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105th Congress                                                   Report
                       HOUSE OF REPRESENTATIVES

 2d Session                                                     105-750
_______________________________________________________________________


 
                  HIGHER EDUCATION AMENDMENTS OF 1998

                               ----------                              

                           CONFERENCE REPORT

                              to accompany

                                 H.R. 6





               September 25, 1998.--Ordered to be printed


                   HIGHER EDUCATION AMENDMENTS OF 1998


105th Congress                                                   Report
                       HOUSE OF REPRESENTATIVES

 2d Session                                                     105-750
_______________________________________________________________________


                      HIGHER EDUCATION AMENDMENTS

                                OF 1998

                               __________

                           CONFERENCE REPORT

                              to accompany

                                 H.R. 6





               September 25, 1998.--Ordered to be printed


105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-750
_______________________________________________________________________


                  HIGHER EDUCATION AMENDMENTS OF 1998

                                _______
                                

               September 25, 1998.--Ordered to be printed

_______________________________________________________________________


Mr. Goodling, from the committee of conference, submitted the following

                           CONFERENCE REPORT

                         [To accompany H.R. 6]

      The committee of conference on the disagreeing votes of 
the two Houses on the amendment of the Senate to the bill (H.R. 
6), to extend the authorization of programs under the Higher 
Education Act of 1965, and for other purposes, having met, 
after full and free conference, have agreed to recommend and do 
recommend to their respective Houses as follows:
      That the House recede from its disagreement to the 
amendment of the Senate and agree to the same with an amendment 
as follows:
      In lieu of the matter proposed to be inserted by the 
Senate amendment, insert the following:

SECTION 1. 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.
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.
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.

                      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. Nondischargability 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 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.

    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. 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 one-
        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) List of Accrediting Agencies.--For purposes of this 
section and section 102, the Secretary shall publish a list of 
nationally 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. 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) 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) Advisory panel.--
                            ``(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-year 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 4-year or a 2-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 
                4-year or a 2-year program of instruction (or 
                both) for which the institution awards a 
                bachelor's degree or an associate's 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) 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.
            ``(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.

    ``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 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.

    ``(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.
    ``(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. 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. 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.
    ``(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. This subsection 
shall cease to be effective on September 30, 2004.

``SEC. 114. 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) 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
            ``(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) 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.

    ``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.

    ``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.

    ``(a) 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 
        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 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.

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

    ``(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 to 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.

    ``(a) 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--
                    ``(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 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--
                            ``(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) Ceremony.--The awards shall be made 
                at a ceremony in Washington, D.C.
                    ``(C) 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. 
                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 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;
                    ``(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.

    ``(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.

    ``(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 such 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 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. 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;
                            ``(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) 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 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) 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. 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. 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 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;
                            ``(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 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; and
                    ``(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.--
            ``(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. 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) 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 
beauthorized 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 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 5. 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 
        agencies, loan servicers, and other participants in 
        those student loan programs.
            ``(3) 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) 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) 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.

``SEC. 142. PROCUREMENT FLEXIBILITY.

    ``(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) 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.
                    ``(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.
            ``(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.--
                    ``(A) Publication.--Not 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 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. 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 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.
    (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 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))''.
                    (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.--
                    (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))''.
                    (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)''.
            (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''.

                       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.

    ``(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.

``SEC. 202. STATE GRANTS.

    ``(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 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.

    ``(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--
                            ``(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).
    ``(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.

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

    ``(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.
            ``(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.
    ``(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.

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

``SEC. 207. ACCOUNTABILITY FOR PROGRAMS THAT PREPARE TEACHERS.

    ``(a) 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.
            ``(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) 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). 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) 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) 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) 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.--
            ``(1) 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.

    ``(a) 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. 
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).
    ``(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.

    ``(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.

    ``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--
            ``(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) 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) 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) by redesignating sections 721 through 728 (20 
        U.S.C. 1132c and 1132c-7) as sections 341 through 348, 
        respectively;
            (5) 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) 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 (as redesignated by 
        paragraph (7)) (20 U.S.C. 1135d-6).
    (b) Conforming Amendments.--Section 361 (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)'';
            (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 (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 (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) (as redesignated by 
        subsection (a)(4)) (20 U.S.C. 1132c-4(2)), by striking 
        ``723'' and inserting ``343'';
            (7) in section 348 (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) (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) (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) (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) (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:
            ``(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) 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).''.
    (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.

    ``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 given 
        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.
    ``(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 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) 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. 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
                    ``(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--
            (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) 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;
            ``(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:
            ``(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 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) (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 (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:
    ``(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 (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 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-5) is repealed.
    (e) Advisory Board.--Section 347 (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.

    ``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.''.
    (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.

    ``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 1 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) (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) (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 institutions's need for the 
        assistance. Subject to the availability of 
        appropriations to carry out 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) (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) (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) (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) (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.

    ``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) (as 
redesignated by section 301(a)(2)) (20 U.S.C. 1069f) is 
amended--
            (1) in paragraph (1)--
                    (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) 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;
            ``(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) 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) 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 \1/2\ 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 B or D 
        after the final publication of cohort default rates for 
        fiscal year 1996 or a succeeding fiscal year.
            ``(2) 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--
                    (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;
                    ``(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 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)  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 3 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 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 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:
            ``(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 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. 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 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) 1 or more local educational agencies 
                acting on behalf of--
                            ``(i) 1 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) 1 or more degree granting 
                institutions of higher education; and
                    ``(C) at least 2 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.

    ``(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 (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 1 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.

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

    ``(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, 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) 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--
                            ``(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.

    ``(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 amount of the scholarship for each fiscal year shall 
not be less than the lesser of--
            ``(1) 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.

    ``(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.

    ``(a) Evaluation.--Each eligible entity receiving a grant 
under this chapter shall biennially evaluate the activities 
assisted under 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 1 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.

    ``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.

    ``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.

    ``(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 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.

    ``(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.

    ``(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.

    ``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.) 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''.
    (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) 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.

    ``(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.''.

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 as 415F; and
            (2) by inserting after section 415D the following:

``SEC. 415E. 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;
            ``(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''.
    (b) 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 a 
        receive 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.

    ``(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 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 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.
                    ``(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.

    ``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.
            ``(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.

    ``(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.

    ``(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.

    ``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;
            ``(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.

    ``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.

    ``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.

    ``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.
            ``(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.

    ``(a) 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 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 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.--
                    ``(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.

    ``(a) 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);
            ``(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 
statusmanagement, 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).
            ``(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,

        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) 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;
                                    ``(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).''.
            (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) 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;
                            ``(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--
                    (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;''.
            (2) Selection of repayment plans.--Clause (ii) of 
        section 428(b)(1)(D) 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)) 
establishedby 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)--
                            (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 
                subparagraph:
                    ``(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--
                    (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) 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 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''; and
                            (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''.
                    (B) 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--
                    (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) 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).
            (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) 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 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 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.''.
    (h) Default Aversion Assistance.--Subsection (l) of section 
428 is amended to 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 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. 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) 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) 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) 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 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) 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) 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.
            ``(3) 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
            ``(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 repayment; 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)''.
    (d) Extension of Authority.--Section 428C(e) 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) 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) 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 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--
            (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 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 
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 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) 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.

    ``(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:
            ``(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 Amendmentsof 
1998, to a student under this part or part D;
                    ``(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--
                    ``(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) 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--
            (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)--
                            (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. 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--
            (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 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:

        ``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 
        paragraph (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;
                            ``(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.--
                    ``(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 one-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 one-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.
                    ``(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 1 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) 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 of delinquency occurs on or after 
        the date of enactment of this Act.
    (d) Cohort Default Rate.--Section 435(m) is amended--
            (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) 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. 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.''.

SEC. 432. DEBT MANAGEMENT OPTIONS.

    Section 437A (20 U.S.C. 1087-O) 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 
asdetermined 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
                                    ``(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 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) 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.

    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--
            (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) (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) 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);
                    (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 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:
            ``(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 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 
                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.
                    ``(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) 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:
            ``(7) Repayment incentives.--
                    ``(A) 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. 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. 
                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 by striking everything after ``section 
428C(a)(4)'' and inserting a period.
    (d) 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),

        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 year 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.

    ``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 of a loan made under this part as the 
Secretary determines appropriate to encourage on-time repayment 
in accordance with 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.

    ``(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) 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.
    ``(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)'';
                            (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) 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 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) 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.
            ``(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) 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) 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.--
            ``(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--
            (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''.

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 reporting the information described in paragraph (2) 
before a loan is paid in full.''; and
            (4) by inserting after paragraph (4) the following:
    ``(5) 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 
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) $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) $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--
            (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 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 notexceed 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 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 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) 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) 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.

                         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 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) 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 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 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.

    (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) 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 oif 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) 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 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 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 is subsequently submitted by the applicant. 
        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) 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 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''.
    (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
                            ``(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 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) 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  o   a  con-
    trolled substancIneligibility period is:
    First offense...  1 year ...........................................
    Second offense..  2 years ..........................................
    Third offense...  Indefinite........................................

  The sale of a contIneligibility 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 2 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)).''.
            (2) 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.--
                    ``(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) 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.--
            ``(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.
                            ``(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 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) 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 
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) 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) 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) 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--
            (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) 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 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) 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) 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 2 business days of the initial report being made to the 
department or a campus security authority.
    ``(ii) 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 2 
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.
    ``(10) Nothing in this section shall be construed to 
require the reporting or disclosure of privileged information.
    ``(11) 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) 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--
            (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 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) 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) 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) 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) 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
                    ``(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 1 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 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.
    ``(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) 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;
            ``(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 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) 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) 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) 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 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. 
        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) 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 
        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) 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.''.

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.

    ``(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) monitor and evaluate the modernization of 
        student financial aid systems and delivery processes, 
        including the implementation of a performance-based 
        organization within the 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'';
                    (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) 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.

    ``(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) work with the Department's various data 
        exchange partners under this title to fully test all 
        data exchange routes 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) 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) 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, 
                        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) 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. 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. 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:

                        ``Subpart 1--State Role

``SEC. 495. STATE RESPONSIBILITIES.

    ``(a) State Responsibilities.--As part of the integrity 
program authorized by this part, each State, through 1 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 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;'';
                    (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) 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) 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 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) 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) 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 1 or more of the programs under 
        part B or D.''.
    (b) Financial Responsibility Standards.--Section 498(c) is 
amended--
            (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) 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) 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 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) 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) 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 
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) 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;'';
                            (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.

    ``(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 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 2 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.--
            ``(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.

    ``(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 2 times higher than that of 
        Hispanic secondary school graduates.
            ``(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;

    ``(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--
                                    ``(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--
                            ``(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.

    ``(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.
            ``(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.

    ``(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 
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.

    ``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.

    ``(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;
            ``(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) 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 1 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 eligibility determinations and shall advance the base-
year for the determinations forward following each annual grant 
cycle.

``SEC. 512. WAIVER AUTHORITY AND REPORTING REQUIREMENT.

    ``(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) 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) 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.

    ``(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--
            ``(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) 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.

    ``(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.

    ``(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.
    ``(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.

    ``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.

    ``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.

    ``(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.

    ``(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.
            ``(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 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 and 
        other international studies, including professional 
        international affairs education and research.

``SEC. 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
                            ``(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 1 
                        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 1 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-year 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 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) 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, 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 
                school 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. 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-year 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
                            ``(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 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.

    ``(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;
            ``(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) 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. 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.
    ``(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.

    ``(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.

    ``(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.

    ``(a) 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;
            ``(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.

    ``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--
            (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.

    ``(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 (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) 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 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''.
    (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.

    ``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.

    ``(a) Authority and Timing of Awards.--The Secretary is 
authorized to award fellowships in accordance with the 
provisions 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) 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.

    ``(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 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) 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 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.

    ``(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) 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.

    ``(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, 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.

    ``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. 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, 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.

    ``(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.

    ``(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 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 thatwould 
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.

    ``(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 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.

    ``(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.
    ``(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.

    ``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.

    ``(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;
            ``(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.

    ``(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 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. 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.
    ``(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. 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.

    ``(a) Technical Employees.--The Secretary may appoint, for 
terms not to exceed 3 years, without regard to the provisions 
of title 5 of the 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 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.

    ``(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-year and 4-year 
        institutions of higher education, including developing 
        innovative methods for ensuring the successful transfer 
        of students from 2-year 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.

    ``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.

    ``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.

    ``(a) Purpose.--It is the purpose of this part to provide 
incentives to urban academic institutions to enable such 
institutions 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.

    ``(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) 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.

    ``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 allviation 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.
            ``(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.

    ``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.

    ``(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.

    ``The 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.

``SEC. 758. DEFINITIONS.

    ``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 
                        opportunitiesmore 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.

    ``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.

    ``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.

    ``(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 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 1 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.

    ``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;
            ``(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.

    ``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.

    ``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. 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:
            (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) 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 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) 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.

    (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;
                    (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) 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.

    (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) 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.

SEC. 805. STUDY OF 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, an 
        intercollegiate sport, and the success of such 
        alternatives.
    (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) 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.

    (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--
            (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.

               PART C--COMMUNITY SCHOLARSHIP MOBILIZATION

SEC. 811. SHORT TITLE.

    This part may be cited as the ``Community Scholarship 
Mobilization Act''.

SEC. 812. FINDINGS.

    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.

    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, 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.

    (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 
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.

    (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; 
                and
                    (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 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.

    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. 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 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) annually report to the Secretary and the 
        Attorney General on the results of the evaluations 
        conducted using the 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. 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.
            (2) 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.--Grants 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 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 grants 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) 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 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) 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.

SEC. 827. STUDY OF 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.

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.

    (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 striking ``1993'' and inserting ``1999''.

                      PART H--UNDERGROUND RAILROAD

SEC. 841. UNDERGROUND RAILROAD EDUCATIONAL AND CULTURAL PROGRAM.

    (a) Program Established.--The Secretary of Education, in 
consultation and cooperation with the Secretary of the 
Interior, 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) 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.

                PART I--SUMMER TRAVEL AND WORK PROGRAMS

SEC. 846. AUTHORITY TO ADMINISTER SUMMER TRAVEL AND WORK PROG