve the goals and objectives established 
                in the performance plan described in subsection (c).
                    ``(B) Revisions to agreement.--The Secretary and the 
                Chief Operating Officer may revise the annual 
                performance agreement described in subsection (d)(4) in 
                light of policy, market, or other changes that occur 
                after the Secretary and the Chief Operating Officer 
                enter into the agreement.

    ``(c) Performance Plan and Report.--
            ``(1) Performance plan.--
                    ``(A) In general.--Each year, the Secretary and 
                Chief Operating Officer shall agree on, and make 
                available to the public, a performance plan for the PBO 
                for the succeeding 5 years that establishes measurable 
                goals and objectives for the organization.
                    ``(B) Consultation.--In developing the 5-year 
                performance plan and any revision to the plan, the 
                Secretary and the Chief Operating Officer shall consult 
                with students, institutions of higher education, 
                Congress, lenders, the Advisory Committee on Student 
                Financial Assistance, and other interested parties not 
                less than 30 days prior to the implementation of the 
                performance plan or revision.
                    ``(C) Areas.--The plan shall include a concise 
                statement of the goals for a modernized system for the 
                delivery of student financial assistance under title IV 
                and identify

[[Page 112 STAT. 1607]]

                action steps necessary to achieve such goals. The plan 
                shall address the PBO's responsibilities in the 
                following areas:
                          ``(i) Improving service.--Improving service to 
                      students and other participants in student 
                      financial aid programs authorized under this 
                      title, including making those programs more 
                      understandable to students and their parents.
                          ``(ii) Reducing costs.--Reducing the costs of 
                      administering those programs.
                          ``(iii) Improvement and integration of support 
                      systems.--Improving and integrating the 
                      information and delivery systems that support 
                      those programs.
                          ``(iv) Delivery and information system.--
                      Developing an open, common, and integrated 
                      delivery and information system for programs 
                      authorized under this title.
                          ``(v) Other areas.--Any other areas identified 
                      by the Secretary.
            ``(2) Annual report.--Each year, the Chief Operating 
        Officer shall prepare and submit to Congress, through the 
        Secretary, an annual report on the performance of the PBO, 
        including an evaluation of the extent to which the PBO met the 
        goals and objectives contained in the 5-year performance plan 
        described in paragraph (1) for the preceding year. The annual 
        report shall include the following:
                    ``(A) An independent financial audit of the 
                expenditures of both the PBO and programs administered 
                by the PBO.
                    ``(B) Financial and performance requirements 
                applicable to the PBO under the Chief Financial Officer 
                Act of 1990 and the Government Performance and Results 
                Act of 1993.
                    ``(C) The results achieved by the PBO during the 
                year relative to the goals established in the 
                organization's performance plan.
                    ``(D) The evaluation rating of the performance of 
                the Chief Operating Officer and senior managers under 
                subsections (d)(4) and (e)(2), including the amounts of 
                bonus compensation awarded to these individuals.
                    ``(E) Recommendations for legislative and regulatory 
                changes to improve service to students and their 
                families, and to improve program efficiency and 
                integrity.
                    ``(F) Other such information as the Director of the 
                Office of Management and Budget shall prescribe for 
                performance based organizations.
            ``(3) Consultation with stakeholders.--The Chief Operating 
        Officer, in preparing the report described in paragraph (2), 
        shall establish appropriate means to consult with borrowers, 
        institutions, lenders, guaranty agencies, secondary markets, and 
        others involved in the delivery system of student aid under this 
        title--
                    ``(A) regarding the degree of satisfaction with the 
                delivery system; and
                    ``(B) to seek suggestions on means to improve the 
                delivery system.

    ``(d) Chief Operating Officer.--

[[Page 112 STAT. 1608]]

            ``(1) Appointment.--The management of the PBO shall be 
        vested in a Chief Operating Officer who shall be appointed by 
        the Secretary to a term of not less than 3 and not more than 5 
        years, and compensated without regard to chapters 33, 51, and 53 
        of title 5, United States Code. <<NOTE: Deadline.>> The 
        Secretary shall appoint the Chief Operating Officer within 6 
        months after the date of enactment of the Higher Education 
        Amendments of 1998. The appointment shall be made on the basis 
        of demonstrated management ability and expertise in information 
        technology, including experience with financial systems, and 
        without regard to political affiliation or activity.
            ``(2) Reappointment.--The Secretary may reappoint the Chief 
        Operating Officer to subsequent terms of not less than 3 and not 
        more than 5 years, so long as the performance of the Chief 
        Operating Officer, as set forth in the performance agreement 
        described in paragraph (4), is satisfactory.
            ``(3) Removal.--The Chief Operating Officer may be removed 
        by--
                    ``(A) the President; or
                    ``(B) the Secretary, for misconduct or failure to 
                meet performance goals set forth in the performance 
                agreement in paragraph (4).
        The President or Secretary shall communicate the reasons for any 
        such removal to the appropriate committees of Congress.
            ``(4) Performance agreement.--
                    ``(A) In general.--Each year, the Secretary and the 
                Chief Operating Officer shall enter into an annual 
                performance agreement, that shall set forth measurable 
                organization and individual goals for the Chief 
                Operating Officer.
                    ``(B) <<NOTE: Public information.>> Transmittal.--
                The final agreement, and any revision to the final 
                agreement, shall be transmitted to the Committee on 
                Education and the Workforce of the House of 
                Representatives and the Committee on Labor and Human 
                Resources of the Senate, and made publicly available.
            ``(5) Compensation.--
                    ``(A) In general.--The Chief Operating Officer is 
                authorized to be paid at an annual rate of basic pay not 
                to exceed the maximum rate of basic pay for the Senior 
                Executive Service under section 5382 of title 5, United 
                States Code, including any applicable locality-based 
                comparability payment that may be authorized under 
                section 5304(h)(2)(B) of such title. The compensation of 
                the Chief Operating Officer shall be considered for 
                purposes of section 207(c)(2)(A) of title 18, United 
                States Code, to be the equivalent of that described 
                under clause (ii) of section 207(c)(2)(A) of such title.
                    ``(B) Bonus.--In addition, the Chief Operating 
                Officer may receive a bonus in an amount that does not 
                exceed 50 percent of such annual rate of basic pay, 
                based upon the Secretary's evaluation of the Chief 
                Operating Officer's performance in relation to the goals 
                set forth in the performance agreement described in 
                paragraph (2).
                    ``(C) Payment.--Payment of a bonus under this 
                subparagraph (B) may be made to the Chief Operating 
                Officer only to the extent that such payment does not

[[Page 112 STAT. 1609]]

                cause the Chief Operating Officer's total aggregate 
                compensation in a calendar year to equal or exceed the 
                amount of the President's salary under section 102 of 
                title 3, United States Code.

    ``(e) Senior Management.--
            ``(1) Appointment.--
                    ``(A) In general.--The Chief Operating Officer may 
                appoint such senior managers as that officer determines 
                necessary without regard to the provisions of title 5, 
                United States Code, governing appointments in the 
                competitive service.
                    ``(B) Compensation.--The senior managers described 
                in subparagraph (A) may be paid without regard to the 
                provisions of chapter 51 and subchapter III of chapter 
                53 of such title relating to classification and General 
                Schedule pay rates.
            ``(2) Performance agreement.--Each year, the Chief Operating 
        Officer and each senior manager appointed under this subsection 
        shall enter into an annual performance agreement that sets forth 
        measurable organization and individual goals. The agreement 
        shall be subject to review and renegotiation at the end of each 
        term.
            ``(3) Compensation.--
                    ``(A) In general.--A senior manager appointed under 
                this subsection may be paid at an annual rate of basic 
                pay of not more than the maximum rate of basic pay for 
                the Senior Executive Service under section 5382 of title 
                5, United States Code, including any applicable 
                locality-based comparability payment that may be 
                authorized under section 5304(h)(2)(C) of such title. 
                The compensation of a senior manager shall be considered 
                for purposes of section 207(c)(2)(A) of title 18, United 
                States Code, to be the equivalent of that described 
                under clause (ii) of section 207(c)(2)(A) of such title.
                    ``(B) Bonus.--In addition, a senior manager may 
                receive a bonus in an amount such that the manager's 
                total annual compensation does not exceed 125 percent of 
                the maximum rate of basic pay for the Senior Executive 
                Service, including any applicable locality-based 
                comparability payment, based upon the Chief Operating 
                Officer's evaluation of the manager's performance in 
                relation to the goals set forth in the performance 
                agreement described in paragraph (2).
            ``(4) Removal.--A senior manager shall be removable by the 
        Chief Operating Officer, or by the Secretary if the position of 
        Chief Operating Officer is vacant.

    ``(f ) Student Loan Ombudsman.--
            ``(1) Appointment.--The Chief Operating Officer, in 
        consultation with the Secretary, shall appoint a Student Loan 
        Ombudsman to provide timely assistance to borrowers of loans 
        made, insured, or guaranteed under title IV by performing the 
        functions described in paragraph (3).
            ``(2) Public information.--The Chief Operating Officer shall 
        disseminate information about the availability and functions of 
        the Ombudsman to borrowers and potential borrowers, as well as 
        institutions of higher education, lenders, guaranty

[[Page 112 STAT. 1610]]

        agencies, loan servicers, and other participants in those 
        student loan programs.
            ``(3) <<NOTE: Regulations.>> Functions of ombudsman.--The 
        Ombudsman shall--
                    ``(A) in accordance with regulations of the 
                Secretary, receive, review, and attempt to resolve 
                informally complaints from borrowers of loans described 
                in paragraph (1), including, as appropriate, attempts to 
                resolve such complaints within the Department of 
                Education and with institutions of higher education, 
                lenders, guaranty agencies, loan servicers, and other 
                participants in the loan programs described in paragraph 
                (1)(A); and
                    ``(B) <<NOTE: Records.>> compile and analyze data on 
                borrower complaints and make appropriate 
                recommendations.
            ``(4) Report.--Each year, the Ombudsman shall submit a 
        report to the Chief Operating Officer, for inclusion in the 
        annual report under subsection (c)(2), that describes the 
        activities, and evaluates the effectiveness of the Ombudsman 
        during the preceding year.

    ``(g) Personnel Flexibility.--
            ``(1) Personnel ceilings.--The PBO shall not be subject to 
        any ceiling relating to the number or grade of employees.
            ``(2) Administrative flexibility.--The Chief Operating 
        Officer shall work with the Office of Personnel Management to 
        develop and implement personnel flexibilities in staffing, 
        classification, and pay that meet the needs of the PBO, subject 
        to compliance with title 5, United States Code.
            ``(3) Excepted service.--The Chief Operating Officer may 
        appoint, without regard to the provisions of title 5, United 
        States Code, governing appointments in the competitive service, 
        not more than 25 technical and professional employees to 
        administer the functions of the PBO. These employees may be paid 
        without regard to the provisions of chapter 51 and subchapter 
        III of chapter 53 of such title relating to classification and 
        General Schedule pay rates.

    ``(h) Establishment of a Fair and Equitable System for Measuring 
Staff Performance.--The PBO shall establish an annual performance 
management system, subject to compliance with title 5, United States 
Code and consistent with applicable provisions of law and regulations, 
which strengthens the organizational effectiveness of the PBO by 
providing for establishing goals or objectives for individual, group, or 
organizational performance (or any combination thereof), consistent with 
the performance plan of the PBO and its performance planning procedures, 
including those established under the Government Performance and Results 
Act of 1993, and communicating such goals or objectives to employees.
    ``(i) <<NOTE: Deadline.>> Report.--The Secretary and the Chief 
Operating Officer, not later than 180 days after the date of enactment 
of the Higher Education Amendments of 1998, shall report to Congress on 
the proposed budget and sources of funding for the operation of the PBO.

    ``( j) Authorization of Appropriations.--The Secretary shall 
allocate from funds made available under section 458 such funds as are 
appropriate to the functions assumed by the PBO. In addition, there are 
authorized to be appropriated such sums as may be necessary to carry out 
the purposes of this part, including transition costs.

[[Page 112 STAT. 1611]]

``SEC. 142. PROCUREMENT FLEXIBILITY. <<NOTE: 20 USC 1018a.>> 

    ``(a) Procurement Authority.--Subject to the authority of the 
Secretary, the Chief Operating Officer of a PBO may exercise the 
authority of the Secretary to procure property and services in the 
performance of functions managed by the PBO. For the purposes of this 
section, the term `PBO' includes the Chief Operating Officer of the PBO 
and any employee of the PBO exercising procurement authority under the 
preceding sentence.
    ``(b) In General.--Except as provided in this section, the PBO shall 
abide by all applicable Federal procurement laws and regulations when 
procuring property and services. The PBO shall--
            ``(1) <<NOTE: Contracts.>> enter into contracts for 
        information systems supporting the programs authorized under 
        title IV to carry out the functions set forth in section 
        141(b)(2); and
            ``(2) obtain the services of experts and consultants without 
        regard to section 3109 of title 5, United States Code and set 
        pay in accordance with such section.

    ``(c) Service Contracts.--
            ``(1) Performance-based servicing contracts.--The Chief 
        Operating Officer shall, to the extent practicable, maximize the 
        use of performance-based servicing contracts, consistent with 
        guidelines for such contracts published by the Office of Federal 
        Procurement Policy, to achieve cost savings and improve service.
            ``(2) Fee for service arrangements.--The Chief Operating 
        Officer shall, when appropriate and consistent with the purposes 
        of the PBO, acquire services related to the title IV delivery 
        system from any entity that has the capability and capacity to 
        meet the requirements for the system. The Chief Operating 
        Officer is authorized to pay fees that are equivalent to those 
        paid by other entities to an organization that provides an 
        information system or service that meets the requirements of the 
        PBO, as determined by the Chief Operating Officer.

    ``(d) Two-Phase Source-Selection Procedures.--
            ``(1) In general.--The PBO may use a two-phase process for 
        selecting a source for a procurement of property or services.
            ``(2) First phase.--The procedures for the first phase of 
        the process for a procurement are as follows:
                    ``(A) Publication of notice.--The contracting 
                officer for the procurement shall publish a notice of 
                the procurement in accordance with section 18 of the 
                Office of Federal Procurement Policy Act (41 U.S.C. 416) 
                and subsections (e), (f ), and (g) of section 8 of the 
                Small Business Act (15 U.S.C. 637), except that the 
                notice shall include only the following:
                          ``(i) A general description of the scope or 
                      purpose of the procurement that provides 
                      sufficient information on the scope or purpose for 
                      sources to make informed business decisions 
                      regarding whether to participate in the 
                      procurement.
                          ``(ii) A description of the basis on which 
                      potential sources are to be selected to submit 
                      offers in the second phase.
                          ``(iii) A description of the information that 
                      is to be required under subparagraph (B).
                          ``(iv) Any additional information that the 
                      contracting officer determines appropriate.

[[Page 112 STAT. 1612]]

                    ``(B) Information submitted by offerors.--Each 
                offeror for the procurement shall submit basic 
                information, such as information on the offeror's 
                qualifications, the proposed conceptual approach, costs 
                likely to be associated with the proposed conceptual 
                approach, and past performance of the offeror on Federal 
                Government contracts, together with any additional 
                information that is requested by the contracting 
                officer.
                    ``(C) Selection for second phase.--The contracting 
                officer shall select the offerors that are to be 
                eligible to participate in the second phase of the 
                process. The contracting officer shall limit the number 
                of the selected offerors to the number of sources that 
                the contracting officer determines is appropriate and in 
                the best interests of the Federal Government.
            ``(3) Second phase.--
                    ``(A) In general.--The contracting officer shall 
                conduct the second phase of the source selection process 
                in accordance with sections 303A and 303B of the Federal 
                Property and Administrative Services Act of 1949 (41 
                U.S.C. 253a and 253b).
                    ``(B) Eligible participants.--Only the sources 
                selected in the first phase of the process shall be 
                eligible to participate in the second phase.
                    ``(C) Single or multiple procurements.--The second 
                phase may include a single procurement or multiple 
                procurements within the scope, or for the purpose, 
                described in the notice pursuant to paragraph (2)(A).
            ``(4) Procedures considered competitive.--The procedures 
        used for selecting a source for a procurement under this 
        subsection shall be considered competitive procedures for all 
        purposes.

    ``(e) Use of Simplified Procedures for Commercial Items.--Whenever 
the PBO anticipates that commercial items will be offered for a 
procurement, the PBO may use (consistent with the special rules for 
commercial items) the special simplified procedures for the procurement 
without regard to--
            ``(1) any dollar limitation otherwise applicable to the use 
        of those procedures; and
            ``(2) the expiration of the authority to use special 
        simplified procedures under section 4202(e) of the Clinger-Cohen 
        Act of 1996 (110 Stat. 654; 10 U.S.C. 2304 note).

    ``(f ) Flexible Wait Periods and Deadlines for Submission of Offers 
of Noncommercial Items.--
            ``(1) Authority.--In carrying out a procurement, the PBO 
        may--
                    ``(A) apply a shorter waiting period for the 
                issuance of a solicitation after the publication of a 
                notice under section 18 of the Office of Federal 
                Procurement Policy Act (41 U.S.C. 416) than is required 
                under subsection (a)(3)(A) of such section; and
                    ``(B) notwithstanding subsection (a)(3) of such 
                section, establish any deadline for the submission of 
                bids or proposals that affords potential offerors a 
                reasonable opportunity to respond to the solicitation.
            ``(2) Inapplicability to commercial items.--Paragraph (1) 
        does not apply to a procurement of a commercial item.

[[Page 112 STAT. 1613]]

            ``(3) Consistency with applicable international 
        agreements.--If an international agreement is applicable to the 
        procurement, any exercise of authority under paragraph (1) shall 
        be consistent with the international agreement.

    ``(g) Modular Contracting.--
            ``(1) In general.--The PBO may satisfy the requirements of 
        the PBO for a system incrementally by carrying out successive 
        procurements of modules of the system. In doing so, the PBO may 
        use procedures authorized under this subsection to procure any 
        such module after the first module.
            ``(2) Utility requirement.--A module may not be procured for 
        a system under this subsection unless the module is useful 
        independently of the other modules or useful in combination with 
        another module previously procured for the system.
            ``(3) Conditions for use of authority.--The PBO may use 
        procedures authorized under paragraph (4) for the procurement of 
        an additional module for a system if--
                    ``(A) competitive procedures were used for awarding 
                the contract for the procurement of the first module for 
                the system; and
                    ``(B) the solicitation for the first module 
                included--
                          ``(i) a general description of the entire 
                      system that was sufficient to provide potential 
                      offerors with reasonable notice of the general 
                      scope of future modules;
                          ``(ii) other information sufficient for 
                      potential offerors to make informed business 
                      judgments regarding whether to submit offers for 
                      the contract for the first module; and
                          ``(iii) a statement that procedures authorized 
                      under this subsection could be used for awarding 
                      subsequent contracts for the procurement of 
                      additional modules for the system.
            ``(4) Procedures.--If the procurement of the first module 
        for a system meets the requirements set forth in paragraph (3), 
        the PBO may award a contract for the procurement of an 
        additional module for the system using any of the following 
        procedures:
                    ``(A) Sole source.--Award of the contract on a sole-
                source basis to a contractor who was awarded a contract 
                for a module previously procured for the system under 
                competitive procedures or procedures authorized under 
                subparagraph (B).
                    ``(B) Adequate competition.--Award of the contract 
                on the basis of offers made by--
                          ``(i) a contractor who was awarded a contract 
                      for a module previously procured for the system 
                      after having been selected for award of the 
                      contract under this subparagraph or other 
                      competitive procedures; and
                          ``(ii) at least one other offeror that 
                      submitted an offer for a module previously 
                      procured for the system and is expected, on the 
                      basis of the offer for the previously procured 
                      module, to submit a competitive offer for the 
                      additional module.
                    ``(C) Other.--Award of the contract under any other 
                procedure authorized by law.
            ``(5) Notice requirement.--

[[Page 112 STAT. 1614]]

                    ``(A) Publication.--Not <<NOTE: Deadline.>>  less 
                than 30 days before issuing a solicitation for offers 
                for a contract for a module for a system under 
                procedures authorized under subparagraph (A) or (B) of 
                paragraph (4), the PBO shall publish in the Commerce 
                Business Daily a notice of the intent to use such 
                procedures to enter into the contract.
                    ``(B) Exception.--Publication of a notice is not 
                required under this paragraph with respect to a use of 
                procedures authorized under paragraph (4) if the 
                contractor referred to in that subparagraph (who is to 
                be solicited to submit an offer) has previously provided 
                a module for the system under a contract that contained 
                cost, schedule, and performance goals and the contractor 
                met those goals.
                    ``(C) Content of notice.--A notice published under 
                subparagraph (A) with respect to a use of procedures 
                described in paragraph (4) shall contain the information 
                required under section 18(b) of the Office of Federal 
                Procurement Policy Act (41 U.S.C. 416(b)), other than 
                paragraph (4) of such section, and shall invite the 
                submission of any assertion that the use of the 
                procedures for the procurement involved is not in the 
                best interest of the Federal Government together with 
                information supporting the assertion.
            ``(6) Documentation.--The basis for an award of a contract 
        under this subsection shall be documented. However, a 
        justification pursuant to section 303(f ) of the Federal 
        Property and Administrative Services Act of 1949 (41 U.S.C. 
        253(f )) or section 8(h) of the Small Business Act (15 U.S.C. 
        637(h)) is not required.
            ``(7) Simplified source-selection procedures.--The PBO may 
        award a contract under any other simplified procedures 
        prescribed by the PBO for the selection of sources for the 
        procurement of modules for a system, after the first module, 
        that are not to be procured under a contract awarded on a sole-
        source basis.

    ``(h) Use of Simplified Procedures for Small Business Set-Asides for 
Services Other Than Commercial Items.--
            ``(1) Authority.--The PBO may use special simplified 
        procedures for a procurement of services that are not commercial 
        items if--
                    ``(A) the procurement is in an amount not greater 
                than $1,000,000;
                    ``(B) the procurement is conducted as a small 
                business set-aside pursuant to section 15(a) of the 
                Small Business Act (15 U.S.C. 644(a)); and
                    ``(C) the price charged for supplies associated with 
                the services procured are items of supply expected to be 
                less than 20 percent of the total contract price.
            ``(2) Inapplicability to certain procurements.--The 
        authority set forth in paragraph (1) may not be used for--
                    ``(A) an award of a contract on a sole-source basis; 
                or
                    ``(B) a contract for construction.

    ``(i) Guidance for Use of Authority.--
            ``(1) Issuance by pbo.--The Chief Operating Officer of the 
        PBO, in consultation with the Administrator for Federal

[[Page 112 STAT. 1615]]

        Procurement Policy, shall issue guidance for the use by PBO 
        personnel of the authority provided in this section.
            ``(2) Guidance from ofpp.--As part of the consultation 
        required under paragraph (1), the Administrator for Federal 
        Procurement Policy shall provide the PBO with guidance that is 
        designed to ensure, to the maximum extent practicable, that the 
        authority under this section is exercised by the PBO in a manner 
        that is consistent with the exercise of the authority by the 
        heads of the other performance-based organizations.
            ``(3) Compliance with ofpp guidance.--The head of the PBO 
        shall ensure that the procurements of the PBO under this section 
        are carried out in a manner that is consistent with the guidance 
        provided for the PBO under paragraph (2).

    ``( j) Limitation on Multiagency Contracting.--No department or 
agency of the Federal Government may purchase property or services under 
contracts entered into or administered by a PBO under this section 
unless the purchase is approved in advance by the senior procurement 
official of that department or agency who is responsible for purchasing 
by the department or agency.
    ``(k) Laws Not Affected.--Nothing in this section shall be construed 
to waive laws for the enforcement of civil rights or for the 
establishment and enforcement of labor standards that are applicable to 
contracts of the Federal Government.
    ``(l) Definitions.--In this section:
            ``(1) Commercial item.--The term `commercial item' has the 
        meaning given the term in section 4(12) of the Office of Federal 
        Procurement Policy Act (41 U.S.C. 403(12)).
            ``(2) Competitive procedures.--The term `competitive 
        procedures' has the meaning given the term in section 309(b) of 
        the Federal Property and Administrative Services Act of 1949 (41 
        U.S.C. 259(b)).
            ``(3) Sole-source basis.--The term `sole-source basis', with 
        respect to an award of a contract, means that the contract is 
        awarded to a source after soliciting an offer or offers from, 
        and negotiating with, only that source.
            ``(4) Special rules for commercial items.--The term `special 
        rules for commercial items' means the regulations set forth in 
        the Federal Acquisition Regulation pursuant to section 303(g)(1) 
        of the Federal Property and Administrative Services Act of 1949 
        (41 U.S.C. 253(g)(1)) and section 31 of the Office of Federal 
        Procurement Policy Act (41 U.S.C. 427).
            ``(5) Special simplified procedures.--The term `special 
        simplified procedures' means the procedures applicable to 
        purchases of property and services for amounts not greater than 
        the simplified acquisition threshold that are set forth in the 
        Federal Acquisition Regulation pursuant to section 303(g)(1)(B) 
        of the Federal Property and Administrative Services Act of 1949 
        (41 U.S.C. 253(g)(1)(A)) and section 31(a)(1) of the Office of 
        Federal Procurement Policy Act (41 U.S.C. 427(a)(1)).

``SEC. 143. <<NOTE: 20 USC 1018b.>>  ADMINISTRATIVE SIMPLIFICATION OF 
            STUDENT AID DELIVERY.

    ``(a) In General.--In order to improve the efficiency and 
effectiveness of the student aid delivery system, the Secretary and the 
Chief Operating Officer shall encourage and participate in the 
establishment of voluntary consensus standards and requirements

[[Page 112 STAT. 1616]]

for the electronic transmission of information necessary for the 
administration of programs under title IV.
    ``(b) Participation in Standard Setting Organizations.--
            ``(1) The Chief Operating Officer shall participate in the 
        activities of standard setting organizations in carrying out the 
        provisions of this section.
            ``(2) The Chief Operating Officer shall encourage higher 
        education groups seeking to develop common forms, standards, and 
        procedures in support of the delivery of Federal student 
        financial assistance to conduct these activities within a 
        standard setting organization.
            ``(3) The Chief Operating Officer may pay necessary dues and 
        fees associated with participating in standard setting 
        organizations pursuant to this subsection.

    ``(c) Adoption of Voluntary Consensus Standards.--Except with 
respect to the common financial reporting form under section 483(a), the 
Secretary shall consider adopting voluntary consensus standards agreed 
to by the organization described in subsection (b) for transactions 
required under title IV, and common data elements for such transactions, 
to enable information to be exchanged electronically between systems 
administered by the Department and among participants in the Federal 
student aid delivery system.
    ``(d) Use of Clearinghouses.--Nothing in this section shall restrict 
the ability of participating institutions and lenders from using a 
clearinghouse or servicer to comply with the standards for the exchange 
of information established under this section.
    ``(e) Data Security.--Any entity that maintains or transmits 
information under a transaction covered by this section shall maintain 
reasonable and appropriate administrative, technical, and physical 
safeguards--
            ``(1) to ensure the integrity and confidentiality of the 
        information; and
            ``(2) to protect against any reasonably anticipated security 
        threats, or unauthorized uses or disclosures of the information.

    ``(f ) Definitions.--
            ``(1) Clearinghouse.--The term `clearinghouse' means a 
        public or private entity that processes or facilitates the 
        processing of nonstandard data elements into data elements 
        conforming to standards adopted under this section.
            ``(2) Standard setting organization.--The term `standard 
        setting organization' means an organization that--
                    ``(A) is accredited by the American National 
                Standards Institute;
                    ``(B) develops standards for information 
                transactions, data elements, or any other standard that 
                is necessary to, or will facilitate, the implementation 
                of this section; and
                    ``(C) is open to the participation of the various 
                entities engaged in the delivery of Federal student 
                financial assistance.
            ``(3) Voluntary consensus standard.--The term `voluntary 
        consensus standard' means a standard developed or used by a 
        standard setting organization described in paragraph (2).''.

    (b) Repeal of Old General Provisions.--Title XII (20 U.S.C. 1141 et 
seq.) is repealed.

[[Page 112 STAT. 1617]]

    (c) Repeal of Title IV Definition.--Section 481 (20 U.S.C. 1088) is 
amended--
            (1) by striking subsections (a), (b), and (c); and
            (2) by redesignating subsections (d) through (f ) as 
        subsections (a) through (c), respectively.

SEC. 102. CONFORMING AMENDMENTS.

    (a) Conforming Amendments Correcting References to Section 1201.--
            (1) Agriculture.--
                    (A) Student internship programs.--Section 922 of the 
                Federal Agriculture Improvement and Reform Act of 1996 
                (7 U.S.C. 2279c) is amended--
                          (i) in subsection (a)(1)(B)--
                                    (I) by striking ``1201'' and 
                                inserting ``101''; and
                                    (II) by striking ``(20 U.S.C. 
                                1141)''; and
                          (ii) in subsection (b)(1)--
                                    (I) by striking ``1201'' and 
                                inserting ``101''; and
                                    (II) by striking ``(20 U.S.C. 
                                1141)''.
                    (B) Agricultural sciences education.--Section 1417( 
                j)(1)(A) of the National Agricultural Research, 
                Extension, and Teaching Policy Act of 1977 (7 U.S.C. 
                3152( j)(1)(A)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
            (2) Armed forces.--
                    (A) Science and mathematics education improvement 
                program.--Section 2193(c)(1) of title 10, United States 
                Code, is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (B) Support of science, mathematics, and engineering 
                education.--Section 2199(2) of title 10, United States 
                Code, is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (C) Allowable costs under defense contracts.--
                Section 841(c)(2) of the National Defense Authorization 
                Act for fiscal year 1994 (10 U.S.C. 2324 note) is 
                amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (D) Environmental restoration institutional grants 
                for training dislocated defense workers and young 
                adults.--Section 1333(i)(3) of the National Defense 
                Authorization Act for fiscal year 1994 (10 U.S.C. 2701 
                note) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (E) Environmental education opportunities program.--
                Section 1334(k)(3) of the National Defense Authorization 
                Act for fiscal year 1994 (10 U.S.C. 2701 note) is 
                amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (F) Environmental scholarship and fellowship 
                programs.--Section 4451(b)(1) of the National Defense

[[Page 112 STAT. 1618]]

                Authorization Act for 1993 (10 U.S.C. 2701 note) is 
                amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
            (3) Application of antitrust laws to award of need-based 
        educational aid.--Section 568(c)(3) of the Improving America's 
        Schools Act of 1994 (15 U.S.C. 1 note) is amended--
                    (A) by striking ``1201(a)'' and inserting ``101''; 
                and
                    (B) by striking ``(20 U.S.C. 1141(a))''.
            (4) Omnibus parks and public lands management act of 1996.--
        Section 1007(c)(5) of the Omnibus Parks and Public Lands 
        Management Act of 1996 (16 U.S.C. 698u-5) is amended by striking 
        ``1201(a) of the Higher Education Act of 1965 (20 U.S.C. 
        1141(a))'' and inserting ``101 of the Higher Education Act of 
        1965''.
            (5) Restrictions on former officers, employees, and elected 
        officials of the executive and legislative branches.--Section 
        207( j)(2)(B) of title 18, United States Code, is amended by 
        striking ``1201(a)'' and inserting ``101''.
            (6) Education.--
                    (A) Higher education amendments of 1992.--Section 
                1(c) of the Higher Education Amendments of 1992 (20 
                U.S.C. 1001 note) is amended by striking ``1201'' and 
                inserting ``101''.
                    (B) Treatment of branches.--Section 498( j)(2) of 
                the Higher Education Act of 1965 (20 U.S.C. 1099c( 
                j)(2)) is amended by striking ``1201(a)(2)'' and 
                inserting ``101(a)(2)''.
                    (C) Disclosure requirements.--Section 
                429(d)(2)(B)(ii) of the General Education Provisions Act 
                (20 U.S.C. 1228c(d)(2)(B)(ii)) is amended by striking 
                ``1201(a)'' and inserting ``101''.
                    (D) Harry s. truman scholarships.--Section 3(4) of 
                the Harry S. Truman Memorial Scholarship Act (20 U.S.C. 
                2002(4)) is amended by striking ``1201(a)'' and 
                inserting ``101''.
                    (E) Tech-prep education.--Section 347(2)(A) of the 
                Carl D. Perkins Vocational and Applied Technology 
                Education Act (20 U.S.C. 2394e(2)(A)) is amended by 
                striking ``1201(a)'' and inserting ``101''.
                    (F) Education for economic security.--Section 3(6) 
                of the Education for Economic Security Act (20 U.S.C. 
                3902(6)) is amended by striking ``1201(a)'' and 
                inserting ``101''.
                    (G) James madison memorial fellowships.--Section 815 
                of the James Madison Memorial Fellowship Act (20 U.S.C. 
                4514) is amended--
                          (i) in paragraph (3), by striking ``1201(a)'' 
                      and inserting ``101''; and
                          (ii) in paragraph (4), by striking ``1201(d) 
                      of the Higher Education Act of 1965'' and 
                      inserting ``14101 of the Elementary and Secondary 
                      Education Act of 1965''.
                    (H) Barry goldwater scholarships.--Section 1403(4) 
                of the Barry Goldwater Scholarship and Excellence in 
                Education Act (20 U.S.C. 4702(4)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.

[[Page 112 STAT. 1619]]

                    (I) Morris k. udall scholarships.--Section 4(6) of 
                the Morris K. Udall Scholarship and Excellence in 
                National Environmental and Native American Public Policy 
                Act of 1992 (20 U.S.C. 5602(6)) is amended by striking 
                ``1201(a)'' and inserting ``101''.
                    (J) Bilingual education, and language enhancement 
                and acquisition.--Section 7501(4) of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 7601(4)) is 
                amended by striking ``1201(a)'' and inserting ``101''.
                    (K) General definitions.--Section 14101(17) of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 8801(17)) is amended by striking ``1201(a)'' and 
                inserting ``101''.
                    (L) National education statistics.--Section 
                402(c)(3) of the National Education Statistics Act of 
                1994 (20 U.S.C. 9001(c)(3)) is amended by striking 
                ``1201(a)'' and inserting ``101''.
            (7) Foreign relations.--
                    (A) Environment and sustainable development exchange 
                program.--Section 240(d) of the Foreign Relations 
                Authorization Act, Fiscal Years 1994 and 1995 (22 U.S.C. 
                2452 note) is amended by striking ``1201(a)'' and 
                inserting ``101''.
                    (B) Samantha smith memorial exchange program.--
                Section 112(a)(8) of the Mutual Educational and Cultural 
                Exchange Act of 1961 (22 U.S.C. 2460(a)(8)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (C) Soviet-eastern european training.--Section 
                803(1) of the Soviet-Eastern European Research and 
                Training Act of 1983 (22 U.S.C. 4502(1)) is amended by 
                striking ``1201(a)'' and inserting ``101''.
                    (D) Developing country scholarships.--Section 603(d) 
                of the Foreign Relations Authorization Act, Fiscal Years 
                1986 and 1987 (22 U.S.C. 4703(d)) is amended by striking 
                ``1201(a)'' and inserting ``101''.
            (8) Indians.--
                    (A) Snyder act.--The last paragraph of section 410 
                of the Act entitled ``An Act authorizing appropriations 
                and expenditures for the administration of Indian 
                Affairs, and for other purposes'', approved November 2, 
                1921 (25 U.S.C. 13) (commonly known as the Snyder Act) 
                is amended by striking ``1201'' and inserting ``101''.
                    (B) Tribally controlled community college 
                assistance.--Section 2(a)(5) of the Tribally Controlled 
                Community College Assistance Act (25 U.S.C. 1801(a)(5)) 
                is amended by striking ``1201(a)'' and inserting 
                ``101''.
                    (C) Construction of new facilities.--Section 
                113(b)(2) of the Tribally Controlled Community College 
                Assistance Act (25 U.S.C. 1813(b)(2)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (D) American indian teacher training.--Section 
                1371(a)(1)(B) of the Higher Education Amendments of 1992 
                (25 U.S.C. 3371(a)(1)(B)) is amended by striking 
                ``1201(a)'' and inserting ``101''.
            (9) Labor.--

[[Page 112 STAT. 1620]]

                    (A) Rehabilitation definitions.--Section 6(23) of 
                the Rehabilitation Act of 1973 (29 U.S.C. 705(23)) is 
                amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (B) Technology related assistance for individuals 
                with disabilities act of 1988.--Section 3(8) of the 
                Technology Related Assistance for Individuals with 
                Disabilities Act of 1988 (29 U.S.C. 2202(8)) is amended 
                by striking ``1201(a) of the Higher Education Act of 
                1965 (20 U.S.C. 1141(a))'' and inserting ``101 of the 
                Higher Education Act of 1965''.
            (10) Surface mining control.--Section 701(32) of the Surface 
        Mining Control and Reclamation Act of 1977 (30 U.S.C. 1291(32)) 
        is amended by striking ``1201(a)'' and inserting ``101''.
            (11) Pollution prevention.--Section 112(a)(1) of the Federal 
        Water Pollution Control Act (33 U.S.C. 1262(a)(1)) is amended by 
        striking ``1201'' and inserting ``101''.
            (12) Postal service.--Section 3626(b)(3) of title 39, United 
        States Code, is amended--
                    (A) by striking ``1201(a)'' and inserting ``101''; 
                and
                    (B) by striking ``(20 U.S.C. 1141(a))''.
            (13) Public health and welfare.--
                    (A) Public health service act.--Section 705(a)(2)(C) 
                of the Public Health Service Act (42 U.S.C. 
                292d(a)(2)(C)) is amended by striking ``section 481(a)'' 
                and inserting ``section 102(a)''.
                    (B) Scientific and technical education.--Section 
                3(g) of the Scientific and Advanced-Technology Act of 
                1992 (42 U.S.C. 1862i(g)) is amended--
                          (i) in paragraph (2)--
                                    (I) by striking ``1201(a)'' and 
                                inserting ``101''; and
                                    (II) by striking ``(20 U.S.C. 
                                1141(a))''; and
                          (ii) in paragraph (3)--
                                    (I) by striking ``1201(a)'' and 
                                inserting ``101''; and
                                    (II) by striking ``(20 U.S.C. 
                                1141(a))''.
                    (C) Older americans.--Section 102(32) of the Older 
                Americans Act of 1965 (42 U.S.C. 3002(32)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (D) Justice system improvement.--Section 901(17) of 
                the Omnibus Crime Control and Safe Streets Act of 1968 
                (42 U.S.C. 3791(17)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (E) Energy technology commercialization services 
                program.--Section 362(f )(5)(A) of the Energy Policy and 
                Conservation Act (42 U.S.C. 6322(f )(5)(A)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (F) Environmental restoration and waste 
                management.--Section 3132(b)(1) of the National Defense 
                Authorization Act for Fiscal Years 1992 and 1993 (42 
                U.S.C. 7274e(b)(1)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.

[[Page 112 STAT. 1621]]

                    (G) Head start.--Section 649(c)(3) of the Head Start 
                Act (42 U.S.C. 9844(c)(3)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (H) State dependent care development grants.--
                Section 670G(5) of the Child Care and Development Block 
                Grant Act of 1990 (42 U.S.C. 9877(5)) is amended by 
                striking ``1201(a)'' and inserting ``101''.
                    (I) Instructional activities for low-income youth.--
                The matter preceding subparagraph (A) of section 
                682(b)(1) of the Community Services Block Grant Act (42 
                U.S.C. 9910c(b)(1)) is amended by striking ``1201(a)'' 
                and inserting ``101''.
                    (J) Drug abuse education.--Section 3601(7) of the 
                Anti-Drug Abuse Act of 1988 (42 U.S.C. 11851(7)) is 
                amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (K) National and community service.--Section 101(13) 
                of the National and Community Service Act of 1990 (42 
                U.S.C. 12511(13)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (L) Civilian community corps.--Section 166(6) of the 
                National and Community Service Act of 1990 (42 U.S.C. 
                12626(6)) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (M) Cranston-gonzalez national affordable housing 
                act.--Section 457(9) of the Cranston-Gonzalez National 
                Affordable Housing Act (42 U.S.C. 12899f(9)) is amended 
                by striking ``1201(a)'' and inserting ``101''.
                    (N) Community schools youth services and supervision 
                grant program.--The definition of public school in 
                section 30401(b) of the Community Schools Youth Services 
                and Supervision Grant Program Act of 1994 (42 U.S.C. 
                13791(b)) is amended--
                          (i) by striking ``1201'' each place the term 
                      appears and inserting ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(i))''.
                    (O) Police corps.--The definition of institution of 
                higher education in section 200103 of the Police Corps 
                Act (42 U.S.C. 14092) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
                    (P) Law enforcement scholarship program.--The 
                definition of institution of higher education in section 
                200202 of the Law Enforcement Scholarship and 
                Recruitment Act (42 U.S.C. 14111) is amended--
                          (i) by striking ``1201(a)'' and inserting 
                      ``101''; and
                          (ii) by striking ``(20 U.S.C. 1141(a))''.
            (14) Telecommunications.--Section 223(h)(4) of the 
        Telecommunications Act of 1934 (47 U.S.C. 223(h)(4)) is 
        amended--
                    (A) by striking ``1201'' and inserting ``101''; and
                    (B) by striking ``(20 U.S.C. 1141)''.

[[Page 112 STAT. 1622]]

            (15) War and national defense.--Section 808(3) of the David 
        L. Boren National Security Education Act of 1991 (50 U.S.C. 
        1908(3)) is amended--
                    (A) by striking ``1201(a)'' and inserting ``101''; 
                and
                    (B) by striking ``(20 U.S.C. 1141(a))''.

    (b) Internal Cross References.--The Act (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in section 402A(c)(2) (20 U.S.C. 1070a-11(c)(2)), by 
        striking ``1210'' and inserting ``118'';
            (2) in section 435(a) (20 U.S.C. 1085(a)), by striking 
        ``section 481'' and inserting ``section 102'';
            (3) in section 485(f )(1)(I) (20 U.S.C. 1092(f )(1)(I)), by 
        striking ``1213'' and inserting ``120'';
            (4) in section 487(d) (20 U.S.C. 1094(d)), by striking 
        ``section 481'' and inserting ``section 102'';
            (5) in subsections ( j) and (k) of section 496 (20 U.S.C. 
        1099b), by striking ``section 481'' each place the term appears 
        and inserting ``section 102'';
            (6) in section 498(i) (20 U.S.C. 1099c) is amended by 
        striking ``section 481'' and inserting ``section 102'';
            (7) in section 498( j) (20 U.S.C. 1099c( j))--
                    (A) in paragraph (1), by striking ``sections 
                481(b)(5) and 481(c)(3)'' and inserting ``sections 
                102(b)(1)(E) and 102(c)(1)(C)''; and
                    (B) in paragraph (2), by striking ``1201(a)(2)'' and 
                inserting ``101(a)(2)''; and
            (8) in section 631(a)(8) (20 U.S.C. 1132(a)(8))--
                    (A) by striking ``section 1201(a)'' each place the 
                term appears and inserting ``section 101''; and
                    (B) by striking ``of 1201(a)'' and inserting ``of 
                section 101''.

    (c) Additional Conforming Amendments Correcting 
References to Section 481.--
            (1) School-to-work opportunities act of  1994.--Section 4 of 
        the School-to-Work Opportunities Act of 1994 (20 U.S.C. 6103) is 
        amended--
                    (A) in paragraph (11)(B)(viii), by striking 
                ``section 481(b)'' and inserting ``section 102(b)''; and
                    (B) in paragraph (12), by striking ``section 481'' 
                and inserting ``section 102''.
            (2) National and community service act of 1990.--
        Section 148(g) of the National and Community Service Act of 1990 
        (42 U.S.C. 12604(g)) is amended by striking ``section 481(a) of 
        the Higher Education Act of 1965 (20 U.S.C. 1088(a))'' and 
        inserting ``section 102 of the Higher Education Act of 1965''.

    (d) Workforce Investment Act of 1998.--The Workforce Investment Act 
of 1998 is amended--
            (1) in section 101(35) (29 U.S.C. 2801(35)), by striking 
        ``section 481 of the Higher Education Act of 1965 (20 U.S.C. 
        1088)'' and inserting ``section 102 of the Higher Education Act 
        of 1965''; and
            (2) in section 203(11) (20 U.S.C. 9202(11)), by striking 
        ``section 1201 of the Higher Education Act of 1965 (20 U.S.C. 
        1141)'' and inserting ``section 101 of the Higher Education Act 
        of 1965''.

[[Page 112 STAT. 1623]]

                        TITLE II--TEACHER QUALITY

SEC. 201. TEACHER QUALITY ENHANCEMENT GRANTS.

    The Act is amended by inserting after title I (20 U.S.C. 1001 et 
seq.) the following:

     ``TITLE II--TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND 
                              PARTNERSHIPS

``SEC. 201. PURPOSES; DEFINITIONS. <<NOTE: 20 USC 1021.>> 

    ``(a) Purposes.--The purposes of this title are to--
            ``(1) improve student achievement;
            ``(2) improve the quality of the current and future teaching 
        force by improving the preparation of prospective teachers and 
        enhancing professional development activities;
            ``(3) hold institutions of higher education accountable for 
        preparing teachers who have the necessary teaching skills and 
        are highly competent in the academic content areas in which the 
        teachers plan to teach, such as mathematics, science, English, 
        foreign languages, history, economics, art, civics, Government, 
        and geography, including training in the effective uses of 
        technology in the classroom; and
            ``(4) recruit highly qualified individuals, including 
        individuals from other occupations, into the teaching force.

    ``(b) Definitions.--In this title:
            ``(1) Arts and sciences.--The term `arts and sciences' 
        means--
                    ``(A) when referring to an organizational unit of an 
                institution of higher education, any academic unit that 
                offers 1 or more academic majors in disciplines or 
                content areas corresponding to the academic subject 
                matter areas in which teachers provide instruction; and
                    ``(B) when referring to a specific academic subject 
                matter area, the disciplines or content areas in which 
                academic majors are offered by the arts and science 
                organizational unit.
            ``(2) High need local educational agency.--The term `high 
        need local educational agency' means a local educational agency 
        that serves an elementary school or secondary school located in 
        an area in which there is--
                    ``(A) a high percentage of individuals from families 
                with incomes below the poverty line;
                    ``(B) a high percentage of secondary school teachers 
                not teaching in the content area in which the teachers 
                were trained to teach; or
                    ``(C) a high teacher turnover rate.
            ``(3) Poverty line.--The term `poverty line' means the 
        poverty line (as defined by the Office of Management and Budget, 
        and revised annually in accordance with section 673(2) of the 
        Community Services Block Grant Act (42 U.S.C. 9902(2))) 
        applicable to a family of the size involved.

[[Page 112 STAT. 1624]]

``SEC. 202. STATE GRANTS. <<NOTE: 20 USC 1022.>> 

    ``(a) In General.--From amounts made available under section 210(1) 
for a fiscal year, the Secretary is authorized to award grants under 
this section, on a competitive basis, to eligible States to enable the 
eligible States to carry out the activities described in subsection (d).
    ``(b) Eligible State.--
            ``(1) Definition.--In this title, the term `eligible State' 
        means--
                    ``(A) the Governor of a State; or
                    ``(B) in the case of a State for which the 
                constitution or law of such State designates another 
                individual, entity, or agency in the State to be 
                responsible for teacher certification and preparation 
                activity, such individual, entity, or agency.
            ``(2) Consultation.--The Governor and the individual, 
        entity, or agency designated under paragraph (1) shall consult 
        with the Governor, State board of education, State educational 
        agency, or State agency for higher education, as appropriate, 
        with respect to the activities assisted under this section.
            ``(3) Construction.--Nothing in this subsection shall be 
        construed to negate or supersede the legal authority under State 
        law of any State agency, State entity, or State public official 
        over programs that are under the jurisdiction of the agency, 
        entity, or official.

    ``(c) Application.--To be eligible to receive a grant under this 
section, an eligible State shall, at the time of the initial grant 
application, submit an application to the Secretary that--
            ``(1) meets the requirement of this section;
            ``(2) includes a description of how the eligible State 
        intends to use funds provided under this section; and
            ``(3) contains such other information and assurances as the 
        Secretary may require.

    ``(d) Uses of Funds.--An eligible State that receives a grant under 
this section shall use the grant funds to reform teacher preparation 
requirements, and to ensure that current and future teachers possess the 
necessary teaching skills and academic content knowledge in the subject 
areas in which the teachers are assigned to teach, by carrying out 1 or 
more of the following activities:
            ``(1) Reforms.--Implementing reforms that hold institutions 
        of higher education with teacher preparation programs 
        accountable for preparing teachers who are highly competent in 
        the academic content areas in which the teachers plan to teach, 
        and possess strong teaching skills, which may include the use of 
        rigorous subject matter competency tests and the requirement 
        that a teacher have an academic major in the subject area, or 
        related discipline, in which the teacher plans to teach.
            ``(2) Certification or licensure requirements.--Reforming 
        teacher certification or licensure requirements to ensure that 
        teachers have the necessary teaching skills and academic content 
        knowledge in the subject areas in which teachers are assigned to 
        teach.
            ``(3) Alternatives to traditional preparation for 
        teaching.--Providing prospective teachers with alternatives to

[[Page 112 STAT. 1625]]

        traditional preparation for teaching through programs at 
        colleges of arts and sciences or at nonprofit educational 
        organizations.
            ``(4) Alternative routes to state certification.--
        Carrying out programs that--
                    ``(A) include support during the initial teaching 
                experience; and
                    ``(B) establish, expand, or improve alternative 
                routes to State certification of teachers for highly 
                qualified individuals, including mid-career 
                professionals from other occupations, paraprofessionals, 
                former military personnel and recent college graduates 
                with records of academic distinction.
            ``(5) Recruitment; pay; removal.--Developing and 
        implementing effective mechanisms to ensure that local 
        educational agencies and schools are able to effectively recruit 
        highly qualified teachers, to financially reward those teachers 
        and principals whose students have made significant progress 
        toward high academic performance, such as through performance-
        based compensation systems and access to ongoing professional 
        development opportunities for teachers and administrators, and 
        to expeditiously remove incompetent or unqualified teachers 
        consistent with procedures to ensure due process for the 
        teachers.
            ``(6) Social promotion.--Development and implementation of 
        efforts to address the problem of social promotion and to 
        prepare teachers to effectively address the issues raised by 
        ending the practice of social promotion.
            ``(7) Recruitment.--Activities described in section 204(d).

``SEC. 203. PARTNERSHIP GRANTS. <<NOTE: 20 USC 1023.>> 

    ``(a) Grants.--From amounts made available under section 210(2) for 
a fiscal year, the Secretary is authorized to award grants under this 
section, on a competitive basis, to eligible partnerships to enable the 
eligible partnerships to carry out the activities described in 
subsections (d) and (e).
    ``(b) Definitions.--
            ``(1) Eligible partnerships.--In this title, the term 
        `eligible partnerships' means an entity that--
                    ``(A) shall include--
                          ``(i) a partner institution;
                          ``(ii) a school of arts and sciences; and
                          ``(iii) a high need local educational agency; 
                      and
                    ``(B) may include a Governor, State educational 
                agency, the State board of education, the State agency 
                for higher education, an institution of higher education 
                not described in subparagraph (A), a public charter 
                school, a public or private elementary school or 
                secondary school, a public or private nonprofit 
                educational organization, a business, a teacher 
                organization, or a prekindergarten program.
            ``(2) Partner institution.--In this section, the term 
        `partner institution' means a private independent or State-
        supported public institution of higher education, the teacher 
        training program of which demonstrates that--
                    ``(A) graduates from the teacher training program 
                exhibit strong performance on State-determined 
                qualifying assessments for new teachers through--

[[Page 112 STAT. 1626]]

                          ``(i) demonstrating that 80 percent or more of 
                      the graduates of the program who intend to enter 
                      the field of teaching have passed all of the 
                      applicable State qualification assessments for new 
                      teachers, which shall include an assessment of 
                      each prospective teacher's subject matter 
                      knowledge in the content area or areas in which 
                      the teacher intends to teach; or
                          ``(ii) being ranked among the highest-
                      performing teacher preparation programs in the 
                      State as determined by the State--
                                    ``(I) using criteria consistent with 
                                the requirements for the State report 
                                card under section 207(b); and
                                    ``(II) using the State report card 
                                on teacher preparation required under 
                                section 207(b), after the first 
                                publication of such report card and for 
                                every year thereafter; or
                    ``(B) the teacher training program requires all the 
                students of the program to participate in intensive 
                clinical experience, to meet high academic standards, 
                and--
                          ``(i) in the case of secondary school 
                      candidates, to successfully complete an academic 
                      major in the subject area in which the candidate 
                      intends to teach or to demonstrate competence 
                      through a high level of performance in relevant 
                      content areas; and
                          ``(ii) in the case of elementary school 
                      candidates, to successfully complete an academic 
                      major in the arts and sciences or to demonstrate 
                      competence through a high level of performance in 
                      core academic subject areas.

    ``(c) Application.--Each eligible partnership desiring a grant under 
this section shall submit an application to the Secretary at such time, 
in such manner, and accompanied by such information as the Secretary may 
require. Each such application shall--
            ``(1) contain a needs assessment of all the partners with 
        respect to teaching and learning and a description of how the 
        partnership will coordinate with other teacher training or 
        professional development programs, and how the activities of the 
        partnership will be consistent with State, local, and other 
        education reform activities that promote student achievement;
            ``(2) contain a resource assessment that describes the 
        resources available to the partnership, the intended use of the 
        grant funds, including a description of how the grant funds will 
        be fairly distributed in accordance with subsection (f ), and 
        the commitment of the resources of the partnership to the 
        activities assisted under this title, including financial 
        support, faculty participation, time commitments, and 
        continuation of the activities when the grant ends; and
            ``(3) contain a description of--
                    ``(A) how the partnership will meet the purposes of 
                this title;
                    ``(B) how the partnership will carry out the 
                activities required under subsection (d) and any 
                permissible activities under subsection (e); and
                    ``(C) the partnership's evaluation plan pursuant to 
                section 206(b).

[[Page 112 STAT. 1627]]

    ``(d) Required Uses of Funds.--An eligible partnership that receives 
a grant under this section shall use the grant funds to carry out the 
following activities:
            ``(1) Reforms.--Implementing reforms within teacher 
        preparation programs to hold the programs accountable for 
        preparing teachers who are highly competent in the academic 
        content areas in which the teachers plan to teach, and for 
        promoting strong teaching skills, including working with a 
        school of arts and sciences and integrating reliable research-
        based teaching methods into the curriculum, which curriculum 
        shall include programs designed to successfully integrate 
        technology into teaching and learning.
            ``(2) Clinical experience and interaction.--Providing 
        sustained and high quality preservice clinical experience 
        including the mentoring of prospective teachers by veteran 
        teachers, and substantially increasing interaction between 
        faculty at institutions of higher education and new and 
        experienced teachers, principals, and other administrators at 
        elementary schools or secondary schools, and providing support, 
        including preparation time, for such interaction.
            ``(3) Professional development.--Creating opportunities for 
        enhanced and ongoing professional development that improves the 
        academic content knowledge of teachers in the subject areas in 
        which the teachers are certified to teach or in which the 
        teachers are working toward certification to teach, and that 
        promotes strong teaching skills.

    ``(e) Allowable Uses of Funds.--An eligible partnership that 
receives a grant under this section may use such funds to carry out the 
following activities:
            ``(1) Teacher preparation and parent involvement.--Preparing 
        teachers to work with diverse student populations, including 
        individuals with disabilities and limited English proficient 
        individuals, and involving parents in the teacher preparation 
        program reform process.
            ``(2) Dissemination and coordination.--Broadly disseminating 
        information on effective practices used by the partnership, and 
        coordinating with the activities of the Governor, State board of 
        education, State higher education agency, and State educational 
        agency, as appropriate.
            ``(3) Managerial and leadership skills.--Developing and 
        implementing proven mechanisms to provide principals and 
        superintendents with effective managerial and leadership skills 
        that result in increased student achievement.
            ``(4) Teacher recruitment.--Activities described in section 
        204(d).

    ``(f ) Special Rule.--No individual member of an eligible 
partnership shall retain more than 50 percent of the funds made 
available to the partnership under this section.
    ``(g) Construction.--Nothing in this section shall be construed to 
prohibit an eligible partnership from using grant funds to coordinate 
with the activities of more than one Governor, State board of education, 
State educational agency, local educational agency, or State agency for 
higher education.

``SEC. 204. TEACHER RECRUITMENT GRANTS. <<NOTE: 20 USC 1024.>> 

    ``(a) Program Authorized.--From amounts made available under section 
210(3) for a fiscal year, the Secretary is authorized

[[Page 112 STAT. 1628]]

to award grants, on a competitive basis, to eligible applicants to 
enable the eligible applicants to carry out activities described in 
subsection (d).
    ``(b) Eligible Applicant Defined.--In this title, the term `eligible 
applicant' means--
            ``(1) an eligible State described in section 202(b); or
            ``(2) an eligible partnership described in section 203(b).

    ``(c) Application.--Any eligible applicant desiring to receive a 
grant under this section shall submit an application to the Secretary at 
such time, in such form, and containing such information as the 
Secretary may require, including--
            ``(1) a description of the assessment that the eligible 
        applicant, and the other entities with whom the eligible 
        applicant will carry out the grant activities, have undertaken 
        to determine the most critical needs of the participating high-
        need local educational agencies;
            ``(2) a description of the activities the eligible applicant 
        will carry out with the grant; and
            ``(3) a description of the eligible applicant's plan for 
        continuing the activities carried out with the grant, once 
        Federal funding ceases.

    ``(d) Uses of Funds.--Each eligible applicant receiving a grant 
under this section shall use the grant funds--
            ``(1)(A) to award scholarships to help students pay the 
        costs of tuition, room, board, and other expenses of completing 
        a teacher preparation program;
            ``(B) to provide support services, if needed to enable 
        scholarship recipients to complete postsecondary education 
        programs; and
            ``(C) for followup services provided to former scholarship 
        recipients during the recipients first 3 years of teaching; or
            ``(2) to develop and implement effective mechanisms to 
        ensure that high need local educational agencies and schools are 
        able to effectively recruit highly qualified teachers.

    ``(e) Service Requirements.--The Secretary shall establish such 
requirements as the Secretary finds necessary to ensure that recipients 
of scholarships under this section who complete teacher education 
programs subsequently teach in a high-need local educational agency, for 
a period of time equivalent to the period for which the recipients 
receive scholarship assistance, or repay the amount of the scholarship. 
The Secretary shall use any such repayments to carry out additional 
activities under this section.

``SEC. 205. ADMINISTRATIVE PROVISIONS. <<NOTE: 20 USC 1025.>> 

    ``(a) Duration; One-Time Awards; Payments.--
            ``(1) Duration.--
                    ``(A) Eligible states and eligible applicants.--
                Grants awarded to eligible States and eligible 
                applicants under this title shall be awarded for a 
                period not to exceed 3 years.
                    ``(B) Eligible partnerships.--Grants awarded to 
                eligible partnerships under this title shall be awarded 
                for a period of 5 years.
            ``(2) One-time award.--An eligible State and an eligible 
        partnership may receive a grant under each of sections 202, 203, 
        and 204 only once.

[[Page 112 STAT. 1629]]

            ``(3) Payments.--The Secretary shall make annual payments of 
        grant funds awarded under this part.

    ``(b) Peer Review.--
            ``(1) Panel.--The Secretary shall provide the applications 
        submitted under this title to a peer review panel for 
        evaluation. With respect to each application, the peer review 
        panel shall initially recommend the application for funding or 
        for disapproval.
            ``(2) Priority.--In recommending applications to the 
        Secretary for funding under this title, the panel shall--
                    ``(A) with respect to grants under section 202, give 
                priority to eligible States serving States that--
                          ``(i) have initiatives to reform State teacher 
                      certification requirements that are designed to 
                      ensure that current and future teachers possess 
                      the necessary teaching skills and academic content 
                      knowledge in the subject areas in which the 
                      teachers are certified or licensed to teach;
                          ``(ii) include innovative reforms to hold 
                      institutions of higher education with teacher 
                      preparation programs accountable for preparing 
                      teachers who are highly competent in the academic 
                      content area in which the teachers plan to teach 
                      and have strong teaching skills; or
                          ``(iii) involve the development of innovative 
                      efforts aimed at reducing the shortage of highly 
                      qualified teachers in high poverty urban and rural 
                      areas;
                    ``(B) with respect to grants under section 203--
                          ``(i) give priority to applications from 
                      eligible partnerships that involve businesses; and
                          ``(ii) take into consideration--
                                    ``(I) providing an equitable 
                                geographic distribution of the grants 
                                throughout the United States; and
                                    ``(II) the potential of the proposed 
                                activities for creating improvement and 
                                positive change.
            ``(3) Secretarial selection.--The Secretary shall determine, 
        based on the peer review process, which application shall 
        receive funding and the amounts of the grants. In determining 
        grant amounts, the Secretary shall take into account the total 
        amount of funds available for all grants under this title and 
        the types of activities proposed to be carried out.

    ``(c) Matching Requirements.--
            ``(1) State grants.--Each eligible State receiving a grant 
        under section 202 or 204 shall provide, from non-Federal 
        sources, an amount equal to 50 percent of the amount of the 
        grant (in cash or in kind) to carry out the activities supported 
        by the grant.
            ``(2) Partnership grants.--Each eligible partnership 
        receiving a grant under section 203 or 204 shall provide, from 
        non-Federal sources (in cash or in kind), an amount equal to 25 
        percent of the grant for the first year of the grant, 35 percent 
        of the grant for the second year of the grant, and 50 percent of 
        the grant for each succeeding year of the grant.

    ``(d) Limitation on Administrative Expenses.--An eligible State or 
eligible partnership that receives a grant under this title may not use 
more than 2 percent of the grant funds for purposes of administering the 
grant.

[[Page 112 STAT. 1630]]

    ``(e) Teacher Qualifications Provided to Parents Upon Request.--Any 
local educational agency or school that benefits from the activities 
assisted under this title shall make available, upon request and in an 
understandable and uniform format, to any parent of a student attending 
any school served by the local educational agency, information regarding 
the qualification of the student's classroom teacher with regard to the 
subject matter in which the teacher provides instruction. The local 
educational agency shall inform parents that the parents are entitled to 
receive the information upon request.

``SEC. 206. ACCOUNTABILITY AND EVALUATION. <<NOTE: 20 USC 1026.>> 

    ``(a) State Grant Accountability Report.--An eligible State that 
receives a grant under section 202 shall submit an annual accountability 
report to the Secretary, the Committee on Labor and Human Resources of 
the Senate, and the Committee on Education and the Workforce of the 
House of Representatives. Such report shall include a description of the 
degree to which the eligible State, in using funds provided under such 
section, has made substantial progress in meeting the following goals:
            ``(1) Student achievement.--Increasing student achievement 
        for all students as defined by the eligible State.
            ``(2) Raising standards.--Raising the State academic 
        standards required to enter the teaching profession, including, 
        where appropriate, through the use of incentives to incorporate 
        the requirement of an academic major in the subject, or related 
        discipline, in which the teacher plans to teach.
            ``(3) Initial certification or licensure.--Increasing 
        success in the pass rate for initial State teacher certification 
        or licensure, or increasing the numbers of highly qualified 
        individuals being certified or licensed as teachers through 
        alternative programs.
            ``(4) Core academic subjects.--
                    ``(A) Secondary school classes.--Increasing the 
                percentage of secondary school classes taught in core 
                academic subject areas by teachers--
                          ``(i) with academic majors in those areas or 
                      in a related field;
                          ``(ii) who can demonstrate a high level of 
                      competence through rigorous academic subject area 
                      tests; or
                          ``(iii) who can demonstrate competence through 
                      a high level of performance in relevant content 
                      areas.
                    ``(B) Elementary school classes.--Increasing the 
                percentage of elementary school classes taught by 
                teachers--
                          ``(i) with academic majors in the arts and 
                      sciences; or
                          ``(ii) who can demonstrate competence through 
                      a high level of performance in core academic 
                      subjects.
            ``(5) Decreasing teacher shortages.--Decreasing shortages of 
        qualified teachers in poor urban and rural areas.
            ``(6) Increasing opportunities for professional 
        development.--Increasing opportunities for enhanced and ongoing 
        professional development that improves the academic content 
        knowledge of teachers in the subject areas in which the teachers 
        are certified or licensed to teach or in which the teachers

[[Page 112 STAT. 1631]]

        are working toward certification or licensure to teach, and that 
        promotes strong teaching skills.
            ``(7) Technology integration.--Increasing the number of 
        teachers prepared to integrate technology in the classroom.

    ``(b) Eligible Partnership Evaluation.--Each eligible partnership 
receiving a grant under section 203 shall establish and include in the 
application submitted under section 203(c), an evaluation plan that 
includes strong performance objectives. The plan shall include 
objectives and measures for--
            ``(1) increased student achievement for all students as 
        measured by the partnership;
            ``(2) increased teacher retention in the first 3 years of a 
        teacher's career;
            ``(3) increased success in the pass rate for initial State 
        certification or licensure of teachers; and
            ``(4) increased percentage of secondary school classes 
        taught in core academic subject areas by teachers--
                    ``(A) with academic majors in the areas or in a 
                related field; and
                    ``(B) who can demonstrate a high level of competence 
                through rigorous academic subject area tests or who can 
                demonstrate competence through a high level of 
                performance in relevant content areas;
            ``(5) increasing the percentage of elementary school classes 
        taught by teachers with academic majors in the arts and sciences 
        or who demonstrate competence through a high level of 
        performance in core academic subject areas; and
            ``(6) increasing the number of teachers trained in 
        technology.

    ``(c) Revocation of Grant.--
            ``(1) Report.--Each eligible State or eligible partnership 
        receiving a grant under this title shall report annually on the 
        progress of the eligible State or eligible partnership toward 
        meeting the purposes of this title and the goals, objectives, 
        and measures described in subsections (a) and (b).
            ``(2) Revocation.--
                    ``(A) Eligible states and eligible applicants.--If 
                the Secretary determines that an eligible State or 
                eligible applicant is not making substantial progress in 
                meeting the purposes, goals, objectives, and measures, 
                as appropriate, by the end of the second year of a grant 
                under this title, then the grant payment shall not be 
                made for the third year of the grant.
                    ``(B) Eligible partnerships.--If the Secretary 
                determines that an eligible partnership is not making 
                substantial progress in meeting the purposes, goals, 
                objectives, and measures, as appropriate, by the end of 
                the third year of a grant under this title, then the 
                grant payments shall not be made for any succeeding year 
                of the grant.

    ``(d) Evaluation and Dissemination.--The Secretary shall evaluate 
the activities funded under this title and report the Secretary's 
findings regarding the activities to the Committee on Labor and Human 
Resources of the Senate and the Committee on Education and the Workforce 
of the House of Representatives. The Secretary shall broadly disseminate 
successful practices developed by eligible States and eligible 
partnerships under this title, and

[[Page 112 STAT. 1632]]

shall broadly disseminate information regarding such practices that were 
found to be ineffective.

``SEC. 207. <<NOTE: 20 USC 1027.>>  ACCOUNTABILITY FOR PROGRAMS THAT 
            PREPARE TEACHERS.

    ``(a) <<NOTE: Deadline.>> Development of Definitions and Reporting 
Methods.--Within 9 months of the date of enactment of the Higher 
Education Amendments of 1998, the Commissioner of the National Center 
for Education Statistics, in consultation with States and institutions 
of higher education, shall develop key definitions for terms, and 
uniform reporting methods (including the key definitions for the 
consistent reporting of pass rates), related to the performance of 
elementary school and secondary school teacher preparation programs.

    ``(b) State Report Card on the Quality of Teacher Preparation.--Each 
State that receives funds under this Act shall provide to the Secretary, 
within 2 years of the date of enactment of the Higher Education 
Amendments of 1998, and annually thereafter, in a uniform and 
comprehensible manner that conforms with the definitions and methods 
established in subsection (a), a State report card on the quality of 
teacher preparation in the State, which shall include at least the 
following:
            ``(1) A description of the teacher certification and 
        licensure assessments, and any other certification and licensure 
        requirements, used by the State.
            ``(2) The standards and criteria that prospective teachers 
        must meet in order to attain initial teacher certification or 
        licensure and to be certified or licensed to teach particular 
        subjects or in particular grades within the State.
            ``(3) A description of the extent to which the assessments 
        and requirements described in paragraph (1) are aligned with the 
        State's standards and assessments for students.
            ``(4) The percentage of teaching candidates who passed each 
        of the assessments used by the State for teacher certification 
        and licensure, and the passing score on each assessment that 
        determines whether a candidate has passed that assessment.
            ``(5) The percentage of teaching candidates who passed each 
        of the assessments used by the State for teacher certification 
        and licensure, disaggregated and ranked, by the teacher 
        preparation program in that State from which the teacher 
        candidate received the candidate's most recent degree, which 
        shall be made available widely and publicly.
            ``(6) Information on the extent to which teachers in the 
        State are given waivers of State certification or licensure 
        requirements, including the proportion of such teachers 
        distributed across high- and low-poverty school districts and 
        across subject areas.
            ``(7) A description of each State's alternative routes to 
        teacher certification, if any, and the percentage of teachers 
        certified through alternative certification routes who pass 
        State teacher certification or licensure assessments.
            ``(8) For each State, a description of proposed criteria for 
        assessing the performance of teacher preparation programs within 
        institutions of higher education in the State, including 
        indicators of teacher candidate knowledge and skills.

[[Page 112 STAT. 1633]]

            ``(9) Information on the extent to which teachers or 
        prospective teachers in each State are required to take 
        examinations or other assessments of their subject matter 
        knowledge in the area or areas in which the teachers provide 
        instruction, the standards established for passing any such 
        assessments, and the extent to which teachers or prospective 
        teachers are required to receive a passing score on such 
        assessments in order to teach in specific subject areas or grade 
        levels.

    ``(c) Initial Report.--
            ``(1) <<NOTE: Deadline.>> In general.--Each State that 
        receives funds under this Act, not later than 6 months of the 
        date of enactment of the Higher Education Amendments of 1998 and 
        in a uniform and comprehensible manner, shall submit to the 
        Secretary the information described in paragraphs (1), (5), and 
        (6) of subsection (b). <<NOTE: Records.>> Such information shall 
        be compiled by the Secretary and submitted to the Committee on 
        Labor and Human Resources of the Senate and the Committee on 
        Education and the Workforce of the House of Representatives not 
        later than 9 months after the date of enactment of the Higher 
        Education Amendments of 1998.
            ``(2) Construction.--Nothing in this subsection shall be 
        construed to require a State to gather information that is not 
        in the possession of the State or the teacher preparation 
        programs in the State, or readily available to the State or 
        teacher preparation programs.

    ``(d) Report of the Secretary on the Quality of Teacher 
Preparation.--
            ``(1) <<NOTE: Publication. Public information.>> Report 
        card.--The Secretary shall provide to Congress, and publish and 
        make widely available, a report card on teacher qualifications 
        and preparation in the United States, including all the 
        information reported in paragraphs (1) through (9) of subsection 
        (b). Such report shall identify States for which eligible States 
        and eligible partnerships received a grant under this title. 
        Such report shall be so provided, published and made available 
        not later than 2 years 6 months after the date of enactment of 
        the Higher Education Amendments of 1998 and annually thereafter.
            ``(2) Report to congress.--The Secretary shall report to 
        Congress--
                    ``(A) a comparison of States' efforts to improve 
                teaching quality; and
                    ``(B) regarding the national mean and median scores 
                on any standardized test that is used in more than 1 
                State for teacher certification or licensure.
            ``(3) <<NOTE: Records. Publication.>> Special rule.--In the 
        case of teacher preparation programs with fewer than 10 
        graduates taking any single initial teacher certification or 
        licensure assessment during an academic year, the Secretary 
        shall collect and publish information with respect to an average 
        pass rate on State certification or licensure assessments taken 
        over a 3-year period.

    ``(e) <<NOTE: Records. Publication.>> Coordination.--The Secretary, 
to the extent practicable, shall coordinate the information collected 
and published under this title among States for individuals who took 
State teacher certification or licensure assessments in a State other 
than the State in which the individual received the individual's most 
recent degree.

    ``(f ) Institutional Report Cards on the Quality of Teacher 
Preparation.--

[[Page 112 STAT. 1634]]

            ``(1) <<NOTE: Deadline. Reports. Public 
        information.>> Report card.--Each institution of higher 
        education that conducts a teacher preparation program that 
        enrolls students receiving Federal assistance under this Act, 
        not later than 18 months after the date of enactment of the 
        Higher Education Amendments of 1998 and annually thereafter, 
        shall report to the State and the general public, in a uniform 
        and comprehensible manner that conforms with the definitions and 
        methods established under subsection (a), the following 
        information:
                    ``(A) Pass rate.--(i) For the most recent year for 
                which the information is available, the pass rate of the 
                institution's graduates on the teacher certification or 
                licensure assessments of the State in which the 
                institution is located, but only for those students who 
                took those assessments within 3 years of completing the 
                program.
                    ``(ii) A comparison of the program's pass rate with 
                the average pass rate for programs in the State.
                    ``(iii) In the case of teacher preparation programs 
                with fewer than 10 graduates taking any single initial 
                teacher certification or licensure assessment during an 
                academic year, the institution shall collect and publish 
                information with respect to an average pass rate on 
                State certification or licensure assessments taken over 
                a 3-year period.
                    ``(B) Program information.--The number of students 
                in the program, the average number of hours of 
                supervised practice teaching required for those in the 
                program, and the faculty-student ratio in supervised 
                practice teaching.
                    ``(C) Statement.--In States that approve or accredit 
                teacher education programs, a statement of whether the 
                institution's program is so approved or accredited.
                    ``(D) Designation as low-performing.--Whether the 
                program has been designated as low-performing by the 
                State under section 208(a).
            ``(2) Requirement.--The information described in paragraph 
        (1) shall be reported through publications such as school 
        catalogs and promotional materials sent to potential applicants, 
        secondary school guidance counselors, and prospective employers 
        of the institution's program graduates.
            ``(3) Fines.--In addition to the actions authorized in 
        section 487(c), the Secretary may impose a fine not to exceed 
        $25,000 on an institution of higher education for failure to 
        provide the information described in this subsection in a timely 
        or accurate manner.

``SEC. 208. STATE FUNCTIONS. <<NOTE: 20 USC 1028.>> 

    ``(a) <<NOTE: Deadline. Procedures.>> .State Assessment.--In order 
to receive funds under this Act, a State, not later than 2 years after 
the date of enactment of the Higher Education Amendments of 1998, shall 
have in place a procedure to identify, and assist, through the provision 
of technical assistance, low-performing programs of teacher preparation 
within institutions of higher education. <<NOTE: Records.>> Such State 
shall provide the Secretary an annual list of such low-performing 
institutions that includes an identification of those institutions at-
risk of being placed on such list. Such levels of performance shall be 
determined solely by the State and may include criteria based upon 
information collected pursuant to this title. Such assessment shall be 
described in the report under section 207(b).

[[Page 112 STAT. 1635]]

    ``(b) Termination of Eligibility.--Any institution of higher 
education that offers a program of teacher preparation in which the 
State has withdrawn the State's approval or terminated the State's 
financial support due to the low performance of the institution's 
teacher preparation program based upon the State assessment described in 
subsection (a)--
            ``(1) shall be ineligible for any funding for professional 
        development activities awarded by the Department of Education; 
        and
            ``(2) shall not be permitted to accept or enroll any student 
        that receives aid under title IV of this Act in the 
        institution's teacher preparation program.

    ``(c) Negotiated Rulemaking.--If the Secretary develops any 
regulations implementing subsection (b)(2), the Secretary shall submit 
such proposed regulations to a negotiated rulemaking process, which 
shall include representatives of States, institutions of higher 
education, and educational and student organizations.

``SEC. 209. GENERAL PROVISIONS. <<NOTE: 20 USC 1029.>> 

    ``(a) Methods.--In complying with sections 207 and 208, the 
Secretary shall ensure that States and institutions of higher education 
use fair and equitable methods in reporting and that the reporting 
methods protect the privacy of individuals.
    ``(b) Special Rule.--For each State in which there are no State 
certification or licensure assessments, or for States that do not set 
minimum performance levels on those assessments--
            ``(1) the Secretary shall, to the extent practicable, 
        collect data comparable to the data required under this title 
        from States, local educational agencies, institutions of higher 
        education, or other entities that administer such assessments to 
        teachers or prospective teachers; and
            ``(2) notwithstanding any other provision of this title, the 
        Secretary shall use such data to carry out requirements of this 
        title related to assessments or pass rates.

    ``(c) Limitations.--
            ``(1) Federal control prohibited.--Nothing in this title 
        shall be construed to permit, allow, encourage, or authorize any 
        Federal control over any aspect of any private, religious, or 
        home school, whether or not a home school is treated as a 
        private school or home school under State law. This section 
        shall not be construed to prohibit private, religious, or home 
        schools from participation in programs or services under this 
        title.
            ``(2) No change in state control encouraged or required.--
        Nothing in this title shall be construed to encourage or require 
        any change in a State's treatment of any private, religious, or 
        home school, whether or not a home school is treated as a 
        private school or home school under State law.
            ``(3) National system of teacher certification prohibited.--
        Nothing in this title shall be construed to permit, allow, 
        encourage, or authorize the Secretary to establish or support 
        any national system of teacher certification.

``SEC. 210. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1030.>> 

    ``There are authorized to be appropriated to carry out this title 
$300,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years, of which--

[[Page 112 STAT. 1636]]

            ``(1) 45 percent shall be available for each fiscal year to 
        award grants under section 202;
            ``(2) 45 percent shall be available for each fiscal year to 
        award grants under section 203; and
            ``(3) 10 percent shall be available for each fiscal year to 
        award grants under section 204.''.

                      TITLE III--INSTITUTIONAL AID

SEC. 301. TRANSFERS AND REDESIGNATIONS.

    (a) In General.--The Higher Education Act of 1965 is 
amended--
            (1) by redesignating part D of title III (20 U.S.C. 1066 et 
        seq.) as part F of title III;
            (2) <<NOTE: 20 USC 1066 et seq., 1068 et seq.>> by 
        redesignating sections 351, 352, 353, 354, 356, 357, 358, and 
        360 (20 U.S.C. 1066, 1067, 1068, 1069, 1069b, 1069c, 1069d, and 
        1069f) as sections 391, 392, 393, 394, 395, 396, 397, and 399, 
        respectively;
            (3) <<NOTE: 20 USC 1132 et seq., 1066 et seq.>> by 
        transferring part B of title VII (20 U.S.C. 1132c et seq.) to 
        title III to follow part C of title III (20 U.S.C. 1065 et 
        seq.), and redesignating such part B as part D;
            (4) <<NOTE: 20 USC 1132 et seq., 1066 et seq.>> by 
        redesignating sections 721 through 728 (20 U.S.C. 1132c and 
        1132c-7) as sections 341 through 348, respectively;
            (5) <<NOTE: 20 USC 1135b et seq., 1067a et seq.>> by 
        transferring subparts 1 and 3 of part B of title X (20 U.S.C. 
        1135b et seq. and 1135d et seq.) to title III to follow part D 
        of title III (as redesignated by paragraph (3)), and 
        redesignating such subpart 3 as subpart 2;
            (6) by inserting after part D of title III (as redesignated 
        by paragraph (3)) the following:

    ``PART E--MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM'';

            (7) <<NOTE: 20 USC 1135b et seq., 1067a et seq.>> by 
        redesignating sections 1021 through 1023 (20 U.S.C. 1135b and 
        1135b-2), and sections 1041, 1042, 1043, 1044, 1046, and 1047 
        (20 U.S.C. 1135d, 1135d-1, 1135d-2, 1135d-3, 1135d-5, and 1135d-
        6) as sections 351 through 353, and sections 361, 362, 363, 364, 
        365, and 366, respectively; and
            (8) by repealing section 366 <<NOTE: 20 USC 1067l.>> (as 
        redesignated by paragraph (7)) (20 U.S.C. 1135d-6).

    (b) Conforming Amendments.--Section 361 <<NOTE: 20 USC 1067g.>> (as 
redesignated by subsection (a)(7)) (20 U.S.C. 1135d) is amended--
            (1) in paragraph (1), by inserting ``and'' after the 
        semicolon;
            (2) in paragraph (2), by striking ``; and'' and inserting a 
        period; and
            (3) by striking paragraph (3).

    (c) Cross References.--Title III (20 U.S.C. 1051 et seq.) is 
amended--
            (1) in section 311(b) (20 U.S.C. 1057(b)), by striking 
        ``360(a)(1)'' and inserting ``399(a)(1)'';
            (2) in section 312 (20 U.S.C. 1058)--
                    (A) in subsection (b)(1)(B), by striking ``352(b)'' 
                and inserting ``392(b)''; and
                    (B) in subsection (c)(2), by striking ``352(a)'' and 

                inserting ``392(a)'';

[[Page 112 STAT. 1637]]

            (3) in section 313(b) (20 U.S.C. 1059(b)), by striking 
        ``354(a)(1)'' and inserting ``394(a)(1)'';
            (4) in section 342 <<NOTE: 20 USC 1066a.>> (as redesignated 
        by subsection (a)(4)) (20 U.S.C. 1132c-1)--
                    (A) in paragraph (3), by striking ``723(b)'' and 
                inserting ``343(b)'';
                    (B) in paragraph (4), by striking ``723'' and 
                inserting ``343'';
                    (C) in the matter preceding subparagraph (A) of 
                paragraph (5), by striking ``724(b)'' and inserting 
                ``344(b)'';
                    (D) in paragraph (8), by striking ``725(1)'' and 
                inserting ``345(1)''; and
                    (E) in paragraph (9), by striking ``727'' and 
                inserting ``347'';
            (5) in section 343 <<NOTE: 20 USC 1066b.>> (as redesignated 
        by subsection (a)(4)) (20 U.S.C. 1132c-2)--
                    (A) in subsection (a), by striking ``724'' and 
                inserting ``344''; and
                    (B) in subsection (b)--
                          (i) in the matter preceding paragraph (1), by 
                      striking ``725(1) and 726'' and inserting ``345(1) 
                      and 346'';
                          (ii) in paragraph (10), by striking ``724'' 
                      and inserting ``344''; and
                          (iii) in subsection (d), by striking 
                      ``723(c)(1)'' and inserting ``343(c)(1)'';
            (6) in section 345(2) <<NOTE: 20 USC 1066d.>> (as 
        redesignated by subsection (a)(4)) (20 U.S.C. 1132c-4(2)), by 
        striking ``723'' and inserting ``343'';
            (7) in section 348 <<NOTE: 20 USC 1066g.>> (as redesignated 
        by subsection (a)(4)) (20 U.S.C. 1132c-7), by striking 
        ``725(1)'' and inserting ``345(1)'';
            (8) in section 353(a) <<NOTE: 20 USC 1067c.>> (as 
        redesignated by subsection (a)(7)) (20 U.S.C. 1135b-2(a))--
                    (A) in paragraph (1), by striking ``1046(6)'' and 
                inserting ``365(6)'';
                    (B) in paragraph (2), by striking ``1046(7)'' and 
                inserting ``365(7)'';
                    (C) in paragraph (3), by striking ``1046(8)'' and 
                inserting ``365(8)''; and
                    (D) in paragraph (4), by striking ``1046(9)'' and 
                inserting ``365(9)'';
            (9) in section 361(1) <<NOTE: 20 USC 1067g.>> (as 
        redesignated by subsection (a)(7)) (20 U.S.C. 1135d(1)), by 
        striking ``1046(3)'' and inserting ``365(3)'';
            (10) in section 362(a) <<NOTE: 20 USC 1067h.>> (as 
        redesignated by subsection (a)(7)) (20 U.S.C. 1135d-1(a))--
                    (A) in the matter preceding paragraph (1), by 
                striking ``1041'' and inserting ``361''; and
                    (B) in paragraph (1), by striking ``1021(b)'' and 
                inserting ``351(b)''; and
            (11) in section 391(b)(6) <<NOTE: 20 USC 1068.>> (as 
        redesignated by subsection (a)(2)), by striking ``357'' and 
        inserting ``396''.

SEC. 302. FINDINGS.

    Section 301(a) (20 U.S.C. 1051(a)) is amended--
            (1) by redesignating paragraphs (3) through (7) as 
        paragraphs (4) through (8), respectively; and
            (2) by inserting after paragraph (2) the following:

[[Page 112 STAT. 1638]]

            ``(3) in order to be competitive and provide a high-quality 
        education for all, institutions of higher education should 
        improve their technological capacity and make effective use of 
        technology;''.

SEC. 303. STRENGTHENING INSTITUTIONS.

    (a) Grants.--Section 311 (20 U.S.C. 1057) is amended by 
adding at the end the following:
    ``(c) Authorized Activities.--Grants awarded under this 
section shall be used for 1 or more of the following activities:
            ``(1) Purchase, rental, or lease of scientific or laboratory 
        equipment for educational purposes, including instructional and 
        research purposes.
            ``(2) Construction, maintenance, renovation, and improvement 
        in classrooms, libraries, laboratories, and other instructional 
        facilities, including the integration of computer technology 
        into institutional facilities to create smart buildings.
            ``(3) Support of faculty exchanges, faculty development, and 
        faculty fellowships to assist in attaining advanced degrees in 
        the field of instruction of the faculty.
            ``(4) Development and improvement of academic programs.
            ``(5) Purchase of library books, periodicals, and other 
        educational materials, including telecommunications program 
        material.
            ``(6) Tutoring, counseling, and student service programs 
        designed to improve academic success.
            ``(7) Funds management, administrative management, and 
        acquisition of equipment for use in strengthening funds 
        management.
            ``(8) Joint use of facilities, such as laboratories and 
        libraries.
            ``(9) Establishing or improving a development office to 
        strengthen or improve contributions from alumni and the private 
        sector.
            ``(10) Establishing or improving an endowment fund.
            ``(11) Creating or improving facilities for Internet or 
        other distance learning academic instruction capabilities, 
        including purchase or rental of telecommunications technology 
        equipment or services.
            ``(12) Other activities proposed in the application 
        submitted pursuant to subsection (c) that--
                    ``(A) contribute to carrying out the purposes of the 
                program assisted under this part; and
                    ``(B) are approved by the Secretary as part of the 
                review and acceptance of such application.

    ``(d) Endowment Fund.--
            ``(1) In general.--An eligible institution may use not more 
        than 20 percent of the grant funds provided under this part to 
        establish or increase an endowment fund at such institution.
            ``(2) Matching requirement.--In order to be eligible to use 
        grant funds in accordance with paragraph (1), the eligible 
        institution shall provide matching funds from non-Federal 
        sources, in an amount equal to or greater than the Federal funds 
        used in accordance with paragraph (1), for the establishment or 
        increase of the endowment fund.
            ``(3) <<NOTE: Applicability.>> Comparability.--The 
        provisions of part C, regarding the establishment or increase of 
        an endowment fund, that

[[Page 112 STAT. 1639]]

        the Secretary determines are not inconsistent with this 
        subsection, shall apply to funds used under paragraph (1).''.

    (b) Endowment Fund Definition.--Section 312 (as amended by section 
301(c)(2)) (20 U.S.C. 1058) is amended--
            (1) by redesignating subsections (c) through (f ) as 
        subsections (d) through (g), respectively; and
            (2) by inserting after subsection (b) the following:

    ``(c) Endowment Fund.--For the purpose of this part, the term 
`endowment fund' means a fund that--
            ``(1) is established by State law, by an institution of 
        higher education, or by a foundation that is exempt from Federal 
        income taxation;
            ``(2) is maintained for the purpose of generating income for 
        the support of the institution; and
            ``(3) does not include real estate.''.

    (c) Duration of Grant.--Section 313 (20 U.S.C. 1059) is amended--
            (1) in subsection (b), by inserting ``subsection (c) and a 
        grant under'' before ``section 394(a)(1)''; and
            (2) by adding at the end the following:

    ``(d) Wait-Out-Period.--Each eligible institution that received a 
grant under this part for a 5-year period shall not be eligible to 
receive an additional grant under this part until 2 years after the date 
on which the 5-year grant period terminates.''.
    (d) Applications.--Title III is amended by striking section 314 (20 
U.S.C. 1059a) and inserting the following:

``SEC. 314. APPLICATIONS. <<NOTE: 20 USC 1059a.>> 

    ``Each eligible institution desiring to receive assistance under 
this part shall submit an application in accordance with the 
requirements of section 391.''.
    (e) American Indian Tribally Controlled Colleges and Universities.--
Section 316 (20 U.S.C. 1059c) is amended to read as follows:

``SEC. 316. AMERICAN INDIAN TRIBALLY CONTROLLED COLLEGES AND 
            UNIVERSITIES.

    ``(a) Program Authorized.--The Secretary shall provide grants and 
related assistance to Indian Tribal Colleges and Universities to enable 
such institutions to improve and expand their capacity to serve Indian 
students.
    ``(b) Definitions.--In this section:
            ``(1) Indian.--The term `Indian' has the meaning given the 
        term in section 2 of the Tribally Controlled College or 
        University Assistance Act of 1978.
            ``(2) Indian tribe.--The term `Indian tribe' has the meaning 
        given the term in section 2 of the Tribally Controlled College 
        or University Assistance Act of 1978.
            ``(3) Tribal college or university.--The term `Tribal 
        College or University' has the meaning give the term `tribally 
        controlled college or university' in section 2 of the Tribally 
        Controlled College or University Assistance Act of 1978, and 
        includes an institution listed in the Equity in Educational Land 
        Grant Status Act of 1994.
            ``(4) Institution of higher education.--The term 
        `institution of higher education' means an institution of higher 
        education as defined in section 101(a), except that paragraph 
        (2) of such section shall not apply.

[[Page 112 STAT. 1640]]

    ``(c) Authorized Activities.--
            ``(1) In general.--Grants awarded under this section shall 
        be used by Tribal Colleges or Universities to assist such 
        institutions to plan, develop, undertake, and carry out 
        activities to improve and expand such institutions' capacity to 
        serve Indian students.
            ``(2) Examples of authorized activities.--The activities 
        described in paragraph (1) may include--
                    ``(A) purchase, rental, or lease of scientific or 
                laboratory equipment for educational purposes, including 
                instructional and research purposes;
                    ``(B) construction, maintenance, renovation, and 
                improvement in classrooms, libraries, laboratories, and 
                other instructional facilities, including purchase or 
                rental of telecommunications technology equipment or 
                services;
                    ``(C) support of faculty exchanges, faculty 
                development, and faculty fellowships to assist in 
                attaining advanced degrees in the faculty's field of 
                instruction;
                    ``(D) academic instruction in disciplines in which 
                Indians are underrepresented;
                    ``(E) purchase of library books, periodicals, and 
                other educational materials, including 
                telecommunications program material;
                    ``(F) tutoring, counseling, and student service 
                programs designed to improve academic success;
                    ``(G) funds management, administrative management, 
                and acquisition of equipment for use in strengthening 
                funds management;
                    ``(H) joint use of facilities, such as laboratories 
                and libraries;
                    ``(I) establishing or improving a development office 
                to strengthen or improve contributions from alumni and 
                the private sector;
                    ``(J) establishing or enhancing a program of teacher 
                education designed to qualify students to teach in 
                elementary schools or secondary schools, with a 
                particular emphasis on teaching Indian children and 
                youth, that shall include, as part of such program, 
                preparation for teacher certification;
                    ``(K) establishing community outreach programs that 
                encourage Indian elementary school and secondary school 
                students to develop the academic skills and the interest 
                to pursue postsecondary education; and
                    ``(L) other activities proposed in the application 
                submitted pursuant to subsection (d) that--
                          ``(i) contribute to carrying out the 
                      activities described in subparagraphs (A) through 
                      (K); and
                          ``(ii) are approved by the Secretary as part 
                      of the review and acceptance of such application.
            ``(3) Endowment fund.--
                    ``(A) In general.--A Tribal College or University 
                may use not more than 20 percent of the grant funds 
                provided under this section to establish or increase an 
                endowment fund at the institution.
                    ``(B) Matching requirement.--In order to be eligible 
                to use grant funds in accordance with subparagraph (A), 
                the Tribal College or University shall provide matching

[[Page 112 STAT. 1641]]

                funds, in an amount equal to the Federal funds used in 
                accordance with subparagraph (A), for the establishment 
                or increase of the endowment fund.
                    ``(C) <<NOTE: Applicability.>> Comparability.--The 
                provisions of part C regarding the establishment or 
                increase of an endowment fund, that the Secretary 
                determines are not inconsistent with this paragraph, 
                shall apply to funds used under subparagraph (A).

    ``(d) Application Process.--
            ``(1) Institutional eligibility.--To be eligible to receive 
        assistance under this section, a Tribal College or University 
        shall be an eligible institution under section 312(b).
            ``(2) Application.--Any Tribal College or University 
        desiring to receive assistance under this section shall submit 
        an application to the Secretary at such time, and in such 
        manner, as the Secretary may by regulation reasonably require. 
        Each such application shall include--
                    ``(A) a 5-year plan for improving the assistance 
                provided by the Tribal College or University to Indian 
                students, increasing the rates at which Indian secondary 
                school students enroll in higher education, and 
                increasing overall postsecondary retention rates for 
                Indian students; and
                    ``(B) such enrollment data and other information and 
                assurances as the Secretary may require to demonstrate 
                compliance with paragraph (1).
            ``(3) Special rule.--For the purposes of this part, no 
        Tribal College or University that is eligible for and receives 
        funds under this section may concurrently receive other funds 
        under this part or part B.''.

    (f ) Alaska Native and Native Hawaiian-Serving Institutions.--Part A 
of title III (20 U.S.C. 1057 et seq.) is amended by adding at the end 
the following:

``SEC. 317. <<NOTE: 20 USC 1059d.>>  ALASKA NATIVE AND NATIVE HAWAIIAN-
            SERVING INSTITUTIONS.

    ``(a) Program Authorized.--The Secretary shall provide grants and 
related assistance to Alaska Native-serving institutions and Native 
Hawaiian-serving institutions to enable such institutions to improve and 
expand their capacity to serve Alaska Natives and Native Hawaiians.
    ``(b) Definitions.--For the purpose of this section--
            ``(1) the term `Alaska Native' has the meaning given the 
        term in section 9308 of the Elementary and Secondary Education 
        Act of 1965;
            ``(2) the term `Alaska Native-serving institution' means an 
        institution of higher education that--
                    ``(A) is an eligible institution under section 
                312(b); and
                    ``(B) at the time of application, has an enrollment 
                of undergraduate students that is at least 20 percent 
                Alaska Native students;
            ``(3) the term `Native Hawaiian' has the meaning given the 
        term in section 9212 of the Elementary and Secondary Education 
        Act of 1965; and
            ``(4) the term `Native Hawaiian-serving institution' means 
        an institution of higher education which--
                    ``(A) is an eligible institution under section 
                312(b); and

[[Page 112 STAT. 1642]]

                    ``(B) at the time of application, has an enrollment 
                of undergraduate students that is at least 10 percent 
                Native Hawaiian students.

    ``(c) Authorized Activities.--
            ``(1) Types of activities authorized.--Grants awarded under 
        this section shall be used by Alaska Native-serving institutions 
        and Native Hawaiian-serving institutions to assist such 
        institutions to plan, develop, undertake, and carry out 
        activities to improve and expand such institutions' capacity to 
        serve Alaska Natives or Native Hawaiians.
            ``(2) Examples of authorized activities.--Such programs may 
        include--
                    ``(A) purchase, rental, or lease of scientific or 
                laboratory equipment for educational purposes, including 
                instructional and research purposes;
                    ``(B) renovation and improvement in classroom, 
                library, laboratory, and other instructional facilities;
                    ``(C) support of faculty exchanges, and faculty 
                development and faculty fellowships to assist in 
                attaining advanced degrees in the faculty's field of 
                instruction;
                    ``(D) curriculum development and academic 
                instruction;
                    ``(E) purchase of library books, periodicals, 
                microfilm, and other educational materials;
                    ``(F) funds and administrative management, and 
                acquisition of equipment for use in strengthening funds 
                management;
                    ``(G) joint use of facilities such as laboratories 
                and libraries; and
                    ``(H) academic tutoring and counseling programs and 
                student support services.

    ``(d) Application Process.--
            ``(1) Institutional eligibility.--Each Alaska Native-serving 
        institution and Native Hawaiian-serving institution desiring to 
        receive assistance under this section shall submit to the 
        Secretary such enrollment data as may be necessary to 
        demonstrate that the institution is an Alaska Native-serving 
        institution or a Native Hawaiian-serving institution as defined 
        in subsection (b), along with such other information and data as 
        the Secretary may by regulation require.
            ``(2) Applications.--Any institution which is determined by 
        the Secretary to be an Alaska Native-serving institution or a 
        Native Hawaiian-serving institution may submit an application 
        for assistance under this section to the Secretary. Such 
        application shall include--
                    ``(A) a 5-year plan for improving the assistance 
                provided by the Alaska Native-serving institution or the 
                Native Hawaiian-serving institution to Alaska Native or 
                Native Hawaiian students; and
                    ``(B) such other information and assurance as the 
                Secretary may require.

    ``(e) Special Rule.--For the purposes of this section, no Alaska 
Native-serving institution or Native Hawaiian-serving institution which 
is eligible for and receives funds under this section may concurrently 
receive other funds under this part or part B.''.

SEC. 304. STRENGTHENING HBCU's.

    (a) Grants.--Section 323 (20 U.S.C. 1062) is amended--

[[Page 112 STAT. 1643]]

            (1) by redesignating subsection (b) as subsection (c);
            (2) by inserting after subsection (a) the following:

    ``(b) Endowment Fund.--
            ``(1) In general.--An institution may use not more than 20 
        percent of the grant funds provided under this part to establish 
        or increase an endowment fund at the institution.
            ``(2) Matching requirement.--In order to be eligible to use 
        grant funds in accordance with paragraph (1), the eligible 
        institution shall provide matching funds from non-Federal 
        sources, in an amount equal to or greater than the Federal funds 
        used in accordance with paragraph (1), for the establishment or 
        increase of the endowment fund.
            ``(3) <<NOTE: Applicability.>> Comparability.--The 
        provisions of part C regarding the establishment or increase of 
        an endowment fund, that the Secretary determines are not 
        inconsistent with this subsection, shall apply to funds used 
        under paragraph (1).''; and
            (3) in subsection (c) (as redesignated by paragraph (1)), by 
        striking paragraph (3).

    (b) Professional or Graduate Institutions.--
            (1) General authorization.--Section 326(a) (20 U.S.C. 
        1063b(a)) is amended--
                    (A) in subsection (a)--
                          (i) in paragraph (1), by inserting ``in 
                      mathematics, engineering, or the physical or 
                      natural sciences'' after ``graduate education 
                      opportunities''; and
                          (ii) in paragraph (2)--
                                    (I) by striking ``$500,000'' and 
                                inserting ``$1,000,000''; and
                                    (II) by striking ``except that'' and 
                                all that follows and inserting the 
                                following: ``, except that no 
                                institution shall be required to match 
                                any portion of the first $1,000,000 of 
                                the institution's award from the 
                                Secretary. After funds are made 
                                available to each eligible institution 
                                under the funding rules described in 
                                subsection (f ), the Secretary shall 
                                distribute, on a pro rata basis, any 
                                amounts which were not so made available 
                                (by reason of the failure of an 
                                institution to comply with the matching 
                                requirements of this paragraph) among 
                                the institutions that have complied with 
                                such matching requirement.''; and
                    (B) in subsection (d)(2), by striking ``$500,000'' 
                and inserting ``$1,000,000''.
            (2) Use of funds.--Section 326(c) (20 U.S.C. 1063b(c)) is 
        amended by striking paragraphs (1) through (3) and inserting the 
        following:
            ``(1) purchase, rental or lease of scientific or laboratory 
        equipment for educational purposes, including instructional and 
        research purposes;
            ``(2) construction, maintenance, renovation, and improvement 
        in classroom, library, laboratory, and other instructional 
        facilities, including purchase or rental of telecommunications 
        technology equipment or services;
            ``(3) purchase of library books, periodicals, technical and 
        other scientific journals, microfilm, microfiche, and other 
        educational materials, including telecommunications program 
        materials;

[[Page 112 STAT. 1644]]

            ``(4) scholarships, fellowships, and other financial 
        assistance for needy graduate and professional students to 
        permit the enrollment of the students in and completion of the 
        doctoral degree in medicine, dentistry, pharmacy, veterinary 
        medicine, law, and the doctorate degree in the physical or 
        natural sciences, engineering, mathematics, or other scientific 
        disciplines in which African Americans are underrepresented;
            ``(5) establish or improve a development office to 
        strengthen and increase contributions from alumni and the 
        private sector;
            ``(6) assist in the establishment or maintenance of an 
        institutional endowment to facilitate financial independence 
        pursuant to section 331; and
            ``(7) funds and administrative management, and the 
        acquisition of equipment, including software, for use in 
        strengthening funds management and management information 
        systems.''.
            (3) Eligibility.--Section 326(e) (20 U.S.C. 1063b(e)) is 
        amended--
                    (A) in paragraph (1)--
                          (i) by striking ``include--'' and inserting 
                      ``are the following'';
                          (ii) by inserting ``and other qualified 
                      graduate programs'' before the semicolon at the 
                      end of subparagraphs (E) through (J);
                          (iii) by striking ``and'' at the end of 
                      subparagraph (O); and
                          (iv) in subparagraph (P)--
                                    (I) by inserting ``University'' 
                                after ``State''; and
                                    (II) by striking the period and 
                                inserting a semicolon; and
                                    (III) by adding at the end the 
                                following:
                    ``(Q) Norfolk State University qualified graduate 
                programs; and
                    ``(R) Tennessee State University qualified graduate 
                programs.'';
                    (B) by striking paragraphs (2) and (3) and inserting 
                the following:
            ``(2) Qualified graduate program.--(A) For the purposes of 
        this section, the term `qualified graduate program' means a 
        graduate or professional program that provides a program of 
        instruction in the physical or natural sciences, engineering, 
        mathematics, or other scientific discipline in which African 
        Americans are underrepresented and has students enrolled in such 
        program at the time of application for a grant under this 
        section.
            ``(B) Notwithstanding the enrollment requirement contained 
        in subparagraph (A), an institution may use an amount equal to 
        not more than 10 percent of the institution's grant under this 
        section for the development of a new qualified graduate program.
            ``(3) Special rule.--Institutions that were awarded grants 
        under this section prior to October 1, 1998, shall continue to 
        receive such grants, subject to the availability of appropriated 
        funds, regardless of the eligibility of the institutions 
        described in subparagraphs (Q) and (R) of paragraph (1).''; and
                    (C) by adding at the end the following:

[[Page 112 STAT. 1645]]

            ``(5) Institutional choice.--The president or chancellor of 
        the institution may decide which graduate or professional school 
        or qualified graduate program will receive funds under the grant 
        in any 1 fiscal year, if the allocation of funds among the 
        schools or programs is delineated in the application for funds 
        submitted to the Secretary under this section.''.
            (4) Funding rule.--Section 326(f ) (20 U.S.C. 1063b(f )) is 
        amended--
                    (A) by striking ``Of the amount appropriated'' and 
                inserting ``Subject to subsection (g), of the amount 
                appropriated'';
                    (B) in paragraph (1)--
                          (i) by striking ``$12,000,000'' and inserting 
                      ``$26,600,000''; and
                          (ii) by striking ``(A) through (E)'' and 
                      inserting ``(A) through (P)'';
                    (C) by striking paragraph (2) and inserting the 
                following:
            ``(2) any amount in excess of $26,600,000, but not in excess 
        of $28,600,000, shall be available for the purpose of making 
        grants to institutions or programs described in subparagraphs 
        (Q) and (R) of subsection (e)(1); and
            ``(3) any amount in excess of $28,600,000, shall be made 
        available to each of the institutions or programs identified in 
        subparagraphs (A) through (R) pursuant to a formula developed by 
        the Secretary that uses the following elements:
                    ``(A) The ability of the institution to match 
                Federal funds with non-Federal funds.
                    ``(B) The number of students enrolled in the 
                programs for which the eligible institution received 
                funding under this section in the previous year.
                    ``(C) The average cost of education per student, for 
                all full-time graduate or professional students (or the 
                equivalent) enrolled in the eligible professional or 
                graduate school, or for doctoral students enrolled in 
                the qualified graduate programs.
                    ``(D) The number of students in the previous year 
                who received their first professional or doctoral degree 
                from the programs for which the eligible institution 
                received funding under this section in the previous 
                year.
                    ``(E) The contribution, on a percent basis, of the 
                programs for which the institution is eligible to 
                receive funds under this section to the total number of 
                African Americans receiving graduate or professional 
                degrees in the professions or disciplines related to the 
                programs for the previous year.''.
            (5) Hold harmless rule.--Section 326 is further amended by 
        adding at the end the following new subsection:

    ``(g) Hold Harmless Rule.--Notwithstanding paragraphs (2) and (3) of 
subsection (f ), no institution or qualified program identified in 
subsection (e)(1) that received a grant for fiscal year 1998 and that is 
eligible to receive a grant in a subsequent fiscal year shall receive a 
grant amount in any such subsequent fiscal year that is less than the 
grant amount received for fiscal year 1998, unless the amount 
appropriated is not sufficient to provide such

[[Page 112 STAT. 1646]]

grant amounts to all such institutions and programs, or the institution 
cannot provide sufficient matching funds to meet the requirements of 
this section.''.

SEC. 305. ENDOWMENT CHALLENGE GRANTS.

    Section 331(b) (20 U.S.C. 1065(b)) is amended--
            (1) in paragraph (1), by striking ``360'' and inserting 
        ``399''; and
            (2) in paragraph (2), by striking subparagraphs (B) and (C) 
        and inserting the following:

    ``(B) The Secretary may make a grant under this part to an eligible 
institution in any fiscal year if the institution--
            ``(i) applies for a grant in an amount not exceeding 
        $500,000; and
            ``(ii) has deposited in the eligible institution's endowment 
        fund established under this section an amount which is equal to 
        \1/2\ of the amount of such grant.

    ``(C) An eligible institution of higher education that is awarded a 
grant under subparagraph (B) shall not be eligible to receive an 
additional grant under subparagraph (B) until 10 years after the date on 
which the grant period terminates.''.

SEC. 306. HBCU CAPITAL FINANCING.

    (a) Definition.--Section 342(5) <<NOTE: 20 USC 1066a.>> (as 
redesignated by section 301(a)(4)) (20 U.S.C. 1132c-1(5)) is amended--
            (1) by redesignating subparagraphs (B), (C), and (D) as 
        subparagraphs (C), (G), and (H), respectively;
            (2) by inserting after subparagraph (A) the following:
                    ``(B) a facility for the administration of an 
                educational program, or a student center or student 
                union, except that not more than 5 percent of the loan 
                proceeds provided under this part may be used for the 
                facility, center or union if the facility, center or 
                union is owned, leased, managed, or operated by a 
                private business, that, in return for such use, makes a 
                payment to the eligible institution;'';
            (3) in subparagraph (C) (as redesignated by paragraph (1)), 
        insert ``technology,'' after ``instructional equipment'';
            (4) by inserting after subparagraph (C) (as redesignated by 
        paragraph (1)) the following:
                    ``(D) a maintenance, storage, or utility facility 
                that is essential to the operation of a facility, a 
                library, a dormitory, equipment, instrumentation, a 
                fixture, real property or an interest therein, described 
                in this paragraph;
                    ``(E) a facility designed to provide primarily 
                outpatient health care for students or faculty;
                    ``(F) physical infrastructure essential to support 
                the projects authorized under this paragraph, including 
                roads, sewer and drainage systems, and water, power, 
                lighting, telecommunications, and other utilities;''; 
                and
            (5) in subparagraph (H) (as redesignated by paragraph (2)), 
        by striking ``(C)'' and inserting ``(G)''.

    (b) Responsibilities.--Section 343 <<NOTE: 20 USC 1066b.>> (as 
redesignated by section 301(a)(4)) (20 U.S.C. 1132c-2) is amended--
            (1) in subsection (b)(8) (as redesignated by section 
        301(a)(4)) (20 U.S.C. 1132c-2(b)(8)), by striking ``10 percent'' 
        each place the term appears and inserting ``5 percent''; and
            (2) by adding at the end the following:

[[Page 112 STAT. 1647]]

    ``(e) Notwithstanding any other provision of law, a qualified bond 
guaranteed under this part may be sold to any party that offers terms 
that the Secretary determines are in the best interest of the eligible 
institution.''.
    (c) Technical Assistance.--Section 345 <<NOTE: 20 USC 1066d.>> (as 
redesignated by section 301(a)(4)) (20 U.S.C. 1132c-4) is amended--
            (1) in paragraph (5), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (6), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(7) may, directly or by grant or contract, provide 
        technical assistance to eligible institutions to prepare the 
        institutions to qualify, apply for, and maintain a capital 
        improvement loan, including a loan under this part.''.

    (d) Prohibition.--Section 346 <<NOTE: 20 USC 1066e.>> (as 
redesignated by section 301(a)(4)) (20 U.S.C. 1132c-5) is repealed.

    (e) Advisory Board.--Section 347 <<NOTE: 20 USC 1066f.>> (as 
redesignated by section 301(a)(4)) (20 U.S.C. 1132c-6) is amended--
            (1) in subsection (b)--
                    (A) in subparagraph (D), by inserting ``, or the 
                president's designee.'' after the period; and
                    (B) in subparagraph (E), by inserting ``, or the 
                designee of the Association'' before the period; and
            (2) by striking subsection (c).

SEC. 307. MINORITY SCIENCE AND ENGINEERING IMPROVEMENT 
            PROGRAM.

    (a) Minority Science and Engineering Improvement 
Program Findings.--Subpart 1 of part E of title III (as redesignated by 
paragraphs (6) and (7) of section 301) (20 U.S.C. 1135b et seq.) is 
amended by inserting after the subpart heading the following:

``SEC. 350. FINDINGS. <<NOTE: 20 USC 1067.>> 

    ``Congress makes the following findings:
            ``(1) It is incumbent on the Federal Government to support 
        the technological and economic competitiveness of the United 
        States by improving and expanding the scientific and 
        technological capacity of the United States. More and better 
        prepared scientists, engineers, and technical experts are needed 
        to improve and expand such capacity.
            ``(2) As the Nation's population becomes more diverse, it is 
        important that the educational and training needs of all 
        Americans are met. Underrepresentation of minorities in science 
        and technological fields diminishes our Nation's competitiveness 
        by impairing the quantity of well prepared scientists, 
        engineers, and technical experts in these fields.
            ``(3) Despite significant limitations in resources, minority 
        institutions provide an important educational opportunity for 
        minority students, particularly in science and engineering 
        fields. Aid to minority institutions is a good way to address 
        the underrepresentation of minorities in science and 
        technological fields.
            ``(4) There is a strong Federal interest in improving 
        science and engineering programs at minority institutions as 
        such programs lag behind in program offerings and in student 
        enrollment compared to such programs at other institutions of 
        higher education.''.

[[Page 112 STAT. 1648]]

    (b) Eligibility for Grants.--Section 361 (as redesignated by section 
301(a)(7)) (20 U.S.C. 1135d) is amended to read as follows:

``SEC. 361. ELIGIBILITY FOR GRANTS. <<NOTE: 20 USC 1067g.>> 

    ``Eligibility to receive grants under this part is limited to--
            ``(1) public and private nonprofit institutions of higher 
        education that--
                    ``(A) award baccalaureate degrees; and
                    ``(B) are minority institutions;
            ``(2) public or private nonprofit institutions of higher 
        education that--
                    ``(A) award associate degrees; and
                    ``(B) are minority institutions that--
                          ``(i) have a curriculum that includes science 
                      or engineering subjects; and
                          ``(ii) enter into a partnership with public or 
                      private nonprofit institutions of higher education 
                      that award baccalaureate degrees in science and 
                      engineering;
            ``(3) nonprofit science-oriented organizations, professional 
        scientific societies, and institutions of higher education that 
        award baccalaureate degrees, that--
                    ``(A) provide a needed service to a group of 
                minority institutions; or
                    ``(B) provide in-service training for project 
                directors, scientists, and engineers from minority 
                institutions; or
            ``(4) consortia of organizations, that provide needed 
        services to one or more minority institutions, the membership of 
        which may include--
                    ``(A) institutions of higher education which have a 
                curriculum in science or engineering;
                    ``(B) institutions of higher education that have a 
                graduate or professional program in science or 
                engineering;
                    ``(C) research laboratories of, or under contract 
                with, the Department of Energy;
                    ``(D) private organizations that have science or 
                engineering facilities; or
                    ``(E) quasi-governmental entities that have a 
                significant scientific or engineering mission.''.

    (c) Definitions.--Section 365(4) <<NOTE: 20 USC 1067k.>> (as 
redesignated by section 301(a)(7)) (20 U.S.C. 1135d-5(4)) is amended by 
inserting ``behavioral,'' after ``physical,''.

    (d) Conforming amendments.--The heading for subpart 1 of part E of 
title III (as redesignated by paragraphs (6) and (7) of section 301(a)) 
is amended by inserting ``and Engineering'' before ``Improvement 
Program''.

SEC. 308. GENERAL PROVISIONS.

    (a) Applications for Assistance.--Subsection (a) of section 
391(a) <<NOTE: 20 USC 1068.>> (as redesignated by section 301(a)(2)) (20 
U.S.C. 1066(a)) is amended to read as follows:

    ``(a) Applications.--
            ``(1) Applications required.--Any institution which is 
        eligible for assistance under this title shall submit to the 
        Secretary an application for assistance at such time, in such 
        form, and containing such information, as may be necessary to 
        enable the Secretary to evaluate the institution's need for the 
        assistance. Subject to the availability of appropriations to 
        carry out

[[Page 112 STAT. 1649]]

        this title, the Secretary may approve an application for 
        assistance under this title only if the Secretary determines 
        that--
                    ``(A) the application meets the requirements of 
                subsection (b);
                    ``(B) the applicant is eligible for assistance in 
                accordance with the part of this title under which the 
                assistance is sought; and
                    ``(C) the applicant's performance goals are 
                sufficiently rigorous as to meet the purposes of this 
                title and the performance objectives and indicators for 
                this title established by the Secretary pursuant to the 
                Government Performance and Results Act of 1993 and the 
                amendments made by such Act.
            ``(2) Preliminary applications.--In carrying out paragraph 
        (1), the Secretary may develop a preliminary application for use 
        by eligible institutions applying under part A prior to the 
        submission of the principal application.''.

    (b) Applications.--Paragraph (1) of section 391(b) <<NOTE: 20 USC 
1068.>> (as redesignated by section 301(a)(2)) (20 U.S.C. 1066(b)) is 
amended by inserting ``, D or E'' after ``part C''.

    (c) Contents of Applications.--Section 391(b)(6) (as redesignated by 
section 301(a)(2)) is amended by inserting before the semicolon the 
following: ``, except that for purposes of section 316, paragraphs (2) 
and (3) of section 396 shall not apply''.
    (d) Waivers.--Section 392(a) <<NOTE: 20 USC 1068a.>> (as 
redesignated by section 301(a)(2)) (20 U.S.C. 1067(a)) is amended--
            (1) by striking ``or'' at the end of paragraph (5);
            (2) by redesignating paragraph (6) as paragraph (7); and
            (3) by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) that is a tribally controlled college or university as 
        defined in section 2 of the Tribally Controlled College or 
        University Assistance Act of 1978; or''.

    (e) Application Review Process.--Section 393(a) <<NOTE: 20 USC 
1068b.>> (as redesignated by section 301(a)(2)) (20 U.S.C. 1068(a)) is 
amended--
            (1) in paragraph (2), by striking ``Native American colleges 
        and universities'' and inserting ``Tribal Colleges and 
        Universities''; and
            (2) by adding at the end the following:

    ``(d) Exclusion.--The provisions of this section shall not apply to 
applications submitted under part D.''.
    (f ) Waivers.--Paragraph (2) of section 395(b) <<NOTE: 20 USC 
1068d.>> (as redesignated by section 301(a)(2)) (20 U.S.C. 1069b(b)) is 
amended by striking ``title IV, VII, or VIII'' and inserting ``part D or 
title IV''.

    (g) Continuation Awards.--Part F of title III is amended by 
inserting after section 397 (as redesignated by section 301(a)(2)) (20 
U.S.C. 1069d) the following:

``SEC. 398. CONTINUATION AWARDS. <<NOTE: 20 USC 1068g.>> 

    ``The Secretary shall make continuation awards under this title for 
the second and succeeding years of a grant only after determining that 
the recipient is making satisfactory progress in carrying out the 
grant.''.
    (h) Authorization of Appropriations.--Section 399(a) <<NOTE: 20 USC 
1068h.>> (as redesignated by section 301(a)(2)) (20 U.S.C. 1069f) is 
amended--
            (1) in paragraph (1)--

[[Page 112 STAT. 1650]]

                    (A) in subparagraph (A), by striking ``1993'' and 
                inserting ``1999'';
                    (B) in subparagraph (B)--
                          (i) in clause (i), by striking ``$45,000,000 
                      for fiscal year 1993'' and inserting ``$10,000,000 
                      for fiscal year 1999'';
                          (ii) by striking clause (ii); and
                          (iii) by striking ``(B)(i) There'' and 
                      inserting ``(B) There''; and
                    (C) by adding at the end the following:
            ``(C) There are authorized to be appropriated to carry out 
        section 317, $5,000,000 for fiscal year 1999 and such sums as 
        may be necessary for each of the 4 succeeding fiscal years.'';
            (2) in paragraph (2)--
                    (A) in subparagraph (A), by striking ``1993'' and 
                inserting ``1999''; and
                    (B) in subparagraph (B), by striking ``$20,000,000 
                for fiscal year 1993'' and inserting ``$35,000,000 for 
                fiscal year 1999'';
            (3) in paragraph (3), by striking ``$50,000,000 for fiscal 
        year 1993'' and inserting ``$10,000,000 for fiscal year 1999'';
            (4) by adding at the end the following:
            ``(4) Part d.--(A) There are authorized to be appropriated 
        to carry out part D (other than section 345(7), but including 
        section 347), $110,000 for fiscal year 1999, and such sums as 
        may be necessary for each of the 4 succeeding fiscal years.
            ``(B) There are authorized to be appropriated to carry out 
        section 345(7), such sums as may be necessary for fiscal year 
        1999 and each of the 4 succeeding fiscal years.
            ``(5) Part e.--There are authorized to be appropriated to 
        carry out part E, $10,000,000 for fiscal year 1999, and such 
        sums as may be necessary for each of the 4 succeeding fiscal 
        years.''; and
            (5) by striking subsections (c), (d), and (e).

                      TITLE IV--STUDENT ASSISTANCE

                       PART A--GRANTS TO STUDENTS

SEC. 401. FEDERAL PELL GRANTS.

    (a) Extension of Authority.--Section 401(a)(1) (20 U.S.C. 
1070a(a)(1)) is amended--
            (1) in the first sentence, by striking ``The Secretary 
        shall, during the period beginning July 1, 1972, and ending 
        September 30, 1998,'' and inserting ``For each fiscal year 
        through fiscal year 2004, the Secretary shall''; and
            (2) <<NOTE: Federal Register, publication.>> in the second 
        sentence, by inserting ``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,'' after ``pay eligible students''.

    (b) Amount of Grant.--Paragraph (2)(A) of section 401(b) is amended 
to read as follows:
    ``(2)(A) The amount of the Federal Pell Grant for a student eligible 
under this part shall be--
            ``(i) $4,500 for academic year 1999-2000;

[[Page 112 STAT. 1651]]

            ``(ii) $4,800 for academic year 2000-2001;
            ``(iii) $5,100 for academic year 2001-2002;
            ``(iv) $5,400 for academic year 2002-2003; and
            ``(v) $5,800 for academic year 2003-2004,

less an amount equal to the amount determined to be the expected family 
contribution with respect to that student for that year.''.
    (c) Relation of Maximum Grant to Tuition and Expenses.--Paragraph 
(3) of section 401(b) <<NOTE: 20 USC 1070a.>> is amended to read as 
follows:

    ``(3)(A) For any academic year for which an appropriation Act 
provides a maximum basic grant in an amount in excess of $2,700, the 
amount of a student's basic grant shall equal $2,700 plus--
            ``(i) one-half of the amount by which such maximum basic 
        grant exceeds $2,700; plus
            ``(ii) the lesser of--
                    ``(I) the remaining one-half of such excess; or
                    ``(II) the sum of the student's tuition and, if the 
                student has dependent care expenses (as described in 
                section 472(8)) or disability-related expenses (as 
                described in section 472(9)), an allowance determined by 
                the institution for such expenses.

    ``(B) An institution that charged only fees in lieu of tuition as of 
October 1, 1998, may include in the institution's determination of 
tuition charged, fees that would normally constitute tuition.''.
    (d) Regulations for Multiple Awards.--Section 401(b)(6) is amended--
            (1) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively;
            (2) by inserting ``(A)'' after the paragraph designation; 
        and
            (3) by adding at the end the following:

    ``(B) <<NOTE: Regulations.>> The Secretary shall promulgate 
regulations implementing this paragraph.''.

    (e) Time Limit To Receive Grants.--Section 401(c) is amended by 
adding at the end the following:
    ``(4) Notwithstanding paragraph (1), the Secretary may allow, on a 
case-by-case basis, a student to receive a basic grant if the student--
            ``(A) is carrying at least one-half the normal full-time 
        work load for the course of study the student is pursuing, as 
        determined by the institution of higher education; and
            ``(B) is enrolled or accepted for enrollment in a 
        postbaccalaureate program that does not lead to a graduate 
        degree, and in courses required by a State in order for the 
        student 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 this paragraph shall not apply to a student who is enrolled 
in an institution of higher education that offers a baccalaureate degree 
in education.''.
    (f ) Institutional Ineligibility Based on Default Rates.--Section 
401 is amended by adding at the end the following:
    ``( j) Institutional Ineligibility Based on Default Rates.--
            ``(1) In general.--No institution of higher education shall 
        be an eligible institution for purposes of this subpart if such 
        institution of higher education is ineligible to participate in 
        a loan program under part B or D as a result of a final default 
        rate determination made by the Secretary under part

[[Page 112 STAT. 1652]]

        B or D after the final publication of cohort default rates for 
        fiscal year 1996 or a succeeding fiscal year.
            ``(2) <<NOTE: Regulations.>> Sanctions subject to appeal 
        opportunity.--No institution may be subject to the terms of this 
        subsection unless the institution has had the opportunity to 
        appeal the institution's default rate determination under 
        regulations issued by the Secretary for the loan program 
        authorized under part B or D, as applicable. This subsection 
        shall not apply to an institution that was not participating in 
        the loan program authorized under part B or D on the date of 
        enactment of the Higher Education Amendments of 1998, unless the 
        institution subsequently participates in the loan programs.''.

    (g) Conforming Amendments.--
            (1) Section 400(a)(1) (20 U.S.C. 1070(a)(1)) is amended by 
        striking ``basic educational opportunity grants'' and inserting 
        ``Federal Pell Grants''.
            (2) The heading of subpart 1 of part A of title IV (20 
        U.S.C. 1070a et seq.) is amended to read as follows:

                   ``Subpart 1--Federal Pell Grants''.

            (3) Section 401 is amended-- <<NOTE: 20 USC 1070a.>> 
                    (A) in the heading of the section, by striking 
                ``basic educational opportunity'' and inserting 
                ``federal pell'';
                    (B) in subsection (a)(3), by striking ``Basic 
                grants'' and inserting ``Grants'';
                    (C) by striking ``basic grant'' each place the term 
                appears and inserting ``Federal Pell Grant''; and
                    (D) by striking ``basic grants'' each place the term 
                appears and inserting ``Federal Pell Grants''.
            (4) Section 401(f )(3) is amended by striking ``Education 
        and Labor'' and inserting ``Education and the Workforce''.
            (5) Section 452(c) (20 U.S.C. 1087b(c)) is amended by 
        striking ``basic grants'' and inserting ``Federal Pell Grants''.
            (6) Subsections ( j)(2) and (k)(3) of section 455 (20 U.S.C. 
        1087e) are each amended by striking ``basic grants'' and 
        inserting ``Federal Pell Grants''.

SEC. 402. FEDERAL TRIO PROGRAMS.

    (a) Program Authority; Authorization of Appropriations.--
            (1) Duration of grants.--Section 402A(b)(2) (20 U.S.C. 
        1070a-11(b)(2)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (A);
                    (B) by striking the period at the end of 
                subparagraph (B) and inserting ``; and''; and
                    (C) by inserting after subparagraph (B) the 
                following new subparagraph:
                    ``(C) grants under section 402H shall be awarded for 
                a period determined by the Secretary.''.
            (2) Minimum grants.--Section 402A(b)(3) is amended to read 
        as follows:
            ``(3) Minimum grants.--Unless the institution or agency 
        requests a smaller amount, individual grants under this chapter 
        shall be no less than--
                    ``(A) $170,000 for programs authorized by sections 
                402D and 402G;

[[Page 112 STAT. 1653]]

                    ``(B) $180,000 for programs authorized by sections 
                402B and 402F; and
                    ``(C) $190,000 for programs authorized by sections 
                402C and 402E.''.
            (3) Procedures for awarding grants and contracts.--
        Subsection (c) of section 402A is amended <<NOTE: 20 USC 1070a-
        11.>> to read as follows:

    ``(c) Procedures for Awarding Grants and Contracts.--
            ``(1) Application requirements.--An eligible entity that 
        desires to receive a grant or contract under this chapter shall 
        submit an application to the Secretary in such manner and form, 
        and containing such information and assurances, as the Secretary 
        may reasonably require.
            ``(2) Prior experience.--In making grants under this 
        chapter, the Secretary shall consider each applicant's prior 
        experience of service delivery under the particular program for 
        which funds are sought. The level of consideration given the 
        factor of prior experience shall not vary from the level of 
        consideration given such factor during fiscal years 1994 through 
        1997, except that grants made under section 402H shall not be 
        given prior experience consideration.
            ``(3) <<NOTE: Grants. Contracts.>>  Order of awards; program 
        fraud.--(A) Except with respect to grants made under sections 
        402G and 402H and as provided in subparagraph (B), the Secretary 
        shall award grants and contracts under this chapter in the order 
        of the scores received by the application for such grant or 
        contract in the peer review process required under paragraph (4) 
        and adjusted for prior experience in accordance with paragraph 
        (2) of this subsection.
            ``(B) The Secretary is not required to provide assistance to 
        a program otherwise eligible for assistance under this chapter, 
        if the Secretary has determined that such program has involved 
        the fraudulent use of funds under this chapter.
            ``(4) Peer review process.--(A) The Secretary shall ensure 
        that, to the extent practicable, members of groups 
        underrepresented in higher education, including African 
        Americans, Hispanics, Native Americans, Alaska Natives, Asian 
        Americans, and Native American Pacific Islanders (including 
        Native Hawaiians), are represented as readers of applications 
        submitted under this chapter. The Secretary shall also ensure 
        that persons from urban and rural backgrounds are represented as 
        readers.
            ``(B) The Secretary shall ensure that each application 
        submitted under this chapter is read by at least three readers 
        who are not employees of the Federal Government (other than as 
        readers of applications).
            ``(5) Number of applications for grants and contracts.--The 
        Secretary shall not limit the number of applications submitted 
        by an entity under any program authorized under this chapter if 
        the additional applications describe programs serving different 
        populations or campuses.
            ``(6) Coordination with other programs for disadvantaged 
        students.--The Secretary shall encourage coordination of 
        programs assisted under this chapter with other programs for 
        disadvantaged students operated by the sponsoring institution or 
        agency, regardless of the funding source of such programs. The 
        Secretary shall not limit an entity's eligibility to receive 
        funds under this chapter because such entity sponsors

[[Page 112 STAT. 1654]]

        a program similar to the program to be assisted under this 
        chapter, regardless of the funding source of such program. The 
        Secretary shall permit the Director of a program receiving funds 
        under this chapter to administer one or more additional programs 
        for disadvantaged students operated by the sponsoring 
        institution or agency, regardless of the funding sources of such 
        programs.
            ``(7)  Application status.--The Secretary shall inform each 
        entity operating programs under this chapter regarding the 
        status of their application for continued funding at least 8 
        months prior to the expiration of the grant or contract. The 
        Secretary, in the case of an entity that is continuing to 
        operate a successful program under this chapter, shall ensure 
        that the start-up date for a new grant or contract for such 
        program immediately follows the termination of the preceding 
        grant or contract so that no interruption of funding occurs for 
        such successful reapplicants. The Secretary shall inform each 
        entity requesting assistance under this chapter for a new 
        program regarding the status of their application at least 8 
        months prior to the proposed startup date of such program.''.
            (4) Authorization of appropriations.--Section 402A(f ) is 
        amended <<NOTE: 20 USC 1070a-11.>> by striking ``$650,000,000 
        for fiscal year 1993'' and inserting ``$700,000,000 for fiscal 
        year 1999''.
            (5) Waiver.--Section 402A(g) is amended by adding at the end 
        the following:
            ``(4) Waiver.--The Secretary may waive the service 
        requirements in subparagraph (A) or (B) of paragraph (3) if the 
        Secretary determines the application of the service requirements 
        to a veteran will defeat the purpose of a program under this 
        chapter.''.

    (b) Talent Search.--Section 402B(b) (20 U.S.C. 1070a-12(b)) is 
amended--
            (1) by striking paragraph (4) and inserting the following:
            ``(4) guidance on and assistance in secondary school 
        reentry, entry to general educational development (GED) 
        programs, other alternative education programs for secondary 
        school dropouts, or postsecondary education;'';
            (2) in paragraph (5), by inserting ``, or activities 
        designed to acquaint individuals from disadvantaged backgrounds 
        with careers in which the individuals are particularly 
        underrepresented'' before the semicolon;
            (3) in paragraph (8), by striking ``parents'' and inserting 
        ``families''; and
            (4) in paragraph (9), by inserting ``or counselors'' after 
        ``teachers''.

    (c) Upward Bound.--Section 402C (20 U.S.C. 1070a-13) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (2), by striking ``personal 
                counseling'' and inserting ``counseling and workshops'';
                    (B) in paragraph (9)--
                          (i) by inserting ``or counselors'' after 
                      ``teachers''; and
                          (ii) by striking ``and'' after the semicolon;
                    (C) by redesignating paragraph (10) as paragraph 
                (12);
                    (D) by inserting after paragraph (9) the following:

[[Page 112 STAT. 1655]]

            ``(10) work-study positions where youth participating in the 
        project are exposed to careers requiring a postsecondary degree;
            ``(11) special services to enable veterans to make the 
        transition to postsecondary education; and''; and
                    (E) in paragraph (12) (as redesignated by 
                subparagraph (C)), by striking ``(9)'' and inserting 
                ``(11)''; and
            (2) in subsection (e), by striking ``and not in excess of 
        $40 per month during the remaining period of the year.'' and 
        inserting ``except that youth participating in a work-study 
        position under subsection (b)(10) may be paid a stipend of $300 
        per month during June, July, and August. Youths participating in 
        a project proposed to be carried out under any application may 
        be paid stipends not in excess of $40 per month during the 
        remaining period of the year.''.

    (d) Student Support Services.--Paragraph (6) of section 402D(c) (20 
U.S.C. 1070a-14(c)(6)) is amended to read as follows:
            ``(6) consider, in addition to such other criteria as the 
        Secretary may prescribe, the institution's effort, and where 
        applicable past history, in--
                    ``(A) providing sufficient financial assistance to 
                meet the full financial need of each student in the 
                project; and
                    ``(B) maintaining the loan burden of each such 
                student at a manageable level.''.

    (e) Postbaccalaureate Achievement Program.--Section 402E(e)(1) (20 
U.S.C. 1070a-15(e)(1)) is amended by striking ``$2,400'' and inserting 
``$2,800''.
    (f ) Staff Development Activities.--Section 402G (20 U.S.C. 1070a-
17) is amended--
            (1) in subsection (a), by inserting ``participating in,'' 
        after ``leadership personnel employed in,''; and
            (2) in subsection (b), by inserting after paragraph (3) the 
        following new paragraph:
            ``(4) The use of appropriate educational technology in the 
        operation of projects assisted under this chapter.''.

    (g) Evaluation and Dissemination.--Section 402H (20 U.S.C. 1070a-18) 
is amended to read as follows:

``SEC. 402H. EVALUATIONS AND GRANTS FOR PROJECT IMPROVEMENT AND 
            DISSEMINATION PARTNERSHIP PROJECTS.

    ``(a) Evaluations.--
            ``(1) In general.--For the purpose of improving the 
        effectiveness of the programs and projects assisted under this 
        chapter, the Secretary may make grants to or enter into 
        contracts with institutions of higher education and other public 
        and private institutions and organizations to evaluate the 
        effectiveness of the programs and projects assisted under this 
        chapter.
            ``(2) Practices.--The evaluations described in paragraph (1) 
        shall identify institutional, community, and program or project 
        practices that are particularly effective in enhancing the 
        access of low-income individuals and first-generation college 
        students to postsecondary education, the preparation of the 
        individuals and students for postsecondary education, and the 
        success of the individuals and students in postsecondary 
        education. Such evaluations shall also investigate the 
        effectiveness of alternative and innovative methods within 
        Federal TRIO

[[Page 112 STAT. 1656]]

        programs of increasing access to, and retention of, students in 
        postsecondary education.

    ``(b) Grants.--The Secretary may award grants to institutions of 
higher education or other private and public institutions and 
organizations, that are carrying out a program or project assisted under 
this chapter prior to the date of enactment of the Higher Education 
Amendments of 1998, to enable the institutions and organizations to 
expand and leverage the success of such programs or projects by working 
in partnership with other institutions, community-based organizations, 
or combinations of such institutions and organizations, that are not 
receiving assistance under this chapter and are serving low-income 
students and first generation college students, in order to--
            ``(1) disseminate and replicate best practices of programs 
        or projects assisted under this chapter; and
            ``(2) provide technical assistance regarding programs and 
        projects assisted under this chapter.

    ``(c) Results.--In order to improve overall program or project 
effectiveness, the results of evaluations and grants described in this 
section shall be disseminated by the Secretary to similar programs or 
projects assisted under this subpart, as well as other individuals 
concerned with postsecondary access for and retention of low-income 
individuals and first-generation college students.''.

SEC. 403. GEAR UP PROGRAM.

    Chapter 2 of subpart 2 of part A of title IV (20 U.S.C. 1070a-21 et 
seq.) is amended to read as follows:

  ``CHAPTER 2--GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE 
                                PROGRAMS

``SEC. 404A. <<NOTE: 20 USC 1070a-21.>> EARLY INTERVENTION AND COLLEGE 
            AWARENESS PROGRAM AUTHORIZED.

    ``(a) Program Authorized.--The Secretary is authorized, in 
accordance with the requirements of this chapter, to establish a program 
that--
            ``(1) encourages eligible entities to provide or maintain a 
        guarantee to eligible low-income students who obtain a secondary 
        school diploma (or its recognized equivalent), of the financial 
        assistance necessary to permit the students to attend an 
        institution of higher education; and
            ``(2) supports eligible entities in providing--
                    ``(A) additional counseling, mentoring, academic 
                support, outreach, and supportive services to elementary 
                school, middle school, and secondary school students who 
                are at risk of dropping out of school; and
                    ``(B) information to students and their parents 
                about the advantages of obtaining a postsecondary 
                education and the college financing options for the 
                students and their parents.

    ``(b) Awards.--
            ``(1) In general.--From funds appropriated under section 
        404H for each fiscal year, the Secretary shall make awards

[[Page 112 STAT. 1657]]

        to eligible entities described in paragraphs (1) and (2) of 
        subsection (c) to enable the entities to carry out the program 
        authorized under subsection (a).
            ``(2) Priority.--In making awards to eligible entities 
        described in paragraph (c)(1), the Secretary shall--
                    ``(A) give priority to eligible entities that--
                          ``(i) on the day before the date of enactment 
                      of the Higher Education Amendments of 1998, 
                      carried out successful educational opportunity 
                      programs under this chapter (as this chapter was 
                      in effect on such day); and
                          ``(ii) have a prior, demonstrated commitment 
                      to early intervention leading to college access 
                      through collaboration and replication of 
                      successful strategies;
                    ``(B) ensure that students served under this chapter 
                on the day before the date of enactment of the Higher 
                Education Amendments of 1998 continue to receive 
                assistance through the completion of secondary school.

    ``(c) Definition of Eligible Entity.--For the purposes of this 
chapter, the term `eligible entity' means--
            ``(1) a State; or
            ``(2) a partnership consisting of--
                    ``(A) one or more local educational agencies acting 
                on behalf of--
                          ``(i) one or more elementary schools or 
                      secondary schools; and
                          ``(ii) the secondary schools that students 
                      from the schools described in clause (i) would 
                      normally attend;
                    ``(B) one or more degree granting institutions of 
                higher education; and
                    ``(C) at least two community organizations or 
                entities, such as businesses, professional associations, 
                community-based organizations, philanthropic 
                organizations, State agencies, institutions or agencies 
                sponsoring programs authorized under subpart 4, or other 
                public or private agencies or organizations.

``SEC. 404B. REQUIREMENTS. <<NOTE: 20 USC 1070a-22.>> 

    ``(a) Funding Rules.--
            ``(1) Continuation awards.--From the amount appropriated 
        under section 404H for a fiscal year, the Secretary shall 
        continue to award grants to States under this chapter (as this 
        chapter was in effect on the day before the date of enactment of 
        the Higher Education Amendments of 1998) in accordance with the 
        terms and conditions of such grants.
            ``(2) Distribution.--From the amount appropriated under 
        section 404H that remains after making continuation awards under 
        paragraph (1) for a fiscal year, the Secretary shall--
                    ``(A) make available--
                          ``(i) not less than 33 percent of the amount 
                      to eligible entities described in section 
                      404A(c)(1); and
                          ``(ii) not less than 33 percent of the amount 
                      to eligible entities described in section 
                      404A(c)(2); and
                    ``(B) award the remainder of the amount to eligible 
                entities described in paragraph (1) or (2) of section 
                404A(c).
            ``(3) Special rule.--The Secretary shall annually reevaluate 
        the distribution of funds described in paragraph

[[Page 112 STAT. 1658]]

        (2)(B) based on number, quality, and promise of the applications 
        and adjust the distribution accordingly.''.

    ``(b) Limitation.--Each eligible entity described in section 
404A(c)(1), and each eligible entity described in section 404A(c)(2) 
that conducts a scholarship component under section 404E, shall use not 
less than 25 percent and not more than 50 percent of grant funds 
received under this chapter for the early intervention component of an 
eligible entity's program under this chapter, except that the Secretary 
may waive the 50 percent limitation if the eligible entity demonstrates 
that the eligible entity has another means of providing the students 
with financial assistance that is described in the plan submitted under 
section 404C.
    ``(c) Coordination.--Each eligible entity shall ensure that the 
activities assisted under this chapter are, to the extent practicable, 
coordinated with, and complement and enhance--
            ``(1) services under this chapter provided by other eligible 
        entities serving the same school district or State; and
            ``(2) related services under other Federal or non-Federal 
        programs.

    ``(d) Designation of Fiscal Agent.--An eligible entity described in 
section 404A(c)(2) shall designate an institution of higher education or 
a local educational agency as the fiscal agent for the eligible entity.
    ``(e) Coordinators.--An eligible entity described in section 
404A(c)(2) shall have a full-time program coordinator or a part-time 
program coordinator, whose primary responsibility is a project under 
section 404C.
    ``(f ) Displacement.--An eligible entity described in 404A(c)(2) 
shall ensure that the activities assisted under this chapter will not 
displace an employee or eliminate a position at a school assisted under 
this chapter, including a partial displacement such as a reduction in 
hours, wages or employment benefits.
    ``(g) Cohort Approach.--
            ``(1) In general.--The Secretary shall require that eligible 
        entities described in section 404A(c)(2)--
                    ``(A) provide services under this chapter to at 
                least one grade level of students, beginning not later 
                than 7th grade, in a participating school that has a 7th 
                grade and in which at least 50 percent of the students 
                enrolled are eligible for free or reduced-price lunch 
                under the National School Lunch Act (or, if an eligible 
                entity determines that it would promote the 
                effectiveness of a program, an entire grade level of 
                students, beginning not later than the 7th grade, who 
                reside in public housing as defined in section 3(b)(1) 
                of the United States Housing Act of 1937); and
                    ``(B) ensure that the services are provided through 
                the 12th grade to students in the participating grade 
                level.
            ``(2) Coordination requirement.--In order for the Secretary 
        to require the cohort approach described in paragraph (1), the 
        Secretary shall, where applicable, ensure that the cohort 
        approach is done in coordination and collaboration with existing 
        early intervention programs and does not duplicate the services 
        already provided to a school or community.

``SEC. 404C. ELIGIBLE ENTITY PLANS. <<NOTE: 20 USC 1070a-23.>> 

    ``(a) Plan Required for Eligibility.--

[[Page 112 STAT. 1659]]

            ``(1) In general.--In order for an eligible entity to 
        qualify for a grant under this chapter, the eligible entity 
        shall submit to the Secretary a plan for carrying out the 
        program under this chapter. Such plan shall provide for the 
        conduct of a scholarship component if required or undertaken 
        pursuant to section 404E and an early intervention component 
        required pursuant to section 404D.
            ``(2) Contents.--Each plan submitted pursuant to paragraph 
        (1) shall be in such form, contain or be accompanied by such 
        information or assurances, and be submitted at such time as the 
        Secretary may require by regulation. Each such plan shall--
                    ``(A) describe the activities for which assistance 
                under this chapter is sought; and
                    ``(B) provide such additional assurances as the 
                Secretary determines necessary to ensure compliance with 
                the requirements of this chapter.

    ``(b) Matching Requirement.--
            ``(1) In general.--The Secretary shall not approve a plan 
        submitted under subsection (a) unless such plan--
                    ``(A) provides that the eligible entity will 
                provide, from State, local, institutional, or private 
                funds, not less than 50 percent of the cost of the 
                program, which matching funds may be provided in cash or 
                in kind;
                    ``(B) specifies the methods by which matching funds 
                will be paid; and
                    ``(C) includes provisions designed to ensure that 
                funds provided under this chapter shall supplement and 
                not supplant funds expended for existing programs.
            ``(2) Special rule.--Notwithstanding the matching 
        requirement described in paragraph (1)(A), the Secretary may by 
        regulation modify the percentage requirement described in 
        paragraph (1)(A) for eligible entities described in section 
        404A(c)(2).

    ``(c) Methods for Complying With Matching Requirement.--An eligible 
entity may count toward the matching requirement described in subsection 
(b)(1)(A)--
            ``(1) the amount of the financial assistance paid to 
        students from State, local, institutional, or private funds 
        under this chapter;
            ``(2) the amount of tuition, fees, room or board waived or 
        reduced for recipients of financial assistance under this 
        chapter; and
            ``(3) the amount expended on documented, targeted, long-term 
        mentoring and counseling provided by volunteers or paid staff of 
        nonschool organizations, including businesses, religious 
        organizations, community groups, postsecondary educational 
        institutions, nonprofit and philanthropic organizations, and 
        other organizations.

    ``(d) Peer Review Panels.--The Secretary shall convene peer review 
panels to assist in making determinations regarding the awarding of 
grants under this chapter.

``SEC. 404D. EARLY INTERVENTION. <<NOTE: 20 USC 1070a-24.>> 

    ``(a) Services.--
            ``(1) In general.--In order to receive a grant under this 
        chapter, an eligible entity shall demonstrate to the 
        satisfaction of the Secretary, in the plan submitted under 
        section 404C,

[[Page 112 STAT. 1660]]

        that the eligible entity will provide comprehensive mentoring, 
        counseling, outreach, and supportive services to students 
        participating in programs under this chapter. Such counseling 
        shall include--
                    ``(A) financial aid counseling and information 
                regarding the opportunities for financial assistance 
                under this title; and
                    ``(B) activities or information regarding--
                          ``(i) fostering and improving parent 
                      involvement in promoting the advantages of a 
                      college education, academic admission 
                      requirements, and the need to take college 
                      preparation courses;
                          ``(ii) college admissions and achievement 
                      tests; and
                          ``(iii) college application procedures.
                    ``(2) Methods.--The eligible entity shall 
                demonstrate in such plan, pursuant to regulations of the 
                Secretary, the methods by which the eligible entity will 
                target services on priority students described in 
                subsection (c), if applicable.

    ``(b) Uses of Funds.--
            ``(1) <<NOTE: Regulations.>> In general.--The Secretary 
        shall, by regulation, establish criteria for determining whether 
        comprehensive mentoring, counseling, outreach, and supportive 
        services programs may be used to meet the requirements of 
        subsection (a).
            ``(2) Permissible activities.--Examples of activities that 
        meet the requirements of subsection (a) include the following:
                    ``(A) Providing eligible students in preschool 
                through grade 12 with a continuing system of mentoring 
                and advising that--
                          ``(i) is coordinated with the Federal and 
                      State community service initiatives; and
                          ``(ii) may include such support services as 
                      after school and summer tutoring, assistance in 
                      obtaining summer jobs, career mentoring, and 
                      academic counseling.
                    ``(B) Requiring each student to enter into an 
                agreement under which the student agrees to achieve 
                certain academic milestones, such as completing a 
                prescribed set of courses and maintaining satisfactory 
                progress described in section 484(c), in exchange for 
                receiving tuition assistance for a period of time to be 
                established by each eligible entity.
                    ``(C) Activities designed to ensure secondary school 
                completion and college enrollment of at-risk children, 
                such as identification of at-risk children, after school 
                and summer tutoring, assistance in obtaining summer 
                jobs, academic counseling, volunteer and parent 
                involvement, providing former or current scholarship 
                recipients as mentor or peer counselors, skills 
                assessment, providing access to rigorous core courses 
                that reflect challenging academic standards, personal 
                counseling, family counseling and home visits, staff 
                development, and programs and activities described in 
                this subparagraph that are specially designed for 
                students of limited English proficiency.
                    ``(D) Summer programs for individuals who are in 
                their sophomore or junior years of secondary school or 
                are planning to attend an institution of higher 
                education in the succeeding academic year that--

[[Page 112 STAT. 1661]]

                          ``(i) are carried out at an institution of 
                      higher education that has programs of academic 
                      year supportive services for disadvantaged 
                      students through projects authorized under section 
                      402D or through comparable projects funded by the 
                      State or other sources;
                          ``(ii) provide for the participation of the 
                      individuals who are eligible for assistance under 
                      section 402D or who are eligible for comparable 
                      programs funded by the State;
                          ``(iii)(I) provide summer instruction in 
                      remedial, developmental or supportive courses;
                          ``(II) provide such summer services as 
                      counseling, tutoring, or orientation; and
                          ``(III) provide financial assistance to the 
                      individuals to cover the individuals' summer costs 
                      for books, supplies, living costs, and personal 
                      expenses; and
                          ``(iv) provide the individuals with financial 
                      assistance during each academic year the 
                      individuals are enrolled at the participating 
                      institution after the summer program.
                    ``(E) Requiring eligible students to meet other 
                standards or requirements as the State determines 
                necessary to meet the purposes of this section.

    ``(c) Priority Students.--For eligible entities not using a cohort 
approach, the eligible entity shall treat as priority students any 
student in preschool through grade 12 who is eligible--
            ``(1) to be counted under section 1124(c) of the Elementary 
        and Secondary Education Act of 1965;
            ``(2) for free or reduced price meals under the National 
        School Lunch Act; or
            ``(3) for assistance pursuant to part A of title IV of the 
        Social Security Act.

    ``(d) Allowable Providers.--In the case of eligible entities 
described in section 404A(c)(1), the activities required by this section 
may be provided by service providers such as community-based 
organizations, schools, institutions of higher education, public and 
private agencies, nonprofit and philanthropic organizations, businesses, 
institutions and agencies sponsoring programs authorized under subpart 
4, and other organizations the State deems appropriate.

``SEC. 404E. SCHOLARSHIP COMPONENT. <<NOTE: 20 USC 1070a-25.>> 

    ``(a) In General.--
            ``(1) States.--In order to receive a grant under this 
        chapter, an eligible entity described in section 404A(c)(1) 
        shall establish or maintain a financial assistance program that 
        awards scholarships to students in accordance with the 
        requirements of this section. The Secretary shall encourage the 
        eligible entity to ensure that a scholarship provided pursuant 
        to this section is available to an eligible student for use at 
        any institution of higher education.
            ``(2) Partnerships.--An eligible entity described in section 
        404A(c)(2) may award scholarships to eligible students in 
        accordance with the requirements of this section.

    ``(b) Grant Amounts.--The maximum amount of a scholarship that an 
eligible student shall be eligible to receive under this section shall 
be established by the eligible entity. The minimum

[[Page 112 STAT. 1662]]

amount of the scholarship for each fiscal year shall not be less than 
the lesser of--
            ``(1) <<NOTE: Regulations.>> 75 percent of the average cost 
        of attendance for an in-State student, in a 4-year program of 
        instruction, at public institutions of higher education in such 
        State, as determined in accordance with regulations prescribed 
        by the Secretary; or
            ``(2) the maximum Federal Pell Grant funded under section 
        401 for such fiscal year.

    ``(c) Relation to Other Assistance.--Scholarships provided under 
this section shall not be considered for the purpose of awarding Federal 
grant assistance under this title, except that in no case shall the 
total amount of student financial assistance awarded to a student under 
this title exceed such student's total cost of attendance.
    ``(d) Eligible Students.--A student eligible for assistance under 
this section is a student who--
            ``(1) is less than 22 years old at time of first scholarship 
        award under this section;
            ``(2) receives a secondary school diploma or its recognized 
        equivalent on or after January 1, 1993;
            ``(3) is enrolled or accepted for enrollment in a program of 
        undergraduate instruction at an institution of higher education 
        that is located within the State's boundaries, except that, at 
        the State's option, an eligible entity may offer scholarship 
        program portability for recipients who attend institutions of 
        higher education outside such State; and
            ``(4) who participated in the early intervention component 
        required under section 404D.

    ``(e) Priority.--The Secretary shall ensure that each eligible 
entity places a priority on awarding scholarships to students who will 
receive a Federal Pell Grant for the academic year for which the 
scholarship is awarded under this section.
    ``(f ) Special Rule.--An eligible entity may consider students who 
have successfully participated in programs funded under chapter 1 to 
have met the requirements of subsection (d)(4).

``SEC. 404F. 21ST CENTURY SCHOLAR CERTIFICATES. <<NOTE: 20 USC 1070a-
            26.>> 

    ``(a) Authority.--The Secretary, using funds appropriated under 
section 404H that do not exceed $200,000 for a fiscal year--
            ``(1) shall ensure that certificates, to be known as 21st 
        Century Scholar Certificates, are provided to all students 
        participating in programs under this chapter; and
            ``(2) may, as practicable, ensure that such certificates are 
        provided to all students in grades 6 through 12 who attend 
        schools at which at least 50 percent of the students enrolled 
        are eligible for a free or reduced price lunch under the 
        National School Lunch Act.

    ``(b) Information Required.--A 21st Century Scholar Certificate 
shall be personalized for each student and indicate the amount of 
Federal financial aid for college which a student may be eligible to 
receive.

``SEC. 404G. EVALUATION AND REPORT. <<NOTE: 20 USC 1070a-27.>> 

    ``(a) Evaluation.--Each eligible entity receiving a grant under this 
chapter shall biennially evaluate the activities assisted under

[[Page 112 STAT. 1663]]

this chapter in accordance with the standards described in subsection 
(b) and shall submit to the Secretary a copy of such evaluation. The 
evaluation shall permit service providers to track eligible student 
progress during the period such students are participating in the 
activities and shall be consistent with the standards developed by the 
Secretary pursuant to subsection (b).
    ``(b) Evaluation Standards.--The Secretary shall prescribe standards 
for the evaluation described in subsection (a). Such standards shall--
            ``(1) provide for input from eligible entities and service 
        providers; and
            ``(2) ensure that data protocols and procedures are 
        consistent and uniform.

    ``(c) Federal Evaluation.--In order to evaluate and improve the 
impact of the activities assisted under this chapter, the Secretary 
shall, from not more than 0.75 percent of the funds appropriated under 
section 404H for a fiscal year, award one or more grants, contracts, or 
cooperative agreements to or with public and private institutions and 
organizations, to enable the institutions and organizations to evaluate 
the effectiveness of the program and, as appropriate, disseminate the 
results of the evaluation.
    ``(d) Report.--The Secretary shall biennially report to Congress 
regarding the activities assisted under this chapter and the evaluations 
conducted pursuant to this section.

``SEC. 404H. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1070a-
            28.>> 

    ``There are authorized to be appropriated to carry out this chapter 
$200,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

SEC. 404. ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS.

    Chapter 3 of subpart 2 of part A of title IV (20 U.S.C. 1070a-31 et 
seq.) is amended to read as follows:

        ``CHAPTER 3--ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS

``SEC. 406A. SCHOLARSHIPS AUTHORIZED. <<NOTE: 20 USC 1070a-31.>> 

    ``The Secretary is authorized to award scholarships to students who 
graduate from secondary school after May 1, 2000, to enable the students 
to pay the cost of attendance at an institution of higher education 
during the students first 2 academic years of undergraduate education, 
if the students--
            ``(1) are eligible to receive Federal Pell Grants for the 
        year in which the scholarships are awarded; and
            ``(2) demonstrate academic achievement by graduating in the 
        top 10 percent of their secondary school graduating class.

``SEC. 406B. SCHOLARSHIP PROGRAM REQUIREMENTS. <<NOTE: 20 USC 1070a-
            32.>> 

    ``(a) Amount of Award.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amount of a scholarship awarded under this chapter for any 
        academic year shall be equal to 100 percent of the amount of the 
        Federal Pell Grant for which the recipient is eligible for the 
        academic year.
            ``(2) Adjustment for insufficient appropriations.--If, after 
        the Secretary determines the total number of eligible applicants 
        for an academic year in accordance with section

[[Page 112 STAT. 1664]]

        406C, funds available to carry out this chapter for the academic 
        year are insufficient to fully fund all awards under this 
        chapter for the academic year, the amount of the scholarship 
        paid to each student under this chapter shall be reduced 
        proportionately.

    ``(b) Assistance Not To Exceed Cost of Attendance.--A scholarship 
awarded under this chapter to any student, in combination with the 
Federal Pell Grant assistance and other student financial assistance 
available to such student, may not exceed the student's cost of 
attendance.

``SEC. 406C. ELIGIBILITY OF SCHOLARS. <<NOTE: 20 USC 1070a-33.>> 

    ``(a) Procedures Established by Regulation.--The Secretary shall 
establish by regulation procedures for the determination of eligibility 
of students for the scholarships awarded under this chapter. Such 
procedures shall include measures to prevent any secondary school from 
certifying more than 10 percent of the school's students for eligibility 
under this section.
    ``(b) Coordination.--In prescribing procedures under subsection (a), 
the Secretary shall ensure that the determination of eligibility and the 
amount of the scholarship is determined in a timely and accurate manner 
consistent with the requirements of section 482 and the submission of 
the financial aid form required by section 483. For such purposes, the 
Secretary may provide that, for the first academic year of a student's 2 
academic years of eligibility under this chapter, class rank may be 
determined prior to graduation from secondary school, at such time and 
in such manner as the Secretary may specify in regulations prescribed 
under this chapter.

``SEC. 406D. STUDENT REQUIREMENTS. <<NOTE: 20 USC 1070a-34.>> 

    ``(a) In General.--Each eligible student desiring a scholarship 
under this chapter shall submit an application to the Secretary at such 
time, in such manner, and containing such information as the Secretary 
may reasonably require.
    ``(b) Continuing Eligibility.--In order for a student to continue to 
be eligible to receive a scholarship under this chapter for the second 
year of undergraduate education, the eligible student shall maintain 
eligibility to receive a Federal Pell Grant for that year, including 
fulfilling the requirements for satisfactory progress described in 
section 484(c).

``SEC. 407E. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1070a-
            35.>> 

    ``There are authorized to be appropriated to carry out this chapter 
$200,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

SEC. 405. REPEALS.

    Chapters 4 through 8 of subpart 2 of part A of title IV (20 U.S.C. 
1070a-41 et seq. and 1070a-81 et seq.) <<NOTE: 20 USC 1070a-41 et seq., 
1070a-51 et seq., 1070a-61, 1070a-71, 1070a-81.>> are repealed.

SEC. 406. FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS.

    (a) Authorization of Appropriations.--Section 413A(b)(1) (20 U.S.C. 
1070b(b)(1)) is amended by striking ``1993'' and inserting ``1999''.

[[Page 112 STAT. 1665]]

    (b) Use of Funds for Less-Than-Full-Time Students.--Subsection (d) 
of section 413C (20 U.S.C. 1070b-2) is amended to read as follows:
    ``(d) Use of Funds for Less-Than-Full-Time Students.--If the 
institution's allocation under this subpart is directly or indirectly 
based in part on the financial need demonstrated by students who are 
independent students or attending the institution on less than a full-
time basis, then a reasonable proportion of the allocation shall be made 
available to such students.''.
    (c) Allocation of Funds.--
            (1) Updating the base period.--Section 413D(a) (20 U.S.C. 
        1070b-3(a)) is amended--
                    (A) in paragraph (1), by striking ``received and 
                used under this part for fiscal year 1985'' and 
                inserting ``received under subsections (a) and (b) of 
                this section for fiscal year 1999 (as such subsections 
                were in effect with respect to allocations for such 
                fiscal year)'';
                    (B) in paragraph (2)--
                          (i) in subparagraphs (A) and (B), by striking 
                      ``1985'' each place the term appears and inserting 
                      ``1999''; and
                          (ii) in subparagraph (C)(i), by striking 
                      ``1986'' and inserting ``2000''.
            (2) Elimination of pro rata share.--Section 413D is further 
        amended--
                    (A) by striking subsection (b);
                    (B) in subsection (c)(1), by striking ``three-
                quarters of the remainder'' and inserting ``the 
                remainder'';
                    (C) in subsection (c)(2)(A)(i), by striking 
                ``subsection (d)'' and inserting ``subsection (c)''; and
                    (D) by redesignating subsections (c), (d), (e), and 
                (f ) as subsections (b), (c), (d), and (e), 
                respectively.
            (3) <<NOTE: Applicability. 20 USC 1070b-3 note.>> Effective 
        Date.--The amendments made by this subsection shall apply with 
        respect to allocations of amounts appropriated pursuant to 
        section 413A(b) of the Higher Education Act of 1965 for fiscal 
        year 2000 or any succeeding fiscal year.

    (d) Carryover and Carryback Authority.--Subpart 3 of part A of title 
IV (20 U.S.C. 1070b et seq.) is amended by adding at the end the 
following:

``SEC. 413E. CARRYOVER AND CARRYBACK AUTHORITY. <<NOTE: 20 USC 1070b-
            4.>> 

    ``(a) Carryover Authority.--Of the sums made available to an 
eligible institution under this subpart for a fiscal year, not more than 
10 percent may, at the discretion of the institution, remain available 
for expenditure during the succeeding fiscal year to carry out the 
program under this subpart.
    ``(b) Carryback Authority.--
            ``(1) In general.--Of the sums made available to an eligible 
        institution under this subpart for a fiscal year, not more than 
        10 percent may, at the discretion of the institution, be used by 
        the institution for expenditure for the fiscal year preceding 
        the fiscal year for which the sums were appropriated.
            ``(2) Use of carried-back funds.--An eligible institution 
        may make grants to students after the end of the academic year, 
        but prior to the beginning of the succeeding fiscal year, from 
        such succeeding fiscal year's appropriations.''.

[[Page 112 STAT. 1666]]

SEC. 407. LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP PROGRAM.

    (a) Amendment to Subpart Heading.--
            (1) In general.--The heading for subpart 4 of part A of 
        title IV (20 U.S.C. 1070c et seq.) is amended to read as 
        follows:

  ``Subpart 4--Leveraging Educational Assistance Partnership Program''.

            (2) Conforming amendments.--Subpart 4 of part A of title IV 
        (20 U.S.C. 1070c et seq.) is amended--
                    (A) in section 415B(b) (20 U.S.C. 1070c-1(b)), by 
                striking ``State student grant incentive'' and inserting 
                ``leveraging educational assistance partnership''; and
                    (B) in the heading for section 415C (20 U.S.C. 
                1070c-2), by striking ``state student incentive grant'' 
                and inserting ``leveraging educational assistance 
                partnership''.

    (b) Authorization of Appropriations.--Section 415A(b) (20 U.S.C. 
1070c(b)) is amended--
            (1) in paragraph (1), by striking ``1993'' and inserting 
        ``1999'';
            (2) by redesignating paragraph (2) as paragraph (3); and
            (3) by inserting after paragraph (1) the following:
            ``(2) Reservation.--For any fiscal year for which the amount 
        appropriated under paragraph (1) exceeds $30,000,000, the excess 
        shall be available to carry out section 415E.''.

    (c) Special Leveraging Educational Assistance Partnership Program.--
Subpart 4 of part A of title IV (20 U.S.C. 1070c et seq.) is amended--
            (1) by redesignating section 415E <<NOTE: 20 USC 1070c-
        4.>> as 415F; and
            (2) by inserting after section 415D the following:

``SEC. 415E. <<NOTE: 20 USC 1070c-3a.>> SPECIAL LEVERAGING EDUCATIONAL 
            ASSISTANCE PARTNERSHIP PROGRAM.

    ``(a) In General.--From amounts reserved under section 415A(b)(2) 
for each fiscal year, the Secretary shall--
            ``(1) make allotments among States in the same manner as the 
        Secretary makes allotments among States under section 415B; and
            ``(2) award grants to States, from allotments under 
        paragraph (1), to enable the States to pay the Federal share of 
        the cost of the authorized activities described in subsection 
        (c).

    ``(b) Applicability Rule.--The provisions of this subpart which are 
not inconsistent with this section shall apply to the program authorized 
by this section.
    ``(c) Authorized Activities.--Each State receiving a grant under 
this section may use the grant funds for--
            ``(1) increasing the dollar amount of grants awarded under 
        section 415B to eligible students who demonstrate financial 
        need;
            ``(2) carrying out transition programs from secondary school 
        to postsecondary education for eligible students who demonstrate 
        financial need;

[[Page 112 STAT. 1667]]

            ``(3) carrying out a financial aid program for eligible 
        students who demonstrate financial need and wish to enter 
        careers in information technology, or other fields of study 
        determined by the State to be critical to the State's workforce 
        needs;
            ``(4) making funds available for community service work-
        study activities for eligible students who demonstrate financial 
        need;
            ``(5) creating a postsecondary scholarship program for 
        eligible students who demonstrate financial need and wish to 
        enter teaching;
            ``(6) creating a scholarship program for eligible students 
        who demonstrate financial need and wish to enter a program of 
        study leading to a degree in mathematics, computer science, or 
        engineering;
            ``(7) carrying out early intervention programs, mentoring 
        programs, and career education programs for eligible students 
        who demonstrate financial need; and
            ``(8) awarding merit or academic scholarships to eligible 
        students who demonstrate financial need.

    ``(d) Maintenance of Effort Requirement.--Each State receiving a 
grant under this section for a fiscal year shall provide the Secretary 
an assurance that the aggregate amount expended per student or the 
aggregate expenditures by the State, from funds derived from non-Federal 
sources, for the authorized activities described in subsection (c) for 
the preceding fiscal year were not less than the amount expended per 
student or the aggregate expenditures by the State for the activities 
for the second preceding fiscal year.
    ``(e) Federal Share.--The Federal share of the cost of the 
authorized activities described in subsection (c) for any fiscal year 
shall be not more than 33\1/3\ percent.''.
    (c) Technical and Conforming Amendments.--
            (1) Purpose.--Subsection (a) of section 415A (20 U.S.C. 
        1070c(a)) is amended to read as follows:

    ``(a) Purpose of Subpart.--It is the purpose of this subpart to make 
incentive grants available to States to assist States in--
            ``(1) providing grants to--
                    ``(A) eligible students attending institutions of 
                higher education or participating in programs of study 
                abroad that are approved for credit by institutions of 
                higher education at which such students are enrolled; 
                and
                    ``(B) eligible students for campus-based community 
                service work-study; and
            ``(2) carrying out the activities described in section 
        415F.''.
            (2) Allotment.--Section 415B(a)(1) (20 U.S.C. 1070c-1(a)(1)) 
        is amended by inserting ``and not reserved under section 
        415A(b)(2)'' after ``415A(b)(1)''.

SEC. 408. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE ENGAGED IN 
            MIGRANT AND SEASONAL FARMWORK.

    (a) Coordination.--Section 418A(d) (20 U.S.C. 1070d-2(d)) is amended 
by inserting after ``contains assurances'' the following: ``that the 
grant recipient will coordinate the project, to the extent feasible, 
with other local, State, and Federal programs to maximize the resources 
available for migrant students, and''.

[[Page 112 STAT. 1668]]

    (b) <<NOTE: 20 USC 1070d-2.>> Authorization of Appropriations.--
Section 418A(g) is amended by striking ``1993'' each place the term 
appears and inserting ``1999''.

    (c) Data Collection.--Section 418A is amended--
            (1) by redesignating subsection (g) (as amended by 
        subsection (b)) as subsection (h); and
            (2) by inserting after subsection (f ) the following:

    ``(g) Data Collection.--The National Center for Education Statistics 
shall collect postsecondary education data on migrant students.''.
    (d) Technical Amendment.--Section 418A(e) is amended by striking 
``authorized by subpart 4 of this part in accordance with section 
417A(b)(2)'' and inserting ``in accordance with section 402A(c)(1)''.

SEC. 409. ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM.

    (a) FAS Eligibility.--Section 419D (20 U.S.C. 1070d-34) is amended 
by adding at the end thereof the following:
    ``(e) FAS Eligibility.--
            ``(1) Fiscal years 2000 through 2004.--Notwithstanding any 
        other provision of this subpart, in the case of students from 
        the Freely Associated States who may be selected to receive a 
        scholarship under this subpart for the first time for any of the 
        fiscal years 2000 through 2004--
                    ``(A) there shall be 10 scholarships in the 
                aggregate awarded to such students for each of the 
                fiscal years 2000 through 2004; and
                    ``(B) the Pacific Regional Educational Laboratory 
                shall administer the program under this subpart in the 
                case of scholarships for students in the Freely 
                Associated States.
            ``(2) Termination of eligibility.--A student from the Freely 
        Associated States shall not be eligible to receive a scholarship 
        under this subpart after September 30, 2004.''.

    (b) Authorization of Appropriations.--Section 419K (20 U.S.C. 1070d-
41) is amended by striking ``$10,000,000 for fiscal year 1993'' and 
inserting ``$45,000,000 for fiscal year 1999''.

SEC. 410. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL.

    Part A of title IV (20 U.S.C. 1070 et seq.) is amended by inserting 
after subpart 6 (20 U.S.C. 1070d-31 et seq.) the following:

         ``Subpart 7--Child Care Access Means Parents in School

``SEC. 419N. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL. <<NOTE: 20 USC 
            1070e.>> 

    ``(a) Purpose.--The purpose of this section is to support the 
participation of low-income parents in postsecondary education through 
the provision of campus-based child care services.
    ``(b) Program Authorized.--
            ``(1) Authority.--The Secretary may award grants to 
        institutions of higher education to assist the institutions in 
        providing campus-based child care services to low-income 
        students.
            ``(2) Amount of grants.--
                    ``(A) In general.--The amount of a grant awarded to 
                an institution of higher education under this section 
                for a fiscal year shall not exceed 1 percent of the 
                total

[[Page 112 STAT. 1669]]

                amount of all Federal Pell Grant funds awarded to 
                students enrolled at the institution of higher education 
                for the preceding fiscal year.
                    ``(B) Minimum.--A grant under this section shall be 
                awarded in an amount that is not less than $10,000.
            ``(3) Duration; renewal; and payments.--
                    ``(A) Duration.--The Secretary shall award a grant 
                under this section for a period of 4 years.
                    ``(B) Payments.--Subject to subsection (e)(2), the 
                Secretary shall make annual grant payments under this 
                section.
            ``(4) Eligible institutions.--An institution of higher 
        education shall be eligible to receive a grant under this 
        section for a fiscal year if the total amount of all Federal 
        Pell Grant funds awarded to students enrolled at the institution 
        of higher education for the preceding fiscal year equals or 
        exceeds $350,000.
            ``(5) Use of funds.--Grant funds under this section shall be 
        used by an institution of higher education to support or 
        establish a campus-based child care program primarily serving 
        the needs of low-income students enrolled at the institution of 
        higher education. Grant funds under this section may be used to 
        provide before and after school services to the extent necessary 
        to enable low-income students enrolled at the institution of 
        higher education to pursue postsecondary education.
            ``(6) Construction.--Nothing in this section shall be 
        construed to prohibit an institution of higher education that 
        receives grant funds under this section from serving the child 
        care needs of the community served by the institution.
            ``(7) Definition of low-income student.--For the purpose of 
        this section, the term ``low-income student'' means a student 
        who is eligible to receive a Federal Pell Grant for the fiscal 
        year for which the determination is made.

    ``(c) Applications.--An institution of higher education desiring a 
grant under this section shall submit an application to the Secretary at 
such time, in such manner, and accompanied by such information as the 
Secretary may require. Each application shall--
            ``(1) demonstrate that the institution is an eligible 
        institution described in subsection (b)(4);
            ``(2) specify the amount of funds requested;
            ``(3) demonstrate the need of low-income students at the 
        institution for campus-based child care services by including in 
        the application--
                    ``(A) information regarding student demographics;
                    ``(B) an assessment of child care capacity on or 
                near campus;
                    ``(C) information regarding the existence of waiting 
                lists for existing child care;
                    ``(D) information regarding additional needs created 
                by concentrations of poverty or by geographic isolation; 
                and
                    ``(E) other relevant data;
            ``(4) contain a description of the activities to be 
        assisted, including whether the grant funds will support an 
        existing child care program or a new child care program;
            ``(5) identify the resources, including technical expertise 
        and financial support, the institution will draw upon to support

[[Page 112 STAT. 1670]]

        the child care program and the participation of low-income 
        students in the program, such as accessing social services 
        funding, using student activity fees to help pay the costs of 
        child care, using resources obtained by meeting the needs of 
        parents who are not low-income students, and accessing 
        foundation, corporate or other institutional support, and 
        demonstrate that the use of the resources will not result in 
        increases in student tuition;
            ``(6) contain an assurance that the institution will meet 
        the child care needs of low-income students through the 
        provision of services, or through a contract for the provision 
        of services;
            ``(7) describe the extent to which the child care program 
        will coordinate with the institution's early childhood education 
        curriculum, to the extent the curriculum is available, to meet 
        the needs of the students in the early childhood education 
        program at the institution, and the needs of the parents and 
        children participating in the child care program assisted under 
        this section;
            ``(8) in the case of an institution seeking assistance for a 
        new child care program--
                    ``(A) provide a timeline, covering the period from 
                receipt of the grant through the provision of the child 
                care services, delineating the specific steps the 
                institution will take to achieve the goal of providing 
                low-income students with child care services;
                    ``(B) specify any measures the institution will take 
                to assist low-income students with child care during the 
                period before the institution provides child care 
                services; and
                    ``(C) include a plan for identifying resources 
                needed for the child care services, including space in 
                which to provide child care services, and technical 
                assistance if necessary;
            ``(9) contain an assurance that any child care facility 
        assisted under this section will meet the applicable State or 
        local government licensing, certification, approval, or 
        registration requirements; and
            ``(10) contain a plan for any child care facility assisted 
        under this section to become accredited within 3 years of the 
        date the institution first receives assistance under this 
        section.

    ``(d) Priority.--The Secretary shall give priority in awarding 
grants under this section to institutions of higher education that 
submit applications describing programs that--
            ``(1) leverage significant local or institutional resources, 
        including in-kind contributions, to support the activities 
        assisted under this section; and
            ``(2) utilize a sliding fee scale for child care services 
        provided under this section in order to support a high number of 
        low-income parents pursuing postsecondary education at the 
        institution.

    ``(e) Reporting Requirements; Continuing Eligibility.--
            ``(1) Reporting requirements.--
                    ``(A) Reports.--Each institution of higher education 
                receiving a grant under this section shall report to the 
                Secretary 18 months, and 36 months, after receiving the 
                first grant payment under this section.

[[Page 112 STAT. 1671]]

                    ``(B) Contents.--The report shall include--
                          ``(i) data on the population served under this 

                      section;
                          ``(ii) information on campus and community 
                      resources and funding used to help low-income 
                      students access child care services;
                          ``(iii) information on progress made toward 
                      accreditation of any child care facility; and
                          ``(iv) information on the impact of the grant 
                      on the quality, availability, and affordability of 
                      campus-based child care services.
            ``(2) Continuing eligibility.--The Secretary shall make the 
        third annual grant payment under this section to an institution 
        of higher education only if the Secretary determines, on the 
        basis of the 18-month report submitted under paragraph (1), that 
        the institution is making a good faith effort to ensure that 
        low-income students at the institution have access to 
        affordable, quality child care services.

    ``(f ) Construction.--No funds provided under this section shall be 
used for construction, except for minor renovation or repair to meet 
applicable State or local health or safety requirements.
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $45,000,000 for fiscal year 1999 
and such sums as may be necessary for each of the 4 succeeding fiscal 
years.''.

SEC. 411. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

    Subpart 8 of part A of title IV (20 U.S.C. 1070 et seq.) is amended 
to read as follows:

           ``Subpart 8--Learning Anytime Anywhere Partnerships

``SEC. 420D. FINDINGS. <<NOTE: 20 USC 1070f.>> 

    ``Congress makes the following findings:
            ``(1) The nature of postsecondary education delivery is 
        changing, and new technology and other related innovations can 
        provide promising education opportunities for individuals who 
        are currently not being served, particularly for individuals 
        without easy access to traditional campus-based postsecondary 
        education or for whom traditional courses are a poor match with 
        education or training needs.
            ``(2) Individuals, including individuals seeking basic or 
        technical skills or their first postsecondary experience, 
        individuals with disabilities, dislocated workers, individuals 
        making the transition from welfare-to-work, and individuals who 
        are limited by time and place constraints can benefit from 
        nontraditional, noncampus-based postsecondary education 
        opportunities and appropriate support services.
            ``(3) The need for high-quality, nontraditional, technology-
        based education opportunities is great, as is the need for skill 
        competency credentials and other measures of educational 
        progress and attainment that are valid and widely accepted, but 
        neither need is likely to be adequately addressed by the 
        uncoordinated efforts of agencies and institutions acting 
        independently and without assistance.

[[Page 112 STAT. 1672]]

            ``(4) Partnerships, consisting of institutions of higher 
        education, community organizations, or other public or private 
        agencies or organizations, can coordinate and combine 
        institutional resources--
                    ``(A) to provide the needed variety of education 
                options to students; and
                    ``(B) to develop new means of ensuring 
                accountability and quality for innovative education 
                methods.

``SEC. 420E. PURPOSE; PROGRAM AUTHORIZED. <<NOTE: 20 USC 1070f-1.>> 

    ``(a) Purpose.--It is the purpose of this subpart to enhance the 
delivery, quality, and accountability of postsecondary education and 
career-oriented lifelong learning through technology and related 
innovations.
    ``(b) Program Authorized.--
            ``(1) Grants.--
                    ``(A) In general.--The Secretary may, from funds 
                appropriated under section 420J make grants to, or enter 
                into contracts or cooperative agreements with, eligible 
                partnerships to carry out the authorized activities 
                described in section 420G.
                    ``(B) Duration.--Grants under this subpart shall be 
                awarded for periods that do not exceed 5 years.
            ``(2) Definition of eligible partnership.--For purposes of 
        this subpart, the term `eligible partnership' means a 
        partnership consisting of 2 or more independent agencies, 
        organizations, or institutions. The agencies, organizations, or 
        institutions may include institutions of higher education, 
        community organizations, and other public and private 
        institutions, agencies, and organizations.

``SEC. 420F. APPLICATION. <<NOTE: 20 USC 1070f-2.>> 

    ``(a) Requirement.--An eligible partnership desiring to receive a 
grant under this subpart shall submit an application to the Secretary, 
in such form and containing such information, as the Secretary may 
require.
    ``(b) Contents.--Each application shall include--
            ``(1) the name of each partner and a description of the 
        responsibilities of the partner, including the designation of a 
        nonprofit organization as the fiscal agent for the partnership;
            ``(2) a description of the need for the project, including a 
        description of how the project will build on any existing 
        services and activities;
            ``(3) a listing of human, financial (other than funds 
        provided under this subpart), and other resources that each 
        member of the partnership will contribute to the partnership, 
        and a description of the efforts each member of the partnership 
        will make in seeking additional resources; and
            ``(4) a description of how the project will operate, 
        including how funds awarded under this subpart will be used to 
        meet the purpose of this subpart.

``SEC. 420G. AUTHORIZED ACTIVITIES. <<NOTE: 20 USC 1070f-3.>> 

    ``Funds awarded to an eligible partnership under this subpart shall 
be used to--
            ``(1) develop and assess model distance learning programs or 
        innovative educational software;

[[Page 112 STAT. 1673]]

            ``(2) develop methodologies for the identification and 
        measurement of skill competencies;
            ``(3) develop and assess innovative student support 
        services; or
            ``(4) support other activities that are consistent with the 
        purpose of this subpart.

``SEC. 420H. MATCHING REQUIREMENT. <<NOTE: 20 USC 1070f-4.>> 

    ``Federal funds shall provide not more than 50 percent of the cost 
of a project under this subpart. The non-Federal share of project costs 
may be in cash or in kind, fairly evaluated, including services, 
supplies, or equipment.

``SEC. 420I. PEER REVIEW. <<NOTE: 20 USC 1070f-5.>> 

    ``The Secretary shall use a peer review process to review 
applications under this subpart and to make recommendations for funding 
under this subpart to the Secretary.

``SEC. 420J. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1070f-6.>> 

    ``There are authorized to be appropriated to carry out this subpart 
$10,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

              PART B--FEDERAL FAMILY EDUCATION LOAN PROGRAM

SEC. 411. LIMITATION REPEALED.

    Section 421 (20 U.S.C. 1071) is amended by striking subsection (d).

SEC. 412. ADVANCES TO RESERVE FUNDS.

    Section 422 (20 U.S.C. 1072) is amended--
            (1) in subsection (a)(2), by striking ``428(c)(10)(E)'' and 
        inserting ``428(c)(9)(E)'';
            (2) in subsection (c)--
                    (A) in paragraph (6)(B)(i), by striking ``written'' 
                and inserting ``written, electronic,'';
                    (B) in paragraph (7)(A), by striking ``during the 
                transition from the Federal Family Education Loan 
                Program under this part to the Federal Direct Student 
                Loan Program under part D of this title''; and
                    (C) in paragraph (7)(B), by striking 
                ``428(c)(10)(F)(v)'' and inserting ``428(c)(9)(F)(v)'';
            (3) in the first and second sentences of subsection (g)(1), 
        by striking ``or the program authorized by part D of this 
        title'' each place it appears; and
            (4) by adding at the end the following:

    ``(i) Additional Recall of Reserves.--
            ``(1) In general.--Notwithstanding any other provision of 
        law and subject to paragraph (4), the Secretary shall recall, 
        from reserve funds held in the Federal Student Loan Reserve 
        Funds established under section 422A by guaranty agencies--
                    ``(A) $85,000,000 in fiscal year 2002;
                    ``(B) $82,500,000 in fiscal year 2006; and
                    ``(C) $82,500,000 in fiscal year 2007.
            ``(2) Deposit.--Funds recalled by the Secretary under this 
        subsection shall be deposited in the Treasury.

[[Page 112 STAT. 1674]]

            ``(3) Required share.--The Secretary shall require each 
        guaranty agency to return reserve funds under paragraph (1) on 
        the basis of the agency's required share. For purposes of this 
        paragraph, a guaranty agency's required share shall be 
        determined as follows:
                    ``(A) Equal percentage.--The Secretary shall require 
                each guaranty agency to return an amount representing an 
                equal percentage reduction in the amount of reserve 
                funds held by the agency on September 30, 1996.
                    ``(B) Calculation.--The equal percentage reduction 
                shall be the percentage obtained by dividing--
                          ``(i) $250,000,000, by
                          ``(ii) the total amount of all guaranty 
                      agencies' reserve funds held on September 30, 
                      1996, less any amounts subject to recall under 
                      subsection (h).
                    ``(C) Special rule.--Notwithstanding subparagraphs 
                (A) and (B), the percentage reduction under subparagraph 
                (B) shall not result in the depletion of the reserve 
                funds of any agency which charges the 1.0 percent 
                insurance premium pursuant to section 428(b)(1)(H) below 
                an amount equal to the amount of lender claim payments 
                paid during the 90 days prior to the date of the return 
                under this subsection. If any additional amount is 
                required to be returned after deducting the total of the 
                required shares under subparagraph (B) and as a result 
                of the preceding sentence, such additional amount shall 
                be obtained by imposing on each guaranty agency to which 
                the preceding sentence does not apply, an equal 
                percentage reduction in the amount of the agency's 
                remaining reserve funds.
            ``(4) Offset of required shares.--If any guaranty agency 
        returns to the Secretary any reserve funds in excess of the 
        amount required under this subsection or subsection (h), the 
        total amount required to be returned under paragraph (1) shall 
        be reduced by the amount of such excess reserve funds returned.
            ``(5) Definition of reserve funds.--The term `reserve funds' 
        when used with respect to a guaranty agency--
                    ``(A) includes any reserve funds in cash or liquid 
                assets held by the guaranty agency, or held by, or under 
                the control of, any other entity; and
                    ``(B) does not include buildings, equipment, or 
                other nonliquid assets.''.

SEC. 413. GUARANTY AGENCY REFORMS.

    (a) Federal Student Loan Reserve Fund.--Part B of title IV is 
amended by inserting after section 422 (20 U.S.C. 1072) the following 
new section:

``SEC. 422A. FEDERAL STUDENT LOAN RESERVE FUND. <<NOTE: 20 USC 1072a.>> 

    ``(a) <<NOTE: Deadline.>> Establishment.--Each guaranty agency 
shall, not later than 60 days after the date of enactment of this 
section, deposit all funds, securities, and other liquid assets 
contained in the reserve fund established pursuant to section 422 into a 
Federal Student Loan Reserve Fund (in this section and section 422B 
referred to as the `Federal Fund'), which shall be an account of a type 
selected by the agency, with the approval of the Secretary.

    ``(b) Investment of Funds.--Funds transferred to the Federal Fund 
shall be invested in obligations issued or guaranteed by the United 
States or a State, or in other similarly low-risk securities

[[Page 112 STAT. 1675]]

selected by the guaranty agency, with the approval of the Secretary. 
Earnings from the Federal Fund shall be the sole property of the Federal 
Government.
    ``(c) Additional Deposits.--After the establishment of the Federal 
Fund, a guaranty agency shall deposit into the Federal Fund--
            ``(1) all amounts received from the Secretary as payment of 
        reinsurance on loans pursuant to section 428(c)(1);
            ``(2) from amounts collected on behalf of the obligation of 
        a defaulted borrower, a percentage amount equal to the 
        complement of the reinsurance percentage in effect when payment 
        under the guaranty agreement was made--
                    ``(A) with respect to the defaulted loan pursuant to 
                sections 428(c)(6)(A) and 428F(a)(1)(B); and
                    ``(B) with respect to a loan that the Secretary has 
                repaid or discharged under section 437;
            ``(3) insurance premiums collected from borrowers pursuant 
        to sections 428(b)(1)(H) and 428H(h);
            ``(4) all amounts received from the Secretary as payment for 
        supplemental preclaims activity performed prior to the date of 
        enactment of this section;
            ``(5) 70 percent of amounts received after such date of 
        enactment from the Secretary as payment for administrative cost 
        allowances for loans upon which insurance was issued prior to 
        such date of enactment; and
            ``(6) other receipts as specified in regulations of the 
        Secretary.

    ``(d) Uses of Funds.--Subject to subsection (f ), the Federal Fund 
may only be used by a guaranty agency--
            ``(1) to pay lender claims pursuant to sections 
        428(b)(1)(G), 428( j), 437, and 439(q); and
            ``(2) to pay into the Agency Operating Fund established 
        pursuant to section 422B (in this section and section 422B 
        referred to as the ``Operating Fund'') a default aversion fee in 
        accordance with section 428(l).

    ``(e) Ownership of Federal Fund.--The Federal Fund, and any 
nonliquid asset (such as a building or equipment) developed or purchased 
by the guaranty agency in whole or in part with Federal reserve funds, 
regardless of who holds or controls the Federal reserve funds or such 
asset, shall be considered to be the property of the United States, 
prorated based on the percentage of such asset developed or purchased 
with Federal reserve funds, which property shall be used in the 
operation of the program authorized by this part, as provided in 
subsection (d). The Secretary may restrict or regulate the use of such 
asset only to the extent necessary to reasonably protect the Secretary's 
prorated share of the value of such asset. The Secretary may direct a 
guaranty agency, or such agency's officers or directors, to cease any 
activity involving expenditures, use, or transfer of the Federal Fund 
administered by the guaranty agency that the Secretary determines is a 
misapplication, misuse, or improper expenditure of the Federal Fund or 
the Secretary's share of such asset.
    ``(f ) Transition.--
            ``(1) In general.--In order to establish the Operating Fund, 
        each guaranty agency may transfer not more than 180 days' cash 
        expenses for normal operating expenses (not including claim 
        payments) as a working capital reserve as defined in

[[Page 112 STAT. 1676]]

        Office of Management and Budget Circular A-87 (Cost Accounting 
        Standards) from the Federal Fund for deposit into the Operating 
        Fund for use in the performance of the guaranty agency's duties 
        under this part. Such transfers may occur during the first 3 
        years following the establishment of the Operating Fund. 
        However, no agency may transfer in excess of 45 percent of the 
        balance, as of September 30, 1998, of the agency's Federal Fund 
        to the agency's Operating Fund during such 3-year period. In 
        determining the amount that may be transferred, the agency shall 
        ensure that sufficient funds remain in the Federal Fund to pay 
        lender claims within the required time periods and to meet the 
        reserve recall requirements of this section and subsections (h) 
        and (i) of section 422.
            ``(2) Special rule.--A limited number of guaranty agencies 
        may transfer interest earned on the Federal Fund to the 
        Operating Fund during the first 3 years after the date of 
        enactment of this section if the guaranty agency demonstrates to 
        the Secretary that--
                    ``(A) the cash flow in the Operating Fund will be 
                negative without the transfer of such interest; and
                    ``(B) the transfer of such interest will 
                substantially improve the financial circumstances of the 
                guaranty agency.
            ``(3) Repayment provisions.--Each guaranty agency shall 
        begin repayment of sums transferred pursuant to this subsection 
        not later than the start of the fourth year after the 
        establishment of the Operating Fund, and shall repay all amounts 
        transferred not later than 5 years from the date of the 
        establishment of the Operating Fund. With respect to amounts 
        transferred from the Federal Fund, the guaranty agency shall not 
        be required to repay any interest on the funds transferred and 
        subsequently repaid. The guaranty agency shall provide to the 
        Secretary a reasonable schedule for repayment of the sums 
        transferred and an annual financial analysis demonstrating the 
        agency's ability to comply with the schedule and repay all 
        outstanding sums transferred.
            ``(4) Prohibition.--If a guaranty agency transfers funds 
        from the Federal Fund in accordance with this section, and fails 
        to make scheduled repayments to the Federal Fund, the agency may 
        not receive any other funds under this part until the Secretary 
        determines that the agency has made such repayments. The 
        Secretary shall pay to the guaranty agency any funds withheld in 
        accordance with this paragraph immediately upon making the 
        determination that the guaranty agency has made all such 
        repayments.
            ``(5) Waiver.--The Secretary may--
                    ``(A) waive the requirements of paragraph (3), but 
                only with respect to repayment of interest that was 
                transferred in accordance with paragraph (2); and
                    ``(B) waive paragraph (4);
        for a guaranty agency, if the Secretary determines that there 
        are extenuating circumstances (such as State constitutional 
        prohibitions) beyond the control of the agency that justify such 
        a waiver.
            ``(6) Extension of repayment period for interest.--

[[Page 112 STAT. 1677]]

                    ``(A) Extension permitted.--The Secretary shall 
                extend the period for repayment of interest that was 
                transferred in accordance with paragraph (2) from 2 
                years to 5 years if the Secretary determines that--
                          ``(i) the cash flow of the Operating Fund will 
                      be negative as a result of repayment as required 
                      by paragraph (3);
                          ``(ii) the repayment of the interest 
                      transferred will substantially diminish the 
                      financial circumstances of the guaranty agency; 
                      and
                          ``(iii) the guaranty agency has demonstrated--
                                    ``(I) that the agency is able to 
                                repay all transferred funds by the end 
                                of the 8th year following the date of 
                                establishment of the Operating Fund; and
                                    ``(II) that the agency will be 
                                financially sound on the completion of 
                                repayment.
                    ``(B) Repayment of income on transferred funds.--All 
                repayments made to the Federal Fund during the 6th, 7th, 
                and 8th years following the establishment of the 
                Operating Fund of interest that was transferred shall 
                include the sums transferred plus any income earned from 
                the investment of the sums transferred after the 5th 
                year.
            ``(7) Investment of federal funds.--Funds transferred from 
        the Federal Fund to the Operating Fund for operating expenses 
        shall be invested in obligations issued or guaranteed by the 
        United States or a State, or in other similarly low-risk 
        securities selected by the guaranty agency, with the approval of 
        the Secretary.
            ``(8) Special rule.--In calculating the minimum reserve 
        level required by section 428(c)(9)(A), the Secretary shall 
        include all amounts owed to the Federal Fund by the guaranty 
        agency in the calculation.''.

    (b) Agency Operating Fund Established.--Part B of title IV is 
further amended by inserting after section 422A (as added by subsection 
(a)) the following new section:

``SEC. 422B. AGENCY OPERATING FUND. <<NOTE: 20 USC 1072b.>> 

    ``(a) <<NOTE: Deadline.>> Establishment.--Each guaranty agency 
shall, not later than 60 days after the date of enactment of this 
section, establish a fund designated as the Operating Fund.

    ``(b) Investment of Funds.--Funds deposited into the Operating Fund 
shall be invested at the discretion of the guaranty agency in accordance 
with prudent investor standards.
    ``(c) Additional Deposits.--After the establishment of the Operating 
Fund, the guaranty agency shall deposit into the Operating Fund--
            ``(1) the loan processing and issuance fee paid by the 
        Secretary pursuant to section 428(f );
            ``(2) 30 percent of amounts received after the date of 
        enactment of this section from the Secretary as payment for 
        administrative cost allowances for loans upon which insurance 
        was issued prior to such date of enactment;
            ``(3) the account maintenance fee paid by the Secretary in 
        accordance with section 458;
            ``(4) the default aversion fee paid in accordance with 
        section 428(l);

[[Page 112 STAT. 1678]]

            ``(5) amounts remaining pursuant to section 428(c)(6)(B) 
        from collection on defaulted loans held by the agency, after 
        payment of the Secretary's equitable share, excluding amounts 
        deposited in the Federal Fund pursuant to section 422A(c)(2); 
        and
            ``(6) other receipts as specified in regulations of the 
        Secretary.

    ``(d) Uses of Funds.--
            ``(1) In general.--Funds in the Operating Fund shall be used 
        for application processing, loan disbursement, enrollment and 
        repayment status management, default aversion activities 
        (including those described in section 422(h)(8)), default 
        collection activities, school and lender training, financial aid 
        awareness and related outreach activities, compliance 
        monitoring, and other student financial aid related activities, 
        as selected by the guaranty agency.
            ``(2) Special rule.--The guaranty agency may, in the 
        agency's discretion, transfer funds from the Operating Fund to 
        the Federal Fund for use pursuant to section 422A. Such transfer 
        shall be irrevocable, and any funds so transferred shall become 
        the sole property of the United States.
            ``(3) Definitions.--For purposes of this subsection:
                    ``(A) Default collection activities.--The term 
                `default collection activities' means activities of a 
                guaranty agency that are directly related to the 
                collection of the loan on which a default claim has been 
                paid to the participating lender, including the due 
                diligence activities required pursuant to regulations of 
                the Secretary.
                    ``(B) Default aversion activities.--The term 
                `default aversion activities' means activities of a 
                guaranty agency that are directly related to providing 
                collection assistance to the lender on a delinquent 
                loan, prior to the loan's being legally in a default 
                status, including due diligence activities required 
                pursuant to regulations of the Secretary.
                    ``(C) Enrollment and repayment status management.--
                The term `enrollment and repayment status management' 
                means activities of a guaranty agency that are directly 
                related to ascertaining the student's enrollment status, 
                including prompt notification to the lender of such 
                status, an audit of the note or written agreement to 
                determine if the provisions of that note or agreement 
                are consistent with the records of the guaranty agency 
                as to the principal amount of the loan guaranteed, and 
                an examination of the note or agreement to assure that 
                the repayment provisions are consistent with the 
                provisions of this part.

    ``(e) Ownership and Regulation of Operating Fund.--
            ``(1) Ownership.--The Operating Fund, with the exception of 
        funds transferred from the Federal Fund in accordance with 
        section 422A(f ), shall be considered to be the property of the 
        guaranty agency.
            ``(2) Regulation.--Except as provided in paragraph (3), the 
        Secretary may not regulate the uses or expenditure of moneys in 
        the Operating Fund, but the Secretary may require such necessary 
        reports and audits as provided in section 428(b)(2).

[[Page 112 STAT. 1679]]

            ``(3) Exception.--Notwithstanding paragraphs (1) and (2), 
        during any period in which funds are owed to the Federal Fund as 
        a result of transfer under section 422A(f )--
                    ``(A) moneys in the Operating Fund may only be used 
                for expenses related to the student loan programs 
                authorized under this part; and
                    ``(B) the Secretary may regulate the uses or 
                expenditure of moneys in the Operating Fund.''.

SEC. 414. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM.

    Section 424(a) (20 U.S.C. 1074(a)) is amended--
            (1) by striking ``October 1, 2002'' and inserting ``October 
        1, 2004''; and
            (2) by striking ``September 30, 2006'' and inserting 
        ``September 30, 2008''.

SEC. 415. LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS AND FEDERAL 
            LOAN INSURANCE.

    Section 425(a)(1)(A) (20 U.S.C. 1075(a)(1)(A)) is amended--
            (1) in clause (i)--
                    (A) by inserting ``and'' after the semicolon at the 
                end of subclause (I); and
                    (B) by striking subclauses (II) and (III) and 
                inserting the following:
                          ``(II) if such student is enrolled in a 
                      program of undergraduate education which is less 
                      than one academic year, the maximum annual loan 
                      amount that such student may receive may not 
                      exceed the amount that bears the same ratio to the 
                      amount specified in subclause (I) as the length of 
                      such program measured in semester, trimester, 
                      quarter, or clock hours bears to one academic 
                      year;''; and
            (2) by inserting ``and'' after the semicolon at the end of 
        clause (iii).

SEC. 416. APPLICABLE INTEREST RATES.

    (a) Applicable Interest Rates.--
            (1) Amendment.--Section 427A (20 U.S.C. 1077a) is amended--
                    (A) by redesignating subsections (k) and (l) as 
                subsections (l) and (m), respectively; and
                    (B) by inserting after subsection ( j) the 
                following:

    ``(k) Interest Rates for New Loans on or After October 1, 1998, and 
Before July 1, 2003.--
            ``(1) In general.--Notwithstanding subsection (h) and 
        subject to paragraph (2) of this subsection, with respect to any 
        loan made, insured, or guaranteed under this part (other than a 
        loan made pursuant to section 428B or 428C) for which the first 
        disbursement is made on or after October 1, 1998, and before 
        July 1, 2003, 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--
                    ``(A) the bond equivalent rate of 91-day Treasury 
                bills auctioned at the final auction held prior to such 
                June 1; plus
                    ``(B) 2.3 percent,

[[Page 112 STAT. 1680]]

        except that such rate shall not exceed 8.25 percent.
            ``(2) In school and grace period rules.--Notwithstanding 
        subsection (h), with respect to any loan under this part (other 
        than a loan made pursuant to section 428B or 428C) for which the 
        first disbursement is made on or after October 1, 1998, and 
        before July 1, 2003, the applicable rate of interest for 
        interest which accrues--
                    ``(A) prior to the beginning of the repayment period 
                of the loan; or
                    ``(B) during the period in which principal need not 
                be paid (whether or not such principal is in fact paid) 
                by reason of a provision described in section 
                427(a)(2)(C) or 428(b)(1)(M),
        shall be determined under paragraph (1) by substituting `1.7 
        percent' for `2.3 percent'.
            ``(3) PLUS loans.--Notwithstanding subsection (h), with 
        respect to any loan under section 428B for which the first 
        disbursement is made on or after October 1, 1998, and before 
        July 1, 2003, the applicable rate of interest shall be 
        determined under paragraph (1)--
                    ``(A) by substituting `3.1 percent' for `2.3 
                percent'; and
                    ``(B) by substituting `9.0 percent' for `8.25 
                percent'.
            ``(4) Consolidation loans.--With respect to any 
        consolidation loan under section 428C for which the application 
        is received by an eligible lender on or after October 1, 1998, 
        and before July 1, 2003, the applicable rate of interest shall 
        be at an annual rate on the unpaid principal balance of the loan 
        that is equal to the lesser of--
                    ``(A) the weighted average of the interest rates on 
                the loans consolidated, rounded to the nearest higher 
                one-eighth of 1 percent; or
                    ``(B) 8.25 percent.
            ``(5) <<NOTE: Federal Register, 
        publication.>> Consultation.--The Secretary shall determine the 
        applicable rate of interest under this subsection after 
        consultation with the Secretary of the Treasury and shall 
        publish such rate in the Federal Register as soon as practicable 
        after the date of determination.''.
            (2) Conforming amendment.--Section 428B(d)(4) (20 U.S.C. 
        1078-2(d)(4)) is amended by striking ``section 427A(c)'' and 
        inserting ``section 427A''.

    (b) Special Allowances.--
            (1) Amendment.--Section 438(b)(2) (20 U.S.C. 1087-1(b)(2)) 
        is amended by adding at the end the following:
                    ``(H) Loans disbursed on or after october 1, 1998, 
                and before july 1, 2003.--
                          ``(i) In general.--Subject to paragraph (4) 
                      and clauses (ii), (iii), and (iv) of this 
                      subparagraph, and except as provided in 
                      subparagraph (B), the special allowance paid 
                      pursuant to this subsection on loans for which the 
                      first disbursement is made on or after October 1, 
                      1998, and before July 1, 2003, shall be computed--
                                    ``(I) by determining the average of 
                                the bond equivalent rates of 91-day 
                                Treasury bills auctioned for such 3-
                                month period;

[[Page 112 STAT. 1681]]

                                    ``(II) by subtracting the applicable 
                                interest rates on such loans from such 
                                average bond equivalent rate;
                                    ``(III) by adding 2.8 percent to the 
                                resultant percent; and
                                    ``(IV) by dividing the resultant 
                                percent by 4.
                          ``(ii) In school and grace period.--In the 
                      case of any loan for which the first disbursement 
                      is made on or after October 1, 1998, and before 
                      July 1, 2003, and for which the applicable rate of 
                      interest is described in section 427A(k)(2), 
                      clause (i)(III) of this subparagraph shall be 
                      applied by substituting `2.2 percent' for `2.8 
                      percent'.
                          ``(iii) PLUS loans.--In the case of any loan 
                      for which the first disbursement is made on or 
                      after October 1, 1998, and before July 1, 2003, 
                      and for which the applicable rate of interest is 
                      described in section 427A(k)(3), clause (i)(III) 
                      of this subparagraph shall be applied by 
                      substituting `3.1 percent' for `2.8 percent', 
                      subject to clause (v) of this subparagraph.
                          ``(iv) Consolidation loans.--In the case of 
                      any consolidation loan for which the application 
                      is received by an eligible lender on or after 
                      October 1, 1998, and before July 1, 2003, and for 
                      which the applicable interest rate is determined 
                      under section 427A(k)(4), clause (i)(III) of this 
                      subparagraph shall be applied by substituting `3.1 
                      percent' for `2.8 percent', subject to clause (vi) 
                      of this subparagraph.
                          ``(v) Limitation on special allowances for 
                      plus loans.--In the case of PLUS loans made under 
                      section 428B and first disbursed on or after 
                      October 1, 1998, and before July 1, 2003, for 
                      which the interest rate is determined under 
                      section 427A(k)(3), a special allowance shall not 
                      be paid for such loan during any 12-month period 
                      beginning on July 1 and ending on June 30 unless, 
                      on the June 1 preceding such July 1--
                                    ``(I) the bond equivalent rate of 
                                91-day Treasury bills auctioned at the 
                                final auction held prior to such June 1 
                                (as determined by the Secretary for 
                                purposes of such section); plus
                                    ``(II) 3.1 percent,
                      exceeds 9.0 percent.
                          ``(vi) Limitation on special allowances for 
                      consolidation loans.--In the case of consolidation 
                      loans made under section 428C and for which the 
                      application is received on or after October 1, 
                      1998, and before July 1, 2003, for which the 
                      interest rate is determined under section 
                      427A(k)(4), a special allowance shall not be paid 
                      for such loan during any 3-month period ending 
                      March 31, June 30, September 30, or December 31 
                      unless--
                                    ``(I) the average of the bond 
                                equivalent rate of 91-day Treasury bills 
                                auctioned for such 3-month period; plus
                                    ``(II) 3.1 percent,
                      exceeds the rate determined under section 
                      427A(k)(4).''.

[[Page 112 STAT. 1682]]

            (2) Consolidation loans.--Section 428C(c)(1) (20 U.S.C. 
        1078-3(c)(1)) is amended by striking everything preceding 
        subparagraph (B) and inserting the following:
            ``(1) Interest rate.--(A) Notwithstanding subparagraphs (B) 
        and (C), with respect to any loan made under this section for 
        which the application is received by an eligible lender on or 
        after October 1, 1998, and before July 1, 2003, the applicable 
        interest rate shall be determined under section 427A(k)(4).''.
            (3) Conforming amendment.--Section 438(b)(2) (20 U.S.C. 
        1087-1(b)(2)(C)(ii)) is amended--
                    (A) in subparagraph (A), by striking ``(F), and 
                (G)'' and inserting ``(F), (G), and (H)'';
                    (B) in subparagraph (B)(iv), by striking ``(F), or 
                (G)'' and inserting ``(F), (G), or (H)''; and
                    (C) in subparagraph (C)(ii), by striking 
                ``subparagraph (G)'' and inserting ``subparagraphs (G) 
                and (H)''.

    (c) <<NOTE: Applicability. 20 USC 1077a note.>> Effective Date.--The 
amendments made by this section shall apply with respect to any loan 
made, insured, or guaranteed under part B of title IV of the Higher 
Education Act of 1965 for which the first disbursement is made on or 
after October 1, 1998, and before July 1, 2003, except that such 
amendments shall apply with respect to any loan made under section 428C 
of such Act for which the application is received by an eligible lender 
on or after October 1, 1998, and before July 1, 2003.

SEC. 417. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

    (a) Federal Interest Subsidies.--
            (1) Requirements to receive subsidy.--Section 428(a)(2) (20 
        U.S.C. 1078(a)(2)) is amended--
                    (A) in subparagraph (A)(i), by striking subclauses 
                (I), (II), and (III) and inserting the following:
                          ``(I) sets forth the loan amount for which the 
                      student shows financial need; and
                          ``(II) sets forth a schedule for disbursement 
                      of the proceeds of the loan in installments, 
                      consistent with the requirements of section 428G; 
                      and''; and
                    (B) by amending subparagraph (B) to read as follows:
            ``(B) For the purpose of clause (ii) of subparagraph (A), a 
        student shall qualify for a portion of an interest payment under 
        paragraph (1) if the eligible institution has determined and 
        documented the student's amount of need for a loan based on the 
        student's estimated cost of attendance, estimated financial 
        assistance, and, for the purpose of an interest payment pursuant 
        to this section, expected family contribution (as determined 
        under part F), subject to the provisions of subparagraph (D).'';
                    (C) by amending subparagraph (C) to read as follows:
            ``(C) For the purpose of subparagraph (B) and this 
        paragraph--
                    ``(i) a student's cost of attendance shall be 
                determined under section 472;
                    ``(ii) a student's estimated financial assistance 
                means, for the period for which the loan is sought--
                          ``(I) the amount of assistance such student 
                      will receive under subpart 1 of part A (as 
                      determined in accordance with section 484(b)), 
                      subpart 3 of part A, and parts C and E;

[[Page 112 STAT. 1683]]

                          ``(II) any veterans' education benefits paid 
                      because of enrollment in a postsecondary education 
                      institution, including veterans' education 
                      benefits (as defined in section 480(c), but 
                      excluding benefits described in paragraph (2)(E) 
                      of such section); plus
                          ``(III) other scholarship, grant, or loan 
                      assistance, but excluding any national service 
                      education award or post-service benefit under 
                      title I of the National and Community Service Act 
                      of 1990; and
                    ``(iii) the determination of need and of the amount 
                of a loan by an eligible institution under subparagraph 
                (B) with respect to a student shall be calculated in 
                accordance with part F.''; and
                    (D) by striking subparagraph (F).
            (2) Duration of authority.--Section 428(a)(5) is 
        amended-- <<NOTE: 20 USC 1078.>> 
                    (A) by striking ``September 30, 2002'' and inserting 
                ``September 30, 2004''; and
                    (B) by striking ``September 30, 2006'' and inserting 
                ``September 30, 2008''.

    (b) Insurance Program Agreements.--
            (1) Annual loan limits.--Section 428(b)(1)(A) is 
        amended--
                    (A) in the matter preceding clause (i), by inserting 
                ``, as defined in section 481(a)(2),'' after ``academic 
                year'';
                    (B) in clause (i)--
                          (i) in subclause (I), by striking ``length (as 
                      determined under section 481);'' and inserting 
                      ``length; and''; and
                          (ii) by striking subclauses (II) and (III) and 
                      inserting the following:
                                    ``(II) if such student is enrolled 
                                in a program of undergraduate education 
                                which is less than 1 academic year, the 
                                maximum annual loan amount that such 
                                student may receive may not exceed the 
                                amount that bears the same ratio to the 
                                amount specified in subclause (I) as the 
                                length of such program measured in 
                                semester, trimester, quarter, or clock 
                                hours bears to 1 academic year;'';
                    (C) in clause (iv), by striking ``and'' after the 
                semicolon;
                    (D) in clause (v), by inserting ``and'' after the 
                semicolon; and
                    (E) by inserting before the matter following clause 
                (v) the following:
                          ``(vi) in the case of a student enrolled in 
                      coursework specified in sections 484(b)(3)(B) and 
                      484(b)(4)(B)--
                                    ``(I) $2,625 for coursework 
                                necessary for enrollment in an 
                                undergraduate degree or certificate 
                                program, and, in the case of a student 
                                who has obtained a baccalaureate degree, 
                                $5,500 for coursework necessary for 
                                enrollment in a graduate or professional 
                                degree or certification program; and
                                    ``(II) in the case of a student who 
                                has obtained a baccalaureate degree, 
                                $5,500 for coursework necessary for a 
                                professional credential or certification 
                                from a State required for employment as 
                                a teacher in an elementary school or 
                                secondary school;''.

[[Page 112 STAT. 1684]]

            (2) Selection of repayment plans.--Clause (ii) of section 
        428(b)(1)(D) <<NOTE: 20 USC 1078.>>  is amended to read as 
        follows: ``(ii) the student borrower may annually change the 
        selection of a repayment plan under this part, and''.
            (3) Repayment plans.--Subparagraph (E) of section 428(b)(1) 
        is amended to read as follows:
                    ``(E) subject to subparagraphs (D) and (L), and 
                except as provided by subparagraph (M), provides that--
                          ``(i) not more than 6 months prior to the date 
                      on which the borrower's first payment is due, the 
                      lender shall offer the borrower of a loan made, 
                      insured, or guaranteed under this section or 
                      section 428H, the option of repaying the loan in 
                      accordance with a standard, graduated, income-
                      sensitive, or extended repayment schedule (as 
                      described in paragraph (9)) established by the 
                      lender in accordance with regulations of the 
                      Secretary; and
                          ``(ii) repayment of loans shall be in 
                      installments in accordance with the repayment plan 
                      selected under paragraph (9) and commencing at the 
                      beginning of the repayment period determined under 
                      paragraph (7);'';
            (4) Coinsurance.--Section 428(b)(1)(G) is amended by 
        striking ``not less than''.
            (5) Payment amounts.--Section 428(b)(1)(L)(i) is 
        amended--
                    (A) by inserting ``except as otherwise provided by a 
                repayment plan selected by the borrower under clause 
                (ii) or (iii) of paragraph (9)(A),'' before ``during 
                any''; and
                    (B) by inserting ``, notwithstanding any payment 
                plan under paragraph (9)(A)'' after ``due and payable''.
            (6) Deferments.--Section 428(b)(1)(M) is amended--
                    (A) in clause (i)(I), by inserting before the 
                semicolon the following: ``, except that no borrower, 
                notwithstanding the provisions of the promissory note, 
                shall be required to borrow an additional loan under 
                this title in order to be eligible to receive a 
                deferment under this clause''; and
                    (B) in clause (ii), by inserting before the 
                semicolon the following: ``, except that no borrower who 
                provides evidence of eligibility for unemployment 
                benefits shall be required to provide additional 
                paperwork for a deferment under this clause''.
            (7) Limitation, suspension, and termination.--Section 
        428(b)(1)(U) is amended--
                    (A) by striking ``emergency action,,'' each place 
                the term appears and inserting ``emergency action,''; 
                and
                    (B) in clause (iii)(I), by inserting ``that 
                originates or holds more than $5,000,000 in loans made 
                under this title for any lender fiscal year (except that 
                each lender described in section 435(d)(1)(A)(ii)(III) 
                shall annually submit the results of an audit required 
                by this clause),'' before ``at least once a year''.
            (8) Additional insurance program requirements.--
        Section 428(b)(1) is further amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (W);
                    (B) in subparagraph (X)--

[[Page 112 STAT. 1685]]

                          (i) by striking ``428(c)(10)'' and inserting 
                      ``428(c)(9)''; and
                          (ii) by striking the period at the end and 
                      inserting ``; and'';
                    (C) by adding at the end the following new sub-
                paragraph:
                    ``(Y) provides that--
                          ``(i) the lender shall determine the 
                      eligibility of a borrower for a deferment 
                      described in subparagraph (M)(i) based on receipt 
                      of--
                                    ``(I) a request for deferment from 
                                the borrower and documentation of the 
                                borrower's eligibility for the 
                                deferment;
                                    ``(II) a newly completed loan 
                                application that documents the 
                                borrower's eligibility for a deferment; 
                                or
                                    ``(III) student status information 
                                received by the lender that the borrower 
                                is enrolled on at least a half-time 
                                basis; and
                          ``(ii) the lender will notify the borrower of 
                      the granting of any deferment under clause (i)(II) 
                      or (III) of this subparagraph and of the option to 
                      continue paying on the loan.''.
            (9) Restrictions on inducements.--Section 428(b)(3) is 
        amended-- <<NOTE: 20 USC 1078.>> 
                    (A) by striking subparagraph (C) and inserting the 
                following:
                    ``(C) conduct unsolicited mailings of student loan 
                application forms to students enrolled in secondary 
                school or a postsecondary institution, or to parents of 
                such students, except that applications may be mailed to 
                borrowers who have previously received loans guaranteed 
                under this part by the guaranty agency; or''; and
                    (B) by adding at the end the following new sentence:
        ``It shall not be a violation of this paragraph for a guaranty 
        agency to provide assistance to institutions of higher education 
        comparable to the kinds of assistance provided to institutions 
        of higher education by the Department of Education.''.
            (10) Delay in commencement of repayment period.--Section 
        428(b)(7) is amended by adding at the end the following:
            ``(D) There shall be excluded from the 6-month period that 
        begins on the date on which a student ceases to carry at least 
        one-half the normal full-time academic workload as described in 
        subparagraph (A)(i) any period not to exceed 3 years during 
        which a borrower who is a member of a reserve component of the 
        Armed Forces named in section 10101 of title 10, United States 
        Code, is called or ordered to active duty for a period of more 
        than 30 days (as defined in section 101(d)(2) of such title). 
        Such period of exclusion shall include the period necessary to 
        resume enrollment at the borrower's next available regular 
        enrollment period.''.
            (11) Repayment plans.--Section 428(b) is amended by 
        adding at the end the following:
            ``(9) Repayment plans.--
                    ``(A) <<NOTE: Regulations.>> Design and selection.--
                In accordance with regulations promulgated by the 
                Secretary, the lender shall offer a borrower of a loan 
                made under this part the plans

[[Page 112 STAT. 1686]]

                described in this subparagraph for repayment of such 
                loan, including principal and interest thereon. No plan 
                may require a borrower to repay a loan in less than 5 
                years unless the borrower, during the 6 months 
                immediately preceding the start of the repayment period, 
                specifically requests that repayment be made over of a 
                shorter period. The borrower may choose from--
                          ``(i) a standard repayment plan, with a fixed 
                      annual repayment amount paid over a fixed period 
                      of time, not to exceed 10 years;
                          ``(ii) a graduated repayment plan paid over a 
                      fixed period of time, not to exceed 10 years;
                          ``(iii) an income-sensitive repayment plan, 
                      with income-sensitive repayment amounts paid over 
                      a fixed period of time, not to exceed 10 years, 
                      except that the borrower's scheduled payments 
                      shall not be less than the amount of interest due; 
                      and
                          ``(iv) for new borrowers on or after the date 
                      of enactment of the Higher Education Amendments of 
                      1998 who accumulate (after such date) outstanding 
                      loans under this part totaling more than $30,000, 
                      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 the borrower shall repay annually a minimum 
                      amount determined in accordance with paragraph 
                      (1)(L)(i).
                    ``(B) Lender selection of option if borrower does 
                not select.--If a borrower of a loan made under this 
                part does not select a repayment plan described in 
                subparagraph (A), the lender shall provide the borrower 
                with a repayment plan described in subparagraph 
                (A)(i).''.

    (c) Guarantee Agreements.--
            (1) Reinsurance payments.--
                    (A) Amendments.--Section 428(c)(1) (20 U.S.C. 
                1078(c)(1)) is amended--
                          (i) in subparagraph (A), by striking ``98 
                      percent'' and inserting ``95 percent'';
                          (ii) in subparagraph (B)(i), by striking ``88 
                      percent'' and inserting ``85 percent'';
                          (iii) in subparagraph (B)(ii), by striking 
                      ``78 percent'' and inserting ``75 percent'';
                          (iv) in subparagraph (E)--
                                    (I) in clause (i), by striking ``98 
                                percent'' and inserting ``95 percent'';
                                    (II) in clause (ii), by striking 
                                ``88 percent'' and inserting ``85 
                                percent''; and
                                    (III) in clause (iii), by striking 
                                ``78 percent'' and inserting ``75 
                                percent''; and
                          (v) in subparagraph (F)--
                                    (I) in clause (i), by striking ``98 
                                percent'' and inserting ``95 percent'';
                                    (II) in clause (ii), by striking 
                                ``88 percent'' and inserting ``85 
                                percent''; and
                                    (III) in clause (iii), by striking 
                                ``78 percent'' and inserting ``75 
                                percent''.

[[Page 112 STAT. 1687]]

                    (B) <<NOTE: Applicability. 20 USC 1078 
                note.>> Effective date.--The amendments made by 
                subparagraph (A) of this paragraph apply to loans for 
                which the first disbursement is made on or after October 
                1, 1998.
            (2) Notice to institutions of defaults.--Section 428(c)(2) 
        is amended-- <<NOTE: 20 USC 1078.>> 
                    (A) in subparagraph (A), by striking ``proof that 
                reasonable attempts were made'' and inserting ``proof 
                that the institution was contacted and other reasonable 
                attempts were made''; and
                    (B) in subparagraph (G), by striking ``certifies to 
                the Secretary that diligent attempts have been made'' 
                and inserting ``certifies to the Secretary that diligent 
                attempts, including contact with the institution, have 
                been made''.
            (3) Guaranty agency information to eligible institutions.--
        Section 428(c)(2)(H)(ii) is amended to read as follows:
                          ``(ii) the guaranty agency shall not require 
                      the payment from the institution of any fee for 
                      such information; and''.
            (4) Forbearance.--Section 428(c)(3) is amended--
                    (A) in subparagraph (A)(i), by striking ``written'';
                    (B) in subparagraph (B), by striking ``and'' after 
                the semicolon;
                    (C) in subparagraph (C), by striking the period and 
                inserting ``; and''; and
                    (D) by inserting before the matter following 
                subparagraph (C) the following:
                    ``(D) shall contain provisions that specify that--
                          ``(i) forbearance for a period not to exceed 
                      60 days may be granted if the lender reasonably 
                      determines that such a suspension of collection 
                      activity is warranted following a borrower's 
                      request for deferment, forbearance, a change in 
                      repayment plan, or a request to consolidate loans, 
                      in order to collect or process appropriate 
                      supporting documentation related to the request, 
                      and
                          ``(ii) during such period interest shall 
                      accrue but not be capitalized.''.
            (5) Equitable share.--Paragraph (6) of section 428(c) is 
        amended to read as follows:
            ``(6) Secretary's equitable share.--For the purpose of 
        paragraph (2)(D), the Secretary's equitable share of payments 
        made by the borrower shall be that portion of the payments 
        remaining after the guaranty agency with which the Secretary has 
        an agreement under this subsection has deducted from such 
        payments--
                    ``(A) a percentage amount equal to the complement of 
                the reinsurance percentage in effect when payment under 
                the guaranty agreement was made with respect to the 
                loan; and
                    ``(B) <<NOTE: Effective date. Applicability.>> an 
                amount equal to 24 percent of such payments for use in 
                accordance with section 422B, except that, beginning on 
                October 1, 2003, this subparagraph shall be applied by 
                substituting `23 percent' for `24 percent'.''.
            (6) Assignment.--Section 428(c)(8) is amended--
                    (A) by striking ``(A) If'' and inserting ``If''; and
                    (B) by striking subparagraph (B).

[[Page 112 STAT. 1688]]

             <<NOTE: 20 USC 1078.>> (7) Guaranty agency reserve level; 
        agency termination.--Section 428(c)(9) is amended--
                    (A) in subparagraph (A), by striking ``maintain a 
                current minimum reserve level of at least .5 percent'' 
                and inserting ``maintain in the agency's Federal Student 
                Loan Reserve Fund established under section 422A a 
                current minimum reserve level of at least 0.25 
                percent'';
                    (B) in subparagraph (C)--
                          (i) by striking ``80 percent pursuant to 
                      section 428(c)(1)(B)(ii)'' and inserting ``85 
                      percent pursuant to paragraph (1)(B)(i)'';
                          (ii) by striking ``, as appropriate,''; and
                          (iii) by striking ``30 working days'' and 
                      inserting ``45 working days'';
                    (C) in subparagraph (E)--
                          (i) by inserting ``or'' at the end of clause 
                      (iv);
                          (ii) by striking ``; or'' at the end of clause 
                      (v) and inserting a period; and
                          (iii) by striking clause (vi);
                    (D) in subparagraph (F)(vii), by striking ``to avoid 
                disruption'' and everything that follows and inserting 
                ``and to avoid disruption of the student loan 
                program.'';
                    (E) in subparagraph (I), by inserting ``that, if 
                commenced after September 24, 1998, shall be on the 
                record'' after ``for a hearing''; and
                    (F) in subparagraph (K)--
                          (i) by striking ``and Labor'' and inserting 
                      ``and the Workforce''; and
                          (ii) by striking everything after ``guaranty 
                      agency system'' and inserting a period.

    (d) Payment for Lender Referral Services; Income-Sensitive 
Repayment.--Subsection (e) of section 428 is amended to read as follows:
    ``(e) <<NOTE: Regulations.>> Notice of Availability of Income-
Sensitive Repayment Option.--At the time of offering a borrower a loan 
under this part, and at the time of offering the borrower the option of 
repaying a loan in accordance with this section, the lender shall 
provide the borrower with a notice that informs the borrower, in a form 
prescribed by the Secretary by regulation--
            ``(1) that all borrowers are eligible for income-sensitive 
        repayment, including through loan consolidation under section 
        428C;
            ``(2) the procedures by which the borrower may elect income-
        sensitive repayment; and
            ``(3) where and how the borrower may obtain additional 
        information concerning income-sensitive repayment.''.

    (e) Payment of Certain Costs.--Subsection (f ) of section 428 is 
amended to read as follows:
    ``(f ) Payments of Certain Costs.--
            ``(1) Payment for certain activities.--
                    ``(A) In general.--The Secretary--
                          ``(i) for loans originated during fiscal years 
                      beginning on or after October 1, 1998, and before 
                      October 1, 2003, and in accordance with the 
                      provisions of this paragraph, shall, except as 
                      provided in subparagraph (C), pay to each guaranty 
                      agency, a loan processing and issuance fee equal 
                      to 0.65 percent of the total

[[Page 112 STAT. 1689]]

                      principal amount of the loans on which insurance 
                      was issued under this part during such fiscal year 
                      by such agency; and
                          ``(ii) for loans originated during fiscal 
                      years beginning on or after October 1, 2003, and 
                      in accordance with the provisions of this 
                      paragraph, shall, except as provided in 
                      subparagraph (C), pay to each guaranty agency, a 
                      loan processing and issuance fee equal to 0.40 
                      percent of the total principal amount of the loans 
                      on which insurance was issued under this part 
                      during such fiscal year by such agency.
                    ``(B) Payment.--The payment required by subparagraph 
                (A) shall be paid on a quarterly basis. The guaranty 
                agency shall be deemed to have a contractual right 
                against the United States to receive payments according 
                to the provisions of this paragraph. Payments shall be 
                made promptly and without administrative delay to any 
                guaranty agency submitting an accurate and complete 
                application under this subparagraph.
                    ``(C) Requirement for payment.--No payment may be 
                made under this paragraph for loans for which the 
                disbursement checks have not been cashed or for which 
                electronic funds transfers have not been completed.''.

    (f ) Action on Agreements.--Section 428(g) is amended <<NOTE: 20 USC 
1078.>> by striking ``and Labor'' and inserting ``and the Workforce''.

    (g) Lenders-of-Last-Resort.--Paragraph (3) of section 428( j) is 
amended--
            (1) in the paragraph heading, by striking ``during 
        transition to direct lending'';
            (2) in subparagraph (A)--
                    (A) by striking ``during the transition from the 
                Federal Family Education Loan Program under this part to 
                the Federal Direct Student Loan Program under part D of 
                this title,'' and inserting a comma;
                    (B) by inserting ``designated for a State'' after 
                ``a 
                guaranty agency''; and
                    (C) by inserting ``subparagraph (C) and'' before 
                ``section 422(c)(7),''; and
            (3) by adding at the end thereof the following:
            ``(C) The Secretary shall exercise the authority described 
        in subparagraph (A) only if the Secretary determines that 
        eligible borrowers are seeking and are unable to obtain loans 
        under this part, and that the guaranty agency designated for 
        that State has the capability to provide lender-of-last-resort 
        loans in a timely manner, in accordance with the guaranty 
        agency's obligations under paragraph (1), but cannot do so 
        without advances provided by the Secretary under this paragraph. 
        If the Secretary makes the determinations described in the 
        preceding sentence and determines that it would be cost-
        effective to do so, the Secretary may provide advances under 
        this paragraph to such guaranty agency. If the Secretary 
        determines that such guaranty agency does not have such 
        capability, or will not provide such loans in a timely fashion, 
        the Secretary may provide such advances to enable another 
        guaranty agency, that the Secretary determines to have such 
        capability, to make lender-of-last-resort loans to eligible 
        borrowers in that State who are experiencing loan access 
        problems.''.

[[Page 112 STAT. 1690]]

    (h) Default Aversion Assistance.--Subsection (l) of section 428 is 
amended to <<NOTE: 20 USC 1078.>> read as follows:

    ``(l) Default Aversion Assistance.--
            ``(1) Assistance required.--Upon receipt of a complete 
        request from a lender received not earlier than the 60th day of 
        delinquency, a guaranty agency having an agreement with the 
        Secretary under subsection (c) shall engage in default aversion 
        activities designed to prevent the default by a borrower on a 
        loan covered by such agreement.
            ``(2) Reimbursement.--
                    ``(A) In general.--A guaranty agency, in accordance 
                with the provisions of this paragraph, may transfer from 
                the Federal Student Loan Reserve Fund under section 422A 
                to the Agency Operating Fund under section 422B a 
                default aversion fee. Such fee shall be paid for any 
                loan on which a claim for default has not been paid as a 
                result of the loan being brought into current repayment 
                status by the guaranty agency on or before the 300th day 
                after the loan becomes 60 days delinquent.
                    ``(B) Amount.--The default aversion fee shall be 
                equal to 1 percent of the total unpaid principal and 
                accrued interest on the loan at the time the request is 
                submitted by the lender. A guaranty agency may transfer 
                such fees earned under this subsection not more 
                frequently than monthly. Such a fee shall not be paid 
                more than once on any loan for which the guaranty agency 
                averts the default unless--
                          ``(i) at least 18 months has elapsed between 
                      the date the borrower entered current repayment 
                      status and the date the lender filed a subsequent 
                      default aversion assistance request; and
                          ``(ii) during the period between such dates, 
                      the borrower was not more than 30 days past due on 
                      any payment of principal and interest on the loan.
                    ``(C) Definition.--For the purpose of earning the 
                default aversion fee, the term `current repayment 
                status' means that the borrower is not delinquent in the 
                payment of any principal or interest on the loan.''.

    (i) Income Contingent Repayment.--Section 428(m) is amended by 
striking ``shall require at least 10 percent of the borrowers'' and 
inserting ``may require borrowers''.
    ( j) State Share of Default Costs.--Subsection (n) of section 428 is 
repealed.
    (k) Blanket Certificate of Guaranty.--Section 428 is amended by 
adding at the end the following:
    ``(n) Blanket Certificate of Loan Guaranty.--
            ``(1) In general.--Subject to paragraph (3), any guaranty 
        agency that has entered into or enters into any insurance 
        program agreement with the Secretary under this part may--
                    ``(A) offer eligible lenders participating in the 
                agency's guaranty program a blanket certificate of loan 
                guaranty that permits the lender to make loans without 
                receiving prior approval from the guaranty agency of 
                individual loans for eligible borrowers enrolled in 
                eligible programs at eligible institutions; and
                    ``(B) provide eligible lenders with the ability to 
                transmit electronically data to the agency concerning 
                loans the

[[Page 112 STAT. 1691]]

                lender has elected to make under the agency's insurance 
                program via standard reporting formats, with such 
                reporting to occur at reasonable and standard intervals.
            ``(2) Limitations on blanket certificate of guaranty.--(A) 
        An eligible lender may not make a loan to a borrower under this 
        section after such lender receives a notification from the 
        guaranty agency that the borrower is not an eligible borrower.
            ``(B) A guaranty agency may establish limitations or 
        restrictions on the number or volume of loans issued by a lender 
        under the blanket certificate of guaranty.
            ``(3) Participation level.--During fiscal years 1999 and 
        2000, the Secretary may permit, on a pilot basis, a limited 
        number of guaranty agencies to offer blanket certificates of 
        guaranty under this subsection. Beginning in fiscal year 2001, 
        any guaranty agency that has an insurance program agreement with 
        the Secretary may offer blanket certificates of guaranty under 
        this subsection.
            ``(4) Report required.--The Secretary shall, at the 
        conclusion of the pilot program under paragraph (3), provide a 
        report to the Committee on Education and the Workforce of the 
        House of Representatives and the Committee on Labor and Human 
        Resources of the Senate on the impact of the blanket 
        certificates of guaranty on program efficiency and integrity.''.

SEC. 418. VOLUNTARY FLEXIBLE AGREEMENTS WITH GUARANTY 
            AGENCIES.

    Part B of title IV (20 U.S.C. 1071 et seq.) is amended by inserting 
after section 428 (20 U.S.C. 1078) the following:

``SEC. 428A. <<NOTE: 20 USC 1078-1.>> VOLUNTARY FLEXIBLE AGREEMENTS WITH 
            GUARANTY AGENCIES.

    ``(a) Voluntary Agreements.--
            ``(1) Authority.--Subject to paragraph (2), the Secretary 
        may enter into a voluntary, flexible agreement with a guaranty 
        agency under this section, in lieu of agreements with a guaranty 
        agency under subsections (b) and (c) of section 428. The 
        Secretary may waive or modify any requirement under such 
        subsections, except that the Secretary may not waive--
                    ``(A) any statutory requirement pertaining to the 
                terms and conditions attached to student loans or 
                default claim payments made to lenders; or
                    ``(B) the prohibitions on inducements contained in 
                section 428(b)(3) unless the Secretary determines that 
                such a waiver is consistent with the purposes of this 
                section and is limited to activities of the guaranty 
                agency within the State or States for which the guaranty 
                agency serves as the designated guarantor.
            ``(2) Special rule.--If the Secretary grants a waiver 
        pursuant to paragraph (1)(B), any guaranty agency doing business 
        within the affected State or States may request, and the 
        Secretary shall grant, an identical waiver to such guaranty 
        agency under the same terms and conditions (including service 
        area limitations) as govern the original waiver.
            ``(3) Eligibility.--During fiscal years 1999, 2000, and 
        2001, the Secretary may enter into a voluntary, flexible 
        agreement with not more than 6 guaranty agencies that had 1 or 
        more agreements with the Secretary under subsections (b) and (c)

[[Page 112 STAT. 1692]]

        of section 428 as of the day before the date of enactment of the 
        Higher Education Amendments of 1998. Beginning in fiscal year 
        2002, any guaranty agency or consortium thereof may enter into a 
        voluntary flexible agreement with the Secretary.
            ``(4) <<NOTE: Deadline.>> Report required.--Not later than 
        September 30, 2001, the Secretary shall report to the Committee 
        on Labor and Human Resources of the Senate and the Committee on 
        Education and the Workforce of the House of Representatives 
        regarding the impact that the voluntary flexible agreements have 
        had upon program integrity, program and cost efficiencies, and 
        the availability and delivery of student financial aid. Such 
        report shall include--
                    ``(A) a description of each voluntary flexible 
                agreement and the performance goals established by the 
                Secretary for each agreement;
                    ``(B) <<NOTE: Records.>> a list of participating 
                guaranty agencies and the specific statutory or 
                regulatory waivers provided to each guaranty agency and 
                any waivers provided to other guaranty agencies under 
                paragraph (2);
                    ``(C) a description of the standards by which each 
                agency's performance under the agency's voluntary 
                flexible agreement was assessed and the degree to which 
                each agency achieved the performance standards; and
                    ``(D) an analysis of the fees paid by the Secretary, 
                and the costs and efficiencies achieved under each 
                voluntary agreement.

    ``(b) Terms of Agreement.--An agreement between the Secretary and a 
guaranty agency under this section--
            ``(1) shall be developed by the Secretary, in consultation 
        with the guaranty agency, on a case-by-case basis;
            ``(2) may only include provisions--
                    ``(A) specifying the responsibilities of the 
                guaranty agency under the agreement, with respect to--
                          ``(i) administering the issuance of insurance 
                      on loans made under this part on behalf of the 
                      Secretary;
                          ``(ii) monitoring insurance commitments made 
                      under this part;
                          ``(iii) default aversion activities;
                          ``(iv) review of default claims made by 
                      lenders;
                          ``(v) payment of default claims;
                          ``(vi) collection of defaulted loans;
                          ``(vii) adoption of internal systems of 
                      accounting and auditing that are acceptable to the 
                      Secretary, and reporting the result thereof to the 
                      Secretary in a timely manner, and on an accurate, 
                      and auditable basis;
                          ``(viii) timely and accurate collection and 
                      reporting of such other data as the Secretary may 
                      require to carry out the purposes of the programs 
                      under this title;
                          ``(ix) monitoring of institutions and lenders 
                      participating in the program under this part; and
                          ``(x) informational outreach to schools and 
                      students in support of access to higher education;
                    ``(B) regarding the fees the Secretary shall pay, in 
                lieu of revenues that the guaranty agency may otherwise 
                receive under this part, to the guaranty agency under

[[Page 112 STAT. 1693]]

                the agreement, and other funds that the guaranty agency 
                may receive or retain under the agreement, except that 
                in no case may the cost to the Secretary of the 
                agreement, as reasonably projected by the Secretary, 
                exceed the cost to the Secretary, as similarly 
                projected, in the absence of the agreement;
                    ``(C) regarding the use of net revenues, as 
                described in the agreement under this section, for such 
                other activities in support of postsecondary education 
                as may be agreed to by the Secretary and the guaranty 
                agency;
                    ``(D) regarding the standards by which the guaranty 
                agency's performance of the agency's responsibilities 
                under the agreement will be assessed, and the 
                consequences for a guaranty agency's failure to achieve 
                a specified level of performance on 1 or more 
                performance standards;
                    ``(E) regarding the circumstances in which a 
                guaranty agency's agreement under this section may be 
                ended in advance of the agreement's expiration date;
                    ``(F) regarding such other businesses, previously 
                purchased or developed with reserve funds, that relate 
                to the program under this part and in which the 
                Secretary permits the guaranty agency to engage; and
                    ``(G) such other provisions as the Secretary may 
                determine to be necessary to protect the United States 
                from the risk of unreasonable loss and to promote the 
                purposes of this part;
            ``(3) shall provide for uniform lender participation with 
        the guaranty agency under the terms of the agreement; and
            ``(4) shall not prohibit or restrict borrowers from 
        selecting a lender of the borrower's choosing, subject to the 
        prohibitions and restrictions applicable to the selection under 
        this Act.

    ``(c) Public Notice.--
            ``(1) <<NOTE: Federal Register, publication.>> In general.--
        The Secretary shall publish in the 
        Federal Register a notice to all guaranty agencies that sets 
        forth--
                    ``(A) an invitation for the guaranty agencies to 
                enter into agreements under this section; and
                    ``(B) the criteria that the Secretary will use for 
                selecting the guaranty agencies with which the Secretary 
                will enter into agreements under this section.
            ``(2) Agreement notice.--The Secretary shall notify the 
        Chairperson and the Ranking Minority Member of the Committee on 
        Labor and Human Resources of the Senate and the Committee on 
        Education and the Workforce of the House of Representatives not 
        later than 30 days prior to concluding an agreement under this 
        section. The notice shall contain--
                    ``(A) a description of the voluntary flexible 
                agreement and the performance goals established by the 
                Secretary for the agreement;
                    ``(B) <<NOTE: Records.>> a list of participating 
                guaranty agencies and the specific statutory or 
                regulatory waivers provided to each guaranty agency;
                    ``(C) a description of the standards by which each 
                guaranty agency's performance under the agreement will 
                be assessed; and
                    ``(D) a description of the fees that will be paid to 
                each participating guaranty agency.

[[Page 112 STAT. 1694]]

            ``(3) <<NOTE: Deadline.>> Waiver notice.--The Secretary 
        shall notify the Chairperson and the Ranking Minority Member of 
        the Committee on Labor and Human Resources of the Senate and the 
        Committee on Education and the Workforce of the House of 
        Representatives not later than 30 days prior to the granting of 
        a waiver pursuant to subsection (a)(2) to a guaranty agency that 
        is not a party to a voluntary flexible agreement.
            ``(4) Public availability.--The text of any voluntary 
        flexible agreement, and any subsequent revisions, and any 
        waivers related to section 428(b)(3) that are not part of such 
        an agreement, shall be readily available to the public.
            ``(5) Modification notice.--The Secretary shall notify the 
        Chairperson and the Ranking Minority Members of the Committee on 
        Labor and Human Resources of the Senate and the Committee on 
        Education and the Workforce of the House of Representatives 30 
        days prior to any modifications to an agreement under this 
        section.

    ``(d) Termination.--At the expiration or early termination of an 
agreement under this section, the Secretary shall reinstate the guaranty 
agency's prior agreements under subsections (b) and (c) of section 428, 
subject only to such additional requirements as the Secretary determines 
to be necessary in order to ensure the efficient transfer of 
responsibilities between the agreement under this section and the 
agreements under subsections (b) and (c) of section 428, and including 
the guaranty agency's compliance with reserve requirements under 
sections 422 and 428.''.

SEC. 419. FEDERAL PLUS LOANS.

    Section 428B (20 U.S.C. 1078-2) is amended--
            (1) by amending subsection (a) to read as follows:

    ``(a) Authority To Borrow.--
            ``(1) Authority and eligibility.--Parents of a dependent 
        student shall be eligible to borrow funds under this section in 
        amounts specified in subsection (b), if--
                    ``(A) the parents do not have an adverse credit 
                history as determined pursuant to regulations 
                promulgated by the Secretary; and
                    ``(B) the parents meet such other eligibility 
                criteria as the Secretary may establish by regulation, 
                after consultation with guaranty agencies, eligible 
                lenders, and other organizations involved in student 
                financial assistance.
            ``(2) Terms, conditions, and benefits.--Except as provided 
        in subsections (c), (d), and (e), loans made under this section 
        shall have the same terms, conditions, and benefits as all other 
        loans made under this part.
            ``(3) Special rule.--Whenever necessary to carry out the 
        provisions of this section, the terms `student' and `borrower' 
        as used in this part shall include a parent borrower under this 
        section.''; and
            (2) by adding at the end the following:

    ``(f ) Verification of Immigration Status and Social 
Security Number.--A parent who wishes to borrow funds under this section 
shall be subject to verification of the parent's--
            ``(1) immigration status in the same manner as immigration 
        status is verified for students under section 484(g); and

[[Page 112 STAT. 1695]]

            ``(2) social security number in the same manner as social 
        security numbers are verified for students under section 
        484(p).''.

SEC. 420. FEDERAL CONSOLIDATION LOANS.

    (a) Definition of Eligible Borrower.--Section 428C(a)(3) (20 U.S.C. 
1078-3(a)(3)) is amended by striking everything preceding subparagraph 
(C) and inserting the following:
            ``(3) Definition of eligible borrower.--(A) For the 
        purpose of this section, the term `eligible borrower' means a 
        borrower who--
                    ``(i) is not subject to a judgment secured through 
                litigation with respect to a loan under this title or to 
                an order for wage garnishment under section 488A; and
                    ``(ii) at the time of application for a 
                consolidation loan--
                          ``(I) is in repayment status;
                          ``(II) is in a grace period preceding repay-
                      ment; or
                          ``(III) is a defaulted borrower who has made 
                      arrangements to repay the obligation on the 
                      defaulted loans satisfactory to the holders of the 
                      defaulted loans.
            ``(B)(i) An individual's status as an eligible borrower 
        under this section terminates upon receipt of a consolidation 
        loan under this section, except that--
                    ``(I) an individual who receives eligible student 
                loans after the date of receipt of the consolidation 
                loan may receive a subsequent consolidation loan;
                    ``(II) loans received prior to the date of the 
                consolidation loan may be added during the 180-day 
                period following the making of the consolidation loan;
                    ``(III) loans received following the making of the 
                consolidation loan may be added during the 180-day 
                period following the making of the consolidation loan; 
                and
                    ``(IV) loans received prior to the date of the first 
                consolidation loan may be added to a subsequent 
                consolidation loan.''.

    (b) Definition of Eligible Student Loan.--Section 428C(a)(4) is 
amended by striking subparagraph (C) and inserting the 
following:
                    ``(C) made under part D of this title;''.

    (c) Contents of Agreements.--Section 428C(b) is amended--
            (1) in paragraph (1)(A)(i), by inserting ``except that this 
        clause shall not apply in the case of a borrower with multiple 
        holders of loans under this part,'' after ``under this 
        section,'';
            (2) in paragraph (4)(C)(ii)--
                    (A) in the matter preceding subclause (I), by 
                inserting ``during any such period'' after ``and be 
                paid'';
                    (B) in subclause (I), by striking ``, or on or after 
                October 1, 1998,''; and
                    (C) in subclause (II), by striking ``and before 
                October 1, 1998,'';
            (3) in paragraph (6)(A), by inserting before the semicolon 
        at the end the following: ``, except that a lender is not 
        required to consolidate loans described in subparagraph (D) or 
        (E) of subsection (a)(4) or subsection (d)(1)(C)(ii)''.

[[Page 112 STAT. 1696]]

    (d) Extension of Authority.--Section 428C(e) <<NOTE: 20 USC 1078-
3.>> is amended by striking ``September 30, 2002'' and inserting 
``September 30, 2004''.

    (e) Special Rule.--Section 428C(f ) is amended--
            (1) by redesignating paragraph (2) as paragraph (3); and
            (2) by inserting after paragraph (1) the following:
            ``(2) Special rule.--For consolidation loans based on 
        applications received during the period from October 1, 1998 
        through January 31, 1999, inclusive, the rebate described in 
        paragraph (1) shall be equal to 0.62 percent of the principal 
        plus accrued unpaid interest on such loan.''.

SEC. 421. DEFAULT REDUCTION PROGRAM.

    The heading for subsection (b) of section 428F (20 U.S.C. 1078-6) is 
amended by striking ``Special Rule'' and inserting ``Satisfactory 
Repayment Arrangements To Renew Eligibility''.

SEC. 422. REQUIREMENTS FOR DISBURSEMENTS OF STUDENT LOANS.

    (a) Special Rule.--Section 428G(a) (20 U.S.C. 1078-7(a)) is amended 
by adding at the end the following:
            ``(3) Special rule.--An institution whose cohort default 
        rate (as determined under section 435(m)) for each of the 3 most 
        recent fiscal years for which data are available is less than 10 
        percent may disburse any loan made, insured, or guaranteed under 
        this part in a single installment for any period of enrollment 
        that is not more than 1 semester, 1 trimester, 1 quarter, or 4 
        months.''.

    (b) Disbursement.--Section 428G(b)(1) is amended by adding at the 
end the following new sentence: ``An institution whose cohort default 
rate (as determined under section 435(m)) for each of the three most 
recent fiscal years for which data are available is less than 10 percent 
shall be exempt from the requirements of this paragraph.''.
    (c) Exclusions.--Section 428G(e) is amended--
            (1) by striking ``or made'' and inserting ``, made''; and
            (2) by inserting ``, or made to a student to cover the cost 
        of attendance in a program of study abroad approved by the home 
        eligible institution if the home eligible institution has a 
        cohort default rate (as calculated under section 435(m)) of less 
        than 5 percent'' before the period.

    (d) <<NOTE: Termination date. 20 USC 1078-7 note.>> Effective 
Date.--The amendments made by subsections (a) and (b) shall be effective 
during the period beginning on October 1, 1998, and ending on September 
30, 2002.

SEC. 423. UNSUBSIDIZED LOANS.

    (a) Eligible Borrowers.--Subsection (b) of section 428H (20 
U.S.C.1078-8(b)) is amended to read as follows:
    ``(b) <<NOTE: Regulations.>> Eligible Borrowers.--Any student 
meeting the requirements for student eligibility under section 484 
(including graduate and professional students as defined in regulations 
promulgated by the Secretary) shall be entitled to borrow an 
unsubsidized Federal Stafford Loan if the eligible institution at which 
the student has been accepted for enrollment, or at which the student is 
in attendance, has--
            ``(1) determined and documented the student's need for the 
        loan based on the student's estimated cost of attendance (as 
        determined under section 472) and the student's estimated

[[Page 112 STAT. 1697]]

        financial assistance, including a loan which qualifies for 
        interest subsidy payments under section 428; and
            ``(2) provided the lender a statement--
                    ``(A) certifying the eligibility of the student to 
                receive a loan under this section and the amount of the 
                loan for which such student is eligible, in accordance 
                with subsection (c); and
                    ``(B) setting forth a schedule for disbursement of 
                the proceeds of the loan in installments, consistent 
                with the requirements of section 428G.''.

    (b) Loan Limits.--Section 428H(d) is amended-- <<NOTE: 20 USC 1078-
8.>> 
            (1) in paragraph (2)--
                    (A) in the matter preceding subparagraph (A)--
                          (i) by inserting ``(as defined in section 
                      481(a)(2))'' after ``academic year''; and
                          (ii) by striking ``or in any period of 7 
                      consecutive months, whichever is longer,'';
                    (B) in subparagraph (A)--
                          (i) in clause (i), by striking ``length (as 
                      determined under section 481);'' and inserting 
                      ``length; and''; and
                          (ii) by striking clauses (ii) and (iii) and 
                      inserting the following:
                          ``(ii) if such student is enrolled in a 
                      program of undergraduate education which is less 
                      than one academic year, the maximum annual loan 
                      amount that such student may receive may not 
                      exceed the amount that bears the same ratio to the 
                      amount specified in clause (i) as the length of 
                      such program measured in semester, trimester, 
                      quarter, or clock hours bears to one academic 
                      year;''.
                    (C) in subparagraph (C), by inserting ``and'' after 
                the semicolon; and
                    (D) by inserting before the matter following 
                subparagraph (C) the following:
                    ``(D) in the case of a student enrolled in 
                coursework specified in sections 484(b)(3)(B) and 
                484(b)(4)(B)--
                          ``(i) $4,000 for coursework necessary for 
                      enrollment in an undergraduate degree or 
                      certificate program, and, in the case of a student 
                      who has obtained a baccalaureate degree, $5,000 
                      for coursework necessary for enrollment in a 
                      graduate or professional program; and
                          ``(ii) in the case of a student who has 
                      obtained a baccalaureate degree, $5,000 for 
                      coursework necessary for a professional credential 
                      or certification from a State required for 
                      employment as a teacher in an elementary or 
                      secondary school;''; and
            (2) in paragraph (3), by adding at the end the following: 
        ``Interest capitalized shall not be deemed to exceed such 
        maximum aggregate amount.''.

    (c) Capitalization of Interest.--Paragraph (2) of section 428H(e) is 
amended to read as follows:
            ``(2) Capitalization of interest.--(A) Interest on loans 
        made under this section for which payments of principal are not 
        required during the in-school and grace periods or for which 
        payments are deferred under sections 427(a)(2)(C) and

[[Page 112 STAT. 1698]]

        428(b)(1)(M) shall, if agreed upon by the borrower and the 
        lender--
                    ``(i) be paid monthly or quarterly; or
                    ``(ii) be added to the principal amount of the loan 
                by the lender only--
                          ``(I) when the loan enters repayment;
                          ``(II) at the expiration of a grace period, in 
                      the case of a loan that qualifies for a grace 
                      period;
                          ``(III) at the expiration of a period of 
                      deferment or forbearance; or
                          ``(IV) when the borrower defaults.
            ``(B) The capitalization of interest described in 
        subparagraph (A) shall not be deemed to exceed the annual 
        insurable limit on account of the student.''.

    (d) Extended Repayment Plan.--Section 428H(e)(6) is 
amended <<NOTE: 20 USC 1078-8.>> by striking ``10 year repayment period 
under section 428(b)(1)(D)'' and inserting ``repayment period under 
section 428(b)(9)''.

    (e) Qualification.--Section 428H(e) is amended by adding at the end 
the following:
            ``(7) Qualification for forbearance.--A lender may grant the 
        borrower of a loan under this section a forbearance for a period 
        not to exceed 60 days if the lender reasonably determines that 
        such a forbearance from collection activity is warranted 
        following a borrower's request for forbearance, deferment, or a 
        change in repayment plan, or a request to consolidate loans in 
        order to collect or process appropriate supporting documentation 
        related to the request. During any such period, interest on the 
        loan shall accrue but not be capitalized.''.

    (f ) Repeal.--Subsection (f ) of section 428H is repealed.

SEC. 424. LOAN FORGIVENESS FOR TEACHERS.

    Section 428J (20 U.S.C. 1078-10) is amended to read as follows:

``SEC. 428J. LOAN FORGIVENESS FOR TEACHERS.

    ``(a) Statement of Purpose.--It is the purpose of this section to 
encourage individuals to enter and continue in the teaching profession.
    ``(b) Program Authorized.--The Secretary shall carry out a program, 
through the holder of the loan, of assuming the obligation to repay a 
qualified loan amount for a loan made under section 428 or 428H, in 
accordance with subsection (c), for any new borrower on or after October 
1, 1998, who--
            ``(1) has been employed as a full-time teacher for 5 
        consecutive complete school years--
                    ``(A) in a school that qualifies under section 
                465(a)(2)(A) for loan cancellation for Perkins loan 
                recipients who teach in such schools;
                    ``(B) if employed as a secondary school teacher, is 
                teaching a subject area that is relevant to the 
                borrower's academic major as certified by the chief 
                administrative officer of the public or nonprofit 
                private secondary school in which the borrower is 
                employed; and
                    ``(C) if employed as an elementary school teacher, 
                has demonstrated, as certified by the chief 
                administrative officer of the public or nonprofit 
                private elementary school in which the borrower is 
                employed, knowledge and teaching

[[Page 112 STAT. 1699]]

                skills in reading, writing, mathematics, and other areas 
                of the elementary school curriculum; and
            ``(2) is not in default on a loan for which the borrower 
        seeks forgiveness.

    ``(c) Qualified Loans Amount.--
            ``(1) In general.--The Secretary shall repay not more than 
        $5,000 in the aggregate of the loan obligation on a loan made 
        under section 428 or 428H that is outstanding after the 
        completion of the fifth complete school year of teaching 
        described in subsection (b)(1). No borrower may receive a 
        reduction of loan obligations under both this section and 
        section 460.
            ``(2) <<NOTE: Regulations.>> Treatment of consolidation 
        loans.--A loan amount for a loan made under section 428C 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 Federal 
        Direct Stafford Loan, a Federal Direct Unsubsidized Stafford 
        Loan, or a loan made under section 428 or 428H for a borrower 
        who meets the requirements of subsection (b), as determined in 
        accordance with regulations prescribed by the Secretary.

    ``(d) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(e) Construction.--Nothing in this section shall be construed to 
authorize any refunding of any repayment of a loan.
    ``(f ) List.--If the list of schools in which a teacher may perform 
service pursuant to subsection (b) is not available before May 1 of any 
year, the Secretary may use the list for the year preceding the year for 
which the determination is made to make such service determination.
    ``(g) Additional Eligibility Provisions.--
            ``(1) Continued eligibility.--Any teacher who performs 
        service in a school that--
                    ``(A) meets the requirements of subsection (b)(1)(A) 
                in any year during such service; and
                    ``(B) in a subsequent year fails to meet the 
                requirements of such subsection,
        may continue to teach in such school and shall be eligible for 
        loan forgiveness pursuant to subsection (b).
            ``(2) Prevention of double benefits.--No borrower may, for 
        the same service, receive a benefit under both this subsection 
        and subtitle D of title I of the National and Community Service 
        Act of 1990 (42 U.S.C. 12571 et seq.).

    ``(h) Definition.--For purposes of this section, the term `year', 
where applied to service as a teacher, means an academic year as defined 
by the Secretary.''.

SEC. 425. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.

    Part B (20 U.S.C. 1071 et seq.) is amended by inserting after 
section 428J (20 U.S.C. 1078-10) the following:

``SEC. 428K. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS. <<NOTE: 20 USC 
            1078-11.>> 

    ``(a) Purpose.--It is the purpose of this section--
            ``(1) to bring more highly trained individuals into the 
        early child care profession; and
            ``(2) to keep more highly trained child care providers in 
        the early child care field for longer periods of time.

    ``(b) Definitions.--In this section:

[[Page 112 STAT. 1700]]

            ``(1) Child care facility.--The term `child care facility' 
        means a facility, including a home, that--
                    ``(A) provides child care services; and
                    ``(B) meets applicable State or local government 
                licensing, certification, approval, or registration 
                requirements, if any.
            ``(2) Child care services.--The term `child care services' 
        means activities and services provided for the education and 
        care of children from birth through age 5 by an individual who 
        has a degree in early childhood education.
            ``(3) Degree.--The term `degree' means an associate's or 
        bachelor's degree awarded by an institution of higher education.
            ``(4) Early childhood education.--The term `early childhood 
        education' means education in the areas of early child 
        education, child care, or any other educational area related to 
        child care that the Secretary determines appropriate.
            ``(5) Institution of higher education.--Notwithstanding 
        section 102, the term `institution of higher education' has the 
        meaning given the term in section 101.

    ``(c) Demonstration Program.--
            ``(1) In general.--The Secretary may carry out a 
        demonstration program of assuming the obligation to repay, 
        pursuant to subsection (d), a loan made, insured, or guaranteed 
        under this part or part D (excluding loans made under sections 
        428B and 428C or comparable loans made under part D) for any new 
        borrower after the date of enactment of the Higher Education 
        Amendments of 1998, who--
                    ``(A) completes a degree in early childhood 
                education;
                    ``(B) obtains employment in a child care facility; 
                and
                    ``(C) has worked full time for the 2 consecutive 
                years preceding the year for which the determination is 
                made as a child care provider in a low-income community.
            ``(2) Low-income community.--For the purposes of this 
        subsection, the term `low-income community' means a community in 
        which 70 percent of households within the community earn less 
        than 85 percent of the State median household income.
            ``(3) Award basis; priority.--
                    ``(A) Award basis.--Subject to subparagraph (B), 
                loan repayment under this section shall be on a first-
                come, first-served basis and subject to the availability 
                of appropriations.
                    ``(B) Priority.--The Secretary shall give priority 
                in providing loan repayment under this section for a 
                fiscal year to student borrowers who received loan 
                repayment under this section for the preceding fiscal 
                year.
            ``(4) Regulations.--The Secretary is authorized to prescribe 
        such regulations as may be necessary to carry out the provisions 
        of this section.

    ``(d) Loan Repayment.--
            ``(1) In general.--The Secretary shall assume the obligation 
        to repay--
                    ``(A) after the second consecutive year of 
                employment described in subparagraphs (B) and (C) of 
                subsection (c)(1), 20 percent of the total amount of all 
                loans made after date of enactment of the Higher 
                Education Amendments of 1998, to a student under this 
                part or part D;

[[Page 112 STAT. 1701]]

                    ``(B) after the third consecutive year of such 
                employment, 20 percent of the total amount of all such 
                loans; and
                    ``(C) after each of the fourth and fifth consecutive 
                years of such employment, 30 percent of the total amount 
                of all such loans.
            ``(2) Construction.--Nothing in this section shall be 
        construed to authorize the refunding of any repayment of a loan 
        made under this part or part D.
            ``(3) 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 which accrues for such year 
        shall be repaid by the Secretary.
            ``(4) Special rule.--In the case where a student borrower 
        who is not participating in loan repayment pursuant to this 
        section returns to an institution of higher education after 
        graduation from an institution of higher education for the 
        purpose of obtaining a degree in early childhood education, the 
        Secretary is authorized to assume the obligation to repay the 
        total amount of loans made under this part or part D incurred 
        for a maximum of two academic years in returning to an 
        institution of higher education for the purpose of obtaining a 
        degree in early childhood education. Such loans shall only be 
        repaid for borrowers who qualify for loan repayment pursuant to 
        the provisions of this section, and shall be repaid in 
        accordance with the provisions of paragraph (1).
            ``(5) Ineligibility of national service award recipients.--
        No student borrower may, for the same volunteer 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.).

    ``(e) Repayment to Eligible Lenders.--The Secretary shall pay to 
each eligible lender or holder for each fiscal year an amount equal to 
the aggregate amount of loans which are subject to repayment pursuant to 
this section for such year.
    ``(f ) 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 each year of 
        qualifying employment. The borrower shall receive forbearance 
        while engaged in qualifying employment unless the borrower is in 
        deferment while so engaged.

    ``(g) Evaluation.--
            ``(1) In general.--The Secretary shall conduct, by grant or 
        contract, an independent national evaluation of the impact of 
        the demonstration program assisted under this section on the 
        field of early childhood education.
            ``(2) Competitive basis.--The grant or contract described in 
        subsection (b) shall be awarded on a competitive basis.
            ``(3) Contents.--The evaluation described in this subsection 
        shall--

[[Page 112 STAT. 1702]]

                    ``(A) determine the number of individuals who were 
                encouraged by the demonstration program assisted under 
                this section to pursue early childhood education;
                    ``(B) determine the number of individuals who remain 
                employed in a child care facility as a result of 
                participation in the program;
                    ``(C) identify the barriers to the effectiveness of 
                the program;
                    ``(D) assess the cost-effectiveness of the program 
                in improving the quality of--
                          ``(i) early childhood education; and
                          ``(ii) child care services;
                    ``(E) identify the reasons why participants in the 
                program have chosen to take part in the program;
                    ``(F) identify the number of individuals 
                participating in the program who received an associate's 
                degree and the number of such individuals who received a 
                bachelor's degree; and
                    ``(G) identify the number of years each individual 
                participates in the program.
            ``(4) <<NOTE: Deadline.>> Interim and final evaluation 
        reports.--The Secretary shall prepare and submit to the 
        President and the Congress such interim reports regarding the 
        evaluation described in this subsection as the Secretary deems 
        appropriate, and shall prepare and so submit a final report 
        regarding the evaluation by January 1, 2002.

    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $10,000,000 for fiscal year 1999, 
and such sums as may be necessary for each of the 4 succeeding fiscal 
years.''.

SEC. 426. NOTICE TO SECRETARY AND PAYMENT OF LOSS.

    The third sentence of section 430(a) (20 U.S.C. 1080(a)) is amended 
by inserting ``the institution was contacted and other'' after ``submit 
proof that''.

SEC. 427. LEGAL POWERS AND RESPONSIBILITIES.

    (a) Audit of Financial Transactions.--Section 432(f )(1) is 
amended-- <<NOTE: 20 USC 1082.>> 
            (1) in subparagraph (B), by striking ``section 435(d)(1) 
        (D), (F), or (H);'' and inserting ``section 435(d)(1); and'';
            (2) in subparagraph (C)--
                    (A) by striking ``and Labor'' and inserting ``and 
                the Workforce''; and
                    (B) by striking ``; and'' inserting a period; and
            (3) by striking subparagraph (D).

    (b) Program of Assistance.--Section 432(k)(3) is amended by striking 
``Within 1 year'' and everything that follows through ``1992, the'' and 
inserting ``The''.
    (c) Common Forms and Formats.--Section 432(m) is 
amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), by striking ``a common 
                application form and promissory note'' and inserting 
                ``common application forms and promissory notes, or 
                master promissory notes,'';
                    (B) in subparagraph (B)--

[[Page 112 STAT. 1703]]

                          (i) by striking ``The form'' and inserting 
                      ``The forms'';
                          (ii) by striking clause (iii); and
                    (C) by amending subparagraph (C) to read as follows:
                    ``(C) Free application form.--For academic year 
                1999-2000 and succeeding academic years, the Secretary 
                shall prescribe the form developed under section 483 as 
                the application form under this part, other than for 
                loans under sections 428B and 428C.'';
                    (D) by amending subparagraph (D) to read as follows:
                    ``(D) Master promissory note.--
                          ``(i) In general.--The Secretary shall develop 
                      and require the use of master promissory note 
                      forms for loans made under this part and part 
                      D. <<NOTE: Deadline.>>  Such forms shall be 
                      available for periods of enrollment beginning not 
                      later than July 1, 2000. Each form shall allow 
                      eligible borrowers to receive, in addition to 
                      initial loans, additional loans for the same or 
                      subsequent periods of enrollment through a student 
                      confirmation process approved by the Secretary. 
                      Such forms shall be used for loans made under this 
                      part or part D as directed by the Secretary.
                          ``(ii) Consultation.--In developing the master 
                      promissory note under this subsection, the 
                      Secretary shall consult with representatives of 
                      guaranty agencies, eligible lenders, institutions 
                      of higher education, students, and organizations 
                      involved in student financial assistance.
                          ``(iii) Sale; assignment; enforceability.--
                      Notwithstanding any other provision of law, each 
                      loan made under a master promissory note under 
                      this subsection may be sold or assigned 
                      independently of any other loan made under the 
                      same promissory note and each such loan shall be 
                      separately enforceable in all Federal and State 
                      courts on the basis of an original or copy of the 
                      master promissory note in accordance with the 
                      terms of the master promissory note.
                          ``(iv) Perfection of security interests in 
                      student loans.--Notwithstanding the provisions of 
                      any State law to the contrary, including the 
                      Uniform Commercial Code as in effect in any State, 
                      a security interest in loans made under this part 
                      created on behalf of any eligible lender as 
                      defined in section 435(d) may be perfected either 
                      through the taking of possession of such loans 
                      (which can be through taking possession of an 
                      original or copy of the master promissory note) or 
                      by the filing of notice of such security interest 
                      in such loans in the manner provided by such State 
                      law for perfection of security interests in 
                      accounts.''; and
            (2) by adding at the end the following:
            ``(4) Electronic forms.--Nothing in this section shall be 
        construed to limit the development and use of electronic forms 
        and procedures.''.

    (d) Default Reduction Management.--Section 432(n) is amended-- 
<<NOTE: 20 USC 1082.>> 

[[Page 112 STAT. 1704]]

            (1) in paragraph (1), by striking ``1993'' and inserting 
        ``1999''; and
            (2) in paragraph (3), by striking ``and Labor'' and 
        inserting ``and the Workforce''.

    (e) Reporting Requirement.--Section 432(p) is amended <<NOTE: 20 USC 
1082.>> by striking ``State postsecondary reviewing entities designated 
under subpart 1 of part H,''.

SEC. 428. STUDENT LOAN INFORMATION BY ELIGIBLE LENDERS.

    (a) Required Disclosure Before Disbursement.--Section 433(a) (20 
U.S.C. 1083(a)) is amended by amending the matter preceding paragraph 
(1) to read as follows:
    ``(a) Required Disclosure Before Disbursement.--Each eligible 
lender, at or prior to the time such lender disburses a loan that is 
insured or guaranteed under this part (other than a loan made under 
section 428C), shall provide thorough and accurate loan information on 
such loan to the borrower in simple and understandable terms. Any 
disclosure required by this subsection may be made by an eligible lender 
by written or electronic means, including as part of the application 
material provided to the borrower, as part of the promissory note 
evidencing the loan, or on a separate written form provided to the 
borrower. Each lender shall provide to each borrower a telephone number, 
and may provide an electronic address, through which additional loan 
information can be obtained. The disclosure shall include--''.
    (b) Required Disclosure Before Repayment.--Section 433(b) is amended 
by amending the matter preceding paragraph (1) to read as follows:
    ``(b) Required Disclosure Before Repayment.--Each eligible lender 
shall, at or prior to the start of the repayment period of the student 
borrower on loans made, insured, or guaranteed under this part, disclose 
to the borrower by written or electronic means the information required 
under this subsection in simple and understandable terms. Each eligible 
lender shall provide to each borrower a telephone number, and may 
provide an electronic address, through which additional loan information 
can be obtained. For any loan made, insured, or guaranteed under this 
part, other than a loan made under section 428B or 428C, such disclosure 
required by this subsection shall be made not less than 30 days nor more 
than 240 days before the first payment on the loan is due from the 
borrower. The disclosure shall include--''.

SEC. 429. DEFINITIONS.

    (a) Cohort Default Rate.--Section 435(a) (20 U.S.C. 1085(a)) is 
amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A)--
                          (i) by striking ``or'' at the end of clause 
                      (i);
                          (ii) by striking clause (ii) and inserting the 
                      following:
                    ``(ii) there are exceptional mitigating 
                circumstances within the meaning of paragraph (4); or
                    ``(iii) there are, in the judgment of the Secretary, 
                other exceptional mitigating circumstances that would 
                make the application of this paragraph inequitable.''; 
                and
                          (iii) by adding after the matter following 
                      clause (iii) (as added by clause (ii)) the 
                      following:

[[Page 112 STAT. 1705]]

        ``If an institution continues to participate in a program under 
        this part, and the institution's appeal of the loss of 
        eligibility is unsuccessful, the institution shall be required 
        to pay to the Secretary an amount equal to the amount of 
        interest, special allowance, reinsurance, and any related 
        payments made by the Secretary (or which the Secretary is 
        obligated to make) with respect to loans made under this part to 
        students attending, or planning to attend, that institution 
        during the pendency of such appeal.''; and
                    (B) in subparagraph (C), by striking ``July 1, 
                1998,'' and inserting ``July 1, 1999,'';
            (2) in the matter following subparagraph (C) of para-
        graph (3)--
                    (A) by inserting ``for a reasonable period of time, 
                not to exceed 30 days,'' after ``access''; and
                    (B) by striking ``of the affected guaranty agencies 
                and loan servicers for a reasonable period of time, not 
                to exceed 30 days'' and inserting ``used by a guaranty 
                agency in determining whether to pay a claim on a 
                defaulted loan or by the Department in determining an 
                institution's default rate in the loan program under 
                part D of this title''; and
            (3) by adding at the end the following new paragraphs:
            ``(4) Definition of mitigating circumstances.--(A) For 
        purposes of paragraph (2)(A)(ii), an institution of higher 
        education shall be treated as having exceptional mitigating 
        circumstances that make application of that paragraph 
        inequitable if such institution, in the opinion of an 
        independent auditor, meets the following criteria:
                    ``(i) For a 12-month period that ended during the 6 
                months immediately preceding the fiscal year for which 
                the cohort of borrowers used to calculate the 
                institution's cohort default rate is determined, at 
                least two-thirds of the students enrolled on at least a 
                half-time basis at the institution--
                          ``(I) are eligible to receive a Federal Pell 
                      Grant award that is at least equal to one-half the 
                      maximum Federal Pell Grant award for which a 
                      student would be eligible based on the student's 
                      enrollment status; or
                          ``(II) have an adjusted gross income that when 
                      added with the adjusted gross income of the 
                      student's parents (unless the student is an 
                      independent student), of less than the poverty 
                      level, as determined by the Department of Health 
                      and Human Services.
                    ``(ii) In the case of an institution of higher 
                education that offers an associate, baccalaureate, 
                graduate or professional degree, 70 percent or more of 
                the institution's regular students who were initially 
                enrolled on a full-time basis and were scheduled to 
                complete their programs during the same 12-month period 
                described in clause (i)--
                          ``(I) completed the educational programs in 
                      which the students were enrolled;
                          ``(II) transferred from the institution to a 
                      higher level educational program;

[[Page 112 STAT. 1706]]

                          ``(III) at the end of the 12-month period, 
                      remained enrolled and making satisfactory progress 
                      toward completion of the student's educational 
                      programs; or
                          ``(IV) entered active duty in the Armed Forces 
                      of the United States.
                    ``(iii)(I) In the case of an institution of higher 
                education that does not award a degree described in 
                clause (ii), had a placement rate of 44 percent or more 
                with respect to the institution's former regular 
                students who--
                          ``(aa) remained in the program beyond the 
                      point the students would have received a 100 
                      percent tuition refund from the institution;
                          ``(bb) were initially enrolled on at least a 
                      half-time basis; and
                          ``(cc) were originally scheduled, at the time 
                      of enrollment, to complete their educational 
                      programs during the same 12-month period described 
                      in clause (i).
                    ``(II) The placement rate shall not include students 
                who are still enrolled and making satisfactory progress 
                in the educational programs in which the students were 
                originally enrolled on the date following 12 months 
                after the date of the student's last date of attendance 
                at the institution.
                    ``(III) The placement rate is calculated by 
                determining the percentage of all those former regular 
                students who--
                          ``(aa) are employed, in an occupation for 
                      which the institution provided training, on the 
                      date following 12 months after the date of their 
                      last day of attendance at the institution;
                          ``(bb) were employed, in an occupation for 
                      which the institution provided training, for at 
                      least 13 weeks before the date following 12 months 
                      after the date of their last day of attendance at 
                      the institution; or
                          ``(cc) entered active duty in the Armed Forces 
                      of the United States.
                    ``(IV) The placement rate shall not include as 
                placements a student or former student for whom the 
                institution is the employer.
            ``(B) For purposes of determining a rate of completion and a 
        placement rate under this paragraph, a student is originally 
        scheduled, at the time of enrollment, to complete the 
        educational program on the date when the student will have been 
        enrolled in the program for the amount of time normally required 
        to complete the program. The amount of time normally required to 
        complete the program for a student who is initially enrolled 
        full-time is the period of time specified in the institution's 
        enrollment contract, catalog, or other materials, for completion 
        of the program by a full-time student. For a student who is 
        initially enrolled less than full-time, the period is the amount 
        of time it would take the student to complete the program if the 
        student remained enrolled at that level of enrollment throughout 
        the program.
            ``(5) Reduction of default rates at certain minority 
        institutions.--

[[Page 112 STAT. 1707]]

                    ``(A) Beneficiaries of exception required to 
                establish management plan.--After July 1, 1999, any 
                institution that has a cohort default rate that equals 
                or exceeds 25 percent for each of the three most recent 
                fiscal years for which data are available and that 
                relies on the exception in subparagraph (B) to continue 
                to be an eligible institution shall--
                          ``(i) submit to the Secretary a default 
                      management plan which the Secretary, in the 
                      Secretary's discretion, after consideration of the 
                      institution's history, resources, dollars in 
                      default, and targets for default reduction, 
                      determines is acceptable and provides reasonable 
                      assurance that the institution will, by July 1, 
                      2002, have a cohort default rate that is less than 
                      25 percent;
                          ``(ii) engage an independent third party 
                      (which may be paid with funds received under 
                      section 317 or part B of title III) to provide 
                      technical assistance in implementing such default 
                      management plan; and
                          ``(iii) provide to the Secretary, on an annual 
                      basis or at such other intervals as the Secretary 
                      may require, evidence of cohort default rate 
                      improvement and successful implementation of such 
                      default management plan.
                    ``(B) Discretionary eligibility conditioned on 
                improvement.--Notwithstanding the expiration of the 
                exception in paragraph (2)(C), the Secretary may, in the 
                Secretary's discretion, continue to treat an institution 
                described in subparagraph (A) of this paragraph as an 
                eligible institution for each of the 1-year periods 
                beginning on July 1 of 1999, 2000, and 2001, only if the 
                institution submits by the beginning of such period 
                evidence satisfactory to the Secretary that--
                          ``(i) such institution has complied and is 
                      continuing to comply with the requirements of 
                      subparagraph (A); and
                          ``(ii) such institution has made substantial 
                      improvement, during each of the preceding 1-year 
                      periods, in the institution's cohort default rate.
            ``(6) Participation rate index.--
                    ``(A) In general.--An institution that demonstrates 
                to the Secretary that the institution's participation 
                rate index is equal to or less than 0.0375 for any of 
                the 3 most recent fiscal years for which data is 
                available shall not be subject to paragraph (2). The 
                participation rate index shall be determined by 
                multiplying the institution's cohort default rate for 
                loans under part B or D, or weighted average cohort 
                default rate for loans under parts B and D, by the 
                percentage of the institution's regular students, 
                enrolled on at least a half-time basis, who received a 
                loan made under part B or D for a 12-month period ending 
                during the 6 months immediately preceding the fiscal 
                year for which the cohort of borrowers used to calculate 
                the institution's cohort default rate is determined.

[[Page 112 STAT. 1708]]

                    ``(B) Data.--An institution shall provide the 
                Secretary with sufficient data to determine the 
                institution's participation rate index within 30 days 
                after receiving an initial notification of the 
                institution's draft cohort default rate.
                    ``(C) Notification.--Prior to publication of a final 
                cohort default rate for an institution that provides the 
                data described in subparagraph (B), the Secretary shall 
                notify the institution of the institution's compliance 
                or noncompliance with subparagraph (A).''.

    (b) Eligible Lender.--Section 435(d) (20 U.S.C. 1085(d)) is 
amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)(ii)--
                          (i) by striking ``or'' after ``1992,''; and
                          (ii) by inserting before the semicolon the 
                      following: ``, or (III) it is a bank (as defined 
                      in section 3(a)(1) of the Federal Deposit 
                      Insurance Act (12 U.S.C. 1813(a)(1)) that is a 
                      wholly owned subsidiary of a nonprofit foundation, 
                      the foundation is described in section 501(c)(3) 
                      of the Internal Revenue Code of 1986 and exempt 
                      from taxation under section 501(1) of such Code, 
                      and the bank makes loans under this part only to 
                      undergraduate students who are age 22 or younger 
                      and has a portfolio of such loans that is not more 
                      than $5,000,000'';
                    (B) by striking ``and'' at the end of subparagraph 
                (I);
                    (C) by striking the period at the end of 
                subparagraph (J) and inserting ``; and''; and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(K) a consumer finance company subsidiary of a 
                national bank which, as of the date of enactment of this 
                subparagraph, through one or more subsidiaries: (i) acts 
                as a small business lending company, as determined under 
                regulations of the Small Business Administration under 
                section 120.470 of title 13, Code of Federal Regulations 
                (as such section is in effect on the date of enactment 
                of this subparagraph); and (ii) participates in the 
                program authorized by this part pursuant to subparagraph 
                (C), provided the national bank and all of the bank's 
                direct and indirect subsidiaries taken together as a 
                whole, do not have, as their primary consumer credit 
                function, the making or holding of loans made to 
                students under this part.''; and
            (2) in paragraph (5), by adding at the end the following new 
        sentence:
        ``It shall not be a violation of this paragraph for a lender to 
        provide assistance to institutions of higher education 
        comparable to the kinds of assistance provided to institutions 
        of higher education by the Department of Education.''.

    (c) Definition of Default.--
            (1) Amendment.--Section 435(l) is amended--
                    (A) by striking ``180 days'' and inserting ``270 
                days''; and
                    (B) <<NOTE: Applicability. 20 USC 1085 note.>>  by 
                striking ``240 days'' and inserting ``330 days''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to loans for which the first day

[[Page 112 STAT. 1709]]

        of delinquency occurs on or after the date of enactment of this 
        Act.

    (d) Cohort Default Rate.--Section 435(m) is amended-- <<NOTE: 20 USC 
1085.>> 
            (1) in paragraph (1)(B), by striking ``insurance, and, in 
        considering appeals with respect to cohort default rates 
        pursuant to subsection (a)(3), exclude'' and inserting 
        ``insurance. In considering appeals with respect to cohort 
        default rates pursuant to subsection (a)(3), the Secretary shall 
        exclude, from the calculation of the number of students who 
        entered repayment and from the calculation of the number of 
        students who default,''; and
            (2) in paragraph (2)(C), by adding at the end the following: 
        ``The Secretary may require guaranty agencies to collect data 
        with respect to defaulted loans in a manner that will permit the 
        identification of any defaulted loan for which (i) the borrower 
        is currently making payments and has made not less than 6 
        consecutive on-time payments by the end of such following fiscal 
        year, and (ii) a guaranty agency has renewed the borrower's 
        title IV eligibility as provided in section 428F(b).''; and
            (3) in paragraph (4), by adding at the end the following:
            ``(D) <<NOTE: Publication. Deadline.>>  The Secretary shall 
        publish the report described in subparagraph (C) by September 30 
        of each year.''.

SEC. 430. DELEGATION OF FUNCTIONS.

    Section 436 (20 U.S.C. 1086) is amended to read as follows:

``SEC. 436. DELEGATION OF FUNCTIONS.

    ``(a) In General.--An eligible lender or guaranty agency that 
contracts with another entity to perform any of the lender's or agency's 
functions under this title, or otherwise delegates the performance of 
such functions to such other entity--
            ``(1) shall not be relieved of the lender's or agency's duty 
        to comply with the requirements of this title; and
            ``(2) shall monitor the activities of such other entity for 
        compliance with such requirements.

    ``(b) Special Rule.--A lender that holds a loan made under part B in 
the lender's capacity as a trustee is responsible for complying with all 
statutory and regulatory requirements imposed on any other holder of a 
loan made under this part.''.

SEC. 431. DISCHARGE.

    Section 437(c)(1) (20 U.S.C. 1087(c)(1)) is amended--
            (1) by inserting after ``falsely certified by the eligible 
        institution,'' the following: ``or if the institution failed to 
        make a refund of loan proceeds which the institution owed to 
        such student's lender,''; and
            (2) by adding at the end the following new sentences: ``In 
        the case of a discharge based upon a failure to refund, the 
        amount of the discharge shall not exceed that portion of the 
        loan which should have been refunded. <<NOTE: Reports.>> The 
        Secretary shall report to the Committee on Education and the 
        Workforce of the House of Representatives and the Committee on 
        Labor and Human Resources of the Senate annually as to the 
        dollar amount of loan discharges attributable to failures to 
        make refunds.''.

[[Page 112 STAT. 1710]]

SEC. 432. DEBT MANAGEMENT OPTIONS.

    Section 437A (20 U.S.C. 1087-0) is repealed.

SEC. 433. SPECIAL ALLOWANCES.

    (a) Deduction From Interest and Special Allowance 
Subsidies.--Paragraph (1) of section 438(c) (20 U.S.C. 1087-1) is 
amended to read as follows:
            ``(1) Deduction from interest and special allowance 
        subsidies.--(A) Notwithstanding subsection (b), the Secretary 
        shall collect the amount the lender is authorized to charge as 
        an origination fee in accordance with paragraph (2) of this 
        subsection--
                    ``(i) by reducing the total amount of interest and 
                special allowance payable under section 428(a)(3)(A) and 
                subsection (b) of this section, respectively, to any 
                holder; or
                    ``(ii) directly from the holder of the loan, if the 
                lender fails or is not required to bill the Secretary 
                for interest and special allowance or withdraws from the 
                program with unpaid loan origination fees.
            ``(B) If the Secretary collects the origination fee under 
        this subsection through the reduction of interest and special 
        allowance, and the total amount of interest and special 
        allowance payable under section 428(a)(3)(A) and subsection (b) 
        of this section, respectively, is less than the amount the 
        lender was authorized to charge borrowers for origination fees 
        in that quarter, the Secretary shall deduct the excess amount 
        from the subsequent quarters' payments until the total amount 
        has been deducted.''.

    (b) Origination Fees.--Section 438(c) is amended--
            (1) in paragraph (2)--
                    (A) by striking ``(other than'' and inserting 
                ``(including loans made under section 428H, but 
                excluding''; and
                    (B) by adding at the end the following new sentence: 
                ``Except as provided in paragraph (8), a lender that 
                charges an origination fee under this paragraph shall 
                assess the same fee to all student borrowers.''; and
            (2) by adding at the end the following new paragraph:
            ``(8) Exception.--Notwithstanding paragraph (2), a lender 
        may assess a lesser origination fee for a borrower demonstrating 
        greater financial need as determined by such borrower's adjusted 
        gross family income.''.

    (c) Collection of Fees.--Paragraph (1) of section 438(d) is amended 
to read as follows:
            ``(1) Deduction from interest and special allowance 
        subsidies.--
                    ``(A) In general.--Notwithstanding subsection (b), 
                the Secretary shall collect a loan fee in an amount 
                determined in accordance with paragraph (2)--
                          ``(i) by reducing the total amount of interest 
                      and special allowance payable under section 
                      428(a)(3)(A) and subsection (b), respectively, to 
                      any holder of a loan; or
                          ``(ii) directly from the holder of the loan, 
                      if the lender--
                                    ``(I) fails or is not required to 
                                bill the Secretary for interest and 
                                special allowance payments; or

[[Page 112 STAT. 1711]]

                                    ``(II) withdraws from the program 
                                with unpaid loan fees.
                    ``(B) Special rule.--If the Secretary collects loan 
                fees under this subsection through the reduction of 
                interest and special allowance payments, and the total 
                amount of interest and special allowance payable under 
                section 428(a)(3)(A) and subsection (b), respectively, 
                is less than the amount of such loan fees, then the 
                Secretary shall deduct the amount of the loan fee 
                balance from the amount of interest and special 
                allowance payments that would otherwise be payable, in 
                subsequent quarterly increments until the balance has 
                been deducted.''.

    (d) Lending From Proceeds of Tax-Exempt Obligations.--
            (1) Amendment.--Subsection (e) of section 438 <<NOTE: 20 USC 
        1087-1.>> is amended to read as follows:

    ``(e) Nondiscrimination.--In order for the holders of loans which 
were made or purchased with funds obtained by the holder from an 
Authority issuing obligations, the income from which is exempt from 
taxation under the Internal Revenue Code of 1986, to be eligible to 
receive a special allowance under subsection (b)(2) on any such loans, 
the Authority shall not engage in any pattern or practice which results 
in a denial of a borrower's access to loans under this part because of 
the borrower's race, sex, color, religion, national origin, age, 
disability status, income, attendance at a particular eligible 
institution within the area served by the Authority, length of the 
borrower's educational program, or the borrower's academic year in 
school.''.
            (2) <<NOTE: 20 USC 1087-1 note.>> Effective date.--The 
        amendment made by paragraph (1) shall be effective as of the 
        date the plan required by section 438(e)(1) (as such section was 
        in effect prior to such amendment) was approved by the Secretary 
        or the Governor (whichever was the case). No Authority shall 
        have a right or cause of action against the Secretary for any 
        amounts paid to or offset by the Secretary pursuant to a final 
        settlement agreement entered into prior to July 1, 1998, 
        resolving any audit or program review findings alleging 
        violations of any provision of section 438(e) (as in effect 
        prior to such amendment).

SEC. 434. FEDERAL FAMILY EDUCATION LOAN INSURANCE FUND. <<NOTE: 20 USC 
            1081 note.>> 

    Any funds in the insurance fund, as established under section 431 of 
the Higher Education Act of 1965 (20 U.S.C. 1081), on the date of 
enactment of this Act shall be transferred to and deposited in the 
Treasury. All funds received by the Secretary of Education under 
subsection (a) of such section after the date of enactment of this Act 
shall be deposited into the fund in accordance with such subsection.

                   PART C--FEDERAL WORK-STUDY PROGRAMS

SEC. 441. AUTHORIZATION OF APPROPRIATIONS; COMMUNITY 
            SERVICES.

    (a) Authorization of Appropriations.--Section 441(b) (42 U.S.C. 
2751(b)) is amended by striking ``$800,000,000 for fiscal year 1993'' 
and inserting ``$1,000,000,000 for fiscal year 1999''.
    (b) Definition of Community Services.--Section 441(c) is amended--

[[Page 112 STAT. 1712]]

            (1) in paragraph (1), by inserting ``(including child care 
        services provided on campus that are open and accessible to the 
        community)'' after ``child care''; and
            (2) in paragraph (3), by inserting ``, including students 
        with disabilities who are enrolled at the institution'' before 
        the semicolon.

SEC. 442. ALLOCATION OF FUNDS.

    (a) Updating the Base Period.--Section 442(a) <<NOTE: 42 USC 
2752.>> (20 U.S.C. 2752(a)) is amended--
            (1) in paragraph (1), by striking ``received and used under 
        this part for fiscal year 1985'' and inserting ``received under 
        subsections (a) and (b) for fiscal year 1999 (as such 
        subsections were in effect with respect to allocations for such 
        fiscal year)'';
            (2) in paragraph (2)--
                    (A) in subparagraphs (A) and (B), by striking 
                ``1985'' each place the term appears and inserting 
                ``1999''; and
                    (B) in subparagraph (C)(i), by striking ``1986'' and 
                inserting ``2000''.

    (b) Elimination of Pro Rata Share.--Section 442 is 
amended--
            (1) by striking subsection (b);
            (2) by redesignating subsections (c) through (f ) as 
        subsections (b) through (e), respectively;
            (3) in subsection (b)(1) (as redesignated by paragraph (2)), 
        by striking ``three-quarters of'';
            (4) in subsection (b)(2)(A)(i) (as so redesignated), by 
        striking ``subsection (d)'' and inserting ``subsection (c)'';
            (5) in subsection (c)(3) (as so redesignated), by striking 
        ``the Secretary, for academic year 1988-1989 shall use the 
        procedures employed for academic year 1986-1987, and, for any 
        subsequent academic years,''; and
            (6) in subsection (d)(1) (as so redesignated)--
                    (A) by striking ``10 percent'' and inserting ``5 
                percent'';
                    (B) by striking ``in community service'' and 
                inserting ``in tutoring in reading and family literacy 
                activities''; and
                    (C) by striking ``subsection (c)'' and inserting 
                ``subsection (b)''.

    (c) <<NOTE: Applicability. 42 USC 2752 note.>> Effective Date.--The 
amendments made by this section shall apply with respect to allocations 
of amounts appropriated pursuant to section 441(b) for fiscal year 2000 
or any succeeding fiscal year.

SEC. 443. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.

    (a) Eligible Employment.--Section 443(b)(1) (42 U.S.C. 2753(b)(1)) 
is amended by inserting ``, including internships, practica, or research 
assistantships as determined by the Secretary,'' after ``part-time 
employment''.
    (b) Community Service.--Section 443(b)(2)(A) is amended--
            (1) by striking ``in fiscal year 1994 and succeeding fiscal 
        years,'' and inserting ``for fiscal year 1999,''; and
            (2) by inserting ``(including a reasonable amount of time 
        spent in travel or training directly related to such community 
        service)'' after ``community service''.

    (c) Tutoring and Literacy Activities.--Section 443 is 
amended--
            (1) in subsection (b)(2)--
                    (A) by striking ``and'' at the end of subparagraph 
                (A);

[[Page 112 STAT. 1713]]

                    (B) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (C) by inserting after subparagraph (A) the 
                following:
                    ``(B) for fiscal year 2000 and succeeding fiscal 
                years, an institution shall use at least 7 percent of 
                the total amount of funds granted to such institution 
                under this section for such fiscal year to compensate 
                students employed in community service, and shall ensure 
                that not less than 1 tutoring or family literacy project 
                (as described in subsection (d)) is included in meeting 
                the requirement of this subparagraph, except that the 
                Secretary may waive this subparagraph if the Secretary 
                determines that enforcing this subparagraph would cause 
                hardship for students at the institution; and''; and
            (2) by adding at the end the following new subsection:

    ``(d) Tutoring and Literacy Activities.--
            ``(1) Use of funds.--In any academic year to which 
        subsection (b)(2)(B) applies, an institution shall ensure that 
        funds granted to such institution under this section are used in 
        accordance with such subsection to compensate (including 
        compensation for time spent in training and travel directly 
        related to tutoring in reading and family literacy activities) 
        students--
                    ``(A) employed as reading tutors for children who 
                are preschool age or are in elementary school; or
                    ``(B) employed in family literacy projects.
            ``(2) Priority for schools.--To the extent practicable, an 
        institution shall--
                    ``(A) give priority to the employment of students in 
                the provision of tutoring in reading in schools that are 
                participating in a reading reform project that--
                          ``(i) is designed to train teachers how to 
                      teach reading on the basis of scientifically-based 
                      research on reading; and
                          ``(ii) is funded under the Elementary and 
                      Secondary Education Act of 1965; and
                    ``(B) ensure that any student compensated with the 
                funds described in paragraph (1) who is employed in a 
                school participating in a reading reform project 
                described in subparagraph (A) receives training from the 
                employing school in the instructional practices used by 
                the school.
            ``(3) Federal share.--The Federal share of the compensation 
        of work-study students compensated under this subsection may 
        exceed 75 percent.''.

    (d) Use of Funds for Independent and Less Than Full-Time Students.--
Paragraph (3) of section 443(b) is amended <<NOTE: 42 USC 2753.>>  to 
read as follows:
            ``(3) provide that in the selection of students for 
        employment under such work-study program, only students who 
        demonstrate financial need in accordance with part F and meet 
        the requirements of section 484 will be assisted, except that if 
        the institution's grant under this part is directly or 
        indirectly based in part on the financial need demonstrated by 
        students who are (A) attending the institution on less than a 
        full-time basis, or (B) independent students, a reasonable 
        portion of the grant shall be made available to such 
        students;''.

    (e) Federal Share.--Paragraph (5) of section 443(b) is 
amended to read as follows:

[[Page 112 STAT. 1714]]

            ``(5) provide that the Federal share of the compensation of 
        students employed in the work-study program in accordance with 
        the agreement shall not exceed 75 percent, except that--
                    ``(A) the Federal share may exceed 75 percent, but 
                not exceed 90 percent, if, consistent with regulations 
                of the Secretary--
                          ``(i) the student is employed at a nonprofit 
                      private organization or a government agency that--
                                    ``(I) is not a part of, and is not 
                                owned, operated, or controlled by, or 
                                under common ownership, operation, or 
                                control with, the institution;
                                    ``(II) is selected by the 
                                institution on an individual case-by-
                                case basis for such student; and
                                    ``(III) would otherwise be unable to 
                                afford the costs of such employment; and
                          ``(ii) not more than 10 percent of the 
                      students compensated through the institution's 
                      grant under this part during the academic year are 
                      employed in positions for which the Federal share 
                      exceeds 75 percent; and
                    ``(B) the Federal share may exceed 75 percent if the 
                Secretary determines, pursuant to regulations 
                promulgated by the Secretary establishing objective 
                criteria for such determinations, that a Federal share 
                in excess of such amounts is required in furtherance of 
                the purpose of this part;''.

    (f ) Availability of Employment.--Section 443(b)(6) is 
amended <<NOTE: 42 USC 2753.>> by striking ``, and to make'' and all 
that follows through ``such employment''.

    (g) Academic Relevance.--Section 443(c)(4) is amended by inserting 
before the semicolon at the end the following: ``, to the maximum extent 
practicable''.

SEC. 444. FLEXIBLE USE OF FUNDS.

    Section 445 (42 U.S.C. 2755) is amended by adding at the end the 
following:
    ``(c) Flexible Use of Funds.--An eligible institution may, upon the 
request of a student, make payments to the student under this part by 
crediting the student's account at the institution or by making a direct 
deposit to the student's account at a depository institution. An 
eligible institution may only credit the student's account at the 
institution for (1) tuition and fees, (2) in the case of institutionally 
owned housing, room and board, and (3) other institutionally provided 
goods and services.''.

SEC. 445. WORK COLLEGES.

    Section 448 (42 U.S.C. 2756b) is amended--
            (1) in subsection (b)(2)--
                    (A) in subparagraph (C), by striking ``and'' after 
                the semicolon;
                    (B) in subparagraph (D)(ii), by striking the period 
                and inserting a semicolon; and
                    (C) by adding at the end the following:
                    ``(E) coordinate and carry out joint projects and 
                activities to promote work service learning; and
                    ``(F) carry out a comprehensive, longitudinal study 
                of student academic progress and academic and career 
                outcomes, relative to student self-sufficiency in 
                financing their

[[Page 112 STAT. 1715]]

                higher education, repayment of student loans, continued 
                community service, kind and quality of service 
                performed, and career choice and community service 
                selected after graduation.''; and
            (2) in subsection (f ), by striking ``1993'' and inserting 
        ``1999''.

           PART D--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

SEC. 451. SELECTION OF INSTITUTIONS.

    (a) General Authority.--Section 453(a) (20 U.S.C. 1087c(a)) is 
amended--
            (1) by striking ``Phase-In'' and everything that follows 
        through ``General authority.--'' and inserting ``General 
        Authority.--''; and
            (2) by striking paragraphs (2), (3), and (4).

    (b) Selection Criteria.--Section 453(b)(2) is amended by striking 
``prescribe,'' and everything that follows through the end of 
subparagraph (B) and inserting ``prescribe.''.
    (c) Origination.--Section 453(c) is amended--
            (1) in paragraph (2)--
                    (A) in the heading, by striking ``Transition 
                selection criteria'' and inserting ``Selection 
                criteria'';
                    (B) by striking ``For academic year 1994-1995, the 
                Secretary'' and inserting ``The Secretary'';
                    (C) by striking subparagraph (A);
                    (D) by striking subparagraph (E); and
                    (E) by redesignating subparagraphs (B), (C), (D), 
                (F), (G), and (H) as subparagraphs (A) through (F), 
                respectively; and
            (2) in paragraph (3)--
                    (A) in the paragraph heading, by striking ``After 
                transition''; and
                    (B) by striking ``For academic year 1995-1996 and 
                subsequent academic years, the'' and inserting ``The''.

SEC. 452. TERMS AND CONDITIONS.

    (a) Direct Loan Interest Rates.--
            (1) Amendment.--Section 455(b) (20 U.S.C. 1087e(b)) is 
        amended by adding at the end the following:
            ``(6) Interest rate provision for new loans on or after 
        october 1, 1998, and before july 1, 2003.--
                    ``(A) Rates for fdsl and fdusl.--Notwithstanding the 
                preceding paragraphs of this subsection, for Federal 
                Direct Stafford Loans and Federal Direct Unsubsidized 
                Stafford Loans for which the first disbursement is made 
                on or after October 1, 1998, and before July 1, 2003, 
                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.

[[Page 112 STAT. 1716]]

                    ``(B) In school and grace period rules.--
                Notwithstanding the preceding paragraphs of this 
                subsection, with respect to any Federal Direct Stafford 
                Loan or Federal Direct Unsubsidized Stafford Loan for 
                which the first disbursement is made on or after October 
                1, 1998, and before July 1, 2003, the applicable rate of 
                interest for interest which accrues--
                          ``(i) prior to the beginning of the repayment 
                      period of the loan; or
                          ``(ii) during the period in which principal 
                      need not be paid (whether or not such principal is 
                      in fact paid) by reason of a provision described 
                      in section 428(b)(1)(M) or 427(a)(2)(C),
                shall be determined under subparagraph (A) by 
                substituting `1.7 percent' for `2.3 percent'.
                    ``(C) PLUS loans.--Notwithstanding the preceding 
                paragraphs of this subsection, with respect to Federal 
                Direct PLUS Loan for which the first disbursement is 
                made on or after October 1, 1998, and before July 1, 
                2003, the applicable rate of interest shall be 
                determined under subparagraph (A)--
                          ``(i) by substituting `3.1 percent' for `2.3 
                      percent'; and
                          ``(ii) by substituting `9.0 percent' for `8.25 
                      percent'.
                    ``(D) Consolidation loans.--Notwithstanding the 
                preceding paragraphs of this subsection, any Federal 
                Direct Consolidation loan for which the application is 
                received on or after February 1, 1999, and before July 
                1, 2003, shall bear interest at an annual rate on the 
                unpaid principal balance of the loan that is equal to 
                the lesser of--
                          ``(i) the weighted average of the interest 
                      rates on the loans consolidated, rounded to the 
                      nearest higher one-eighth of one percent; or
                          ``(ii) 8.25 percent.
                    ``(E) Temporary rules for consolidation loans.--
                Notwithstanding the preceding paragraphs of this 
                subsection, any Federal Direct Consolidation loan for 
                which the application is received on or after October 1, 
                1998, and before February 1, 1999, shall bear interest 
                at an annual rate on the unpaid principal balance of the 
                loan that is 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.''.
            (2) <<NOTE: 20 USC 1087e note.>> Limitation on consolidation 
        loans during temporary interest rate.--Notwithstanding section 
        455(g) of the Higher Education Act of 1965, a borrower who is 
        enrolled or accepted for enrollment in an institution of higher 
        education may not consolidate loans under such section during 
        the period beginning October 1, 1998, and ending February 1, 
        1999, unless the borrower certifies that the borrower has no 
        outstanding loans made, insured, or guaranteed under title IV of 
        such Act other than loans made under part D of such title.

    (b) Repayment Incentives.--Section 455(b) (20 U.S.C. 1087e(b)) is 
further amended by adding at the end the following:

[[Page 112 STAT. 1717]]

            ``(7) Repayment incentives.--
                    ``(A) <<NOTE: Regulations.>> In general.--
                Notwithstanding any other provision of this part, the 
                Secretary is authorized to prescribe by regulation such 
                reductions in the interest rate paid by a borrower of a 
                loan made under this part as the Secretary determines 
                appropriate to encourage on-time repayment of the loan. 
                Such reductions may be offered only if the Secretary 
                determines the reductions are cost neutral and in the 
                best financial interest of the Federal Government. Any 
                increase in subsidy costs resulting from such reductions 
                shall be completely offset by corresponding savings in 
                funds available for the William D. Ford Federal Direct 
                Loan Program in that fiscal year from section 458 and 
                other administrative accounts.
                    ``(B) Accountability.--Prior to publishing 
                regulations proposing repayment incentives, the 
                Secretary shall ensure the cost neutrality of such 
                reductions. <<NOTE: Reports.>> The Secretary shall not 
                prescribe such regulations in final form unless an 
                official report from the Director of the Office of 
                Management and Budget to the Secretary and a comparable 
                report from the Director of the Congressional Budget 
                Office to the Congress each certify that any such 
                reductions will be completely cost 
                neutral. <<NOTE: Deadline.>> Such reports shall be 
                transmitted to the Committee on Labor and Human 
                Resources of the Senate and the Committee on Education 
                and the Workforce of the House of Representatives not 
                less than 60 days prior to the publication of 
                regulations proposing such reductions.''.

    (c) Consolidation Loans.--The first sentence of section 455(g) is 
amended <<NOTE: 20 USC 1087e.>> by striking everything after ``section 
428C(a)(4)'' and inserting a period.

    (d) <<NOTE: Applicability. 20 USC 1087e note.>> Effective Date.--The 
amendments made by subsection (a) shall apply with respect to any loan 
made under part D of title IV of the Higher Education Act of 1965 for 
which the first disbursement is made on or after October 1, 1998, and 
before July 1, 2003, except that such amendments shall apply with 
respect to a Federal Direct Consolidation Loan for which the application 
is received on or after October 1, 1998, and before July 1, 2003.

SEC. 453. CONTRACTS.

    Section 456(b) (20 U.S.C. 1087f(b)) is amended--
            (1) in paragraph (3), by inserting ``and'' after the 
        semicolon;
            (2) by striking paragraph (4); and
            (3) by redesignating paragraph (5) as paragraph (4).

SEC. 454. FUNDS FOR ADMINISTRATIVE EXPENSES.

    Section 458 (20 U.S.C. 1087h) is amended--
            (1) by amending subsection (a) to read as follows:

    ``(a) Administrative Expenses.--
            ``(1) In general.--Each fiscal year there shall be available 
        to the Secretary, from funds not otherwise appropriated, funds 
        to be obligated for--
                    ``(A) administrative costs under this part and part 
                B, including the costs of the direct student loan 
                programs under this part; and
                    ``(B) account maintenance fees payable to guaranty 
                agencies under part B and calculated in accordance with 
                subsections (b) and (c),

[[Page 112 STAT. 1718]]

        not to exceed (from such funds not otherwise appropriated) 
        $617,000,000 in fiscal year 1999, $735,000,000 in fiscal year 
        2000, $770,000,000 in fiscal year 2001, $780,000,000 in fiscal 
        year 2002, and $795,000,000 in fiscal year 2003.
            ``(2) Account maintenance fees.--Account maintenance fees 
        under paragraph (1)(B) shall be paid quarterly and deposited in 
        the Agency Operating Fund established under section 422B.
            ``(3) Carryover.--The Secretary may carry over funds made 
        available under this section to a subsequent fiscal year.'';
            (2) by amending subsection (b) to read as follows:

    ``(b) Calculation Basis.--Except as provided in subsection (c), 
account maintenance fees payable to guaranty agencies under paragraph 
(1)(B) shall be calculated--
            ``(1) for fiscal years 1999 and 2000, on the basis of 0.12 
        percent of the original principal amount of outstanding loans on 
        which insurance was issued under part B; and
            ``(2) for fiscal years 2001, 2002, and 2003, on the basis of 
        0.10 percent of the original principal amount of outstanding 
        loans on which insurance was issued under part B.'';
            (3) by striking subsection (d);
            (4) by redesignating subsection (c) as subsection (d); and
            (5) by inserting after subsection (b) the following:

    ``(c) Special Rules.--
            ``(1) Fee cap.--The total amount of account maintenance fees 
        payable under this section--
                    ``(A) for fiscal year 1999, shall not exceed 
                $177,000,000;
                    ``(B) for fiscal year 2000, shall not exceed 
                $180,000,000;
                    ``(C) for fiscal year 2001, shall not exceed 
                $170,000,000;
                    ``(D) for fiscal year 2002, shall not exceed 
                $180,000,000; and
                    ``(E) for fiscal year 2003, shall not exceed 
                $195,000,000.
            ``(2) Insufficient funding.--
                    ``(A) In general.--If the amounts set forth in 
                paragraph (1) are insufficient to pay the account 
                maintenance fees payable to guaranty agencies pursuant 
                to subsection (b) for a fiscal year, the Secretary shall 
                pay the insufficiency by requiring guaranty agencies to 
                transfer funds from the Federal Student Loan Reserve 
                Funds under section 422A to the Agency Operating Funds 
                under section 422B.
                    ``(B) Entitlement.--A guaranty agency shall be 
                deemed to have a contractual right against the United 
                States to receive payments according to the provisions 
                of subparagraph (A).''.

SEC. 455. AUTHORITY TO SELL LOANS.

    Part D of title IV (20 U.S.C. 1087a et seq.) is amended by adding at 
the end the following:

``SEC. 459. AUTHORITY TO SELL LOANS. <<NOTE: 20 USC 1087i.>> 

    ``The Secretary, in consultation with the Secretary of the Treasury, 
is authorized to sell loans made under this part on such terms as the 
Secretary determines are in the best interest of the United States, 
except that any such sale shall not result in any cost to the Federal 
Government. Notwithstanding any other provision of law, the proceeds of 
any such sale may be used by the Secretary to offer reductions in the 
interest rate paid by a borrower

[[Page 112 STAT. 1719]]

of a loan made under this part as the Secretary determines appropriate 
to encourage on-time repayment in accordance with section 455(b)(7). 
Such reductions may be offered only if the Secretary determines the 
reductions are in the best financial interests of the Federal 
Government.''.

SEC. 456. LOAN CANCELLATION FOR TEACHERS.

    Part D of title IV (20 U.S.C. 1087a et seq.) is further amended by 
adding after section 459 (as added by section 455) the following:

``SEC. 460. LOAN CANCELLATION FOR TEACHERS. <<NOTE: 20 USC 1087j.>> 

    ``(a) Statement of Purpose.--It is the purpose of this section to 
encourage individuals to enter and continue in the teaching profession.
    ``(b) Program Authorized.--
            ``(1) In general.--The Secretary shall carry out a program 
        of canceling the obligation to repay a qualified loan amount in 
        accordance with subsection (c) for Federal Direct Stafford Loans 
        and Federal Direct Unsubsidized Stafford Loans made under this 
        part for any new borrower on or after October 1, 1998, who--
                    ``(A) has been employed as a full-time teacher for 5 
                consecutive complete school years--
                          ``(i) in a school that qualifies under section 
                      465(a)(2)(A) for loan cancellation for Perkins 
                      loan recipients who teach in such schools;
                          ``(ii) if employed as a secondary school 
                      teacher, is teaching a subject area that is 
                      relevant to the borrower's academic major as 
                      certified by the chief administrative officer of 
                      the public or non-profit private secondary school 
                      in which the borrower is employed; and
                          ``(iii) if employed as an elementary school 
                      teacher, has demonstrated, as certified by the 
                      chief administrative officer of the public or 
                      nonprofit private elementary school in which the 
                      borrower is employed, knowledge and teaching 
                      skills in reading, writing, mathematics and other 
                      areas of the elementary school curriculum; and
                    ``(B) is not in default on a loan for which the 
                borrower seeks forgiveness.
            ``(2) Special rule.--No borrower may obtain a reduction of 
        loan obligations under both this section and section 428J.

    ``(c) Qualified Loan Amounts.--
            ``(1) In general.--The Secretary shall cancel not more than 
        $5,000 in the aggregate of the loan obligation on a Federal 
        Direct Stafford Loan or a Federal Direct Unsubsidized Stafford 
        Loan that is outstanding after the completion of the fifth 
        complete school year of teaching described in subsection 
        (b)(1)(A).
            ``(2) <<NOTE: Regulations.>> Treatment of consolidation 
        loans.--A loan amount 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 Federal Direct Stafford Loan, a Federal Direct 
        Unsubsidized Stafford Loan, or a loan made under section 428 or 
        428H, for a borrower who meets the requirements of subsection 
        (b), as determined in accordance with regulations prescribed by 
        the Secretary.

[[Page 112 STAT. 1720]]

    ``(d) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(e) Construction.--Nothing in this section shall be construed to 
authorize any refunding of any canceled loan.
    ``(f ) List.--If the list of schools in which a teacher may perform 
service pursuant to subsection (b) is not available before May 1 of any 
year, the Secretary may use the list for the year preceding the year for 
which the determination is made to make such service determination.
    ``(g) Additional Eligibility Provisions.--
            ``(1) Continued eligibility.--Any teacher who performs 
        service in a school that--
                    ``(A) meets the requirements of subsection (b)(1)(A) 
                in any year during such service; and
                    ``(B) in a subsequent year fails to meet the 
                requirements of such subsection, may continue to teach 
                in such school and shall be eligible for loan 
                cancellation pursuant to subsection (b).
            ``(2) Prevention of double benefits.--No borrower may, for 
        the same volunteer 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. 12571 et seq.).

    ``(h) Definition.--For the purpose of this section, the term `year' 
where applied to service as a teacher means an academic year as defined 
by the Secretary.''.

                      PART E--FEDERAL PERKINS LOANS

SEC. 461. AUTHORIZATION OF APPROPRIATIONS.

    Subsection (b) of section 461 (20 U.S.C. 1087aa) is amended--
            (1) in paragraph (1), by striking ``1993'' and inserting 
        ``1999''; and
            (2) in paragraph (2), by striking ``1997'' each place the 
        term appears and inserting ``2003''.

SEC. 462. ALLOCATION OF FUNDS.

    (a) Changes in Allocation Formula.--
            (1) Updating the base period.--Section 462(a) (20 U.S.C. 
        1087bb(a)) is amended--
                    (A) in paragraph (1)(A), by striking ``the amount of 
                the Federal capital contribution allocated to such 
                institution under this part for fiscal year 1985'' and 
                inserting ``the amount received under subsections (a) 
                and (b) of this section for fiscal year 1999 (as such 
                subsections were in effect with respect to allocations 
                for such fiscal year)'';
                    (B) in paragraph (2)--
                          (i) in subparagraphs (A) and (B), by striking 
                      ``1985'' each place the term appears and inserting 
                      ``1999''; and
                          (ii) in subparagraph (C)(i), by striking 
                      ``1986'' and inserting ``2000''.
            (2) Elimination of pro rata share.--Section 462 is further 
        amended--
                    (A) in subsection (a)--
                          (i) in paragraph (1)(B), by striking 
                      ``subsection (f )'' and inserting ``subsection 
                      (e)'';

[[Page 112 STAT. 1721]]

                          (ii) in the matter following paragraph (1)(B), 
                      by striking ``subsection (g)'' and inserting 
                      ``subsection (f)'';
                          (iii) in paragraph (2)(D)(ii), by striking 
                      ``subsection (f)'' and inserting ``subsection 
                      (e)''; and
                          (iv) in the matter following paragraph 
                      (2)(D)(ii), by striking ``subsection (g)'' and 
                      inserting ``subsection (f)'';
                    (B) by striking subsection (b);
                    (C) in subsection (c)(1), by striking ``three-
                quarters of the remainder'' and inserting ``the 
                remainder'';
                    (D) in the matter following subsection (c)(2)(B), by 
                striking ``subsection (g)'' and inserting ``subsection 
                (f )'';
                    (E) in subsection (c)(3)--
                          (i) in subparagraph (A), by striking 
                      ``subsection (d)'' and inserting ``subsection 
                      (c)'';
                          (ii) in subparagraph (C), by striking 
                      ``subsection (f )'' and inserting ``subsection 
                      (e)''; and
                          (iii) in the matter following subparagraph 
                      (C), by striking ``subsection (g)'' and inserting 
                      ``subsection (f )'';
                    (F) in subsection ( j)(1)(B)(i), by striking 
                ``1985'' and inserting ``1999'';
                    (G) in subsection ( j)(2)--
                          (i) in subparagraph (A), by striking 
                      ``paragraph (3) of subsection (c)'' and inserting 
                      ``subsection (b)(3)''; and
                          (ii) in subparagraph (B), by striking 
                      ``subsection (c) of section 462'' and inserting 
                      ``subsection (b)''; and
                    (H) by redesignating subsections (c) through ( j) as 
                subsections (b) through (i), respectively.
            (3) <<NOTE: Applicability. 20 USC 1087bb note.>> Effective 
        Date.--The amendments made by this subsection shall apply with 
        respect to allocations of amounts appropriated pursuant to 
        section 461(b) for fiscal year 2000 or any succeeding fiscal 
        year.

    (b) Self-Help Need.--The matter preceding subparagraph (A) of 
section 462(c)(3) (as redesignated by subsection (a)(2)(G)) is 
amended <<NOTE: 20 USC 1087bb.>> by striking ``the Secretary, for'' and 
all that follows through ``years,''.

    (c) Default Penalties.--Subsections (e) and (f ) of section 462 (as 
redesignated by subsection (a)(2)(G)) are amended to read as follows:
    ``(e) Default Penalties.--
            ``(1) Years preceding fiscal year 2000.--For any fiscal year 
        preceding fiscal year 2000, any institution with a cohort 
        default rate that--
                    ``(A) <<NOTE: Regulations.>> equals or exceeds 15 
                percent, shall establish a default reduction plan 
                pursuant to regulations prescribed by the Secretary, 
                except that such plan shall not be required with respect 
                to an institution that has a default rate of less than 
                20 percent and that has less than 100 students who have 
                loans under this part in such academic year;
                    ``(B) equals or exceeds 20 percent, but is less than 
                25 percent, shall have a default penalty of 0.9;
                    ``(C) equals or exceeds 25 percent, but is less than 
                30 percent, shall have a default penalty of 0.7; and
                    ``(D) equals or exceeds 30 percent shall have a 
                default penalty of zero.

[[Page 112 STAT. 1722]]

            ``(2) Years following fiscal year 2000.--For fiscal year 
        2000 and any succeeding fiscal year, any institution with a 
        cohort default rate (as defined under subsection (g)) that 
        equals or exceeds 25 percent shall have a default penalty of 
        zero.
            ``(3) Ineligibility.--
                    ``(A) <<NOTE: Deadlines.>> In general.--For fiscal 
                year 2000 and any succeeding fiscal year, any 
                institution with a cohort default rate (as defined in 
                subsection (g)) that equals or exceeds 50 percent for 
                each of the 3 most recent years for which data are 
                available shall not be eligible to participate in a 
                program under this part for the fiscal year for which 
                the determination is made and the 2 succeeding fiscal 
                years, unless, within 30 days of receiving notification 
                from the Secretary of the loss of eligibility under this 
                paragraph, the institution appeals the loss of 
                eligibility to the Secretary. The Secretary shall issue 
                a decision on any such appeal within 45 days after the 
                submission of the appeal. Such decision may permit the 
                institution to continue to participate in a program 
                under this part if--
                          ``(i) the institution demonstrates to the 
                      satisfaction of the Secretary that the calculation 
                      of the institution's cohort default rate is not 
                      accurate, and that recalculation would reduce the 
                      institution's cohort default rate for any of the 3 
                      fiscal years below 50 percent; or
                          ``(ii) there are, in the judgment of the 
                      Secretary, such a small number of borrowers 
                      entering repayment that the application of this 
                      subparagraph would be inequitable.
                    ``(B) Continued participation.--During an appeal 
                under subparagraph (A), the Secretary may permit the 
                institution to continue to participate in a program 
                under this part.
                    ``(C) <<NOTE: Deadline.>> Return of funds.--Within 
                90 days after the date of any termination pursuant to 
                subparagraph (A), or the conclusion of any appeal 
                pursuant to subparagraph (B), whichever is later, the 
                balance of the student loan fund established under this 
                part by the institution that is the subject of the 
                termination shall be distributed as follows:
                          ``(i) The Secretary shall first be paid an 
                      amount which bears the same ratio to such balance 
                      (as of the date of such distribution) as the total 
                      amount of Federal capital contributions to such 
                      fund by the Secretary under this part bears to the 
                      sum of such Federal capital contributions and the 
                      capital contributions to such fund made by the 
                      institution.
                          ``(ii) The remainder of such student loan fund 
                      shall be paid to the institution.
                    ``(D) Use of returned funds.--Any funds returned to 
                the Secretary under this paragraph shall be reallocated 
                to institutions of higher education pursuant to 
                subsection (i).
                    ``(E) Definition.--For the purposes of subparagraph 
                (A), the term `loss of eligibility' shall be defined as 
                the mandatory liquidation of an institution's student 
                loan fund, and assignment of the institution's 
                outstanding loan portfolio to the Secretary.

    ``(f ) Applicable Maximum Cohort Default Rate.--

[[Page 112 STAT. 1723]]

            ``(1) Award years prior to 2000.--For award years prior to 
        award year 2000, the applicable maximum cohort default rate is 
        30 percent.
            ``(2) Award year 2000 and succeeding award years.--For award 
        year 2000 and subsequent years, the applicable maximum cohort 
        default rate is 25 percent.''.

    (d) Cohort Default Rate Definition.--Section 462(g) (as redesignated 
by subsection (a)(2)(G)) is amended-- <<NOTE: 20 USC 1087bb.>> 
            (1) by striking the subsection heading and paragraphs (1) 
        and (2) and inserting the following:

    ``(g) Definition of Cohort Default Rate.--'';
            (2) by striking ``(3)(A) For award year 1994 and any 
        succeeding award year, the term'' and inserting the following:
            ``(1)(A) The term'';
            (3) in paragraph (1) (as redesignated by paragraph (2))--
                    (A) by striking subparagraphs (B) and (E); and
                    (B) by redesignating subparagraphs (C), (D), (F), 
                and (G) as subparagraphs (B), (C), (D), and (F), 
                respectively;
                    (C) by inserting after subparagraph (D) (as 
                redesignated by subparagraph (B)) the following:
            ``(E) In determining the number of students who default 
        before the end of such award year, the institution, in 
        calculating the cohort default rate, shall exclude--
                    ``(i) any loan on which the borrower has, after the 
                time periods specified in paragraph (2)--
                          ``(I) voluntarily made 6 consecutive payments;
                          ``(II) voluntarily made all payments currently 
                      due;
                          ``(III) repaid in full the amount due on the 
                      loan; or
                          ``(IV) received a deferment or forbearance, 
                      based on a condition that began prior to such time 
                      periods;
                    ``(ii) any loan which has, after the time periods 
                specified in paragraph (2), been rehabilitated or 
                canceled; and
                    ``(iii) any other loan that the Secretary determines 
                should be excluded from such determination.''; and
            (4) by striking paragraph (4) and inserting the following:
            ``(2) For purposes of calculating the cohort default rate 
        under this subsection, a loan shall be considered to be in 
        default--
                    ``(A) 240 days (in the case of a loan repayable 
                monthly), or
                    ``(B) 270 days (in the case of a loan repayable 
                quarterly),
        after the borrower fails to make an installment payment when due 
        or to comply with other terms of the promissory note.''.

    (e) Conforming Amendments.--Section 462 (20 U.S.C. 1087bb) is 
amended--
            (1) in the matter following paragraphs (1)(B) and (2)(D)(ii) 
        of subsection (a), by inserting ``cohort'' before ``default'' 
        each place the term appears;
            (2) in the matter following paragraphs (2)(B) and (3)(C) of 
        subsection (b) (as redesignated by subsection (a)(2)(G)), by 
        inserting ``cohort'' before ``default'' each place the term 
        appears;
            (3) in subsection (d)(2) (as redesignated by subsection 
        (a)(2)(G)), by inserting ``cohort'' before ``default''; and
            (4) in subsection (g)(1)(F) (as redesignated by subsections 
        (a)(2)(G) and (d)(3)(B)), by inserting ``cohort'' before 
        ``default''.

[[Page 112 STAT. 1724]]

SEC. 463. AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION.

    (a) Contents of Agreements.--Section 463(a) (20 U.S.C. 1087cc(a)) is 
amended--
            (1) by amending subparagraph (B) of paragraph (2) to read as 
        follows:
                    ``(B) a capital contribution by an institution in an 
                amount equal to one-third of the Federal capital 
                contributions described in subparagraph (A);'';
            (2) by striking paragraph (4); and
            (3) by redesignating paragraphs (5) through (10) as 
        paragraphs (4) through (9);

    (b) Agreements With Credit Bureaus.--Section 463(c) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``the Secretary shall'' and 
                inserting ``the Secretary and each institution of higher 
                education participating in the program under this part 
                shall''; and
                    (B) by inserting ``and regarding loans held by the 
                Secretary or an institution'' after ``section 467'';
            (2) in paragraph (2)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``by the Secretary'' and all that follows 
                through ``of--'' and inserting ``by the Secretary or an 
                institution, as the case may be, to such organizations, 
                with respect to any loan held by the Secretary or the 
                institution, respectively, of--'';
                    (B) by amending subparagraph (A) to read as follows:
                    ``(A) the date of disbursement and the amount of 
                such loans made to any borrower under this part at the 
                time of disbursement of the loan;'';
                    (C) in subparagraph (B)--
                          (i) by inserting ``the repayment and'' after 
                      ``concerning''; and
                          (ii) by striking ``any defaulted'' and 
                      inserting ``such''; and
                    (D) in subparagraph (C), by inserting ``, or upon 
                cancellation or discharge of the borrower's obligation 
                on the loan for any reason'' before the period;
            (3) in paragraph (3)--
                    (A) in the matter preceding subparagraph (A)--
                          (i) by inserting ``or an institution'' after 
                      ``from the Secretary''; and
                          (ii) by striking ``until--'' and inserting 
                      ``until the loan is paid in full.''; and
                    (B) by striking subparagraphs (A) and (B);
            (4) by amending paragraph (4) to read as follows:

    ``(4)(A) Except as provided in subparagraph (B), an institution of 
higher education, after consultation with the Secretary and pursuant to 
the agreements entered into under paragraph (1), shall disclose at least 
annually to any credit bureau organization with which the Secretary has 
such an agreement the information set forth in paragraph (2), and shall 
disclose promptly to such credit bureau organization any changes to the 
information previously disclosed.
    ``(B) The Secretary may promulgate regulations establishing criteria 
under which an institution of higher education may cease

[[Page 112 STAT. 1725]]

reporting the information described in paragraph (2) before a loan is 
paid in full.''; and
            (4) by inserting after paragraph (4) the following:

    ``(5) <<NOTE: Notification.>> Each institution of higher education 
shall notify the appropriate credit bureau organizations whenever a 
borrower of a loan that is made and held by the institution and that is 
in default makes 6 consecutive monthly payments on such loan, for the 
purpose of encouraging such organizations to update the status of 
information maintained with respect to that borrower.''.

    (c) Conforming Amendment.--Section 463(d) is 
amended by <<NOTE: 20 USC 1087cc.>> striking ``subsection (a)(10)'' and 
inserting ``subsection (a)(9)''.

SEC. 464. TERMS OF LOANS.

    (a) Terms and Conditions; Annual Limits.--Paragraph (2) of section 
464(a) (20 U.S.C. 1087dd(a)) is amended to read as follows:
    ``(2)(A) Except as provided in paragraph (4), the total of loans 
made to a student in any academic year or its equivalent by an 
institution of higher education from a loan fund established pursuant to 
an agreement under this part shall not exceed--
            ``(i) $4,000, in the case of a student who has not 
        successfully completed a program of undergraduate education; or
            ``(ii) <<NOTE: Regulations.>> $6,000, in the case of a 
        graduate or professional student (as defined in regulations 
        issued by the Secretary).

    ``(B) Except as provided in paragraph (4), the aggregate unpaid 
principal amount for all loans made to a student by institutions of 
higher education from loan funds established pursuant to agreements 
under this part may not exceed--
            ``(i) $40,000, in the case of any graduate or professional 
        student (as defined by regulations issued by the Secretary, and 
        including any loans from such funds made to such person before 
        such person became a graduate or professional student);
            ``(ii) <<NOTE: Regulations.>> $20,000, in the case of a 
        student who has successfully completed 2 years of a program of 
        education leading to a bachelor's degree but who has not 
        completed the work necessary for such a degree (determined under 
        regulations issued by the Secretary), and including any loans 
        from such funds made to such person before such person became 
        such a student; and
            ``(iii) $8,000, in the case of any other student.''.

    (b) Need and Eligibility.--Section 464(b) is amended--
            (1) in paragraph (1), by adding at the end the following: 
        ``A student who is in default on a loan under this part shall 
        not be eligible for an additional loan under this part unless 
        such loan meets one of the conditions for exclusion under 
        section 462(g)(1)(E).''; and
            (2) by amending paragraph (2) to read as follows:

    ``(2) If the institution's capital contribution under section 462 is 
directly or indirectly based in part on the financial need demonstrated 
by students who are (A) attending the institution less than full time, 
or (B) independent students, then a reasonable portion of the loans made 
from the institution's student loan fund containing the contribution 
shall be made available to such students.''.
    (c) Contents of Loan Agreement.--Section 464(c) is 
amended--

[[Page 112 STAT. 1726]]

            (1) in paragraph (1)(D)--
                    (A) by striking ``(i) 3 percent'' and all that 
                follows through ``or (iii)''; and
                    (B) by striking ``subparagraph (A)(i)'' and 
                inserting ``paragraph (2)(A)(i)'';
            (2) in the matter following clause (iv) of paragraph (2)(A), 
        by striking ``subparagraph (B)'' and inserting ``subparagraph 
        (A) of paragraph (1)'';
            (3) by adding at the end of paragraph (2) the following:

    ``(C) An individual with an outstanding loan balance who meets the 
eligibility criteria for a deferment described in subparagraph (A) as in 
effect on the date of enactment of this subparagraph shall be eligible 
for deferment under this paragraph notwithstanding any contrary 
provision of the promissory note under which the loan or loans were 
made, and notwithstanding any amendment (or effective date provision 
relating to any amendment) to this section made prior to the date of 
such deferment.''; and
            (4) by adding at the end the following:

    ``(7) There shall be excluded from the 9-month period that begins on 
the date on which a student ceases to carry at least one-half the normal 
full-time academic workload (as described in paragraph (1)(A)) any 
period not to exceed 3 years during which a borrower who is a member of 
a reserve component of the Armed Forces named in section 10101 of title 
10, United States Code, is called or ordered to active duty for a period 
of more than 30 days (as defined in section 101(d)(2) of such title). 
Such period of exclusion shall include the period necessary to resume 
enrollment at the borrower's next available regular enrollment 
period.''.
    (d) Discharge; Rehabilitation; Incentive Repayment.--
Section 464 is amended <<NOTE: 20 USC 1087dd.>> by adding at the end the 
following:

    ``(g) Discharge.--
            ``(1) In general.--If a student borrower who received a loan 
        made under this part on or after January 1, 1986, is unable to 
        complete the program in which such student is enrolled due to 
        the closure of the institution, then the Secretary shall 
        discharge the borrower's liability on the loan (including the 
        interest and collection fees) and shall subsequently pursue any 
        claim available to such borrower against the institution and the 
        institution's affiliates and principals, or settle the loan 
        obligation pursuant to the financial responsibility standards 
        described in section 498(c).
            ``(2) Assignment.--A borrower whose loan has been discharged 
        pursuant to this subsection shall be deemed to have assigned to 
        the United States the right to a loan refund in an amount that 
        does not exceed the amount discharged against the institution 
        and the institution's affiliates and principals.
            ``(3) Eligibility for additional assistance.--The period 
        during which a student was unable to complete a course of study 
        due to the closing of the institution shall not be considered 
        for purposes of calculating the student's period of eligibility 
        for additional assistance under this title.
            ``(4) Special rule.--A borrower whose loan has been 
        discharged pursuant to this subsection shall not be precluded, 
        because of that discharge, from receiving additional grant, 
        loan, or work assistance under this title for which the borrower

[[Page 112 STAT. 1727]]

        would be otherwise eligible (but for the default on the 
        discharged loan). The amount discharged under this subsection 
        shall be treated as an amount canceled under section 465(a).
            ``(5) Reporting.--The Secretary or institution, as the case 
        may be, shall report to credit bureaus with respect to loans 
        that have been discharged pursuant to this subsection.

    ``(h) Rehabilitation of Loans.--
            ``(1) Rehabilitation.--
                    ``(A) In general.--If the borrower of a loan made 
                under this part who has defaulted on the loan makes 12 
                ontime, consecutive, monthly payments of amounts owed on 
                the loan, as determined by the institution, or by the 
                Secretary in the case of a loan held by the Secretary, 
                the loan shall be considered rehabilitated, and the 
                institution that made that loan (or the Secretary, in 
                the case of a loan held by the Secretary) shall request 
                that any credit bureau organization or credit reporting 
                agency to which the default was reported remove the 
                default from the borrower's credit history.
                    ``(B) Comparable conditions.--As long as the 
                borrower continues to make scheduled repayments on a 
                loan rehabilitated under this paragraph, the 
                rehabilitated loan shall be subject to the same terms 
                and conditions, and qualify for the same benefits and 
                privileges, as other loans made under this part.
                    ``(C) Additional assistance.--The borrower of a 
                rehabilitated loan shall not be precluded by section 484 
                from receiving additional grant, loan, or work 
                assistance under this title (for which the borrower is 
                otherwise eligible) on the basis of defaulting on the 
                loan prior to such rehabilitation.
                    ``(D) Limitations.--A borrower only once may obtain 
                the benefit of this paragraph with respect to 
                rehabilitating a loan under this part.
            ``(2) Restoration of eligibility.--If the borrower of a loan 
        made under this part who has defaulted on that loan makes 6 
        ontime, consecutive, monthly payments of amounts owed on such 
        loan, the borrower's eligibility for grant, loan, or work 
        assistance under this title shall be restored to the extent that 
        the borrower is otherwise eligible. A borrower only once may 
        obtain the benefit of this paragraph with respect to restored 
        eligibility.

    ``(i) Incentive Repayment Program.--
            ``(1) In general.--Each institution of higher education may 
        establish, with the approval of the Secretary, an incentive 
        repayment program designed to reduce default and to replenish 
        student loan funds established under this part. Each such 
        incentive repayment program may--
                    ``(A) offer a reduction of the interest rate on a 
                loan on which the borrower has made 48 consecutive, 
                monthly repayments, but in no event may the rate be 
                reduced by more than 1 percent;
                    ``(B) provide for a discount on the balance owed on 
                a loan on which the borrower pays the principal and 
                interest in full prior to the end of the applicable 
                repayment period, but in no event may the discount 
                exceed 5 percent

[[Page 112 STAT. 1728]]

                of the unpaid principal balance due on the loan at the 
                time the early repayment is made; and
                    ``(C) include such other incentive repayment options 
                as the institution determines will carry out the 
                objectives of this subsection.
            ``(2) Limitation.--No incentive repayment option under an 
        incentive repayment program authorized by this subsection may be 
        paid for with Federal funds, including any Federal funds from 
        the student loan fund, or with institutional funds from the 
        student loan fund.''.

SEC. 465. CANCELLATION FOR PUBLIC SERVICE.

    Section 465 (20 U.S.C. 1087ee) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (2)(C), by striking ``section 
                676(b)(9)'' and inserting ``section 635(a)(10)'';
                    (B) in the last sentence of paragraph (2), by 
                striking ``section 602(a)(1)'' and inserting ``section 
                602''; and
                    (C) by adding at the end the following new 
                paragraph:

    ``(7) An individual with an outstanding loan obligation under this 
part who performs service of any type that is described in paragraph (2) 
as in effect on the date of enactment of this paragraph shall be 
eligible for cancellation under this section for such service 
notwithstanding any contrary provision of the promissory note under 
which the loan or loans were made, and notwithstanding any amendment (or 
effective date provision relating to any amendment) to this section made 
prior to the date of such service.''; and
            (2) <<NOTE: Deadline.>> in subsection (b), by adding at the 
        end the following new sentence: ``To the extent feasible, the 
        Secretary shall pay the amounts for which any institution 
        qualifies under this subsection not later than 3 months after 
        the institution files an institutional application for campus-
        based funds.''.

SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.

    Section 466 (20 U.S.C. 1087ff) is amended--
            (1) in subsection (a)--
                    (A) in the matter preceding paragraph (1)--
                          (i) by striking ``1996'' and inserting 
                      ``2003''; and
                          (ii) by striking ``1997'' and inserting 
                      ``2004''; and
                    (B) in paragraph (1), by striking ``1996'' and 
                inserting ``2003'';
            (2) in subsection (b)--
                    (A) by striking ``2005'' and inserting ``2012''; and
                    (B) by striking ``1996'' and inserting ``2003''; and
            (3) in subsection (c), by striking ``1997'' and inserting 
        ``2004''.

SEC. 467. PERKINS LOAN REVOLVING FUND.

    (a) Repeal.--Subsection (c) of section 467 (20 U.S.C. 1087gg(c)) is 
repealed.
    (b) <<NOTE: 20 USC 1087gg note.>> Transfer of Balance.--Any funds in 
the Perkins Loan Revolving Fund on the date of enactment of this Act 
shall be transferred to and deposited in the Treasury.

[[Page 112 STAT. 1729]]

                          PART F--NEED ANALYSIS

SEC. 471. COST OF ATTENDANCE.

    Section 472 (20 U.S.C. 1087ll) is amended--
            (1) in paragraph (2), by inserting after ``personal 
        expenses'' the following: ``, including a reasonable allowance 
        for the documented rental or purchase of a personal computer,'';
            (2) in paragraph (3)--
                    (A) in subparagraph (A), by striking ``of not less 
                than $1,500'' and inserting ``determined by the 
                institution''; and
                    (B) in subparagraph (C), by striking ``, except that 
                the amount may not be less than $2,500'';
            (3) in paragraph (10), by striking everything after 
        ``determining costs'' and inserting a semicolon; and
            (4) in paragraph (11), by striking ``placed'' and inserting 
        ``engaged''.

SEC. 472. DATA ELEMENTS.

    Section 474(b)(3) (20 U.S.C. 1087nn(b)(3)) is amended by 
inserting ``, excluding the student's parents,'' after ``family of the 
student''.

SEC. 473. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.

    (a) Parents' Contribution from Adjusted Available Income.--Section 
475(b)(3) (20 U.S.C. 1087oo(b)(3)) is amended by inserting ``, excluding 
the student's parents,'' after ``number of family members''.
    (b) Student Contribution From Available Income.--Section 475(g) is 
amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (D), by striking ``$1,750; and'' 
                and inserting ``$2,200 (or a successor amount prescribed 
                by the Secretary under section 478);'';
                    (B) by striking the period at the end of 
                subparagraph (E) and inserting ``; and''; and
                    (C) by inserting after subparagraph (E) the 
                following new subparagraph:
                    ``(F) an allowance for parents' negative available 
                income, determined in accordance with paragraph (6).''; 
                and
            (2) by adding at the end the following new paragraph:
            ``(6) Allowance for parents' negative available income.--The 
        allowance for parents' negative available income is the amount, 
        if any, by which the sum of the amounts deducted under 
        subparagraphs (A) through (F) of subsection (c)(1) exceeds the 
        sum of the parents' total income (as defined in section 480) and 
        the parents' contribution from assets (as determined in 
        accordance with subsection (d)).''.

    (c) Adjustments to Student's Contribution for Enrollment Periods 
Other Than Nine Months.--Section 475 is amended by adding at the end the 
following:
    ``( j) Adjustments to Student's Contribution for Enrollment Periods 
of Less Than Nine Months.--For periods of enrollment of less than 9 
months, the student's contribution from adjusted available income (as 
determined under subsection (g)) is determined, for purposes other than 
subpart 2 of part A, by dividing the amount

[[Page 112 STAT. 1730]]

determined under such subsection by 9, and multiplying the result by the 
number of months in the period of enrollment.''.

SEC. 474. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT 
            DEPENDENTS OTHER THAN A SPOUSE.

    (a) Adjustments for Enrollment Periods of Less Than Nine Months.--
Section 476(a) (20 U.S.C. 1087pp(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (1)(B);
            (2) by inserting ``and'' after the semicolon at the end of 
        paragraph (2); and
            (3) by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) for periods of enrollment of less than 9 months, for 
        purposes other than subpart 2 of part A--
                    ``(A) dividing the quotient resulting under 
                paragraph (2) by 9; and
                    ``(B) multiplying the result by the number of months 
                in the period of enrollment;''.

    (b) Contribution from Available Income.--Section 476(b)(1)(A)(iv) is 
amended--
            (1) by striking ``allowance of--'' and inserting ``allowance 
        of the following amount (or a successor amount prescribed by the 
        Secretary under section 478)--'';
            (2) in subclauses (I) and (II), by striking ``$3,000'' each 
        place the term appears and inserting ``$5,000''; and
            (3) in subclause (III), by striking ``$6,000'' and inserting 
        ``$8,000''.

SEC. 475. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH DEPENDENTS 
            OTHER THAN A SPOUSE.

    Section 477(a) (20 U.S.C. 1087qq(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (2);
            (2) by inserting ``and'' after the semicolon at the end of 
        paragraph (3); and
            (3) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) for periods of enrollment of less than 9 months, for 
        purposes other than subpart 2 of part A--
                    ``(A) dividing the quotient resulting under 
                paragraph (3) by 9; and
                    ``(B) multiplying the result by the number of months 
                in the period of enrollment;''.

SEC. 476. REGULATIONS; UPDATED TABLES AND AMOUNTS.

    Section 478(b) (20 U.S.C. 1087rr(b)) is amended--
            (1) by striking ``For each academic year'' and inserting the 
        following:
            ``(1) Revised tables.--For each academic year''; and
            (2) by adding at the end the following new paragraph:
            ``(2) <<NOTE: Federal Register, publication.>> Revised 
        amounts.--For each academic year after academic year 2000-2001, 
        the Secretary shall publish in the Federal Register revised 
        income protection allowances for the purpose of sections 
        475(g)(2)(D) and 476(b)(1)(A)(iv). Such revised allowances shall 
        be developed by increasing each of the dollar amounts contained 
        in such section by a percentage equal to the estimated 
        percentage increase in the Consumer Price Index (as determined 
        by the Secretary) between December 1999 and

[[Page 112 STAT. 1731]]

        the December next preceding the beginning of such academic year, 
        and rounding the result to the nearest $10.''.

SEC. 477. SIMPLIFIED NEEDS TEST; ZERO EXPECTED FAMILY CONTRIBUTION.

    Section 479 (20 U.S.C. 1087ss) is amended--
            (1) in subsection (b)(3)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``this paragraph'' and inserting ``this 
                subsection, or subsection (c), as the case may be,'';
                    (B) in subparagraph (A), by striking ``or'' at the 
                end thereof;
                    (C) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (D) by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) a form 1040 (including any prepared or 
                electronic version of such form) required pursuant to 
                the Internal Revenue Code of 1986, except that such form 
                shall be considered a qualifying form only if the 
                student or family files such form in order to take a tax 
                credit under section 25A of the Internal Revenue Code of 
                1986, and would otherwise be eligible to file a form 
                described in subparagraph (A); or'';
            (2) in subsection (c)--
                    (A) by amending paragraph (1)(A) to read as follows:
                    ``(A) the student's parents file, or are eligible to 
                file, a form described in subsection (b)(3), or certify 
                that the parents are not required to file an income tax 
                return and the student files, or is eligible to file, 
                such a form, or certifies that the student is not 
                required to file an income tax return; and''; and
                    (B) by amending paragraph (2)(A) to read as follows:
                    ``(A) the student (and the student's spouse, if any) 
                files, or is eligible to file, a form described in 
                subsection (b)(3), or certifies that the student (and 
                the student's spouse, if any) is not required to file an 
                income tax return; and''.

SEC. 478. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

    Section 479A (20 U.S.C. 1087tt) is amended--
            (1) in subsection (a), by inserting after the second 
        sentence the following: ``Special circumstances may include 
        tuition expenses at an elementary or secondary school, medical 
        or dental expenses not covered by insurance, unusually high 
        child care costs, recent unemployment of a family member, the 
        number of parents enrolled at least half-time in a degree, 
        certificate, or other program leading to a recognized 
        educational credential at an institution with a program 
        participation agreement under section 487, or other changes in a 
        family's income, a family's assets, or a student's status.''; 
        and
            (2) by amending subsection (c) to read as follows:

    ``(c) Refusal or Adjustment of Loan Certifications.--On a case-by-
case basis, an eligible institution may refuse to certify a statement 
that permits a student to receive a loan under part B or D, or may 
certify a loan amount or make a loan that is less than the student's 
determination of need (as determined under this part), if the reason for 
the action is documented and provided

[[Page 112 STAT. 1732]]

in written form to the student. No eligible institution shall 
discriminate against any borrower or applicant in obtaining a loan on 
the basis of race, national origin, religion, sex, marital status, age, 
or disability status.''.

SEC. 479. TREATMENT OF OTHER FINANCIAL ASSISTANCE.

    Section 480( j) (20 U.S.C. 1087vv( j)) is amended--
            (1) in paragraph (1), by inserting before the period at the 
        end the following: ``, and national service educational awards 
        or post-service benefits under title I of the National and 
        Community Service Act of 1990 (42 U.S.C. 12571 et seq.)'';
            (2) by striking paragraph (3); and
            (3) by redesignating paragraph (4) as paragraph (3).

SEC. 480. CLERICAL AMENDMENTS.

    (a) Amount of Need.--Section 471 (20 U.S.C. 1087kk) is amended by 
striking ``or 4'' and inserting ``or 2''.
    (b) Family Contribution.--Section 473 (20 U.S.C. 1087mm) is amended 
by striking ``subpart 4'' and inserting ``subpart 2''.

SEC. 480A. EFFECTIVE DATES. <<NOTE: 20 USC 1087kk note.>> 

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this part are effective on the date of enactment of 
this Act.
    (b) <<NOTE: Applicability.>> Provisions Effective for Academic Year 
2000-2001, and Thereafter.--The amendments made by sections 472, 473, 
474, and 475 shall apply with respect to determinations of need under 
part F of title IV of the Higher Education Act of 1965 for academic 
years beginning on or after July 1, 2000.

                       PART G--GENERAL PROVISIONS

SEC. 481. MASTER CALENDAR.

    (a) Required Schedule.--Section 482(a) (20 U.S.C. 1089(a)) is 
amended by adding at the end the following:
            ``(3) <<NOTE: Notification.>> The Secretary shall, to the 
        extent practicable, notify eligible institutions, guaranty 
        agencies, lenders, interested software providers, and, upon 
        request, other interested parties, by December 1 prior to the 
        start of an award year of minimal hardware and software 
        requirements necessary to administer programs under this title.
            ``(4) The Secretary shall attempt to conduct training 
        activities for financial aid administrators and others in an 
        expeditious and timely manner prior to the start of an award 
        year in order to ensure that all participants are informed of 
        all administrative requirements.''.

    (b) Delay of Effective Date of Late Publications.--Subsection (c) of 
section 482 is amended to read as follows:
    ``(c) Delay of Effective Date of Late Publications.--(1) Except as 
provided in paragraph (2), any regulatory changes initiated by the 
Secretary affecting the programs under this title that have not been 
published in final form by November 1 prior to the start of the award 
year shall not become effective until the beginning of the second award 
year after such November 1 date.
    ``(2)(A) The Secretary may designate any regulatory provision that 
affects the programs under this title and is published in final form 
after November 1 as one that an entity subject to the provision may, in 
the entity's discretion, choose to implement prior

[[Page 112 STAT. 1733]]

to the effective date described in paragraph (1). The Secretary may 
specify in the designation when, and under what conditions, an entity 
may implement the provision prior to that effective date. 
The <<NOTE: Federal Register, publication.>> Secretary shall publish any 
designation under this subparagraph in the Federal Register.

    ``(B) If an entity chooses to implement a regulatory provision prior 
to the effective date described in paragraph (1), as permitted by 
subparagraph (A), the provision shall be effective with respect to that 
entity in accordance with the terms of the Secretary's designation.''.

SEC. 482. FORMS AND REGULATIONS.

    (a) Common Financial Aid Form Development.--Section 483(a) (20 
U.S.C. 1090(a)) is amended--
            (1) in the subsection heading, by striking ``Form'' and 
        inserting ``Form Development'';
            (2) in paragraph (1)--
                    (A) by striking ``A, C, D, and E'' and inserting ``A 
                through E'';
                    (B) by striking ``and to determine the need of a 
                student for the purpose of part B of this title'';
                    (C) by striking the second sentence and inserting 
                the following: ``The Secretary shall include on the form 
                developed under this subsection such data items as the 
                Secretary determines are appropriate for inclusion. Such 
                items shall be selected in consultation with States to 
                assist in the awarding of State financial assistance. In 
                no case shall the number of such data items be less than 
                the number included on the form on the date of enactment 
                of the Higher Education Amendments of 1998.''; and
                    (D) by striking the last sentence;
            (3) in paragraph (2)--
                    (A) by striking ``A, C, D, and E'' each place the 
                term appears and inserting ``A through E'';
                    (B) by striking ``and the need of a student for the 
                purpose of part B of this title,''; and
                    (C) by striking ``or have the student's need 
                established for the purpose of part B of this title'';
            (4) by amending paragraph (3) to read as follows:
            ``(3) Distribution of data.--Institutions of higher 
        education, guaranty agencies, and States shall receive, without 
        charge, the data collected by the Secretary using the form 
        developed pursuant to this section for the purposes of 
        processing loan applications and determining need and 
        eligibility for institutional and State financial aid awards. 
        Entities designated by institutions of higher education, 
        guaranty agencies, or States to receive such data shall be 
        subject to all the requirements of this section, unless such 
        requirements are waived by the Secretary.'';
            (5) by adding at the end the following:
            ``(5) Electronic forms.--(A) The Secretary, in cooperation 
        with representatives of agencies and organizations involved in 
        student financial assistance, including private computer 
        software providers, shall develop an electronic version of the 
        form described in paragraph (1). As permitted by the Secretary, 
        such an electronic version shall not require a signature to be 
        collected at the time such version is submitted, if a signature

[[Page 112 STAT. 1734]]

        is subsequently submitted by the 
        applicant. <<NOTE: Deadline.>> The Secretary shall prescribe 
        such version not later than 120 days after the date of enactment 
        of the Higher Education Amendments of 1998.
            ``(B) Nothing in this section shall be construed to prohibit 
        the use of the form developed by the Secretary pursuant to 
        subparagraph (A) by an eligible institution, eligible lender, 
        guaranty agency, State grant agency, private computer software 
        providers, a consortium thereof, or such other entities as the 
        Secretary may designate.
            ``(C) No fee shall be charged to students in connection with 
        the use of the electronic version of the form, or of any other 
        electronic forms used in conjunction with such form in applying 
        for Federal or State student financial assistance.
            ``(D) <<NOTE: Privacy.>> The Secretary shall ensure that 
        data collection complies with section 552a of title 5, United 
        States Code, and that any entity using the electronic version of 
        the form developed by the Secretary pursuant to subparagraph (A) 
        shall maintain reasonable and appropriate administrative, 
        technical, and physical safeguards to ensure the integrity and 
        confidentiality of the information, and to protect against 
        security threats, or unauthorized uses or disclosures of the 
        information provided on the electronic version of the form. Data 
        collected by such version of the form shall be used only for the 
        application, award, and administration of aid awarded under this 
        title, State aid, or aid awarded by eligible institutions or 
        such entities as the Secretary may designate. No data collected 
        by such version of the form shall be used for making final aid 
        awards under this title until such data have been processed by 
        the Secretary or a contractor or designee of the Secretary.
            ``(6) Third party servicers and private software 
        providers.--To the extent practicable and in a timely manner, 
        the Secretary shall provide, to private organizations and 
        consortia that develop software used by eligible institutions 
        for the administration of funds under this title, all the 
        necessary specifications that the organizations and consortia 
        must meet for the software the organizations and consortia 
        develop, produce, and distribute (including any diskette, modem, 
        or network communications) which are so used. The specifications 
        shall contain record layouts for required data. The Secretary 
        shall develop in advance of each processing cycle an annual 
        schedule for providing such specifications. The Secretary, to 
        the extent practicable, shall use means of providing such 
        specifications, including conferences and other meetings, 
        outreach, and technical support mechanisms (such as training and 
        printed reference materials). The Secretary shall, from time to 
        time, solicit from such organizations and consortia means of 
        improving the support provided by the Secretary.
            ``(7) Parent's social security number and birth date.--The 
        Secretary is authorized to include on the form developed under 
        this subsection space for the social security number and birth 
        date of parents of dependent students seeking financial 
        assistance under this title.''.

    (b) Streamlined Reapplication Process.--Section 483(b)(1) is 
amended <<NOTE: 20 USC 1090.>> by striking ``, within 240 days'' and all 
that follows through ``of 1992,''.

    (c) Information to Committees.--Section 483(c) is amended by 
striking ``and Labor'' and inserting ``and the Workforce''.

[[Page 112 STAT. 1735]]

     <<NOTE: 20 USC 1090.>> (d) Toll-Free Information.--Section 483(d) 
is amended by striking ``section 633(c)'' and inserting ``section 
685(d)(2)(C)''.

    (e) Repeal.--Subsection (f ) of section 483 is repealed.

SEC. 483. STUDENT ELIGIBILITY.

    (a) In General.--Section 484(a) (20 U.S.C. 1091(a)) is 
amended--
            (1) in paragraph (4), by striking ``the institution'' and 
        everything that follows through ``lender), a document'' and 
        inserting ``the Secretary, as part of the original financial aid 
        application process, a certification,''; and
            (2) in paragraph (5), by striking ``or a permanent resident 
        of the Trust Territory of the Pacific Islands, Guam, or the 
        Northern Mariana Islands'' and inserting ``a citizen of any one 
        of the Freely Associated States''.

    (b) Home-Schooled Students.--Section 484(d) is amended--
            (1) in the matter preceding paragraph (1), by striking 
        ``either''; and
            (2) by adding at the end the following:
            ``(3) The student has completed a secondary school education 
        in a home school setting that is treated as a home school or 
        private school under State law.''.

    (c) Termination of Eligibility.--Section 484( j) is amended to read 
as follows:
    ``( j) Assistance Under Subparts 1 and 3 of Part A, and Part C.--
Notwithstanding any other provision of law, a student shall be eligible 
until September 30, 2004, for assistance under subparts 1 and 3 of part 
A, and part C, if the student is otherwise qualified and--
            ``(1) is a citizen of any one of the Freely Associated 
        States and attends an institution of higher education in a State 
        or a public or nonprofit private institution of higher education 
        in the Freely Associated States; or
            ``(2) meets the requirements of subsection (a)(5) and 
        attends a public or nonprofit private institution of higher 
        education in any one of the Freely Associated States.''.

    (d) Correspondence Courses.--Paragraph (1) of section 484(l) is 
amended to read as follows:
            ``(1) Relation to correspondence courses.--
                    ``(A) In general.--A student enrolled in a course of 
                instruction at an institution of higher education that 
                is offered in whole or in part through 
                telecommunications and leads to a recognized certificate 
                for a program of study of 1 year or longer, or a 
                recognized associate, baccalaureate, or graduate degree, 
                conferred by such institution, shall not be considered 
                to be enrolled in correspondence courses unless the 
                total amount of telecommunications and correspondence 
                courses at such institution equals or exceeds 50 percent 
                of the total amount of all courses at the institution.
                    ``(B) Requirement.--An institution of higher 
                education referred to in subparagraph (A) is an 
                institution of higher education--
                          ``(i) that is not an institute or school 
                      described in section 521(4)(C) of the Carl D. 
                      Perkins Vocational and Applied Technology 
                      Education Act; and

[[Page 112 STAT. 1736]]

                          ``(ii) for which at least 50 percent of the 
                      programs of study offered by the institution lead 
                      to the award of a recognized associate, 
                      baccalaureate, or graduate degree.''.

    (e) Verification of Income Data.--Section 484 <<NOTE: 20 USC 
1091.>> is amended by adding at the end the following:

    ``(q) Verification of Income Data.--
            ``(1) Confirmation with irs.--The Secretary of Education, in 
        cooperation with the Secretary of the Treasury, is authorized to 
        confirm with the Internal Revenue Service the adjusted gross 
        income, Federal income taxes paid, filing status, and exemptions 
        reported by applicants (including parents) under this title on 
        their Federal income tax returns for the purpose of verifying 
        the information reported by applicants on student financial aid 
        applications.
            ``(2) <<NOTE: Procedures.>> Notification.--The Secretary 
        shall establish procedures under which an applicant is notified 
        that the Internal Revenue Service will disclose to the Secretary 
        tax return information as authorized under section 6103(l)(13) 
        of the Internal Revenue Code of 1986.''.

    (f ) Suspension of Eligibility for Drug-Related Offenses.--
            (1) Amendment.--Section 484 is amended by adding at the end 
        thereof the following:

    ``(r) Suspension of Eligibility for Drug-Related Offenses.--
            ``(1) In general.--A student who has been convicted of any 
        offense under any Federal or State law involving the possession 
        or sale of a controlled substance shall not be eligible to 
        receive any grant, loan, or work assistance under this title 
        during the period beginning on the date of such conviction and 
        ending after the interval specified in the following table:

``If convicted of an offense involving:

    The  possession  of  a  con-
      trolled substance:  Ineligibility period is:
        First offense.....    1 year 
        Second offense....    2 years 
        Third offense.....    Indefinite.

    The  sale  of  a  cont  lled
      substance:          Ineligibility period is:
        First offense.....    2 years 
        Second offense....    Indefinite.

            ``(2) Rehabilitation.--A student whose eligibility has been 
        suspended under paragraph (1) may resume eligibility before the 
        end of the ineligibility period determined under such paragraph 
        if--
                    ``(A) the student satisfactorily completes a drug 
                rehabilitation program that--
                          ``(i) complies with such criteria as the 
                      Secretary shall prescribe in regulations for 
                      purposes of this paragraph; and
                          ``(ii) includes two unannounced drug tests; or
                    ``(B) the conviction is reversed, set aside, or 
                otherwise rendered nugatory.
            ``(3) Definitions.--In this subsection, the term `controlled 
        substance' has the meaning given the term in section 102(6) of 
        the Controlled Substances Act (21 U.S.C. 802(6)).''.

[[Page 112 STAT. 1737]]

            (2) <<NOTE: Applicability. 20 USC 1091 note.>> Effective 
        date.--The amendment made by paragraph (1), regarding suspension 
        of eligibility for drug-related offenses, shall apply with 
        respect to financial assistance to cover the costs of attendance 
        for periods of enrollment beginning after the date of enactment 
        of this Act.

SEC. 484. STATE COURT JUDGMENTS.

    Section 484A (20 U.S.C. 1091a) is amended--
            (1) in the heading of the section by inserting ``, and state 
        court judgments'' after ``limitations''; and
            (2) by adding at the end the following:

    ``(c) State Court Judgments.--A judgment of a State court for the 
recovery of money provided as grant, loan, or work assistance under this 
title that has been assigned or transferred to the Secretary under this 
title may be registered in any district court of the United States by 
filing a certified copy of the judgment and a copy of the assignment or 
transfer. A judgment so registered shall have the same force and effect, 
and may be enforced in the same manner, as a judgment of the district 
court of the district in which the judgment is registered.''.

SEC. 485. INSTITUTIONAL REFUNDS.

    Section 484B (20 U.S.C. 1091b) is amended to read as follows:

``SEC. 484B. INSTITUTIONAL REFUNDS.

    ``(a) Return of Title IV Funds.--
            ``(1) In general.--If a recipient of assistance under this 
        title withdraws from an institution during a payment period or 
        period of enrollment in which the recipient began attendance, 
        the amount of grant or loan assistance (other than assistance 
        received under part C) to be returned to the title IV programs 
        is calculated according to paragraph (3) and returned in 
        accordance with subsection (b).
            ``(2) Leave of absence.--
                    ``(A) Leave not treated as withdrawal.--In the case 
                of a student who takes a leave of absence from an 
                institution for not more than a total of 180 days in any 
                12-month period, the institution may consider the 
                student as not having withdrawn from the institution 
                during the leave of absence, and not calculate the 
                amount of grant and loan assistance provided under this 
                title that is to be returned in accordance with this 
                section if--
                          ``(i) the institution has a formal policy 
                      regarding leaves of absence;
                          ``(ii) the student followed the institution's 
                      policy in requesting a leave of absence; and
                          ``(iii) the institution approved the student's 
                      request in accordance with the institution's 
                      policy.
                    ``(B) Consequences of failure to return.--If a 
                student does not return to the institution at the 
                expiration of an approved leave of absence that meets 
                the requirements of subparagraph (A), the institution 
                shall calculate the amount of grant and loan assistance 
                provided under this title that is to be returned in 
                accordance with this section based on the day the 
                student withdrew (as determined under subsection (c)).
            ``(3) Calculation of amount of title iv assistance earned.--

[[Page 112 STAT. 1738]]

                    ``(A) In general.--The amount of grant or loan 
                assistance under this title that is earned by the 
                recipient for purposes of this section is calculated 
                by--
                          ``(i) determining the percentage of grant and 
                      loan assistance under this title that has been 
                      earned by the student, as described in 
                      subparagraph (B); and
                          ``(ii) applying such percentage to the total 
                      amount of such grant and loan assistance that was 
                      disbursed (and that could have been disbursed) to 
                      the student, or on the student's behalf, for the 
                      payment period or period of enrollment for which 
                      the assistance was awarded, as of the day the 
                      student withdrew.
                    ``(B) Percentage earned.--For purposes of 
                subparagraph (A)(i), the percentage of grant or loan 
                assistance under this title that has been earned by the 
                student is--
                          ``(i) equal to the percentage of the payment 
                      period or period of enrollment for which 
                      assistance was awarded that was completed (as 
                      determined in accordance with subsection (d)) as 
                      of the day the student withdrew, provided that 
                      such date occurs on or before the completion of 60 
                      percent of the payment period or period of 
                      enrollment; or
                          ``(ii) 100 percent, if the day the student 
                      withdrew occurs after the student has completed 60 
                      percent of the payment period or period of 
                      enrollment.
                    ``(C) Percentage and amount not earned.--For 
                purposes of subsection (b), the amount of grant and loan 
                assistance awarded under this title that has not been 
                earned by the student shall be calculated by--
                          ``(i) determining the complement of the 
                      percentage of grant or loan assistance under this 
                      title that has been earned by the student 
                      described in subparagraph (B); and
                          ``(ii) applying the percentage determined 
                      under clause (i) to the total amount of such grant 
                      and loan assistance that was disbursed (and that 
                      could have been disbursed) to the student, or on 
                      the student's behalf, for the payment period or 
                      period of enrollment, as of the day the student 
                      withdrew.
            ``(4) Differences between amounts earned and amounts 
        received.--
                    ``(A) <<NOTE: Regulations.>> In general.--If the 
                student has received less grant or loan assistance than 
                the amount earned as calculated under subparagraph (A) 
                of paragraph (3), the institution of higher education 
                shall comply with the procedures for late disbursement 
                specified by the Secretary in regulations.
                    ``(B) Return.--If the student has received more 
                grant or loan assistance than the amount earned as 
                calculated under paragraph (3)(A), the unearned funds 
                shall be returned by the institution or the student, or 
                both, as may be required under paragraphs (1) and (2) of 
                subsection (b), to the programs under this title in the 
                order specified in subsection (b)(3).

    ``(b) Return of Title IV Program Funds.--

[[Page 112 STAT. 1739]]

            ``(1) Responsibility of the institution.--The institution 
        shall return, in the order specified in paragraph (3), the 
        lesser of--
                    ``(A) the amount of grant and loan assistance 
                awarded under this title that has not been earned by the 
                student, as calculated under subsection (a)(3)(C); or
                    ``(B) an amount equal to--
                          ``(i) the total institutional charges incurred 
                      by the student for the payment period or period of 
                      enrollment for which such assistance was awarded; 
                      multiplied by
                          ``(ii) the percentage of grant and loan 
                      assistance awarded under this title that has not 
                      been earned by the student, as described in 
                      subsection (a)(3)(C)(i).
            ``(2) Responsibility of the student.--
                    ``(A) In general.--The student shall return 
                assistance that has not been earned by the student as 
                described in subsection (a)(3)(C)(ii) in the order 
                specified in paragraph (3) minus the amount the 
                institution is required to return under paragraph (1).
                    ``(B) Special rule.--The student (or parent in the 
                case of funds due to a loan borrowed by a parent under 
                part B or D) shall return or repay, as appropriate, the 
                amount determined under subparagraph (A) to--
                          ``(i) a loan program under this title in 
                      accordance with the terms of the loan; and
                          ``(ii) a grant program under this title, as an 
                      overpayment of such grant and shall be subject 
                      to--
                                    ``(I) repayment arrangements 
                                satisfactory to the institution; or
                                    ``(II) overpayment collection 
                                procedures prescribed by the Secretary.
                    ``(C) Requirement.--Notwithstanding subparagraphs 
                (A) and (B), a student shall not be required to return 
                50 percent of the grant assistance received by the 
                student under this title, for a payment period or period 
                of enrollment, that is the responsibility of the student 
                to repay under this section.
            ``(3) Order of return of title iv funds.--
                    ``(A) In general.--Excess funds returned by the 
                institution or the student, as appropriate, in 
                accordance with paragraph (1) or (2), respectively, 
                shall be credited to outstanding balances on loans made 
                under this title to the student or on behalf of the 
                student for the payment period or period of enrollment 
                for which a return of funds is required. Such excess 
                funds shall be credited in the following order:
                          ``(i) To outstanding balances on loans made 
                      under section 428H for the payment period or 
                      period of enrollment for which a return of funds 
                      is required.
                          ``(ii) To outstanding balances on loans made 
                      under section 428 for the payment period or period 
                      of enrollment for which a return of funds is 
                      required.
                          ``(iii) To outstanding balances on 
                      unsubsidized loans (other than parent loans) made 
                      under part D for the payment period or period of 
                      enrollment for which a return of funds is 
                      required.

[[Page 112 STAT. 1740]]

                          ``(iv) To outstanding balances on subsidized 
                      loans made under part D for the payment period or 
                      period of enrollment for which a return of funds 
                      is required.
                          ``(v) To outstanding balances on loans made 
                      under part E for the payment period or period of 
                      enrollment for which a return of funds is 
                      required.
                          ``(vi) To outstanding balances on loans made 
                      under section 428B for the payment period or 
                      period of enrollment for which a return of funds 
                      is required.
                          ``(vii) To outstanding balances on parent 
                      loans made under part D for the payment period or 
                      period of enrollment for which a return of funds 
                      is required.
                    ``(B) Remaining excesses.--If excess funds remain 
                after repaying all outstanding loan amounts, the 
                remaining excess shall be credited in the following 
                order:
                          ``(i) To awards under subpart 1 of part A for 
                      the payment period or period of enrollment for 
                      which a return of funds is required.
                          ``(ii) To awards under subpart 3 of part A for 
                      the payment period or period of enrollment for 
                      which a return of funds is required.
                          ``(iii) To other assistance awarded under this 
                      title for which a return of funds is required.

    ``(c) Withdrawal Date.--
            ``(1) In general.--In this section, the term `day the 
        student withdrew'--
                    ``(A) is the date that the institution determines--
                          ``(i) the student began the withdrawal process 
                      prescribed by the institution;
                          ``(ii) the student otherwise provided official 
                      notification to the institution of the intent to 
                      withdraw; or
                          ``(iii) in the case of a student who does not 
                      begin the withdrawal process or otherwise notify 
                      the institution of the intent to withdraw, the 
                      date that is the mid-point of the payment period 
                      for which assistance under this title was 
                      disbursed or a later date documented by the 
                      institution; or
                    ``(B) for institutions required to take attendance, 
                is determined by the institution from such attendance 
                records.
            ``(2) Special rule.--Notwithstanding paragraph (1), if the 
        institution determines that a student did not begin the 
        withdrawal process, or otherwise notify the institution of the 
        intent to withdraw, due to illness, accident, grievous personal 
        loss, or other such circumstances beyond the student's control, 
        the institution may determine the appropriate withdrawal date.

    ``(d) Percentage of the Payment Period or Period of Enrollment 
Completed.--For purposes of subsection (a)(3)(B)(i), the percentage of 
the payment period or period of enrollment for which assistance was 
awarded that was completed, is determined--
            ``(1) in the case of a program that is measured in credit 
        hours, by dividing the total number of calendar days comprising 
        the payment period or period of enrollment for which assistance 
        is awarded into the number of calendar days completed in that 
        period as of the day the student withdrew; and
            ``(2) in the case of a program that is measured in clock 
        hours, by dividing the total number of clock hours comprising

[[Page 112 STAT. 1741]]

        the payment period or period of enrollment for which assistance 
        is awarded into the number of clock hours--
                    ``(A) completed by the student in that period as of 
                the day the student withdrew; or
                    ``(B) <<NOTE: Regulations.>>  scheduled to be 
                completed as of the day the student withdrew, if the 
                clock hours completed in the period are not less than a 
                percentage, to be determined by the Secretary in 
                regulations, of the hours that were scheduled to be 
                completed by the student in the period.

    ``(e) Effective Date.--The provisions of this section shall take 
effect 2 years after the date of enactment of the Higher Education 
Amendments of 1998. An institution of higher education may choose to 
implement such provisions prior to that date.''.

SEC. 486. INSTITUTIONAL AND FINANCIAL ASSISTANCE INFORMATION FOR 
            STUDENTS.

    (a) Information Dissemination Activities.--Section 485(a) (20 U.S.C. 
1092(a)) is amended--
            (1) in paragraph (1)--
                    (A) in the second sentence, by striking ``, through 
                appropriate publications and mailings, to all current 
                students, and to any prospective student upon request'' 
                and inserting ``upon request, through appropriate 
                publications, mailings, and electronic media, to an 
                enrolled student and to any prospective student'';
                    (B) by inserting after the second sentence the 
                following: ``Each eligible institution shall, on an 
                annual basis, provide to all enrolled students a list of 
                the information that is required to be provided by 
                institutions to students by this section and section 444 
                of the General Education Provisions Act (also referred 
                to as the Family Educational Rights and Privacy Act of 
                1974), together with a statement of the procedures 
                required to obtain such information.'';
                    (C) by amending subparagraph (F) to read as follows:
            ``(F) a statement of--
                    ``(i) the requirements of any refund policy with 
                which the institution is required to comply;
                    ``(ii) the requirements under section 484B for the 
                return of grant or loan assistance provided under this 
                title; and
                    ``(iii) the requirements for officially withdrawing 
                from the institution;''; and
                    (D) by striking ``and'' at the end of subparagraph 
                (M);
                    (E) by striking the period at the end of 
                subparagraph (N) and inserting ``; and''; and
                    (F) by adding at the end the following:
            ``(O) the campus crime report prepared by the institution 
        pursuant to subsection (f ), including all required reporting 
        categories.'';
            (2) in paragraph (3), by amending subparagraph (A) to read 
        as follows:
            ``(A) shall be made available by July 1 each year to 
        enrolled students and prospective students prior to the students 
        enrolling or entering into any financial obligation; and''; and
            (3) by adding at the end the following:

    ``(6) Each institution may provide supplemental information to 
enrolled and prospective students showing the completion or

[[Page 112 STAT. 1742]]

graduation rate for students described in paragraph (4) or for students 
transferring into the institution or information showing the rate at 
which students transfer out of the institution.''.
    (b) Exit Counseling for Borrowers.--Section 485(b) (20 U.S.C. 
1092(b)) is amended--
            (1) in paragraph (1)(A), by striking ``(individually or in 
        groups)''; and
            (2) in paragraph (2), by adding at the end the following:

    ``(C) Nothing in this subsection shall be construed to prohibit an 
institution of higher education from utilizing electronic means to 
provide personalized exit counseling.''.
    (c) Departmental Publications.--Section 485(d) is amended--
            (1) by striking ``(1) assist'' and inserting ``(A) assist'';
            (2) by striking ``(2) assist'' and inserting ``(B) assist'';
            (3) by inserting ``(1)'' before ``The Secretary'' the first 
        place the term appears; and
            (4) by adding at the end the following:

    ``(2) <<NOTE: Records.>>  The Secretary, to the extent the 
information is available, shall compile information describing State and 
other prepaid tuition programs and savings programs and disseminate such 
information to States, eligible institutions, students, and parents in 
departmental publications.

    ``(3) <<NOTE: Internet.>> The Secretary, to the extent practicable, 
shall update the Department's Internet site to include direct links to 
databases that contain information on public and private financial 
assistance programs. The Secretary shall only provide direct links to 
databases that can be accessed without charge and shall make reasonable 
efforts to verify that the databases included in a direct link are not 
providing fraudulent information. The Secretary shall prominently 
display adjacent to any such direct link a disclaimer indicating that a 
direct link to a database does not constitute an endorsement or 
recommendation of the database, the provider of the database, or any 
services or products of such provider. The Secretary shall provide 
additional direct links to information resources from which students may 
obtain information about fraudulent and deceptive practices in the 
provision of services related to student financial aid.''.

    (d) Disclosures.--Section 485(e) is amended--
            (1) in paragraph (2)--
                    (A) by striking ``his parents, his guidance'' and 
                inserting ``the student's parents, guidance''; and
                    (B) by adding at the end the following: ``If the 
                institution is a member of a national collegiate 
                athletic association that compiles graduation rate data 
                on behalf of the association's member institutions that 
                the Secretary determines is substantially comparable to 
                the information described in paragraph (1), the 
                distribution of the compilation of such data to all 
                secondary schools in the United States shall fulfill the 
                responsibility of the institution to provide information 
                to a prospective student athlete's guidance counselor 
                and coach.''; and
            (2) by amending paragraph (9) to read as follows:

    ``(9) <<NOTE: Reports. Deadline.>> The reports required by this 
subsection shall be due each July 1 and shall cover the 1-year period 
ending August 31 of the preceding year.''.

    (e) Disclosure of Campus Security Policy and Campus Crime 
Statistics.--Section 485(f ) (20 U.S.C. 1092(f )) is amended--

[[Page 112 STAT. 1743]]

            (1) in paragraph (1)--
                    (A) by amending subparagraph (F) to read as follows:
            ``(F) Statistics concerning the occurrence on campus, in or 
        on noncampus buildings or property, and on public property 
        during the most recent calendar year, and during the 2 preceding 
        calendar years for which data are available--
                    ``(i) of the following criminal offenses reported to 
                campus security authorities or local police agencies:
                          ``(I) murder;
                          ``(II) sex offenses, forcible or nonforcible;
                          ``(III) robbery;
                          ``(IV) aggravated assault;
                          ``(V) burglary;
                          ``(VI) motor vehicle theft;
                          ``(VII) manslaughter;
                          ``(VIII) arson; and
                          ``(IX) arrests or persons referred for campus 
                      disciplinary action for liquor law violations, 
                      drug-related violations, and weapons possession; 
                      and
                    ``(ii) of the crimes described in subclauses (I) 
                through (VIII) of clause (i), and other crimes involving 
                bodily injury to any person in which the victim is 
                intentionally selected because of the actual or 
                perceived race, gender, religion, sexual orientation, 
                ethnicity, or disability of the victim that are reported 
                to campus security authorities or local police agencies, 
                which data shall be collected and reported according to 
                category of prejudice.'';
                    (B) by striking subparagraph (H); and
                    (C) by redesignating subparagraph (I) as 
                subparagraph (H);
            (2) in paragraph (4)--
                    (A) by striking ``Upon request of the Secretary, 
                each'' and inserting ``On an annual basis, each'';
                    (B) by striking ``paragraphs (1)(F) and (1)(H)'' and 
                inserting ``paragraph (1)(F)'';
                    (C) by striking ``and Labor'' and inserting ``and 
                the Workforce'';
                    (D) by striking ``1995'' and inserting ``2000'';
                    (E) by striking ``and'' at the end of subparagraph 
                (A);
                    (F) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (G) by inserting after subparagraph (A) the 
                following:
            ``(B) <<NOTE: Public information.>> make copies of the 
        statistics submitted to the Secretary available to the public; 
        and'';
            (3) by amending paragraph (5)(A) to read as follows:

    ``(5)(A) In this subsection:
            ``(i) The term `campus' means--
                    ``(I) any building or property owned or controlled 
                by an institution of higher education within the same 
                reasonably contiguous geographic area of the institution 
                and used by the institution in direct support of, or in 
                a manner related to, the institution's educational 
                purposes, including residence halls; and
                    ``(II) property within the same reasonably 
                contiguous geographic area of the institution that is 
                owned by the institution but controlled by another 
                person, is used by

[[Page 112 STAT. 1744]]

                students, and supports institutional purposes (such as a 
                food or other retail vendor).
            ``(ii) The term `noncampus building or property' means--
                    ``(I) any building or property owned or controlled 
                by a student organization recognized by the institution; 
                and
                    ``(II) any building or property (other than a branch 
                campus) owned or controlled by an institution of higher 
                education that is used in direct support of, or in 
                relation to, the institution's educational purposes, is 
                used by students, and is not within the same reasonably 
                contiguous geographic area of the institution.
            ``(iii) The term `public property' means all public property 
        that is within the same reasonably contiguous geographic area of 
        the institution, such as a sidewalk, a street, other 
        thoroughfare, or parking facility, and is adjacent to a facility 
        owned or controlled by the institution if the facility is used 
        by the institution in direct support of, or in a manner related 
        to the institution's educational purposes.'';
            (4) in paragraph (6)--
                    (A) by striking ``paragraphs (1)(F) and (1)(H)'' and 
                inserting ``paragraph (1)(F)''; and
                    (B) by adding at the end the following: ``Such 
                statistics shall not identify victims of crimes or 
                persons accused of crimes.'';
            (5) by redesignating paragraphs (4) through (7) as 
        paragraphs (5) through (8), respectively;
            (6) by inserting after paragraph (3) the following:

    ``(4)(A) <<NOTE: Records.>> Each institution participating in any 
program under this title that maintains a police or security department 
of any kind shall make, keep, and maintain a daily log, written in a 
form that can be easily understood, recording all crimes reported to 
such police or security department, including--
            ``(i) the nature, date, time, and general location of each 
        crime; and
            ``(ii) the disposition of the complaint, if known.

    ``(B)(i) <<NOTE: Public information.>> All entries that are required 
pursuant to this paragraph shall, except where disclosure of such 
information is prohibited by law or such disclosure would jeopardize the 
confidentiality of the victim, be open to public inspection within two 
business days of the initial report being made to the department or a 
campus security authority.

    ``(ii) <<NOTE: Deadline.>> If new information about an entry into a 
log becomes available to a police or security department, then the new 
information shall be recorded in the log not later than two business 
days after the information becomes available to the police or security 
department.

    ``(iii) If there is clear and convincing evidence that the release 
of such information would jeopardize an ongoing criminal investigation 
or the safety of an individual, cause a suspect to flee or evade 
detection, or result in the destruction of evidence, such information 
may be withheld until that damage is no longer likely to occur from the 
release of such information.''; and
            (7) by adding at the end the following:

    ``(9) The Secretary shall provide technical assistance in complying 
with the provisions of this section to an institution of higher 
education who requests such assistance.

[[Page 112 STAT. 1745]]

    ``(10) Nothing in this section shall be construed to require the 
reporting or disclosure of privileged information.
    ``(11) <<NOTE: Reports.>> The Secretary shall report to the 
appropriate committees of Congress each institution of higher education 
that the Secretary determines is not in compliance with the reporting 
requirements of this subsection.

    ``(12) For purposes of reporting the statistics with respect to 
crimes described in paragraph (1)(F), an institution of higher education 
shall distinguish, by means of separate categories, any criminal 
offenses that occur--
            ``(A) on campus;
            ``(B) in or on a noncampus building or property;
            ``(C) on public property; and
            ``(D) in dormitories or other residential facilities for 
        students on campus.

    ``(13) Upon a determination pursuant to section 487(c)(3)(B) that an 
institution of higher education has substantially misrepresented the 
number, location, or nature of the crimes required to be reported under 
this subsection, the Secretary shall impose a civil penalty upon the 
institution in the same amount and pursuant to the same procedures as a 
civil penalty is imposed under section 487(c)(3)(B).
    ``(14)(A) Nothing in this subsection may be construed to--
            ``(i) create a cause of action against any institution of 
        higher education or any employee of such an institution for any 
        civil liability; or
            ``(ii) establish any standard of care.

    ``(B) Notwithstanding any other provision of law, evidence regarding 
compliance or noncompliance with this subsection shall not be admissible 
as evidence in any proceeding of any court, agency, board, or other 
entity, except with respect to an action to enforce this subsection.
    ``(15) <<NOTE: Short title.>> This subsection may be cited as the 
`Jeanne Clery Disclosure of Campus Security Policy and Campus Crime 
Statistics Act'.''.

    (f ) Data Required.--Section 485(g) is amended-- <<NOTE: 20 USC 
1092.>> 
            (1) in paragraph (1), by adding at the end the following:
                    ``(I)(i) The total revenues, and the revenues from 
                football, men's basketball, women's basketball, all 
                other men's sports combined and all other women's sports 
                combined, derived by the institution from the 
                institution's intercollegiate athletics activities.
                    ``(ii) For the purpose of clause (i), revenues from 
                intercollegiate athletics activities allocable to a 
                sport shall include (without limitation) gate receipts, 
                broadcast revenues, appearance guarantees and options, 
                concessions, and advertising, but revenues such as 
                student activities fees or alumni contributions not so 
                allocable shall be included in the calculation of total 
                revenues only.
                    ``(J)(i) The total expenses, and the expenses 
                attributable to football, men's basketball, women's 
                basketball, all other men's sports combined, and all 
                other women's sports combined, made by the institution 
                for the institution's intercollegiate athletics 
                activities.
                    ``(ii) For the purpose of clause (i), expenses for 
                intercollegiate athletics activities allocable to a 
                sport shall include (without limitation) grants-in-aid, 
                salaries, travel, equipment, and supplies, but expenses 
                such as general

[[Page 112 STAT. 1746]]

                and administrative overhead not so allocable shall be 
                included in the calculation of total expenses only.''; 
                and
            (2) by striking paragraph (5);
            (3) by redesignating paragraph (4) as paragraph (5); and
            (4) by inserting after paragraph (3) the following:
            ``(4) <<NOTE: Deadlines.>> Submission; report; information 
        availability.--(A) On an annual basis, each institution of 
        higher education described in paragraph (1) shall provide to the 
        Secretary, within 15 days of the date that the institution makes 
        available the report under paragraph (1), the information 
        contained in the report.
            ``(B) The Secretary shall prepare a report regarding the 
        information received under subparagraph (A) and submit such 
        report to the Committee on Education and the Workforce of the 
        House of Representatives and the Committee on Labor and Human 
        Resources of the Senate by April 1, 2000. The report shall--
                    ``(i) summarize the information and identify trends 
                in the information;
                    ``(ii) aggregate the information by divisions of the 
                National Collegiate Athletic Association; and
                    ``(iii) contain information on each individual 
                institution of higher education.
            ``(C) <<NOTE: Public information.>> The Secretary shall 
        ensure that the reports described in subparagraph (A) and the 
        report to Congress described in subparagraph (B) are made 
        available to the public within a reasonable period of time.
            ``(D) <<NOTE: Deadline. Notification.>> Not later than 180 
        days after the date of enactment of the Higher Education 
        Amendments of 1998, the Secretary shall notify all secondary 
        schools in all States regarding the availability of the 
        information reported under subparagraph (B) and the information 
        made available under paragraph (1), and how such information may 
        be accessed.''.

SEC. 487. NATIONAL STUDENT LOAN DATA SYSTEM.

    Section 485B(a) (20 U.S.C. 1092b(a)) is amended by inserting before 
the period at the end of the third sentence the following: ``not later 
than one year after the date of enactment of the Higher Education 
Amendments of 1998''.

SEC. 488. DISTANCE EDUCATION DEMONSTRATION PROGRAMS.

    Section 486 (20 U.S.C. 1083) <<NOTE: 20 USC 1093.>> is amended to 
read as follows:

``SEC. 486. DISTANCE EDUCATION DEMONSTRATION PROGRAMS.

    ``(a) Purpose.--It is the purpose of this section--
            ``(1) to allow demonstration programs that are strictly 
        monitored by the Department of Education to test the quality and 
        viability of expanded distance education programs currently 
        restricted under this Act;
            ``(2) to provide for increased student access to higher 
        education through distance education programs; and
            ``(3) to help determine--
                    ``(A) the most effective means of delivering quality 
                education via distance education course offerings;
                    ``(B) the specific statutory and regulatory 
                requirements which should be altered to provide greater 
                access to high quality distance education programs; and

[[Page 112 STAT. 1747]]

                    ``(C) the appropriate level of Federal assistance 
                for students enrolled in distance education programs.

    ``(b) Demonstration Programs Authorized.--
            ``(1) In general.--In accordance with the provisions of 
        subsection (d), the Secretary is authorized to select 
        institutions of higher education, systems of such institutions, 
        or consortia of such institutions for voluntary participation in 
        a Distance Education Demonstration Program that provides 
        participating institutions with the ability to offer distance 
        education programs that do not meet all or a portion of the 
        sections or regulations described in paragraph (2).
            ``(2) Waivers.--The Secretary is authorized to waive for any 
        institution of higher education, system of institutions of 
        higher education, or consortium participating in a Distance 
        Education Demonstration Program, the requirements of section 
        472(5) as the section relates to computer costs, sections 481(a) 
        and 481(b) as such sections relate to requirements for a minimum 
        number of weeks of instruction, sections 102(a)(3)(A), 
        102(a)(3)(B), and 484(l)(1), or one or more of the regulations 
        prescribed under this part or part F which inhibit the operation 
        of quality distance education programs.
            ``(3) Eligible applicants.--
                    ``(A) Eligible institutions.--Except as provided in 
                subparagraphs (B), (C), and (D), only an institution of 
                higher education that is eligible to participate in 
                programs under this title shall be eligible to 
                participate in the demonstration program authorized 
                under this section.
                    ``(B) Prohibition.--An institution of higher 
                education described in section 102(a)(1)(C) shall not be 
                eligible to participate in the demonstration program 
                authorized under this section.
                    ``(C) Special rule.--Subject to subparagraph (B), an 
                institution of higher education that meets the 
                requirements of subsection (a) of section 102, other 
                than the requirement of paragraph (3)(A) or (3)(B) of 
                such subsection, and that provides a 2-year or 4-year 
                program of instruction for which the institution awards 
                an associate or baccalaureate degree, shall be eligible 
                to participate in the demonstration program authorized 
                under this section.
                    ``(D) Requirement.--Notwithstanding any other 
                provision of this paragraph, Western Governors 
                University shall be considered eligible to participate 
                in the demonstration program authorized under this 
                section. In addition to the waivers described in 
                paragraph (2), the Secretary may waive the provisions of 
                title I and parts G and H of this title for such 
                university that the Secretary determines to be 
                appropriate because of the unique characteristics of 
                such university. In carrying out the preceding sentence, 
                the Secretary shall ensure that adequate program 
                integrity and accountability measures apply to such 
                university's participation in the demonstration program 
                authorized under this section.

    ``(c) Application.--
            ``(1) In general.--Each institution, system, or consortium 
        of institutions desiring to participate in a demonstration 
        program under this section shall submit an application to the

[[Page 112 STAT. 1748]]

        Secretary at such time and in such manner as the Secretary may 
        require.
            ``(2) Contents.--Each application shall include--
                    ``(A) a description of the institution, system, or 
                consortium's consultation with a recognized accrediting 
                agency or association with respect to quality assurances 
                for the distance education programs to be offered;
                    ``(B) a description of the statutory and regulatory 
                requirements described in subsection (b)(2) or, if 
                applicable, subsection (b)(3)(D) for which a waiver is 
                sought and the reasons for which the waiver is sought;
                    ``(C) a description of the distance education 
                programs to be offered;
                    ``(D) a description of the students to whom distance 
                education programs will be offered;
                    ``(E) an assurance that the institution, system, or 
                consortium will offer full cooperation with the ongoing 
                evaluations of the demonstration program provided for in 
                this section; and
                    ``(F) such other information as the Secretary may 
                require.

    ``(d) Selection.--
            ``(1) In general.--For the first year of the demonstration 
        program authorized under this section, the Secretary is 
        authorized to select for participation in the program not more 
        than 15 institutions, systems of institutions, or consortia of 
        institutions. For the third year of the demonstration program 
        authorized under this section, the Secretary may select not more 
        than 35 institutions, systems, or consortia, in addition to the 
        institutions, systems, or consortia selected pursuant to the 
        preceding sentence, to participate in the demonstration program 
        if the Secretary determines that such expansion is warranted 
        based on the evaluations conducted in accordance with 
        subsections (f ) and (g).
            ``(2) Considerations.--In selecting institutions to 
        participate in the demonstration program in the first or 
        succeeding years of the program, the Secretary shall take into 
        account--
                    ``(A) the number and quality of applications 
                received;
                    ``(B) the Department's capacity to oversee and 
                monitor each institution's participation;
                    ``(C) an institution's--
                          ``(i) financial responsibility;
                          ``(ii) administrative capability; and
                          ``(iii) program or programs being offered via 
                      distance education; and
                    ``(D) ensuring the participation of a diverse group 
                of institutions with respect to size, mission, and 
                geographic distribution.

    ``(e) Notification.--The Secretary shall make available to the 
public and to the Committee on Labor and Human Resources of the Senate 
and the Committee on Education and the Workforce of the House of 
Representatives a list of institutions, systems or consortia selected to 
participate in the demonstration program authorized by this section. 
Such notice shall include a listing of the specific statutory and 
regulatory requirements being waived for each institution, system or 
consortium and a description of the distance education courses to be 
offered.

[[Page 112 STAT. 1749]]

    ``(f ) Evaluations and Reports.--
            ``(1) Evaluation.--The Secretary shall evaluate the 
        demonstration programs authorized under this section on an 
        annual basis. Such evaluations specifically shall review--
                    ``(A) the extent to which the institution, system or 
                consortium has met the goals set forth in its 
                application to the Secretary, including the measures of 
                program quality assurance;
                    ``(B) the number and types of students participating 
                in the programs offered, including the progress of 
                participating students toward recognized certificates or 
                degrees and the extent to which participation in such 
                programs increased;
                    ``(C) issues related to student financial assistance 
                for distance education;
                    ``(D) effective technologies for delivering distance 
                education course offerings; and
                    ``(E) the extent to which statutory or regulatory 
                requirements not waived under the demonstration program 
                present difficulties for students or institutions.
            ``(2) Policy analysis.--The Secretary shall review current 
        policies and identify those policies that present impediments to 
        the development and use of distance education and other 
        nontraditional methods of expanding access to education.
            ``(3) Reports.--
                    ``(A) <<NOTE: Deadline.>> In general.--Within 18 
                months of the initiation of the demonstration program, 
                the Secretary shall report to the Committee on Labor and 
                Human Resources of the Senate and the Committee on 
                Education and the Workforce of the House of 
                Representatives with respect to--
                          ``(i) the evaluations of the demonstration 
                      programs authorized under this section; and
                          ``(ii) any proposed statutory changes designed 
                      to enhance the use of distance education.
                    ``(B) Additional reports.--The Secretary shall 
                provide additional reports to the Committee on Labor and 
                Human Resources of the Senate and the Committee on 
                Education and the Workforce of the House of 
                Representatives on an annual basis regarding--
                          ``(i) the demonstration programs authorized 
                      under this section; and
                          ``(ii) the number and types of students 
                      receiving assistance under this title for 
                      instruction leading to a recognized certificate, 
                      as provided for in section 484(l)(1), including 
                      the progress of such students toward recognized 
                      certificates and the degree to which participation 
                      in such programs leading to such certificates 
                      increased.

    ``(g) Oversight.--In conducting the demonstration program authorized 
under this section, the Secretary shall, on a continuing basis--
            ``(1) assure compliance of institutions, systems or 
        consortia with the requirements of this title (other than the 
        sections and regulations that are waived under subsections 
        (b)(2) and (b)(3)(D));
            ``(2) provide technical assistance;

[[Page 112 STAT. 1750]]

            ``(3) monitor fluctuations in the student population 
        enrolled in the participating institutions, systems or 
        consortia; and
            ``(4) consult with appropriate accrediting agencies or 
        associations and appropriate State regulatory authorities.

    ``(h) Definition.--For the purpose of this section, the term 
`distance education' means an educational process that is characterized 
by the separation, in time or place, between instructor and student. 
Such term may include courses offered principally through the use of--
            ``(1) television, audio, or computer transmission, such as 
        open broadcast, closed circuit, cable, microwave, or satellite 
        transmission;
            ``(2) audio or computer conferencing;
            ``(3) video cassettes or discs; or
            ``(4) correspondence.''.

SEC. 489. PROGRAM PARTICIPATION AGREEMENTS.

    (a) Required Content.--Section 487(a) (20 U.S.C. 1094(a)) is 
amended--
            (1) in paragraph (3)--
                    (A) by striking subparagraph (B); and
                    (B) by redesignating subparagraphs (C) and (D) as 
                subparagraphs (B) and (C), respectively;
            (2) in paragraph (4), by striking ``subsection (b)'' and 
        inserting ``subsection (c)'';
            (3) in paragraph (9), by striking ``part B'' and inserting 
        ``part B or D'';
            (4) in paragraph (14)--
                    (A) in subparagraph (A), by striking ``part B'' and 
                inserting ``part B or D''; and
                    (B) in subparagraph (B), by striking ``part B'' and 
                inserting ``part B or D''; and
                    (C) by adding at the end the following:
            ``(C) This paragraph shall not apply in the case of an 
        institution in which (i) neither the parent nor the subordinate 
        institution has a cohort default rate in excess of 10 percent, 
        and (ii) the new owner of such parent or subordinate institution 
        does not, and has not, owned any other institution with a cohort 
        default rate in excess of 10 percent.'';
            (5) in paragraph (15), by striking ``State review entities'' 
        and inserting ``the State agencies'';
            (6) by amending paragraph (18) to read as follows:
            ``(18) The institution will meet the requirements 
        established pursuant to section 485(g).''; and
            (7) by amending paragraph (21) to read as follows:
            ``(21) The institution will meet the requirements 
        established by the Secretary and accrediting agencies or 
        associations, and will provide evidence to the Secretary that 
        the institution has the authority to operate within a State.''.

    (b) Provision of Voter Registration Forms.--
            (1) Program participation requirement.--Section 487(a) (20 
        U.S.C. 1094(a)) is amended by adding at the end the 
        following:
            ``(23)(A) The institution, if located in a State to which 
        section 4(b) of the National Voter Registration Act (42 U.S.C. 
        1973gg-2(b)) does not apply, will make a good faith effort to 
        distribute a mail voter registration form, requested and

[[Page 112 STAT. 1751]]

        received from the State, to each student enrolled in a degree or 
        certificate program and physically in attendance at the 
        institution, and to make such forms widely available to students 
        at the institution.
            ``(B) The institution shall request the forms from the State 
        120 days prior to the deadline for registering to vote within 
        the State. If an institution has not received a sufficient 
        quantity of forms to fulfill this section from the State within 
        60 days prior to the deadline for registering to vote in the 
        State, the institution shall not be held liable for not meeting 
        the requirements of this section during that election year.
            ``(C) <<NOTE: Applicability.>> This paragraph shall apply to 
        elections as defined in section 301(1) of the Federal Election 
        Campaign Act of 1971 (2 U.S.C. 431(1)), and includes the 
        election for Governor or other chief executive within such 
        State).''.
            (2) <<NOTE: 20 USC 1094 note.>> Regulation prohibited.--No 
        officer of the executive branch is authorized to instruct the 
        institution in the manner in which the amendment made by this 
        subsection is carried out.

    (c) Audits; Financial Responsibility.--Section 487(c) <<NOTE: 20 USC 
1094.>> is amended--
            (1) in paragraph (1)(A)--
                    (A) in clause (i)--
                          (i) by striking ``clause (ii)'' and inserting 
                      ``clauses (ii) and (iii)'';
                          (ii) by striking ``State review entities 
                      referred to in'' and inserting ``appropriate State 
                      agency notifying the Secretary under''; and
                          (iii) by striking ``or'' after the semicolon;
                    (B) in clause (ii), by inserting ``or'' after the 
                semicolon; and
                    (C) by adding at the end the following:
            ``(iii) at the discretion of the Secretary, with regard to 
        an eligible institution (other than an eligible institution 
        described in section 102(a)(1)(C)) that has obtained less than 
        $200,000 in funds under this title during each of the 2 award 
        years that precede the audit period and submits a letter of 
        credit payable to the Secretary equal to not less than \1/2\ of 
        the annual potential liabilities of such institution as 
        determined by the Secretary, deeming an audit conducted every 3 
        years to satisfy the requirements of clause (i), except for the 
        award year immediately preceding renewal of the institution's 
        eligibility under section 498(g);'';
            (2) in paragraph (4), by striking ``, after consultation 
        with each State review entity designated under subpart 1 of part 
        H,''; and
            (3) in paragraph (5), by striking ``State review entities 
        designated'' and inserting ``State agencies notifying the 
        Secretary''.

SEC. 490. REGULATORY RELIEF AND IMPROVEMENT.

    Section 487A (20 U.S.C. 1094a) is amended to read as follows:

``SEC. 487A. REGULATORY RELIEF AND IMPROVEMENT.

    ``(a) Quality Assurance Program.--
            ``(1) In general.--The Secretary is authorized to select 
        institutions for voluntary participation in a Quality Assurance

[[Page 112 STAT. 1752]]

        Program that provides participating institutions with an 
        alternative management approach through which individual schools 
        develop and implement their own comprehensive systems, related 
        to processing and disbursement of student financial aid, 
        verification of student financial aid application data, and 
        entrance and exit interviews, thereby enhancing program 
        integrity within the student aid delivery system.
            ``(2) Criteria and consideration.--The Quality Assurance 
        Program authorized by this section shall be based on criteria 
        that include demonstrated institutional performance, as 
        determined by the Secretary, and shall take into consideration 
        current quality assurance goals, as determined by the Secretary. 
        The selection criteria shall ensure the participation of a 
        diverse group of institutions of higher education with respect 
        to size, mission, and geographical distribution.
            ``(3) Waiver.--The Secretary is authorized to waive for any 
        institution participating in the Quality Assurance Program any 
        regulations dealing with reporting or verification requirements 
        in this title that are addressed by the institution's 
        alternative management system, and may substitute such quality 
        assurance reporting as the Secretary determines necessary to 
        ensure accountability and compliance with the purposes of the 
        programs under this title. The Secretary shall not modify or 
        waive any statutory requirements pursuant to this paragraph.
            ``(4) Determination.--The Secretary is authorized to 
        determine--
                    ``(A) when an institution that is unable to 
                administer the Quality Assurance Program shall be 
                removed from such program; and
                    ``(B) when institutions desiring to cease 
                participation in such program will be required to 
                complete the current award year under the requirements 
                of the Quality Assurance Program.
            ``(5) Review and evaluation.--The Secretary shall review and 
        evaluate the Quality Assurance Program conducted by each 
        participating institution and, on the basis of that evaluation, 
        make recommendations regarding amendments to this Act that will 
        streamline the administration and enhance the integrity of 
        Federal student assistance programs. Such recommendations shall 
        be submitted to the Committee on Labor and Human Resources of 
        the Senate and the Committee on Education and the Workforce of 
        the House of Representatives.

    ``(b) Regulatory Improvement and Streamlining Experiments.--
            ``(1) In general.--The Secretary may continue any 
        experimental sites in existence on the date of enactment of the 
        Higher Education Amendments of 1998. <<NOTE: Termination 
        date.>> Any activities approved by the Secretary prior to such 
        date that are inconsistent with this section shall be 
        discontinued not later than June 30, 1999.
            ``(2) <<NOTE: Deadline.>> Report.--The Secretary shall 
        review and evaluate the experience of institutions participating 
        as experimental sites during the period of 1993 through 1998 
        under this section (as such section was in effect on the day 
        before the date of enactment of the Higher Education Amendments 
        of 1998), and shall submit a report based on this review and 
        evaluation to the Committee on Labor and Human Resources of the 
        Senate and the Committee on Education and the Workforce of the

[[Page 112 STAT. 1753]]

        House of Representatives not later than 6 months after the 
        enactment of the Higher Education Amendments of 1998. Such 
        report shall include--
                    ``(A) a list of participating institutions and the 
                specific statutory or regulatory waivers granted to each 
                institution;
                    ``(B) the findings and conclusions reached regarding 
                each of the experiments conducted; and
                    ``(C) recommendations for amendments to improve and 
                streamline this Act, based on the results of the 
                experiment.
            ``(3) Selection.--
                    ``(A) In general.--Upon the submission of the report 
                required by paragraph (2), the Secretary is authorized 
                to select a limited number of additional institutions 
                for voluntary participation as experimental sites to 
                provide recommendations to the Secretary on the impact 
                and effectiveness of proposed regulations or new 
                management initiatives.
                    ``(B) Consultation.--Prior to approving any 
                additional experimental sites, the Secretary shall 
                consult with the Committee on Labor and Human Resources 
                of the Senate and the Committee on Education and the 
                Workforce of the House of Representatives and shall 
                provide to such Committees--
                          ``(i) <<NOTE: Records.>> a list of 
                      institutions proposed for participation in the 
                      experiment and the specific statutory or 
                      regulatory waivers proposed to be granted to each 
                      institution;
                          ``(ii) a statement of the objectives to be 
                      achieved through the experiment; and
                          ``(iii) an identification of the period of 
                      time over which the experiment is to be conducted.
                    ``(C) Waivers.--The Secretary is authorized to 
                waive, for any institution participating as an 
                experimental site under subparagraph (A), any 
                requirements in this title, or regulations prescribed 
                under this title, that will bias the results of the 
                experiment, except that the Secretary shall not waive 
                any provisions with respect to award rules, grant and 
                loan maximum award amounts, and need analysis 
                requirements.

    ``(c) Definitions.--For purposes of this section, the term `current 
award year' means the award year during which the participating 
institution indicates the institution's intention to cease 
participation.''.

SEC. 490A. GARNISHMENT REQUIREMENTS.

    Section 488A (20 U.S.C. 1095a) is amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following:

    ``(d) No Attachment of Student Assistance.--Except as authorized in 
this section, notwithstanding any other provision of Federal or State 
law, no grant, loan, or work assistance awarded under this title, or 
property traceable to such assistance, shall be subject to garnishment 
or attachment in order to satisfy any debt owed by the student awarded 
such assistance, other than a debt owed to the Secretary and arising 
under this title.''.

[[Page 112 STAT. 1754]]

SEC. 490B. ADMINISTRATIVE SUBPOENA AUTHORITY.

    Part G of title IV is further amended by inserting immediately after 
section 490 (20 U.S.C. 1097) the following:

``SEC. 490A. ADMINISTRATIVE SUBPOENAS. <<NOTE: 20 USC 1097a.>> 

    ``(a) Authority.--To assist the Secretary in the conduct of 
investigations of possible violations of the provisions of this title, 
the Secretary is authorized to require by subpoena the production of 
information, documents, reports, answers, records, accounts, papers, and 
other documentary evidence pertaining to participation in any program 
under this title. The production of any such records may be required 
from any place in a State.
    ``(b) Enforcement.--In case of contumacy by, or refusal to obey a 
subpoena issued to, any person, the Secretary may request the Attorney 
General to invoke the aid of any court of the United States where such 
person resides or transacts business for a court order for the 
enforcement of this section.''.

SEC. 490C. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

    Section 491 (20 U.S.C. 1098) is amended--
            (1) in subsection (b)--
                    (A) in the second sentence, by striking ``and 
                expenditures'' and inserting ``, expenditures and 
                staffing levels''; and
                    (B) by inserting after the third sentence the 
                following: ``Reports, publications, and other documents 
                of the Advisory Committee, including such reports, 
                publications, and documents in electronic form, shall 
                not be subject to review by the Secretary.'';
            (2) in subsection (e)--
                    (A) by redesignating paragraphs (3), (4), and (5), 
                as paragraphs (4), (5), and (6), respectively; and
                    (B) by inserting after paragraph (2) the following:

    ``(3) No officers or full-time employees of the Federal Government 
shall serve as members of the Advisory Committee.'';
            (3) in subsection (g), by striking ``(1) Members'' and all 
        that follows through ``of the United States may each'' and 
        inserting ``Members of the Advisory Committee may each'';
            (4) in subsection (h)(1)--
                    (A) by inserting ``determined'' after ``as may be''; 
                and
                    (B) by adding at the end the following: ``The 
                Advisory Committee may appoint not more than 1 full-time 
                equivalent, nonpermanent, consultant without regard to 
                the provisions of title 5, United States Code. The 
                Advisory Committee shall not be required by the 
                Secretary to reduce personnel to meet agency personnel 
                reduction goals.'';
            (5) in subsection (i), by striking ``$750,000'' and 
        inserting ``$800,000'';
            (6) by amending subsection ( j) to read as follows:

    ``( j) Special Analyses and Activities.--The Advisory 
Committee shall--
            ``(1) <<NOTE: Reports.>> monitor and evaluate the 
        modernization of student financial aid systems and delivery 
        processes, including the implementation of a performance-based 
        organization within the

[[Page 112 STAT. 1755]]

        Department, and report to Congress regarding such modernization 
        on not less than an annual basis, including recommendations for 
        improvement;
            ``(2) assess the adequacy of current methods for 
        disseminating information about programs under this title and 
        recommend improvements, as appropriate, regarding early needs 
        assessment and information for first-year secondary school 
        students;
            ``(3) assess and make recommendations concerning the 
        feasibility and degree of use of appropriate technology in the 
        application for, and delivery and management of, financial 
        assistance under this title, as well as policies that promote 
        use of such technology to reduce cost and enhance service and 
        program integrity, including electronic application and 
        reapplication, just-in-time delivery of funds, reporting of 
        disbursements and reconciliation;
            ``(4) assess the implications of distance education on 
        student eligibility and other requirements for financial 
        assistance under this title, and make recommendations that will 
        enhance access to postsecondary education through distance 
        education while maintaining access, through on-campus 
        instruction at eligible institutions, and program integrity; and
            ``(5) make recommendations to the Secretary regarding 
        redundant or outdated provisions of and regulations under this 
        Act, consistent with the Secretary's requirements under section 
        498B.'';
            (7) in subsection (k), by striking ``1998'' and inserting 
        ``2004''; and
            (8) by repealing subsection (l).

SEC. 490D. MEETINGS AND NEGOTIATED RULEMAKING.

    (a) Meetings.--Section 492(a) (20 U.S.C. 1098a) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``convene regional meetings to'';
                    (B) by striking ``parts B, G, and H of this title,'' 
                and inserting ``this title;''; and
                    (C) by striking ``Such meetings shall include'' and 
                inserting ``The Secretary shall obtain the advice of and 
                recommendations from''; and
            (2) in paragraph (2)--
                    (A) by striking ``During such meetings the'' and 
                inserting ``The'';
                    (B) by striking ``parts B, G, and H'' and inserting 
                ``this title'';
                    (C) by striking ``1992'' and inserting ``1998 
                through such mechanisms as regional meetings and 
                electronic exchanges of information''; and
                    (D) by striking ``at such meetings'' and inserting 
                ``through such mechanisms''.

    (b) Draft Regulations.--Section 492(b) is amended--
            (1) by striking ``After'' and inserting the following:
            ``(1) In general.--After'';
            (2) in paragraph (1) (as redesignated by paragraph (1))--
                    (A) by striking ``holding regional meetings'' and 
                inserting ``obtaining the advice and recommendations 
                described in subsection (a)(1)'';
                    (B) by striking ``parts B, G, and H of this title'' 
                and inserting ``this title'';

[[Page 112 STAT. 1756]]

                    (C) by striking ``1992'' and inserting ``1998'';
                    (D) by striking ``The Secretary shall follow the 
                guidance provided in sections 305.82-4 and 305.85-5 of 
                chapter 1, Code of Federal Regulations, and any 
                successor recommendation, regulation, or law.'';
                    (E) by striking ``participating in the regional 
                meetings'';
                    (F) by striking ``240-day'' and inserting ``360-
                day''; and
                    (G) by striking ``section 431(g)'' and inserting 
                ``section 437(e)''; and
            (3) by adding at the end the following:
            ``(2) <<NOTE: Federal Register, publication.>> Expansion of 
        negotiated rulemaking.--All regulations pertaining to this title 
        that are promulgated after the date of enactment of this 
        paragraph shall be subject to a negotiated rulemaking (including 
        the selection of the issues to be negotiated), unless the 
        Secretary determines that applying such a requirement with 
        respect to given regulations is impracticable, unnecessary, or 
        contrary to the public interest (within the meaning of section 
        553(b)(3)(B) of title 5, United States Code), and publishes the 
        basis for such determination in the Federal Register at the same 
        time as the proposed regulations in question are first 
        published. All published proposed regulations shall conform to 
        agreements resulting from such negotiated rulemaking unless the 
        Secretary reopens the negotiated rulemaking process or provides 
        a written explanation to the participants in that process why 
        the Secretary has decided to depart from such agreements. Such 
        negotiated rulemaking shall be conducted in accordance with the 
        provisions of paragraph (1), and the Secretary shall ensure that 
        a clear and reliable record of agreements reached during the 
        negotiations process is maintained.''.

SEC. 490E. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT OF 
            EDUCATION.

    Part G of title IV (20 U.S.C. 1088 et seq.) is amended by adding at 
the end the following:

``SEC. 493A. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT. <<NOTE: 20 USC 
            1098c.>> 

    ``(a) Preparations for Year 2000.--In order to ensure that the 
processing, delivery, and administration of grant, loan, and work 
assistance provided under this title is not interrupted due to 
operational problems related to the inability of computer systems to 
indicate accurately dates after December 31, 1999, the Secretary of 
Education shall--
            ``(1) take such actions as are necessary to ensure that all 
        internal and external systems, hardware, and data exchange 
        infrastructure administered by the Department that are necessary 
        for the processing, delivery, and administration of the grant, 
        loan, and work assistance are Year 2000 compliant by March 31, 
        1999, such that there will be no business interruption after 
        December 31, 1999;
            ``(2) ensure that the Robert T. Stafford Federal Student 
        Loan Program and the William D. Ford Federal Direct Loan Program 
        are equal in level of priority with respect to addressing, and 
        that resources are managed to equally provide for successful 
        resolution of, the Year 2000 computer problem in both programs 
        by December 31, 1999;
            ``(3) <<NOTE: Reports. Deadline.>>  work with the 
        Department's various data exchange partners under this title to 
        fully test all data exchange routes

[[Page 112 STAT. 1757]]

        for Year 2000 compliance via end-to-end testing, and submit a 
        report describing the parameters and results of such tests to 
        the Comptroller General not later than March 31, 1999;
            ``(4) <<NOTE: Publication. Public information. Deadline.>>  
        ensure that the Inspector General of the Department (or an 
        external, independent entity selected by the Inspector General) 
        performs and publishes a risk assessment of the systems and 
        hardware under the Department's management, that has been 
        reviewed by an independent entity, and make such assessment 
        publicly available not later than 60 days after the date of 
        enactment of the Higher Education Amendments of 1998;
            ``(5) <<NOTE: Deadline. Reports.>>  not later than June 30, 
        1999, ensure that the Inspector General (or an external, 
        independent entity selected by the Inspector General) conducts a 
        review of the Department's Year 2000 compliance for the 
        processing, delivery, and administration of grant, loan, and 
        work assistance, and submits a report reflecting the results of 
        that review to the Chairperson of the Committee on Labor and 
        Human Resources of the Senate and the Chairperson of the 
        Committee on Education and the Workforce of the House of 
        Representatives;
            ``(6) develop a contingency plan to ensure the programs 
        under this title will continue to run uninterrupted in the event 
        of widespread disruptions in the flow of accurate computerized 
        data, which contingency plan shall include a prioritization of 
        mission critical systems and strategies to allow data partners 
        to transfer data through alternate means; and
            ``(7) alert Congress at the earliest possible time if 
        mission critical deadlines will not be met.

    ``(b) Postponement Authority for the Year 2000.--
            ``(1) Purpose.--It is the purpose of this subsection to 
        provide the Secretary with the flexibility necessary to--
                    ``(A) ensure that the resources and capabilities of 
                institutions, lenders, and guaranty agencies are not 
                overburdened by the combination of student aid 
                processing and delivery requirements added or modified 
                by the amendments made by the Higher Education 
                Amendments of 1998 and by the changes required to ensure 
                that the systems of the institutions, lenders and 
                guaranty agencies are Year 2000 compliant; and
                    ``(B) avoid the disruption of grant, loan, or work 
                assistance funds awarded to students because of Year 
                2000 compliance problems at a substantial number of 
                institutions, lenders, and guaranty agencies.
            ``(2) Authority to postpone.--The Secretary may postpone, 
        for a period of time described in paragraph (3), the 
        implementation of any requirements under part B, D, E, or G that 
        are added or modified by the amendments made by the Higher 
        Education Amendments of 1998 related to the processing or 
        delivery of grant, loan, and work assistance (which shall not 
        include the determination of need for such assistance) provided 
        under this title, if the Secretary--
                    ``(A) determines that--
                          ``(i) implementation of such requirements 
                      would require extensive changes to the existing 
                      systems of institutions, lenders, or guaranty 
                      agencies; and
                          ``(ii) postponement is necessary to avoid 
                      jeopardizing the ability of a substantial number 
                      of institutions,

[[Page 112 STAT. 1758]]

                      lenders, or guaranty agencies to ensure that all 
                      of the systems of the institutions, lenders, or 
                      guaranty agencies related to the processing or 
                      delivery of such assistance function successfully 
                      after December 31, 1999; and
                    ``(B) <<NOTE: Federal Register, 
                publication. Records. Notification.>> promptly publishes 
                in the Federal Register a list of, and notifies Congress 
                of, any provisions, the implementation of which the 
                Secretary intends to postpone, with the reasons for such 
                postponement.
            ``(3) Exceptions to authority.--The Secretary may not 
        postpone the implementation of one or more provisions described 
        in this subsection longer than the earlier of--
                    ``(A) the period of time that the Secretary 
                determines necessary to ensure that the processing and 
                delivery systems of the institutions, lenders, and 
                guaranty agencies referred to in paragraph (1)(A)(ii) 
                are capable of functioning successfully after December 
                31, 1999; or
                    ``(B) one award year after the effective date 
                applicable to such provision under the Higher Education 
                Amendments of 1998.''.

SEC. 490F. PROCEDURES FOR CANCELLATIONS AND DEFERMENTS FOR ELIGIBLE 
            DISABLED VETERANS.

    Part G of title IV (20 U.S.C. 1088 et seq.) is amended by adding 
after section 493A (as added by section 490E) the following:

``SEC. 493B. <<NOTE: 20 USC 1098d.>> PROCEDURES FOR CANCELLATIONS AND 
            DEFERMENTS FOR ELIGIBLE DISABLED VETERANS.

    ``The Secretary, in consultation with the Secretary of Veterans 
Affairs, shall develop and implement a procedure to permit Department of 
Veterans Affairs physicians to provide the certifications and affidavits 
needed to enable disabled veterans enrolled in the Department of 
Veterans Affairs health care system to document such veterans' 
eligibility for deferments or cancellations of student loans made, 
insured, or guaranteed under this 
title. <<NOTE: Deadline. Reports.>> Not later than 6 months after the 
date of enactment of the Higher Education Amendments of 1998, the 
Secretary and the Secretary of Veterans Affairs jointly shall report to 
Congress on the progress made in developing and implementing the 
procedure.''.

                        PART H--PROGRAM INTEGRITY

SEC. 491. STATE ROLE AND RESPONSIBILITIES.

    Part H of title IV (20 U.S.C. 1099a et seq.) is amended by--
            (1) striking the heading of such part and inserting the 
        following:

                     ``PART H--PROGRAM INTEGRITY'';

            and
            (2) by amending subpart 1 (20 U.S.C. 1099a et seq.) to read 
        as follows:

[[Page 112 STAT. 1759]]

                         ``Subpart 1--State Role

``SEC. 495. STATE RESPONSIBILITIES. <<NOTE: 20 USC 1099a.>> 

    ``(a) <<NOTE: Notification.>> State Responsibilities.--As part of 
the integrity program authorized by this part, each State, through one 
State agency or several State agencies selected by the State, shall--
            ``(1) furnish the Secretary, upon request, information with 
        respect to the process for licensing or other authorization for 
        institutions of higher education to operate within the State;
            ``(2) notify the Secretary promptly whenever the State 
        revokes a license or other authority to operate an institution 
        of higher education; and
            ``(3) notify the Secretary promptly whenever the State has 
        credible evidence that an institution of higher education within 
        the State--
                    ``(A) has committed fraud in the administration of 
                the student assistance programs authorized by this 
                title; or
                    ``(B) has substantially violated a provision of this 
                title.

    ``(b) Institutional Responsibility.--Each institution of higher 
education shall provide evidence to the Secretary that the institution 
has authority to operate within a State at the time the institution is 
certified under subpart 3.''.

SEC. 492. ACCREDITING AGENCY RECOGNITION.

    (a) Recognition.--
            (1) Subpart heading.--The heading of subpart 2 of part H is 
        amended by striking ``Approval'' and inserting ``Recognition''.
            (2) Section 496 heading.--The heading of section 
        496 <<NOTE: 20 USC 1099b.>> is amended by striking ``approval'' 
        and inserting ``recognition''.

    (b) Standards.--Section 496(a) (20 U.S.C. 1099b(a)) is 
amended--
            (1) in the subsection heading, by striking ``Standards'' and 
        inserting ``Criteria'';
            (2) in the matter preceding paragraph (1), by striking 
        ``standards'' each place the term appears and inserting 
        ``criteria'';
            (3) in paragraph (4)--
                    (A) by striking ``at the institution'' and inserting 
                ``offered by the institution''; and
                    (B) by inserting ``, including distance education 
                courses or programs,'' after ``higher education''; and
            (4) in paragraph (5)--
                    (A) by striking ``of accreditation'' and inserting 
                ``for accreditation'';
                    (B) by striking subparagraphs (H), (I), and (J);
                    (C) by redesignating subparagraphs (A) through (G) 
                as subparagraphs (B) through (H), respectively;
                    (D) by redesignating subparagraphs (K) and (L) as 
                subparagraphs (I) and (J), respectively;
                    (E) by inserting before subparagraph (B) the 
                following:
                    ``(A) success with respect to student achievement in 
                relation to the institution's mission, including, as 
                appropriate, consideration of course completion, State 
                licensing examinations, and job placement rates;'';

[[Page 112 STAT. 1760]]

                    (F) in subparagraph (H) (as redesignated by 
                subparagraph (C)), by striking ``program length and 
                tuition and fees in relation to the subject matters 
                taught'' and inserting ``measures of program length'';
                    (G) in subparagraph (J) (as redesignated by 
                subparagraph (D))--
                          (i) by inserting ``record of'' before 
                      ``compliance'';
                          (ii) by striking ``Act, including any'' and 
                      inserting ``Act based on the most recent student 
                      loan default rate data provided by the Secretary, 
                      the''; and
                          (iii) by inserting ``any'' after ``reviews, 
                      and''; and
                    (H) in the matter following subparagraph (J) (as 
                redesignated by subparagraph (D)), by striking ``(G), 
                (H), (I), (J), and (L)'' and inserting ``(A), (H), and 
                (J)'';
            (5) in paragraph (7), by striking ``State postsecondary 
        review entity'' and inserting ``State licensing or authorizing 
        agency''; and
            (6) in paragraph (8), by striking ``State postsecondary'' 
        and everything that follows through ``is located'' and inserting 
        ``State licensing or authorizing agency''.

    (c) Operating Procedures.--Section 496(c) <<NOTE: 20 USC 1099b.>> is 
amended--
            (1) by striking ``approved by the Secretary'' and inserting 
        ``recognized by the Secretary''; and
            (2) in paragraph (1), by striking ``(at least'' and 
        everything that follows through ``unannounced),'' and inserting 
        ``(which may include unannounced site visits)''.

    (d) Conforming Amendments.--Section 496 is further 
amended--
            (1) in subsection (d)--
                    (A) by striking ``Approval'' in the heading of such 
                subsection and inserting ``Recognition''; and
                    (B) by striking ``approved'' and inserting 
                ``recognized'';
            (2) in subsection (f ), by striking ``approved'' and 
        inserting ``recognized'';
            (3) in subsection (g)--
                    (A) in the heading of such subsection, by striking 
                ``Standards'' and inserting ``Criteria''; and
                    (B) by striking ``standards'' the first place such 
                term appears and inserting ``criteria'';
            (4) in subsection (k)--
                    (A) in the matter preceding paragraph (1), by 
                striking ``section 481'' and inserting ``section 102''; 
                and
                    (B) in paragraph (2), by striking ``standards'' and 
                inserting ``criteria'';
            (5) in subsection (l), by striking everything preceding 
        paragraph (2) and inserting the following:

    ``(l) Limitation, Suspension, or Termination of Recognition.--(1) If 
the Secretary determines that an accrediting agency or association has 
failed to apply effectively the criteria in this section, or is 
otherwise not in compliance with the requirements of this section, the 
Secretary shall--
            ``(A) <<NOTE: Notice.>> after notice and opportunity for a 
        hearing, limit, suspend, or terminate the recognition of the 
        agency or association; or
            ``(B) require the agency or association to take appropriate 
        action to bring the agency or association into compliance with

[[Page 112 STAT. 1761]]

        such requirements within a timeframe specified by the Secretary, 
        except that--
                    ``(i) such timeframe shall not exceed 12 months 
                unless the Secretary extends such period for good cause; 
                and
                    ``(ii) <<NOTE: Notice.>> if the agency or 
                association fails to bring the agency or association 
                into compliance within such timeframe, the Secretary 
                shall, after notice and opportunity for a hearing, 
                limit, suspend, or terminate the recognition of the 
                agency or association.''; and
            (6) in subsection (n)--
                    (A) by striking ``standards'' each place the term 
                appears and inserting ``criteria'';
                    (B) in paragraph (3)--
                          (i) by striking ``approval process'' and 
                      inserting ``recognition process'';
                          (ii) by striking ``approval or disapproval'' 
                      and inserting ``recognition or denial of 
                      recognition''; and
                          (iii) by adding at the end the following: 
                      ``When the Secretary decides to recognize an 
                      accrediting agency or association, the Secretary 
                      shall determine the agency or association's scope 
                      of recognition. If the agency or association 
                      reviews institutions offering distance education 
                      courses or programs and the Secretary determines 
                      that the agency or association meets the 
                      requirements of this section, then the agency 
                      shall be recognized and the scope of recognition 
                      shall include accreditation of institutions 
                      offering distance education courses or 
                      programs.''; and
                    (C) by striking paragraph (4) and inserting the 
                following:

    ``(4) <<NOTE: Records. Public information.>> The Secretary shall 
maintain sufficient documentation to support the conclusions reached in 
the recognition process, and, if the Secretary does not recognize any 
accreditation agency or association, shall make publicly available the 
reason for denying recognition, including reference to the specific 
criteria under this section which have not been fulfilled.''.

SEC. 493. ELIGIBILITY AND CERTIFICATION PROCEDURES.

    (a) Single Application Form.--Section 498(b) (20 U.S.C. 1099c(b)) is 
amended--
            (1) in paragraph (1), by striking ``and capability'' and 
        inserting ``financial responsibility, and administrative 
        capability'';
            (2) by amending paragraph (3) to read as follows:
            ``(3) requires--
                    ``(A) a description of the third party servicers of 
                an institution of higher education; and
                    ``(B) the institution to maintain a copy of any 
                contract with a financial aid service provider or loan 
                servicer, and provide a copy of any such contract to the 
                Secretary upon request;'';
            (3) in paragraph (4), by striking the period and inserting 
        ``; and''; and
            (4) by adding at the end the following:
            ``(5) provides, at the option of the institution, for 
        participation in one or more of the programs under part B or 
        D.''.

    (b) Financial Responsibility Standards.--Section 498(c) is amended--

[[Page 112 STAT. 1762]]

            (1) in paragraph (2)--
                    (A) in the first sentence, by striking ``with 
                respect to operating losses, net worth, asset to 
                liabilities ratios, or operating fund deficits'' and 
                inserting ``regarding ratios that demonstrate financial 
                responsibility,''; and
                    (B) in the second sentence, by inserting ``, 
                public,'' after ``for profit'';
            (2) in paragraph (3)(A), by inserting ``that the Secretary 
        determines are reasonable'' after ``guarantees''; and
            (3) in paragraph (4)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``ratio of current assets to current 
                liabilities'' and inserting ``criteria''; and
                    (B) in subparagraph (C), by striking ``current 
                operating ratio requirement'' and inserting 
                ``criteria''.

    (c) Financial Guarantees From Owners.--
            (1) Amendment.--Section 498(e) <<NOTE: 20 USC 1099c.>> is 
        amended by adding at the end the following:

    ``(6) Notwithstanding any other provision of law, any individual 
who--
            ``(A) the Secretary determines, in accordance with paragraph 
        (2), exercises substantial control over an institution 
        participating in, or seeking to participate in, a program under 
        this title;
            ``(B) is required to pay, on behalf of a student or 
        borrower, a refund of unearned institutional charges to a 
        lender, or to the Secretary; and
            ``(C) willfully fails to pay such refund or willfully 
        attempts in any manner to evade payment of such refund,

shall, in addition to other penalties provided by law, be liable to the 
Secretary for the amount of the refund not paid, to the same extent with 
respect to such refund that such an individual would be liable as a 
responsible person for a penalty under section 6672(a) of Internal 
Revenue Code of 1986 with respect to the nonpayment of taxes.''.
            (2) <<NOTE: 20 USC 1099c note.>> Effective date.--The 
        amendment made by paragraph (1) shall be effective with respect 
        to any unpaid refunds that were first required to be paid to a 
        lender or to the Secretary on or after 90 days after the date of 
        enactment of this Act.

    (d) Applications and Site Visits.--Section 498(f ) is 
amended--
            (1) in the subsection heading, by striking ``; Site Visits 
        and Fees'' and inserting ``and Site Visits'';
            (2) in the second sentence, by striking ``shall'' and 
        inserting ``may'';
            (3) in the third sentence--
                    (A) by striking ``may establish'' and insert ``shall 

                establish''; and
                    (B) by striking ``may coordinate'' and inserting 
                ``shall, to the extent practicable, coordinate''; and
            (4) by striking the fourth sentence.

    (e) Time Limitations on, and Renewal of, Eligibility.--Subsection 
(g) of section 498 is amended to read as follows:
    ``(g) Time Limitations on, and Renewal of, Eligibility.--
            ``(1) General rule.--After the expiration of the 
        certification of any institution under the schedule prescribed 
        under this section (as this section was in effect prior to the 
        enactment

[[Page 112 STAT. 1763]]

        of the Higher Education Act Amendments of 1998), or upon request 
        for initial certification from an institution not previously 
        certified, the Secretary may certify the eligibility for the 
        purposes of any program authorized under this title of each such 
        institution for a period not to exceed 6 years.
            ``(2) <<NOTE: Deadline.>> Notification.--The Secretary shall 
        notify each institution of higher education not later than 6 
        months prior to the date of the expiration of the institution's 
        certification.
            ``(3) <<NOTE: Regulations.>> Institutions outside the united 
        states.--The 
        Secretary shall promulgate regulations regarding the 
        recertification requirements applicable to an institution of 
        higher education outside of the United States that meets the 
        requirements of section 102(a)(1)(C) and received less than 
        $500,000 in funds under part B for the most recent year for 
        which data are available.''.

    (f ) Provisional Certification.--Section 498(h)(2) is <<NOTE: 20 USC 
1099c.>>  
amended--
            (1) by striking ``the approval'' and inserting ``the 
        recognition''; and
            (2) by striking ``of approval'' and inserting ``of 
        recognition''.

    (g) Change in Ownership.--Section 498(i) is amended by 
adding at the end the following:
    ``(4)(A) The Secretary may provisionally certify an institution 
seeking approval of a change in ownership based on the preliminary 
review by the Secretary of a materially complete application that is 
received by the Secretary within 10 business days of the transaction for 
which the approval is sought.
    ``(B) <<NOTE: Termination date.>> A provisional certification under 
this paragraph shall expire not later than the end of the month 
following the month in which the transaction occurred, except that if 
the Secretary has not issued a decision on the application for the 
change of ownership within that period, the Secretary may continue such 
provisional certification on a month-to-month basis until such decision 
has been issued.''.

    (h) Treatment of Branches.--The second sentence of section 498( 
j)(1) is amended by inserting ``after the branch is certified by the 
Secretary as a branch campus participating in a program under this 
title,'' after ``2 years''.

SEC. 494. PROGRAM REVIEW AND DATA.

    Section 498A (20 U.S.C. 1099c-1) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (2)--
                          (i) in the matter preceding subparagraph (A), 
                      by striking ``may'' and inserting ``shall'';
                          (ii) by amending subparagraph (C) to read as 
                      follows:
                    ``(C) institutions with a significant fluctuation in 
                Federal Stafford Loan volume, Federal Direct Stafford/
                Ford Loan volume, or Federal Pell Grant award volume, or 
                any combination thereof, in the year for which the 
                determination is made, compared to the year prior to 
                such year, that are not accounted for by changes in the 
                Federal Stafford Loan program, the Federal Direct 
                Stafford/Ford Loan program, or the Pell Grant program, 
                or any combination thereof;'';

[[Page 112 STAT. 1764]]

                          (iii) by amending subparagraph (D) to read as 
                      follows:
                    ``(D) institutions reported to have deficiencies or 
                financial aid problems by the State licensing or 
                authorizing agency, or by the appropriate accrediting 
                agency or association;'';
                          (iv) in subparagraph (E), by inserting ``and'' 
                      after the semicolon; and
                          (v) by striking subparagraphs (F) and (G) and 
                      inserting the following:
                    ``(F) such other institutions that the Secretary 
                determines may pose a significant risk of failure to 
                comply with the administrative capability or financial 
                responsibility provisions of this title; and''; and
                    (B) in paragraph (3)(A), by inserting ``relevant'' 
                after ``all''; and
            (2) by amending subsection (b) to read as follows:

    ``(b) Special Administrative Rules.--In carrying out paragraphs (1) 
and (2) of subsection (a) and any other relevant provisions of this 
title, the Secretary shall--
            ``(1) establish guidelines designed to ensure uniformity of 
        practice in the conduct of program reviews of institutions of 
        higher education;
            ``(2) make available to each institution participating in 
        programs authorized under this title complete copies of all 
        review guidelines and procedures used in program reviews;
            ``(3) permit the institution to correct or cure an 
        administrative, accounting, or recordkeeping error if the error 
        is not part of a pattern of error and there is no evidence of 
        fraud or misconduct related to the error;
            ``(4) base any civil penalty assessed against an institution 
        of higher education resulting from a program review or audit on 
        the gravity of the violation, failure, or misrepresentation; and
            ``(5) inform the appropriate State and accrediting agency or 
        association whenever the Secretary takes action against an 
        institution of higher education under this section, section 498, 
        or section 432.''.

SEC. 495. REVIEW OF REGULATIONS.

    Part H of title IV is further amended by adding at the end the 
following:

``SEC. 498B. REVIEW OF REGULATIONS. <<NOTE: 20 USC 1099c-2.>> 

    ``(a) Review Required.--The Secretary shall review each regulation 
issued under this title that is in effect at the time of the review and 
applies to the operations or activities of any participant in the 
programs assisted under this title. The review shall include a 
determination of whether the regulation is duplicative, or is no longer 
necessary. The review may involve one or more of the following:
            ``(1) An assurance of the uniformity of interpretation and 
        application of such regulations.
            ``(2) The establishment of a process for ensuring that 
        eligibility and compliance issues, such as institutional audit, 
        program review, and recertification, are considered 
        simultaneously.
            ``(3) A determination of the extent to which unnecessary 
        costs are imposed on institutions of higher education as a

[[Page 112 STAT. 1765]]

        consequence of the applicability to the facilities and equipment 
        of such institutions of regulations prescribed for purposes of 
        regulating industrial and commercial enterprises.

    ``(b) Regulatory and Statutory Relief for Small Volume 
Institutions.--The Secretary shall review and evaluate ways in which 
regulations under and provisions of this Act affecting institution of 
higher education (other than institutions described in section 
102(a)(1)(C)), that have received in each of the two most recent award 
years prior to the date of the enactment of the Higher Education 
Amendments of 1998 less than $200,000 in funds through this title, may 
be improved, streamlined, or eliminated.
    ``(c) Consultation.--In carrying out subsections (a) and (b), the 
Secretary shall consult with relevant representatives of institutions 
participating in the programs authorized by this title.
    ``(d) Reports to Congress.-- <<NOTE: Deadlines.>> 
            ``(1) In general.--The Secretary shall submit, not later 
        than 1 year after the date of the enactment of the Higher 
        Education Amendments of 1998, a report to the Committee on Labor 
        and Human Resources of the Senate and the Committee on Education 
        and the Workforce of the House of Representatives detailing the 
        Secretary's findings and recommendations based on the reviews 
        conducted under subsections (a) and (b), including a timetable 
        for implementation of any recommended changes in regulations and 
        a description of any recommendations for legislative changes.
            ``(2) Additional reports.--Not later than January 1, 2003, 
        the Secretary shall submit a report to the Committee on Labor 
        and Human Resources of the Senate and the Committee on Education 
        and the Workforce of the House of Representatives detailing the 
        Secretary's findings and recommendations based on the review 
        conducted under subsection (a), including a timetable for 
        implementation of any recommended changes in regulations and a 
        description of any recommendations for legislative changes.''.

                    TITLE V--DEVELOPING INSTITUTIONS

SEC. 501. ESTABLISHMENT OF NEW TITLE V.

    Title V (20 U.S.C. 1101 et seq.) is amended to read as follows:

                   ``TITLE V--DEVELOPING INSTITUTIONS

                 ``PART A--HISPANIC-SERVING INSTITUTIONS

``SEC. 501. FINDINGS; PURPOSE; AND PROGRAM AUTHORITY. <<NOTE: 20 USC 
            1101.>> 

    ``(a) Findings.--Congress makes the following findings:
            ``(1) Hispanic Americans are at high risk of not enrolling 
        or graduating from institutions of higher education.
            ``(2) Disparities between the enrollment of non-Hispanic 
        white students and Hispanic students in postsecondary education 
        are increasing. Between 1973 and 1994, enrollment of white 
        secondary school graduates in 4-year institutions of higher 
        education increased at a rate two times higher than that of 
        Hispanic secondary school graduates.

[[Page 112 STAT. 1766]]

            ``(3) Despite significant limitations in resources, 
        Hispanic-serving institutions provide a significant proportion 
        of postsecondary opportunities for Hispanic students.
            ``(4) Relative to other institutions of higher education, 
        Hispanic-serving institutions are underfunded. Such institutions 
        receive significantly less in State and local funding, per full-
        time equivalent student, than other institutions of higher 
        education.
            ``(5) Hispanic-serving institutions are succeeding in 
        educating Hispanic students despite significant resource 
        problems that--
                    ``(A) limit the ability of such institutions to 
                expand and improve the academic programs of such 
                institutions; and
                    ``(B) could imperil the financial and administrative 
                stability of such institutions.
            ``(6) There is a national interest in remedying the 
        disparities described in paragraphs (2) and (4) and ensuring 
        that Hispanic students have an equal opportunity to pursue 
        postsecondary opportunities.

    ``(b) Purpose.--The purpose of this title is to--
            ``(1) expand educational opportunities for, and improve the 
        academic attainment of, Hispanic students; and
            ``(2) expand and enhance the academic offerings, program 
        quality, and institutional stability of colleges and 
        universities that are educating the majority of Hispanic college 
        students and helping large numbers of Hispanic students and 
        other low-income individuals complete postsecondary degrees.

    ``(c) Program Authority.--The Secretary shall provide grants and 
related assistance to Hispanic-serving institutions to enable such 
institutions to improve and expand their capacity to serve Hispanic 
students and other low-income individuals.

``SEC. 502. DEFINITIONS; ELIGIBILITY. <<NOTE: 20 USC 1101a.>> 

    ``(a) Definitions.--For the purpose of this title:
            ``(1) Educational and general expenditures.--The term 
        `educational and general expenditures' means the total amount 
        expended by an institution for instruction, research, public 
        service, academic support (including library expenditures), 
        student services, institutional support, scholarships and 
        fellowships, operation and maintenance expenditures for the 
        physical plant, and any mandatory transfers that the institution 
        is required to pay by law.
            ``(2) Eligible institution.--The term `eligible institution' 
        means--
                    ``(A) an institution of higher education--
                          ``(i) that has an enrollment of needy students 
                      as required by subsection (b);
                          ``(ii) except as provided in section 512(b), 
                      the average educational and general expenditures 
                      of which are low, per full-time equivalent 
                      undergraduate student, in comparison with the 
                      average educational and general expenditures per 
                      full-time equivalent undergraduate student of 
                      institutions that offer similar instruction;
                          ``(iii) that is--

[[Page 112 STAT. 1767]]

                                    ``(I) legally authorized to provide, 
                                and provides within the State, an 
                                educational program for which the 
                                institution awards a bachelor's degree; 
                                or
                                    ``(II) a junior or community 
                                college;
                          ``(iv) that is accredited by a nationally 
                      recognized accrediting agency or association 
                      determined by the Secretary to be reliable 
                      authority as to the quality of training offered or 
                      that is, according to such an agency or 
                      association, making reasonable progress toward 
                      accreditation;
                          ``(v) that meets such other requirements as 
                      the Secretary may prescribe; and
                          ``(vi) that is located in a State; and
                    ``(B) any branch of any institution of higher 
                education described under subparagraph (A) that by 
                itself satisfies the requirements contained in clauses 
                (i) and (ii) of such subparagraph.
        For purposes of the determination of whether an institution is 
        an eligible institution under this paragraph, the factor 
        described under subparagraph (A)(i) shall be given twice the 
        weight of the factor described under subparagraph (A)(ii).
            ``(3) Endowment fund.--The term `endowment fund' means a 
        fund that--
                    ``(A) is established by State law, by a Hispanic-
                serving institution, or by a foundation that is exempt 
                from Federal income taxation;
                    ``(B) is maintained for the purpose of generating 
                income for the support of the institution; and
                    ``(C) does not include real estate.
            ``(4) Full-time equivalent students.--The term `full-time 
        equivalent students' means the sum of the number of students 
        enrolled full time at an institution, plus the full-time 
        equivalent of the number of students enrolled part time 
        (determined on the basis of the quotient of the sum of the 
        credit hours of all part-time students divided by 12) at such 
        institution.
            ``(5) Hispanic-serving institution.--The term `Hispanic-
        serving institution' means an institution of higher education 
        that--
                    ``(A) is an eligible institution;
                    ``(B) at the time of application, has an enrollment 
                of undergraduate full-time equivalent students that is 
                at least 25 percent Hispanic students; and
                    ``(C) provides assurances that not less than 50 
                percent of the institution's Hispanic students are low-
                income individuals.
            ``(6) Junior or community college.--The term `junior or 
        community college' means an institution of higher education--
                    ``(A) that admits as regular students persons who 
                are beyond the age of compulsory school attendance in 
                the State in which the institution is located and who 
                have the ability to benefit from the training offered by 
                the institution;
                    ``(B) that does not provide an educational program 
                for which the institution awards a bachelor's degree (or 
                an equivalent degree); and
                    ``(C) that--

[[Page 112 STAT. 1768]]

                          ``(i) provides an educational program of not 
                      less than 2 years in duration that is acceptable 
                      for full credit toward such a degree; or
                          ``(ii) offers a 2-year program in engineering, 
                      mathematics, or the physical or biological 
                      sciences, designed to prepare a student to work as 
                      a technician or at the semiprofessional level in 
                      engineering, scientific, or other technological 
                      fields requiring the understanding and application 
                      of basic engineering, scientific, or mathematical 
                      principles of knowledge.
            ``(7) Low-income individual.--The term `low-income 
        individual' means an individual from a family whose taxable 
        income for the preceding year did not exceed 150 percent of an 
        amount equal to the poverty level determined by using criteria 
        of poverty established by the Bureau of the Census.

    ``(b) Enrollment of Needy Students.--For the purpose of this title, 
the term `enrollment of needy students' means an enrollment at an 
institution with respect to which--
            ``(1) at least 50 percent of the degree students so enrolled 
        are receiving need-based assistance under title IV in the second 
        fiscal year preceding the fiscal year for which the 
        determination is made (other than loans for which an interest 
        subsidy is paid pursuant to section 428); or
            ``(2) a substantial percentage of the students so enrolled 
        are receiving Federal Pell Grants in the second fiscal year 
        preceding the fiscal year for which determination is made, 
        compared to the percentage of students receiving Federal Pell 
        Grants at all such institutions in the second fiscal year 
        preceding the fiscal year for which the determination is made, 
        unless the requirement of this paragraph is waived under section 
        512(a).

``SEC. 503. AUTHORIZED ACTIVITIES. <<NOTE: 20 USC 1101b.>> 

    ``(a) Types of Activities Authorized.--Grants awarded under this 
title shall be used by Hispanic-serving institutions of higher education 
to assist the institutions to plan, develop, undertake, and carry out 
programs to improve and expand the institutions' capacity to serve 
Hispanic students and other low-income students.
    ``(b) Authorized Activities.--Grants awarded under this section 
shall be used for one or more of the following activities:
            ``(1) Purchase, rental, or lease of scientific or laboratory 
        equipment for educational purposes, including instructional and 
        research purposes.
            ``(2) Construction, maintenance, renovation, and improvement 
        in classrooms, libraries, laboratories, and other instructional 
        facilities.
            ``(3) Support of faculty exchanges, faculty development, 
        curriculum development, academic instruction, and faculty 
        fellowships to assist in attaining advanced degrees in the 
        fellow's field of instruction.
            ``(4) Purchase of library books, periodicals, and other 
        educational materials, including telecommunications program 
        material.
            ``(5) Tutoring, counseling, and student service programs 
        designed to improve academic success.

[[Page 112 STAT. 1769]]

            ``(6) Funds management, administrative management, and 
        acquisition of equipment for use in strengthening funds 
        management.
            ``(7) Joint use of facilities, such as laboratories and 
        libraries.
            ``(8) Establishing or improving a development office to 
        strengthen or improve contributions from alumni and the private 
        sector.
            ``(9) Establishing or improving an endowment fund.
            ``(10) Creating or improving facilities for Internet or 
        other distance learning academic instruction capabilities, 
        including purchase or rental of telecommunications technology 
        equipment or services.
            ``(11) Establishing or enhancing a program of teacher 
        education designed to qualify students to teach in public 
        elementary schools and secondary schools.
            ``(12) Establishing community outreach programs that will 
        encourage elementary school and secondary school students to 
        develop the academic skills and the interest to pursue 
        postsecondary education.
            ``(13) Expanding the number of Hispanic and other 
        underrepresented graduate and professional students that can be 
        served by the institution by expanding courses and institutional 
        resources.
            ``(14) Other activities proposed in the application 
        submitted pursuant to section 504 that--
                    ``(A) contribute to carrying out the purposes of 
                this title; and
                    ``(B) are approved by the Secretary as part of the 
                review and acceptance of such application.

    ``(c) Endowment Fund Limitations.--
            ``(1) Portion of grant.--A Hispanic-serving institution may 
        not use more than 20 percent of the grant funds provided under 
        this title for any fiscal year for establishing or improving an 
        endowment fund.
            ``(2) Matching required.--A Hispanic-serving institution 
        that uses any portion of the grant funds provided under this 
        title for any fiscal year for establishing or improving an 
        endowment fund shall provide from non-Federal funds an amount 
        equal to or greater than the portion.
            ``(3) Comparability.--The provisions of part C of title III 
        regarding the establishment or increase of an endowment fund, 
        that the Secretary determines are not inconsistent with this 
        subsection, shall apply to funds used under paragraph (1).

``SEC. 504. DURATION OF GRANT. <<NOTE: 20 USC 1101c.>> 

    ``(a) Award Period.--
            ``(1) In general.--The Secretary may award a grant to a 
        Hispanic-serving institution under this title for 5 years.
            ``(2) Waitout period.--A Hispanic-serving institution shall 
        not be eligible to secure a subsequent 5-year grant award under 
        this title until 2 years have elapsed since the expiration of 
        the institution's most recent 5-year grant award under this 
        title, except that for the purpose of this subsection a grant 
        under section 514(a) shall not be considered a grant under this 
        title.

    ``(b) Planning Grants.--Notwithstanding subsection (a), the 
Secretary may award a grant to a Hispanic-serving institution

[[Page 112 STAT. 1770]]

under this title for a period of 1 year for the purpose of preparation 
of plans and applications for a grant under this title.

``SEC. 505. SPECIAL RULE. <<NOTE: 20 USC 1101d.>> 

    ``No Hispanic-serving institution that is eligible for and receives 
funds under this title may receive funds under part A or B of title III 
during the period for which funds under this title are awarded.

                      ``PART B--GENERAL PROVISIONS

``SEC. 511. ELIGIBILITY; APPLICATIONS. <<NOTE: 20 USC 1103.>> 

    ``(a) Institutional Eligibility.--Each Hispanic-serving institution 
desiring to receive assistance under this title shall submit to the 
Secretary such enrollment data as may be necessary to demonstrate that 
the institution is a Hispanic-serving institution as defined in section 
502, along with such other data and information as the Secretary may by 
regulation require.
    ``(b) Applications.--
            ``(1) Applications required.--Any institution which is 
        eligible for assistance under this title shall submit to the 
        Secretary an application for assistance at such time, in such 
        form, and containing such information, as may be necessary to 
        enable the Secretary to evaluate the institution's need for 
        assistance. Subject to the availability of appropriations to 
        carry out this title, the Secretary may approve an application 
        for a grant under this title only if the Secretary determines 
        that--
                    ``(A) the application meets the requirements of 
                subsection (b); and
                    ``(B) the institution is eligible for assistance in 
                accordance with the provisions of this title under which 
                the assistance is sought.
            ``(2) Preliminary applications.--In carrying out paragraph 
        (1), the Secretary may develop a preliminary application for use 
        by Hispanic-serving institutions applying under this title prior 
        to the submission of the principal application.

    ``(c) Contents.--A Hispanic-serving institution, in the 
institution's application for a grant, shall--
            ``(1) set forth, or describe how the institution will 
        develop, a comprehensive development plan to strengthen the 
        institution's academic quality and institutional management, and 
        otherwise provide for institutional self-sufficiency and growth 
        (including measurable objectives for the institution and the 
        Secretary to use in monitoring the effectiveness of activities 
        under this title);
            ``(2) include a 5-year plan for improving the assistance 
        provided by the Hispanic-serving institution to Hispanic 
        students and other low-income individuals;
            ``(3) set forth policies and procedures to ensure that 
        Federal funds made available under this title for any fiscal 
        year will be used to supplement and, to the extent practical, 
        increase the funds that would otherwise be made available for 
        the purposes of section 501(b), and in no case supplant those 
        funds;
            ``(4) set forth policies and procedures for evaluating the 
        effectiveness in accomplishing the purpose of the activities for 
        which a grant is sought under this title;

[[Page 112 STAT. 1771]]

            ``(5) provide for such fiscal control and fund accounting 
        procedures as may be necessary to ensure proper disbursement of 
        and accounting for funds made available to the institution under 
        this title;
            ``(6) provide that the institution will comply with the 
        limitations set forth in section 516;
            ``(7) describe in a comprehensive manner any proposed 
        project for which funds are sought under the application and 
        include--
                    ``(A) a description of the various components of the 
                proposed project, including the estimated time required 
                to complete each such component;
                    ``(B) in the case of any development project that 
                consists of several components (as described by the 
                institution pursuant to subparagraph (A)), a statement 
                identifying those components which, if separately 
                funded, would be sound investments of Federal funds and 
                those components which would be sound investments of 
                Federal funds only if funded under this title in 
                conjunction with other parts of the development project 
                (as specified by the institution);
                    ``(C) an evaluation by the institution of the 
                priority given any proposed project for which funds are 
                sought in relation to any other projects for which funds 
                are sought by the institution under this title, and a 
                similar evaluation regarding priorities among the 
                components of any single proposed project (as described 
                by the institution pursuant to subparagraph (A));
                    ``(D) a detailed budget showing the manner in which 
                funds for any proposed project would be spent by the 
                institution; and
                    ``(E) a detailed description of any activity which 
                involves the expenditure of more than $25,000, as 
                identified in the budget referred to in subparagraph 
                (D);
            ``(8) <<NOTE: Reports.>> provide for making reports, in such 
        form and containing such information, as the Secretary may 
        require to carry out the Secretary's functions under this title, 
        including not less than one report annually setting forth the 
        institution's progress toward achieving the objectives for which 
        the funds were awarded and for keeping such records and 
        affording such access to such records, as the Secretary may find 
        necessary to assure the correctness and verification of such 
        reports; and
            ``(9) include such other information as the Secretary may 
        prescribe.

    ``(d) Priority.--With respect to applications for assistance under 
this section, the Secretary shall give priority to an application that 
contains satisfactory evidence that the Hispanic-serving institution has 
entered into or will enter into a collaborative arrangement with at 
least one local educational agency or community-based organization to 
provide such agency or organization with assistance (from funds other 
than funds provided under this title) in reducing dropout rates for 
Hispanic students, improving rates of academic achievement for Hispanic 
students, and increasing the rates at which Hispanic secondary school 
graduates enroll in higher education.
    ``(e) Eligibility Data.--The Secretary shall use the most recent and 
relevant data concerning the number and percentage of students receiving 
need-based assistance under title IV in making

[[Page 112 STAT. 1772]]

eligibility determinations and shall advance the base-year for the 
determinations forward following each annual grant cycle.

``SEC. 512. WAIVER AUTHORITY AND REPORTING REQUIREMENT. <<NOTE: 20 USC 
            1103a.>> 

    ``(a) Waiver Requirements; Need-Based Assistance Students.--The 
Secretary may waive the requirements set forth in section 
502(a)(2)(A)(i) in the case of an institution--
            ``(1) that is extensively subsidized by the State in which 
        the institution is located and charges low or no tuition;
            ``(2) that serves a substantial number of low-income 
        students as a percentage of the institution's total student 
        population;
            ``(3) that is contributing substantially to increasing 
        higher education opportunities for educationally disadvantaged, 
        underrepresented, or minority students, who are low-income 
        individuals;
            ``(4) which is substantially increasing higher educational 
        opportunities for individuals in rural or other isolated areas 
        which are unserved by postsecondary institutions; or
            ``(5) wherever located, if the Secretary determines that the 
        waiver will substantially increase higher education 
        opportunities appropriate to the needs of Hispanic Americans.

    ``(b) Waiver Determinations; Expenditures.--
            ``(1) Waiver determinations.--The Secretary may waive the 
        requirements set forth in section 502(a)(2)(A)(ii) if the 
        Secretary determines, based on persuasive evidence submitted by 
        the institution, that the institution's failure to meet the 
        requirements is due to factors which, when used in the 
        determination of compliance with the requirements, distort such 
        determination, and that the institution's designation as an 
        eligible institution under part A is otherwise consistent with 
        the purposes of this title.
            ``(2) <<NOTE: Reports.>> Expenditures.--The Secretary shall 
        submit to Congress every other year a report concerning the 
        institutions that, although not satisfying the requirements of 
        section 502(a)(2)(A)(ii), have been determined to be eligible 
        institutions under part A. Such report shall--
                    ``(A) identify the factors referred to in paragraph 
                (1) that were considered by the Secretary as factors 
                that distorted the determination of compliance with 
                clauses (i) and (ii) of section 502(a)(2)(A); and
                    ``(B) <<NOTE: Records.>>  contain a list of each 
                institution determined to be an eligible institution 
                under part A including a statement of the reasons for 
                each such determination.

``SEC. 513. APPLICATION REVIEW PROCESS. <<NOTE: 20 USC 1103b.>> 

    ``(a) Review Panel.--All applications submitted under this title by 
Hispanic-serving institutions shall be read by a panel of readers 
composed of individuals who are selected by the Secretary and who 
include individuals representing Hispanic-serving institutions. The 
Secretary shall ensure that no individual assigned under this section to 
review any application has any conflict of interest with regard to the 
application that might impair the impartiality with which the individual 
conducts the review under this section.
    ``(b) Instruction.--All readers selected by the Secretary shall 
receive thorough instruction from the Secretary regarding the evaluation 
process for applications submitted under this title that are consistent 
with the provisions of this title, including--

[[Page 112 STAT. 1773]]

            ``(1) an enumeration of the factors to be used to determine 
        the quality of applications submitted under this title; and
            ``(2) an enumeration of the factors to be used to determine 
        whether a grant should be awarded for a project under this 
        title, the amount of any such grant, and the duration of any 
        such grant.

    ``(c) Recommendations of Panel.--In awarding grants under this 
title, the Secretary shall take into consideration the recommendations 
of the panel made under subsection (a).
    ``(d) <<NOTE: Deadline.>> Notification.--Not later than June 30 of 
each year, the Secretary shall notify each Hispanic-serving institution 
making an application under this title of--
            ``(1) the scores given the institution by the panel pursuant 
        to this section;
            ``(2) the recommendations of the panel with respect to such 
        application; and
            ``(3) the reasons for the decision of the Secretary in 
        awarding or refusing to award a grant under this title, and any 
        modifications, if any, in the recommendations of the panel made 
        by the Secretary.

``SEC. 514. COOPERATIVE ARRANGEMENTS. <<NOTE: 20 USC 1103c.>> 

    ``(a) General Authority.--The Secretary may make grants to encourage 
cooperative arrangements with funds available to carry out this title, 
between Hispanic-serving institutions eligible for assistance under this 
title, and between such institutions and institutions not receiving 
assistance under this title, for the activities described in section 503 
so that the resources of the cooperating institutions might be combined 
and shared in order to achieve the purposes of this title, to avoid 
costly duplicative efforts, and to enhance the development of Hispanic-
serving institutions.
    ``(b) Priority.--The Secretary shall give priority to grants for the 
purposes described under subsection (a) whenever the Secretary 
determines that the cooperative arrangement is geographically and 
economically sound or will benefit the applicant Hispanic-serving 
institution.
    ``(c) Duration.--Grants to Hispanic-serving institutions having a 
cooperative arrangement may be made under this section for a period 
determined under section 505.

``SEC. 515. ASSISTANCE TO INSTITUTIONS UNDER OTHER PROGRAMS. <<NOTE: 20 
            USC 1103d.>> 

    ``(a) Assistance Eligibility.--Each Hispanic-serving institution 
that the Secretary determines to be an institution eligible under this 
title may be eligible for waivers in accordance with subsection (b).
    ``(b) Waiver Applicability.--
            ``(1) In general.--Subject to, and in accordance with, 
        regulations promulgated for the purpose of this section, in the 
        case of any application by a Hispanic-serving institution 
        referred to in subsection (a) for assistance under any programs 
        specified in paragraph (2), the Secretary is authorized, if such 
        application is otherwise approvable, to waive any requirement 
        for a non-Federal share of the cost of the program or project, 
        or, to the extent not inconsistent with other law, to give, or 
        require to be given, priority consideration of the application 
        in relation to applications from other institutions.
            ``(2) Programs.--The provisions of this section shall apply 
        to any program authorized by title IV or section 604.

[[Page 112 STAT. 1774]]

    ``(c) Limitation.--The Secretary shall not waive, under subsection 
(b), the non-Federal share requirement for any program for applications 
which, if approved, would require the expenditure of more than 10 
percent of the appropriations for the program for any fiscal year.

``SEC. 516. LIMITATIONS. <<NOTE: 20 USC 1103e.>> 

    ``The funds appropriated under section 518 may not be used--
            ``(1) for a school or department of divinity or any 
        religious worship or sectarian activity;
            ``(2) for an activity that is inconsistent with a State plan 
        for desegregation of higher education applicable to a Hispanic-
        serving institution;
            ``(3) for an activity that is inconsistent with a State plan 
        of higher education applicable to a Hispanic-serving 
        institution; or
            ``(4) for purposes other than the purposes set forth in the 
        approved application under which the funds were made available 
        to a Hispanic-serving institution.

``SEC. 517. PENALTIES. <<NOTE: 20 USC 1103f.>> 

    ``Whoever, being an officer, director, agent, or employee of, or 
connected in any capacity with, any recipient of Federal financial 
assistance or grant pursuant to this title embezzles, willfully 
misapplies, steals, or obtains by fraud any of the funds that are the 
subject of such grant or assistance, shall be fined not more than 
$10,000 or imprisoned for not more than 2 years, or both.

``SEC. 518. AUTHORIZATIONS OF APPROPRIATIONS. <<NOTE: 20 USC 1103g.>> 

    ``(a) Authorizations.--There are authorized to be appropriated to 
carry out this title $62,500,000 for fiscal year 1999 and such sums as 
may be necessary for each of the 4 succeeding fiscal years.
    ``(b) Use of Multiple Year Awards.--In the event of a multiple year 
award to any Hispanic-serving institution under this title, the 
Secretary shall make funds available for such award from funds 
appropriated for this title for the fiscal year in which such funds are 
to be used by the institution.''.

               TITLE VI--INTERNATIONAL EDUCATION PROGRAMS

SEC. 601. INTERNATIONAL AND FOREIGN LANGUAGE STUDIES.

    Part A of title VI (20 U.S.C. 1121 et seq.) is amended to read as 
follows:

          ``PART A--INTERNATIONAL AND FOREIGN LANGUAGE STUDIES

``SEC. 601. FINDINGS AND PURPOSES. <<NOTE: 20 USC 1121.>> 

    ``(a) Findings.--Congress finds as follows:
            ``(1) The security, stability, and economic vitality of the 
        United States in a complex global era depend upon American 
        experts in and citizens knowledgeable about world regions, 
        foreign languages, and international affairs, as well as upon a 
        strong research base in these areas.

[[Page 112 STAT. 1775]]

            ``(2) Advances in communications technology and the growth 
        of regional and global problems make knowledge of other 
        countries and the ability to communicate in other languages more 
        essential to the promotion of mutual understanding and 
        cooperation among nations and their peoples.
            ``(3) Dramatic post-Cold War changes in the world's 
        geopolitical and economic landscapes are creating needs for 
        American expertise and knowledge about a greater diversity of 
        less commonly taught foreign languages and nations of the world.
            ``(4) Systematic efforts are necessary to enhance the 
        capacity of institutions of higher education in the United 
        States for--
                    ``(A) producing graduates with international and 
                foreign language expertise and knowledge; and
                    ``(B) research regarding such expertise and 
                knowledge.
            ``(5) Cooperative efforts among the Federal Government, 
        institutions of higher education, and the private sector are 
        necessary to promote the generation and dissemination of 
        information about world regions, foreign languages, and 
        international affairs throughout education, government, 
        business, civic, and nonprofit sectors in the United States.

    ``(b) Purposes.--The purposes of this part are--
            ``(1)(A) to support centers, programs, and fellowships in 
        institutions of higher education in the United States for 
        producing increased numbers of trained personnel and research in 
        foreign languages, area studies, and other international 
        studies;
            ``(B) to develop a pool of international experts to meet 
        national needs;
            ``(C) to develop and validate specialized materials and 
        techniques for foreign language acquisition and fluency, 
        emphasizing (but not limited to) the less commonly taught 
        languages;
            ``(D) to promote access to research and training overseas; 
        and
            ``(E) to advance the internationalization of a variety of 
        disciplines throughout undergraduate and graduate education;
            ``(2) to support cooperative efforts promoting access to and 
        the dissemination of international and foreign language 
        knowledge, teaching materials, and research, throughout 
        education, government, business, civic, and nonprofit sectors in 
        the United States, through the use of advanced technologies; and
            ``(3) to coordinate the programs of the Federal Government 
        in the areas of foreign language, area studies, and other 
        international studies, including professional international 
        affairs education and research.

``SEC. <<NOTE: 20 USC 1122.>> 602. GRADUATE AND UNDERGRADUATE LANGUAGE 
            AND AREA CENTERS AND PROGRAMS.

    ``(a) National Language and Area Centers and Programs Authorized.--
            ``(1) Centers and programs.--
                    ``(A) In general.--The Secretary is authorized--
                          ``(i) to make grants to institutions of higher 
                      education, or combinations thereof, for the 
                      purpose of establishing, strengthening, and 
                      operating comprehensive foreign language and area 
                      or international studies centers and programs; and

[[Page 112 STAT. 1776]]

                          ``(ii) to make grants to such institutions or 
                      combinations for the purpose of establishing, 
                      strengthening, and operating a diverse network of 
                      undergraduate foreign language and area or 
                      international studies centers and programs.
                    ``(B) National resources.--The centers and programs 
                referred to in paragraph (1) shall be national resources 
                for--
                          ``(i) teaching of any modern foreign language;
                          ``(ii) instruction in fields needed to provide 
                      full understanding of areas, regions, or countries 
                      in which such language is commonly used;
                          ``(iii) research and training in international 
                      studies, and the international and foreign 
                      language aspects of professional and other fields 
                      of study; and
                          ``(iv) instruction and research on issues in 
                      world affairs that concern one or more countries.
            ``(2) Authorized activities.--Any such grant may be used to 
        pay all or part of the cost of establishing or operating a 
        center or program, including the cost of--
                    ``(A) teaching and research materials;
                    ``(B) curriculum planning and development;
                    ``(C) establishing and maintaining linkages with 
                overseas institutions of higher education and other 
                organizations that may contribute to the teaching and 
                research of the center or program;
                    ``(D) bringing visiting scholars and faculty to the 
                center to teach or to conduct research;
                    ``(E) professional development of the center's 
                faculty and staff;
                    ``(F) projects conducted in cooperation with other 
                centers addressing themes of world regional, cross-
                regional, international, or global importance;
                    ``(G) summer institutes in the United States or 
                abroad designed to provide language and area training in 
                the center's field or topic; and
                    ``(H) support for faculty, staff, and student travel 
                in foreign areas, regions, or countries, and for the 
                development and support of educational programs abroad 
                for students.
            ``(3) Grants to maintain library collections.--The Secretary 
        may make grants to centers described in paragraph (1) having 
        important library collections, as determined by the Secretary, 
        for the maintenance of such collections.
            ``(4) Outreach grants and summer institutes.--The 
        Secretary may make additional grants to centers described in 
        paragraph (1) for any one or more of the following purposes:
                    ``(A) Programs of linkage or outreach between 
                foreign language, area studies, or other international 
                fields, and professional schools and colleges.
                    ``(B) Programs of linkage or outreach with 2- and 4-
                year colleges and universities.
                    ``(C) Programs of linkage or outreach with 
                departments or agencies of Federal and State 
                governments.
                    ``(D) Programs of linkage or outreach with the news 
                media, business, professional, or trade associations.
                    ``(E) Summer institutes in foreign area, foreign 
                language, and other international fields designed to 
                carry

[[Page 112 STAT. 1777]]

                out the programs of linkage and outreach described in 
                subparagraphs (A), (B), (C), and (D).

    ``(b) Graduate Fellowships for Foreign Language and Area or 
International Studies.--
            ``(1) In general.--The Secretary is authorized to make 
        grants to institutions of higher education or combinations of 
        such institutions for the purpose of paying stipends to 
        individuals undergoing advanced training in any center or 
        program approved by the Secretary.
            ``(2) Eligible students.--Students receiving stipends 
        described in paragraph (1) shall be individuals who are engaged 
        in an instructional program with stated performance goals for 
        functional foreign language use or in a program developing such 
        performance goals, in combination with area studies, 
        international studies, or the international aspects of a 
        professional studies program, including predissertation level 
        studies, preparation for dissertation research, dissertation 
        research abroad, and dissertation writing.

    ``(c) Special Rule With Respect to Travel.--No funds may be expended 
under this part for undergraduate travel except in accordance with rules 
prescribed by the Secretary setting forth policies and procedures to 
assure that Federal funds made available for such travel are expended as 
part of a formal program of supervised study.
    ``(d) Allowances.--Stipends awarded to graduate level recipients may 
include allowances for dependents and for travel for research and study 
in the United States and abroad.

``SEC. 603. LANGUAGE RESOURCE CENTERS.

    ``(a) <<NOTE: Contracts. 20 USC 1123.>>  Language Resource Centers 
Authorized.--The Secretary is authorized to make grants to and enter 
into contracts with institutions of higher education, or combinations of 
such institutions, for the purpose of establishing, strengthening, and 
operating a small number of national language resource and training 
centers, which shall serve as resources to improve the capacity to teach 
and learn foreign languages effectively.

    ``(b) Authorized Activities.--The activities carried out by the 
centers described in subsection (a)--
            ``(1) shall include effective dissemination efforts, 
        whenever appropriate; and
            ``(2) may include--
                    ``(A) the conduct and dissemination of research on 
                new and improved teaching methods, including the use of 
                advanced educational technology;
                    ``(B) the development and dissemination of new 
                teaching materials reflecting the use of such research 
                in effective teaching strategies;
                    ``(C) the development, application, and 
                dissemination of performance testing appropriate to an 
                educational setting for use as a standard and comparable 
                measurement of skill levels in all languages;
                    ``(D) the training of teachers in the administration 
                and interpretation of performance tests, the use of 
                effective teaching strategies, and the use of new 
                technologies;
                    ``(E) a significant focus on the teaching and 
                learning needs of the less commonly taught languages, 
                including an assessment of the strategic needs of the 
                United States,

[[Page 112 STAT. 1778]]

                the determination of ways to meet those needs 
                nationally, and the publication and dissemination of 
                instructional materials in the less commonly taught 
                languages;
                    ``(F) the development and dissemination of materials 
                designed to serve as a resource for foreign language 
                teachers at the elementary and secondary school levels; 
                and
                    ``(G) the operation of intensive summer language 
                institutes to train advanced foreign language students, 
                to provide professional development, and to improve 
                language instruction through preservice and inservice 
                language training for teachers.

    ``(c) Conditions for Grants.--Grants under this section shall be 
made on such conditions as the Secretary determines to be necessary to 
carry out the provisions of this section.

``SEC. 604. <<NOTE: 20 USC 1124.>> UNDERGRADUATE INTERNATIONAL STUDIES 
            AND FOREIGN LANGUAGE PROGRAMS.

    ``(a) Incentives for the Creation of New Programs and the 
Strengthening of Existing Programs in Undergraduate International 
Studies and Foreign Language Programs.--
            ``(1) Authority.--The Secretary is authorized to make grants 
        to institutions of higher education, combinations of such 
        institutions, or partnerships between nonprofit educational 
        organizations and institutions of higher education, to assist 
        such institutions, combinations or partnerships in planning, 
        developing, and carrying out programs to improve undergraduate 
        instruction in international studies and foreign languages. Such 
        grants shall be awarded to institutions, combinations or 
        partnerships seeking to create new programs or to strengthen 
        existing programs in foreign languages, area studies, and other 
        international fields.
            ``(2) Use of funds.--Grants made under this section may be 
        used for Federal share of the cost of projects and activities 
        which are an integral part of such a program, such as--
                    ``(A) planning for the development and expansion of 
                undergraduate programs in international studies and 
                foreign languages;
                    ``(B) teaching, research, curriculum development, 
                faculty training in the United States or abroad, and 
                other related activities, including--
                          ``(i) the expansion of library and teaching 
                      resources; and
                          ``(ii) preservice and inservice teacher 
                      training;
                    ``(C) expansion of opportunities for learning 
                foreign languages, including less commonly taught 
                languages;
                    ``(D) programs under which foreign teachers and 
                scholars may visit institutions as visiting faculty;
                    ``(E) programs designed to develop or enhance 
                linkages between 2- and 4-year institutions of higher 
                education, or baccalaureate and post-baccalaureate 
                programs or institutions;
                    ``(F) the development of undergraduate educational 
                programs--
                          ``(i) in locations abroad where such 
                      opportunities are not otherwise available or that 
                      serve students for whom such opportunities are not 
                      otherwise available; and

[[Page 112 STAT. 1779]]

                          ``(ii) that provide courses that are closely 
                      related to on-campus foreign language and 
                      international curricula;
                    ``(G) the integration of new and continuing 
                education abroad opportunities for undergraduate 
                students into curricula of specific degree programs;
                    ``(H) the development of model programs to enrich or 
                enhance the effectiveness of educational programs 
                abroad, including predeparture and postreturn programs, 
                and the integration of educational programs abroad into 
                the curriculum of the home institution;
                    ``(I) the development of programs designed to 
                integrate professional and technical education with 
                foreign languages, area studies, and other international 
                fields;
                    ``(J) the establishment of linkages overseas with 
                institutions of higher education and organizations that 
                contribute to the educational programs assisted under 
                this subsection;
                    ``(K) the conduct of summer institutes in foreign 
                area, foreign language, and other international fields 
                to provide faculty and curriculum development, including 
                the integration of professional and technical education 
                with foreign area and other international studies, and 
                to provide foreign area and other international 
                knowledge or skills to government personnel or private 
                sector professionals in international activities;
                    ``(L) the development of partnerships between--
                          ``(i) institutions of higher education; and
                          ``(ii) the private sector, government, or 
                      elementary and secondary education institutions,
                in order to enhance international knowledge and skills; 
                and
                    ``(M) the use of innovative technology to increase 
                access to international education programs.
            ``(3) Non-federal share.--The non-Federal share of the cost 
        of the programs assisted under this subsection--
                    ``(A) may be provided in cash from the private 
                sector corporations or foundations in an amount equal to 
                one-third of the total cost of the programs assisted 
                under this section; or
                    ``(B) may be provided as an in-cash or in-kind 
                contribution from institutional and noninstitutional 
                funds, including State and private sector corporation or 
                foundation contributions, equal to one-half of the total 
                cost of the programs assisted under this section.
            ``(4) Special rule.--The Secretary may waive or reduce the 
        required non-Federal share for institutions that--
                    ``(A) are eligible to receive assistance under part 
                A or B of title III or under title V; and
                    ``(B) have submitted a grant application under this 
                section.
            ``(5) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to applications from institutions 
        of higher education, combinations or partnerships that require 
        entering students to have successfully completed at least 2 
        years of secondary school foreign language instruction or that

[[Page 112 STAT. 1780]]

        require each graduating student to earn 2 years of postsecondary 
        credit in a foreign language (or have demonstrated equivalent 
        competence in the foreign language) or, in the case of a 2-year 
        degree granting institution, offer 2 years of postsecondary 
        credit in a foreign language.
            ``(6) Grant conditions.--Grants under this subsection shall 
        be made on such conditions as the Secretary determines to be 
        necessary to carry out this subsection.
            ``(7) Application.--Each application for assistance under 
        this subsection shall include--
                    ``(A) evidence that the applicant has conducted 
                extensive planning prior to submitting the application;
                    ``(B) an assurance that the faculty and 
                administrators of all relevant departments and programs 
                served by the applicant are involved in ongoing 
                collaboration with regard to achieving the stated 
                objectives of the application;
                    ``(C) an assurance that students at the applicant 
                institutions, as appropriate, will have equal access to, 
                and derive benefits from, the program assisted under 
                this subsection; and
                    ``(D) an assurance that each institution, 
                combination or partnership will use the Federal 
                assistance provided under this subsection to supplement 
                and not supplant non-Federal funds the institution 
                expends for programs to improve undergraduate 
                instruction in international studies and foreign 
                languages.
            ``(8) Evaluation.--The Secretary may establish requirements 
        for program evaluations and require grant recipients to submit 
        annual reports that evaluate the progress and performance of 
        students participating in programs assisted under this 
        subsection.

    ``(b) Programs of National Significance.--The Secretary may also 
award grants to public and private nonprofit agencies and organizations, 
including professional and scholarly associations, whenever the 
Secretary determines such grants will make an especially significant 
contribution to improving undergraduate international studies and 
foreign language programs.
    ``(c) Funding Support.--The Secretary may use not more than 10 
percent of the total amount appropriated for this part for carrying out 
the purposes of this section.

``SEC. 605. RESEARCH; STUDIES; ANNUAL REPORT. <<NOTE: 20 USC 1125.>> 

    ``(a) Authorized Activities.--The Secretary may, directly or through 
grants or contracts, conduct research and studies that contribute to 
achieving the purposes of this part. Such research and studies may 
include--
            ``(1) studies and surveys to determine needs for increased 
        or improved instruction in foreign language, area studies, or 
        other international fields, including the demand for foreign 
        language, area, and other international specialists in 
        government, education, and the private sector;
            ``(2) studies and surveys to assess the utilization of 
        graduates of programs supported under this title by 
        governmental, educational, and private sector organizations and 
        other studies assessing the outcomes and effectiveness of 
        programs so supported;

[[Page 112 STAT. 1781]]

            ``(3) evaluation of the extent to which programs assisted 
        under this title that address national needs would not otherwise 
        be offered;
            ``(4) comparative studies of the effectiveness of strategies 
        to provide international capabilities at institutions of higher 
        education;
            ``(5) research on more effective methods of providing 
        instruction and achieving competency in foreign languages, area 
        studies, or other international fields;
            ``(6) the development and publication of specialized 
        materials for use in foreign language, area studies, and other 
        international fields, or for training foreign language, area, 
        and other international specialists;
            ``(7) studies and surveys of the uses of technology in 
        foreign language, area studies, and international studies 
        programs;
            ``(8) studies and evaluations of effective practices in the 
        dissemination of international information, materials, research, 
        teaching strategies, and testing techniques throughout the 
        education community, including elementary and secondary schools; 
        and
            ``(9) the application of performance tests and standards 
        across all areas of foreign language instruction and classroom 
        use.

    ``(b) <<NOTE: Publication.>> Annual Report.--The Secretary shall 
prepare, publish, and announce an annual report listing the books and 
research materials produced with assistance under this section.

``SEC. 606. <<NOTE: 20 USC 1126.>> TECHNOLOGICAL INNOVATION AND 
            COOPERATION FOR FOREIGN INFORMATION ACCESS.

    ``(a) Authority.--The Secretary is authorized to make grants to 
institutions of higher education, public or nonprofit private libraries, 
or consortia of such institutions or libraries, to develop innovative 
techniques or programs using new electronic technologies to collect, 
organize, preserve, and widely disseminate information on world regions 
and countries other than the United States that address our Nation's 
teaching and research needs in international education and foreign 
languages.
    ``(b) Authorized Activities.--Grants under this section may be 
used--
            ``(1) to facilitate access to or preserve foreign 
        information resources in print or electronic forms;
            ``(2) to develop new means of immediate, full-text document 
        delivery for information and scholarship from abroad;
            ``(3) to develop new means of shared electronic access to 
        international data;
            ``(4) to support collaborative projects of indexing, 
        cataloging, and other means of bibliographic access for scholars 
        to important research materials published or distributed outside 
        the United States;
            ``(5) to develop methods for the wide dissemination of 
        resources written in non-Roman language alphabets;
            ``(6) to assist teachers of less commonly taught languages 
        in acquiring, via electronic and other means, materials suitable 
        for classroom use; and
            ``(7) to promote collaborative technology based projects in 
        foreign languages, area studies, and international studies among 
        grant recipients under this title.

[[Page 112 STAT. 1782]]

    ``(c) Application.--Each institution or consortium desiring a grant 
under this section shall submit an application to the Secretary at such 
time, in such manner, and accompanied by such information and assurances 
as the Secretary may reasonably require.
    ``(d) Match Required.--The Federal share of the total cost of 
carrying out a program supported by a grant under this section shall not 
be more than 66\2/3\ percent. The non-Federal share of such cost may be 
provided either in-kind or in cash, and may include contributions from 
private sector corporations or foundations.''.

``SEC. 607. SELECTION OF CERTAIN GRANT RECIPIENTS. <<NOTE: 20 USC 
            1127.>> 

    ``(a) Competitive Grants.--The Secretary shall award grants under 
section 602 competitively on the basis of criteria that 
separately, but not less rigorously, evaluates the applications for 
comprehensive and undergraduate language and area centers and programs.
    ``(b) Selection Criteria.--The Secretary shall set criteria for 
grants awarded under section 602 by which a determination of excellence 
shall be made to meet the differing objectives of graduate and 
undergraduate institutions.
    ``(c) Equitable Distribution of Grants.--The Secretary shall, to the 
extent practicable, award grants under this part (other than section 
602) in such manner as to achieve an equitable distribution of the grant 
funds throughout the United States, based on the merit of a proposal as 
determined pursuant to a peer review process involving broadly 
representative professionals.

``SEC. 608. EQUITABLE DISTRIBUTION OF CERTAIN FUNDS. <<NOTE: 20 USC 
            1128.>> 

    ``(a) Selection Criteria.--The Secretary shall make excellence the 
criterion for selection of grants awarded under section 602.
    ``(b) Equitable Distribution.--To the extent practicable and 
consistent with the criterion of excellence, the Secretary shall award 
grants under this part (other than section 602) in such a manner as will 
achieve an equitable distribution of funds throughout the United States.
    ``(c) Support for Undergraduate Education.--The Secretary shall also 
award grants under this part in such manner as to ensure that an 
appropriate portion of the funds appropriated for this part (as 
determined by the Secretary) are used to support undergraduate 
education.

``SEC. 609. AMERICAN OVERSEAS RESEARCH CENTERS. <<NOTE: 20 USC 1128a.>> 

    ``(a) <<NOTE: Contracts.>>  Centers Authorized.--The Secretary is 
authorized to make grants to and enter into contracts with any American 
overseas research center that is a consortium of institutions of higher 
education (hereafter in this section referred to as a ``center'') to 
enable such center to promote postgraduate research, exchanges and area 
studies.

    ``(b) Use of Grants.--Grants made and contracts entered into 
pursuant to this section may be used to pay all or a portion of the cost 
of establishing or operating a center or program, 
including--
            ``(1) the cost of faculty and staff stipends and salaries;
            ``(2) the cost of faculty, staff, and student travel;
            ``(3) the cost of the operation and maintenance of overseas 
        facilities;
            ``(4) the cost of teaching and research materials;

[[Page 112 STAT. 1783]]

            ``(5) the cost of acquisition, maintenance, and preservation 
        of library collections;
            ``(6) the cost of bringing visiting scholars and faculty to 
        a center to teach or to conduct research;
            ``(7) the cost of organizing and managing conferences; and
            ``(8) the cost of publication and dissemination of material 
        for the scholarly and general public.

    ``(c) Limitation.--The Secretary shall only award grants to and 
enter into contracts with centers under this section that--
            ``(1) receive more than 50 percent of their funding from 
        public or private United States sources;
            ``(2) have a permanent presence in the country in which the 
        center is located; and
            ``(3) are organizations described in section 501(c)(3) of 
        the Internal Revenue Code of 1986 which are exempt from taxation 
        under section 501(a) of such Code.

    ``(d) Development Grants.--The Secretary is authorized to make 
grants for the establishment of new centers. The grants may be used to 
fund activities that, within 1 year, will result in the creation of a 
center described in subsection (c).

``SEC. 610. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1128b.>> 

    ``There are authorized to be appropriated to carry out this part 
$80,000,000 for fiscal year 1999, and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

SEC. 602. BUSINESS AND INTERNATIONAL EDUCATION PROGRAMS.

    (a) Amendment to Heading.--The heading for section 611 (20 U.S.C. 
1130) is amended to read as follows:

``SEC. 611. FINDINGS AND PURPOSES.''.

    (b) Centers.--Section 612 (20 U.S.C. 1130-1) is amended--
            (1) in subsection (c)--
                    (A) in paragraph (1)--
                          (i) in subparagraph (B), by striking 
                      ``advanced''; and
                          (ii) in subparagraph (C), by striking 
                      ``evening or summer''; and
                    (B) in paragraph (2)(C), by inserting ``foreign 
                language studies,'' after ``area studies,''; and
            (2) in subsection (d)(2)(G), by inserting ``, such as a 
        representative of a community college in the region served by 
        the center'' before the period.

    (c) Authorization of Appropriations.--Section 614 (20 U.S.C. 1130b) 
is amended--
            (1) in subsection (a), by striking ``1993'' and inserting 
        ``1999''; and
            (2) in subsection (b), by striking ``1993'' and inserting 
        ``1999''.

SEC. 603. INSTITUTE FOR INTERNATIONAL PUBLIC POLICY.

    (a) Minority Foreign Service Professional Development Program.--
Section 621(e) (20 U.S.C. 1131(e)) is amended by striking ``one-fourth'' 
and inserting ``one-half''.
    (b) Institutional Development.--Part C of title VI (20 U.S.C. 1131 
et seq.) is amended--

[[Page 112 STAT. 1784]]

            (1) by redesignating sections 622 through 627 (20 U.S.C. 
        1131a through 1131f) as sections 623 through 628, respectively; 
        and
            (2) by inserting after section 621 (20 U.S.C. 1131) the 
        following:

``SEC. 622. INSTITUTIONAL DEVELOPMENT. <<NOTE: Minorities. 20 USC 1131-
            1.>> 

    ``(a) In General.--The Institute shall award grants, from amounts 
available to the Institute for each fiscal year, to historically Black 
colleges and universities, Hispanic-serving institutions, Tribally 
Controlled Colleges or Universities, and minority institutions, to 
enable such colleges, universities, and institutions to strengthen 
international affairs programs.
    ``(b) Application.--No grant may be made by the Institute unless an 
application is made by the college, university, or institution at such 
time, in such manner, and accompanied by such information as the 
Institute may require.
    ``(c) Definitions.--In this section--
            ``(1) the term `historically Black college and university' 
        has the meaning given the term in section 322;
            ``(2) the term `Hispanic-serving institution' has the 
        meaning given the term in section 502;
            ``(3) the term `Tribally Controlled College or University' 
        has the meaning given the term in section 2 of the Tribally 
        Controlled College or University Assistance Act of 1978 (25 
        U.S.C. 1801); and
            ``(4) the term `minority institution' has the meaning given 
        the term in section 365.''.

    (c) Study Abroad Program.--Section 623 (as redesignated by 
subsection(b)(1)) (20 U.S.C. 1131a)--
            (1) in the section heading, by striking ``junior year'' and 
        inserting ``study'';
            (2) in subsection (b)(2)--
                    (A) by inserting ``, or completing the third year of 
                study in the case of a summer abroad program,'' after 
                ``study''; and
                    (B) by striking ``junior year'' and inserting 
                ``study''; and
            (3) in subsection (c)--
                    (A) in the matter preceding paragraph (1), by 
                striking ``junior year'' and inserting ``study'';
                    (B) in paragraph (1), by striking ``junior year'' 
                and inserting ``study''; and
                    (C) in paragraph (2)--
                          (i) by striking ``one-half'' and inserting 
                      ``one-third''; and
                          (ii) by striking ``junior year'' and inserting 
                      ``study''.

    (d) Internships.--Section 625 <<NOTE: 20 USC 1131c.>> (as 
redesignated by subsection (b)(1)) (20 U.S.C. 1132c)--
            (1) by striking ``The Institute'' and inserting ``(a) In 
        General.--The Institute''; and
            (2) by adding at the end the following:

    ``(b) <<NOTE: Contracts.>> Postbaccalaureate Internships.--The 
Institute shall enter into agreements with institutions of higher 
education described in the first sentence of subsection (a) to conduct 
internships for students who have completed study for a baccalaureate

[[Page 112 STAT. 1785]]

degree. The internship program authorized by this subsection shall--
            ``(1) assist the students to prepare for a master's degree 
        program;
            ``(2) be carried out with the assistance of the Woodrow 
        Wilson International Center for Scholars;
            ``(3) contain work experience for the students designed to 
        contribute to the students' preparation for a master's degree 
        program; and
            ``(4) be assisted by the Interagency Committee on Minority 
        Careers in International Affairs established under subsection 
        (c).

    ``(c) Interagency Committee on Minority Careers in International 
Affairs.--
            ``(1) Establishment.--There is established in the executive 
        branch of the Federal Government an Interagency Committee on 
        Minority Careers in International Affairs composed of not less 
        than 7 members, including--
                    ``(A) the Under Secretary for Farm and Foreign 
                Agricultural Services of the Department of Agriculture, 
                or the Under Secretary's designee;
                    ``(B) the Assistant Secretary and Director General, 
                of the United States and Foreign Commercial Service of 
                the Department of Commerce, or the Assistant Secretary 
                and Director General's designee;
                    ``(C) the Under Secretary of Defense for Personnel 
                and Readiness of the Department of Defense, or the Under 
                Secretary's designee;
                    ``(D) the Assistant Secretary for Postsecondary 
                Education in the Department of Education, or the 
                Assistant Secretary's designee;
                    ``(E) the Director General of the Foreign Service of 
                the Department of State, or the Director General's 
                designee;
                    ``(F) the General Counsel of the Agency for 
                International Development, or the General Counsel's 
                designee; and
                    ``(G) the Associate Director for Educational and 
                Cultural Affairs of the United States Information 
                Agency, or the Associate Director's designee.
            ``(2) Functions.--The Interagency Committee established by 
        this section shall--
                    ``(A) on an annual basis inform the Secretary and 
                the Institute regarding ways to advise students 
                participating in the internship program assisted under 
                this section with respect to goals for careers in 
                international affairs;
                    ``(B) locate for students potential internship 
                opportunities in the Federal Government related to 
                international affairs; and
                    ``(C) promote policies in each department and agency 
                participating in the Committee that are designed to 
                carry out the objectives of this part.''.

    (f ) Conforming Amendment.--Section 627 (as redesignated by 
subsection (b)(1)) (20 U.S.C. 1131e) is amended by striking ``625'' and 
inserting ``626''.

[[Page 112 STAT. 1786]]

    (g) Authorization of Appropriations.--Section 628 (as redesignated 
by subsection (b)(1)) (20 U.S.C. 1131f ), by striking ``1993'' and 
inserting ``1999''.

SEC. 604. GENERAL PROVISIONS.

    (a) Definitions.--Section 631(a) (20 U.S.C. 1132(a)) is 
amended--
            (1) by striking ``and'' at the end of paragraph (7);
            (2) by striking the period at the end of paragraph (8) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (8) the following:
            ``(9) the term `educational programs abroad' means programs 
        of study, internships, or service learning outside the United 
        States which are part of a foreign language or other 
        international curriculum at the undergraduate or graduate 
        education levels.''.

    (b) Repeal.--Section 632 (20 U.S.C. 1132-1) is repealed.

       TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

SEC. 701. REVISION OF TITLE VII.

    Title VII (20 U.S.C. 1132a et seq.) is amended to read as follows:

      ``TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

``SEC. 700. PURPOSE. <<NOTE: 20 USC 1133.>> 

    ``It is the purpose of this title--
            ``(1) to authorize national graduate fellowship programs--
                    ``(A) in order to attract students of superior 
                ability and achievement, exceptional promise, and 
                demonstrated financial need, into high-quality graduate 
                programs and provide the students with the financial 
                support necessary to complete advanced degrees; and
                    ``(B) that are designed to--
                          ``(i) sustain and enhance the capacity for 
                      graduate education in areas of national need; and
                          ``(ii) encourage talented students to pursue 
                      scholarly careers in the humanities, social 
                      sciences, and the arts; and
            ``(2) to promote postsecondary programs.

                  ``PART A--GRADUATE EDUCATION PROGRAMS

             ``Subpart 1--Jacob K. Javits Fellowship Program

``SEC. 701. AWARD OF JACOB K. JAVITS FELLOWSHIPS. <<NOTE: 20 USC 
            1134.>> 

    ``(a) Authority and Timing of Awards.--The Secretary is authorized 
to award fellowships in accordance with the provisions

[[Page 112 STAT. 1787]]

of this subpart for graduate study in the arts, humanities, and social 
sciences by students of superior ability selected on the basis of 
demonstrated achievement, financial need, and exceptional promise. The 
fellowships shall be awarded to students who are eligible to receive any 
grant, loan, or work assistance pursuant to section 484 and intend to 
pursue a doctoral degree, except that fellowships may be granted to 
students pursuing a master's degree in those fields in which the 
master's degree is the terminal highest degree awarded in the area of 
study. All funds appropriated in a fiscal year shall be obligated and 
expended to the students for fellowships for use in the academic year 
beginning after July 1 of the fiscal year following the fiscal year for 
which the funds were appropriated. The fellowships shall be awarded for 
only 1 academic year of study and shall be renewable for a period not to 
exceed 4 years of study.
    ``(b) Designation of Fellows.--Students receiving awards under this 
subpart shall be known as `Jacob K. Javits Fellows'.
    ``(c) Interruptions of Study.--The institution of higher education 
may allow a fellowship recipient to interrupt periods of study for a 
period not to exceed 12 months for the purpose of work, travel, or 
independent study away from the campus, if such independent study is 
supportive of the fellowship recipient's academic program and shall 
continue payments for those 12-month periods during which the student is 
pursuing travel or independent study supportive of the recipient's 
academic program.
    ``(d) <<NOTE: Deadlines.>> Process and Timing of Competition.--The 
Secretary shall make applications for fellowships under this part 
available not later than October 1 of the academic year preceding the 
academic year for which fellowships will be awarded, and shall announce 
the recipients of fellowships under this section not later than March 1 
of the academic year preceding the academic year for which the 
fellowships are awarded.

    ``(e) Authority To Contract.--The Secretary is authorized to enter 
into a contract with a nongovernmental agency to administer the program 
assisted under this part if the Secretary determines that entering into 
the contract is an efficient means of carrying out the program.

``SEC. 702. ALLOCATION OF FELLOWSHIPS. <<NOTE: 20 USC 1134a.>> 

    ``(a) Fellowship Board.--
            ``(1) Appointment.--The Secretary shall appoint a Jacob K. 
        Javits Fellows Program Fellowship Board (hereinafter in this 
        subpart referred to as the `Board') consisting of 9 individuals 
        representative of both public and private institutions of higher 
        education who are especially qualified to serve on the Board. In 
        making appointments, the Secretary shall give due consideration 
        to the appointment of individuals who are highly respected in 
        the academic community. The Secretary shall assure that 
        individuals appointed to the Board are broadly representative of 
        a range of disciplines in graduate education in arts, 
        humanities, and social sciences.
            ``(2) Duties.--The Board shall--
                    ``(A) establish general policies for the program 
                established by this subpart and oversee the program's 
                operation;
                    ``(B) establish general criteria for the award of 
                fellowships in academic fields identified by the Board, 
                or, in the event that the Secretary enters into a 
                contract with

[[Page 112 STAT. 1788]]

                a nongovernmental entity to administer the program 
                assisted under this subpart, by such nongovernmental 
                entity;
                    ``(C) appoint panels of academic scholars with 
                distinguished backgrounds in the arts, humanities, and 
                social sciences for the purpose of selecting fellows, 
                except that, in the event that the Secretary enters into 
                a contract with a nongovernmental entity to administer 
                the program, such panels may be appointed by such 
                nongovernmental entity; and
                    ``(D) <<NOTE: Reports.>> prepare and submit to the 
                Congress at least once in every 3-year period a report 
                on any modifications in the program that the Board 
                determines are appropriate.
            ``(3) Consultations.--In carrying out its responsibilities, 
        the Board shall consult on a regular basis with representatives 
        of the National Science Foundation, the National Endowment for 
        the Humanities, the National Endowment for the Arts, and 
        representatives of institutions of higher education and 
        associations of such institutions, learned societies, and 
        professional organizations.
            ``(4) Term.--The term of office of each member of the Board 
        shall be 4 years, except that any member appointed to fill a 
        vacancy shall serve for the remainder of the term for which the 
        predecessor of the member was appointed. No member may serve for 
        a period in excess of 6 years.
            ``(5) Initial meeting; vacancy.--The Secretary shall call 
        the first meeting of the Board, at which the first order of 
        business shall be the election of a Chairperson and a Vice 
        Chairperson, who shall serve until 1 year after the date of the 
        appointment of the Chairperson and Vice Chairperson. Thereafter 
        each officer shall be elected for a term of 2 years. In case a 
        vacancy occurs in either office, the Board shall elect an 
        individual from among the members of the Board to fill such 
        vacancy.
            ``(6) Quorum; additional meetings.--(A) A majority of the 
        members of the Board shall constitute a quorum.
            ``(B) The Board shall meet at least once a year or more 
        frequently, as may be necessary, to carry out the Board's 
        responsibilities.
            ``(7) Compensation.--Members of the Board, while serving on 
        the business of the Board, shall be entitled to receive 
        compensation at rates fixed by the Secretary, but not exceeding 
        the rate of basic pay payable for level IV of the Executive 
        Schedule, including travel time, and while so serving away from 
        their homes or regular places of business, the members may be 
        allowed travel expenses, including per diem in lieu of 
        subsistence, as authorized by section 5703 of title 5, United 
        States Code, for persons in Government service employed 
        intermittently.

    ``(b) Use of Selection Panels.--The recipients of fellowships shall 
be selected in each designated field from among all applicants 
nationwide in each field by distinguished panels appointed by the Board 
to make such selections under criteria established by the Board, except 
that, in the event that the Secretary enters into a contract with a 
nongovernmental entity to administer the program, such panels may be 
appointed by such nongovernmental entity. The number of recipients in 
each field in each year shall

[[Page 112 STAT. 1789]]

not exceed the number of fellows allocated to that field for that year 
by the Board.
    ``(c) Fellowship Portability.--Each recipient shall be entitled to 
use the fellowship in a graduate program at any accredited institution 
of higher education in which the recipient may decide to enroll.

``SEC. 703. STIPENDS. <<NOTE: 20 USC 1134b.>> 

    ``(a) Award by Secretary.--The Secretary shall pay to individuals 
awarded fellowships under this subpart such stipends as the Secretary 
may establish, reflecting the purpose of this program to encourage 
highly talented students to undertake graduate study as described in 
this subpart. In the case of an individual who receives such 
individual's first stipend under this subpart in academic year 1999-2000 
or any succeeding academic year, such stipend shall be set at a level of 
support equal to that provided by the National Science Foundation 
graduate fellowships, except such amount shall be adjusted as necessary 
so as not to exceed the fellow's demonstrated level of need determined 
in accordance with part F of title IV.
    ``(b) Institutional Payments.--
            ``(1) In general.--(A) The Secretary shall (in addition to 
        stipends paid to individuals under this subpart) pay to the 
        institution of higher education, for each individual awarded a 
        fellowship under this subpart at such institution, an 
        institutional allowance. Except as provided in subparagraph (B), 
        such allowance shall be, for 1999-2000 and succeeding academic 
        years, the same amount as the institutional payment made for 
        1998-1999 under section 933(b) (as such section was in effect on 
        the day before the date of enactment of the Higher Education 
        Amendments of 1998) adjusted for 1999-2000 and annually 
        thereafter in accordance with inflation as determined by the 
        Department of Labor's Consumer Price Index for the previous 
        calendar year.
            ``(B) The institutional allowance paid under subparagraph 
        (A) shall be reduced by the amount the institution charges and 
        collects from a fellowship recipient for tuition and other 
        expenses as part of the recipient's instructional program.
            ``(2) <<NOTE: Effective date.>> Special rules.--(A) 
        Beginning March 1, 1992, any applicant for a fellowship under 
        this subpart who has been notified in writing by the Secretary 
        that such applicant has been selected to receive such a 
        fellowship and is subsequently notified that the fellowship 
        award has been withdrawn, shall receive such fellowship unless 
        the Secretary subsequently makes a determination that such 
        applicant submitted fraudulent information on the application.
            ``(B) Subject to the availability of appropriations, amounts 
        payable to an institution by the Secretary pursuant to this 
        subsection shall not be reduced for any purpose other than the 
        purposes specified under paragraph (1).

``SEC. 704. FELLOWSHIP CONDITIONS. <<NOTE: 20 USC 1134c.>> 

    ``(a) Requirements for Receipt.--An individual awarded a fellowship 
under the provisions of this subpart shall continue to receive payments 
provided in section 703 only during such periods as the Secretary finds 
that such individual is maintaining satisfactory proficiency in, and 
devoting essentially full time to, study or research in the field in 
which such fellowship was awarded,

[[Page 112 STAT. 1790]]

in an institution of higher education, and is not engaging in gainful 
employment other than part-time employment by such institution in 
teaching, research, or similar activities, approved by the Secretary.
    ``(b) Reports From Recipients.--The Secretary is authorized to 
require reports containing such information in such form and filed at 
such times as the Secretary determines necessary from any person awarded 
a fellowship under the provisions of this subpart. The reports shall be 
accompanied by a certificate from an appropriate official at the 
institution of higher education, library, archive, or other research 
center approved by the Secretary, stating that such individual is making 
satisfactory progress in, and is devoting essentially full time to the 
program for which the fellowship was awarded.

``SEC. 705. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1134d.>> 

    ``There are authorized to be appropriated $30,000,000 for fiscal 
year 1999 and such sums as may be necessary for each of the 4 succeeding 
fiscal years to carry out this subpart.

       ``Subpart 2--Graduate Assistance in Areas of National Need

``SEC. 711. <<NOTE: 20 USC 1135.>> GRANTS TO ACADEMIC DEPARTMENTS AND 
            PROGRAMS OF INSTITUTIONS.

    ``(a) Grant Authority.--
            ``(1) In general.--The Secretary shall make grants to 
        academic departments, programs and other academic units of 
        institutions of higher education that provide courses of study 
        leading to a graduate degree in order to enable such 
        institutions to provide assistance to graduate students in 
        accordance with this subpart.
            ``(2) Additional grants.--The Secretary may also make grants 
        to such departments, programs and other academic units of 
        institutions of higher education granting graduate degrees which 
        submit joint proposals involving nondegree granting institutions 
        which have formal arrangements for the support of doctoral 
        dissertation research with degree-granting institutions. 
        Nondegree granting institutions eligible for awards as part of 
        such joint proposals include any organization which--
                    ``(A) is described in section 501(c)(3) of the 
                Internal Revenue Code of 1986, and is exempt from tax 
                under section 501(a) of such Code;
                    ``(B) is organized and operated substantially to 
                conduct scientific and cultural research and graduate 
                training programs;
                    ``(C) is not a private foundation;
                    ``(D) has academic personnel for instruction and 
                counseling who meet the standards of the institution of 
                higher education in which the students are enrolled; and
                    ``(E) has necessary research resources not otherwise 
                readily available in such institutions to such students.

    ``(b) Award and Duration of Grants.--
            ``(1) Awards.--The principal criterion for the award of 
        grants shall be the relative quality of the graduate programs 
        presented in competing applications. Consistent with an 
        allocation of awards based on quality of competing applications,

[[Page 112 STAT. 1791]]

        the Secretary shall, in awarding such grants, promote an 
        equitable geographic distribution among eligible public and 
        private institutions of higher education.
            ``(2)Duration and Amount.--
                    ``(A) Duration.--The Secretary shall award a grant 
                under this subpart for a period of 3 years.
                    ``(B) Amount.--The Secretary shall award a grant to 
                an academic department, program or unit of an 
                institution of higher education under this subpart for a 
                fiscal year in an amount that is not less than $100,000 
                and not greater than $750,000.
            ``(3) Reallotment.--Whenever the Secretary determines that 
        an academic department, program or unit of an institution of 
        higher education is unable to use all of the amounts available 
        to the department, program or unit under this subpart, the 
        Secretary shall, on such dates during each fiscal year as the 
        Secretary may fix, reallot the amounts not needed to academic 
        departments, programs and units of institutions which can use 
        the grants authorized by this subpart.

    ``(c) Preference To Continuing Grant Recipients.--
            ``(1) In general.--The Secretary shall make new grant awards 
        under this subpart only to the extent that each previous grant 
        recipient under this subpart has received continued funding in 
        accordance with subsection (b)(2)(A).
            ``(2) Ratable reduction.--To the extent that appropriations 
        under this subpart are insufficient to comply with paragraph 
        (1), available funds shall be distributed by ratably reducing 
        the amounts required to be awarded under subsection (b)(2)(A).

``SEC. 712. INSTITUTIONAL ELIGIBILITY. <<NOTE: 20 USC 1135a.>> 

    ``(a) Eligibility Criteria.--Any academic department, program or 
unit of an institution of higher education that offers a program of 
postbaccalaureate study leading to a graduate degree in an area of 
national need (as designated under subsection (b)) may apply for a grant 
under this subpart. No department, program or unit shall be eligible for 
a grant unless the program of postbaccalaureate study has been in 
existence for at least 4 years at the time of application for assistance 
under this subpart.
    ``(b) Designation of Areas of National Need.--After consultation 
with appropriate Federal and nonprofit agencies and organizations, the 
Secretary shall designate areas of national need. In making such 
designations, the Secretary shall take into account the extent to which 
the interest in the area is compelling, the extent to which other 
Federal programs support postbaccalaureate study in the area concerned, 
and an assessment of how the program could achieve the most significant 
impact with available resources.

``SEC. 713. CRITERIA FOR APPLICATIONS. <<NOTE: 20 USC 1135b.>> 

    ``(a) Selection of Applications.--The Secretary shall make grants to 
academic departments, programs and units of institutions of higher 
education on the basis of applications submitted in accordance with 
subsection (b). Applications shall be ranked on program quality by 
review panels of nationally recognized scholars and evaluated on the 
quality and effectiveness of the academic program and the achievement 
and promise of the students to be served. To the extent possible 
(consistent with other provisions of this

[[Page 112 STAT. 1792]]

section), the Secretary shall make awards that are consistent with 
recommendations of the review panels.
    ``(b) Contents of Applications.--An academic department, program or 
unit of an institution of higher education, in the department, program 
or unit's application for a grant, shall--
            ``(1) describe the current academic program of the applicant 
        for which the grant is sought;
            ``(2) provide assurances that the applicant will provide, 
        from other non-Federal sources, for the purposes of the 
        fellowship program under this subpart an amount equal to at 
        least 25 percent of the amount of the grant received under this 
        subpart, which contribution may be in cash or in kind, fairly 
        valued;
            ``(3) set forth policies and procedures to assure that, in 
        making fellowship awards under this subpart, the institution 
        will seek talented students from traditionally underrepresented 
        backgrounds, as determined by the Secretary;
            ``(4) describe the number, types, and amounts of the 
        fellowships that the applicant intends to offer with grant funds 
        provided under this part;
            ``(5) set forth policies and procedures to assure that, in 
        making fellowship awards under this subpart, the institution 
        will make awards to individuals who--
                    ``(A) have financial need, as determined under part 
                F of title IV;
                    ``(B) have excellent academic records in their 
                previous programs of study; and
                    ``(C) plan to pursue the highest possible degree 
                available in their course of study;
            ``(6) set forth policies and procedures to ensure that 
        Federal funds made available under this subpart for any fiscal 
        year will be used to supplement and, to the extent practical, 
        increase the funds that would otherwise be made available for 
        the purpose of this subpart and in no case to supplant those 
        funds;
            ``(7) provide assurances that, in the event that funds made 
        available to the academic department, program or unit under this 
        subpart are insufficient to provide the assistance due a student 
        under the commitment entered into between the academic 
        department, program or unit and the student, the academic 
        department, program or unit will, from any funds available to 
        the department, program or unit, fulfill the commitment to the 
        student;
            ``(8) provide that the applicant will comply with the 
        limitations set forth in section 715;
            ``(9) provide assurances that the academic department will 
        provide at least 1 year of supervised training in instruction 
        for students; and
            ``(10) include such other information as the Secretary may 
        prescribe.

``SEC. 714. AWARDS TO GRADUATE STUDENTS. <<NOTE: 20 USC 1135c.>> 

    ``(a) Commitments to Graduate Students.--
            ``(1) In general.--An academic department, program or unit 
        of an institution of higher education shall make commitments to 
        graduate students who are eligible students under section 484 
        (including students pursuing a doctoral degree after having 
        completed a master's degree program at an institution

[[Page 112 STAT. 1793]]

        of higher education) at any point in their graduate study to 
        provide stipends for the length of time necessary for a student 
        to complete the course of graduate study, but in no case longer 
        than 5 years.
            ``(2) Special rule.--No such commitments shall be made to 
        students under this subpart unless the academic department, 
        program or unit has determined adequate funds are available to 
        fulfill the commitment from funds received or anticipated under 
        this subpart, or from institutional funds.

    ``(b) Amount of Stipends.--The Secretary shall make payments to 
institutions of higher education for the purpose of paying stipends to 
individuals who are awarded fellowships under this subpart. The stipends 
the Secretary establishes shall reflect the purpose of the program under 
this subpart to encourage highly talented students to undertake graduate 
study as described in this subpart. In the case of an individual who 
receives such individual's first stipend under this subpart in academic 
year 1999-2000 or any succeeding academic year, such stipend shall be 
set at a level of support equal to that provided by the National Science 
Foundation graduate fellowships, except such amount shall be adjusted as 
necessary so as not to exceed the fellow's demonstrated level of need as 
determined under part F of title IV.
    ``(c) Treatment of Institutional Payments.--An institution of higher 
education that makes institutional payments for tuition and fees on 
behalf of individuals supported by fellowships under this subpart in 
amounts that exceed the institutional payments made by the Secretary 
pursuant to section 716(a) may count such excess toward the amounts the 
institution is required to provide pursuant to section 714(b)(2).
    ``(d) Academic Progress Required.--Notwithstanding the provisions of 
subsection (a), no student shall receive an award--
            ``(1) except during periods in which such student is 
        maintaining satisfactory progress in, and devoting essentially 
        full time to, study or research in the field in which such 
        fellowship was awarded; or
            ``(2) if the student is engaging in gainful employment other 
        than part-time employment involved in teaching, research, or 
        similar activities determined by the institution to be in 
        support of the student's progress towards a degree.

``SEC. 715. ADDITIONAL ASSISTANCE FOR COST OF EDUCATION. <<NOTE: 20 USC 
            1135d.>> 

    ``(a) Institutional Payments.--
            ``(1) In general.--The Secretary shall (in addition to 
        stipends paid to individuals under this subpart) pay to the 
        institution of higher education, for each individual awarded a 
        fellowship under this subpart at such institution, an 
        institutional allowance. Except as provided in paragraph (2), 
        such allowance shall be, for 1999-2000 and succeeding academic 
        years, the same amount as the institutional payment made for 
        1998-1999 adjusted annually thereafter in accordance with 
        inflation as determined by the Department of Labor's Consumer 
        Price Index for the previous calendar year.
            ``(2) Reduction.--The institutional allowance paid under 
        paragraph (1) shall be reduced by the amount the institution 
        charges and collects from a fellowship recipient for tuition and 
        other expenses as part of the recipient's instructional program.

[[Page 112 STAT. 1794]]

    ``(b) Use for Overhead Prohibited.--Funds made available pursuant to 
this subpart may not be used for the general operational overhead of the 
academic department or program.

``SEC. 716. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1135ee.>> 

    ``There are authorized to be appropriated $35,000,000 for fiscal 
year 1999 and such sums as may be necessary for each of the 4 succeeding 
fiscal years to carry out this subpart.

  ``Subpart 3--Thurgood Marshall Legal Educational Opportunity Program

``SEC. 721. LEGAL EDUCATIONAL OPPORTUNITY PROGRAM. <<NOTE: 20 USC 
            1136.>> 

    ``(a) Program Authority.--The Secretary shall carry out a program to 
be known as the `Thurgood Marshall Legal Educational Opportunity 
Program' designed to provide low-income, minority, or disadvantaged 
college students with the information, preparation, and financial 
assistance to gain access to and complete law school study.
    ``(b) Eligibility.--A college student is eligible for assistance 
under this section if the student is--
            ``(1) from a low-income family;
            ``(2) a minority; or
            ``(3) from an economically or otherwise disadvantaged 
        background.

    ``(c) Contract or Grant Authorized.--The Secretary is authorized to 
enter into a contract with, or make a grant to, the Council on Legal 
Education Opportunity, for a period of not less than 5 years--
            ``(1) to identify college students who are from low-income 
        families, are minorities, or are from disadvantaged backgrounds 
        described in subsection (b)(3);
            ``(2) to prepare such students for study at accredited law 
        schools;
            ``(3) to assist such students to select the appropriate law 
        school, make application for entry into law school, and receive 
        financial assistance for such study;
            ``(4) to provide support services to such students who are 
        first-year law students to improve retention and success in law 
        school studies; and
            ``(5) to motivate and prepare such students with respect to 
        law school studies and practice in low-income communities.

    ``(d) Services Provided.--In carrying out the purposes described in 
subsection (c), the contract or grant shall provide for the delivery of 
services through prelaw information resource centers, summer institutes, 
midyear seminars, and other educational activities, conducted under this 
section. Such services may include--
            ``(1) information and counseling regarding--
                    ``(A) accredited law school academic programs, 
                especially tuition, fees, and admission requirements;
                    ``(B) course work offered and required for 
                graduation;
                    ``(C) faculty specialties and areas of legal 
                emphasis; and
                    ``(D) undergraduate preparatory courses and 
                curriculum selection;

[[Page 112 STAT. 1795]]

            ``(2) tutoring and academic counseling, including assistance 
        in preparing for bar examinations;
            ``(3) prelaw mentoring programs, involving law school 
        faculty, members of State and local bar associations, and 
        retired and sitting judges, justices, and magistrates;
            ``(4) assistance in identifying preparatory courses and 
        material for the law school aptitude or admissions tests;
            ``(5) summer institutes for Thurgood Marshall Fellows that 
        expose the Fellows to a rigorous curriculum that emphasizes 
        abstract thinking, legal analysis, research, writing, and 
        examination techniques; and
            ``(6) midyear seminars and other educational activities that 
        are designed to reinforce reading, writing, and studying skills 
        of Thurgood Marshall Fellows.

    ``(e) Duration of the Provision of Services.--The services described 
in subsection (d) may be provided--
            ``(1) prior to the period of law school study;
            ``(2) during the period of law school study; and
            ``(3) during the period following law school study and prior 
        to taking a bar examination.

    ``(f ) Subcontracts and Subgrants.--For the purposes of planning, 
developing, or delivering one or more of the services described in 
subsection (d), the Council on Legal Education Opportunity shall enter 
into subcontracts with, and make subgrants to, institutions of higher 
education, law schools, public and private agencies and organizations, 
and combinations of such institutions, schools, agencies, and 
organizations.
    ``(g) Stipends.--The Secretary shall annually establish the maximum 
stipend to be paid (including allowances for participant travel and for 
the travel of the dependents of the participant) to Thurgood Marshall 
Fellows for the period of participation in summer institutes and midyear 
seminars. A Fellow may be eligible for such a stipend only if the 
Thurgood Marshall Fellow maintains satisfactory academic progress toward 
the Juris Doctor or Bachelor of Laws degree, as determined by the 
respective institutions.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $5,000,000 for fiscal year 1999 
and each of the 4 succeeding fiscal years.

                     ``Subpart 4--General Provisions

``SEC. 731. ADMINISTRATIVE PROVISIONS FOR SUBPARTS 1, 2, AND 
            3. <<NOTE: 20 USC 1137.>> 

    ``(a) Coordinated Administration.--In carrying out the purpose 
described in section 700(1), the Secretary shall provide for coordinated 
administration and regulation of graduate programs assisted under 
subparts 1, 2, and 3 with other Federal programs providing assistance 
for graduate education in order to minimize duplication and improve 
efficiency to ensure that the programs are carried out in a manner most 
compatible with academic practices and with the standard timetables for 
applications for, and notifications of acceptance to, graduate programs.
    ``(b) Hiring Authority.--For purposes of carrying out subparts 1, 2, 
and 3, the Secretary shall appoint, without regard to the provisions of 
title 5, United States Code, that govern appointments in the competitive 
service, such administrative and technical employees, with the 
appropriate educational background, as shall

[[Page 112 STAT. 1796]]

be needed to assist in the administration of such parts. The employees 
shall be paid without regard to the provisions of chapter 51 and 
subchapter III of chapter 53 of such title relating to classification 
and General Schedule pay rates.
    ``(c) Use for Religious Purposes Prohibited.--No institutional 
payment or allowance under section 703(b) or 715(a) shall be paid to a 
school or department of divinity as a result of the award of a 
fellowship under subpart 1 or 2, respectively, to an individual who is 
studying for a religious vocation.
    ``(d) Evaluation.--The Secretary shall evaluate the success of 
assistance provided to individuals under subpart 1, 2, or 3 with respect 
to graduating from their degree programs, and placement in faculty and 
professional positions.
    ``(e) Continuation Awards.--The Secretary, using funds appropriated 
to carry out subparts 1 and 2, and before awarding any assistance under 
such parts to a recipient that did not receive assistance under part C 
or D of title IX (as such parts were in effect prior to the date of 
enactment of the Higher Education Amendments of 1998) shall continue to 
provide funding to recipients of assistance under such part C or D (as 
so in effect), as the case may be, pursuant to any multiyear award of 
such assistance.

      ``PART B--FUND FOR THE IMPROVEMENT OF POSTSECONDARY EDUCATION

``SEC. 741. <<NOTE: 20 USC 1138.>> FUND FOR THE IMPROVEMENT OF 
            POSTSECONDARY 
            EDUCATION.

    ``(a) Authority.--The Secretary is authorized to make grants to, or 
enter into contracts with, institutions of higher education, 
combinations of such institutions, and other public and private 
nonprofit institutions and agencies, to enable such institutions, 
combinations, and agencies to improve postsecondary education 
opportunities by--
            ``(1) encouraging the reform, innovation, and improvement of 
        postsecondary education, and providing equal educational 
        opportunity for all;
            ``(2) the creation of institutions, programs, and joint 
        efforts involving paths to career and professional training, and 
        combinations of academic and experiential learning;
            ``(3) the establishment of institutions and programs based 
        on the technology of communications;
            ``(4) the carrying out, in postsecondary educational 
        institutions, of changes in internal structure and operations 
        designed to clarify institutional priorities and purposes;
            ``(5) the design and introduction of cost-effective methods 
        of instruction and operation;
            ``(6) the introduction of institutional reforms designed to 
        expand individual opportunities for entering and reentering 
        institutions and pursuing programs of study tailored to 
        individual needs;
            ``(7) the introduction of reforms in graduate education, in 
        the structure of academic professions, and in the recruitment 
        and retention of faculties; and
            ``(8) the creation of new institutions and programs for 
        examining and awarding credentials to individuals, and the 
        introduction of reforms in current institutional practices 
        related thereto.

[[Page 112 STAT. 1797]]

    ``(b) Planning Grants.--The Secretary is authorized to make planning 
grants to institutions of higher education for the development and 
testing of innovative techniques in postsecondary education. Such grants 
shall not exceed $20,000.

``SEC. 742. <<NOTE: 20 USC 1138a.>> BOARD OF THE FUND FOR THE 
            IMPROVEMENT OF POSTSECONDARY EDUCATION.

    ``(a) Establishment.--There is established a National Board of the 
Fund for the Improvement of Postsecondary Education (in this part 
referred to as the `Board'). The Board shall consist of 15 members 
appointed by the Secretary for overlapping 3-year terms. A majority of 
the Board shall constitute a quorum. Any member of the Board who has 
served for 6 consecutive years shall thereafter be ineligible for 
appointment to the Board during a 2-year period following the expiration 
of such sixth year.
    ``(b) Membership.--
            ``(1) In general.--The Secretary shall designate one of the 
        members of the Board as Chairperson of the Board. A majority of 
        the members of the Board shall be public interest 
        representatives, including students, and a minority shall be 
        educational representatives. All members selected shall be 
        individuals able to contribute an important perspective on 
        priorities for improvement in postsecondary education and 
        strategies of educational and institutional change.
            ``(2) Appointment of director.--The Secretary shall appoint 
        the Director of the Fund for the Improvement of Postsecondary 
        Education (hereafter in this part referred to as the 
        `Director').

    ``(c) Duties.--The Board shall--
            ``(1) advise the Secretary and the Director on priorities 
        for the improvement of postsecondary education and make such 
        recommendations as the Board may deem appropriate for the 
        improvement of postsecondary education and for the evaluation, 
        dissemination, and adaptation of demonstrated improvements in 
        postsecondary educational practice;
            ``(2) advise the Secretary and the Director on the operation 
        of the Fund for the Improvement of Postsecondary Education, 
        including advice on planning documents, guidelines, and 
        procedures for grant competitions prepared by the Fund; and
            ``(3) meet at the call of the Chairperson, except that the 
        Board shall meet whenever one-third or more of the members 
        request in writing that a meeting be held.

    ``(d) Information and Assistance.--The Director shall make available 
to the Board such information and assistance as may be necessary to 
enable the Board to carry out its functions.

``SEC. 743. ADMINISTRATIVE PROVISIONS. <<NOTE: 20 USC 1138b.>> 

    ``(a) Technical Employees.--The Secretary may appoint, for terms not 
to exceed 3 years, without regard to the provisions of title 5, United 
States Code, governing appointments in the competitive service, not more 
than 7 technical employees to administer this part who may be paid 
without regard to the provisions of chapter 51 and subchapter III of 
chapter 53 of such title relating to classification and General Schedule 
pay rates.
    ``(b) Procedures.--The Director shall establish procedures for 
reviewing and evaluating grants and contracts made or entered into under 
this part. Procedures for reviewing grant applications or contracts for 
financial assistance under this section may not

[[Page 112 STAT. 1798]]

be subject to any review outside of officials responsible for the 
administration of the Fund for the Improvement of Postsecondary 
Education.

``SEC. 744. SPECIAL PROJECTS. <<NOTE: 20 USC 1138c.>> 

    ``(a) Grant Authority.--The Director is authorized to make grants to 
institutions of higher education, or consortia thereof, and such other 
public agencies and nonprofit organizations as the Director deems 
necessary for innovative projects concerning one or more areas of 
particular national need identified by the Director.
    ``(b) Application.--No grant shall be made under this part unless an 
application is made at such time, in such manner, and contains or is 
accompanied by such information as the Secretary may require.
    ``(c) Areas of National Need.--Areas of national need shall 
initially include, but shall not be limited to, the following:
            ``(1) Institutional restructuring to improve learning and 
        promote productivity, efficiency, quality improvement, and cost 
        and price control.
            ``(2) Articulation between 2- and 4-year institutions of 
        higher education, including developing innovative methods for 
        ensuring the successful transfer of students from 2- to 4-year 
        institutions of higher education.
            ``(3) Evaluation and dissemination of model programs.
            ``(4) International cooperation and student exchange among 
        postsecondary educational institutions.

``SEC. 745. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1138d.>> 

    ``There are authorized to be appropriated to carry out this part 
$30,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.

                    ``PART C--URBAN COMMUNITY SERVICE

``SEC. 751. FINDINGS. <<NOTE: 20 USC 1139.>> 

    ``The Congress finds that--
            ``(1) the Nation's urban centers are facing increasingly 
        pressing problems and needs in the areas of economic 
        development, community infrastructure and service, social 
        policy, public health, housing, crime, education, environmental 
        concerns, planning and work force preparation;
            ``(2) there are, in the Nation's urban institutions, people 
        with underutilized skills, knowledge, and experience who are 
        capable of providing a vast range of services toward the 
        amelioration of the problems described in paragraph (1);
            ``(3) the skills, knowledge and experience in these urban 
        institutions, if applied in a systematic and sustained manner, 
        can make a significant contribution to the solution of such 
        problems; and
            ``(4) the application of such skills, knowledge and 
        experience is hindered by the limited funds available to 
        redirect attention to solutions to such urban problems.

``SEC. 752. PURPOSE; PROGRAM AUTHORIZED. <<NOTE: 20 USC 1139a.>> 

    ``(a) Purpose.--It is the purpose of this part to provide incentives 
to urban academic institutions to enable such institutions

[[Page 112 STAT. 1799]]

to work with private and civic organizations to devise and implement 
solutions to pressing and severe problems in their communities.
    ``(b) Program Authorized.--The Secretary is authorized to carry out 
a program of providing assistance to eligible institutions to enable 
such institutions to carry out the activities described in section 754 
in accordance with the provisions of this part.

``SEC. 753. APPLICATION FOR URBAN COMMUNITY SERVICE GRANTS. <<NOTE: 20 
            USC 1139b.>> 

    ``(a) Application.--
            ``(1) In general.--An eligible institution seeking 
        assistance under this part shall submit to the Secretary an 
        application at such time, in such form, and containing or 
        accompanied by such information and assurances as the Secretary 
        may require by regulation.
            ``(2) Contents.--Each application submitted pursuant to 
        paragraph (1) shall--
                    ``(A) describe the activities and services for which 
                assistance is sought; and
                    ``(B) include a plan that is agreed to by the 
                members of a consortium that includes, in addition to 
                the eligible institution, one or more of the following 
                entities:
                          ``(i) A community college.
                          ``(ii) An urban school system.
                          ``(iii) A local government.
                          ``(iv) A business or other employer.
                          ``(v) A nonprofit institution.
            ``(3) Waiver.--The Secretary may waive the consortium 
        requirements described in paragraph (2) for any applicant who 
        can demonstrate to the satisfaction of the Secretary that the 
        applicant has devised an integrated and coordinated plan which 
        meets the purpose of this part.

    ``(b) Priority in Selection of Applications.--The Secretary shall 
give priority to applications that propose to conduct joint projects 
supported by other local, State, and Federal programs. In addition, the 
Secretary shall give priority to eligible institutions submitting 
applications that demonstrate the eligible institution's commitment to 
urban community service.
    ``(c) <<NOTE: Regulations. Federal Register, 
publication.>> Selection Procedures.--The Secretary shall, by 
regulation, develop a formal procedure for the submission of 
applications under this part and shall publish in the Federal Register 
an announcement of that procedure and the availability of funds under 
this part.

``SEC. 754. ALLOWABLE ACTIVITIES. <<NOTE: 20 USC 1139c.>> 

    ``Funds made available under this part shall be used to support 
planning, applied research, training, resource exchanges or technology 
transfers, the delivery of services, or other activities the purpose of 
which is to design and implement programs to assist urban communities to 
meet and address their pressing and severe problems, such as the 
following:
            ``(1) Work force preparation.
            ``(2) Urban poverty and the alleviation of such poverty.
            ``(3) Health care, including delivery and access.
            ``(4) Underperforming school systems and students.
            ``(5) Problems faced by the elderly and individuals with 
        disabilities in urban settings.
            ``(6) Problems faced by families and children.

[[Page 112 STAT. 1800]]

            ``(7) Campus and community crime prevention, including 
        enhanced security and safety awareness measures as well as 
        coordinated programs addressing the root causes of crime.
            ``(8) Urban housing.
            ``(9) Urban infrastructure.
            ``(10) Economic development.
            ``(11) Urban environmental concerns.
            ``(12) Other problem areas which participants in the 
        consortium described in section 753(a)(2)(B) concur are of high 
        priority in the urban area.
            ``(13)(A) Problems faced by individuals with disabilities 
        regarding accessibility to institutions of higher education and 
        other public and private community facilities.
            ``(B) Amelioration of existing attitudinal barriers that 
        prevent full inclusion by individuals with disabilities in their 
        community.
            ``(14) Improving access to technology in local communities.

``SEC. 755. PEER REVIEW. <<NOTE: 20 USC 1139d.>> 

    ``The Secretary shall designate a peer review panel to review 
applications submitted under this part and make recommendations for 
funding to the Secretary. In selecting the peer review panel, the 
Secretary may consult with other appropriate Cabinet-level officials and 
with non-Federal organizations, to ensure that the panel will be 
geographically balanced and be composed of representatives from public 
and private institutions of higher education, labor, business, and State 
and local government, who have expertise in urban community service or 
in education.

``SEC. 756. DISBURSEMENT OF FUNDS. <<NOTE: 20 USC 1139e.>> 

    ``(a) Multiyear Availability.--Subject to the availability of 
appropriations, grants under this part may be made on a multiyear basis, 
except that no institution, individually or as a participant in a 
consortium of such institutions, may receive such a grant for more than 
5 years.
    ``(b) Equitable Geographic Distribution.--The Secretary shall award 
grants under this part in a manner that achieves an equitable geographic 
distribution of such grants.
    ``(c) Matching Requirement.--An applicant under this part and the 
local governments associated with the application shall contribute to 
the conduct of the program supported by the grant an amount from non-
Federal funds equal to at least one-fourth of the amount of the grant, 
which contribution may be in cash or in kind.

``SEC. 757. DESIGNATION OF URBAN GRANT INSTITUTIONS. <<NOTE: 20 USC 
            1139f.>> 

    ``The <<NOTE: Publication. Records. Establishment.>> Secretary shall 
publish a list of eligible institutions under this part and shall 
designate these institutions of higher education as `Urban Grant 
Institutions'. The Secretary shall establish a national network of Urban 
Grant Institutions so that the results of individual projects achieved 
in one metropolitan area can then be generalized, disseminated, 
replicated, and applied throughout the Nation. The information developed 
as a result of this section shall be made available to Urban Grant 
Institutions and to any other interested institution of higher education 
by any appropriate means.

[[Page 112 STAT. 1801]]

``SEC. 758. DEFINITIONS. <<NOTE: 20 USC 1139g.>> 

    ``As used in this part:
            ``(1) Urban area.--The term `urban area' means a 
        metropolitan statistical area having a population of not less 
        than 350,000, or two contiguous metropolitan statistical areas 
        having a population of not less than 350,000, or, in any State 
        which does not have a metropolitan statistical area which has 
        such a population, the eligible entity in the State submitting 
        an application under section 753, or, if no such entity submits 
        an application, the Secretary, shall designate one urban area 
        for the purposes of this part.
            ``(2) Eligible institution.--The term `eligible institution' 
        means--
                    ``(A) a nonprofit municipal university, established 
                by the governing body of the city in which it is 
                located, and operating as of the date of enactment of 
                the Higher Education Amendments of 1992 under that 
                authority; or
                    ``(B) an institution of higher education, or a 
                consortium of such institutions any one of which meets 
                all of the requirements of this paragraph, which--
                          ``(i) is located in an urban area;
                          ``(ii) draws a substantial portion of its 
                      undergraduate students from the urban area in 
                      which such institution is located, or from 
                      contiguous areas;
                          ``(iii) carries out programs to make 
                      postsecondary educational opportunities more 
                      accessible to residents of such urban area, or 
                      contiguous areas;
                          ``(iv) has the present capacity to provide 
                      resources responsive to the needs and priorities 
                      of such urban area and contiguous areas;
                          ``(v) offers a range of professional, 
                      technical, or graduate programs sufficient to 
                      sustain the capacity of such institution to 
                      provide such resources; and
                          ``(vi) has demonstrated and sustained a sense 
                      of responsibility to such urban area and 
                      contiguous areas and the people of such areas.

``SEC. 759. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1139h.>> 

    ``There are authorized to be appropriated $20,000,000 for fiscal 
year 1999 and such sums as may be necessary for each of the 4 succeeding 
fiscal years to carry out this part.

 ``PART D--DEMONSTRATION PROJECTS TO ENSURE STUDENTS WITH DISABILITIES 
                   RECEIVE A QUALITY HIGHER EDUCATION

``SEC. 761. PURPOSES. <<NOTE: 20 USC 1140.>> 

    ``It is the purpose of this part to support model demonstration 
projects to provide technical assistance or professional development for 
faculty and administrators in institutions of higher education in order 
to provide students with disabilities a quality postsecondary education.

``SEC. 762. GRANTS AUTHORIZED. <<NOTE: 20 USC 1140a.>> 

    ``(a) Competitive Grants Authorized.--The Secretary may award 
grants, contracts, and cooperative agreements, on a competitive basis, 
to institutions of higher education, of which at least

[[Page 112 STAT. 1802]]

two such grants shall be awarded to institutions that provide 
professional development and technical assistance in order for students 
with learning disabilities to receive a quality postsecondary education.
    ``(b) Duration; Activities.--
            ``(1) Duration.--Grants under this part shall be awarded for 
        a period of 3 years.
            ``(2) Authorized activities.--Grants under this part shall 
        be used to carry out one or more of the following activities:
                    ``(A) Teaching methods and strategies.--The 
                development of innovative, effective, and efficient 
                teaching methods and strategies to provide faculty and 
                administrators with the skills and supports necessary to 
                teach students with disabilities. Such methods and 
                strategies may include inservice training, professional 
                development, customized and general technical 
                assistance, workshops, summer institutes, distance 
                learning, and training in the use of assistive and 
                educational technology.
                    ``(B) Synthesizing research and information.--
                Synthesizing research and other information related to 
                the provision of postsecondary educational services to 
                students with disabilities.
                    ``(C) Professional development and training 
                sessions.--Conducting professional development and 
                training sessions for faculty and administrators from 
                other institutions of higher education to enable the 
                faculty and administrators to meet the postsecondary 
                educational needs of students with disabilities.
            ``(3) Mandatory evaluation and dissemination.--Grants under 
        this part shall be used for evaluation, and dissemination to 
        other institutions of higher education, of the information 
        obtained through the activities described in subparagraphs (A) 
        through (C).

    ``(c) Considerations in Making Awards.--In awarding grants, 
contracts, or cooperative agreements under this section, the Secretary 
shall consider the following:
            ``(1) Geographic distribution.--Providing an equitable 
        geographic distribution of such grants.
            ``(2) Rural and urban areas.--Distributing such grants to 
        urban and rural areas.
            ``(3) Range and type of institution.--Ensuring that the 
        activities to be assisted are developed for a range of types and 
        sizes of institutions of higher education.
            ``(4) Prior experience or exceptional programs.--
        Institutions of higher education with demonstrated prior 
        experience in, or exceptional programs for, meeting the 
        postsecondary educational needs of students with disabilities.

``SEC. 763. APPLICATIONS. <<NOTE: 20 USC 1140b.>> 

    ``Each institution of higher education desiring to receive a grant, 
contract, or cooperative agreement under this part shall submit an 
application to the Secretary at such time, in such manner, and 
accompanied by such information as the Secretary may require. Each 
application shall include--
            ``(1) a description of how such institution plans to address 
        each of the activities required under this part;

[[Page 112 STAT. 1803]]

            ``(2) a description of how the institution consulted with a 
        broad range of people within the institution to develop 
        activities for which assistance is sought; and
            ``(3) a description of how the institution will coordinate 
        and collaborate with the office that provides services to 
        students with disabilities within the institution.

``SEC. 764. RULE OF CONSTRUCTION. <<NOTE: 20 USC 1140c.>> 

    ``Nothing in this part shall be construed to impose any additional 
duty, obligation, or responsibility on an institution of higher 
education or on the institution's faculty, administrators, or staff than 
are required by section 504 of the Rehabilitation Act of 1973 and the 
Americans with Disabilities Act of 1990.

``SEC. 765. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1140d.>> 

    ``There are authorized to be appropriated for this part $10,000,000 
for fiscal year 1999 and such sums as may be necessary for each of the 4 
succeeding fiscal years.''.

SEC. 702. REPEALS.

    Except as otherwise provided in section 301(a), titles VIII (20 
U.S.C. 1133 et seq.), IX (20 U.S.C. 1134 et seq.), X (20 U.S.C. 1135 et 
seq.), XI (20 U.S.C. 1136), and XII (20 U.S.C. 1141) are repealed.

           TITLE VIII--STUDIES, REPORTS, AND RELATED PROGRAMS

                             PART A--STUDIES

SEC. 801. <<NOTE: 20 USC 1018 note.>>  STUDY OF MARKET MECHANISMS IN 
            FEDERAL STUDENT LOAN PROGRAMS.

    (a) Study Required.--The Comptroller General and the Secretary of 
Education shall convene a study group including the Secretary of the 
Treasury, the Director of the Office of Management and Budget, the 
Director of the Congressional Budget Office, representatives of entities 
making loans under part B of title IV of the Higher Education Act of 
1965, representatives of other entities in the financial services 
community, representatives of other participants in the student loan 
programs, and such other individuals as the Comptroller General and the 
Secretary may designate. The Comptroller General and Secretary, in 
consultation with the study group, shall design and conduct a study to 
identify and evaluate means of establishing a market mechanism for the 
delivery of loans made pursuant to such title IV.
    (b) Design of Study.--The study required under this section shall 
identify not fewer than 3 different market mechanisms for use in 
determining lender return on student loans while continuing to meet the 
other objectives of the programs under parts B and D of such title IV, 
including the provision of loans to all eligible students. Consideration 
may be given to the use of auctions and to the feasibility of 
incorporating income-contingent repayment options into the student loan 
system and requiring borrowers to repay through income tax withholding.
    (c) Evaluation of Market Mechanisms.--The mechanisms identified 
under subsection (b) shall be evaluated in terms of the following areas:

[[Page 112 STAT. 1804]]

            (1) The cost or savings of loans to or for borrowers, 
        including parent borrowers.
            (2) The cost or savings of the mechanism to the Federal 
        Government.
            (3) The cost, effect, and distribution of Federal subsidies 
        to or for participants in the program.
            (4) The ability of the mechanism to accommodate the 
        potential distribution of subsidies to students through an 
        income-contingent repayment option.
            (5) The effect on the simplicity of the program, including 
        the effect of the plan on the regulatory burden on students, 
        institutions, lenders, and other program participants.
            (6) The effect on investment in human capital and resources, 
        loan servicing capability, and the quality of service to the 
        borrower.
            (7) The effect on the diversity of lenders, including 
        community-based lenders, originating and secondary market 
        lenders.
            (8) The effect on program integrity.
            (9) The degree to which the mechanism will provide market 
        incentives to encourage continuous improvement in the delivery 
        and servicing of loans.
            (10) The availability of loans to students by region, income 
        level, and by categories of institutions.
            (11) The proposed Federal and State role in the operation of 
        the mechanism.
            (12) A description of how the mechanism will be administered 
        and operated.
            (13) Transition procedures, including the effect on loan 
        availability during a transition period.
            (14) Any other areas the study group may include.

    (d) <<NOTE: Deadlines. Public information.>> Preliminary Findings 
and Publication of Study.--Not later than November 15, 2000, the study 
group shall make the group's preliminary findings, including any 
additional or dissenting views, available to the public with a 60-day 
request for public comment. The study group shall review these comments 
and the Comptroller General and the Secretary shall transmit a final 
report, including any additional or dissenting views, to the Committee 
on Education and the Workforce of the House of Representatives, the 
Committee on Labor and Human Resources of the Senate, and the Committees 
on the Budget of the House of Representatives and the Senate not later 
than May 15, 2001.

SEC. 802. STUDY OF THE FEASIBILITY OF ALTERNATIVE FINANCIAL INSTRUMENTS 
            FOR DETERMINING LENDER YIELDS.

    (a) Study Required.--The Comptroller General and the Secretary of 
Education shall convene a study group including the Secretary of the 
Treasury, the Director of the Office of Management and Budget, the 
Director of the Congressional Budget Office, representatives of entities 
making loans under part B of title IV of the Higher Education Act of 
1965, representatives of other entities in the financial services 
community, representatives of other participants in the student loan 
programs, and such other individuals as the Comptroller General and the 
Secretary of Education may designate. The Comptroller General and the 
Secretary of Education, in consultation with the study group, shall 
evaluate the 91-day Treasury bill, 30-day and 90-day commercial paper, 
and

[[Page 112 STAT. 1805]]

the 90-day London Interbank Offered Rate (in this section referred to as 
``LIBOR'') in terms of the following:
            (1) The historical liquidity of the market for each, and a 
        historical comparison of the spread between: (A) the 30-day and 
        90-day commercial paper rate, respectively, and the 91-day 
        Treasury bill rate; and (B) the spread between the LIBOR and the 
        91-day Treasury bill rate.
            (2) The historical volatility of the rates and projections 
        of future volatility.
            (3) Recent changes in the liquidity of the market for each 
        such instrument in a balanced Federal budget environment and a 
        low-interest rate environment, and projections of future 
        liquidity assuming the Federal budget remains in balance.
            (4) The cost or savings to lenders with small, medium, and 
        large student loan portfolios of basing lender yield on either 
        the 30-day or 90-day commercial paper rate or the LIBOR while 
        continuing to base the borrower rate on the 91-day Treasury 
        bill, and the effect of such change on the diversity of lenders 
        participating in the program.
            (5) The cost or savings to the Federal Government of basing 
        lender yield on either the 30-day or 90-day commercial paper 
        rate or the LIBOR while continuing to base the borrower rate on 
        the 91-day Treasury bill.
            (6) Any possible risks or benefits to the student loan 
        programs under the Higher Education Act of 1965 and to student 
        borrowers.
            (7) Any other areas the Comptroller General and the 
        Secretary of Education agree to include.

    (b) <<NOTE: Deadline.>> Report Required.--Not later than 6 months 
after the date of enactment of this Act, the Comptroller General and the 
Secretary shall submit a final report regarding the findings of the 
study group to the Committee on Education and the Workforce of the House 
of Representatives and the Committee on Labor and Human Resources of the 
Senate.

SEC. 803. STUDENT-RELATED DEBT STUDY REQUIRED. <<NOTE: 20 USC 1015 
            note.>> 

    (a) In General.--The Secretary of Education shall conduct a study 
that analyzes the distribution and increase in student-related debt in 
terms of--
            (1) demographic characteristics, such as race or ethnicity, 
        and family income;
            (2) type of institution and whether the institution is a 
        public or private institution;
            (3) loan source, such as Federal, State, institutional or 
        other, and, if the loan source is Federal, whether the loan is 
        or is not subsidized;
            (4) academic field of study;
            (5) parent loans, and whether the parent loans are federally 
        guaranteed, private, or property-secured such as home equity 
        loans; and
            (6) relation of student debt or anticipated debt to--
                    (A) students' decisions about whether and where to 
                enroll in college and whether or how much to borrow in 
                order to attend college;
                    (B) the length of time it takes students to earn 
                baccalaureate degrees;

[[Page 112 STAT. 1806]]

                    (C) students' decisions about whether and where to 
                attend graduate school;
                    (D) graduates' employment decisions;
                    (E) graduates' burden of repayment as reflected by 
                the graduates' ability to save for retirement or invest 
                in a home; and
                    (F) students' future earnings.

    (b) <<NOTE: Deadline.>> Report.--After conclusion of the study 
required by subsection (a), the Secretary of Education shall submit a 
final report regarding the findings of the study to the Committee on 
Labor and Human Resources of the Senate and the Committee on Education 
and the Workforce of the House of Representatives not later than 18 
months after the date of enactment of the Higher Education Amendments of 
1998.

    (c) Information.--After the study and report under this section are 
concluded, the Secretary of Education shall determine which information 
described in subsection (a) would be useful for families to know and 
shall include such information as part of the comparative information 
provided to families about the costs of higher education under the 
provisions of part C of title I.

SEC. 804. STUDY OF TRANSFER OF CREDITS. <<NOTE: 20 USC 1099b note.>> 

    (a) Study Required.--The Secretary of Education shall conduct a 
study to evaluate policies or practices instituted by recognized 
accrediting agencies or associations regarding the treatment of the 
transfer of credits from one institution of higher education to another, 
giving particular attention to--
            (1) adopted policies regarding the transfer of credits 
        between institutions of higher education which are accredited by 
        different agencies or associations and the reasons for such 
        policies;
            (2) adopted policies regarding the transfer of credits 
        between institutions of higher education which are accredited by 
        national agencies or associations and institutions of higher 
        education which are accredited by regional agencies and 
        associations and the reasons for such policies;
            (3) the effect of the adoption of such policies on students 
        transferring between such institutions of higher education, 
        including time required to matriculate, increases to the student 
        of tuition and fees paid, and increases to the student with 
        regard to student loan burden;
            (4) the extent to which Federal financial aid is awarded to 
        such students for the duplication of coursework already 
        completed at another institution; and
            (5) the aggregate cost to the Federal Government of the 
        adoption of such policies.

    (b) <<NOTE: Deadline.>> Report.--Not later than one year after the 
date of enactment of this Act, the Secretary of Education shall submit a 
report to the Chairman and Ranking Minority Member of the Committee on 
Education and the Workforce of the House of Representatives and the 
Committee on Labor and Human Resources of the Senate detailing the 
Secretary's findings regarding the study conducted under subsection (a). 
The Secretary's report shall include such recommendation with respect to 
the recognition of accrediting agencies or associations as the Secretary 
deems advisable.

[[Page 112 STAT. 1807]]

SEC. 805. STUDY OF <<NOTE: 20 USC 1001 note.>> OPPORTUNITIES FOR 
            PARTICIPATION IN ATHLETICS PROGRAMS.

    (a) Study.--The Comptroller General shall conduct a study of the 
opportunities for participation in intercollegiate athletics. The study 
shall address issues including--
            (1) the extent to which the number of--
                    (A) secondary school athletic teams has increased or 
                decreased in the 20 years preceding 1998 (in aggregate 
                terms); and
                    (B) intercollegiate athletic teams has increased or 
                decreased in the 20 years preceding 1998 (in aggregate 
                terms) at 2-year and 4-year institutions of higher 
                education;
            (2) the extent to which participation by student-athletes in 
        secondary school and intercollegiate athletics has increased or 
        decreased in the 20 years preceding 1998 (in aggregate terms);
            (3) over the 20-year period preceding 1998, a list of the 
        men's and women's secondary school and intercollegiate sports, 
        ranked in order of the sports most affected by increases or 
        decreases in levels of participation and numbers of teams (in 
        the aggregate);
            (4) all factors that have influenced campus officials to add 
        or discontinue sports teams at secondary schools and 
        institutions of higher education, including--
                    (A) institutional mission and priorities;
                    (B) budgetary pressures;
                    (C) institutional reforms and restructuring;
                    (D) escalating liability insurance premiums;
                    (E) changing student and community interest in a 
                sport;
                    (F) advancement of diversity among students;
                    (G) lack of necessary level of competitiveness of 
                the sports program;
                    (H) club level sport achieving a level of 
                competitiveness to make the sport a viable varsity level 
                sport;
                    (I) injuries or deaths; and
                    (J) conference realignment;
            (5) the actions that institutions of higher education have 
        taken when decreasing the level of participation in 
        intercollegiate sports, or the number of teams, in terms of 
        providing information, advice, scholarship maintenance, 
        counseling, advance warning, and an opportunity for student-
        athletes to be involved in the decisionmaking process;
            (6) the administrative processes and procedures used by 
        institutions of higher education when determining whether to 
        increase or decrease intercollegiate athletic teams or 
        participation by student-athletes;
            (7) the budgetary or fiscal impact, if any, of a decision by 
        an institution of higher education--
                    (A) to increase or decrease the number of 
                intercollegiate athletic teams or the participation of 
                student-athletes; or
                    (B) to be involved in a conference realignment; and
            (8) the alternatives, if any, institutions of higher 
        education have pursued in lieu of eliminating, or severely 
        reducing the funding for, anintercollegiate sport, and the 
        success of such alternatives.

[[Page 112 STAT. 1808]]

    (b) Report.--The Comptroller General shall submit a report regarding 
the results of the study to the Committee on Labor and Human Resources 
of the Senate and the Committee on Education and the Workforce of the 
House of Representatives.

SEC. 806. STUDY OF THE EFFECTIVENESS OF COHORT DEFAULT RATES FOR 
            INSTITUTIONS WITH FEW STUDENT LOAN BORROWERS.

    (a) Study Required.--The Secretary of Education shall conduct a 
study of the effectiveness of cohort default rates as an indicator of 
administrative capability and program quality for institutions of higher 
education at which less than 15 percent of students eligible to borrow 
participate in the Federal student loan programs under title IV of the 
Higher Education Act of 1965 and fewer than 30 borrowers enter repayment 
in any fiscal year. At a minimum, the study shall include--
            (1) identification of the institutions included in the study 
        and of the student populations the institutions serve;
            (2) analysis of cohort default rates as indicators of 
        administrative shortcomings and program quality at the 
        institutions;
            (3) analysis of the effectiveness of cohort default rates as 
        a means to prevent fraud and abuse in the programs assisted 
        under such title;
            (4) analysis of the extent to which the institutions with 
        high cohort default rates are no longer participants in the 
        Federal student loan programs under such title; and
            (5) analysis of the costs incurred by the Department of 
        Education for the calculation, publication, correction, and 
        appeal of cohort default rates for the institutions in relation 
        to any benefits to taxpayers.

    (b) Consultation.--In conducting the study described in subsection 
(a), the Secretary of Education shall consult with institutions of 
higher education.
    (c) <<NOTE: Deadline.>> Report to Congress.--The Secretary of 
Education shall report to the Committee on Labor and Human Resources of 
the Senate and the Committee on Education and the Workforce of the House 
of Representatives not later than September 30, 1999, regarding the 
results of the study described in subsection (a).

              PART B--ADVANCED PLACEMENT INCENTIVE PROGRAM

SEC. 810. ADVANCED PLACEMENT INCENTIVE PROGRAM. <<NOTE: 20 USC 1070a-11 
            note.>> 

    (a) Program Established.--The Secretary of Education is authorized 
to make grants to States having applications approved under subsection 
(c) to enable the States to reimburse low-income individuals to cover 
part or all of the cost of advanced placement test fees, if the low-
income individuals--
            (1) are enrolled in an advanced placement class; and
            (2) plan to take an advanced placement test.

    (b) Information Dissemination.--The State educational agency shall 
disseminate information regarding the availability of test fee payments 
under this section to eligible individuals through secondary school 
teachers and guidance counselors.
    (c) Requirements for Approval of Applications.--In approving 
applications for grants the Secretary of Education shall--

[[Page 112 STAT. 1809]]

            (1) require that each such application contain a description 
        of the advanced placement test fees the State will pay on behalf 
        of individual students;
            (2) require an assurance that any funds received under this 
        section, other than funds used in accordance with subsection 
        (d), shall be used only to pay advanced placement test fees;
            (3) contain such information as the Secretary may require to 
        demonstrate that the State will ensure that a student is 
        eligible for payments under this section, including the 
        documentation required by chapter 1 of subpart 2 of part A of 
        title IV of the Higher Education Act of 1965 (20 U.S.C. 1070a-11 
        et seq.); and
            (4) consider the number of children eligible to be counted 
        under section 1124(c) of the Elementary and Secondary Education 
        Act of 1965 in the State in relation to the number of such 
        children in all the States in determining grant award amounts.

    (d) Funding Rules.--
            (1) Use of funds.--A State educational agency in a State in 
        which no eligible low-income individual is required to pay more 
        than a nominal fee to take advanced placement tests in core 
        subjects may use any grant funds provided to that State 
        educational agency, that remain after fees have been paid on 
        behalf of all eligible low-income individuals, for activities 
        directly related to increasing--
                    (A) the enrollment of low-income individuals in 
                advanced placement courses;
                    (B) the participation of low-income individuals in 
                advanced placement tests; and
                    (C) the availability of advanced placement courses 
                in schools serving high poverty areas.
            (2) Supplement, not supplant, rule.--Funds provided under 
        this section shall supplement and not supplant other non-Federal 
        funds that are available to assist low-income individuals in 
        paying advanced placement test fees.

    (e) Regulations.--The Secretary of Education shall prescribe such 
regulations as are necessary to carry out this section.
    (f ) Report.--Each State annually shall report to the Secretary of 
Education regarding--
            (1) the number of low-income individuals in the State who 
        receive assistance under this section; and
            (2) the activities described in subsection (d)(1), if 
        applicable.

    (g) Definition.--In this section:
            (1) Advanced placement test.--The term ``advanced placement 
        test'' includes only an advanced placement test approved by the 
        Secretary of Education for the purposes of this section.
            (2) Low-income individual.--The term ``low-income 
        individual'' has the meaning given the term in section 
        402A(g)(2) of the Higher Education Act of 1965 (20 U.S.C. 1070a-
        11(g)(2)).

    (h) Authorization of Appropriations.--There are authorized to be 
appropriated $6,800,000 for fiscal year 1999 and such sums as may be 
necessary for each of the 4 succeeding fiscal years to carry out this 
section.

[[Page 112 STAT. 1810]]

  PART C <<NOTE: Community Scholarship Mobilization Act.>> --COMMUNITY 
SCHOLARSHIP MOBILIZATION

SEC. 811. SHORT TITLE. <<NOTE: 20 USC 1070 note.>> 

    This part may be cited as the ``Community Scholarship Mobilization 
Act''.

SEC. 812. FINDINGS. <<NOTE: 20 USC 1070 note.>> 

    Congress finds that--
            (1) the local community, when properly organized and 
        challenged, is one of the best sources of academic support, 
        motivation toward achievement, and financial resources for 
        aspiring postsecondary students;
            (2) local communities, working to complement or augment 
        services currently offered by area schools and colleges, can 
        raise the educational expectations and increase the rate of 
        postsecondary attendance of their youth by forming locally-based 
        organizations that provide both academic support (including 
        guidance, counseling, mentoring, tutoring, encouragement, and 
        recognition) and tangible, locally raised, effectively targeted, 
        publicly recognized, financial assistance;
            (3) proven methods of stimulating these community efforts 
        can be promoted through Federal support for the establishment of 
        regional, State, or community program centers to organize and 
        challenge community efforts to develop educational incentives 
        and support for local students; and
            (4) using Federal funds to leverage private contributions to 
        help students from low-income families attain educational and 
        career goals is an efficient and effective investment of scarce 
        taxpayer-provided resources.

SEC. 813. DEFINITIONS. <<NOTE: 20 USC 1070 note.>> 

    In this part:
            (1) Regional, state, or community program center.--The term 
        ``regional, State, or community program center'' means an 
        organization that--
                    (A) is a division or member of, responsible to, and 
                overseen by, a national organization; and
                    (B) is staffed by professionals trained to create, 
                develop, and sustain local entities in towns, cities, 
                and neighborhoods.
            (2) Local entity.--The term ``local entity'' means an 
        organization that--
                    (A) is a nonprofit 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 shall meet this criteria through affiliation 
                with the national organization);
                    (B) is formed for the purpose of providing 
                educational scholarships and academic support for 
                residents of the local community served by such 
                organization;
                    (C) solicits broad-based community support in its 
                academic support and fund-raising activities;
                    (D) is broadly representative of the local community 
                in the structures of its volunteer-operated organization 
                and has a board of directors that includes leaders from 
                local neighborhood organizations and neighborhood 
                residents,

[[Page 112 STAT. 1811]]

                such as school or college personnel, parents, students, 
                community agency representatives, retirees, and 
                representatives of the business community;
                    (E) awards scholarships without regard to age, sex, 
                marital status, race, creed, color, religion, national 
                origin, or disability; and
                    (F) gives priority to awarding scholarships for 
                postsecondary education to deserving students from low-
                income families in the local community.
            (3) National organization.--The term ``national 
        organization'' means an organization that--
                    (A) has the capacity to create, develop and sustain 
                local entities and affiliated regional, State, or 
                community program centers;
                    (B) has the capacity to sustain newly created local 
                entities in towns, cities, and neighborhoods through 
                ongoing training support programs;
                    (C) 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;
                    (D) is a publicly supported organization within the 
                meaning of section 170(b)(1)(A)(iv) of such Code;
                    (E) ensures that each of the organization's local 
                entities meet the criteria described in subparagraphs 
                (C) and (D); and
                    (F) has a program for or experience in cooperating 
                with secondary and postsecondary institutions in 
                carrying out the organization's scholarship and academic 
                support activities.
            (4) High poverty area.--The term ``high poverty area'' means 
        a community with a higher percentage of children from low-income 
        families than the national average of such percentage and a 
        lower percentage of children pursuing postsecondary education 
        than the national average of such percentage.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.
            (6) Students from low-income families.--The term ``students 
        from low-income families'' means students determined, pursuant 
        to part F of title IV of the Higher Education Act of 1965 (20 
        U.S.C. 1087kk et seq.), to be eligible for a Federal Pell Grant 
        under subpart 1 of part A of title IV of such Act (20 U.S.C. 
        1070a).

SEC. 814. PURPOSE; ENDOWMENT GRANT AUTHORITY. <<NOTE: 20 USC 1070 
            note.>> 

    (a) Purpose.--It is the purpose of this part to establish and 
support regional, State or community program centers to enable such 
centers to foster the development of local entities in high poverty 
areas that promote higher education goals for students from low-income 
families by--
            (1) providing academic support, including guidance, 
        counseling, mentoring, tutoring, and recognition; and
            (2) providing scholarship assistance for the cost of 
        postsecondary education.

    (b) Endowment Grant Authority.--From the funds appropriated pursuant 
to the authority of section 816, the Secretary shall award an endowment 
grant, on a competitive basis, to a national organization to enable such 
organization to support the

[[Page 112 STAT. 1812]]

establishment or ongoing work of regional, State or community program 
centers that foster the development of local entities in high poverty 
areas to improve secondary school graduation rates and postsecondary 
attendance through the provision of academic support services and 
scholarship assistance for the cost of postsecondary education.

SEC. 815. GRANT AGREEMENT AND REQUIREMENTS. <<NOTE: 20 USC 1070 note.>> 

    (a) In General.--The Secretary shall award one or more endowment 
grants described in section 814(b) pursuant to an agreement between the 
Secretary and a national organization. Such agreement shall--
            (1) require a national organization to establish an 
        endowment fund in the amount of the grant, the corpus of which 
        shall remain intact and the interest income from which shall be 
        used to support the activities described in paragraphs (2) and 
        (3);
            (2) require a national organization to use 70 percent of the 
        interest income from the endowment fund in any fiscal year to 
        support the establishment or ongoing work of regional, State or 
        community program centers to enable such centers to work with 
        local communities to establish local entities in high poverty 
        areas and provide ongoing technical assistance, training 
        workshops, and other activities to help ensure the ongoing 
        success of the local entities;
            (3) require a national organization to use 30 percent of the 
        interest income from the endowment fund in any fiscal year to 
        provide scholarships for postsecondary education to students 
        from low-income families, which scholarships shall be matched on 
        a dollar-for-dollar basis from funds raised by the local 
        entities;
            (4) require that at least 50 percent of all the interest 
        income from the endowment be allocated to establish new local 
        entities or support regional, State or community program centers 
        in high poverty areas;
            (5) require a national organization to submit, for each 
        fiscal year in which such organization uses the interest from 
        the endowment fund, a report to the Secretary that contains--
                    (A) a description of the programs and activities 
                supported by the interest on the endowment fund;
                    (B) the audited financial statement of the national 
                organization for the preceding fiscal year;
                    (C) a plan for the programs and activities to be 
                supported by the interest on the endowment fund as the 
                Secretary may require;
                    (D) an evaluation of the programs and activities 
                supported by the interest on the endowment fund as the 
                Secretary may require; and
                    (E) data indicating the number of students from low-
                income families who receive scholarships from local 
                entities, and the amounts of such scholarships;
            (6) contain such assurances as the Secretary may require 
        with respect to the management and operation of the endowment 
        fund; and
            (7) contain an assurance that if the Secretary determines 
        that such organization is not in substantial compliance with the 
        provisions of this part, then the national organization shall

[[Page 112 STAT. 1813]]

        pay to the Secretary an amount equal to the corpus of the 
        endowment fund plus any accrued interest on such fund that is 
        available to the national organization on the date of such 
        determination.

    (b) Returned Funds.--All funds returned to the Secretary pursuant to 
subsection (a)(7) shall be available to the Secretary to carry out any 
scholarship or grant program assisted under title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070 et seq.).

SEC. 816. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1070 note.>> 

    There are authorized to be appropriated to carry out this part 
$10,000,000 for fiscal year 2000.

PART D--GRANTS TO STATES FOR WORKPLACE AND COMMUNITY TRANSITION TRAINING 
                    FOR INCARCERATED YOUTH OFFENDERS

SEC. 821. <<NOTE: 20 USC 1151.>> GRANTS TO STATES FOR WORKPLACE AND 
            COMMUNITY TRANSITION TRAINING FOR INCARCERATED YOUTH 
            OFFENDERS.

    (a) Findings.--Congress makes the following findings:
            (1) Over 150,000 youth offenders age 21 and younger are 
        incarcerated in the Nation's jails, juvenile facilities, and 
        prisons.
            (2) Most youth offenders who are incarcerated have been 
        sentenced as first-time adult felons.
            (3) Approximately 75 percent of youth offenders are high 
        school dropouts who lack basic literacy and life skills, have 
        little or no job experience, and lack marketable skills.
            (4) The average incarcerated youth has attended school only 
        through grade 10.
            (5) Most of these youths can be diverted from a life of 
        crime into productive citizenship with available educational, 
        vocational, work skills, and related service programs.
            (6) If not involved with educational programs while 
        incarcerated, almost all of these youths will return to a life 
        of crime upon release.
            (7) The average length of sentence for a youth offender is 
        about 3 years. Time spent in prison provides a unique 
        opportunity for education and training.
            (8) Even with quality education and training provided during 
        incarceration, a period of intense supervision, support, and 
        counseling is needed upon release to ensure effective 
        reintegration of youth offenders into society.
            (9) Research consistently shows that the vast majority of 
        incarcerated youths will not return to the public schools to 
        complete their education.
            (10) There is a need for alternative educational 
        opportunities during incarceration and after release.

    (b) Definition.--For purposes of this part, the term ``youth 
offender'' means a male or female offender under the age of 25, who is 
incarcerated in a State prison, including a prerelease facility.
    (c) Grant Program.--The Secretary of Education (in this section 
referred to as the ``Secretary'') shall establish a program in 
accordance with this section to provide grants to the State correctional 
education agencies in the States, from allocations for the

[[Page 112 STAT. 1814]]

States under subsection (i), to assist and encourage incarcerated youths 
to acquire functional literacy, life, and job skills, through the 
pursuit of a postsecondary education certificate, or an associate of 
arts or bachelor's degree while in prison, and employment counseling and 
other related services which start during incarceration and continue 
through prerelease and while on parole.
    (d) Application.--To be eligible for a grant under this section, a 
State correctional education agency shall submit to the Secretary a 
proposal for a youth offender program that--
            (1) identifies the scope of the problem, including the 
        number of incarcerated youths in need of postsecondary education 
        and vocational training;
            (2) lists the accredited public or private educational 
        institution or institutions that will provide postsecondary 
        educational services;
            (3) lists the cooperating agencies, public and private, or 
        businesses that will provide related services, such as 
        counseling in the areas of career development, substance abuse, 
        health, and parenting skills;
            (4) describes the evaluation methods and performance 
        measures that the State correctional education agency will 
        employ, which methods and measures--
                    (A) shall be appropriate to meet the goals and 
                objectives of the proposal; and
                    (B) shall include measures of--
                          (i) program completion;
                          (ii) student academic and vocational skill 
                      attainment;
                          (iii) success in job placement and retention; 
                      and
                          (iv) recidivism;
            (5) describes how the proposed programs are to be integrated 
        with existing State correctional education programs (such as 
        adult education, graduate education degree programs, and 
        vocational training) and State industry programs;
            (6) addresses the educational needs of youth offenders who 
        are in alternative programs (such as boot camps); and
            (7) describes how students will be selected so that only 
        youth offenders eligible under subsection (f ) will be enrolled 
        in postsecondary programs.

    (e) Program Requirements.--Each State correctional education agency 
receiving a grant under this section shall--
            (1) integrate activities carried out under the grant with 
        the objectives and activities of the school-to-work programs of 
        such State, including--
                    (A) work experience or apprenticeship programs;
                    (B) transitional worksite job training for 
                vocational education students that is related to the 
                occupational goals of such students and closely linked 
                to classroom and laboratory instruction;
                    (C) placement services in occupations that the 
                students are preparing to enter;
                    (D) employment-based learning programs; and
                    (E) programs that address State and local labor 
                shortages;
            (2) <<NOTE: Reports.>> annually report to the Secretary and 
        the Attorney 
        General on the results of the evaluations conducted using the

[[Page 112 STAT. 1815]]

        methods and performance measures contained in the proposal; and
            (3) provide to each State for each student eligible under 
        subsection (f ) not more than $1,500 annually for tuition, 
        books, and essential materials, and not more than $300 annually 
        for related services such as career development, substance abuse 
        counseling, parenting skills training, and health education, for 
        each eligible incarcerated youth.

    (f ) Student Eligibility.--A youth offender shall be eligible for 
participation in a program receiving a grant under this section if the 
youth offender--
            (1) is eligible to be released within 5 years (including a 
        youth offender who is eligible for parole within such time); and
            (2) is 25 years of age or younger.

    (g) Length of Participation.--A State correctional education agency 
receiving a grant under this section shall provide educational and 
related services to each participating youth offender for a period not 
to exceed 5 years, 1 year of which may be devoted to study in a graduate 
education degree program or to remedial education services for students 
who have obtained a secondary school diploma or its recognized 
equivalent. Educational and related services shall start during the 
period of incarceration in prison or prerelease and may continue during 
the period of parole.
    (h) Education Delivery Systems.--State correctional education 
agencies and cooperating institutions shall, to the extent practicable, 
use high-tech applications in developing programs to meet the 
requirements and goals of this section.
    (i) Allocation of Funds.--From the funds appropriated pursuant to 
subsection ( j) for each fiscal year, the Secretary shall allot to each 
State an amount that bears the same relationship to such funds as the 
total number of students eligible under subsection (f ) in such State 
bears to the total number of such students in all States.
    ( j) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $17,000,000 for fiscal year 1999 
and such sums as may be necessary for each of the 4 succeeding fiscal 
years.

    PART E--GRANTS TO COMBAT VIOLENT CRIMES AGAINST WOMEN ON CAMPUSES

SEC. 826. <<NOTE: 20 USC 1152.>> GRANTS TO COMBAT VIOLENT CRIMES AGAINST 
            WOMEN ON CAMPUSES.

    (a) Grants Authorized.--
            (1) In general.--The Attorney General is authorized to make 
        grants to institutions of higher education, for use by such 
        institutions or consortia consisting of campus personnel, 
        student organizations, campus administrators, security 
        personnel, and regional crisis centers affiliated with the 
        institution, to develop and strengthen effective security and 
        investigation strategies to combat violent crimes against women 
        on campuses, and to develop and strengthen victim services in 
        cases involving violent crimes against women on campuses, which 
        may include partnerships with local criminal justice authorities 
        and community-based victim services agencies.

[[Page 112 STAT. 1816]]

            (2) <<NOTE: Contracts.>> Award basis.--The Attorney General 
        shall award grants and contracts under this section on a 
        competitive basis.
            (3) Equitable participation.--The Attorney General shall 
        make every effort to ensure--
                    (A) the equitable participation of private and 
                public institutions of higher education in the 
                activities assisted under this section; and
                    (B) the equitable geographic distribution of grants 
                under this section among the various regions of the 
                United States.

    (b) Use of Grant Funds.--Grant funds awarded under this section may 
be used for the following purposes:
            (1) To provide personnel, training, technical assistance, 
        data collection, and other equipment with respect to the 
        increased apprehension, investigation, and adjudication of 
        persons committing violent crimes against women on campus.
            (2) To train campus administrators, campus security 
        personnel, and personnel serving on campus disciplinary or 
        judicial boards to more effectively identify and respond to 
        violent crimes against women on campus, including the crimes of 
        sexual assault, stalking, and domestic violence.
            (3) To implement and operate education programs for the 
        prevention of violent crimes against women.
            (4) To develop, enlarge, or strengthen support services 
        programs, including medical or psychological counseling, for 
        victims of sexual offense crimes.
            (5) To create, disseminate, or otherwise provide assistance 
        and information about victims' options on and off campus to 
        bring disciplinary or other legal action.
            (6) To develop and implement more effective campus policies, 
        protocols, orders, and services specifically devoted to prevent, 
        identify, and respond to violent crimes against women on campus, 
        including the crimes of sexual assault, stalking, and domestic 
        violence.
            (7) To develop, install, or expand data collection and 
        communication systems, including computerized systems, linking 
        campus security to the local law enforcement for the purpose of 
        identifying and tracking arrests, protection orders, violations 
        of protection orders, prosecutions, and convictions with respect 
        to violent crimes against women on campus, including the crimes 
        of sexual assault, stalking, and domestic violence.
            (8) To develop, enlarge, or strengthen victim services 
        programs for the campus and to improve delivery of victim 
        services on campus.
            (9) To provide capital improvements (including improved 
        lighting and communications facilities but not including the 
        construction of buildings) on campuses to address violent crimes 
        against women on campus, including the crimes of sexual assault, 
        stalking, and domestic violence.
            (10) To support improved coordination among campus 
        administrators, campus security personnel, and local law 
        enforcement to reduce violent crimes against women on campus.

    (c) Applications.--
            (1) In general.--In order to be eligible to be awarded a 
        grant under this section for any fiscal year, an institution of 
        higher education shall submit an application to the Attorney

[[Page 112 STAT. 1817]]

        General at such time and in such manner as the Attorney General 
        shall prescribe.
            (2) Contents.--Each application submitted under paragraph 
        (1) shall--
                    (A) describe the need for grant funds and the plan 
                for implementation for any of the purposes described in 
                subsection (b);
                    (B) describe how the campus authorities shall 
                consult and coordinate with nonprofit and other victim 
                services programs, including sexual assault and domestic 
                violence victim services programs;
                    (C) describe the characteristics of the population 
                being served, including type of campus, demographics of 
                the population, and number of students;
                    (D) provide measurable goals and expected results 
                from the use of the grant funds;
                    (E) provide assurances that the Federal funds made 
                available under this section shall be used to supplement 
                and, to the extent practical, increase the level of 
                funds that would, in the absence of Federal funds, be 
                made available by the institution for the purposes 
                described in subsection (b); and
                    (F) include such other information and assurances as 
                the Attorney General reasonably determines to be 
                necessary.
            (3) Compliance with campus crime reporting required.--No 
        institution of higher education shall be eligible for a grant 
        under this section unless such institution is in compliance with 
        the requirements of section 485(f ) of the Higher Education Act 
        of 1965.

    (d) General Terms and Conditions.--
            (1) Nonmonetary assistance.--In addition to the assistance 
        provided under this section, the Attorney General may request 
        any Federal agency to use the agency's authorities and the 
        resources granted to the agency under Federal law (including 
        personnel, equipment, supplies, facilities, and managerial, 
        technical, and advisory services) in support of campus security, 
        and investigation and victim service efforts.
            (2) Grantee reporting.--
                    (A) Annual report.--Each institution of higher 
                education receiving a grant under this section shall 
                submit an annual performance report to the Attorney 
                General. The Attorney General shall suspend funding 
                under this section for an institution of higher 
                education if the institution fails to submit an annual 
                performance report.
                    (B) Final report.--Upon completion of the grant 
                period under this section, the institution shall file a 
                performance report with the Attorney General and the 
                Secretary of Education explaining the activities carried 
                out under this section together with an assessment of 
                the effectiveness of those activities in achieving the 
                purposes described in subsection (b).
            (3) <<NOTE: Deadline.>> Report to congress.--Not later than 
        180 days after the end of the fiscal year for which grants are 
        awarded under this section, the Attorney General shall submit to 
        the committees of the House of Representatives and the Senate 
        responsible

[[Page 112 STAT. 1818]]

        for issues relating to higher education and crime, a report that 
        includes--
                    (A) the number of grants, and the amount of funds, 
                distributed under this section;
                    (B) a summary of the purposes for which the grants 
                were provided and an evaluation of the progress made 
                under the grant;
                    (C) a statistical summary of the persons served, 
                detailing the nature of victimization, and providing 
                data on age, sex, race, ethnicity, language, disability, 
                relationship to offender, geographic distribution, and 
                type of campus; and
                    (D) an evaluation of the effectiveness of programs 
                funded under this part, including information obtained 
                from reports submitted pursuant to section 485(f ) of 
                the Higher Education Act of 1965.
            (4) <<NOTE: Deadlines. Publications.>> Regulations or 
        guidelines.--Not later than 120 days after the date of enactment 
        of this section, the Attorney General, in consultation with the 
        Secretary of Education, shall publish proposed regulations or 
        guidelines implementing this section. Not later than 180 days 
        after the date of enactment of this section, the Attorney 
        General shall publish final regulations or guidelines 
        implementing this section.

    (f ) Definitions.--In this section--
            (1) the term ``domestic violence'' includes acts or threats 
        of violence, not including acts of self defense, committed by a 
        current or former spouse of the victim, by a person with whom 
        the victim shares a child in common, by a person who is 
        cohabitating with or has cohabitated with the victim, by a 
        person similarly situated to a spouse of the victim under the 
        domestic or family violence laws of the jurisdiction, or by any 
        other person against a victim who is protected from that 
        person's acts under the domestic or family violence laws of the 
        jurisdiction;
            (2) the term ``sexual assault'' means any conduct proscribed 
        by chapter 109A of title 18, United States Code, whether or not 
        the conduct occurs in the special maritime and territorial 
        jurisdiction of the United States or in a Federal prison, 
        including both assaults committed by offenders who are strangers 
        to the victim and assaults committed by offenders who are known 
        or related by blood or marriage to the victim; and
            (3) the term ``victim services'' means a nonprofit, 
        nongovernmental organization that assists domestic violence or 
        sexual assault victims, including campus women's centers, rape 
        crisis centers, battered women's shelters, and other sexual 
        assault or domestic violence programs, including campus 
        counseling support and victim advocate organizations with 
        domestic violence, stalking, and sexual assault programs, 
        whether or not organized and staffed by students.

    (g) Authorization of Appropriations.--For the purpose of carrying 
out this part, there are authorized to be appropriated $10,000,000 for 
fiscal year 1999 and such sums as may be necessary for each of the 4 
succeeding fiscal years.

[[Page 112 STAT. 1819]]

SEC. 827. STUDY OF <<NOTE: 20 USC 1152 note.>> INSTITUTIONAL PROCEDURES 
            TO REPORT SEXUAL ASSAULTS.

    (a) In General.--The Attorney General, in consultation with the 
Secretary of Education, shall provide for a national study to examine 
procedures undertaken after an institution of higher education receives 
a report of sexual assault.
    (b) Report.--The study required by subsection (a) shall include an 
analysis of--
            (1) the existence and publication of the institution of 
        higher education's and State's definition of sexual assault;
            (2) the existence and publication of the institution's 
        policy for campus sexual assaults;
            (3) the individuals to whom reports of sexual assault are 
        given most often and--
                    (A) how the individuals are trained to respond to 
                the reports; and
                    (B) the extent to which the individuals are trained;
            (4) the reporting options that are articulated to the victim 
        or victims of the sexual assault regarding--
                    (A) on-campus reporting and procedure options; and
                    (B) off-campus reporting and procedure options;
            (5) the resources available for victims' safety, support, 
        medical health, and confidentiality, including--
                    (A) how well the resources are articulated both 
                specifically to the victim of sexual assault and 
                generally to the campus at large; and
                    (B) the security of the resources in terms of 
                confidentiality or reputation;
            (6) policies and practices that may prevent or discourage 
        the reporting of campus sexual assaults to local crime 
        authorities, or that may otherwise obstruct justice or interfere 
        with the prosecution of perpetrators of campus sexual assaults;
            (7) policies and practices found successful in aiding the 
        report and any ensuing investigation or prosecution of a campus 
        sexual assault;
            (8) the on-campus procedures for investigation and 
        disciplining the perpetrator of a sexual assault, including--
                    (A) the format for collecting evidence; and
                    (B) the format of the investigation and disciplinary 
                proceeding, including the faculty responsible for 
                running the disciplinary procedure and the persons 
                allowed to attend the disciplinary procedure; and
            (9) types of punishment for offenders, including--
                    (A) whether the case is directed outside the 
                institution for further punishment; and
                    (B) how the institution punishes perpetrators.

    (c) Submission of Report.--The report required by subsection (b) 
shall be submitted to Congress not later than September 1, 2000.
    (d) Definition.--For purposes of this section, the term ``campus 
sexual assaults'' means sexual assaults occurring at institutions of 
higher education and sexual assaults committed against or by students or 
employees of such institutions.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,000,000 for fiscal year 2000.

[[Page 112 STAT. 1820]]

 PART F--IMPROVING UNITED STATES UNDERSTANDING OF SCIENCE, ENGINEERING, 
                       AND TECHNOLOGY IN EAST ASIA

SEC. 831. <<NOTE: 42 USC 1862 note.>> IMPROVING UNITED STATES 
            UNDERSTANDING OF SCIENCE, ENGINEERING, AND TECHNOLOGY IN 
            EAST ASIA.

    (a) Establishment.--The Director of the National Science Foundation 
is authorized, beginning in fiscal year 2000, to carry out an 
interdisciplinary program of education and research on East Asian 
science, engineering, and technology. The Director shall carry out the 
interdisciplinary program in consultation with the Secretary of 
Education.
    (b) Purposes.--The purposes of the program established under this 
section shall be to--
            (1) increase understanding of East Asian research, and 
        innovation for the creative application of science and 
        technology to the problems of society;
            (2) provide scientists, engineers, technology managers, and 
        students with training in East Asian languages, and with an 
        understanding of research, technology, and management of 
        innovation, in East Asian countries;
            (3) provide program participants with opportunities to be 
        directly involved in scientific and engineering research, and 
        activities related to the management of scientific and 
        technological innovation, in East Asia; and
            (4) create mechanisms for cooperation and partnerships among 
        United States industry, universities, colleges, not-for-profit 
        institutions, Federal laboratories (within the meaning of 
        section 4(6) of the Stevenson-Wydler Technology Innovation Act 
        of 1980 (15 U.S.C. 3703(6))), and government, to disseminate the 
        results of the program assisted under this section for the 
        benefit of United States research and innovation.

    (c) Participation by Federal Scientists, Engineers, and Managers.--
Scientists, engineers, and managers of science and engineering programs 
in Federal agencies and the Federal laboratories shall be eligible to 
participate in the program assisted under this section on a reimbursable 
basis.
    (d) Requirement for Merit Review.--Awards made under the program 
established under this section shall only be made using a competitive, 
merit-based review process.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $10,000,000 for fiscal year 2000.

                      PART G--OLYMPIC SCHOLARSHIPS

SEC. 836. EXTENSION OF AUTHORIZATION.

    Section 1543(d) of the Higher Education Amendments of 1992 is 
amended by <<NOTE: 20 USC 1070 note.>> striking ``1993'' and inserting 
``1999''.

                      PART H--UNDERGROUND RAILROAD

SEC. 841. <<NOTE: Historic preservation. 20 USC 1153.>> UNDERGROUND 
            RAILROAD EDUCATIONAL AND CULTURAL PROGRAM.

    (a) Program Established.--The Secretary of Education, in 
consultation and cooperation with the Secretary of the Interior,

[[Page 112 STAT. 1821]]

is authorized to make grants to 1 or more nonprofit educational 
organizations that are established to research, display, interpret, and 
collect artifacts relating to the history of the Underground Railroad.
    (b) Grant Agreement.--Each nonprofit educational organization 
awarded a grant under this section shall enter into an agreement with 
the Secretary of Education. Each such agreement shall require the 
organization--
            (1) to establish a facility to house, display, and interpret 
        the artifacts related to the history of the Underground 
        Railroad, and to make the interpretive efforts available to 
        institutions of higher education that award a baccalaureate or 
        graduate degree;
            (2) to demonstrate substantial private support for the 
        facility through the implementation of a public-private 
        partnership between a State or local public entity and a private 
        entity for the support of the facility, which private entity 
        shall provide matching funds for the support of the facility in 
        an amount equal to 4 times the amount of the contribution of the 
        State or local public entity, except that not more than 20 
        percent of the matching funds may be provided by the Federal 
        Government;
            (3) to create an endowment to fund any and all shortfalls in 
        the costs of the on-going operations of the facility;
            (4) to establish a network of satellite centers throughout 
        the United States to help disseminate information regarding the 
        Underground Railroad throughout the United States, if such 
        satellite centers raise 80 percent of the funds required to 
        establish the satellite centers from non-Federal public and 
        private sources;
            (5) to establish the capability to electronically link the 
        facility with other local and regional facilities that have 
        collections and programs which interpret the history of the 
        Underground Railroad; and
            (6) <<NOTE: Reports.>> to submit, for each fiscal year for 
        which the organization receives funding under this section, a 
        report to the Secretary of Education that contains--
                    (A) a description of the programs and activities 
                supported by the funding;
                    (B) the audited financial statement of the 
                organization for the preceding fiscal year;
                    (C) a plan for the programs and activities to be 
                supported by the funding as the Secretary may require; 
                and
                    (D) an evaluation of the programs and activities 
                supported by the funding as the Secretary may require.

    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $6,000,000 for fiscal year 1999, 
$6,000,000 for fiscal year 2000, $6,000,000 for fiscal year 2001, 
$3,000,000 for fiscal year 2002, and $3,000,000 for fiscal year 2003.

[[Page 112 STAT. 1822]]

                 PART I--SUMMER TRAVEL AND WORK PROGRAMS

SEC. 846. <<NOTE: 22 USC 1474 note.>> AUTHORITY TO ADMINISTER SUMMER 
            TRAVEL AND WORK PROGRAMS.

    The Director of the United States Information Agency is authorized 
to administer summer travel and work programs without regard to 
preplacement requirements.

    PART J <<NOTE: Web-Based Education Commission Act.>> --WEB-BASED 
EDUCATION COMMISSION

SEC. 851. SHORT TITLE; DEFINITIONS.

    (a) In General.--This part may be cited as the ``Web-Based Education 
Commission Act''.
    (b) Definitions.--In this part:
            (1) Commission.--The term ``Commission'' means the Web-Based 
        Education Commission established under section 852.
            (2) Information technology.--The term ``information 
        technology'' has the meaning given that term in section 5002 of 
        the Information Technology Management Reform Act of 1996 (110 
        Stat. 679).
            (3) State.--The term ``State'' means each of the several 
        States of the United States and the District of Columbia.

SEC. 852. ESTABLISHMENT OF WEB-BASED EDUCATION COMMISSION.

    (a) Establishment.--There is established a commission to be known as 
the W