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HR 2669 .R.2669
EAS
One Hundred Tenth Congress
I
of the
n the United StatesSenate of America
Begun and held at the United States,CityJuly 20 (legislative day, July 19), 2007. Resolved, That the bill from the House of Representatives (H.R. 2669) entitled `An Act tWashington on Thursday,
the fourth day of January, two thousand and seven
An Act
To provide for reconciliation pursuant to section 601 of the concurrent resolution on the budget for fiscal year 2008.
', do pass with Be it enacted by the followingAMENDMENT:Strike out all after the enacting clausSenate and insert:House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES.
(a) Short Title- This Act may be cited as the `Higher EducationCollege Cost Reduction and Access Act of 2007'.'.
(b) References- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).
(c) Effective Date- Except as otherwise expressly provided, the amendments made by this Act shall be effective on October 1, 2007.
TITLE I--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER EDUCATION
SEC. 101. TUITION SENSITIVITY.
(a) Amendment- Section 401(b) (20 U.S.C. 1070a(b)) is amended--
(1) by striking paragraph (3).; and
(2) by redesignating paragraphs (4) through (9) as paragraphs (3) through (8), respectively.
(b) Effective Date- The amendments made by subsection (a) shall be effective with respect to determinations of Federal Pell Grant amounts for award years beginning on or after July 1, 2007.
(c) Authorization and Appropriation of Funds- There is authorized to be appropriated, and there is appropriated, out of any money in the Treasury not otherwise appropriated, for the Department of Education to carry out the amendment made by subsection (a), $511,000,000 for fiscal year 2008.
SEC. 102. PROMISE GRANTS.MANDATORY PELL GRANT INCREASES.
(a) Amendment- Subpart 1 of part AExtension of title IVAuthority- Section 401(a) (20 U.S.C. 1070a et seq.(a)) is amended by striking `fiscal year 2004' and inserting `fiscal year 2017'.
(b) Funding for Increases- Section 401(b) (20 U.S.C. 1070a(b)) is amended by adding at the end the following: new paragraph:
`SEC. 401B. PROMISE GRANTS.
`(9) ADDITIONAL FUNDS-
`(a) Grants- `(A `(1) IN GENERAL- FromThere are authorized to be appropriated, and there are appropriated, to carry out subparagraph (B) of this paragraph (in addition to any other amounts appropriated under subsection (e)to carry out this section and out of any money in the Treasury not otherwise appropriated) the following amounts--
`(i) $2,030,000,000 a for fiscal year and subjec2008;
`(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 subsection (b), the Secretaryparagraph (A) of this paragraph shall award grantsbe used to students inincrease the same manner asamount of the Secretary awardsmaximum Federal Pell Grants to students under section 401, except that-- for which a student shall be eligible during an award year, as specified in `(A) at the beginning of eachlast enacted appropriation Act applicable to that award year, by--
`(i) $490 for each of Secretary shall establish a maximum and minimum the award level based on amounts made available under subsection (e);years 2008-2009 and 2009-2010;
`(B)`(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 grantsan increased amount of a Federal Pell Grant under this section for any award year pursuant to the provisions of this paragraph to students eligiblewho qualify for a Federal Pell Grant foaward under the maximum grant award year; andenacted in the annual appropriation Act `(C) when determining eligibility for such award year without regard to the awards underprovisions of this paragraph.
`(D) FORMULA OTHERWISE UNAFFECTED- Except as provided in subparagraphs (B) and (C), nothing in this paragraph shall be construed to alter the requirements of this section, or authorize the Secretary shall consider only those students who submitted a Free Applicationimposition of additional requirements, for the determination and allocation of Federal Student AiPell Grants under this section.
`(E) RATABLE INCREASES AND DECREASES- The amounts specified in subparagraph (B) shall be ratably increased or other common reporting formdecreased to the extent that funds available under section 483 as of July 1 ofubparagraph (A) exceed or are less than (respectively) the awardmount required to provide the amounts specified in subparagraph (B).
`(F) USE OF FISCAL YEAR FUNDS FOR AWARD YEARS- The amounts made available by subparagraph (A) for any fiscal year shall be available and remain available for use under subparagraph (B) which for the determinationaward year that begins in such fiscal year.'.
SEC. 103. UPWARD BOUND.
Section 402C is made.further amended by adding at the end the following new subsection:
`(2) STUDENTS WITH THE GREATEST NEED-
`(f) Additional Funds-
`(1) AUTHORIZATION AND APPROPRIATION- There are authorized to be appropriated, and there are appropriated to the Secretary, from funds not otherwise appropriated, $57,000,000 for each of the fiscal years 2008 through 2011 to carry out paragraph (2), except that any amounts that remain unexpended for such purpose for each of such fiscal years may be available for technical assistance and administration costs for the Upward Bound program. The Secretary shall ensureauthority to award are awarded grants under this subsection shall expire at the end of fiscal year 2011.
`(2) USE OF FUNDS- The amounts made available by paragraph (1) shall be available to provide assistance to all Upward Bound projects that did not receive assistance in fiscal year 2007 and that have a grant score above 70. Such assistance shall be made available in the form of 4-year grants.'.
SEC. 104. TEACH GRANTS.
Part A of title IV (20 U.S.C. 1070 et seq.) is amended by adding at the end the following new subpart:
`Subpart 9--TEACH Grants
`SEC. 420L. DEFINITIONS.
`For the purposes of this subpart:
`(1) ELIGIBLE INSTITUTION- The term `eligible institution' means an institution of higher education, as defined in section 102, that the Secretary determines--
`(A) provides high quality teacher preparation and professional development services, including extensive clinical experience as a part of pre-service preparation;
`(B) is financially sound;
`(C) provides pedagogical course work, or assistance in the provision of such coursework, including the monitoring of student performance, and formal instruction related students with to the greatest needtheory and practices of teaching; and
`(D) provides supervision and support services to teachers, or assistance in the provision of such services, including mentoring focused on developing effective teaching skills and strategies.
`(2) POST-BACCALAUREATE- The term `post-baccalaureate' means a program of instruction for individuals who have completed a baccalaureate degree, that does not lead to a graduate degree, and that consists of courses required by a State in order for a teacher candidate to receive a professional certification or licensing credential that is required for employment as determineda teacher in an elementary school or secondary school in that State, except that such term shall not include any program of instruction offered by an eligible institution that offers a baccalaureate degree in education.
`(3) TEACHER CANDIDATE- The term `teacher candidate' means a student or teacher described in subparagraph (A) or (B) of section 420N(a)(2).
`SEC. 420M. PROGRAM ESTABLISHED.
`(a) Program Authority-
`(1) PAYMENTS REQUIRED- The Secretary shall pay to each eligible institution such sums as may be necessary to pay to each teacher candidate who files an application and agreement in accordance with section 471.20N, and who qualifies `(b) Cost of Attendance Limitation- A grant awarded under thisparagraph (2) of section 420N(a), a TEACH Grant in the amount of $4,000 for an awardeach academic year during which that teacher candidate is in attendance at the institution.
`(2) REFERENCES- Grants made under paragraph (1) shall be awarded iknown as `Teacher Education Assistance for College and Higher Education Grants' or `TEACH Grants'.
`(b) Payment Methodology-
`(1) PREPAYMENT- Not less than 85 percent of any funds provided to an eligible institution under subsection (a) shall be advanced to the eligible institution prior to the start of each payment period and shall be based upon an amount requested by the institution as needed to pay teacher candidates until such time as the Secretary determines and publishes in the Federal Register with an opportunity for comment, an alternative payment system that doesprovides payments to institutions in an accurate and timely manner, except that this sentence shall not exceed--be construed to limit `(1) the student's costauthority attendance for of the award year; lessSecretary to place `(2) an amount equalinstitution on a reimbursement system of payment.
`(2) DIRECT PAYMENT- Nothing in this section shall be interpreted to prohibit the sum of--Secretary from paying directly to teacher candidates, in advance of `(A) the expected family contribution forbeginning of the studeacademic term, an amount for which teacher candidates are eligible, in cases where the award year; andeligible institution elects not to participate in the disbursement system required by paragraph (1).
`(B) `(3) DISTRIBUTION OF GRANTS TO TEACHER CANDIDATES- Payments under this subpart shall be made, in accordance with regulations promulgatany Federal Pell Grant award received by the studentSecretary for such purpose, in such manner as will best accomplish the award year.purposes of this subpart. Any disbursement allowed to be `(c) Supplement Not Supplant- Grants awarded from funds made available under subsection (e)by crediting the teacher candidate's account shall be uslimited to supplement,tuition and not supplant, fees and, inother Federal, State, or institutional grant funds. `(d) Use of Excess Funds- `(1) FIFTEEN PERCENT OR LESS- If, at the endcase of institutionally-owned housing, room and board. The teacher candidate may elect to have the institution provide other such goods and services by crediting the teacher candidate's account.
`(c) Reductions in Amount-
`(1) PART-TIME STUDENTS- In any case where a fiscalteacher candidate attends an eligible institution on less than a full-time basis (including a teacher candidate who attends an eligible institution on less than a half-time basis) during any academic year, the funds available for makingamount of a payments grant under this section exceedubpart for which that teacher candidate is eligible shall be reduced in proportion to the amount necessarydegree to makewhich that teacher candidate is not attending on a full-time basis, in accordance with a schedule of reductions established by the Secretary for the purposes of this subpart, computed in accordance with this subpart. Such schedule of reductions shall be established by regulation and published in the Federal Register in accordance with section 482 of this Act.
`(2) NO EXCEEDING COST- The amount of a grant payments requirawarded under this subpart, in combination with Federal assistance and other student assistance, shall not exceed the cost of attendance (as defined in section 472) at the eligible institution at which that teacher candidate is in attendance. If, with respect to any teacher candidate for any academic year, it is determined that the amount of a TEACH Grant exceeds the cost of attendance for that year, the amount of the TEACH Grant shall be reduced until such grant does not exceed the cost of attendance at the eligible students by 15 percentinstitution.
`(d) Period of Eligibility for Grants-
`(1) UNDERGRADUATE AND POST-BACCALAUREATE STUDENTS- The period during which an undergraduate or less, then allpost-baccalaureate student may receive grants under this subpart shall be the period required for the completion of the excess fundsfirst undergraduate baccalaureate or post-baccalaureate course of study being pursued by the teacher candidate at the eligible institution at which the teacher candidate is in attendance, except that--
`(A) any period during which the teacher candidate is enrolled in a noncredit or remedial course of study as described in paragraph (3) shall remain availablenot be counted for making grant paymentsthe purpose of this paragraph; and
`(B) the total amount that a teacher candidate may receive under this sectionubpart for undergraduate or post-baccalaureate study shall not exceed $16,000.
`(2) GRADUATE STUDENTS- The period during which a graduate student may receive grants under this subpart shall be the next succeeding fiscal year.period required for `(2) MORE THAN FIFTEEN PERCENT- If, at the endcompletion of a fiscal year,master's degree course of study pursued by the funds available for making grant paymentsteacher candidate at the eligible institution at which the teacher candidate is in attendance, except that the total amount that a teacher candidate may receive under this sectionubpart for graduate study shall not exceed $8,000.
`(3) REMEDIAL COURSE; STUDY ABROAD- Nothing in this section shall be construed to exclude from eligibility courses of study which are noncredit or remedial in nature (including courses in English language acquisition) which are determined by the amounteligible institution to be necessary to makehelp the grant payments required underteacher candidate be prepared for the pursuit of a first undergraduate baccalaureate or post-baccalaureate degree or certificate or, in the case of courses in English language instruction, to be necessary to enable the teacher candidate to utilize already existing knowledge, training, or skills. Nothing in this section shall be construed to eligible studentsxclude from eligibility programs of study abroad that are approved for credit by more than 15 percent, then allthe home institution at which the teacher candidate is enrolled.
`SEC. 420N. APPLICATIONS; ELIGIBILITY.
`(a) Applications; Demonstration of such fundsEligibility-
`(1) FILING REQUIRED- The Secretary shall remain availableperiodically set dates by which teacher candidates shall file applications for making such grant payments butgrants under this subpart. Each teacher candidate desiring a payments may be made grant under this paragraph only with respect to awardssubpart for that fiscal year.any year shall file an application containing such inform `(e) Authorization and Appropriationassurances as the Secretary may determine necessary to enable the Secretary to carry out the functions and responsibilities of Funds- this subpart.
``(2) DEMONSTRATION OF TEACH GRANT ELIGIBILITY- Each application submitted under paragraph (1) IN GENERAL- There are authorizedshall contain such information as is necessary to demonstrate that--
`(A) if the applicant is an enrolled student--
`(i) the student is an eligible student for purposes of section 484;
`(ii) the student--
`(I) has a grade point average that is determined, under standards prescribed by the Secretary, to be appropriated, and there are appropriated, comparable to a 3.25 average on a zero to 4.0 scale, except that, if the student is in the first yearout of any money program of undergraduate education, such grade point average shall be determined on the basis of the student's cumulative secondary school grade point average; or
`(II) displayed high academic aptitude by receiving a score above the 75th percentile on at least one of the batteries in an undergraduate, post-baccalaureate, or graduate school admissions test; and
`(iii) the Treasury not otherwise appropriatedstudent is completing coursework and other requirements necessary to begin a career in teaching, or plans to complete such coursework and requirements prior to graduating; or
,`(B) if the applicant is a current or prospective teacher applying for a grant to obtain a graduate degree--
`(i) the Departmentapplicant is a teacher or a retiree from another occupation with expertise in a field in which there is a shortage of Educationteachers, such as mathematics, science, special education, English language acquisition, or another high-need subject; or
`(ii) the applicant is or was a teacher who is using high-quality alternative certification routes, such as Teach for America, to carry out this section--get certified.
`(b) Agreements to Serve- Each application under subsection (a) shall contain or be accompanied by an agreement by the applicant that--
`(1) the applicant will--
`(A) $2,62serve as a full-time teacher0,000,000 for fiscal year 2008;a total of not less than 4 academic years within 8 years after completing the course of study `(B) $3,040,000,000 for fiscal year 2009;which the applicant received a TEACH Grant under this subpart;
`(B) teach in a school described in section 465(a)(2)(A);
`(C) $3,46teach in any of the following fields--
0,000,000 for fiscal year 2010;
`(i) mathematics;
`(ii) science;
`(iii) a foreign language;
`(iv) bilingual education;
`(v) special education;
`(vi) as a reading specialist; or
`(vii) another field documented as high-need by the Federal Government, State government, or local educational agency, and approved by the Secretary;
`(D) $3,90submit evidence of such employment in the form of a certification by the chief administrative officer of the school upon completion of each0,000,000 for fiscal year 2011;of such service; and
`(E) $4,02comply with the requirements0,000,000 for fiscal year 2012; `(F) $10,000,000 for fiscal year 2013; `(G) $3,650,000,000 for fiscal year 2014; `(H) $3,850,000,000 for fiscal year 2015; `(I) $4,175,000,000 for fiscal year 2016; and `(J) $4,180,000,000 for fiscal year 2017.being `(2) AVAILABILITY OF FUNDS- Funds appropriated under paragraph (1)for a fiscal yearhighly qualified teacher as defined in section 9101 of shall remain available through the last Elementary and Secondary Education Actday of 1965; and
`(2) in the fiscalevent that year immediately succeeding the fiscalapplicant is determined to have failed or refused to carry out such service obligation, year for which the funds are appropriated.'.sum of the amounts of any TEACH Grants received (b) Effective Date- The amendmentmade by such applicant will be treated as a loan and collected from the applicant in accordance with subsection (a)c) and the regulations thereunder.
`(c) Repayment for Failure to Complete Service- In the event that any recipient of a grant under this subpart fails or refuses to comply with the service obligation in the agreement under subsection (b), the sum of the amounts of any TEACH Grants received by such recipient shall, upon a determination of such a failure or refusal in such service obligation, be treated as a Federal Direct Unsubsidized Stafford Loan under part D of title IV, and shall take effectbe subject to repayment, together with interest thereon accruing from the date of the grant award, in accordance with terms and conditions specified by the Secretary in regulations under this subpart.
`SEC. 420O. PROGRAM PERIOD AND FUNDING.
`Beginning on July 1, 2008, there shall be available to the Secretary to carry out this subpart, from funds not otherwise appropriated, such sums as may be necessary to provide TEACH Grants in accordance with this subpart to each eligible applicant.'.
TITLE II--STUDENT LOAN BENEFITS, TERMS, AND CONDITIONS
SEC. 201. DEFERMENTS.INTEREST RATE REDUCTIONS.
(a) FISL-FEL Interest Rates-
(1) Section 427(a)(2)(C)(iiiA(l) (20 U.S.C. 1077(a)(2)(C)(iiia(l)) is amended by striking `3 years'adding at the end the following new paragraph:
`(4) REDUCED RATES FOR UNDERGRADUATE SUBSIDIZED LOANS- Notwithstanding subsection (h) and inserting `6 years'.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 (b) Interest Subsidies- Section 428(b)(1)(M)(iv) (20 U.S.C. 1078(b)(1)(M)(iv)) is amended made on or after July 1, 2006,by striking `3 years' and inserting `before July 1, 2012, the applicable rate of interest shall be as follows:
`(A) For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2008, 6.8 percent on the unpaid principal balance of the loan.
`(B) For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 6.0 percent on the unpaid principal balance of the loan.
`(C) For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 5.6 years'.percent on the unpaid principal balance of the loan.
(c) Direct Loans
`(D) For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.5 percent on the unpaid principal balance of the loan.
`(E) For a loan for which the first disbursement is made on or after July 1, 2011, and before July 1, 2012, 3.4 percent on the unpaid principal balance of the loan.'.
(2) SPECIAL ALLOWANCE CROSS REFERENCE- Section 455(f)(2)(D38(b)(2)(I)(ii)(II) (20 U.S.C. 1087e(f)(2)(D-1(b)(2)(I)(ii)(II)) is amended by striking `3 yearssection 427A(l)(1)' and inserting `6 years'.section 427A(l)(1) or (l)(4)'.
(d) Perkin(b) Direct Loan Interest Rates- Section 464(c)(2)(A)(iv55(b)(7) (20 U.S.C. 1087dd(c)(2)(A)(ive(b)(7)) is amended by striking `3 years' and inserting `6 years'.adding at the end the following new subparagraph:
(e) Effective Date`(D) REDUCED RATES FOR UNDERGRADUATE FDSL- Notwithstanding the preceding paragraphs of this subsection and Applicabilitysubparagraph (A) of- The amendments made by this sparagraph, for Federal Direct Stafford Loans made to undergraduate students for which the first disbursement is madeection shall take effect on or after July 1, 20086, and before July 1, 2012, the applicable rate of interest shall only apply with respect be as follows:
to`(i) For a loan for which the loanfirst disbursement is made to a bon or after July 1, 2006, and before July 1, 2008, 6.8 percent on the unpaid principal balanceorrower of the loan.
`(ii) For a loan under title IVfor which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 6.0 percent on the unpaid principal balance of the Higher Education Actloan.
`(iii) For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 5.6 percent on the unpaid principal balance 1965 who obtained of the borrower'sloan.
`(iv) For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.5 percent on the unpaid principal balance of the loan.
`(v) For a loan underfor which the first disbursement is made on or after July such title prior to October 1, 20121, and before July 1, 2012, 3.4 percent on the unpaid principal balance of the loan.'.
SEC. 202. STUDENT LOAN DEFERMENT FOR CERTAIN MEMBERS OF THE ARMED FORCES.
(a) Federal Family Education Loans- Section 428(b)(1)(M)(iii) (20 U.S.C. 1078(b)(1)(M)(iii)) is amended--
(1) in the matter preceding subclause (I), by striking `not in excess of 3 years';
(2) in subclause (II), by striking `; or' and inserting a comma; and
(3) by adding at the end the following:
(b) Direct Loans- Section 455(f)(2)(C) (20 U.S.C. 1087e(f)(2)(C)) is amended--
(1) in the matter preceding clause (i), by striking `not in excess of 3 years';
(2) in clause (ii), by striking `; or' and inserting a comma; and
(3) by addingat the end the following:
`and for the 180-day period following the demobilization date for the service described in clause (i) or (ii); or'.
(c) Perkins Loans- Section 464(c)(2)(A)(iii) (20 U.S.C. 1087dd(c)(2)(A)(iii)) is amended--
(1) in the matter preceding subclause (I), by striking `not in excess of 3 years';
(2) in subclause (II), by striking the semicolon and inserting a comma; and
(3) by adding at the end the following:
`and for the 180-day period following the demobilization date for the service described in subclause (I) or (II);'.
(d) Applicability- Section 8007(f) of the Higher Education Reconciliation Act of 2005 (20 U.S.C. 1078 note) is amended by striking `loans for which' and all that follows through the period at the end and inserting `all loans under title IV of the Higher Education Act of 1965.'.
(e) Effective Date- The amendments made by this section shall take effect on July 1, 2008.SEC. 203. INCOME-BASED REPAYMENT PLANS..
(a) FFELAmendment- Part G of title IV- Section 428 (as amended by sections 201(b) and 202(a)) (20 U.S.C. 107888 et seq.) is further amended--amended (1) in subsection (b)-- (A) in paragraph (1)-- (i) in subparagraph (D), by striking `income contingent' and inserting `income-based'; and (ii) in subparagraph (E)(i), by striking `income-sensitive' and inserting `income-based'; and (B) by striking adding atclause (iii) of paragraph (9)(A) and inserting the following: `(iii) an income-based repayment plan, with parallel terms, conditions, and benefits as the income-based repayment plan described in subsections (e) and (d)(1)(D) of section 455, except that--end `(I) the plan described ifollowing:
`SEC. 493C. INCOME-BASED REPAYMENT.
`(a) Definitions- In this clause shall not be available to a borrower of an section:
`(1) EXCEPTED PLUS LOAN- The term `excepted PLUS loan' means a loan (as defined inunder section 455(e)(10))28B, or a Federal Direct PLUS Loan, that is made, insured, or guaranteed on behalf of a dependent student.
`(2) EXCEPTED CONSOLIDATION LOAN- The term `excepted consolidation loan' means a consolidation made loan under 428C that includessection 428C, or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to the discharge the liability on an excepted PLUS loan;.
`(II) in lieu
`(3) PARTIAL FINANCIAL HARDSHIP- The term `partial financial hardship', when used with respect to a borrower, means that for such borrower--
`(A) the annual amount due on the total amount of loans made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) to a borrower as calculated under the processstandard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period; exceeds
`(B) 15 percent of obtaining Federal income tax returnsthe result obtained by calculating, on at least an annual basis, the amount by which--
`(i) the borrower's, information from and the Internal Revenue Service,borrower's spouse's (if applicable), adjusted gross income; exceeds
`(ii) 150 percent of the poverty line applicable to the borrower's family size as described intermined under section 455(e)(1)673(2) of, the borrowerCommunity Services Block Grant Act (42 U.S.C. 9902(2)).
shall `(b) Income-Based Repayment Program Authorized- Notwithstanding any other provision of this Act,provide the lenderSecretary shall carry out with a copyprogram under which--
`(1) a borrower of any loan made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) who has a partial financial hardship (whether or not the Federal income tax return and return informationborrower's loan has been submitted to a guaranty agency for default aversion or is already in default) may elect, during any period the borrower (and, if applicable,has the partial financial hardship, to have the borrower's spouse)aggregate monthly payment for all such loans not exceed the purposesresult described in section 4ubsection (a)(3)(B) divided by 12;
55(e)(1), and`(2) the lenderholder of such a loan shall determineapply the repayment obligationborrower's monthly payment under this subsection first toward interest due on the loan, in next toward any fees due onaccordance with the prloan, and then toward the principal of the loan;
ocedures develope
`(3) any interest due and not paid under paragraph (2)--
`(A) shall, on subsidized loans, be paid by the Secretary; for a period `(III) in lieu of not more than 3 years after the requirementsdate of the borrower's election under paragraph (1), except that such period shall not include any period during which the borrower is in deferment due to an economic hardship described in section 455(e)(3),35(o); and
`(B) be capitalized--
`(i) in the case of a borrower who choosessubsidized loan, subject to repay a loan made, insured, or guaranteedsubparagraph (A), at the time the borrower--
`(I) ends the election to make income-based repayment under this part pursuantsubsection; or
`(II) begins making payments of not less than the amount specified in paragraph (6)(A); or
`(ii) in the case of an unsubsidized loan, at the time the borrower--
`(I) ends the election to make income-based repayment and under this subsection; or
for whom the adjusted gross income is unavailable or does`(II) begins making payments of not reasonably reflect the borrower's current income,less than the borroweramount specified in paragraph (6)(A);
`(4) any principal due and not paid under paragraph (2) shall providebe deferred;
`(5) the lender with other documentationamount of income thattime the Secretaryborrower makes monthly payments under paragraph (1) may exceed 10 years;
`(6) if the borrower no longer has determined is satisfactorya partial financial hardship or no longer wishes to continue the election under this subsection, then--
`(A) the maximum monthly payment required to be paid for similar borrowersall of loans made to the borrower under part D;B or D (other than an excepted PLUS loan or excepted consolidation loan) `(IV) the Secretary pay any interest due and shall not paid for underexceed the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment scheduleperiod, when the borrower first made the election described section 455(e)(4) for a loan made, insured, or guaranteed under in this part insubsection; and
`(B) the same manner amount of timeas the Secretary pays anborrower is permitted to repay such interest under loans may exceed 10 years;
section `(7455(e)(6) for a Federal Direct Stafford Loan; `(V) the Secretary assume the obligation to shall repay anor cancel any outstanding balance of principal and interest due on all loans made, insured, or guaranteed this under part B or D (other an excepted PLUS Loan or than a loan under section 428C that includes an exceptedB or a Federal Direct PLUS loan), forLoan) to a borrower who satisfies--
the `requirements of subparagraphs (A) and t any time, elected to participate in income-based repayment under paragraph (1); and
`(B) for a period of section 455(e)(7),time prescribed by in the same manner asSecretary, not to exceed 25 years, meets 1 or more of the Secretary cancels such outstanding balancefollowing requirements--
`(i) has made reduced monthly payments under paragraph (1) or paragraph (6);
`(ii) has made monthly payments of not less than the monthly amount calculated under section 455(e)(7); and28(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period, when the borrower first made the election described `(VI) in lieuthis subsection;
`(iii) has made payments of not less than the notification requirementspayments required under a standard repayment plan under section 455(e)(8),28(b)(9)(A)(i) or 455(d)(1)(A) with the lender shall notify a borrowerrepayment period of 10 years;
`(iv) has made payments under an income-contingent repayment plan under section 455(d)(1)(D); or
`(v) has been in deferment due to an economic hardship described in section 435(o);
`(8) a borrower who is repaying a loan made, insured, or guaranteed this under part who choosesB or D pursuant to repay income-based repayment may elect, at any time, to terminate repaymentsuch loan pursuant to income-based of the terms repayment and conditionsrepay of such plan,loan under the standard repayment plan; and
`(9) the special allowance payment to a lender calculated under section 438(b)(2)(I), when calculated for a loan in accordance withrepayment under this section, shall be calculated on the procedures established byincipal balance of the Secretary, including notification that--loan and on any accrued interest unpaid by `(aa) the borrower in accordance with this section.
`(c) Eligibility Determinations- The Secretary shall be responsibleestablish procedures for providing annually determiningthe lender with the information necessarborrower's eligibility for documentincome-based repayment, including verification of thea borrower's income, includingannual income informationandfor the borrower's spouseannual amount due on (as applicable); and `(bb) if the borrower considers that special circumstances warranttotal amount of loans made, insured, or guaranteed under part B or D (other than an adjustment, as describexcepted PLUS loan or excepted consolidation loan)ed in section 455(e)(8)(B), the borrower may contact the lender, the lender shall determine whether and such adjustmenother procedures as are necessary to effectively implement income-based repayment under this section. The Secretary shall consider, but is appropriate, in accordance withnot limited to, the criteriaprocedures by the Secretary; and'; (2) in subsection (e)-- (A) in the subsection heading, by striking `Income-Sensitive' and inserting `Income-Based'; (B) in paragraph (1)-- (i) by striking `income-sensitive repayment' and inserting `income-based repayment'; and (ii) by inserting `and for the public service loan forgiveness program under section 455(m), established in accordance with section 428C(b)(5)' before the semicolon; and55(e)(1) or (C) in paragraphs (2) and (3), by striking `income-sensitive' each place the term occurs and inserting `income-based'; and (3) in subsection (m)-- (A) in the subsection heading, by striking `Income Contingent' and inserting `Income-Based'; (B) in paragraph (1)connection with , by striking `income contingent repayment plan' and all that follows throughsensitive the period at the end and inserting `income-based repayment plan as described in subsection (b)(9)(A)(iii) andschedules under section 455(d)(1)(D).28(b)(9)(A)(iii) or 428C(b)(1)(E).'.
'; and (C) in the paragraph heading of paragraph (2), by striking `INCOME CONTINGENT' and inserting `INCOME-BASED'. (b) Consolidation Loans-forming Amendments-
(1) Section 428C (20 U.S.C. 1078-3) is amended--
(1(A) in subsection (a)(3)(B)(i)(V), by striking `amending subclause (V) to read as follows:
`(aa) for the purposes of obtaining an income contingent repayment plan,' and inserting `only if the loan has been submitted to the guaranty agency for default aversion; or
`(bb) for the purposes of using the public service loan forgiveness program under section 455(m),';.';
(2(B) in subsection (b)(5)-- (A) in the first sentence of subsection (b)(5), striking `, or is unable to obtain a consolidation loan with income-sensitive repayment terms acceptable to the borrower from such a lender,' and by , inserting `or chooses to obtain a consolidation loan for the purposes of using the public service loan forgiveness program offered under section 455(m),' after `from such a lender,'; and
(B(C) in the second sentence, by striking `income contingent repayment under part D of this title' and inserting `income-based repayment'; and (3) in subsection (c)-- (A) in paragraph (2)(A)-- (i) in the first sentence, by striking `of graduated or income-sensitive repayment schedules, established by the lender in accordance with the regulations of the Secretary.' and inserting `of graduated repayment schedules, establishedsuch subsection, by inserting before the lenderperiod in accordance with the regulations of the Secretary, and income-based repayment schedules, established pursuantfollowing: `, except that if a borrower intends to regulations by be eligible to usethe Secretary.'; and (ii) in the second sentence,public service loan forgiveness program under section 455(m), by striking `Except as required' and all that follows through `subsection (b)(5),' and inserting `Except as required by such income-basedloan shall be repaid using one of the repayment schedules,'; andoptions described (B) in paragraph (3)(B), by striking `income contingent repayment offered bysection 455(m)(1)(A)'.
the (2)Secretary under subsection (b)(5)' and inserting `income-based repayment'. (c) Direct Loans- Section 455 (as amended by sections 201(c) and 202(b)28C) (20 U.S.C. 108778-3) (as amended by paragraphe) is further amended-- (1) of this subsection) is amended--
(A) in subsection (d)--a)(3)(B)(i)(V)(aa)--
(A) in paragraph (1)(D)-- (i) by striking `an income contingent repayment plan,' and inserting `income-based contingent repayment planor income-based repayment,'; and
(ii) striking `a Federal Direct PLUS loan' and by an excepted PLUS loan inserting `or any Federal Direct Consolidation Loan that includes an excepted PLUSif the loan (as defined in sis alreadyubsection (e)(10))'; and (B) in paragraph (5)(B), by striking `income contingent' and inserting `income-based'; and (2) in subsection (e)-- (A) in default' before the subsection heading, by striking `emicolon;
Income Contingent' and inserting `Income-Based'; (B) paragraphs (1), (2), and (3), by striking `income contingent' each place in the term appears first sentence of subsection (b)(5),and inserting `income-based';(C) in paragraph (4)-- (i) striking `Income contingent' and by inserting `Income-basedor income-based repayment terms' after `income-sensitive repayment terms'; and
(ii) by striking `Secretary.'(C) in and inserting `Secretary, except that the monthly required payment undersecond sentence of such schedule shall not exceed 15 percentubsection,of the result obtained by calculating the amount by which--inserting `, pursuant `(A) the borrower's adjusted gross income; exceeds `(B) 150 percent of the poverty line applicable to the borrower's family size,income-based repayment as determined under section 673(2)493C,' after `part D of the is title'.
Community Service Block Grant Act,(3) Section 455(d)(1)(D) (20 U.S.C. 1087e(d)(1)(D)) is amendeddivided by 12.'; (D) in paragraph (5), striking `income contingent' and by inserting `income-based';made on behalf of a dependent student' after `PLUS loan'.
(E
(c) Effective Date-
) by redesignating paragraph(1) IN GENERAL- Except (6) as provided in paragraph (8);2), (F) by inserting after paragraph (5) the following: `(6) TREATMENT OF INTEREST- In the caseamendments made by this section shall be effective on July 1, 2009.
of a Federal Direct Stafford Loan, any interest due and not paid for under paragraph (2) EXCEPTION- The amendments made by subsection (b)(1) shall be paieffective on July 1, 2008.
SEC. 204. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.
Part G of title IV is further amended by adding after section 493C (as added by section 203 of this Act) the Secretary.following new section:
`(7)`SEC. 493D. DEFERRAL OF LOAN FORGIVENESS- The Secretary shall cancelREPAYMENT FOLLOWING ACTIVE DUTY.
the `(a) Deferral of Loan Repayment Following Active Duty- In addiobligation to repay an outstanding balanceany deferral of principal and interest due on all loansrepayment of a loan made under this part, or assume the obligatiotitle pursuantn repay an outstanding balance of principal and interest due on all loans made, insured, or guaranteed under part B, (other than an excepted PLUS Loan, or any Federal Direct Consolidation Loan or loan under to section 428C that includes an excepted PLUS loan) to(b)(1)(M)(iii), 455(f)(2)(C), or 464(c)(2)(A)(iii), a borrower who--of a loa `(A) makes the election under this subsectiontitle who is or under section 428(b)(9)(A)(iii); and `(B) for a periodmember time prescribed by of the Secretary not to exceed 25 years (including any period during National Guard or other reserve component ofwhich the borrowerArmed Forces of the United States, or a member of such Armed Force is in deferment duea retired status, is called or ordered to an economic hardship describedctive duty, and is enrolled, or was enrolled within six months prior to the activation, in section 435(o)), meets 1a program of instruction at an eligible institution, shall be eligible for a deferment during the 13 months requirements with respect to each payment made during such period: `(i) Has made following the payconclusion of such service, except that a deferment under this subsection or shall expire uponsection 428(b)(9)(A)(iii). `(ii) Has made the payment undeborrower's return to enrolled student status.
r a `(b) Active Duty- Notwithstandingstandard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A).81(d), in this section, `(iii) Has made a payment that counted toward the maximum repayment period under income-sensitive repayment under section 428(b)(9)(A)(iii)term `active duty' has the meaning given or income contingent repayment under section 455(d)(1)(D), as each such section wasterm in effecsection 101(d)(1)t on June 30, 2008. `(iv) Has made a reduced payment of title 10, United States Code, except that such term--
`(1) does not less than include active dutythe amount required under subsection (e), pursuant to a forbearance agreement under section 428(c)(3)(A)(i) for training or attendance at a borrower described in 428(c)(3)(A)(i)(II).';service school; but
(G)`(2) includes, in the matter preceding subparagraph (A)case of paragraph (8) (as redesignated by subparagraph (E)), by striking `income contingent'members of the National Guard, active State duty.'.
and
SEC. 205. MAXIMUM REPAYMENT PERIOD.
inserting `income-based'; andSection 455(e) (20 U.S.C. 1087e(e)) is amended (H) by adding at the end the following:
`(9) RETURN TO STANDARD REPAYMENT- A borrower who is repaying`(7) MAXIMUM REPAYMENT PERIOD- In calculating a loan made under this part pursuant to income-based repayment may choose, at any time, to terminate repayment pursuant to income-based repayment and repay such loan under the standardextended period of time for which an income contingent repayment plan. under `(10) DEFINITION OF EXCEPTED PLUS LOAN- In this subsection, may be in effect for the term `excepted PLUS loan' means a Federal Direct PLUS borrower, the Secretary shall include all time periods during whichloan or a loanborrower of loans under section 428B thapart B, part Dt is made, insured, or guaranteedpart E--
`(A) is not in default on behalfany loan thatof a dependent student.'. (d) Conforming Amendments and Technical Corrections- The Act (20 U.S.C. 1001 et seq.) is further amended--included (1) in section 427(a)(2)(H) (the income contingent20 U.S.C. 1077(a)(2)(H))-- (A) by striking `or income-sensitive'; and (B) by inserting `or income-based repayment schedule established pursuantplan; and
`(B)(i) is in deferment due to regulations by the Secretary'an economic hardship describedbefore the semicolon at the end; and(2) in section 455(d)(1)(C35(o);
) (`(ii) makes monthly payments20 U.S.C. 1087e(d)(1)(C)), by striking `428(b)(9)(A)(v)' and inserting `428(b)(9)(A)(iv)'. (e) Transition Provision- A student who, as of June 30, 2008, elects to repay a loan under part Bagraph (1) or part D of the Higher Education Act(6) 1965 (20 U.S.C. 1071 et seq., 1087a et seq.) through an income-sensitive repayment plan under of section 428(b)(9)(A)(iii)93C(b);
`(iii) makes monthly payments of such Act (not less than the monthly amount calculated20 U.S.C. 1078(b)(9)(A)(iii)) or an income contingent repayment plan under section 455(d)(1)(D) of such Act (28(b)(9)(A)(i) or subsection (d)(1)(A), based20 U.S.C. 1087e(d)(1)(D)) (as each such section was in effect on a 10-year repayment period, when the dayborrower first madbefore the delection described in section 493C(b)(1);
ate of `(iv) makes paymentsenactment of this Act)not less than shall have the option to continue repaymentpayments required under such section (as such section was in effecta standar on such day), or may elect, beginning on July 1, 2008, to use the income-based repayment plan under section 428(b)(9)(A)(iii) or 455(d)(1)(D) (as applicable)subsection (d)(1)(A) of the Higher Education Act of 1965, as amended by this section. (f) Effective Date and Applicability- The amendments made by this section shall take effect on July 1, 2008, and shall only apply respect to a borrowerof with a loan repayment periodunder title IV of the Higher Education Act of 1965 who obtained 0 years; or
the `(v) makes paymentsborrower's first loan under such title prior to Octoberan income contingent repayment plan under subsection (d)(1)(D).' 1, 2012.
TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM
SEC. REDUCTION OF LENDER INSURANCE PERCENTAGE. (a) Amendment- Section 428(b)(1)(G) (20 U.S.C. 1078(b)(1)(G)) is amended-- (1) in the matter preceding clause (i), by striking `insures 98 percent' and inserting `insures 97 percent';(2) in clause (i), by inserting `and' after the semicolon; (3) by striking clause (ii); and (4) by redesignating clause (iii) as clause (ii). (b) Effective Date- The amendment made by subsection (a) shall take effect with respect to loans made on or after October 1, 2007.SEC. 302. 301. GUARANTY AGENCY COLLECTION RETENTION.
SEC. 3032. ELIMINATION OF EXCEPTIONAL PERFORMER STATUS FOR LENDERS.
(a) Elimination of Status- Part B of title IV (20 U.S.C. 1071 et seq.) is amended by striking section 428I (20 U.S.C. 1078-9).
(b) Conforming Amendments- Part B of title IV is further amended--
(1) in section 428(c)(1) (20 U.S.C. 1078(c)(1))--
(A) by striking subparagraph (D); and
(B) by redesignating subparagraphs (E) through (H) as subparagraphs (D) through (G), respectively; and
(2) in section 438(b)(5) (20 U.S.C. 1087-1(b)(5)), by striking the matter following subparagraph (B).
(c) Effective Date- The amendments made by subsections (a) and (b) shall take be effectiveeffect on October 1, 2007, except that section 428I of the Higher Education Act of 1965 (as in effect on the day before the date of enactment of this Act) shall apply to eligible lenders that received a designation under subsection (a) of such section prior to October 1, 2007, for the remainder of the year for which the designation was made.
SEC. 304. DEFINITIONS.3. REDUCTION OF LENDER INSURANCE PERCENTAGE.
(a) Amendments- - Subparagraph (G) of section 428(b)(1) (20 U.S.C. 1078(b)(1)(G)) is amended to read as follows:
`(G) insures 95 percent of the unpaid principal of loans insured under the program, except that--`(i) such program shall insure 100 percent of the unpaid principal of loans made with funds advanced pursuant to section 428(j) or 439(q); and`(ii) notwithstanding the preceding provisions of this subparagraph, such program shall insure 100 percent of the unpaid principal amount of exempt claims as defined in subsection (c)(1)(G);'.
(b) Effective Date- The amendment made by subsection (a) shall be effective on October 1, 2012, and shall apply with respect to loans made on or after such date.
SEC. 304. DEFINITIONS.
Section 435 (20 U.S.C. 1085) is amended--
(1) in subsection (o)(1)--
(A) in subparagraph (A)(ii),--
(i) by striking `100 percent of the poverty line for a family of 2' and inserting `150 percent of the poverty line applicableto the borrower's family size'; and
(B) in
(ii) by inserting `or' after the semicolon;
(B) by striking subparagraph (B)(ii; and
(C) by redesignating subparagraph (C) as subparagraph (B);
(2) in subsection (o)(2), by striking `to(1)(C) a family of two' and inserting `to the (1)(B)borrower's family size'; and
(2(3) by adding at the end the following:
`(p) Eligible Not-for-Profit Holder-
`(1) DEFINITION OF ELIGIBLE NOT-FOR-PROFIT HOLDER- T- Subject to the limitations in paragraph (2) and the prohibition in paragraph (3), the term `eligible not-for-profit holder' means an eligible lender under subsection (d) (except for an eligible lender described in subsection (d)(1)(E)) that requests a special allowance payment under section 438(b)(2)(I)(vi)(II) or a payment under section 771 and that is--
`(A) a State of the United States, or a political subdivision thereof,, or an authority, agency, or other instrumentality thereof (, including such entities that areeligible to issue bonds described in section 1.103-1 of title 26, Code of Federal Regulations, or section 144(b)of the Internal Revenue Code of 1986);;
`(B) an entity described in section 150(d)(2) of such Code that has not made the election described in section 150(d)(3)of such Code;
`(C) an entity described in section 501(c)(3) of such Code; or
`(D) a trustee acting as an eligible lender on behalf of an State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C),.
except
`(2) LIMITATIONS-
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