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111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    111-232

======================================================================



 
           STUDENT AID AND FISCAL RESPONSIBILITY ACT OF 2009

                                _______
                                

 July 27, 2009.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. George Miller of California, from the Committee on Education and 
                     Labor, submitted the following

                              R E P O R T

                             together with

                    SUPPLEMENTAL AND MINORITY VIEWS

                        [To accompany H.R. 3221]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Education and Labor, to whom was referred 
the bill (H.R. 3221) to amend the Higher Education Act of 1965, 
and for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Student Aid and Fiscal Responsibility 
Act of 2009''.

SEC. 2. TABLE OF CONTENTS.

  The table of contents is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. References.

              TITLE I--INVESTING IN STUDENTS AND FAMILIES

          Subtitle A--Increasing College Access and Completion

Sec. 101. Federal Pell Grants.
Sec. 102. College Access and Completion Innovation Fund.
Sec. 103. Investment in historically Black colleges and universities 
and other minority-serving institutions.
Sec. 104. Investment in cooperative education.
Sec. 105. Loan forgiveness for servicemembers activated for duty.
Sec. 106. Veterans Educational Equity Supplemental Grant Program.

         Subtitle B--Student Financial Aid Form Simplification

Sec. 121. General effective date.
Sec. 122. Treatment of assets in need analysis.
Sec. 123. Changes to total income; aid eligibility.

                     TITLE II--STUDENT LOAN REFORM

                    Subtitle A--Stafford Loan Reform

Sec. 201. Federal Family Education Loan appropriations.
Sec. 202. Scope and duration of Federal loan insurance program.
Sec. 203. Applicable interest rates.
Sec. 204. Federal payments to reduce student interest costs.
Sec. 205. Federal PLUS Loans.
Sec. 206. Federal Consolidation Loan.
Sec. 207. Unsubsidized Stafford loans for middle-income borrowers.
Sec. 208. Loan repayment for civil legal assistance attorneys.
Sec. 209. Special allowances.
Sec. 210. Revised special allowance calculation.
Sec. 211. Origination of Direct Loans at institutions located outside 
the United States.
Sec. 212. Agreements with institutions.
Sec. 213. Terms and conditions of loans.
Sec. 214. Contracts.
Sec. 215. Interest rates.

                    Subtitle B--Perkins Loan Reform

Sec. 221. Federal Direct Perkins Loans terms and conditions.
Sec. 222. Authorization of appropriations.
Sec. 223. Allocation of funds.
Sec. 224. Federal Direct Perkins Loan allocation.
Sec. 225. Agreements with institutions of higher education.
Sec. 226. Student loan information by eligible institutions.
Sec. 227. Terms of loans.
Sec. 228. Distribution of assets from student loan funds.
Sec. 229. Implementation of non-title IV revenue requirement.
Sec. 230. Administrative expenses.

            TITLE III--MODERNIZATION, RENOVATION, AND REPAIR

             Subtitle A--Elementary and Secondary Education

Sec. 301. Definitions.

 Chapter 1--Grants for Modernization, Renovation, or Repair of Public 
                           School Facilities

Sec. 311. Purpose.
Sec. 312. Allocation of funds.
Sec. 313. Allowable uses of funds.
Sec. 314. Priority projects.

 Chapter 2--Supplemental Grants for Louisiana, Mississippi, and Alabama

Sec. 321. Purpose.
Sec. 322. Allocation to local educational agencies.
Sec. 323. Allowable uses of funds.

                     Chapter 3--General Provisions

Sec. 331. Impermissible uses of funds.
Sec. 332. Supplement, not supplant.
Sec. 333. Prohibition regarding State aid.
Sec. 334. Maintenance of effort.
Sec. 335. Special rule on contracting.
Sec. 336. Use of American iron, steel, and manufactured goods.
Sec. 337. Labor standards.
Sec. 338. Charter schools.
Sec. 339. Green schools.
Sec. 340. Reporting.
Sec. 341. Special rules.
Sec. 342. Promotion of employment experiences.
Sec. 343. Advisory Council on Green, High-Performing Public School 
Facilities.
Sec. 344. Education regarding projects.
Sec. 345. Availability of funds.

                      Subtitle B--Higher Education

Sec. 351. Federal assistance for community college modernization and 
construction.

                TITLE IV--EARLY LEARNING CHALLENGE FUND

Sec. 401. Purpose.
Sec. 402. Programs authorized.
Sec. 403. Quality pathways grants.
Sec. 404. Development grants.
Sec. 405. Research and evaluation.
Sec. 406. Reporting requirements.
Sec. 407. Construction.
Sec. 408. Definitions.
Sec. 409. Availability of funds.

                TITLE V--AMERICAN GRADUATION INITIATIVE

Sec. 501. Authorization and appropriation.
Sec. 502. Definitions; grant priority.
Sec. 503. Grants to eligible entities for community college reform.
Sec. 504. Grants to eligible States for community college programs.
Sec. 505. National activities.

SEC. 3. 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.).

              TITLE I--INVESTING IN STUDENTS AND FAMILIES

          Subtitle A--Increasing College Access and Completion

SEC. 101. FEDERAL PELL GRANTS.

  (a) Amount of Grants.--Section 401(b) (20 U.S.C. 1070a(b)) is 
amended--
          (1) by amending paragraph (2)(A) to read as follows:
                  ``(A) The amount of the Federal Pell Grant for a 
                student eligible under this part shall be--
                          ``(i) the maximum Federal Pell Grant, as 
                        specified in the last enacted appropriation Act 
                        applicable to that award year, plus
                          ``(ii) the amount of the increase calculated 
                        under paragraph (8)(B) for that year, less
                          ``(iii) an amount equal to the amount 
                        determined to be the expected family 
                        contribution with respect to that student for 
                        that year.''; and
          (2) by amending paragraph (8), as amended by the Higher 
        Education Opportunity Act (Public Law 110-315), to read as 
        follows:
          ``(8) Additional funds.--
                  ``(A) In general.--There are authorized to be 
                appropriated, and there are appropriated, to carry out 
                subparagraph (B) of this paragraph (in addition to any 
                other amounts appropriated to carry out this section 
                and out of any money in the Treasury not otherwise 
                appropriated) the following amounts--
                          ``(i) $2,030,000,000 for fiscal year 2008;
                          ``(ii) $2,733,000,000 for fiscal year 2009; 
                        and
                          ``(iii) such sums as may be necessary for 
                        fiscal year 2010 and each subsequent fiscal 
                        year to provide the amount of increase of the 
                        maximum Federal Pell Grant required by clauses 
                        (ii) and (iii) of subparagraph (B).
                  ``(B) Increase in federal pell grants.--The amounts 
                made available pursuant to subparagraph (A) shall be 
                used to increase the amount of the maximum Federal Pell 
                Grant for which a student shall be eligible during an 
                award year, as specified in the last enacted 
                appropriation Act applicable to that award year, by--
                          ``(i) $490 for each of the award years 2008-
                        2009 and 2009-2010;
                          ``(ii) $690 for the award year 2010-2011; and
                          ``(iii) the amount determined under 
                        subparagraph (C) for each succeeding award 
                        year.
                  ``(C) Inflation-adjusted amounts.--
                          ``(i) Award year 2011-2012.--For award year 
                        2011-2012, the amount determined under this 
                        subparagraph for purposes of subparagraph 
                        (B)(iii) shall be equal to--
                                  ``(I) $5,550 or the total maximum 
                                Federal Pell Grant for the preceding 
                                award year (as determined under clause 
                                (iv)(II)), whichever is greater, 
                                increased by a percentage equal to the 
                                annual adjustment percentage for award 
                                year 2011-2012; reduced by
                                  ``(II) $4,860 or the maximum Federal 
                                Pell Grant for which a student was 
                                eligible for the preceding award year, 
                                as specified in the last enacted 
                                appropriation Act applicable to that 
                                year, whichever is greater; and
                                  ``(III) rounded to the nearest $5.
                          ``(ii) Subsequent award years.--For award 
                        year 2012-2013 and each of the subsequent award 
                        years, the amount determined under this 
                        subparagraph for purposes of subparagraph 
                        (B)(iii) shall be equal to--
                                  ``(I) the total maximum Federal Pell 
                                Grant for the preceding award year (as 
                                determined under clause (iv)(II)), 
                                increased by a percentage equal to the 
                                annual adjustment percentage for the 
                                award year for which the amount under 
                                this subparagraph is being determined; 
                                reduced by
                                  ``(II) $4,860 or the maximum Federal 
                                Pell Grant for which a student was 
                                eligible for the preceding award year, 
                                as specified in the last enacted 
                                appropriation Act applicable to that 
                                year, whichever is greater; and
                                  ``(III) rounded to the nearest $5.
                          ``(iii) Limitation on decreases.--
                        Notwithstanding clauses (i) and (ii), if the 
                        amount determined under clause (i) or (ii) for 
                        an award year is less than the amount 
                        determined under this paragraph for the 
                        preceding award year, the amount determined 
                        under such clause for such award year shall be 
                        the amount determined under this paragraph for 
                        the preceding award year.
                          ``(iv) Definitions.--For purposes of this 
                        subparagraph--
                                  ``(I) the term `annual adjustment 
                                percentage' as it applies to an award 
                                year is equal to the sum of--
                                          ``(aa) the estimated 
                                        percentage change in the 
                                        Consumer Price Index (as 
                                        determined by the Secretary, 
                                        using the definition in section 
                                        478(f)) for the most recent 
                                        calendar year ending prior to 
                                        the beginning of that award 
                                        year; and
                                          ``(bb) one percentage point; 
                                        and
                                  ``(II) the term `total maximum 
                                Federal Pell Grant' as it applies to a 
                                preceding award year is equal to the 
                                sum of--
                                          ``(aa) the maximum Federal 
                                        Pell Grant for which a student 
                                        is eligible during an award 
                                        year, as specified in the last 
                                        enacted appropriation Act 
                                        applicable to that preceding 
                                        award year; and
                                          ``(bb) the amount of the 
                                        increase in the maximum Federal 
                                        Pell Grant required by this 
                                        paragraph for that preceding 
                                        award year.
                  ``(D) Program requirements and operations otherwise 
                unaffected.--Except as provided in subparagraphs (B) 
                and (C), nothing in this paragraph shall be construed 
                to alter the requirements and operations of the Federal 
                Pell Grant Program as authorized under this section, or 
                to authorize the imposition of additional requirements 
                or operations for the determination and allocation of 
                Federal Pell Grants under this section.
                  ``(E) Availability of funds.--The amounts made 
                available by subparagraph (A) for any fiscal year shall 
                be available beginning on October 1 of that fiscal 
                year, and shall remain available through September 30 
                of the succeeding fiscal year.''.
  (b) Conforming Amendments.--Title IV (20 U.S.C. 1070 et seq.) is 
further amended--
          (1) in section 401(b)(6), as amended by the Higher Education 
        Opportunity Act (Public Law 110-315), by striking ``the grant 
        level specified in the appropriate Appropriation Act for this 
        subpart for such year'' and inserting ``the Federal Pell Grant 
        amount, determined under paragraph (2)(A), for which a student 
        is eligible during such award year'';
          (2) in section 402D(d)(1), by striking ``exceed the maximum 
        appropriated Pell Grant'' and inserting ``exceed the Federal 
        Pell Grant amount, determined under section 401(b)(2)(A), for 
        which a student is eligible'';
          (3) in section 435(a)(5)(A)(i)(I), by striking ``one-half the 
        maximum Federal Pell Grant award for which a student would be 
        eligible'' and inserting ``one-half the Federal Pell Grant 
        amount, determined under section 401(b)(2)(A), for which a 
        student would be eligible'';
          (4) in section 483(e)(3)(ii), by striking ``based on the 
        maximum Federal Pell Grant award at the time of application'' 
        and inserting ``based on the Federal Pell Grant amount, 
        determined under section 401(b)(2)(A), for which a student is 
        eligible at the time of application'';
          (5) in section 485E(b)(1)(A), by striking ``of such students' 
        potential eligibility for a maximum Federal Pell Grant under 
        subpart 1 of part A'' and inserting ``of such students' 
        potential eligibility for the Federal Pell Grant amount, 
        determined under section 401(b)(2)(A), for which the student 
        would be eligible''; and
          (6) in section 894(f)(2)(C)(ii)(I), by striking ``the maximum 
        Federal Pell Grant for each award year'' and inserting ``the 
        Federal Pell Grant amount, determined under section 
        401(b)(2)(A), for which a student may be eligible for each 
        award year''.
  (c) Effective Date.--The amendments made by subsections (a) and (b) 
of this section shall take effect on July 1, 2010.

SEC. 102. COLLEGE ACCESS AND COMPLETION INNOVATION FUND.

  (a) Header.--Part E of title VII (20 U.S.C. 1141 et seq.) is amended 
by striking the header of such part and inserting the following:

       ``PART E--COLLEGE ACCESS AND COMPLETION INNOVATION FUND''.

  (b) Purpose.--Part E of title VII (20 U.S.C. 1141 et seq.) is further 
amended by inserting before section 781 the following:

``SEC. 780. PURPOSES.

  ``The purposes of this part are--
          ``(1) to promote innovation in postsecondary education 
        practices and policies by institutions of higher education, 
        States, and nonprofit organizations to improve student success, 
        completion, and post-completion employment, particularly for 
        students from groups that are underrepresented in postsecondary 
        education; and
          ``(2) to assist States in developing longitudinal data 
        systems, common metrics, and reporting systems to enhance the 
        quality and availability of information about student success, 
        completion, and post-completion employment.''.
  (c) Authorization and Appropriation.--Section 781(a) (20 U.S.C. 
1141(a)) is amended to read as follows:
  ``(a) Authorization and Appropriation.--
          ``(1) In general.--There are authorized to be appropriated, 
        and there are appropriated, to carry out this part (in addition 
        to any other amounts appropriated to carry out this part and 
        out of any money in the Treasury not otherwise appropriated), 
        $600,000,000 for each of the fiscal years 2010 through 2014.
          ``(2) Allocations.--Of the amount appropriated for any fiscal 
        year under paragraph (1)--
                  ``(A) 25 percent shall be made available to carry out 
                section 781;
                  ``(B) 50 percent shall be made available to carry out 
                section 782;
                  ``(C) 23 percent shall be made available to carry out 
                section 783; and
                  ``(D) 2 percent shall be made available to carry out 
                section 784.''.
  (d) State Grants and Grants to Eligible Entities.--Part E of title 
VII (20 U.S.C. 1141 et seq.) is further amended by adding at the end 
the following:

``SEC. 782. STATE INNOVATION COMPLETION GRANTS.

  ``(a) Program Authorization.--From the amount appropriated under 
section 781(a)(2)(B) to carry out this section, the Secretary shall 
award grants to States on a competitive basis to promote student 
persistence in, and completion of, postsecondary education.
  ``(b) Federal Share; Non-Federal Share.--
          ``(1) Federal share.--The amount of the Federal share under 
        this section for a fiscal year shall be equal to \2/3\ of the 
        costs of the activities and services described in subsection 
        (d)(1) that are carried out under the grant.
          ``(2) Non-federal share.--The amount of the non-Federal share 
        under this section shall be equal to \1/3\ of the costs of the 
        activities and services described in subsection (d)(1). The 
        non-Federal share may be in cash or in kind, and may be 
        provided from State resources, contributions from private 
        organizations, or both.
          ``(3) Supplement, not supplant.--The Federal and non-Federal 
        shares required by this paragraph shall be used to supplement, 
        and not supplant, State and private resources that would 
        otherwise be expended to carry out activities and services to 
        promote student persistence in and completion of postsecondary 
        education.
  ``(c) Application and Selection.--
          ``(1) Application requirements.--For each fiscal year for 
        which a State desires to receive a grant under this section, 
        the State agency with jurisdiction over higher education, or 
        another agency designated by the Governor or chief executive of 
        the State to administer the grant program under this section, 
        shall submit an application to the Secretary at such time, in 
        such manner, and containing such information as the Secretary 
        may require. Such application shall include--
                  ``(A) a description of the State's capacity to 
                administer the grant under this section;
                  ``(B) a description of the State's plans for using 
                the grant funds for activities described in subsection 
                (d)(1), including plans for how the State will make 
                special efforts to provide benefits to students in the 
                State who are from groups that are underrepresented in 
                postsecondary education;
                  ``(C) a description of how the State will provide for 
                the non-Federal share from State resources, private 
                contributions, or both;
                  ``(D) a description of--
                          ``(i) the administrative system that the 
                        State has in place to administer the activities 
                        and services described in subsection (d)(1); or
                          ``(ii) the plan to develop such 
                        administrative system;
                  ``(E) a description of the data system the State has 
                or will have in place to measure the performance and 
                progress toward the State's goals included in the 
                Access and Completion Plan submitted, or that will be 
                submitted, under paragraph (2)(A); and
                  ``(F) the assurances under paragraph (2).
          ``(2) State assurances.--The assurances required in paragraph 
        (1)(F) shall include an assurance of each of the following:
                  ``(A) That the State will submit, not later than July 
                1, 2011, an Access and Completion Plan to increase the 
                State's rate of persistence in and completion of 
                postsecondary education. Such plan shall include--
                          ``(i) the State's annual and long-term 
                        quantifiable goals with respect to--
                                  ``(I) the rates of postsecondary 
                                enrollment, persistence, and 
                                completion, disaggregated by income, 
                                race, ethnicity, sex, disability, and 
                                age of students;
                                  ``(II) closing gaps in enrollment, 
                                persistence, and completion rates for 
                                students from groups that are 
                                underrepresented in postsecondary 
                                education;
                                  ``(III) targeting education and 
                                training programs to address labor 
                                market needs in the State, as such 
                                needs are determined by the State, or 
                                the State in coordination with the 
                                State public employment service, the 
                                State workforce investment board, or 
                                industry or sector partnerships in the 
                                State; and
                                  ``(IV) improving coordination between 
                                two-year and four-year institutions of 
                                higher education in the State, 
                                including supporting comprehensive 
                                articulation agreements between such 
                                institutions; and
                          ``(ii) the State's plan to develop an 
                        interoperable statewide longitudinal data 
                        system that--
                                  ``(I) can be linked to other data 
                                systems, as applicable, including 
                                elementary and secondary education and 
                                workforce data systems;
                                  ``(II) will collect, maintain, 
                                disaggregate (by institution, income, 
                                race, ethnicity, sex, disability, and 
                                age of students), and analyze 
                                postsecondary education and workforce 
                                information, including--
                                          ``(aa) postsecondary 
                                        education enrollment, 
                                        persistence, and completion 
                                        information;
                                          ``(bb) post-completion 
                                        employment outcomes of students 
                                        who enrolled in postsecondary 
                                        programs and training programs 
                                        offered by eligible training 
                                        providers under the Workforce 
                                        Investment Act of 1998 (29 
                                        U.S.C. 2801 et seq.);
                                          ``(cc) postsecondary 
                                        education and employment 
                                        outcomes of students who move 
                                        out of the State; and
                                          ``(dd) postsecondary 
                                        instructional workforce 
                                        information; and
                                  ``(III) makes the information 
                                described in subclause (I) available to 
                                the general public in a manner that is 
                                transparent and user-friendly.
                  ``(B) That the State has a comprehensive planning or 
                policy formulation process with respect to increasing 
                postsecondary enrollment, persistence, and completion 
                that--
                          ``(i) encourages coordination between the 
                        State administration of grants under this 
                        section and similar State programs;
                          ``(ii) encourages State policies that are 
                        designed to improve rates of enrollment and 
                        persistence in, and completion of, 
                        postsecondary education for all categories of 
                        institutions of higher education described in 
                        section 132(d) in the State;
                          ``(iii) considers the postsecondary education 
                        needs of students from groups that are 
                        underrepresented in postsecondary education;
                          ``(iv) considers the resources of public and 
                        private institutions of higher education, 
                        organizations, and agencies within the State 
                        that are capable of providing access to 
                        postsecondary education opportunities within 
                        the State; and
                          ``(v) provides for direct, equitable, and 
                        active participation in the comprehensive 
                        planning or policy formulation process or 
                        processes, through membership on State planning 
                        commissions, State advisory councils, or other 
                        State entities established by the State and 
                        consistent with State law, by representatives 
                        of--
                                  ``(I) institutions of higher 
                                education, including at least one 
                                member from a junior or community 
                                college (as defined in section 312(f));
                                  ``(II) students;
                                  ``(III) other providers of 
                                postsecondary education services 
                                (including organizations providing 
                                access to such services);
                                  ``(IV) the general public in the 
                                State; and
                                  ``(V) postsecondary education faculty 
                                members, including at least one faculty 
                                member whose primary responsibilities 
                                are teaching and scholarship.
                  ``(C) That the State will incorporate policies and 
                practices that, through the activities funded under 
                this section, are determined to be effective in 
                improving rates of postsecondary education enrollment, 
                persistence, and completion into the future 
                postsecondary education policies and practices of the 
                State to ensure that the benefits achieved through the 
                activities funded under this section continue beyond 
                the period of the grant.
                  ``(D) That the State will participate in the 
                evaluation required under section 784.
          ``(3) Subgrants to nonprofit organizations.--A State 
        receiving a payment under this section may elect to make a 
        subgrant to one or more nonprofit organizations in the State, 
        including agencies with agreements with the Secretary under 
        subsections (b) and (c) of section 428 on the date of the 
        enactment of the Student Aid and Fiscal Responsibility Act of 
        2009, or a partnership of such organizations, to carry out 
        activities and services described in subsection (d)(1), if the 
        nonprofit organization or partnership--
                  ``(A) was in existence on the day before the date of 
                the enactment of the Student Aid and Fiscal 
                Responsibility Act of 2009; and
                  ``(B) as of such day, was participating in activities 
                and services related to promoting persistence in, and 
                completion of, postsecondary education, such as the 
                activities and services described in subsection (d)(1).
          ``(4) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to States that enter into a 
        partnership with one of the following entities to carry out the 
        activities and services described in subsection (d)(1):
                  ``(A) A philanthropic organization, as such term is 
                defined in section 781(i)(1).
                  ``(B) An agency with an agreement with the Secretary 
                under subsections (b) and (c) of section 428 on the 
                date of the enactment of Student Aid and Fiscal 
                Responsibility Act of 2009.
  ``(d) Uses of Funds.--
          ``(1) Authorized uses.--A State receiving a grant under this 
        section shall use the grant funds to--
                  ``(A) provide programs in such State that increase 
                persistence in, and completion of, postsecondary 
                education, which may include--
                          ``(i) assisting institutions of higher 
                        education in providing financial literacy, 
                        education, and counseling to enrolled students;
                          ``(ii) assisting students enrolled in an 
                        institution of higher education to reduce the 
                        amount of loan debt incurred by such students;
                          ``(iii) providing grants to students 
                        described in section 415A(a)(1), in accordance 
                        with the terms of that section; and
                          ``(iv) carrying out the activities described 
                        in section 415E(a); and
                  ``(B) support the development and implementation of a 
                statewide longitudinal data system, as described in 
                subsection (c)(2)(A)(ii).
          ``(2) Prohibited uses.--Funds made available under this 
        section shall not be used to promote any lender's loans.
          ``(3) Restrictions on use of funds.--A State--
                  ``(A) shall use not less than \1/3\ of the sum of the 
                Federal and non-Federal share used for paragraph (1)(A) 
                on activities that benefit students enrolled in junior 
                or community colleges (as defined in section 312(f)), 
                two-year public institutions, or two-year programs of 
                instruction at four-year public institutions;
                  ``(B) may use not more than 10 percent of the sum of 
                the Federal and non-Federal share under this section 
                for activities described in paragraph (1)(B); and
                  ``(C) may use not more than 6 percent of the sum of 
                the Federal and non-Federal share under this section 
                for administrative purposes relating to the grant under 
                this section.
  ``(e) Annual Report.--Each State receiving a grant under this section 
shall submit to the Secretary an annual report on--
          ``(1) the activities and services described in subsection 
        (d)(1) that are carried out with such grant;
          ``(2) the effectiveness of such activities and services in 
        increasing postsecondary persistence and completion, as 
        determined by measurable progress in achieving the State's 
        goals for persistence and completion described in the Access 
        and Completion Plan submitted by the State under subsection 
        (c)(2)(A), if such plan has been submitted; and
          ``(3) any other information or assessments the Secretary may 
        require.
  ``(f) Definitions.--In this section:
          ``(1) Industry or sector partnership.--The term `industry or 
        sector partnership' means a workforce collaborative that 
        organizes key stakeholders in a targeted industry cluster into 
        a working group that focuses on the human capital needs of a 
        targeted industry cluster and that includes, at the appropriate 
        stage of development of the partnership--
                  ``(A) representatives of multiple firms or employers 
                (including workers) in a targeted industry cluster, 
                including small- and medium-sized employers when 
                practicable;
                  ``(B) 1 or more representatives of State labor 
                organizations, central labor coalitions, or other labor 
                organizations;
                  ``(C) 1 or more representatives of local workforce 
                investment boards;
                  ``(D) 1 or more representatives of postsecondary 
                educational institutions or other training providers; 
                and
                  ``(E) 1 or more representatives of State workforce 
                agencies or other entities providing employment 
                services.
          ``(2) State public employment service.--The term `State 
        public employment service' has the meaning given such term in 
        section 502(a)(9) of the Student Aid and Fiscal Responsibility 
        Act of 2009.
          ``(3) State workforce investment board; local workforce 
        investment board.--The terms `State workforce investment board' 
        and `local workforce investment board' have the meanings given 
        such terms in section 502(a)(10) of the Student Aid and Fiscal 
        Responsibility Act of 2009.

``SEC. 783. INNOVATION IN COLLEGE ACCESS AND COMPLETION NATIONAL 
                    ACTIVITIES.

  ``(a) Programs Authorized.--From the amount appropriated under 
section 781(a)(2)(C) to carry out this section, the Secretary shall 
award grants, on a competitive basis, to eligible entities in 
accordance with this section to conduct innovative programs that 
advance knowledge about, and adoption of, policies and practices that 
increase the number of individuals with postsecondary degrees or 
certificates.
  ``(b) Eligible Entities.--The Secretary is authorized to award grants 
under subsection (a) to--
          ``(1) institutions of higher education;
          ``(2) States;
          ``(3) nonprofit organizations with demonstrated experience in 
        the operation of programs to increase postsecondary completion;
          ``(4) philanthropic organizations (as such term is defined in 
        section 781(i)(1));
          ``(5) entities receiving a grant under chapter 1 of subpart 2 
        of part A of title IV; and
          ``(6) consortia of any of the entities described in 
        paragraphs (1) through (5).
  ``(c) Innovation Grants.--
          ``(1) Minimum award.--A grant awarded under subsection (a) 
        shall be not less than $1,000,000.
          ``(2) Grants uses.--The Secretary's authority to award grants 
        under subsection (a) includes--
                  ``(A) the authority to award to an eligible entity a 
                grant in an amount equal to all or part of the amount 
                of funds received by such entity from philanthropic 
                organizations (as such term is defined in section 
                781(i)(1)) to conduct innovative programs that advance 
                knowledge about, and adoption of, policies and 
                practices that increase the number of individuals with 
                postsecondary degrees or certificates; and
                  ``(B) the authority to award an eligible entity a 
                grant to develop 2-year programs that provide 
                supplemental grant or loan benefits to students that--
                          ``(i) are designed to improve student 
                        outcomes, including degree completion, 
                        graduation without student loan debt, and post-
                        completion employment;
                          ``(ii) are in addition to the student 
                        financial aid available under title IV of this 
                        Act; and
                          ``(iii) do not result in the reduction of the 
                        amount of that aid or any other student 
                        financial aid for which a student is otherwise 
                        eligible under Federal law.
          ``(3) Application.--To be eligible to receive a grant under 
        subsection (a), an eligible entity shall submit an application 
        at such time, in such manner, and containing such information 
        as the Secretary shall require.
          ``(4) Priorities.--In awarding grants under subsection (a), 
        the Secretary shall give priority to applications that--
                  ``(A) are from an eligible entity with demonstrated 
                experience in serving students from groups that are 
                underrepresented in postsecondary education, including 
                institutions of higher education that are eligible for 
                assistance under title III or V, or are from a 
                consortium that includes an eligible entity with such 
                experience;
                  ``(B) are from an eligible entity that is a public 
                institution of higher education that does not 
                predominantly provide an educational program for which 
                it awards a bachelor's degree (or an equivalent 
                degree), or from a consortium that includes at least 
                one such institution;
                  ``(C) include activities to increase degree or 
                certificate completion in the fields of science, 
                technology, engineering, and mathematics, including 
                preparation for, or entry into, postbaccaluareate 
                study, especially for women and other groups of 
                students who are underrepresented in such fields;
                  ``(D) are from an eligible entity that is a 
                philanthropic organization with the primary purpose of 
                providing scholarships and support services to students 
                from groups that are underrepresented in postsecondary 
                education, or are from a consortium that includes such 
                an organization; or
                  ``(E) are from an eligible entity that encourages 
                partnerships between institutions of higher education 
                with high degree-completion rates and institutions of 
                higher education with low degree-completion rates from 
                the same category of institutions described in section 
                132(d) to facilitate the sharing of information 
                relating to, and the implementation of, best practices 
                for increasing postsecondary completion.
          ``(5) Technical assistance.--The Secretary may reserve up to 
        $5,000,000 per year to award grants and contracts to provide 
        technical assistance to eligible entities receiving a grant 
        under subsection (a), including technical assistance on the 
        evaluation conducted in accordance with section 784 and 
        establishing networks of eligible entities receiving grants 
        under such subsection.
  ``(d) Reports.--
          ``(1) Annual reports by entities.--Each eligible entity 
        receiving a grant under subsection (a) shall submit to the 
        Secretary an annual report on--
                  ``(A) the effectiveness of the program carried out 
                with such grant in increasing postsecondary completion, 
                as determined by measurable progress in achieving the 
                goals of the program, as described in the application 
                for such grant; and
                  ``(B) any other information or assessments the 
                Secretary may require.
          ``(2) Annual report to congress.--The Secretary shall submit 
        to the authorizing committees an annual report on grants 
        awarded under subsection (a), including--
                  ``(A) the amount awarded to each eligible entity 
                receiving a grant under such subsection; and
                  ``(B) a description of the activities conducted by 
                each such eligible entity.

``SEC. 784. EVALUATION.

  ``From the amount appropriated under section 781(a)(2)(D), the 
Director of the Institute of Education Sciences shall evaluate the 
programs funded under this part. Not later than January 30, 2016, the 
Director shall issue a final report on such evaluation to the 
authorizing committees and the Secretary, and shall make such report 
available to the public.

``SEC. 785. VETERANS RESOURCE OFFICER GRANTS.

  ``(a) Program Authorized.--The Secretary shall award grants, on a 
competitive basis, to eligible institutions of higher education to hire 
a Veterans Resource Officer to increase the college completion rates 
for veterans enrolled at such institutions.
  ``(b) Definitions.--In this section:
          ``(1) Eligible institution of higher education.--The term 
        `eligible institution of higher education' means an institution 
        of higher education that has an enrollment of at least 100 
        full-time equivalent students who are veterans.
          ``(2) Full-time equivalent students.--The term `full-time 
        equivalent students' has the meaning given such term in section 
        312(e).
          ``(3) Veteran.--The term `veteran' has the meaning give such 
        term in section 480(c).
  ``(c) Application.--To be eligible to receive a grant under this 
section, an eligible institution of higher education shall submit an 
application at such time, in such manner, and containing such 
information as the Secretary shall require.
  ``(d) Uses of Funds.--
          ``(1) In general.--An eligible institution of higher 
        education receiving a grant under this section shall use such 
        grant to hire 1 or 2 Veterans Resource Officers (in the case of 
        an institution that has an enrollment of at least 200 full-time 
        equivalent students who are veterans) to serve in the office of 
        campus programs, or a similar office, at such institution and 
        carry out the activities described in paragraph (2).
          ``(2) Activities.--A Veterans Resource Officer shall carry 
        out activities at an eligible institution of higher education 
        to help increase the completion rates for veterans enrolled at 
        such institution, which shall include the following activities:
                  ``(A) Serving as a link between student veterans and 
                the staff of the institution.
                  ``(B) Serving as a link between student veterans and 
                local facilities of the Department of Veterans Affairs.
                  ``(C) Organizing and advising student veterans 
                organization.
                  ``(D) Organizing veterans oriented group functions 
                and events.
                  ``(E) Maintaining newsletters and listserves to 
                distribute news and information to all student 
                veterans.
                  ``(F) Organizing new student veterans campus 
                orientation.
                  ``(G) Ensuring that the Department of Veterans 
                Affairs certifying official at such institution is 
                properly trained.
          ``(3) Priority.--To the extent practicable, each institution 
        described in paragraph (1) shall give priority to hiring a 
        veteran to serve as a Veterans Resource Officer.
  ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary 
for fiscal year 2010 and each succeeding fiscal year.''.

SEC. 103. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES 
                    AND OTHER MINORITY-SERVING INSTITUTIONS.

  Section 371 (20 U.S.C. 1067q) is amended--
          (1) in subsection (a)--
                  (A) in paragraph (2), by striking ``section 502'' and 
                inserting ``section 502(a)'';;
                  (B) in paragraph (3), by striking ``section 316'' and 
                inserting ``section 316(b)'';
                  (C) in paragraph (5), by striking ``in subsection 
                (c)'' and inserting ``in section 318(b)'';
                  (D) in paragraph (6), by striking ``in subsection 
                (c)'' and inserting ``in section 320(b)''; and
                  (E) in paragraph (7), by striking ``in subsection 
                (c)'' and inserting ``in section 319(b)'';
          (2) in subsection (b)--
                  (A) in paragraph (1)(A), by striking ``$255,000,000'' 
                and all that follows and inserting ``$255,000,000 for 
                each of the fiscal years 2008 through 2019.''; and
                  (B) by amending paragraph (2)(B) to read as follows:
                  ``(B) Stem and articulation programs.--From the 
                amount made available for allocation under this 
                subparagraph by subparagraph (A)(i) for any fiscal 
                year--
                          ``(i) 90 percent shall be available for 
                        Hispanic-serving institutions for activities 
                        described in sections 503 and 513, with a 
                        priority given to applications that propose--
                                  ``(I) to increase the number of 
                                Hispanic and other low-income students 
                                attaining degrees in the fields of 
                                science, technology, engineering, or 
                                mathematics; and
                                  ``(II) to develop model transfer and 
                                articulation agreements between 2-year 
                                Hispanic-serving institutions and 4-
                                year institutions in such fields; and
                          ``(ii) 10 percent shall be available for 
                        grants under section 355.'';
                  (C) in paragraph (2)(C)(ii), by striking ``and shall 
                be available for a competitive'' and all that follows 
                and inserting ``and shall be made available as grants 
                under section 318 and allotted among such institutions 
                under section 318(e), treating such amount, plus the 
                amount appropriated for such fiscal year in a regular 
                or supplemental appropriation Act to carry out section 
                318, as the amount appropriated to carry out section 
                318 for purposes of allotments under section 318(e)''; 
                and
                  (D) in paragraph (2)(D)--
                          (i) in clause (iii), by striking ``for 
                        activities described in section 311(c)'' and 
                        inserting ``and shall be made available as 
                        grants under section 320, treating such 
                        $5,000,000 as part of the amount appropriated 
                        for such fiscal year in a regular or 
                        supplemental appropriation Act to carry out 
                        such section and using such $5,000,000 for 
                        purposes described in subsection (c) of such 
                        section''; and
                          (ii) in clause (iv), by striking ``described 
                        in subsection (a)(7)--'' and all that follows 
                        and inserting ``and shall be made available as 
                        grants under section 319, treating such 
                        $5,000,000 as part of the amount appropriated 
                        for such fiscal year in a regular or 
                        supplemental appropriation Act to carry out 
                        such section and using such $5,000,000 for 
                        purposes described in subsection (c) of such 
                        section''; and
          (3) by striking subsection (c).

SEC. 104. INVESTMENT IN COOPERATIVE EDUCATION.

  There are authorized to be appropriated, and there are appropriated, 
to carry out part N of title VIII of the Higher Education Act of 1965 
(20 U.S.C. 1161n) (in addition to any other amounts appropriated to 
carry out such part and out of any money in the Treasury not otherwise 
appropriated), $10,000,000 for fiscal year 2010.

SEC. 105. LOAN FORGIVENESS FOR SERVICEMEMBERS ACTIVATED FOR DUTY.

  (a) In General.--Section 484B(b)(2) (20 U.S.C. 1091b(b)(2)) is 
amended by adding at the end the following:
                  ``(F) Tuition relief for students called to military 
                service.--
                          ``(i) Waiver of repayment by students called 
                        to military service.--In addition to the 
                        waivers authorized by subparagraphs (D) and 
                        (E), the Secretary shall waive the amounts that 
                        students are required to return under this 
                        section if the withdrawals on which the returns 
                        are based are withdrawals necessitated by 
                        reason of service in the uniformed services.
                          ``(ii) Loan forgiveness authorized.--Whenever 
                        a student's withdrawal from an institution of 
                        higher education is necessitated by reason of 
                        service in the uniformed services, the 
                        Secretary shall, with respect to the payment 
                        period or period of enrollment for which such 
                        student did not receive academic credit as a 
                        result of such withdrawal, carry out a 
                        program--
                                  ``(I) through the holder of the loan, 
                                to assume the obligation to repay--
                                          ``(aa) the outstanding 
                                        principle and accrued interest 
                                        on any loan assistance awarded 
                                        to the student under part B 
                                        (including to a parent on 
                                        behalf of the student under 
                                        section 428B) for such payment 
                                        period or period of enrollment; 
                                        minus
                                          ``(bb) any amount of such 
                                        loan assistance returned by the 
                                        institution in accordance with 
                                        paragraph (1) of this 
                                        subsection for such payment 
                                        period or period of enrollment; 
                                        and
                                  ``(II) to cancel--
                                          ``(aa) the outstanding 
                                        principle and accrued interest 
                                        on the loan assistance awarded 
                                        to the student under part D or 
                                        E (including a Federal Direct 
                                        PLUS loan awarded to a parent 
                                        on behalf of the student) for 
                                        such payment period or period 
                                        of enrollment; minus
                                          ``(bb) any amount of such 
                                        loan assistance returned by the 
                                        institution in accordance with 
                                        paragraph (1) of this 
                                        subsection for such payment 
                                        period or period of enrollment.
                          ``(iii) Reimbursement for cancellation of 
                        perkins loans.--The Secretary shall pay to each 
                        institution for each fiscal year an amount 
                        equal to the aggregate of the amounts of 
                        Federal Perkins loans in such institutions's 
                        student loan fund which are cancelled pursuant 
                        to clause (iii)(II) for such fiscal year, minus 
                        an amount equal to the aggregate of the amounts 
                        of any such loans so canceled which were made 
                        from Federal capital contributions to its 
                        student loan fund provided by the Secretary 
                        under section 468. None of the funds 
                        appropriated pursuant to section 461(b) shall 
                        be available for payments pursuant to this 
                        paragraph. To the extent feasible, the 
                        Secretary shall pay the amounts for which any 
                        institution qualifies under this paragraph not 
                        later than 3 months after the institution files 
                        an institutional application for campus-based 
                        funds.
                          ``(iv) Loan eligibility and limits for 
                        students.--Any amounts that are returned by an 
                        institution in accordance with paragraph (1), 
                        or forgiven or waived by the Secretary under 
                        this subparagraph, with respect to a payment 
                        period or period of enrollment for which a 
                        student did not receive academic credit as a 
                        result of withdrawal necessitated by reason of 
                        service in the uniformed services, shall not be 
                        included in the calculation of the student's 
                        annual or aggregate loan limits for assistance 
                        under this title, or otherwise affect the 
                        student's eligibility for grants or loans under 
                        this title.
                          ``(v) Definition.--In this subparagraph, the 
                        term `service in the uniformed services' has 
                        the meaning given such term in section 
                        484C(a).''.
  (b) Effective Date.--
          (1) In general.--The amendments made by this section shall 
        take effect for periods of service in the uniformed services 
        beginning after the date of the enactment of this Act.
          (2) Definition.--In this paragraph, the term ``period of 
        service in the uniformed services'' means the period beginning 
        30 days prior to the date a student is required to report to 
        service in the uniformed services (as defined in section 
        484C(a) of the Higher Education Act of 1965 (20 U.S.C. 
        1091c(a)) and ending when such student returns from such 
        service.

SEC. 106. VETERANS EDUCATIONAL EQUITY SUPPLEMENTAL GRANT PROGRAM.

  (a) Veterans Educational Equity Supplemental Grant Program.--Subpart 
1 of part A of title IV (20 U.S.C. 1070a et seq.) is amended by adding 
at the end the following:

``SEC. 401B. VETERANS EDUCATIONAL EQUITY SUPPLEMENTAL GRANT PROGRAM.

  ``(a) Veterans Educational Equity Supplemental Grants Authorized.--
The Secretary shall award a grant to each eligible student, in an 
amount determined in accordance with subsection (c), to assist such 
student with paying the cost of tuition incurred by the student for a 
program of education at an institution of higher education.
  ``(b) Definitions.--In this section--
          ``(1) Eligible student.--The term `eligible student' means a 
        student who--
                  ``(A) is a covered individual, as such term is 
                defined in section 3311(b) of title 38, United States 
                Code;
                  ``(B) is enrolled at an institution of higher 
                education that--
                          ``(i) is not a public institution of higher 
                        education; and
                          ``(ii) is located in a State with a zero, or 
                        very low, maximum tuition charge per credit 
                        hour compared to the maximum tuition charge per 
                        credit hour in all other States, as determined 
                        by the Secretary of Veterans Affairs (based on 
                        the determinations of maximum tuition charged 
                        per credit hour in each State for the purposes 
                        of chapter 33 of title 38, United States Code); 
                        and
                  ``(C) is eligible for educational assistance for an 
                academic year, and will receive an amount of such 
                assistance for such year for fees charged the 
                individual that is less than the maximum amount of such 
                assistance available for fees charged for such year in 
                such State.
          ``(2) Educational assistance.--The term `educational 
        assistance' means the amount of educational assistance from the 
        Secretary of Veterans Affairs an eligible student receives or 
        will receive under section 3313(c)(1)(A) of title 38, United 
        States Code, or a similar amount of such assistance under 
        paragraphs (2) through (7) of such section 3313(c).
  ``(c) Grant Amount.--A grant to an eligible student under this 
section be equal to an amount that is--
          ``(1) the maximum amount of educational assistance for fees 
        charged that the eligible student would receive, in accordance 
        with section 3313(c) of title 38, United States Code, if such 
        student attended the public institution of higher education in 
        the State in which the eligible student is enrolled that has 
        the highest fees charged to an individual for a year in such 
        State (as determined by the Secretary of Veterans Affairs for 
        the purposes of chapter 33 of such title 38), less
          ``(2) the educational assistance the eligible student will 
        receive, in accordance with such section, for fees charged to 
        the student for such year at the institution of higher 
        education at which the student is enrolled.
  ``(d) Uses of Funds.--An eligible student who receives a grant under 
this section shall use such grant to pay tuition incurred by the 
student for a program of education at an institution of higher 
education.
  ``(e) Notification.--The Secretary, in coordination with Secretary of 
Veterans Affairs, shall establish a system of notification to ensure 
the timely delivery to each eligible student of--
          ``(1) educational assistance received by the student; and
          ``(2) grants awarded to the student under this section.
  ``(f) Authorization and Appropriation.--There are authorized to be 
appropriated, and there are appropriated, such sums as may be necessary 
to carry out this section (in addition to any other amounts 
appropriated to carry out this section and out of any money in the 
Treasury not otherwise appropriated).''.
  (b) Conforming Amendment.--The header for subpart 1 of part A of 
title IV (20 U.S.C. 1070a et seq.) is amended by inserting ``; Veterans 
Educational Equity Supplemental Grants'' after ``Pell Grants''.

         Subtitle B--Student Financial Aid Form Simplification

SEC. 121. GENERAL EFFECTIVE DATE.

  Except as otherwise provided in this subtitle, amendments made by 
this subtitle shall be effective with respect to determinations of need 
for assistance under title IV of the Higher Education Act of 1965 (20 
U.S.C. 1070 et seq.) for award years beginning on or after July 1, 
2011.

SEC. 122. TREATMENT OF ASSETS IN NEED ANALYSIS.

  (a) Amount of Need.--Section 471 (20 U.S.C. 1087kk) is amended--
          (1) by striking ``Except'' and inserting the following:
  ``(a) In General.--Except'';
          (2) by inserting ``and subject to subsection (b)'' after 
        ``therein''; and
          (3) by adding at the end the following:
  ``(b) Asset Cap for Need-based Aid.--Notwithstanding any other 
provision of this title, a student shall not be eligible to receive a 
Federal Pell Grant, a Federal Direct Stafford Loan, or work assistance 
under this title if--
          ``(1) in the case of a dependent student, the combined net 
        assets of the student and the student's parents are equal to an 
        amount greater than $150,000 (or a successor amount prescribed 
        by the Secretary under section 478(c)); or
          ``(2) in the case of an independent student, the net assets 
        of the student (and the student's spouse, if applicable) are 
        equal to an amount greater than $150,000 (or a successor amount 
        prescribed by the Secretary under section 478(c)).''.
  (b) Data Elements.--Section 474(b) (20 U.S.C. 1087nn(b)) is amended--
          (1) by striking paragraph (4); and
          (2) by redesignating paragraphs (5), (6), and (7) as 
        paragraphs (4), (5), and (6), respectively.
  (c) Dependent Students.--Section 475 (20 U.S.C. 1087oo) is amended--
          (1) in subsection (a)--
                  (A) in paragraph (1)--
                          (i) by striking ``adjusted''; and
                          (ii) by inserting ``and'' after the 
                        semicolon;
                  (B) in paragraph (2), by striking ``; and'' and 
                inserting a period; and
                  (C) by striking paragraph (3);
          (2) in subsection (b)--
                  (A) in the header, by striking ``Adjusted'';
                  (B) in the matter preceding paragraph (1), by 
                striking ``adjusted'';
                  (C) by striking paragraph (1);
                  (D) by redesignating paragraphs (2) and (3) as 
                paragraphs (1) and (2), respectively;
                  (E) in paragraph (1) (as redesignated by subparagraph 
                (D) of this paragraph), by striking ``adjusted''; and
                  (F) in paragraph (2) (as redesignated by subparagraph 
                (D) of this paragraph), by striking ``paragraph (2)'' 
                and inserting ``paragraph (1)'';
          (3) by repealing subsection (d);
          (4) in subsection (e)--
                  (A) by striking ``The adjusted available'' and 
                inserting ``The available'';
                  (B) by striking ``to as `AAI')'' and inserting ``to 
                as `AI')'';
                  (C) by striking ``From Adjusted Available Income 
                (AAI)'' and inserting ``From Available Income (AI)''; 
                and
                  (D) in the table--
                          (i) by striking ``If AAI'' and inserting ``If 
                        AI''; and
                          (ii) by striking ``of AAI'' each place it 
                        appears and inserting ``of AI'';
          (5) in subsection (f)--
                  (A) by striking ``and assets'' each place it appears;
                  (B) in paragraph (2)(B), by striking ``or assets''; 
                and
                  (C) in paragraph (3)--
                          (i) by striking ``are taken into'' and 
                        inserting ``is taken into''; and
                          (ii) by striking ``adjusted'';
          (6) in subsection (g)(6), by striking ``exceeds the sum of'' 
        and all that follows and inserting ``exceeds the parents' total 
        income (as defined in section 480)'';
          (7) by repealing subsection (h); and
          (8) in subsection (i), by striking ``adjusted'' each place it 
        appears.
  (d) Family Contribution for Independent Students Without Dependents 
Other Than a Spouse.--Section 476 (20 U.S.C. 1087pp) is amended--
          (1) in subsection (a)--
                  (A) by striking paragraph (1);
                  (B) by redesignating paragraphs (2) and (3) as 
                paragraphs (1) and (2), respectively;
                  (C) in paragraph (1) (as redesignated by subparagraph 
                (B)), by striking ``the sum resulting under paragraph 
                (1)'' and inserting ``the family's contribution from 
                available income (determined in accordance with 
                subsection (b))''; and
                  (D) in paragraph (2)(A) (as redesignated by 
                subparagraph (B)), by striking ``paragraph (2)'' and 
                inserting ``paragraph (1)'';
          (2) by repealing subsection (c); and
          (3) in subsection (d)--
                  (A) by striking ``and assets''; and
                  (B) by striking ``or assets''.
  (e) Family Contribution for Independent Students With Dependents 
Other Than a Spouse.--Section 477 (20 U.S.C. 1087qq) is amended--
          (1) in subsection (a)--
                  (A) by striking paragraph (1);
                  (B) by redesignating paragraphs (2), (3), and (4) as 
                paragraphs (1), (2), and (3), respectively;
                  (C) in paragraph (1) (as redesignated by subparagraph 
                (B)), by striking ``such adjusted available income'' 
                and inserting ``the family's available income 
                (determined in accordance with subsection (b))'';
                  (D) in paragraph (2) (as redesignated by subparagraph 
                (B)), by striking ``paragraph (2)'' and inserting 
                ``paragraph (1)''; and
                  (E) in paragraph (3)(A) (as redesignated by 
                subparagraph (B)), by striking ``paragraph (3)'' and 
                inserting ``paragraph (2)'';
          (2) by repealing subsection (c); and
          (3) in subsection (d)--
                  (A) by striking ``The adjusted available'' and 
                inserting ``The available'';
                  (B) by striking ``to as `AAI')'' and inserting ``to 
                as `AI')'';
                  (C) by striking ``From Adjusted Available Income 
                (AAI)'' and inserting ``From Available Income (AI)''; 
                and
                  (D) in the table--
                          (i) by striking ``If AAI'' and inserting ``If 
                        AI''; and
                          (ii) by striking ``of AAI'' each place it 
                        appears and inserting ``of AI''; and
                  (E) in subsection (e)--
                          (i) by striking ``and assets''; and
                          (ii) by striking ``or assets''.
  (f) Regulations; Updated Tables.--Section 478 (20 U.S.C. 1087rr) is 
amended--
          (1) in subsection (a), by inserting ``or amounts, as the case 
        may be,'' after ``tables'' each place the term appears;
          (2) by amending subsection (c) to read as follows:
  ``(c) Asset Cap for Need-based Aid.--For each award year after award 
year 2011-2012, the Secretary shall publish in the Federal Register a 
revised net asset cap for the purposes of section 471(b). Such revised 
cap shall be determined by increasing the dollar amount in such section 
by a percentage equal to the estimated percentage change in the 
Consumer Price Index (as determined by the Secretary) between December 
2010 and the December preceding the beginning of such award year, and 
rounding the result to the nearest $5.'';
          (3) by repealing subsection (d); and
          (4) in subsection (e), by striking ``adjusted'' both places 
        it appears.

SEC. 123. CHANGES TO TOTAL INCOME; AID ELIGIBILITY.

  (a) Definition of Untaxed Income and Benefits.--Section 480(b)(1) (20 
U.S.C. 1087vv(b)(1)), as amended by the Higher Education Opportunity 
Act (Public Law 110-315), is amended--
          (1) by striking subparagraphs (A), (B), (C), (E), (F), and 
        (I);
          (2) by redesignating subparagraphs (D), (G), and (H) as 
        subparagraphs (A), (B), and (C), respectively;
          (3) in subparagraph (B) (as redesignated by paragraph (2)), 
        by inserting ``and'' after the semicolon; and
          (4) in subparagraph (C) (as redesignated by paragraph (2)), 
        by striking ``; and'' and inserting a period.
  (b) Definition of Assets.--Section 480(f)(2) (20 U.S.C. 1087vv(f)(2)) 
is amended--
          (1) by striking ``or'' at the end of subparagraph (B);
          (2) by striking the period at the end of subparagraph (C) and 
        inserting ``; or''; and
          (3) by adding at the end the following:
                  ``(D) an employee pension benefit plan (as defined in 
                section 3(2) of the Employee Retirement Income Security 
                Act of 1974 (29 U.S.C. 1002(2))).''.
  (c) Financial Administrator Discretion.--Section 479A(b) (20 U.S.C. 
1087tt) is amended in the subsection heading, by striking ``to 
Assets''.
  (d) Suspension of Eligibility for Drug-related Offenses.--Section 
484(r)(1) (20 U.S.C. 1091(r)(1)) is amended to read as follows:
          ``(1) In general.--A student who is convicted of any offense 
        under any Federal or State law involving the sale of a 
        controlled substance for conduct that occurred during a period 
        of enrollment for which the student was receiving any grant, 
        loan, or work assistance under this title shall not be eligible 
        to receive any grant, loan, or work assistance under this title 
        from the date of that conviction for the period of time 
        specified in the following subparagraphs:
                  ``(A) For a first offense, the period of 
                ineligibility shall be 2 years.
                  ``(B) For a second offense, the period of 
                ineligibility shall be indefinite.''.

                     TITLE II--STUDENT LOAN REFORM

                    Subtitle A--Stafford Loan Reform

SEC. 201. FEDERAL FAMILY EDUCATION LOAN APPROPRIATIONS.

  Section 421 (20 U.S.C. 1071) is amended--
          (1) in subsection (b), in the matter following paragraph (6), 
        by inserting ``, except that no sums may be expended after June 
        30, 2010, with respect to loans under this part for which the 
        first disbursement would be made after such date'' after 
        ``expended''; and
          (2) by adding at the end the following new subsection:
  ``(d) Termination of Authority To Make or Insure New Loans.--
Notwithstanding paragraphs (1) through (6) of subsection (b) or any 
other provision of law--
          ``(1) no new loans (including consolidation loans) may be 
        made or insured under this part after June 30, 2010; and
          ``(2) no funds are authorized to be appropriated, or may be 
        expended, under this Act or any other Act to make or insure 
        loans under this part (including consolidation loans) for which 
        the first disbursement would be made after June 30, 2010,
except as expressly authorized by an Act of Congress enacted after the 
date of enactment of Student Aid and Fiscal Responsibility Act of 
2009.''.

SEC. 202. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM.

  Section 424(a) (20 U.S.C. 1074(a)) is amended by striking ``September 
30, 1976,'' and all that follows and inserting ``September 30, 1976, 
for each of the succeeding fiscal years ending prior to October 1, 
2009, and for the period from October 1, 2009, to June 30, 2010, for 
loans first disbursed on or before June 30, 2010.''.

SEC. 203. APPLICABLE INTEREST RATES.

  Section 427A(l) (20 U.S.C. 1077a(l)) is amended--
          (1) in paragraph (1), by inserting ``and before July 1, 
        2010,'' after ``July 1, 2006,'';
          (2) in paragraph (2), by inserting ``and before July 1, 
        2010,'' after ``July 1, 2006,'';
          (3) in paragraph (3), by inserting ``and that was disbursed 
        before July 1, 2010,'' after ``July 1, 2006,''; and
          (4) in paragraph (4)--
                  (A) in the matter preceding subparagraph (A), by 
                striking ``July 1, 2012'' and inserting ``July 1, 
                2010''; and
                  (B) by repealing subparagraphs (D) and (E).

SEC. 204. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

  (a) Higher Education Act of 1965.--Section 428 (20 U.S.C. 1078) is 
amended--
          (1) in subsection (a)--
                  (A) in paragraph (1), in the matter preceding 
                subparagraph (A), by inserting ``for which the first 
                disbursement is made before July 1, 2010, and'' after 
                ``eligible institution''; and
                  (B) in paragraph (5), by striking ``September 30, 
                2014,'' and all that follows through the period and 
                inserting ``June 30, 2010.'';
          (2) in subsection (b)(1)--
                  (A) in subparagraph (G)(ii), by inserting ``and 
                before July 1, 2010,'' after ``July 1, 2006,''; and
                  (B) in subparagraph (H)(ii), by inserting ``and that 
                are first disbursed before July 1, 2010,'' after ``July 
                1, 2006,'';
          (3) in subsection (f)(1)(A)(ii)--
                  (A) by striking ``during fiscal years beginning''; 
                and
                  (B) by inserting ``and first disbursed before July 1, 
                2010,'' after ``October 1, 2003,''; and
          (4) in subsection (j)(1), by inserting ``, before July 1, 
        2010,'' after ``section 435(d)(1)(D) of this Act shall''.
  (b) College Cost Reduction and Access Act.--Section 303 of the 
College Cost Reduction and Access Act (Public Law 110-84) is repealed.

SEC. 205. FEDERAL PLUS LOANS.

  Section 428B(a)(1) (20 U.S.C. 1078-2(a)(1)) is amended by striking 
``A graduate'' and inserting ``Prior to July 1, 2010, a graduate''.

SEC. 206. FEDERAL CONSOLIDATION LOAN.

  (a) Amendments.--Section 428C (20 U.S.C. 1078-3) is amended--
          (1) in subsection (a)--
                  (A) by amending paragraph (3)(B)(i)(V) to read as 
                follows:
                          ``(V) an individual who has a consolidation 
                        loan under this section and does not have a 
                        consolidation loan under section 455(g) may 
                        obtain a subsequent consolidation loan under 
                        section 455(g).''; and
                  (B) in paragraph (4)(A), by inserting ``, and first 
                disbursed before July 1, 2010'' after ``under this 
                part'';
          (2) in subsection (b)--
                  (A) in paragraph (1)(E), by inserting before the 
                semicolon ``, and before July 1, 2010'' and
                  (B) in paragraph (5), by striking ``In the event 
                that'' and inserting ``If, before July 1, 2010,'';
          (3) in subsection (c)(1)--
                  (A) in subparagraph (A)(ii), by inserting ``and that 
                is disbursed before July 1, 2010,'' after ``2006,''; 
                and
                  (B) in subparagraph (C), by inserting ``and first 
                disbursed before July 1, 2010,'' after ``1994,''; and
          (4) in subsection (e), by striking ``September 30, 2014.'' 
        and inserting ``June 30, 2010. No loan may be made under this 
        section for which the first disbursement would be on or after 
        July 1, 2010.''.
  (b) Effective Date.--The amendments made by subsection (a)(1)(A) 
shall be effective at the close of June 30, 2010.

SEC. 207. UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE-INCOME BORROWERS.

  Section 428H (20 U.S.C. 1078-8) is amended--
          (1) in subsection (a), by inserting ``that are first 
        disbursed before July 1, 2010,'' after ``under this part'';
          (2) in subsection (b)--
                  (A) by striking ``Any student'' and inserting ``Prior 
                to July 1, 2010, any student''; and
                  (B) by inserting ``for which the first disbursement 
                is made before such date'' after ``unsubsidized Federal 
                Stafford Loan''; and
          (3) in subsection (h), by inserting ``and that are first 
        disbursed before July 1, 2010,'' after ``July 1, 2006,''.

SEC. 208. LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE ATTORNEYS.

  Section 428L(b)(2)(A) (20 U.S.C. 1078-12(b)(2)(A)) is amended--
          (1) by amending clause (i) to read as follows:
                          ``(i) subject to clause (ii)--
                                  ``(I) a loan made, insured, or 
                                guaranteed under this part, and that is 
                                first disbursed before July 1, 2010; or
                                  ``(II) a loan made under part D or 
                                part E; and''; and
          (2) in clause (ii)--
                  (A) by striking ``428C or 455(g)'' and inserting 
                ``428C, that is disbursed before July 1, 2010, or 
                section 455(g)''; and
                  (B) in subclause (II), by inserting ``for which the 
                first disbursement is made before July 1, 2010,'' after 
                ``or 428H''.

SEC. 209. SPECIAL ALLOWANCES.

  Section 438 (20 U.S.C. 1087-1) is amended--
          (1) in subsection (b)(2)(I)--
                  (A) in the header, by inserting ``, and before july 
                1, 2010'' after ``2000'';
                  (B) in clause (i), by inserting ``and before July 1, 
                2010,'' after ``2000,'';
                  (C) in clause (ii)(II), by inserting ``and before 
                July 1, 2010,'' after ``2006,'';
                  (D) in clause (iii), by inserting ``and before July 
                1, 2010,'' after ``2000,'';
                  (E) in clause (iv), by inserting ``and that is 
                disbursed before July 1, 2010,'' after ``2000,'';
                  (F) in clause (v)(I), by inserting ``and before July 
                1, 2010,'' after ``2006,''; and
                  (G) in clause (vi)--
                          (i) in the header, by inserting ``, and 
                        before july 1, 2010'' after ``2007''; and
                          (ii) in the matter preceding subclause (I), 
                        by inserting ``and before July 1, 2010,'' after 
                        ``2007,'';
          (2) in subsection (c)--
                  (A) in paragraph (2)(B)--
                          (i) in clause (iii), by inserting ``and'' 
                        after the semicolon;
                          (ii) in clause (iv), by striking ``; and'' 
                        and inserting a period; and
                          (iii) by striking clause (v); and
                  (B) in paragraph (6), by inserting ``and first 
                disbursed before July 1, 2010,'' after ``1992,''; and
          (3) in subsection (d)(2)(B), by inserting ``, and before July 
        1, 2010'' after ``2007''.

SEC. 210. REVISED SPECIAL ALLOWANCE CALCULATION.

  (a) Revised Calculation Rule.--Section 438(b)(2)(I) of the Higher 
Education Act of 1965 (20 U.S.C. 1087-1(b)(2)(I)) is amended by adding 
at the end the following new clause:
                          ``(vii) Revised calculation rule to reflect 
                        financial market conditions.--
                                  ``(I) Calculation based on libor.--
                                For the calendar quarter beginning on 
                                October 1, 2009, and each subsequent 
                                calendar quarter, in computing the 
                                special allowance paid pursuant to this 
                                subsection with respect to loans 
                                described in subclause (II), clause 
                                (i)(I) of this subparagraph shall be 
                                applied by substituting `of the 1-month 
                                London Inter Bank Offered Rate (LIBOR) 
                                for United States dollars in effect for 
                                each of the days in such quarter as 
                                compiled and released by the British 
                                Bankers Association' for `of the quotes 
                                of the 3-month commercial paper 
                                (financial) rates in effect for each of 
                                the days in such quarter as reported by 
                                the Federal Reserve in Publication H-15 
                                (or its successor) for such 3-month 
                                period'.
                                  ``(II) Loans eligible for libor-based 
                                calculation.--The special allowance 
                                paid pursuant to this subsection shall 
                                be calculated as described in subclause 
                                (I) with respect to special allowance 
                                payments for the 3-month period ending 
                                December 31, 2009, and each succeeding 
                                3-month period, on loans for which the 
                                first disbursement is made--
                                          ``(aa) on or after the date 
                                        of enactment of the Student Aid 
                                        and Fiscal Responsibility Act 
                                        of 2009, and before July 1, 
                                        2010; and
                                          ``(bb) on or after January 1, 
                                        2000, and before the date of 
                                        enactment of the Student Aid 
                                        and Fiscal Responsibility Act 
                                        of 2009, if, not later than the 
                                        last day of the second full 
                                        fiscal quarter after the date 
                                        of enactment of such Act, the 
                                        holder of the loan 
                                        affirmatively and permanently 
                                        waives all contractual, 
                                        statutory or other legal rights 
                                        to a special allowance paid 
                                        pursuant to this subsection 
                                        that is calculated using the 
                                        formula in effect at the time 
                                        the loans were first disbursed.
                                  ``(III) Terms of waiver.--A waiver 
                                pursuant to subclause (II)(bb) shall--
                                          ``(aa) be applicable to all 
                                        loans described in such 
                                        subclause that are held under 
                                        any lender identification 
                                        number associated with the 
                                        holder (pursuant to section 
                                        487B); and
                                          ``(bb) apply with respect to 
                                        all future calculations of the 
                                        special allowance on loans 
                                        described in such subclause 
                                        that are held on the date of 
                                        such waiver or that are 
                                        acquired by the holder after 
                                        such date.
                                  ``(IV) Participant's yield.--For the 
                                calendar quarter beginning on October 
                                1, 2009, and each subsequent calendar 
                                quarter, the Secretary's participant 
                                yield in any loan for which the first 
                                disbursement is made on or after 
                                January 1, 2000, and before October 1, 
                                2009, and that is held by a lender that 
                                has sold any participation interest in 
                                such loan to the Secretary shall be 
                                determined by using the LIBOR-based 
                                rate described in subclause (I) as the 
                                substitute rate (for the commercial 
                                paper rate) referred to in the 
                                participation agreement between the 
                                Secretary and such lender.'';
  (b) Conforming Amendment.--Section 438(b)(2)(I) (20 U.S.C. 1087-
1(b)(2)(I)) is further amended--
          (1) in clause (i)(II), by striking ``such average bond 
        equivalent rate'' and inserting ``the rate determined under 
        subclause (I)''; and
          (2) in clause (v)(III) by striking ``(iv), and (vi)'' and 
        inserting ``(iv), (vi), and (vii)''.

SEC. 211. ORIGINATION OF DIRECT LOANS AT INSTITUTIONS LOCATED OUTSIDE 
                    THE UNITED STATES.

  (a) Loans for Students Attending Institutions Located Outside the 
United States.--Section 452 (20 U.S.C. 1087b) is amended by adding at 
the end the following:
  ``(d) Institutions Located Outside the United States.--Loan funds for 
students (and parents of students) attending institutions located 
outside the United States shall be disbursed through a financial 
institution located in the United States and designated by the 
Secretary to serve as the agent of such institutions with respect to 
the receipt of the disbursements of such loan funds and the transfer of 
such funds to such institutions. To be eligible to receive funds under 
this part, an otherwise eligible institution located outside the United 
States shall make arrangements, subject to regulations by the 
Secretary, with the agent designated by the Secretary under this 
subsection to receive funds under this part.''.
  (b) Conforming Amendments.--
          (1) Amendments.--Section 102 (20 U.S.C. 1002), as amended by 
        section 102 of the Higher Education Opportunity Act (Public Law 
        110-315) and section 101 of Public Law 111-39, is amended--
                  (A) by striking ``part B'' each place it appears and 
                inserting ``part D'';
                  (B) in subsection (a)(1)(C), by inserting ``, 
                consistent with the requirements of section 452(d)'' 
                before the period at the end; and
                  (C) in subsection (a)(2)(A)--
                          (i) in the matter preceding clause (i), by 
                        striking ``made, insured, or guaranteed'' and 
                        inserting ``made''; and
                          (ii) in clause (iii)--
                                  (I) in subclause (III), by striking 
                                ``only Federal Stafford'' and all that 
                                follows through ``section 428B'' and 
                                inserting ``only Federal Direct 
                                Stafford Loans under section 
                                455(a)(2)(A), Federal Direct 
                                Unsubsidized Stafford Loans under 
                                section 455(a)(2)(D), or Federal Direct 
                                PLUS Loans under section 
                                455(a)(2)(B)''; and
                                  (II) in subclause (V), by striking 
                                ``a Federal Stafford'' and all that 
                                follows through ``section 428B'' and 
                                inserting ``a Federal Direct Stafford 
                                Loan under section 455(a)(2)(A), a 
                                Federal Direct Unsubsidized Stafford 
                                Loan under section 455(a)(2)(D), or a 
                                Federal Direct PLUS Loan under section 
                                455(a)(2)(B)''.
          (2) Effective date.--The amendments made by subparagraph (C) 
        of paragraph (1) shall be effective on July 1, 2010, as if 
        enacted as part of section 102(a)(1) of the Higher Education 
        Opportunity Act (Public Law 110-315).

SEC. 212. AGREEMENTS WITH INSTITUTIONS.

  Section 454 (20 U.S.C. 1087d) is amended--
          (1) in subsection (a), by striking paragraph (4) and 
        redesignating the succeeding paragraphs accordingly; and
          (2) in subsection (b)(2), by striking ``(5), (6), and (7)'' 
        and inserting ``(5), and (6)''.

SEC. 213. TERMS AND CONDITIONS OF LOANS.

  (a) Amendments.--Section 455 (20 U.S.C. 1087e) is amended--
          (1) in subsection (a)(1), by inserting ``, and first 
        disbursed on June 30, 2010,'' before ``under sections 428''; 
        and
          (2) in subsection (g)--
                  (A) by inserting ``, including any loan made under 
                part B and first disbursed before July 1, 2010'' after 
                ``section 428C(a)(4)''; and
                  (B) by striking the third sentence.
  (b) Effective Date.--The amendment made by subsection (a)(1) shall 
apply with respect to loans first disbursed under part D of title IV of 
the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) on or after 
July 1, 2010.

SEC. 214. CONTRACTS.

  Section 456 (20 U.S.C. 1087f) is amended--
          (1) in subsection (a)--
                  (A) in paragraph (1)--
                          (i) in the header, by striking ``In general'' 
                        and inserting ``Awarding of contracts'';
                          (ii) by striking ``The Secretary'' and 
                        inserting the following:
                  ``(A) In general.--The Secretary''; and
                          (iii) by adding at the end the following:
                  ``(B) Awarding contracts for servicing loans.--The 
                Secretary shall, if practicable, award multiple 
                contracts, through a competitive bidding process, to 
                entities, including eligible not-for-profit servicers, 
                to service loans originated under this part. The 
                competitive bidding process shall take into account 
                price, servicing capacity, and capability, and may take 
                into account the capacity and capability to provide 
                default aversion activities and outreach services.
                  ``(C) Job retention incentive payment.--(i) In a 
                contract with an entity under subparagraph (B) for the 
                servicing of loans, the Secretary shall provide a job 
                retention incentive payment, in an amount and manner 
                determined by the Secretary, if such entity agrees to 
                give priority for hiring for positions created as a 
                result of such a contract to those geographical 
                locations at which the entity performed student loan 
                origination or servicing activities under the Federal 
                Family Education Loan Program as of the date of 
                enactment of the Student Aid and Fiscal Responsibility 
                Act of 2009.
                  ``(ii) In determining the allocation of loans to be 
                serviced by an entity awarded such a contract, the 
                Secretary shall consider the retention of highly 
                qualified employees of such entity a positive factor in 
                determining such allocation.'';
                  (B) in paragraph (2)--
                          (i) in the first sentence, by inserting ``, 
                        including eligible not-for-profit servicers,'' 
                        after ``The entities'';
                          (ii) by amending the third sentence to read 
                        as follows: ``The entities with which the 
                        Secretary may enter into such contracts shall 
                        include, where practicable, agencies with 
                        agreements with the Secretary under sections 
                        428(b) and (c) on the date of the enactment of 
                        the Student Aid and Fiscal Responsibility Act 
                        of 2009, and eligible not-for-profit servicers, 
                        if such agencies or servicers meet the 
                        qualifications as determined by the Secretary 
                        under this subsection and if those agencies or 
                        servicers have such experience and demonstrated 
                        effectiveness.''; and
                          (iii) by striking the last sentence and 
                        inserting the following: ``In awarding 
                        contracts to such State agencies, and such 
                        eligible not-for-profit servicers, the 
                        Secretary shall, to the extent practicable and 
                        consistent with the purposes of this part, give 
                        special consideration to State agencies and 
                        such servicers with a history of high quality 
                        performance and demonstrated integrity in 
                        conducting operations with institutions of 
                        higher education and the Secretary.'';
                  (C) by redesignating paragraph (3) as paragraph (4), 
                and by inserting in such paragraph ``, or of any 
                eligible not-for-profit servicer to enter into an 
                agreement for the purposes of this section as a member 
                of a consortium of such entities'' before the period at 
                the end; and
                  (D) by inserting after paragraph (2) the following 
                new paragraph:
          ``(3) Servicing by eligible not-for-profit servicers.--
                  ``(A) In general.--Notwithstanding any other 
                provision of this section, in each State where one or 
                more eligible not-for-profit servicer has its principal 
                place of business, the Secretary shall contract with 
                each such servicer to service loans originated under 
                this part on behalf of borrowers attending institutions 
                located within such State, provided that the servicer 
                demonstrates that it meets the standards for servicing 
                Federal assets and providing quality service and agrees 
                to service the loans at a competitive market rate, as 
                determined by the Secretary. In determining such a 
                competitive market rate, the Secretary may take into 
                account the volume of loans serviced by the servicer. 
                Contracts awarded under this paragraph shall be subject 
                to the same requirements for quality, performance, and 
                accountability as contracts awarded under paragraph (2) 
                for similar activities.
                  ``(B) Allocations.--(i) One servicer.--In the case of 
                a State with only one eligible not-for-profit servicer 
                with a contract described in subparagraph (A), the 
                Secretary shall, at a minimum, allocate to such 
                servicer, on an annual basis and subject to such 
                contract, the servicing rights for the lesser of--
                          ``(I) the loans of 100,000 borrowers 
                        (including borrowers who borrowed loans in a 
                        prior year that were serviced by the servicer) 
                        attending institutions located within the 
                        State; or
                          ``(II) the loans of all the borrowers 
                        attending institutions located within the 
                        State.
                  ``(ii) Multiple servicers.--In the case of a State 
                with more than one eligible not-for-profit servicer 
                with a contract described in subparagraph (A), the 
                Secretary shall, at a minimum, allocate to each such 
                servicer, on an annual basis and subject to such 
                contract, the servicing rights for the lesser of--
                          ``(I) the loans of 100,000 borrowers 
                        (including borrowers who borrowed loans in a 
                        prior year that were serviced by the servicer) 
                        attending institutions located within the 
                        State; or
                          ``(II) an equal share of the loans of all 
                        borrowers attending institutions located within 
                        the State, except the Secretary shall adjust 
                        such shares as necessary to ensure that the 
                        loans of any single borrower remain with a 
                        single servicer.
                  ``(iii) Additional allocation.--The Secretary may 
                allocate additional servicing rights to an eligible 
                not-for-profit servicer based on the performance of 
                such servicer, as determined by the Secretary, 
                including performance in the areas of customer service 
                and default aversion.
                  ``(C) Multiple loans.--Notwithstanding the 
                allocations required by subparagraph (B), the Secretary 
                may transfer loans among servicers who are awarded 
                contracts to service loans pursuant to this section to 
                ensure that the loans of any single borrower remain 
                with a single servicer.''; and
          (2) by adding at the end the following:
  ``(c) Report to Congress.--Not later than 3 years after the date of 
the enactment of the Student Aid and Fiscal Responsibility Act of 2009, 
the Secretary shall prepare and submit to the authorizing committees, a 
report evaluating the performance of all eligible not-for-profit 
servicers awarded a contract under this section to service loans 
originated under this part. Such report shall give consideration to--
          ``(1) customer satisfaction of borrowers and institutions 
        with respect to the loan servicing provided by the servicers;
          ``(2) compliance with applicable regulations by the 
        servicers; and
          ``(3) the effectiveness of default aversion activities, and 
        outreach services (if any), provided by the servicers.
  ``(d) Definitions.--In this section:
          ``(1) Default aversion activities.--The term `default 
        aversion activities' means activities that are directly related 
        to providing collection assistance to the Secretary on a 
        delinquent loan, prior to the loan being legally in a default 
        status, including due diligence activities required pursuant to 
        regulations.
          ``(2) Eligible not-for-profit servicer.--
                  ``(A) In general.--The term `eligible not-for-profit 
                servicer' means an entity that, on the date of 
                enactment of the Student Aid and Fiscal Responsibility 
                Act of 2009--
                          ``(i) meets the definition of an eligible 
                        not-for-profit holder under section 435(p), 
                        except that such term does not include eligible 
                        lenders described in paragraph (1)(D) of such 
                        section;
                          ``(ii) notwithstanding clause (i), is the 
                        sole beneficial owner of a loan for which the 
                        special allowance rate is calculated under 
                        section 438(b)(2)(I)(vi)(II) because the loan 
                        is held by an eligible lender trustee that is 
                        an eligible not-for-profit holder as defined 
                        under section 435(p)(1)(D); or
                          ``(iii) is an affiliated entity of an 
                        eligible not-for-profit servicer described in 
                        clause (i) or (ii) that--
                                  ``(I) directly employs, or will 
                                directly employ (on or before the date 
                                the entity begins servicing loans under 
                                a contract awarded by the Secretary 
                                pursuant to subsection (a)(3)(A)), the 
                                majority of individuals who perform 
                                student loan servicing functions; and
                                  ``(II) on such date of enactment, was 
                                performing, or had entered into a 
                                contract with a third party servicer 
                                (as such term is defined in section 
                                481(c)) who was performing, student 
                                loan servicing functions for loans made 
                                under part B of this title.
                  ``(B) Affiliated entity.--For the purposes of 
                subparagraph (A), the term `affiliated entity' means an 
                entity contracted to perform services for an eligible 
                not-for-profit servicer that--
                          ``(i) is a nonprofit entity or is wholly 
                        owned by a nonprofit entity; and
                          ``(ii) is not owned or controlled, in whole 
                        or in part, by--
                                  ``(I) a for-profit entity; or
                                  ``(II) an entity having its principal 
                                place of business in another State.
          ``(3) Outreach services.--The term `outreach services' means 
        programs offered to students and families, including programs 
        delivered in coordination with institutions of higher education 
        that--
                  ``(A) encourage--
                          ``(i) students to attend and complete a 
                        degree or certification program at an 
                        institution of higher education; and
                          ``(ii) students and families to obtain 
                        financial aid, but minimize the borrowing of 
                        education loans; and
                  ``(B) deliver financial literacy and counseling 
                tools.''.

SEC. 215. INTEREST RATES.

  Section 455(b)(7) (20 U.S.C. 1087e(b)(7)) is amended by adding at the 
end the following new subparagraph:
                  ``(E) Reduced rates for undergraduate fdsl on and 
                after july 1, 2012.--Notwithstanding the preceding 
                paragraphs of this subsection and subparagraph (A) of 
                this paragraph, for Federal Direct Stafford Loans made 
                to undergraduate students for which the first 
                disbursement is made on or after July 1, 2012, 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) 2.5 percent,
                except that such rate shall not exceed 6.8 percent.''.

                    Subtitle B--Perkins Loan Reform

SEC. 221. FEDERAL DIRECT PERKINS LOANS TERMS AND CONDITIONS.

  Part D of title IV (20 U.S.C. 1087a et seq.) is amended by inserting 
after section 455 the following new section:

``SEC. 455A. FEDERAL DIRECT PERKINS LOANS.

  ``(a) Designation of Loans.--Loans made to borrowers under this 
section shall be known as `Federal Direct Perkins Loans'.
  ``(b) In General.--It is the purpose of this section to authorize 
loans to be awarded by institutions of higher education through 
agreements established under section 463(f). Unless otherwise specified 
in this section, all terms and conditions and other requirements 
applicable to Federal Direct Unsubsidized Stafford loans established 
under section 455(a)(2)(D) shall apply to loans made pursuant to this 
section.
  ``(c) Eligible Borrowers.--Any student meeting the requirements for 
student eligibility under section 464(b) (including graduate and 
professional students as defined in regulations promulgated by the 
Secretary) shall be eligible to borrow a Federal Direct Perkins Loan, 
provided the student attends an eligible institution with an agreement 
with the Secretary under section 463(f), and the institution uses its 
authority under that agreement to award the student a loan.
  ``(d) Loan Limits.--The annual and aggregate limits for loans under 
this section shall be the same as those established under section 464, 
and aggregate limits shall include loans made by institutions under 
agreements under section 463(a).
  ``(e) Applicable Rates of Interest.--Loans made pursuant to this 
section shall bear interest, on the unpaid balance of the loan, at the 
rate of 5 percent per year.''.

SEC. 222. AUTHORIZATION OF APPROPRIATIONS.

  Section 461 (20 U.S.C. 1087aa) is amended--
          (1) in subsection (a), by inserting ``, before July 1, 
        2010,'' after ``The Secretary shall'';
          (2) in subsection (b)--
                  (A) in paragraph (1)--
                          (i) by striking ``(1) For the purpose'' and 
                        inserting ``For the purpose''; and
                          (ii) by striking ``and for each of the five 
                        succeeding fiscal years''; and
                  (B) by striking paragraph (2); and
          (3) by striking subsection (c).

SEC. 223. ALLOCATION OF FUNDS.

  Section 462 (20 U.S.C. 1087bb) is amended--
          (1) in subsection (a)(1), by striking ``From'' and inserting 
        ``For any fiscal year before fiscal year 2010, from''; and
          (2) in subsection (i)(1), by striking ``for any fiscal 
        year,'' and inserting ``for any fiscal year before fiscal year 
        2010,''.

SEC. 224. FEDERAL DIRECT PERKINS LOAN ALLOCATION.

  Part E of title IV is further amended by inserting after section 462 
(20 U.S.C. 1087bb) the following:

``SEC. 462A. FEDERAL DIRECT PERKINS LOAN ALLOCATION.

  ``(a) Purposes.--The purposes of this section are--
          ``(1) to allocate, among eligible and participating 
        institutions (as such terms are defined in this section), the 
        authority to make Federal Direct Perkins Loans under section 
        455A with a portion of the annual loan authority described in 
        subsection (b); and
          ``(2) to make funds available, in accordance with section 
        452, to each participating institution from a portion of the 
        annual loan authority described in subsection (b), in an amount 
        not to exceed the sum of an institution's allocation of funds 
        under subparagraphs (A), (B), and (C) of subsection (b)(1) to 
        enable each such institution to make Federal Direct Perkins 
        Loans to eligible students at the institution.
  ``(b) Available Direct Perkins Annual Loan Authority.--
          ``(1) Availability and allocations.--There are hereby made 
        available, from funds made available for loans made under part 
        D, not to exceed $6,000,000,000 of annual loan authority for 
        award year 2010-2011 and each succeeding award year, to be 
        allocated as follows:
                  ``(A) The Secretary shall allocate not more than \1/
                2\ of such funds for each award year by allocating to 
                each participating institution an amount equal to the 
                adjusted self-help need amount of the institution, as 
                determined in accordance with subsection (c) for such 
                award year.
                  ``(B) The Secretary shall allocate not more than \1/
                4\ of such funds for each award year by allocating to 
                each participating institution an amount equal to the 
                low tuition incentive amount of the institution, as 
                determined in accordance with subsection (d).
                  ``(C) The Secretary shall allocate not more than \1/
                4\ of such funds for each award year by allocating to 
                each participating institution an amount which bears 
                the same ratio to the funds allocated under this 
                subparagraph as the ratio determined in accordance with 
                subsection (e) for the calculation of the Federal Pell 
                Grant and degree recipient amount of the institution.
          ``(2) No funds to non-participating institutions.--The 
        Secretary shall not make funds available under this subsection 
        to any eligible institution that is not a participating 
        institution. The adjusted self-help need amount (determined in 
        accordance with subsection (c)) of an eligible institution that 
        is not a participating institution shall not be made available 
        to any other institution.
  ``(c) Adjusted Self-help Need Amount.--For the purposes of subsection 
(b)(1)(A), the Secretary shall calculate the adjusted self-help need 
amount of each eligible institution for an award year as follows:
          ``(1) Use of base self-help need amounts.--
                  ``(A) In general.--Except as provided in paragraphs 
                (2), (3), and (4), the adjusted self-help need amount 
                of each eligible institution shall be the institution's 
                base self-help need amount, which is the sum of--
                          ``(i) the self-help need of the institution's 
                        eligible undergraduate students for such award 
                        year; and
                          ``(ii) the self-help need of the 
                        institution's eligible graduate and 
                        professional students for such award year.
                  ``(B) Undergraduate student self-help need.--To 
                determine the self-help need of an institution's 
                eligible undergraduate students, the Secretary shall 
                determine the sum of each eligible undergraduate 
                student's average cost of attendance for the second 
                preceding award year less each such student's expected 
                family contribution (computed in accordance with part 
                F) for the second preceding award year, except that, 
                for each such eligible undergraduate student, the 
                amount computed by such subtraction shall not be less 
                than zero or more than the lesser of--
                          ``(i) 25 percent of the average cost of 
                        attendance with respect to such eligible 
                        student; or
                          ``(ii) $5,500.
                  ``(C) Graduate and professional student self-help 
                need.--To determine the self-help need of an 
                institution's eligible graduate and professional 
                students, the Secretary shall determine the sum of each 
                eligible graduate and professional student's average 
                cost of attendance for the second preceding award year 
                less each such student's expected family contribution 
                (computed in accordance with part F) for such second 
                preceding award year, except that, for each such 
                eligible graduate and professional student, the amount 
                computed by such subtraction shall not be less than 
                zero or more than $8,000.
          ``(2) Ratable reduction adjustments.--If the sum of the base 
        self-help need amounts of all eligible institutions for an 
        award year as determined under paragraph (1) exceeds \1/2\ of 
        the annual loan authority under subsection (b) for such award 
        year, the Secretary shall ratably reduce the base self-help 
        need amounts of all eligible institutions until the sum of such 
        amounts is equal to the amount that is \1/2\ of the annual loan 
        authority under subsection (b).
          ``(3) Required minimum amount.--Notwithstanding paragraph 
        (2), the adjusted self-help need amount of each eligible 
        institution shall not be less than the average of the 
        institution's total principal amount of loans made under this 
        part for each of the 5 most recent award years.
          ``(4) Additional adjustments.--If the Secretary determines 
        that a ratable reduction under paragraph (2) results in the 
        adjusted self-help need amount of any eligible institution 
        being reduced below the minimum amount required under paragraph 
        (3), the Secretary shall--
                  ``(A) for each institution for which the minimum 
                amount under paragraph (3) is not satisfied, increase 
                the adjusted self-help need amount to the amount of the 
                required minimum under such subparagraph; and
                  ``(B) ratably reduce the adjusted self-help need 
                amounts of all eligible institutions not described in 
                subparagraph (A) until the sum of the adjusted self-
                help need amounts of all eligible institutions is equal 
                to the amount that is \1/2\ of the annual loan 
                authority under subsection (b).
  ``(d) Low Tuition Incentive Amount.--
          ``(1) In general.--For purposes of subsection (b)(1)(B), the 
        Secretary shall determine the low tuition incentive amount for 
        each participating institution for each award year, by 
        calculating for each such institution the sum of--
                  ``(A) the total amount, if any (but not less than 
                zero), by which--
                          ``(i) the average tuition and required fees 
                        for the institution's sector for the second 
                        preceding award year; exceeds
                          ``(ii) the tuition and required fees for the 
                        second preceding award year for each 
                        undergraduate and graduate student attending 
                        the institution who had financial need (as 
                        determined under part F); plus
                  ``(B) the total amount, if any (but not less than 
                zero), by which--
                          ``(i) the total amount for the second 
                        preceding award year of non-Federal grant aid 
                        provided to meet the financial need of all 
                        undergraduate students attending the 
                        institution (as determined without regard to 
                        financial aid not received under this title); 
                        exceeds
                          ``(ii) the total amount for the second 
                        preceding award year, if any, by which--
                                  ``(I) the tuition and required fees 
                                of each such student with such 
                                financial need; exceeds
                                  ``(II) the average tuition and 
                                required fees for the institution's 
                                sector.
          ``(2) Ratable reduction.--If the sum of the low tuition 
        incentive amounts of all participating institutions for an 
        award year as determined under paragraph (1) exceeds \1/4\ of 
        the annual loan authority under subsection (b) for such award 
        year, the Secretary shall ratably reduce the low tuition 
        incentive amounts of all participating institutions until the 
        sum of such amounts is equal to the amount that is \1/4\ of the 
        annual loan authority under subsection (b).
  ``(e) Federal Pell Grant and Degree Recipient Amount.--For purposes 
of subsection (b)(1)(C), the Secretary shall determine the Federal Pell 
Grant and degree recipient amount for each participating institution 
for each award year, by calculating for each such institution the ratio 
of--
          ``(1) the number of students who, during the most recent year 
        for which data are available, obtained an associate's degree or 
        other postsecondary degree from such participating institution 
        and, prior to obtaining such degree, received a Federal Pell 
        Grant for attendance at any institution of higher education; to
          ``(2) the sum of the number of students who, during the most 
        recent year for which data are available, obtained an 
        associate's degree or other postsecondary degree from each 
        participating institution and, prior to obtaining such degree, 
        received a Federal Pell Grant for attendance at any institution 
        of higher education.
  ``(f) Definitions.--As used in this section:
          ``(1) Annual loan authority.--The term `annual loan 
        authority' means the total original principal amount of loans 
        that may be allocated and made available for an award year to 
        make Federal Direct Perkins Loans under section 455A.
          ``(2) Average cost of attendance.--
                  ``(A) In general.--The term `average cost of 
                attendance' means the average of the attendance costs 
                for undergraduate students and for graduate and 
                professional students, respectively, for the second 
                preceding award year which shall include--
                          ``(i) tuition and required fees determined in 
                        accordance with subparagraph (B);
                          ``(ii) standard living expenses determined in 
                        accordance with subparagraph (C); and
                          ``(iii) books and supplies determined in 
                        accordance with subparagraph (D).
                  ``(B) Tuition and required fees.--The average 
                undergraduate and graduate and professional tuition and 
                required fees described in subparagraph (A)(i) shall be 
                computed on the basis of information reported by the 
                institution to the Secretary, which shall include--
                          ``(i) total revenue received by the 
                        institution from undergraduate and graduate and 
                        professional students, respectively, for 
                        tuition and required fees for the second 
                        preceding award year; and
                          ``(ii) the institution's full-time equivalent 
                        enrollment of undergraduate and graduate and 
                        professional students, respectively, for such 
                        second preceding award year.
                  ``(C) Standard living expenses.--The standard living 
                expense described in subparagraph (A)(ii) is equal to 
                the allowance, determined by an institution, for room 
                and board costs incurred by a student, as computed in 
                accordance with part F for the second preceding award 
                year.
                  ``(D) Books and supplies.--The allowance for books 
                and supplies described in subparagraph (A)(iii) is 
                equal to the allowance, determined by an institution, 
                for books, supplies, transportation, and miscellaneous 
                personal expenses, including a reasonable allowance for 
                the documented rental or purchase of a personal 
                computer, as computed in accordance with part F for the 
                second preceding award year.
          ``(3) Average tuition and required fees for the institution's 
        sector.--The term `average tuition and required fees for the 
        institution's sector' shall be determined by the Secretary for 
        each of the categories described in section 132(d).
          ``(4) Eligible institution.--The term `eligible institution' 
        means an institution of higher education that participates in 
        the Federal Direct Stafford Loan Program.
          ``(5) Participating institution.--The term `participating 
        institution' means an institution of higher education that has 
        an agreement under section 463(f).
          ``(6) Sector.--The term `sector' means each of the categories 
        described in section 132(d).''.

SEC. 225. AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION.

  (a) Amendments.--Section 463 (20 U.S.C. 1087cc) is amended--
          (1) in subsection (a)--
                  (A) in the heading, by inserting ``for Loans Made 
                Before July 1, 2010'' after ``Agreements'';
                  (B) in paragraph (3)(A), by inserting ``before July 
                1, 2010'' after ``students'';
                  (C) in paragraph (4), by striking ``thereon--'' and 
                all that follows and inserting ``thereon, if the 
                institution has failed to maintain an acceptable 
                collection record with respect to such loan, as 
                determined by the Secretary in accordance with criteria 
                established by regulation, the Secretary may require 
                the institution to assign such note or agreement to the 
                Secretary, without recompense;''; and
                  (D) in paragraph (5), by striking ``and the Secretary 
                shall apportion'' and all that follows through ``in 
                accordance with section 462'' and inserting ``and the 
                Secretary shall return a portion of funds from loan 
                repayments to the institution as specified in section 
                466(b)'';
          (2) by amending subsection (b) to read as follows:
  ``(b) Administrative Expenses.--An institution that has entered into 
an agreement under subsection (a) shall be entitled, for each fiscal 
year during which it services student loans from a student loan fund 
established under such agreement, to a payment in lieu of reimbursement 
for its expenses in servicing student loans made before July 1, 2010. 
Such payment shall be equal to 0.50 percent of the outstanding 
principal and interest balance of such loans being serviced by the 
institution as of September 30 of each fiscal year.''; and
          (3) by adding at the end the following:
  ``(f) Contents of Agreements for Loans Made on or After July 1, 
2010.--An agreement with any institution of higher education that 
elects to participate in the Federal Direct Perkins Loan program under 
section 455A shall provide--
          ``(1) for the establishment and maintenance of a Direct 
        Perkins Loan program at the institution under which the 
        institution shall use loan authority allocated under section 
        462A to make loans to eligible students attending the 
        institution;
          ``(2) that the institution, unless otherwise specified in 
        this subsection, shall operate the program consistent with the 
        requirements of agreements established under section 454;
          ``(3) that the institution will pay matching funds, 
        quarterly, in an amount agreed to by the institution and the 
        Secretary, to an escrow account approved by the Secretary, for 
        the purpose of providing loan benefits to borrowers;
          ``(4) that if the institution fails to meet the requirements 
        of paragraph (3), the Secretary shall suspend or terminate the 
        institution's eligibility to make Federal Direct Perkins Loans 
        under section 455A until such time as the Secretary determines, 
        in accordance with section 498, that the institution has met 
        the requirements of such paragraph; and
          ``(5) that if the institution ceases to be an eligible 
        institution within the meaning of section 435(a) by reason of 
        having a cohort default rate that exceeds the threshold 
        percentage specified paragraph (2) of such section, the 
        Secretary shall suspend or terminate the institution's 
        eligibility to make Federal Direct Perkins Loans under section 
        455A unless and until the institution would qualify for a 
        resumption of eligible institution status under such 
        section.''.
  (b) Effective Date.--The amendments made by paragraph (2) of 
subsection (a) shall take effect on October 1, 2010.

SEC. 226. STUDENT LOAN INFORMATION BY ELIGIBLE INSTITUTIONS.

  Section 463A (20 U.S.C. 1087cc-1) is amended--
          (1) in subsection (a), by striking ``Each institution'' and 
        inserting ``For loans made before July 1, 2010, each 
        institution''; and
          (2) in subsection (b), by striking ``Each institution'' and 
        inserting ``For loans made before July 1, 2010, each 
        institution''.

SEC. 227. TERMS OF LOANS.

  (a) Section 464 (20 U.S.C. 1087dd) is amended--
          (1) in subsection (a)(1), by striking ``section 463'' and 
        inserting ``section 463(a)'';
          (2) in subsection (b)(1), by inserting ``made before July 1, 
        2010,'' after ``A loan'';
          (3) in subsection (c)--
                  (A) in paragraph (1), by inserting ``made before July 
                1, 2010,'' after ``a loan'';
                  (B) in paragraph (2)--
                          (i) in subparagraph (A), by inserting ``made 
                        before July 1, 2010,'' after ``any loan''; and
                          (ii) in subparagraph (B), by inserting ``made 
                        before July 1, 2010,'' after ``any loan'';
                  (C) in paragraph (3)(B), by inserting ``for a loan 
                made before July 1, 2010,'' after ``during the 
                repayment period'';
                  (D) in paragraph (4), by inserting ``before July 1, 
                2010,'' after ``for a loan made'';
                  (E) in paragraph (5), by striking ``The institution'' 
                and inserting ``For loans made before July 1, 2010, the 
                institution''; and
                  (F) in paragraph (6), by inserting ``made before July 
                1, 2010,'' after ``of loans'';
          (4) in subsection (d), by inserting ``made before July 1, 
        2010,'' before ``from the student loan fund'';
          (5) in subsection (e), by inserting ``with respect to loans 
        made before July 1, 2010, and'' before ``as documented in 
        accordance with paragraph (2),'';
          (6) by repealing subsection (f);
          (7) in subsection (g)(1), by inserting ``and before July 1, 
        2010,'' after ``January 1, 1986,'';
          (8) in subsection (h)--
                  (A) in paragraph (1)(A) by inserting ``before July 1, 
                2010,'' after ``made under this part''; and
                  (B) in paragraph (2), by inserting ``before July 1, 
                2010,'' after ``under this part''; and
          (9) in subsection (j)(1), by inserting ``before July 1, 
        2010,'' after ``under this part''.

SEC. 228. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.

  (a) Section 465 (20 U.S.C. 1087ee) is amended--
          (1) in subsection (a), by inserting ``and before July 1, 
        2010,'' after ``June 30, 1972,''; and
          (2) by amending subsection (b) to read as follows:
  ``(b) Reimbursement for Cancellations.--
          ``(1) Assigned loans.--In the case of loans made under this 
        part before July 1, 2010, and that are assigned to the 
        Secretary, the Secretary shall, from amounts repaid each 
        quarter on assigned Perkins Loans made before July 1, 2010, pay 
        to each institution for each quarter an amount equal to--
                  ``(A) the aggregate of the amounts of loans from its 
                student loan fund that are canceled pursuant to this 
                section for such quarter, minus
                  ``(B) an amount equal to the aggregate of the amounts 
                of any such loans so canceled that were made from 
                Federal capital contributions to its student loan fund.
          ``(2) Retained loans.--In the case of loans made under this 
        part before July 1, 2010, and that are retained by the 
        institution for servicing, the institution shall deduct from 
        loan repayments owed to the Secretary under section 466, an 
        amount equal to--
                  ``(A) the aggregate of the amounts of loans from its 
                student loan fund that are canceled pursuant to this 
                section for such quarter, minus
                  ``(B) an amount equal to the aggregate of the amounts 
                of any such loans so canceled that were made from 
                Federal capital contributions to its student loan 
                fund.''.
  (b) Section 466 (20 U.S.C. 1087ff) is amended to read as follows:

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

  ``(a) Capital Distribution.--Beginning July 1, 2010, there shall be a 
capital distribution of the balance of the student loan fund 
established under this part by each institution of higher education as 
follows:
          ``(1) For the quarter beginning July 1, 2010, the Secretary 
        shall first be paid, no later than September 30, 2010, an 
        amount that bears the same ratio to the cash balance in such 
        fund at the close of June 30, 2010, as the total amount of the 
        Federal capital contributions to such fund by the Secretary 
        under this part bears to--
                  ``(A) the sum of such Federal contributions and the 
                institution's capital contributions to such fund, less
                  ``(B) an amount equal to--
                          ``(i) the institution's outstanding 
                        administrative costs as calculated under 
                        section 463(b),
                          ``(ii) outstanding charges assessed under 
                        section 464(c)(1)(H), and
                          ``(iii) outstanding loan cancellation costs 
                        incurred under section 465.
          ``(2) At the end of each quarter subsequent to the quarter 
        ending September 30, 2010, the Secretary shall first be paid an 
        amount that bears the same ratio to the cash balance in such 
        fund at the close of the preceding quarter, as the total amount 
        of the Federal capital contributions to such fund by the 
        Secretary under this part bears to--
                  ``(A) the sum of such Federal contributions and the 
                institution's capital contributions to such fund, less
                  ``(B) an amount equal to--
                          ``(i) the institution's administrative costs 
                        incurred for that quarter as calculated under 
                        section 463(b),
                          ``(ii) charges assessed for that quarter 
                        under section 464(c)(1)(H), and
                          ``(iii) loan cancellation costs incurred for 
                        that quarter under section 465.
          ``(3)(A) The Secretary shall calculate the amounts due to the 
        Secretary under paragraph (1) (adjusted in accordance with 
        subparagraph (B), as appropriate) and paragraph (2) and shall 
        promptly inform the institution of such calculated amounts.
          ``(B) In the event that, prior to the date of enactment of 
        the Student Aid and Fiscal Responsibility Act of 2009, an 
        institution made a short-term, interest-free loan to the 
        institution's student loan fund established under this part in 
        anticipation of collections or receipt of Federal capital 
        contributions, and the institution demonstrates to the 
        Secretary, on or before June 30, 2010, that such loan will 
        still be outstanding after June 30, 2010, the Secretary shall 
        subtract the amount of such outstanding loan from the cash 
        balance of the institution's student loan fund that is used to 
        calculate the amount due to the Secretary under paragraph (1). 
        An adjustment of an amount due to the Secretary under this 
        subparagraph shall be made by the Secretary on a case-by-case 
        basis.
          ``(4) Any remaining balance at the end of a quarter after a 
        payment under paragraph (1) or (2) shall be retained by the 
        institution for use at its discretion. Any balance so retained 
        shall be withdrawn from the student loan fund and shall not be 
        counted in calculating amounts owed to the Secretary for 
        subsequent quarters.
          ``(5) Each institution shall make the quarterly payments to 
        the Secretary described in paragraph (2) until all outstanding 
        Federal Perkins Loans at that institution have been assigned to 
        the Secretary and there are no funds remaining in the 
        institution's student loan fund.
          ``(6) In the event that the institution's administrative 
        costs, charges, and cancellation costs described in paragraph 
        (2) for a quarter exceed the amount owed to the Secretary under 
        paragraphs (1) and (2) for that quarter, no payment shall be 
        due to the Secretary from the institution for that quarter and 
        the Secretary shall pay the institution, from funds realized 
        from the collection of assigned Federal Perkins Loans made 
        before July 1, 2010, an amount that, when combined with the 
        amount retained by the institution under paragraphs (1) and 
        (2), equals the full amount of such administrative costs, 
        charges, and cancellation costs.
  ``(b) Assignment of Outstanding Loans.--Beginning July 1, 2010, an 
institution of higher education may assign all outstanding loans made 
under this part before July 1, 2010, to the Secretary, consistent with 
the requirements of section 463(a)(5). In collecting loans so assigned, 
the Secretary shall pay an institution an amount that constitutes the 
same fraction of such collections as the fraction of the cash balance 
that the institution retains under subsection (a)(2), but determining 
such fraction without regard to subparagraph (B)(i) of such 
subsection.''.

SEC. 229. IMPLEMENTATION OF NON-TITLE IV REVENUE REQUIREMENT.

  (a) Amendments.--Section 487(d) (20 U.S.C. 1094(d)) is amended--
          (1) in paragraph (1)(E), by striking ``July 1, 2011'' and 
        inserting ``July 1, 2012'';
          (2) in paragraph (1)(F)--
                  (A) by redesignating clauses (iii), (iv), and (v) as 
                clauses (iv), (v), and (vi), respectively; and
                  (B) by inserting after clause (ii) the following new 
                clause:
                          ``(iii) for the period beginning July 1, 
                        2010, and ending July 1, 2012, the amount of 
                        funds the institution received from loans 
                        disbursed under section 455A;'';.
          (3) in paragraph (2)(A), by striking ``two consecutive'' and 
        inserting ``three consecutive''; and
          (4) in paragraph (2)(B)--
                  (A) by striking ``any institutional fiscal year'' and 
                inserting ``two consecutive institutional fiscal 
                years'';
                  (B) by striking ``the two institutional fiscal years 
                after the institutional fiscal year'' and inserting 
                ``the institutional fiscal year after the second 
                consecutive institutional fiscal year''; and
                  (C) by striking ``two consecutive'' in clause (ii) of 
                such paragraph and inserting ``three consecutive''.
  (b) Temporary Effect.--The amendments made by paragraphs (3) and (4) 
of subsection (a)--
          (1) shall take effect on the date of enactment of this Act; 
        and
          (2) shall cease to be effective on July 1, 2012.

SEC. 230. ADMINISTRATIVE EXPENSES.

  Section 489(a) (20 U.S.C. 1096(a)) is amended--
          (1) in the second sentence, by striking ``or under part E of 
        this title''; and
          (2) in the third sentence--
                  (A) by inserting ``and'' after ``subpart 3 of part 
                A,''; and
                  (B) by striking ``compensation of students,'' and all 
                that follows through the period and inserting 
                ``compensation of students.''.

            TITLE III--MODERNIZATION, RENOVATION, AND REPAIR

             Subtitle A--Elementary and Secondary Education

SEC. 301. DEFINITIONS.

  In this subtitle:
          (1) The term ``Bureau-funded school'' has the meaning given 
        such term in section 1141 of the Education Amendments of 1978 
        (25 U.S.C. 2021).
          (2) The term ``charter school'' has the meaning given such 
        term in section 5210 of the Elementary and Secondary Education 
        Act of 1965 (20 U.S.C. 7221i).
          (3) The term ``CHPS Criteria'' means the green building 
        rating program developed by the Collaborative for High 
        Performance Schools.
          (4) The term ``Energy Star'' means the Energy Star program of 
        the United States Department of Energy and the United States 
        Environmental Protection Agency.
          (5) The term ``Green Globes'' means the Green Building 
        Initiative environmental design and rating system referred to 
        as Green Globes.
          (6) The term ``LEED Green Building Rating System'' means the 
        United States Green Building Council Leadership in Energy and 
        Environmental Design green building rating standard referred to 
        as LEED Green Building Rating System.
          (7) The term ``local educational agency''--
                  (A) has the meaning given such term in section 9101 
                of the Elementary and Secondary Education Act of 1965 
                (20 U.S.C. 7801);
                  (B) includes any public charter school that 
                constitutes a local educational agency under State law; 
                and
                  (C) includes the Recovery School District of 
                Louisiana.
          (8) The term ``outlying area''--
                  (A) means the United States Virgin Islands, Guam, 
                American Samoa, and the Commonwealth of the Northern 
                Mariana Islands; and
                  (B) includes the Republic of Palau.
          (9) The term ``public school facilities'' means existing 
        public elementary or secondary school facilities, including 
        public charter school facilities and other existing facilities 
        planned for adaptive reuse as public charter school facilities.
          (10) The term ``Secretary'' means the Secretary of Education.
          (11) The term ``State'' means each of the 50 States, the 
        District of Columbia, and the Commonwealth of Puerto Rico.

 CHAPTER 1--GRANTS FOR MODERNIZATION, RENOVATION, OR REPAIR OF PUBLIC 
                           SCHOOL FACILITIES

SEC. 311. PURPOSE.

  Grants under this chapter shall be for the purpose of modernizing, 
renovating, or repairing public school facilities (including early 
learning facilities, as appropriate), based on the need of the 
facilities for such improvements, to ensure that public school 
facilities are safe, healthy, high-performing, and technologically up-
to-date.

SEC. 312. ALLOCATION OF FUNDS.

  (a) Reservation.--
          (1) In general.--From the amount appropriated to carry out 
        this chapter for each fiscal year pursuant to section 345(a), 
        the Secretary shall reserve 2 percent of such amount, 
        consistent with the purpose described in section 311--
                  (A) to provide assistance to the outlying areas; and
                  (B) for payments to the Secretary of the Interior to 
                provide assistance to Bureau-funded schools.
          (2) Use of reserved funds.--In each fiscal year, the amount 
        reserved under paragraph (1) shall be divided between the uses 
        described in subparagraphs (A) and (B) of such paragraph in the 
        same proportion as the amount reserved under section 1121(a) of 
        the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        6331(a)) is divided between the uses described in paragraphs 
        (1) and (2) of such section 1121(a) in such fiscal year.
          (3) Distressed areas and natural disasters.--From the amount 
        appropriated to carry out this chapter for each fiscal year 
        pursuant to section 345(a), the Secretary shall reserve 5 
        percent of such amount for grants to--
                  (A) local educational agencies serving geographic 
                areas with significant economic distress, to be used 
                consistent with the purpose described in section 311 
                and the allowable uses of funds described in section 
                313; and
                  (B) local educational agencies serving geographic 
                areas recovering from a natural disaster, to be used 
                consistent with the purpose described in section 321 
                and the allowable uses of funds described in section 
                323.
  (b) Allocation to States.--
          (1) State-by-state allocation.--Of the amount appropriated to 
        carry out this chapter for each fiscal year pursuant to section 
        345(a), and not reserved under subsection (a), each State shall 
        be allocated an amount in proportion to the amount received by 
        all local educational agencies in the State under part A of 
        title I of the Elementary and Secondary Education Act of 1965 
        (20 U.S.C. 6311 et seq.) for the previous fiscal year relative 
        to the total amount received by all local educational agencies 
        in every State under such part for such fiscal year.
          (2) State administration.--A State may reserve up to 1 
        percent of its allocation under paragraph (1) to carry out its 
        responsibilities under this chapter, which include--
                  (A) providing technical assistance to local 
                educational agencies;
                  (B) developing an online, publicly searchable 
                database that includes an inventory of public school 
                facilities in the State, including for each such 
                facility, its design, condition, modernization, 
                renovation and repair needs, utilization, energy use, 
                and carbon footprint; and
                  (C) creating voluntary guidelines for high-performing 
                school buildings, including guidelines concerning the 
                following:
                          (i) Site location, storm water management, 
                        outdoor surfaces, outdoor lighting, and 
                        transportation, including public transit and 
                        pedestrian and bicycle accessability.
                          (ii) Outdoor water systems, landscaping to 
                        minimize water use, including elimination of 
                        irrigation systems for landscaping, and indoor 
                        water use reduction.
                          (iii) Energy efficiency (including minimum 
                        and superior standards, such as for heating, 
                        ventilation, and air conditioning systems), use 
                        of alternative energy sources, commissioning, 
                        and training.
                          (iv) Use of durable, sustainable materials 
                        and waste reduction.
                          (v) Indoor environmental quality, such as day 
                        lighting in classrooms, lighting quality, 
                        indoor air quality (including with reference to 
                        reducing the incidence and effects of asthma 
                        and other respiratory illnesses), acoustics, 
                        and thermal comfort.
                          (vi) Operations and management, such as use 
                        of energy-efficient equipment, indoor 
                        environmental management plan, maintenance 
                        plan, and pest management.
          (3) Grants to local educational agencies.--From the amount 
        allocated to a State under paragraph (1), each eligible local 
        educational agency in the State shall receive an amount in 
        proportion to the amount received by such local educational 
        agency under part A of title I of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6311 et seq.) for the previous 
        fiscal year relative to the total amount received by all local 
        educational agencies in the State under such part for such 
        fiscal year, except that no local educational agency that 
        received funds under such part for such fiscal year shall 
        receive a grant of less than $5,000 in any fiscal year under 
        this chapter.
          (4) Special rule.--Section 1122(c)(3) of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6332(c)(3)) shall 
        not apply to paragraph (1) or (3).
  (c) Special Rules.--
          (1) Distributions by secretary.--The Secretary shall make and 
        distribute the reservations and allocations described in 
        subsections (a) and (b) not later than 120 days after an 
        appropriation of funds for this chapter is made.
          (2) Distributions by states.--A State shall make and 
        distribute the allocations described in subsection (b)(3) 
        within 90 days of receiving such funds from the Secretary.

SEC. 313. ALLOWABLE USES OF FUNDS.

  A local educational agency receiving a grant under this chapter shall 
use the grant for modernization, renovation, or repair of public school 
facilities (including early learning facilities, as appropriate), 
including--
          (1) repair, replacement, or installation of roofs, including 
        extensive, intensive or semi-intensive green roofs, electrical 
        wiring, water supply and plumbing systems, sewage systems, 
        storm water runoff systems, lighting systems, building 
        envelope, windows, ceilings, flooring, or doors, including 
        security doors;
          (2) repair, replacement, or installation of heating, 
        ventilation, or air conditioning systems, including insulation, 
        and conducting indoor air quality assessments;
          (3) compliance with fire, health, seismic, and safety codes, 
        including professional installation of fire and life safety 
        alarms, and modernizations, renovations, and repairs that 
        ensure that schools are prepared for emergencies, such as 
        improving building infrastructure to accommodate security 
        measures and installing or upgrading technology to ensure that 
        schools are able to respond to emergencies such as acts of 
        terrorism, campus violence, and natural disasters;
          (4) retrofitting necessary to increase the energy efficiency 
        and water efficiency of public school facilities;
          (5) modifications necessary to make facilities accessible in 
        compliance with the Americans with Disabilities Act of 1990 (42 
        U.S.C. 12101 et seq.) and section 504 of the Rehabilitation Act 
        of 1973 (29 U.S.C. 794);
          (6) abatement, removal, or interim controls of asbestos, 
        polychlorinated biphenyls, mold, mildew, lead-based hazards, 
        including lead-based paint hazards, or a proven carcinogen;
          (7) measures designed to reduce or eliminate human exposure 
        to classroom noise and environmental noise pollution;
          (8) modernization, renovation, or repair necessary to reduce 
        the consumption of coal, electricity, land, natural gas, oil, 
        or water;
          (9) installation or upgrading of educational technology 
        infrastructure;
          (10) modernization, renovation, or repair of science and 
        engineering laboratories, libraries, and career and technical 
        education facilities, and improvements to building 
        infrastructure to accommodate bicycle and pedestrian access;
          (11) installation or upgrading of renewable energy generation 
        and heating systems, including solar, photovoltaic, wind, 
        biomass (including wood pellet and woody biomass), waste-to-
        energy, and solar-thermal and geothermal systems, and for 
        energy audits;
          (12) measures designed to reduce or eliminate human exposure 
        to airborne particles such as dust, sand, and pollens;
          (13) creating greenhouses, gardens (including trees), and 
        other facilities for environmental, scientific, or other 
        educational purposes, or to produce energy savings;
          (14) modernizing, renovating, or repairing physical education 
        facilities for students, including upgrading or installing 
        recreational structures made from post-consumer recovered 
        materials in accordance with the comprehensive procurement 
        guidelines prepared by the Administrator of the Environmental 
        Protection Agency under section 6002(e) of the Solid Waste 
        Disposal Act (42 U.S.C. 6962(e));
          (15) other modernization, renovation, or repair of public 
        school facilities to--
                  (A) improve teachers' ability to teach and students' 
                ability to learn;
                  (B) ensure the health and safety of students and 
                staff;
                  (C) make them more energy efficient; or
                  (D) reduce class size; and
          (16) required environmental remediation related to 
        modernization, renovation, or repair described in paragraphs 
        (1) through (15).

SEC. 314. PRIORITY PROJECTS.

  In selecting a project under section 313, a local educational agency 
may give priority to projects involving the abatement, removal, or 
interim controls of asbestos, polychlorinated biphenyls, mold, mildew, 
lead-based hazards, including lead-based paint hazards, or a proven 
carcinogen.

 CHAPTER 2--SUPPLEMENTAL GRANTS FOR LOUISIANA, MISSISSIPPI, AND ALABAMA

SEC. 321. PURPOSE.

  Grants under this chapter shall be for the purpose of modernizing, 
renovating, repairing, or constructing public school facilities, 
including, where applicable, early learning facilities, based on the 
need for such improvements or construction, to ensure that public 
school facilities are safe, healthy, high-performing, and 
technologically up-to-date.

SEC. 322. ALLOCATION TO LOCAL EDUCATIONAL AGENCIES.

  (a) In General.--Of the amount appropriated to carry out this chapter 
for each fiscal year pursuant to section 345(b), the Secretary shall 
allocate to local educational agencies in Louisiana, Mississippi, and 
Alabama an amount equal to the infrastructure damage inflicted on 
public school facilities in each such district by Hurricane Katrina or 
Hurricane Rita in 2005 relative to the total of such infrastructure 
damage so inflicted in all such districts, combined.
  (b) Distribution by Secretary.--The Secretary shall determine and 
distribute the allocations described in subsection (a) not later than 
120 days after an appropriation of funds for this chapter is made.

SEC. 323. ALLOWABLE USES OF FUNDS.

  A local educational agency receiving a grant under this chapter shall 
use the grant for one or more of the activities described in section 
313, except that an agency receiving a grant under this chapter also 
may use the grant for the construction of new public school facilities.

                     CHAPTER 3--GENERAL PROVISIONS

SEC. 331. IMPERMISSIBLE USES OF FUNDS.

  No funds received under this subtitle may be used for--
          (1) payment of maintenance costs, including routine repairs 
        classified as current expenditures under State or local law;
          (2) stadiums or other facilities primarily used for athletic 
        contests or exhibitions or other events for which admission is 
        charged to the general public;
          (3) improvement or construction of facilities the purpose of 
        which is not the education of children, including central 
        office administration or operations or logistical support 
        facilities; or
          (4) purchasing carbon offsets.

SEC. 332. SUPPLEMENT, NOT SUPPLANT.

  A local educational agency receiving a grant under this subtitle 
shall use such Federal funds only to supplement and not supplant the 
amount of funds that would, in the absence of such Federal funds, be 
available for modernization, renovation, repair, and construction of 
public school facilities.

SEC. 333. PROHIBITION REGARDING STATE AID.

  A State shall not take into consideration payments under this 
subtitle in determining the eligibility of any local educational agency 
in that State for State aid, or the amount of State aid, with respect 
to free public education of children.

SEC. 334. MAINTENANCE OF EFFORT.

  (a) In General.--A local educational agency may receive a grant under 
this subtitle for any fiscal year only if either the combined fiscal 
effort per student or the aggregate expenditures of the agency and the 
State involved with respect to the provision of free public education 
by the agency for the preceding fiscal year was not less than 90 
percent of the combined fiscal effort or aggregate expenditures for the 
second preceding fiscal year.
  (b) Reduction in Case of Failure To Meet Maintenance of Effort 
Requirement.--
          (1) In general.--The State educational agency shall reduce 
        the amount of a local educational agency's grant in any fiscal 
        year in the exact proportion by which a local educational 
        agency fails to meet the requirement of subsection (a) by 
        falling below 90 percent of both the combined fiscal effort per 
        student and aggregate expenditures (using the measure most 
        favorable to the local agency).
          (2) Special rule.--No such lesser amount shall be used for 
        computing the effort required under subsection (a) for 
        subsequent years.
  (c) Waiver.--The Secretary shall waive the requirements of this 
section if the Secretary determines that a waiver would be equitable 
due to--
          (1) exceptional or uncontrollable circumstances, such as a 
        natural disaster; or
          (2) a precipitous decline in the financial resources of the 
        local educational agency.

SEC. 335. SPECIAL RULE ON CONTRACTING.

  Each local educational agency receiving a grant under this subtitle 
shall ensure that, if the agency carries out modernization, renovation, 
repair, or construction through a contract, the process for any such 
contract ensures the maximum number of qualified bidders, including 
local, small, minority, and women- and veteran-owned businesses, 
through full and open competition.

SEC. 336. USE OF AMERICAN IRON, STEEL, AND MANUFACTURED GOODS.

  (a) In General.--None of the funds appropriated or otherwise made 
available by this subtitle may be used for a project for the 
modernization, renovation, repair, or construction of a public school 
facility unless all of the iron, steel, and manufactured goods used in 
the project are produced in the United States.
  (b) Exceptions.--Subsection (a) shall not apply in any case or 
category of cases in which the Secretary finds that--
          (1) applying subsection (a) would be inconsistent with the 
        public interest;
          (2) iron, steel, and the relevant manufactured goods are not 
        produced in the United States in sufficient and reasonably 
        available quantities and of a satisfactory quality; or
          (3) inclusion of iron, steel, and manufactured goods produced 
        in the United States will increase the cost of the overall 
        project by more than 25 percent.
  (c) Publication of Justification.--If the Secretary determines that 
it is necessary to waive the application of subsection (a) based on a 
finding under subsection (b), the Secretary shall publish in the 
Federal Register a detailed written justification of the determination.
  (d) Construction.--This section shall be applied in a manner 
consistent with United States obligations under international 
agreements.

SEC. 337. LABOR STANDARDS.

  The grant programs under this subtitle are applicable programs (as 
that term is defined in section 400 of the General Education Provisions 
Act (20 U.S.C. 1221)) subject to section 439 of such Act (20 U.S.C. 
1232b).

SEC. 338. CHARTER SCHOOLS.

  (a) In General.--A local educational agency receiving an allocation 
under this subtitle shall reserve an amount of that allocation for 
charter schools within its jurisdiction for modernization, renovation, 
repair, and construction of charter school facilities.
  (b) Determination of Reserved Amount.--The amount to be reserved by a 
local educational agency under subsection (a) shall be determined based 
on the combined percentage of students counted under section 1113(a)(5) 
of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
6313(a)(5)) in the schools of the agency who--
          (1) are enrolled in charter schools; and
          (2) the local educational agency, in consultation with the 
        authorized public chartering agency, expects to be enrolled, 
        during the year with respect to which the reservation is made, 
        in charter schools that are scheduled to commence operation 
        during such year.
  (c) School Share.--Individual charter schools shall receive a share 
of the amount reserved under subsection (a) based on the need of each 
school for modernization, renovation, repair, or construction, as 
determined by the local educational agency in consultation with charter 
school administrators.
  (d) Excess Funds.--After the consultation described in subsection 
(c), if the local educational agency determines that the amount of 
funds reserved under subsection (a) exceeds the modernization, 
renovation, repair, and construction needs of charter schools within 
the local educational agency's jurisdiction, the agency may use the 
excess funds for other public school facility modernization, 
renovation, repair, or construction consistent with this subtitle and 
is not required to carry over such funds to the following fiscal year 
for use for charter schools.

SEC. 339. GREEN SCHOOLS.

  (a) In General.--Of the funds appropriated for a given fiscal year 
and made available to a local educational agency to carry out this 
subtitle, the local educational agency shall use not less than the 
applicable percentage (described in subsection (b)) of such funds for 
public school modernization, renovation, repair, or construction that 
are certified, verified, or consistent with any applicable provisions 
of--
          (1) the LEED Green Building Rating System;
          (2) Energy Star;
          (3) the CHPS Criteria;
          (4) Green Globes; or
          (5) an equivalent program adopted by the State, or another 
        jurisdiction with authority over the local educational agency, 
        that includes a verifiable method to demonstrate compliance 
        with such program.
  (b) Applicable Percentages.--The applicable percentage described in 
subsection (a) is--
          (1) for funds appropriated in fiscal year 2010, 50 percent; 
        and
          (2) for funds appropriated in fiscal year 2011, 75 percent.
  (c) Rule of Construction.--Nothing in this section shall be construed 
to prohibit a local educational agency from using sustainable, domestic 
hardwood lumber as ascertained through the forest inventory and 
analysis program of the Forest Service of the Department of Agriculture 
under the Forest and Rangeland Renewable Resources Research Act of 1978 
(16 U.S.C. 1641 et seq.) for public school modernization, renovation, 
repairs, or construction.
  (d) Technical Assistance.--The Secretary, in consultation with the 
Secretary of Energy and the Administrator of the Environmental 
Protection Agency, shall provide outreach and technical assistance to 
States and local educational agencies concerning the best practices in 
school modernization, renovation, repair, and construction, including 
those related to student academic achievement, student and staff 
health, energy efficiency, and environmental protection.

SEC. 340. REPORTING.

  (a) Reports by Local Educational Agencies.--Local educational 
agencies receiving a grant under this subtitle shall annually compile a 
report describing the projects for which such funds were used, 
including--
          (1) the number and identity of public schools in the agency, 
        including the number of charter schools, and for each school, 
        the total number of students, and the number of students 
        counted under section 1113(a)(5) of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6313(a)(5));
          (2) the total amount of funds received by the local 
        educational agency under this subtitle, and for each public 
        school in the agency, including each charter school, the amount 
        of such funds expended, and the types of modernization, 
        renovation, repair, or construction projects for which such 
        funds were used;
          (3) the number of students impacted by such projects, 
        including the number of students so impacted who are counted 
        under section 1113(a)(5) of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6313(a)(5));
          (4) the number of public schools in the agency with a metro-
        centric locale code of 41, 42, or 43 as determined by the 
        National Center for Education Statistics and the percentage of 
        funds received by the agency under chapter 1 or chapter 2 of 
        this subtitle that were used for projects at such schools;
          (5) the number of public schools in the agency that are 
        eligible for schoolwide programs under section 1114 of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 6314) 
        and the percentage of funds received by the agency under 
        chapter 1 or chapter 2 of this subtitle that were used for 
        projects at such schools;
          (6) for each project--
                  (A) the cost;
                  (B) the standard described in section 339(a) with 
                which the use of the funds complied or, if the use of 
                funds did not comply with a standard described in 
                section 339(a), the reason such funds were not able to 
                be used in compliance with such standards and the 
                agency's efforts to use such funds in an 
                environmentally sound manner; and
                  (C) any demonstrable or expected benefits as a result 
                of the project (such as energy savings, improved indoor 
                environmental quality, student and staff health, 
                including the reduction of the incidence and effects of 
                asthma and other respiratory illnesses, and improved 
                climate for teaching and learning); and
          (7) the total number and amount of contracts awarded, and the 
        number and amount of contracts awarded to local, small, 
        minority, women, and veteran-owned businesses.
  (b) Availability of Reports.--A local educational agency shall--
          (1) submit the report described in subsection (a) to the 
        State educational agency, which shall compile such information 
        and report it annually to the Secretary; and
          (2) make the report described in subsection (a) publicly 
        available, including on the agency's website.
  (c) Reports by Secretary.--Not later than March 31 of each fiscal 
year, the Secretary shall submit to the Committee on Education and 
Labor of the House of Representatives and the Committee on Health, 
Education, Labor and Pensions of the Senate, and make available on the 
Department of Education's website, a report on grants made under this 
subtitle, including the information from the reports described in 
subsection (b)(1).

SEC. 341. SPECIAL RULES.

  Notwithstanding any other provision of this subtitle, none of the 
funds authorized by this subtitle may be--
          (1) used to employ workers in violation of section 274A of 
        the Immigration and Nationality Act (8 U.S.C. 1324a); or
          (2) distributed to a local educational agency that does not 
        have a policy that requires a criminal background check on all 
        employees of the agency.

SEC. 342. PROMOTION OF EMPLOYMENT EXPERIENCES.

  The Secretary of Education, in consultation with the Secretary of 
Labor, shall work with recipients of funds under this subtitle to 
promote appropriate opportunities to gain employment experience working 
on modernization, renovation, repair, and construction projects funded 
under this subtitle for--
          (1) participants in a YouthBuild program (as defined in 
        section 173A of the Workforce Investment Act of 1998 (29 U.S.C. 
        2918a));
          (2) individuals enrolled in the Job Corps program carried out 
        under subtitle C of title I of the Workforce Investment Act of 
        1998 (29 U.S.C. 2881 et seq.);
          (3) individuals enrolled in a junior or community college (as 
        defined in section 312(f) of the Higher Education Act of 1965 
        (20 U.S.C. 1088(f))) certificate or degree program relating to 
        projects described in section 339(a); and
          (4) participants in preapprenticeship programs that have 
        direct linkages with apprenticeship programs that are 
        registered with the Department of Labor or a State 
        Apprenticeship Agency under the National Apprenticeship Act of 
        1937 (29 U.S.C. 50 et seq.).

SEC. 343. ADVISORY COUNCIL ON GREEN, HIGH-PERFORMING PUBLIC SCHOOL 
                    FACILITIES.

  (a) Establishment of Advisory Council.--The Secretary shall establish 
an advisory council to be known as the ``Advisory Council on Green, 
High-Performing Public School Facilities'' (in this section referred to 
as the ``Advisory Council'') which shall be composed of--
          (1) appropriate officials from the Department of Education;
          (2) representatives of the academic, architectural, business, 
        education, engineering, environmental, labor, and scientific 
        communities; and
          (3) such other representatives as the Secretary deems 
        appropriate.
  (b) Duties of Advisory Council.--
          (1) Advisory duties.--The Advisory Council shall advise the 
        Secretary on the impact of green, high-performing schools, on--
                  (A) teaching and learning;
                  (B) health;
                  (C) energy costs;
                  (D) environmental impact; and
                  (E) other areas that the Secretary and the Advisory 
                Council deem appropriate.
          (2) Other duties.--The Advisory Council shall assist the 
        Secretary in--
                  (A) making recommendations on Federal policies to 
                increase the number of green, high-performing schools;
                  (B) identifying Federal policies that are barriers to 
                helping States and local educational agencies make 
                green, high-performing schools;
                  (C) providing technical assistance and outreach to 
                States and local educational agencies under section 
                339(d); and
                  (D) providing the Secretary such other assistance as 
                the Secretary deems appropriate.
  (c) Consultation.--In carrying out its duties under subsection (b), 
the Advisory Council shall consult with the Chair of the Council on 
Environmental Quality and the heads of appropriate Federal agencies, 
including the Secretary of Commerce, the Secretary of Energy, the 
Secretary of Health and Human Services, the Secretary of Labor, the 
Administrator of the Environmental Protection Agency, and the 
Administrator of the General Services Administration (through the 
Office of Federal High-Performance Green Buildings).

SEC. 344. EDUCATION REGARDING PROJECTS.

  A local educational agency receiving funds under this subtitle may 
encourage schools at which projects are undertaken with such funds to 
educate students about the project, including, as appropriate, the 
functioning of the project and its environmental, energy, 
sustainability, and other benefits.

SEC. 345. AVAILABILITY OF FUNDS.

  (a) Chapter 1.--There are authorized to be appropriated, and there 
are appropriated, to carry out chapter 1 of this subtitle (in addition 
to any other amounts appropriated to carry out such chapter and out of 
any money in the Treasury not otherwise appropriated), $2,020,000,000 
for each of fiscal years 2010 and 2011.
  (b) Chapter 2.--There are authorized to be appropriated, and there 
are appropriated, to carry out chapter 2 of this subtitle (in addition 
to any other amounts appropriated to carry out such chapter and out of 
any money in the Treasury not otherwise appropriated), $30,000,000 for 
each of fiscal years 2010 and 2011.
  (c) Prohibition on Earmarks.--None of the funds appropriated under 
this section may be used for a Congressional earmark as defined in 
clause 9(d) of rule XXI of the Rules of the House of Representatives.

                      Subtitle B--Higher Education

SEC. 351. FEDERAL ASSISTANCE FOR COMMUNITY COLLEGE MODERNIZATION AND 
                    CONSTRUCTION.

  (a) In General.--
          (1) Grant program.--From the amounts made available under 
        subsection (i), the Secretary shall award grants to States for 
        the purposes of constructing new community college facilities 
        and modernizing, renovating, and repairing existing community 
        college facilities. Grants awarded under this section shall be 
        used by a State for one or more of the following:
                  (A) To reduce financing costs of loans for new 
                construction, modernization, renovation, or repair 
                projects at community colleges (such as paying interest 
                or points on such loans).
                  (B) To provide matching funds for a community college 
                capital campaign to attract private donations of funds 
                for new construction, modernization, renovation, or 
                repair projects at the community college.
                  (C) To capitalize a revolving loan fund to finance 
                new construction, modernization, renovation, and repair 
                projects at community colleges.
          (2) Allocation.--
                  (A) Determination of available amount.--The Secretary 
                shall determine the amount available for allocation to 
                each State by determining the amount equal to the total 
                number of students in the State who are enrolled in 
                community colleges and who are pursuing a degree or 
                certificate that is not a bachelor's, master's, 
                professional, or other advanced degree, relative to the 
                total number of such students in all States, combined.
                  (B) Allocation.--The Secretary shall allocate to each 
                State selected by the Secretary to receive a grant 
                under this section an amount equal to the amount 
                determined to be available for allocation to such State 
                under subparagraph (A), less any portion of that amount 
                that is subject to a limitation under paragraph (3).
                  (C) Reallocation.--Amounts not allocated under this 
                section to a State because--
                          (i) the State did not submit an application 
                        under subsection (b);
                          (ii) the State submitted an application that 
                        the Secretary determined did not meet the 
                        requirements of such subsection; or
                          (iii) the State is subject to a limitation 
                        under paragraph (3) that prevents the State 
                        from using a portion of the allocation,
                shall be proportionately reallocated under this 
                paragraph to the States that are not described in 
                clause (i), (ii), or (iii) of this subparagraph.
          (3) Grant amount limitations.--A grant awarded to a State 
        under this section--
                  (A) to reduce financing costs of loans for new 
                construction, modernization, renovation, or repair 
                projects at community colleges under paragraph (1)(A) 
                shall be for an amount that is not more than 25 percent 
                of the total principal amount of the loans for which 
                financing costs are being reduced; and
                  (B) to provide matching funds for a community college 
                capital campaign under paragraph (1)(B) shall be for an 
                amount that is not more than 25 percent of the total 
                amount of the private donations of funds raised through 
                such campaign over the duration of such campaign, as 
                such duration is determined by the State in the 
                application submitted under subsection (b).
          (4) Supplement, not supplant.--Funds made available under 
        this section shall be used to supplement, and not supplant, 
        other Federal, State, and local funds that would otherwise be 
        expended to construct new community college facilities or 
        modernize, renovate, or repair existing community college 
        facilities.
  (b) Application.--A State that desires to receive a grant under this 
section shall submit an application to the Secretary at such time, in 
such manner, and containing such information and assurances as the 
Secretary may require. Such application shall include a certification 
by the State that the funds provided under this section for the 
construction of new community college facilities and the modernization, 
renovation, and repair of existing community college facilities will 
improve instruction at such colleges and will improve the ability of 
such colleges to educate and train students to meet the workforce needs 
of employers in the State.
  (c) Use of Funds by Community Colleges.--
          (1) Permissible uses of funds.--Funds made available to 
        community colleges through a loan described in subsection 
        (a)(1)(A), a capital campaign described in subsection 
        (a)(1)(B), or a loan from a revolving loan fund described in 
        subsection (a)(1)(C) shall be used only for the construction, 
        modernization, renovation, or repair of community college 
        facilities that are primarily used for instruction, research, 
        or student housing, which may include any of the following:
                  (A) Repair, replacement, or installation of roofs, 
                including extensive, intensive, or semi-intensive green 
                roofs, electrical wiring, water supply and plumbing 
                systems, sewage systems, storm water runoff systems, 
                lighting systems, building envelope, windows, ceilings, 
                flooring, or doors, including security doors.
                  (B) Repair, replacement, or installation of heating, 
                ventilation, or air conditioning systems, including 
                insulation, and conducting indoor air quality 
                assessments.
                  (C) Compliance with fire, health, seismic, and safety 
                codes, including professional installation of fire and 
                life safety alarms, and modernizations, renovations, 
                and repairs that ensure that the community college's 
                facilities are prepared for emergencies, such as 
                improving building infrastructure to accommodate 
                security measures and installing or upgrading 
                technology to ensure that the community college is able 
                to respond to emergencies such as acts of terrorism, 
                campus violence, and natural disasters.
                  (D) Retrofitting necessary to increase the energy 
                efficiency of the community college's facilities.
                  (E) Modifications necessary to make facilities 
                accessible in compliance with the Americans with 
                Disabilities Act of 1990 (42 U.S.C. 12101 et seq.) and 
                section 504 of the Rehabilitation Act of 1973 (29 
                U.S.C. 794).
                  (F) Abatement, removal, or interim controls of 
                asbestos, polychlorinated biphenyls, mold, mildew, or 
                lead-based hazards, including lead-based paint hazards 
                from the community college's facilities.
                  (G) Modernization, renovation, or repair necessary to 
                reduce the consumption of coal, electricity, land, 
                natural gas, oil, or water.
                  (H) Modernization, renovation, and repair relating to 
                improving science and engineering laboratories, 
                libraries, or instructional facilities.
                  (I) Installation or upgrading of educational 
                technology infrastructure.
                  (J) Installation or upgrading of renewable energy 
                generation and heating systems, including solar, 
                photovoltaic, wind, biomass (including wood pellet and 
                woody biomass), waste-to-energy, solar-thermal and 
                geothermal systems, and energy audits.
                  (K) Other modernization, renovation, or repair 
                projects that are primarily for instruction, research, 
                or student housing.
                  (L) Required environmental remediation related to 
                modernization, renovation, or repair described in 
                subparagraphs (A) through (K).
          (2) Green school requirement.--A community college receiving 
        assistance through a loan described in subsection (a)(1)(A), a 
        capital campaign described in subsection (a)(1)(B), or a loan 
        from a revolving loan fund described in subsection (a)(1)(C) 
        shall use not less than 50 percent of such assistance to carry 
        out projects for construction, modernization, renovation, or 
        repair that are certified, verified, or consistent with the 
        applicable provisions of--
                  (A) the LEED Green Building Rating System;
                  (B) Energy Star;
                  (C) the CHPS Criteria, as applicable;
                  (D) Green Globes; or
                  (E) an equivalent program adopted by the State or the 
                State higher education agency that includes a 
                verifiable method to demonstrate compliance with such 
                program.
          (3) Prohibited uses of funds.--
                  (A) In general.--No funds awarded under this section 
                may be used for--
                          (i) payment of maintenance costs;
                          (ii) construction, modernization, renovation, 
                        or repair of stadiums or other facilities 
                        primarily used for athletic contests or 
                        exhibitions or other events for which admission 
                        is charged to the general public; or
                          (iii) construction, modernization, 
                        renovation, or repair of facilities--
                                  (I) used for sectarian instruction, 
                                religious worship, or a school or 
                                department of divinity; or
                                  (II) in which a substantial portion 
                                of the functions of the facilities are 
                                subsumed in a religious mission.
                  (B) Four-year institutions.--No funds awarded to a 
                four-year public institution of higher education under 
                this section may be used for any facility, service, or 
                program of the institution that is not available to 
                students who are pursuing a degree or certificate that 
                is not a bachelor's, master's, professional, or other 
                advanced degree.
  (d) Application of GEPA.--The grant program authorized in this 
section is an applicable program (as that term is defined in section 
400 of the General Education Provisions Act (20 U.S.C. 1221)) subject 
to section 439 of such Act (20 U.S.C. 1232b). The Secretary shall, 
notwithstanding section 437 of such Act (20 U.S.C. 1232) and section 
553 of title 5, United States Code, establish such program rules as may 
be necessary to implement such grant program by notice in the Federal 
Register.
  (e) Concurrent Funding.--Funds made available under this section 
shall not be used to assist any community college that receives funding 
for the construction, modernization, renovation, and repair of 
facilities under any other program under this Act, the Higher Education 
Act of 1965, or the American Recovery and Reinvestment Act of 2009.
  (f) Reports by the States.--Each State that receives a grant under 
this section shall, not later than September 30, 2012, and annually 
thereafter for each fiscal year in which the State expends funds 
received under this section, submit to the Secretary a report that 
includes--
          (1) a description the projects for which the grant funding 
        was, or will be, used;
          (2) a list of the community colleges that have received, or 
        will receive, assistance from the grant through a loan 
        described in subsection (a)(1)(A), a capital campaign described 
        in subsection (a)(1)(B), or a loan from a revolving loan fund 
        described in subsection (a)(1)(C); and
          (3) a description of the amount and nature of the assistance 
        provided to each such college.
  (g) Report by the Secretary.--The Secretary shall submit to the 
authorizing committees (as defined in section 103 of the Higher 
Education Act of 1965) an annual report on the grants made under this 
section, including the information described in subsection (f).
  (h) Definitions.--
          (1) Community college.--As used in this section, the term 
        ``community college'' means--
                  (A) a junior or community college, as such term is 
                defined in section 312(f) of the Higher Education Act 
                of 1965 (20 U.S.C. 1085(f)); or
                  (B) a four-year public institution of higher 
                education (as defined in section 101 of the Higher 
                Education Act of 1965) that awards a significant number 
                of degrees and certificates that are not--
                          (i) bachelor's degrees (or an equivalent); or
                          (ii) master's, professional, or other 
                        advanced degrees.
          (2) CHPS criteria.--The term ``CHPS Criteria'' means the 
        green building rating program developed by the Collaborative 
        for High Performance Schools.
          (3) Energy star.--The term ``Energy Star'' means the Energy 
        Star program of the United States Department of Energy and the 
        United States Environmental Protection Agency.
          (4) Green globes.--The term ``Green Globes'' means the Green 
        Building Initiative environmental design and rating system 
        referred to as Green Globes.
          (5) Leed green building rating system.--The term ``LEED Green 
        Building Rating System'' means the United States Green Building 
        Council Leadership in Energy and Environmental Design green 
        building rating standard referred to as the LEED Green Building 
        Rating System.
          (6) Secretary.--The term ``Secretary'' means the Secretary of 
        Education.
          (7) State.--The term ``State'' has the meaning given such 
        term in section 103 of the Higher Education Act of 1965 (20 
        U.S.C. 1003).
  (i) Availability of Funds.--There are authorized to be appropriated, 
and there are appropriated, to carry out this section (in addition to 
any other amounts appropriated to carry out this section and out of any 
money in the Treasury not otherwise appropriated), $2,500,000,000 for 
fiscal year 2011, which shall remain available until expended.

                TITLE IV--EARLY LEARNING CHALLENGE FUND

SEC. 401. PURPOSE.

  The purpose of this title is to provide grants on a competitive basis 
to States for the following:
          (1) To promote standards reform of State early learning 
        programs serving children from birth through age 5 in order to 
        support the healthy development and improve the school 
        readiness outcomes of young children.
          (2) To establish a high standard of quality in early learning 
        programs that integrates appropriate early learning and 
        development standards across early learning settings.
          (3) To fund and implement quality initiatives that improve 
        the skills and effectiveness of early learning providers, and 
        improve the quality of existing early learning programs, in 
        order to increase the number of disadvantaged children who 
        participate in comprehensive and high-quality early learning 
        programs.
          (4) To ensure that a greater number of disadvantaged children 
        enter kindergarten with the cognitive, social, emotional, and 
        physical skills and abilities needed to be successful in 
        school.
          (5) To increase parents' abilities to access comprehensive 
        and high quality early learning programs across settings for 
        their children.

SEC. 402. PROGRAMS AUTHORIZED.

  (a) Quality Pathways Grants.--The Secretary shall use funds made 
available to carry out this title for a fiscal year to award grants on 
a competitive basis to States in accordance with section 403.
  (b) Development Grants.--The Secretary shall use funds made available 
to carry out this title for a fiscal year to award grants in accordance 
with section 404 on a competitive basis to States that demonstrate a 
commitment to establishing a system of early learning that will include 
the components described in section 403(c)(3) but are not--
          (1) eligible to be awarded a grant under subsection (a); or
          (2) are not awarded such a grant after application.
  (c) Reservations of Federal Funds.--
          (1) Research, evaluation, and administration.--From the 
        amount made available to carry out this title for a fiscal 
        year, the Secretary--
                  (A) shall reserve up to 2 percent jointly to 
                administer this title with the Secretary of Health and 
                Human Services; and
                  (B) shall reserve up to 3 percent to carry out 
                activities under section 405.
          (2) Tribal school readiness planning demonstration.--After 
        making the reservations under paragraph (1), the Secretary 
        shall reserve 0.25 percent for a competitive grant program for 
        Indian tribes to develop and implement school readiness plans 
        that--
                  (A) are coordinated with local educational agencies 
                serving children who are members of the tribe; and
                  (B) include American Indian and Alaska Native Head 
                Start and Early Head Start programs, tribal child care 
                programs, Indian Health Service programs, and other 
                tribal programs serving children.
          (3) Quality pathways grants.--
                  (A) In general.--From the amount made available to 
                carry out this title for a fiscal year and not reserved 
                under paragraph (1) or (2), the Secretary shall reserve 
                a percent (which shall be not greater than 65 percent 
                for fiscal years 2010 through 2012 and not greater than 
                85 percent for fiscal year 2013 and each succeeding 
                fiscal year) determined under subparagraph (B) to carry 
                out subsection (a).
                  (B) Determination of amount.--In determining the 
                amount to reserve under subparagraph (A), the 
                Secretary, consistent with section 403(e), shall take 
                into account the following:
                          (i) The total number of States determined by 
                        the Secretary to qualify for receipt of a grant 
                        under this title for the year.
                          (ii) The number of children under age 5 from 
                        low-income families in each State with an 
                        approved application under section 403 for the 
                        year.
                  (C) Reallocation.--For fiscal year 2013 and 
                subsequent fiscal years, the Secretary may reallocate 
                funds allocated for development grants under subsection 
                (b) for the purpose of providing additional grants 
                under subsection (a), if the Secretary determines that 
                there is an insufficient number of applications that 
                meet the requirements for a grant under subsection (b).
  (d) State Applications.--In applying for a grant under this title, a 
State--
          (1) shall designate a State-level entity for administration 
        of the grant;
          (2) shall coordinate proposed activities with the State 
        Advisory Council on Early Childhood Education and Care 
        (established pursuant to section 642B(b)(1)(A) of the Head 
        Start Act (42 U.S.C. 9837b(b)(1)(A))) and shall incorporate 
        plans and recommendations from such Council in the application, 
        where applicable; and
          (3) otherwise shall submit the application to the Secretary 
        at such time, in such manner, and containing such information 
        as the Secretary may reasonably require.
  (e) Priority in Awarding Grants.--In awarding grants under this 
title, the Secretary shall give priority to States--
          (1) whose applications contain assurances that the State will 
        use, in part, funds reserved under section 658G of the Child 
        Care and Development Block Grant Act of 1990 (42 U.S.C. 9858e) 
        for activities described in section 403(f);
          (2) that will commit to dedicating a significant increase, in 
        comparison to recent fiscal years, in State expenditures on 
        early learning programs and services; and
          (3) that demonstrate efforts to build public-private 
        partnerships designed to accomplish the purposes of this title.
  (f) Maintenance of Effort.--
          (1) In general.--With respect to each period for which a 
        State is awarded a grant under this title, the aggregate 
        expenditures by the State and its political subdivisions on 
        early learning programs and services shall be not less than the 
        level of the expenditures for such programs and services by the 
        State and its political subdivisions for fiscal year 2006.
          (2) State expenditures.--For purposes of paragraph (1), 
        expenditures by the State on early learning programs and 
        services shall include, at a minimum, the following:
                  (A) State matching and maintenance of effort funds 
                for the Child Care and Development Block Grant Act of 
                1990 (42 U.S.C. 9858 et seq.).
                  (B) State matching funds for the State Advisory 
                Council on Early Childhood Education and Care 
                (established pursuant to section 642B(b)(1)(A) of the 
                Head Start Act (42 U.S.C. 9837b(b)(1)(A))).
                  (C) State expenditures on public pre-kindergarten, 
                Head Start (including Early Head Start), and other 
                State early learning programs and services dedicated to 
                children (including State expenditures under part C of 
                the Individuals with Disabilities Education Act (20 
                U.S.C. 1431 et seq.)).
  (g) Prohibitions on Use of Funds.--Funds under this title may not be 
used for any of the following:
          (1) Assessments that provide rewards or sanctions for 
        individual children or teachers.
          (2) A single assessment used as the primary or sole method 
        for assessing program effectiveness.
          (3) Evaluating children other than for--
                  (A) improving instruction or classroom environment;
                  (B) targeting professional development;
                  (C) determining the need for health, mental health, 
                disability, or family support services;
                  (D) informing the quality improvement process at the 
                State level;
                  (E) program evaluation for the purposes of program 
                improvement and parent information; or
                  (F) research conducted as part of the national 
                evaluation required by section 405(2).
  (h) Federal Administration.--
          (1) In general.--With respect to this title, the Secretary 
        shall bear responsibility for obligating and disbursing funds 
        and ensuring compliance with applicable laws and administrative 
        requirements, subject to paragraph (2).
          (2) Interagency agreement.--The Secretary of Education and 
        the Secretary of Health and Human Services shall jointly 
        administer this title on such terms as such secretaries shall 
        set forth in an interagency agreement.

SEC. 403. QUALITY PATHWAYS GRANTS.

  (a) Grant Period.--Grants under section 402(a)--
          (1) may be awarded for a period not to exceed 5 years; and
          (2) may be renewed, subject to approval by the Secretary, and 
        based on the State's progress in--
                  (A) increasing the percentage of disadvantaged 
                children in each age group (infants, toddlers, and 
                preschoolers) who participate in high-quality early 
                learning programs;
                  (B) increasing the number of high-quality early 
                learning programs in low-income communities;
                  (C) implementing an early learning system that 
                includes the components described in subsection (c)(3); 
                and
                  (D) incorporating the findings and recommendations 
                reported by the commission established under section 
                405(1) into the State system of early learning.
  (b) Matching Requirement.--
          (1) In general.--Subject to subsection (g), to be eligible to 
        receive a grant under section 402(a), a State shall contribute 
        to the activities assisted under the grant non-Federal matching 
        funds in an amount equal to not less than the applicable 
        percent of the amount of the grant.
          (2) Applicable percent.--For purposes of paragraph (1), the 
        applicable percent means--
                  (A) 10 percent in the first fiscal year of the grant;
                  (B) 10 percent in the second fiscal year of the 
                grant;
                  (C) 15 percent in the third fiscal year of the grant; 
                and
                  (D) 20 percent in the fourth fiscal year of the grant 
                and subsequent fiscal years.
          (3) Non-federal funds.--A State may use the following to 
        satisfy the requirement of paragraph (1):
                  (A) Cash.
                  (B) In-kind contributions for the acquisition, 
                construction, or improvement of early learning program 
                facilities serving disadvantaged children.
                  (C) Technical assistance related to subparagraph (B).
          (4) Private contributions.--Private contributions made as 
        part of public-private partnerships to increase the number of 
        low-income children in high-quality early learning programs in 
        a State may be used by the State to satisfy the requirement of 
        paragraph (1).
          (5) Financial hardship waiver.--The Secretary may waive or 
        reduce the non-Federal share of a State that has submitted an 
        application for a grant under section 402(a) if the State 
        demonstrates a need for such waiver or reduction due to extreme 
        financial hardship, as defined by the Secretary by regulation.
  (c) State Applications.--In order to be considered for a grant under 
section 402(a), a State's application under section 402(d) shall 
include the following:
          (1) A description of how the State will use the grant to 
        implement quality initiatives to improve early learning 
        programs serving disadvantaged children from birth to age 5 to 
        lead to a greater percentage of such children participating in 
        higher quality early learning programs.
          (2) A description of the goals and benchmarks the State will 
        establish to lead to a greater percentage of disadvantaged 
        children participating in higher quality early learning 
        programs to improve school readiness outcomes, including an 
        established baseline of the number of disadvantaged children in 
        high-quality early learning programs.
          (3) A description of how the State will implement a 
        governance structure and a system of early learning programs 
        and services that includes the following components:
                  (A) Not later than 12 months after receiving notice 
                of an award of the grant, complete State early learning 
                and development standards that include social and 
                emotional, cognitive, and physical development domains, 
                and approaches to learning that are developmentally 
                appropriate (including culturally and linguistically 
                appropriate) for all children.
                  (B) A process to ensure that State early learning and 
                development standards are integrated into the 
                instructional and programmatic practices of early 
                learning programs and services, including services 
                provided to children under section 619 and part C of 
                the Individuals with Disabilities Education Act (20 
                U.S.C. 1419, 1431 et seq.).
                  (C) A program rating system that builds on licensing 
                requirements, as appropriate, and other State 
                regulatory standards and that--
                          (i) is designed to improve quality and 
                        effectiveness across different types of early 
                        learning settings;
                          (ii) integrates evidence-based program 
                        quality standards that reflect standard levels 
                        of quality and has progressively higher levels 
                        of program quality;
                          (iii) integrates the State's early learning 
                        and development standards for the purpose of 
                        improving instructional and programmatic 
                        practices;
                          (iv) addresses quality and effective 
                        inclusion of children with disabilities or 
                        developmental delays across different types of 
                        early learning settings;
                          (v) addresses staff qualifications and 
                        professional development;
                          (vi) provides financial incentives and other 
                        supports to help programs meet and sustain 
                        higher levels of quality;
                          (vii) includes mechanisms for evaluating how 
                        programs are meeting those standards and 
                        progressively higher levels of quality; and
                          (viii) includes a mechanism for public 
                        awareness and understanding of the program 
                        rating system, including rating levels of 
                        individual programs.
                  (D) A system of program review and monitoring that is 
                designed to rate providers using the system described 
                in subparagraph (C) and to assess and improve 
                programmatic practices, instructional practices, and 
                classroom environment.
                  (E) A process to support early learning programs 
                integrating instructional and programmatic practices 
                that--
                          (i) include developmentally appropriate 
                        (including culturally and linguistically 
                        appropriate), ongoing, classroom-based 
                        instructional assessments for each domain of 
                        child development and learning (including 
                        social and emotional, cognitive, and physical 
                        development domains and approaches to learning) 
                        to guide and improve instructional practice, 
                        professional development of staff, and 
                        services; and
                          (ii) are aligned with the curricula used in 
                        the early learning program and with the State 
                        early learning and development standards or the 
                        Head Start Child Outcomes Framework (as 
                        described in the Head Start Act), as 
                        applicable.
                  (F) Minimum preservice early childhood development 
                and education training requirements for providers in 
                early learning programs.
                  (G) A comprehensive plan for supporting the 
                professional preparation and the ongoing professional 
                development of an effective, well-compensated early 
                learning workforce, which plan includes training and 
                education that is sustained, intensive, and classroom-
                focused and leads toward a credential or degree and is 
                tied to improved compensation.
                  (H) An outreach strategy to promote understanding by 
                parents and families of--
                          (i) how to support their child's early 
                        development and learning;
                          (ii) the State's program rating system, as 
                        described in subparagraph (C); and
                          (iii) the rating of the program in which 
                        their child is enrolled.
                  (I) A coordinated system to facilitate screening, 
                referral, and provision of services related to health, 
                mental health, disability, and family support for 
                children participating in early learning programs.
                  (J) A process for evaluating school readiness in 
                children that reflects all of the major domains of 
                development, and that is used to guide practice and 
                improve early learning programs.
                  (K) A coordinated data infrastructure that 
                facilitates--
                          (i) uniform data collection about the quality 
                        of early learning programs, essential 
                        information about the children and families 
                        that participate in such programs, and the 
                        qualifications and compensation of the early 
                        learning workforce in such programs; and
                          (ii) alignment and interoperability between 
                        the data system for early learning programs for 
                        children and data systems for elementary and 
                        secondary education.
          (4) A description of how the funds provided under the grant 
        will be targeted to prioritize increasing the number and 
        percentage of low-income children in high-quality early 
        learning programs, including children--
                  (A) in each age group (infants, toddlers, and 
                preschoolers);
                  (B) with developmental delays and disabilities;
                  (C) with limited English proficiency; and
                  (D) living in rural areas.
          (5) An assurance that the grant will be used to improve the 
        quality of early learning programs across a range of types of 
        settings and providers of such programs.
          (6) A description of the steps the State will take to make 
        progress toward including all center-based child care programs, 
        family child care programs, State-funded prekindergarten, Head 
        Start programs, and other early learning programs, such as 
        those funded under title I of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6301 et seq.) or receiving 
        funds under section 619 or part C of the Individuals with 
        Disabilities Education Act (20 U.S.C. 1419, 1431 et seq.) in 
        the State program rating system described in paragraph (3)(C).
          (7) An assurance that the State, not later than 18 months 
        after receiving notice of an award of the grant, will conduct 
        an analysis of the alignment of the State's early learning and 
        development standards with--
                  (A) appropriate academic content standards for grades 
                kindergarten through 3; and
                  (B) elements of program quality standards for early 
                learning programs.
          (8) An assurance that the grant will be used only to 
        supplement, and not to supplant, Federal, State, and local 
        funds otherwise available to support existing early learning 
        programs and services.
          (9) A description of any disparity by age group (infants, 
        toddlers, and preschoolers) of available high-quality early 
        learning programs in low-income communities and the steps the 
        State will take to decrease such disparity, if applicable.
          (10) A description of how the State early learning and 
        development standards will address the needs of children with 
        limited English proficiency, including by incorporating 
        benchmarks related to English language development.
          (11) A description of how the State's professional 
        development plan will prepare the early learning workforce to 
        support the early learning needs of children with limited 
        English proficiency.
          (12) A description of how the State will improve interagency 
        collaboration and coordinate the purposes of this title with 
        the activities funded under--
                  (A) section 658G of the Child Care and Development 
                Block Grant Act of 1990 (42 U.S.C. 9858e);
                  (B) section 619 and part C of the Individuals with 
                Disabilities Education Act (20 U.S.C. 1419, 1431 et 
                seq.);
                  (C) title I of the Elementary and Secondary Education 
                Act of 1965 (20 U.S.C. 6301 et seq.);
                  (D) State-funded pre-kindergarten programs (where 
                applicable);
                  (E) Head Start programs; and
                  (F) other early childhood programs and services.
          (13) A description of how the State's early learning 
        policies, including child care policies, facilitate access to 
        high-quality early learning programs for children from low-
        income families.
          (14) An assurance that the State will continue to participate 
        in part C of the Individuals with Disabilities Education Act 
        (20 U.S.C. 1431 et seq.) for the duration of the grant.
  (d) Criteria Used in Awarding Grants.--In awarding grants under 
section 402(a), the Secretary shall evaluate the applications, and 
award grants under such section on a competitive basis, based on--
          (1) the quality of the application submitted pursuant to 
        section 402(d);
          (2) the priority factors described in section 402(e);
          (3) evidence of significant progress in establishing a system 
        of early learning for children that includes the components 
        described in subsection (c)(3); and
          (4) the State's capacity to fully complete implementation of 
        such a system.
  (e) Criterion Used in Determining Amount of Award.--In determining 
the amount to award a State under section 402(a), the Secretary shall 
take into account--
          (1) the proportion of children under age 5 from low-income 
        families in the State relative to such proportion in other 
        States; and
          (2) the State plan and capacity to implement the criteria 
        described in paragraphs (3) and (4) of subsection (d).
  (f) State Uses of Funds.--
          (1) In general.--A State receiving a grant under section 
        402(a) shall use the grant as follows:
                  (A) Not less than 65 percent of the grant amount 
                shall be used for two or more of the following 
                activities to improve the quality of early learning 
                programs serving disadvantaged children:
                          (i) Initiatives that improve the credentials 
                        of early learning providers and are tied to 
                        increased compensation.
                          (ii) Initiatives that help early learning 
                        programs meet and sustain higher program 
                        quality standards, such as--
                                  (I) improving the ratio of early 
                                learning provider to children in early 
                                learning settings;
                                  (II) reducing group size;
                                  (III) improving the qualifications of 
                                early learning providers; and
                                  (IV) supporting effective education 
                                and training for early learning 
                                providers.
                          (iii) Implementing classroom observation 
                        assessments and data-driven decisions (which 
                        may include implementation of a research-based 
                        prevention and intervention framework designed 
                        to build social competence and prevent 
                        challenging behaviors) tied to activities that 
                        improve instructional practices, programmatic 
                        practices, or classroom environment and promote 
                        school readiness.
                          (iv) Providing financial incentives to early 
                        learning programs--
                                  (I) for undertaking quality 
                                improvements that promote healthy 
                                development and school readiness; and
                                  (II) maintaining quality improvements 
                                that promote healthy development and 
                                school readiness.
                          (v) Integrating State early learning and 
                        development standards into instructional and 
                        programmatic practices in early learning 
                        programs.
                          (vi) Providing high-quality, sustained, 
                        intensive, and classroom-focused professional 
                        development that improves the knowledge and 
                        skills of early learning providers, including 
                        professional development related to meeting the 
                        needs of diverse populations.
                          (vii) Building the capacity of early learning 
                        programs and communities to promote the 
                        understanding of parents and families of the 
                        State's early learning system and the rating of 
                        the program in which their child is enrolled 
                        and to encourage the active involvement and 
                        engagement of parents and families in the 
                        learning and development of their children.
                          (viii) Building the capacity of early 
                        learning programs and communities to facilitate 
                        screening, referral, and provision of services 
                        related to health, mental health, disability, 
                        and family support for children participating 
                        in early learning programs.
                          (ix) Other innovative activities, proposed by 
                        the State and approved in advance by the 
                        Secretary that are--
                                  (I) based on successful practices;
                                  (II) designed to improve the quality 
                                of early learning programs and 
                                services; and
                                  (III) advance the system components 
                                described in subsection (c)(3).
                  (B) The remainder of the grant amount may be used for 
                one or more of the following:
                          (i) Implementation or enhancement of the 
                        State's data system described in subsection 
                        (c)(3)(K), including interoperability across 
                        agencies serving children, and unique child and 
                        program identifiers.
                          (ii) Enhancement of the State's oversight 
                        system for early learning programs, including 
                        the implementation of a program rating system.
                          (iii) The development and implementation of 
                        measures of school readiness of children that 
                        reflect all of the major domains of child 
                        development and that inform the quality 
                        improvement process.
          (2) Priority.--A State receiving a grant under section 402(a) 
        shall use the grant so as to prioritize improving the quality 
        of early learning programs serving children from low-income 
        families.
  (g) Special Rule.--
          (1) In general.--Beginning with the second fiscal year of a 
        grant under section 402(a), a State with respect to which the 
        Secretary certifies that the State has made sufficient progress 
        in implementing the requirements of the grant may apply to the 
        Secretary to reserve up to 25 percent of the amount of the 
        grant to expand access for children from low-income families to 
        the highest quality early learning programs that offer full-day 
        services, except that the State must agree to contribute for 
        such purpose non-Federal matching funds in an amount equal to 
        not less than 20 percent of the amount reserved under this 
        subsection. One-half of such non-Federal matching funds may be 
        provided by a private entity.
          (2) Non-federal funds.--A State may use the following to 
        satisfy the matching requirement of paragraph (1):
                  (A) Cash.
                  (B) In-kind contributions for the acquisition, 
                construction, or improvement of early learning program 
                facilities serving disadvantaged children.
                  (C) Technical assistance related to subparagraph (B).
          (3) Financial hardship waiver.--The Secretary may waive or 
        reduce the non-Federal share of a State under paragraph (1) if 
        the State demonstrates a need for such waiver or reduction due 
        to extreme financial hardship, as defined by the Secretary by 
        regulation.
  (h) Improvement Plan.--If the Secretary determines that a State 
receiving a grant under section 402(a) is encountering barriers to 
reaching goals described in subsection (c)(2), the State shall develop 
a plan for improvement in consultation with, and subject to approval 
by, the Secretary.

SEC. 404. DEVELOPMENT GRANTS.

  (a) Grant Period.--Grants under section 402(b) may be awarded for a 
period not to exceed 3 years, and may not be renewed.
  (b) State Uses of Funds.--
          (1) In general.--A State receiving a grant under section 
        402(b) shall use the grant to undertake activities to develop 
        the early learning system components described in section 
        403(c)(3) and that will allow a State to become eligible and 
        competitive for a grant described in section 402(a).
          (2) Priority.--A State receiving a grant under section 402(b) 
        shall use the grant so as to prioritize improving the quality 
        of early learning programs serving low-income children.
  (c) Matching Requirement.--
          (1) In general.--To be eligible to receive a grant under 
        section 402(b), a State shall contribute to the activities 
        assisted under the grant non-Federal matching funds in an 
        amount equal to not less than the applicable percent of the 
        amount of the grant.
          (2) Applicable percent.--For purposes of paragraph (1), the 
        applicable percent means--
                  (A) 20 percent in the first fiscal year of the grant;
                  (B) 25 percent in the second fiscal year of the 
                grant; and
                  (C) 30 percent in the third fiscal year of the grant.
          (3) Non-federal funds.--A State may use the following to 
        satisfy the requirement of paragraph (1):
                  (A) Cash.
                  (B) In-kind contributions for the acquisition, 
                construction, or improvement of early learning program 
                facilities serving disadvantaged children.
                  (C) Technical assistance related to subparagraph (B).
          (4) Private contributions.--Private contributions made as 
        part of public-private partnerships to increase the number of 
        low-income children in high-quality early learning programs in 
        a State may be used by the State to satisfy the requirement of 
        paragraph (1).
          (5) Financial hardship waiver.--The Secretary may waive or 
        reduce the non-Federal share of a State that has submitted an 
        application for a grant under section 402(b) if the State 
        demonstrates a need for such waiver or reduction due to extreme 
        financial hardship, as defined by the Secretary by regulation.

SEC. 405. RESEARCH AND EVALUATION.

  From funds reserved under section 402(c)(1), the Secretary of 
Education and the Secretary of Health and Human Services, acting 
jointly, shall carry out the following activities:
          (1) Establishing a national commission whose duties shall 
        include--
                  (A) reviewing the status of State and Federal early 
                learning program quality standards and early learning 
                and development standards;
                  (B) recommending benchmarks for program quality 
                standards and early learning and development standards, 
                including taking into consideration the school 
                readiness needs of children with limited English 
                proficiency; and
                  (C) reporting to the Secretaries of Education and 
                Health and Human Services not later than 2 years after 
                the date of the enactment of this Act on the 
                commission's findings and recommendations.
          (2) Conducting a national evaluation of the grants made under 
        this title through the Institute of Education Science in 
        collaboration with the appropriate research divisions within 
        the Department of Health and Human Services.
          (3) Supporting a research collaborative among the Institute 
        of Education Sciences, the National Institute of Child Health 
        and Human Development, the Office of Planning, Research, and 
        Evaluation within the Administration for Children and Families 
        in the Department of Health and Human Services, and, as 
        appropriate, other Federal entities to support research on 
        early learning that can inform improved State and other 
        standards and licensing requirements and improved child 
        outcomes, which collaborative shall--
                  (A) biennially prepare and publish for public comment 
                a detailed research plan;
                  (B) support early learning research activities that 
                could include determining--
                          (i) the characteristics of early learning 
                        programs that produce positive developmental 
                        outcomes for children;
                          (ii) the effects of program quality standards 
                        on child outcomes;
                          (iii) the relationships between specific 
                        interventions and types of child and family 
                        outcomes;
                          (iv) the effectiveness of early learning 
                        provider training in raising program quality 
                        and improving child outcomes;
                          (v) the effectiveness of professional 
                        development strategies in raising program 
                        quality and improving child outcomes; and
                          (vi) how to improve the school readiness 
                        outcomes of children with limited English 
                        proficiency, special needs, and homeless 
                        children, including evaluation of professional 
                        development programs for working with such 
                        children; and
                  (C) disseminate relevant research findings and best 
                practices.
          (4) Evaluating barriers to improving the quality of early 
        learning programs serving low-income children, including 
        evaluating barriers to successful interagency collaboration and 
        coordination, by conducting a review of the statewide strategic 
        reports developed by the State Advisory Councils on Early Care 
        and Education and other relevant reports, reporting the 
        findings of such review to Congress, and disseminating relevant 
        research findings and best practices.

SEC. 406. REPORTING REQUIREMENTS.

  (a) Reports to Congress.--For each year in which funding is provided 
under this title, the Secretary shall submit an annual report to the 
Committee on Education and Labor of the House of Representatives and 
the Committee on Health, Education, Labor and Pensions of the Senate on 
the activities carried out under this title, including, at a minimum, 
information on the following:
          (1) The activities undertaken by States to increase the 
        availability of high-quality early learning programs.
          (2) The number of children in high-quality early learning 
        programs, and the change from the prior year, disaggregated by 
        State, age, and race.
          (3) The number of early learning providers enrolled, with 
        assistance from funds under this title, in a program to obtain 
        a credential or degree in early childhood education and the 
        settings in which such providers work.
          (4) A summary of State progress in implementing a system of 
        early learning with the components described in section 
        403(c)(3).
          (5) A summary of the research activities being conducted 
        under section 405 and the findings of such research.
  (b) Reports to Secretary.--Each State that receives a grant under 
this title shall submit to the Secretary an annual report that 
includes, at a minimum, information on the activities carried out by 
the State under this title, including the following:
          (1) The progress on fully implementing and integrating into a 
        system of early learning each of the components described in 
        section 403(c)(3).
          (2) The State's progress in meeting its goals for increasing 
        the number of disadvantaged children participating in high-
        quality early learning programs, disaggregated by child age.
          (3) The number and percentage of disadvantaged children 
        participating in early learning programs at each level of 
        quality, disaggregated by race, family income, child age, 
        disability, and limited English proficiency status.
          (4) The number of providers participating in the State 
        quality rating system, disaggregated by setting, rating, and 
        the number of high-quality providers available in low-income 
        communities.
          (5) Information on how the funds provided under this title 
        were used to increase the availability of high-quality early 
        learning programs for each age group, disaggregated by race and 
        limited English proficient status, to the maximum extent 
        practicable.
          (6) Information on professional development and training 
        expenditures, including--
                  (A) the number of early learning providers engaged in 
                such activities; and
                  (B) the number of early learning providers enrolled 
                in programs to obtain a credential or degree in early 
                childhood education, disaggregated by the type of 
                credential and degree.
          (7) The change in the number and percentage of early learning 
        providers with appropriate credentials or degrees in early 
        childhood education, including the change in compensation given 
        to such providers, in comparison to the prior fiscal year, 
        disaggregated by early learning setting and the type of 
        credential or degree.
          (8) In the case of a State receiving a grant under section 
        402(a), the percentage of children receiving assistance under 
        the Child Care and Development Block Grant Act of 1990 (42 
        U.S.C. 9858 et seq.) who participate in the highest quality 
        early learning programs, disaggregated by program setting and 
        child age.
          (9) Barriers to expanding access to high-quality early 
        learning programs for disadvantaged children.

SEC. 407. CONSTRUCTION.

  Nothing in this title--
          (1) shall be construed to require a child to participate in 
        an early learning program; or
          (2) shall be used to deny entry to kindergarten for any 
        individual if the individual is legally eligible, as defined by 
        State or local law.

SEC. 408. DEFINITIONS.

  For purposes of this title:
          (1) Child.--The term ``child'' refers to an individual from 
        birth through the day the individual enters kindergarten.
          (2) Disadvantaged.--The term ``disadvantaged'', when used 
        with respect to a child, means a child whose family income is 
        described in section 658P(4)(B) of the Child Care and 
        Development Block Grant Act of 1990 (42 U.S.C. 9858n(4)(B)).
          (3) Indian tribe.--The term ``Indian tribe'' has the meaning 
        given such term in section 637 of the Head Start Act (42 U.S.C. 
        9832).
          (4) Limited english proficient.--The term ``limited English 
        proficient'' has the meaning given such term in section 637 of 
        the Head Start Act (42 U.S.C. 9832).
          (5) Secretary.--The term ``Secretary'' means the Secretary of 
        Education.
          (6) State.--The term ``State'' has the meaning given such 
        term in section 9101 of the Elementary and Secondary Education 
        Act of 1965 (20 U.S.C. 7801).

SEC. 409. AVAILABILITY OF FUNDS.

  There are authorized to be appropriated, and there are appropriated, 
to carry out this title (in addition to any other amounts appropriated 
to carry out this title and out of any money in the Treasury not 
otherwise appropriated) $1,000,000,000 for each of fiscal years 2010 
through 2017.

                TITLE V--AMERICAN GRADUATION INITIATIVE

SEC. 501. AUTHORIZATION AND APPROPRIATION.

  (a) Authorization and Appropriation.--There are authorized to be 
appropriated, and there are appropriated, to carry out this title (in 
addition to any other amounts appropriated to carry out this title and 
out of any money in the Treasury not otherwise appropriated), 
$730,000,000 for each of the fiscal years 2010 through 2013, and 
$680,000,000 for each of the fiscal years 2014 through 2019.
  (b) Allocations.--Of the amount appropriated under subsection (a)--
          (1) $630,000,000 shall be made available for each of the 
        fiscal years 2010 through 2013 to carry out section 503;
          (2) $630,000,000 shall be made available for each of the 
        fiscal years 2014 through 2019 to carry out section 504;
          (3) $50,000,000 shall be made available for each of the 
        fiscal years 2010 through 2019 to carry out subsection (a) of 
        section 505; and
          (4) $50,000,000 shall be made available for each of the 
        fiscal years 2010 through 2013 to carry out subsections (b) and 
        (c) of section 505.
  (c) Responsibility.--
          (1) In general.--With respect to sections 503 and 504, the 
        Secretary of Education shall bear the responsibility for 
        obligating and disbursing funds under such sections and 
        ensuring compliance with applicable law and administrative 
        requirements, subject to paragraph (2).
          (2) Interagency agreement.--The Secretary of Education and 
        the Secretary of Labor shall jointly administer sections 503 
        and 504 on such terms as such Secretaries shall set forth in an 
        interagency agreement.

SEC. 502. DEFINITIONS; GRANT PRIORITY.

  (a) Definitions.--In this title:
          (1) Area career and technical education school.--The term 
        ``area career and technical education school'' has the meaning 
        given such term in section 3 of the Carl D. Perkins Career and 
        Technical Education Act of 2006 (20 U.S.C. 2302).
          (2) Community college.--The term ``community college'' means 
        a public institution of higher education at which the highest 
        degree that is predominantly awarded to students is an 
        associate's degree.
          (3) Eligible entity.--The term ``eligible entity'' means--
                  (A) a community college or community college 
                district;
                  (B) an area career and technical education school;
                  (C) a public four-year institution of higher 
                education that--
                          (i) offers two-year degrees;
                          (ii) will use funds provided under this 
                        section for activities at the certificate and 
                        associate degree levels; and
                          (iii) is not reasonably close, as determined 
                        by the Secretary, to a community college;
                  (D) a public four-year institution of higher 
                education that is in partnership with an eligible 
                entity described in subparagraph (A), (B), or (C);
                  (E) a State that--
                          (i) is in compliance with section 137 of the 
                        Higher Education Act of 1965 (20 U.S.C. 1015f);
                          (ii) has an articulation agreement pursuant 
                        to section 486A of such Act (20 U.S.C. 1093a); 
                        and
                          (iii) is in partnership with an eligible 
                        entity described in subparagraph (A), (B), (C), 
                        or (D); or
                  (F) a consortium of at least 2 entities described in 
                subparagraphs (A) through (E).
          (4) Industry or sector partnership.--The term ``industry or 
        sector partnership'' has the meaning given such term in section 
        782(f) of the Higher Education Act of 1965.
          (5) Institution of higher education.--The term ``institution 
        of higher education'' has the meaning given such term in 
        section 101 of the Higher Education Act of 1965 (20 U.S.C. 
        1001).
          (6) Philanthropic organization.--The term ``philanthropic 
        organization'' has the meaning given such term in section 
        781(i) of the Higher Education Act of 1965 (20 U.S.C. 1141(i)).
          (7) Secretary.--The term ``Secretary'' means the Secretary of 
        Education.
          (8) State.--The term ``State'' has the meaning given such 
        term in section 103 of the Higher Education Act of 1965 (20 
        U.S.C. 1003).
          (9) State public employment service.--The term ``State public 
        employment service'' refers to a State public employment 
        service established under the Wagner-Peyser Act (29 U.S.C. 49 
        et seq.).
          (10) State workforce investment board; local workforce 
        investment board.--The terms ``State workforce investment 
        board'' and ``local workforce investment board'' refer to a 
        State workforce investment board established under section 111 
        of the Workforce Investment Act (29 U.S.C. 2821) and a local 
        workforce investment board established under section 117 of 
        such Act (29 U.S.C. 2832), respectively.
          (11) Supportive services.--The term ``supportive services'' 
        has the meaning given such term in section 101(46) of the 
        Workforce Investment Act of 1998 (29 U.S.C. 2801(46)).
  (b) Grant Priority.--In addition to any grant priorities established 
under any other provision of this title, the Secretary, in awarding 
grants under this title, shall give priority to applications focused on 
serving low-income, nontraditional students who do not have a 
bachelor's degree, and who have one or more of the following 
characteristics:
          (1) Are the first generation in their family to attend 
        college.
          (2) Have delayed enrollment in college.
          (3) Have dependents.
          (4) Are independent students.
          (5) Work at least 25 hours per week.
          (6) Are out-of-school youth without a high school diploma.

SEC. 503. GRANTS TO ELIGIBLE ENTITIES FOR COMMUNITY COLLEGE REFORM.

  (a) Program Authorization.--
          (1) Grants authorized.--
                  (A) In general.--Subject to paragraph (2), from the 
                amount appropriated to carry out this section, the 
                Secretary, in coordination with the Secretary of Labor, 
                shall award grants to eligible entities, on a 
                competitive basis, to establish and support programs 
                described in subparagraph (B) at eligible entities 
                described in subparagraphs (A) through (D) of section 
                502(a)(3).
                  (B) Programs.--The programs to be established and 
                supported with grants under subparagraph (A) (and 
                carried out through activities described in subsection 
                (f)) shall be programs--
                          (i) that are--
                                  (I) innovative programs; or
                                  (II) programs of demonstrated 
                                effectiveness, based on the evaluations 
                                of similar programs funded by the 
                                Department of Education or the 
                                Department of Labor, or other research 
                                of similar programs; and
                          (ii) that lead to the completion of a 
                        postsecondary degree, certificate, or industry-
                        recognized credential leading to a skilled 
                        occupation in a high-demand industry.
          (2) Limitation.--For each fiscal year for which funds are 
        appropriated to carry out this section, the aggregate amount of 
        the grants awarded to eligible entities that are States, or 
        consortia that include a State, shall be not more than 50 
        percent of the total amount appropriated under section 
        501(b)(1) for such fiscal year.
          (3) Prohibition.--The Secretary shall not award a grant to an 
        eligible entity for the same activities that are being 
        supported by other Federal funds.
  (b) Grant Duration and Amount.--
          (1) Duration.--A grant under this section shall be awarded to 
        an eligible entity for a 4-year period, except that if the 
        Secretary determines that the eligible entity has not made 
        demonstrable progress in achieving the benchmarks developed 
        pursuant to subsection (g) by the end of the third year of such 
        grant period, no further grant funds shall be made available to 
        the entity after the date of such determination.
          (2) Amount.--The minimum amount of a total grant award under 
        this section over the 4-year period of the award shall be 
        $750,000.
  (c) Priority.--In awarding grants under this section, the Secretary 
shall give priority to eligible entities that--
          (1) enter into partnerships with--
                  (A) philanthropic or research organizations with 
                expertise in meeting the goals of this section;
                  (B) businesses or industry or sector partnerships 
                that--
                          (i) design and implement programs described 
                        in subsection (a)(1)(B);
                          (ii) pay a portion of the costs of such 
                        programs; and
                          (iii) agree to collaborate with one or more 
                        eligible entities to hire individuals who have 
                        completed a particular postsecondary degree, 
                        certificate, or credential program; or
                  (C) labor organizations that provide technical 
                expertise for occupationally specific education 
                necessary for an industry-recognized credential leading 
                to a skilled occupation in a high-demand industry; or
          (2) are institutions of higher education eligible for 
        assistance under title III or V of the Higher Education Act of 
        1965, or consortia that include such an institution.
  (d) Federal and Non-Federal Share; Supplement, Not Supplant.--
          (1) Federal share.--The amount of the Federal share under 
        this section for a fiscal year shall be not greater than \1/2\ 
        of the costs of the programs, services, and policies described 
        in subsection (f) that are carried out under the grant.
          (2) Non-federal share.--
                  (A) In general.--The amount of the non-Federal share 
                under this section for a fiscal year shall be not less 
                than \1/2\ of the costs of the programs, services, and 
                policies described in subsection (f) that are carried 
                out under the grant. The non-Federal share may be in 
                cash or in kind, and may be provided from State 
                resources, local resources, contributions from private 
                organizations, or a combination thereof.
                  (B) Financial hardship waiver.--The Secretary may 
                waive or reduce the non-Federal share of an eligible 
                entity that has submitted an application under this 
                section if the entity demonstrates a need for such 
                waiver or reduction due to extreme financial hardship, 
                as defined by the Secretary by regulation.
          (3) Supplement, not supplant.--The Federal and non-Federal 
        shares required by this section shall be used to supplement, 
        and not supplant, State and private resources that would 
        otherwise be expended to establish and support programs 
        described in subsection (a)(1)(B) at eligible entities.
  (e) Application.--An eligible entity seeking to receive a grant under 
this section shall submit to the Secretary an application at such time, 
in such manner, and containing such information as the Secretary may 
require. Such application shall describe the programs under subsection 
(a)(1)(B) that the eligible entity will carry out using the grant 
funds, (including the programs, services, and policies under subsection 
(f)), including--
          (1) the goals of such programs, services, and policies;
          (2) how the eligible entity will allocate grant funds for 
        such programs, services, and policies;
          (3) how such programs, services, and policies, and the 
        resources of the eligible entity, will enable the eligible 
        entity to meet the benchmarks developed pursuant to subsection 
        (g), and how the eligible entity will track and report the 
        entity's progress in reaching such benchmarks;
          (4) how the eligible entity will use such programs, services, 
        and policies to establish quantifiable targets for improving 
        graduation rates and employment-related outcomes;
          (5) how the eligible entity will serve high-need populations 
        through such programs, services, and policies;
          (6) how the eligible entity will partner with industry or 
        sector partnerships in the State, the State public employment 
        service, and State or local workforce investment boards in 
        carrying out such programs, services, and policies;
          (7) an assurance that the eligible entity will share 
        information with the Learning and Earning Research Center 
        established under section 505(b), once such Center is 
        established;
          (8) an assurance that the eligible entity will participate in 
        the evaluation of such programs, services, and policies under 
        subsection (i); and
          (9) the potential for such programs, services, and policies 
        to be replicated at other institutions of higher education.
  (f) Uses of Funds.--An eligible entity receiving a grant under this 
section shall use the grant funds to carry out the programs described 
in subsection (a)(1)(B), which shall include at least 2 of the 
following activities:
          (1) Developing and implementing policies and programs to 
        expand opportunities for students at eligible entities 
        described in subparagraphs (A) through (D) of section 502(a)(3) 
        to earn bachelor's degrees by--
                  (A) facilitating the transfer of academic credits 
                between institutions of higher education, including the 
                transfer of academic credits for courses in the same 
                field of study; and
                  (B) expanding articulation agreements and guaranteed 
                transfer agreements between such institutions, 
                including through common course numbering and general 
                core curriculum.
          (2) Expanding, enhancing, or creating academic programs or 
        training programs, which shall be carried out with industry or 
        sector partnerships or in partnership with employers and may 
        include other relevant partners, that provide relevant job-
        skill training (including apprenticeships and worksite learning 
        and training opportunities) for skilled occupations in high-
        demand industries.
          (3) Providing student support services, including--
                  (A) intensive career and academic advising;
                  (B) labor market information and job counseling; and
                  (C) transitional job support, supportive services, or 
                assistance in connecting students with community 
                resources.
          (4) Creating workforce programs that provide a sequence of 
        education and occupational training that leads to industry-
        recognized credentials, including programs that--
                  (A) blend basic skills and occupational training that 
                lead to industry-recognized credentials;
                  (B) integrate developmental education curricula and 
                instruction with for-credit coursework toward degree or 
                certificate pathways; or
                  (C) advance individuals on a career path toward high-
                wage occupations in high-demand industries.
          (5) Building or enhancing linkages, including the development 
        of dual enrollment programs and early college high schools, 
        between--
                  (A) secondary education or adult education programs 
                (including programs established under the Carl D. 
                Perkins Career and Technical Education Act of 2006 and 
                title II of the Workforce Investment Act of 1998 (29 
                U.S.C. 9201 et seq.)); and
                  (B) eligible entities described in subparagraphs (A) 
                through (D) of section 502(a)(3).
          (6) Implementing other innovative programs, services, and 
        policies designed to--
                  (A) increase postsecondary degree, certificate, and 
                industry-recognized credential completion rates, 
                particularly with respect to groups underrepresented in 
                higher education, at eligible entities described in 
                subparagraphs (A) through (D) of section 502(a)(3); and
                  (B) increase the provision of training for students 
                to enter skilled occupations in high-demand industries.
          (7) Improving the timeliness of the process for creating 
        degree, certificate, and industry-recognized credential 
        programs at eligible entities described in subparagraphs (A) 
        through (D) of section 502(a)(3) that--
                  (A) reflect and respond to regional labor market 
                developments and trends;
                  (B) effectively address the workforce needs of 
                employers in the State; and
                  (C) are designed in consultation with such employers.
  (g) Benchmarks.--
          (1) In general.--Each eligible entity receiving a grant under 
        this section shall develop quantifiable benchmarks on the 
        following indicators (where applicable), to be approved by the 
        Secretary:
                  (A) Closing gaps in enrollment and completion rates 
                for--
                          (i) groups underrepresented in higher 
                        education; and
                          (ii) groups of students enrolled at the 
                        eligible entity (or at an institution of higher 
                        education under the jurisdiction of the 
                        eligible entity, in the case of an entity that 
                        is not an institution) who have the lowest 
                        enrollment and completion rates.
                  (B) Addressing local and regional workforce needs.
                  (C) Establishing articulation agreements between two-
                year and four-year public institutions of higher 
                education within a State.
                  (D) Improving comprehensive employment and 
                educational outcomes for postsecondary education and 
                training programs, including--
                          (i) student persistence from one academic 
                        year to the following academic year;
                          (ii) the number of credits students earn 
                        toward a certificate or an associate's degree;
                          (iii) the number of students in developmental 
                        education courses who subsequently enroll in 
                        credit bearing coursework;
                          (iv) transfer of general education credits 
                        between institutions of higher education, as 
                        applicable;
                          (v) completion of industry-recognized 
                        credentials or associate's degrees to work in 
                        skilled occupations in high-demand industries;
                          (vi) transfers to four-year institutions of 
                        higher education; and
                          (vii) job placement related to skills 
                        training or associate's degree completion.
          (2) Report.--The eligible entity receiving such a grant shall 
        annually measure and report to the Secretary the progress of 
        the entity in achieving the benchmarks developed pursuant to 
        paragraph (1).
  (h) Provision of Transfer of Credit Information in Community College 
Course Schedules.--To the maximum extent practicable, each community 
college receiving a grant under this section shall include in each 
electronic and printed publication of the college's course schedule, in 
a manner of the college's choosing, for each course listed in the 
college's course schedule, whether such course is transferable for 
credit toward the completion of a 4-year baccalaureate degree at a 
public institution of higher education in the State in which the 
college is located.
  (i) Evaluation.--The Secretary shall allocate not more than two 
percent of the funds appropriated under section 501(b)(1) to the 
Institute of Education Sciences to conduct evaluations, ending not 
later than January 30, 2014, that--
          (1) assess the effectiveness of the grant programs carried 
        out by each eligible entity receiving such a grant in--
                  (A) improving postsecondary education completion 
                rates (disaggregated by age, race, ethnicity, sex, 
                income, and disability);
                  (B) improving employment-related outcomes for 
                students served by such programs;
                  (C) serving high-need populations; and
                  (D) building or enhancing working partnerships with 
                the State public employment service or State or local 
                workforce investment boards; and
          (2) include any other information or assessments the 
        Secretary may require.
  (j) Report.--The Secretary shall submit to the Committee on Health, 
Education, Labor, and Pensions of the Senate and the Committee on 
Education and Labor of the House of Representatives an annual report on 
grants awarded under this section, including--
          (1) the amount awarded to each eligible entity under this 
        section;
          (2) a description of the activities conducted by each 
        eligible entity receiving a grant under this section; and
          (3) a summary of the results of the evaluations submitted to 
        the Secretary under subsection (i) and the progress each 
        eligible entity made toward achieving the benchmarks developed 
        under subsection (g).

SEC. 504. GRANTS TO ELIGIBLE STATES FOR COMMUNITY COLLEGE PROGRAMS.

  (a) Program Authorization.--From the amount appropriated to carry out 
this section, the Secretary, in coordination with the Secretary of 
Labor, shall award grants to eligible States, on a competitive basis, 
to implement the systematic reform of community colleges located in the 
State by carrying out programs, services, and policies that 
demonstrated effectiveness under the evaluation described in section 
503(i).
  (b) Eligible State.--In this section, the term ``eligible State'' 
means a State that demonstrates to the Secretary in the application 
submitted pursuant to subsection (e) that the State--
          (1) has a plan under section 782 of the Higher Education Act 
        of 1965 to increase the State's rate of persistence in and 
        completion of postsecondary education that takes into 
        consideration and involves community colleges located in such 
        State;
          (2) has a statewide longitudinal data system that includes 
        data with respect to community colleges;
          (3) has an articulation agreement pursuant to section 486A of 
        the Higher Education Act of 1965 (20 U.S.C. 1093a);
          (4) is in compliance with section 137 of such Act (20 U.S.C. 
        1015f); and
          (5) meets any other requirements the Secretary may require.
  (c) Grant Duration; Renewal.--A grant awarded under this section 
shall be awarded to an eligible State for a 6-year period, except that 
if the Secretary determines that the eligible State has not made 
demonstrable progress in achieving the benchmarks developed pursuant to 
subsection (g) by the end of the third year of the grant period, no 
further grant funds shall be made available to the entity after the 
date of such determination.
  (d) Federal and Non-Federal Share; Supplement, Not Supplant.--
          (1) Federal share.--The amount of the Federal share under 
        this section for a fiscal year shall be not greater than \1/2\ 
        of the costs of the reform described in subsection (f) that is 
        carried out with the grant.
          (2) Non-federal share.--
                  (A) In general.--The amount of the Non-Federal share 
                under this section for a fiscal year shall be not less 
                than \1/2\ of the costs of the reform described in 
                subsection (f) that is carried out with the grant. The 
                non-Federal share may be in cash or in kind, and may be 
                provided from State resources, local resources, 
                contributions from private organizations, or a 
                combination thereof.
                  (B) Financial hardship waiver.--The Secretary may 
                waive or reduce the non-Federal share of an eligible 
                State that has submitted an application under this 
                section if the State demonstrates a need for such 
                waiver or reduction due to extreme financial hardship, 
                as defined by the Secretary by regulation.
          (3) Supplement, not supplant.--The Federal and non-Federal 
        share required by this section shall be used to supplement, and 
        not supplant, State and private resources that would otherwise 
        be expended to carry out the systematic reform of community 
        colleges in a State.
  (e) Application.--An eligible State desiring to receive a grant under 
this section shall submit to the Secretary an application at such time, 
in such manner, and containing such information as the Secretary may 
require. Such application shall describe the programs, service, and 
policies to be used by the State to achieve the systematic reform 
described in subsection (f), including--
          (1) the goals of such programs, services, and policies;
          (2) how the State will allocate grant funds to carry out such 
        programs, services, and policies, including identifying any 
        State or private entity that will administer such programs, 
        services, and policies;
          (3) how such programs, services, and policies will enable the 
        State to--
                  (A) meet the benchmarks developed pursuant to 
                subsection (g), and how the State will track and report 
                the State's progress in reaching such benchmarks; and
                  (B) benefit students attending all community colleges 
                within the State;
          (4) how the State will use such programs, services, and 
        policies to establish quantifiable targets for improving 
        graduation rates and employment-related outcomes;
          (5) how the State will serve high-need populations through 
        such programs, services, and policies;
          (6) how the State will partner with the State public 
        employment service and State or local workforce investment 
        boards in carrying out such programs, services, and policies;
          (7) how the State will evaluate such programs, services, and 
        policies, which may include participation in national 
        evaluations; and
          (8) how the State will involve community colleges and 
        community college faculty in the planning, implementation, and 
        evaluation of such programs, services, and policies.
  (f) Uses of Funds.--An eligible State receiving a grant under this 
section shall use the grant funds to implement the systematic reform of 
community colleges located in the State by carrying out programs, 
services, and policies that the Secretary has determined to have 
demonstrated effectiveness based on the results of the evaluation 
described in section 503(i). States shall allocate not less than 90 
percent of such grant funds to community colleges within the State.
  (g) Benchmarks.--
          (1) In general.--Each eligible State receiving a grant under 
        this section shall, in consultation with the Secretary, develop 
        quantifiable benchmarks on the indicators identified in section 
        503(f)(1).
          (2) Progress.--An eligible State receiving such a grant shall 
        annually measure and report to the Secretary progress in 
        achieving the benchmarks developed pursuant to paragraph (1).
  (h) Report.--
          (1) Reports to the secretary.--Each eligible State receiving 
        a grant under this section shall annually submit to the 
        Secretary and the Secretary of Labor a report on such grant, 
        including--
                  (A) a description of the systematic reform carried 
                out by the State using such grant; and
                  (B) the outcome of such reform, including the State's 
                progress in achieving the benchmarks developed under 
                subsection (g).
          (2) Reports to congress.--Not later than 6 months after the 
        end of the grant period, the Secretary shall submit to the 
        Committee on Health, Education, Labor, and Pensions of the 
        Senate and the Committee on Education and Labor of the House of 
        Representatives a summary of the reports submitted under 
        paragraph (1) with respect to such grant period.
  (i) Sense of Congress.--It is the sense of Congress that--
          (1) community colleges play an important role in preparing 
        and training students seeking to enter the workforce;
          (2) it is vital that all States have access to the resources 
        and assistance needed to compete for grants authorized under 
        this section; and
          (3) in executing the grant program authorized under this 
        section, the Secretary will make available any and all 
        assistance, guidance, and support to States seeking to compete 
        for grants authorized under this section and will work to 
        ensure that such grants are distributed in a fair and equitable 
        manner.

SEC. 505. NATIONAL ACTIVITIES.

  (a) Open Online Education.--From the amount appropriated to carry out 
this section, the Secretary is authorized to make competitive grants 
to, or enter into contracts with, institutions of higher education, 
philanthropic organizations, and other appropriate entities to develop, 
evaluate, and disseminate freely-available high-quality online 
training, high school courses, and postsecondary education courses. 
Entities receiving funds under this subsection shall ensure that 
electronic and information technology activities meet the access 
standards established under section 508 of the Rehabilitation Act of 
1973 (29 U.S.C. 794d).
  (b) Learning and Earning Research Center.--
          (1) In general.--From the amount appropriated to carry out 
        this section, the Director of the Institute of Education 
        Sciences is authorized to award a grant to, or enter into a 
        contract with, an organization with demonstrated expertise in 
        the research and evaluation of community colleges to establish 
        and operate the Learning and Earning Research Center (in this 
        section referred to as the ``Center'').
          (2) Grant term.--The grant or contract awarded under this 
        section shall be awarded for a period of not more than 4 years.
          (3) Board.--The Center shall have an independent advisory 
        board of 9 individuals who--
                  (A) are appointed by the Secretary, based on 
                recommendations from the organization receiving the 
                grant or contract under this section; and
                  (B) who have demonstrated expertise in--
                          (i) data collection;
                          (ii) data analysis; and
                          (iii) econometrics, postsecondary education, 
                        and workforce development research.
          (4) Center activities.--The Center shall--
                  (A) develop--
                          (i) peer-reviewed metrics to help consumers 
                        make sound education and training choices, and 
                        to help students, workers, schools, businesses, 
                        researchers, and policymakers assess the 
                        effectiveness of community colleges, and 
                        courses of study at such colleges, in meeting 
                        education and employment objectives and serving 
                        groups that are underrepresented in 
                        postsecondary education;
                          (ii) common metrics and data elements to 
                        measure the education and employment outcomes 
                        of students attending community colleges;
                  (B) coordinate with the Institute of Education 
                Sciences and States receiving a grant under subsection 
                (c) to develop--
                          (i) standardized data elements, definitions, 
                        and data-sharing protocols to make it possible 
                        for data systems related to postsecondary 
                        education to be linked and interoperable, and 
                        for best practices to be shared among States;
                          (ii) standards and processes for facilitating 
                        sharing of data in a manner that safeguards 
                        student privacy; and
                  (C) develop and make widely available materials 
                analyzing best practices and research on successful 
                postsecondary education and training efforts;
                  (D) make the data and metrics developed pursuant to 
                subparagraph (A) available to the public in a 
                transparent, user-friendly format that is accessible to 
                individuals with disabilities; and
                  (E) consult with representatives from States with 
                respect to the activities of the Center.
  (c) State Systems.--
          (1) In general.--From the amount appropriated to carry out 
        this section, the Secretary is authorized to award grants to 
        States or consortia of States to establish cooperative 
        agreements to develop, implement, and expand interoperable 
        statewide longitudinal data systems that--
                  (A) collect, maintain, disaggregate (by institution, 
                income, race, ethnicity, sex, disability, and age), and 
                analyze student data from community colleges, including 
                data on the programs of study and education and 
                employment outcomes for particular students, tracked 
                over time; and
                  (B) can be linked to other data systems, as 
                applicable, including elementary and secondary 
                education and workforce data systems.
          (2) Supplement, not supplant.--Funds appropriated to carry 
        out this subsection shall be used to supplement, and not 
        supplant, other Federal and State resources that would 
        otherwise be expended to carry out statewide longitudinal data 
        systems, including funding appropriated for State Longitudinal 
        Data Systems in the American Recovery and Reinvestment Act of 
        2009 (Public Law 111-5; 123 Stat. 115).
          (3) Privacy and access to data.--
                  (A) In general.--Each State or consortia that 
                receives a grant under this subsection or any other 
                provision of this Act shall implement measures to--
                          (i) ensure that the statewide longitudinal 
                        data system under this subsection and any other 
                        data system the State or consortia is operating 
                        for the purposes of this Act meet the 
                        requirements of section 444 of the General 
                        Education Provisions Act (20 U.S.C. 1232g) 
                        (commonly known as the ``Family Educational 
                        Rights and Privacy Act of 1974'');
                          (ii) limit the use of information in any such 
                        data system by governmental agencies in the 
                        State, including State agencies, State 
                        educational authorities, local educational 
                        agencies, community colleges, and institutions 
                        of higher education, to education and workforce 
                        related activities under this Act or education 
                        and workforce related activities otherwise 
                        permitted by Federal or State law;
                          (iii) prohibit the disclosure of personally 
                        identifiable information except as permitted 
                        under section 444 of the General Education 
                        Provisions Act and any additional limitations 
                        set forth in State law;
                          (iv) keep an accurate accounting of the date, 
                        nature, and purpose of each disclosure of 
                        personally identifiable information in any such 
                        data system, a description of the information 
                        disclosed, and the name and address of the 
                        person, agency, institution, or entity to whom 
                        the disclosure is made, which accounting shall 
                        be made available on request to parents of any 
                        student whose information has been disclosed;
                          (v) notwithstanding section 444 of the 
                        General Education Provisions Act, require any 
                        non-governmental party obtaining personally 
                        identifiable information to sign a data use 
                        agreement prior to disclosure that--
                                  (I) prohibits the party from further 
                                disclosing the information;
                                  (II) prohibits the party from using 
                                the information for any purpose other 
                                than the purpose specified in the 
                                agreement; and
                                  (III) requires the party to destroy 
                                the information when the purpose for 
                                which the disclosure was made is 
                                accomplished;
                          (vi) maintain adequate security measures to 
                        ensure the confidentiality and integrity of any 
                        such data system, such as protecting a student 
                        record from identification by a unique 
                        identifier;
                          (vii) where rights are provided to parents 
                        under this clause, provide those rights to the 
                        student instead of the parent if the student 
                        has reached the age of 18 or is enrolled in a 
                        postsecondary educational institution; and
                          (viii) ensure adequate enforcement of the 
                        requirements of this paragraph.
                  (B) Use of unique identifiers.--It shall be unlawful 
                for any Federal, State, or local governmental agency 
                to--
                          (i) use the unique identifiers employed in 
                        such data systems for any purpose other than as 
                        authorized by Federal or State law; or
                          (ii) deny any individual any right, benefit, 
                        or privilege provided by law because of such 
                        individual's refusal to disclose the 
                        individual's unique identifier.
  (d) Report.--The Secretary shall submit to the Committee on Health, 
Education, Labor, and Pensions of the Senate and the Committee on 
Education and Labor of the House of Representatives an annual report on 
the amounts awarded to entities receiving grants or contracts under 
this section, and the activities carried out by such entities under 
such grants and contracts.

                               I. Purpose

    The purpose of H.R. 3221, the Student Aid and Fiscal 
Responsibility Act of 2009 is to reform the federal student 
loan program, provide for modernization, renovation and repair 
of public school facilities, enhance early learning, and 
strengthen community colleges.

                          II. Committee Action


                             110TH CONGRESS

Committee on Education and Labor Hearing: ``Investing in Early 
        Education: Paths To Improving Children's Success''

    On January 23, 2008, the Committee on Education and Labor 
held a hearing in Washington, D.C., entitled ``Investing in 
Early Education: Paths to Improving Children's Success.'' The 
hearing examined the need for expanding access to affordable 
high-quality early education opportunities through federal 
investments as part of improving student success in elementary 
school and beyond. Panelists testified to the science of early 
brain development and the experiences in the first five years 
of life that foster healthy development and academic success, 
the research on high quality pre-kindergarten, the state and 
local challenges to building a high quality early learning 
system, and the business community's interest in investing in 
early childhood education. The following witnesses testified 
before the Committee: Deborah Phillips, Ph.D., Professor of 
Psychology Georgetown University, Washington, D.C.; Kathleen 
Priestley, Early Education Coordinator for the City of Orange 
School District, Orange, NJ; Elisabeth Chun, Executive 
Director, Good Beginnings Alliance, Honolulu, Hawaii; Charles 
Kolb, President, Committee on Economic Development, Washington, 
D.C., Eric Karolak, Ph.D., Executive Director, Early Care and 
Education Consortium, Washington, D.C.; Ron Haskins, Ph.D., 
Senior Fellow, Economic Studies, Brookings Institution, 
Washington, D.C.

Full Committee hearing on ``Modern Public School Facilities: Investing 
        in the Future''

    On Wednesday, February 13, 2008, the Committee on Education 
and Labor held a hearing in Washington, D.C., on ``Modern 
Public School Facilities: Investing in the Future.'' The 
purpose of the hearing was to highlight the poor quality of 
public school buildings frequently found throughout the United 
States, particularly in low-income areas, and the importance of 
federal investment in public school buildings.

Introduction of the ``21st Century High-Performing Public School 
        Facilities Act''

    On Thursday, July 12, 2007, Representatives Ben Chandler 
(D-KY), George Miller (D-CA), and Dale Kildee (D-MI) introduced 
H.R. 3021, the 21st Century High-Performing Public School 
Facilities Act, a bill to direct the Secretary of Education to 
make grants and low-interest loans to local educational 
agencies for the construction, modernization, or repair of 
public kindergarten, elementary, and secondary educational 
facilities, and for other purposes. The House of 
Representatives passed H.R. 3021 by a vote of 250-164 with all 
Democrats present and 27 Republicans voting in favor. The bill 
was referred to the Senate Committee on Health, Education, 
Labor and Pensions.

Related legislative action

    On September 26, 2008, the House passed H.R. 7110, the Job 
Creation and Unemployment Relief Act of 2008, introduced by 
Representative David Obey (D-WI), Chairman of the 
Appropriations Committee. H.R. 7110 appropriated $3 billion for 
public school modernization, renovation and repair, essentially 
as described in Title I of H.R. 3021.
    On January 28, 2009, at the beginning of the 111th 
Congress, the House passed H.R. 1, the American Recovery and 
Reinvestment Act, also introduced by Chairman Obey. H.R. 1 
appropriated $14 billion for public school modernization, 
renovation and repair, again, essentially as described in Title 
I of H.R. 3021. On February 12, 2009, the House passed the 
Conference Report on H.R. 1, which did not include dedicated 
funds for public school modernization, renovation and repair. 
However, Title XIV of the Conference Report, the State Fiscal 
Stabilization Fund, included $48.6 billion for states and local 
educational agencies, of which public school modernization, 
renovation and repair (including modernization, renovation and 
repair that complies with a recognized green building 
standards) is an authorized use.

                             111TH CONGRESS

Committee on Education and Labor Hearing: ``The Importance of Early 
        Childhood Development.''

    On March 17, 2009, the Committee on Education and Labor 
held a hearing in Washington, D.C., entitled ``The Importance 
of Early Childhood Development.'' The hearing examined the 
well-being of young children, the needs of children and 
families, and state efforts to undertake comprehensive birth to 
age five approaches to support early learning and development. 
Panelists testified regarding the high-cost of quality early 
education and that often the children who would benefit from 
these high-quality early childhood opportunities are the least 
likely to access such services. Panelists underscored state and 
local resources challenges to building high quality early 
learning systems, emphasizing the proven success seen in some 
localities when such infrastructures have been established and 
the important role private organizations and community 
interests play in the continued struggle to provide high-
quality early childhood opportunities. The following witnesses 
testified before the Committee: Harriet Meyer, President, Ounce 
of Prevention Fund, Chicago, IL; Jessie Rasmussen, Vice 
President, Buffett Early Childhood Fund, Omaha, NE; James 
Redmon, Executive Director, Kansas Children's Cabinet and Trust 
Fund, Topeka, KS; Holly Robinson, Ph.D, Commissioner, Georgia 
Department of Early Care and Learning, Atlanta, GA; Don Soifer, 
Executive Vice President, Lexington Institute, Arlington, VA; 
Helene Stebbins, Project Coordinator, National Center on 
Children in Poverty, New York, NY.

Subcommittee on Early Childhood, Elementary, and Secondary Education 
        hearing: ``Improving Early Childhood Development Policies and 
        Practices''

    On March 19, 2009, the Subcommittee on Early Childhood, 
Elementary and Secondary Education held a hearing in 
Washington, D.C. entitled, ``Improving Early Childhood 
Development Policies and Practices.'' The hearing discussed 
barriers families face in accessing quality early education and 
development programs, and state and other efforts to address 
such issues. The panelists discussed state and local efforts to 
improve birth to age five learning opportunities, such as state 
efforts to maintain quality control standards, efforts to reach 
the most at risk families and children, as well as programs to 
provide scholarship supports and wage supplements to improve 
the workforce of educators. Witnesses underscored the barriers 
states, local communities, and disadvantaged children and 
families face in developing and accessing such programs. The 
following witnesses testified before the Subcommittee: Harriet 
Dichter, Deputy Secretary, Office of Child Development and 
Early Learning, Harrisburg, PA; Sue Russell, President, Child 
Care Services Association, Chapel Hill, NC; Gina Adams, Senior 
Fellow, Urban Institute, Center on Labor, Human Services and 
Population, Washington, D.C.; Lillian Lowery, Ph.D., Secretary, 
Delaware Department of Education, Dover, DE.

The ``21st Century Green High-Performing Public School Facilities Act''

    On Thursday, April 30, 2009, Representatives Ben Chandler 
(D-KY), George Miller (D-CA), Dale Kildee (D-MI), and Dave 
Loebsack (D-IA) introduced H.R. 2187, the 21st Century Green 
High-Performing Public School Facilities Act. This bill, which 
is very similar to H.R. 3021, directs the Secretary of 
Education to make grants to local educational agencies for the 
modernization, renovation, or repair of public early learning, 
kindergarten, elementary, and secondary educational facilities, 
and for other purposes.\1\ On Wednesday, May 6, 2009, the 
Committee considered H.R. 2187 in legislative session, and 
reported the bill favorably, as amended, to the House of 
Representatives by a vote of 31-14. The House of 
Representatives passed H.R. 2187 by a vote of 275-155 with 24 
Republicans voting in favor. The bill was referred to the 
Senate Committee on Health, Education, Labor and Pensions.
---------------------------------------------------------------------------
    \1\Other original cosponsors of the bill include: Representatives 
Robert E. Andrews, Joe Courtney, Raul M. Grijalva, Phil Hare, Mazie K. 
Hirono, Rush Holt, Pedro R. Pierluisi, Jared Polis, Gregorio Sablan, 
John F. Tierney, Paul D. Tonko, Lynn C. Woolsey, and David Wu.
---------------------------------------------------------------------------

Full committee hearing on ``The Obama Administration's Education 
        Agenda''

    On Wednesday, May 20, 2009, the Committee on Education and 
Labor held a hearing in Washington, D.C. on the Obama 
Administration's Education Agenda. Education Secretary, Arne 
Duncan, testified before the House Education and Labor 
Committee about President Obama's agenda for transforming 
American education. The purpose of the hearing was to highlight 
the President's budget proposal for early education, K-12 
education, and higher education.

Full committee hearing on ``Increasing Student Aid through Loan 
        Reform''

    On Thursday, May 21, 2009, the Committee on Education and 
Labor held a hearing entitled ``Increasing Student Aid through 
Loan Reform.'' The purpose of the hearing was to discuss 
proposals to reform the student aid system to ensure that 
Federal student aid is efficient, reliable, and meaningful for 
our nation's students and families and to identify ways to use 
reform efforts to increase benefits to students, especially 
through increased grant aid. The following witnesses testified 
before the Committee: Robert Shireman, Deputy Under Secretary, 
U.S. Department of Education; Anna M. Griswold, Assistant Vice 
President for Undergraduate Education and Executive Director 
for Student Aid, The Pennsylvania State University; John (Jack) 
F. Remondi, Vice Chairman and Chief Financial Officer, Sallie 
Mae; Dr. Charles Reed, Chancellor, The California State 
University; and Rene Drouin, President and CEO, New Hampshire 
Higher Education Assistance Foundation (NHHEAF); Dr. Richard 
Vetter, Professor of Economics, Ohio University; and 
Christopher Chapman, President and Chief Executive Officer, 
Access Group.

Introduction of the Student Aid and Fiscal Responsibility Act

    On Wednesday, July 15, 2009, Chairman George Miller, along 
with Representatives Robert E. Andrews (D-NJ), Bishop (D-NY), 
Courtney (D-CT), Davis (D-CA), Eshoo (D-CA), Fudge (D-OH), 
Grijalva (D-AZ), Hare (D-IL), Hinojosa (D-TX), Hirono (D-HI), 
Holt (D-NJ), Kildee (D-MI), Kucinich (D-OH), Loebsack (D-IA), 
Payne (D-NJ), Sablan (D-MP), Scott (D-VA), Sestak (D-PA), Shea-
Porter (D-NH), Tierney (D-MA), Woolsey (D-CA), Wu (D-OR) 
introduced H.R. 3221, the Student Aid and Fiscal Responsibility 
Act of 2009, a bill to amend the Higher Education Act of 1965, 
and for other purposes.

Full committee markup of H.R. 3221

    On Tuesday, July 21, 2009, the Committee on Education and 
Labor considered H.R. 3221 in legislative session, and reported 
the bill favorably, as amended, to the House of 
Representatives, by a vote of 30-17. Chairman Miller offered an 
amendment in the nature of a substitute.
    The amendment in the nature of a substitute contained minor 
technical changes and the following changes to H.R. 3221:
           Strikes language in section 215, from the 
        introduced bill that would have eliminated graduate 
        student eligibility for the Subsidized Stafford loan 
        program;
           Strikes section 123, which amended the 
        Social Security Allowances in the federal needs 
        analysis formula;
           Reduces funding for K-12 modernization, 
        renovation, and repair from $5 billion over two years 
        to $4.1 billion over two years (for chapter 1 of 
        subtitle III there are authorized $2,020,000,000 for 
        each of fiscal years 2010 and 2011 and for chapter 2 of 
        subtitle III $30,000,000 for each of fiscal years 2010 
        and 2011);
           Changes the variable rate for Subsidized 
        Stafford loans from the introduced bill level of the 
        91-day T-bill +2.3 percent to the 91-day T-bill plus 
        2.5 percent;
           Encourages the Secretary of Education, in 
        consultation with the Secretary of Labor to work with 
        recipients of K-12 modernization, renovation, and 
        repair funds to promote appropriate pre-apprenticeship 
        opportunities;
           In Title IV (Early Learning Challenge Fund)
                   Changes funding from $1 billion 
                per year for 10 years to $1 billion per year 
                for 8 years.
                   Changes the 2% set-aside for 
                Federal administration to a cap.
                   Changes the 3% set-aside for 
                Federal research activities to a cap.
                   Changes Maintenance of Effort 
                requirements from FY 2009 to FY 2006.
                  Changes state match related to 
                expanding access from 50% to 20%.
                   Includes provisions to ensure 
                state plans adequately address the needs of 
                children with limited English proficiency.
                   Allows in-kind contributions for 
                facilities development, including technical 
                assistance, to be counted toward state match.
           In Title V (American Graduation Initiative):
                   Directs the Secretary of 
                Education, in consultation with the Secretary 
                of Labor, to promote opportunities for 
                participants in pre-apprenticeship programs to 
                gain employment experience
                   Modifies the definition of 
                eligible institutions to only include 4-year 
                public institutions that offer two-year 
                degrees, use funds for associate degree and 
                certificate level activities, and that are not 
                located near a community college, allowing for 
                the participation of all public 4-year 
                institutions to participate in partnership with 
                community colleges;
                   Allows in-kind contributions for 
                facilities development (including technical 
                assistance) to be counted toward state match; 
                and
           Adds a privacy provision that covers the 
        bill, limiting the use of information in the state-wide 
        data systems to use by governmental agencies in the 
        state and for those education and workforce activities 
        authorized by the bill, or otherwise permitted by 
        federal or state law.

                        III. Summary of the Bill


                                PURPOSE

    The purpose of H.R. 3221, the Student Aid and Fiscal 
Responsibility Act of 2009, is to provide for reconciliation 
pursuant to S. Con. Res. 13, the concurrent resolution on the 
budget for fiscal year 2010, to invest in students and 
families; increase college access and completion rates; invest 
in elementary and secondary school and community college 
modernization, renovation and repair projects; and invest early 
learning.

Increased funding for Pell grant scholarships

    The Student Aid and Fiscal Responsibility Act of 2009 will 
provide mandatory funds to reach the President's goal of a 
maximum Pell Grant award of $5,550 in 2010. In future years, 
the maximum award would automatically increase by an amount 
equivalent to the Consumer Price Index (CPI) plus 1%. At this 
rate, the Pell maximum is estimated to increase to $6,900 by 
2019. This legislation will build on the mandatory investment 
in Pell enacted as in the College Cost Reduction and Access Act 
of 2007 and set the maximum awards on an increasing trajectory.

 


Increasing College Access and Completion

    In addition to increasing funding for Pell Grant 
scholarships, this legislation establishes the College Access & 
Completion Innovation Fund. The purpose of this fund is to: (a) 
continue college access activities that are currently funded 
through College Access Challenge Grant (or Section 781 of the 
Higher Education Act of 1965) and from student loan proceeds to 
state agencies and nonprofit organizations; (b) promote state 
higher education planning, innovation, and systems of data and 
accountability; (c) support innovation through national 
activities to expand college access and increase degrees and 
certificate completion rates; and (d) conduct rigorous 
evaluation of the funded programs.
    Additionally, the Fund will provide competitive grants to 
States to establish programs that increase financial literacy 
and encourage college completion. Funding under this program 
can be used to develop state-wide access and completion plans 
and statewide data systems. Priority will be given to States 
partnering with philanthropic organizations or state and non-
profit guaranty agencies to carry out grant activities. 
Additionally, 1/3 of the state funds must be used for 
activities that benefit students enrolled at junior or 
community colleges, two-year public institutions, or two-year 
programs of instruction at four-year public institutions.
    The Access and Completion Innovation Fund would also 
provide funding directly from the Secretary to institutions and 
organizations working toward closing gaps in attainment and 
completion, as well as provide the opportunity to develop two-
year programs providing supplemental financial aid in a way 
that would improve student outcomes while not reducing other 
available aid. Priorities for these grants will go towards 
entities or consortia with proven experience in serving 
populations traditionally underrepresented in higher education 
or those that have this goal as a primary purpose, to those 
public institutions that do not predominantly award bachelor's 
degrees, and to those that include activities aimed at 
increasing STEM degree or certificate production. Also, the 
Secretary shall give priority to partnerships between 
institutions with high-degree production rates and those with 
low-degree production rates, in order to facilitate the 
transfer of best practices for increasing completion.
    Each entity receiving a grant under this section will be 
required to provide an annual report assessing their measurable 
progress in reaching the completion goals outlined in their 
initial grant plan submitted to the Secretary. The Secretary 
may also require additional evaluation standards as he 
determines are necessary. Furthermore, the Director of the 
Institute for Education Sciences will conduct a rigorous 
evaluation of all projects funded under this section in order 
to learn from these innovation projects in a tangible way that 
is useful for all entities engaged in this work.

Investing in Historically Black Colleges and Universities and Minority-
        Serving Institutions

    H.R. 3221 invests in Historically Black Colleges and 
Universities (HBCUs), Hispanic Serving Institutions (HSIs), 
Predominately Black Institutions (PBIs), Tribal Colleges and 
Universities (TCUs), Alaska Native and Native Hawaiian 
Institutions, institutions serving Asian American and Pacific 
Islanders and Native American non tribal serving institutions 
to ensure that students attending these institutions will not 
only enter college, but remain and graduate.

Student financial aid form simplification

    This legislation further simplifies the Free Application 
for Federal Student Aid (FAFSA) by reducing the number of 
questions that a family must answer to determine a student's 
financial aid eligibility. H.R. 3221 builds on the important 
work of the Congress in the Higher Education Opportunity Act, 
Pub.L. No. 110-315, by taking FAFSA simplification to the next 
important step: eliminating from the needs analysis the 
financial data not available from the applicant's tax form. The 
goal of FAFSA simplification is to make it possible to complete 
the financial aid application with nothing more than a copy of 
IRS Form 1040 or through importing data from the IRS. Under 
this legislation, the only applicants who would need to provide 
additional financial information are those who choose to do so 
to reduce their reported income in certain circumstances.
    H.R. 3221 would allow the Department to replace the six 
current asset questions with a single ``yes/no'' question that 
most applicants will be able to answer easily. Additionally, 
H.R. 3221 eliminates several items that applicants are asked to 
add to their income, such as child support payments received, 
military and clergy living allowances, and untaxed disability 
support. The only items remaining that are not on the tax form 
are items that applicants are allowed to subtract from their 
incomes. These include combat pay, child support payments made, 
and scholarship aid that had been included as income on the tax 
form.

Stafford loan reform

    This legislation will move all institutions of higher 
education in the country to the Direct Lending program by 2010, 
saving the federal government and taxpayers $87 billion dollars 
over the next 10 years. These savings will be used to reinvest 
in expanding educational opportunities for students and 
families and paying down the federal deficit. While the 
legislation directs the government to originate all student 
loans, it also ensures that there is a role for private 
industry in providing loan servicing. Moreover, it will ensure 
that State and local non-profit agencies, that meet quality and 
pricing standards, will participate in servicing through a 
minimum volume allocation of the loans of 100,000 borrowers. 
These reforms mean that student borrowers will have a reliable 
stream of funding to finance their college education, and can 
rely on quality loan servicing during repayment.

Student loan interest rates

    This legislation will make interest rates on subsidized 
student loans for undergraduate borrowers variable with a cap 
of 6.8 percent, beginning in 2012. The variable interest rate 
will be based on the 91-day T-bill plus 2.5 percent. This 
change will continue Congress's investment in keeping interest 
rates low for needy students and families by ensuring that 
students and families benefit from low market interest rates 
and protecting them during periods of high market interest 
rates. At current CBO estimates for interest rates on the 91-
day T-bill, the interest rate for federal subsidized Stafford 
loans would be 6.3 percent through 2015.

Revised special allowance calculation on existing federal loans

    Under current law, the government pays private sector 
lenders a subsidy known as the Special Allowance Payment (SAP), 
which is calculated based on a lender's cost of borrowing 
money. The index used as a proxy for the lender's cost of money 
is the 90-Day Commercial Paper rate (CP), which Congress 
intended to serve as a market-based measure. Credit market 
dislocations and the Federal Reserve's intervention in the 
capital markets has had a significant and unintended effect on 
CP rates. This title provides lenders the option of having 
their SAP payments calculated based on the 1-Month LIBOR rate, 
rather than the 90-Day Commercial Paper rate. Such a change 
will provide lenders with greater predictability in the 
underlying index, as well as ensure that the index reflects a 
market-based rate as Congress had intended.

Perkins reform

    H.R. 3221 reforms the Perkins loan program by providing 
participating schools an allotment of lending authority to make 
Perkins loans to students on their campuses. The funding for 
loans will be provided through the Direct Loan program, rather 
than through revolving loan funds at each school. This 
legislation maintains key features of the current Perkins 
program, including the discretion afforded financial aid 
officers in targeting Perkins loans to financially-needy 
students. It will greatly increase the number of campuses 
participating in the program and ensure that students' loans 
will retain the current interest rate of 5 percent. Six billion 
dollars in lending authority will be allocated to schools that 
wish to participate in the new Perkins Program: half of the 
funds will be allocated to institutions based on the unmet 
financial need among an institution's students, while the other 
half will be allocated to institutions based on the extent to 
which institutions provide low tuition or high levels of non-
Federal aid, as well as on the number of Pell grant recipients 
that graduate from the institution. As current Perkins Loan 
borrowers repay their loans, schools would remit the Federal 
share of those payments to the Department of Education. Schools 
would retain their own share of the revolving funds, as well as 
amounts sufficient to cover the costs of the various Perkins 
Loan forgiveness provisions.

Modernization, renovation, and repair of elementary and secondary 
        education public school facilities

    This legislation provides $4.1 billion to elementary and 
secondary schools over the next two fiscal years for 
modernization, renovation, and repair projects that create 
healthier, safer, and more energy-efficient teaching and 
learning climates. Title III, chapter 1 of H.R. 3221 
appropriates $2.02 billion for fiscal years 2010 and 2011 for 
school facilities. The bill ensures that school districts 
around the country will receive funds for much needed public 
school modernization, renovation, and repair projects to 
improve the teaching and learning climate, student and staff 
health, and safety, energy efficiency, and the environment. The 
bill directs the Secretary to reserve two percent of funds 
appropriated for chapter 1 for each fiscal year for assistance 
to the outlying areas and for payments to the Secretary of the 
Interior for assistance to Bureau-funded schools. The bill 
further directs the Secretary to reserve five percent of funds 
appropriated for chapter 1 for each fiscal year for assistance 
to local educational agencies serving geographic areas with 
significant economic distress and those recovering from a 
natural disaster.
    H.R. 3221 allocates to each State the same percentage of 
funds that the State receives under Title I, Part A of the 
Elementary and Secondary Education Act and allocates within 
States the same percentage to each school district that the 
school district receives under such part (except that no such 
school district will receive less than $5,000).
    The bill allows States to reserve one percent of their 
chapter 1 allocation for technical assistance and to develop a 
plan to create an online, publicly searchable statewide 
database of public school facility design, condition, 
modernization, renovation and repair needs, usage, utilization, 
energy use, and carbon footprint, and create voluntary 
guidelines for high-performing public school buildings.
    Funds under chapter 1 may be used for public school 
modernization, renovation, and repair, including repair to 
roofs, electrical, plumbing, sewage, stormwater runoff and 
lighting systems, heating, ventilation, and air-conditioning 
systems, windows, floors, ceilings, doors, including insulation 
and indoor air quality assessments. Funds may also be used to 
bring schools into compliance with fire, health, seismic and 
safety codes, including modernizations, renovations, and 
repairs that ensure that schools are prepared for emergencies. 
Funds may be used to comply with the Americans with 
Disabilities Act of 1990 and section 504 of the Rehabilitation 
Act of 1973. Additional uses include abatement, removal, or 
interim controls of asbestos, polychlorinated biphenyls, mold, 
or mildew; reduction of human exposure to lead-based hazards; 
reduction of classroom noise and environmental noise pollution; 
modernization, renovation, or repair to reduce the consumption 
of coal, electricity, land, natural gas, oil, or water; 
upgrading or installing educational technology infrastructure; 
modernization, renovation, or repairs of laboratory facilities, 
libraries, and career and technical education facilities; 
renewable energy generation and energy audits; other 
modernizations, renovations, or repairs that improve the 
teaching and learning climate, ensure the health and safety of 
students and staff, or make schools more energy efficient; or 
reduce class size; and required environmental remediation 
related to modernizations, renovations, or repairs described 
above.
    H.R. 3221 requires that funds be used for projects that 
meet one of four widely recognized green standards (Leadership 
in Energy and Environmental Design (LEED) Green Building Rating 
System, Energy Star, Collaborative for High Performance 
Schools, or Green Globes) or an equivalent State or local 
standard, which must include a verifiable method to demonstrate 
compliance. School districts must use the green requirement for 
a percentage of the funds (fifty percent in 2010 and seventy-
five percent in 2011) for projects that meet one of the green 
standards described above.
    In chapter 2, the bill provides $30 million for each of 
fiscal years 2010 and 2011 for public schools in the Gulf 
region in response to damages from Hurricane Katrina or 
Hurricane Rita. These funds are to be used for the same 
purposes as chapter 1 funds, but also may be used for new 
construction.
    The bill includes provisions to require local educational 
agencies to ensure that the bid process for any projects 
carried out through a contract ensures the maximum number of 
qualified bidders, including local, small, minority, women- and 
veteran-owned businesses, through full and open competition. 
Also, Davis-Bacon labor law protections apply to all funds 
received under this subtitle.
    The bill requires school districts to report publicly on 
educational, energy, and environmental benefits of projects, 
compliance with the green requirement, and the percentage of 
funds used for projects at low-income, charter and rural 
schools. States must compile these reports and submit them to 
the Secretary who shall, in turn, report to the House Committee 
on Education and Labor and the Senate Committee on Health, 
Education, Labor, and Pensions.
    The legislation requires the Secretary of Education, in 
consultation with the Secretary of Energy and Administrator of 
the Environmental Protection Agency, to disseminate best 
practices in school modernization, renovation, repair and 
construction of school facilities and to provide technical 
assistance to States and school districts concerning such best 
practices.
    The bill encourages the Secretary of Education, in 
consultation with the Secretary of Labor, to promote 
appropriate opportunities for participants in YouthBuild, Job 
Corps, junior or community college degree, or pre-
apprenticeship programs.
    H.R. 3221 establishes the Advisory Council on Green, High-
Performing Public School Facilities to advise the Secretary on 
the impact of green, high-performing schools on teaching and 
learning, health, energy costs, environmental impact, and other 
areas. Finally, the bill allows local educational agencies to 
encourage schools where modernization, renovation, or repair 
projects are undertaken to educate students about the project, 
including, as appropriate, the functioning of the project and 
its environmental, energy, sustainability, and other benefits.

Community college modernization and construction

    This legislation will authorize the Secretary to award 
grants to States to leverage and provide funds for the 
construction of new community college facilities, and the 
modernization, renovation, and repair of existing community 
college facilities necessary to improve instruction and better 
meet employer needs. Federal funds may be used to reduce the 
financing costs of construction projects (such as through the 
purchase of bond insurance or buying down interest rates on 
loans), providing matching funds to attract private donations 
of funds as part of a capital fundraising campaign, or 
capitalizing a revolving loan fund that a state could use, in 
turn, to make loans to community colleges to finance new 
construction or modernization projects. The legislation ensures 
that funding is used for facilities that are primarily used for 
instruction, research, or student housing and requires half of 
the funds be used for projects that meet green building 
standards.

Early Learning Challenge Fund

    The purpose of Title IV of H.R. 3221 is to fund competitive 
grants to states that will leverage standards reform and fund 
quality initiatives that will increase the number of 
disadvantaged children in high quality early learning programs 
and ensure more children reach kindergarten with the skills 
they need to succeed in school and in life.
    Funds are reserved for the joint administration of this 
title by the Secretary of Education and the Secretary of Health 
and Human Services. The Secretary of Education shall bear 
responsibility for obligating and disbursing funds and ensuring 
compliance with applicable law and administrative requirements, 
subject to an interagency agreement set forth by the 
secretaries that shall make clear the specific nature of this 
joint administration.
    This legislation provides $1 billion in each fiscal year 
from 2010 through 2017 for the Early Learning Challenge Fund. 
Up to 2 percent is reserved for Federal administration of the 
Fund and up to 3 percent is reserved for the national research 
activities described in section 405. One-quarter of one percent 
is reserved for a competitive grant program for Indian tribes 
to develop and implement school readiness plans. Of the 
remainder, the Secretary shall reserve up to 65% for Quality 
Pathway Grants in fiscal years 2010 through 2012, and the 
Secretary shall reserve up to 85 percent for Quality Pathway 
Grants in subsequent fiscal years. The remainder shall be 
allocated for Development Grants. For fiscal year 2013 and 
subsequent fiscal years, the Secretary has discretion to 
reallocate funds allocated for Development Grants to Quality 
Pathway Grants if needed based on the number and quality of 
applicants. Aggregate expenditures by the State and its 
political subdivisions on early learning programs and services 
may not be less than the level of expenditures for such 
programs and services for fiscal year 2006.

Quality Pathways Grants

    In awarding grants, the Secretary shall give priority to 
States that will use some or all of the funds allocated to them 
under the quality set-aside of the Child Care and Development 
Block Grant for the activities described in this Title. 
Priority is also provided for States that will commit to 
dedicating significant increases in coming years in State 
expenditures on early learning programs and services and to 
states that demonstrate efforts to build public-private 
partnerships that are designed to accomplish the purposes of 
this title.
    To be considered for a Quality Pathways Grant a State must 
submit an application to the Secretary that includes specific 
criteria. Among these criteria includes a description of the 
goals and benchmarks, including a baseline, the State will 
establish to lead to a greater percentage of disadvantaged 
children participating in higher quality early learning 
programs. In addition, States must include a description of how 
their system of early learning programs and services will 
include the following key components: not later than 12 months 
after receiving notice of an award of a grant, early learning 
and development standards that are developmentally appropriate 
for children birth through age 5, and include social, 
emotional, cognitive, and psychical development, and approaches 
to learning; a process to ensure State early learning and 
development standards are integrated into the instructional and 
programmatic practices of early learning programs and services; 
a program rating system; an oversight system for the program 
rating system; a process to support early learning programs 
integrating instructional and programmatic practices that 
include ongoing classroom based instructional assessments and 
are aligned with the curricula and early learning and 
development standards; a comprehensive plan for professional 
development of an effective and well-compensated early learning 
workforce; outreach strategy to parents and families; a 
coordinated system to facilitate screening, referral, and 
provision of services related to health, mental health, 
disability, and family support; a process for evaluating school 
readiness in children used to guide practice and improve 
programs, and a coordinated data infrastructure.
    The Secretary shall evaluate applications for Quality 
Pathways Grants based on the quality of the application, the 
priority factors, evidence of significant progress in 
establishing a system of early learning that includes the 
described key components, and the State's capacity to fully 
implement such a system.
    States awarded a Quality Pathways Grant must use at least 
65 percent of the grant for two or more of the following 
activities in order to improve the quality of early learning 
programs serving disadvantaged children: initiatives that 
improve the credentials and compensation of early learning 
providers; initiatives that help early learning programs meet 
and sustain higher program quality standards; implementing 
classroom observation assessments and data-driven decisions 
tied to activities that improve programmatic practices; 
financial incentives to early learning programs for undertaking 
and maintaining quality improvements; integrating State early 
learning and development standards into instructional and 
programmatic practices; providing high quality, sustained, 
intensive, and classroom-focused professional development; 
building the capacity of early learning programs and 
communities to promote the understanding by parents and 
families of their children's learning and development and of 
the State's early learning system; building the capacity of 
early learning programs and communities to facilitate 
screening, referral, and provision of services related to 
health, mental health, disability, and family support; and 
other innovative activities approved in advance by the 
Secretary. The remainder of the grant may be used for one or 
more of the following: implementation or enhancement of the 
state's data system; enhancement of the state's oversight 
system; and development and implementation of measures of 
school readiness that inform the quality improvement process. 
States must use the grant such that they prioritize improving 
the quality of early learning programs serving children from 
low-income families.
    A State awarded a Quality Pathways Grants that has made 
sufficient progress implementing the requirements of the grant, 
may apply to the Secretary to reserve up to 25 percent of the 
grant to directly expand access for children from low-income 
families to the highest quality early learning programs that 
offer full-day services. States must contribute a 20 percent 
match for these funds, one half of which may be provided by a 
private entity. The Secretary may waive or reduce the State 
match if the State demonstrates a need due to extreme financial 
hardship.
    States awarded a Quality Pathways Grant must contribute 
matching funds in the amount of 10 percent in each of the first 
two fiscal years, 15 percent in the third fiscal year, and 20 
percent in subsequent fiscal years. Private contributions made 
as part of a public-private partnership designed to increase 
the number of low-income children in high-quality programs may 
be considered in meeting the state match. In addition, in-kind 
contributions for the acquisition, construction, or improvement 
of early learning program facilities serving disadvantaged 
children may be used to satisfy the State match. The Secretary 
may waive or reduce the State match if the State demonstrates a 
need due to extreme financial hardship.

Development Grants

    To be considered for a Development Grant, a State must 
submit an application that designates a State-level entity for 
administration of the grant, coordinate proposed activities 
with the State Advisory Council on Early Childhood Education 
and Care (created under the Head Start Act), and provide other 
information as required by the Secretary. Grants shall be 
awarded on a competitive basis to States that demonstrate a 
commitment to establishing a system of early learning that will 
include the key component described in the legislation. A State 
may receive a Development Grant for 3 years but the grant is 
not renewable.
    The Secretary shall give priority to States who will use 
some or all of the funds allocated to them under the quality 
set-aside of the Child Care and Development Block Grant for the 
activities described in this Title. Priority is also given to 
states that will commit to dedicating significant increases in 
coming years in State expenditures on early learning programs 
and services and to states that demonstrate efforts to build 
public-private partnerships that are designed to accomplish the 
purposes of this title. States receiving a Development Grant 
shall use the award to undertake activities to develop the 
early learning system components described in the legislation 
and that will allow a State to become eligible and competitive 
for a Quality Pathways Grant. States must use the grant such 
that they prioritize improving the quality of early learning 
programs serving children from low-income families.
    States awarded a Development Grant must contribute matching 
funds in the amount of 20 percent in the first fiscal year, 25 
percent in the second fiscal year, and 30 percent in the third. 
Private contributions made as part of a public-private 
partnership designed to increase the number of low-income 
children in high-quality programs may be considered in meeting 
the state match. In addition, in-kind contributions for the 
acquisition, construction, or improvement of early learning 
program facilities serving disadvantaged children may be used 
to satisfy the State match. The Secretary may waive or reduce 
the State match if the State demonstrates a need due to extreme 
financial hardship.

Research and evaluation

    The Secretary of Education and the Secretary of Health and 
Human Services are required to carry out four research and 
evaluation activities: (1) establish a national commission to 
review early learning program quality standards and early 
learning and development standards and recommend benchmarks 
within 2 years; (2) conduct a national evaluation of the grants 
made under this title; (3) support a research collaborative 
that supports research on early learning and informs improved 
child outcomes; and (4) review the strategic reports of the 
State Advisory Councils on Early Care and Education and report 
and disseminate on barriers to improving access to high quality 
early learning programs.

Reporting requirements

    The legislation requires the Secretary to provide annual 
reports to the Committee on Education and Labor of the U.S. 
House of Representatives and the Health, Education, Labor, and 
Pensions Committee of the Senate regarding the activities 
carried out under this title. The legislation also requires 
States receiving grants under this Title to submit annual 
reports to the Secretary on the activities carried out by the 
State and includes a list of information that must be included 
in the reports.

Prohibitions and special rules

    This legislation clarifies that all references to early 
learning programs in the Title reflect voluntary participation 
by a child in an early learning program. No provision may be 
construed to be requiring mandatory participation by a child in 
an early learning program. It additionally clarifies that no 
provision in this Title should be construed to deny entry to 
kindergarten for a child who is legally eligible as defined by 
State or local law. The legislation also includes rules 
regarding how funds provided under this Title may be used for 
assessment and evaluation.

Leading the world in graduation by 2020 through investing in community 
        college education and workforce training

    This legislation establishes the Community College 
Challenge Grant Program, which was recently proposed by 
President Obama. The legislation authorizes grants to support 
innovative pilot programs and policies that will increase the 
number of associate degree, certificate, and industry-
recognized credentials, including activities that promote the 
transfer of credits from 2-year to 4-year institutions.
    The first phase of the program will provide competitive 
grants to institutions and states proposing to implement 
comprehensive reforms within the community college system to 
promote job readiness, academic success and degree completion, 
and strengthen ties to employers. This will facilitate access 
to and enable success in community colleges, especially for 
adult learners seeking to build the skills needed to secure a 
good job in a high-growth sector of the economy.
    The second phase of the program will look to states to draw 
on lessons learned from the first phase and to systematize and 
sustain the reforms in the community colleges in their states. 
In order to compete for these reform dollars, states must have 
an education plan to increase persistence and completion of 
postsecondary education as well as a statewide longitudinal 
data system that includes all segments of education, including 
community colleges.
    Online courses provide flexibility important to students 
and workers who may juggle multiple commitments, including 
family and work or those who live in rural areas without access 
to traditional systems of higher education. This legislation 
provides competitive grants to develop high quality, rigorously 
evaluated, open web-based high school and college-level 
courses, which would be available for free, on an open-source 
basis, to students, teachers, schools, and companies to help 
students gain knowledge, skills, and credentials.
    H.R. 3221 provides grants to States for the development of 
common data systems to help students, institutions, and states 
make well-informed decisions to achieve their educational and 
employment goals.

Privacy provision

    This legislation includes a privacy provision that limits 
the use of information in the statewide data systems to use by 
governmental agencies in the state and for those education and 
workforce activities authorized by this bill or otherwise 
permitted by federal or state law.

                          IV. Committee Views

    The Committee believes that H.R. 3221, The Student Aid and 
Fiscal Responsibility Act represents a historic investment in 
higher education and expands high-quality educational 
opportunities to all Americans. This legislation will give the 
Congress the opportunity to create the kind of country and the 
kind of future that we all envision for our children.
    In his first address to Congress on February 24, 2009, 
President Obama set a laudable goal for this nation, by saying:

          . . . And so tonight, I ask every American to commit 
        to at least one year or more of higher education or 
        career training. This can be community college or a 
        four-year school; vocational training or an 
        apprenticeship. But whatever the training may be, every 
        American will need to get more than a high school 
        diploma. And dropping out of high school is no longer 
        an option. It's not just quitting on yourself, it's 
        quitting on your country--and this country needs and 
        values the talents of every American. That is why we 
        will provide the support necessary for you to complete 
        college and meet a new goal: by 2020, America will once 
        again have the highest proportion of college graduates 
        in the world.\2\
---------------------------------------------------------------------------
    \2\http://www.whitehouse.gov/the_press_office/remarks-of-president-
barack-obama-address-to-joint-session-of-congress/

The Committee agrees, and H.R. 3221 will help us reach this 
goal by making college more affordable and accessible.
    The Committee believes that this legislation makes critical 
investments in our nation's postsecondary education students. 
It will invest in the Pell Grant scholarship award, simplify 
the FAFSA form to make it easier to apply for federal student 
aid, and build on the Congress' efforts to make interest rates 
on loans affordable. Further, the legislation will provide more 
students with access to low-cost Perkins loans by expanding the 
program to many more campuses and strengthen minority-serving 
institutions and programs that will help retain and graduate 
students.
    Further, the legislation makes an unprecedented $10 billion 
investment in our community colleges. The Committee believes 
that our nation's community colleges are essential to driving 
economic recovery and that they provide an important low-cost 
option for postsecondary education for many individuals. This 
legislation will address our nation's economic crisis by 
ensuring that there is adequate support and training to build a 
21st century workforce by strengthening partnerships among 
community colleges, businesses and job training programs that 
will align community college curricula with the needs of high-
wage, high-demand industries.
    H.R. 3221 will also ensure that every student can learn in 
a safe, energy-efficient and modern environment by renovating 
and repairing our nation's schools--a measure that this 
Committee and the House have already supported.
    The legislation provides important investments in our 
children by providing $1 billion per year to help ensure that 
the next generation of children can enter kindergarten with the 
skills they need to succeed in school. It will transform early 
learning programs and improve the school readiness outcomes of 
children by insisting upon real change in state standards and 
practices. And, it will support states that are ready to expect 
more from their early learning programs than just basic health 
and safety and are looking to undertake major reform and demand 
results. It will build an effective and well-compensated early 
childhood workforce, integrate key quality standards, improve 
instructional practices, and better support parents in the 
early education of their children.
    The Committee believes that these important reforms should 
be paid for without increasing our nation's deficit. This 
legislation is completely paid for by making necessary changes 
to the federal student loan programs. The Committee strongly 
believes that the reforms in this legislation will result in a 
stronger, more reliable, and more efficient student loan 
system. H.R. 3221 proposes to convert all new federal student 
loans to the Direct Loan program starting in July 2010. 
Students will have access to the low-cost loans they need, in 
any economy. H.R. 3221 will also upgrade the customer service 
borrowers receive when repaying their loans. Rather than force 
private industry out of the system, the legislation will 
maintain jobs and a role for lenders and non-profits by 
allowing them to compete for contracts to service these loans. 
This simple change will save $87 billion over the next ten 
years.
    Finally, as part of the Committee's efforts to secure a 
stronger future for our children and the country they will 
inherit, this legislation will direct $10 billion of these 
savings to pay down the country's deficit.

                   INVESTING IN STUDENTS AND FAMILIES

Significantly increasing the pell grant award

    The Committee believes boosting the nation's investment in 
the Pell Grant program is essential to ensuring access and 
making college more affordable for students and families. Since 
its inception in 1972, the Pell Grant scholarship has opened 
the door to postsecondary education for millions of low- and 
moderate-income students. However, over the last several years, 
the purchasing power of the Pell Grant has declined. Today, the 
maximum Pell Grant covers only one third of the average price 
of attendance at a public four-year institution compared to 
more than two-thirds in 1980.
    In the last three years, the Congress has renewed its 
commitment to the purchasing power of the Pell Grant award. 
Both this Committee and the Committee on Appropriations have 
made significant investments in increasing the maximum award; 
increasing the award by 32 percent since 2006.
    The Committee believes that a continued investment in the 
Pell program is paramount to ensuring that all students who 
choose to attend postsecondary education, regardless of income, 
are able to pursue their academic goals. This legislation 
builds on the recent investments by ensuring that the maximum 
Pell grant award continues to increase with the cost of living 
and setting increases in the maximum award to the Consumer 
Price Index plus 1 percentage point. Under this bill, the 
maximum award is estimated to rise from $5,350 in the 2010-2011 
academic year to $6,900 in the 2019-2020 academic year.
    This change will not only dramatically increase the maximum 
Pell award, but will put the Pell grant on a trajectory that 
students and families can count on. The Committee believes that 
Federal programs should ensure that students and families can 
begin to plan for college, including how to pay for college 
costs, years before entering into college. By indexing the 
maximum award to the cost of living, students and families will 
be able to project an estimated Pell grant award years prior to 
entering college- and important planning tool.
    Finally, this investment will not only ensure that eligible 
students receive a higher grant award, but that more students 
will be eligible for the grant. Coupled with recent changes in 
the needs analysis formula passed by the Congress in the 
College Cost Reduction and Access Act and the Higher Education 
Opportunity Act, the increased award provided for in this 
legislation will ensure that more students will have access to 
postsecondary education.

Increasing postsecondary access and completion

    The United States has long been a global leader in 
postsecondary education, but recently our advantage has 
slipped. According to the OECD, while the U.S. ranks 7th in 
terms of the percentage of 18-24 year olds enrolled in college, 
we rank 15th in terms of the number of certificates and degrees 
awarded. Further, only about half of all college students 
graduate within six years; for low-income students, the 
completion rate is closer to 25 percent. These facts are 
especially troubling considering the economic returns of having 
a college education have increased dramatically over the last 
30 years. In 1973, a college graduate with no further schooling 
earned 46 percent more per hour than a high school graduate. In 
2007, the differential was 77 percent. According to a recent 
report by the Council of Economic Advisors, the jobs of 
tomorrow will require at least some postsecondary training. The 
Committee believes that there is a great need to prepare, 
encourage, and support our nation's students in their pursuit 
of a higher education to ensure that they not only have the 
access to postsecondary education, but that they enroll in and 
complete their programs of study.
    The Committee believes that states, institutions of higher 
education, non-profit philanthropic organizations, and other 
organizations with experience in college access and completion 
are critical partners in ensuring that students have access to 
high-quality and affordable higher education and that they 
succeed and complete their education. This legislation actively 
engages these partners by encouraging innovative efforts at the 
state and local levels to ensure that President Obama's goal of 
greatly increasing our nation's college graduates is realized.
    This legislation seeks to increase postsecondary access and 
success for all students, but especially for underserved 
populations. The Committee encourages States to focus efforts 
on students from groups that are underrepresented in higher 
education to address the inequities between groups of students 
and ensure that all Americans, regardless of race or income, 
have the opportunity to succeed. References in the legislation 
to ``students from groups that are under-represented in 
postsecondary education'' and ``high-need populations'' 
includes, but is not limited to, nontraditional students (as 
defined in the Higher Education Opportunity Act of 2008), 
students from groups defined as special populations under the 
Carl D. Perkins Career and Technical Education Act of 2006, and 
groups underrepresented both in postsecondary education overall 
and in certain degree, certificate or credential programs. All 
outcome reporting should be disaggregated by gender, race, 
ethnicity, age and special population category.
    It is the intent of the Committee that the states receiving 
grants under the State Innovation and Completion Fund may 
distribute those funds to entities that work with borrowers to 
avoid delinquency and default, provide assistance with entrance 
and exit student loan counseling to borrowers and assistance to 
borrowers in selecting a loan repayment plan and in applying 
for any loan cancellation, forgiveness, deferment or 
forbearance to which the borrower may be eligible.
    A number of states have already begun initiatives to 
implement new practices aimed at increasing degree and 
certificate production; this funding would further support such 
innovation, allowing states to capitalize on other funding in 
collaboration with federal funds. It is the intent of the 
Committee that states may not, however, use this funding to 
decrease or otherwise supplant other funding dedicated to 
postsecondary education.
    The Committee encourages the Secretary of Education to 
prioritize under the Innovation in College Access and 
Completion National Activities program, program approaches that 
advance knowledge about, and adoption of, policies and 
practices that increase the number of students prepared to 
successfully pursue, enter and successfully complete 
postsecondary degrees or certificates as described in sections 
801 and 403 of the Higher Education Act.

Continuing historic investments in Historically Black Colleges and 
        Universities, and Hispanic-Serving Institutions, Tribal 
        Colleges, Alaska Native and Native-Hawaiian serving 
        institutions, Predominately Black Institutions, and Asian 
        American and Pacific Islander serving intuitions, and Native 
        American serving institutions

    Historically Black Colleges and Universities, Hispanic-
Serving Institutions, Tribal Colleges, Alaska and Hawaiian 
Native, Predominately Black Institutions, institutions serving 
Asian American and Pacific Islanders, and institutions serving 
Native Americans are critical to the nation's economic and 
social well-being. As the growth in the nation's population 
increasingly reflects the diversity of the students at these 
institutions, the Committee believes that this mandatory 
funding is an investment in our future. By educating the 
nation's emerging majority populations, these institutions 
represent the vanguard of the country's potential and promise 
and should be appropriately supported.
    This Committee first recognized the need for significant 
investment in these institutions with the passage of the 
College Cost Reduction and Access Act two years ago. This 
legislation continues this important investment for the next 
ten years; recognizing the continued critical role that these 
institutions have to serve.
    The importance of these unique institutions is underscored 
by the fact that they provide postsecondary educational 
opportunities specifically tailored to students who 
traditionally have been denied access to adequately funded 
elementary and secondary schools, especially low-income, 
educationally disadvantaged students. Additionally, a high 
proportion of students attending these institutions are the 
first in their family to attend college.

FAFSA simplification

    The Committee believes the current application for federal 
student aid is complicated and burdensome, asking students and 
their families to answer as many as 153 questions, many of 
which have little or no impact on the amount of financial aid 
that students receive. The length and difficulty of the 
application process can undermine efforts to increase college 
enrollment with student aid. The implications of this lengthy 
and difficult application process on current and potential 
students can be profound. One analysis by the American Council 
on Education found that there are 1.5 million enrolled students 
who are likely eligible for Pell grants (and other federal 
student aid) but fail to apply, due in part to the complicated 
aid application.
    The Committee recognizes recent work by the Department of 
Education, the Internal Revenue Service, and others in the 
Administration. With the authority provided by Congress in the 
Higher Education and Opportunity Act, the Secretary Duncan has 
already announced some significant steps to improve the web-
based application process for many students through improved 
use of skip-logic. In addition, the Education and Treasury 
Departments have announced that they will give those who apply 
during the relevant academic year to import data from their 
income tax filings from the IRS, further simplifying the 
process.
    With these changes, every applicant will find the process 
substantially easier to navigate and complete, a small number 
will find their financial aid awards increased, and no one will 
see aid reductions The Committee encourages the Department of 
Education to make use of its authority to start the FAFSA 
process earlier, so that students can apply at the beginning of 
their senior year in high school. Having early, real 
information about financial aid can affect low income students' 
college plans. As it stands, students receive financial aid 
information after they apply to and are accepted to college, 
too late for many students and families to make changes to 
their enrollment plans. Earlier, more accurate information will 
help students and families plan for affordable college options, 
helping to reduce student debt in the long term. This strategy 
is only effective if it starts no later than the fall of the 
senior year of high school.

                          STUDENT LOAN REFORM

    Students and families have become increasingly reliant on 
the federal student loan programs to help finance their 
postsecondary education. As a result, the Committee is 
committed to ensuring that every eligible student and family 
can access these loans so critical toward helping pay today's 
college costs. The turmoil in the U.S. credit markets has 
shown, however, that the federally guaranteed student loan 
program is an unreliable source of funds for students and 
families. Over the past year, this program has become dependent 
not only on the Federal guarantee of borrower repayment and 
taxpayer subsidies paid to financial institutions, but also 
dependent on the Federal Government for the very loan capital 
provided to borrowers. On the other hand, despite the stresses 
in the credit markets, students and families continued to 
access Federal student loans under the Direct Loan Program with 
no interruptions. Moreover, costs to the taxpayers of the 
Direct Loan Program are significantly less than those of the 
federally guaranteed program. The Committee believes that 
prudence dictates the time has come to end the entitlements for 
financial institutions that lend to students and instead take 
full advantage of the Direct Loan Program's low-cost and stable 
source of capital so students are ensured access to loans. By 
relying on competitive, private-sector entities to service 
loans, students and families can be provided with high-quality 
services. This new approach, consistent with the President's 
vision, will save $87 billion over the next 10 years. In 
addition to this reform, the Committee believes it is also time 
to modernize and expand the Perkins Loan Program so that more 
colleges can participate and more students can receive access 
to greater aid.

Instability of the Federal Family Education Loan Program

    The federally guaranteed loan program, known as the Federal 
Family Education Loan Program (FFELP), has become unstable and 
unreliable and can no longer be depended upon to ensure 
students' and families' access to Federal student loans. Over 
the past year, turmoil in the U.S. credit markets has made it 
impossible for many lenders, and difficult for others, to 
secure private capital with which to make student loans. As a 
result, many lenders that once participated in the FFELP have 
pulled out of the program and are no longer making loans.
    In April 2008, the Committee passed the Ensuring Continued 
Access to Student Loans Act of 2008, which was enacted into law 
the following month (Public Law No: 110-227). The Act provided 
the Secretary of Education with the authority to help fund the 
Federal student loans made by financial institutions to 
students and families, or to buy Federal student loans from 
financial institutions, upon a determination that there was an 
inadequate availability of loan capital to meet the demand for 
loans. The Act further required that any purchase by the 
Secretary be revenue-neutral or beneficial to the Federal 
Government.
    Throughout 2008 and 2009, the Department of Education 
established several support programs to provide FFELP lenders 
with capital, who in turn used the capital to make loans to 
students and families. The reliance by FFELP lenders on the 
Department's support programs has been startling. As of July 
22, 2009, the Department has purchased over $14.6 billion in 
Federal student loans put up for sale by FFELP lenders. 
Moreover, the Department has funded an additional $31.2 billion 
of the loans made by FFELP lenders during the 2008-2009 school 
year.
    Clearly, the FFELP has become dependent on taxpayer funds 
to make loans to students and families. Overall, the Department 
of Education has financed over 60 percent of the 2008-2009 
FFELP loan volume to date. When combined with Direct Loans, 
Education has financed over 70 percent of all Federal student 
loans made during the 2008-2009 school year.

William D. Ford Direct Loan Program

    Established in 1993, the Direct Loan Program provides loans 
directly to students, through the student's school, with loan 
capital secured from the U.S. Treasury. As a result, the Direct 
Loan Program has been insulated from the turmoil in the credit 
markets, and loans to students and families have flowed without 
interruptions or the need for any back-stop measures similar to 
what was required for the FFELP.
    Over the course of the last year, the growth in the Direct 
Loan Program has increased significantly. The number of schools 
that have moved to the Direct Loan Program has increased by 
over 45 percent, from 1,186 in school year 2007-2008 to over 
1,700 in 2008-2009. Over the same time period, the number of 
loans disbursed under the Direct Loan Program increased by 66 
percent, from 3.2 million to 5.3 million; and the overall 
amount of loans made under the program increased by 60 percent, 
from $13.8 billion to over $22 billion.
    To participate in the Direct Loan Program, all schools must 
first be eligible and certified by the Department of Education. 
Once eligible and certified for the Direct Loan Program, the 
school must send an e-mail request to the Department to 
actively participate in the Direct Loan Program. Once approved 
and in order to begin processing Direct Loans and transmit and 
receive Direct Loan data electronically, the school must set up 
an electronic email account to exchange information with the 
Department as well as a bank account with the Department to 
receive the federal funding that is used to provide Direct Loan 
proceeds to borrowers. To a large degree, many schools, in 
particular those that disburse Pell Grants to students, are 
already familiar with the Department's information technology 
systems that are used to provide Direct Loans to students. The 
Department's ``Common Origination and Disbursement (COD)'' 
system is used to deliver both Pell Grant funds and Direct Loan 
funds to schools.
    Schools that have recently transitioned to the Direct Loan 
Program have reported high levels of satisfaction with the 
program. In a June 2009 survey of schools that recently 
transitioned, the National Association of Student Financial Aid 
Administrators found that 80 percent of the schools surveyed 
found making the switch to the Direct Loan Program was easy. In 
addition, 84 percent of the schools reported that the 
Department of Education was helpful in providing assistance for 
the conversion. Moreover, 80 percent of the schools reported 
that they were able to convert to the Direct Loan Program 
within four months.

Providing for a stable, reliable, and efficient student loan program

    Now more than ever, Americans need affordable, quality 
education opportunities to help make our economy strong and 
competitive again. The Committee believes this can be 
accomplished, in part, by implementing the President's proposal 
to move all schools in the country to the Direct Loan program 
by 2010, thereby saving the federal government and taxpayers 
$87 billion dollars over the next 10 years. While the 
legislation directs the Government to originate all student 
loans, it also ensures that there is a role for private 
industry in providing loan servicing. Moreover, it will ensure 
that state and local non-profit agencies, that meet quality and 
pricing standards, will participate in servicing student loans 
through a minimum volume allocation of the loans of 100,000 
borrowers. These reforms mean that student borrowers will have 
a reliable stream of funding to finance their college 
education, and can rely on quality loan servicing during 
repayment. The legislation does not force private industry out 
of the system. Rather, the legislation will maintain the jobs 
of, and a role for, lenders and nonprofits by allowing them to 
compete for contracts that service student loans on an expanded 
basis. For example, the Department of Education has already let 
major contracts to four large FFELP industry participants to 
help service those loans that FFELP lenders found necessary to 
sell to the government as a result of the problems in the 
credit markets.

Reforming and reinvigorating the Perkins Loan Program

    The Committee believes the Perkins Loan Program should be 
reformed so that more loans can be made available to students 
on more campuses across the country. Currently, Perkins loans 
are awarded to students by schools from institutional revolving 
funds, which are comprised of Federal capital contributions, 
institutional matching funds, and student repayments on 
outstanding loans. However, no new Federal capital 
contributions have been appropriated since 2004, leaving many 
schools and their students without access to low-interest 
loans. The legislation will modernize and expand the Perkins 
Loan program so more colleges can participate and more students 
can receive access to low-cost loans to help pay postsecondary 
expenses.

                 MODERNIZATION, RENOVATION, AND REPAIR

    The Committee believes that Title III of H.R. 3221 
addresses a number of important issues--the quality of our 
nation's public school facilities, student achievement, the 
state of the economy, and the state of the environment. The 
Committee believes that these issues are interrelated and that 
each represents a critical national concern.
    President Obama and Congress have already endorsed these 
principles by making green school modernization, renovation and 
repair part of an allowable use of funds under the state fiscal 
stabilization fund in H.R. 1, the American Recovery and 
Reinvestment Act. The Committee believes H.R. 3221 is a 
critical next step in this effort because it is important to 
provide funds specifically dedicated to this purpose. Prior to 
ARRA, and with the exception of funding through the Impact Aid 
program and through the Department of the Interior for Indian 
schools, direct federal support for school construction has 
been virtually non-existent since fiscal year 2001 when 
Congress appropriated $1.2 billion primarily for emergency 
school repair and renovation.
    The demand for new and renovated public school facilities 
is unprecedented in our nation's history.\3\ A briefing paper 
delivered at an Economic Policy Institute forum, Investing in 
U.S. Infrastructure, in April 2009, called for $140 billion in 
federal funds for capital outlays for low-income school 
districts and an ongoing federal role in such funding 
comparable to the current federal share of education operations 
funding (approximately 10 percent) in order to bring these 
districts up to parity with the highest income districts. The 
paper argued that such funding is necessary to ensure that 
``the nation's public schools are healthy, safe, 
environmentally sound, and built . . . to support a high-
quality education.''\4\
---------------------------------------------------------------------------
    \3\Testimony of Kathleen J. Moore, Director, School Facilities 
Planning Division, California Department of Education, Hearing, U.S. 
House of Representatives, Committee on Education and Labor, Modern 
Public School Facilities: Investing in the Future, February 13, 2008 
(http://edlabor.house.gov/testimony/2008-02-13-KathleenMoore.pdf).
    \4\Good Buildings, Better Schools, Filardo, M., Economic Policy 
Institute Briefing Paper, April 29, 2008.
---------------------------------------------------------------------------

Need and disparity

    The most recent comprehensive estimates of the national 
need for school construction and renovation were made in 1995 
($112 billion, U.S. General Accounting Office\5\ (GAO)\6\), 
2000 ($127 billion, National Center for Education Statistics\7\ 
(NCES)), 2001 ($322 billion, National Education Association\8\ 
(NEA)), and 2008 ($254.6 billion, American Federation of 
Teachers (AFT))\9\.
---------------------------------------------------------------------------
    \5\Condition of America's Schools, Government Accounting Office, 
1995 (GAO/HEHS-95-61).
    \6\In 2004, the General Accounting Office was renamed the 
Government Accountability Office. The Committee will use ``GAO'' to 
refer to both.
    \7\Condition of America's Public School Facilities: 1999, National 
Center for Education Statistics.
    \8\Modernizing Our Schools: What Will It Cost?, National Education 
Association, 2000.
    \9\Building Minds, Minding Buildings: School Infrastructure Funding 
Need, A state-by-state assessment and an analysis of recent court 
cases: 2008, American Federation of Teachers.
---------------------------------------------------------------------------
    Several studies highlight the inadequacy of school 
facilities. In 2009, the American Society of Civil Engineers, 
on its national infrastructure report card, gave America's 
public schools a D.\10\ A 2005 survey of school principals by 
NCES found that fifty-two percent of schools had no science 
laboratories, thirty percent had no art rooms, nineteen percent 
had no music rooms, and seventeen percent had no gymnasium.\11\ 
A 2004 NCES report found that one school in three had temporary 
buildings as the primary learning space for at least 160 
students, and that in one in five schools, teachers routinely 
had to use a building's common areas for instructional 
purposes.\12\
---------------------------------------------------------------------------
    \10\http://www.infrastructurereportcard.org/fact-sheet/schools.
    \11\Public School Principals Report on Their School Facilities: 
Fall 2005, Institute of Education Sciences, National Center for 
Education Statistics.
    \12\Characteristics of Schools, Districts, Teachers, Principals, 
and School Libraries in the United States 2003-2004, Schools and 
Staffing Survey, National Center for Education Statistics.
---------------------------------------------------------------------------
    Disparities in the condition of our schools are also well-
documented. In 1996, GAO reported, in a follow-up to an earlier 
study, that on every measure--inadequate buildings or building 
features, unsatisfactory environmental conditions, etc.--the 
same subgroups--schools in central cities, western states, and 
schools serving higher percentages of minority or low-income 
students--reported having more significant problems.\13\
---------------------------------------------------------------------------
    \13\America's Schools Report Differing Conditions, Government 
Accounting Office, 1996 (GAO/HEHS-96-103).
---------------------------------------------------------------------------
    In 2006, a report by Building Educational Success Together 
(BEST) concluded that the GAO and NEA estimates ``grossly 
underestimated'' the need for school improvements, and 
concurred with the 1996 GAO finding that facilities in low-
income and minority-serving areas tended to be in significantly 
worse condition. The report also concluded that despite 
significant State and local expenditures on school construction 
and renovation from 1996-2004, ``there continue to be millions 
of students in substandard and crowded school conditions.''\14\
---------------------------------------------------------------------------
    \14\Growth and Disparity: A Decade of U.S. Public School 
Construction, Building Educational Success Together, 2006.
---------------------------------------------------------------------------
    It is the Committee's intent that funds authorized by this 
bill be used to ensure that all children have access to a high-
quality public school facility. The Committee recognizes that 
facility quality disparity is most likely to occur in low-
income areas. Accordingly, the Committee encourages local 
educational agencies to take care to ensure that the needs of 
low-income and rural schools are addressed by giving priority 
to schools where modernization, renovation, and repair will 
most benefit students, teachers, and other staff and ensuring 
that the schools are safe, healthy, conducive to teaching and 
learning, energy efficient, and environmentally sound.

Green Schools

    A 2006 report concludes that a green school (1) uses one-
third percent less energy than a conventional school; (2) 
reduces harmful carbon dioxide emissions by forty percent, 
which helps reduce global climate change; (3) uses thirty 
percent less water; (4) has better lighting and temperature 
controls, which promotes higher student achievement; and (5) 
has a more comfortable indoor environment, improved ventilation 
and indoor air quality, which result in short-term ($96,760 per 
year) and long-term savings as a result of green building.\15\ 
The average national school construction cost is $150 per 
square foot; building green adds only $3 per square foot. 
According to the study, the long-term savings from green 
buildings are $70 per square foot.\16\
---------------------------------------------------------------------------
    \15\Greening America's Schools, Kats, G., 2006
    \16\Ibid.
---------------------------------------------------------------------------
    The Committee believes that green building can serve a 
number of purposes. Such building will directly benefit both 
the larger environment and the indoor environment. The 
Committee further believes that green building will improve the 
ability of teachers to teach and students to learn as well as 
the health of students, teachers, and other school staff.
    The Committee believes that a critical component of the 
success of this bill will be local educational agencies' 
knowledge of best practices in school construction, 
modernization, renovation, and repair as they relate to green 
building.
    The bill directs States to develop state-level voluntary 
guidelines for high-performing school buildings. The Committee 
encourages States, in developing the energy efficiency 
components of such guidelines, to look for direction to the 
definition of such plans in H.R. 579, the School Building 
Enhancement Act, introduced by Representative Rush Holt. That 
bill defines such plans as including standards for school 
building design, construction, and renovation; and proposals 
for the systematic improvement (including benchmarks and 
timelines) of environmental conditions in and around schools 
throughout the State. H.R. 579 also encourages purchasing 
environmentally preferable products for instruction and 
maintenance, increasing the use of alternative energy fuels in 
school buses, and maximizing transportation choices for 
students, staff, and other members of the community.
    In addition to the voluntary state guidelines for high-
performing school buildings required in the bill, the Committee 
encourages states to establish voluntary guidelines concerning 
performance monitoring, use of Energy Star equipment, 
alternative fuels buses, anti-idling measures, and other 
measures the state believes will contribute to high-performing 
schools.
    The Committee encourages the Secretary, in carrying out the 
Department's technical assistance responsibilities under H.R. 
3221, as amended, to examine the Illinois Resource Guide for 
Healthy, High-Performing School Buildings. The recommendations 
and information in the guide are intended to provide school 
administrators, school boards and other community members with 
guidance to make informed decisions about health and energy 
efficiency issues important to schools. The guide's objective 
is to promote long-term thinking and to ensure that school 
buildings are compatible with the goals of improving learning 
environments, reducing operating costs, supporting health and 
safety, and protecting our natural environment.\17\
---------------------------------------------------------------------------
    \17\For a discussion of a case study in building a modern, green 
school, see, Testimony of Mary Cullinane, Director, Innovation and 
Business Development Team, Microsoft Corporation, Hearing, U.S. House 
of Representatives, Committee on Education and Labor, Modern Public 
School Facilities: Investing in the Future, February 13, 2008 (http://
edlabor.house.gov/testimony/2008-02-13-MaryCullinane.pdf).
---------------------------------------------------------------------------

Impact on teaching and learning

    The Committee believes that while equity alone justifies 
federal support for local educational agencies to ensure that 
every child has access to a high-quality public school 
facility, such support also is essential to closing the 
achievement gap. The Committee believes that the relationship 
between the quality of school facilities and student 
achievement and teacher performance and retention are 
positively intertwined.\18\ Research demonstrates that better 
school facilities result in improved student achievement and 
teacher recruitment and retention. The physical condition of 
schools also affects student and teacher health.
---------------------------------------------------------------------------
    \18\See, e.g., Testimony of Judi Caddick, Teacher, Memorial Junior 
High School, Illinois Education Association, Lansing, Illinois, 
Hearing, U.S. House of Representatives, Committee on Education and 
Labor, Modern Public School Facilities: Investing in the Future, 
February 13, 2008 (http://edlabor.house.gov/testimony/2008-02-13-
JudiCaddick.pdf).
---------------------------------------------------------------------------
    According to a 2004 report by the 21st Century School Fund, 
inadequate school facilities can result in alienated students, 
low staff morale, high teacher attrition, the inability to 
provide specialized curricula, reduced learning time, 
distractions from learning, reduced ability to meet special 
needs, lack of technological proficiency, health problems for 
students and staff, safety hazards, and less supervision of 
student behavior.\19\
---------------------------------------------------------------------------
    \19\For Generations to Come, 21st Century School Fund, 2004.
---------------------------------------------------------------------------
    It is the Committee's intent that local educational 
agencies use funds provided under this subtitle for the 
installation or upgrading of educational technology 
infrastructure such as wiring and other projects, including 
energy efficient improvements, to bring school facilities 
technologically up-to-date.
    In its 2005 survey, NCES noted that a key reason for school 
construction and renovation is student and teacher safety, but 
that building quality also affects the context for learning, 
such that lighting, noise reduction, air quality and other 
factors can affect student achievement and behavior. NCES 
further noted that building quality affects teacher retention--
forty percent of teachers who transferred schools and thirty-
nine percent who left teaching cited the need for significant 
school repairs as a source of their dissatisfaction.\20\ NCES 
found that one-third of school principals cited at least one 
environmental factor\21\ as interfering with their ability to 
deliver instruction.
---------------------------------------------------------------------------
    \20\Another study finding a relationship between facility quality 
and teacher retention is The Effects of School Facility Quality on 
Teacher Retention in Urban School Districts, Buckley, J., Schneider, 
M., and Shang, Y., 2004.
    \21\Those factors include: air conditioning, size/configuration of 
rooms, acoustics or noise control, ventilation, heating, physical 
condition, indoor air quality, natural lighting, artificial lighting.
---------------------------------------------------------------------------
    The Committee encourages school districts that undertake 
projects to reduce or eliminate human exposure to classroom 
noise and environmental noise pollution, and the Secretary, in 
providing technical assistance concerning reducing background 
noise and reverberation in classrooms, to consider the American 
National Standards Institute (ANSI) approved Standard S12.60-
2002, [Acoustical Performance Criteria, Design Requirements, 
and Guidelines for School].

Impact on health

    A 2004 study mandated by the Elementary and Secondary 
Education Act of 1965, as amended by the No Child Left Behind 
Act, and funded by the Department of Education found that 
``overall evidence suggests that poor environments in schools, 
due primarily to the effects of indoor pollutants, adversely 
affect the health, performance, and attendance of students.'' 
Specifically, the study found that indoor environmental quality 
can influence health outcomes, which may, in turn, influence 
student and teacher performance directly and indirectly.\22\ 
The study cites the 1995 GAO finding that thirty percent of 
schools reported unsatisfactory ventilation.
---------------------------------------------------------------------------
    \22\A Summary of Scientific Findings on Adverse Effects of Indoor 
Environments on Students' Health, Academic Performance and Attendance, 
U.S. Department of Education, Policy and Program Studies Service, 2004.
---------------------------------------------------------------------------
    The Centers for Disease Control advises that asthma 
accounts for more than fourteen million missed school days per 
year.\23\ A 2006 report by the American Federation of Teachers 
concludes that ``[p]oor air quality in schools contributes to 
students' asthma, absences due to illness, difficulty 
concentrating, and lower achievement.''\24\
---------------------------------------------------------------------------
    \23\http://www.cdc.gov/asthma/children.htm.
    \24\Building Minds, Minding Buildings, American Federation of 
Teachers, 2006.
---------------------------------------------------------------------------
    The Committee further recognizes that although lead solder 
with more than 0.2 percent lead and plumbing fixtures with more 
than eight percent lead were banned in 1987, such products 
remain in schools across the country. The Environmental 
Protection Agency and the Centers for Disease Control both have 
concluded that there is no safe level of exposure to lead. 
Exposure to lead early in life has been linked to cognitive 
deficits, attention deficits, and extremely aggressive 
behavior.

Impact on community

    According to the 2006 BEST study, the difference between 
good and poor quality facilities also affects the communities 
in which they are located. School quality has a direct, 
positive impact on residential property values and can improve 
a community's ability to attract businesses and workers.\25\ 
This point also is supported by Representative Bob Etheridge's 
testimony at the February 13, 2008, Committee hearing on this 
issue.\26\
---------------------------------------------------------------------------
    \25\Growth and Disparity: A Decade of U.S. Public School 
Construction, Building Educational Success Together, 2006.
    \26\Testimony of Representative Bob Etheridge, Hearing, U.S. House 
of Representatives, Committee on Education and Labor, Modern Public 
School Facilities: Investing in the Future, February 13, 2008 (http://
edlabor.house.gov/testimony/2008-02-13-BobEtheridge.pdf.
---------------------------------------------------------------------------
    The BEST study also concluded that investments in school 
facilities bring money into local economies through job 
creation and supply purchases and can help revitalize 
distressed neighborhoods. The Committee is persuaded by these 
findings and expects that this bill will produce positive 
results in our communities.

Impact on economy

    Direct federal investment in school construction and 
renovation could provide an immediate boost to our economy and 
generate jobs. Federal funding for the modernization, 
renovation, or repair of school facilities could be spent 
quickly and efficiently to address the loss of 1.3 million jobs 
in the construction industry over the last year and a half.\27\
---------------------------------------------------------------------------
    \27\See http://www.bls.gov/news.release/empsit.nr0.htm.
---------------------------------------------------------------------------

Hurricanes Katrina and Rita

    H.R. 3221 provides additional support for Gulf Coast 
schools still recovering from damage caused by Hurricanes 
Katrina and Rita. The Gulf region, primarily New Orleans, has 
hundreds of millions of dollars in unmet school modernization, 
renovation, repair and construction need, including as a result 
of Hurricanes Katrina and Rita. Prior to Hurricanes Katrina and 
Rita, the Recovery School District of Louisiana (RSD) already 
had a deferred maintenance infrastructure deficit of 
approximately $1 billion. The hurricanes caused an additional 
$800 million in damage to the district's schools. The funding 
from this bill will help the district, and others in the Gulf 
region, meet these important and timely needs as they continue 
to recover from the hurricanes.\28\
---------------------------------------------------------------------------
    \28\See also Testimony of Paul Vallas, Superintendent, Louisiana 
Recovery School District, Hearing, U.S. House of Representatives, 
Committee on Education and Labor, Modern Public School Facilities: 
Investing in the Future, February 13, 2008 (http://edlabor.house.gov/
testimony/2008-02-13-PaulVallas.pdf).
---------------------------------------------------------------------------

Davis-Bacon

    Under the bill, the construction, modernization, repair, 
and renovation projects paid for, in whole or in part, with the 
grants made available by this legislation are subject to Davis-
Bacon prevailing wage requirements. Davis-Bacon prevailing wage 
rules ensure that taxpayer dollars are not used to undercut 
local wage rates. These rules require contractors to pay the 
local prevailing wage to their employees.
    Davis-Bacon requirements will help control costs, ensure 
higher quality work, and improve safety. Studies have shown 
that, where prevailing wages are not required, contractors 
compete on the basis of labor costs, frequently resulting in 
poor construction quality as well as substantial cost and time 
overruns due to cheaper workers' lower levels of skill, 
productivity, and training.\29\ Where prevailing wages are 
paid, higher rates of productivity, safety, and building 
quality more than offset the cost of higher wages. For example, 
one study by the Mechanical Electrical Sheet Metal Alliance, 
focusing on highway and bridge construction, found that workers 
who were paid more than double the wage of low-wage workers 
were able to build 74.4 more miles of highway and 32.8 more 
miles of bridges for $557 million less.
---------------------------------------------------------------------------
    \29\See generally, Peter Philips, ``Square Foot Construction Costs 
for Newly Constructed State and Local Schools, Offices and Warehouses 
in Nine Southwestern and Intermountain States 1992-1994'' Prepared for 
the Legislative Education Study Committee of the New Mexico State 
Legislature, September 6, 1996.
---------------------------------------------------------------------------
    Davis-Bacon requirements help save federal, State, and 
local revenue. By creating family supporting jobs in local 
communities that do not drive workers' wages down, these 
requirements ease the burden on public programs and provide 
support for more economic activity. Studies have found that 
repeal of local prevailing wage laws results in lower incomes, 
loss of sales tax revenues, and a general loss of economic 
activity.\30\ These are precisely the types of effects the 
Committee intends to avoid by providing federal assistance to 
local communities consistent with Davis-Bacon.
---------------------------------------------------------------------------
    \30\Michael P. Kelsay et al., ``The Adverse Economic Impact from 
Repeal of the Prevailing Wage Law in Missouri,'' Council for Promoting 
American Business, January 2004.
---------------------------------------------------------------------------
    For the reasons stated above, the Committee believes 
passage of this bill will provide significant educational 
benefits for our nation's students, health benefits for 
students, teachers, and others who work in our schools, 
financial benefits for schools resulting from energy savings, 
economic benefits for hundreds of thousands of American workers 
and their families, and environmental benefits.

                EARLY LEARNING CHALLENGE FUND (TITLE IV)

    Over the past several decades, research on the brain and on 
child development has established that learning begins at birth 
and that the first five years of life have a lasting effect on 
children's learning, health, and behavior. During the first 
three years of life alone, the brain goes through its most 
dramatic development: children learn to walk, speak, reason, 
talk, learn, trust, and to interact with others.\31\ This 
developmental period is enormously consequential, laying the 
foundation for a child's cognitive, social, emotional, and 
physical development.\32\ It can be a time when a child 
experiences supportive and consistent relationships with 
parents and other caregivers that fosters healthy development 
and teaches children to trust others and their own abilities, 
or it can be a time when children fail to receive the 
supportive relationships and early learning opportunities their 
growing brains need, setting a course that can take years to 
remediate.
---------------------------------------------------------------------------
    \31\Submitted Testimony, Matthew Melmed, Submitted to the Committee 
on Education and Labor, U.S. House of Representatives Hearing 
``Investing in Early Education: Paths to Improving Children's 
Success,'' January 23, 2008.
    \32\National Research Council and Institute of Medicine (2000). 
From Neurons to Neighborhoods: The Science of Early Child Development. 
Jack P. Shonkoff and Deborah A. Phillips, Eds. Washington, D.C.: 
National Academy Press.
---------------------------------------------------------------------------
    As a result, the early years present an important 
opportunity for policymakers. By investing in programs that 
support families in their efforts to get their children off to 
a good start, we can prevent problems from developing that are 
more difficult and costly to address later in life. The 
Committee strongly believes that improving access to high-
quality early learning programs is an integral component of 
comprehensive school reform and is essential to ensuring 
America can compete in the global economy in the decades to 
come. The Early Learning Challenge Fund capitalizes on the 
importance of these early years by creating an investment that 
will leverage standards reform and fund initiatives that 
together will increase the availability of high-quality early 
learning programs for disadvantaged children from birth through 
age 5 so that all children can fulfill their potential. The 
Committee appreciates President Obama's recognition of the 
importance of early childhood to lifelong success and looks 
forward to working with the President to ensure that all 
children receive the early learning opportunities they need to 
thrive.
    Nearly 12 million children under age 5, including 6 million 
children under age 3 are regularly cared for by someone other 
than their parents.\33\ Child care is usually a family's 
highest or second highest budget item. Many families struggle 
to find and afford high quality early learning programs for 
young children. Unfortunately, the quality of early learning 
settings varies greatly, and despite some progress, early 
learning programs are held to inconsistent standards among and 
within states. Large national evaluations of child care find 
the average quality to be mediocre.\34\ and child care costs 
are frequently a family's highest expense or second highest 
family expense after housing.\35\ Center-based child care for 
one child costs between $3,000 and $13,000 per year, putting it 
out of reach for many working families.\36\ Therefore, it can 
be very difficult for families to find the kind of high quality 
early learning programs that appropriately support their 
child's development or that have the standards needed to help 
close the achievement gap.\37\ The Committee believes that 
without significant new public investment in the quality of 
early learning programs, many children will be unable to attain 
the benefit from early learning programs that would otherwise 
help them arrive at kindergarten ready to succeed.
---------------------------------------------------------------------------
    \33\Iruka, I. U., and Carver, P. R. (2006). Initial Results From 
the 2005 NHES Early Childhood Program Participation Survey (NCES 2006-
075). U.S. Department of Education. Washington, DC: National Center for 
Education Statistics.
    \34\Cost, Quality, and Outcomes Study Team. (1995). Cost, quality, 
and child outcomes in child care centers: Key findings and 
recommendations. Young Children, 50, 40-44; Peisner-Feinberg, E. S., 
Burchinal, M. R., Clifford, R. M., Culkin, M.L., Howes, C., Kagan, S. 
L., Yazejian, N., Byler, P., Rustici, J., & Zelazo, J. (1999). The 
children of the cost, quality, and outcomes study go to school: 
Executive summary. Chapel Hill: University of North Carolina at Chapel 
Hill, Frank Porter Graham Child Development Center.
    \35\Parents and the High Price of Care (2009). National Association 
of Child Care Resource and Referral Agencies. http://www.naccrra.org/
docs/reports/price_report/Price_Report_2009_execsumm.pdf.
    \36\Ibid.
    \37\Cost, Quality, and Outcomes Study Team. (1995). Cost, quality, 
and child outcomes in child care centers: Key findings and 
recommendations. Young Children, 50, 40-44; Peisner-Feinberg, E. S., 
Burchinal, M. R., Clifford, R. M., Culkin, M.L., Howes, C., Kagan, S. 
L., Yazejian, N., Byler, P., Rustici, J., & Zelazo, J. (1999). The 
children of the cost, quality, and outcomes study go to school: 
Executive summary. Chapel Hill: University of North Carolina at Chapel 
Hill, Frank Porter Graham Child Development Center.
---------------------------------------------------------------------------
    The long-lasting benefits of high quality early learning 
programs are well documented, and these programs are of 
particular benefit to disadvantaged children. High quality 
programs improve academic achievement, reduce the need for 
special education, increase employment and earnings, lower 
rates of teen pregnancy, reduce crime and delinquency, and 
ultimately increase our global competitiveness.\38\ Yet despite 
our understanding of the importance of quality early learning 
environments and the benefits that accrue when we provide 
children with high quality early learning opportunities, far 
too many of our children spend their time in settings that do 
not adequately support their development. The early childhood 
system has inconsistent standards among and within States, 
which often lack adequate resources to ensure that programs are 
of high quality and that children enter kindergarten ready to 
succeed. Fewer than half of States require centers to encourage 
parent involvement and thirteen State pre-kindergarten programs 
do not require any site visits to monitor compliance with 
standards. Additionally, twenty States do not require child 
care providers to have even a high school degree. Currently, no 
single State implements all the quality components of a model 
early learning system, though States and programs have made 
significant progress over the last twenty years in improving 
their early childhood systems.
---------------------------------------------------------------------------
    \38\E.g., Currie, J., & Thomas, D. (1995). Does Head Start Make a 
Difference? The American Economic Review, Vol. 85(3), 341-364. U.S. 
Department of Health & Human Services, Administration for Children & 
Families (2001). Head Start FACES: Longitudinal Findings on Program 
Performance, Third Progress Report. Washington, D.C.
---------------------------------------------------------------------------
    The Committee contends that given the importance of the 
first five years of life, substantially more investment in 
early childhood is necessary for all of America's children to 
have the opportunity to succeed and if America is to compete in 
the global economy. The graph below reflects the striking 
mismatch between the importance of investing early and the 
level of public investment in early childhood.\39\
---------------------------------------------------------------------------
    \39\Bruner, C., Goldberg, J., & Kot, V. (1999). The ABC's of early 
childhood: Trends, information, and evidence for use in developing an 
early childhood system of care and education.


    The Early Learning Challenge Fund is a bold and wise 
investment that recognizes the importance of quality and will 
support and advance State reforms that improve the quality of 
early learning programs across all settings for all children 
from birth through age 5, and particularly for low-income 
children. This landmark initiative will challenge States to 
develop effective, innovative models that promote high 
standards of quality. The Fund will also increase the 
transparency of what early learning programs are providing and 
how children are doing so that parents can hold states 
accountable for their choices and so parents can expect more 
for their children. High quality comprehensive early learning 
systems, starting at birth, will go a long way toward 
eliminating achievement gaps and providing children with the 
resources, skills, and tools they need to arrive at school 
ready for success. The years prior to kindergarten are about 
the most significant in shaping a child's foundation for 
learning and school success--and the Early Learning Challenge 
Fund will ensure that our investments reflect the importance of 
those early years.

The achievement gap

    The achievement gap that exists in elementary school and 
beyond begins before children enter kindergarten.\40\\41\ For 
example, the Early Childhood Longitudinal Study (ECLS) 
conducted by the National Center for Education Statistics found 
4 year olds from families living below the poverty line are 
already 18 months behind their peers.\42\ Moreover, of 4 year 
old children from families in the lowest 20 percent of 
socioeconomic status, 40.1 percent were proficient in numbers 
and shapes, of children from families in the middle 60 percent 
of socioeconomic status, 65.3 percent were proficient in 
numbers and shapes, and of children from families in the 
highest 20 percent socioeconomic status group, 87.1 percent 
were proficient in numbers and shapes.\43\ The achievement gap 
at kindergarten entry between students from more affluent 
families and those from middle and lower income families is 
also abundantly clear in this graph using additional data from 
the ECLS study.\44\

    \40\Lee, J., Grigg, W., and Dion, G. (2007). The Nation's Report 
Card: Mathematics 2007. National Assessment for Educational Progress. 
Can be accessed at: http:
//nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2007494; Lee, J., Grigg, W., 
and Donahue, P. (2007). The Nation's Report Card: Reading 2007. 
National Assessment for Educational Progress. Can be accessed at: 
http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2007496
    \41\Lee, V.E., and Burkam, D.T. (2002). Inequality at the Starting 
Gate: Social Background Differences in Achievement as Children Begin 
School. Economic Policy Institute: Washington DC.
    \42\Klein, L.G., & Knitzer, J. (2007). Promoting Effective Early 
Learning: What Every Policymaker and Educator Should Know. National 
Center on Children and Poverty. Columbia University.
    \43\Jacobson Chernoff, J., Flanagan, K. D., McPhee, C., and Park, 
J. (2007). Preschool: First Findings From the Preschool Follow-up of 
the Early Childhood Longitudinal Study, Birth Cohort (ECLS-B) (NCES 
2008-025). National Center for Education Statistics, Institute of 
Education Sciences, U.S. Department of Education. Washington, DC.
    \44\Source: U.S. Department of Education, National Center for 
Education Statistics, Early Childhood Longitudinal Study, Kindergarten 
Class of 1998-99, Fall 1998. 



    Unfortunately, children who enter kindergarten behind their 
peers have a difficult time catching up.\45\ The Committee 
strongly believes that effective investments to minimize the 
achievement gap prior to school entry benefits children, 
schools, and our nation, and that high quality state-funded 
preschool has significant potential to help accomplish this 
goal.
---------------------------------------------------------------------------
    \45\Entwisle, D. R. (1995). The role of schools in sustaining 
benefits of early childhood programs. The Future of Children, 5, 133-
144.
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Cost effectiveness of high quality early learning programs

    The Committee believes that the cost-benefits of Title IV 
of H.R. 3221 make it a sound public investment. Acclaimed 
economists like Art Rolnick of the Minneapolis Federal Reserve 
and Nobel Laureate and University of Chicago professor James 
Heckman, conclude that early childhood interventions are among 
the best investments we can make for ensuring that all children 
become productive citizens and securing our long-term economic 
prosperity. ``Ability gaps between disadvantaged and other 
children open up early and children who start ahead keep 
accelerating past their peers, widening the gap,'' wrote James 
Heckman and Dimitriy Masterov in The Productivity Argument for 
Investing in Young Children. ``[Early learning] programs are 
likely to generate substantial savings to society and to 
promote higher economic growth by improving the skills of the 
workforce.'' Nobel Laureate James Heckman points out that 
``skill begets skill'' and concludes the longer we wait to 
intervene in a child's life, the more difficult it is to be 
effective and the more costly it is for society.\46\ By 
reducing the need for grade retention, reducing the need for 
special education services, increasing academic success, 
reducing juvenile crime, and creating a more qualified and 
competitive workforce, high quality early learning programs 
will ultimately save more in public funding than they cost to 
support.
---------------------------------------------------------------------------
    \46\Heckman, J. (May 2006). Keynote speech at the National Summit 
on America's Children. U.S. House of Representatives, Washington, DC.
---------------------------------------------------------------------------

The Early Learning Challenge Fund

    The Early Learning Challenge Funds challenges Governors to 
develop new approaches to raising the bar across State early 
learning settings. It will promote standards reform of State 
early learning programs serving children from birth through age 
5 in order to support healthy development and improve the 
school readiness outcomes of young children. By leveraging 
standards reform and funding quality initiatives, it will 
ensure more disadvantaged children participate in high-quality 
early learning programs that meet their developmental needs and 
help them arrive at kindergarten ready to succeed.
    The Early Learning Challenge Fund creates an incentive for 
States to develop an early learning system that integrate 8 key 
components:
     Early Learning and Development Standards that lead 
to school readiness and are integrated with programmatic and 
instructional practices.
     Quality Rating System that is evidence-based and 
structured with progressive levels of quality that target funds 
and provide transparent goals for program improvement.
     Program review and oversight that is applied 
across all programs and settings and is focused on components 
of quality related to school readiness.
     Comprehensive professional development system that 
can prepare an effective and well-qualified workforce of early 
educators, including supporting appropriate levels of training, 
education, credentials, and compensation.
     Support to parents and families so they are 
engaged and supported in their child's early learning.
     Coordinated systems to facilitate screening and 
referrals for health, mental health, disability and family 
support.
     A coordinated data infrastructure to collect 
essential information on where young children spend their time 
and the quality of the programs that serve them.
     An age- and developmentally-appropriate curriculum 
and assessment system for early learning programs that is used 
to support best practices, improve school readiness.
    Quality Pathways grants will be awarded to high-capacity 
States pursuing models of reform and excellence in early 
learning settings for children from birth through age 5. 
Innovative plans that already reflect significant progress 
toward establishing the core eight elements needed to improve 
quality and learning outcomes for children will be rewarded. 
States must develop data systems that will provide transparency 
on the number of children in high quality settings and require 
States to make progress increasing the number of children, in 
each age group, in The Committee emphasizes that state 
applications must demonstrate that improvements to the early 
learning system must address settings for infants, toddlers, 
and preschoolers. A state whose primary or sole focus is on 
improving the quality of early learning settings for 4-year-
olds would not be meeting the expectations of this grant. 
Moreover, in reviewing applications, the Committee intends the 
Secretary to recognize that states need to strive to support 
high quality full-day early learning programs because of their 
importance in meeting the needs of working families as well as 
meeting the needs of children. In addition, though the 
allowable use of funds in the legislation
    Development grants will be awarded to States that show 
promise for strengthening and expanding their early learning 
system but who need additional assistance to launch a 
comprehensive standards-based system. Development grants are 
not renewable because the Committee believes that if States 
implement them effectively, States will have positioned 
themselves to be competitive for a Quality Pathways Grant after 
three years.
    The Committee believes the Early Learning Challenge Grants 
will transform early learning programs and practices and become 
an integral part of a larger effort to reform education in this 
country.

Early Learning and Development Standards

    The Committee believes Early Learning and Development 
Standards reform is essential to the effort to improve early 
learning program quality and child outcomes. Accordingly, 
States receiving a Quality Pathway grant have 12 months to 
complete early learning and development standards that are 
developmentally, culturally, and linguistically appropriate for 
all children from until kindergarten entry. To adequately 
support child development and school readiness, these standards 
must address all domains of children's development and 
learning, including social, emotional, cognitive, and physical 
development and approaches to learning. States with standards 
that do not cover all these domains appropriate for infants, 
toddlers, and preschoolers must revise their standards 
accordingly. In addition, States receiving Quality Pathways 
grants have 18 months to conduct an analysis of alignment 
between their early learning and development standards with 
their program quality standards and with their kindergarten-
grade 3 academic content standards. It is critical that this 
alignment reflect the development progression of how children 
learn and develop the requisite skills as they move forward 
through the early grades. It is important this analysis ensure 
the breadth (language, literacy, math, social, emotional, 
approaches to learning, science, creative arts, and physical 
development) and depth (emphasis within each standard). The 
Committee believes it is then critical for states to support 
the integration of these standards into early learning program 
practices.

Children with disabilities

    Over the past decade, the number of identified children 
with disabilities and developmental delays under the age of 
five has grown substantially, represented by a 70 percent 
increase in infants and toddlers with disabilities and a 45 
percent increase in preschool children with disabilities. Under 
the Individuals with Disabilities Education Act, young children 
with disabilities are to be supported in natural settings (the 
least restrictive environment), including provision of 
specialized services in childcare programs, Head Start Centers, 
preschools, pre-K classrooms and other early learning settings. 
The Department of Education reports that a majority of states 
are making progress in serving children with disabilities in 
inclusive programs, with 36 states and territories serving 50 
percent or more of their preschoolers with disabilities in 
these general early learning programs.
    The Early Learning Challenge Fund requires states to 
address the needs of young children with disabilities as part 
of their broader early learning system and quality improvement 
activities. The Committee intends for States to develop early 
learning and development standards appropriate for all 
children, including children with disabilities. The Committee 
encourages states to consider the principles of Universal 
Design for Learning in developing such standards in order to 
meet this requirement. States should also address, as part of 
their plans to improve the capacity of the early learning 
workforce, how professional development activities will prepare 
all teachers to work with young children with disabilities. The 
Committee notes the legislation intends to hold states 
accountable for including the needs of young children with 
disabilities in their comprehensive plans as well as in 
improving the school readiness outcomes of these children.

Children with limited English proficiency

    Children with limited English proficiency account for a 
growing and significant share of children enrolled in schools 
and early learning programs. In some parts of the county, more 
than 50 percent of the preschool population comes from non-
English speaking homes.\47\ As a group, these students lag 
behind their peers in educational attainment and achievement. 
It is estimated that children with limited English proficiency 
entering kindergarten know 5,000 fewer words than their English 
speaking peers.\48\ As these students progress through the 
elementary grades, challenges with English proficiency and 
these vocabulary gaps will impact their ability to master 
higher order literacy skills, such as reading comprehension and 
writing, and challenging academic content. Therefore, there is 
an urgent need to design and implement early learning programs 
that provide these children with experiences that prepare them 
to achieve at high levels and become fluent in English. The 
Committee contends these efforts must be driven by empirical 
findings rather than ideology and language politics. In the 
last decade, advances in research regarding how young children 
with limited English proficiency acquire a second language 
provide useful guidance for policy development and the 
implementation of effective classroom practices for these 
children.\49\
---------------------------------------------------------------------------
    \47\Espinsoa, Linda, ``Challenging Common Myths About Young English 
Language Learners,'' Foundation for Child Development, January 2008.
    \48\Betty Hart and Todd R. Risley, Meaningful Differences in the 
Everyday Experience of Young American Children (Baltimore: Paul H. 
Brookes Co., Inc., 1995).
    \49\``Challenging Common Myths About Young English Language 
Learners,'' Foundation for Child Development, op.cit.
---------------------------------------------------------------------------
    The Early Learning Challenge Fund requires states to 
address the needs of young children with limited English 
proficiency as part of their broader quality improvement 
activities. States should address, as part of their plans to 
improve the capacity of the early learning teacher workforce, 
how professional development activities will prepare all 
teachers to work with young children with limited English 
proficiency. The Committee urges the research activities 
carried out under this Title to adequately examine how the 
school readiness outcomes of this population can be adequately 
addressed and improved. The Committee notes the legislation 
intends to hold states accountable for including the needs of 
young children with limited English proficiency in their 
comprehensive plans as well as in improving the school 
readiness outcomes of these children.

Voluntary participation in early learning programs

    The Committee notes that nothing in this legislation 
requires a child to participate in an early learning program.

Facilities

    The Committee notes that the supply of suitable spaces to 
house early childhood programs has not kept pace with the 
growth of the sector, and the shortage is especially severe in 
low-income communities--both urban and rural. For example, 
according to a 2007 report by the Advancement Project, 
California's Preschool Space Challenge, California currently 
lacks preschool-suitable spaces for approximately 117,000 or 21 
percent of its four year olds, with most of the deficit 
occurring in low-income communities. Because the Committee 
acknowledges the need for high-quality early learning program 
facilities to support the ultimate goal of preparing children 
to be ready to learn when they enter kindergarten. The bill 
provides that in-kind contributions for facilities development, 
including technical assistance, may be counted toward the State 
match. In-kind contributions that could be used for this 
purpose include the provision of lien-free land, structures or 
leased space, no-interest loans, revolving lines of credit, 
construction materials, and labor, in accordance with the 
Department of Education regulations at 34 CFR 74.23.

Child care licensing

    States cannot improve early childhood education for all 
ages without addressing basic health and safety requirements in 
child care programs. This should include minimum health and 
safety standards, pre-requisite training related to these 
health and safety standards and child development, and regular 
monitoring and inspections. The Committee expects to address 
these and other key licensing issues in the reauthorization of 
the Child Care and Development Block Grant so that states will 
receive further support and guidance to improve upon these 
areas and that children can be safe and healthy when out of 
their parents' care.

                     AMERICAN GRADUATION INITIATIVE

    The Committee believes that community colleges are the 
backbone of our Nation's educational and workforce systems, 
providing post-secondary education and job training to millions 
of Americans and serving as the critical pipeline to 
postsecondary education, job training, and economic vitality.
    Nearly 12 million students are enrolled at the more than 
1,000 community colleges across the country. These include 
students who are taking for-credit classes as well as those 
pursuing apprenticeships, taking developmental courses or 
career-prep courses, or taking basic core vocational education 
or general education courses necessary to further their 
education and achieve their career goals. Community colleges 
are essential to strengthening the middle class and providing 
the skilled workers necessary to meet our nation's economic and 
social challenges. For future workers, community colleges will 
be vital--the Bureau of Labor Statistics projects that 
occupations requiring an associate's degree or postsecondary 
vocational credentials will experience faster growth than those 
requiring a bachelor's degree. For dislocated workers, 
community colleges are similarly critical--research indicates 
that displaced workers who attend a community college 
substantially increase their long-term earnings, particularly 
if the classes are related to high-growth industries. These 
successes are in part due to the flexible nature of community 
colleges. They are able to work with employers and the private 
sector to address workforce shortages and create tailored 
training, partnerships, and apprentice programs for specific 
occupations. Community colleges lead the way in preparing 
graduates in the fields of green technology, healthcare, 
teaching, information technology and clean energy technology--
some of the fastest growing fields in America--and the world. 
Yet they are bursting at the seams, heavily under-resourced, 
and lack incentives to innovate.
    The Committee believes that America's ability to remain 
true to our highest ideals--and to maintain our leadership in 
the global economy--depends on our ability to transform our 
higher education system to provide the relevant knowledge and 
skills necessary to compete in a new and changing world. 
Economic progress and educational achievement go hand in hand. 
And in today's economy, access to higher education institutions 
and success in post-secondary education is no longer just a 
pathway to opportunity--it is a prerequisite.
    To address these and other overarching concerns, H.R. 3221 
includes provisions to increase innovation at community 
colleges, encourage states to be active participants in 
systematic community college reform, develop and make available 
free high-quality online education and training courses, and 
ensure that educational and employment outcomes are measured 
and shared within and among states and with the public.
    Further, it is the intent of the Committee that the states 
and entities receiving grants under the American Graduation 
Initiative should be encouraged to find innovative ways to 
address the needs of students and workers. This can include, 
but is not limited to the following: adapting college offerings 
to the schedules and needs of working students, such as 
creating evening, weekend, modular, compressed, or distance 
learning formats; augmenting programs and services, including 
providing specialized assessments and learning tools, 
streamlined registration processes, and specialized job 
placement counseling, for vulnerable populations, including 
disabled veterans and ex-offenders; enrolling students in 
learning communities; and other relevant innovations. The 
Committee encourages the design and implementation of 
innovative ways to improve retention in and completion of 
developmental education courses, including but not limited to 
enrolling students in cohorts; accelerating course content; 
integrating remediation and college-level curricula and 
instruction; dual enrolling students in remediation and 
college-level courses; tutoring; providing counseling and other 
supportive services; and giving small, material incentives for 
attendance and performance.
    Use of grants in this section are intended to prepare 
students for employment in skilled occupations in high-demand 
industries, and the Committee encourages entities to create 
programs that aim to close the gaps in enrollment for groups 
underrepresented in particular programs and occupations.
    In establishing benchmarks and evaluating the use funds, 
Congress intends the Secretary to consider the employment of 
underrepresented populations in nontraditional occupations for 
their gender as defined in the Carl D. Perkins Career and 
Technical Education Act of 2006. The evaluation should consider 
earnings relative to economic self-sufficiency, a standard of 
economic independence calculated or commissioned by the state 
which considers the income needs of families by family size, 
the number and ages of children in the family and sub-state 
geographical considerations.
    The Committee intends for entities developing, evaluating 
and disseminating high-quality online training, high school 
courses, and postsecondary education courses must ensure that 
these electronic materials are accessible to individuals with 
disabilities by meeting the access standards established by the 
U.S. Access Board.

                     V. Section-by-Section Analysis


              Title I--Investing in Students and Families


          SUBTITLE A--INCREASING COLLEGE ACCESS AND COMPLETION

Section 101. Federal Pell Grants

    The Student Aid and Fiscal Responsibility Act of 2009 
amends the Higher Education Act to include mandatory funding 
for the Pell Grant. This provides additional mandatory funding 
to augment funds appropriated to increase the federal maximum 
Pell Grant award by the change in the Consumer Price Index plus 
one percent.
    The mandatory component of the funding is determined by 
inflating the previous year's total and subtracting the maximum 
award provided for in the appropriations act for the previous 
year or $4860, whichever is greater.

Section 102. College Access and Completion Innovation Fund

    This section of the bill amends Part E of Title VII of the 
Higher Education Act to include two additional areas of grant 
activity for States, institutions of higher education, non-
profit organizations and guaranty agencies designed to improve 
post-secondary student success, completion, and post-completion 
employment, particularly for students from underrepresented 
backgrounds.
    The section authorizes and appropriates $600 million 
dollars for each fiscal year 2010 through 2014 for the three 
types of grants in Part E. Of the funds, 25% will be used for 
the College Access Challenge Grants under section 781, 50% will 
be used for State Innovation and Completion Grants under 
section 782, 23% will be used for Innovation in College Access 
and Completion National Activities Grants, and 2% will be used 
to evaluate the outcome of grants administered under Part E.
    State Innovation and Completion Grants will be awarded 
annually on a competitive basis to States meeting the 
application requirements set forth in the bill. States are 
required to provide assurances that they will develop and 
submit a statewide Access and Completion Plan, engaging key 
education stakeholders in the state, to increase the State's 
rate of persistence in and completion of postsecondary 
education. The State is authorized to provide subgrants to non-
profit organizations and guaranty agencies for assistance in 
carrying out the State grant. Priority is given to states who 
partner with philanthropic organizations or guaranty agencies. 
At least one-third of the State program (including both federal 
and non-federal shares) must be used for activities benefiting 
students at two-year institutions, no more than 10% of funds 
shall be used for development and implementation of statewide 
longitudinal data systems, and no more than 6% of funds can be 
used for administrative purposes relating to the grant.
    Under the Innovation in College Access and Completion 
National Activities grants, higher education institutions, non-
profit organizations, philanthropic organizations, guaranty 
agencies, and States are eligible to apply for grants awarded 
on a competitive basis for not less than $1,000,000. Grant 
funds may be used for innovative programs, policies, and 
services that increase the number of individuals with 
postsecondary degrees or certificates.

Section 103. Investment in historically black colleges and universities 
        and other minority-serving institutions

    This section amends section 371(b) of the higher Education 
Act by extending funding for programs under this section 
created under the College Cost Reduction Act for programs at 
historically black colleges and universities and other 
minority-serving institutions through 2014, including programs 
that help low-income students attain degrees in the fields of 
science, technology, engineering or mathematics by the 
following annual amounts: $100 million to Hispanic Serving 
Institutions including $10 million for community partnerships, 
$85 million to Historically Black Colleges and Universities, 
$15 million to Predominantly Black Institutions, $30 million to 
Tribal Colleges and Universities, $15 million to Alaska, 
Hawaiian Native Institutions, $5 million to Asian American and 
Pacific Islander Institutions, and $5 million to Native 
American non-tribal serving institutions.

Section 104. Investment in cooperative education

    This section provides $10 million for fiscal year 2010 for 
cooperative education programs pursuant to Part N of Title VIII 
of the Higher Education Act.

         SUBTITLE B--STUDENT FINANCIAL AID FORM SIMPLIFICATION

Section 121. General effective date

    This section specifies that changes to the federal needs 
analysis pursuant to this subtitle will take effect of the 
award year beginning on or after July 1, 2011.

Section 122. Treatment of assets in need analysis

    This section amends section 471 of the Higher Education Act 
by excluding the consideration of parental and student assets 
in the federal needs analysis formula that determines student 
aid eligibility for families with incomes below $150,000. 
Creates an asset cap for need-based aid above which a student 
is ineligible for need-based grants, loans, or work assistance. 
The asset cap is indexed for inflation. The section also makes 
conforming changes.

Section 123. Changes to total income; aid eligibility

    This section amends the definition of total income to 
streamline consideration of untaxed income and benefits to 
exclude: child support, workman's compensation, veteran's 
benefits, living allowances for military and clergy, non-
parental cash support, and other untaxed income and benefits. 
The section also amends the suspension of eligibility for drug-
related offenses related to exclude students convicted of 
possession of a controlled substance.

                     Title II--Student Loan Reform


                    SUBTITLE A--STAFFORD LOAN REFORM

Section 201. Federal Family Education Loan appropriations

    This section terminates the authority to make or insure any 
additional loans in the Federal Family Education Loan program 
after June 30, 2010.

Section 202. Scope and duration of Federal loan insurance program

    This section is a conforming amendment with regard to the 
termination of the FFEL program, limiting Federal insurance to 
those loans in the Federal Family Education Loan program for 
loans first disbursed prior to July 1, 2010.

Section 203. Applicable interest rates

    This section makes a conforming amendment with regard to 
the termination of the FFEL program limiting interest rate 
applicability to Stafford, Consolidation, and PLUS loans to 
those loans made before July 1, 2010.

Section 204. Federal payments to reduce student interest costs

    This section makes a conforming amendment with regard to 
the termination of the FFEL program by limiting subsidy 
payments to lenders for those loans for which the first 
disbursement is made before July 1, 2010.

Section 205. Federal PLUS loans

    This section makes a conforming change with regard to the 
termination of the FFEL program for federal PLUS loans by 
prohibiting further FFEL origination of loans after July 1, 
2010.

Section 206. Federal consolidation loans

    This section makes conforming changes with regard to the 
termination of FFEL program for federal consolidation loans by 
allowing borrowers who have a consolidated FFEL loan to 
subsequently consolidate into the Direct Lending program.

Section 207. Unsubsidized Stafford loans for middle-income borrowers

    This section makes conforming changes with regard to the 
termination of the FFEL program for Unsubsidized Stafford loans 
by prohibiting further FFEL origination of loans after July 1, 
2010.

Section 208. Loan repayment for civil legal assistance attorneys

    This section makes conforming changes with regard to the 
termination of the FFEL program for loans eligible for 
repayment for civil legal assistance attorneys, to FFEL loans 
first disbursed before July 1, 2010 and maintains eligibility 
for loan repayment in the Direct Lending program.

Section 209. Special allowances

    This section makes conforming changes with regard to the 
termination of the FFEL program by limiting special allowance 
payments to lenders under the FFEL program to loans first 
disbursed before July 1, 2010.

Section 210. Revised special allowance calculation

    This section changes the underlying index for the 
calculation of special allowance payments to lenders for loans 
first disbursed on or after January 1, 2000 and before July 1, 
2010 under the FFEL program from commercial paper (CP) to the 
1-month London Inter Bank Offered Rate (LIBOR).

Section 211. Origination of Direct Loans at institutions located 
        outside of the United States

    This section provides for the origination of federal Direct 
Loans at institutions located outside of the United States, 
through a financial institution designated by the Secretary.

Section 212. Agreements with institutions

    This section makes conforming technical changes with regard 
to the termination of the FFEL program for Department of 
Education agreements with Direct Lending institutions.

Section 213. Terms and conditions of loans

    This section makes conforming technical changes with regard 
to the termination of the FFEL program to clarify the terms and 
conditions of Direct Loans.

Section 214. Contracts

    This section directs the Secretary to award contracts for 
servicing loans through a competitive bidding process to 
eligible non-profit servicers for federal Direct Loans. The 
section provides for a minimum allocation to eligible servicers 
of the lesser of 100,000 borrowers or the loans of all the 
borrowers in a State. In the case of multiple servicers, the 
Secretary shall allocate each servicer the lesser of the loans 
of 100,000 borrowers or equal shares of the loans of all 
borrowers in the state. The section also ensures that borrowers 
with multiple loans remain with a single servicer. Non-profit 
servicers must meet quality and pricing standards set by the 
Secretary.

Section 215. Interest rates

    This section changes, beginning on July 1, 2012, the 
interest rate on Subsidized Stafford loans for undergraduates 
from a fixed rate to a variable rate with a cap of 6.8%. The 
variable rate is calculated on the basis of the 91-day Treasury 
bill plus 2.5%.

                    SUBTITLE B--PERKINS LOAN REFORM

Section 221. Federal Direct Perkins Loans terms and conditions

    This section amends Part D of Title IV, adding in a new 
section 455A creating Federal Direct Perkins Loans. The section 
authorizes institutions to award Perkins loans to students 
pursuant to an agreement with the Secretary. The section aligns 
the Perkins loan program with the terms, conditions, and 
requirements of the federal Direct Unsubsidized Stafford loan, 
with the exception of a lower applicable interest rate of 5%.

Section 222. Authorization of appropriations

    This section makes a conforming change to sunset the 
discretionary allocation of additional Perkins funds through 
the current Perkins loan program to loans made prior to July 1, 
2010.

Section 223. Allocation of funds

    This section makes a conforming change to the allocation of 
funds under section 462 of the current Perkins loan program to 
sunset the program by fiscal year 2010.

Section 224. Federal Direct Perkins Loan allocation

    This section establishes an annual Direct Perkins loan 
authority for the annual issuance of up to $6 billion from 
funds under Part D beginning with the 2010-2011 award year. For 
each award year, 50% of funds are allocated to institutions on 
the basis of the adjusted self-help need amount of the 
institution. The adjusted self-help need amount is determined 
by each eligible undergraduate student's average cost of 
attendance less each undergraduate student's expected family 
contribution, plus each eligible graduate or professional 
student's average cost of attendance less each graduate or 
professional student's expected family contribution. For 
undergraduate students the amount of self-help need cannot 
exceed 25% of the average cost of attendance or $5,500 and for 
graduate and professional students it cannot exceed $8,000.
    Of the remaining 50% of funds: 25% of the funds are awarded 
on the basis of a low tuition incentive, and 25% of the funds 
are allocated to institutions based on the number of students 
that graduate who are federal Pell Grant recipients. The 
calculation of the low tuition incentive is based on the amount 
by which the institution's tuition and fees is below the 
average tuition and fees for its sector, plus the amount by 
which the non Federal grant aid provided by the institution to 
needy students drives them below the average tuition and fees 
for the institution's sector. The calculation of the Pell Grant 
incentive is determined by the ratio of Pell grant recipients 
to Pell grant recipients who complete a postsecondary degree.
    If the institution's base self-help need amount exceeds 50% 
of the loan authority under this section, the base amounts of 
the eligible institutions is ratably reduced. There is also a 
corresponding ratable reduction that applies to the low tuition 
incentive and the Pell Grant incentive.
    Participants of the current Perkins loan program are 
guaranteed to receive no less than the average of the 
institution's total principal amount of loans for each of the 
five most recent award years.

Section 225. Agreements with institutions of higher education

    This section describes the nature of the agreement between 
the Secretary and the institution with regard to participation 
in the Federal Direct Perkins Loan program. Specific 
requirements include that the institution will: establish and 
maintain the program, operate the program consistent with their 
requirements under the Federal Direct Loan program, and pay an 
institutional match to be determined by the Secretary.

Section 226. Student loan information by eligible institution

    This section makes conforming changes to limit the 
disclosure requirements of institutions participating in the 
current Perkins loan program to Perkins loans made before July 
1, 2010.

Section 227. Terms of loans

    This section makes conforming changes to sunset the terms 
and conditions of Perkins loans made before July 1, 2010.

Section 228. Distribution of assets from student loan funds

    This section recalls the federal capital contribution to 
the Perkins loan revolving funds at participating institutions 
minus the cost of student loan cancellations pursuant to the 
terms of the current program and administrative costs. The 
institution's contribution is also paid back to the 
institution.

Section 229. Administrative expenses

    This section makes conforming changes to sunset the 
administrative expense payments by the Secretary under Part E 
for the current Perkins loan program.

            Title III--Modernization, Renovation, and Repair


             SUBTITLE A--ELEMENTARY AND SECONDARY EDUCATION

Section 301. Definitions

    Includes definitions of Bureau-funded school, charter 
school, CHPS Criteria, Energy Star, Green Globes, LEED Green 
Building Rating System, local educational agency, outlying 
area, public school facilities, Secretary, and State.

 CHAPTER 1--GRANTS FOR MODERNIZATION, RENOVATION, OR REPAIR OF PUBLIC 
                           SCHOOL FACILITIES

Section 311. Purpose

    Indicates the purpose of grants under chapter 1 is for 
modernizing, renovating, or repairing public school facilities 
to ensure that public school facilities are safe, healthy, 
high-performing, and technologically up-to-date.

Section 312. Allocation of funds

    Directs the Secretary to reserve two percent of funds 
appropriated for chapter 1 for each fiscal year for assistance 
to the outlying areas and for payments to the Secretary of the 
Interior for assistance to Bureau-funded schools and requires 
that such funds be distributed between the outlying areas and 
the Department of the Interior for schools in outlying areas 
and Bureau of Indian Education-funded schools in the same 
proportion as the amount reserved under section 1121(a) of the 
Elementary and Secondary Education Act. Directs the Secretary 
to reserve five percent of funds appropriated for chapter 1 for 
each fiscal year for assistance to local educational agencies 
serving geographic areas with significant economic distress and 
those recovering from a natural disaster. Allows each State to 
reserve up to one percent of funds appropriated for chapter 1 
for each fiscal year to provide technical assistance, to 
develop a plan to create an online, publicly searchable 
statewide database of public school facility design, condition, 
modernization, renovation and repair needs, usage, utilization, 
energy use, and carbon footprint, and create voluntary 
guidelines for high-performing public school buildings.
    Allocates to each State the same percentage of funds 
appropriated under Title I of this Act that the State receives 
under Title I, Part A of the Elementary and Secondary Education 
Act of 1965. Within each State, allocates to each local 
educational agency the same percentage of funds appropriated 
under Title I of this Act that the agency receives under Title 
I, Part A of the Elementary and Secondary Education Act of 
1965.
    Requires the Secretary, in determining State and local 
allocations, to take into account the hold-harmless provisions 
of Title I, Part A of the Elementary and Secondary Education 
Act of 1965.
    Requires the Secretary to distribute funds to States within 
one hundred twenty days of the Department's appropriation and 
requires States to distribute funds to local educational 
agencies within ninety days of having received them from the 
Secretary.

Section 313. Allowable use of funds

    Describes the types of public school modernizations, 
renovations, and repairs that are allowable uses of funds under 
chapter 1, including repair to roofs, electrical, plumbing, 
sewage, stormwater runoff, lighting systems, building envelope, 
heating, ventilation, and air-conditioning systems, windows, 
floors, ceilings, doors, including insulation and indoor air 
quality assessments. Funds may also be used to bring schools 
into compliance with fire, health, seismic and safety codes, 
including modernizations, renovations, and repairs that ensure 
that schools are prepared for emergencies. Funds may be used 
for retrofitting that will increase the energy efficiency of 
public school facilities and for modifications necessary to 
comply with the Americans with Disabilities Act of 1990 and 
section 504 of the Rehabilitation Act of 1973. Additional uses 
contemplated by the bill include, abatement, removal, or 
interim controls of asbestos, polychlorinated biphenyls, mold, 
or mildew; reduction of human exposure to lead-based hazards or 
proven carcinogens; reduction of classroom noise and 
environmental noise pollution; modernization, renovation, or 
repair to reduce the consumption of coal, electricity, land, 
natural gas, oil, or water; upgrading or installing educational 
technology infrastructure; modernization, renovation, or 
repairs of laboratory facilities, libraries, career and 
technical education facilities, and improvements to building 
infrastructure to accommodate bicycle and pedestrian access; 
renewable energy generation, heating systems and energy audits; 
measures designed to reduce or eliminate human exposure to 
airborne particles; creating greenhouses, gardens, and other 
facilities for environmental scientific, or other educational 
purposes, or to produce energy savings; modernizing, 
renovating, or repairing physical education facilities and 
recreational structures for students, other modernizations, 
renovations, or repairs that improve the teaching and learning 
climate, ensure the health and safety of students and staff, or 
make schools more energy efficient; or reduce class size; and 
required environmental remediation related to modernizations, 
renovations, or repairs described above.

Section 314. Priority projects

    Allows local educational agencies to give priority to 
projects involving the abatement, removal, or interim controls 
of asbestos, polychlorinated biphenyls, mold, mildew, lead-
based hazards, including lead-based paint hazards, or a proven 
carcinogen.

 CHAPTER 2--SUPPLEMENTAL GRANTS FOR LOUISIANA, MISSISSIPPI, AND ALABAMA

Section 321. Purpose

    Indicates the purpose of grants under chapter 2 is for 
modernizing, renovating, repairing, or constructing public 
early learning, kindergarten, elementary, and secondary 
educational facilities to address needs caused by damage 
resulting from Hurricane Katrina or Hurricane Rita.

Section 322. Allocation to local educational agencies

    Directs the Secretary to allocate funds to local 
educational agencies in Louisiana, Mississippi, and Alabama 
based on the infrastructure damage caused as a result of 
Hurricane Katrina or Hurricane Rita.
    Requires the Secretary to distribute funds to local 
educational agencies within one hundred twenty days of an 
appropriation of funds.

Section 323. Allowable use of funds

    Includes the same list of allowable uses of funds as 
section 313, but also allows local educational agencies to use 
chapter 2 funds for construction of new facilities.

                     CHAPTER 3--GENERAL PROVISIONS

Section 331. Impermissible uses of funds

    Prohibits funds received under this Act from being used for 
payment of maintenance costs and stadiums or similar facilities 
whose primary use is for athletic contests or exhibitions for 
which admission is charged to the general public. Also 
prohibits the improvement or construction of facilities whose 
purpose is not the education of students, such as 
administrative facilities and the purchase of carbon offsets.

Section 332. Supplement, not supplant

    Requires local educational agencies receiving funds under 
this Act to use such funds to supplement, and not supplant, 
funds that otherwise would be used for the same purposes.

Section 333. Prohibition regarding State aid

    Prohibits a State from taking payments under this Act into 
consideration when determining the eligibility, or amount of, 
State aid for any local educational agencies.

Section 334. Maintenance of effort

    Allows only local educational agencies with at least a 
ninety percent maintenance of effort with respect to the 
provision of a free public education from the previous fiscal 
year to receive funds under this Act.

Section 335. Special rule on contracting

    Requires a local educational agency that receives funds 
under this Act and that carries out projects through a contract 
to ensure that the bidding process consist of the maximum 
number of qualified bidders, including local, small, minority, 
women- and veteran-owned businesses, through full and open 
competition.

Section 336. Use of American iron, steel, and manufactured goods

    Requires that all of the iron, steel, and manufactured 
goods used in projects under this Act are produced in the 
United States unless the Secretary finds that the use of these 
products is inconsistent with the public interest, the products 
are not produced in sufficient quantities or of satisfactory 
quality, or the use of such products will increase the overall 
cost of the project by more than 25 percent. If the Secretary 
waives this provision due to a circumstance described above, 
the Secretary must public a detailed written justification of 
the determination in the Federal Register. This section must be 
applied in a manner that is consistent with international 
agreements.

Section 337. Labor standards

    States that the Davis-Bacon labor law provisions apply to 
any funds received under this Act.

Section 338. Charter schools

    Requires that charter schools receive a portion of a local 
educational agency's funds under this Act, based on the 
percentage of low income students in the local educational 
agency served by charter schools and that local educational 
agencies consult with charter schools to determine individual 
school's needs for renovation, modernization, and repair. 
Allows local educational agencies to use excess funds for other 
public school facility modernization, renovation, repair, or 
construction if, after consulting with charter school 
administrators, the local educational agency determines that 
the amount reserved exceeds the needs of charter schools within 
the agency.

Section 339. Green schools

    Requires local educational agencies receiving funds under 
this subtitle to use at least half of such funds appropriated 
in fiscal year 2010 and seventy five percent of funds 
appropriated in fiscal year 2011 for public school 
modernizations, renovations, repairs, or construction that meet 
specified ``green'' standards, including equivalent standards 
adopted by the State or local authority with jurisdiction over 
the agency, which must include a verifiable method to 
demonstrate compliance.
    Clarifies that nothing under Sec. 339 shall be construed to 
prohibit a local educational agency from using sustainable, 
domestic hardwood lumber for public school modernization, 
renovation, repairs, or construction.
    Requires the Secretary, in consultation with the Secretary 
of Energy and the Administrator of the Environmental Protection 
Agency, to provide outreach and technical assistance to States 
and local educational agencies concerning best practices in 
school modernization, renovation, and repair, including those 
related to student academic achievement, student and staff 
health, energy efficiency, and environmental protection.

Section 340. Reporting

    Describes the reporting requirements applicable to local 
educational agencies, States, and the Secretary, and requires 
local educational agencies to make their reports publicly 
available, including on their website.

Section 341. Special rules

    Prohibits funds under this subtitle from being used to 
employ workers in violation of section 274A of the Immigration 
and Nationality Act and from being distributed to a local 
educational agency that does not have a policy that requires a 
criminal background check on all employees of the agency.

Section 342. Promotion of employment experiences

    Directs the Secretary, in consultation with the Secretary 
of Labor, to promote appropriate opportunities for participants 
in the Youthbuild program, individuals enrolled in the Job 
Corps program, individuals enrolled in a junior or community 
college certificate or degree program related to sec 339(a), 
and participants in preapprenticeship programs that have direct 
linkages with apprenticeship programs that are registered with 
the Department of Labor or a State Apprenticeship Agency under 
the National Apprenticeship Act of 1937 to gain employment 
experience through projects under this subtitle.

Section 343. Advisory Council on Green, High-Performing Public School 
        Facilities

    Establishes the Advisory Council on Green, High-Performing 
Public School Facilities to advise the Secretary on the impact 
of green, high-performing schools on teaching and learning, 
health, energy costs, environmental impact, and other areas.

Section 344. Education regarding projects

    Allows local educational agencies to encourage schools 
where modernization, renovation, or repair projects are 
undertaken to educate students about the project, including, as 
appropriate, the functioning of the project and its 
environmental, energy, sustainability, and other benefits.

Section 345. Availability of funds

    Authorizes to be appropriated and appropriates for chapter 
1 $2,020,000,000 for each of fiscal years 2010 and 2011. 
Authorizes to be appropriated and appropriates for chapter 2 
$30,000,000 for each of fiscal years 2010 and 2011.

                      SUBTITLE B--HIGHER EDUCATION

Section 351. Federal assistance for community college modernization

    This section establishes a federal grant program for 
community college modernization, repair, and construction. 
Grants are awarded to states for one of the following uses: to 
reduce financing costs of loans, to provide matching funds for 
capital campaigns, or to provide capital to a revolving loan 
fund, for new construction modernization, renovation, or repair 
projects at community colleges. Community colleges can use 
funds for the construction, modernization, renovation, or 
repair of community college facilities that are primarily used 
for instruction, research, or student housing including: 
heating and air conditioning systems, emergency preparedness, 
increasing energy efficiency, expanding accessibility of 
facilities for Americans with Disabilities Act compliance, 
removal or abatement of asbestos or lead-based paint, 
technology upgrades, or renewable energy generation. Requires 
local educational agencies receiving funds under this subtitle 
to use at least half of such funds appropriated for community 
college modernizations, renovations, repairs, or construction 
that meet specified ``green'' standards, including equivalent 
standards adopted by the State or local authority with 
jurisdiction over the agency, which must include a verifiable 
method to demonstrate compliance.

                Title IV--Early Learning Challenge Fund


Section 401. Purpose

    Sets forth five purposes to the title.

Section 402. Programs authorized

    Reserves up to 2 percent of funds for joint administration 
of the title by the Secretary of Education and up to 3 percent 
for research activities described in section 405. Authorizes 
.25 percent for a competitive grant program to Indian tribes to 
develop and implement school readiness plans. After these 
reservations, reserves up to 65 percent for fiscal years 2010 
through 2012 and up to 85 percent for subsequent fiscal years 
for Quality Pathways Grants. The remainder is reserved for 
Development Grants. Lists priority criteria for awarding 
competitive grants and state maintenance of effort 
requirements. Describes the federal administration of the grant 
program and includes a list of a prohibition on the use of 
funds.

Section 403. Quality pathways grants

    Describes the quality pathways grants, including the grant 
period, the Secretary's criteria for awarding grants and 
determining amount of the award, as well as criteria for 
renewal, and the state matching requirement. Explains the 
required contents of State applications and the allowable uses 
of funds. Includes special rule allowing 25% of funds from a 
Quality Pathways grant to be used to expand access under 
certain conditions. Includes an improvement plan for states 
encountering barriers to reaching their goals.

Section 404. Development grants

    Describes the development grants, including the grant 
period, the use of funds, and the matching requirement.

Section 405. Research and evaluation

    From funds reserved in section 402, requires the Secretary 
of education and the Secretary of Health and Human Services to 
act jointly to carry out 4 activities: (1) establish a national 
commission to review and provide recommendations regarding 
early learning program standards and early learning and 
development standards; (2) conduct a national evaluation of the 
grants made under the title; (3) support a research 
collaborative to support research that can inform improved 
child outcomes; (4) review strategic reports by the State 
Advisory Councils on Early Care and Education and disseminate 
best practices.

Section 406. Reporting requirements

    Requires the Secretary of Education to submit an annual 
report to the Committee on Education and Labor of the U.S. 
House of Representatives and the Health, Education, Labor, and 
Pensions Committee of the U.S. Senate and describes the 
contents of such report. Requires States receiving grants under 
this title to submit annual reports to the Secretary of 
Education and describes the contents of such report.

Section 407. Construction

    Includes two rules of construction regarding interpretation 
of the provisions of the title.

Section 408. Definitions

    Includes definitions for the term `child', `disadvantaged', 
`Indian tribe', `Limited English Proficient', `Secretary', and 
`State'.

Sec. 409. Availability of Funds

    Provides $1 billion for each of fiscal years 2010 through 
2017.

                Title V--American Graduation Initiative


Section 501. Authorization and appropriation

    This section authorizes and appropriates $730 million for 
each fiscal year 2010 through 2013 and $680 million for each 
fiscal year 2014 through 2019 for the American Graduation 
Initiative. For fiscal years 2010 through 2013: $630 million is 
available for the Community College Challenge grant program, 
$50 million is available for open online education, and $50 
million is available for the Learning and Earning Research 
Center and grants to states for data systems. For fiscal years 
2014 through 2019: $630 million is available for grants to 
States for community college programs and $50 million is 
available for open online education.
    Sections 503 and 504 will be jointly administered by the 
Secretary of Education and the Secretary of Labor pursuant to 
an interagency agreement, with the Secretary of Education 
having primary responsibility for obligating and disbursing 
funds and ensuring compliance with applicable law and 
administrative requirements.

Section 502. Definitions

    This section defines eligible entities and the following 
terms: area career and technical education school, institution 
of higher education, community college, philanthropic 
organization, State, State Public Employment Service, State 
Workforce Investment Board, Local Workforce Investment Board, 
and supportive services. Eligible entities include: community 
colleges and community college districts; area and career 
technical education schools; public four-year institutions that 
offer two-year degrees, use funds for activities at the 
associate degree and certificate levels, and is not reasonably 
close to a community college; States and higher education 
institutions in partnership with one of the above four eligible 
entities; and consortia of at least two of the above entities.

Section 503. Grants to eligible entities for community college reform

    This section authorizes the Secretary of Education, in 
coordination with the Secretary of Labor to award competitive 
grants to community colleges, area career and technical 
colleges, public four-year institutions offering two-year 
degrees, States or public four-year institutions partnering 
with community colleges, or consortia of the above entities.
    Grants awarded are for innovative programs, or programs of 
demonstrated effectiveness, that lead to the completion of a 
postsecondary degree, certificate, or industry-recognized 
credential leading to a skilled occupation in a high-demand 
industry. Grants are awarded for a four-year period. The 
Secretary is authorized to terminate a grant in the third year 
if the eligible entity has not made demonstrable progress in 
achieving agreed upon benchmarks. If such a determination is 
made, no further grant funds will be awarded. The minimum grant 
award is $750,000. Priority is given to eligible entities 
partnering philanthropic organizations, businesses, and labor 
organizations for defined purposes. Eligible entities seeking a 
grant must submit a detailed application to the Secretary.
    Requires a non-federal match for federal dollars to cover 
50% of the cost of the programs, services, and policies under 
the grant. The non-federal portion of the match can be in cash 
or in kind, and can be provided from States, local resources, 
and/or private organizations. A hardship waiver may be granted 
by the Secretary pursuant to Department regulations.
    Eligible entities receiving a grant must use grant funds to 
carry out two of the following activities: facilitating 
transfer of credit and articulation agreements; expanding, 
enhancing, or creating academic or training programs in 
partnership with employers; providing student and worker 
support services; creating workforce programs leading to 
industry-recognized credentials; building or enhancing linkages 
including the development of dual enrollment programs and early 
college high schools; and other innovative programs to increase 
completion and the provision of training for students to enter 
skilled occupations.
    Requires eligible entities receiving a grant to develop and 
annually measure and report quantifiable benchmarks approved by 
the Secretary on the following indicators as applicable: 
closing gaps in enrollment and completion rates; addressing 
local and regional workforce needs; and improving educational 
and employment outcomes for education and training programs.
    This section also authorizes the Secretary to allocate up 
to 2% of funds to direct the Institute of Education Sciences to 
conduct evaluations to determine the effectiveness of grant 
programs carried out by eligible entities receiving a grant. 
Evaluations must conclude prior to January 30, 2014.
    The Secretary is required to annually submit a report to 
the Committee on Health, Education, Labor, and Pensions of the 
Senate and Labor and the Senate and the Committee on Education 
and Labor of the House of Representatives.

Section 504. Grants to eligible States for community college programs

    This section authorizes the Secretary of Education, in 
coordination with the Secretary of Labor to award competitive 
grants to States to implement systematic reform of community 
colleges located in the State by carrying out programs, 
policies, and services that have demonstrated effectiveness 
resulting from the evaluation in section 503.
    In order to be eligible for a grant under this section a 
State must: have an access and completion plan under section 
782 of the Higher Education Act of 1965, have an interoperable 
statewide longitudinal data system including community college 
data, have an articulation agreement pursuant to section 486A 
of the Higher Education Act of 1965, and is in compliance with 
section 137 of the Higher Education Act of 1965. Eligible 
States seeking a grant must submit a detailed application to 
the Secretary.
    Grants are awarded for a six-year period. The Secretary is 
authorized to terminate a grant in the third year if the 
eligible entity has not made demonstrable progress in achieving 
agreed upon benchmarks. If such a determination is made, no 
further grant funds will be awarded.
    Requires a non-federal match for federal dollars to cover 
50% of the cost of the programs, services, and policies under 
the grant. The non-federal portion of the match can be in cash 
or in kind, and can be provided from States, local resources, 
and/or private organizations. A hardship waiver may be granted 
by the Secretary pursuant to Department regulations.
    Requires eligible entities receiving a grant to develop and 
annually measure and report quantifiable benchmarks approved by 
the Secretary on the following indicators as applicable: 
closing gapes in enrollment and completion rates; addressing 
local and regional workforce needs; and improving educational 
and employment outcomes for education and training programs.
    States must submit an annual report to the Secretary of 
Education and the Secretary of Labor detailing the description 
and outcome of the systematic reform carried out under the 
grant.
    The Secretary is required to submit a report not later than 
six months following the end of the grant period.

Section 505. National activities

    This section authorizes the Secretary to make competitive 
grants or contract with institutions of higher education, 
philanthropic organizations, or other appropriate entities to 
develop, evaluate, and disseminate freely-available high-
quality online training, high school courses, and postsecondary 
education courses.
    This section also authorizes the Director of the Institute 
of Education Sciences to award a grant or contract with an 
organization with demonstrated expertise in research and 
evaluation of community colleges to establish and operate a 
Learning and Earning Center. The grant or contract is 
authorized for four years. Creates an advisory board appointed 
by the Secretary. Authorized activities for the center include: 
the development of common education and training metrics and 
creating standardized data elements and data-sharing protocol.
    Authorizes the Secretary to award grant to States and 
consortia of States to establish cooperative agreements to 
develop, implement, and expand interoperable statewide 
longitudinal data systems.
    Requires compliance with defined privacy and access to data 
provisions made applicable to the entire Act.
    The Secretary is required to annually submit a report to 
the Committee on Health, Education, Labor, and Pensions of the 
Senate and Labor and the Senate and the Committee on Education 
and Labor of the House of Representatives detailing the amounts 
awarded to entities and activities carried out pursuant to such 
grants or contracts.

                     VI. Explanation of Amendments

    The Committee considered and adopted the following 
amendments:
     Chairman Miller (D-CA) offered an amendment in the 
nature of a substitute which is explained in the body of this 
report.
     Representative Lynn Woolsey (D-CA) offered an 
amendment that requires the Secretary to give priority to grant 
applications for the Community College Initiative that focus on 
serving low-income, non-traditional students. The amendment was 
adopted by voice vote.
     Representative Susan Davis (D-CA) offered an 
amendment to provide loan forgiveness for loans incurred during 
the academic term in which a service member is activated. The 
amendment was adopted by voice vote.
     Representative Howard ``Buck'' McKeon (R-CA) 
offered an amendment that requires the Secretary, in 
coordination with the Secretary of Veterans Affairs, to provide 
supplemental grants to eligible veterans whose educational 
costs are not covered by the G.I. bill. The amendment was 
adopted by voice vote.
     Representative Ruben Hinojosa (D-TX) offered an 
amendment to extend mandatory funding to Historically Black 
Colleges and Universities (HBCUs) and Minority Serving 
Institutions (MSIs) for programs to provide training in the 
areas of science, technology, engineering and mathematics 
through 2019. The amendment was adopted by voice vote.
     Representatives Dennis Kucinich (D-OH) and Phil 
Hare (D-IL) offered an amendment that requires States to report 
to the Secretary on barriers to expanding access to early 
learning programs to disadvantaged children. The amendment was 
adopted by voice vote.
     Representatives David Loebsack (D-IA) and Marcia 
Fudge (D-OH) offered an amendment to encourage greater 
connections among States, community colleges, and industry/
sector partnerships to strengthen core industries, create jobs, 
and train the workforce to fulfill those jobs. The amendment 
was adopted by voice vote.
     Representative Mazie Hirono (D-HI) offered an 
amendment to require state applications for Quality Pathway 
grants to address quality and effective inclusion of children 
with disabilities in early learning settings in state program 
rating systems. The amendment was adopted by voice vote.
     Representative Hare offered an amendment to 
clarify that States may use Early Learning Challenge grants to 
implement prevention strategies designed to build social 
competence and prevent challenging behaviors as an allowable 
use of funds. The amendment was adopted by voice vote.
     Representative Joe Courtney (D-CT) offered an 
amendment that it is a sense of the Congress that State 
grantees in the American Graduation Initiative distribute 
resources for community colleges across the State. The 
amendment was adopted by voice vote.
     Representative Jared Polis (D-CO) offered an 
amendment to allow eligible community colleges to use American 
Graduation Initiative grants to redesign and create new 
programs that address emerging needs of the workplace. The 
amendment was adopted by voice vote.
     Representatives Polis and Paul Tonko (D-NY) 
offered an amendment to add grants designed to increase 
certificate completion in the STEM fields for women and other 
disadvantaged group as a priority for the Secretary in issuing 
Innovation Grants. The amendment was adopted by voice vote.
     Representatives Polis and Hirono offered an 
amendment to require the research collaborative established 
under title IV of the bill to evaluate barriers to improving 
the quality of early learning programs for disadvantaged 
children. The amendment was adopted by voice vote.
     Representative Tonko offered two amendments:
           The first amendment adds water efficiency as 
        an allowable use of funds for K-12 modernization, 
        renovation, and repair, and provides that federal 
        funding for community college modernization and 
        construction supplement, and not supplant, other 
        funding for those purposes.
           The second amendment establishes a 
        competitive grant program for eligible institutions of 
        higher education to hire a Veterans Resource Officer to 
        increase college completion rates for veterans.
    Both amendments were adopted by voice vote.
     Representative Robert Andrews offered an amendment 
to amend the 90-10 rule to provide temporary relief to 
proprietary institutions by: extending the number of 
consecutive years an institution may fail to meet the 90-10 
requirement from two to three, before becoming ineligible to 
participate in Title IV programs; extending the period of time 
during which an institution may count the increase in student 
loan limits as non-title IV revenue; and exempting Federal 
Direct Perkins Loans made between July 1, 2010 through July 1, 
2010 from the 90-10 revenue calculation. The amendment was 
adopted by a vote of 42 to 5.
     Representatives Pedro Pierluisi (D-PR) and 
Gregorio Sablan (D-MP) offered an amendment to ensure that 
Puerto Rico, the District of Columbia, Guam, American Samoa, 
the United States Virgin Islands, the Commonwealth of the 
Northern Mariana, and the Freely Associated States are 
eligible, on the same terms as the states, for modernization 
and construction grants for community colleges under the 
American Graduation Initiative. The amendment was adopted by 
voice vote.

           VII. Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act, requires a description of the application 
of this bill to the legislative branch. H.R. 3221, as amended, 
will reform the federal student loan program, provide for 
modernization, renovation and repair of public school 
facilities, enhance early learning, and strengthen community 
colleges. The bill does not prevent legislative branch 
employees' coverage under this legislation.

                    VIII. Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. H.R. 3221 contains no intergovernmental or private-
sector mandates as defined by the Unfunded Mandates Reform Act 
(UMRA).

                         IX. Earmark Statement

    H.R. 3221 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clauses 9(d), 9(e) or 9(f) of rule XXI of the House of 
Representatives.

                              X. Roll Call



    XI. Statement of Oversight Findings and Recommendations of the 
                               Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

            XII. New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974 and with respect to 
requirements of 3(c)(3) of rule XIII of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee expects to receive an estimate for H.R. 
3221 from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                                Congressional Budget Office
                                  Washington, DC, January 24, 2009.
Hon. George Miller,
Chairman, Committee on Education and Labor,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3221, the Student 
Aid and Fiscal Responsibility Act of 2009.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Deborah 
Kalcevic and Justin Humphrey.
            Sincerely,
                                    Douglas W. Elmendorf, Director.
    Enclosure.

H.R. 3221--Student Aid and Fiscal Responsibility Act of 2009

    Summary: H.R. 3221 would amend the Higher Education Act of 
1965, which authorizes most federal postsecondary education 
programs. It would prohibit new federally guaranteed loans from 
being made under the Federal Family Education Loan (FFEL) 
Program and would increase direct spending for the Federal Pell 
Grant Program and other programs.
    The elimination of guaranteed student loans would lead to a 
comparable increase in direct lending by the government. The 
estimated subsidy cost shown in the budget is lower for the 
direct student loan program than for the FFEL program. Thus, 
enacting the bill would yield net budgetary savings for 
shifting new lending from the guaranteed loan program to the 
direct loan program.
    On balance, CBO estimates that enacting H.R. 3221 would 
reduce direct spending by $13.3 billion over the 2009-2013 
period and $7.8 billion over the 2009-2019 period. Assuming 
appropriation of the necessary amounts, implementing the bill 
would increase discretionary spending by at least $13.5 billion 
over the 2009-2019 period. (That estimate reflects the bulk of 
the likely discretionary costs under H.R. 3221; but CBO has not 
completed a comprehensive estimate of all effects that would be 
subject to appropriation action.) Enacting H.R. 3221 would not 
affect revenues.
    H.R. 3221 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
impact of H.R. 3221 on spending is shown in Table 1. The costs 
of this legislation fall within budget functions 500 
(education, training, employment, and social services) and 700 
(veterans benefits and services).

                        TABLE 1.--ESTIMATED BUDGETARY IMPACT OF H.R. 3221, THE STUDENT AID AND FISCAL RESPONSIBILITY ACT OF 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in billions of dollars--
                                ------------------------------------------------------------------------------------------------------------------------
                                   2009     2010     2011     2012     2013     2014     2015     2016     2017     2018     2019   2009-2014  2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Federal Student Loan Programs:a
    Estimated Budget Authority.      -0.2    -6.1    -14.1    -12.2     -8.7     -8.4     -8.0     -7.9     -7.6     -7.8     -8.1     -49.8      -89.2
    Estimated Outlays..........      -0.3    -3.8     -9.6    -11.3     -8.2     -7.5     -7.0     -6.8     -6.7     -6.7     -6.9     -40.7      -74.8
Federal Pell Grant Program:
    Estimated Budget Authority.       0       0.1      1.9      0.8      6.7      3.6      4.0      5.2      6.4      8.1      9.9      13.0       46.7
    Estimated Outlays..........       0         *      0.6      1.6      2.4      5.8      3.7      4.3      5.5      6.9      8.6      10.4       39.4
Other Programs:
    Estimated Budget Authority.       0       4.7      7.3      2.8      2.8      2.7      2.1      2.1      2.2      1.2      1.2      20.3       29.0
    Estimated Outlays..........       0       0.6      3.7      5.0      4.2      3.4      2.6      2.3      2.2      2.1      1.5      16.9       27.6
Total Changes:
    Estimated Budget Authority.      -0.2    -1.3     -4.9     -8.7      0.7     -2.2     -1.8     -0.5      1.0      1.5      3.0     -16.5      -13.4
    Estimated Outlays..........      -0.3    -3.1     -5.3     -4.6     -1.7      1.6     -0.7     -0.2      1.0      2.3      3.1     -13.3       -7.8

                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATIONb

Estimated Authorization Level..       0       0.1      0.8      0.9      1.1      1.3      1.5      1.8      2.1      2.4      2.6       4.3       14.8
Estimated Outlays..............       0       0.1      0.4      0.9      1.0      1.2      1.5      1.7      2.0      2.2      2.5       3.6      13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
aIncluding the Federal Perkins Loan Program.
bCBO has not completed an estimate of all discretionary spending under H.R. 3221; the estimates shown here represent the bulk of the bill's
  discretionary costs.

Notes: Components may not add to totals because of rounding; * = less than S50 million.

    Basis of estimate: As required under the Federal Credit 
Reform Act of 1990 (FCRA), most of the costs of the federal 
student loan programs are estimated on a net-present-value 
basis. Under credit reform, the present value of all loan-
related cash flows is calculated by discounting those expected 
cash flows to the year of disbursement, using the rates for 
comparable maturities on U.S. Treasury borrowing. (For example, 
the cash flow for a one-year loan is discounted using the 
Treasury rate for a one-year zero-coupon note.) The costs for 
the federal administration of student loans are estimated on a 
cash basis. For this estimate, CBO assumes the bill will be 
enacted by October 1, 2009, and that the necessary funds will 
be appropriated for all discretionary programs.

Direct spending

    H.R. 3221 would amend the federal student loan programs 
(including the Federal Perkins Loan Program) and the Federal 
Pell Grant Program and would amend or create several other 
programs. Those changes would decrease net direct spending by 
$13.3 billion over the 2009-2014 period and $7.8 billion over 
the 2009-2019 period.
    Federal Student Loan Programs. H.R. 3221 would make several 
changes to the federal student loan programs, including the 
Federal Perkins Loan Program. As shown in Table 2, CBO 
estimates that, on net, those changes would reduce federal 
costs by $40.7 billion over five years and $74.8 billion over 
10 years. The major changes that affect direct spending 
include:
           Eliminating new guaranteed student loans 
        under the FFEL program and thus shifting those loans to 
        the William D. Ford Federal Direct Student Loan 
        program--saving an estimated $86.8 billion over the 
        2010-2019 period;
           Reducing interest rates on subsidized 
        student loans to undergraduate borrowers--at a cost of 
        $3.2 billion over the 2012-2019 period;
           Interactions between the FFEL and direct 
        loan program and various other program changes--
        resulting in a net cost of $7.5 billion over the 2009-
        2019 period; and
           Speeding up the phase-out of the current 
        Perkins loan program and establishing a new Perkins 
        loan program in its place--for a net cost of $1.3 
        billion over the 2010-2019 period.

                                                                TABLE 2.--SUMMARY OF CHANGES IN THE FEDERAL STUDENT LOAN PROGRAMS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           By fiscal year, in billions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                                2009      2010      2011      2012      2013      2014      2015      2016      2017      2018      2019    2009-2014  2009-2019
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   CHANGES IN DIRECT SPENDING

Eliminate new lending in the FFEL Program:
    Estimated Budget Authority..............................       0        -4.8     -13.3     -12.2     -11.2     -10.5     -10.2     -10.2     -10.1     -10.3     -10.7      -52.1     -103.5
    Estimated Outlays.......................................       0        -2.6      -8.9     -11.0     -10.0      -9.4      -9.0      -8.9      -8.9      -9.0      -9.3      -41.8      -86.8
Reduce borrower interest rates:
    Estimated Budget Authority..............................       0         0         0         *         0.5       0.5       0.5       0.5       0.6       0.6       0.6        1.1        3.9
    Estimated Outlays.......................................       0         0         0         *         0.3       0.5       0.5       0.5       0.5       0.5       0.5        0.8        3.2
Interactions and other changes:
    Estimated Budget Authority..............................      -0.2       *         *         0.6       1.2       1.2       1.2       1.2       1.3       1.3       1.4        2.7        9.1
    Estimated Outlays.......................................      -0.3       *         *         0.4       0.8       1.0       1.0       1.1       1.1       1.1       1.2        2.0        7.5
Subtotal, FFEL and Direct Loans:
    Estimated Budget Authority..............................      -0.2      -4.8     -13.3     -11.6      -9.5      -8.8      -8.5      -8.4      -8.3      -8.4      -8.7      -48.3      -90.6
    Estimated Outlays.......................................      -0.3      -2.6      -8.9     -10.6      -8.9      -7.9      -7.5      -7.4      -7.3      -7.3      -7.6      -39.0      -76.1
Federal Perkins Loans:
    Estimated Budget Authority..............................       0        -1.3      -0.8      -0.6       0.7       0.4       0.5       0.6       0.6       0.6       0.6       -1.6        1.4
    Estimated Outlays.......................................       0        -1.2      -0.8      -0.7       0.7       0.3       0.5       0.5       0.6       0.6       0.6       -1.6        1.3
Total, All Federal Student Loans:
    Estimated Budget Authority..............................      -0.2      -6.1     -14.1     -12.2      -8.7      -8.4      -8.0      -7.9      -7.6      -7.8      -8.1      -49.8      -89.2
    Estimated Outlays.......................................      -0.3      -3.8      -9.6     -11.3      -8.2      -7.5      -7.0      -6.8      -6.7      -6.7      -6.9      -40.7      -74.8 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding; * between -$50 million and $50 million.

    Eliminate new lending in the FFEL Program. Under current 
law, the federal government provides federal loans to borrowers 
through two separate programs. In the FFEL Program (guaranteed 
loans), private lenders originate loans to postsecondary 
students and the federal government makes payments to these 
lenders, guarantees them against significant loss in the case 
of default, and provides funds to guaranty agencies to help 
administer those loans. In the direct loan program, the federal 
government serves as the lender.
    Beginning in July 2010, the bill would prohibit new 
guaranteed loans under the FFEL Program; which under current 
law, CBO estimates will account for about $705 billion in 
loans--70 percent of all loan volume--over the next 10 years. 
Under the prohibition in the bill, CBO expects that volume 
would shift to the direct loan program. CBO estimates that the 
subsidy rates for direct loans are, on average, about 10 to 20 
percentage points lower than for guaranteed loans. (The subsidy 
rate reflects the present value cost for each dollar the 
government loans or guarantees.) Because of that difference in 
subsidy rates, CBO estimates that prohibiting new guaranteed 
loans--with the replacement of those loans by direct student 
loans--would lower federal budget costs by $41.8 billion over 
2010-2014 period and by $86.8 billion over the 2010-2019 
period. Consistent with the accounting required under FCRA, 
most of those estimated savings represent the changes in 
present-value estimates for the switch from guarantees to 
direct loans for each year over that period.
    About $7 billion of the projected savings over the 2010-
2019 period reflect forgone administrative costs in the FFEL 
Program. The increased loan volume in the direct loan program 
would require additional funds for administering and servicing 
those loans, but those costs are classified as discretionary 
spending and discussed below under the heading ``Spending 
Subject to Appropriation.''
    Reduce Borrower Interest Rates. The bill would change the 
interest rate on subsidized loans for undergraduate borrowers 
beginning in July 2012. Under current law, the borrower rate on 
those student loans is scheduled to increase from 3.4 percent 
to 6.8 percent on July 1, 2012. Under the bill, the borrower 
rate would switch to a variable-rate formula. The rate charged 
would be equal to the 91-day Treasury bill rate (calculated as 
if it were equivalent to a bond) plus 2.5 percentage points, 
and would be adjusted annually each July. Because the rate 
would be capped at 6.8 percent, borrowers would never pay an 
interest rate higher than the 6.8 percent they would pay under 
current law, but would have some probability of paying a lower 
interest rate, depending on future Treasury rates.
    Taking into account the one-sided aspect of the new 
interest rate calculation and the historical volatility of 
rates on short-term Treasury borrowing, CBO estimates that 
changing the interest rate to a capped variable rate would cost 
$0.8 billion over the 2010-2014 period and $3.2 billion over 
the 2010-2019 period.
    Interactions and Other Changes. Other changes to the 
student loan programs and interactions between different 
sections of the bill would reduce net savings by $7.5 billion 
over the 2009-2019 period. Those changes are detailed below:
           CBO estimated the effects of each section of 
        the bill independently of all other sections and then 
        calculated the interaction between provisions for the 
        bill as a whole. For H.R. 3221, CBO estimates that the 
        interactive effects would reduce net savings by $7.6 
        billion over the 2009-2019 period.
     Beginning July 1, 2010, borrowers who currently 
have a guaranteed consolidation loan but do not also have a 
direct consolidation loan would be able to refinance their 
guaranteed consolidation loan into a direct loan. Under current 
law, consolidation loans are not permitted to be refinanced. 
Because of the difference in subsidy rates, CBO estimates this 
change would lower direct spending by an estimated $250 million 
in 2009.
     Beginning in July 2011, the bill would:
          1. Exclude the assets and most untaxed income of both 
        students and parents currently included in calculating 
        eligibility for need-based aid. CBO estimates this 
        would cost $120 million over the 2011-2019 period; and
          2. Allow student who have been convicted of 
        possession of illegal drug while receiving financial 
        aid to receive student aid. CBO estimates this would 
        cost $24 million over the 2011-2019 period. Both of 
        these provisions would also affect the Pell grant 
        program, and those costs are discussed below.
     H.R. 3221 would forgive federal loans for members 
of the uniformed services who do not receive academic credit 
because they must withdraw from school for reasons of military 
service. CBO estimates this provision would increase direct 
spending by $21 million over the 2010-2019 period.
     In October 2009, for loans first originated in 
January 2000 and after, the bill would allow lenders to make a 
one-time, permanent choice to change the underlying rate on 
which the yields are based for both outstanding and new 
guaranteed student loans. Under current law, the yield rates 
are based on the bond equivalency rate of the three-month 
Commercial Paper rate with various add-ons depending on the 
type of loan and the loan status. The bill would allow lenders, 
within a specified period of time, to change that rate to the 
one-month London Interbank Offered Rate (LIBOR), calculated as 
if it were equivalent to a bond. CBO estimates that this change 
would have a negligible impact on spending.
    Perkins Loan Program. H.R. 3221 also would amend the 
current Federal Perkins Loan Program, under which some 1,700 
colleges and universities use revolving funds to make student 
loans. (Schools loan about $1 billion a year to students from 
those revolving funds.) Over 80 percent of the capital in those 
revolving funds came from the federal government. Under current 
law in October 2012, schools must begin returning the 
government's share of those funds to the Treasury. Under H.R. 
3221, schools would begin the return of federal capital in July 
2010. The bill would allow schools to retain amounts for 
administrative expenses and other fees, thus slightly reducing 
expected receipts.
    The bill would establish a new Federal Perkins Loan Program 
in July 2010; the interest rate would be 5 percent and students 
would face the same terms and conditions as with unsubsidized 
direct loans under the direct loan program. (Borrowing limits 
would be similar to the existing Perkins Loan Program.) The new 
loans would be disbursed through school financial aid offices 
to borrowers who met the new financial need requirements. A 
maximum of $6 billion in new loans could be made each year.
    CBO estimates that, on net, these changes to the Perkins 
Loan Program would reduce direct spending by $1.6 billion over 
the 2010-2014 and increase direct spending by $1.3 billion over 
the 2010-2019 period.
    Federal Pell Grant Program. H.R. 3221 also would amend the 
current structure of the Federal Pell Grant Program and 
formulas for determining eligibility under that program. As 
shown in Table 3, CBO estimates these changes would increase 
direct spending by $10.4 billion over the 2010-2014 period and 
by $39.4 billion over the 2010-2019 period. (Some of these 
changes also would affect discretionary spending in the Pell 
grant program. Those changes are discussed below under 
``Spending Subject to Appropriation.'')

                                                  TABLE 3. ESTIMATED MANDATORY SPENDING FOR PELL GRANTS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in billions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2009    2010    2011    2012    2013    2014    2015    2016    2017    2018    2019   2009-2014  2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Amend the Current Mandatory Award:
    Estimated Budget Authority............       0     0.1     1.9     0.7     6.7     3.5     3.9     5.1     6.3     7.9     9.7      13.0       45.8
    Estimated Outlays.....................       0       *     0.6     1.6     2.4     5.8     3.6     4.2     5.4     6.7     8.4      10.3       38.7
Other Changes:
    Estimated Budget Authority............       0       *       *       *       *       *     0.1     0.1     0.2     0.2     0.2       0.1        0.9
    Estimated Outlays.....................       0       *       *       *       *       *     0.1     0.1     0.1     0.2     0.2         *        0.7
Total Changes:
    Estimated Budget Authority............       0     0.1     1.9     0.8     6.7     3.6     4.0     5.2     6.4     8.1     9.9      13.0       46.7
    Estimated Outlays.....................       0       *     0.6     1.6     2.4     5.8     3.7     4.3     5.5     6.9     8.6      10.4      39.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding; * = between -$50 million and $50 million.

    Mandatory Spending for Pell grants. Under current law, the 
Pell grant program is funded from both discretionary and 
mandatory sources. An annual appropriation sets the maximum 
award level for which students are eligible and a mandatory 
account provides additional funding to students eligible for 
the discretionary program. The amount of the additional 
mandatory award is determined by the amount of budget authority 
directly appropriated in the Higher Education Act. In 2009, CBO 
estimates that discretionary costs for the Pell grant program 
will be $22.8 billion with additional mandatory spending equal 
to $2.7 billion.
    H.R. 3221 would permanently amend the calculation of 
mandatory funding for Pell grants beginning in fiscal year 
2011. For each year, the bill would appropriate such sums as 
may be necessary to increase the mandatory award from the 
previous year. The increase in the mandatory award would be 
determined by inflating the previous year's total award level 
by the change in the Consumer Price Index plus one percentage 
point and then subtracting out the previous year's 
discretionary award level or $4,860 (whichever is greater). The 
base level of the award would continue to be set in an annual 
appropriations act. For 2010, the mandatory award level is set 
at $690.
    As shown in Table 4, starting with the most recent 
appropriations act (for the 2009-2010 academic year) which 
specifies an award level of $4,860, CBO estimates the mandatory 
award would grow from $690 in 2010 to $2,040 in 2019. If an 
appropriations act were to set the discretionary maximum award 
at a level greater than $4,860, it would raise the amount of 
the mandatory award in each successive year, and increase 
overall costs.

                                         TABLE 4. ESTIMATED MAXIMUM AWARD LEVELS FOR PELL GRANTS UNDER H.R. 3221
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               By fiscal year, in dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   2009    2010    2011    2012    2013    2014    2015    2016    2017    2018    2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   MAXIMUM AWARD LEVEL

Discretionary award level.......................................   4,860   4,860   4,860   4,860   4,860   4,860   4,860   4,860   4,860   4,860   4,860
Additional mandatory award levela...............................     490     690     825     950   1,065   1,180   1,315   1,475   1,660   1,850   2,040
    Total.......................................................   5,350   5,550   5,865   5,810   5,925   6,040   6,175   6,335   6,520   6,710  6,900
--------------------------------------------------------------------------------------------------------------------------------------------------------
aThe mandatory add-on of $690 for fiscal year 2010 is stated in current law.

    Other Changes to Pell grants. In addition, CBO estimates 
that changes to the eligibility and needs analysis formulas 
(described above) and to programs whose funding is tied to Pell 
grants would, on net, increase direct spending by $0.7 billion 
over the 2010-2019 period.
    Other Federal Programs. H.R. 3221 would amend or create 
several mandatory grant programs that would provide education-
related funding to a wide variety of entities. As shown in 
Table 5, CBO estimates that these programs would increase 
direct spending by $16.9 billion over the 2010-2014 period and 
by $27.6 billion over the 2010-2019 period. In particular:
     H.R. 3221 would appropriate $8.0 billion for the 
Early Learning Challenge Fund--$1.0 billion a year for 2010 
through 2017. Based on the spending patterns of similar 
programs, CBO estimates this provision would increase direct 
spending by $7.9 billion over the 2010-2019 period.
     For fiscal years 2010 through 2019, H.R. 3221 
would appropriate a total of $7.0 billion for grants to states 
and institutions of higher education to undertake systemic 
reform of community colleges. CBO estimates this provision 
would increase direct spending by $6.1 billion over the next 10 
years.
     The bill would appropriate $2.5 billion in 2011 to 
renovate and modernize facilities for community colleges. Based 
on the spending patterns of similar programs, CBO estimates 
this provision would increase direct spending by $2.5 billion 
over the 2011-2019 period.
     The bill would appropriate $2.1 billion in 2010 
and 2011 to renovate and modernize facilities for elementary 
and secondary schools (K-12). Based on the spending patterns of 
similar programs, CBO estimates this provision would increase 
direct spending by $4.1 billion over the 2101-2019 period.
     The bill would appropriate $3.0 billion for the 
College Access and Completion Innovation Fund. Based on the 
spending patterns of similar programs, CBO estimates these 
provisions would increase direct spending by $3.0 billion over 
the 2010-2019 period.
     H.R. 3221 would extend through 2019 the current 
direct appropriation of $255 million per year for grants to 
Historically Black Colleges and Universities and Minority 
Serving Institutions that expires in 2009 under current law. 
CBO estimates this provision would increase direct spending by 
$2.2 billion over the next 10 years.
    In addition, the bill would amend an existing program for 
providing education benefits to veterans (as described below).

                                                                   TABLE 5. OTHER MANDATORY SPENDING PROGRAMS UNDER H.R. 3221
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           By fiscal year, in billions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                               2009     2010      2011      2012      2013      2014      2015      2016      2017      2018      2019     2009-2014   2009-2019
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   CHANGES IN DIRECT SPENDING
Early Childhood Education:
    Budget Authority........................................       0       1.0       1.0       1.0       1.0       1.0       1.0       1.0       1.0       0         0           5.0         8.0
    Estimated Outlays.......................................       0       0.1       0.7       0.9       1.0       1.0       1.0       1.0       1.0       1.0       0.3         3.7         7.9
Community College Reform:
    Budget Authority........................................       0       0.7       0.7       0.7       0.7       0.7       0.7       0.7       0.7       0.7       0.7         3.6         7.0
    Estimated Outlays.......................................       0       *         0.5       0.6       0.7       0.7       0.7       0.7       0.7       0.7       0.7         2.6         6.1
Community College Grants:
    Budget Authority........................................       0       0         2.5       0         0         0         0         0         0         0         0           2.5         2.5
    Estimated Outlays.......................................       0       0         0.6       1.0       0.5       0.4       0         0         0         0         0           2.5         2.5
Modernization and Renovation (K-12):
    Budget Authority........................................       0       2.1       2.1       0         0         0         0         0         0         0         0           4.1         4.1
    Estimated Outlays.......................................       0       0.3       1.1       1.5       0.9       0.2       *         0         0         0         0           4.1         4.1
College Access Completion: Innovation Fund
    Budget Authority........................................       0       0.6       0.6       0.6       0.6       0.6       0         0         0         0         0           3.0         3.0
    Estimated Outlays.......................................       0       0.1       0.5       0.6       0.6       0.6       0.5       0.1       *         *         0           2.4         3.0
HBCU and MSI Funding:
    Budget Authority........................................       0       0.3       0.3       0.3       0.3       0.3       0.3       0.3       0.3       0.3       0.3         1.3         2.6
    Estimated Outlays.......................................       0       *         0.1       0.2       0.3       0.3       0.3       0.3       0.3       0.3       0.3         0.9         2.2
Supplemental Education Grants for Veteransa:
    Estimated Budget Authority..............................       0       0.1       0.1       0.2       0.2       0.2       0.2       0.2       0.2       0.2       0.2         0.8         1.9
    Estimated Outlays.......................................       0       0.1       0.1       0.2       0.2       0.2       0.2       0.2       0.2       0.2       0.2         0.8         1.9
Cooperative Education:
    Estimated Budget Authority..............................       0       *         0         0         0         0         0         0         0         0         0             *           *
    Estimated Outlays.......................................       0       *         *         *         *         0         0         0         0         0         0             *           *
    Total:
        Estimated Budget Authority..........................       0       4.7       7.3       2.8       2.8       2.7       2.1       2.1       2.2       1.2       1.2        20.3        29.0
        Estimated Outlays...................................       0       0.6       3.7       5.0       4.2       3.4       2.6       2.3       2.2       2.1       1.5        16.9        27.6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
aFunding for Supplemental Education Grants for Veterans affects direct spending at both the Departments of Education and Veterans Affairs. The effects on outlays for each department is as
  follows:



                                                               2009     2010      2011      2012      2013      2014      2015      2016      2017      2018      2019     2009-2014   2009-2019

Department of Education.....................................       0       0.1       0.2       0.3       0.3       0.3       0.3       0.3       0.3       0.4       0.4         1.2         2.9
Department of Veterans Affairs..............................       0       *        -0.1      -0.1      -0.1      -0.1      -0.1      -0.1      -0.1      -0.1      -0.1        -0.4        -1.1

Notes: Components may not add to totals because of rounding; * = less than $50 million; HBCU = Historically Black Colleges and Universities; MSI = Minority Serving Institutions.

    Supplemental Education Grants for Veterans. Section 106 
would require the Department of Education to create a 
supplemental grant program for certain veterans who are 
eligible for education benefits under the Post-9/11 GI Bill. 
Under the new GI Bill, the highest amount of in-state tuition 
charged at a public institution in a given state constitutes 
the maximum tuition benefit that the Department of Veterans 
Affairs (VA) can pay in that state. In addition, VA will pay 
for student fees up to the highest amount charged in that 
state. Under the proposed grant program, supplemental funding 
would be available to veterans attending private colleges and 
universities in states where the benefit amount for tuition is 
low compared to other states. The dollar amount of each grant 
would equal the difference between the highest fees charged at 
a public institution in the state where the individual is 
attending school and the fees charged at the private 
institution the individual is attending.
    Based on information from VA, CBO estimates that 
approximately 25,000 veterans would be eligible for those 
grants each year and that the average value of the grants would 
grow from about $9,000 in 2010 to $14,000 in 2019. Thus, CBO 
estimates that the grant program would increase direct spending 
by the Department of Education by $2.9 billion over the 2010-
2019 period.
    That increase in spending would be partially offset by 
reduced spending by VA. Under the Post-9/11 GI Bill, veterans 
attending schools participating in the Yellow Ribbon Program 
are eligible to receive an additional contribution from VA 
(which is matched by the school) to help cover the cost of 
tuition and fees at more expensive schools. The grant program 
in the bill would cover much of the cost of high tuition and 
fees for eligible veterans at private institutions, decreasing 
the amount that VA would pay as a matching contribution for the 
Yellow Ribbon Program. Under the bill, CBO estimates that 
direct spending by VA would decrease by $1.1 billion over the 
2010-2019 period. On net, CBO estimates that this proposal 
would increase direct spending for veterans education benefits 
by $1.9 billion over the 2010-2019 period.

Spending subject to appropriation

    H.R. 3221 also would make several changes to discretionary 
spending. CBO has not completed an estimate of all the effects 
on discretionary spending under the bill, but we have estimated 
the bulk of such costs. The biggest increases in discretionary 
spending would stem from changes to the direct loan and Pell 
grant programs.
    Administration of Direct Loans. As mentioned above, most of 
the costs for administering loans in the FFEL Program are 
mandatory, while administrative costs in the direct loan 
program are mostly discretionary. Based on information about 
contracts for administering the FFEL program and consistent 
with projected loan volume, CBO estimates that eliminating new 
lending in the FFEL program and shifting the projected volume 
to the direct loan program would increase discretionary 
spending for administrative costs by $7.2 billion over the 
2010-2019 period.
    Federal Pell Grant Program. In 2009, CBO estimates that the 
discretionary costs for Pell grants will total about $22.8 
billion. CBO estimates that implementing H.R. 3221 would 
increase discretionary spending for the Pell grants by $6.3 
billion over the 2010-2019 period, subject to appropriation of 
the necessary amounts. Those increased costs stem mostly from 
changes made to the needs analysis formulas and eligibility 
calculations, which are described in greater detail under the 
subheading ``Federal Student Loan Programs'' in the ``Direct 
Spending'' section.
    Intergovernmental and private-sector impact: H.R. 3221 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. Institutions of higher education and public 
school systems would benefit from grants authorized under the 
bill. Any costs or requirements associated with those grant 
programs would be incurred voluntarily as conditions of federal 
assistance.
    Estimate prepared by: Federal Costs: Federal Student Loan 
and Grant Programs: Deborah Kalcevic and Justin Humphrey; 
Veterans Education Programs: Camille Woodland; Impact on State, 
Local, and Tribal Governments: Burke Doherty; Impact on the 
Private Sector: Nabeel Alsalam.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

      XIII. Statement of General Performance Goals and Objectives

    In accordance with clause 3(c) of rule XIII of the House of 
Representatives, the goal of H.R. 3221 is to reform the federal 
student loan program, provide for modernization, renovation and 
repair of public school facilities, enhance early learning, and 
strengthen community colleges. The Committee expects the 
Secretary of Education to comply with H.R. 3221 and implement 
the changes to the law in accordance with these stated goals.

                XIV. Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the House of 
Representatives, the Committee must include a statement citing 
the specific powers granted to Congress in the Constitution to 
enact the law proposed by H.R. 3221. The Committee believes 
that the amendments made by this bill are within Congress' 
authority under Article I, section 8, clause 1 of the U.S. 
Constitution.

                         XV. Committee Estimate

    Clause 3(d)(2) of rule XIII of the House of Representatives 
requires an estimate and a comparison of the costs that would 
be incurred in carrying out H.R. 3221. The Committee expects to 
file, in the appropriate place, the cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act upon receipt.

       XVI. Changes in Existing Law Made by the Bill, as Reproted

    In compliance with clause 3(e) of rule XIII of the House of 
Representatives, changes in existing law made by the bill, as 
reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new matter is printed in 
italic, existing law in which no change is proposed is shown in 
roman):

                      HIGHER EDUCATION ACT OF 1965




           *       *       *       *       *       *       *
                      TITLE I--GENERAL PROVISIONS

PART A--DEFINITIONS

           *       *       *       *       *       *       *


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) * * *

           *       *       *       *       *       *       *

                  (C) only for the purposes of [part B] part D 
                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] part D of title IV, 
                consistent with the requirements of section 
                452(d).

  [Note: Paragraph (2) reflects amendments made by this bill to such 
clause as amended by the Higher Education Opportunity Act, effective on 
                             July 1, 2012.]

          (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 (except 
                that a graduate medical school, nursing school, 
                or a veterinary school, located outside the 
                United States shall not be required to meet the 
                requirements of section 101(a)(4)). Such 
                criteria shall include a requirement that a 
                student attending such school outside the 
                United States is ineligible for loans [made, 
                insured, or guaranteed] made under [part B] 
                part D of title IV unless--
                          (i) except as provided in 
                        subparagraph (B)(iii)(IV), in the case 
                        of a graduate medical school located 
                        outside the United States--
                                  (I)(aa) 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 ] part D 
                                of title IV; and
                                  (bb) at least 75 percent of 
                                the individuals who were 
                                students or graduates of the 
                                graduate medical school outside 
                                the United States or Canada 
                                (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] part D of 
                                title IV; or

           *       *       *       *       *       *       *

                          (iii) in the case of a nursing school 
                        located outside of the United States--
                                  (I) * * *

           *       *       *       *       *       *       *

                                  (III) the nursing school 
                                certifies [only Federal 
                                Stafford Loans under section 
                                428, unsubsidized Federal 
                                Stafford Loans under section 
                                428H, or Federal PLUS loans 
                                under section 428B] only 
                                Federal Direct Stafford Loans 
                                under section 455(a)(2)(A), 
                                Federal Direct Unsubsidized 
                                Stafford Loans under section 
                                455(a)(2)(D), or Federal Direct 
                                PLUS Loans under section 
                                455(a)(2)(B) for students 
                                attending the institution;

           *       *       *       *       *       *       *

                                  (V) not less than 75 percent 
                                of the individuals who were 
                                students or graduates of the 
                                nursing school, and who took 
                                the National Council Licensure 
                                Examination for Registered 
                                Nurses in the year preceding 
                                the year for which the 
                                institution is certifying [a 
                                Federal Stafford Loan under 
                                section 428, an unsubsidized 
                                Federal Stafford Loan under 
                                section 428H, or a Federal PLUS 
                                loan under section 428B] a 
                                Federal Direct Stafford Loan 
                                under section 455(a)(2)(A), a 
                                Federal Direct Unsubsidized 
                                Stafford Loan under section 
                                455(a)(2)(D), or a Federal 
                                Direct PLUS Loan under section 
                                455(a)(2)(B), received a 
                                passing score on such 
                                examination.
                  (B) Advisory panel.--
                          (i)  * * *

           *       *       *       *       *       *       *

                          (iii) Report.--
                                  (I) In general.--Not later 
                                than 1 year after the date of 
                                enactment of the Higher 
                                Education Opportunity Act, the 
                                advisory panel described in 
                                clause (i) shall submit a 
                                report to the Secretary and to 
                                the authorizing committees 
                                recommending eligibility 
                                criteria for participation in 
                                the loan programs under [part 
                                B] part D of title IV for 
                                graduate medical schools that--
                                          (aa)  * * *

           *       *       *       *       *       *       *

                                  (III) Minimum eligibility 
                                requirement.--In the 
                                recommendations described in 
                                subclause (II), the criteria 
                                described in subparagraph 
                                (A)(i)(I)(bb), as amended by 
                                section 102(b) of the Higher 
                                Education Opportunity Act, 
                                shall be a minimum eligibility 
                                requirement for a graduate 
                                medical school described in 
                                subclause (I) to participate in 
                                the loan programs under [part 
                                B] part D of title IV.
                                  (IV) Authority.--The 
                                Secretary may--
                                          (aa) not earlier than 
                                        180 days after the 
                                        submission of the 
                                        report described in 
                                        subclause (I), issue 
                                        proposed regulations 
                                        establishing criteria 
                                        for the eligibility of 
                                        graduate medical 
                                        schools described in 
                                        such subclause to 
                                        participate in the loan 
                                        programs under [part B] 
                                        part D of title IV 
                                        based on the 
                                        recommendations of such 
                                        report; and

           *       *       *       *       *       *       *

                  (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] part D 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] part D of title IV while attending 
                such institution for the academic year 
                succeeding the academic year in which such loss 
                of eligibility occurred.

           *       *       *       *       *       *       *


TITLE III--INSTITUTIONAL AID

           *       *       *       *       *       *       *


PART F--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND 
                  OTHER MINORITY-SERVING INSTITUTIONS

SEC. 371. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES 
                    AND OTHER MINORITY-SERVING INSTITUTIONS.

  (a) Eligible Institution.--An institution of higher education 
is eligible to receive funds from the amounts made available 
under this section if such institution is--
          (1) * * *
          (2) a Hispanic-serving institution (as defined in 
        [section 502] section 502(a) (20 U.S.C. 1101a));
          (3) a Tribal College or University (as defined in 
        [section 316] section 316(b) (20 U.S.C. 1059c));

           *       *       *       *       *       *       *

          (5) a Predominantly Black Institution (as defined [in 
        subsection (c)] in section 318(b));
          (6) an Asian American and Native American Pacific 
        Islander-serving institution (as defined [in subsection 
        (c)] in section 320(b)); or
          (7) a Native American-serving nontribal institution 
        (as defined [in subsection (c)] in section 319(b)).
  (b) New Investment of Funds.--
          (1) In general.--
                  (A) Provision of funds.--There shall be 
                available to the Secretary to carry out this 
                section, from funds in the Treasury not 
                otherwise appropriated, [$255,000,000 for each 
                of the fiscal years 2008 and 2009. The 
                authority to award grants under this section 
                shall expire at the end of fiscal year 2009.] 
                $255,000,000 for each of the fiscal years 2008 
                through 2019.

           *       *       *       *       *       *       *

          (2) Allocation and allotment.--
                  (A) * * *
                  [(B) HSI stem and articulation programs.--The 
                amount made available for allocation under this 
                subparagraph by subparagraph (A)(i) for any 
                fiscal year shall be available for Hispanic-
                serving Institutions for activities described 
                in section 503, with a priority given to 
                applications that propose--
                          [(i) to increase the number of 
                        Hispanic and other low income students 
                        attaining degrees in the fields of 
                        science, technology, engineering, or 
                        mathematics; and
                          [(ii) to develop model transfer and 
                        articulation agreements between 2-year 
                        Hispanic-serving institutions and 4-
                        year institutions in such fields.]
                  (B) Stem and articulation programs.--From the 
                amount made available for allocation under this 
                subparagraph by subparagraph (A)(i) for any 
                fiscal year--
                          (i) 90 percent shall be available for 
                        Hispanic-serving institutions for 
                        activities described in sections 503 
                        and 513, with a priority given to 
                        applications that propose--
                                  (I) to increase the number of 
                                Hispanic and other low-income 
                                students attaining degrees in 
                                the fields of science, 
                                technology, engineering, or 
                                mathematics; and
                                  (II) to develop model 
                                transfer and articulation 
                                agreements between 2-year 
                                Hispanic-serving institutions 
                                and 4-year institutions in such 
                                fields; and
                          (ii) 10 percent shall be available 
                        for grants under section 355.
                  (C) Allocation and allotment hbcus and 
                pbis.--From the amount made available for 
                allocation under this subparagraph by 
                subparagraph (A)(ii) for any fiscal year--
                          (i) * * *
                          (ii) 15 percent shall be available to 
                        eligible institutions described in 
                        subsection (a)(5) [and shall be 
                        available for a competitive grant 
                        program to award 25 grants of $600,000 
                        annually for programs in any of the 
                        following areas:
                                  [(I) science, technology, 
                                engineering, or mathematics 
                                (STEM);
                                  [(II) health education;
                                  [(III) internationalization 
                                or globalization;
                                  [(IV) teacher preparation; or
                                  [(V) improving educational 
                                outcomes of African American 
                                males.] and shall be made 
                                available as grants under 
                                section 318 and allotted among 
                                such institutions under section 
                                318(e), treating such amount, 
                                plus the amount appropriated 
                                for such fiscal year in a 
                                regular or supplemental 
                                appropriation Act to carry out 
                                section 318, as the amount 
                                appropriated to carry out 
                                section 318 for purposes of 
                                allotments under section 318(e)
                  (D) Allocation and allotment to other 
                minority-serving institutions.--From the amount 
                made available for allocation under this 
                subparagraph by subparagraph (A)(iii) for any 
                fiscal year--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) $5,000,000 for such fiscal year 
                        shall be available to eligible 
                        institutions described in subsection 
                        (a)(6) [for activities described in 
                        section 311(c)] and shall be made 
                        available as grants under section 320, 
                        treating such $5,000,000 as part of the 
                        amount appropriated for such fiscal 
                        year in a regular or supplemental 
                        appropriation Act to carry out such 
                        section and using such $5,000,000 for 
                        purposes described in subsection (c) of 
                        such section; and
                          (iv) $5,000,000 for such fiscal year 
                        shall be available to eligible 
                        institutions [described in subsection 
                        (a)(7)--
                                  [(I) to plan, develop, 
                                undertake, and carry out 
                                activities to improve and 
                                expand such institutions' 
                                capacity to serve Native 
                                Americans, which may include--
                                          [(aa) the purchase, 
                                        rental, or lease of 
                                        scientific or 
                                        laboratory equipment 
                                        for educational 
                                        purposes, including 
                                        instructional and 
                                        research purposes;
                                          [(bb) renovation and 
                                        improvement in 
                                        classroom, library, 
                                        laboratory, and other 
                                        instructional 
                                        facilities;
                                          [(cc) support of 
                                        faculty exchanges, 
                                        faculty development, 
                                        and faculty fellowships 
                                        to assist faculty in 
                                        attaining advanced 
                                        degrees in the 
                                        faculty's field of 
                                        instruction;
                                          [(dd) curriculum 
                                        development and 
                                        academic instruction;
                                          [(ee) the purchase of 
                                        library books, 
                                        periodicals, microfilm, 
                                        and other educational 
                                        materials;
                                          [(ff) funds and 
                                        administrative 
                                        management, and 
                                        acquisition of 
                                        equipment for use in 
                                        strengthening funds 
                                        management;
                                          [(gg) the joint use 
                                        of facilities such as 
                                        laboratories and 
                                        libraries; and
                                          [(hh) academic 
                                        tutoring and counseling 
                                        programs and student 
                                        support services; and
                                  [(II) to which the Secretary, 
                                to the extent possible and 
                                consistent with a competitive 
                                process under which such grants 
                                are awarded, allocates funds 
                                under this clause to ensure 
                                maximum and equitable 
                                distribution among all such 
                                eligible institutions.] and 
                                shall be made available as 
                                grants under section 319, 
                                treating such $5,000,000 as 
                                part of the amount appropriated 
                                for such fiscal year in a 
                                regular or supplemental 
                                appropriation Act to carry out 
                                such section and using such 
                                $5,000,000 for purposes 
                                described in subsection (c) of 
                                such section
  [(c) Definitions.--
          [(1) Asian american.--The term ``Asian American'' has 
        the meaning given the term ``Asian'' in the Office of 
        Management and Budget's Standards for Maintaining, 
        Collecting, and Presenting Federal Data on Race and 
        Ethnicity as published on October 30, 1997 (62 Fed. 
        Reg. 58789).
          [(2) Asian american and native american pacific 
        islander-serving institution.--The term ``Asian 
        American and Native American Pacific Islander-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 10 percent Asian American and Native 
                American Pacific Islander students.
          [(3) Enrollment of needy students.--The term 
        ``enrollment of needy students'' means the enrollment 
        at an institution of higher education with respect to 
        which not less than 50 percent of the undergraduate 
        students enrolled in an academic program leading to a 
        degree--
                  [(A) in the second fiscal year preceding the 
                fiscal year for which the determination is 
                made, were Federal Pell Grant recipients for 
                such year;
                  [(B) come from families that receive benefits 
                under a means-tested Federal benefit program 
                (as defined in paragraph (5));
                  [(C) attended a public or nonprofit private 
                secondary school--
                          [(i) that is in the school district 
                        of a local educational agency that was 
                        eligible for assistance under part A of 
                        title I of the Elementary and Secondary 
                        Education Act of 1965 for any year 
                        during which the student attended such 
                        secondary school; and
                          [(ii) which for the purpose of this 
                        paragraph and for that year was 
                        determined by the Secretary (pursuant 
                        to regulations and after consultation 
                        with the State educational agency of 
                        the State in which the school is 
                        located) to be a school in which the 
                        enrollment of children counted under a 
                        measure of poverty described in section 
                        1113(a)(5) of such Act exceeds 30 
                        percent of the total enrollment of such 
                        school; or
                  [(D) are first-generation college students 
                (as that term is defined in section 402A(h)), 
                and a majority of such first-generation college 
                students are low-income individuals.
          [(4) Low-income individual.--The term ``low-income 
        individual'' has the meaning given such term in section 
        402A(h).
          [(5) Means-tested federal benefit program.--The term 
        ``means-tested Federal benefit program'' means a 
        program of the Federal Government, other than a program 
        under title IV, in which eligibility for the programs' 
        benefits or the amount of such benefits are determined 
        on the basis of income or resources of the individual 
        or family seeking the benefit.
          [(6) Native american.--The term ``Native American'' 
        means an individual who is of a tribe, people, or 
        culture that is indigenous to the United States.
          [(7) Native american pacific islander.--The term 
        ``Native American Pacific Islander'' means any 
        descendant of the aboriginal people of any island in 
        the Pacific Ocean that is a territory or possession of 
        the United States.
          [(8) Native american-serving nontribal institution.--
        The term ``Native American-serving nontribal 
        institution'' means an institution of higher education 
        that--
                  [(A) at the time of application--
                          [(i) has an enrollment of 
                        undergraduate students that is not less 
                        than 10 percent Native American 
                        students; and
                          [(ii) is not a Tribal College or 
                        University (as defined in section 316); 
                        and
                  [(B) submits to the Secretary such enrollment 
                data as may be necessary to demonstrate that 
                the institution is described in subparagraph 
                (A), along with such other information and data 
                as the Secretary may by regulation require.
          [(9) Predominantly black institution.--The term 
        ``Predominantly Black institution'' means an 
        institution of higher education that--
                  [(A) has an enrollment of needy students as 
                defined by paragraph (3);
                  [(B) has an average educational and general 
                expenditure which is low, per full-time 
                equivalent undergraduate student in comparison 
                with the average educational and general 
                expenditure per full-time equivalent 
                undergraduate student of institutions of higher 
                education that offer similar instruction, 
                except that the Secretary may apply the waiver 
                requirements described in section 392(b) to 
                this subparagraph in the same manner as the 
                Secretary applies the waiver requirements to 
                section 312(b)(1)(B);
                  [(C) has an enrollment of undergraduate 
                students--
                          [(i) that is at least 40 percent 
                        Black American students;
                          [(ii) that is at least 1,000 
                        undergraduate students;
                          [(iii) of which not less than 50 
                        percent of the undergraduate students 
                        enrolled at the institution are low-
                        income individuals or first-generation 
                        college students (as that term is 
                        defined in section 402A(h)); and
                          [(iv) of which not less than 50 
                        percent of the undergraduate students 
                        are enrolled in an educational program 
                        leading to a bachelor's or associate's 
                        degree that the institution is licensed 
                        to award by the State in which the 
                        institution is located;
                  [(D) is legally authorized to provide, and 
                provides within the State, an educational 
                program for which the institution of higher 
                education awards a bachelor's degree, or in the 
                case of a junior or community college, an 
                associate's degree;
                  [(E) is accredited by a nationally recognized 
                accrediting agency or association determined by 
                the Secretary to be a reliable authority as to 
                the quality of training offered, or is, 
                according to such an agency or association, 
                making reasonable progress toward 
                accreditation; and
                  [(F) is not receiving assistance under--
                          [(i) part B;
                          [(ii) part A of title V; or
                          [(iii) an annual authorization of 
                        appropriations under the Act of March 
                        2, 1867 (14 Stat. 438; 20 U.S.C. 123).]

           *       *       *       *       *       *       *


                      TITLE IV--STUDENT ASSISTANCE

  PART A--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER 
EDUCATION

           *       *       *       *       *       *       *


      Subpart 1--Federal Pell Grants; Veterans Educational Equity 
                          Supplemental Grants

SEC. 401. FEDERAL PELL GRANTS: AMOUNT AND DETERMINATIONS; APPLICATIONS.

  (a) * * *
  (b) Purpose and Amount of Grants.--(1) * * *
  (2)[(A) The amount of the Federal Pell Grant for a student 
eligible under this part shall be--
          [(i) $6,000 for academic year 2009-2010;
          [(ii) $6,400 for academic year 2010-2011;
          [(iii) $6,800 for academic year 2011-2012;
          [(iv) $7,200 for academic year 2012-2013;
          [(v) $7,600 for academic year 2013-2014; and
          [(vi) $8,000 for academic year 2014-2015,
less an amount equal to the amount determined to be the 
expected family contribution with respect to that student for 
that year.]
  (A) The amount of the Federal Pell Grant for a student 
eligible under this part shall be--
                  (i) the maximum Federal Pell Grant, as 
                specified in the last enacted appropriation Act 
                applicable to that award year, plus
                  (ii) the amount of the increase calculated 
                under paragraph (8)(B) for that year, less
                  (iii) an amount equal to the amount 
                determined to be the expected family 
                contribution with respect to that student for 
                that year.

           *       *       *       *       *       *       *

  (6) Notwithstanding any other provision of this subpart, the 
Secretary shall allow the amount of the Federal Pell Grant to 
be exceeded for students participating in a program of study 
abroad approved for credit by the institution at which the 
student is enrolled when the reasonable costs of such program 
are greater than the cost of attendance at the student's home 
institution, except that the amount of such Federal Pell Grant 
in any fiscal year shall not exceed [the grant level specified 
in the appropriate Appropriation Act for this subpart for such 
year] the Federal Pell Grant amount, determined under paragraph 
(2)(A), for which a student is eligible during such award year. 
If the preceding sentence applies, the financial aid 
administrator at the home institution may use the cost of the 
study abroad program, rather than the home institution's cost, 
to determine the cost of attendance of the student.

           *       *       *       *       *       *       *

  [(8) Additional funds.--
          [(A) In general.--There are authorized to be 
        appropriated, and there are appropriated, to carry out 
        subparagraph (B) of this paragraph (in addition to any 
        other amounts appropriated to carry out this section 
        and out of any money in the Treasury not otherwise 
        appropriated) the following amounts--
                  [(i) $2,030,000,000 for fiscal year 2008;
                  [(ii) $2,090,000,000 for fiscal year 2009;
                  [(iii) $3,030,000,000 for fiscal year 2010;
                  [(iv) $3,090,000,000 for fiscal year 2011;
                  [(v) $5,050,000,000 for fiscal year 2012;
                  [(vi) $105,000,000 for fiscal year 2013;
                  [(vii) $4,305,000,000 for fiscal year 2014;
                  [(viii) $4,400,000,000 for fiscal year 2015;
                  [(ix) $4,600,000,000 for fiscal year 2016; 
                and
                  [(x) $4,900,000,000 for fiscal year 2017.
          [(B) Increase in federal pell grants.--The amounts 
        made available pursuant to subparagraph (A) of this 
        paragraph shall be used to increase the amount of the 
        maximum Federal Pell Grant for which a student shall be 
        eligible during an award year, as specified in the last 
        enacted appropriation Act applicable to that award 
        year, by--
                  [(i) $490 for each of the award years 2008-
                2009 and 2009-2010;
                  [(ii) $690 for each of the award years 2010-
                2011 and 2011-2012; and
                  [(iii) $1,090 for award year 2012-2013.
          [(C) Eligibility.--The Secretary shall only award an 
        increased amount of a Federal Pell Grant under this 
        section for any award year pursuant to the provisions 
        of this paragraph to students who qualify for a Federal 
        Pell Grant award under the maximum grant award enacted 
        in the annual appropriation Act for such award year 
        without regard to the provisions of this paragraph.
          [(D) Program requirements and operations otherwise 
        unaffected.--Except as provided in subparagraphs (B) 
        and (C), nothing in this paragraph shall be construed 
        to alter the requirements and operations of the Federal 
        Pell Grant Program as authorized under this section, or 
        authorize the imposition of additional requirements or 
        operations for the determination and allocation of 
        Federal Pell Grants under this section.
          [(E) Ratable increases and decreases.--The amounts 
        specified in subparagraph (B) shall be ratably 
        increased or decreased to the extent that funds 
        available under subparagraph (A) exceed or are less 
        than (respectively) the amount required to provide the 
        amounts specified in subparagraph (B).
          [(F) Availability of funds.--The amounts made 
        available by subparagraph (A) for any fiscal year shall 
        be available beginning on October 1 of that fiscal 
        year, and shall remain available through September 30 
        of the succeeding fiscal year.]
  (8) Additional funds.--
          (A) In general.--There are authorized to be 
        appropriated, and there are appropriated, to carry out 
        subparagraph (B) of this paragraph (in addition to any 
        other amounts appropriated to carry out this section 
        and out of any money in the Treasury not otherwise 
        appropriated) the following amounts--
                  (i) $2,030,000,000 for fiscal year 2008;
                  (ii) $2,733,000,000 for fiscal year 2009; and
                  (iii) such sums as may be necessary for 
                fiscal year 2010 and each subsequent fiscal 
                year to provide the amount of increase of the 
                maximum Federal Pell Grant required by clauses 
                (ii) and (iii) of subparagraph (B).
          (B) Increase in federal pell grants.--The amounts 
        made available pursuant to subparagraph (A) shall be 
        used to increase the amount of the maximum Federal Pell 
        Grant for which a student shall be eligible during an 
        award year, as specified in the last enacted 
        appropriation Act applicable to that award year, by--
                  (i) $490 for each of the award years 2008-
                2009 and 2009-2010;
                  (ii) $690 for the award year 2010-2011; and
                  (iii) the amount determined under 
                subparagraph (C) for each succeeding award 
                year.
          (C) Inflation-adjusted amounts.--
                  (i) Award year 2011-2012.--For award year 
                2011-2012, the amount determined under this 
                subparagraph for purposes of subparagraph 
                (B)(iii) shall be equal to--
                          (I) $5,550 or the total maximum 
                        Federal Pell Grant for the preceding 
                        award year (as determined under clause 
                        (iv)(II)), whichever is greater, 
                        increased by a percentage equal to the 
                        annual adjustment percentage for award 
                        year 2011-2012; reduced by
                          (II) $4,860 or the maximum Federal 
                        Pell Grant for which a student was 
                        eligible for the preceding award year, 
                        as specified in the last enacted 
                        appropriation Act applicable to that 
                        year, whichever is greater; and
                          (III) rounded to the nearest $5.
                  (ii) Subsequent award years.--For award year 
                2012-2013 and each of the subsequent award 
                years, the amount determined under this 
                subparagraph for purposes of subparagraph 
                (B)(iii) shall be equal to--
                          (I) the total maximum Federal Pell 
                        Grant for the preceding award year (as 
                        determined under clause (iv)(II)), 
                        increased by a percentage equal to the 
                        annual adjustment percentage for the 
                        award year for which the amount under 
                        this subparagraph is being determined; 
                        reduced by
                          (II) $4,860 or the maximum Federal 
                        Pell Grant for which a student was 
                        eligible for the preceding award year, 
                        as specified in the last enacted 
                        appropriation Act applicable to that 
                        year, whichever is greater; and
                          (III) rounded to the nearest $5.
                  (iii) Limitation on decreases.--
                Notwithstanding clauses (i) and (ii), if the 
                amount determined under clause (i) or (ii) for 
                an award year is less than the amount 
                determined under this paragraph for the 
                preceding award year, the amount determined 
                under such clause for such award year shall be 
                the amount determined under this paragraph for 
                the preceding award year.
                  (iv) Definitions.--For purposes of this 
                subparagraph--
                          (I) the term ``annual adjustment 
                        percentage'' as it applies to an award 
                        year is equal to the sum of--
                                  (aa) the estimated percentage 
                                change in the Consumer Price 
                                Index (as determined by the 
                                Secretary, using the definition 
                                in section 478(f)) for the most 
                                recent calendar year ending 
                                prior to the beginning of that 
                                award year; and
                                  (bb) one percentage point; 
                                and
                          (II) the term ``total maximum Federal 
                        Pell Grant'' as it applies to a 
                        preceding award year is equal to the 
                        sum of--
                                  (aa) the maximum Federal Pell 
                                Grant for which a student is 
                                eligible during an award year, 
                                as specified in the last 
                                enacted appropriation Act 
                                applicable to that preceding 
                                award year; and
                                  (bb) the amount of the 
                                increase in the maximum Federal 
                                Pell Grant required by this 
                                paragraph for that preceding 
                                award year.
          (D) Program requirements and operations otherwise 
        unaffected.--Except as provided in subparagraphs (B) 
        and (C), nothing in this paragraph shall be construed 
        to alter the requirements and operations of the Federal 
        Pell Grant Program as authorized under this section, or 
        to authorize the imposition of additional requirements 
        or operations for the determination and allocation of 
        Federal Pell Grants under this section.
          (E) Availability of funds.--The amounts made 
        available by subparagraph (A) for any fiscal year shall 
        be available beginning on October 1 of that fiscal 
        year, and shall remain available through September 30 
        of the succeeding fiscal year.

           *       *       *       *       *       *       *


SEC. 401B. VETERANS EDUCATIONAL EQUITY SUPPLEMENTAL GRANT PROGRAM.

  (a) Veterans Educational Equity Supplemental Grants 
Authorized.--The Secretary shall award a grant to each eligible 
student, in an amount determined in accordance with subsection 
(c), to assist such student with paying the cost of tuition 
incurred by the student for a program of education at an 
institution of higher education.
  (b) Definitions.--In this section--
          (1) Eligible student.--The term ``eligible student'' 
        means a student who--
                  (A) is a covered individual, as such term is 
                defined in section 3311(b) of title 38, United 
                States Code;
                  (B) is enrolled at an institution of higher 
                education that--
                          (i) is not a public institution of 
                        higher education; and
                          (ii) is located in a State with a 
                        zero, or very low, maximum tuition 
                        charge per credit hour compared to the 
                        maximum tuition charge per credit hour 
                        in all other States, as determined by 
                        the Secretary of Veterans Affairs 
                        (based on the determinations of maximum 
                        tuition charged per credit hour in each 
                        State for the purposes of chapter 33 of 
                        title 38, United States Code); and
                  (C) is eligible for educational assistance 
                for an academic year, and will receive an 
                amount of such assistance for such year for 
                fees charged the individual that is less than 
                the maximum amount of such assistance available 
                for fees charged for such year in such State.
          (2) Educational assistance.--The term ``educational 
        assistance'' means the amount of educational assistance 
        from the Secretary of Veterans Affairs an eligible 
        student receives or will receive under section 
        3313(c)(1)(A) of title 38, United States Code, or a 
        similar amount of such assistance under paragraphs (2) 
        through (7) of such section 3313(c).
  (c) Grant Amount.--A grant to an eligible student under this 
section be equal to an amount that is--
          (1) the maximum amount of educational assistance for 
        fees charged that the eligible student would receive, 
        in accordance with section 3313(c) of title 38, United 
        States Code, if such student attended the public 
        institution of higher education in the State in which 
        the eligible student is enrolled that has the highest 
        fees charged to an individual for a year in such State 
        (as determined by the Secretary of Veterans Affairs for 
        the purposes of chapter 33 of such title 38), less
          (2) the educational assistance the eligible student 
        will receive, in accordance with such section, for fees 
        charged to the student for such year at the institution 
        of higher education at which the student is enrolled.
  (d) Uses of Funds.--An eligible student who receives a grant 
under this section shall use such grant to pay tuition incurred 
by the student for a program of education at an institution of 
higher education.
  (e) Notification.--The Secretary, in coordination with 
Secretary of Veterans Affairs, shall establish a system of 
notification to ensure the timely delivery to each eligible 
student of--
          (1) educational assistance received by the student; 
        and
          (2) grants awarded to the student under this section.
  (f) Authorization and Appropriation.--There are authorized to 
be appropriated, and there are appropriated, such sums as may 
be necessary to carry out this section (in addition to any 
other amounts appropriated to carry out this section and out of 
any money in the Treasury not otherwise appropriated).

    Subpart 2--Federal Early Outreach and Student Services Programs

CHAPTER 1--FEDERAL TRIO PROGRAMS

           *       *       *       *       *       *       *


SEC. 402D. STUDENT SUPPORT SERVICES.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Special Rule.--
          (1) Use for student aid.--A recipient of a grant that 
        undertakes any of the permissible services identified 
        in subsection (c) may, in addition, use such funds to 
        provide grant aid to students. A grant provided under 
        this paragraph shall not [exceed the maximum 
        appropriated Pell Grant] exceed the Federal Pell Grant 
        amount, determined under section 401(b)(2)(A), for 
        which a student is eligible or, be less than the 
        minimum appropriated Pell Grant, for the current 
        academic year. In making grants to students under this 
        subsection, an institution shall ensure that adequate 
        consultation takes place between the student support 
        service program office and the institution's financial 
        aid office.

           *       *       *       *       *       *       *


             PART B--FEDERAL FAMILY EDUCATION LOAN PROGRAM

SEC. 421. STATEMENT OF PURPOSE; NONDISCRIMINATION; AND APPROPRIATIONS 
                    AUTHORIZED.

  (a) * * *
  (b) Authorization of Appropriations.--For the purpose of 
carrying out this part--
          (1) * * *

           *       *       *       *       *       *       *

Sums appropriated under paragraphs (1), (2), (4), and (5) of 
this subsection shall remain available until expended, except 
that no sums may be expended after June 30, 2010, with respect 
to loans under this part for which the first disbursement would 
be made after such date. No additional sums are authorized to 
be appropriated under paragraph (3) or (4) of this subsection 
by reason of the reenactment of such paragraphs by the Higher 
Education Amendments of 1986.

           *       *       *       *       *       *       *

  (d) Termination of Authority To Make or Insure New Loans.--
Notwithstanding paragraphs (1) through (6) of subsection (b) or 
any other provision of law--
          (1) no new loans (including consolidation loans) may 
        be made or insured under this part after June 30, 2010; 
        and
          (2) no funds are authorized to be appropriated, or 
        may be expended, under this Act or any other Act to 
        make or insure loans under this part (including 
        consolidation loans) for which the first disbursement 
        would be made after June 30, 2010,
except as expressly authorized by an Act of Congress enacted 
after the date of enactment of Student Aid and Fiscal 
Responsibility Act of 2009.

           *       *       *       *       *       *       *


SEC. 424. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM.

  (a) Limitations on Amounts of Loans Covered by Federal 
Insurance.--The total principal amount of new loans made and 
installments paid pursuant to lines of credit (as defined in 
section 435) to students covered by Federal loan insurance 
under this part shall not exceed $2,000,000,000 for the period 
from July 1, 1976, to [September 30, 1976, and for each of the 
succeeding fiscal years ending prior to October 1, 2014. 
Thereafter, Federal loan insurance pursuant to this part may be 
granted only for loans made (or for loan installments paid 
pursuant to lines of credit) to enable students, who have 
obtained prior loans insured under this part, to continue or 
complete their educational program; but no insurance may be 
granted for any loan made or installment paid after September 
30, 2018.] September 30, 1976, for each of the succeeding 
fiscal years ending prior to October 1, 2009, and for the 
period from October 1, 2009, to June 30, 2010, for loans first 
disbursed on or before June 30, 2010.

           *       *       *       *       *       *       *


SEC. 427A. APPLICABLE INTEREST RATES.

  (a) * * *

           *       *       *       *       *       *       *

  (l) Interest Rates for New Loans on or After July 1, 2006.--
          (1) In general.--Notwithstanding subsection (h), 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 July 1, 2006, and before July 1, 2010, the 
        applicable rate of interest shall be 6.8 percent on the 
        unpaid principal balance of the loan.
          (2) PLUS loans.--Notwithstanding subsection (h), with 
        respect to any loan under section 428B for which the 
        first disbursement is made on or after July 1, 2006, 
        and before July 1, 2010, the applicable rate of 
        interest shall be 8.5 percent on the unpaid principal 
        balance of the loan.
          (3) Consolidation loans.--With respect to any 
        consolidation loan under section 428C for which the 
        application is received by an eligible lender on or 
        after July 1, 2006, and that was disbursed before July 
        1, 2010, 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) * * *

           *       *       *       *       *       *       *

          (4) Reduced rates for undergraduate subsidized 
        loans.--Notwithstanding subsection (h) and paragraph 
        (1) of this subsection, with respect to any loan to an 
        undergraduate student made, insured, or guaranteed 
        under this part (other than a loan made pursuant to 
        section 428B, 428C, or 428H) for which the first 
        disbursement is made on or after July 1, 2006, and 
        before July 1, [2012] 2010, the applicable rate of 
        interest shall be as follows:
                  (A)  * * *

           *       *       *       *       *       *       *

                  [(D) For a loan for which the first 
                disbursement is made on or after July 1, 2010, 
                and before July 1, 2011, 4.5 percent on the 
                unpaid principal balance of the loan.
                  [(E) For a loan for which the first 
                disbursement is made on or after July 1, 2011, 
                and before July 1, 2012, 3.4 percent on the 
                unpaid principal balance of the loan.]

           *       *       *       *       *       *       *


SEC. 428. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

  (a) Federal Interest Subsidies.--
          (1) Types of loans that qualify.--Each student who 
        has received a loan for study at an eligible 
        institution for which the first disbursement is made 
        before July 1, 2010, and--
                  (A) * * *

           *       *       *       *       *       *       *

          (5) Duration of authority to make interest subsidized 
        loans.--The period referred to in subparagraph (B) of 
        paragraph (1) of this subsection shall begin on the 
        date of enactment of this Act and end at the close of 
        [September 30, 2014, except that, in the case of a loan 
        made or insured under a student loan or loan insurance 
        program to enable a student who has obtained a prior 
        loan made or insured under such program to continue his 
        or her education program, such period shall end at the 
        close of September 30, 2018.] June 30, 2010.

           *       *       *       *       *       *       *

  (b) Insurance Program Agreements To Qualify Loans for 
Interest Subsidies.--
          (1) Requirements of insurance program.--Any State or 
        any nonprofit private institution or organization may 
        enter into an agreement with the Secretary for the 
        purpose of entitling students who receive loans which 
        are insured under a student loan insurance program of 
        that State, institution, or organization to have made 
        on their behalf the payments provided for in subsection 
        (a) if the Secretary determines that the student loan 
        insurance program--
                  (A) * * *

           *       *       *       *       *       *       *

                  (G) insures 98 percent of the unpaid 
                principal of loans insured under the program, 
                except that--
                          (i) * * *
                          (ii) for any loan for which the first 
                        disbursement of principal is made on or 
                        after July 1, 2006, and before July 1, 
                        2010, the preceding provisions of this 
                        subparagraph shall be applied by 
                        substituting ``97 percent'' for ``98 
                        percent''; and

           *       *       *       *       *       *       *

                  (H) provides--
                          (i) * * *
                          (ii) for loans for which the date of 
                        guarantee of principal is on or after 
                        July 1, 2006, and that are first 
                        disbursed before July 1, 2010, for the 
                        collection, and the deposit into the 
                        Federal Student Loan Reserve Fund under 
                        section 422A of a Federal default fee 
                        of an amount equal to 1.0 percent of 
                        the principal amount of the loan, which 
                        fee shall be collected either by 
                        deduction from the proceeds of the loan 
                        or by payment from other non-Federal 
                        sources, and ensures that the proceeds 
                        of the Federal default fee will not be 
                        used for incentive payments to lenders;

           *       *       *       *       *       *       *

  (f) Payments of Certain Costs.--
          (1) Payment for certain activities.--
                  (A) In general.--The Secretary--
                          (i) * * *
                          (ii) for loans originated [during 
                        fiscal years beginning] on or after 
                        October 1, 2003, and first disbursed 
                        before July 1, 2010, 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.

           *       *       *       *       *       *       *

  (j) Lenders-of-last-resort.--
          (1) General requirement.--In each State, the guaranty 
        agency or an eligible lender in the State described in 
        section 435(d)(1)(D) of this Act shall, before July 1, 
        2010, make loans directly, or through an agreement with 
        an eligible lender or lenders, to eligible students and 
        parents who are otherwise unable to obtain loans under 
        this part (except for consolidation loans under section 
        428C) or who attend an institution of higher education 
        in the State that is designated under paragraph (4). 
        Loans made under this subsection shall not exceed the 
        amount of the need of the borrower, as determined under 
        subsection (a)(2)(B), nor be less than $200. No loan 
        under section 428, 428B, or 428H that is made pursuant 
        to this subsection shall be made with interest rates, 
        origination or default fees, or other terms and 
        conditions that are more favorable to the borrower than 
        the maximum interest rates, origination or default 
        fees, or other terms and conditions applicable to that 
        type of loan under this part. The guaranty agency shall 
        consider the request of any eligible lender, as defined 
        under section 435(d)(1)(A) of this Act, to serve as the 
        lender-of-last-resort pursuant to this subsection.

           *       *       *       *       *       *       *


SEC. 428B. FEDERAL PLUS LOANS.

  (a) Authority To Borrow.--
          (1) Authority and eligibility.--[A graduate] Prior to 
        July 1, 2010, a graduate or professional student or the 
        parents of a dependent student shall be eligible to 
        borrow funds under this section in amounts specified in 
        subsection (b), if--
                  (A) * * *

           *       *       *       *       *       *       *


SEC. 428C. FEDERAL CONSOLIDATION LOANS.

  (a) Agreements With Eligible Lenders.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Definition of eligible borrower.--(A) * * *
          (B)(i) An individual's status as an eligible borrower 
        under this section or under section 455(g) terminates 
        under both sections upon receipt of a consolidation 
        loan under this section or under section 455(g), except 
        that--
                  (I) * * *

           *       *       *       *       *       *       *

                  [(V) an individual may obtain a subsequent 
                consolidation loan under section 455(g) only--
                          [(aa) for the purposes of obtaining 
                        income contingent repayment or income-
                        based repayment, and only if the loan 
                        has been submitted to the guaranty 
                        agency for default aversion or if the 
                        loan is already in default;
                          [(bb) for the purposes of using the 
                        public service loan forgiveness program 
                        under section 455(m); or
                          [(cc) for the purpose of using the no 
                        accrual of interest for active duty 
                        service members benefit offered under 
                        section 455(o).]
                          (V) an individual who has a 
                        consolidation loan under this section 
                        and does not have a consolidation loan 
                        under section 455(g) may obtain a 
                        subsequent consolidation loan under 
                        section 455(g).
          (4) Definition of eligible student loans.--For the 
        purpose of paragraph (1), the term ``eligible student 
        loans'' means loans--
                  (A) made, insured, or guaranteed under this 
                part, and first disbursed before July 1, 2010, 
                including loans on which the borrower has 
                defaulted (but has made arrangements to repay 
                the obligation on the defaulted loans 
                satisfactory to the Secretary or guaranty 
                agency, whichever insured the loans);

           *       *       *       *       *       *       *

  (b) Contents of Agreements, Certificates of Insurance, and 
Loan Notes.--
          (1) Agreements with lenders.--Any lender described in 
        subparagraph (A), (B), or (C) of subsection (a)(1) who 
        wishes to make consolidation loans under this section 
        shall enter into an agreement with the Secretary or a 
        guaranty agency which provides--
                  (A) * * *

           *       *       *       *       *       *       *

                  (E) that the lender shall offer an income-
                sensitive repayment schedule, established by 
                the lender in accordance with the regulations 
                promulgated by the Secretary, to the borrower 
                of any consolidation loan made by the lender on 
                or after July 1, 1994, and before July 1, 2010;

           *       *       *       *       *       *       *

          (5) Direct loans.--[In the event that] If, before 
        July 1, 2010, a borrower is unable to obtain a 
        consolidation loan from a lender with an agreement 
        under subsection (a)(1), or is unable to obtain a 
        consolidation loan with income-sensitive repayment 
        terms or income-based repayment terms acceptable to the 
        borrower from such a lender, or chooses to obtain a 
        consolidation loan for the purposes of using the public 
        service loan forgiveness program offered under section 
        455(m), the Secretary shall offer any such borrower who 
        applies for it, a Federal Direct Consolidation loan. In 
        addition, in the event that a borrower chooses to 
        obtain a consolidation loan for the purposes of using 
        the no accrual of interest for active duty service 
        members program offered under section 455(o), the 
        Secretary shall offer a Federal Direct Consolidation 
        loan to any such borrower who applies for participation 
        in such program. A direct consolidation loan offered 
        under this paragraph shall, as requested by the 
        borrower, be repaid either pursuant to income 
        contingent repayment under part D of this title, 
        pursuant to income-based repayment under section 493C, 
        or pursuant to any other repayment provision under this 
        section, except that if a borrower intends to be 
        eligible to use the public service loan forgiveness 
        program under section 455(m), such loan shall be repaid 
        using one of the repayment options described in section 
        455(m)(1)(A). The Secretary shall not offer such loans 
        if, in the Secretary's judgment, the Department of 
        Education does not have the necessary origination and 
        servicing arrangements in place for such loans.

           *       *       *       *       *       *       *

  (c) Payment of Principal and Interest.--
          (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--
                  (i) * * *
                  (ii) on or after July 1, 2006, and that is 
                disbursed before July 1, 2010, the applicable 
                interest rate shall be determined under section 
                427A(l)(3).

           *       *       *       *       *       *       *

          (C) A consolidation loan made on or after July 1, 
        1994, and first disbursed before July 1, 2010, shall 
        bear interest at an annual rate on the unpaid principal 
        balance of the loan that is equal to the weighted 
        average of the interest rates on the loans 
        consolidated, rounded upward to the nearest whole 
        percent.

           *       *       *       *       *       *       *

  (e) Termination of Authority.--The authority to make loans 
under this section expires at the close of [September 30, 
2014.] June 30, 2010. No loan may be made under this section 
for which the first disbursement would be on or after July 1, 
2010. Nothing in this section shall be construed to authorize 
the Secretary to promulgate rules or regulations governing the 
terms or conditions of the agreements and certificates under 
subsection (b). Loans made under this section which are insured 
by the Secretary shall be considered to be new loans made to 
students for the purpose of section 424(a).

           *       *       *       *       *       *       *


SEC. 428H. UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE-INCOME BORROWERS.

  (a) In General.--It is the purpose of this section to 
authorize insured loans under this part that are first 
disbursed before July 1, 2010, for borrowers who do not qualify 
for Federal interest subsidy payments under section 428 of this 
Act. Except as provided in this section, all terms and 
conditions for Federal Stafford loans established under section 
428 shall apply to loans made pursuant to this section.
  (b) Eligible Borrowers.--[Any student] Prior to July 1, 2010, 
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 for 
which the first disbursement is made before such date if the 
eligible institution at which the student has been accepted for 
enrollment, or at which the student is in attendance, has--
          (1) * * *

           *       *       *       *       *       *       *

  (h) Insurance Premium.--Each State or nonprofit private 
institution or organization having an agreement with the 
Secretary under section 428(b)(1) may charge a borrower under 
this section an insurance premium equal to not more than 1.0 
percent of the principal amount of the loan, if such premium 
will not be used for incentive payments to lenders. Effective 
for loans for which the date of guarantee of principal is on or 
after July 1, 2006, and that are first disbursed before July 1, 
2010, in lieu of the insurance premium authorized under the 
preceding sentence, each State or nonprofit private institution 
or organization having an agreement with the Secretary under 
section 428(b)(1) shall collect and deposit into the Federal 
Student Loan Reserve Fund under section 422A, a Federal default 
fee of an amount equal to 1.0 percent of the principal amount 
of the loan, which fee shall be collected either by deduction 
from the proceeds of the loan or by payment from other non-
Federal sources. The Federal default fee shall not be used for 
incentive payments to lenders.

           *       *       *       *       *       *       *


SEC. 428L. LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE ATTORNEYS.

  (a) * * *
  (b) Definitions.--In this section:
          (1) * * *
          (2) Student loan.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``student loan'' 
                means--
                          [(i) subject to clause (ii), a loan 
                        made, insured, or guaranteed under this 
                        part, part D, or part E; and]
                          (i) subject to clause (ii)--
                                  (I) a loan made, insured, or 
                                guaranteed under this part, and 
                                that is first disbursed before 
                                July 1, 2010; or
                                  (II) a loan made under part D 
                                or part E; and
                          (ii) a loan made under section [428C 
                        or 455(g)] 428C, that is disbursed 
                        before July 1, 2010, or section 455(g), 
                        to the extent that such loan was used 
                        to repay--
                                  (I) * * *
                                  (II) a loan made under 
                                section 428, 428B, or 428H for 
                                which the first disbursement is 
                                made before July 1, 2010,; or

           *       *       *       *       *       *       *


SEC. 435. DEFINITIONS FOR STUDENT LOAN INSURANCE PROGRAM.

  As used in this part:
  (a) Eligible Institution.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Definition of mitigating circumstances.--(A) For 
        purposes of this subsection, an institution of higher 
        education shall be treated as having exceptional 
        mitigating circumstances that make application of 
        paragraph (2) inequitable, and that provide for 
        regulatory relief under paragraph (3), 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] one-half the Federal Pell 
                        Grant amount, determined under section 
                        401(b)(2)(A), for which a student would 
                        be eligible based on the student's 
                        enrollment status; or

           *       *       *       *       *       *       *


SEC. 438. SPECIAL ALLOWANCES.

  (a) * * *
  (b) Computation and Payment.--
          (1) * * *
          (2) Rate of special allowance.--(A) * * *

           *       *       *       *       *       *       *

          (I) Loans disbursed on or after january 1, 2000, and 
        before july 1, 2010.--
                  (i) In general.--Notwithstanding 
                subparagraphs (G) and (H), but subject to 
                paragraph (4) and the following clauses 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 
                January 1, 2000, and before July 1, 2010, shall 
                be computed--
                          (I) * * *
                          (II) by subtracting the applicable 
                        interest rates on such loans from [such 
                        average bond equivalent rate] the rate 
                        determined under subclause (I);

           *       *       *       *       *       *       *

                  (ii) In school and grace period.--In the case 
                of any loan--
                          (I) * * *
                          (II) for which the first disbursement 
                        is made on or after July 1, 2006, and 
                        before July 1, 2010, and for which the 
                        applicable rate of interest is 
                        described in section section 427A(l)(1) 
                        or (l)(4), but only with respect to 
                        (aa) periods prior to the beginning of 
                        the repayment period of the loan; or 
                        (bb) during the periods 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);
                clause (i)(III) of this subparagraph shall be 
                applied by substituting ``1.74 percent'' for 
                ``2.34 percent''.
                  (iii) PLUS loans.--In the case of any loan 
                for which the first disbursement is made on or 
                after January 1, 2000, and before July 1, 2010, 
                and for which the applicable rate of interest 
                is described in section 427A(k)(3) or (l)(2), 
                clause (i)(III) of this subparagraph shall be 
                applied by substituting ``2.64 percent'' for 
                ``2.34 percent''.
                  (iv) Consolidation loans.--In the case of any 
                consolidation loan for which the application is 
                received by an eligible lender on or after 
                January 1, 2000, and that is disbursed before 
                July 1, 2010, and for which the applicable 
                interest rate is determined under section 
                427A(k)(4) or (l)(3), clause (i)(III) of this 
                subparagraph shall be applied by substituting 
                ``2.64 percent'' for ``2.34 percent''.
                  (v) Recapture of excess interest.--
                          (I) Excess credited.--With respect to 
                        a loan on which the applicable interest 
                        rate is determined under subsection (k) 
                        or (l) of section 427A and for which 
                        the first disbursement of principal is 
                        made on or after April 1, 2006, and 
                        before July 1, 2010, if the applicable 
                        interest rate for any 3-month period 
                        exceeds the special allowance support 
                        level applicable to such loan under 
                        this subparagraph for such period, then 
                        an adjustment shall be made by 
                        calculating the excess interest in the 
                        amount computed under subclause (II) of 
                        this clause, and by crediting the 
                        excess interest to the Government not 
                        less often than annually.

           *       *       *       *       *       *       *

                          (III) Special allowance support 
                        level.--For purposes of this clause, 
                        the term ``special allowance support 
                        level'' means, for any loan, a number 
                        expressed as a percentage equal to the 
                        sum of the rates determined under 
                        subclauses (I) and (III) of clause (i), 
                        and applying any substitution rules 
                        applicable to such loan under clauses 
                        (ii), (iii), [(iv), and (vi)] (iv), 
                        (vi), and (vii) in determining such 
                        sum.
                  (vi) Reduction for loans disbursed on or 
                after october 1, 2007, and before july 1, 
                2010.--With respect to a loan on which the 
                applicable interest rate is determined under 
                section 427A(l) and for which the first 
                disbursement of principal is made on or after 
                October 1, 2007, and before July 1, 2010, the 
                special allowance payment computed pursuant to 
                this subparagraph shall be computed--
                          (I) * * *

           *       *       *       *       *       *       *

                  (vii) Revised calculation rule to reflect 
                financial market conditions.--
                          (I) Calculation based on libor.--For 
                        the calendar quarter beginning on 
                        October 1, 2009, and each subsequent 
                        calendar quarter, in computing the 
                        special allowance paid pursuant to this 
                        subsection with respect to loans 
                        described in subclause (II), clause 
                        (i)(I) of this subparagraph shall be 
                        applied by substituting ``of the 1-
                        month London Inter Bank Offered Rate 
                        (LIBOR) for United States dollars in 
                        effect for each of the days in such 
                        quarter as compiled and released by the 
                        British Bankers Association'' for ``of 
                        the quotes of the 3-month commercial 
                        paper (financial) rates in effect for 
                        each of the days in such quarter as 
                        reported by the Federal Reserve in 
                        Publication H-15 (or its successor) for 
                        such 3-month period''.
                          (II) Loans eligible for libor-based 
                        calculation.--The special allowance 
                        paid pursuant to this subsection shall 
                        be calculated as described in subclause 
                        (I) with respect to special allowance 
                        payments for the 3-month period ending 
                        December 31, 2009, and each succeeding 
                        3-month period, on loans for which the 
                        first disbursement is made--
                                  (aa) on or after the date of 
                                enactment of the Student Aid 
                                and Fiscal Responsibility Act 
                                of 2009, and before July 1, 
                                2010; and
                                  (bb) on or after January 1, 
                                2000, and before the date of 
                                enactment of the Student Aid 
                                and Fiscal Responsibility Act 
                                of 2009, if, not later than the 
                                last day of the second full 
                                fiscal quarter after the date 
                                of enactment of such Act, the 
                                holder of the loan 
                                affirmatively and permanently 
                                waives all contractual, 
                                statutory or other legal rights 
                                to a special allowance paid 
                                pursuant to this subsection 
                                that is calculated using the 
                                formula in effect at the time 
                                the loans were first disbursed.
                          (III) Terms of waiver.--A waiver 
                        pursuant to subclause (II)(bb) shall--
                                  (aa) be applicable to all 
                                loans described in such 
                                subclause that are held under 
                                any lender identification 
                                number associated with the 
                                holder (pursuant to section 
                                487B); and
                                  (bb) apply with respect to 
                                all future calculations of the 
                                special allowance on loans 
                                described in such subclause 
                                that are held on the date of 
                                such waiver or that are 
                                acquired by the holder after 
                                such date.
                          (IV) Participant's yield.--For the 
                        calendar quarter beginning on October 
                        1, 2009, and each subsequent calendar 
                        quarter, the Secretary's participant 
                        yield in any loan for which the first 
                        disbursement is made on or after 
                        January 1, 2000, and before October 1, 
                        2009, and that is held by a lender that 
                        has sold any participation interest in 
                        such loan to the Secretary shall be 
                        determined by using the LIBOR-based 
                        rate described in subclause (I) as the 
                        substitute rate (for the commercial 
                        paper rate) referred to in the 
                        participation agreement between the 
                        Secretary and such lender.

           *       *       *       *       *       *       *

  (c) Origination Fees From Students.--
          (1) * * *
          (2) Amount of origination fees.--
                  (A) * * *
                  (B) Subsequent reductions.--Subparagraph (A) 
                shall be applied to loans made under this part 
                (other than loans made under sections 428C and 
                439(o))--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) by substituting ``1.0 percent'' 
                        for ``3.0 percent'' with respect to 
                        loans for which the first disbursement 
                        of principal is made on or after July 
                        1, 2008, and before July 1, 2009; and
                          (iv) by substituting ``0.5 percent'' 
                        for ``3.0 percent'' with respect to 
                        loans for which the first disbursement 
                        of principal is made on or after July 
                        1, 2009, and before July 1, 2010[; 
                        and].
                          [(v) by substituting ``0.0 percent'' 
                        for ``3.0 percent'' with respect to 
                        loans for which the first disbursement 
                        of principal is made on or after July 
                        1, 2010.]

           *       *       *       *       *       *       *

          (6) SLS And plus loans.--With respect to any loans 
        made under section 428A or 428B on or after October 1, 
        1992, and first disbursed before July 1, 2010, each 
        eligible lender under this part shall charge the 
        borrower an origination fee of 3.0 percent of the 
        principal amount of the loan, to be deducted 
        proportionately from each installment payment of the 
        proceeds of the loan prior to payments to the borrower.

           *       *       *       *       *       *       *

  (d) Loan Fees From Lenders.--
          (1) * * *
          (2) Amount of loan fees.--The amount of the loan fee 
        which shall be deducted under paragraph (1), but which 
        may not be collected from the borrower, shall be equal 
        to--
                  (A) * * *
                  (B) 1.0 percent of the principal amount of 
                the loan with respect to any loan under this 
                part for which the first disbursement was made 
                on or after October 1, 2007, and before July 1, 
                2010.

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *


SEC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT LOANS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Institutions Located Outside the United States.--Loan 
funds for students (and parents of students) attending 
institutions located outside the United States shall be 
disbursed through a financial institution located in the United 
States and designated by the Secretary to serve as the agent of 
such institutions with respect to the receipt of the 
disbursements of such loan funds and the transfer of such funds 
to such institutions. To be eligible to receive funds under 
this part, an otherwise eligible institution located outside 
the United States shall make arrangements, subject to 
regulations by the Secretary, with the agent designated by the 
Secretary under this subsection to receive funds under this 
part.

           *       *       *       *       *       *       *


SEC. 454. AGREEMENTS WITH INSTITUTIONS.

  (a) Participation Agreements.--An agreement with any 
institution of higher education for participation in the direct 
student loan program under this part shall--
          (1) * * *

           *       *       *       *       *       *       *

          [(4) provide that students at the institution and 
        their parents (with respect to such students) will be 
        eligible to participate in the programs under part B of 
        this title at the discretion of the Secretary for the 
        period during which such institution participates in 
        the direct student loan program under this part, except 
        that a student or parent may not receive loans under 
        both this part and part B for the same period of 
        enrollment;]
          [(5)] (4) provide for the implementation of a quality 
        assurance system, as established by the Secretary and 
        developed in consultation with institutions of higher 
        education, to ensure that the institution is complying 
        with program requirements and meeting program 
        objectives;
          [(6)] (5) provide that the institution will not 
        charge any fees of any kind, however described, to 
        student or parent borrowers for origination activities 
        or the provision of any information necessary for a 
        student or parent to receive a loan under this part, or 
        any benefits associated with such loan; and
          [(7)] (6) include such other provisions as the 
        Secretary determines are necessary to protect the 
        interests of the United States and to promote the 
        purposes of this part.
  (b) Origination.--An agreement with any institution of higher 
education, or consortia thereof, for the origination of loans 
under this part shall--
          (1) * * *
          (2) include provisions established by the Secretary 
        that are similar to the participation agreement 
        provisions described in paragraphs (1)(E)(ii), (2), 
        (3), (4), [(5), (6), and (7)] (5), and (6) of 
        subsection (a), as modified to relate to the 
        origination of loans by the institution or consortium;

           *       *       *       *       *       *       *


SEC. 455. TERMS AND CONDITIONS OF LOANS.

  (a) In General.--
          (1) Parallel terms, conditions, benefits, and 
        amounts.--Unless otherwise specified in this part, 
        loans made to borrowers under this part shall have the 
        same terms, conditions, and benefits, and be available 
        in the same amounts, as loans made to borrowers, and 
        first disbursed on June 30, 2010, under sections 428, 
        428B, 428C, and 428H of this title.

           *       *       *       *       *       *       *

  (b) Interest Rate.--
          (1) * * *

           *       *       *       *       *       *       *

          (7) Interest rate provision for new loans on or after 
        july 1, 2006.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (E) Reduced rates for undergraduate fdsl on 
                and after july 1, 2012.--Notwithstanding the 
                preceding paragraphs of this subsection and 
                subparagraph (A) of this paragraph, for Federal 
                Direct Stafford Loans made to undergraduate 
                students for which the first disbursement is 
                made on or after July 1, 2012, 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) 2.5 percent,
                except that such rate shall not exceed 6.8 
                percent.

           *       *       *       *       *       *       *

  (g) Federal Direct Consolidation Loans.--A borrower of a loan 
made under this part may consolidate such loan with the loans 
described in section 428C(a)(4), including any loan made under 
part B and first disbursed before July 1, 2010. To be eligible 
for a consolidation loan under this part, a borrower shall meet 
the eligibility criteria set forth in section 428C(a)(3). [The 
Secretary, upon application for such a loan, shall comply with 
the requirements applicable to a lender under section 
428C(b)(1)(G).]

           *       *       *       *       *       *       *


SEC. 455A. FEDERAL DIRECT PERKINS LOANS.

  (a) Designation of Loans.--Loans made to borrowers under this 
section shall be known as ``Federal Direct Perkins Loans''.
  (b) In General.--It is the purpose of this section to 
authorize loans to be awarded by institutions of higher 
education through agreements established under section 463(f). 
Unless otherwise specified in this section, all terms and 
conditions and other requirements applicable to Federal Direct 
Unsubsidized Stafford loans established under section 
455(a)(2)(D) shall apply to loans made pursuant to this 
section.
  (c) Eligible Borrowers.--Any student meeting the requirements 
for student eligibility under section 464(b) (including 
graduate and professional students as defined in regulations 
promulgated by the Secretary) shall be eligible to borrow a 
Federal Direct Perkins Loan, provided the student attends an 
eligible institution with an agreement with the Secretary under 
section 463(f), and the institution uses its authority under 
that agreement to award the student a loan.
  (d) Loan Limits.--The annual and aggregate limits for loans 
under this section shall be the same as those established under 
section 464, and aggregate limits shall include loans made by 
institutions under agreements under section 463(a).
  (e) Applicable Rates of Interest.--Loans made pursuant to 
this section shall bear interest, on the unpaid balance of the 
loan, at the rate of 5 percent per year.

SEC. 456. CONTRACTS.

  (a) Contracts for Supplies and Services.--
          (1) [In general.--The Secretary] Awarding of 
        contracts.--
                  (A) In general.--The Secretary shall, to the 
                extent practicable, award contracts for 
                origination, servicing, and collection 
                described in subsection (b). In awarding such 
                contracts, the Secretary shall ensure that such 
                services and supplies are provided at 
                competitive prices.
                  (B) Awarding contracts for servicing loans.--
                The Secretary shall, if practicable, award 
                multiple contracts, through a competitive 
                bidding process, to entities, including 
                eligible not-for-profit servicers, to service 
                loans originated under this part. The 
                competitive bidding process shall take into 
                account price, servicing capacity, and 
                capability, and may take into account the 
                capacity and capability to provide default 
                aversion activities and outreach services.
                  (C) Job retention incentive payment.--(i) In 
                a contract with an entity under subparagraph 
                (B) for the servicing of loans, the Secretary 
                shall provide a job retention incentive 
                payment, in an amount and manner determined by 
                the Secretary, if such entity agrees to give 
                priority for hiring for positions created as a 
                result of such a contract to those geographical 
                locations at which the entity performed student 
                loan origination or servicing activities under 
                the Federal Family Education Loan Program as of 
                the date of enactment of the Student Aid and 
                Fiscal Responsibility Act of 2009.
                  (ii) In determining the allocation of loans 
                to be serviced by an entity awarded such a 
                contract, the Secretary shall consider the 
                retention of highly qualified employees of such 
                entity a positive factor in determining such 
                allocation.
          (2) Entities.--The entities, including eligible not-
        for-profit servicers, with which the Secretary may 
        enter into contracts shall include only entities which 
        the Secretary determines are qualified to provide such 
        services and supplies and will comply with the 
        procedures applicable to the award of such contracts. 
        In the case of awarding contracts for the origination, 
        servicing, and collection of loans under this part, the 
        Secretary shall enter into contracts only with entities 
        that have extensive and relevant experience and 
        demonstrated effectiveness. [The entities with which 
        the Secretary may enter into such contracts shall 
        include, where practicable, agencies with agreements 
        with the Secretary under sections 428(b) and (c), if 
        such agencies meet the qualifications as determined by 
        the Secretary under this subsection and if those 
        agencies have such experience and demonstrated 
        effectiveness. In awarding contracts to such State 
        agencies, the Secretary shall, to the extent 
        practicable and consistent with the purposes of this 
        part, give special consideration to State agencies with 
        a history of high quality performance to perform 
        services for institutions of higher education within 
        their State.] The entities with which the Secretary may 
        enter into such contracts shall include, where 
        practicable, agencies with agreements with the 
        Secretary under sections 428(b) and (c) on the date of 
        the enactment of the Student Aid and Fiscal 
        Responsibility Act of 2009, and eligible not-for-profit 
        servicers, if such agencies or servicers meet the 
        qualifications as determined by the Secretary under 
        this subsection and if those agencies or servicers have 
        such experience and demonstrated effectiveness. In 
        awarding contracts to such State agencies, and such 
        eligible not-for-profit servicers, the Secretary shall, 
        to the extent practicable and consistent with the 
        purposes of this part, give special consideration to 
        State agencies and such servicers with a history of 
        high quality performance and demonstrated integrity in 
        conducting operations with institutions of higher 
        education and the Secretary.
          (3) Servicing by eligible not-for-profit servicers.--
                  (A) In general.--Notwithstanding any other 
                provision of this section, in each State where 
                one or more eligible not-for-profit servicer 
                has its principal place of business, the 
                Secretary shall contract with each such 
                servicer to service loans originated under this 
                part on behalf of borrowers attending 
                institutions located within such State, 
                provided that the servicer demonstrates that it 
                meets the standards for servicing Federal 
                assets and providing quality service and agrees 
                to service the loans at a competitive market 
                rate, as determined by the Secretary. In 
                determining such a competitive market rate, the 
                Secretary may take into account the volume of 
                loans serviced by the servicer. Contracts 
                awarded under this paragraph shall be subject 
                to the same requirements for quality, 
                performance, and accountability as contracts 
                awarded under paragraph (2) for similar 
                activities.
                  (B) Allocations.--(i) One servicer.--In the 
                case of a State with only one eligible not-for-
                profit servicer with a contract described in 
                subparagraph (A), the Secretary shall, at a 
                minimum, allocate to such servicer, on an 
                annual basis and subject to such contract, the 
                servicing rights for the lesser of--
                          (I) the loans of 100,000 borrowers 
                        (including borrowers who borrowed loans 
                        in a prior year that were serviced by 
                        the servicer) attending institutions 
                        located within the State; or
                          (II) the loans of all the borrowers 
                        attending institutions located within 
                        the State.
                  (ii) Multiple servicers.--In the case of a 
                State with more than one eligible not-for-
                profit servicer with a contract described in 
                subparagraph (A), the Secretary shall, at a 
                minimum, allocate to each such servicer, on an 
                annual basis and subject to such contract, the 
                servicing rights for the lesser of--
                          (I) the loans of 100,000 borrowers 
                        (including borrowers who borrowed loans 
                        in a prior year that were serviced by 
                        the servicer) attending institutions 
                        located within the State; or
                          (II) an equal share of the loans of 
                        all borrowers attending institutions 
                        located within the State, except the 
                        Secretary shall adjust such shares as 
                        necessary to ensure that the loans of 
                        any single borrower remain with a 
                        single servicer.
                  (iii) Additional allocation.--The Secretary 
                may allocate additional servicing rights to an 
                eligible not-for-profit servicer based on the 
                performance of such servicer, as determined by 
                the Secretary, including performance in the 
                areas of customer service and default aversion.
                  (C) Multiple loans.--Notwithstanding the 
                allocations required by subparagraph (B), the 
                Secretary may transfer loans among servicers 
                who are awarded contracts to service loans 
                pursuant to this section to ensure that the 
                loans of any single borrower remain with a 
                single servicer.
          [(3)] (4) Rule of construction.--Nothing in this 
        section shall be construed as a limitation of the 
        authority of any State agency to enter into an 
        agreement for the purposes of this section as a member 
        of a consortium of State agencies, or of any eligible 
        not-for-profit servicer to enter into an agreement for 
        the purposes of this section as a member of a 
        consortium of such entities.

           *       *       *       *       *       *       *

  (c) Report to Congress.--Not later than 3 years after the 
date of the enactment of the Student Aid and Fiscal 
Responsibility Act of 2009, the Secretary shall prepare and 
submit to the authorizing committees, a report evaluating the 
performance of all eligible not-for-profit servicers awarded a 
contract under this section to service loans originated under 
this part. Such report shall give consideration to--
          (1) customer satisfaction of borrowers and 
        institutions with respect to the loan servicing 
        provided by the servicers;
          (2) compliance with applicable regulations by the 
        servicers; and
          (3) the effectiveness of default aversion activities, 
        and outreach services (if any), provided by the 
        servicers.
  (d) Definitions.--In this section:
          (1) Default aversion activities.--The term ``default 
        aversion activities'' means activities that are 
        directly related to providing collection assistance to 
        the Secretary on a delinquent loan, prior to the loan 
        being legally in a default status, including due 
        diligence activities required pursuant to regulations.
          (2) Eligible not-for-profit servicer.--
                  (A) In general.--The term ``eligible not-for-
                profit servicer'' means an entity that, on the 
                date of enactment of the Student Aid and Fiscal 
                Responsibility Act of 2009--
                          (i) meets the definition of an 
                        eligible not-for-profit holder under 
                        section 435(p), except that such term 
                        does not include eligible lenders 
                        described in paragraph (1)(D) of such 
                        section;
                          (ii) notwithstanding clause (i), is 
                        the sole beneficial owner of a loan for 
                        which the special allowance rate is 
                        calculated under section 
                        438(b)(2)(I)(vi)(II) because the loan 
                        is held by an eligible lender trustee 
                        that is an eligible not-for-profit 
                        holder as defined under section 
                        435(p)(1)(D); or
                          (iii) is an affiliated entity of an 
                        eligible not-for-profit servicer 
                        described in clause (i) or (ii) that--
                                  (I) directly employs, or will 
                                directly employ (on or before 
                                the date the entity begins 
                                servicing loans under a 
                                contract awarded by the 
                                Secretary pursuant to 
                                subsection (a)(3)(A)), the 
                                majority of individuals who 
                                perform student loan servicing 
                                functions; and
                                  (II) on such date of 
                                enactment, was performing, or 
                                had entered into a contract 
                                with a third party servicer (as 
                                such term is defined in section 
                                481(c)) who was performing, 
                                student loan servicing 
                                functions for loans made under 
                                part B of this title.
                  (B) Affiliated entity.--For the purposes of 
                subparagraph (A), the term ``affiliated 
                entity'' means an entity contracted to perform 
                services for an eligible not-for-profit 
                servicer that--
                          (i) is a nonprofit entity or is 
                        wholly owned by a nonprofit entity; and
                          (ii) is not owned or controlled, in 
                        whole or in part, by--
                                  (I) a for-profit entity; or
                                  (II) an entity having its 
                                principal place of business in 
                                another State.
          (3) Outreach services.--The term ``outreach 
        services'' means programs offered to students and 
        families, including programs delivered in coordination 
        with institutions of higher education that--
                  (A) encourage--
                          (i) students to attend and complete a 
                        degree or certification program at an 
                        institution of higher education; and
                          (ii) students and families to obtain 
                        financial aid, but minimize the 
                        borrowing of education loans; and
                  (B) deliver financial literacy and counseling 
                tools.

           *       *       *       *       *       *       *


                     PART E--FEDERAL PERKINS LOANS

SEC. 461. APPROPRIATIONS AUTHORIZED.

  (a) Program Authority.--The Secretary shall, before July 1, 
2010, carry out a program of stimulating and assisting in the 
establishment and maintenance of funds at institutions of 
higher education for the making of low-interest loans to 
students in need thereof to pursue their courses of study in 
such institutions or while engaged in programs of study abroad 
approved for credit by such institutions. Loans made under this 
part shall be known as ``Federal Perkins Loans''.
  (b) Authorization of Appropriations.--[(1) For the purpose] 
For the purpose of enabling the Secretary to make contributions 
to student loan funds established under this part, there are 
authorized to be appropriated $300,000,000 for fiscal year 2009 
[and for each of the five succeeding fiscal years].
  [(2) In addition to the funds authorized under paragraph (1), 
there are hereby authorized to be appropriated such sums for 
fiscal year 2015 and each of the 5 succeeding fiscal years as 
may be necessary to enable students who have received loans for 
academic years ending prior to October 1, 2015, to continue or 
complete courses of study.
  [(c) Use of Appropriations.--Any sums appropriated pursuant 
to subsection (b) for any fiscal year shall be available for 
apportionment pursuant to section 462 and for payments of 
Federal capital contributions therefrom to institutions of 
higher education which have agreements with the Secretary under 
section 463. Such Federal capital contributions and all 
contributions from such institutions shall be used for the 
establishment, expansion, and maintenance of student loan 
funds.]

SEC. 462. ALLOCATION OF FUNDS.

  (a) Allocation Based on Previous Allocation.--(1) [From] For 
any fiscal year before fiscal year 2010, from the amount 
appropriated pursuant to section 461(b) for each fiscal year, 
the Secretary shall first allocate to each eligible institution 
an amount equal to--
          (A) * * *

           *       *       *       *       *       *       *

  (i) Reallocation of Excess Allocations.--
          (1) In general.--(A) If an institution of higher 
        education returns to the Secretary any portion of the 
        sums allocated to such institution under this section 
        [for any fiscal year,] for any fiscal year before 
        fiscal year 2010, the Secretary shall reallocate 80 
        percent of such returned portions to participating 
        institutions in an amount not to exceed such 
        participating institution's excess eligible amounts as 
        determined under paragraph (2).

           *       *       *       *       *       *       *


SEC. 462A. FEDERAL DIRECT PERKINS LOAN ALLOCATION.

  (a) Purposes.--The purposes of this section are--
          (1) to allocate, among eligible and participating 
        institutions (as such terms are defined in this 
        section), the authority to make Federal Direct Perkins 
        Loans under section 455A with a portion of the annual 
        loan authority described in subsection (b); and
          (2) to make funds available, in accordance with 
        section 452, to each participating institution from a 
        portion of the annual loan authority described in 
        subsection (b), in an amount not to exceed the sum of 
        an institution's allocation of funds under 
        subparagraphs (A), (B), and (C) of subsection (b)(1) to 
        enable each such institution to make Federal Direct 
        Perkins Loans to eligible students at the institution.
  (b) Available Direct Perkins Annual Loan Authority.--
          (1) Availability and allocations.--There are hereby 
        made available, from funds made available for loans 
        made under part D, not to exceed $6,000,000,000 of 
        annual loan authority for award year 2010-2011 and each 
        succeeding award year, to be allocated as follows:
                  (A) The Secretary shall allocate not more 
                than \1/2\ of such funds for each award year by 
                allocating to each participating institution an 
                amount equal to the adjusted self-help need 
                amount of the institution, as determined in 
                accordance with subsection (c) for such award 
                year.
                  (B) The Secretary shall allocate not more 
                than \1/4\ of such funds for each award year by 
                allocating to each participating institution an 
                amount equal to the low tuition incentive 
                amount of the institution, as determined in 
                accordance with subsection (d).
                  (C) The Secretary shall allocate not more 
                than \1/4\ of such funds for each award year by 
                allocating to each participating institution an 
                amount which bears the same ratio to the funds 
                allocated under this subparagraph as the ratio 
                determined in accordance with subsection (e) 
                for the calculation of the Federal Pell Grant 
                and degree recipient amount of the institution.
          (2) No funds to non-participating institutions.--The 
        Secretary shall not make funds available under this 
        subsection to any eligible institution that is not a 
        participating institution. The adjusted self-help need 
        amount (determined in accordance with subsection (c)) 
        of an eligible institution that is not a participating 
        institution shall not be made available to any other 
        institution.
  (c) Adjusted Self-Help Need Amount.--For the purposes of 
subsection (b)(1)(A), the Secretary shall calculate the 
adjusted self-help need amount of each eligible institution for 
an award year as follows:
          (1) Use of base self-help need amounts.--
                  (A) In general.--Except as provided in 
                paragraphs (2), (3), and (4), the adjusted 
                self-help need amount of each eligible 
                institution shall be the institution's base 
                self-help need amount, which is the sum of--
                          (i) the self-help need of the 
                        institution's eligible undergraduate 
                        students for such award year; and
                          (ii) the self-help need of the 
                        institution's eligible graduate and 
                        professional students for such award 
                        year.
                  (B) Undergraduate student self-help need.--To 
                determine the self-help need of an 
                institution's eligible undergraduate students, 
                the Secretary shall determine the sum of each 
                eligible undergraduate student's average cost 
                of attendance for the second preceding award 
                year less each such student's expected family 
                contribution (computed in accordance with part 
                F) for the second preceding award year, except 
                that, for each such eligible undergraduate 
                student, the amount computed by such 
                subtraction shall not be less than zero or more 
                than the lesser of--
                          (i) 25 percent of the average cost of 
                        attendance with respect to such 
                        eligible student; or
                          (ii) $5,500.
                  (C) Graduate and professional student self-
                help need.--To determine the self-help need of 
                an institution's eligible graduate and 
                professional students, the Secretary shall 
                determine the sum of each eligible graduate and 
                professional student's average cost of 
                attendance for the second preceding award year 
                less each such student's expected family 
                contribution (computed in accordance with part 
                F) for such second preceding award year, except 
                that, for each such eligible graduate and 
                professional student, the amount computed by 
                such subtraction shall not be less than zero or 
                more than $8,000.
          (2) Ratable reduction adjustments.--If the sum of the 
        base self-help need amounts of all eligible 
        institutions for an award year as determined under 
        paragraph (1) exceeds \1/2\ of the annual loan 
        authority under subsection (b) for such award year, the 
        Secretary shall ratably reduce the base self-help need 
        amounts of all eligible institutions until the sum of 
        such amounts is equal to the amount that is \1/2\ of 
        the annual loan authority under subsection (b).
          (3) Required minimum amount.--Notwithstanding 
        paragraph (2), the adjusted self-help need amount of 
        each eligible institution shall not be less than the 
        average of the institution's total principal amount of 
        loans made under this part for each of the 5 most 
        recent award years.
          (4) Additional adjustments.--If the Secretary 
        determines that a ratable reduction under paragraph (2) 
        results in the adjusted self-help need amount of any 
        eligible institution being reduced below the minimum 
        amount required under paragraph (3), the Secretary 
        shall--
                  (A) for each institution for which the 
                minimum amount under paragraph (3) is not 
                satisfied, increase the adjusted self-help need 
                amount to the amount of the required minimum 
                under such subparagraph; and
                  (B) ratably reduce the adjusted self-help 
                need amounts of all eligible institutions not 
                described in subparagraph (A) until the sum of 
                the adjusted self-help need amounts of all 
                eligible institutions is equal to the amount 
                that is \1/2\ of the annual loan authority 
                under subsection (b).
  (d) Low Tuition Incentive Amount.--
          (1) In general.--For purposes of subsection 
        (b)(1)(B), the Secretary shall determine the low 
        tuition incentive amount for each participating 
        institution for each award year, by calculating for 
        each such institution the sum of--
                  (A) the total amount, if any (but not less 
                than zero), by which--
                          (i) the average tuition and required 
                        fees for the institution's sector for 
                        the second preceding award year; 
                        exceeds
                          (ii) the tuition and required fees 
                        for the second preceding award year for 
                        each undergraduate and graduate student 
                        attending the institution who had 
                        financial need (as determined under 
                        part F); plus
                  (B) the total amount, if any (but not less 
                than zero), by which--
                          (i) the total amount for the second 
                        preceding award year of non-Federal 
                        grant aid provided to meet the 
                        financial need of all undergraduate 
                        students attending the institution (as 
                        determined without regard to financial 
                        aid not received under this title); 
                        exceeds
                          (ii) the total amount for the second 
                        preceding award year, if any, by 
                        which--
                                  (I) the tuition and required 
                                fees of each such student with 
                                such financial need; exceeds
                                  (II) the average tuition and 
                                required fees for the 
                                institution's sector.
          (2) Ratable reduction.--If the sum of the low tuition 
        incentive amounts of all participating institutions for 
        an award year as determined under paragraph (1) exceeds 
        \1/4\ of the annual loan authority under subsection (b) 
        for such award year, the Secretary shall ratably reduce 
        the low tuition incentive amounts of all participating 
        institutions until the sum of such amounts is equal to 
        the amount that is \1/4\ of the annual loan authority 
        under subsection (b).
  (e) Federal Pell Grant and Degree Recipient Amount.--For 
purposes of subsection (b)(1)(C), the Secretary shall determine 
the Federal Pell Grant and degree recipient amount for each 
participating institution for each award year, by calculating 
for each such institution the ratio of--
          (1) the number of students who, during the most 
        recent year for which data are available, obtained an 
        associate's degree or other postsecondary degree from 
        such participating institution and, prior to obtaining 
        such degree, received a Federal Pell Grant for 
        attendance at any institution of higher education; to
          (2) the sum of the number of students who, during the 
        most recent year for which data are available, obtained 
        an associate's degree or other postsecondary degree 
        from each participating institution and, prior to 
        obtaining such degree, received a Federal Pell Grant 
        for attendance at any institution of higher education.
  (f) Definitions.--As used in this section:
          (1) Annual loan authority.--The term ``annual loan 
        authority'' means the total original principal amount 
        of loans that may be allocated and made available for 
        an award year to make Federal Direct Perkins Loans 
        under section 455A.
          (2) Average cost of attendance.--
                  (A) In general.--The term ``average cost of 
                attendance'' means the average of the 
                attendance costs for undergraduate students and 
                for graduate and professional students, 
                respectively, for the second preceding award 
                year which shall include--
                          (i) tuition and required fees 
                        determined in accordance with 
                        subparagraph (B);
                          (ii) standard living expenses 
                        determined in accordance with 
                        subparagraph (C); and
                          (iii) books and supplies determined 
                        in accordance with subparagraph (D).
                  (B) Tuition and required fees.--The average 
                undergraduate and graduate and professional 
                tuition and required fees described in 
                subparagraph (A)(i) shall be computed on the 
                basis of information reported by the 
                institution to the Secretary, which shall 
                include--
                          (i) total revenue received by the 
                        institution from undergraduate and 
                        graduate and professional students, 
                        respectively, for tuition and required 
                        fees for the second preceding award 
                        year; and
                          (ii) the institution's full-time 
                        equivalent enrollment of undergraduate 
                        and graduate and professional students, 
                        respectively, for such second preceding 
                        award year.
                  (C) Standard living expenses.--The standard 
                living expense described in subparagraph 
                (A)(ii) is equal to the allowance, determined 
                by an institution, for room and board costs 
                incurred by a student, as computed in 
                accordance with part F for the second preceding 
                award year.
                  (D) Books and supplies.--The allowance for 
                books and supplies described in subparagraph 
                (A)(iii) is equal to the allowance, determined 
                by an institution, for books, supplies, 
                transportation, and miscellaneous personal 
                expenses, including a reasonable allowance for 
                the documented rental or purchase of a personal 
                computer, as computed in accordance with part F 
                for the second preceding award year.
          (3) Average tuition and required fees for the 
        institution's sector.--The term ``average tuition and 
        required fees for the institution's sector'' shall be 
        determined by the Secretary for each of the categories 
        described in section 132(d).
          (4) Eligible institution.--The term ``eligible 
        institution'' means an institution of higher education 
        that participates in the Federal Direct Stafford Loan 
        Program.
          (5) Participating institution.--The term 
        ``participating institution'' means an institution of 
        higher education that has an agreement under section 
        463(f).
          (6) Sector.--The term ``sector'' means each of the 
        categories described in section 132(d).

SEC. 463. AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION.

  (a) Contents of Agreements for Loans Made Before July 1, 
2010.--An agreement with any institution of higher education 
for the payment of Federal capital contributions under this 
part shall--
          (1) * * *

           *       *       *       *       *       *       *

          (3) provide that such student loan fund shall be used 
        only for--
                  (A) loans to students before July 1, 2010, in 
                accordance with the provisions of this part;

           *       *       *       *       *       *       *

          (4) provide that where a note or written agreement 
        evidencing a loan has been in default despite due 
        diligence on the part of the institution in attempting 
        collection [thereon--
                  [(A) if the institution has knowingly failed 
                to maintain an acceptable collection record 
                with respect to such loan, as determined by the 
                Secretary in accordance with criteria 
                established by regulation, the Secretary may--
                          [(i) require the institution to 
                        assign such note or agreement to the 
                        Secretary, without recompense; and
                          [(ii) apportion any sums collected on 
                        such a loan, less an amount not to 
                        exceed 30 percent of any sums collected 
                        to cover the Secretary's collection 
                        costs, among other institutions in 
                        accordance with section 462; or
                  [(B) if the institution is not one described 
                in subparagraph (A), the Secretary may allow 
                such institution to refer such note or 
                agreement to the Secretary, without recompense, 
                except that, once every six months, any sums 
                collected on such a loan (less an amount not to 
                exceed 30 percent of any such sums collected to 
                cover the Secretary's collection costs) shall 
                be repaid to such institution and treated as an 
                additional capital contribution under section 
                462;] thereon, if the institution has failed to 
                maintain an acceptable collection record with 
                respect to such loan, as determined by the 
                Secretary in accordance with criteria 
                established by regulation, the Secretary may 
                require the institution to assign such note or 
                agreement to the Secretary, without recompense;
          (5) provide that, if an institution of higher 
        education determines not to service and collect student 
        loans made available from funds under this part, the 
        institution will assign, at the beginning of the 
        repayment period, notes or evidence of obligations of 
        student loans made from such funds to the Secretary 
        [and the Secretary shall apportion any sums collected 
        on such notes or obligations (less an amount not to 
        exceed 30 percent of any such sums collected to cover 
        that Secretary's collection costs) among other 
        institutions in accordance with section 462] and the 
        Secretary shall return a portion of funds from loan 
        repayments to the institution as specified in section 
        466(b);

           *       *       *       *       *       *       *

  [(b) Administrative Expenses.--An institution which has 
entered into an agreement under subsection (a) shall be 
entitled, for each fiscal year during which it makes student 
loans from a student loan fund established under such 
agreement, to a payment in lieu of reimbursement for its 
expenses in administering its student loan program under this 
part during such year. Such payment shall be made in accordance 
with section 489.]
  (b) Administrative Expenses.--An institution that has entered 
into an agreement under subsection (a) shall be entitled, for 
each fiscal year during which it services student loans from a 
student loan fund established under such agreement, to a 
payment in lieu of reimbursement for its expenses in servicing 
student loans made before July 1, 2010. Such payment shall be 
equal to 0.50 percent of the outstanding principal and interest 
balance of such loans being serviced by the institution as of 
September 30 of each fiscal year.

           *       *       *       *       *       *       *

  (f) Contents of Agreements for Loans Made on or After July 1, 
2010.--An agreement with any institution of higher education 
that elects to participate in the Federal Direct Perkins Loan 
program under section 455A shall provide--
          (1) for the establishment and maintenance of a Direct 
        Perkins Loan program at the institution under which the 
        institution shall use loan authority allocated under 
        section 462A to make loans to eligible students 
        attending the institution;
          (2) that the institution, unless otherwise specified 
        in this subsection, shall operate the program 
        consistent with the requirements of agreements 
        established under section 454;
          (3) that the institution will pay matching funds, 
        quarterly, in an amount agreed to by the institution 
        and the Secretary, to an escrow account approved by the 
        Secretary, for the purpose of providing loan benefits 
        to borrowers;
          (4) that if the institution fails to meet the 
        requirements of paragraph (3), the Secretary shall 
        suspend or terminate the institution's eligibility to 
        make Federal Direct Perkins Loans under section 455A 
        until such time as the Secretary determines, in 
        accordance with section 498, that the institution has 
        met the requirements of such paragraph; and
          (5) that if the institution ceases to be an eligible 
        institution within the meaning of section 435(a) by 
        reason of having a cohort default rate that exceeds the 
        threshold percentage specified paragraph (2) of such 
        section, the Secretary shall suspend or terminate the 
        institution's eligibility to make Federal Direct 
        Perkins Loans under section 455A unless and until the 
        institution would qualify for a resumption of eligible 
        institution status under such section.

SEC. 463A. STUDENT LOAN INFORMATION BY ELIGIBLE INSTITUTIONS.

  (a) Disclosure Required Prior to Disbursement.--[Each 
institution] For loans made before July 1, 2010, each 
institution of higher education, in order to carry out the 
provisions of section 463(a)(8), shall, at or prior to the time 
such institution makes a loan to a student borrower which is 
made under this part, provide thorough and adequate loan 
information on such loan to the student borrower. Any 
disclosure required by this subsection may be made by an 
institution of higher education as part of the written 
application material provided to the borrower, or as part of 
the promissory note evidencing the loan, or on a separate 
written form provided to the borrower. The disclosures shall 
include--
          (1) * * *

           *       *       *       *       *       *       *

  (b) Disclosure Required Prior to Repayment.--[Each 
institution] For loans made before July 1, 2010, each 
institution of higher education shall enter into an agreement 
with the Secretary under which the institution will, prior to 
the start of the repayment period of the student borrower on 
loans made under this part, disclose to the student borrower 
the information required under this subsection. Any disclosure 
required by this subsection may be made by an institution of 
higher education either in a promissory note evidencing the 
loan or loans or in a written statement provided to the 
borrower. The disclosures shall include--
          (1) * * *

           *       *       *       *       *       *       *


SEC. 464. TERMS OF LOANS.

  (a) Terms and Conditions.--(1) Loans from any student loan 
fund established pursuant to an agreement under section 463(a) 
to any student by any institution shall, subject to such 
conditions, limitations, and requirements as the Secretary 
shall prescribe by regulation, be made on such terms and 
conditions as the institution may determine.

           *       *       *       *       *       *       *

  (b) Demonstration of Need and Eligibility Required.--(1) A 
loan made before July 1, 2010, from a student loan fund 
assisted under this part may be made only to a student who 
demonstrates financial need in accordance with part F of this 
title, who meets the requirements of section 484, and who 
provides the institution with the student's drivers license 
number, if any, at the time of application for the loan. 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).

           *       *       *       *       *       *       *

  (c) Contents of Loan Agreement.--(1) Any agreement between an 
institution and a student for a loan made before July 1, 2010, 
from a student loan fund assisted under this part--
          (A)  * * *

           *       *       *       *       *       *       *

  (2)(A) No repayment of principal of, or interest on, any loan 
made before July 1, 2010, from a student loan fund assisted 
under this part shall be required during any period--
          (i) * * *

           *       *       *       *       *       *       *

  (B) No repayment of principal of, or interest on, any loan 
made before July 1, 2010, for any period described in 
subparagraph (A) shall begin until 6 months after the 
completion of such period.

           *       *       *       *       *       *       *

  (3)(A) * * *
  (B) Pursuant to uniform criteria established by the 
Secretary, the repayment period for any student borrower who 
during the repayment period for a loan made before July 1, 
2010, is a low-income individual may be extended for a period 
not to exceed 10 years and the repayment schedule may be 
adjusted to reflect the income of that individual.
  (4) The repayment period for a loan made before July 1, 2010, 
under this part shall begin on the day immediately following 
the expiration of the period, specified in paragraph (1)(A), 
after the student ceases to carry the required academic 
workload, unless the borrower requests and is granted a 
repayment schedule that provides for repayment to commence at 
an earlier point in time, and shall exclude any period of 
authorized deferment, forbearance, or cancellation.
  (5) [The institution] For loans made before July 1, 2010, the 
institution may elect--
          (A) * * *

           *       *       *       *       *       *       *

  (6) Requests for deferment of repayment of loans made before 
July 1, 2010, under this part by students engaged in graduate 
or post-graduate fellowship-supported study (such as pursuant 
to a Fulbright grant) outside the United States shall be 
approved until completion of the period of the fellowship.

           *       *       *       *       *       *       *

  (d) Availability of Loan Fund to All Eligible Students.--An 
agreement under this part for payment of Federal capital 
contributions shall include provisions designed to make loans 
made before July 1, 2010, from the student loan fund 
established pursuant to such agreement reasonably available (to 
the extent of the available funds in such fund) to all eligible 
students in such institutions in need thereof.
  (e) Forbearance.--(1) The Secretary shall ensure that, with 
respect to loans made before July 1, 2010, and as documented in 
accordance with paragraph (2), an institution of higher 
education shall grant a borrower forbearance of principal and 
interest or principal only, renewable at 12-month intervals for 
a period not to exceed 3 years, on such terms as are otherwise 
consistent with the regulations issued by the Secretary and 
agreed upon in writing by the parties to the loan, if--
          (A)  * * *

           *       *       *       *       *       *       *

  [(f) Special Repayment Rule Authority.--(1) Subject to such 
restrictions as the Secretary may prescribe to protect the 
interest of the United States, in order to encourage repayment 
of loans made under this part which are in default, the 
Secretary may, in the agreement entered into under this part, 
authorize an institution of higher education to compromise on 
the repayment of such defaulted loans in accordance with 
paragraph (2). The Federal share of the compromise repayment 
shall bear the same relation to the institution's share of such 
compromise repayment as the Federal capital contribution to the 
institution's loan fund under this part bears to the 
institution's capital contribution to such fund.
  [(2) No compromise repayment of a defaulted loan as 
authorized by paragraph (1) may be made unless the student 
borrower pays--
          [(A) 90 percent of the loan under this part;
          [(B) the interest due on such loan; and
          [(C) any collection fees due on such loan;
in a lump sum payment.]
  (g) Discharge.--
          (1) In general.--If a student borrower who received a 
        loan made under this part on or after January 1, 1986, 
        and before July 1, 2010, 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).

           *       *       *       *       *       *       *

  (h) Rehabilitation of Loans.--
          (1) Rehabilitation.--
                  (A) In general.--If the borrower of a loan 
                made under this part before July 1, 2010, who 
                has defaulted on the loan makes 9 on-time, 
                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 consumer reporting agency to which the 
                default was reported remove the default from 
                the borrower's credit history.

           *       *       *       *       *       *       *

          (2) Restoration of eligibility.--If the borrower of a 
        loan made under this part before July 1, 2010, 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.

           *       *       *       *       *       *       *

  (j) Armed Forces Student Loan Interest Payment Program.--
          (1) Authority.--Using funds received by transfer to 
        the Secretary under section 2174 of title 10, United 
        States Code, for the payment of interest on a loan made 
        under this part before July 1, 2010, to a member of the 
        Armed Forces, the Secretary shall pay the interest on 
        the loan as due for a period not in excess of 36 
        consecutive months. The Secretary may not pay interest 
        on such a loan out of any funds other than funds that 
        have been so transferred.

           *       *       *       *       *       *       *


SEC. 465. CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE.

  (a) Cancellation of Percentage of Debt Based on Years of 
Qualifying Service.--(1) The percent specified in paragraph (3) 
of this subsection of the total amount of any loan made after 
June 30, 1972, and before July 1, 2010, from a student loan 
fund assisted under this part shall be canceled for each 
complete year of service after such date by the borrower under 
circumstances described in paragraph (2).

           *       *       *       *       *       *       *

  [(b) Reimbursement for Cancellation.--The Secretary shall pay 
to each institution for each fiscal year an amount equal to the 
aggregate of the amounts of loans from its student loan fund 
which are canceled pursuant to this section for such year, 
minus an amount equal to the aggregate of the amounts of any 
such loans so canceled which were made from Federal capital 
contributions to its student loan fund provided by the 
Secretary under section 468. None of the funds appropriated 
pursuant to section 461(b) shall be available for payments 
pursuant to this subsection. 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.]
  (b) Reimbursement for Cancellations.--
          (1) Assigned loans.--In the case of loans made under 
        this part before July 1, 2010, and that are assigned to 
        the Secretary, the Secretary shall, from amounts repaid 
        each quarter on assigned Perkins Loans made before July 
        1, 2010, pay to each institution for each quarter an 
        amount equal to--
                  (A) the aggregate of the amounts of loans 
                from its student loan fund that are canceled 
                pursuant to this section for such quarter, 
                minus
                  (B) an amount equal to the aggregate of the 
                amounts of any such loans so canceled that were 
                made from Federal capital contributions to its 
                student loan fund.
          (2) Retained loans.--In the case of loans made under 
        this part before July 1, 2010, and that are retained by 
        the institution for servicing, the institution shall 
        deduct from loan repayments owed to the Secretary under 
        section 466, an amount equal to--
                  (A) the aggregate of the amounts of loans 
                from its student loan fund that are canceled 
                pursuant to this section for such quarter, 
                minus
                  (B) an amount equal to the aggregate of the 
                amounts of any such loans so canceled that were 
                made from Federal capital contributions to its 
                student loan fund.

           *       *       *       *       *       *       *


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

  [(a) In General.--After September 30, 2003, and not later 
than March 31, 2004, there shall be a capital distribution of 
the balance of the student loan fund established under this 
part by each institution of higher education as follows:
          [(1) The Secretary shall first be paid an amount 
        which bears the same ratio to the balance in such fund 
        at the close of September 30, 2003, as the total amount 
        of the Federal capital contributions to such fund by 
        the Secretary under this part bears to the sum of such 
        Federal contributions and the institution's capital 
        contributions to such fund.
          [(2) The remainder of such balance shall be paid to 
        the institution.
  [(b) Distribution of Late Collections.--After October 1, 
2012, each institution with which the Secretary has made an 
agreement under this part, shall pay to the Secretary the same 
proportionate share of amounts received by this institution 
after September 30, 2003, in payment of principal and interest 
on student loans made from the student loan fund established 
pursuant to such agreement (which amount shall be determined 
after deduction of any costs of litigation incurred in 
collection of the principal or interest on loans from the fund 
and not already reimbursed from the fund or from such payments 
of principal or interest), as was determined for the Secretary 
under subsection (a).
  [(c) Distribution of Excess Capital.--(1) Upon a finding by 
the institution or the Secretary prior to October 1, 2004, that 
the liquid assets of a student loan fund established pursuant 
to an agreement under this part exceed the amount required for 
loans or otherwise in the foreseeable future, and upon notice 
to such institution or to the Secretary, as the case may be, 
there shall be, subject to such limitations as may be included 
in regulations of the Secretary or in such agreement, a capital 
distribution from such fund. Such capital distribution shall be 
made as follows:
          [(A) The Secretary shall first be paid an amount 
        which bears the same ratio to the total to be 
        distributed as the Federal capital contributions by the 
        Secretary to the student loan fund prior to such 
        distribution bear to the sum of such Federal capital 
        contributions and the capital contributions to the fund 
        made by the institution.
          [(B) The remainder of the capital distribution shall 
        be paid to the institution.
  [(2) No finding that the liquid assets of a student loan fund 
established under this part exceed the amount required under 
paragraph (1) may be made prior to a date which is 2 years 
after the date on which the institution of higher education 
received the funds from such institution's allocation under 
section 462.]

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

  (a) Capital Distribution.--Beginning July 1, 2010, there 
shall be a capital distribution of the balance of the student 
loan fund established under this part by each institution of 
higher education as follows:
          (1) For the quarter beginning July 1, 2010, the 
        Secretary shall first be paid, no later than September 
        30, 2010, an amount that bears the same ratio to the 
        cash balance in such fund at the close of June 30, 
        2010, as the total amount of the Federal capital 
        contributions to such fund by the Secretary under this 
        part bears to--
                  (A) the sum of such Federal contributions and 
                the institution's capital contributions to such 
                fund, less
                  (B) an amount equal to--
                          (i) the institution's outstanding 
                        administrative costs as calculated 
                        under section 463(b),
                          (ii) outstanding charges assessed 
                        under section 464(c)(1)(H), and
                          (iii) outstanding loan cancellation 
                        costs incurred under section 465.
          (2) At the end of each quarter subsequent to the 
        quarter ending September 30, 2010, the Secretary shall 
        first be paid an amount that bears the same ratio to 
        the cash balance in such fund at the close of the 
        preceding quarter, as the total amount of the Federal 
        capital contributions to such fund by the Secretary 
        under this part bears to--
                  (A) the sum of such Federal contributions and 
                the institution's capital contributions to such 
                fund, less
                  (B) an amount equal to--
                          (i) the institution's administrative 
                        costs incurred for that quarter as 
                        calculated under section 463(b),
                          (ii) charges assessed for that 
                        quarter under section 464(c)(1)(H), and
                          (iii) loan cancellation costs 
                        incurred for that quarter under section 
                        465.
          (3)(A) The Secretary shall calculate the amounts due 
        to the Secretary under paragraph (1) (adjusted in 
        accordance with subparagraph (B), as appropriate) and 
        paragraph (2) and shall promptly inform the institution 
        of such calculated amounts.
          (B) In the event that, prior to the date of enactment 
        of the Student Aid and Fiscal Responsibility Act of 
        2009, an institution made a short-term, interest-free 
        loan to the institution's student loan fund established 
        under this part in anticipation of collections or 
        receipt of Federal capital contributions, and the 
        institution demonstrates to the Secretary, on or before 
        June 30, 2010, that such loan will still be outstanding 
        after June 30, 2010, the Secretary shall subtract the 
        amount of such outstanding loan from the cash balance 
        of the institution's student loan fund that is used to 
        calculate the amount due to the Secretary under 
        paragraph (1). An adjustment of an amount due to the 
        Secretary under this subparagraph shall be made by the 
        Secretary on a case-by-case basis.
          (4) Any remaining balance at the end of a quarter 
        after a payment under paragraph (1) or (2) shall be 
        retained by the institution for use at its discretion. 
        Any balance so retained shall be withdrawn from the 
        student loan fund and shall not be counted in 
        calculating amounts owed to the Secretary for 
        subsequent quarters.
          (5) Each institution shall make the quarterly 
        payments to the Secretary described in paragraph (2) 
        until all outstanding Federal Perkins Loans at that 
        institution have been assigned to the Secretary and 
        there are no funds remaining in the institution's 
        student loan fund.
          (6) In the event that the institution's 
        administrative costs, charges, and cancellation costs 
        described in paragraph (2) for a quarter exceed the 
        amount owed to the Secretary under paragraphs (1) and 
        (2) for that quarter, no payment shall be due to the 
        Secretary from the institution for that quarter and the 
        Secretary shall pay the institution, from funds 
        realized from the collection of assigned Federal 
        Perkins Loans made before July 1, 2010, an amount that, 
        when combined with the amount retained by the 
        institution under paragraphs (1) and (2), equals the 
        full amount of such administrative costs, charges, and 
        cancellation costs.
  (b) Assignment of Outstanding Loans.--Beginning July 1, 2010, 
an institution of higher education may assign all outstanding 
loans made under this part before July 1, 2010, to the 
Secretary, consistent with the requirements of section 
463(a)(5). In collecting loans so assigned, the Secretary shall 
pay an institution an amount that constitutes the same fraction 
of such collections as the fraction of the cash balance that 
the institution retains under subsection (a)(2), but 
determining such fraction without regard to subparagraph (B)(i) 
of such subsection.

           *       *       *       *       *       *       *


                         PART F--NEED ANALYSIS

SEC. 471. AMOUNT OF NEED.

  [Except] (a) In General.--Except as otherwise provided 
therein and subject to subsection (b), the amount of need of 
any student for financial assistance under this title (except 
subparts 1 or 2 of part A) is equal to--
          (1) * * *

           *       *       *       *       *       *       *

  (b) Asset Cap for Need-Based Aid.--Notwithstanding any other 
provision of this title, a student shall not be eligible to 
receive a Federal Pell Grant, a Federal Direct Stafford Loan, 
or work assistance under this title if--
          (1) in the case of a dependent student, the combined 
        net assets of the student and the student's parents are 
        equal to an amount greater than $150,000 (or a 
        successor amount prescribed by the Secretary under 
        section 478(c)); or
          (2) in the case of an independent student, the net 
        assets of the student (and the student's spouse, if 
        applicable) are equal to an amount greater than 
        $150,000 (or a successor amount prescribed by the 
        Secretary under section 478(c)).

           *       *       *       *       *       *       *


SEC. 474. DETERMINATION OF EXPECTED FAMILY CONTRIBUTION; DATA ELEMENTS.

  (a) * * *
  (b) Data Elements.--The following data elements are 
considered in determining the expected family contribution:
          (1) * * *

           *       *       *       *       *       *       *

          [(4) the net assets of (A) the student and the 
        student's spouse, and (B) the student and the student's 
        parents, in the case of a dependent student;]
          [(5)] (4) the marital status of the student;
          [(6)] (5) the age of the older parent, in the case of 
        a dependent student, and the student; and
          [(7)] (6) the additional expenses incurred (A) in the 
        case of a dependent student, when both parents of the 
        student are employed or when the family is headed by a 
        single parent who is employed, or (B) in the case of an 
        independent student, when the student is married and 
        the student's spouse is employed, or when the employed 
        student qualifies as a surviving spouse or as a head of 
        a household under section 2 of the Internal Revenue 
        Code of 1986.

SEC. 475. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.

  (a) Computation of Expected Family Contribution.--For each 
dependent student, the expected family contribution is equal to 
the sum of--
          (1) the parents' contribution from [adjusted] 
        available income (determined in accordance with 
        subsection (b)); and
          (2) the student contribution from available income 
        (determined in accordance with subsection (g))[; and].
          [(3) the student contribution from assets (determined 
        in accordance with subsection (h)).]
  (b) Parents' Contribution From [Adjusted] Available Income.--
The parents' contribution from [adjusted] available income is 
equal to the amount determined by--
          [(1) computing adjusted available income by adding--
                  [(A) the parents' available income 
                (determined in accordance with subsection (c)); 
                and
                  [(B) the parents' contribution from assets 
                (determined in accordance with subsection 
                (d));]
          [(2)] (1) assessing such [adjusted] available income 
        in accordance with the assessment schedule set forth in 
        subsection (e); and
          [(3)] (2) dividing the assessment resulting under 
        paragraph [(2] (1)) by the number of the family 
        members, excluding the student's parents, who are 
        enrolled or accepted for enrollment, on at least a 
        half-time basis, in a degree, certificate, or other 
        program leading to a recognized educational credential 
        at an institution of higher education that is an 
        eligible institution in accordance with the provisions 
        of section 487 during the award period for which 
        assistance under this title is requested;

           *       *       *       *       *       *       *

  [(d) Parents' Contribution From Assets.--
          [(1) In general.--The parents' contribution from 
        assets is equal to--
                  [(A) the parental net worth (determined in 
                accordance with paragraph (2)); minus
                  [(B) the education savings and asset 
                protection allowance (determined in accordance 
                with paragraph (3)); multiplied by
                  [(C) the asset conversion rate (determined in 
                accordance with paragraph (4)), except that the 
                result shall not be less than zero.
          [(2) Parental net worth.--The parental net worth is 
        calculated by adding--
                  [(A) the current balance of checking and 
                savings accounts and cash on hand;
                  [(B) the net value of investments and real 
                estate, excluding the net value of the 
                principal place of residence; and
                  [(C) the adjusted net worth of a business or 
                farm, computed on the basis of the net worth of 
                such business or farm (hereafter in this 
                subsection referred to as ``NW''), determined 
                in accordance with the following table (or a 
                successor table prescribed by the Secretary 
                under section 478), except as provided under 
                section 480(f):

                [Adjusted Net Worth of a Business or Farm
------------------------------------------------------------------------
 If the net worth of a business or farm
                  is--                   Then the adjusted net worth is:
------------------------------------------------------------------------
Less than $1...........................  $0
$1-$75,000.............................  40 percent of NW
$75,001-$225,000.......................  $30,000 plus 50 percent of NW
                                          over $75,000
$225,001-$375,000......................  $105,000 plus 60 percent of NW
                                          over $225,000
$375,001 or more.......................  $195,000 plus 100 percent of NW
                                          over $375,000
------------------------------------------------------------------------

          [(3) Education savings and asset protection 
        allowance.--The education savings and asset protection 
        allowance is calculated according to the following 
        table (or a successor table prescribed by the Secretary 
        under section 478):

   [Education Savings and Asset Protection Allowances for Families and
                                Students
------------------------------------------------------------------------
                                              And there are
   If the age of the oldest    -----------------------------------------
          parent is--               two parents           one parent
------------------------------------------------------------------------
                         then the allowance is--
                                ...................  ...................
25 or less....................          $ 0                   $0
26............................          2,200                1,600
27............................          4,300                3,200
28............................          6,500                4,700
29............................          8,600                6,300
30............................         10,800                7,900
31............................         13,000                9,500
32............................         15,100               11,100
33............................         17,300               12,600
34............................         19,400               14,200
35............................         21,600               15,800
36............................         23,800               17,400
37............................         25,900               19,000
38............................         28,100               20,500
39............................         30,200               22,100
40............................         32,400               23,700
41............................         33,300               24,100
42............................         34,100               24,700
43............................         35,000               25,200
44............................         35,700               25,800
45............................         36,600               26,300
46............................         37,600               26,900
47............................         38,800               27,600
48............................         39,800               28,200
49............................         40,800               28,800
50............................         41,800               29,500
51............................         43,200               30,200
52............................         44,300               31,100
53............................         45,700               31,800
54............................         47,100               32,600
55............................         48,300               33,400
56............................         49,800               34,400
57............................         51,300               35,200
58............................         52,900               36,200
59............................         54,800               37,200
60............................         56,500               38,100
61............................         58,500               39,200
62............................         60,300               40,300
63............................         62,400               41,500
64............................         64,600               42,800
65 or more....................         66,800               44,000
------------------------------------------------------------------------

          [(4) Asset conversion rate.--The asset conversion 
        rate is 12 percent.]
  (e) Assessment Schedule.--The [adjusted] available income (as 
determined under subsection (b)(1) and hereafter in this 
subsection referred to as [``AAI''] ``AI'') is assessed 
according to the following table (or a successor table 
prescribed by the Secretary under section 478):

     Parents' Assessment [From Adjusted Available Income (AAI)] From
                          Available Income (AI)
------------------------------------------------------------------------
            If [AAI] AI is--                 Then the assessment is--
------------------------------------------------------------------------
Less than -$3,409......................  -$750
-$3,409 to $9,400......................  22% of [AAI] AI
$9,401 to $11,800......................  $2,068 + 25% of [AAI] AI over
                                          $9,400
$11,801 to $14,200.....................  $2,668 + 29% of [AAI] AI over
                                          $11,800
$14,201 to $16,600.....................  $3,364 + 34% of [AAI] AI over
                                          $14,200
$16,601 to $19,000.....................  $4,180 + 40% of [AAI] AI over
                                          $16,600
$19,001 or more........................  $5,140 + 47% of [AAI] AI over
                                          $19,000
------------------------------------------------------------------------

  (f) Computations in Case of Separation, Divorce, Remarriage, 
or Death.--
          (1) Divorced or separated parents.--Parental income 
        [and assets] for a student whose parents are divorced 
        or separated is determined under the following 
        procedures:
                  (A) Include only the income [and assets] of 
                the parent with whom the student resided for 
                the greater portion of the 12-month period 
                preceding the date of the application.
                  (B) If the preceding criterion does not 
                apply, include only the income [and assets] of 
                the parent who provided the greater portion of 
                the student's support for the 12-month period 
                preceding the date of application.
                  (C) If neither of the preceding criteria 
                apply, include only the income [and assets] of 
                the parent who provided the greater support 
                during the most recent calendar year for which 
                parental support was provided.
          (2) Death of a parent.--Parental income [and assets] 
        in the case of the death of any parent is determined as 
        follows:
                  (A) If either of the parents has died, the 
                student shall include only the income [and 
                assets] of the surviving parent.
                  (B) If both parents have died, the student 
                shall not report any parental income [or 
                assets].
          (3) Remarried parents.--If a parent whose income [and 
        assets are] is taken into account under paragraph (1) 
        of this subsection, or if a parent who is a widow or 
        widower and whose income is taken into account under 
        paragraph (2) of this subsection, has remarried, the 
        income of that parent's spouse shall be included in 
        determining the parent's [adjusted] available income 
        only if--
                  (A) * * *

           *       *       *       *       *       *       *

  (g) Student Contribution From Available Income.--
          (1)  * * *.--

           *       *       *       *       *       *       *

          (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)).] exceeds the parents' 
        total income (as defined in section 480)

           *       *       *       *       *       *       *

  [(h) Student Contribution From Assets.--The student 
contribution from assets is determined by calculating the net 
assets of the student and multiplying such amount by 20 
percent, except that the result shall not be less than zero.]
  (i) Adjustments to Parents' Contribution for Enrollment 
Periods Other Than 9 Months For Purposes Other Than Subpart 2 
of Part A of This Title.--For periods of enrollment other than 
9 months, the parents' contribution from [adjusted] available 
income (as determined under subsection (b)) is determined as 
follows for purposes other than subpart 2 of part A of this 
title:
          (1) For periods of enrollment less than 9 months, the 
        parents' contribution from [adjusted] available income 
        is divided by 9 and the result multiplied by the number 
        of months enrolled.
          (2) For periods of enrollment greater than 9 months--
                  (A) the parents' [adjusted] available income 
                (determined in accordance with subsection 
                (b)(1)) is increased by the difference between 
                the income protection allowance (determined in 
                accordance with subsection (c)(4)) for a family 
                of four and a family of five, each with one 
                child in college;
                  (B) the resulting revised parents' [adjusted] 
                available income is assessed according to 
                subsection (e) and [adjusted] according to 
                subsection (b)(3) to determine a revised 
                parents' contribution from [adjusted] available 
                income;
                  (C) the original parents' contribution from 
                [adjusted] available income is subtracted from 
                the revised parents' contribution from 
                [adjusted] available income, and the result is 
                divided by 12 to determine the monthly 
                adjustment amount; and
                  (D) the original parents' contribution from 
                [adjusted] available income is increased by the 
                product of the monthly adjustment amount 
                multiplied by the number of months greater than 
                9 for which the student will be enrolled.

           *       *       *       *       *       *       *


SEC. 476. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT 
                    DEPENDENTS OTHER THAN A SPOUSE.

  (a) Computation of Expected Family Contribution.--For each 
independent student without dependents other than a spouse, the 
expected family contribution is determined by--
          [(1) adding--
                  [(A) the family's contribution from available 
                income (determined in accordance with 
                subsection (b)); and
                  [(B) the family's contribution from assets 
                (determined in accordance with subsection 
                (c));]
          [(2)] (1) dividing [the sum resulting under paragraph 
        (1)] the family's contribution from available income 
        (determined in accordance with subsection (b)) by the 
        number of students who are enrolled or accepted for 
        enrollment, on at least a half-time basis, in a degree, 
        certificate, or other program leading to a recognized 
        educational credential at an institution of higher 
        education that is an eligible institution in accordance 
        with the provisions of section 487 during the award 
        period for which assistance under this title is 
        requested; and
          [(3)] (2) 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)] (1) by 9; and

           *       *       *       *       *       *       *

  [(c) Family Contribution From Assets.--
          [(1) In general.--The family's contribution from 
        assets is equal to--
                  [(A) the family's net worth (determined in 
                accordance with paragraph (2)); minus
                  [(B) the asset protection allowance 
                (determined in accordance with paragraph (3)); 
                multiplied by
                  [(C) the asset conversion rate (determined in 
                accordance with paragraph (4));
        except that the family's contribution from assets shall 
        not be less than zero.
          [(2) Family's net worth.--The family's net worth is 
        calculated by adding--
                  [(A) the current balance of checking and 
                savings accounts and cash on hand;
                  [(B) the net value of investments and real 
                estate, excluding the net value in the 
                principal place of residence; and
                  [(C) the adjusted net worth of a business or 
                farm, computed on the basis of the net worth of 
                such business or farm (hereafter referred to as 
                ``NW''), determined in accordance with the 
                following table (or a successor table 
                prescribed by the Secretary under section 478), 
                except as provided under section 480(f):

                [Adjusted Net Worth of a Business or Farm
------------------------------------------------------------------------
 If the net worth of a business or farm  Then the adjusted net worth is--
                  is--
------------------------------------------------------------------------
Less than $1...........................  $0
$1-$75,000.............................  40 percent of NW
$75,001-$225,000.......................  $30,000 plus 50 percent of NW
                                          over $75,000
$225,001-$375,000......................  $105,000 plus 60 percent of NW
                                          over $225,000
$375,001 or more.......................  $195,000 plus 100 percent of NW
                                          over $375,000
------------------------------------------------------------------------

          [(3) Asset protection allowance.--The asset 
        protection allowance is calculated according to the 
        following table (or a successor table prescribed by the 
        Secretary under section 478):

         [Asset Protection Allowances for Families and Students
------------------------------------------------------------------------
                                                     And the student is
          If the age of the student is--           ---------------------
                                                     married     single
------------------------------------------------------------------------
                         then the allowance is--
                                                    .........  .........
25 or less........................................     $ 0         $0
26................................................     2,200      1,600
27................................................     4,300      3,200
28................................................     6,500      4,700
29................................................     8,600      6,300
30................................................    10,800      7,900
31................................................    13,000      9,500
32................................................    15,100     11,100
33................................................    17,300     12,600
34................................................    19,400     14,200
35................................................    21,600     15,800
36................................................    23,800     17,400
37................................................    25,900     19,000
38................................................    28,100     20,500
39................................................    30,200     22,100
40................................................    32,400     23,700
41................................................    33,300     24,100
42................................................    34,100     24,700
43................................................    35,000     25,200
44................................................    35,700     25,800
45................................................    36,600     26,300
46................................................    37,600     26,900
47................................................    38,800     27,600
48................................................    39,800     28,200
49................................................    40,800     28,800
50................................................    41,800     29,500
51................................................    43,200     30,200
52................................................    44,300     31,100
53................................................    45,700     31,800
54................................................    47,100     32,600
55................................................    48,300     33,400
56................................................    49,800     34,400
57................................................    51,300     35,200
58................................................    52,900     36,200
59................................................    54,800     37,200
60................................................    56,500     38,100
61................................................    58,500     39,200
62................................................    60,300     40,300
63................................................    62,400     41,500
64................................................    64,600     42,800
65 or more........................................    66,800     44,000
------------------------------------------------------------------------

          [(4) Asset conversion rate.--The asset conversion 
        rate is 20 percent.]
  (d) Computations in Case of Separation, Divorce, or Death.--
In the case of a student who is divorced or separated, or whose 
spouse has died, the spouse's income [and assets] shall not be 
considered in determining the family's contribution from income 
[or assets].

SEC. 477. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH DEPENDENTS 
                    OTHER THAN A SPOUSE.

  (a) Computation of Expected Family Contribution.--For each 
independent student with dependents other than a spouse, the 
expected family contribution is equal to the amount determined 
by--
          [(1) computing adjusted available income by adding--
                  [(A) the family's available income 
                (determined in accordance with subsection (b)); 
                and
                  [(B) the family's contribution from assets 
                (determined in accordance with subsection 
                (c));]
          [(2)] (1) assessing [such adjusted available income] 
        the family's available income (determined in accordance 
        with subsection (b)) in accordance with an assessment 
        schedule set forth in subsection (d);
          [(3)] (2) dividing the assessment resulting under 
        paragraph [(2)] (1) by the number of family members who 
        are enrolled or accepted for enrollment, on at least a 
        half-time basis, in a degree, certificate, or other 
        program leading to a recognized educational credential 
        at an institution of higher education that is an 
        eligible institution in accordance with the provisions 
        of section 487 during the award period for which 
        assistance under this title is requested; and
          [(4)] (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 [(3)] (2) by 9; and

           *       *       *       *       *       *       *

  [(c) Family's Contribution From Assets.--
          [(1) In general.--The family's contribution from 
        assets is equal to--
                  [(A) the family net worth (determined in 
                accordance with paragraph (2)); minus
                  [(B) the asset protection allowance 
                (determined in accordance with paragraph (3)); 
                multiplied by
                  [(C) the asset conversion rate (determined in 
                accordance with paragraph (4)), except that the 
                result shall not be less than zero.
          [(2) Family net worth.--The family net worth is 
        calculated by adding--
                  [(A) the current balance of checking and 
                savings accounts and cash on hand;
                  [(B) the net value of investments and real 
                estate, excluding the net value in the 
                principal place of residence; and
                  [(C) the adjusted net worth of a business or 
                farm, computed on the basis of the net worth of 
                such business or farm (hereafter referred to as 
                ``NW''), determined in accordance with the 
                following table (or a successor table 
                prescribed by the Secretary under section 478), 
                except as provided under section 480(f):

                [Adjusted Net Worth of a Business or Farm
------------------------------------------------------------------------
 If the net worth of a business or farm  Then the adjusted net worth is--
                  is--
------------------------------------------------------------------------
Less than $1...........................  $0
$1-$75,000.............................  40 percent of NW
$75,001-$225,000.......................  $30,000 plus 50 percent of NW
                                          over $75,000
$225,001-$375,000......................  $105,000 plus 60 percent of NW
                                          over $225,000
$375,001 or more.......................  $195,000 plus 100 percent of NW
                                          over $375,000
------------------------------------------------------------------------

          [(3) Asset protection allowance.--The asset 
        protection allowance is calculated according to the 
        following table (or a successor table prescribed by the 
        Secretary under section 478):

         [Asset Protection Allowances for Families and Students
------------------------------------------------------------------------
                                                     And the student is
          If the age of the student is--           ---------------------
                                                     married     single
------------------------------------------------------------------------
                         then the allowance is--
                                                    .........  .........
25 or less........................................     $ 0         $0
26................................................     2,200      1,600
27................................................     4,300      3,200
28................................................     6,500      4,700
29................................................     8,600      6,300
30................................................    10,800      7,900
31................................................    13,000      9,500
32................................................    15,100     11,100
33................................................    17,300     12,600
34................................................    19,400     14,200
35................................................    21,600     15,800
36................................................    23,800     17,400
37................................................    25,900     19,000
38................................................    28,100     20,500
39................................................    30,200     22,100
40................................................    32,400     23,700
41................................................    33,300     24,100
42................................................    34,100     24,700
43................................................    35,000     25,200
44................................................    35,700     25,800
45................................................    36,600     26,300
46................................................    37,600     26,900
47................................................    38,800     27,600
48................................................    39,800     28,200
49................................................    40,800     28,800
50................................................    41,800     29,500
51................................................    43,200     30,200
52................................................    44,300     31,100
53................................................    45,700     31,800
54................................................    47,100     32,600
55................................................    48,300     33,400
56................................................    49,800     34,400
57................................................    51,300     35,200
58................................................    52,900     36,200
59................................................    54,800     37,200
60................................................    56,500     38,100
61................................................    58,500     39,200
62................................................    60,300     40,300
63................................................    62,400     41,500
64................................................    64,600     42,800
65 or more........................................    66,800     44,000
------------------------------------------------------------------------

          [(4) Asset conversion rate.--The asset conversion 
        rate is 7 percent.]
  (d) Assessment Schedule.--The [adjusted] available income (as 
determined under subsection (a)(1) and hereafter referred to as 
[``AAI''] ``AI'') is assessed according to the following table 
(or a successor table prescribed by the Secretary under section 
478):

 Assessment [From Adjusted Available Income (AAI)] From Available Income
                                  (AI)
------------------------------------------------------------------------
            If [AAI] AI is--                 Then the assessment is--
------------------------------------------------------------------------
Less than -$3,409......................  -$750
-$3,409 to $9,400......................  22% of [AAI] AI
$9,401 to $11,800......................  $2,068 + 25% of [AAI] AI over
                                          $9,400
$11,801 to $14,200.....................  $2,668 + 29% of [AAI] AI over
                                          $11,800
$14,201 to $16,600.....................  $3,364 + 34% of [AAI] AI over
                                          $14,200
$16,601 to $19,000.....................  $4,180 + 40% of [AAI] AI over
                                          $16,600
$19,001 or more........................  $5,140 + 47% of [AAI] AI over
                                          $19,000
------------------------------------------------------------------------

  (e) Computations in Case of Separation, Divorce, or Death.--
In the case of a student who is divorced or separated, or whose 
spouse has died, the spouse's income [and assets] shall not be 
considered in determining the family's available income [or 
assets].

SEC. 478. REGULATIONS; UPDATED TABLES.

  (a) Authority To Prescribe Regulations Restricted.--(1) 
Notwithstanding any other provision of law, the Secretary shall 
not have the authority to prescribe regulations to carry out 
this part except--
          (A) to prescribe updated tables or amounts, as the 
        case may be, in accordance with subsections (b) through 
        (h) of this section; or
          (B) to propose modifications in the need analysis 
        methodology required by this part.
  (2) Any regulation proposed by the Secretary that (A) updates 
tables or amounts, as the case may be, in a manner that does 
not comply with subsections (b) through (h) of this section, or 
(B) that proposes modifications under paragraph (1)(B) of this 
subsection, shall not be effective unless approved by joint 
resolution of the Congress by May 1 following the date such 
regulations are published in the Federal Register in accordance 
with section 482. If the Congress fails to approve such 
regulations by such May 1, the Secretary shall publish in the 
Federal Register in accordance with section 482 updated tables 
or amounts, as the case may be, for the applicable award year 
that are prescribed in accordance with subsections (b) through 
(h) of this section.

           *       *       *       *       *       *       *

  [(c) Adjusted Net Worth of a Farm or Business.--For each 
award year after award year 1993-1994, the Secretary shall 
publish in the Federal Register a revised table of adjusted net 
worth of a farm or business for purposes of sections 
475(d)(2)(C), 476(c)(2)(C), and 477(c)(2)(C). Such revised 
table shall be developed--
          [(1) by increasing each dollar amount that refers to 
        net worth of a farm or business by a percentage equal 
        to the estimated percentage increase in the Consumer 
        Price Index (as determined by the Secretary) between 
        December 1992 and the December next preceding the 
        beginning of such award year, and rounding the result 
        to the nearest $5,000; and
          [(2) by adjusting the dollar amounts ``$30,000'', 
        ``$105,000'', and ``$195,000'' to reflect the changes 
        made pursuant to paragraph (1).
  [(d) Education Savings and Asset Protection Allowance.--For 
each award year after award year 1993-1994, the Secretary shall 
publish in the Federal Register a revised table of allowances 
for the purpose of sections 475(d)(3), 476(c)(3), and 
477(c)(3). Such revised table shall be developed by determining 
the present value cost, rounded to the nearest $100, of an 
annuity that would provide, for each age cohort of 40 and 
above, a supplemental income at age 65 (adjusted for inflation) 
equal to the difference between the moderate family income (as 
most recently determined by the Bureau of Labor Statistics), 
and the current average social security retirement benefits. 
For each age cohort below 40, the allowance shall be computed 
by decreasing the allowance for age 40, as updated, by one-
fifteenth for each year of age below age 40 and rounding the 
result to the nearest $100. In making such determinations--
          [(1) inflation shall be presumed to be 6 percent per 
        year;
          [(2) the rate of return of an annuity shall be 
        presumed to be 8 percent; and
          [(3) the sales commission on an annuity shall be 
        presumed to be 6 percent.]
  (c) Asset Cap for Need-Based Aid.--For each award year after 
award year 2011-2012, the Secretary shall publish in the 
Federal Register a revised net asset cap for the purposes of 
section 471(b). Such revised cap shall be determined by 
increasing the dollar amount in such section by a percentage 
equal to the estimated percentage change in the Consumer Price 
Index (as determined by the Secretary) between December 2010 
and the December preceding the beginning of such award year, 
and rounding the result to the nearest $5.
  (e) Assessment Schedules and Rates.--For each award year 
after award year 1993-1994, the Secretary shall publish in the 
Federal Register a revised table of assessments from [adjusted] 
available income for the purpose of sections 475(e) and 477(d). 
Such revised table shall be developed--
          (1) by increasing each dollar amount that refers to 
        [adjusted] available income by a percentage equal to 
        the estimated percentage increase in the Consumer Price 
        Index (as determined by the Secretary) between December 
        1992 and the December next preceding the beginning of 
        such academic year, rounded to the nearest $100; and
          (2) by adjusting the other dollar amounts to reflect 
        the changes made pursuant to paragraph (1).

           *       *       *       *       *       *       *


SEC. 479A. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

  (a) * * *
  (b) Adjustments [to Assets] Taken Into Account.--A student 
financial aid administrator shall be considered to be making a 
necessary adjustment in accordance with subsection (a) if--
          (1) * * *

           *       *       *       *       *       *       *


SEC. 480. DEFINITIONS.

  As used in this part:
  (a) * * *

[Note: Paragraph (1) of subsection (b) reflects amendments made by this 
 bill to such paragraph as amended by the Higher Education Opportunity 
                    Act, effective on July 1, 2010.]

  (b) Untaxed Income and Benefits.--
          (1) The term ``untaxed income and benefits'' means--
                  [(A) child support received;
                  [(B) workman's compensation;
                  [(C) veteran's benefits such as death 
                pension, dependency, and indemnity 
                compensation, but excluding veterans' education 
                benefits as defined in subsection (c);]
                  [(D)] (A) interest on tax-free bonds;
                  [(E) housing, food, and other allowances 
                (excluding rent subsidies for low-income 
                housing) for military, clergy, and others 
                (including cash payments and cash value of 
                benefits), except that the value of on-base 
                military housing or the value of basic 
                allowance for housing determined under section 
                403(b) of title 37, United States Code, 
                received by the parents, in the case of a 
                dependent student, or the student or student's 
                spouse, in the case of an independent student, 
                shall be excluded;
                  [(F) cash support or any money paid on the 
                student`s behalf, except, for dependent 
                students, funds provided by the student's 
                parents;]
                  [(G)] (B) untaxed portion of pensions; and
                  [(H)] (C) payments to individual retirement 
                accounts and Keogh accounts excluded from 
                income for Federal income tax purposes[; and].
                  [(I) any other untaxed income and benefits, 
                such as Black Lung Benefits, Refugee 
                Assistance, or railroad retirement benefits, or 
                benefits received through participation in 
                employment and training activities under title 
                I of the Workforce Investment Act of 1998 (29 
                U.S.C. 2801 et seq.).]

           *       *       *       *       *       *       *

  (f) Assets.--(1) * * *
  (2) With respect to determinations of need under this title, 
other than for subpart 4 of part A, the term ``assets'' shall 
not include the net value of--
          (A) * * *
          (B) a family farm on which the family resides; [or]
          (C) a small business with not more than 100 full-time 
        or full-time equivalent employees (or any part of such 
        a small business) that is owned and controlled by the 
        family[.]; or
          (D) an employee pension benefit plan (as defined in 
        section 3(2) of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1002(2))).

           *       *       *       *       *       *       *


   PART G--GENERAL PROVISIONS RELATING TO STUDENT ASSISTANCE PROGRAMS

SEC. 483. FORMS AND REGULATIONS.

  (a)  * * *.--

           *       *       *       *       *       *       *

  (e) Early Application and Estimated Award Demonstration 
Program.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Early application and estimated award.--For all 
        dependent students selected for participation in the 
        demonstration program who submit a completed FAFSA, or, 
        as appropriate, an EZ FAFSA, two years prior to the 
        year such students plan to enroll in an institution of 
        higher education, the Secretary shall, not later than 
        one year prior to the year of such planned enrollment--
                  (A) provide each student who completes an 
                early application with an estimated 
                determination of such student's--
                          (i)  * * *
                          (ii) Federal Pell Grant award for the 
                        first such year, based on the maximum 
                        Federal Pell Grant award at the time of 
                        application; and

           *       *       *       *       *       *       *


SEC. 484. STUDENT ELIGIBILITY. .

  (a) * * *

           *       *       *       *       *       *       *

  (r) Suspension of Eligibility for Drug-Related Offenses.--
          [(1) In general.--A student who is convicted of any 
        offense under any Federal or State law involving the 
        possession or sale of a controlled substance for 
        conduct that occurred during a period of enrollment for 
        which the student was receiving any grant, loan, or 
        work assistance under this title shall not be eligible 
        to receive any grant, loan, or work assistance under 
        this title from the date of that conviction for the 
        period of time specified in the following table:

[If convicted of an offense involving: 
  The possession of   con-..............................................
  trolled substance:Ineligibility period is: ...........................
  First offense.....1 year .............................................
  Second offense....2 years ............................................
  Third offense.....Indefinite. ........................................
  The sale of a cont olled..............................................
  substance:........Ineligibility period is: ...........................
  First offense.....2 years ............................................
  Second offense....Indefinite.]........................................
          (1) In general.--A student who is convicted of any 
        offense under any Federal or State law involving the 
        sale of a controlled substance for conduct that 
        occurred during a period of enrollment for which the 
        student was receiving any grant, loan, or work 
        assistance under this title shall not be eligible to 
        receive any grant, loan, or work assistance under this 
        title from the date of that conviction for the period 
        of time specified in the following subparagraphs:
                  (A) For a first offense, the period of 
                ineligibility shall be 2 years.
                  (B) For a second offense, the period of 
                ineligibility shall be indefinite.

           *       *       *       *       *       *       *


SEC. 484B. INSTITUTIONAL REFUNDS.

  (a) * * *
  (b) Return of Title IV Program Funds.--
          (1) * * *
          (2) Responsibility of the student.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (F) Tuition relief for students called to 
                military service.--
                          (i) Waiver of repayment by students 
                        called to military service.--In 
                        addition to the waivers authorized by 
                        subparagraphs (D) and (E), the 
                        Secretary shall waive the amounts that 
                        students are required to return under 
                        this section if the withdrawals on 
                        which the returns are based are 
                        withdrawals necessitated by reason of 
                        service in the uniformed services.
                          (ii) Loan forgiveness authorized.--
                        Whenever a student's withdrawal from an 
                        institution of higher education is 
                        necessitated by reason of service in 
                        the uniformed services, the Secretary 
                        shall, with respect to the payment 
                        period or period of enrollment for 
                        which such student did not receive 
                        academic credit as a result of such 
                        withdrawal, carry out a program--
                                  (I) through the holder of the 
                                loan, to assume the obligation 
                                to repay--
                                          (aa) the outstanding 
                                        principle and accrued 
                                        interest on any loan 
                                        assistance awarded to 
                                        the student under part 
                                        B (including to a 
                                        parent on behalf of the 
                                        student under section 
                                        428B) for such payment 
                                        period or period of 
                                        enrollment; minus
                                          (bb) any amount of 
                                        such loan assistance 
                                        returned by the 
                                        institution in 
                                        accordance with 
                                        paragraph (1) of this 
                                        subsection for such 
                                        payment period or 
                                        period of enrollment; 
                                        and
                                  (II) to cancel--
                                          (aa) the outstanding 
                                        principle and accrued 
                                        interest on the loan 
                                        assistance awarded to 
                                        the student under part 
                                        D or E (including a 
                                        Federal Direct PLUS 
                                        loan awarded to a 
                                        parent on behalf of the 
                                        student) for such 
                                        payment period or 
                                        period of enrollment; 
                                        minus
                                          (bb) any amount of 
                                        such loan assistance 
                                        returned by the 
                                        institution in 
                                        accordance with 
                                        paragraph (1) of this 
                                        subsection for such 
                                        payment period or 
                                        period of enrollment.
                          (iii) Reimbursement for cancellation 
                        of perkins loans.--The Secretary shall 
                        pay to each institution for each fiscal 
                        year an amount equal to the aggregate 
                        of the amounts of Federal Perkins loans 
                        in such institutions's student loan 
                        fund which are cancelled pursuant to 
                        clause (iii)(II) for such fiscal year, 
                        minus an amount equal to the aggregate 
                        of the amounts of any such loans so 
                        canceled which were made from Federal 
                        capital contributions to its student 
                        loan fund provided by the Secretary 
                        under section 468. None of the funds 
                        appropriated pursuant to section 461(b) 
                        shall be available for payments 
                        pursuant to this paragraph. To the 
                        extent feasible, the Secretary shall 
                        pay the amounts for which any 
                        institution qualifies under this 
                        paragraph not later than 3 months after 
                        the institution files an institutional 
                        application for campus-based funds.
                          (iv) Loan eligibility and limits for 
                        students.--Any amounts that are 
                        returned by an institution in 
                        accordance with paragraph (1), or 
                        forgiven or waived by the Secretary 
                        under this subparagraph, with respect 
                        to a payment period or period of 
                        enrollment for which a student did not 
                        receive academic credit as a result of 
                        withdrawal necessitated by reason of 
                        service in the uniformed services, 
                        shall not be included in the 
                        calculation of the student's annual or 
                        aggregate loan limits for assistance 
                        under this title, or otherwise affect 
                        the student's eligibility for grants or 
                        loans under this title.
                          (v) Definition.--In this 
                        subparagraph, the term ``service in the 
                        uniformed services'' has the meaning 
                        given such term in section 484C(a).

           *       *       *       *       *       *       *


SEC. 485E. EARLY AWARENESS OF FINANCIAL AID ELIGIBILITY.

  (a) * * *
  (b) Communication of Availability of Aid and Aid 
Eligibility.--
          (1) Students who receive benefits.--The Secretary 
        shall--
                  (A) make special efforts to notify students 
                who receive or are eligible to receive benefits 
                under a Federal means-tested benefit program 
                (including the supplemental nutrition 
                assistance program under the Food and Nutrition 
                Act of 2008 (7 U.S.C. 2011 et seq.)), or 
                another such benefit program as determined by 
                the Secretary, [of such students' potential 
                eligibility for a maximum Federal Pell Grant 
                under subpart 1 of part A] of such students' 
                potential eligibility for the Federal Pell 
                Grant amount, determined under section 
                401(b)(2)(A), for which the student would be 
                eligible; and

           *       *       *       *       *       *       *


SEC. 487. PROGRAM PARTICIPATION AGREEMENTS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Implementation of Non-Title IV Revenue Requirement.--
          (1) Calculation.--In making calculations under 
        subsection (a)(24), a proprietary institution of higher 
        education shall--
                  (A) * * *

           *       *       *       *       *       *       *

                  (E) in the case of each student who receives 
                a loan on or after July 1, 2008, and prior to 
                [July 1, 2011] July 1, 2012, that is authorized 
                under section 428H or that is a Federal Direct 
                Unsubsidized Stafford Loan, treat as revenue 
                received by the institution from sources other 
                than funds received under this title, the 
                amount by which the disbursement of such loan 
                received by the institution exceeds the limit 
                on such loan in effect on the day before the 
                date of enactment of the Ensuring Continued 
                Access to Student Loans Act of 2008; and
                  (F) exclude from revenues--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) for the period beginning July 
                        1, 2010, and ending July 1, 2012, the 
                        amount of funds the institution 
                        received from loans disbursed under 
                        section 455A;
                          [(iii)] (iv) the amount of funds 
                        provided by the institution as matching 
                        funds for a program under this title;
                          [(iv)] (v) the amount of funds 
                        provided by the institution for a 
                        program under this title that are 
                        required to be refunded or returned; 
                        and
                          [(v)] (vi) the amount charged for 
                        books, supplies, and equipment, unless 
                        the institution includes that amount as 
                        tuition, fees, or other institutional 
                        charges.
          (2) Sanctions.--
                  (A) Ineligibility.--A proprietary institution 
                of higher education that fails to meet a 
                requirement of subsection (a)(24) for [two 
                consecutive] three consecutive institutional 
                fiscal years shall be ineligible to participate 
                in the programs authorized by this title for a 
                period of not less than two institutional 
                fiscal years. To regain eligibility to 
                participate in the programs authorized by this 
                title, a proprietary institution of higher 
                education shall demonstrate compliance with all 
                eligibility and certification requirements 
                under section 498 for a minimum of two 
                institutional fiscal years after the 
                institutional fiscal year in which the 
                institution became ineligible.
                  (B) Additional enforcement.--In addition to 
                such other means of enforcing the requirements 
                of this title as may be available to the 
                Secretary, if a proprietary institution of 
                higher education fails to meet a requirement of 
                subsection (a)(24) for [any institutional 
                fiscal year] two consecutive institutional 
                fiscal years, then the institution's 
                eligibility to participate in the programs 
                authorized by this title becomes provisional 
                for [the two institutional fiscal years after 
                the institutional fiscal year] the 
                institutional fiscal year after the second 
                consecutive institutional fiscal year in which 
                the institution failed to meet the requirement 
                of subsection (a)(24), except that such 
                provisional eligibility shall terminate--
                          (i) * * *
                          (ii) in the case that the Secretary 
                        determines that the institution failed 
                        to meet a requirement of subsection 
                        (a)(24) for [two consecutive] three 
                        consecutive institutional fiscal years, 
                        on the date the institution is 
                        determined ineligible in accordance 
                        with subparagraph (A).

           *       *       *       *       *       *       *


SEC. 489. ADMINISTRATIVE EXPENSES.

  (a) Amount of Payments.--From the sums appropriated for any 
fiscal year for the purpose of the program authorized under 
subpart 1 of part A, the Secretary shall reserve such sums as 
may be necessary to pay to each institution with which he has 
an agreement under section 487, an amount equal to $5 for each 
student at that institution who receives assistance under 
subpart 1 of part A. In addition, an institution which has 
entered into an agreement with the Secretary under subpart 3 of 
part A or part C, of this title [or under part E of this title] 
shall be entitled for each fiscal year which such institution 
disburses funds to eligible students under any such part to a 
payment for the purpose set forth in subsection (b). The 
payment for a fiscal year shall be payable from each such 
allotment by payment in accordance with regulations of the 
Secretary and shall be equal to 5 percent of the institution's 
first $2,750,000 of expenditures plus 4 percent of the 
institution's expenditures greater than $2,750,000 and less 
than $5,500,000, plus 3 percent of the institution's 
expenditures in excess of $5,500,000 during the fiscal year 
from the sum of its grants to students under subpart 3 of part 
A, and its expenditures during such fiscal year under part C 
for [compensation of students, and the principal amount of 
loans made during such fiscal year from its student loan fund 
established under part E, excluding the principal amount of any 
such loans which the institution has referred under section 
463(a)(4)(B).] compensation of students. In addition, the 
Secretary shall provide for payment to each institution of 
higher education an amount equal to 100 percent of the costs 
incurred by the institution in implementing and operating the 
immigration status verification system under section 484(g).

           *       *       *       *       *       *       *


TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

           *       *       *       *       *       *       *


            [PART E--COLLEGE ACCESS CHALLENGE GRANT PROGRAM]

         PART E--COLLEGE ACCESS AND COMPLETION INNOVATION FUND

SEC. 780. PURPOSES.

  The purposes of this part are--
          (1) to promote innovation in postsecondary education 
        practices and policies by institutions of higher 
        education, States, and nonprofit organizations to 
        improve student success, completion, and post-
        completion employment, particularly for students from 
        groups that are underrepresented in postsecondary 
        education; and
          (2) to assist States in developing longitudinal data 
        systems, common metrics, and reporting systems to 
        enhance the quality and availability of information 
        about student success, completion, and post-completion 
        employment.

SEC. 781. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.

  [(a) Authorization and Appropriation.--There are authorized 
to be appropriated, and there are appropriated, to carry out 
this section $66,000,000 for each of the fiscal years 2008 and 
2009. In addition to the amount authorized and appropriated 
under the preceding sentence, there are authorized to be 
appropriated to carry out this section such sums as may be 
necessary for fiscal year 2009 and each of the five succeeding 
fiscal years.]
  (a) Authorization and Appropriation.--
          (1) In general.--There are authorized to be 
        appropriated, and there are appropriated, to carry out 
        this part (in addition to any other amounts 
        appropriated to carry out this part and out of any 
        money in the Treasury not otherwise appropriated), 
        $600,000,000 for each of the fiscal years 2010 through 
        2014.
          (2) Allocations.--Of the amount appropriated for any 
        fiscal year under paragraph (1)--
                  (A) 25 percent shall be made available to 
                carry out section 781;
                  (B) 50 percent shall be made available to 
                carry out section 782;
                  (C) 23 percent shall be made available to 
                carry out section 783; and
                  (D) 2 percent shall be made available to 
                carry out section 784.

           *       *       *       *       *       *       *


SEC. 782. STATE INNOVATION COMPLETION GRANTS.

  (a) Program Authorization.--From the amount appropriated 
under section 781(a)(2)(B) to carry out this section, the 
Secretary shall award grants to States on a competitive basis 
to promote student persistence in, and completion of, 
postsecondary education.
  (b) Federal Share; Non-Federal Share.--
          (1) Federal share.--The amount of the Federal share 
        under this section for a fiscal year shall be equal to 
        \2/3\ of the costs of the activities and services 
        described in subsection (d)(1) that are carried out 
        under the grant.
          (2) Non-federal share.--The amount of the non-Federal 
        share under this section shall be equal to \1/3\ of the 
        costs of the activities and services described in 
        subsection (d)(1). The non-Federal share may be in cash 
        or in kind, and may be provided from State resources, 
        contributions from private organizations, or both.
          (3) Supplement, not supplant.--The Federal and non-
        Federal shares required by this paragraph shall be used 
        to supplement, and not supplant, State and private 
        resources that would otherwise be expended to carry out 
        activities and services to promote student persistence 
        in and completion of postsecondary education.
  (c) Application and Selection.--
          (1) Application requirements.--For each fiscal year 
        for which a State desires to receive a grant under this 
        section, the State agency with jurisdiction over higher 
        education, or another agency designated by the Governor 
        or chief executive of the State to administer the grant 
        program under this section, shall submit an application 
        to the Secretary at such time, in such manner, and 
        containing such information as the Secretary may 
        require. Such application shall include--
                  (A) a description of the State's capacity to 
                administer the grant under this section;
                  (B) a description of the State's plans for 
                using the grant funds for activities described 
                in subsection (d)(1), including plans for how 
                the State will make special efforts to provide 
                benefits to students in the State who are from 
                groups that are underrepresented in 
                postsecondary education;
                  (C) a description of how the State will 
                provide for the non-Federal share from State 
                resources, private contributions, or both;
                  (D) a description of--
                          (i) the administrative system that 
                        the State has in place to administer 
                        the activities and services described 
                        in subsection (d)(1); or
                          (ii) the plan to develop such 
                        administrative system;
                  (E) a description of the data system the 
                State has or will have in place to measure the 
                performance and progress toward the State's 
                goals included in the Access and Completion 
                Plan submitted, or that will be submitted, 
                under paragraph (2)(A); and
                  (F) the assurances under paragraph (2).
          (2) State assurances.--The assurances required in 
        paragraph (1)(F) shall include an assurance of each of 
        the following:
                  (A) That the State will submit, not later 
                than July 1, 2011, an Access and Completion 
                Plan to increase the State's rate of 
                persistence in and completion of postsecondary 
                education. Such plan shall include--
                          (i) the State's annual and long-term 
                        quantifiable goals with respect to--
                                  (I) the rates of 
                                postsecondary enrollment, 
                                persistence, and completion, 
                                disaggregated by income, race, 
                                ethnicity, sex, disability, and 
                                age of students;
                                  (II) closing gaps in 
                                enrollment, persistence, and 
                                completion rates for students 
                                from groups that are 
                                underrepresented in 
                                postsecondary education;
                                  (III) targeting education and 
                                training programs to address 
                                labor market needs in the 
                                State, as such needs are 
                                determined by the State, or the 
                                State in coordination with the 
                                State public employment 
                                service, the State workforce 
                                investment board, or industry 
                                or sector partnerships in the 
                                State; and
                                  (IV) improving coordination 
                                between two-year and four-year 
                                institutions of higher 
                                education in the State, 
                                including supporting 
                                comprehensive articulation 
                                agreements between such 
                                institutions; and
                          (ii) the State's plan to develop an 
                        interoperable statewide longitudinal 
                        data system that--
                                  (I) can be linked to other 
                                data systems, as applicable, 
                                including elementary and 
                                secondary education and 
                                workforce data systems;
                                  (II) will collect, maintain, 
                                disaggregate (by institution, 
                                income, race, ethnicity, sex, 
                                disability, and age of 
                                students), and analyze 
                                postsecondary education and 
                                workforce information, 
                                including--
                                          (aa) postsecondary 
                                        education enrollment, 
                                        persistence, and 
                                        completion information;
                                          (bb) post-completion 
                                        employment outcomes of 
                                        students who enrolled 
                                        in postsecondary 
                                        programs and training 
                                        programs offered by 
                                        eligible training 
                                        providers under the 
                                        Workforce Investment 
                                        Act of 1998 (29 U.S.C. 
                                        2801 et seq.);
                                          (cc) postsecondary 
                                        education and 
                                        employment outcomes of 
                                        students who move out 
                                        of the State; and
                                          (dd) postsecondary 
                                        instructional workforce 
                                        information; and
                                  (III) makes the information 
                                described in subclause (I) 
                                available to the general public 
                                in a manner that is transparent 
                                and user-friendly.
                  (B) That the State has a comprehensive 
                planning or policy formulation process with 
                respect to increasing postsecondary enrollment, 
                persistence, and completion that--
                          (i) encourages coordination between 
                        the State administration of grants 
                        under this section and similar State 
                        programs;
                          (ii) encourages State policies that 
                        are designed to improve rates of 
                        enrollment and persistence in, and 
                        completion of, postsecondary education 
                        for all categories of institutions of 
                        higher education described in section 
                        132(d) in the State;
                          (iii) considers the postsecondary 
                        education needs of students from groups 
                        that are underrepresented in 
                        postsecondary education;
                          (iv) considers the resources of 
                        public and private institutions of 
                        higher education, organizations, and 
                        agencies within the State that are 
                        capable of providing access to 
                        postsecondary education opportunities 
                        within the State; and
                          (v) provides for direct, equitable, 
                        and active participation in the 
                        comprehensive planning or policy 
                        formulation process or processes, 
                        through membership on State planning 
                        commissions, State advisory councils, 
                        or other State entities established by 
                        the State and consistent with State 
                        law, by representatives of--
                                  (I) institutions of higher 
                                education, including at least 
                                one member from a junior or 
                                community college (as defined 
                                in section 312(f));
                                  (II) students;
                                  (III) other providers of 
                                postsecondary education 
                                services (including 
                                organizations providing access 
                                to such services);
                                  (IV) the general public in 
                                the State; and
                                  (V) postsecondary education 
                                faculty members, including at 
                                least one faculty member whose 
                                primary responsibilities are 
                                teaching and scholarship.
                  (C) That the State will incorporate policies 
                and practices that, through the activities 
                funded under this section, are determined to be 
                effective in improving rates of postsecondary 
                education enrollment, persistence, and 
                completion into the future postsecondary 
                education policies and practices of the State 
                to ensure that the benefits achieved through 
                the activities funded under this section 
                continue beyond the period of the grant.
                  (D) That the State will participate in the 
                evaluation required under section 784.
          (3) Subgrants to nonprofit organizations.--A State 
        receiving a payment under this section may elect to 
        make a subgrant to one or more nonprofit organizations 
        in the State, including agencies with agreements with 
        the Secretary under subsections (b) and (c) of section 
        428 on the date of the enactment of the Student Aid and 
        Fiscal Responsibility Act of 2009, or a partnership of 
        such organizations, to carry out activities and 
        services described in subsection (d)(1), if the 
        nonprofit organization or partnership--
                  (A) was in existence on the day before the 
                date of the enactment of the Student Aid and 
                Fiscal Responsibility Act of 2009; and
                  (B) as of such day, was participating in 
                activities and services related to promoting 
                persistence in, and completion of, 
                postsecondary education, such as the activities 
                and services described in subsection (d)(1).
          (4) Priority.--In awarding grants under this section, 
        the Secretary shall give priority to States that enter 
        into a partnership with one of the following entities 
        to carry out the activities and services described in 
        subsection (d)(1):
                  (A) A philanthropic organization, as such 
                term is defined in section 781(i)(1).
                  (B) An agency with an agreement with the 
                Secretary under subsections (b) and (c) of 
                section 428 on the date of the enactment of 
                Student Aid and Fiscal Responsibility Act of 
                2009.
  (d) Uses of Funds.--
          (1) Authorized uses.--A State receiving a grant under 
        this section shall use the grant funds to--
                  (A) provide programs in such State that 
                increase persistence in, and completion of, 
                postsecondary education, which may include--
                          (i) assisting institutions of higher 
                        education in providing financial 
                        literacy, education, and counseling to 
                        enrolled students;
                          (ii) assisting students enrolled in 
                        an institution of higher education to 
                        reduce the amount of loan debt incurred 
                        by such students;
                          (iii) providing grants to students 
                        described in section 415A(a)(1), in 
                        accordance with the terms of that 
                        section; and
                          (iv) carrying out the activities 
                        described in section 415E(a); and
                  (B) support the development and 
                implementation of a statewide longitudinal data 
                system, as described in subsection 
                (c)(2)(A)(ii).
          (2) Prohibited uses.--Funds made available under this 
        section shall not be used to promote any lender's 
        loans.
          (3) Restrictions on use of funds.--A State--
                  (A) shall use not less than \1/3\ of the sum 
                of the Federal and non-Federal share used for 
                paragraph (1)(A) on activities that benefit 
                students enrolled in junior or community 
                colleges (as defined in section 312(f)), two-
                year public institutions, or two-year programs 
                of instruction at four-year public 
                institutions;
                  (B) may use not more than 10 percent of the 
                sum of the Federal and non-Federal share under 
                this section for activities described in 
                paragraph (1)(B); and
                  (C) may use not more than 6 percent of the 
                sum of the Federal and non-Federal share under 
                this section for administrative purposes 
                relating to the grant under this section.
  (e) Annual Report.--Each State receiving a grant under this 
section shall submit to the Secretary an annual report on--
          (1) the activities and services described in 
        subsection (d)(1) that are carried out with such grant;
          (2) the effectiveness of such activities and services 
        in increasing postsecondary persistence and completion, 
        as determined by measurable progress in achieving the 
        State's goals for persistence and completion described 
        in the Access and Completion Plan submitted by the 
        State under subsection (c)(2)(A), if such plan has been 
        submitted; and
          (3) any other information or assessments the 
        Secretary may require.
  (f) Definitions.--In this section:
          (1) Industry or sector partnership.--The term 
        ``industry or sector partnership'' means a workforce 
        collaborative that organizes key stakeholders in a 
        targeted industry cluster into a working group that 
        focuses on the human capital needs of a targeted 
        industry cluster and that includes, at the appropriate 
        stage of development of the partnership--
                  (A) representatives of multiple firms or 
                employers (including workers) in a targeted 
                industry cluster, including small- and medium-
                sized employers when practicable;
                  (B) 1 or more representatives of State labor 
                organizations, central labor coalitions, or 
                other labor organizations;
                  (C) 1 or more representatives of local 
                workforce investment boards;
                  (D) 1 or more representatives of 
                postsecondary educational institutions or other 
                training providers; and
                  (E) 1 or more representatives of State 
                workforce agencies or other entities providing 
                employment services.
          (2) State public employment service.--The term 
        ``State public employment service'' has the meaning 
        given such term in section 502(a)(9) of the Student Aid 
        and Fiscal Responsibility Act of 2009.
          (3) State workforce investment board; local workforce 
        investment board.--The terms ``State workforce 
        investment board'' and ``local workforce investment 
        board'' have the meanings given such terms in section 
        502(a)(10) of the Student Aid and Fiscal Responsibility 
        Act of 2009.

SEC. 783. INNOVATION IN COLLEGE ACCESS AND COMPLETION NATIONAL 
                    ACTIVITIES.

  (a) Programs Authorized.--From the amount appropriated under 
section 781(a)(2)(C) to carry out this section, the Secretary 
shall award grants, on a competitive basis, to eligible 
entities in accordance with this section to conduct innovative 
programs that advance knowledge about, and adoption of, 
policies and practices that increase the number of individuals 
with postsecondary degrees or certificates.
  (b) Eligible Entities.--The Secretary is authorized to award 
grants under subsection (a) to--
          (1) institutions of higher education;
          (2) States;
          (3) nonprofit organizations with demonstrated 
        experience in the operation of programs to increase 
        postsecondary completion;
          (4) philanthropic organizations (as such term is 
        defined in section 781(i)(1));
          (5) entities receiving a grant under chapter 1 of 
        subpart 2 of part A of title IV; and
          (6) consortia of any of the entities described in 
        paragraphs (1) through (5).
  (c) Innovation Grants.--
          (1) Minimum award.--A grant awarded under subsection 
        (a) shall be not less than $1,000,000.
          (2) Grants uses.--The Secretary's authority to award 
        grants under subsection (a) includes--
                  (A) the authority to award to an eligible 
                entity a grant in an amount equal to all or 
                part of the amount of funds received by such 
                entity from philanthropic organizations (as 
                such term is defined in section 781(i)(1)) to 
                conduct innovative programs that advance 
                knowledge about, and adoption of, policies and 
                practices that increase the number of 
                individuals with postsecondary degrees or 
                certificates; and
                  (B) the authority to award an eligible entity 
                a grant to develop 2-year programs that provide 
                supplemental grant or loan benefits to students 
                that--
                          (i) are designed to improve student 
                        outcomes, including degree completion, 
                        graduation without student loan debt, 
                        and post-completion employment;
                          (ii) are in addition to the student 
                        financial aid available under title IV 
                        of this Act; and
                          (iii) do not result in the reduction 
                        of the amount of that aid or any other 
                        student financial aid for which a 
                        student is otherwise eligible under 
                        Federal law.
          (3) Application.--To be eligible to receive a grant 
        under subsection (a), an eligible entity shall submit 
        an application at such time, in such manner, and 
        containing such information as the Secretary shall 
        require.
          (4) Priorities.--In awarding grants under subsection 
        (a), the Secretary shall give priority to applications 
        that--
                  (A) are from an eligible entity with 
                demonstrated experience in serving students 
                from groups that are underrepresented in 
                postsecondary education, including institutions 
                of higher education that are eligible for 
                assistance under title III or V, or are from a 
                consortium that includes an eligible entity 
                with such experience;
                  (B) are from an eligible entity that is a 
                public institution of higher education that 
                does not predominantly provide an educational 
                program for which it awards a bachelor's degree 
                (or an equivalent degree), or from a consortium 
                that includes at least one such institution;
                  (C) include activities to increase degree or 
                certificate completion in the fields of 
                science, technology, engineering, and 
                mathematics, including preparation for, or 
                entry into, postbaccaluareate study, especially 
                for women and other groups of students who are 
                underrepresented in such fields;
                  (D) are from an eligible entity that is a 
                philanthropic organization with the primary 
                purpose of providing scholarships and support 
                services to students from groups that are 
                underrepresented in postsecondary education, or 
                are from a consortium that includes such an 
                organization; or
                  (E) are from an eligible entity that 
                encourages partnerships between institutions of 
                higher education with high degree-completion 
                rates and institutions of higher education with 
                low degree-completion rates from the same 
                category of institutions described in section 
                132(d) to facilitate the sharing of information 
                relating to, and the implementation of, best 
                practices for increasing postsecondary 
                completion.
          (5) Technical assistance.--The Secretary may reserve 
        up to $5,000,000 per year to award grants and contracts 
        to provide technical assistance to eligible entities 
        receiving a grant under subsection (a), including 
        technical assistance on the evaluation conducted in 
        accordance with section 784 and establishing networks 
        of eligible entities receiving grants under such 
        subsection.
  (d) Reports.--
          (1) Annual reports by entities.--Each eligible entity 
        receiving a grant under subsection (a) shall submit to 
        the Secretary an annual report on--
                  (A) the effectiveness of the program carried 
                out with such grant in increasing postsecondary 
                completion, as determined by measurable 
                progress in achieving the goals of the program, 
                as described in the application for such grant; 
                and
                  (B) any other information or assessments the 
                Secretary may require.
          (2) Annual report to congress.--The Secretary shall 
        submit to the authorizing committees an annual report 
        on grants awarded under subsection (a), including--
                  (A) the amount awarded to each eligible 
                entity receiving a grant under such subsection; 
                and
                  (B) a description of the activities conducted 
                by each such eligible entity.

SEC. 784. EVALUATION.

  From the amount appropriated under section 781(a)(2)(D), the 
Director of the Institute of Education Sciences shall evaluate 
the programs funded under this part. Not later than January 30, 
2016, the Director shall issue a final report on such 
evaluation to the authorizing committees and the Secretary, and 
shall make such report available to the public.

SEC. 785. VETERANS RESOURCE OFFICER GRANTS.

  (a) Program Authorized.--The Secretary shall award grants, on 
a competitive basis, to eligible institutions of higher 
education to hire a Veterans Resource Officer to increase the 
college completion rates for veterans enrolled at such 
institutions.
  (b) Definitions.--In this section:
          (1) Eligible institution of higher education.--The 
        term ``eligible institution of higher education'' means 
        an institution of higher education that has an 
        enrollment of at least 100 full-time equivalent 
        students who are veterans.
          (2) Full-time equivalent students.--The term ``full-
        time equivalent students'' has the meaning given such 
        term in section 312(e).
          (3) Veteran.--The term ``veteran'' has the meaning 
        give such term in section 480(c).
  (c) Application.--To be eligible to receive a grant under 
this section, an eligible institution of higher education shall 
submit an application at such time, in such manner, and 
containing such information as the Secretary shall require.
  (d) Uses of Funds.--
          (1) In general.--An eligible institution of higher 
        education receiving a grant under this section shall 
        use such grant to hire 1 or 2 Veterans Resource 
        Officers (in the case of an institution that has an 
        enrollment of at least 200 full-time equivalent 
        students who are veterans) to serve in the office of 
        campus programs, or a similar office, at such 
        institution and carry out the activities described in 
        paragraph (2).
          (2) Activities.--A Veterans Resource Officer shall 
        carry out activities at an eligible institution of 
        higher education to help increase the completion rates 
        for veterans enrolled at such institution, which shall 
        include the following activities:
                  (A) Serving as a link between student 
                veterans and the staff of the institution.
                  (B) Serving as a link between student 
                veterans and local facilities of the Department 
                of Veterans Affairs.
                  (C) Organizing and advising student veterans 
                organization.
                  (D) Organizing veterans oriented group 
                functions and events.
                  (E) Maintaining newsletters and listserves to 
                distribute news and information to all student 
                veterans.
                  (F) Organizing new student veterans campus 
                orientation.
                  (G) Ensuring that the Department of Veterans 
                Affairs certifying official at such institution 
                is properly trained.
          (3) Priority.--To the extent practicable, each 
        institution described in paragraph (1) shall give 
        priority to hiring a veteran to serve as a Veterans 
        Resource Officer.
  (e) Authorization of Appropriations.--There are authorized to 
be appropriated to carry out this section such sums as may be 
necessary for fiscal year 2010 and each succeeding fiscal year.

TITLE VIII--ADDITIONAL PROGRAMS

           *       *       *       *       *       *       *


   PART Y--EARLY FEDERAL PELL GRANT COMMITMENT DEMONSTRATION PROGRAM

SEC. 894. EARLY FEDERAL PELL GRANT COMMITMENT DEMONSTRATION PROGRAM.

  (a) * * *

           *       *       *       *       *       *       *

  (f) Targeted Information Campaign.--
          (1) * * *
          (2) Plan.--Each State educational agency receiving a 
        grant under this section shall include in the 
        application submitted under subsection (c) a written 
        plan for the State educational agency proposed targeted 
        information campaign. The plan shall include the 
        following:
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) Information.--The annual provision by the 
                State educational agency to all students and 
                families participating in the demonstration 
                project of information regarding--
                          (i) * * *
                          (ii) Federal Pell Grants, including--
                                  (I) [the maximum Federal Pell 
                                Grant for each award year] the 
                                Federal Pell Grant amount, 
                                determined under section 
                                401(b)(2)(A), for which a 
                                student may be eligible for 
                                each award year;

           *       *       *       *       *       *       *

                              ----------                              


                 COLLEGE COST REDUCTION AND ACCESS ACT



           *       *       *       *       *       *       *
TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM

           *       *       *       *       *       *       *


[SEC. 303. REDUCTION OF LENDER INSURANCE PERCENTAGE.

  [(a) Amendment.--Subparagraph (G) of section 428(b)(1) (20 
U.S.C. 1078(b)(1)(G)) is amended to read as follows:
                  [``(G) insures 95 percent of the unpaid 
                principal of loans insured under the program, 
                except that--
                          [``(i) such program shall insure 100 
                        percent of the unpaid principal of 
                        loans made with funds advanced pursuant 
                        to section 428(j) or 439(q); and
                          [``(ii) notwithstanding the preceding 
                        provisions of this subparagraph, such 
                        program shall insure 100 percent of the 
                        unpaid principal amount of exempt 
                        claims as defined in subsection 
                        (c)(1)(G);'.
  [(b) Effective Date.--The amendment made by subsection (a) 
shall be effective on October 1, 2012, and shall apply with 
respect to loans made on or after such date.]

           *       *       *       *       *       *       *


                     XVII. Committee Correspondence

    None.

                 XVIII. Minority and Supplemental Views

                              ----------                              


   SUPPLEMENTAL VIEWS OF REPRESENTATIVES PHIL HARE AND DAVID LOEBSACK

    We support the majority views. In particular, we agree that 
our nation's community colleges are essential to driving 
economic recovery. We write separately to ensure this 
legislation provides the necessary support to all our nation's 
colleges, especially those located in remote areas of the 
country, in order to fully address the economic crisis. We 
believe the focus of the competitive grant programs authorized 
in Title V for community college reform should be to prepare 
individuals for skilled occupations that are in high-demand in 
their local area or region. Therefore, we would like to clarify 
that the Committee intends for ``high-demand industries'' to be 
defined and determined in accordance with the workforce needs 
of local and regional economies, which may differ within the 
state or between states. In order to slow down and eventually 
stop the brain drain prevalent in rural America and many other 
areas of the country, the objective is to train and educate 
individuals for skilled professions of need within their 
communities, rather than provide educational opportunities for 
individuals to then seek jobs elsewhere.
    We also agree that the focus of the grant programs should 
be on moving individuals into skilled occupations with family-
supporting wages. However, the definition of ``high-wage'' also 
varies between regions and we do not want to inadvertently 
restrict the colleges located in areas with low to moderate 
industry from accessing this grant funding. With one-quarter of 
all Americans living in rural communities, rural America 
presents the most promising area of economic growth in the 
country.
    In addition, we recognize that individuals with lower 
skills may need additional time to achieve skilled or ``high-
wage'' jobs. To address this we believe that when considering 
high-wage or skilled occupations, the Secretary and the states 
must also look at occupations that may be reasonably expected 
to lead to such high-wages or skilled occupations.
    Finally, in order to better ensure that the community 
colleges located in more remote areas of the country have the 
same access to federal funds as schools in urban centers, it is 
important that we have the data to understand where the money 
is being spent. Therefore, it is the Committee's intention for 
the Institute of Education Sciences (IES) in its evaluation of 
all the grantees who receive monies for community college 
reform to indicate whether the grantee is located in either a 
rural or urban area. The data collected from this evaluation 
would be invaluable to understanding where the grant money is 
going, what geographic regions are impacted and how we can 
better distribute resources or structure programs in the future 
to ensure that all our nation's students have access to the 
same educational and workforce opportunities.

                                   Phil Hare.
                                   Dave Loebsack.

                             MINORITY VIEWS

    Committee Republicans are committed to maintaining the 
successful and robust public-private partnership that has 
provided low-cost and easily accessible college loans to 
students well for over 40 years. We have been, and remain, 
supportive of efforts to increase the maximum Pell Grant award 
and simplify the Free Application for Federal Student Aid 
(FAFSA). However, we believe this bill takes the wrong approach 
to accomplish these goals. H.R. 3221, the so-called Student Aid 
and Fiscal Responsibility Act of 2009, turns sharply in the 
wrong direction by eliminating the Federal Family Education 
Loan (FFEL) program, spending less than half of the purported 
``savings'' on increases to Pell Grants, and raiding student 
aid to fund pet projects like school construction, early 
childhood programs, and new initiatives for community colleges.

               ANOTHER TAKEOVER BY THE FEDERAL GOVERNMENT

    Committee Republicans believe H.R. 3221 represents another 
attempt by President Obama and Congressional Democrats to 
orchestrate a federal government takeover of a private 
industry. The federal government has already succeeded in 
taking ownership of the automobile industry and controlling the 
actions of the financial industry. With this bill, the 
Department of Education, an agency intended to ensure that 
every child has the opportunity to learn, will now become one 
of the country's largest banks--originating more than $100 
billion in federal student loans in the next few years.
    In justifying this latest government takeover, Democrats 
claim the FFEL program is on ``life support'' and therefore 
must be eliminated. However, it cannot be ignored that 
Democrats have been trying to eliminate this program since 
1993, when President Clinton put into place the Direct Loan 
program. What Committee Democrats refuse to acknowledge is that 
the FFEL program has been a stable source of private capital 
for more than 40 years. Private capital has temporarily dried 
up in the FFEL program, much like it has in the rest of the 
financial services sector. Yet student lending is the only 
sector of the financial services industry being targeted for a 
permanent government takeover.
    Last Congress, the Committee worked in a bipartisan manner 
to pass H.R. 5715, the Ensuring Continued Access to Student 
Loans Act (ECASLA). This is one of the only economic 
stabilization bills that is working and is proven to save the 
federal government money. In fact, according to the President's 
fiscal year 2010 budget, this program will save the federal 
government $6.7 billion in fiscal year 2010 alone. Under 
ECASLA, the FFEL program successfully originated approximately 
$70 billion in loans and every student who needed a loan 
received one during the 2008-2009 academic year. Congress has 
passed other bills to provide liquidity to the financial 
marketplace or help stimulate the economy. Those bills, 
however, are not proving to be as successful as ECASLA and, in 
most cases have simply driven the country deeper into debt.
    Committee Democrats also fail to mention that the Direct 
Loan program was once on ``life support.'' In 1997, the program 
collapsed and was unable to make consolidation loans to 
borrowers. At that time, Congress did not seek to end the 
program. Rather, Committee Republicans led the effort to pass 
emergency legislation to bail out the Direct Loan program to 
ensure that borrowers could receive consolidation loans.
    Committee Democrats also claim the private sector is dying 
because most student loans being originated in the FFEL program 
today are being made with federal capital using the authority 
provided to the Secretary of Education in ECASLA. At the same 
time, Committee Democrats claim their plan will maintain the 
program's public-private partnership by permitting limited 
participation of certain private sector entities. However, both 
of these claims are false when the facts are examined. Despite 
the global credit crunch, there continues to be robust 
participation by the private sector under the FFEL program. 
There are still more than 1,500 active lenders willing to make 
student loans, including local lenders like the Navy Federal 
Credit Union, University Federal Credit Union, and Banc First, 
and approximately 40 percent of total FFEL loan volume is still 
being made using private capital.
    There are also another 50 private and nonprofit loan 
servicers and more than 30 guaranty agencies that provide 
valuable services in their respective states and employ more 
than 30,000 private sector workers. By comparison, the U.S. 
Department of Education currently uses one servicer for the 
entire nation. While the Department recently announced that it 
would expand this contract to four servicers--a 400% increase 
from the monopoly that it was employing until recently--this 
move is a poor representation of the public-private enterprise 
that has been effective for both students and institutions. 
Even the few private sector participants that are able to 
maintain a limited role in student lending will not be able to 
use the creative, personalized approaches available today. They 
will simply be administering a one-size-fits-all approach 
dictated by the federal government where market competition and 
effective customer service is all but eliminated.

              FFEL IS BETTER FOR STUDENTS AND INSTITUTIONS

    Committee Republicans believe H.R. 3221 ignores the voices 
of the federal student loan consumers--the students who use the 
loans and the institutions that must administer the programs. 
Institutions have made their opinions known. When President 
Clinton first created the Direct Loan program in 1993, the 
federal government paid institutions a $10 fee for each loan, 
something that is classified as an ``illegal inducement'' under 
the FFEL program, and regularly pressured college presidents to 
join the DL program. Despite all of this pressure, the Direct 
Loan program only captured a total of 34 percent of loan volume 
at its peak in 1998. Since that time, loan volume has been 
around 20 percent. There has been a slight uptick in volume 
recently due to the global economic crisis that has affected 
every financial industry, including the student loan industry. 
However, even with the crisis and increased pressure from the 
Administration and Democrats in Congress, 4,400 schools, or 72 
percent, remain in the FFEL program.
    These schools will be forced out of FFEL under the 
Democrats' plan, regardless of their wishes or ability to make 
such a conversion. In fact, the Committee heard from 
institutions as recently as the day before the mark up when a 
group of 15 financial aid advisors released their ideas for an 
alternative proposal which focused on institutional choice of 
loan delivery system, customized default prevention and 
financial literacy programs, and uninterrupted loan access for 
students and parents while still avoiding significant 
administrative and financial burdens for institutions.\1\ When 
it comes to health care, Democrats like to promise that, ``. . 
. if you like your plan, you can keep it.'' It's too bad they 
don't feel the same way about student loan programs.
---------------------------------------------------------------------------
    \1\``Reforming Federal Student Aid Programs: Focused on the 
Students We Serve''
---------------------------------------------------------------------------
    The demands of students and institutions within the FFEL 
program have sparked fierce competition among loan providers 
and servicers. The competition has led to lower prices for 
students and institutions and innovation in loan delivery, 
processing, and servicing. The competition and innovation in 
the current FFEL program has also led to repayment incentives, 
interest rate reductions, fee reductions, loan forgiveness, and 
other financial benefits for students. Loan providers also 
offer broader benefits, such as college planning services, 
financial literacy education, default aversion, and FAFSA 
assistance, among other value-added services. The innovations 
generated by competition cannot be overlooked, even by the 
Department of Education, which has followed the private 
sector's lead and put in place many of these innovations to 
improve the Direct Loan program.
    Committee Republicans have heard from colleges and 
universities that the Direct Loan program puts additional 
administrative burdens on schools. Switching from the FFEL 
program to the DL program is not as easy as flipping a switch. 
Schools must ensure that their basic software can work with the 
DL system. Many schools have ``homegrown'' software that has 
been specifically developed to run the schools'' programs. 
These institutions will have to overhaul their software systems 
since that work will not be done by a software vendor. 
Institutions will also have to notify parents and students that 
they will have to sign new loan agreements and will have to 
answer questions about the new loan products. Some 
institutions, such as graduate schools, do not have access to 
the C.O.D. system that is used for loan origination, so that 
system will need to be added and staff will need to be trained. 
Finally, websites and all financial aid materials will need to 
be updated. This does not even take into account the number of 
staff from different departments that may need to stop their 
current tasks to help with the implementation or the projects 
currently underway at the institution that will have to be 
placed on hold to undergo the systems update necessary for the 
implementation of the Direct Loan program.
    In talking to institutions that have been in and out of the 
Direct Loan program, Committee Republicans have heard that it 
could take anywhere between four and nine months for a large 
institution, with plenty of staff, to be ready to issue its 
first loan. In addition, we have heard that the cost to 
institutions of switching programs was $240,000 at one 
institution and $400,000 at another institution. Dr. Harris 
Pastides, the President of University of South Carolina, 
provided more specific details in a letter he sent. He stated,

    Because of the type of software developed specifically for 
our current computer system, our transition process is not 
simply a matter of purchasing and rapidly installing an `off 
the shelf' program. Transition to direct lending would require 
an investment of well over a million dollars and a timeline for 
implementation exceeding one year. . . .  To add the cost of 
converting our system to direct lending without any help would 
be tantamount to another budget reduction for us at this time. 
Ironically, this would increase costs and negate much of the 
positive impact of potential increases to financial aid 
generated by proposed policy improvements. (Emphasis added).\2\
---------------------------------------------------------------------------
    \2\Letter to The Honorable Joe Wilson, May 26, 2009.

Gaining eligibility for the Direct Loan program and being ready 
to operate the program on an institution-wide basis are two 
very different issues that have been ignored by Congressional 
Democrats in their zeal to nationalize the student loan 
industry.

                      FFEL IS BETTER FOR TAXPAYERS

    Not only is the FFEL program the program of choice for 
students and institutions, it is good for taxpayers, too. 
Industry participants provide the capital up front and then 
share some of the risk in case the borrower defaults. Democrats 
may scoff that FFEL providers shoulder only three percent of 
the risk, but this figure represents billions of dollars that 
the taxpayer is not on the hook for this year. It's also a 
substantial amount when you realize that, under the Direct Loan 
program, the taxpayer is on the hook for the entire amount if a 
student does not repay his or her loan. The FFEL program also 
leverages about $70 billion in private capital each year when 
the financial markets are working properly. Committee Democrats 
want to borrow that $70 billion directly from China and our 
other creditors. Driving up the national debt has long-term 
consequences, whether it is reducing our nation's credit 
rating, inadvertently driving up costs, or putting us at the 
mercy of emerging super-powers on the other side of the globe.
    Committee Democrats claim that the FFEL program simply 
provides profits to banks and that the Direct Loan program 
saves the government money. However, the facts show that the 
federal government has been receiving subsidies from lenders 
for the past several years. Since April 2006, lenders have paid 
$3.2 billion to the federal government. Additionally, while 
there are a number of factors that lead to the scoring 
differences between the two federal student loan programs. One 
undeniable factor is that a significant percentage of the 
``savings'' in the Direct Loan program are due to the 
difference between the government's low cost of borrowing funds 
and the borrower interest rate. Committee Republicans have 
concerns about the federal government serving as a profit-
making bank at the expense of low- and middle-income students.
    Committee Democrats also claim they are making good on 
their promise to lower interest rates for students in H.R. 
3221, but the facts show otherwise. At the beginning of the 
110th Congress, Democrats rushed H.R. 5, the College Student 
Relief Act, through the House. That legislation would have 
reduced interest rates on student loans by half, from 6.8 
percent to 3.4 percent, for all students. Immediately after the 
bill was introduced, Committee Democrats started to dilute 
their promise by scaling back interest rates from 6.8 percent 
to 3.4 percent over five years, but then allowing the interest 
rate to jump back up to 6.8 percent in 2012. At the time, The 
Chronicle of Higher Education reported that Democrats intended 
to make the 3.4 percent interest rate permanent in the 
future.\3\ Additionally, Inside Higher Ed reported that, 
``Democratic staffers explained that budget rules and fiscal 
realities required that compromise. They also aid that they 
fully expected to find money in the intervening years to make 
the cut permanent.''\4\ The bill was never considered in the 
Senate.
---------------------------------------------------------------------------
    \3\Burd, Stephen. ``Democrats'' Plan to Slash the Interest Rate for 
Student Loans Draws Criticism,'' The Chronicle of Higher Education, 
January 5, 2007. The article stated, ``House Democrats briefly 
considered making the interest-rate cut for only one year. Then they 
hoped to make the cut permanent as part of legislation to renew the 
Higher Education Act, the law governing most federal student-aid 
programs, which they hope to consider later this year.''
    \4\Lederman, Doug. ``Political Maneuvering on Student Loans,'' 
Inside Higher Education, January 17, 2007
---------------------------------------------------------------------------
    Through the budget reconciliation process that year, 
Democrats were able to pass H.R. 2669, the College Cost 
Reduction and Access Act--legislation to, among other things, 
reduce student loan interest rates. But it was an even more 
diluted version of their original plan and only scaled back 
interest rates from 6.8 percent to 3.4 percent over four years 
for undergraduate students receiving subsidized loans. The 
legislation retained the 2012 cliff, resulting in the overall 
bill representing a negligible benefit for most students.
    H.R. 3221 officially breaks any promises that Committee 
Democrats made to students when they committed to permanently 
lower interest rates; moreover, it ensures the federal 
government continues to make a profit off of the unnecessarily 
high level of interest being paid by students in the Direct 
Loan program. The bill changes the interest rate in 2012 to a 
variable interest rate, capped at 6.8 percent. Under this 
formula, it is projected that students will see an increase in 
their interest rates in 2012 (5.21 percent) and 2013 (6.26 
percent) and will be right back up at the 6.8 percent cap in 
2014.

                      MASSIVE ENTITLEMENT SPENDING

    Committee Democrats are not only forcing students to spend 
more under their bill, but the American taxpayers will also 
bear the brunt of almost $80 billion in entitlement spending at 
a time when the national debt is more than $11 trillion and the 
deficit is estimated to reach $1.8 trillion this year alone. 
Historically, entitlement programs such as Social Security, 
Medicare, Medicaid, or programs under the Child Nutrition Act 
were created to provide income benefits to individual citizens. 
Instead of recognizing this important policy, this bill spends 
billions of dollars in mandatory, entitlement funding on the 
Committee Democrats' favored political and policy causes.
    While millions of families are struggling to pay their 
monthly bills and are thinking about which of their expenses to 
trim, Democrats in Congress are on a huge spending spree that 
will saddle our children and grandchildren with billions of 
debt. This bill, which Committee Democrats have portrayed as 
legislation to improve college access, actually contains: $6.6 
billion for school construction--both at the elementary and 
secondary and higher education levels; $8 billion for an 
``early learning'' initiative from birth to age 5; and $7 
billion for community colleges, which may undermine our current 
job training system. There are major flaws with what the 
Democrats are proposing on school construction, early childhood 
education, and community colleges, but the larger issue is how 
they are pushing these proposals. Committee Democrats are 
putting forward a proposal to raid student aid funds and spend 
those entitlement dollars to bolster the funding of programs 
which should be within the control of the House and Senate 
Appropriations Committees in Congress.

                               CONCLUSION

    Committee Republicans are concerned that Democrats are 
rushing through a risky scheme to take over the private student 
loan industry, regardless of the negative consequences for 
students and institutions. We are also very concerned that the 
proposed bill takes the ``savings'' that will result from 
eliminating the FFEL program and uses those funds to create a 
number of new programs that are not targeted toward individuals 
but rather toward favored political constituencies and causes. 
It is for these many reasons that Committee Republicans 
strongly oppose H.R. 3221 and urge Members of Congress to 
defeat this bill.

                                   John Kline.
                                   Buck McKeon.
                                   Pete Hoekstra.
                                   Mark Souder.
                                   Joe Wilson.
                                   Cathy McMorris Rodgers.
                                   Rob Bishop.
                                   Brett Guthrie.
                                   Bill Cassidy.
                                   Tom McClintock.
                                   Duncan Hunter.
                                   David P. Roe.
                                   Glenn G.T. Thompson.