ED 443 361
TITLE
INSTITUTION
ISBN
PUB DATE
NOTE
AVAILABLE FROM
PUB TYPE
EDRS PRICE
DESCRIPTORS
IDENTIFIERS
ABSTRACT
DOCUMENT RESUME
HE 033 119
A Compilation of Federal Education Laws: Volume III--Higher
Education, as Amended through December 1999. Prepared for
the Use of the Committee on Education and the Workforce of
the U.S. House of Representatives, Serial No. 106-B, and for
the Use of the Committee on Health, Education, Labor, and
Pensions of the United States Senate, S. Prt. 106-30. One
Hundred Sixth Congress, First Session. [Committee Print].
Congress of the U.S., Washington, DC. Senate Committee on
Health, Education, Labor, and Pensions.; Congress of the
U.S., Washington, DC. House Committee on Education and the
Workforce.
ISBN-0-16-059389-1
1999-09-00
648p.
U.S. Government Printing Office, Superintendent of
Documents, Mail Stop: SSOP, Washington, D.C. 20402-9328.
Legal/Legislative/Regulatory Materials (090)
MF03/PC26 Plus Postage.
Civil Liberties; Community Colleges; *Federal Indian
Relationship; *Federal Programs; Grants; Higher Education;
Human Services; *Land Grant Universities; Scholarships;
Student Financial Aid; Tribally Controlled Education
Higher Education Act Amendments 1986; Higher Education Act
Amendments 1992; Higher Education Act Amendments 1998;
Higher Education Act 1965; Higher Education Amendments 1968;
Howard University DC; National Science Foundation Act 1950;
Pell Grant Program
This compilation of Federal Education Laws pertaining to
higher education presents the full text of each statute. Statutes are
organized in four sections:
(1) general higher education programs;
(2) Native
American higher education;
(3) National Science Foundation; and (4)
assistance to specified institutions. The following is a unified listing of
the statutes included: Act of March 2, 1867 (Howard University);
Bankhead-Jones Act; Calvin Coolidge Memorial Foundation; Claiborne Pell
Institute for International Relations and Public Policy Act; Edmund S. Muskie
Foundation; Education Amendments of 1972, Land-Grant Status for the College
of the Virgin Islands and the University of Guam; Education Amendments of
1980, Title XIII, Parts G and I; Education Amendments of 1980, Title XIII,
Part H (Miscellaneous Provisions); First Morrill Act; George Bush School of
Government and Public Service Act; Grants to Eisenhower College and to Samuel
Rayburn Library; Harry S. Truman Memorial Scholarship Act; Herbert Hoover
Memorial; Higher Education Act of 1965; Higher Education Amendments of 1968;
Higher Education Amendments of 1986; Higher Education Amendments of
1992--Title IV, V, and XV; Higher Education Amendments of 1992--Title XIII;
Higher Education Amendments of 1998; Howard University Endowment Act; Human
Rights, Refugee, and Other Foreign Relations Provisions Act of 1996; Human
Services Reauthorization Act, Title V; Morris K. Udall Scholarship and
Excellence in National Environmental and Native American Public Policy Act of
1992; National Science Foundation Act of 1950; Navajo Community College Act;
Public Law 98-480, Title III (Higher Education Projects); Public Law 98-558,
Reproductions supplied by EDRS are the best that can be made
from the original document.
Title V (Higher Education and Research Project); Second Morrill Act; and
Tribally Controlled Community College Assistance Act of 1978.
(RH)
Reproductions supplied by EDRS are the best that can be made
from the original document.
[COMMITTEE PRINTI
w.
4
a
A COMPILATION OF FEDERAL
EDUCATION LAWS
VOLUME IIIHIGHER EDUCATION
As Amended Through
1999
PREPARED FOR THE USE OF THE
COMMITTEE ON EDUCATION AND THE
WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
106-B
AND FOR THE USE OF THE
_
COMMITTEE ON HEI ALT11,.. EDUCATION.
LABOR, AND .PENSIONS
--OF THE
UNITED STATES SENATE
S. Prt. 10G-30
ONE HUNDRED sucni CONGRESS
FIRST 'SESSION
-
SEPTEMBER 1999
:;=-11.
srCOPY AV IA toLE
U.S. DEPARTMENT OF EDUCATION
Office of Educational Research and Improvement
EDUCATIONAL RESOURCES INFORMATION
CENTER (ERIC)
\i) This document has been reproduced as
received from the person or organization
originating It.
0 Minor changes have been made to
improve reproduction quality.
Points of view or opinions stated in this
document do not necessarily represent
official OERI position or policy.
[COMMITTEE PRINT].
A COMPILATION OF FEDERAL
EDUCATION LAWS
VOLUME III-HIGHER EDUCATION
As Amended Through December 1999
PREPARED FOR THE USE OF THE
COMMITTEE ON EDUCATION AND THE
WORKFORCE
OF THE
U.S. HOUSE OF REPRESENTATIVES
Serial No. 106-B
AND FOR THE.USE OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
OF THE
UNITED STATES SENATE
S. Prt. 106-30
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
SEPTEMBER 1999
U.S. GOVERNMENT PRINTING OFFICE
54-653
WASHINGTON : 1999
For sale by the U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328
ISBN 0-16-059389-1
COMMITTEE ON EDUCATION AND THE WORKFORCE
WILLIAM F. GOODLING, Pennsylvania, Chairman
THOMAS E. PETRI, Wisconsin
MARGE ROUKEMA, New Jersey
CASS BALLENGER, North Carolina
BILL BARRETT, Nebraska
JOHN A. BOEHNER, Ohio
PETER HOEKSTRA, Michigan
HOWARD P. "BUCK" McKEON, California
MICHAEL N. CASTLE, Delaware
SAM JOHNSON, Texas
JAMES M. TALENT, Missouri
JAMES C. GREENWOOD, Pennsylvania
LINDSEY 0. GRAHAM, South Carolina
MARK E. SOUDER, Indiana
DAVID M. McINTOSH, Indiana
CHARLIE NORWOOD, Georgia
RON PAUL, Texas
BOB SCHAFFER, Colorado
FRED UPTON, Michigan
NATHAN DEAL, Georgia
VAN HILLEARY, Tennessee
VERNON J. EHLERS, Michigan
MATT SALMON, Arizona
THOMAS G. TANCREDO, Colorado
ERNIE FLETCHER, Kentucky
JIM DEMINT, South Carolina
JOHNNY ISAKSON, Georgia
WILLIAM (BILL) CLAY, Missouri
GEORGE MILLER, California
DALE E. KILDEE, Michigan
MATTHEW G. MARTINEZ, California
MAJOR R. OWENS, New York
DONALD M. PAYNE, New Jersey
PATSY T. MINK, Hawaii
ROBERT E. ANDREWS, New Jersey
TIM ROEMER, Indiana
ROBERT C. SCOTT, Virginia
LYNN C. WOOLSEY, California,
CARLOS A. ROMERO-BARCELO, Puerto
Rico
CHAKA FATTAH, Pennsylvania
RUBEN HINOJOSA, Texas
CAROLYN McCARTHY, New York
JOHN F. TIERNEY, Massachusetts
RON KIND, Wisconsin
LORETTA SANCHEZ, California
HAROLD E. FORD, JR., Tennessee
DENNIS J. KUCINICH, Ohio
DAVID WU, Oregon
RUSH D. HOLT, New Jersey
KEVIN TALLEY, Majority Staff Director
GAIL WEISS, Minority Staff Director
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
JAMES M. JEFFORDS, Vermont, Chairman
JUDD GREGG, New Hampshire
BILL FRIST, Tennessee
MIKE DeWINE, Ohio
MICHAEL B. ENZI, Wyoming
TIM HUTCHINSON, Arkansas
SUSAN M. COLLINS, Maine
SAM BROWNBACK, Kansas
CHUCK HAGEL, Nebraska
JEFF SESSIONS, Alabama
EDWARD M. KENNEDY, Massachusetts
CHRISTOPHER J. DODD, Connecticut
TOM HARKIN, Iowa
BARBARA A. MIKULSKI, Maryland
JEFF BINGAMAN, New Mexico
PAUL D. WELLSTONE, Minnesota
PATTY MURRAY, Washington
JACK REED, Rhode Island
MARK E. POWDEN, Staff Director
SUSAN K HA'rrAN, Deputy Staff Director
J. MICHAEL MYERS, Minority Staff Director and Chief Counsel
ALPHABETICAL LISTING OF STATUTES
CONTAINED IN VOLUME III
Page
Act of March 2,1867 (Howard University)
631
Bankhead-Jones Act
564
Calvin Coolidge Memorial Foundation
572
Claiborne Pell Institute for International Relations and Public Policy Act
571
Edmund S. Muskie Foundation
572
Education Amendments of 1972, Land-Grant Status for the College of the
Virgin Islands and the University of Guam
500
Education Amendments of 1980; Title XIII, Parts G and I
501
Education Amendments
of
1980,
Title
XIII,
Part H (Miscellaneous
Provisions)
639
First Morrill Act
558
George Bush School of Government and Public Service Act
571
Grants to Eisenhower College and to Samuel Rayburn Library
638
Harry S Truman Memorial Scholarship Act
565
Herbert Hoover Memorial
636
Higher Education Act of 1965
1
Higher Education Amendments of 1968
499
Higher Education Amendments of 1986
503
Higher Education Amendments of 1992Title IV, V, and XV
524
Higher Education Amendments of 1992Title XIII
601
Higher Education Amendments of 1998
532
Howard University Endowment Act
633
Human Rights, Refugee, and Other Foreign Relations Provisions Act
of 1996
571
Human Services Reauthorization Act, Title V
643
Morris K. Udall Scholarship and Excellence in National Environmental and
Native American Public Policy Act of 1992
573
National Science Foundation Act of 1950
619
Navajo Community College Act
583
Public Law 98-480, Title III (Higher Education Projects)
641
Public Law 98-558, Title V (Higher Education and Research Project)
643
Second Morrill Act
561
Tribally Controlled Community College Assistance Act of 1978
587
(m)
TABLE OF CONTENTS
VOLUME IIIHIGHER EDUCATION
PART IGENERAL HIGHER EDUCATION PROGRAMS
Page
Higher Education Act of 1965
1
Title IGeneral Provisions
1
Part ADefinitions
1
Part BAdditional General Provisions
7
Part CCost of Higher Education
19
Part DAdministrative Provisions for Delivery of Student Financial
Assistance
21
Title IITeacher Quality Enhancement Grants for States and
Partnerships
34
Title IIIInstitutional Aid
48
Part AStrengthening Institutions
48
Part BStrengthening Historically Black Colleges and Universities
56
Part CEndowment Challenge Grants for Institutions Eligible for
Assistance Under Part a or Part B
64
Part DHistorically Black College and University Capital Financing
68
Part EMinority Science and Engineering Improvement Program
75
Subpart 1Minority Science and Engineering Improvement
Program
75
Subpart 2Administrative and General Provisions
77
Part FGeneral Provisions
80
Title IVStudent Assistance
86
Part AGrants to Students in Attendance at Institutions of Higher
Education
86
Subpart 1Federal Pell Grants
86
Subpart 2Federal Early Outreach and
Student Services
Programs
91
Chapter 1Federal Trio Programs
91
Chapter 2Gaining Early Awareness and Readiness for Un-
dergraduate Programs
102
Chapter 3Academic Achievement Incentive Scholarships
109
Subpart
3Federal
Supplemental
Education
Opportunity
Grants
111
Subpart 4Grants to States for State Student Incentives
116
Subpart 5Special Programs for Students Whose Families are
Engaged in Migrant and Seasonal Farmwork
121
Subpart 6Robert C. Byrd Honors Scholarship Program
124
*ERR11*Subpart 7Child Care Access Means Parents in School
127
Subpart 8Learning Anytime Anywhere Partnerships
130
Part BFederal Family Education Loan Program
132
Part CFederal Work-Study Programs
293
Part DWilliam D. Ford Federal Direct Loan Program
304
Part EFederal Perkins Loans
321
Part FNeed Analysis
344
Part GGeneral Provisions
Relating
to
Student
Assistance
Programs
373
Part HProgram Integrity Triad
435
Subpart 1State Role
435
Subpart 2Accrediting Agency Recognition
435
(V)
VI
Page
Higher Education Act of 1965Continued
Title IVStudent AssistanceContinued
Part HProgram Integrity TriadContinued
Subpart 3Eligibility and Certification Procedures
441
Title VDeveloping Institutions
450
Part AHispanic-Serving Institutions
450
Part BGeneral Provisions
455
Title VIInternational Education Programs
460
Part AInternational and Foreign Language Studies
460
Part BBusiness and International Education Programs
469
Part CInstitute for International Public Policy
475
Part DGeneral Provisions
478
Title VIIGraduate and Postsecondary Improvement Programs
480
Part AGraduate Education Programs
480
Subpart 1Jacob K. Javits Fellowship Program
480
Subpart 2Graduate Assistance in Areas of National Need
484
Subpart 3Thurgood Marshall Legal Educational Opportunity
Program
488
Subpart 4General Provisions
490
Part BFund for the Improvement of Postsecondary Education
490
Part CUrban Community Service
493
Part DDemonstration Projects to Ensure Students With Disabil-
ities Receive a Quality Higher Education
496
Higher Education Amendments of 1968, Section 507
499
Education Amendments of 1972, Land-Grant Status for the College of the
Virgin Islands and the University of Guam
500
Education Amendments of 1980
501
Title XIIIMiscellaneous Provisions
501
Part GNew Land Grant Colleges
501
Part ITechnical Provisions
501
Higher Education Amendments of 1986
503
Title IVStudent Assistance
503
Title XVAmerican Indian, Alaska Native, and Native Hawaiian Culture
and Art Development
506
Higher Education Amendments of 1992
524
Effective Dates and Related Implementation Provisions
524
Title IVStudent Assistance
524
Title VEducator Recruitment, Retention, and Development
527
Title XVRelated Programs and Amendments to Other Laws
529
Higher Education Amendments of 1998
532
Title VIII Studies, Reports, and Related Programs
532
Part AStudies
532
Part BAdvanced Placement Incentive Program
537
Part C-- Community Scholarship Mobilization
539
Part DGrants to States for Workplace and Community Transition
Training for Incarcerated Youth Offenders
542
Part EGrants to Combat Violent Crimes Against Women on Cam-
puses
545
Part FImproving United
States
Understanding
of
Science,
Engineering, and Technology in East Asia
549
Part GOlympic Scholarships
550
Part HUnderground Railroad
550
Part ISummer Travel and Work Programs
551
Part JWeb-Based Education Commission
552
Part KMiscellaneous
555
First Morrill Act
558
Second Morrill Act
561
Bankhead-Jones Act
564
Harry S Truman Memorial Scholarship Act
565
Human Rights, Refugee, and Other Foreign Relations
Provisions Act
of 1996
571
Claiborne Pell Institute for International Relations and Public Policy
Act
571
George Bush School of Government and Public Service Act
571
Edmund S. Muskie Foundation
572
Calvin Coolidge Memorial Foundation
572
VII
Page
Morris K. Udall Scholarship and Excellence in National Environmental and
Native American Public Policy Act of 1992
573
PART II NATIVE AMERICAN HIGHER EDUCATION
Navajo Community College Act
583
Tribally Controlled College or University Assistance Act of 1978
587
Title ITribally Controlled Colleges or Universities
588
Title IIITribally Controlled College or University Endowment Program
597
Title IVTribal Economic Development
599
Higher Education Amendments of 1992
601
Title XIIIIndian Higher Educations Programs
601
Part ATribally Controlled Community Colleges
601
Part BHigher Education Tribal Grant Authorization Act
601
Part CCritical Needs for Tribal Development Act
607
Part DInstitute of American Indian. Native Culture and Arts
Development
609
Part ETribal Development Student Assistance Revolving Loan
Program
610
Part FAmerican Indian Postsecondary Economic
Development
Scholarship
614
Part GAmerican Indian Teacher Training
616
PART IIINATIONAL SCIENCE FOUNDATION
National Science Foundation Act of 1950
619
PART IVASSISTANCE TO SPECIFIED INSTITUTIONS
Act of March 2,1867
631
Howard University Endowment Act
633
Title IIHoward University Endowment
633
Herbert Hoover Memorial
636
Grants to Eisenhower College and to the Samuel Rayburn Library
638
Education Amendments of 1980
639
Title XIII Miscellaneous Provisions
639
Part HMemorials
639
Subpart 1The Robert A. Taft Institute
639
Subpart 2General Daniel James Memorial Health Education
Center
639
Subpart 3The William Levi Dawson Chair ofPublic Affairs
640
Public Law 98-480
641
Title IIIHigher Education Projects
641
Human Services Reauthorization Act (P.L. 98-558)
643
Title VHigher Education and Research Project
643
PART IGENERAL HIGHER EDUCATION PROGRAMS
Higher Education Act of 1965
(P.L. 89-329)
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That this Act may
be cited as the "Higher Education Act of 1965".
TITLE I-GENERAL PROVISIONS
PART A DEFINITIONS
SEC. 101. [20 U.S.C. 1001] GENERAL DEFINITION OF INSTITUTION OF
HIGHER EDUCATION.
(a) INSTITUTION OF HIGHER EDUCATION.For purposes of this
Act, other than title IV, the term "institution of higher education"
means an educational institution in any State that
(1) admits as regular students only persons having a cer-
tificate of graduation from a school providing secondary edu-
cation, or the recognized equivalent of such a certificate;
(2) is legally authorized within such State to provide a pro-
gram of education beyond secondary education;
(3) provides an educational program for which the institu-
tion awards a bachelor's degree or provides not less than a 2-
year program that is acceptable for full credit toward such a
degree;
(4) is a public or other nonprofit institution; and
(5) is accredited by a nationally recognized accrediting
agency or association, or if not so accredited, is an institution
that has be!n granted preaccreditation status by such an agen-
cy or association that has been recognized by the Secretary for
the granting of preaccreditation status, and the Secretary has
determined that there is satisfactory assurance that the insti-
tution will meet the accreditation standards of such an agency
or association within a reasonable time.
(b) ADDITIONAL INSTITUTIONS INCLUDED.For purposes of this
Act, other than title IV, the term "institution of higher education"
also includes
(1) any school that provides not less than a 1-year program
of training to prepare students for gainful employment in a
recognized occupation and that meets the provision of para-
graphs (1), (2), (4), and (5) of subsection (a); and
(2) a public or nonprofit private educational institution in
any State that, in lieu of the requirement in subsection (a)(1),
admits as regular students persons who are beyond the age of
1
Sec. 102
NIGHER EDUCATION ACT Of 1965
2
compulsory school attendance in the State in which the institu-
tion is located.
(c) LIST OF ACCREDITING AGENCIES.For purposes of this sec-
tion and section 102, the Secretary shall publish a list of nationally
recognized accrediting agencies or associations that the Secretary
determines, pursuant to subpart 2 of part H of title IV, to be reli-
able authority as to the quality of the education or training offered.
SEC. 102. [20 U.S.C. 1002] DEFINITION OF INSTITUTION OF HIGHER
EDUCATION FOR PURPOSES OF TITLE IV PROGRAMS.
(a) DEFINITION OF INSTITUTION OF HIGHER EDUCATION FOR
PURPOSES OF TITLE IV PROGRAMS.
(1) INCLUSION OF ADDITIONAL INSTITUTIONS.Subject to
paragraphs (2) through (4) of this subsection, the term "institu-
tion of higher education" for purposes of title IV includes, in
addition to the institutions covered by the definition in section
101
(A) a proprietary institution of higher education (as
defined in subsection (b) of this section);
(B) a postsecondary vocational institution (as defined
in subsection (c) of this section); and
(C) only for the purposes of part B of title N, an insti-
tution 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 pur-
pose of part B of title IV.
(2) INSTITUTIONS OUTSIDE THE UNITED STATES.
(A) IN GENERAL.For the purpose of qualifying as an
institution under paragraph (1)(C), the Secretary shall es-
tablish criteria by regulation for the approval of institu-
tions outside the United States and for the determination
that such institutions are comparable to an institution of
higher education as defined in section 101. In the case of
a graduate medical or veterinary school outside the United
States, such criteria shall include a requirement that a
student attending such school outside the United States is
ineligible for loans made, insured, or guaranteed under
part B unless
(i)(I) at least 60 percent of those enrolled in, and
at least 60 percent of the graduates of, the graduate
medical school outside the United States were not per-
sons described in section 484(a)(5) in the year preced-
ing the year for which a student is seeking a loan
under part B of title IV; and
(II) at least 60 percent of the individuals who
were students or graduates of the graduate medical
school outside the United States (both nationals of the
United States and others) taking the examinations ad-
ministered by the Educational Commission for Foreign
Medical Graduates received a passing score in the
year preceding the year for which a student is seeking
a loan under part B of title N; or
(ii) the institution has a clinical training program
that was approved by a State as of January 1, 1992,
or the institution's students complete their clinical
0
3
HIGHER EDUCATION ACT OF 1965
Sec. 102
training at an approved veterinary school located in
the United States.
(B) ADVISORY PANEL.
(i) IN GENERAL.For the purpose of qualifying as
an institution under paragraph (1)(C) of this sub-
section, the Secretary shall establish an advisory
panel of medical experts that shall
(I) evaluate the standards of accreditation ap-
plied to applicant foreign medical schools; and
(II) determine the comparability of those
standards to standards for accreditation applied to
United States medical schools.
(ii) SPECIAL RULE.If the accreditation standards
described in clause (i) are determined not to be com-
parable, the foreign medical school shall be required to
meet the requirements of section 101.
(C) FAILURE TO RELEASE INFORMATION.The failure of
an institution outside the United States to provide, re-
lease, or authorize release to the Secretary of such infor-
mation as may be required by subparagraph (A) shall
render such institution ineligible for the purpose of part B
of title IV.
(D) SPECIAL RULE.If, pursuant to this paragraph, an
institution loses eligibility to participate in the programs
under title W, then a student enrolled at such institution
may, notwithstanding such loss of eligibility, continue to
be eligible to receive a loan under part B while attending
such institution for the academic year succeeding the aca-
demic year in which such loss of eligibility occurred.
(3) LIMITATIONS BASED ON COURSE OF STUDY OR ENROLL-
MENT.An institution shall not be considered to meet the defi-
nition of an institution of higher education in paragraph (1) if
such institution
(A) offers more than 50 percent of such institution's
courses by correspondence, unless the institution is an in-
stitution that meets the definition in section 521(4)(C) of
the Carl D. Perkins Vocational and Applied Technology
Education Act;
(B) enrolls 50 percent or more of the institution's stu-
dents in correspondence courses, unless the institution is
an institution that meets the definition in such section, ex-
cept that the Secretary, at the request of such institution,
may waive the applicability of this subparagraph to such
institution for good cause, as determined by the Secretary
in the case of an institution of higher education that pro-
vides a 2- or 4-year program of instruction (or both) for
which the institution awards an associate or baccalaureate
degree, respectively;
(C) has a student enrollment in which more than 25
percent of the students are incarcerated, except that the
Secretary may waive the limitation contained in this sub-
paragraph for a nonprofit institution that provides a 2- or
4-year program of instruction (or both) for which the insti-
Sec. 102
HIGHER EDUCATION ACT OF 1965
4
tution awards a bachelor's degree, or an associate's degree
or a postsecondary diploma, respectively; or
(D) has a student enrollment in which more than 50
percent of the students do not have a secondary school di-
ploma or its recognized equivalent, and does not provide a
2- or 4-year program of instruction (or both) for which the
institution awards a bachelor's degree or an associate's de-
gree, respectively, except that the Secretary may waive the
limitation contained in this subparagraph if a nonprofit in-
stitution demonstrates to the satisfaction of the Secretary
that the institution exceeds such limitation because the in-
stitution serves, through contracts with Federal, State, or
local government agencies, significant numbers of students
who do not have a secondary school diploma or its recog-
nized equivalent.
(4) LIMITATIONS BASED ON MANAGEMENT.An institution
shall not be considered to meet the definition of an institution
of higher education in paragraph (1) if
(A) the institution, or an affiliate of the institution
that has the power, by contract or ownership interest, to
direct or cause the direction of the management or policies
of the institution, has filed for bankruptcy, except that this
paragraph shall not apply to a nonprofit institution, the
primary function of which is to provide health care edu-
cational services (or an affiliate of such an institution that
has the power, by contract or ownership interest, to direct
or cause the direction of the institution's management or
policies) that files for bankruptcy under chapter 11 of title
11, United States Code, between July 1, 1998, and Decem-
ber 1, 1998; or
(B) the institution, the institution's owner, or the insti-
tution's chief executive officer has been convicted of, or has
pled nolo contendere or guilty to, a crime involving the ac-
quisition, use, or expenditure of funds under title IV, or
has been judicially determined to have committed fraud in-
volving funds under title IV.
(5) CERTIFICATION.The Secretary shall certify an institu-
tion's qualification as an institution of higher education in ac-
cordance with the requirements of subpart 3 of part H of title
IV.
(6) LOSS OF ELIGIBILITY.An institution of higher edu-
cation shall not be considered to meet the definition of an insti-
tution of higher education in paragraph (1) if such institution
is removed from eligibility for funds under title IV as a result
of an action pursuant to part H of title IV.
(b) PROPRIETARY INSTITUTION OF HIGHER EDUCATION.
(1) PRINCIPAL CRITERIA.For the purpose of this section,
the term "proprietary institution of higher education" means a
school that
(A) provides an eligible program of training to prepare
students for gainful employment in a recognized occupa-
tion;
(B) meets the requirements of paragraphs (1) and (2)
of section 101(a);
5
HIGHER EDUCATION ACT OF 1965
Sec. 103
(C) does not meet the requirement of paragraph (4) of
section 101(a);
(D) is accredited by a nationally recognized accrediting
agency or association recognized by the Secretary pursuant
to part H of title IV;
(E) has been in existence for at least 2 years; and
(F) has at least 10 percent of the school's revenues
from sources that are not derived from funds provided
under title IV, as determined in accordance with regula-
tions prescribed by the Secretary.
(2) ADDITIONAL INSTITUTIONS.The term "proprietary in-
stitution of higher education" also includes a proprietary edu-
cational institution in any State that, in lieu of the require-
ment in paragraph (1) of section 101(a), admits as regular stu-
dents persons who are beyond the age of compulsory school at-
tendance in the State in which the institution is located.
(c) POSTSECONDARY VOCATIONAL INSTITUTION.
(1) PRINCIPAL CRITERIA.For the purpose of this section,
the term "postsecondary vocational institution" means a school
that
(A) provides an eligible program of training to prepare
students for gainful employment in a recognized occupa-
tion;
(B) meets the requirements of paragraphs (1), (2), (4),
and (5) of section 101(a); and
(C) has been in existence for at least 2 years.
(2) ADDITIONAL INSTITUTIONS.The term "postsecondary
vocational institution" also includes an educational institution
in any State that, in lieu of the requirement in paragraph (1)
of section 101(a), admits as regular students persons who are
beyond the age of compulsory school attendance in the State in
which the institution is located.
SEC. 103. [20 U.S.C. 1003] ADDITIONAL DEFINITIONS.
In this Act:
(1)
COMBINATION OF INSTITUTIONS OF
HIGHER EDU-
CATION.The term "combination of institutions of higher edu-
cation" means a group of institutions of higher education that
have entered into a cooperative arrangement for the purpose of
carrying out a common objective, or a public or private non-
profit agency, organization, or institution designated or created
by a group of institutions of higher education for the purpose
of carrying out a common objective on the group's behalf.
(2) DEPARTMENT.The term "Department" means the De-
partment of Education.
(3) DISABILITY.The term "disability" has the same mean-
ing given that term under section 3(2) of the Americans With
Disabilities Act of 1990.
(4) ELEMENTARY SCHOOL.The term "elementary school"
has the same meaning given that term under section 14101 of
the Elementary and Secondary Education Act of 1965.
(5) GIFTED AND TALENTED.The term "gifted and talented"
has the same meaning given that term under section 14101 of
the Elementary and Secondary Education Act of 1965.
Sec. 103
HIGHER EDUCATION ACT OF 1965
6
(6) LOCAL EDUCATIONAL AGENCY.The term "local edu-
cational agency" has the same meaning given that term under
section 14101 of the Elementary and Secondary Education Act
of 1965.
(7) NEW BORROWER.The term "new borrower" when used
with respect to any date means an individual who on that date
has no outstanding balance of principal or interest owing on
any loan made, insured, or guaranteed under title IV.
(8) NONPROFIT.The term "nonprofit" as applied to a
school, agency, organization, or institution means a school,
agency, organization, or institution owned and operated by one
or more nonprofit corporations or associations, no part of the
net earnings of which inures, or may lawfully inure, to the
benefit of any private shareholder or individual.
(9) SCHOOL OR DEPARTMENT OF DIVINITY.The term
"school or department of divinity" means an institution, or a
department or a branch of an institution, the program of in-
struction of which is designed for the education of students
(A) to prepare the students to become ministers of reli-
gion or to enter upon some other religious vocation (or to
provide continuing training for any such vocation); or
(B) to prepare the students to teach theological sub-
jects.
(10) SECONDARY SCHOOL.The term "secondary school"
has the same meaning given that term under section 14101 of
the Elementary and Secondary Education Act of 1965.
(11) SECRETARY.The term "Secretary" means the Sec-
retary of Education.
(12) SERVICE -LEARNING.The term "service-learning" has
the same meaning given that term under section 101(23) of the
National and Community Service Act of 1990.
(13) SPECIAL EDUCATION TEACHER.The term "special edu-
cation teacher" means teachers who teach children with dis-
abilities as defined in section 602 of the Individuals with Dis-
abilities Education Act.
(14) STATE EDUCATIONAL AGENCY.The term "State edu-
cational agency" has the same meaning given that term under
section 14101 of the Elementary and Secondary Education Act
of 1965.
(15) STATE HIGHER EDUCATION AGENCY.The term "State
higher education agency" means the officer or agency primarily
responsible for the State supervision of higher education.
(16) STATE; FREELY ASSOCIATED STATES.
(A) STATE.The term "State" includes, in addition to
the several States of the United States, the Common-
wealth of Puerto Rico, the District of Columbia, Guam,
American Samoa, the United States Virgin Islands, the
Commonwealth of the Northern Mariana Islands, and the
Freely Associated States.
(B) FREELY ASSOCIATED STATES.The term "Freely As-
sociated States" means the Republic of the Marshall Is-
lands, the Federated States of Micronesia, and the Repub-
lic of Palau.
1
HIGHER EDUCATION ACT OF 1965
Sec. 112
PART B-ADDITIONAL GENERAL PROVISIONS
SEC. 111. [20 U.S.C. 1011] ANTIDISCRIMINATION.
(a) IN GENERAL.Institutions of higher education receiving
Federal financial assistance may not use such financial assistance,
directly or indirectly, to undertake any study or project or fulfill
the terms of any contract containing an express or implied provi-
sion that any person or persons of a particular race, religion, sex,
or national origin be barred from performing such study, project,
or contract, except that nothing in this subsection shall be con-
strued to prohibit an institution from conducting objective studies
or projects concerning the nature, effects, or prevention of discrimi-
nation, or to have the institution's curriculum restricted on the
subject of discrimination.
(b) LIMITATIONS ON STATUTORY CONSTRUCTION.Nothing in
this Act shall be construed to limit the rights or responsibilities of
any individual under the Americans With Disabilities Act of 1990,
the Rehabilitation Act of 1973, or any other law.
SEC. 112. [20 U.S.C. 1011a] PROTECTION OF STUDENT SPEECH AND AS-
SOCIATION RIGHTS.
(a) PROTECTION OF RIGHTS.It is the sense of Congress that no
student attending an institution of higher education on a full- or
part-time basis should, on the basis of participation in protected
speech or protected association, be excluded from participation in,
be denied the benefits of, or be subjected to discrimination or offi-
cial sanction under any education program, activity, or division of
the institution directly or indirectly receiving financial assistance
under this Act, whether or not such program, activity, or division
is sponsored or officially sanctioned by the institution.
(b)
CONSTRUCTION.Nothing
in
this
section
shall
be
construed
(1) to discourage the imposition of an official sanction on
a student that has willfully participated in the disruption or
attempted disruption of a lecture, class, speech, presentation,
or performance made or scheduled to be made under the aus-
pices of the institution of higher education; or
(2) to prevent an institution of higher education from tak-
ing appropriate and effective action to prevent violations of
State liquor laws, to discourage binge drinking and other alco-
hol abuse, to protect students from sexual harassment includ-
ing assault and date rape, to prevent hazing, or to regulate un-
sanitary or unsafe conditions in any student residence.
(c) DEFINITIONS.For the purposes of this section:
(1) OFFICIAL SANCTION.The term "official sanction "
(A) means expulsion, suspension, probation, censure,
condemnation, reprimand, or any other disciplinary, coer-
cive, or adverse action taken by an institution of higher
education or administrative unit of the institution; and
(B) includes an oral or written warning made by an of-
ficial of an institution of higher education acting in the of-
ficial capacity of the official..
(2) PROTECTED ASSOCIATION.The term "protected associa-
tion" means the joining, assembling, and residing with others
15
Sec. 113
HIGHER EDUCATION ACT OF 1965
8
that is protected under the first and 14th amendments to the
Constitution, or would be protected if the institution of higher
education involved were subject to those amendments.
(3) PROTECTED SPEECH.The term "protected speech"
means speech that is protected under the first and 14th
amendments to the Constitution, or would be protected if the
institution of higher education involved were subject to those
amendments.
SEC. 113. [20 U.S.C. 1011b] TREATMENT OF TERRITORIES AND TERRI-
TORIAL STUDENT ASSISTANCE.
(a) WAIVER AUTHORITY.The Secretary is required to waive
the eligibility criteria of any postsecondary education program ad-
ministered by the Department where such criteria do not take into
account the unique circumstances in Guam, the United States Vir-
gin Islands, American Samoa, the Commonwealth of the Northern
Mariana Islands, and the Freely Associated States.
(b) ELIGIBILITY.Notwithstanding any other provision of law,
an institution of higher education that is located in any of the Free-
ly Associated States, rather than in another State, shall be eligible,
if otherwise qualified, for assistance under chapter 1 of subpart 2
of part A of title N. This subsection shall cease to be effective on
September 30, 2004.
SEC. 114. [20 U.S.C. 1011c] NATIONAL ADVISORY COMMITTEE ON INSTI-
TUTIONAL QUALITY AND INTEGRITY.
(a) ESTABLISHMENT.There is established in the Department a
National Advisory Committee on Institutional Quality and Integ-
rity (hereafter in this section referred to as the "Committee"),
which shall be composed of 15 members appointed by the Secretary
from among individuals who are representatives of, or knowledge-
able concerning, education and training beyond secondary edu-
cation, including representatives of all sectors and types of institu-
tions of higher education (as defined in section 102), to assess the
process of eligibility and certification of such institutions under
title N and the provision of financial aid under title N.
(b) TERMS OF MEMBERS.Terms of office of each member of
the Committee shall be 3 years, except that any member appointed
to fill a vacancy occurring prior to the expiration of the term for
which the member's predecessor was appointed shall be appointed
for the remainder of such term.
(c) PUBLIC NOTICE.The Secretary shall
(1) annually publish in the Federal Register a list contain-
ing the name of each member of the Committee and the date
of the expiration of the term of office of the member; and
(2) publicly solicit nominations for each vacant position or
expiring term of office on the Committee.
(d) FUNCTIONS.The Committee shall
(1) advise the Secretary with respect to establishment and
enforcement of the standards of accrediting agencies or associa-
tions under subpart 2 of part H of title N;
(2) advise the Secretary with respect to the recognition of
a specific accrediting agency or association;
HIGHER EDUCATION ACT OF 1965
Sec. 116
(3) advise the Secretary with respect to the preparation
and publication of the list of nationally recognized accrediting
agencies and associations;
(4) develop and recommend to the Secretary standards and
criteria for specific categories of vocational training institutions
and institutions of higher education for which there are no rec-
ognized accrediting agencies, associations, or State agencies, in
order to establish the eligibility of such institutions on an in-
terim basis for participation in federally funded programs;
(5) advise the Secretary with respect to the eligibility and
certification process for institutions of higher education under
title IV, together with recommendations for improvements in
such process;
(6) advise the Secretary with respect to the relationship
between
(A) accreditation of institutions of higher education
and the certification and eligibility of such institutions;
and
(B) State licensing responsibilities with respect to such
institutions; and
(7) carry out such other advisory functions relating to ac-
creditation and institutional eligibility as the Secretary may
prescribe.
(e) MEETING PROCEDURES.The Committee shall meet not less
than twice each year at the call of the Chairperson. The date of,
and agenda for, each meeting of the Committee shall be submitted
in advance to the Secretary for approval. A representative of the
Secretary shall be present at all meetings of the Committee.
(f) REPORT.Not later than November 30 of each year, the
Committee shall make an annual report through the Secretary to
Congress. The annual report shall contain
(1) a list of the members of the Committee and their ad-
dresses;
(2) a list of the functions of the Committee;
(3) a list of dates and places of each meeting during the
preceding fiscal year; and
(4) a summary of the activities, findings and recommenda-
tions made by the Committee during the preceding fiscal year.
(g) TERMINATION.The Committee shall cease to exist on Sep-
tember 30, 2004.
SEC. 115. [20 U.S.C. 1011(1] STUDENT REPRESENTATION.
The Secretary shall, in appointing individuals to any commis-
sion, committee, board, panel, or other body in connection with the
administration of this Act, include individuals who are, at the time
of appointment, attending an institution of higher education.
SEC. 110. [20 U.S.C. 10110 FINANCIAL RESPONSIBILITY OF FOREIGN
STUDENTS.
Nothing in this Act or any other Federal law shall be con-
strued to prohibit any institution of higher education from requir-
ing a student who is a foreign national (and not admitted to perma-
nent residence in the United States) to guarantee the future pay-
ment of tuition and fees to such institution by
(1) making advance payment of such tuition and fees;
Sec. 117
NIGHER EDUCATION ACT OF 1965
10
(2) making deposits in an escrow account administered by
such institution for such payments; or
(3) obtaining a bond or other insurance that such pay-
ments will be made.
SEC. 117. [20 U.S.C. 1011f] DISCLOSURES OF FOREIGN GIFTS.
(a) DISCLOSURE REPORT.Whenever any institution is owned
or controlled by a foreign source or receives a gift from or enters
into a contract with a foreign source, the value of which is $250,000
or more, considered alone or in combination with all other gifts
from or contracts with that foreign source within a calendar year,
the institution shall file a disclosure report with the Secretary on
January 31 or July 31, whichever is sooner.
(b) CONTENTS OF REPORT.Each report to the Secretary re-
quired by this section shall contain the following:
(1) For gifts received from or contracts entered into with
a foreign source other than a foreign government, the aggre-
gate dollar amount of such gifts and contracts attributable to
a particular country. The country to which a gift is attributable
is the country of citizenship, or if unknown, the principal resi-
dence for a foreign source who is a natural person, and the
country of incorporation, or if unknown, the principal place of
business, for a foreign source which is a legal entity.
(2) For gifts received from or contracts entered into with
a foreign government, the aggregate amount of such gifts and
contracts received from each foreign government.
(3) In the case of an institution which is owned or con-
trolled by a foreign source, the identity of the foreign source,
the date on which the foreign source assumed ownership or
control, and any changes in program or structure resulting
from the change in ownership or control.
(C) ADDITIONAL DISCLOSURES FOR RESTRICTED AND CONDI-
TIONAL Givrs.Notwithstanding the provisions of subsection (b),
whenever any institution receives a restricted or conditional gift or
contract from a foreign source, the institution shall disclose the fol-
lowing:
(1) For such gifts received from or contracts entered into
with a foreign source other than a foreign government, the
amount, the date, and a description of such conditions or re-
strictions. The report shall also disclose the country of citizen-
ship, or if unknown, the principal residence for a foreign source
which is a natural person, and the country of incorporation, or
if unknown, the principal place of business for a foreign source
which is a legal entity.
(2) For gifts received from or contracts entered into with
a foreign government, the amount, the date, a description of
such conditions or restrictions, and the name of the foreign
government.
(d) RELATION TO OTHER REPORTING REQUIREMENTS.
(1) STATE REQUIREMENTS.If an institution described
under subsection (a) is within a State which has enacted re-
quirements for public disclosure of gifts from or contracts with
a foreign source that are substantially similar to the require-
ments of this section, a copy of the disclosure report filed with
18.
11
HIGHER EDUCATION ACT OF 1965
Sec. 117
the State may be filed with the Secretary in lieu of a report
required under subsection (a). The State in which the institu-
tion is located shall provide to the Secretary such assurances
as the Secretary may require to establish that the institution
has met the requirements for public disclosure under State law
if the State report is filed.
(2) USE OF OTHER FEDERAL REPORTS.If an institution re-
ceives a gift from, or enters into a contract with, a foreign
source, where any other department, agency, or bureau of the
executive branch requires a report containing requirements
substantially similar to those required under this section, a
copy of the report may be filed with the Secretary in lieu of a
report required under subsection (a).
(e) PUBLIC INSPECTION.All disclosure reports required by this
section shall be public records open to inspection and copying dur-
ing business hours.
(f) ENFORCEMENT.
(1) COURT ORDERS.Whenever it appears that an institu-
tion has failed to comply with the requirements of this section,
including any rule or regulation promulgated under this sec-
tion, a civil action may be brought by the Attorney General, at
the request of the Secretary, in an appropriate district court of
the United States, or the appropriate United States court of
any territory or other place subject to the jurisdiction of the
United States, to request such court to compel compliance with
the requirements of this section.
(2) COSTS.For knowing or willful failure to comply with
the requirements of this section, including any rule or regula-
tion promulgated thereunder, an institution shall pay to the
Treasury of the United States the full costs to the United
States of obtaining compliance, including all associated costs of
investigation and enforcement.
(g) REGULATIONS.The Secretary may promulgate regulations
to carry out this section.
(h) DEFINITIONS.For the purpose of this section
(1) the term "contract" means any agreement for the acqui-
sition by purchase, lease, or barter of property or services by
the foreign source, for the direct benefit or use of either of the
parties;
(2) the term "foreign source" means
(A) a foreign government, including an agency of a for-
eign government;
(B) a legal entity, governmental or otherwise, created
solely under the laws of a foreign state or states;
(C) an individual who is not a citizen or a national of
the United States or a trust territory or protectorate there-
of; and
(D) an agent, including a subsidiary or affiliate of a
foreign legal entity, acting on behalf of a foreign source;
(3) the term "gift" means any gift of money or property;
(4) the term "institution" means any institution, public or
private, or, if a multicampus institution, any single campus of
such institution, in any State, that
Sec. 118
HIGHER EDUCATION ACT OF 1965
12
(A) is legally authorized within such State to provide
a program of education beyond secondary school;
(B) provides a program for which the institution
awards a bachelor's degree (or provides not less than a 2-
year program which is acceptable for full credit toward
such a degree) or more advanced degrees; and
(C) is accredited by a nationally recognized accrediting
agency or association and to which institution Federal fi-
nancial assistance
is
extended (directly or indirectly
through another entity or person), or which institution re-
ceives support from the extension of Federal financial as-
sistance to any of the institution's subunits; and
(5) the term "restricted or conditional gift or contract"
means any endowment, gift, grant, contract, award, present, or
property of any kind which includes provisions regarding
(A) the employment, assignment, or termination of fac-
ulty;(B) the establishment of departments, centers, re-
search or lecture programs, or new faculty positions;
(C) the selection or admission of students; or
(D) the award of grants, loans, scholarships, fellow-
ships, or other forms of financial aid restricted to students
of a specified country, religion, sex, ethnic origin, or politi-
cal opinion.
SEC. 118. [20 U.S.C. 10110 APPLICATION OF PEER REVIEW PROCESS.
All applications submitted under the provisions of this Act
which require peer review shall be read by a panel of readers com-
posed of individuals selected by the Secretary, which shall include
outside readers who are not employees of the Federal Government.
The Secretary shall ensure that no individual assigned under this
section to review any application has any conflict of interest with
regard to that application which might impair the impartiality with
which that individual conducts the review under this section.
SEC. 119. [20 U.S.C. 101111] BINGE DRINKING ON COLLEGE CAMPUSES.
(a) SHORT TITLE.This section may be cited as the "Collegiate
Initiative To Reduce Binge Drinking and Illegal Alcohol Consump-
tion".
(b) SENSE OF CONGRESS.It is the sense of Congress that, in
an effort to change the culture of alcohol consumption on college
campuses, all institutions of higher education should carry out the
following:
(1) The president of the institution should appoint a task
force consisting of school administrators, faculty, students,
Greek system representatives, and others to conduct a full ex-
amination of student and academic life at the institution. The
task force should make recommendations for a. broad range of
policy and program changes that would serve to reduce alcohol
and other drug-related problems. The institution should pro-
vide resources to assist the task force in promoting the campus
policies and proposed environmental changes that have been
identified.
(2) The institution should provide maximum opportunities
for students to live in an alcohol-free environment and to en-
13
NIGHER EDUCATION ACT OF 1965
Sec. 120
gage in stimulating, alcohol-free recreational and leisure activi-
ties.
(3) The institution should enforce a "zero tolerance" policy
on the illegal consumption of alcohol by students at the institu-
tion.
(4) The institution should vigorously enforce the institu-
tion's code of disciplinary sanctions for those who violate cam-
pus alcohol policies. Students with alcohol or other drug-relat-
ed problems should be referred for assistance, including on-
campus counseling programs if appropriate.
(5) The institution should adopt a policy to discourage alco-
holic beverage-related sponsorship of on-campus activities. It
should adopt policies limiting the advertisement and promotion
of alcoholic beverages on campus.
(6) The institution should work with the local community,
including local businesses, in a "Town/Gown" affiance to en-
courage responsible policies toward alcohol consumption and to
address illegal alcohol use by students.
SEC. 120. [20 U.S.C. 1011i] DRUG AND ALCOHOL ABUSE PREVENTION.
(a) RESTRICTION ON ELIGIBILITY.Notwithstanding any other
provision of law, no institution of higher education shall be eligible
to receive funds or any other form offinancial assistance under any
Federal program, including participation in any federally funded or
guaranteed student loan program, unless the institution certifies to
the Secretary that the institution has adopted and has imple-
mented a program to prevent the use of illicit drugs and the abuse
of alcohol by students and employees that, at a minimum,
includes
(1) the annual distribution to each student and employee
of
(A) standards of conduct that clearly prohibit, at a
minimum, the unlawful possession, use, or distribution of
illicit drugs and alcohol by students and employees on the
institution's property or as part of any of the institution's
activities;
(B) a description of the applicable legal sanctions
under local, State, or Federal law for the unlawful posses-
sion or distribution of illicit drugs and alcohol;
(C) a description of the health-risks associated with
the use of illicit drugs and the abuse of alcohol;
(D) a description of any drug or alcohol counseling,
treatment, or rehabilitation or re-entry programs that are
available to employees or students; and
(E) a clear statement that the institution will impose
sanctions on students and employees (consistent with
local, State, and Federal law), and a description of those
sanctions, up to and including expulsion or termination of
employment and referral for prosecution, for violations of
the standards of conduct required by subparagraph (A);
and
(2) a biennial review by the institution of the institution's
program to
Sec. 120
HIGHER EDUCATION ACT OF 1965
14
(A) determine the program's effectiveness and imple
ment changes to the program if the changes are needed;
and
(B) ensure that the sanctions required by paragraph
(1)(E) are consistently enforced.
(b) INFORMATION AVAILABILITY.Each institution of higher
education that provides the certification required by subsection (a)
shall, upon request, make available to the Secretary and to the
public a copy of each item required by subsection (a)(1) as well as
the results of the biennial review required by subsection (a)(2).
(C) REGULATIONS.
(1) IN GENERALThe Secretary shall publish regulations
to implement and enforce the provisions of this section, includ-
ing regulations that provide for
(A) the periodic review of a representative sample of
programs required by subsection (a); and
(B) a range of responses and sanctions for institutions
of higher education that fail to implement their programs
or to consistently enforce their sanctions, including infor-
mation and technical assistance, the development of a
compliance agreement, and the termination of any form of
Federal financial assistance.
(2) REHABILITATION PROGRAM.The sanctions required by
subsection (a)(1)(E) may include the completion of an appro-
priate rehabilitation program.
(d) APPEALS.Upon determination by the Secretary to termi-
nate financial assistance to any institution of higher education
under this section, the institution may file an appeal with an ad-
ministrative law judge before the expiration of the 30-day period
beginning on the date such institution is notified of the decision to
terminate financial assistance under this section. Such judge shall
hold a hearing with respect to such termination of assistance before
the expiration of the 45-day period beginning on the date that such
appeal is filed. Such judge may extend such 45-day period upon a
motion by the institution concerned. The decision of the judge with
respect to such termination shall be considered to be a final agency
action.
(e) ALCOHOL AND DRUG ABUSE PREVENTION GRANTS.
(1) PROGRAM AUTHORITY.The Secretary may make grants
to institutions of higher education or consortia of such institu-
tions, and enter into contracts with such institutions, consor-
tia, and other organizations, to develop, implement, operate,
improve, and disseminate programs of prevention, and edu-
cation (including treatment-referral) to reduce and eliminate
the illegal use of drugs and alcohol and the violence associated
with such use. Such grants or contracts may also be used for
the support of a higher education center for alcohol and drug
abuse prevention that will provide training, technical assist-
ance, evaluation, dissemination, and associated services and
assistance to the higher education community as determined
by the Secretary and institutions of higher education.
(2) AWARDS.Grants and contracts shall be awarded
under paragraph (1) on a competitive basis.
15
HIGHER EDUCATION ACT OF 1965
Sec. 120
(3) APPLICATIONS.An institution of higher education, a
consortium of such institutions, or another organization that
desires to receive a grant or contract under paragraph (1) shall
submit an application to the Secretary at such time, in such
manner, and containing or accompanied by such information as
the Secretary may reasonably require by regulation.
(4) ADDITIONAL REQUIREMENTS.
(A) PARTICIPATION.In awarding grants and contracts
under this subsection the Secretary shall make every effort
to ensure
(i) the equitable participation of private and public
institutions of higher education (including community
and junior colleges); and
(ii) the equitable geographic participation of such
institutions.
(B) CONSIDERATION.In awarding grants and con-
tracts under this subsection the Secretary shall give appro-
priate consideration to institutions of higher education
with limited enrollment.
(5) AUTHORIZATION OF APPROPRIATIONS.There are author-
ized to be appropriated to carry out this subsection $5,000,000
for fiscal year 1999 and such sums as may be necessary for
each of the 4 succeeding fiscal years.
(f) NATIONAL RECOGNITION AWARDS.
(1) PURPOSE.It is the purpose of this subsection to pro-
vide models of innovative and effective alcohol and drug abuse
prevention programs in higher education and to focus national
attention on exemplary alcohol and drug abuse prevention ef-
forts.
(2) AWARDS.
(A) IN GENERAL.The Secretary shall make 5 National
Recognition Awards for outstanding alcohol prevention
programs and 5 National Recognition Awards for outstand-
ing drug abuse prevention programs, on an annual basis,
to institutions of higher education that
(i) have developed and implemented innovative
and effective alcohol prevention programs or drug
abuse prevention programs; and
(ii) with respect to an application for an alcohol
prevention program award, demonstrate in the appli-
cation submitted under paragraph (3) that the institu-
tion has undertaken efforts designed to change the
culture of college drinking consistent with the review
criteria described in paragraph (3)(C)(iii).
(B) CEREMONY.The awards shall be made at a cere-
mony in Washington, D.C.
(C) DocumErrr.The Secretary shall publish a docu-
ment describing the alcohol and drug abuse prevention
programs of institutions of higher education that receive
the awards under this subsection and disseminate the doc-
ument nationally to all public and private secondary school
guidance counselors for use by secondary school juniors
and seniors preparing to enter an institution of higher
Sec. 120
HIGHER EDUCATION ACT OF 1965
16
education. The document shall be disseminated not later
than January 1 of each academic year.
(D) AMOUNT AND USE.Each institution of higher edu-
cation selected to receive an award under this subsection
shall receive an award in the amount of $50,000. Such
award shall be used for the maintenance and improvement
of the institution's outstanding prevention program for the
academic year following the academic year for which the
award is made.
(3) APPLICATION.
(A) IN GENERALEach institution of higher education
desiring an award under this subsection shall submit an
application to the Secretary at such time, in such manner,
and accompanied by such information as the Secretary
may require. Each such application shall contain
(i) a clear description of the goals and objectives
of the prevention program of the institution;
(ii) a description of program activities that focus
on alcohol or drug policy issues, policy development,
modification, or refinement, policy dissemination and
implementation, and policy enforcement;
(iii) a description of activities that encourage stu-
dent and employee participation and involvement in
activity development and implementation;
(iv) the objective criteria used to determine the ef-
fectiveness of the methods used in such programs and
the means used to evaluate and improve the programs'
efforts;
(v) a description of special initiatives used to re-
duce high-risk behavior or increase low-risk behavior;
and (vi) a description of coordination and networking
efforts that exist in the community in which the insti-
tution is located for purposes of such programs.
(B) APPLICATION REVIEW.The Secretary shall appoint
a committee to review applications submitted under this
paragraph. The committee may include representatives of
Federal departments or agencies the programs of which in-
clude alcohol abuse prevention and education efforts and
drug abuse prevention and education efforts, directors or
heads (or their representatives) of professional associations
that focus on alcohol and drug abuse prevention efforts,
and non-Federal scientists who have backgrounds in social
science evaluation and research methodology and in edu-
cation. Decisions of the committee shall be made directly
to the Secretary without review by any other entity in the
Department.
(C) REVIEW CRITERIA.The committee described in
subparagraph (B) shall develop specific review criteria for
reviewing and evaluating applications submitted under
this paragraph. The review criteria shall include
(i) measures of the effectiveness of the program of
the institution, that includes changes in the campus
alcohol or other drug environment or the climate and
11
HIGHER EDUCATION ACT OF 1965
Sec. 121
changes in alcohol or other drug use before and after
the initiation of the program;
(ii)
measures of program
institutionalization,
including
(I) an assessment of needs of the institution;
(II) the institution's alcohol and drug policies,
staff and faculty development activities, drug pre-
vention criteria, student, faculty, and campus
community involvement; and
(III) whether the program will be continued
after the cessation of Federal funding; and
(iii) with respect to an application for an alcohol
prevention program award, criteria for determining
whether the institution has policies in effectthat
(I) prohibit alcoholic beverage sponsorship of
athletic events, and prohibit alcoholic beverage
advertising inside athletic facilities;
(II) prohibit alcoholic beverage marketing on
campus, which may include efforts to ban alcohol
advertising in institutional publications or efforts
to prohibit alcohol-related advertisements at cam-
pus events;
(III) establish or expand upon alcohol-free liv-
ing arrangements for all college students;
(IV) establish partnerships with community
members and organizations to further alcohol pre-
vention efforts on campus and the areas surround-
ing campus; and
(V) establish innovative communications pro-
grams involving students and faculty in an effort
to educate students about alcohol-related risks.
(4) ELIGIBILITY.In order to be eligible to receive a Na-
tional Recognition Award an institution of higher education
shall
(A) offer an associate or baccalaureate degree;
(B) have established an alcohol abuse prevention and
education program or a drug abuse prevention and edu-
cation program;
(C) nominate itself or be nominated by others, such as
professional associations or student organizations, to re-
ceive the award; and
(D) not have received an award under this subsection
during the 5 academic years preceding the academic year
for which the determination is made.
(5) AUTHORIZATION OF APPROPRIATIONS.
(A) IN GENERALThere is authorized to be appro-
priated to carry out this subsection $750,000 for fiscal year
1999.
(B) AVAILABILITY.Funds appropriated under sub-
paragraph (A) shall remain available until expended.
SEC. 121. [20 U.S.C. 10111] PRIOR RIGHTS AND OBLIGATIONS.
(a) AUTHORIZATION OF APPROPRIATIONS.
Sec. 122
HIGHER EDUCATION ACT OF 1965
18
(1) PRE-1987 PARTS C AND D OF TITLE VII.There are au-
thorized to be appropriated such sums as may be necessary for
fiscal year 1999 and for each of the 4 succeeding fiscal years
to pay obligations incurred prior to 1987 under parts C and D
of title VII, as such parts were in effect before the effective
date of the Higher Education Amendments of 1992.
(2) POST-1992 AND PRE-1998 PART C OF TITLE VII.There are
authorized to be appropriated such sums as may be necessary
for fiscal year 1999 and for each of the 4 succeeding fiscal
years to pay obligations incurred prior to the date of enactment
of the Higher Education Amendments of 1998 under part C of
title VII, as such part was in effect during the period
(A) after the effective date of the Higher Education
Amendments of 1992; and
(B) prior to the date of enactment of the Higher Edu-
cation Amendments of 1998.
(b) LEGAL RESPONSIBILITIES.
(1) PRE-1987 TITLE VII. All entities with continuing obliga-
tions incurred under parts A, B, C, and D of title VII, as such
parts were in effect before the effective date of the Higher Edu-
cation Amendments of 1992, shall be subject to the require-
ments of such part as in effect before the effective date of the
Higher Education Amendments of 1992.
(2) POST-1992 AND PRE-1998 PART C OF TITLE VII.All enti-
ties with continuing obligations incurred under part C of title
VII, as such part was in effect during the period
(A) after the effective date of the Higher Education
Amendments of 1992; and
(B) prior to the date of enactment of the Higher Edu-
cation Amendments of 1998,
shall be subject to the requirements of such part as such part
was in effect during such period.
SEC. 122. [20 U.S.C. 1011k] RECOVERY OF PAYMENTS.
(a) PUBLIC BENEFIT.Congress declares that, if a facility con-
structed with the aid of a grant under part A of title VII as such
part A was in effect prior to the date of enactment of the Higher
Education Amendments of 1998, or part B of such title as part B
was in effect prior to the date of enactment of the Higher Edu-
cation Amendments of 1992, is used as an academic facility for 20
years following completion of such construction, the public benefit
accruing to the United States will equal in value the amount of the
grant. The period of 20 years after completion of such construction
shall therefore be deemed to be the period of Federal interest in
such facility for the purposes of such title as so in effect.
(b) RECOVERY UPON CESSATION OF PUBLIC BENEFIT.If, within
20 years after completion of construction of an academic facility
which has been constructed, _in part with a grant under part 'A of
title VII as such part A was in effect prior to the date of enactment
of the Higher Education Amendments of 1998, or part B of title VII
as such part. B .was in effect prior to the date- of enactment of the
Higher Education Amendments of 1992
19
HIGHER EDUCATION ACT OF 1965
Sec. 131
(1) the applicant under such parts as so in effect (or the
applicant's successor in title or possession) ceases or fails to be
a public or nonprofit institution; or
(2) the facility ceases to be used as an academic facility,
or the facility is used as a facility excluded from the term "aca-
demic facility" (as such term was defined under title VII, as so
in effect), unless the Secretary determines that there is good
cause for releasing the institution from its obligation,
the United States shall be entitled to recover from such applicant
(or successor) an amount which bears to the value of the facility
at that time (or so much thereof as constituted an approved project
or projects) the same ratio as the amount of Federal grant bore to
the cost of the facility financed with the aid of such grant. The
value shall be determined by agreement of the parties or by action
brought in the United States district court for the district in which
such facility is situated.
(c) PROHIBITION ON USE FOR RELIGION.Notwithstanding the
provisions of subsections (a) and (b), no project assisted with funds
under title VII (as in effect prior to the date of enactment of the
Higher Education Amendments of 1998) shall ever be used for reli-
gious worship or a sectarian activity or for a school or department
of divinity.
PART C-COST OF HIGHER EDUCATION
SEC. 131. [20 U.S.C. 10151 IMPROVEMENTS IN MARKET INFORMATION
AND PUBLIC ACCOUNTABILITY IN HIGHER EDUCATION.
(a) IMPROVED DATA COLLECTION.
(1) DEVELOPMENT OF UNIFORM METHODOLOGY.The Sec-
retary shall direct the Commissioner of Education Statistics to
convene a series of forums to develop nationally consistent
methodologies for reporting costs incurred by postsecondary in-
stitutions in providing postsecondary education.
(2) REDESIGN OF DATA SYSTEMS.On the basis of the meth-
odologies developed pursuant to paragraph (1), the Secretary
shall redesign relevant parts of the postsecondary education
data systems to improve the usefulness and timeliness of the
data collected by such systems.
(3) INFORMATION TO INSTITUTIONS.The Commissioner of
Education Statistics shall
(A) develop a standard definition for the following data
elements:
(i) tuition and fees for a full-time undergraduate
student;
(ii) cost of attendance for a full-time undergradu-
ate student, consistent with the provisions of section
472;
(iii) average amount of financial assistance re-
ceived by an undergraduate student who attends an
institution of higher education, including
(I) each type of assistance or benefit described
in section 428(a)(2)(C)(i);
(II) fellowships; and
(III) institutional and other assistance; and
Sec. 131
HIGHER EDUCATION ACT OF 1965
20
(iv) number of students receiving financial assist-
ance described in each of subclauses (I), (II), and (III)
of clause (iii);
(B) not later than 90 days after the date of enactment
of the Higher Education Amendments of 1998, report the
definitions to each institution of higher education and
within a reasonable period of time thereafter inform the
Committee on Labor and Human Resources of the Senate
and the Committee on Education and the Workforce of the
House of Representatives of those definitions; and
(C) collect information regarding the data elements de-
scribed in subparagraph (A) with respect to at least all in-
stitutions of higher education participating in programs
information
under title IV, beginning with the
formation from aca-
demic year. 2000-2001 and annually thereafter.
(b) DATA DISSEMINATION.The Secretary shall make available
the data collected pursuant to subsection (a). Such data shall be
available in a form that permits the review and comparison of the
data submissions of individual institutions of higher education.
Such data shall be presented in a form that is easily understand-
able and allows parents and students to make informed decisions
based on the costs for typical full-time undergraduate students.
(c) STUDY.
(1) IN GENERAL.The Commissioner of Education Statis-
tics shall conduct a national study of expenditures at institu-
tions of higher education. Such study shall include information
with respect to
(A) the change in tuition and fees compared with the
consumer price index and other appropriate measures of
inflation;
(B) faculty salaries and benefits;
(C) administrative salaries, benefits and expenses;
(D) academic support services;
(E) research;
(F) operations and maintenance; and
(G) institutional expenditures for construction and
technology and the potential cost of replacing instructional
buildings and equipment.
(2) EVALUATION.The study shall include an evaluation
of
(A) changes over time in the expenditures identified in
paragraph (1);
(B) the relationship of the expenditures identified in
paragraph (1) to college costs; and
(C) the extent to which increases in institutional fi-
nancial aid and tuition discounting practices affect tuition
increases, including the demographics of students receiv-
ing such discounts, the extent to which financial aid is pro-
vided to students with limited need in order to attract a
student to a particular institution, and the extent to which
Federal financial aid, including loan aid, has been used to
offset the costs of such practices.
(3) FINAL REPORT.The Commissioner of Education Statis-
tics shall submit a report regarding the findings of the study
28
21
HIGHER EDUCATION ACT OF 1965
Sec. 141
required by paragraph (1) to the appropriate committees of
Congress not later than September 30, 2002.
(4) HIGHER EDUCATION MARKET BASKET.--The Bureau of
Labor Statistics, in consultation with the Commissioner of
Education Statistics, shall develop a higher education market
basket that identifies the items that comprise the costs of high-
er education. The Bureau of Labor Statistics shall provide a re-
port on the market basket to the Committee on Labor and
Human Resources of the Senate and the Committee on Edu-
cation and the Workforce of the House of Representatives not
later than September 30, 2002.
(5) FINES.In addition to actions authorized in section
487(c), the Secretary may impose a fine in an amount not to
exceed $25,000 on an institution of higher education for failing
to provide the information described in paragraph (1) in a
timely and accurate manner, or for failing to otherwise cooper-
ate with the National Center for Education Statistics regarding
efforts to obtain data on the cost of higher education under this
section and pursuant to the program participation agreement
entered into under section 487.
(d) STUDENT Am RECIPIENT SURVEY.(1) The Secretary shall
survey student aid recipients on a regular cycle, but not less than
once every 3 years
(A) to identify the population of students receiving Federal
student aid;
(B) to determine the income distribution and other socio-
economic characteristics of federally aided students;
(C) to describe the combinations of aid from State, Federal,
and private sources received by students from all income
groups;
(D) to describe the debt burden of loan recipients and their
capacity to repay their education debts; and
(E) to disseminate such information in both published and
machine readable form.
(2) The survey shall be representative of full-time and part-
time, undergraduate, graduate, and professional and current and
former students in all types of institutions, and should be designed
and administered in consultation with the Congress and the post-
secondary education community.
PART D-- ADMINISTRATIVE PROVISIONS FOR
DELIVERY OF STUDENT FINANCIAL ASSIST-
ANCE
SEC. 141. [20 U.S.C. 1018] PERFORMANCE-BASED ORGANIZATION FOR
THE DELIVERY OF FEDERAL STUDENT FINANCIAL ASSIST-
ANCE.
(a) ESTABLISHMENT AND PURPOSE.
(1) ESTABLISHMENT.There is established in the Depart-
ment a Performance-Based Organization (hereafter referred to
as the "PBO") which shall be a discrete management unit re-
sponsible for managing the operational functions supporting
the programs authorized under title N of this Act, as specified
in subsection (b).
29
Sec. 141
HIGHER EDUCATION ACT OF 1965
22
(2) PURPOSES.The purposes of the PBO are
(A) to improve service to students and other partici-
pants in the student financial assistance programs author-
ized under title IV, including making those programs more
understandable to students and their parents;
(B) to reduce the costs of administering those pro-
grams;
(C) to increase the accountability of the officials re-
sponsible for administering the operational aspects of
these programs;
(D) to provide greater flexibility in the management of
the operational functions of the Federal student financial
assistance programs;
(E) to integrate the information systems supporting
the Federal student financial assistance programs;
(F) to implement an open, common, integrated system
for the delivery of student financial assistance under title
IV; and
(G) to develop and maintain a student financial assist-
ance system that contains complete, accurate, and timely
data to ensure program integrity.
(b) GENERAL AUTHORITY.
(1) AUTHORITY OF SECRETARY.Notwithstanding any other
provision of this part, the. Secretary shall maintain responsibil-
ity for the development and promulgation of policy and regula-
tions relating to the programs of student financial assistance
under title IV. In the exercise of its functions, the PBO shall
be subject to the direction of the Secretary. The Secretary
shall
(A) request the advice of, and work in cooperation
with, the Chief Operating Officer in developing regula-
tions, policies, administrative guidance, or procedures af-
fecting the information systems administered by the PBO,
and other functions performed by the PBO;
(B) request cost estimates from the Chief Operating
Officer for system changes required by specific policies pro-
posed by the Secretary; and
(C) assist the Chief Operating Officer in identifying
goals for the administration and modernization of the de-
livery system for student financial assistance under title
W.
(2) PBO FUNCTIONS.Subject to paragraph (1), the PBO
shall be responsible for administration of the information and
financial systems that support student financial assistance pro-
grams authorized under this title, excluding the development
of policy relating to such programs but including the following:
(A) The administrative, accounting, and financial man-
agement functions of the delivery system for Federal stu-
dent assistance, including
(i) the collection, processing and transmission of
applicant data to students, institutions and authorized
third parties, as provided for in section 483;
23
HIGHER EDUCATION ACT OF 1965
Sec. 141
(ii) design and technical specifications for software
development and systems supporting the delivery of
student financial assistance under title N;
(iii) all software and hardware acquisitions and all
information technology contracts related to the deliv -,
ery and management of student financial assistance
under title IV;
(iv) all aspects of contracting for the information
and financial systems supporting student financial as-
sistance programs under this title; and
(v) providing all customer service, training, and
user support related to systems that support those
programs.
(B) Annual development of a budget for the operations
and services of the PBO, in consultation with the Sec-
retary, and for consideration and inclusion in the Depart-
ment's annual budget submission.
(3) ADDITIONAL FUNCTIONS.The Secretary may allocate to
the PBO such additional functions as the Secretary and the
Chief Operating Officer determine are necessary or appropriate
to achieve the purposes of the PBO.
(4) INDEPENDENCE.Subject to paragraph (1), in carrying
out its functions, the PBO shall exercise independent control of
its budget allocations and expenditures, personnel decisions
and processes, procurements, and other administrative and
management functions.
(5) AUDITS AND REVIEW.The PBO shall be subject to the
usual and customary Federal audit procedures and to review
by the Inspector General of the Department.
(6) CHANGES.
(A) IN GENERAL.The Secretary and the Chief Operat-
ing Officer shall consult concerning the effects of policy,
market, or other changes on the ability of the PBO to
achieve the goals and objectives established in the per-
formance plan described in subsection (c).
(B) REVISIONS TO AGREEMENT.The Secretary and the
Chief Operating Officer may revise the annual perform-
ance agreement described in subsection (d)(4) in light of
policy, market, or other changes that occur after the Sec-
retary and the Chief Operating Officer enter into the
agreement.
(c) PERFORMANCE PLAN AND REPORT.
(1) PERFORMANCE PLAN.
(A) IN GENERALEach year, the Secretary and Chief
Operating Officer shall agree on, and make available to
the public, a performance plan for the PBO for the suc-
ceeding 5 years that establishes measurable goals and ob-
jectives for the organization.
(B) CONSULTATION.In developing the 5-year performL
ance plan and any revision to the plan, the Secretary and
the Chief Operating Officer shall consult with students, in-
stitutions of higher education, Congress, lenders, the Advi-
sory Committee on Student Financial Assistance, and
Sec. 141
HIGHER EDUCATION ACT OF 1965
24
other interested parties not less than 30 days prior to the
implementation of the performance: plan or revision.
(C) AREAS.The plan shall include a concise state-
ment of the goals for a modernized system for the delivery
of student financial assistance under title IV and identify
action steps necessary to achieve such goals. The plan
shall address the PRO's responsibilities in the following
areas:
(i) IMPROVING SERVICE.Improving service to stu-
dents and other participants in student financial aid
programs authorized under this title, including mak-
ing those programs more understandable to students
and their parents.
(ii) REDUCING COSTS.Reducing the costs of ad-
ministering those programs.
(iii) IMPROVEMENT AND INTEGRATION OF SUPPORT
SYSTEMS.Improving and integrating the information
and delivery systems that support those programs.
(iv)
DELIVERY
AND
INFORMATION
SYSTEM.
Developing an open, common, and integrated delivery
and information- system for programs authorized
under this title.
(v) OTHER AREAS.Any other areas identified by
the Secretary.
(2) ANNUAL REPORT.Each year, the Chief Operating
Officer shall prepare and submit to Congress, through the Sec-
retary, an annual report on the performance of the PBO, in-
cluding an evaluation of the extent to which the PBO met the
goals and objectives contained in the 5-year performance plan
described in paragraph (1) for the preceding year. The annual
report shall include the following:
(A) An independent financial audit of the expenditures
of both the PBO and programs administered by the PBO.
(B) Financial and performance requirements applica-
ble to the PBO under the Chief Financial Officer Act of
1990 and the Government Performance and Results Act of
1993.(C) The results achieved by the PBO during the year
relative to the goals established in the organization's per-
formance plan.
(D) The evaluation rating of the performance of the
Chief Operating Officer and senior managers under sub-
sections (d)(4) and (e)(2), including the amounts of bonus
compensation awarded to these individuals.
(E) Recommendations for legislative and regulatory
changes to improve service to students and their families,
and to improve program efficiency and integrity.
(F) Other such information as the Director of the Of-
fice of Management and Budget shall prescribe for per-
formance based organizations.
(3) CONSULTATION WITH STAKEHOLDERS.The Chief Oper-
ating Officer, in preparing the report described in paragraph
(2), shall establish appropriate means to consult with borrow-
ers, institutions, lenders, guaranty agencies, secondary mar-
25
HIGHER EDUCATION ACT OF 1965
Sec. 141
kets, and others involved in the delivery system of student aid
under this title
(A) regarding the degree of satisfaction with the
delivery system; and
(B) to seek suggestions on means to improve the
delivery system.
(d) CHIEF OPERATING OFFICER.
(1) APPOINTMENT.The management of the PBO shall be
vested in a Chief Operating Officer who shall be appointed by
the Secretary to a term of not less than 3 and not more than
5 years, and compensated without regard to chapters 33, 51,
and 53 of title 5, United States Code. The Secretary shall ap-
point the Chief Operating Officer within 6 months after the
date of enactment of the Higher Education Amendments of
1998. The appointment shall be made on the basis of dem-
onstrated management ability and expertise in information
technology, including experience with financial systems, and
without regard to political affiliation or activity.
(2) REAPPOINTMENT.The Secretary may reappoint the
Chief Operating Officer to subsequent terms of not less than
3 and not more than 5 years, so long as the performance of the
Chief Operating Officer, as set forth in the performance agree-
ment described in paragraph (4), is -satisfactory.
(3) REMOVAL.The Chief Operating Officer may be re-
moved by
(A) the President; or
(B) the Secretary, for misconduct or failure to meet
performance goals set forth in the performance agreement
in paragraph (4).
The President or Secretary shall communicate the reasons for
any such removal to the appropriate committees of Congress.
(4) PERFORMANCE AGREEMENT.
(A) IN GENERAL.Each year, the Secretary and the
Chief Operating Officer shall enter into an annual per-
formance agreement, that shall set forth measurable orga-
nization and individual goals for the Chief Operating Offi-
cer.
(B) TRANsmnvrAL.The final agreement, and any revi-
sion to the final agreement, shall be transmitted to the
Committee on Education and the Workforce of the House
of Representatives and the Committee on Labor and
Human Resources of the Senate, and made publicly avail-
able.
(5) COMPENSATION.
(A) IN GENERALThe Chief Operating Officer is au-
thorized to be paid at an annual rate of basic pay not to
exceed the maximum rate of basic pay for the Senior Exec-
utive Service under section 5382 of title 5, United States
Code, including any applicable locality-based comparability
payment
that
may
be
authorized
under
section
5304(h)(2)(B) of such title. The compensation of the Chief
Operating Officer shall be considered for purposes of sec-
tion 207(c)(2)(A) of title 18, United States Code, to be the
Sec. 141
HIGHER EDUCATION ACT OF 1965
26
equivalent of that described under clause (ii) of section
207(c)(2)(A) of such title.
(B) BONUS.In addition, the Chief Operating Officer
may receive a bonus in an amount that does not exceed 50
percent of such annual rate of basic pay, based upon the
Secretary's evaluation of the Chief Operating Officer's per-
formance in relation to the goals set forth in the perform-
ance agreement described in paragraph (2).
(C) PAYMENT.Payment of a bonus under this sub-
paragraph (B) may be made to the Chief Operating Officer
only to the extent that such payment does not cause the
Chief Operating Officer's total aggregate compensation in
a calendar year to equal or exceed the amount of the Presi-
dent's salary under section 102 of title 3, United States
Code.
(e) SENIOR MANAGEMENT.
(1) APPOINTMENT.
(A) IN GENERALThe Chief Operating Officer may ap-
point such senior managers as that officer determines nec-
essary without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service.
(B) COMPENSATION.The senior managers described
in subparagraph (A) may be paid without regard to the
provisions of chapter 51 and subchapter III of chapter 53
of such title relating to classification and General Schedule
pay rates.
(2) PERFORMANCE AGREEMENT.Each year, the Chief Op-
erating Officer and each senior manager appointed under this
subsection shall enter into an annual performance agreement
that sets forth measurable organization and individual goals.
The agreement shall be subject to review and renegotiation at
the end of each term.
(3) COMPENSATION.
(A) IN GENERALA senior manager appointed under
this subsection may be paid at an annual rate of basic pay
of not more than the maximum rate of basic pay for the
Senior Executive Service under section 5382 of title 5,
United States Code, including any applicable locality-based
comparability payment that may be authorized under sec-
tion 5304(h)(2)(C) of such title. The compensation of a sen-
ior manager shall be considered for purposes of section
207(c)(2)(A) of title 18, United States Code, to be the
equivalent of that described under clause (ii) of section
207(c)(2)(A) of such title.
(B) BONUS.In addition, a senior manager may re-
ceive a bonus in an amount such that the manager's total
annual compensation does not exceed 125 percent of the
maximum rate of basic pay for the Senior Executive Serv-
ice, including any applicable locality-based comparability
payment, based upon the Chief Operating Officer's evalua-
tion of the manager's performance in relation to the goals
set forth in the performance agreement described in para-
graph (2).
27
HIGHER EDUCATION ACT OF 1965
Sec. 141
(4) REMOVAL.A senior manager shall be removable by
the Chief Operating Officer, or by the Secretary if the position
of Chief Operating Officer is vacant.
(f) STUDENT LOAN OMBUDSMAN.
(1) APPOINTMENT.The Chief Operating Officer, in con-
sultation with the Secretary, shall appoint a Student Loan
Ombudsman to provide timely assistance to borrowers of loans
made, insured, or guaranteed under title N by performing the
functions described in paragraph (3).
(2) PUBLIC INFORMATION.The Chief Operating Officer
shall disseminate information about the availability and func-
tions of the Ombudsman to borrowers and potential borrowers,
as well as institutions of higher education, lenders, guaranty
agencies, loan servicers, and other participants in those stu-
dent loan programs.
(3) FUNCTIONS OF OMBUDSMAN.The Ombudsman shall
(A) in accordance with regulations of the Secretary, re-
ceive, review, and attempt to resolve informally complaints
from borrowers of loans described in paragraph (1), includ-
ing, as appropriate, attempts to resolve such complaints
within the Department of Education and with institutions
of higher education, lenders, guaranty agencies, loan
servicers, and other participants in the loan programs de-
scribed in paragraph (1)(A); and
(B) compile and analyze data on borrower complaints
and make appropriate recommendations.
(4) REPORT.Each year, the Ombudsman shall submit a
report to the Chief Operating Officer, for inclusion in the an-
nual report under subsection (c)(2), that describes the activi-
ties, and evaluates the effectiveness of the Ombudsman during
the preceding year.
(g) PERSONNEL FLEXIBILITY.
(1) PERSONNEL CEILINGS.The PBO shall not be subject to
any ceiling relating to the number or grade of employees.
(2) ADMINISTRATIVE FLEXIBILITY.The Chief Operating Of-
ficer shall work with the Office of Personnel Management to
develop and implement personnel flexibilities in staffing, clas-
sification, and pay that meet the needs of the PBO, subject to
compliance with title 5, United States Code.
(3) EXCEPTED SERVICE.The Chief Operating Officer may
appoint, without regard to the provisions of title 5, United
States Code, governing appointments in the competitive serv-
ice, not more than 25 technical and professional employees to
administer the functions of the PBO. These employees may be
paid without regard to the provisions of chapter 51 and sub-
chapter III of chapter 53 of such title relating to classification
and General Schedule pay rates.
(h) ESTABLISHMENT OF A FAIR AND EQUITABLE SYSTEM FOR
MEASURING STAFF PERFORMANCE.The PBO shall establish an an-
nual performance management system, subject to compliance with
title 5, United States Code and consistent with applicable provi-
sions of law and regulations, which strengthens the organizational
effectiveness of the PBO by providing for establishing goals or ob-
jectives for individual, group, or organizational performance (or any
Sec. 142
HIGHER EDUCATION ACT OF 1965
28
combination thereof), consistent with the performance plan of the
PBO and its performance planning procedures, including those es-
tablished under the Government Performance and Results Act of
1993, and communicating such goals or objectives to employees.
(i) REPORT.The Secretary and the Chief Operating Officer,
not later than 180 days after the date of enactment of the Higher
Education Amendments of 1998, shall report to Congress on the
proposed budget and sources of funding for the operation of the
PBO.
( j) AUTHORIZATION OF APPROPRIATIONS.The Secretary shall
allocate from funds made available under section 458 such funds
as are appropriate to the functions assumed by the PBO. In addi-
tion, there are authorized to be appropriated such sums as may be
necessary to carry out the purposes of this part, including transi-
tion costs.
SEC. 142. [20 U.S.C. 1018a] PROCUREMENT FLEXIBILITY.
(a) PROCUREMENT AUTHORITY.Subject to the authority of the
Secretary, the Chief Operating Officer of a PBO may exercise the
authority of the Secretary to procure property and services in the
performance of functions managed by the PBO. For the purposes
of this section, the term "PBO" includes the Chief Operating Officer
of the PBO and any employee of the PBO exercising procurement
authority under the preceding sentence.
(b) IN GENERAL.Except as provided in this section, the PBO
shall abide by all applicable Federal procurement laws and regula-
tions when procuring property and services. The PBO shall
(1) enter into contracts for information systems supporting
the programs authorized under title IV to carry out the func-
tions set forth in section 141(b)(2); and
(2) obtain the services of experts and consultants without
regard to section 3109 of title 5, United States Code and set
pay in accordance with such section.
(C) SERVICE CONTRACTS.
(1)
PERFORMANCE-BASED
SERVICING
CONTRACTS.The
Chief Operating Officer_ shall, to the extent practicable, maxi-
mize the use of performance-based servicing contracts, consist-
ent with guidelines for such contracts published by the Office
of Federal Procurement Policy, to achieve cost savings and im-
prove service.
(2) FEE FOR SERVICE ARRANGEMENTS.The Chief Operat-
ing Officer shall, when appropriate and consistent with the
purposes of the PBO, acquire services related to the title N de-
livery system from any entity that has the capability and ca-
pacity to meet the requirements for the system. The Chief Op-
erating Officer is authorized to pay fees that are equivalent to
those paid by other entities to an organization that provides an
information system or service that meets the requirements of
the PBO, as determined by the Chief Operating Officer.
(d) TWO-PHASE SOURCE-SELECTION PROCEDURES.
(1) IN GENERAL.The PBO may use a two-phase process
for selecting a source for a procurement of property or services.
(2) FIRST PHASE.The procedures for the first phase of the
process for a procurement are as follows:
29
HIGHER EDUCATION ACT OF 1965
Sec. 142
(A) PUBLICATION OF NOTICE.The contracting officer
for the procurement shall publish a notice of the procure-
ment in accordance with section 18 of the Office of Federal
Procurement Policy Act (41 U.S.C. 416) and subsections
(e), (f), and (g) of section 8 of the Small Business Act (15
U.S.C. 637), except that the notice shall include only the
following:
(i) A general description of the scope or purpose of
the procurement that provides sufficient information
on the scope or purpose for sources to make informed
business decisions regarding whether to participate in
the procurement.
(ii) A description of the basis on which potential
sources are to be selected to submit offers in the sec-
ond phase.
(iii) A description of the information that is to be
required under subparagraph (B).
(iv) Any additional information that the contract-
ing officer determines appropriate.
(B) INFORMATION SUBMITTED BY OFFERORS.Each of-
feror for the procurement shall submit basic information,
such as information on the offeror's qualifications, the pro-
posed conceptual approach, costs likely to be associated
with the proposed conceptual approach, and past perform-
ance of the offeror on Federal Government contracts, to-
gether with any additional information that is requested
by the contracting officer.
(C) SELECTION FOR SECOND PHASE.The contracting
officer shall select the offerors that are to be eligible to
participate in the second phase of the process. The con-
tracting officer shall limit the number of the selected
offerors to the number of sources that the contracting offi-
cer determines is appropriate and in the best interests of
the Federal Government.
(3) SECOND PHASE.
(A) IN GENERAL.The contracting officer shall conduct
the second phase of the source selection process in accord-
ance with sections 303A and 303B of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 253a
and 253b).
(B) ELIGIBLE PARTICIPANTS.Only the sources selected
in the first phase of the process shall be eligible to partici-
pate in the second phase.
(C) SINGLE OR MULTIPLE PROCUREMENTS.The second
phase may include a single procurement or multiple pro-
curements within the scope, or for the purpose, described
in the notice pursuant to paragraph (2)(A).
(4) PROCEDURES CONSIDERED COMPETITIVE.The proce-
dures used for selecting a source for a procurement under this
subsection shall be considered competitive procedures for all
purposes.
(e) USE OF SIMPLIFIED PROCEDURES FOR COMMERCIAL ITEMS.
Whenever the PBO anticipates that commercial items will be of-
fered for a procurement, the PBO may use (consistent with the
3 7
Sec. 142
HIGHER EDUCATION ACT OF 1965
30
special rules for commercial items) the special simplified proce-
dures for the procurement without regard to
(1) any dollar limitation otherwise applicable to the use of
those procedures; and
(2) the expiration of the authority to use special simplified
procedures under section 4202(e) of the Clinger-Cohen Act of
1996 (110 Stat. 654; 10 U.S.C. 2304 note).
(f) FLEXIBLE WAIT PERIODS AND DEADLINES FOR SUBMISSION
OF OFFERS OF NONCOMMERCIAL ITEMS.
(1) AUTHORITY. In carrying out a procurement, the PBO
may
(A) apply a shorter waiting period for the issuance of
a solicitation after the publication of a notice under section
18 of the Office of Federal Procurement Policy Act (41
U.S.C. 416) than is required under subsection (a)(3)(A) of
such section; and
(B) notwithstanding subsection (a)(3) of such section,
establish any deadline for the submission of bids or pro-
posals that affords potential offerors a reasonable oppor-
tunity to respond to the solicitation.
(2) INAPPLICABILITY TO COMMERCIAL ITEMS.Paragraph (1)
does not apply to a procurement of a commercial item.
(3) CONSISTENCY WITH APPLICABLE INTERNATIONAL AGREE-
MENTS.If an international agreement is applicable to the pro-
curement, any exercise of authority under paragraph (1) shall
be consistent with the international agreement.
(g) MODULAR CONTRACTING.
(1) IN GENERALThe PBO may satisfy the requirements
of the PBO for a system incrementally by carrying out succes-
sive procurements of modules of the system. In doing so, the
PBO may use procedures authorized under this subsection to
procure any such module after the first module.
(2) UTILITY REQUIREMENT.A module may not be procured
for a system under this subsection unless the module is useful
independently of the other modules or useful in combination
with another module previously procured for the system.
(3) CONDITIONS FOR USE OF AUTHORITY.The PBO may
use procedures authorized under paragraph (4) for the procure-
ment of an additional module for a system if
(A) competitive procedures were used for awarding the
contract for the procurement of the first module for the
system; and
(B) the solicitation for the first module included
(i) a general description of the entire system that
was sufficient to provide potential offerors with rea-
sonable notice of the general scope of future modules;
(ii)
other
information
sufficient
for
potential
offerors to make informed business judgments regard-
ing whether to submit offers for the contract for the
first module; and
(iii) a statement that procedures authorized under
this subsection could be used for awarding subsequent
contracts for the procurement of additional modules
for the system.
3
31
HIGHER EDUCATION ACT OF 1965
Sec. 142
(4) PROCEDURES.If the procurement of the first module
for a system meets the requirements set forth in paragraph (3),
the PBO may award a contract for the procurement of an addi-
tional module for the system using any of the following proce-
dures:
(A) SOLE SOURCE. Award of the contract on a sole-
source basis to a contractor who was awarded a contract
for a module previously procured for the system under
competitive procedures or procedures authorized under
subparagraph (B).
(B) ADEQUATE COMPETITION.Award of the contract
on the basis of offers made by
(i) a contractor who was awarded a contract for a
module previously procured for the system after hav-
ing been selected for award of the contract under this
subparagraph or other competitive procedures; and
(ii) at least one other offeror that submitted an
offer for a module previously procured for the system
and is expected, on the basis of the offer for the pre-
viously procured module, to submit a competitive offer
for the additional module.
(C) OTHER.Award of the contract under any other
procedure authorized by law.
(5) NOTICE REQUIREMENT.
(A) PUBLICATION.Not less than 30 days before
issuing a solicitation for offers for a contract for a module
for a system under procedures authorized under subpara-
graph (A) or (B) of paragraph (4), the PBO shall publish
in the Commerce Business Daily a notice of the intent to
use such procedures to enter into the contract.
(B) ExcEpTioN.Publication of a notice is not required
under this paragraph with respect to a use of procedures
authorized under paragraph (4) if the contractor referred
to in that subparagraph (who is to be solicited to submit
an offer) has previously provided a module for the system
under a contract that contained cost, schedule, and per-
formance goals and the contractor met those goals.
(C) CONTENT OF NOTICE.A notice published under
subparagraph (A) with respect to a use of procedures de-
scribed in paragraph (4) shall contain the information re-
quired under section 18(b) of the Office of Federal Procure-
ment Policy Act (41 U.S.C. 416(b)), other than paragraph
(4) of such section, and shall invite the submission of any
assertion that the use of the procedures for the procure-
ment involved is not in the best interest of the Federal
Government together with information supporting the
assertion.
(6) DOCUMENTATION.The basis for an award of a contract
under this subsection shall be documented. However, a jus-
tification pursuant to section 303(f) of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 253(f)) or-
section 8(h) of the Small Business Act (15 U.S.C. 637(h)) is not
required.
Sec. 142
HIGHER EDUCATION ACT OF 1965
32
(7) SIMPLIFIED SOURCE-SELECTION PROCEDURES.The PBO
may award a contract under any other simplified procedures
prescribed by the PBO for the selection of sources for the pro-
curement of modules for a system, after the first module, that
are not to be procured under a contract awarded on a sole-
source basis.
(h) USE OF SIMPLIFIED PROCEDURES FOR SMALL BUSINESS SET-
ASIDES FOR SERVICES OTHER THAN COMMERCIAL ITEMS.
(1) AUTHORITY.The PBO may use special simplified pro-
cedures for a procurement of services that are not commercial
items if
(A) the procurement is in an amount not greater than
$1,000,000;
(B) the procurement is conducted as a small business
set-aside pursuant to section 15(a) of the Small Business
Act (15 U.S.C. 644(a)); and
(C) the price charged for supplies associated with the
services procured are items of supply expected to be less
than 20 percent of the total contract price.
(2) INAPPLICABILITY TO CERTAIN PROCUREMENTS.The au-
thority set forth in paragraph (1) may not be used for
(A) an award of a contract on a sole-source basis; or
(B) a contract for construction.
(i) GUIDANCE FOR USE OF AUTHORITY.
(1) ISSUANCE BY PB0.The Chief Operating Officer of the
PBO, in consultation with the Administrator for Federal Pro-
curement Policy, shall issue guidance for the use by PBO per-
sonnel of the authority provided in this section.
(2) GUIDANCE FROM OFPP.As part of the consultation re-
quired under paragraph (1), the Administrator for Federal Pro-
curement Policy shall provide the PBO with guidance that is
designed to ensure, to the maximum extent practicable, that
the authority under this section is exercised by the PBO in a
manner that is consistent with the exercise of the authority by
the heads of the other performance-based organizations.
(3) COMPLIANCE WITH OFPP GUIDANCE.The head of the
PBO shall ensure that the procurements of the PBO under this
section are carried out in a manner that is consistent with the
guidance provided for the PBO under paragraph (2).
( j) LIMITATION ON MULTIAGENCY CONTRACTING.No depart-
ment or agency of the Federal Government may purchase property
or services under contracts entered into or administered by a PBO
under this section unless the purchase is approved in advance by
the senior procurement official of that department or agency who
is responsible for purchasing by the department or agency.
(k) LAWS NOT AFFECTED.Nothing in this section shall be con-
strued to waive laws for the enforcement of civil rights or for the
establishment and enforcement of labor standards that are applica-
ble to contracts of the Federal Government.
(1) DEFINITIONS.In this section:
(1) COMMERCIAL ITEM.The term "commercial item" has
the meaning given the term in section 4(12) of the Office of
Federal Procurement Policy Act (41 U.S.C. 403(12)).
33
HIGHER EDUCATION ACT OF 1965
Sec. 143
(2) COMPETITIVE PROCEDURES.The term "competitive pro-
cedures" has the meaning given the term in section 309(b) of
the Federal Property and Administrative Services Act of 1949
(41 U.S.C. 259(b)).
(3) SOLE-SOURCE BASIS.The term "sole-source basis", with
respect to an award of a contract, means that the contract is
awarded to a source after soliciting an offer or offers from, and
negotiating with, only that source.
(4) SPECIAL RULES FOR COMMERCIAL ITEMS.The term
"special rules for commercial items" means the regulations set
forth in the Federal Acquisition Regulation pursuant to section
303(g)(1) of the Federal Property and Administrative Services
Act of 1949 (41 U.S.C. 253(g)(1)) and section 31 of the Office
of Federal Procurement Policy Act (41 U.S.C. 427).
(5) SPECIAL SIMPLIFIED PROCEDURES.The term "special
simplified procedures" means the procedures applicable to pur-
chases of property and services for amounts not greater than
the simplified acquisition threshold that are set forth in the
Federal Acquisition Regulation pursuant to section 303(g)(1)(B)
of the Federal Property and Administrative Services Act of
1949 (41 U.S.C. 253(g)(1)(A)) and section 31(a)(1) of the Office
of Federal Procurement Policy Act (41 U.S.C. 427(a)(1)).
SEC. 143. [20 U.S.C. 101813] ADMINISTRATIVE SIMPLIFICATION OF STU-
DENT AID DELIVERY.
(a) IN GENERAL.In order to improve the efficiency and effec-
tiveness of the student aid delivery system, the Secretary and the
Chief Operating Officer shall encourage and participate in the es-
tablishment of voluntary consensus standards and requirements for
the electronic transmission of information necessary for the admin-
istration of programs under title IV.
(b) PARTICIPATION IN STANDARD SETTING ORGANIZATIONS.
(1) The Chief Operating Officer shall participate in the ac-
tivities of standard setting organizations in carrying out the
provisions of this section.
(2) The Chief Operating Officer shall encourage higher
education groups seeking to develop common forms, standards,
and procedures in support of the delivery of Federal student fi-
nancial assistance to conduct these activities within a standard
setting organization.
(3) The Chief Operating Officer may pay necessary dues
and fees associated with participating in standard setting orga-
nizations pursuant to this subsection.
(c) ADOPTION OF VOLUNTARY CONSENSUS STANDARDS.Except
with respect to the common financial reporting form under section
483(a), the Secretary shall consider adopting voluntary consensus
standards agreed to by the organization described in subsection (b)
for transactions required under title IV, and common data elements
for such transactions, to enable information to be exchanged elec-
tronically between systems administered by the Department and
among participants in the Federal student .aid delivery system.
(d) USE OF CLEARINGHOUSES.Nothing in this section shall re-
strict the ability of participating institutions and lenders from
using a clearinghouse or servicer to comply with the standards for
the exchange of information established under this section.
41
Sec. 201
HIGHER EDUCATION ACT OF 1965
34
(e) DATA SECURITY.Any entity that maintains or transmits
information under" a transaction covered by this section shall main-
tain reasonable and appropriate administrative, technical, and
physical safeguards
(1) to ensure the integrity and confidentiality of the infor-
mation; and
(2) to protect against any reasonably anticipated security
threats, or unauthorized uses or disclosures of the information.
(f) DEFINITIONS.
(1) CLEARINGHOUSE.The term "clearinghouse" means a
public or private entity that processes or facilitates the proc-
essing of nonstandard data elements into data elements con-
forming to standards adopted under this section.
(2) STANDARD SETTING ORGANIZATION.The term "stand-
ard setting organization" means an organization that
(A) is accredited by the American National Standards
Institute;
(B) develops standards for information transactions,
data elements, or any other standard that is necessary to,
or will facilitate, the implementation of this section; and
(C) is open to the participation of the various entities
engaged in the delivery of Federal student financial assist-
ance.
(3) VOLUNTARY CONSENSUS STANDARD.The term "vol-
untary consensus standard" means a standard developed or
used by a standard setting organization described in paragraph
(2).
TITLE II TEACHER QUALITY ENHANCE-
MENT GRANTS FOR STATES AND
PARTNERSHIPS
SEC. 201. [20 U.S.C. 1021] PURPOSES; DEFINITIONS.
(a) PURPOSES.The purposes of this title are to
(1) improve student achievement;
(2) improve the quality of the current and future teaching
force by improving the preparation of prospective teachers and
enhancing professional development activities;
(3) hold institutions of higher education accountable for
preparing teachers who have the necessary teaching skills and
are highly competent in the academic content areas in which
the teachers plan to teach, such as mathematics, science,
English, foreign languages, history, economics, art, civics, Gov-
ernment, and geography, including training in the effective
uses of technology in the classroom; and
(4) recruit highly qualified individuals, including individ-
uals from other occupations, into the teaching force.
(b) DEFINITIONS.In this title:
(1) ARTS AND SCIENCES.The term "arts and sciences"
means
(A) when referring to an organizational unit of an in-
stitution of higher education, any academic unit that offers
35
HIGHER EDUCATION ACT OF 1965
Sec. 202
1 or more academic majors in disciplines or content areas
corresponding to the academic subject matter areas in
which teachers provide instruction; and
(B) when referring to a specific academic subject mat-
ter area, the disciplines or content areas in which aca-
demic majors are offered by the arts and science organiza-
tional unit.
(2) HIGH NEED LOCAL EDUCATIONAL AGENCY.The term
"high need local educational agency" means a local educational
agency that serves an elementary school or secondary school lo-
cated in an area in which thereis
(A) a high percentage of individuals from families with
incomes below the poverty line;
(B) a high percentage of secondary school teachers not
teaching in the content area in which the teachers were
trained to teach; or
(C) a high teacher turnover rate.
(3) POVERTY LINE.The term "poverty line" means the
poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section 673(2)
of the Community Services Block Grant Act (42 U.S.C.
9902(2))) applicable to a family of the size involved.
SEC. 202. [20 U.S.C. 1022] STATE GRANTS.
(a) IN GENERAL. From amounts made available under section
210(1) for a fiscal year, the Secretary is authorized to award grants
under this section, on a competitive basis, to eligible States to en-
able the eligible States to carry out the activities described in sub-
section (d).
(b) ELIGIBLE STATE.
(1) DEFINMON.In this title, the term "eligible State"
means
(A) the Governor of a State; or
(B) in the case of a State for which the constitution or
law of such State designates another individual, entity, or
agency in the State to be responsible for teacher certifi-
cation and preparation activity, such individual, entity, or
agency.
(2) CONSULTATION.The Governor and the individual, en-
tity, or agency designated under paragraph (1) shall consult
with the Governor, State board of education, State educational
agency, or State agency for higher education, as appropriate,
with respect to the activities assisted under this section.
(3) CONSTRUCTION.Nothing in this subsection shall be
construed to negate or supersede the legal authority under
State law of any State agency, State entity, or State public offi-
cial over programs that are under the jurisdiction of the agen-
cy, entity, or official.
(c) APPLICATION.To be eligible to receive a grant under this
section, an eligible State shall, at the time of the initial grant ap-
plication, submit an application to the Secretary that
(1) meets the requirement of this section;
(2) includes a description of how the eligible State intends
to use funds provided under this section; and
43
Sec. 202
HIGHER EDUCATION ACT OF 1965
36
(3) contains such other information and assurances as the
Secretary may require.
(d) USES OF FUNDS.An eligible State that receives a grant
under this section shall use the grant funds to reform teacher prep-
aration requirements, and to ensure that current and future teach-
ers possess the necessary teaching skills and academic content
knowledge in the subject areas in which the teachers are assigned
to teach, by carrying out 1 or more of the following activities:
(1) REFORMS.Implementing reforms that hold institu-
tions of higher education with teacher preparation programs
accountable for preparing teachers who are highly competent
in the academic content areas in which the teachers plan to
teach, and possess strong teaching skills, which may include
the use of rigorous subject matter competency tests and the re-
quirement that a teacher have an academic major in the sub-
ject area, or related discipline, in which the teacher plans to
teach.
(2) CERTIFICATION OR LICENSURE REQUIREMENTS.Reform-
ing teacher certification or licensure requirements to ensure
that teachers have the necessary teaching skills and academic
content knowledge in the subject areas in which teachers are
assigned to teach.
(3)
ALTERNATIVES TO TRADITIONAL PREPARATION FOR
TEACHING.Providing prospective teachers with alternatives to
traditional preparation for teaching through programs at col-
leges of arts and sciences or at nonprofit educational organiza-
tions.
(4)
ALTERNATIVE ROUTES TO STATE
CERTIFICATION.
Carrying out programs that
(A)
include
support
during
the
initial
teaching
experience; and
(B) establish, expand, or improve alternative routes to
State certification of teachers for highly qualified individ-
uals, including mid-career professionals from other occupa-
tions, paraprofessionals, former military personnel and re-
cent college graduates with reed-cis of academic distinction.
(5) RECRUITMENT; PAY; REMOVAL.Developing and imple-
menting effective mechanisms to ensure that local educational
agencies and schools are able to effectively recruit highly quali-
fied teachers, to financially reward those teachers and prin-
cipals whose students have made significant progress toward
high academic performance, such as through performance-
based compensation systems and access to ongoing professional
development opportunities for teachers and administrators,
and to expeditiously remove incompetent or unqualified teach-
ers consistent with procedures to ensure due process for the
teachers.
(6) SOCIAL PROMOTION.Development and implementation
of efforts to address the problem of social promotion and to pre-
pare teachers to effectively address the issues raised by ending
the practice of social promotion.
(7) RECRUITMENT.Activities described in section 204(d).
4
31
HIGHER EDUCATION ACT OF 1965
Sec. 203
SEC. 203. [20 U.S.C. 1023] PARTNERSHIP GRANTS.
(a) GRANTS.From amounts made available under section
210(2) for a fiscal year, the Secretary is authorized to award grants
under this section, on a competitive basis, to eligible partnerships
to enable the eligible partnerships to carry out the activities de-
scribed in subsections (d) and (e).
(b) DEFINITIONS.
(1) ELIGIBLE PARTNERSHIPS.In this title, the term "eligi-
ble partnerships" means an entity that
(A) shall include
(i) a partner institution;
(ii) a school of arts and sciences; and
(iii) a high need local educational agency; and
(B) may include a Governor, State educational agency,
the State board of education, the State agency for higher
education, an institution of higher education not described
in subparagraph (A), a public charter school, a public or
private elementary school or secondary school, a public or
private nonprofit educational organization, a business, a
teacher organization, or a prekindergarten program.
(2) PARTNER INSTITUTION.In this section, the term "part-
ner institution" means a private independent or State-sup-
ported public institution of higher education, the teacher train-
ing program of which demonstrates that
(A) graduates from the teacher training program ex-
hibit strong performance on State-determined qualifying
assessments for new teachers through
(i) demonstrating that 80 percent or more of the
graduates of the program who intend to enter the field
of teaching have passed all of the applicable State
qualification assessments for new teachers, which
shall include an assessment of each prospective teach-
er's subject matter knowledge in the content area or
areas in which the teacher intends to teach; or
(ii) being ranked among the highest-performing
teacher preparation programs in the State as deter-
mined by the State
(I) using criteria consistent with the require-
ments for the State report card under section
207(b); and
(II) using the State report card on teacher
preparation required under section 207(b), after
the first publication of such report card and for
every year thereafter; or
(B) the teacher training program requires all the stu-
dents of the program to participate in intensive clinical ex-
perience, to meet high academic standards, and
(i) in the case of secondary school candidates, to
successfully complete an academic major in the subject
area in which the candidate intends to teach or to
demonstrate competence through a high level of per-
formance in relevant content areas; and
(ii) in the case of elementary school candidates, to
successfully complete an academic major in the arts
4 5
Sec. 203
HIGHER EDUCATION ACT OF 1965
38
and sciences or to demonstrate competence through a
high level of performance in core academic subject
areas.
(c) APPLICATION.Each eligible partnership desiring a grant
under this section shall submit an application to the Secretary at
such time, in such manner, and accompanied by such information
as the Secretary may require. Each such application shall
(1) contain a needs assessment of all the partners with re-
spect to teaching and learning and a description of how the
partnership will coordinate with other teacher training or pro-
fessional development programs, and how the activities of the
partnership will be consistent with State, local, and other edu-
cation reform activities that promote student achievement;
(2) contain a resource assessment that describes the re-
sources available to the partnership, the intended use of the
grant funds, including a description of how the grant funds will
be fairly distributed in accordance with subsection (f ), and the
commitment of the resources of the partnership to the activi-
ties assisted under this title, including financial support, fac-
ulty participation, time commitments, and continuation of the
activities when the grant ends; and
(3) contain a description of
(A) how the partnership will meet the purposes of this
title;(B) how the partnership will carry out the activities
required under subsection (d) and any permissible activi-
ties under subsection (e); and
(C) the partnership's evaluation plan pursuant to sec-
tion 206(b).
(d) REQUIRED USES OF FUNDS.An eligible partnership that
receives a grant under this section shall use the grant funds to
carry out the following activities:
(1) REFORMS.Implementing reforms within teacher prep-
aration programs to hold the programs accountable for prepar-
ing teachers who are highly competent in the academic content
areas in which the teachers plan to teach, and for promoting
strong teaching skills, including working with a school of arts
and sciences and integrating reliable research-based teaching
methods into the curriculum, which curriculum shall include
programs designed to successfully integrate technology into
teaching and learning.
(2) CLINICAL EXPERIENCE AND INTERACTION.Providing
sustained and high quality preservice clinical experience in-
cluding the mentoring of prospective teachers by veteran teach-
ers, and substantially increasing interaction between faculty at
institutions of higher education and new and experienced
teachers, principals, and other administrators at elementary
schools or secondary schools, and providing support, including
preparation time, for such interaction.
(3) PROFESSIONAL DEVELOPMENT.Creating opportunities
for enhanced and ongoing professional development that im-
proves the academic content knowledge of teachers in the sub-
ject areas in which the teachers are certified to teach or in
39
HIGHER EDUCATION ACT OF 1965
Sec. 204
which the teachers are working toward certification to teach,
and that promotes strong teaching skills.
(e) ALLOWABLE USES OF FuNDs.An eligible partnership that
receives a grant under this section may use such funds to carry out
the following activities:
(1) TEACHER PREPARATION AND PARENT INVOLVEMENT.
Preparing teachers to work with diverse student populations,
including individuals with disabilities and limited English pro-
ficient individuals, and involving parents in the teacher prepa-
ration program reform process.
(2) DISSEMINATION AND COORDINATION.Broadly dissemi-
nating information on effective practices used by the partner-
ship, and coordinating with the activities of the Governor,
State board of education, State higher education agency, and
State educational agency, as appropriate.
(3) MANAGERIAL AND LEADERSHIP SKILLS.Developing and
implementing proven mechanisms to provide principals and su-
perintendents with effective managerial and leadership skills
that result in increased student achievement.
(4) TEACHER RECRUITMENT.Activities described in section
204(d).
(f) SPECIAL RULE.No individual member of an eligible part-
nership shall retain more than 50 percent of the funds made avail-
able to the partnership under this section.
(g) CONSTRUCTION.Nothing in this section shall be construed
to prohibit an eligible partnership from using grant funds to coordi-
nate with the activities of more than one Governor, State board of
education, State educational agency, local educational agency, or
State agency for higher education.
SEC. 204. 120 U.S.C. 10241 TEACHER RECRUITMENT GRANTS.
(a) PROGRAM AUTHORIZED.From amounts made available
under section 210(3) for a fiscal year, the Secretary is authorized
to award grants, on a competitive basis, to eligible applicants to en-
able the eligible applicants to carry out activities described in sub-
section (d).
(b) ELIGIBLE APPLICANT DEFINED.In this title, the term "eli-
gible applicant" means--
(1) an eligible State described in section 202(b); or
(2) an eligible partnership described in section 203(b).
(c) APPLICATION.Any eligible applicant desiring to receive a
grant under this section shall submit an application to the Sec-
retary at such time, in such form, and containing such information
as the Secretary may require, including
(1) a description of the assessment that the eligible appli-
cant, and the other entities with whom the eligible applicant
will carry out the grant activities, have undertaken to deter-
mine the most critical needs of the participating high-need
local educational agencies;
(2) a description of the activities the eligible applicant will
carry out with the grant; and
(3) a description of the eligible applicant's plan- for continu-
ing the activities carried out with the grant, once Federal fund-
ing ceases.
4
Sec. 205
HIGHER EDUCATION ACT OF 1965
40
(d) USES OF FUNDS.Each eligible applicant receiving a grant
under this section shall use the grant funds
(1)(A) to award scholarships to help students pay the costs
of tuition, room, board, and other expenses of completing a
teacher preparation program;
(B) to provide support services, if needed to enable scholar-
ship recipients to complete postsecondary education programs;
and
(C) for followup services provided to former scholarship re-
cipients during the recipients first 3 years of teaching; or
(2) to develop and implement effective mechanisms to en-
sure that high need local educational agencies and schools are
able to effectively recruit highly qualified teachers.
(e) SERVICE REQUIREMENTS.The Secretary shall establish
such requirements as the Secretary finds necessary to ensure that
recipients of scholarships under this section who complete teacher
education programs subsequently teach in a high-need local edu-
cational agency, for a period of time equivalent to the period for
which the recipients receive scholarship assistance, or repay the
amount of the scholarship. The Secretary shall use any such repay-
ments to carry out additional activities under this section.
SEC. 205. [20 U.S.C. 1025] ADMINISTRATIVE PROVISIONS.
(a) DURATION; ONE-TIME AWARDS; PAYMENTS.
(1) DURATION.
(A) ELIGIBLE STATES AND ELIGIBLE APPLICANTS.
Grants awarded to eligible States and eligible applicants
under this title shall be awarded for a period not to exceed
3 years.
(B) ELIGIBLE PARTNERSHIPS.Grants awarded to eligi-
ble partnerships under this title shall be awarded for a
period of 5 years.
(2) ONE-TIME AWARD.An eligible State and an eligible
partnership may receive a grant under each of sections 202,
203, and 204 only once.
(3) PAYMENTS.The Secretary shall make annual pay-
ments of grant funds awarded under this part.
(b) PEER REVIEW.
(1) PANEL.The Secretary shall provide the applications
submitted under this title to a peer review panel for evalua-
tion. With respect to each application, the peer review panel
shall initially recommend the application for funding or for dis-
approval.
(2)
PRIORITY.In recommending
applications
to
the
Secretary for funding under this title, the panel shall
(A) with respect to grants under section 202, give
priority to eligible States serving States that
(i) have initiatives to reform State teacher certifi-
cation requirements that are designed to ensure that
current and future teachers possess the necessary
teaching skills and academic content knowledge in the
subject areas in which the teachers are certified or
licensed to teach;
41
HIGHER EDUCATION ACT OF 1965
Sec. 206
(ii) include innovative reforms to hold institutions
of higher education with teacher preparation programs
accountable for preparing teachers who are highly
competent in the academic content area in which the
teachers plan to teach and have strong teaching skills;
or
(iii) involve the development of innovative efforts
aimed at reducing the shortage of highly qualified
teachers in high poverty urban and rural areas;
(B) with respect to grants under section 203
(i) give priority to applications from eligible part-
nerships that involve businesses; and
(ii) take into consideration
(I) providing an equitable geographic distribu-
tion of the grants throughout the United States;
and
(II) the potential of the proposed activities for
creating improvement and positive change.
(3) SECRETARIAL SELECTION.The Secretary shall deter-
mine, based on the peer review process, which application shall
receive funding and the amounts of the grants. In determining
grant amounts, the Secretary shall take into account the total
amount of funds available for all grants under this title and
the types of activities proposed to be carried out.
(c) MATCHING REQUIREMENTS.
(1) STATE GRANTS.Each eligible State receiving a grant
under section 202 or 204 shall provide, from non-Federal
sources, an amount equal to 50 percent of the amount of the
grant (in cash or in kind) to carry out the activities supported
by the grant.
(2) PARTNERSHIP GRANTS.Each eligible partnership re-
ceiving a grant under section 203 or 204 shall provide, from
non-Federal sources (in cash or in kind), an amount equal to
25 percent of the grant for the first year of the grant, 35 per-
cent of the grant for the second year of the grant, and 50 per-
cent of the grant for each succeeding year of the grant.
(d) LIMITATION ON ADMINISTRATIVE EXPENSES.An eligible
State or eligible partnership that receives a grant under this title
may not use more than 2 percent of the grant funds for purposes
of administering the grant.
(e) TEACHER QUALIFICATIONS PROVIDED TO PARENTS UPON RE-
QUEST.Any local educational agency or school that benefits from
the activities assisted under this title shall make available, upon
request and in an understandable and uniform format, to any par-
ent of a student attending any school served by the local edu-
cational agency, information regarding the qualification of the stu-
dent's classroom teacher with regard to the subject matter in which
the teacher provides instruction. The local educational agency shall
inform parents that the parents are entitled to receive the informa-
tion upon request.
SEC. 206. [20 U.S.C. 1026] ACCOUNTABILITY AND EVALUATION.
(a) STATE GRANT ACCOUNTABILITY REPORT.An eligible State
that receives a grant under section 202 shall submit an annual
Sec. 206
HIGHER EDUCATION ACT OF 1965
42
accountability report to the Secretary, the Committee on Labor and
Human Resources of the Senate, and the Committee on Education
and the Workforce of the House of Representatives. Such report
shall include a description of the degree to which the eligible State,
in using funds provided under such section, has made substantial
progress in meeting the following goals:
(1) STUDENT ACHIEVEMENT.Increasing student achieve-
ment for all students as defined by the eligible State.
(2) RAISING STANDARDS.Raising the State academic
standards required to enter the teaching profession, including,
where appropriate, through the use of incentives to incorporate
the requirement of an academic major in the subject, or related
discipline, in which the teacher plans to teach.
(3) INITIAL CERTIFICATION OR LICENSURE.Increasing suc-
cess in the pass rate for initial State teacher certification or li-
censure, or increasing the numbers of highly qualified individ-
uals being certified or licensed as teachers through alternative
programs.
(4) CORE ACADEMIC SUBJECTS.
(A) SECONDARY SCHOOL CLASSES.Increasing the per-
centage of secondary school classes taught in core aca-
demic subject areas by teachers
(i) with academic majors in those areas or in a re-
lated field;
(ii) who can demonstrate a high level of com-
petence through rigorous academic subject area tests;
or
(iii) who can demonstrate competence through a
high level of performance in relevant content areas.
(B) ELEMENTARY SCHOOL CLASSES.Increasing the
percentage
of elementary
school
classes
taught
by
teachers
(i) with academic majors in the arts and sciences;
(ii) who can demonstrate competence through a
high level of performance in core academic subjects.
(5) DECREASING TEACHER SHORTAGES.Decreasing short-
ages of qualified teachers in poor urban and rural areas.
(6) INCREASING OPPORTUNITIES FOR PROFESSIONAL DEVEL-
OPMENT.Increasing opportunities for enhanced and ongoing
professional development that improves the academic content
knowledge of teachers in the subject areas in which the teach-
ers are certified or licensed to teach or in which the teachers
are working toward certification or licensure to teach, and that
promotes strong teaching skills.
(7) TECHNOLOGY INTEGRATION.Increasing the number of
teachers prepared to integrate technology in the classroom.
(b) ELIGIBLE PARTNERSHIP EVALUATION.Each eligible part-
nership receiving a grant under section 203 shall establish and in-
clude in the application submitted under section 203(c), an evalua-
tion plan that includes strong performance objectives. The plan
shall include objectives and measures for
(1) increased student achievement for all students as
measured by the partnership;
or
43
HIGHER EDUCATION ACT OF 1965
Sec. 207
(2) increased teacher retention in the first 3 years of a
teacher's career;
(3) increased success in the pass rate for initial State cer-
tification or licensure of teachers; and
(4) increased percentage of secondary school classes taught
in core academic subject areas by teachers
(A) with academic majors in the areas or in a related
field; and
(B) who can demonstrate a high level of competence
through rigorous academic subject area tests or who can
demonstrate competence through a high level of perform-
ance in relevant content areas;
(5) increasing the percentage of elementary school classes
taught by teachers with academic majors in the arts and
sciences or who demonstrate competence through a high level
of performance in core academic subject areas; and
(6) increasing the number of teachers trained in tech-
nology.
(c) REVOCATION OF GRANT.
(1) REPORT.Each eligible State or eligible partnership re-
ceiving a grant under this title shall report annually on the
progress of the eligible State or eligible partnership toward
meeting the purposes of this title and the goals, objectives, and
measures described in subsections (a) and (b).
(2) REVOCATION.
(A) ELIGIBLE STATES AND ELIGIBLE APPLICANTS.If the
Secretary determines that an eligible State or eligible ap-
plicant is not making substantial progress in meeting the
purposes, goals, objectives, and measures, as appropriate,
by the end of the second year of a grant under this title,
then the grant payment shall not be made for the third
year of the grant.
(B) ELIGIBLE PARTNERSHIPS.If the Secretary deter-
mines that an eligible partnership is not making substan-
tial progress in meeting the purposes, goals, objectives,
and measures, as appropriate, by the end of the third year
of a grant under this title, then the grant payments shall
not be made for any succeeding year of the grant.
(d) EVALUATION AND DISSEMINATION.The Secretary shall
evaluate the activities funded under this title and report the Sec-
retary's findings regarding the activities to the Committee on
Labor and Human Resources of the Senate and the Committee on
Education and the Workforce of the House of Representatives. The
Secretary shall broadly disseminate successful practices developed
by eligible States and eligible partnerships under this title, and
shall broadly disseminate information regarding such practices
that were found to be ineffective.
SEC. 207. [20 U.S.C. 1027] ACCOUNTABILITY FOR PROGRAMS THAT
PREPARE TEACHERS.
(a) DEVELOPMENT OF DEFINITIONS AND REPORTING METHODS.
Within 9 months of the date ofenactment of the Higher Education
Amendments of 1998, the Commissioner of the National Center for
Education Statistics, in consultation with States and institutions of
higher education, shall develop key definitions for terms, and uni-
51
Sec. 201
HIGHER EDUCATION ACT OF 1965
44
form reporting methods (including the key definitions for the con-
sistent reporting of pass rates), related to the performance of ele-
mentary school and secondary school teacher preparation pro-
grams.
(b) STATE REPORT CARD ON THE QUALITY OF TEACHER PREPA-
RATION.Each State that receives funds under this Act shall pro-
vide to the Secretary, within 2 years of the date of enactment of
the Higher Education Amendments of 1998, and annually there-
after, in a uniform and comprehensible manner that conforms with
the definitions and methods established in subsection (a), a State
report card on the quality of teacher preparation in the State,
which shall include at least the following:
(1) A description of the teacher certification and licensure
assessments, and any other certification and licensure require-
ments, used by the State.
(2) The standards and criteria that prospective teachers
must meet in order to attain initial teacher certification or li-
censure and to be certified or licensed to teach particular sub-
jects or in particular grades within the State.
(3) A description of the extent to which the assessments
and requirements described in paragraph (1) are aligned with
the State's standards and assessments for students.
(4) The percentage of teaching candidates who passed each
of the assessments used by the State for teacher certification
and licensure, and the passing score on each assessment that
determines whether a candidate has passed that assessment.
(5) The percentage of teaching candidates who passed each
of the assessments used by the State for teacher certification
and licensure, disaggregated and ranked, by the teacher prepa-
ration program in that State from which the teacher candidate
received the candidate's most recent degree, which shall be
made available widely and publicly.
(6) Information on the extent to which teachers in the
State are given waivers of State certification or licensure re-
quirements, including the proportion of such teachers distrib-
uted across high- and low-poverty school districts and across
subject areas.
(7) A description of each State's alternative routes to
teacher certification, if any, and the percentage of teachers cer-
tified through alternative certification routes who pass State
teacher certification or licensure assessments.
(8) For each State, a description of proposed criteria for as-
sessing the performance of teacher preparation programs with-
in institutions of higher education in the State, including indi-
cators of teacher candidate knowledge and skills.
(9) Information on the extent to which teachers or prospec-
tive teachers in each State are required to take examinations
or other assessments of their subject matter knowledge in the
area or areas in which the teachers provide instruction, the
standards established for passing any such assessments, and
the extent to which teachers or prospective teachers are re-
quired to receive a passing score on such assessments in order
to teach in specific subject areas or grade levels.
(C) INITIAL REPORT.
45
HIGHER EDUCATION ACT OF 1965
Sec. 207
(1) IN GENERAL.Each State that receives funds under
this Act, not later than 6 months of the date of enactment of
the Higher Education Amendments of 1998 and in a uniform
and comprehensible manner, shall submit to the Secretary the
information described in paragraphs (1), (5), and (6) of sub-
section (b). Such information shall be compiled by the Sec-
retary and submitted to the Committee on Labor and Human
Resources of the Senate and the Committee on Education and
the Workforce of the House of Representatives not later than
9 months after the date of enactment of the Higher Education
Amendments of 1998.
(2) CONS'TRUCTION.Nothing in this subsection shall be
construed to require a State to gather information that is not
in the possession of the State or the teacher preparation pro-
grams in the State, or readily available to the State or teacher
preparation programs.
(d) REPORT OF THE SECRETARY ON THE QUALITY OF TEACHER
PREPARATION.
(1) REPORT CARD.The Secretary shall provide to Con-
gress, and publish and make widely available, a report card on
teacher qualifications and preparation in the United States, in-
cluding all the information reported in paragraphs (1) through
(9) of subsection (b). Such report shall identify States for which
eligible States and eligible partnerships received a grant under
this title. Such report shall be so provided, published and made
available not later than 2 years 6 months after the date of en-
actment of the Higher Education Amendments of 1998 and an-
nually thereafter.
(2) REPORT TO CONGRESS.The Secretary shall report to
Congress
(A) a comparison of States' efforts to improve teaching
quality; and
(B) regarding the national mean and median scores on
any standardized test that is used in more than 1 State for
teacher certification or licensure.
(3) SPECIAL RULE.In the case of teacher preparation pro-
grams with fewer than 10 graduates taking any single initial
teacher certification or licensure assessment during an aca-
demic year, the Secretary shall collect and publish information
with respect to an average pass rate on State certification or
licensure assessments taken over a 3-year period.
(e) COORDINATION.The Secretary, to the extent practicable,
shall coordinate the information collected and published under this
title among States for individuals who took State teacher certifi-
cation or licensure assessments in a State other than the State in
which the individual received the individual's most recent degree.
(f) INSTITUTIONAL REPORT CARDS ON THE QUALITY OF TEACHER
PREPARATION.
(1) REPORT CARD.Each institution of higher education
that conducts a teacher preparation program that enrolls stu-
dents receiving Federal assistance under this Act, not later
than 18 months after the date of enactment of the Higher Edu-
cation Amendments of 1998 and annually thereafter, shall re-
port to the State and the general public, in a uniform and corn-
53
Sec. 208
HIGHER EDUCATION ACT OF 1965
46
prehensible manner that conforms with the definitions and
methods established under subsection (a), the following infor-
mation:
(A) PASS RATE.(i) For the most recent year for which
the information is available, the pass rate of the institu-
tion's graduates on the teacher certification or licensure
assessments of the State in which the institution is lo-
cated, but only for those students who took those assess-
ments within 3 years of completing the program.
(ii) A comparison of the program's pass rate with the
average pass rate for programs in the State.
(iii) In the case of teacher preparation programs with
fewer than 10 graduates taking any single initial teacher
certification or licensure assessment during an academic
year, the institution shall collect and publish information
with respect to an average pass rate on State certification
or licensure assessments taken over a 3-year period.
(B) PROGRAM INFORMATION.The number of students
in the program, the average number of hours of supervised
practice teaching required for those in the program, and
the faculty-student ratio in supervised practice teaching.
(C) STATEMENT.In States that approve or accredit
teacher education programs, a statement of whether the
institution's program is so approved or accredited.
(D) DESIGNATION AS LOW-PERFORMING.Whether the
program has been designated as low-performing by the
State under section 208(a).
(2) REQUIREMENT.The information described in para-
graph (1) shall be reported through publications such as school
catalogs and promotional materials sent to potential appli-
cants, secondary school guidance counselors, and prospective
employers of the institution's program graduates.
(3) FINES.In addition to the actions authorized in section
487(c), the Secretary may impose a fine not to exceed $25,000
on an institution of higher education for failure to provide the
information described in this subsection in a timely or accurate
manner.
SEC. 208. [20 U.S.C. 1028] STATE FUNCTIONS.
(a) STATE ASSESSMENT.In order to receive funds under this
Act, a State, not later than 2 years after the date of enactment of
the Higher Education Amendments of 1998, shall have in place a
procedure to identify, and assist, through the provision of technical
assistance, low-performing programs of teacher preparation within
institutions of higher education. Such State shall provide the Sec-
retary an annual list of such low-performing institutions that in-
cludes an identification of those institutions at-risk of being placed
on such list. Such levels of performance shall be determined solely
by the State and may include criteria based upon information col-
lected pursuant to this title. Such assessment shall be described in
the report under section 207(b).
(b) TERMINATION OF ELIGIBILITY.Any institution of higher
education that offers a program of teacher preparation in which the
State has withdrawn the State's approval or terminated the State's
47
HIGHER EDUCATION ACT OF 1965
Sec. 210
financial support due to the low performance of the institution's
teacher preparation program based upon the State assessment de-
scribed in subsection (a)
(1) shall be ineligible for any funding for professional de-
velopment activities awarded by the Department of Education;
and
(2) shall not be permitted to accept or enroll any student
that receives aid under title IV of this Act in the institution's
teacher preparation program.
(c) NEGOTIATED RULEMAKING.If the Secretary develops any
regulations implementing subsection (b)(2), the Secretary shall sub-
mit such proposed regulations to a negotiated rulemaking process,
which shall include representatives of States, institutions of higher
education, and educational and student organizations.
SEC. 209. [20 U.S.C. 1029] GENERAL PROVISIONS.
(a) METHODS.In complying with sections 207 and 208, the
Secretary shall ensure that States and institutions of higher edu-
cation use fair and equitable methods in reporting and that the re-
porting methods protect the privacy of individuals.
(b) SPECIAL RULE.For each State in which there are no State
certification or licensure assessments, or for States that do not set
minimum performance levels on those assessments
(1) the Secretary shall, to the extent practicable, collect
data comparable to the data required under this title from
States, local educational agencies, institutions of higher edu-
cation, or other entities that administer such assessments to
teachers or prospective teachers; and
(2) notwithstanding any other provision of this title, the
Secretary shall use such data to carry out requirements of this
title related to assessments or pass rates.
(C) LIMITATIONS.
(1) FEDERAL CONTROL PROHIBITED.Nothing in this title
shall be construed to permit, allow, encourage, or authorize
any Federal control over any aspect of any private, religious,
or home school, whether or not a home school is treated as a
private school or home school under State law. This section
shall not be construed to prohibit private, religious, or home
schools from participation in programs or services under this
title.
(2) No CHANGE IN STATE CONTROL ENCOURAGED OR RE-
QUIRED.Nothing in this title shall be construed to encourage
or require any change in a State's treatment of any private, re-
ligious, or home school, whether or not a home school is treat-
ed as a private school or home school under State law.
(3) NATIONAL SYSTEM OF TEACHER CERTIFICATION PROHIB-
ITED.Nothing in this title shall be construed to permit, allow,
encourage, or authorize the Secretary to establish or support
any national system of teacher certification.
SEC. 210. [20 U.S.C. 1030] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this title
$300,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years, of which-
55
Sec. 301
HIGHER EDUCATION ACT OF 1965
48
(1) 45 percent shall be available for each fiscal year to
award grants under section 202;
(2) 45 percent shall be available for each fiscal year to
award grants under section 203; and
(3) 10 percent shall be available for each fiscal year to
award grants under section 204.
TITLE IIIINSTITUTIONAL AID
SEC. 301. [20 U.S.C. 1051] FINDINGS AND PURPOSES.
(a) FINDINGS.The Congress finds that
(1) there are a significant number of institutions of higher
education serving high percentages of minority students and
students from low-income backgrounds, that face problems that
threaten their ability to survive;
(2) the problems relate to the management and fiscal oper-
ations of certain institutions of higher education, as well as to
an inability to engage in long-range planning and development
activities, including endowment building;
(3) in order to be competitive and provide a high-quality
education for all, institutions of higher education should im-
prove their technological capacity and make effective use of
technology;
(4) the title III program prior to 1985 did not always meet
the specific development needs of historically Black colleges
and universities and other institutions with large concentra-
tions of minority, low-income students;
(5) the solution of the problems of these institutions would
enable them to become viable, fiscally stable and independent,
thriving institutions of higher education;
(6) providing assistance to eligible institutions will en-
hance the role of such institutions in providing access and
quality education to low-income and minority students;
(7) these institutions play an important role in the Amer-
ican system of higher education, and there is a strong national
interest in assisting them in solving their problems and in sta-
bilizing their management and fiscal operations, and in becom-
ing financially independent; and
(8) there is a particular national interest in aiding those
institutions of higher education that have historically served
students who have been denied access to postsecondary edu-
cation because of race or national origin and whose participa-
tion in the American system of higher education is in the Na-
tion's interest so that equality of access and quality of post-
secondary education opportunities may be enhanced for all stu-
dents.
(b) PURPOSE.It is the purpose of this title to assist such insti -.
tutions in equalizing educational opportunity through a program of
Federal assistance.
PART ASTRENGTHENING INSTITUTIONS
SEC. 311. [20 U.S.C. 1057] PROGRAM PURPOSE.
(a) GENERAL AUTHORIZATION.The Secretary shall carry out a
program, in accordance with this part, to improve the academic
49
HIGHER EDUCATION ACT OF 1965
Sec. 311
quality, institutional management, and fiscal stability of eligible in-
stitutions, in order to increase their self-sufficiency and strengthen
their capacity to make a substantial contribution to the higher edu-
cation resources of the Nation.
(b) GRANTS AWARDED; SPECIAL CONSIDERATION.(1) From the
sums available for this part under section 399(a)(1), the Secretary
may award grants to any eligible institution with an application
approved under section 351 in order to assist such an institution
to plan, develop, or implement activities that promise to strengthen
the institution.
(2) Special consideration shall be given to any eligible
institution
(A) which has endowment funds (other than any endow-
ment fund built under section 332 of this Act as in effect on
September 30, 1986, and under part B) the market value of
which, per full-time equivalent student, is less than the aver-
age current market value of the endowment funds, per full-
time equivalent student (other than any endowment fund built
under section 332 of this Act as in effect on September 30,
1986, and under part B) at similar institutions; or
(B) which has expenditures per full-time equivalent stu-
dent for library materials which is less than the average of the
expenditures for library materials per full-time equivalent stu-
dent by other similarly situated institutions.
(3) Special consideration shall be given to applications which
propose, pursuant to the institution's plan, to engage in
(A) faculty development;
(B) funds and administrative management;
(C) development and improvement of academic programs;
(D) acquisition of equipment for use in strengthening
funds management and academic programs;
(E) joint use of facilities such as libraries and laboratories;
and
(F) student services.
(c) AUTHORIZED ACTIVITIES.Grants awarded under this sec-
tion shall be used for 1 or more of the following activities:
(1) Purchase, rental, or lease of scientific or laboratory
equipment for educational purposes, including instructional
and research purposes.
(2) Construction, maintenance, renovation, and improve-
ment in classrooms, libraries, laboratories, and other instruc-
tional facilities, including the integration of computer tech-
nology into institutional facilities to create smart buildings.
(3) Support of faculty exchanges, faculty development, and
faculty fellowships to assist in attaining advanced degrees in
the field of instruction of the faculty.
(4) Development and improvement of academic programs.
(5) Purchase of library books, periodicals, and other edu-
cational materials, including telecommunications program ma-
terial.
(6) Tutoring, counseling, and student service programs de-
signed to improve academic success.
57
Sec. 312
HIGHER EDUCATION ACT OF 1965
50
(7) Funds management, administrative management, and
acquisition of equipment for use in strengthening funds man-
agement.
(8) Joint use of facilities, such as laboratories and libraries.
(9) Establishing or improving a development office to
strengthen or improve contributions from alumni and the pri-
vate sector.
(10) Establishing or improving an endowment fund.
(11) Creating or improving facilities for Internet or other
distance learning academic instruction capabilities, including
purchase or rental of telecommunications technology equip-
ment or services.
(12) Other activities proposed in the application submitted
pursuant to subsection (c) that
(A) contribute to carrying out the purposes of the pro-
gram assisted under this part; and
(B) are approved by the Secretary as part of the re-
view and acceptance of such application.
(d) ENDOWMENT FUND.
(1) IN GENERAL.An eligible institution may use not more
than 20 percent of the grant funds provided under this part to
establish or increase an endowment fund at such institution.
(2) MATCHING REQUIREMENT.In order to be eligible to use
grant funds in accordance with paragraph (1), the eligible in-
stitution shall provide matching funds from non-Federal
sources, in an amount equal to or greater than the Federal
funds used in accordance with paragraph (1), for the establish-
ment or increase of the endowment fund.
(3) COMPARABILITY.The provisions of part C, regarding
the establishment or increase of an endowment fund, that the
Secretary determines are not inconsistent with this subsection,
shall apply to funds used under paragraph (1).
SEC. 312. [20 U.S.C. 1058] DEFINITIONS; ELIGIBILITY.
(a) EDUCATIONAL AND GENERAL EXPENDITURES.For the pur-
pose of this part, the term "educational and general expenditures"
means the total amount expended by an institution of higher edu-
cation for instruction, research, public service, academic support
(including library expenditures), student services, institutional sup-
port, scholarships and fellowships, operation and maintenance ex-
penditures for the physical plant, and any mandatory transfers
which the institution is required to pay by law.
(b) ELIGIBLE INSTITUTION.For the purpose of this part, the
term "eligible institution" means
(1) an institution of higher education
(A) which has an enrollment of needy students as re-
quired by subsection (c) of this section;
(B) except as provided in. section 392(b), the average
educational and general expenditures of which are low, per
full-time equivalent undergraduate student, in comparison
with the average educational and general expenditures per
full-time equivalent undergraduate student of institutions
that offer similar instruction ;.
(C) which is
51
HIGHER EDUCATION ACT OF 1965
Sec. 312
(i) legally authorized to provide, and provides
within the State, an educational program for which
such institution awards a bachelor's degree;
(ii) a junior or community college; or
(iii) the College of the Marshall Islands, the Col-
lege of Micronesia/Federated States of Micronesia, and
Palau Community College;
(D) which is accredited by a nationally recognized ac-
crediting agency or association determined by the Sec-
retary to be reliable authority as to the quality of training
offered or which is, according to such an agency or associa-
tion, making reasonable progress toward accreditation;
(E) which meets such other requirements as the Sec-
retary may prescribe; and
(F) located in a State; and
(2) any branch of any institution of higher education de-
scribed under paragraph (1) which by itself satisfies the re-
quirements contained in subparagraphs (A) and (B) of such
paragraph.
For purposes of the determination of whether an institution is an
eligible institution under this paragraph, the factor described
under paragraph (1)(A) shall be given twice the weight of the factor
described under paragraph (1)(B).
(c) ENDOWMENT FUND.For the purpose of this part, the term
"endowment fund" means a fund that
(1) is established by State law, by an institution of higher
education, or by a foundation that is exempt from Federal in-
come taxation;
(2) is maintained for the purpose of generating income for
the support of the institution; and
(3) does not include real estate.
(d) ENROLLMENT OF NEEDY STUDENTS.For the purpose of this
part, the term "enrollment of needy students" means an enrollment
at an institution of higher education or a junior or community col-
lege which includes
(1) at least 50 percent of the degree students so enrolled
who are receiving need-based assistance under title IV of this
Act in the second fiscal year preceding the fiscal year for which
the determination is being made (other than loans for which an
interest subsidy is paid pursuant to section 428), or
(2) a substantial percentage of students receiving Pell
Grants in the second fiscal year preceding the fiscal year for
which determination is being made, in comparison with the
percentage of students receiving Pell Grants at all such institu-
tions in the second fiscal year preceding the fiscal year for
which the determination is made, unless the requirement of
this subdivision is waived under section 392(a).
(e) FULL-TIME EQUIVALENT STUDENTS.For the purpose of this
part, the term "full-time equivalent students" means the sum of the
number of students enrolled full time at an institution, plus the
full-time equivalent of the number of students enrolled part time
(determined on the basis of the quotient of the sum of the credit
hours of all part-time students divided by 12) at such institution.
59
Sec. 313
HIGHER EDUCATION ACT OF 1965
52
a) JUNIOR OR COMMUNITY COLLEGE.For the purpose of this
part, the term "junior or community college" means an institution
of higher education
(1) that admits as regular students persons who are be-
yond the age of compulsory school attendance in the State in
which the institution is located and who have the ability to
benefit from the training offered by the institution;
(2) that does not provide an educational program for which
it awards a bachelor's degree (or an equivalent degree); and
(3) that
(A) provides an educational program of not less than
2 years that is acceptable for full credit toward such a de-
gree, or
(B) offers a 2-year program in engineering, mathe-
matics, or the physical or biological sciences, designed to
prepare a student to work as a technician or at the
semiprofessional level in engineering, scientific, or other
technological fields requiring the understanding and appli-
cation of basic engineering, scientific, or mathematical
principles of knowledge.
(g) HISTORICALLY BLACK COLLEGE OR UNIVERSITY.For the
purposes of this section, no historically black college or university
which is eligible for and receives funds under part B of this title
is eligible for or may receive funds under this part.
SEC. 313. [20 U.S.C. 10591 DURATION OF GRANT.
(a) AWARD PERIOD.The Secretary may award a grant to an
eligible institution under this part for 5 years.
(b) LIMITATIONS.In awarding grants under this part the Sec-
retary shall give priority to applicants who are not already receiv-
ing a grant under this part, except that for the purpose of this sub-
section a grant under subsection (c) and a grant under section
394(a)(1) shall not be considered a grant under this part.
(c) PLANNING GRANTS. Notwithstanding subsection (a), the
Secretary may award a grant to an eligible institution under this
part for a period of one year for the purpose of preparation of plans
and applications for a grant under this part.
(d) WAIT-OUT-PERIOD.Each eligible institution that received
a grant under this part for a 5-year period shall not be eligible to
receive an additional grant under this part until 2 years after the
date on which the 5-year grant period terminates.
SEC. 314. 120 U.S.C. 1059a1 APPLICATIONS.
Each eligible institution desiring to receive assistance under
this part shall submit an application in accordance with the re-
quirements of section 391.
SEC. 315. [20 U.S.C. 1059b1 GOALS FOR FINANCIAL MANAGEMENT AND
ACADEMIC PROGRAM.
(a) GOALS.Any application for a grant under this part shall
describe measurable goals for the institution's financial manage-
ment and academic programs, and include a plan of how the appli-
cant intends to achieve those goals.
(b) CONTINUATION REQUIREMENTS.Any continuation applica-
tion shall demonstrate the progress made toward achievement of
the goals described pursuant to subsection (a).
53
HIGHER EDUCATION ACT OF 1965
Sec. 316
SEC. 316. [20 U.S.C. 1059c] AMERICAN INDIAN TRIBALLY CONTROLLED
COLLEGES AND UNIVERSITIES.
(a) PROGRAM AUTHORIZED.The Secretary shall provide grants
and related assistance to Indian Tribal Colleges and Universities
to enable such institutions to improve and expand their capacity to
serve Indian students.
(b) DEFINITIONS.In this section:
(1) INDIAN.The term "Indian" has the meaning given the
term in section 2 of the Tribally Controlled College or Univer-
sity Assistance Act of 1978.
(2) INDIAN TRIBE.The term "Indian tribe" has the mean-
ing given the term in section 2 of the Tribally Controlled Col-
lege or University Assistance Act of 1978.
(3) TRIBAL COLLEGE OR UNIVERSITY.The term "Tribal Col-
lege or University" has the meaning give the term "tribally
controlled college or university" in section 2 of the Tribally
Controlled College or University Assistance Act of 1978, and
includes an institution listed in the Equity in Educational
Land Grant Status Act of 1994.
(4) INSTITUTION OF HIGHER EDUCATION.The term "institu-
tion of higher education" means an institution of higher edu-
cation as defined in section 101(a), except that paragraph (2)
of such section shall not apply.
(c) AUTHORIZED ACTIVITIES.
(1) IN GENERAL.Grants awarded under this section shall
be used by Tribal Colleges or Universities to assist such insti-
tutions to plan, develop, undertake, and carry out activities to
improve and expand such institutions' capacity to serve Indian
students.
(2) EXAMPLES OF AUTHORIZED ACTIVITIES.The activities
described in paragraph (1) may include
(A) purchase, rental, or lease of scientific or laboratory
equipment for educational purposes, including instruc-
tional and research purposes;
(B) construction, maintenance, renovation, and im-
provement in classrooms, libraries, laboratories, and other
instructional facilities, including purchase or rental of tele-
communications technology equipment or services;
(C) support of faculty exchanges, faculty development,
and faculty fellowships to assist in attaining advanced de-
grees in the faculty's field of instruction;
(D) academic instruction in disciplines in which Indi-
ans are underrepresented;
(E) purchase of library books, periodicals, and other
educational materials, including telecommunications pro-
gram material;
(F) tutoring, counseling, and student service programs
designed to improve academic success;
(G) funds management, administrative management,
and acquisition of equipment for use in strengthening
funds management;
(H) joint use of facilities, such as laboratories and
libraries;
Sec. 316
HIGHER EDUCATION ACT OF 1965
54
(I) establishing or improving a development office to
strengthen or improve contributions from alumni and the
private sector;
(J) establishing or enhancing a program of teacher
education designed to qualify students to teach in elemen-
tary schools or secondary schools, with a particular empha-
sis on teaching Indian children and youth, that shall in-
clude, as part of such program, preparation for teacher cer-
tification;
(K) establishing community outreach programs that
encourage Indian elementary school and secondary school
students to develop the academic skills and the interest to
pursue postsecondary education; and
(L) other activities proposed in the application submit-
ted pursuant to subsection (d) that
(i) contribute to carrying out the activities de-
scribed in subparagraphs (A) through (K); and
(ii) are approved by the Secretary as part of the
review and acceptance of such application.
(3) ENDowrvimsrr FUND.
(A) IN GENERAL.A Tribal College or University may
use not more than 20 percent of the grant funds provided
under this section to establish or increase an endowment
fund at the institution.
(B) MATCHING REQUIREMENT.In order to be eligible
to use grant funds in accordance with subparagraph (A),
the Tribal College or University shall provide matching
funds, in an amount equal to the Federal funds used in ac-
cordance with subparagraph (A), for the establishment or
increase of the endowment fund.
(C) COMPARABILITY.The provisions of part C regard-
ing the establishment or increase of an endowment fund,
that the Secretary determines are not inconsistent with
this paragraph, shall apply to funds used under subpara-
graph (A).
(d) APPLICATION PROCESS.
(1) INSTITUTIONAL ELIGIBILITY.To be eligible to receive
assistance under this section, a Tribal College or University
shall be an eligible institution under section 312(b).
(2) APPLICATION.Any Tribal College or University desir-
ing to receive assistance under this section shall submit an ap-
plication to the Secretary at such time, and in such manner,
as the Secretary may by regulation reasonably require. Each
such application shall include
(A) a 5-year plan for improving the assistance pro-
vided by the Tribal College or University to Indian stu-
dents, increasing the rates at which Indian secondary
school students enroll in higher education, and increasing
overall postsecondary retention rates for Indian students;
and (B) such enrollment data and other information and
assurances as the Secretary may require to demonstrate
compliance with paragraph (1).
62
55
HIGHER EDUCATION ACT OF 1965
Sec. 317
(3) SPECIAL RULE. For the purposes of this part, no Tribal
College or University that is eligible for and receives funds
under this section may concurrently receive other funds under
this part or part B.
SEC. 317. [20 U.S.C. 1059d1 ALASKA NATIVE AND NATIVE HAWAIIAN-
SERVING INSTITUTIONS.
(a) PROGRAM AUTHORIZED.The Secretary shall provide grants
and related assistance to Alaska Native-serving institutions and
Native Hawaiian-serving institutions to enable such institutions to
improve and expand their capacity to serve Alaska Natives and Na-
tive Hawaiians.
(b) DEFINITIONS.For the purpose of this section
(1) the term "Alaska Native" has the meaning given the
term in section 9308 of the Elementary and Secondary Edu-
cation Act of 1965;
(2) the term "Alaska Native-serving institution" means an
institution of higher education that
(A) is an eligible institution under section 312(b); and
(B) at the time of application, has an enrollment of un-
dergraduate students that is at least 20 percent Alaska
Native students;
(3) the term "Native Hawaiian" has the meaning given the
term in section 9212 of the Elementary and Secondary Edu-
cation Act of 1965; and
(4) the term "Native Hawaiian-serving institution" means
an institution of higher education which
(A) is an eligible institution under section 312(b); and
(B) at the time of application, has an enrollment of un-
dergraduate students that is at least 10 percent Native
Hawaiian students.
(c) AUTHORIZED ACTIVITIES.
(1) TYPES OF ACTIVITIES AUTHORIZED.Grants awarded
under this section shall be used by Alaska Native-serving insti-
tutions and Native Hawaiian-serving institutions to assist such
institutions to plan, develop, undertake, and carry out activi-
ties to improve and expand such institutions' capacity to serve
Alaska Natives or Native Hawaiians.
(2) EXAMPLES OF AUTHORIZED ACTIVITIES.Such programs
may include
(A) purchase, rental, or lease of scientific or laboratory
equipment for educational purposes, including instruc-
tional and research purposes;
(B) renovation and improvement in classroom, library,
laboratory, and other instructional facilities;
(C) support of faculty exchanges, and faculty develop-
ment and faculty fellowships to assist in attaining ad-
vanced degrees in the faculty's field of instruction;
(D) curriculum development and academic instruction;
(E) purchase of library books, periodicals, microfilm,
and other educational materials;
(F) funds and administrative management, and acqui-
sition of equipment for use in strengthening funds man-
agement;
-
i3
Sec. 321
HIGHER EDUCATION ACT OF. 1965
56
(G) joint use of facilities such as laboratories and li-
braries; and
(H) academic tutoring and counseling programs and
student support services.
(d) APPLICATION PROCESS.
( 1) INSTITUTIONAL ELIGIBILITY.Each Alaska Native-serv-
ing institution and Native Hawaiian-serving institution desir-
ing to receive assistance under this section shall submit to the
Secretary such enrollment data as may be necessary to dem-
onstrate that the institution is an Alaska Native-serving insti-
tution or a Native Hawaiian-serving institution as defined in
subsection (b), along with such other information and data as
the Secretary may by regulation require.
(2) APPLICATIONS.Any institution which is determined by
the Secretary to be an Alaska Native-serving institution or a
Native Hawaiian-serving institution may submit an application
for assistance under this section to the Secretary. Such appli-
cation shall include
(A) a 5-year plan for improving the assistance pro-
vided by the Alaska Native-serving institution or the Na-
tive Hawaiian-serving institution to Alaska Native or. Na-
tive Hawaiian students; and
(B) such other information and assurance as the Sec-
retary may require.
(e) SPECIAL RULE.For the purposes of this section, no Alaska
Native-serving institution or Native Hawaiian-serving institution
which is eligible for and receives funds under this section may con-
currently receive other funds under this part or part B.
PART BSTRENGTHENING HISTORICALLY BLACK COLLEGES AND
UNIVERSITIES
SEC. 321. [20 U.S.C. 1060] FINDINGS AND PURPOSES.
The Congress finds that
(1) the historically Black colleges and universities have
contributed significantly to the effort to attain equal oppor-
tunity through postsecondary education for Black, low-income,
and educationally disadvantaged Americans;
(2) States and the Federal Government have discriminated
in the allocation of land and financial resources to support
Black public institutions under the Morrill Act of 1862 and its
progeny, and against public and private Black colleges and uni-
versities in the award of Federal grants and contracts, and the
distribution of Federal resources under this Act and other Fed-
eral programs which benefit institutions of higher education;
(3) the current state of Black colleges and universities is
partly attributable to the discriminatory action of the States
and the Federal Government and this discriminatory action re-
quires the remedy of enhancement of Black postsecondary in-
stitutions to ensure their continuation and participation in ful-
filling the Federal mission of equality of educational oppor-
tunity; and
(4) financial assistance to establish or strengthen the phys-
ical plants, financial management, academic resources, and en-
57
HIGHER EDUCATION ACT OF 1965
Sec. 323
dowments of the historically Black colleges and universities are
appropriate methods to enhance these institutions and facili-
tate a decrease in reliance on governmental financial support
and to encourage reliance on endowments and private sources.
SEC. 322. [20 U.S.C. 10611 DEFINITIONS.
For the purpose of this part:
(1) The term "graduate" means an individual who has at-
tended an institution for at least three semesters and fulfilled
academic requirements for undergraduate studies in not more
than 5 consecutive school years.
(2) The term "part B institution" means any historically
Black college or university that was established prior to 1964,
whose principal mission was, and is, the education of Black
Americans, and that 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 rea-
sonable progress toward accreditation, except that any branch
campus of a southern institution of higher education that prior
to September 30, 1986, received a grant as an institution with
special needs under section 321 of this title and was formally
recognized by the National Center for Education Statistics as
a Historically Black College or University but was determined
not to be a part B institution on or after October 17, 1986,
shall, from the date of enactment of this exception, be consid-
ered a part B institution.
(3) The term "Pell Grant recipient" means a recipient of fi-
nancial aid under subpart 1 of part A of title IV of this Act.
(4) The term "professional and academic areas in which
Blacks are underrepresented" shall be determined by the Sec-
retary and the Commissioner of the Bureau of Labor Statistics,
on the basis of the most recent available satisfactory data, as
professional and academic areas in which the percentage of
Black Americans who have been educated, trained, and em-
ployed is less than the percentage of Blacks in the general pop-
ulation.
(5) The term "school year" means the period of 12 months
beginning July 1 of any calendar year and ending June 30 of
the following calendar year.
SEC. 323. [20 U.S.C. 10621 GRANTS TO INSTITUTIONS.
(a) GENERAL AUTHORIZATION; USES OF FUNDS.From amounts
available under section 360(a)(2) in any fiscal year the Secretary
shall make grants (under section 324) to institutions which have
applications approved by the Secretary (under section 325) for any
of the following uses:
(1) Purchase, rental, or lease of scientific or laboratory
equipment for educational purposes, including instructional
and research purposes.
(2) Construction, maintenance, renovation, and improve-
ment in classroom, library, laboratory, and other instructional
facilities, including purchase or rental of telecommunications
technology equipment or services.
65
54-653 99 - 3
Sec. 323
HIGHER EDUCATION ACT OF 1965
58
(3) Support of faculty exchanges, and faculty development
and faculty fellowships to assist in attaining advanced degrees
in their field of instruction.
(4) Academic instruction in disciplines in which Black
Americans are underrepresented.
(5) Purchase of library books, periodicals, microfilm, and
other educational materials, including telecommunications pro-
gram materials.
(6) Tutoring, counseling, and student service programs de-
signed to improve academic success.
(7) Funds and administrative management, and acquisi-
tion of equipment for use in strengthening funds management.
(8) Joint use of facilities, such as laboratories and libraries.
(9) Establishing or improving a development office to
strengthen or improve contributions from alumni and the pri-
vate sector.
(10) Establishing or enhancing a program of teacher edu-
cation designed to qualify students to teach in a public elemen-
tary or secondary school in the State that shall include, as part
of such program, preparation for teacher certification.
(11) Establishing community outreach programs which will
encourage elementary and secondary students to develop the
academic skills and the interest to pursue postsecondary edu-
cation.
(12) Other activities proposed in the application submitted
pursuant to section 325 that
(A) contribute to carrying out the purposes of this
part; and
(B) are approved by the Secretary as part of the re-
view and acceptance of such application.
(b) ENDOWMENT FUND.
(1) IN GENERAL.An institution may use not more than 20
percent of the grant funds provided under this part to establish
or increase an endowment fund at the institution.
(2) MATCHING REQUIREMENT.In order to be eligible to use
grant funds in accordance with paragraph (1), the eligible in-
stitution
shall provide matching funds from non-Federal
sources, in an amount equal to or greater than the Federal
funds used in accordance with paragraph (1), for the establish-
ment or increase of the endowment fund.
(3) COMPARABILITY.The provisions of part C regarding
the establishment or increase of an endowment fund, that the
Secretary determines are not inconsistent with this subsection,
shall apply to funds used under paragraph (1).
(c) LIMITATIONS.(1) No grant may be made under this Act for
any educational program, activity, or service related to sectarian
instruction or religious worship, or provided by a school or depart-
ment of divinity. For the purpose of this subsection, the term
"school or department of divinity" means an institution whose pro-
gram is specifically for the education of students to prepare them
to become ministers of religion or to enter upon some other reli-
gious vocation, or to prepare them to teach theological subjects.
59
HIGHER EDUCATION ACT OF 1965
Sec. 324
(2) Not more than 50 percent of the allotment of any institu-
tion may be available for the purpose of constructing or maintain-
ing a classroom, library, laboratory, or other instructional facility.
SEC. 324. [20 U.S.C. 1063] ALLOTMENTS TO INSTITUTIONS.
(a) ALLOTMENT; PELL GRANT BASIS.From the amounts appro-
priated to carry out this part for any fiscal year, the Secretary shall
allot to each part B institution a sum which bears the same ratio
to one-half that amount as the number of Pell Grant recipients in
attendance at such institution at the end of the school year preced-
ing the beginning of that fiscal year bears to the total number of
Pell Grant recipients at all part B institutions.
(b) ALLOTMENT; GRADUATES BASIS.From the amounts appro-
priated to carry out this part for any fiscal year, the Secretary shall
allot to each part B institution a sum which bears the same ratio
to one-fourth that amount as the number of graduates for such
school year at such institution bears to the total number of grad-
uates for such school year at all part B institutions.
(C)
ALLOTMENT; GRADUATE AND PROFESSIONAL
STUDENT
BASIS.From the amounts appropriated to carry out this part for
any fiscal year, the Secretary shall allot to each part B institution
a sum which bears the same ratio to one-fourth of that amount as
the percentage of graduates per institution, who are admitted to
and in attendance at, within 5 years of graduation with a bacca-
laureate degree, a graduate or professional school in a degree pro-
gram in disciplines in which Blacks are underrepresented, bears to
the percentage of such graduates per institution for all part B insti-
tutions.
(d) MINIMUM ALLOTMENT.(1) Notwithstanding subsections
(a), (b), and (c), the amount allotted to each part B institution
under this section shall not be less than $500,000.
(2) If the amount appropriated pursuant to section 360(a)(2)(A)
for any fiscal year is not sufficient to pay the minimum allotment
required by paragraph (1) of this subsection to all part B institu-
tions, the amount of such minimum allotments shall be ratably re-
duced. If additional sums become available for such fiscal year,
such reduced allocation shall be increased on the same basis as
they were reduced (until the amount allotted equals the minimum
allotment required by paragraph (1)).
(e) REALLOTMENT.The amount of any part B institution's al-
lotment under subsection (a), (b), (c), or (d) for any fiscal year
which the Secretary determines will not be required for such insti-
tution for the period such allotment is available shall be available
for reallotment from time to time on such date during such period
as the Secretary may determine to other part B institutions in pro-
portion to the original allotment to such other institutions under
this section for such fiscal year.
(f) SPECIAL MERGER RULE.(1) The Secretary shall permit any
eligible institution for a grant under part B in any fiscal year prior
to the fiscal year 1986 to apply for a grant under this part if the
eligible institution has merged with another institution of higher
education which is not so eligible or has merged with an eligible
institution.
6 7
Sec. 325
HIGHER EDUCATION ACT OF 1965
60
(2) The Secretary may establish such regulations as may be
necessary to carry out the requirement of paragraph (1) of this sub-
section.
(g) SPECIAL RULE FOR CERTAIN DISTRICT OF COLUMBIA ELIGI-
BLE INSTITUTIONS.In any fiscal year that the Secretary deter-
mines that Howard University or the University of the District of
Columbia will receive an allotment under subsections (b) and (c) of
this section which is not in excess of amounts received by Howard
University under the Act of March 2, 1867 (14 Stat. 438; 20 U.S.C.
123), relating to annual authorization of appropriations for Howard
University, or by the University of the District of Columbia under
the District of Columbia Self-Government and Governmental Reor-
ganization Act (87 Stat. 774) for such fiscal year, then Howard Uni-
versity and the University of the District of Columbia, as the case
may be, shall be ineligible to receive an allotment under this sec-
tion.
SEC. 325. [20 U.S.C. 1063a] APPLICATIONS.
(a) CONTENTS.No part B institution shall be entitled to its al-
lotment of Federal funds for any grant under section 324 for any
period unless that institution meets the requirements of subpara-
graphs (C), (D), and (E) of section 312(b)(1) and submits an applica-
tion to the Secretary at such time, in such manner, and containing
or accompanied by such information, as the Secretary may reason-
ably require. Each such application shall
(1) provide that the payments under this Act will be used
for the purposes set forth in section 323; and
(2) provide for making an annual report to the Secretary
and provide for
(A) conducting, except as provided in subparagraph
(B), a financial and compliance audit of an eligible institu-
tion, with regard to any funds obtained by it under this
title at least once every 2 years and covering the period
since the most recent audit, conducted by a qualified, inde-
pendent organization or person in accordance with stand-
ards established by the Comptroller General for the audit
of governmental organizations, programs, and functions,
and as prescribed in regulations of the Secretary, the re-
sults of which shall be submitted to the Secretary; or
(B) with regard to an eligible institution which is au-
dited under chapter 75 of title 31, United States Code,
deeming such audit to satisfy the requirements of subpara-
graph (A) for the period covered by such audit.
(b) APPROVAL.The Secretary shall approve any application
which meets the requirements of subsection (a) and shall not dis-
approve any application submitted under this part, or any modi-
fication thereof, without first affording such institution reasonable
notice and opportunity for a hearing.
(c) GOALS FOR FINANCIAL MANAGEMENT AND ACADEMIC PRO-
GRAMS.Any application for a grant under this part shall describe
measurable goals for the institution's financial management and
academic programs and include a plan of how the applicant intends
to achieve those goals.
61
HIGHER EDUCATION ACT OF 1965
Sec. 326
SEC. 326. [20 U.S.C. 1063b1 PROFESSIONAL OR GRADUATE INSTITU-
TIONS.
(a) GENERAL AUTHORIZATION.(1) Subject to the availability of
funds appropriated to carry out this section, the Secretary shall
award program grants to each of the postgraduate institutions list-
ed in subsection (e) that is determined by the Secretary to be mak-
ing a substantial contribution to the legal, medical, dental, veteri-
nary, or other graduate education opportunities in mathematics,
engineering, or the physical or natural sciences for Black Ameri-
cans.
(2) No grant in excess of $1,000,000 may be made under this
section unless the postgraduate institution provides assurances
that 50 percent of the cost of the purposes for which the grant is
made will be paid from non-Federal sources, except that no institu-
tion shall be required to match any portion of the first $1,000,000
of the institution's award from the Secretary. After funds are made
available to each eligible institution under the funding rules de-
scribed in subsection (f), the Secretary shall distribute, on a pro
rata basis, any amounts which were not so made available (by rea-
son of the failure of an institution to comply with the matching re-
quirements of this paragraph) among the institutions that have
complied with such matching requirement.
(b) DURATION.Grants shall be made for a period not to exceed
5 years.
(c) USES OF FUNDS.A grant under this section may be used
for
(1) purchase, rental or lease of scientific or laboratory
equipment for educational purposes, including instructional
and research purposes;
(2) construction, maintenance, renovation, and improve-
ment in classroom, library, laboratory, and other instructional
facilities, including purchase or rental of telecommunications
technology equipment or services;
(3) purchase of library books, periodicals, technical and
other scientific journals, microfilm, microfiche, and other edu-
cational materials, including telecommunications program ma-
terials;
(4) scholarships, fellowships, and other financial assistance
for needy graduate and professional students to permit the en-
rollment of the students in and completion of the doctoral de-
gree in medicine, dentistry, pharmacy, veterinary medicine,
law, and the doctorate degree in the physical or natural
sciences, engineering, mathematics, or other scientific dis-
ciplines in which African Americans are underrepresented;
(5) establish or improve a development office to strengthen
and increase contributions from alumni and the private sector;
(6) assist in the establishment or maintenance of an insti-
tutional endowment to facilitate financial independence pursu-
ant to section 331; and
(7) funds and administrative management, and the acqui-
sition of equipment, including software, for use in strengthen-
ing funds management and management information systems.
(d) APPLICATION.Any institution eligible for a grant under
this section shall submit an application which-
6 9
Sec. 326
HIGHER EDUCATION ACT OF 1965
62
(1) demonstrates how the grant funds will be used to im-
prove graduate educational opportunities for Black and low-in-
come students, and lead to greater financial independence; and
(2) provides, in the case of applications for grants in excess
of $1,000,000, the assurances required by subsection (a)(2) and
specifies the manner in which the eligible institution is going
to pay the non-Federal share of the cost of the application.
(e) ELIGIBILITY.
(1) IN GENERAL.Independent professional or graduate in-
stitutions and programs eligible for grants under subsection (a)
are the following
(A) Morehouse School of Medicine;
(B) Meharry Medical School;
(C) Charles R. Drew Postgraduate Medical School;
(D) Clark-Atlanta University;
(E) Tuskegee University School of Veterinary Medicine
and other qualified graduate programs;
(F) Xavier University School of Pharmacy and other
qualified graduate programs;
(G) Southern University School of Law and other
qualified graduate programs;
(H) Texas Southern University School of Law and
School of Pharmacy and other qualified graduate pro-
grams;
(I) Florida A&M University School of Pharmaceutical
Sciences and other qualified graduate programs;
(J) North Carolina Central University School of Law
and other qualified graduate programs;
(K) Morgan State University qualified graduate pro-
gram;
(L) Hampton University qualified graduate program;
(M) Alabama A&M qualified graduate program;
(N) North Carolina A&T State University qualified
graduate program;
(0) University of Maryland Eastern Shore qualified
graduate program;
(P) Jackson State University qualified graduate pro-
gram;(Q) Norfolk State University qualified graduate pro-
grams; and
(R) Tennessee State University qualified graduate pro-
grams.
(2) QUALIFIED GRADUATE PROGRAM.(A) For the purposes
of this section, the term "qualified graduate program" means
a graduate or professional program that provides a program of
instruction in the physical or natural sciences, engineering,
mathematics, or other scientific discipline in which African
Americans are underrepresented and has students enrolled in
such program at the time of application for a grant under this
section.
(B) Notwithstanding the enrollment requirement contained
in subparagraph (A), an institution may use an amount equal
'So in original. Probably should include a colon.
63
HIGHER EDUCATION ACT OF 1965
Sec. 326
to not more than 10 percent of the institution's grant under
this section for the development of a new qualified graduate
program.
(3) SPECIAL RULE.Institutions that were awarded grants
under this section prior to October 1, 1998, shall continue to
receive such grants, subject to the availability of appropriated
funds, regardless of the eligibility of the institutions described
in subparagraphs (Q) and (R) of paragraph (1).
(4) ONE GRANT PER INSTITUTION.The Secretary shall not
award more than 1 grant under this section in any fiscal year
to any institution of higher education or university system.
(5) INSTITUTIONAL CHOICE.The president or chancellor of
the institution may decide which graduate or professional
school or qualified graduate program will receive funds under
the grant in any 1 fiscal year, if the allocation of funds among
the schools or programs is delineated in the application for
funds submitted to the Secretary under this section.
(f) FUNDING RULE.Subject to subsection (g), of the amount
appropriated to carry out this section for any fiscal year
(1) the first $26,600,000 (or any lesser amount appro-
priated) shall be available only for the purposes of making
grants to institutions or programs described in subparagraphs
(A) through (P) of subsection (e)(1);
(2) any amount in excess of $26,600,000, but not in excess
of $28,600,000, shall be available for the purpose of making
grants to institutions or programs described in subparagraphs
(Q) and (R) of subsection (e)(1); and
(3) any amount in excess of $28,600,000, shall be made
available to each of the institutions or programs identified in
subparagraphs (A) through (R) pursuant to a formula devel-
oped by the Secretary that uses the following elements:
(A) The ability of the institution to match Federal
funds with non-Federal funds.
(B) The number of students enrolled in the programs
for which the eligible institution received funding under
this section in the previous year.
(C) The average cost of education per student, for all
full-time graduate or professional students (or the equiva-
lent) enrolled in the eligible professional or graduate
school, or for doctoral students enrolled in the qualified
graduate programs.
(D) The number of students in the previous year who
received their first professional or doctoral degree from the
programs for which the eligible institution received fund-
ing under this section in the previous year.
(E) The contribution, on a percent basis, of the pro-
grams for which the institution is eligible to receive funds
under this section to the total number of African Ameri-
cans receiving graduate or professional degrees in the pro-
fessions or disciplines related to the programs for the pre-
vious year:
(g) HOLD. HARMLESS RULE.Notwithstanding paragraphs (2)
and (3) of subsection (f), no institution or qualified program identi-
fied in subsection (e)(1) that received a grant for fiscal year 1998
Sec. 321
HIGHER EDUCATION ACT OF 1965
64
and that is eligible to receive a grant in a subsequent fiscal year
shall receive a grant amount in any such subsequent fiscal year
that is less than the grant amount received for fiscal year 1998, un-
less the amount appropriated is not sufficient to provide such grant
amounts to all such institutions and programs, or the institution
'cannot provide sufficient matching funds to meet the requirements
of this section.
SEC. 327. [20 U.S.C. 10630 REPORTING AND AUDIT REQUIREMENTS.
(a) RECORDKEEPING,Each recipient of a grant under this part
shall keep such records as the Secretary shall prescribe, including
records which fully disclose
(1) the amount and disposition by such recipient of the
proceeds of such assistance;
(2) the cost of the project or undertaking in connection
with which such assistance is given or used;
(3) the amount of that portion of the cost of the project or
undertaking supplied by other sources; and
(4) such other records as will facilitate an effective audit.
(b) REPAYMENT OF UNEXPENDED FUNDS.Any funds paid to an
institution and not expended or used for the purposes for which the
funds were paid within 10 years following the date of the initial
grant awarded to an institution under part B of this title shall be
repaid to the Treasury of the United States.
PART CENDOWMENT CHALLENGE GRANTS FOR INSTITUTIONS
ELIGIBLE FOR ASSISTANCE UNDER PART A OR PART B
SEC. 331. [20 U.S.C. 1065] ENDOWMENT CHALLENGE GRANTS.
(a) PURPOSE; DEFINITIONS.(1) The purpose of this section is
to establish a program to provide matching grants to eligible insti-
tutions in order to establish or increase endowment funds at such
institutions, to provide additional incentives to promote fund rais-
ing activities by such institutions, and to foster increased independ-
ence and self-sufficiency at such institutions.
(2) For the purpose of this section:
(A) The term "endowment fund" means a fund established
by State law, by an institution of higher education, or by a
foundation which is exempt from taxation and is maintained
for the purpose of generating income for the support of the in-
stitution, but which shall not include real estate.
(B) The term "endowment fund corpus" means an amount
equal to the grant or grants awarded under this section plus
an amount equal to such grant or grants provided by the insti-
tution.
(C) The term "endowment fund income" means an amount
equal to the total value of the endowment fund established
under this section minus the endowment fund corpus.
(D)(i) The term "eligible institution" means an institution
that is an
(I) eligible institution under part A or would be consid-
ered to be such an institution if section' 312(b)(1)(C) re-
ferred to a postgraduate degree rather than a bachelor's
degree;
65
HIGHER EDUCATION ACT OF 1965
Sec. 331
(II) institution eligible for assistance under part B or
would be considered to be such an institution if section 324
referred to a postgraduate degree rather than a. bacca-
laureate degree; or
(III) institution of higher education that makes a sub-
stantial contribution to postgraduate medical educational
opportunities for minorities and the economically dis-
advantaged.
(ii) The Secretary may waive the requirements of sub-
clauses (I) and (II) of clause (i) with respect to a postgraduate
degree in the case of any institution otherwise eligible under
clause (i) for an endowment challenge grant upon determining
that the institution makes a substantial contribution to medi-
cal education opportunities for minorities and the economically
disadvantaged.
(b) GRANTS AUTHORIZED.-(1) From sums available for this sec-
tion under section 399, the Secretary is authorized to award en-
dowment challenge grants to eligible institutions to establish or in-
crease an endowment fund at such institution. Such grants shall
be made only to eligible institutions described in paragraph (4)
whose applications have been approved pursuant to subsection (g).
(2)(A) Except as provided in subparagraph (B), no institution
shall receive a grant under this section, unless such institution has
deposited in its endowment fund established under this section an
amount equal to the amount of such grant. The source of funds for
this institutional match shall not include Federal funds or funds
from an existing endowment fund.
(B) The Secretary may make a grant under this part to an eli-
gible institution in any fiscal year if the institution
(i) applies for a grant in an amount not exceeding
$500,000; and
(ii) has deposited in the eligible institution's endowment
fund established under this section an amount which is equal
to Y2 of the amount of such grant.
(C) An eligible institution of higher education that is awarded
a grant under subparagraph (B) shall not be eligible to receive an
additional grant under subparagraph (B) until 10 years after the
date on which the grant period terminates.
(3) The period of a grant under this section shall be not more
than 10 years. During the grant period, an institution may not
withdraw or expend any of the endowment fund corpus. After the
termination of the grant period, an institution may use the endow-
ment fund corpus plus any endowment fund income for any edu-
cational purpose.
(4)(A) An institution of higher education is eligible to receive
a grant under this section if it is an eligible institution as described
in subsection (a)(2)(D) of this section.
(B) No institution shall be ineligible for an endowment chal-
lenge grant under this section for a fiscal year by reason of the pre-
vious receipt of such a grant but no institution shall be eligible to
receive such a grant for more than 2 fiscal years out of any period
of 5 consecutive fiscal years.
73
Sec. 331
HIGHER EDUCATION ACT OF 1965
66
(5) An endowment challenge grant awarded under this section
to an eligible institution shall be in an amount which is not less
than $50,000 in any fiscal year.
(6)(A) An eligible institution may designate a foundation,
which was established for the purpose of raising money for the in-
stitution, as the recipient of the grant awarded under this section.
(B) The Secretary shall not award a grant to a foundation on
behalf of an institution unless
(i) the institution assures the Secretary that the founda-
tion is legally authorized to receive the endowment fund corpus
and is legally authorized to administer the fund in accordance
with this section and any implementing regulation;
(ii) the foundation agrees to administer the fund in accord-
ance with the requirements of this section and any implement-
ing regulation; and
(iii) the institution agrees to be liable for any violation by
the foundation of the provisions of this section and any imple-
menting regulation, including any monetary liability that may
arise as a result of such violation.
(c) GRANT AGREEMENT; ENDOWMENT FUND PROVISIONS.(1)
An institution awarded a grant under this section shall enter into
an agreement with the Secretary containing satisfactory assur-
ances that it will (A) immediately comply with the matching re-
quirements of subsection (b)(2), (B) establish an endowment fund
independent of any other such fund of the institution, (C) invest
the endowment fund corpus, and (D) meet the other requirements
of this section.
(2)(A) An institution shall invest the endowment fund corpus
and endowment fund income in low-risk securities in which a regu-
lated insurance company may invest under the law of the State in
which the institution is located such as a federally insured bank
savings account or comparable interest-bearing account, certificate
of deposit, money market fund, mutual fund, or obligations of the
United States.
(B) The institution, in investing the endowment fund estab-
lished under this section, shall exercise the judgment and care,
under the circumstances then prevailing, which a person of pru-
dence, discretion, and intelligence would exercise in the manage-
ment of such person's own affairs.
(3)(A) An institution may withdraw and expend the endow-
ment fund income to defray any expenses necessary to the oper-
ation of such college, including expenses of operations and mainte-
nance, administration, academic and support personnel, construc-
tion and renovation, community and student services programs,
and technical assistance.
(B)(i) Except as provided in clause (ii), an institution may not
spend more than 50 percent of the total aggregate endowment fund
income earned prior to the time of expenditure.
(ii) The Secretary may permit an institution to spend more
than 50 percent of the endowment fund income notwithstanding
clause (i) if the institution demonstrates such an expenditure is
necessary because of (I) a financial emergency, such as a pending
insolvency or temporary liquidity problem; (II) a life-threatening
7 4
67
HIGHER EDUCATION ACT OF 1965
Sec. 331
situation occasioned by a natural disaster or arson; or (III) any
other unusual occurrence or exigent circumstance.
(d) REPAYMENT PROVISIONS.(1) If at any time an institution
withdraws part of the endowment fund corpus, the institution shall
repay to the Secretary an amount equal to 50 percent of the with-
drawn amount, which represents the Federal share, plus income
earned thereon. The Secretary may use such repaid funds to make
additional challenge grants, or to increase existing endowment
grants, to other eligible institutions.
(2) If an institution expends more of the endowment fund in-
come than is permitted under subsection (c), the institution shall
repay the Secretary an amount equal to 50 percent of the amount
improperly expended (representing the Federal share thereof). The
Secretary may use such repaid fund to make additional challenge
grants, or to increase existing challenge grants, to other eligible in-
stitutions.
(e) AUDIT INFORMATION.An institution receiving a grant
under this section shall provide to the Secretary (or a designee
thereof) such information (or access thereto) as may be necessary
to audit or examine expenditures made from the endowment fund
corpus or income in order to determine compliance with this sec-
tion.
(f) SELECTION CRITERIA.In selecting eligible institutions for
grants under this section for any fiscal year, the Secretary shall
(1) give priority to an applicant that is receiving assistance
under part A or part B or has received a grant under part A
or part B of this title within the 5 fiscal years preceding the
fiscal year in which the applicant is applying for a grant under
this section;
(2) give priority to an applicant with a greater need for
such a grant, based on the current market value of the appli-
cant's existing endowment in relation to the number of full-
time equivalent students enrolled at such institution; and
(3) consider
(A) the effort made by the applicant to build or main-
tain its existing endowment fund; and
(B) the degree to which an applicant proposes to
match the grant with nongovernmental funds.
(g) APPLICATION.Any institution which is eligible for assist-
ance under this section may submit to the Secretary a grant appli-
cation at such time, in such form, and containing such information
as the Secretary may prescribe, including a description of the long-
and short-term plans for raising and using the funds under this
part. Subject to the availability of appropriations to carry out this
section and consistent with the requirement of subsection (f), the
Secretary may approve an application for a grant if an institution,
in its application, provides adequate assurances that it will comply
with the requirements of this section.
(h) TERMINATION AND RECOVERY PROVISIONS.(1) After notice
and an opportunity for a hearing, the Secretary may terminate and
recover a grant awarded under this
section if the grantee
institution-
75
Sec. 341
HIGHER EDUCATION ACT OF 1965
68
(A) expends portions of the endowment fund corpus or ex-
pends more than the permissible amount of the endowment
funds income as prescribed in subsection (c)(3);
(B) fails to invest the endowment fund in accordance with
the investment standards set forth in subsection (c)(2); or
(C) fails to properly account to the Secretary concerning
the investment and expenditures of the endowment funds.
(2) If the Secretary terminates a grant under paragraph (1),
the grantee shall return to the Secretary an amount equal to the
sum of each original grant under this section plus income earned
thereon. The Secretary may use such repaid funds to make addi-
tional endowment grants, or to increase existing challenge grants,
to other eligible institutions under this part.
PART D-HISTORICALLY BLACK COLLEGE AND
UNIVERSITY CAPITAL FINANCING
SEC. 341. [20 U.S.C. 1066] FINDINGS.
The Congress finds that
(1) a significant part of the Federal mission in education
has been to attain equal opportunity in higher education for
low-income, educationally disadvantaged Americans and Afri-
can Americans;
(2) the Nation's historically Black colleges and universities
have played a prominent role in American history and have an
unparalleled record of fostering the development of African
Arnerican youth by recognizing their potential, enhancing their
academic and technical skills, and honing their social and po-
litical skills through higher education;
(3) the academic and residential facilities on the campuses
of all historically Black colleges and universities have suffered
from neglect, deferred maintenance and are in need of capital
improvements in order to provide appropriate settings for
learning and social development through higher education;
(4) due to their small enrollments, limited endowments
and other financial factors normally considered by lenders in
construction financing, historically Black colleges and univer-
sities often lack access to the sources of funding necessary to
undertake the necessary capital improvements through borrow-
ing and bond financing;
(5) despite their track record of long-standing and remark-
able institutional longevity and viability, historically Black col-
leges and universities often lack the financial resources nec-
essary to gain access to traditional sources of capital financing
such as bank loans and bond financing; and
(6) Federal assistance to facilitate low-cost capital basis for
historically Black colleges and universities will enable such col-
leges and universities to continue and expand their educational
mission and enhance their significant role in American higher
education.
SEC. 342. [20 U.S.C. 1066a] DEFINITIONS.
For the purposes of this part:
7 6
69
HIGHER EDUCATION ACT OF 1965
Sec. 342
(1) The term "eligible institution" means a "part B institu-
tion" as that term is defined .in section 322(2) of the Higher
Education Act of 1965 (20 U.S.C. 1061(2)).
(2) The term "loan" means a loan made to an eligible insti-
tution under the provisions of this part and pursuant to an
agreement with the Secretary.
(3) The term "qualified bond" means any obligation issued
by the designated bonding authority at the direction of the Sec-
retary, the net proceeds of which are loaned to an eligible insti-
tution for the purposes described in section 343(b).
(4) The term "funding" means any payment under this
part from the Secretary to the eligible institution or its as-
signee in fulfillment of the insurance obligations of the Sec-
retary pursuant to an agreement under section 343.
(5) The term "capital project" means, subject to section
344(b) the repair, renovation, or, in exceptional circumstances,
the construction or acquisition, of
(A) any classroom facility, library, laboratory facility,
dormitory (including dining facilities) or other facility cus-
tomarily used by colleges and universities for instructional
or research purposes or for housing students, faculty, and
staff;
(B) a facility for the administration of an educational
program, or a student center or student union, except that
not more than 5 percent of the loan proceeds provided
under this part may be used for the facility, center or
union if the facility, center or union is owned, leased, man-
aged, or operated by a private business, that, in return for
such use, makes a payment to the eligible institution;
(C) instructional equipment technology 1 research in-
strumentation, and any capital equipment or fixture relat-
ed to facilities described in subparagraph (A);
(D) a maintenance, storage, or utility facility that is
essential to the operation of a facility, a library, a dor-
mitory, equipment, instrumentation, a fixture, real prop-
erty or an interest therein, described in this paragraph;
(E) a facility designed to provide primarily outpatient
health care for students or faculty;
(F) physical infrastructure essential to support the
projects authorized under this paragraph, including roads,
sewer and drainage systems, and water, power, lighting,
telecommunications, and other utilities;
(G) any other facility, equipment or fixture which is
essential to the maintaining of accreditation of the mem-
ber institution by a nationally recognized accrediting agen-
cy or association; and
(H) any real property or interest therein underlying
facilities described in subparagraph (A) or (G).
(6) The term "interest" includes accredited value or any
other payment constituting interest on an obligation.
(7) The term "outstanding", when used with respect to
bonds, shall not include bonds the payment of which shall have
lSo in original.
77
Sec. 343
HIGHER EDUCATION ACT OF 1965
70
been provided for by the irrevocable deposit in trust of obliga-
tions maturing as to principal and interest in such amounts
and at such times as will ensure the availability of sufficient
moneys to make payments on such bonds.
(8) The term "designated bonding authority" means the
private, for-profit corporation selected by the Secretary pursu-
ant to section 345(1) for the purpose of issuing taxable con-
struction bonds in furtherance of the purposes of this part.
(9) The term "Advisory Board" means the Advisory Board
established by section 347 of this part.
SEC. 343. [20 U.S.C. 106613] FEDERAL INSURANCE FOR BONDS.
(a) GENERAL RULE.Subject to the limitations in section 344,
the Secretary is authorized to enter into insurance agreements to
provide financial insurance to guarantee the full payment of prin-
cipal and interest on qualified bonds upon the conditions set forth
in subsections (b), (c) and (d).
(b) RESPONSIBILITIES OF THE DESIGNATED BONDING AUTHOR-
ITY.The Secretary may not enter into an insurance agreement de-
scribed in subsection (a) unless the Secretary designates a qualified
bonding authority in accordance with sections 345(1) and 346 and
the designated bonding authority agrees in such agreement to
(1) use the proceeds of the qualified bonds, less costs of
issuance not to exceed 2 percent of the principal amount there-
of, to make loans to eligible institutions or for deposit into an
escrow account for repayment of the bonds;
(2) provide in each loan agreement with respect to a loan
that not less than 95 percent of the proceeds of the loan will
be used(A) to finance the repair, renovation, and, in excep-
tional cases, construction or acquisition, of a capital
project; or
(B) to refinance an obligation the proceeds of which
were used to finance the repair, renovation, and, in excep-
tional cases, construction or acquisition, of a capital
project;
(3)(A) charge such interest on loans, and provide for such
a schedule of repayments of loans, as will, upon the timely re-
payment of the loans, provide adequate and timely funds for
the payment of principal and interest on the bonds; and
(B) require that any payment on a loan expected to be nec-
essary to make a payment of principal and interest on the
bonds be due not less than 60 days prior to the date of the pay-
ment on the bonds for which such loan payment is expected to
be needed;
(4) prior to the making of any loan, provide for a credit re-
view of the institution receiving the loan and assure the Sec-
retary that, on the basis of such credit review, it is reasonable
to anticipate that the institution receiving the loan will be able
to repay the loan in a timely manner pursuant to the terms
thereof;
(5) provide in each loan agreement with respect to a loan
that, if a delinquency on such loan results in a funding under
the insurance agreement, the institution obligated on such loan
71
HIGHER EDUCATION ACT OF 1965
Sec. 343
shall repay the Secretary, upon terms to be determined by the
Secretary, for such funding;
(6) assign any loans to the Secretary, upon the demand of
the Secretary, if a delinquency on such loan has required a
funding under the insurance agreement;
(7) in the event of a delinquency on a loan, engage in such
collection efforts as the Secretary shall require for a period of
not less than 45 days prior to requesting a funding under the
insurance agreement;
(8) establish an escrow account
(A) into which each eligible institution shall deposit 5
percent of the proceeds of any loan made under this part,
with each eligible institution required to maintain in the
escrow account an amount equal to 5 percent of the out-
standing principal of all loans made to such institution
under this part; and
(B) the balance of which
(i) shall be available to the Secretary to pay prin-
cipal and interest on the bonds in the event of delin-
quency in loan repayment; and
(ii) shall be used to return to an eligible institu-
tion an amount equal to any remaining portion of such
institution's 10 percent deposit of loan proceeds follow-
ing scheduled repayment of such institution's loan;
(9) provide in each loan agreement with respect to a loan
that, if a delinquency on such loan results in amounts being
withdrawn from the escrow account to pay principal and inter-
est on bonds, subsequent payments on such loan shall be avail-
able to replenish such escrow account;
(10) comply with the limitations set forth in section 344 of
this part; and
(11) make loans only to eligible institutions under this part
in accordance with conditions prescribed by the Secretary to
ensure that loans are fairly allocated among as many eligible
institutions as possible, consistent with making loans of
amounts that will permit capital projects of sufficient size and
scope to significantly contribute to the educational program of
the eligible institutions.
(c)
ADDITIONAL AGREEMENT
PROVISIONS.Any insurance
agreement described in subsection (a) of this section shall provide
as follows:
(1) The payment of principal and interest on bonds shall
be insured by the Secretary until such time as such bonds have
been retired or canceled.
(2) The Federal liability for delinquencies and default for
bonds guaranteed under this part shall only become effective
upon the exhaustion of all the funds held in the escrow account
described in subsection (b)(8).
(3) The Secretary shall create a letter of credit authorizing
the Department of the Treasury to disburse funds to the des-
ignated bonding authority or its assignee.
(4) The letter of credit shall be drawn upon in the amount
determined by paragraph (5) of this subsection upon the certifi-.
cation of the designated bonding authority to the Secretary or
79
Sec. 344
HIGHER EDUCATION ACT OF 1965
12
the Secretary's designee that there is a delinquency on 1 or
more loans and there are insufficient funds available from loan
repayments and the escrow account to make a scheduled pay-
ment of principal and interest on the bonds.
(5) Upon receipt by the Secretary or the Secretary's des-
ignee of the certification described in paragraph (4) of this sub-
section, the designated bonding authority may draw a funding
under the letter of credit in an amount equal to
(A) the amount required to make the next scheduled
payment of principal and interest on the bonds, less
(B) the amount available to the designated bonding
authority from loan repayments and the escrow account.
(6) All funds provided under the letter of credit shall be
paid to the designated bonding authority within 2 business
days following receipt of the certification described in para-
graph (4).
(d) FULL FAITH AND CREDIT PROVISIONS.Subject to section
343(c)(1) the full faith and credit of the United States is pledged
to the payment of all funds which may be required to be paid under
the provisions of this section.
(e)1 Notwithstanding any other provision of law, a qualified
bond guaranteed under this part may be sold to any party that of-
fers terms that the Secretary determines are in the best interest
of the eligible institution.
SEC. 344. [20 U.S.C. 1066c] LIMITATIONS ON FEDERAL INSURANCE FOR
BONDS ISSUED BY THE DESIGNATED BONDING AUTHOR-
ITY.
(a) LIMIT ON AMOUNT. At no time shall the aggregate prin-
cipal amount of outstanding bonds insured under this part together
with any accrued unpaid interest thereon exceed $375,000,000, of
which
(1) not more than $250,000,000 shall be used for loans to
eligible institutions that are private historically Black colleges
and universities; and
(2) not more than $125,000,000 shall be used for loans to
eligible institutions which are historically Black public colleges
and universities.
For purposes of paragraphs (1) and (2), Lincoln University of Penn-
sylvania is an historically Black public institution. No institution
of higher education that has received assistance under section 8 of
the Act of March 2, 1867 (20 U.S.C. 123) shall be eligible to receive
assistance under this part.
(b) LIMITATION ON CREDIT AUTHORITY.The authority of the
Secretary to issue letters of credit and insurance under this part
is effective only to the extent provided in advance by appropria-
tions Acts.
(c) RELIGIOUS ACTIVITY PROHIBITION.No loan may be made
under this part for any educational program, activity or service re-
lated to sectarian instruction or religious worship or provided by a
school or department of divinity or to an institution in which a sub-
stantial portion of its functions is subsumed in a religious mission.
I So in original (112 Stat. 1647). This subsection was added without a subsection heading.
80
73
HIGHER EDUCATION ACT OF 1965
Sec. 345
(d) DISCRIMINATION PROHIBITION.No loan may be made to an
institution under this part if the institution discriminates on ac-
count of race, color, religion, national origin, sex (to the extent pro-
vided in title IX of the Education Amendments of 1972), or dis-
abling condition; except that the prohibition with respect to religion
shall not apply to an institution which is controlled by or which is
closely identified with the tenets of a particular religious organiza-
tion if the application of this section would not be consistent with
the religious tenets of such organization.
SEC. 345. [20 U.S.C. 1066d1 AUTHORITY OF THE SECRETARY.
In the performance of, and with respect to, the functions vested
in the Secretary by this part, the Secretary
(1) shall, within 120 days of enactment of the Higher Edu-
cation Amendments of 1992, publish in the Federal Register a
notice and request for proposals for any private for-profit orga-
nization or entity wishing to serve as the designated bonding
authority under this part, which notice shall
(A) specify the time and manner for submission of pro-
posals; and
(B) specify any information, qualifications, criteria, or
standards the Secretary determines to be necessary to
evaluate the financial capacity and administrative capabil-
ity of any applicant to carry out the responsibilities of the
designated bonding authority under this part;
(2) shall require that the first loans for capital projects au-
thorized under section 343 be made no later than March 31,
1994;
(3) may sue and be sued in any court of record of a State
having general jurisdiction or in any district court of the
United States, and such district courts shall have jurisdiction
of civil actions arising under this part without regard to the
amount in controversy, and any action instituted under this
part without regard to the amount in controversy, and any ac-
tion instituted under this section by or against the Secretary
shall survive notwithstanding any change in the person occu-
pying the office of the Secretary or any vacancy in such office;
(4)(A) may foreclose on any property and bid for and pur-
chase at any foreclosure, or any other sale, any property in
connection with which the Secretary has been assigned a loan
pursuant to this part; and
(B) in the event of such an acquisition, notwithstanding
any other provisions of law relating to the acquisition, han-
dling, or disposal of real property by the United States, com-
plete, administer, remodel and convert, dispose of, lease, and
otherwise deal with, such property, except that
(i) such action shall not preclude any other action by
the Secretary to recover any deficiency in the amount of a
loan assigned to the Secretary; and
(ii) any such acquisition of real property shall not de-
prive any State or political subdivision thereof of its civil
or criminal jurisdiction in and over such property or im-
pair the civil rights under the State or local laws of the in-
habitants on such property;
8,1
Sec. 341
HIGHER EDUCATION ACT OF 1965
14
(5) may sell, exchange, or lease real or personal property
and securities or obligations;
(6) may include in any contract such other covenants, con-
ditions, or provisions necessary to ensure that the purposes of
this part will be achieved; and
(7) may, directly or by grant or contract, provide technical
assistance to eligible institutions to prepare the institutions to
qualify, apply for, and maintain a capital improvement loan,
including a loan under this part.
[Section 346 repealed by section 306(d) of P.L. 105-2441
SEC. 347. [20 U.S.C. 1066f] HI3CU CAPITAL FINANCING ADVISORY
BOARD.
(a) ESTABLISHMENT AND PURPOSE.There is established within
the Department of Education, the Historically Black College and
Universities Capital Financing Advisory Board (hereinafter in this
part referred to as the "Advisory Board") which shall provide ad-
vice and counsel to the Secretary and the designated bonding au-
thority as to the most effective and efficient means of implementing
construction financing on African American college campuses, and
advise the Congress of the United States regarding the progress
made in implementing this part. The Advisory Board shall meet
with the Secretary at least twice each year to advise him as to the
capital needs of historically Black colleges and universities, how
those needs can be met through the program authorized by this
part, and what additional steps might be taken to improve the op-
eration and implementation of the construction financing program.
(b) BOARD MEMBERSHIP.
(1) COMPOSITION.The Advisory Board shall be appointed
by the Secretary and shall be composed of 9 members as fol-
lows:
(A) The Secretary or the Secretary's designee.
(B) Three members who are presidents of private his-
torically Black colleges or universities.
(C) Two members who are presidents of public histori-
cally Black colleges or universities.
(D) The president of the United Negro College Fund,
Inc., or the president's designee.
(E) The president of the National Association for
Equal Opportunity in Higher Education, or the designee of
the Association.
(F) The executive director of the White House Initia-
tive on historically Black colleges and universities.
(2) TERMS.The term of office of each member appointed
under paragraphs (1)(B) and (1)(C) shall be 3 years, except
that
(A) of the members first appointed pursuant to para-
graphs (1)(B) and (1)(C), 2 shall be appointed for terms of
1 year, and 3 shall be appointed for terms of 2 years;
(B) members appointed to fill a vacancy occurring be-
fore the expiration of a term of a member shall be ap-
pointed to serve the remainder of that term; and
(C) a member may continue to serve after the expira-
tion of a term until a successor is appointed.
15
HIGHER EDUCATION ACT OF 1965
Sec. 351
SEC. 348. [20 U.S.C. 1066g] MINORITY BUSINESS ENTERPRISE UTILIZA-
TION.
In the performance of and with respect to the Secretary's effec-
tuation of his responsibilities under section 345(1) and to the maxi-
mum extent feasible in the implementation of the purposes of this
part, minority business persons, including bond underwriters and
credit enhancers, bond counsel, marketers, accountants, advisors,
construction contractors, and managers should be utilized.
PART E-MINORITY SCIENCE AND
ENGINEERING IMPROVEMENT PROGRAM
SUBPART 1MINORITY SCIENCE AND ENGINEERING IMPROVEMENT
PROGRAM
SEC. 350. 120 U.S.C. 1067] FINDINGS.
Congress makes the following findings:
(1) It is incumbent on the Federal Government to support
the technological and economic competitiveness of the United
States by improving and expanding the scientific and techno-
logical capacity of the United States. More and better prepared
scientists, engineers, and technical experts are needed to im-
prove and expand such capacity.
(2) As the Nation's population becomes more diverse, it is
important that the educational and training needs of all Amer-
icans are met. Underrepresentation of minorities in science
and technological fields diminishes our Nation's competitive-
ness by impairing the quantity of well prepared scientists, en-
gineers, and technical experts in these fields.
(3) Despite significant limitations in resources, minority
institutions provide an important educational opportunity for
minority students, particularly in science and engineering
fields. Aid to minority institutions is a good way to address the
underrepresentation of minorities in science and technological
fields.
(4) There is a strong Federal interest in improving science
and engineering programs at minority institutions as such pro-
grams lag behind in program offerings and in student enroll-
ment compared to such programs at other institutions of high-
er education.
SEC. 351. [20 U.S.C. 1067a] PURPOSE; AUTHORITY.
(a) It is the purpose of this subpart to continue the authority
of the Department to operate the Minority Institutions Science Im-
provement Program created under section 3(a)(1) of the National
Science Foundation Act of 1950 and transferred to the Department
by section 304(a)(1) of the Department of Education Organization
Act of 1979.
(b) The Secretary shall, in accordance with the provisions of
this subpart, carry out a program of making grants to institutions
of higher education that are designed to effect long-range improve-
ment in science and engineering education at predominantly minor-
ity institutions and to increase the participation of underrep-
resented ethnic
minorities,
particularly minority women, in
scientific and technological careers.
83
Sec. 352
HIGHER EDUCATION ACT OF 1965
76
SEC. 352. [20 U.S.C. 1067b] GRANT RECIPIENT SELECTION.
(a) ESTABLISHMENT OF CRITERIA.Grants under this subpart
shall be awarded on the basis of criteria established by the Sec-
retary by regulations.
(b) PRIORITIES TO BE GIVEN IN CRITERIA.In establishing cri-
teria under subsection (a), the Secretary shall give priority to appli-
cants which have not previously received funding from the Minor-
ity Institutions Science Improvement Program and to previous
grantees with a proven record of success, as well as to applications
that contribute to achieving balance among projects with respect to
geographic region, academic discipline, and project type.
(c) REQUIRED CRITERIA.In establishing criteria under sub-
section (a), the Secretary may consider the following selection cri-
teria in making grants:
(1) plan of operation;
(2) quality of key personnel;
(3) budget and cost effectiveness;
(4) evaluation plan;
(5) adequacy of resources;
(6) identification of need for the project;
(7) potential institutional impact of the project;
(8) institutional commitment to the project;
(9) expected outcomes; and
(10) scientific and educational value of the proposed
project.
SEC. 353. [20 U.S.C. 1067c] USE OF FUNDS.
(a) TYPES OF GRANTS.Funds appropriated to carry out this
subpart may be made available as
(1) institutional grants (as defined in section 365(6));
(2) cooperative grants (as defined in section 365(7));
(3) design projects (as defined in section 365(8)); or
(4) special projects (as defined in section 365(9)).
(b) AUTHORIZED USES FOR EACH TYPE OF GRANT.(1) The au-
thorized uses of funds made available as institutional grants in-
clude (but are not limited to)
(A) faculty development programs; or
(B) development of curriculum materials.
(2) The authorized uses of funds made available as cooperative
grants include (but are not limited to)
(A) assisting institutions in sharing facilities and person-
nel;
(B) disseminating information about established programs
in science and engineering;
(C) supporting cooperative efforts to strengthen the insti-
tutions' science and engineering programs; or
(D) carrying out a combination of any of the activities in
subparagraphs (A) through (C).
(3) The authorized uses of funds made available as design
projects include (but are not limited to)
(A) developing planning, management, and evaluation sys-
tems; or
(B) developing plans for initiating scientific research and
for improving institutions' capabilities for such activities.
8 4
77
HIGHER EDUCATION ACT OF 1965
Sec. 361
Funds used for design project grants may not be used to pay more
than 50 percent of the salaries during any academic year of faculty
members involved in the project.
(4) The authorized uses of funds made available as special
projects include (but are not limitedto)
(A) advanced science seminars;
(B) science faculty workshops and conferences;
(C) faculty training to develop specific science research or
education skills;
(D) research in science education;
(E) programs for visiting scientists;
(F) preparation of films or audio-visual materials in
science;
(G) development of learning experiences in science beyond
those normally available to minority undergraduate students;
(H) development of pre-college enrichment activities in
science; or
(I) any other activities designed to address specific barriers
to the entry of minorities into science.
SEC. 1024.1 [20 U.S.C. 1135b-3] MULTIAGENCY STUDY OF MINORITY
SCIENCE PROGRAMS.
The Secretary, in cooperation with the heads of other depart-
ments and agencies that operate programs similar in purposes to
the Minority Science Improvement Program which seek to increase
minority participation and representation in scientific fields, shall
submit a report to the President and Congress summarizing and
evaluating such programs by January 1, 1996.
SUBPART 2ADMINISTRATIVE AND GENERAL PROVISIONS
SEC. 361. [20 U.S.C. 10670 ELIGIBILITY FOR GRANTS.
Eligibility to receive grants under this part is limited to
(1) public and private nonprofit institutions of higher edu-
cation that
(A) award baccalaureate degrees; and
(B) are minority institutions;
(2) public or private nonprofit institutions of higher edu-
cation that
(A) award associate degrees; and
(B) are minority institutions that
(i) have a curriculum that includes science or engi-
neering subjects; and
(ii) enter into a partnership with public or private
nonprofit institutions of higher education that award
baccalaureate degrees in science and engineering;
(3) 2 nonprofit science-oriented organizations, professional
scientific societies, and institutions of higher education that
award baccalaureate degrees, that-
1 Section 1024 was transferred by section 301(a)(5) of the Higher Education Amendments of
1998 (P.L. 105-244; 112 Stat. 1636), but was not redesignated by section 301(a)(7) of that Act.
Section 1024 may have been intended to have been repealed by section 702 of that Act.
2This paragraph does not reflect amendments made by section 301(b) or 301(0(9) of the
Higher Education Amendments of 1998 (P.L. 105-244; 112 Stat. 1636) as those amendments
were superseded by the amendment made by section 307(b) of that Act (112 Stat. 1636).
BEST COPY AVAILABLE
Sec. 362
HIGHER EDUCATION ACT OF 1965
18
(A) provide a needed service to a group of minority in-
stitutions; or
(B) provide in-service training for project directors, sci-
entists, and engineers from minority institutions; or
(4) consortia of organizations, that provide needed services
to one or more minority institutions, the membership of which
may include
(A) institutions of higher education which have a cur-
riculum in science or engineering;
(B) institutions of higher education that have a grad-
uate or professional program in science or engineering;
(C) research laboratories of, or under contract with,
the Department of Energy;
(D) private organizations that have science or engi-
neering facilities; or
(E) quasi-governmental entities that have a significant
scientific or engineering mission.
SEC. 362. [20 U.S.C. 1067h] GRANT APPLICATION.
(a) SUBMISSION AND CONTENTS OF APPLICATIONS.An eligible
applicant (as determined under section 361) that desires to receive
a grant under this part shall submit to the Secretary an applica-
tion therefor at such time or times, in such manner, and containing
such information as the Secretary may prescribe by regulation.
Such application shall set forth
(1) a program of activities for carrying out one or more of
the purposes described in section 351(b) in such detail as will
enable the Secretary to determine the degree to which such
program will accomplish such purpose or purposes; and
(2) such other policies, procedures, and assurances as the
Secretary may require by regulation.
(b) APPROVAL BASED ON LIKELIHOOD OF PROGRESS.The Sec-
retary shall approve an application only if the Secretary deter-
mines that the application sets forth a program of activities which
are likely to make substantial progress toward achieving the pur-
poses of this part.
SEC. 363. [20 U.S.C. 10671] CROSS PROGRAM AND CROSS AGENCY CO-
OPERATION.
The Minority Science and Engineering Improvement Programs
shall cooperate and consult with other programs within the Depart-
ment and within Federal, State, and private agencies which carry
out programs to improve the quality of science, mathematics, and
engineering education.
SEC. 364. [20 U.S.C. 1067j] ADMINISTRATIVE PROVISIONS.
(a) TECHNICAL STAFF.The Secretary shall appoint, without
regard to the provisions of title 5 of the United States Code govern-
ing appointments in the competitive service, not less than 2 tech-
nical employees with appropriate scientific and educational back-
ground to administer the programs under this part who may be
paid without regard to the provisions of chapter 51 and subchapter
III of chapter 53 of such title relating to classification and General
Schedule pay rates.
(b) PROCEDURES FOR GRANT REVIEW.The Secretary shall es-
tablish procedures for reviewing and evaluating grants and con-
79
HIGHER EDUCATION ACT OF 1965
Sec. 365
tracts made or entered into under such programs. Procedures for
reviewing grant applications, based on the peer review system, or
contracts for financial assistance under this title may not be sub-
ject to any review outside of officials responsible for the adminis-
tration of the Minority Science and Engineering Improvement Pro-
grams.
SEC. 365. [20 U.S.C. 1067k1 DEFINITIONS.
For the purpose of this part
(1) The term "accredited" means currently certified by a
nationally recognized accrediting agency or making satisfactory
progress toward achieving accreditation.
(2) The term "minority" means American Indian, Alaskan
Native, Black (not of Hispanic origin), Hispanic (including per-
sons of Mexican, Puerto Rican, Cuban, and Central or South
American origin), Pacific Islander or other ethnic group under-
represented in science and engineering.
(3) The term "minority institution" means an institution of
higher education whose enrollment of a single minority or a
combination of minorities (as defined in paragraph (2)) exceeds
50 percent of the total enrollment. The Secretary shall verify
this information from the data on enrollments in the higher
education general information surveys (HEGIS) furnished by
the institution to the Office for Civil Rights, Department of
Education.
(4) The term "science" means, for the purpose of this pro-
gram, the biological, engineering, mathematical, physical, be-
havioral, and social sciences, and history and philosophy of
science; also included are interdisciplinary fields which are
comprised of overlapping areas among two or more sciences.
(5) The term "underrepresented in science and engineer-
ing" means a minority group whose number of scientists and
engineers per 10,000 population of that group is substantially
below the comparable figure for scientists and engineers who
are white and not of Hispanic origin.
(6) The term "institutional grant" means a grant that sup-
ports the implementation of a comprehensive science improve-
ment plan, which may include any combination of activities for
improving the preparation of minority students for careers in
science.
(7) The term "cooperative grant" means a grant that as-
sists groups of nonprofit accredited colleges and universities to
work together to conduct a science improvement program.
(8) The term "design projects" means projects that assist
minority institutions that do not have their own appropriate
resources or personnel to plan and develop long-range science
improvement programs.
(9) The term "special projects" means
(A) a special project grant to a minority institution
which support activities that
(i) improve the quality of training in science and
engineering at minority institutions; or
(ii) enhance the minority institutions' general sci-
entific research capabilities; or
1.0
P7
Sec. 391
HIGHER EDUCATION ACT OF 1965
80
(B) a special project grant to any eligible applicant
which supports activities that
(i) provide a needed service to a group of eligible
minority institutions; or
(ii) provide in-service training for project directors,
scientists, and engineers from eligible minority institu-
tions.
PART FGENERAL PROVISIONS.
SEC. 391. [20 U.S.C. 1068] APPLICATIONS FOR ASSISTANCE.
(a) APPLICATIONS.
(1) APPLICATIONS REQUIRED.Any institution which is eli-
gible for assistance under this title shall submit to the Sec-
retary an application for assistance at such time, in such form,
and containing such information, as may be necessary to en-
able the Secretary to evaluate the institution's need for the as-
sistance. Subject to the availability of appropriations to carry
out this title, the Secretary may approve an application for as-
sistance under this title only if the Secretary determines
that
(A) the application meets the requirements of sub-
section (b);
(B) the applicant: is eligible for assistance in accord-
ance with the part of this title under which the assistance
is sought; and
(C) the applicant's performance goals are sufficiently
rigorous as to meet the purposes of this title and the per-
formance objectives and indicators for this title established
by the Secretary pursuant to the Government Performance
and Results Act of 1993 and the amendments made by
such Act.
(2) PRELIMINARY APPLICATIONS.In carrying out para-
graph (1), the Secretary may develop a preliminary application
for use by eligible institutions applying under part A prior to
the submission of the principal application.
(b) CONTENTS.An institution, in its application for a grant,
shall
(1) set forth, or describe how the institution (other than an
institution applying under part C, D or E) will develop, a com-
prehensive development plan to strengthen the institution's
academic quality and institutional management, and otherwise
provide for institutional self-sufficiency and growth (including
measurable objectives for the institution and the Secretary to
use in monitoring the effectiveness of activities under this
title);
(2) set forth policies and procedures to ensure that Federal
funds made available under this title for any fiscal year will
be used to supplement and, to the extent practical, increase the
funds that would otherwise be made available for the purposes
of section 311(b) or 323, and in no case supplant those funds;
(3) set forth policies and procedures for evaluating the ef-
fectiveness in accomplishing the purpose of the activities for
which a grant is sought under this title;
88
81
HIGHER EDUCATION ACT OF 1965
Sec. 391
(4) provide for such fiscal control and fund accounting pro-
cedures as may be necessary to ensure proper disbursement of
and accounting for funds made available to the applicant under
this title;
(5) provide (A) for making such reports, in such form and
containing such information, as the Secretary may require to
carry out the functions under this title, including not less than
one report annually setting forth the institution's progress to-
ward achieving the objectives for which the funds were award-
ed, and (B) for keeping such records and affording such access
thereto, as the Secretary may find necessary to assure the cor-
rectness and verification of such reports;
(6) provide that the institution will comply with the limita-
tions set forth in section 357, except that for purposes of sec-
tion 316, paragraphs (2) and (3) of section 396 shall not apply;
(7) describe in a comprehensive manner any proposed
project for which funds are sought under the application and
include
(A) a description of the various components of the pro-
posed project, including the estimated time required to
complete each such component;
(B) in the case of any development project which con-
sists of several components (as described by the applicant
pursuant to subparagraph (A)), a statement identifying
those components which, if separately funded, would be
sound investments of Federal funds and those components
which would be sound investments of Federal funds only
if funded under this title in conjunction with other parts
of the development project (as specified by the applicant);
(C) an evaluation by the applicant of the priority given
any proposed project for which funds are sought in relation
to any other projects for which funds are sought by the ap-
plicant under this title, and a similar evaluation regarding
priorities among the components of any single proposed
project (as described by the applicant pursuant to subpara-
graph (A));
(D) a detailed budget showing the manner in which
funds for any proposed project would be spent by the appli-
cant; and
(E) a detailed description of any activity which in-
volves the expenditure of more than $25,000, as identified
in the budget referred to in subparagraph (E); and
(8) include such other information as the Secretary may
prescribe.
(c) PRIORITY CRITERIA PUBLICATION REQUIRED.The Secretary
shall publish in the Federal Register, pursuant to chapter 5 of title
5, United States Code, all policies and procedures required to exer-
cise the authority set forth in subsection (a). No other criteria, poli-
cies, or procedures shall apply.
(d) ELIGIBILITY DATA.The Secretary shall use the most recent
and relevant data concerning the number and percentage of stu-
dents receiving need-based assistance under title IV of this Act in
making eligibility determinations under section 312 and shall ad-
vance the base-year forward following each annual grant cycle.
89
Sec. 392
HIGHER EDUCATION ACT OF 1965
82
SEC. 392. [20 U.S.C. 1068a] WAIVER AUTHORITY AND REPORTING RE-
QUIREMENT.
(a) WAIVER REQUIREMENTS; NEED-BASED ASSISTANCE STU-
DENTS.The Secretary may waive the requirements set forth in
section 312(b)(1)(A) in the case of an institution
(1) which is extensively subsidized by the State in which
it is located and charges low or no tuition;
(2) which serves a substantial number of low-income stu-
dents as a percentage of its total student population;
(3) which is contributing substantially to increasing higher
education
opportunities
for
educationally
disadvantaged,
underrepresented, or minority students, who are low-income
individuals;
(4) which is substantially increasing higher educational op-
portunities for individuals in rural or other isolated areas
which are unnerved by postsecondary institutions;
(5) located on or near an Indian reservation or a substan-
tial population of Indians, if the Secretary determines that the
waiver will substantially increase higher education opportuni-
ties appropriate to the needs of American Indians;
(6) that is a tribally controlled college or university as de-
fined in section 2 of the Tribally Controlled College or Univer-
sity Assistance Act of 1978; or
(7) wherever located, if the Secretary determines that the
waiver will substantially increase higher education opportuni-
ties appropriate to the needs of Black Americans, Hispanic
Americans, Native Americans, Asian Americans, or Pacific Is-
landers, including Native Hawaiians
(b) WAIVER DETERMINATIONS; EXPENDITURES.(1) The Sec-
retary may waive the requirements set forth in section 312(b)(1)(B)
if the Secretary determines, based on persuasive evidence submit-
ted by the institution, that the institution's failure to meet that cri-
terion is due to factors which, when used in the determination of
compliance with such criterion, distort such determination, and
that the institution's designation as an eligible institution under
part A is otherwise consistent with the purposes of such parts.
(2) The Secretary shall submit to the Congress every other
year a report concerning the institutions which, although not satis-
fying the criterion contained in section 312(b)(1)(B), have been de-
termined to be eligible institutions under part A institutions which
enroll significant numbers of Black American, Hispanic, Native
American, Asian American, or Native Hawaiian students under
part A, as the case may be. Such report shall
(A) identify the factors referred to in paragraph (1) which
were considered by the Secretary as factors that distorted the
determination of compliance with subparagraphs (A) and (B) of
section 312(b)(1); and
(B) contain a list of each institution determined to be an
eligible institution under part A including a statement of the
reasons for each such determination.
(3) The Secretary may waive the requirement set forth in sec-
tion 312(b)(1)(E) in the case of an institution located on or near an
Indian reservation or a substantial population of Indians, if the
Secretary determines that the waiver will substantially increase
0
83
HIGHER EDUCATION ACT OF 1965
Sec. 394
higher education opportunities appropriate to the needs of Amer-
ican Indians.
SEC. 393. [20 U.S.C. 1068b1 APPLICATION REVIEW PROCESS.
(a) REVIEW PANEL.(1) All applications submitted under this
title by institutions of higher education shall be read by a panel of
readers composed of individuals selected by the Secretary. The Sec-
retary shall assure that no individual assigned under this section
to review any application has any conflict of interest with regard
to the application which might impair the impartiality with which
the individual conducts the review under this section.
(2) The Secretary shall take care to assure that representatives
of historically and predominantly Black colleges, Hispanic institu-
tions, Tribal Colleges and Universities, and institutions with sub-
stantial numbers of Hispanics, Native Americans, Asian Ameri-
cans, and Native American Pacific Islanders (including Native Ha-
waiians) are included as readers.
(3) All readers selected by the Secretary shall receive thorough
instruction from the Secretary regarding the evaluation process for
applications submitted under this title and consistent with the pro-
visions of this title, including
(A) explanations and examples of the types of activities re-
ferred to in section 311(b) that should receive special consider-
ation for grants awarded under part A and of the types of ac-
tivities referred to in section 323 that should receive special
consideration for grants awarded under part B;
(B) an enumeration of the factors to be used to determine
the quality of applications submitted under this title; and
(C) an enumeration of the factors to be used to determine
whether a grant should be awarded for a project under this
title, the amount of any such grant, and the duration of any
such grant.
(b) RECOMMENDATIONS OF PANEL.In awarding grants under
this title, the Secretary shall take into consideration the rec-
ommendations of the panel made under subsection (a).
(c) NOTIFICATION.Not later than June 30 of each year, the
Secretary shall notify each institution of higher education making
an application under this title of
(1) the scores given the applicant by the panel pursuant to
this section;
(2) the recommendations of the panel with respect to such
application; and
(3) the reasons for the decision of the Secretary in award-
ing or refusing to award a grant under this title, and any
modifications, if any, in the recommendations of the panel
made by the Secretary.
(d) EXCLUSION.The provisions of this section shall not apply
to applications submitted under part D.
SEC. 394. [20 U.S.C. 1068c] COOPERATIVE ARRANGEMENTS.
(a) GENERAL AUTHORITY.The Secretary may make grants to
encourage cooperative arrangements
(1) with funds available to carry out part A, between insti-
tutions eligible for assistance under part A and between such
91
Sec. 395
HIGHER EDUCATION ACT OF 1965
84
institutions and institutions not receiving assistance under this
title; or
(2) with funds available to carry out part B, between insti-
tutions eligible for assistance under part B and institutions not
receiving assistance under this title;
for the activities described in section 311(b) or section 323, as the
case may be, so that the resources of the cooperating institutions
might be combined and shared to achieve the purposes of such
parts and avoid costly duplicative efforts and to enhance the devel-
opment of part A and part B eligible institutions.
(b) PRIORITY.The Secretary shall give priority to grants for
the purposes described under subsection (a) whenever the Sec-
retary determines that the cooperative arrangement is geographi-
cally and economically sound or will benefit the applicant institu-
tion.
(c) DURATION.Grants to institutions having a cooperative ar-
rangement may be made under this section for a period as deter-
mined under section 313 or section 323.
SEC. 395. [20 U.S.C. 1068d1 ASSISTANCE TO INSTITUTIONS UNDER
OTHER PROGRAMS.
(a) ASSISTANCE ELIGIBILITY.Each institution which the Sec-
retary determines to be an institution eligible under part A or an
institution eligible under part B may be eligible for waivers in ac-
cordance with subsection (b).
(b) WAIVER APPLICABILITY.(1) Subject to, and in accordance
with, regulations promulgated for the purpose of this section, in the
case of any application by an institution referred to in subsection
(a) for assistance under any programs specified in paragraph (2),
the Secretary is authorized, if such application is otherwise approv-
able, to waive any requirement for a non-Federal share of the cost
of the program or project, or, to the extent not inconsistent with
other law, to give, or require to be given, priority consideration of
the application in relation to applications from other institutions.
(2) The provisions of this section shall apply to any program
authorized by part D or title IV of this Act.
(c) LIMITATION.The Secretary shall not waive, under sub-
section (b), the non-Federal share requirement for any program for
applications which, if approved, would require the expenditure of
more than 10 percent of the appropriations for the program for any
fiscal year.
SEC. 396. [20 U.S.C. 1068e1 LIMITATIONS.
The funds appropriated under section 360 may not be used
(1) for a school or department of divinity or any religious
worship or sectarian activity;
(2) for an activity that is inconsistent with a State plan for
desegregation of higher education applicable to such institu-
tion;
(3) for an activity that is inconsistent with a State plan of
higher education applicable to such institution; or
(4) for purposes other than the purposes set forth in the
approved application under which the funds were made avail-
able to the institution.
85
HIGHER EDUCATION ACT OF 1965
Sec. 399
SEC. 397. [20 U.S.C. 1068f] PENALTIES.
Whoever, being an officer, director, agent, or employee of, or
connected in any capacity with, any recipient of Federal financial
assistance or grant pursuant to this title embezzles, willfully
misapplies, steals, or obtains by fraud any of the funds which are
the subject of such grant or assistance, shall be fined not more
than $10,000 or imprisoned for not more than 2 years, or both.
SEC. 398. [20 U.S.C. 1068g] CONTINUATION AWARDS.
The Secretary shall make continuation awards under this title
for the second and succeeding years of a grant only after determin-
ing that the recipient is making satisfactory progress in carrying
out the grant.
SEC. 399. [20 U.S.C. 1068h] AUTHORIZATIONS OF APPROPRIATIONS.
(a) AUTHORIZATIONS.
(1) PART A.(A) There are authorized to be appropriated
to carry out part A, $135,000,000 (other than section 316) for
fiscal year 1999, and such sums as may be necessary for each
of the 4 succeeding fiscal years.
(B) There are authorized to be appropriated to carry out
section 316, $10,000,000 for fiscal year 1999 and such sums as
may be necessary for each of the 4 succeeding fiscal years.
(C) There are authorized to be appropriated to carry out
section 317, $5,000,000 for fiscal year 1999 and such sums as
may be necessary for each of the 4 succeeding fiscal years.
(2) PART B.(A) There are authorized to be appropriated
to carry out part B (other than section 326), $135,000,000 for
fiscal year 1999, and such sums as may be necessary for each
of the 4 succeeding fiscal years.
(B) There are authorized to be appropriated to carry out
section 326, $35,000,000 for fiscal year 1999, and such sums as
may be necessary for each of the 4 succeeding fiscal years.
(3) PART c. There are authorized to be appropriated to
carry out part C, $10,000,000 for fiscal year 1999, and such
sums as may be necessary for each of the 4 succeeding fiscal
years.
(4) PART D.(A) There are authorized to be appropriated
to carry out part D (other than section 345(7), but including
section 347), $110,000 for fiscal year 1999, and such sums as
may be necessary for each of the 4 succeeding fiscal years.
(B) There are authorized to be appropriated to carry out
section 345(7), such sums as may be necessary for fiscal year
1999 and each of the 4 succeeding fiscal years.
(5) PART E.There are authorized to be appropriated to
carry out part E, $10,000,000 for fiscal year 1999, and such
sums as may be necessary for each of the 4 succeeding fiscal
years.
(b) USE OF MULTIPLE YEAR AWARDS.In the event of a mul-
tiple year award to any institution under this title, the Secretary
shall make funds available for such award from funds appropriated
for this title for the fiscal year in which such funds are to be used
by the recipient.
Sec. 400
HIGHER EDUCATION ACT OF 1965
86
TITLE IVSTUDENT ASSISTANCE
PART AGRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF
HIGHER EDUCATION
SEC. 400. [20 U.S.C. 1070] STATEMENT OF PURPOSE; PROGRAM AU-
THORIZATION.
(a) PURPOSE.It is the purpose of this part, to assist in mak-
ing available the benefits of postsecondary education to eligible stu-
dents (defined in accordance with section 484) in institutions of
higher education by
(1) providing Federal Pell Grants to all eligible students;
(2) providing supplemental educational opportunity grants
to those students who demonstrate fmancial need;
(3) providing for payments to the States to assist them in
making financial aid available to such students;
(4) providing for special programs and projects designed
(A) to identify and encourage qualified youths with financial or
cultural need with a potential for postsecondary education, (B)
to prepare students from low-income families for postsecondary
education, and (C) to provide remedial (including remedial lan-
guage study) and other services to students; and
(5) providing assistance to institutions of higher education.
(b) SECRETARY REQUIRED TO CARRY OUT PURPOSES.The Sec-
retary shall, in accordance with subparts 1 through 8, carry out
programs to achieve the purposes of this part.
Subpart 1Federal Pell Grants
SEC. 401. [20 U.S.C. 1070a] FEDERAL PELL GRANTS: AMOUNT AND DE-
TERMINATIONS; APPLICATION&
(a) PROGRAM AUTHORITY AND METHOD OF DISTRIBUTION.(1)
For each fiscal year through fiscal year 2004, the Secretary shall
pay to each eligible institution such sums as may be necessary to
pay to each eligible student (defined in accordance with section
484) for each academic year during which that student is in attend-
ance at an institution of higher education, as an undergraduate, a
Federal Pell Grant in the amount for which that student is eligible,
as determined pursuant to subsection (b). Not less than 85 percent
of such sums shall be advanced to eligible institutions prior to the
start of each payment period and shall be based upon an amount
requested by the institution as needed to pay eligible students until
such time as the Secretary determines and publishes in the Federal
Register with an opportunity for comment, an alternative payment
system that provides payments to institutions in an accurate and
timely manner 1 except that this sentence shall not be construed
to limit the authority of the Secretary to place an institution on a
reimbursement system of payment.
(2) Nothing in this section shall be interpreted to prohibit the
Secretary from paying directly to students, in advance of the begin-
ning of the academic term, an amount for which they are eligible,
1So in law. Section 401(aX2) of P.L. 105-244 (112 Stat. 1650) added text in the second sen-
tence after "pay eligible students". The inserted material should have been added after the
comma in "pay eligible students,".
87
HIGHER EDUCATION ACT OF 1965
Sec. 401
in cases where the eligible institution elects not to participate in
the disbursement system required by paragraph (1).
(3) Grants made under this subpart shall be known as "Federal
Pell Grants".
(b) PURPOSE AND AMOUNT OF GRANTS.-(1) The purpose of this
subpart is to provide a Federal Pell Grant that in combination with
reasonable family and student contribution and supplemented by
the programs authorized under subparts 3 and 4 of this part, will
meet at least 75 percent of a student's cost of attendance (as de-
fined in section 472), unless the institution determines that a
greater amount of assistance would better serve the purposes of
section 401.
(2)(A) The amount of the Federal Pell Grant for a student eligi-
ble under this part shall be
(i) $4,500 for academic year 1999-2000;
(ii) $4,800 for academic year 2000-2001;
(iii) $5,100 for academic year 2001-2002;
(iv) $5,400 for academic year 2002-2003; and
(v) $5,800 for academic year 2003-2004,
less an amount equal to the amount determined to be the expected
family contribution with respect to that student for that year.
(B) In any case where a student attends an institution of high-
er education on less than a full-time basis (including a student who
attends an institution of higher education on less than a half-time
basis) during any academic year, the amount of the Federal Pell
Grant to which that student is entitled shall be reduced in propor-
tion to the degree to which that student is not so attending on a
full-time basis, in accordance with a schedule of reductions estab-
lished by the Secretary for the purposes of this division, 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.
(3)(A) For any academic year for which an appropriation Act
provides a maximum basic grant in an amount in excess of $2,700,
the amount of a student's basic grant shall equal $2,700 plus
(i) one-half of the amount by which such maximum basic
grant exceeds $2,700; plus
(ii) the lesser of
(I) the remaining one-half of such excess; or
(II) the sum of the student's tuition and, if the student
has dependent care expenses (as described in section
472(8)) or disability-related expenses (as described in sec-
tion 472(9)), an allowance determined by the institution for
such expenses.
(B) An institution that charged only fees in lieu of tuition as
of October 1, 1998, may include in the institution's determination
of tuition charged, fees that would normally constitute tuition.
(4) No Federal Pell Grant under this subpart shall exceed the
difference between the expected family contribution for a student
and the cost of attendance (as defined in section 472) at the institu-
tion at which that student is in attendance. If, with respect to any
student, it is determined that the amount of a Federal Pell Grant
plus the amount of the expected family contribution for that stu-
dent exceeds the cost of attendance for that year, the amount of the
Sec. 401
HIGHER EDUCATION ACT OF 1965
88
Federal Pell Grant shall be reduced until the combination of ex-
pected family contribution and the amount of the Federal Pell
Grant does not exceed the cost of attendance at such institution.
(5) No Federal Pell Grant shall be awarded to a student under
this subpart if the amount of that grant for that student as deter-
mined under this subsection for any academic year is less than
$400, except that a student who is eligible for a Federal Pell Grant
that is equal to or greater than $200 but less than $400 shall be
awarded a Federal Pell Grant of $400.
(6)(A) The Secretary may allow, on a case-by-case basis, a stu-
dent to receive 2 Pell grants during a single award year, if
(i) the student is enrolled full-time in an associate or bac-
calaureate degree program of study that is 2 years or longer
at an eligible institution that is computed in credit hours; and
(ii) the student completes course work toward completion
of an associate or baccalaureate degree that exceeds the re-
quirements for a full academic year as defined by the institu-
tion.
(B) The Secretary shall promulgate regulations implementing
this paragraph.
(7) 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 en-
rolled 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. If the preceding sentence ap-
plies, the financial aid administrator at the home institution may
use the cost of the study abroad program, rather than the home in-
stitution's cost, to determine the cost of attendance of the student.
(8) No Federal Pell Grant shall be awarded under this subpart
to any individual who is incarcerated in any Federal or State penal
institution.
(c) PERIOD OF ELIGIBILITY FOR GRANTS.-(1) The period during
which a student may receive Federal Pell Grants shall be the pe-
riod required for the completion of the first undergraduate bacca-
laureate course of study being pursued by that student at the insti-
tution at which the student is in attendance except that any period
during which the student is enrolled in a noncredit or remedial
course of study as defined in paragraph (2) shall not be counted for
the purpose of this paragraph.
(2) Nothing in this section shall exclude from eligibility courses
of study which are noncredit or remedial in nature (including
courses in English language instruction) which are determined by
the institution to be necessary to help the student be prepared for
the pursuit of a first undergraduate baccalaureate degree or certifi-
cate or, in the case of courses in English language instruction, to
be necessary to enable the student to utilize already existing
knowledge, training, or skills. Nothing in this section shall exclude
from eligibility programs of study abroad that are approved for
credit by the home institution at which the student is enrolled.
89
HIGHER EDUCATION ACT OF 1965
Sec. 401
(3) No student is entitled to receive Pell Grant payments con-
currently from more than one institution or from the Secretary and
an institution.
(4) Notwithstanding. paragraph (1), the Secretary may allow,
on a case-by-case basis, a student to receive a basic grant if the
student
(A) is carrying at least one-half the normal full-time work
load for the course of study the student is pursuing, as deter-
mined by the institution of higher education; and
(B)
is
enrolled
or
accepted
for
enrollment
in
a
postbaccalaureate program that does not lead to a graduate de-
gree, and in courses required by a State in order for the stu-
dent to receive a professional certification or licensing creden-
tial that is required for employment as a teacher in an elemen-
tary school or secondary school in that State;
except that this paragraph shall not apply to a student who is en-
rolled in an institution of higher education that offers a bacca-
laureate degree in education.
(d) APPLICATIONS FOR GRANTS.(1) The Secretary shall from
time to time set dates by which students shall file applications for
Federal Pell Grants under this subpart.
(2) Each student desiring a Federal Pell Grant for any year
shall file an application therefor containing such information and
assurances as the Secretary may deem necessary to enable the Sec-
retary to carry out the functions and responsibilities of this sub-
part.
(e) DISTRIBUTION OF GRANTS TO STUDENTS.Payments under
this section shall be made in accordance with regulations promul-
gated by the Secretary for such purpose, in such manner as will
best accomplish the purpose of this section. Any disbursement al-
lowed to be made by crediting the student's account shall be lim-
ited to tuition and fees and, in the case of institutionally owned
housing, room and board. The student may elect to have the insti-
tution provide other such goods and services by crediting the stu-
dent's account.
(f) CALCULATION OF ELIGIBILITY.(1) Each contractor process-
ing applications for awards under this subpart (including a central
processor, if any, designated by the Secretary) shall, in a timely
manner, furnish to the student financial aid administrator (at each
institution of higher education which a student awarded a Federal
Pell Grant under this subpart is attending), as a part of its regular
output document, the expected family contribution for each such
student. Each such student financial aid administrator shall
(A) examine and assess the data used to calculate the ex-
pected family contribution of the student furnished pursuant to
this subsection;
(B) recalculate the expected family contribution of the stu-
dent if there has been a change in circumstances of the student
or in the data submitted;
(C) make the award to the student in the correct amount;
and
(D) after making such award report the corrected data to
such contractor and to a central processor (if any) designated
by the Secretary for a confirmation of the correct computation
9 7
54-653 99 - 4
Sec. 401
HIGHER EDUCATION ACT OF 1965
90
of amount of the expected family contribution for each such
student.
(2) Whenever a student receives an award under this subpart
that, due to recalculation errors by the institution of higher edu-
cation, is in excess of the amount which the student is entitled to
receive under this subpart, such institution of higher education
shall pay to the Secretary the amount of such excess unless such
excess can be resolved in a subsequent disbursement to the institu-
tion.
(3) Each contractor processing applications for awards under
this subpart shall for each academic year after academic year
1986-1987 prepare and submit a report to the Secretary on the cor-
rectness of the computations of amount of the expected family con-
tribution, and on the accuracy of the questions on the application
form under this subpart for the previous academic year for which
the contractor is responsible. The Secretary shall transmit the re-
port, together with the comments and recommendations of the Sec-
retary, to the Committee on Appropriations and the Committee on
Labor and Human Resources of the Senate and the Committee on
Appropriations and the Committee on Education and the Workforce
of the House of Representatives.
(g) INSUFFICIENT APPROPRIATIONS.If, for any fiscal year, the
funds appropriated for payments under this subpart are insuffi-
cient to satisfy fully all entitlements, as calculated under sub-
section (b) (but at the maximum grant level specified in such ap-
propriation), the Secretary shall promptly transmit a notice of such
insufficiency to each House of the Congress, and identify in such
notice the additional amount that would be required to be appro-
priated to satisfy fully all entitlements (as so calculated at such
maximum grant level).
(h) USE OF EXCESS FUNDS.(1) If, at the end of a fiscal year,
the funds available for making payments under this subpart exceed
the amount necessary to make the payments required under this
subpart to eligible students by 15 percent or less, then all of the
excess funds shall remain available for making payments under
this subpart during the next succeeding fiscal year.
(2) If, at the end of a fiscal year, the funds available for mak-
ing payments under this subpart exceed the amount necessary to
make the payments required under this subpart to eligible stu-
dents by more than 15 percent, then all of such funds shall remain
available for making such payments but payments may be made
under this paragraph only with respect to entitlements for that
fiscal year.
(i) TREATMENT OF INSTITUTIONS AND STUDENTS UNDER OTHER
LAWS.--Any institution of higher education which enters into an
agreement with the Secretary to disburse to students attending
that institution the amounts those students are eligible to receive
under this subpart shall not be deemed, by virtue of such agree-
ment, a contractor maintaining a system of records to accomplish
a function of the Secretary. Recipients of Pell Grants shall not be
considered to be individual grantees for purposes of subtitle D of
title V of Public Law 100-690.
(j) INSTITUTIONAL INELIGIBILITY BASED ON DEFAULT RATES.
91
HIGHER EDUCATION ACT OF 1965
Sec. MA
(1) IN GENERAL.No institution of higher education shall
be an eligible institution for purposes of this subpart if such
institution of higher education is ineligible to participate in a
loan program under part B or D as a result of a final default
rate determination made by the Secretary under part B or D
after the final publication of cohort default rates for fiscal year
1996 or a succeeding fiscal year.
(2) SANCTIONS SUBJECT TO APPEAL OPPORTUNITY.No in-
stitution may be subject to the terms of this subsection unless
the institution has had the opportunity to appeal the institu-
tion's default rate determination under regulations issued by
the Secretary for the loan program authorized under part B or
D, as applicable. This subsection shall not apply to an institu-
tion that was not participating in the loan program authorized
under part B or D on the date of enactment of the Higher Edu-
cation Amendments of 1998, unless the institution subse-
quently participates in the loan programs.
Subpart 2 Federal Early Outreach and Student
Services Programs
CHAPTER 1 FEDERAL TRIO PROGRAMS
SEC. 402A. [20 U.S.C. 1070a-11] PROGRAM AUTHORITY; AUTHORIZA-
TION OF APPROPRIATIONS.
(a) GRANTS AND CONTRACTS AUTHORIZED.The Secretary
shall, in accordance with the provisions of this chapter, carry out
a program of making grants and contracts designed to identify
qualified individuals from disadvantaged backgrounds, to prepare
them for a program of postsecondary education, to provide support
services for such students who are pursuing programs of post-
secondary education, to motivate and prepare students for doctoral
programs, and to train individuals serving or preparing for service
in programs and projects so designed.
(b) RECIPIENTS, DURATION, AND SIZE.
(1) RECIPIENTS.For the purposes described in subsection
(a), the Secretary is authorized, without regard to section 3709
of the Revised Statutes (41 U.S.C. 5), to make grants to, and
contracts with, institutions of higher education, public and pri-
vate agencies and organizations, combinations of such institu-
tions, agencies and organizations, and in exceptional cir-
cumstances, secondary schools, for planning, developing, or
carrying out one or more of the services assisted under this
chapter.
(2) DURATION.Grants or contracts made under this chap-
ter shall be awarded for a period of 4 years, except that
(A) the Secretary shall award such grants or contracts
for 5 years to applicants whose peer review scores were in
the highest 10 percent of scores of all applicants receiving
grants or contracts in each program competition for the
same award year;
(B) grants made under section 402G shall be awarded
for a period of 2 years; and
Sec. 402A
HIGHER EDUCATION ACT OF 1965
92
(C) grants under section 402H shall be awarded for a
period determined by the Secretary.
(3) MINIMUM GRANTS.Unless the institution or agency re-
quests a smaller amount, individual grants under this chapter
shall be no less than
(A) $170,000 for programs authorized by sections 402D
and 402G;
(B) $180,000 for programs authorized by sections 402B
and 402F; and
(C) $190,000 for programs authorized by sections 402C
and 402E.
(c) PROCEDURES FOR AWARDING GRANTS AND CONTRACTS.
(1) APPLICATION REQUIREMENTS.An eligible entity that
desires to receive a grant or contract under this chapter shall
submit an application to the Secretary in such manner and
form, and containing such information and assurances, as the
Secretary may reasonably require.
(2) PRIOR EXPERIENCE.In making grants under this chap-
ter, the Secretary shall consider each applicant's prior experi-
ence of service delivery under the particular program for which
funds are sought. The level of consideration given the factor of
prior experience shall not vary from the level of consideration
given such factor during fiscal years 1994 through 1997, except
that grants made under section 402H shall not be given prior
experience consideration.
(3) ORDER OF AWARDS; PROGRAM FRAUD.(A) Except with
respect to grants made under sections 402G and 402H and as
provided in subparagraph (B), the Secretary shall award
grants and contracts under this chapter in the order of the
scores received by the application for such grant or contract in
the peer review process required under paragraph (4) and ad-
justed for prior experience in accordance with paragraph (2) of
this subsection.
(B) The Secretary is not required to provide assistance to
a program otherwise eligible for assistance under this chapter,
if the Secretary has determined that such program has in-
volved the fraudulent use of funds under this chapter.
(4) PEER REVIEW PROCESS.(A) The Secretary shall ensure
that, to the extent practicable, members of groups underrep-
resented in higher education, including African Americans,
Hispanics, Native Americans, Alaska Natives, Asian Ameri-
cans, and Native American Pacific Islanders (including Native
Hawaiians), are represented as readers of applications submit-
ted under this chapter. The Secretary shall also ensure that
persons from urban and rural backgrounds are represented as
readers.
(B) The Secretary shall ensure that each application sub-
mitted under this chapter is read by at least three readers who
are not employees of the Federal Government (other than as
readers of applications).
(5) NUMBER OF APPLICATIONS FOR GRANTS AND CON-
TRACTS.The Secretary shall not limit the number of applica-
tions submitted by an entity under any program authorized
93
HIGHER EDUCATION ACT OF 1965
Sec. 402A
under this chapter if the additional applications describe pro-
grams serving different populations or campuses.
(6) COORDINATION WITH OTHER PROGRAMS FOR DISADVAN-
TAGED STUDENTS.The Secretary shall encourage coordination
of programs assisted under this chapter with other programs
for disadvantaged students operated by the sponsoring institu-
tion or agency, regardless of the funding source of such pro-
grams. The Secretary shall not limit an entity's eligibility to
receive funds under this chapter because such entity sponsors
a program similar to the program to be assisted under this
chapter, regardless of the funding source of such program. The
Secretary shall permit the Director of a program receiving
funds under this chapter to administer one or more additional
programs for disadvantaged students operated by the sponsor-
ing institution or agency, regardless of the funding sources of
such programs.
(7) APPLICATION STATUS.The Secretary shall inform each
entity operating programs under this chapter regarding the
status of their application for continued funding at least 8
months prior to the expiration of the grant or contract. The
Secretary, in the case of an entity that is continuing to operate
a successful program under this chapter, shall ensure that the
start-up date for a new grant or contract for such program im-
mediately follows the termination of the preceding grant or
contract so that no interruption of funding occurs for such suc-
cessful reapplicants. The Secretary shall inform each entity re-
questing assistance under this chapter for a new program re-
garding the status of their application at least 8 months prior
to the proposed startup date of such program.
(d) OUTREACH.
(1) IN GENERALThe Secretary shall conduct outreach ac-
tivities to ensure that entities eligible for assistance under this
chapter submit applications proposing programs that serve ge-
ographic areas and eligible populations which have been un-
derserved by the programs assisted under this chapter.
(2) NOTICE.In carrying out the provisions of paragraph
(1), the Secretary shall notify the entities described in sub-
section (b) of the availability of assistance under this sub-
section not less than 120 days prior to the deadline for submis-
sion of applications under this chapter and shall consult na-
tional, State, and regional organizations about candidates for
notification.
(3) TECHNICAL ASSISTANCE.The Secretary shall provide
technical training to applicants for projects and programs
authorized under this chapter. The Secretary shall give prior-
ity to serving programs and projects that serve geographic
areas and eligible populations which have been underserved by
the programs assisted under this chapter. Technical training
activities shall include the provision of information on author-
izing legislation, goals and objectives of the program, required
activities, eligibility requirements, the application process and
application deadlines, and assistance in the- development of
program proposals and the completion of program applications.
Such training shall be furnished at conferences, seminars, and
Sec. 402A
HIGHER EDUCATION ACT OF 1965
94
workshops to be conducted at not less than 10 sites throughout
the United States to ensure that all areas of the United States
with large concentrations of eligible participants are served.
(4) SPECIAL RULE.The Secretary may contract with eligi-
ble entities to conduct the outreach activities described in this
subsection.
(e) DOCUMENTATION OF STATUS AS A LOW-INCOME INDIVID-
UAL.(1) Except in the case of an independent student, as defined
in section 480(d), documentation of an individual's status pursuant
to subsection (g)(2) shall be made by providing the Secretary
with
(A) a signed statement from the individual's parent or
legal guardian;
(B) verification from another governmental source;
(C) a signed financial aid application; or
(D) a signed United States or Puerto Rico income tax
return.
(2) In the case of an independent student, as defined in section
480(d), documentation of an individual's status pursuant to sub-
section (g)(2) shall be made by providing the Secretary with
(A) a signed statement from the individual;
(B) verification from another governmental source;
(C) a signed financial aid application; or
(D) a signed United States or Puerto Rico income tax re-
turn.
(0 AUTHORIZATION OF APPROPRIATIONS.For the purpose of
making grants and contracts under this chapter, there are author-
ized to be appropriated $700,000,000 for fiscal year 1999, and such
sums as may be necessary for each of the 4 succeeding fiscal years.
Of the amount appropriated under this chapter, the Secretary may
use no more than Y2 of 1 percent of such amount to obtain addi-
tional qualified readers and additional staff to review applications,
to increase the level of oversight monitoring, to support impact
studies, program assessments and reviews, and to provide technical
assistance to potential applicants and current grantees. In expend-
ing these funds, the Secretary shall give priority to the additional
administrative requirements provided in the Higher Education
Amendments of 1992, to outreach activities, and to obtaining addi-
tional readers. The Secretary shall report to Congress by October
1, 1994, on the use of these funds.
(g) DEFINITIONS.For the purpose of this chapter:
(1) FIRST GENERATION COLLEGE STUDENT.The term "first
generation college student" means
(A) an individual both of whose parents did not com-
plete a baccalaureate degree; or
(B) in the case of any individual who regularly resided
with and received support from only one parent, an indi-
vidual whose only such parent did not complete a bacca-
laureate degree.
(2) LOW-INCOME INDIVIDUAL.The term "low-income indi-
vidual" means an individual from a family whose taxable in-
come for the preceding year did not exceed 150 percent of an
amount equal to the poverty level determined by using criteria
of poverty established by the Bureau of the Census.
95
HIGHER EDUCATION ACT OF 1965
Sec. 402B
(3) VETERAN ELIGIBILITY.No veteran shall be deemed in-
eligible to participate in any program under this chapter by
reason of such individual's age who
(A) served on active duty for a period of more than 180
days, any part of which occurred after January 31, 1955,
and was discharged or released therefrom under conditions
other than dishonorable; or
(B) served on active duty after January 31, 1955, and
was discharged or released therefrom because of a service
connected disability.
(4) WAIVER.The Secretary may waive the service require-
ments in subparagraph (A) or (B) of paragraph (3) if the Sec-
retary determines the application of the service requirements
to a veteran will defeat the purpose of a program under this
chapter.
SEC. 402B. [20 U.S.C. 1070a-121 TALENT SEARCH.
(a) PROGRAM AUTHORITY. The Secretary shall carry out a pro-
gram to be known as talent search which shall be designed
(1) to identify qualified youths with potential for education
at the postsecondary level and to encourage such youths to
complete secondary school and to undertake a program of post-
secondary education;
(2) to publicize the availability of student financial assist-
ance available to persons who pursue a program of postsecond-
ary education; and
(3) to encourage persons who have not completed programs
of education at the secondary or postsecondary level, but who
have the ability to complete such programs, to reenter such
programs.
(b) PERMISSIBLE SERVICES.Any talent search project assisted
under this chapter may provide services such as
(1) academic advice and assistance in secondary school and
college course selection;
(2) assistance in completing college admission and finan-
cial aid applications;
(3) assistance in preparing for college entrance examina-
tions;
(4) guidance on and assistance in secondary school reentry,
entry to general educational development (GED) programs,
other alternative education programs for secondary school
dropouts, or postsecondary education;
(5) personal and career counseling, or activities designed to
acquaint individuals from disadvantaged backgrounds with ca-
reers in which the individuals are particularly underrep-
resented;
(6) tutorial services;
(7) exposure to college campuses as well as cultural events,
academic programs and other sites or activities not usually
available to disadvantaged youth;
(8) workshops and counseling for families of students
served;
(9) mentoring programs involving elementary or secondary
school teachers or counselors, faculty members at institutions
103
Sec. 402C
HIGHER EDUCATION ACT OF 1965
96
of higher education, students, or any combination of such per-
sons; and
(10) programs and activities as described in paragraphs (1)
through (9) which are specially designed for students of limited
English proficiency.
(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.In ap-
proving applications for talent search projects under this chapter
for any fiscal year the Secretary shall
(1) require an assurance that not less than two-thirds of
the individuals participating in the project proposed to be car-
ried out under any application be low-income individuals who
are first generation college students;
(2) require that such participants be persons who either
have completed 5 years of elementary education or are at least
11 years of age but not more than 27 years of age, unless the
imposition of any such limitation with respect to any person
would defeat the purposes of this section or the purposes of
section 402F;
(3) require an assurance that individuals participating in
the project proposed in the application do not have access to
services from another project funded under this section or
under section 402F; and
(4) require an assurance that the project will be located in
a setting accessible to the persons proposed to be served by the
project.
SEC. 402C. [20 U.S.C. 1070a-13] UPWARD BOUND.
(a) PROGRAM AUTHORITY.The Secretary shall carry out a pro-
gram to be known as upward bound which shall be designed to
generate skills and motivation necessary for success in education
beyond secondary school.
(b) PERMISSIBLE SERVICES.Any upward bound project as-
sisted under this chapter may provide services such as
(1) instruction in reading, writing, study skills, mathe-
matics, and other subjects necessary for success beyond second-
ary school;
(2) counseling and workshops;
(3) academic advice and assistance in secondary school
course selection;
(4) tutorial services;
(5) exposure to cultural events, academic programs, and
other activities not usually available to disadvantaged youth;
(6) activities designed to acquaint youths participating in
the project with the range of career options available to them;
(7) instruction designed to prepare youths participating in
the project for careers in which persons from disadvantaged
backgrounds are particularly underrepresented;
(8) on-campus residential programs;
(9) mentoring programs involving elementary or secondary
school teachers or counselors, faculty members at institutions
of higher education, students, or any combination of such per-
sons;
97
HIGHER EDUCATION ACT OF 1965
Sec. 402D
(10) work-study positions where youth participating in the
project are exposed to careers requiring a postsecondary de-
gree;
(11) special services to enable veterans to make the transi-
tion to postsecondary education; and
(12) programs and activities as described in paragraphs (1)
through (11) which are specially designed for students of lim-
ited English proficiency.
(c) REQUIRED SERVICES.Any upward bound project assisted
under this chapter which has received funding for two or more
years shall include, as part of the core curriculum in the next and
succeeding years, instruction in mathematics through precalculus,
laboratory science, foreign language, composition, and literature.
(d) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.In ap-
proving applications for upward bound projects under this chapter
for any fiscal year, the Secretary shall
(1) require an assurance that not less than two-thirds of
the youths participating in the project proposed to be carried
out under any application be low-income individuals who are
first generation college students;
(2) require an assurance that the remaining youths partici-
pating in the project proposed to be carried out under any ap-
plication be either low-income individuals or first generation
college students;
(3) require that there be a determination by the institu-
tion, with respect to each participant in such project that the
participant has a need for academic support in order to pursue
successfully a program of education beyond secondary school;
and
(4) require that such participants be persons who have
completed 8 years of elementary education and are at least 13
years of age but not more than 19 years of age, unless the im-
position of any such limitation would defeat the purposes of
this section.
(e) MAXIMUM STIPENDS.Youths participating in a project pro-
posed to be carried out under any application may be paid stipends
not in excess of $60 per month during June, July, and August, ex-
cept that youth participating in a work-study position under sub-
section (b)(10) may be paid a stipend of $300 per month during
June, July, and August. Youths participating in a project proposed
to be carried out under any application may be paid stipends not
in excess of $40 per month during the remaining period of the year.
SEC. 402D. [20 U.S.C. 1070a-14] STUDENT SUPPORT SERVICES.
(a) PROGRAM AUTHORITY. The Secretary shall carry out a pro-
gram to be known as student support services which shall be
designed
(1) to increase college retention and graduation rates for
eligible students;
(2) to increase the transfer rates of eligible students from
2-year to 4-year institutions; and
(3) to foster an institutional climate supportive of the suc-
cess of low-income and first generation college students and in-
dividuals with disabilities.
1 0 5
Sec. 402D
HIGHER EDUCATION ACT OF 1965
98
(b) PERMISSIBLE SERVICES.A student support services project
assisted under this chapter may provide services such as
(1) instruction in reading, writing, study skills, mathe-
matics, and other subjects necessary for success beyond second-
ary school;
(2) personal counseling;
(3) academic advice and assistance in course selection;
(4) tutorial services and counseling and peer counseling;
(5) exposure to cultural events and academic programs not
usually available to disadvantaged students;
(6) activities designed to acquaint students participating in
the project with the range of career options available to them;
(7) activities designed to assist students participating in
the project in securing admission and financial assistance for
enrollment in graduate and professional programs;
(8) activities designed to assist students currently enrolled
in 2-year institutions in securing admission and financial as-
sistance for enrollment in a four-year program of postsecondary
education;
(9) mentoring programs involving faculty or upper class
students, or a combination thereof; and
(10) programs and activities as described in paragraphs (1)
through (9) which are specially designed for students of limited
English proficiency.
(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.In ap-
proving applications for student support services projects under
this chapter for any fiscal year, the Secretary shall
(1) require an assurance that not less than two-thirds of
the persons participating in the project proposed to be carried
out under any application
(A) be individuals with disabilities; or
(B) be low-income individuals who are first generation
college students;
(2) require an assurance that the remaining students par-
ticipating in the project proposed to be carried out under any
application be low-income individuals, first generation college
students, or individuals with disabilities;
(3) require an assurance that not less than one-third of the
individuals with disabilities participating in the project be low-
income individuals;
(4) require that there be a determination by the institu-
tion, with respect to each participant in such project, that the
participant has a need for academic support in order to pursue
successfully a program of education beyond secondary school;
(5) require that such participants be enrolled or accepted
for enrollment at the institution which is the recipient of the
grant or contract; and
(6) consider, in addition to such other criteria as the Sec-
retary may prescribe, the institution's effort, and where appli-
cable past history, in
(A) providing sufficient financial assistance to meet
the full financial need of each student in the project; and
(B) maintaining the loan burden of each such student
at a manageable level.
1o(
99
HIGHER EDUCATION ACT OF 1965
Sec. 402E
SEC. 402E. [20 U.S.C. 1070a-15] POSTBACCALAUREATE ACHIEVEMENT
PROGRAM AUTHORITY.
(a) PROGRAM AUTHORITY.The Secretary shall carry out a pro-
gram to be known as the "Ronald E. McNair Postbaccalaureate
Achievement Program" that shall be designed to provide disadvan-
taged college students with effective preparation for doctoral study.
(b) SERVICES. A postbaccalaureate achievement project as-
sisted under this section may provide services such as
(1) opportunities for research or other scholarly activities
at the institution or at graduate centers designed to provide
students with effective preparation for doctoral study;
(2) summer internships;
(3) seminars and other educational activities designed to
prepare students for doctoral study;
(4) tutoring;
(5) academic counseling;
(6) activities designed to assist students participating in
the project in securing admission to and financial assistance
for enrollment in graduate programs;
(7) mentoring programs involving faculty members at in-
stitutions of higher education, students, or any combination of
such persons; and
(8) exposure to cultural events and academic programs not
usually available to disadvantaged students.
(c)
REQUIREMENTS.In
approving
applications
for
postbaccalaureate achievement projects assisted under this section
for any fiscal year, the Secretary shall require
(1) an assurance that not less than two-thirds of the indi-
viduals participating in the project proposed to be carried out
under any application be low-income individuals who are first
generation college students;
(2) an assurance that the remaining persons participating
in the project proposed to be carried out be from a group that
is underrepresented in graduate education;
(3) an assurance that participants be enrolled in a degree
program at an eligible institution having an agreement with
the Secretary in accordance with the provisions of section 487;
and
(4) an assurance that participants in summer research in-
ternships have completed their sophomore year in postsecond-
ary education.
(d) AWARD CONSIDERATIONS.In addition to such other selec-
tion criteria as may be prescribed by regulations, the Secretary
shall consider in making awards to institutions under this
section
(1) the quality of research and other scholarly activities in
which students will be involved;
(2) the level of faculty involvement in the project and the
description of the research in which students will be involved;
and
(3) the institution's plan for identifying and recruiting par-
ticipants including students enrolled in projects authorized
under this section.
107
Sec. 402F
HIGHER EDUCATION ACT OF 1965
100
(e) MAXIMUM STIPENDS.Students participating in research
under a postbaccalaureate achievement project may receive an
award that
(1) shall include a stipend not to exceed $2,800 per annum;
and
(2) may include, in addition, the costs of summer tuition,
summer room and board, and transportation to summer pro-
grams.
(f) FUNDING.From amounts appropriated pursuant to the au-
thority of section 402A(f), the Secretary shall, to the extent prac-
ticable, allocate funds for projects authorized by this section in an
amount which is not less than $11,000,000 for each of the fiscal
years 1993 through 1997.
SEC. 402F. [20 U.S.C. 1070a-161 EDUCATIONAL OPPORTUNITY CENTERS.
(a) PROGRAM AUTHORITY; SERVICES PROVIDED.The Secretary
shall carry out a program to be known as educational opportunity
centers which shall be designed
(1) to provide information with respect to financial and
academic assistance available for individuals desiring to pur-
sue a program of postsecondary education; and
(2) to provide assistance to such persons in applying for
admission to institutions at which a program of postsecondary
education is offered, including preparing necessary applications
for use by admissions and financial aid officers.
(b) PERMISSIBLE SERVICES.An educational opportunity center
assisted under this section may provide services such as
(1) public information, campaigns designed to inform the
community regarding opportunities for postsecondary edu-
cation and training;
(2) academic advice and assistance in course selection;
(3) assistance in completing college admission and finan-
cial aid applications;
(4) assistance in preparing for college entrance examina-
tions;
(5) guidance on secondary school reentry or entry to a gen-
eral educational development (GED) program or other alter-
native education programs for secondary school dropouts;
(6) personal counseling;
(7) tutorial services;
(8) career workshops and counseling;
(9) mentoring programs involving elementary or secondary
school teachers, faculty members at institutions of higher edu-
cation, students, or any combination of such persons; and
(10) programs and activities as described in paragraphs (1)
through (9) which are specially designed for students of limited
English proficiency.
(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.In ap-
proving applications for educational opportunity centers under this
section for any fiscal year the Secretary shall
(1) require an assurance that not less than two-thirds of
the persons participating in the project proposed to be carried
out under any application be low-income individuals who are
first generation college students;
108
101
HIGHER EDUCATION ACT OF 1965
Sec. 402G
(2) require that such participants be persons who are at
least nineteen years of age, unless the imposition of such limi-
tation with respect to any person would defeat the purposes of
this section or the purposes of section 402B; and
(3) require an assurance that individuals participating in
the project proposed in the application do not have access to
services from another project funded under this section or
under section 402B.
SEC. 402G. [20 U.S.C. 1070a -171 STAFF DEVELOPMENT ACTIVITIES.
(a) SECRETARY'S AUTHORITY. For the purpose of improving the
operation of the programs and projects authorized by this chapter,
the Secretary is authorized to make grants to institutions of higher
education and other public and private nonprofit institutions and
organizations to provide training for staff and leadership personnel
employed in, participating in, or preparing for employment in, such
programs and projects.
(b) CONTENTS OF TRAINING PROGRAMS.Such training shall in-
clude conferences, internships, seminars, workshops, and the publi-
cation of manuals designed to improve the operation of such pro-
grams and projects and shall be carried out in the various regions
of the Nation in order to ensure that the training opportunities are
appropriate to meet the needs in the local areas being served by
such programs and projects. Such training shall be offered annu-
ally for new directors of projects funded under this chapter as well
as annually on the following topics and other topics chosen by the
Secretary:
(1) Legislative and regulatory requirements for the oper-
ation of programs funded under this chapter.
(2) Assisting students in receiving adequate financial aid
from programs assisted under this title and other programs.
(3) The design and operation of model programs for
projects funded under this chapter.
(4) The use of appropriate educational technology in the
operation of projects assisted under this chapter.
(c) CONSULTATION.Grants for the purposes of this section
shall be made only after consultation with regional and State pro-
fessional associations of persons having special knowledge with re-
spect to the needs and problems of such programs and projects:
SEC. 40211. [20 U.S.C. 1070a-181 EVALUATIONS AND GRANTS FOR
PROJECT IMPROVEMENT AND DISSEMINATION PARTNER-
SHIP PROJECTS.
(a) EVALUATIONS.
(1) IN GENERAL.For the purpose of improving the effec-
tiveness of the programs and projects assisted under this chap-
ter, the Secretary may make grants to or enter into contracts
with institutions of higher education and other public and pri-
vate institutions and organizations to evaluate the effective-
ness of the programs and projects assisted under this chapter.
(2) PRACTICES.The evaluations described in paragraph
(1) shall identify institutional, community, and program or
project practices that are particularly effective in enhancing
the access of low-income individuals and first-generation col-
lege students to postsecondary education, the preparation of
109
Sec. 402H
HIGHER EDUCATION ACT OF 1965
102
the individuals and students for postsecondary education, and
the success of the individuals and students in postsecondary
education. Such evaluations shall also investigate the effective-
ness of alternative and innovative methods within Federal
TRIO programs of increasing access to, and retention of, stu-
dents in postsecondary education.
(b) GRANTS.The Secretary may award grants to institutions
of higher education or other private and public institutions and or-
ganizations, that are carrying out a program or project assisted
under this chapter prior to the date of enactment of the Higher
Education Amendments of 1998, to enable the institutions and or-
ganizations to expand and leverage the success of such programs
or projects by working in partnership with other institutions, com-
munity-based organizations, or combinations of such institutions
and organizations, that are not receiving assistance under this
chapter and are serving low-income students and first generation
college students, in order to
(1) disseminate and replicate best practices of programs or
projects assisted under this chapter; and
(2) provide technical assistance regarding programs and
projects assisted under this chapter.
(c) RESULTS.In order to improve overall program or project
effectiveness, the results of evaluations and grants described in
this section shall be disseminated by the Secretary to similar pro-
grams or projects assisted under this subpart, as well as other indi-
viduals concerned with postsecondary access for and retention of
low-income individuals and first-generation college students.
CHAPTER 2-GAINING EARLY AWARENESS
AND READINESS FOR UNDERGRADUATE
PROGRAMS
SEC. 404A. [20 U.S.C. 1070a-21] EARLY INTERVENTION AND COLLEGE
AWARENESS PROGRAM AUTHORIZED.
(a) PROGRAM AUTHORIZED.The Secretary is authorized, in ac-
cordance with the requirements of this chapter, to establish a pro-
gram that
(1) encourages eligible entities to provide or maintain a
guarantee to eligible low-income students who obtain a second-
ary school diploma (or its recognized equivalent), of the finan-
cial assistance necessary to permit the students to attend an
institution of higher education; and
(2) supports eligible entities in providing
(A) additional counseling, mentoring, academic sup-
port, outreach, and supportive services to elementary
school, middle school, and secondary school students who
are at risk of dropping out of school; and
(B) information to students and their parents about
the advantages of obtaining a postsecondary education and
the college financing options for the students and their
parents.
(b) AWARDS.
103
HIGHER EDUCATION ACT OF 1965
Sec. 404B
(1) IN GENERAL. From funds appropriated under section
404H for each fiscal year, the Secretary shall make awards to
eligible entities described in paragraphs (1) and (2) of sub-
section (c) to enable the entities to carry out the program au-
thorized under subsection (a).
(2) PRIORITY.In making awards to eligible entities de-
scribed in paragraph (c)(1), the Secretary shall
(A) give priority to eligible entities that
(i) on the day before the date of enactment of the
Higher Education Amendments of 1998, carried out
successful educational opportunity programs under
this chapter (as this chapter was in effect on such
day); and
(ii) have a prior, demonstrated commitment to
early intervention leading to college access through
collaboration and replication of successful strategies;
(B) ensure that students served under this chapter on
the day before the date of enactment of the Higher Edu-
cation Amendments of 1998 continue to receive assistance
through the completion of secondary school.
(c) DEFINITION OF ELIGIBLE ENTITY.For the purposes of this
chapter, the term "eligible entity" means
(1) a State; or
(2) a partnership consisting of
(A) one or more local educational agencies acting on
behalf of
(i) one or more elementary schools or secondary
schools; and
(ii) the secondary schools that students from the
schools described in clause (i) would normally attend;
(B) one or more degree granting institutions of higher
education; and
(C) at least two community organizations or entities,
such as businesses, professional associations, community=
based organizations, philanthropic organizations, State
agencies, institutions or agencies sponsoring programs au-
thorized under subpart 4, or other public or private agen-
cies or organizations.
SEC. 404B. [20 U.S.C. 1070a-221 REQUIREMENTS.
(a) FUNDING RULES.
(1) CONTINUATION AWARDS.From the amount
appro-
priated under section 404H for a fiscal year, the Secretary
shall continue to award grants to States under this chapter (as
this chapter was in effect on the day before the date of enact-
ment of the Higher Education Amendments of 1998) in accord-
ance with the terms and conditions of such grants.
(2) DISTRIBUTION.From the amount appropriated under
section 404H that remains after making continuation awards
under paragraph (1) for a fiscal year, the Secretary shall
(A) make available--
(i) not less than. 33 percent of the amount to eligi-
ble entities described in section 404A(c)(1); and
111
Sec. 404B
HIGHER EDUCATION ACT OF 1965
104
(ii) not less than 33 percent of the amount to eligi-
ble entities described in section 404A(c)(2); and
(B) award the remainder of the amount to eligible en-
tities described in paragraph (1) or (2) of section 404A(c).
(3) SPECIAL RULE.The Secretary shall annually reevalu-
ate the distribution of funds described in paragraph (2)(B)
based on number, quality, and promise of the applications and
adjust the distribution accordingly.
(b) LIMITATION.Each eligible entity described in section
404A(c)(1), and each eligible entity described in section 404A(c)(2)
that conducts a scholarship component under section 404E, shall
use not less than 25 percent and not more than 50 percent of grant
funds received under this chapter for the early intervention compo-
nent of an eligible entity's program under this chapter, except that
the Secretary may waive the 50 percent limitation if the eligible
entity demonstrates that the eligible entity has another means of
providing the students with financial assistance that is described
in the plan submitted under section 404C.
(c) COORDINATION.Each eligible entity shall ensure that the
activities assisted under this chapter are, to the extent practicable,
coordinated with, and complement and enhance
(1) services under this chapter provided by other eligible
entities serving the same school district or State; and
(2) related services under other Federal or non-Federal
programs.
(d) DESIGNATION OF FISCAL AGENT. An eligible entity de-
scribed in section 404A(c)(2) shall designate an institution of higher
education or a local educational agency as the fiscal agent for the
eligible entity.
(e) COORDINATORS.An eligible entity described in section
404A(c)(2) shall have a full-time program coordinator or a part-
time program coordinator, whose primary responsibility is a project
under section 404C.
(f) DISPLACEMENT.An eligible entity described in 404A(c)(2)
shall ensure that the activities assisted under this chapter will not
displace an employee or eliminate a position at a school assisted
under this chapter, including a partial displacement such as a re-
duction in hours, wages or employment benefits.
(g) COHORT APPROACH.
(1) IN GENERAL.The Secretary shall require that eligible
entities described in section 404A(c)(2)
(A) provide services under this chapter to at least one
grade level of students, beginning not later than 7th grade,
in a participating school that has a 7th grade and in which
at least 50 percent of the students enrolled are eligible for
free or reduced-price lunch under the National School
Lunch Act (or, if an eligible entity determines that it
would promote the effectiveness of a program, an entire
grade level of students, beginning not later than the 7th
grade, who reside in public housing as defined in section
3(b)(1) of the United States Housing Act of 1937); and
(B) ensure that the services are provided through the
12th grade to students in the participating grade level.
105
HIGHER EDUCATION ACT OF 1965
Sec. 404C
(2) COORDINATION REQUIREMENT.In order for the Sec-
retary to require the cohort approach described in paragraph
(1), the Secretary shall, where applicable, ensure that the co-
hort approach is done in coordination and collaboration with
existing early intervention programs and does not duplicate
the services already provided to a school or community.
SEC. 404C. [20 U.S.C. 1070a-231 ELIGIBLE ENTITY PLANS.
(a) PLAN REQUIRED FOR ELIGIBILITY.
(1) IN GENERAL.In order for an eligible entity to qualify
for a grant under this chapter, the eligible entity shall submit
to the Secretary a plan for carrying out the program under this
chapter. Such plan shall provide for the conduct of a scholar-
ship component if required or undertaken pursuant to section
404E and an early intervention component required pursuant
to section 404D.
(2) CONTENTS.Each plan submitted pursuant to para-
graph (1) shall be in such form, contain or be accompanied by
such information or assurances, and be submitted at such time
as the Secretary may require by regulation. Each such plan
shall
(A) describe the activities for which assistance under
this chapter is sought; and
(B) provide such additional assurances as the Sec-
retary determines necessary to ensure compliance with the
requirements of this chapter.
(b) MATCHING REQUIREMENT.
(1) IN GENERAL.The Secretary shall not approve a plan
submitted under subsection (a) unless such plan
(A) provides that the eligible entity will provide, from
State, local, institutional, or private funds, not less than
50 percent of the cost of the program, which matching
funds may be provided in cash or in kind;
(B) specifies the methods by which matching funds
will be paid; and
(C) includes provisions designed to ensure that funds
provided under this chapter shall supplement and not sup-
plant funds expended for existing programs.
(2) SPECIAL RULE.Notwithstanding the matching require-
ment described in paragraph (1)(A), the Secretary may by reg-
ulation modify the percentage requirement described in para-
graph (1)(A) for eligible entities described in section 404A(c)(2).
(C) METHODS FOR COMPLYING
WITH MATCHING REQUIRE-
MENT.An eligible entity may count toward the matching require-
ment described in subsection (b)(1)(A)
(1) the amount of the financial assistance paid to students
from State, local, institutional, or private funds under this
chapter;
(2) the amount of tuition, fees, room or board waived or re-
duced for recipients of financial assistance under this chapter;
and
(3) the amount expended on documented, targeted, long-
term mentoring and counseling provided by volunteers or paid
staff of nonschool organizations, including businesses, religious
113
Sec. 404D
HIGHER EDUCATION ACT OF 1965
106
organizations, community groups, postsecondary educational
institutions, nonprofit and philanthropic organizations, and
other organizations.
(d) PEER REVIEW PANELS.The Secretary shall convene peer
review panels to assist in making determinations regarding the
awarding of grants under this chapter.
SEC. 404D. [20 U.S.C. 1070a-24] EARLY INTERVENTION.
(a) SERVICES.
(1) IN GENERAL.In order to receive a grant under this
chapter, an eligible entity shall demonstrate to the satisfaction
of the Secretary, in the plan submitted under section 404C,
that the eligible entity will provide comprehensive mentoring,
counseling, outreach, and supportive services to students par-
ticipating in programs under this chapter. Such counseling
shall include
(A) financial aid counseling and information regarding
the opportunities for financial assistance under this title;
and
(B) activities or information regarding
(i) fostering and improving parent involvement in
promoting the advantages of a college education, aca-
demic admission requirements, and the need to take
college preparation courses;
(ii) college admissions and achievement tests; and
(iii) college application procedures.
(2) METHODS.The eligible entity shall demonstrate
in such plan, pursuant to regulations of the Secretary, the
methods by which the eligible entity will target services on
priority students described in subsection (c), if applicable.
(b) USES OF FUNDS.
(1) IN GENERAL.The Secretary shall, by regulation, estab-
lish criteria for determining whether comprehensive mentor-
ing, counseling, outreach, and supportive services programs
may be used to meet the requirements of subsection (a).
(2) PERMISSIBLE ACTIVITIES.Examples of activities that
meet the requirements of subsection (a) include the following:
(A) Providing eligible students in preschool through
grade 12 with a continuing system of mentoring and advis-
ing that
(1) is coordinated with the Federal and State com-
munity service initiatives; and
(ii) may include such support services as after
school and summer tutoring, assistance in obtaining
summer jobs, career mentoring, and academic counsel-
ing.
(B) Requiring each student to enter into an agreement
under which the student agrees to achieve certain aca-
demic milestones, such as completing a prescribed set of
courses and maintaining satisfactory progress described in
section 484(c), in exchange for receiving tuition assistance
for a period of time to be established by each eligible en-
tity.
101
HIGHER EDUCATION ACT OF 1965
Sec. 4040
(C) Activities designed to ensure secondary school com-
pletion and college enrollment of at-risk children, such as
identification of at-risk children, after school and summer
tutoring, assistance in obtaining summer jobs, academic
counseling, volunteer and parent involvement, providing
former or current scholarship recipients as mentor or peer
counselors, skills assessment, providing access to rigorous
core courses that reflect challenging academic standards,
personal counseling, family counseling and home visits,
staff development, and programs and activities described
in this subparagraph that are specially designed for stu-
dents of limited English proficiency.
(D) Summer programs for individuals who are in their
sophomore or junior years of secondary school or are plan-
ning to attend an institution of higher education in the
succeeding academic year that
(i) are carried out at an institution of higher edu-
cation that has programs of academic year supportive
services for disadvantaged students through projects
authorized under section 402D or through comparable
projects funded by the State or other sources;
(ii) provide for the participation of the individuals
who are eligible for assistance under section 402D or
who are eligible for comparable programs funded by
the State;
(iii)(I) provide summer instruction in remedial, de-
velopmental or supportive courses;
(II) provide such summer services as counseling,
tutoring, or orientation; and
(III) provide financial assistance to the individuals
to cover the individuals' summer costs for books, sup-
plies, living costs, and personal expenses; and
(iv) provide the individuals with financial assist-
ance during each academic year the individuals are
enrolled at the participating institution after the sum-
mer program.
(E) Requiring eligible students to meet other stand-
ards or requirements as the State determines necessary to
meet the purposes of this section.
(c) PRIORITY STUDENTS.For eligible entities not using a co-
hort approach, the eligible entity shall treat as priority students
any student in preschool through grade 12 who is eligible
(1) to be counted under section 1124(c) of the Elementary
and Secondary Education Act of 1965;
(2) for free or reduced price meals under the National
School Lunch Act; or
(3) for assistance pursuant to part A of title IV of the So-
cial Security Act.
(d) ALLOWABLE PROVIDERS.In the case of eligible entities de-
scribed in section 404A(c)(1), the activities required by this section
may be provided by service providers such as community-based or-
ganizations, schools, institutions of higher education, public and
private agencies, nonprofit and philanthropic organizations, busi-
nesses, institutions and agencies sponsoring programs authorized
115
Sec. 404E
HIGHER EDUCATION ACT OF 1965
108
under subpart 4, and other organizations the State deems appro-
priate.
SEC. 404E. 120 U.S.C. 1070a-25) SCHOLARSHIP COMPONENT.
(a) IN GENERAL.
(1) STATES.In order to receive a grant under this chap-
ter, an eligible entity described in section 404A(c)(1) shall es-
tablish or maintain a financial assistance program that awards
scholarships to students in accordance with the requirements
of this section. The Secretary shall encourage the eligible en-
tity to ensure that a scholarship provided pursuant to this sec-
tion is available to an eligible student for use at any institution
of higher education.
(2) PARTNERSHIPS.An eligible entity described in section
404A(c)(2) may award scholarships to eligible students in ac-
cordance with the requirements of this section.
(b) GRANT AMOUNTS.The maximum amount of a scholarship
that an eligible student shall be eligible to receive under this sec-
tion shall be established by the eligible entity. The minimum
amount of the scholarship for each fiscal year shall not be less than
the lesser of
(1) 75 percent of the average cost of attendance for an in-
State student, in a 4-year program of instruction, at public in-
stitutions of higher education in such State, as determined in
accordance with regulations prescribed by the Secretary; or
(2) the maximum Federal Pell Grant funded under section
401 for such fiscal year.
(c) RELATION TO OTHER ASSISTANCE.Scholarships provided
under this section shall not be considered for the purpose of award-
ing Federal grant assistance under this title, except that in no case
shall the total amount of student financial assistance awarded to
a student under this title exceed such student's total cost of attend-
an.ce.
(d) ELIGIBLE STUDENTS.A student eligible for assistance
under this section is a student who
(1) is less than 22 years old at time of first scholarship
award under this section;
(2) receives a secondary school diploma or its recognized
equivalent on or after January 1, 1993;
(3) is enrolled or accepted for enrollment in a program of
undergraduate instruction at an institution of higher education
that is located within the State's boundaries, except that, at
the State's option, an eligible entity may offer scholarship pro-
gram portability for recipients who attend institutions of high-
er education outside such State; and
(4) who participated in the early intervention component
required under section 404D.
(e) PRIORITY.The Secretary shall ensure that each eligible en-
tity places a priority on awarding scholarships to students who will
receive a Federal Pell Grant for the academic year for which the
scholarship is awarded under this section.
(f) SPECIAL RULE. An eligible entity may consider students
who have successfully participated in programs funded under chap-
ter 1 to have met the requirements of subsection (d)(4).
109
HIGHER EDUCATION ACT OF 1965
Sec. 406A
SEC. 404F. [20 U.S.C. 1070a-26] 21ST CENTURY SCHOLAR CERTIFI-
CATES.
(a) AUTHORITY.The Secretary, using funds
appropriated
under section 404H that do not exceed $200,000 for a fiscal year
(1) shall ensure that certificates, to be known as 21st Cen-
tury Scholar Certificates, are provided to all students partici-
pating in programs under this chapter; and
(2) may, as practicable, ensure that such certificates are
provided to all students in grades 6 through 12 who attend
schools at which at least 50 percent of the students enrolled
are eligible for a free or reduced price lunch under the Na-
tional School Lunch Act.
(b) INFORMATION REQUIRED.A 21st Century Scholar Certifi-
cate shall be personalized for each student and indicate the amount
of Federal financial aid for college which a student may be eligible
to receive.
SEC. 404G. [20 U.S.C. 1070a-271 EVALUATIONAND REPORT.
(a) EVALUATION.Each eligible entity receiving a grant under
this chapter shall biennially evaluate the activities assisted under
this chapter in accordance with the standards described in sub-
section (b) and shall submit to the Secretary a copy of such evalua-
tion. The evaluation shall permit service providers to track eligible
student progress during the period such students are participating
in the activities and shall be consistent with the standards devel-
oped by the Secretary pursuant to subsection (b).
(b) EVALUATION STANDARDS.The Secretary shall prescribe
standards for the evaluation described in subsection (a). Such
standards shall
(1) provide for input from eligible entities and service pro-
viders; and
(2) ensure that data protocols and procedures are consist-
ent and uniform.
(c) FEDERAL EVALUATION.In order to evaluate and improve
the impact of the activities assisted under this chapter, the Sec-
retary shall, from not more than 0.75 percent of the funds appro-
priated under section 404H for a fiscal year, award one or more
grants, contracts, or cooperative agreements to or with public and
private institutions and organizations, to enable the institutions
and organizations to evaluate the effectiveness of the program and,
as appropriate, disseminate the results of the evaluation.
(d) REPORT.The Secretary shall biennially report to Congress
regarding the activities assisted under this chapter and the evalua-
tions conducted pursuant to this section.
SEC. 404H. [20 U.S.C. 1070a-28] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this chap-
ter $200,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
CHAPTER 3ACADEMIC ACHIEVEMENT INCENTIVE
SCHOLARSHIPS
SEC. 406A. [20 U.S.C. 10'70a-31] SCHOLARSHIPS AUTHORIZED.
The Secretary is authorized to award scholarships to students
who graduate from secondary school after May 1, 2000, to enable
Sec. 406B
HIGHER EDUCATION ACT OF 1965
110
the students to pay the cost of attendance at an institution of high-
er education during the students first 2 academic years of under-
graduate education, if the students
(1) are eligible to receive Federal Pell Grants for the year
in which the scholarships are awarded; and
(2) demonstrate academic achievement by graduating in
the top 10 percent of their secondary school graduating class.
SEC. 406B. [20 U.S.C. 1070a-32] SCHOLARSHIP PROGRAM REQUIRE-
MENTS.
(a) AMOUNT OF AWARD.
(1) IN GENERAL.Except as provided in paragraph (2), the
amount of a scholarship awarded under this chapter for any
academic year shall be equal to 100 percent of the amount of
the Federal Pell Grant for which the recipient is eligible for the
academic year.
(2) ADJUSTMENT FOR INSUFFICIENT APPROPRIATIONS.If,
after the Secretary determines the total number of eligible ap-
plicants for an academic year in accordance with section 406C,
funds available to carry out this chapter for the academic year
are insufficient to fully fund all awards under this chapter for
the academic year, the amount of the scholarship paid to each
student under this chapter shall be reduced proportionately.
(b) ASSISTANCE NOT To EXCEED COST OF ATTENDANCE.A
scholarship awarded under this chapter to any student, in com-
bination with the Federal Pell Grant assistance and other student
financial assistance available to such student, may not exceed the
student's cost of attendance.
SEC. 406C. [20 U.S.C. 1070a-33] ELIGIBILITY OF SCHOLARS.
(a) PROCEDURES ESTABLISHED BY REGULATION.The Secretary
shall establish by regulation procedures for the determination of
eligibility of students for the scholarships awarded under this chap-
ter. Such procedures shall include measures to prevent any second-
ary school from certifying more than 10 percent of the school's
students for eligibility under this section.
(b) COORDINATION.In prescribing procedures under sub-
section (a), the Secretary shall ensure that the determination of eli-
gibility and the amount of the scholarship is determined in a time-
ly and accurate manner consistent with the requirements of section
482 and the submission of the financial aid form required by
section 483. For such purposes, the Secretary may provide that, for
the first academic year of a student's 2 academic years of eligibility
under this chapter, class rank may be determined prior to gradua-
tion from secondary school, at such time and in such manner as the
Secretary may specify in regulations prescribed under this chapter.
SEC. 406D. [20 U.S.C. 1070*-34] STUDENT REQUIREMENTS.
(a) IN GENERAL.Each eligible student desiring a scholarship
under this chapter shall submit an application to the Secretary at
such time, in such manner, and containing such information as the
Secretary may reasonably require.
(b) CONTINUING ELIGIBILITY.In order for a student to con-
tinue to be eligible to receive a scholarship under this chapter for
the second year of undergraduate education, the eligible student
shall maintain eligibility to receive a Federal Pell Grant for that
111
HIGHER EDUCATION ACT OF 1965
Sec. 4136
year, including fulfilling the requirements for satisfactory progress
described in section 484(c).
SEC. 407E.1 [20 U.S.C. 1070a-35] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this chap-
ter $200,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
[Chapters 4 through 8 repealed by section 405 of P.L. 105-2441
SUBPART 3FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY
GRANTS
SEC. 413A. [20 U.S.C. 1070b1 PURPOSE; APPROPRIATIONS AUTHORIZED.
(a) PURPOSE OF SUBPART.It is the purpose of this subpart to
provide, through institutions of higher education, supplemental
grants to assist in making available the benefits of postsecondary
education to qualified students who demonstrate financial need in
accordance with the provisions of part F of this title.
(b) AUTHORIZATION OF APPROPRIATIONS.(1) For the purpose of
enabling the Secretary to make payments to institutions of higher
education which have made agreements with the Secretary in ac-
cordance with section 413C(a), for use by such institutions for pay-
ments to undergraduate students of supplemental grants awarded
to them under this subpart, there are authorized to be appro-
priated $675,000,000 for fiscal year 1999 and such sums as may be
necessary for the 4 succeeding fiscal years.
(2) Sums appropriated pursuant to this subsection for any fis-
cal year shall be available for payments to institutions until the
end of the second fiscal year succeeding the fiscal year for which
such sums were appropriated.
SEC. 413B. [20 U.S.C. 10701)-1] AMOUNT AND DURATION OF GRANTS.
(a) AMOUNT OF GRANT.(1) Except as provided in paragraph
(3), from the funds received by it for such purpose under this sub-
part, an institution which awards a supplemental grant to a stu-
dent for an academic year under this subpart shall, for each year,
pay to that student an amount not to exceed the lesser of (A) the
amount determined by the institution, in accordance with the pro-
visions of part F of this title, to be needed by that student to enable
the student to pursue a course of study at the institution or in a
program of study abroad that is approved for credit by the institu-
tion at which the student is enrolled, or (B) $4,000.
(2) If the amount determined under paragraph (1) with respect
to a student for any academic year is less than $100, no payment
shall be made to that student for that year. For a student enrolled
for less than a full academic year, the minimum payment required
shall be reduced proportionately.
(3) For students participating in study abroad programs, the
institution shall consider all reasonable costs associated with such
study abroad when determining student eligibility. The amount of
grant to be awarded in such cases may exceed the maximum
amount of $4,000 by as much as $400 if reasonable study abroad
costs exceed the cost of attendance at the home institution.
'So in original (112 Stat. 1664). Probablyshould be redesignated as section "406E".
119
Sec. 413C
HIGHER EDUCATION ACT OF 1965
112
(b) PERIOD FOR RECEIPT OF GRANTS; CONTINUING ELIGI-
BILITY.(1) The period during which a student may receive supple-
mental grants shall be the period required for the completion of the
first undergraduate baccalaureate course of study being pursued by
that student.
(2) A supplemental grant awarded under this subpart shall en-
title the student (to whom it is awarded) to payments pursuant to
such grant only if the student meets the requirements of section
484, except as provided in section 413C(c).
(c) DISTRIBUTION OF GRANT DURING ACADEMIC YEAR.Nothing
in this section shall be construed to prohibit an institution from
making payments of varying amounts from a supplemental grant
to a student during an academic year to cover costs for a period
which are not applicable to other periods of such academic year.
SEC. 413C. [20 U.S.C. 1070b-2] AGREEMENTS WITH INSTITUTIONS; SE-
LECTION OF RECIPIENTS.
(a)
INSTITUTIONAL ELIGIBILITY.Assistance may be made
available under this subpart only to an institution which
(1) has, in accordance with section 487, an agreement with
the Secretary applicable to this subpart;
(2) agrees that the Federal share of awards under this sub-
part will not exceed 75 percent of such awards, except that the
Federal share may be exceeded if the Secretary determines,
pursuant to regulations establishing objective criteria for such
determinations, that a larger Federal share is required to fur-
ther the purpose of this subpart; and
except that the Federal share may be exceeded if the Secretary
determines, pursuant to regulations establishing objective cri-
teria for such determinations, that a larger Federal share is re-
quired to further the purpose of this subpart; and
(3) agrees that the non-Federal share of awards made
under this subpart shall be made from the institution's own re-
sources, including
(A) institutional grants and scholarships;
(B) tuition or fee waivers;
(C) State scholarships; and
(D) foundation or other charitable organization funds.
(b) ELIGIBILITY FOR SELECTION.Awards may be made under
this subpart only to a student who
(1) is an eligible student under section 484; and
(2) makes application at a time and in a manner consistent
with the requirements of the Secretary and that institution.
(c)
SELECTION OF INDIVIDUALS AND DETERMINATION OF
AMOUNT OF AWARDS.(1) From among individuals who are eligible
for supplemental grants for each fiscal year, the institution shall,
in accordance with the agreement under section 487, and within
the amount allocated to the institution for that purpose for that
year under section 413D, select individuals who are to be awarded
such grants and determine, in accordance with section 413B, the
amounts to be paid to them.
(2)(A) In carrying out paragraph (1) of this subsection, each in-
stitution of higher education shall, in the agreement made under
section 487, assure that the selection procedures
113
HIGHER EDUCATION ACT OF 1965
Sec. 413D
(i) will be designed to award supplemental grants under
this subpart, first, to students with exceptional need, and
(ii) will give a priority for supplemental grants under this
subpart to students who receive Pell Grants and meet the re-
quirements of section 484.
(B) For the purpose of subparagraph (A), the term "students
with exceptional need" means students with the lowest expected
family contributions at the institution.
(d) USE OF FUNDS FOR LESS-THAN-FULL-TIME STUDENTS.If
the institution's allocation under this subpart is directly or indi-
rectly based in part on the financial need demonstrated by students
who are independent students or attending the institution on less
than a full-time basis, then a reasonable proportion of the alloca-
tion shall be made available to such students.
(e) USE AND TRANSFER OF FUNDS FOR ADMINISTRATIVE Ex-
PENSES.An agreement entered into pursuant to this section shall
provide that funds granted to an institution of higher education
may be used only to make payments to students participating in
a grant program authorized under this subpart, except that an in-
stitution may use a portion of the sums allocated to it under this
subpart to meet administrative expenses in accordance with section
489 of this title.
SEC. 413D. [20 U.S.C. 10701)-3] ALLOCATION OF FUNDS.
(a) ALLOCATION BASED ON PREVIOUS ALLOCATION 1.(1) From
the amount appropriated pursuant to section 413A(b) for each fis-
cal year, the Secretary shall first allocate to each eligible institu-
tion an amount equal to 100 percent of the amount such institution
received under subsections (a) and (b) of this section for fiscal year
1999 (as such subsections were in effect with respect to allocations
for such fiscal year). 2
(2)(A) From the amount so appropriated, the Secretary shall
next allocate to each eligible institution that began participation in
the program under this subpart after fiscal year 1999 but is not a
first or second time participant, an amount equal to the greater
of
(i) $5,000; or
(ii) 90 percent of the amount received and used under this
subpart for the first year it participated in the program.
(B) From the amount so appropriated, the Secretary shall next
allocate to each eligible institution that began participation in the
program under this subpart after fiscal year 1999 and is a first or
second time participant, an amount equal to the greatest of
(i) $5,000;
(ii) an amount equal to (I) 90 percent of the amount re-
ceived and used under this subpart in the second preceding fis-
The allocation provisions of section 413D of the Higher Education Act of 1965 were amended
by section 406(c) of the Higher Education Amendments of 1998 (P.L. 105-244; 112 Stat. 1665).
Paragraph (3) of that section 406(c) contained the following effective date provision:
(3) EFFECTIVE DATE.The amendments made by this subsection shall apply with respect
to allocations of amounts appropriated pursuant to section 413A(b) of the Higher Education
Act of 1965 for fiscal year 2000 or any succeeding fiscal year.
2 Section 406(cX1XA) of the Higher Education Amendments of 1998 (P.L. 105-244; 112 Stat.
1665) amended subsection (aX1) by striking "received and used under this part for fiscal year
1985" and inserting "received under" through "such fiscal year)". The amendment, executed to
reflect the probable intent of Congress, probably should have been to strike "subpart" not "part".
BEST COPY AVAILABLE
121
Sec. 413D
HIGHER EDUCATION ACT OF 1965
114
cal year by eligible institutions offering comparable programs
of instruction, divided by (II) the number of students enrolled
at such comparable institutions in such fiscal year, multiplied
by (III) the number of students enrolled at the applicant insti-
tution in such fiscal year; or
(iii) 90 percent of the institution's allocation under this
part for the preceding fiscal year.
(C) Notwithstanding subparagraphs (A) and (B) of this para-
graph, the Secretary shall allocate to each eligible institution which
(i) was a first-time participant in the program in fiscal
year 2000 or any subsequent fiscal year, and
(ii) received a larger amount under this subsection in the
second year of participation,
an amount equal to 90 percent of the amount it received under this
subsection in its second year of participation.
(3)(A) If the amount appropriated for any fiscal year is less
than the amount required to be allocated to all institutions under
paragraph (1) of this subsection, then the amount of the allocation
to each such institution shall be ratably reduced.
(B) If the amount appropriated for any fiscal year is more than
the amount required to be allocated to all institutions under para-
graph (1) but less than the amount required to be allocated to all
institutions under paragraph (2), then
(i) the Secretary shall allot the amount required to be allo-
cated to all institutions under paragraph (1),: and
(ii) the amount of the allocation to each institution under
paragraph (2) shall be ratably reduced.
(C) If additional amounts are appropriated for any such fiscal
year, such reduced amounts shall be increased on the same basis
as they were reduced (until the amount allocated equals the
amount required to be allocated under paragraphs (1) and (2) of
this subsection).
(4XA) Notwithstanding any other provision of this section, the
Secretary may allocate an amount equal to not more than 10 per-
cent of the amount by which the amount appropriated in any fiscal
year to carry out this part exceeds $700,000,000 among eligible in-
stitutions described in subparagraph (B).
(B) In order to receive an allocation pursuant to subparagraph
(A) an institution shall be an eligible institution from which 50 per-
cent or more of the Pell Grant recipients attending such eligible in-
stitution graduate from or transfer to a 4-year institution of higher
education.
(b) ALLOCATION OF EXCESS BASED ON FAIR SHARE.-(1) From
the remainder of the amount appropriated pursuant to section
413A(b) for each year (after making the allocations required by
subsection (a)), the Secretary shall allocate to each eligible institu-
tion which has an excess eligible amount an amount which bears
the same ratio to such remainder as such excess eligible amount
bears to the sum of the excess eligible amounts of all such eligible
institutions (having such excess eligible amounts).
(2) For any eligible institution, the excess eligible amount is
the amount, if any, by which
(A)(i) the amount of that institution's need (as determined
under subsection (c)), divided by (ii) the sum of the need of all
115
HIGHER EDUCATION ACT OF 1965
Sec. 413D
institutions (as so determined), multiplied by (iii) the amount
appropriated pursuant to section 413A(b) of the fiscal year; ex-
ceeds
(B) the amount required to be allocated to that institution
under subsection (a).
(c) DETERMINATION OF INSTITUTION'S NEED.(1) The amount of
an institution's need is equal to
(A) the sum of the need of the institution's eligible under-
graduate students; minus.
(B) the sum of grant aid received by students under sub-
parts 1 and 3 of this part.
(2) To determine the need of an institution's eligible under-
graduate students, the Secretary shall
(A) establish various income categories for dependent and
independent undergraduate students;
(B) establish an expected family contribution for each in-
come category of dependent and independent undergraduate
students, determined on the basis of the average expected fam-
ily contribution (computed in accordance with part F of this
title) of a representative sample within each income category
for the second preceding fiscal year;
(C) compute 75 percent of the average cost of attendance
for all undergraduate students;
(D) multiply the number of eligible dependent students in
each income category by 75 percent of the average cost of at-
tendance for all undergraduate students determined under.
subparagraph (C), minus the expected family contribution de-
termined under subparagraph (B) for that income category, ex-
cept that the amount computed by such subtraction shall not
be less than zero;
(E) add the amounts determined under subparagraph (D)
for each income category of dependent students;
(F) multiply the number of eligible independent students
in each income category by 75 percent of the average cost of
attendance for all undergraduate students determined under
subparagraph (C), minus the expected family contribution de-
termined under subparagraph (B) for that income category, ex-
cept that the amount computed by such subtraction shall not
be less than zero;
(G) add the amounts determined under subparagraph (F)
for each income category of independent students; and
(H) add the amounts determined under subparagraphs (E)
and (G).
(3)(A) For purposes of paragraph (2), the term "average cost of
attendance" means the average of the attendance costs for under-
graduate students which shall include (i) tuition and fees deter-
mined in accordance with subparagraph (B), (ii) standard living ex-
penses determined in accordance with subparagraph (C), and (iii)
books and supplies determined in accordance with subparagraph
(D).
(B) The average undergraduate tuition and 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 tui-
123
SOC. 413E
HIGHER EDUCATION ACT OF 1965
116
tion and fees for the second year preceding the year for which it
is applying for an allocation, and (ii) the institution's enrollment for
such second preceding year.
(C) The standard living expense described in subparagraph
(A)(ii) is equal to 150 percent of the difference between the income
protection allowance for a family of five with one in college and the
income protection allowance for a family of six with one in college
for a single independent student.
(D) The allowance for books and supplies described in subpara-
graph (A)(iii) is equal to $450.
(d) REALLOCATION OF EXCESS ALLOCATIONS.(1) If an institu-
tion returns to the Secretary any portion of the sums allocated to
such institution under this section for any fiscal year the Secretary
shall, in accordance with regulations, reallocate such excess to
other institutions.
(2) If under paragraph (1) of this subsection an institution re-
turns more than 10 percent of its allocation, the institution's alloca-
tion for the next fiscal year shall be reduced by the amount re-
turned. The Secretary may waive this paragraph for a specific in-
stitution if the Secretary finds that enforcing this paragraph would
be contrary to the interest of the program.
(e) FILING DEADLINES.The Secretary shall, from time to time,
set dates before which institutions must file applications for alloca-
tions under this part.
SEC. 413E. [20 U.S.C. 1070b-4] CARRYOVER AND CARRYBACK AUTHOR-
ITY.
(a) CARRYOVER AUTHORITY.Of the sums made available to an
eligible institution under this subpart for a fiscal year, not more
than 10 percent may, at the discretion of the institution, remain
available for expenditure during the succeeding fiscal year to carry
out the program under this subpart.
(b) CARRYBACK AUTHORITY.
(1) IN GENERAL.Of the sums made available to an eligi-
ble institution under this subpart for a fiscal year, not more
than 10 percent may, at the discretion of the institution, be
used by the institution for expenditure for the fiscal year pre-
ceding the fiscal year for which the sums were appropriated.
(2) USE OF CARRIED-BACK FUNDS.An eligible institution
may make grants to students after the end of the academic
year, but prior to the beginning of the succeeding fiscal year,
from such succeeding fiscal year's appropriations.
SUBPART 4LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP
PROGRAM
SEC. 415A. [20 U.S.C. 1070c] PURPOSE; APPROPRIATIONS AUTHORIZED.
(a) PURPOSE OF SUBPART.It is the purpose of this subpart to
make incentive grants available to States to assist States in
(1) providing grants to
(A) eligible students attending institutions of higher
education or participating in programs of study abroad
that are approved for credit by institutions of higher edu-
cation at which such students are enrolled; and
111
HIGHER EDUCATION ACT OF 1965
Sec. 415B
(B) eligible students for campus-based community
service work-study; and
(2) carrying out the activities described in section 415F.
(b) AUTHORIZATION OF APPROPRIATIONS; AVAILABILITY.
(1) IN GENERAL.-----There are authorized to be appropriated
$105,000,000 for fiscal year 1999, and such sums as may be
necessary for each of the 4 succeeding fiscal years.
(2) RESERVATION.For any fiscal year for which the
amount appropriated under paragraph (1) exceeds $30,000,000,
the excess shall be available to carry out section 415E.
(3) AVAILABILITY.SUMS appropriated pursuant to the au-
thority of paragraph (1) for any fiscal year shall remain avail-
able for payments to States under this subpart until the end
of the fiscal year succeeding the fiscal year for which such
sums were appropriated.
SEC. 415B. [20 U.S.C. 1070c-1] ALLOTMENT AMONG STATES.
(a) ALLOTMENT BASED ON NUMBER OF ELIGIBLE STUDENTS IN
ATTENDANCE.(1) From the sums appropriated pursuant to section
415A(b)(1) and not reserved under section 415A(b)(2) for any fiscal
year, the Secretary shall allot to each State an amount which bears
the same ratio to such sums as the number of students who are
deemed eligible in such State for participation in the grant pro-
gram authorized by this subpart bears to the total number of such
students in all the States, except that no State shall receive less
than the State received for fiscal year 1979.
(2) For the purpose of this subsection, the number of students
who are deemed eligible in a State for participation in the grant
program authorized by this subpart, and the number of such stu-
dents in all the States, shall be determined for the most recent
year for which satisfactory data are available.
(b) REALLOTMENT.The amount of any State's allotment under
subsection (a) for any fiscal year which the Secretary determines
will not be required for such fiscal year for the leveraging edu-
cational assistance partnership program of that State shall be
available for reallotment from time to time, on such dates during
such year as the Secretary may fix, to other States in proportion
to the original allotments to such States under such part for such
year, but with such proportionate amount for any of such States
being reduced to the extent it exceeds the sum the Secretary esti-
mates such State needs and will be able to use for such year for
carrying out the State plan. The total of such reductions shall be
similarly reallotted among the States whose proportionate amounts
were not so reduced. Any amount reallotted to a State under this
part during a year from funds appropriated pursuant to section
415A(b)(1) shall be deemed part of its allotment under subsection
(a) for such year.
(c) ALLOTMENTS SUBJECT TO CONTINUING COMPLIANCE.The
Secretary shall make payments for continuing incentive grants
only to States which continue to meet the requirements of section
415C(b).
Sec. 415C
NIGHER EDUCATION ACT OF 1965
118
SEC. 415C. [20 U.S.C. 1070c-2] APPLICATIONS FOR LEVERAGING EDU-
CATIONAL ASSISTANCE PARTNERSHIP PROGRAMS.
(a) SUBMISSION AND CONTENTS OF APPLICATIONS.A State
which desires to obtain a payment under this subpart for any fiscal
year shall submit annually an application therefor through the
State agency administering its program under this subpart as of
July 1, 1985, unless the Governor of that State so designates, in
writing, a different agency to administer the program. The applica-
tion shall contain such information as may be required by, or pur-
suant to, regulation for the purpose of enabling the Secretary to
make the determinations required under this subpart.
(b) PAYMENT OF FEDERAL SHARE OF GRANTS MADE BY QUALI-
FIED PROGRAM.From a State's allotment under this subpart for
any fiscal year the Secretary is authorized to make payments to
such State for paying up to 50 percent of the amount of student
grants pursuant to a State program which
(1) is administered by a single State agency;
(2) provides that such grants will be in amounts not in ex-
cess of $5,000 per academic year (A) for attendance on a full-
time basis at an institution of higher education, and (B) for
campus-based community service work learning study jobs;
(3) provides that
(A) not more than 20 percent of the allotment to the
State for each fiscal year may be used for the purpose de-
scribed in paragraph (2)(B);
(B) grants for the campus-based community work
learning study jobs may be made only to students who are
otherwise eligible for assistance under this subpart; and
(C) grants for such jobs be made in accordance with
the provisions of section 443(b)(1);
(4) provides for the selection of recipients of such grants or
of such State work-study jobs on the basis of substantial finan-
cial need determined annually on the basis of criteria estab-
lished by the State and approved by the Secretary, except that
for the purpose of collecting data to make such determination
of financial need, no student or parent shall be charged a fee
that is payable to an entity other than such State;
(5) provides that, effective with respect to any academic
year beginning on or after October 1, 1978, all nonprofit insti-
tutions of higher education in the State are eligible to partici-
pate in the State program, except in any State in which par-
ticipation of nonprofit institutions of higher education is in vio-
lation of the constitution of the State or in any State in which
participation of nonprofit institutions of higher education is in
violation of a statute of the State which was enacted prior to
October 1, 1978;
(6) provides for the payment of the non-Federal portion of
such grants or of such work-study jobs from funds supplied by
such State which represent an additional expenditure for such
year by such State for grants or work-study jobs for students
attending institutions of higher education over the amount ex-
pended by such State for such grants or work-study jobs, if
any, during the second fiscal year preceding the fiscal year in
which such State initially received funds under this subpart;
126
119
HIGHER EDUCATION ACT OF 1965
Sec. 4150
(7) provides that if the State's allocation under this sub-
part is based in part on the financial need demonstrated by
students who are independent students or attending the insti-
tution less than full time, a reasonable proportion of the
State's allocation shall be made available to such students;
(8) provides for State expenditures under such program of
an amount not less than the average annual aggregate expend-
itures for the preceding three fiscal years or the average an-
nual expenditure per full-time equivalent student for such
years;
(9) provides (A) for such fiscal control and fund accounting
procedures as may be necessary to assure proper disbursement
of and accounting for Federal funds paid to the State agency
under this subpart, and (B) for the making of such reports, in
such form and containing such information, as may be reason-
ably necessary to enable the Secretary to perform his functions
under this subpart; and
(10) for any academic year beginning after June 30, 1987,
provides the non-Federal share of the amount of student
grants or work-study jobs under this subpart through a direct
appropriation of State funds for the program under this sub-
part.
(c) RESERVATION AND DISBURSEMENT OF ALLOTMENTS AND RE-
ALLOTMENTS.Upon his approval of any application for a payment
under this subpart, the Secretary shall reserve from the applicable
allotment (including any applicable reallotment) available therefor,
the amount of such payment, which (subject to the limits of such
allotment or reallotment) shall be equal to the Federal share of the
cost of the students' incentive grants or work-study jobs covered by
such application. The Secretary shall pay such reserved amount, in
advance or by way of reimbursement, and in such installments as
the Secretary may determine. The Secretary may amend the res-
ervation of any amount under this section, either upon approval of
an amendment of the application or upon revision of the estimated
cost of the student grants or work-study jobs with respect to which
such reservation was made. If the Secretary approves an upward
revision of such estimated cost, the Secretary may reserve the Fed-
eral share of the added cost only from the applicable allotment (or
reallotment) available at the time of such approval.
SEC. 415D. [20 U.S.C. 1070c-31 ADMINISTRATION OF STATE PROGRAMS;
JUDICIAL REVIEW.
(a) DISAPPROVAL OF APPLICATIONS;
SUSPENSION OF ELIGI-
BILITY.(1) The Secretary shall not finally disapprove any applica-
tion for a State program submitted under section 415C, or any
modification thereof, without first affording the State agency sub-
mitting the program reasonable notice and opportunity for a hear-
ing.
(2) Whenever the Secretary, after reasonable notice and oppor-
tunity for hearing to the State agency administering a State pro-
gram approved under this subpart, finds
(A) that the State program has been so changed that it no
longer complies with the provisions of this subpart, or
12 7
Sec. 415E
HIGHER EDUCATION ACT OF 1965
120
(B) that in the administration of the program there is a
failure to comply substantially with any such provisions,
the Secretary shall notify such State agency that the State will not
be regarded as eligible to participate in the program under this
subpart until he is satisfied that there is no longer any such failure
to comply.
(b) REVIEW OF DECISIONS.(1) If any State is dissatisfied with
the Secretary's final action with respect to the approval of its State
program submitted under this subpart or with his final action
under subsection (a), such State may appeal to the United States
court of appeals for the circuit in which such State is located. The
summons and notice of appeal may be served at any place in the
United States. The Commissioner shall forthwith certify and file in
the court the transcript of the proceedings and the record on which
he based his action.
(2) The findings of fact by the Secretary, if supported by sub-
stantial evidence, shall be conclusive; but the court, for good cause
shown, may remand the case to the Secretary to take further evi-
dence, and the Secretary may thereupon make new or modified
findings of fact and may modify his previous action, and shall cer-
tify to the court the transcript and record of further proceedings.
Such new or modified findings of fact shall likewise be conclusive
if supported by substantial evidence.
(3) The court shall have jurisdiction to affirm the action of the
Secretary or to set it aside, in-whole or in part. The judgment of
the court shall be subject to review by the Supreme Court of the
United States upon certiorari or certification as provided in title
28, United States Code, section 1254.
SEC. 415E. [20 U.S.C. 1070o -3a] SPECIAL LEVERAGING EDUCATIONAL
ASSISTANCE PARTNERSHIP PROGRAM.
(a) IN GENERAL.From amounts reserved under section
415A(b)(2) for each fiscal year, the Secretary shall
(1) make allotments among States in the same manner as
the Secretary makes allotments among States under section
415B; and
(2) award grants to States, from allotments under para-
graph (1), to enable the States to pay the Federal share of the
cost of the authorized activities described in subsection (c).
(b) APPLICABILITY RULE.The provisions of this subpart which
are not inconsistent with this section shall apply to the program
authorized by this section.
(c) AUTHORIZED ACTIVITIES.Each State receiving a grant
under this section may use the grant funds for
(1) increasing the dollar amount of grants awarded under
section 415B to eligible students who demonstrate financial
need;
(2) carrying out transition programs from secondary school
to postsecondary education for eligible students who dem-
onstrate financial need;
(3) carrying out a financial aid program for eligible stu-
dents who demonstrate financial need and wish to enter ca-
reers in information technology, or other fields of study deter-
mined by the State to be critical to the State's workforce needs;
128
121
HIGHER EDUCATION ACT OF 1965
Sec. 415F
(4) making funds available for community service work-
study activities for eligible students who demonstrate financial
need;
(5) creating a postsecondary scholarship program for eligi-
ble students who demonstrate financial need and wish to enter
teaching;
(6) creating a scholarship program for eligible students
who demonstrate financial need and wish to enter a program
of study leading to a degree in mathematics, computer science,
or engineering;
(7) carrying out early intervention programs, mentoring
programs, and career education programs for eligible students
who demonstrate financial need; and
(8) awarding merit or academic scholarships to eligible stu-
dents who demonstrate financial need.
(d) MAINTENANCE OF EFFORT REQUIREMENT.Each State re-
ceiving a grant under this section for a fiscal year shall provide the
Secretary an assurance that the aggregate amount expended per
student or the aggregate expenditures by the State, from funds de-
rived from non-Federal sources, for the authorized activities de-
scribed in subsection (c) for the preceding fiscal year were not less
than the amount expended per student or the aggregate expendi-
tures by the State for the activities for the second preceding fiscal
year.
(e) FEDERAL SHARE.The Federal share of the cost of the au-
thorized activities described in subsection (c) for any fiscal year
shall be not more than 33% percent.
SEC. 415F. [20 U.S.C. 107043-4] DEFINITION.
For the purpose of this subpart, the term "community service"
means services, including direct service, planning, and applied re-
search which are identified by an institution of higher education,
through formal or informal consultation with local nonprofit, gov-
ernmental, and community-based organizations, and which
(1) are designed to improve the quality of life for commu-
nity residents, particularly low-income individuals, or to solve
particular problems related to the needs of such residents, in-
cluding but not limited to, such fields as health care, child
care, education, literacy training, welfare, social services, pub-
lic safety, crime prevention and control, transportation, recre-
ation, housing and neighborhood improvement, rural develop-
ment, and community improvement; and
(2) provide participating students with work-learning op-
portunities related to their educational or vocational programs
or goals.
SUBPART 5SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES
ARE ENGAGED IN MIGRANT AND SEASONAL FARMWORK
SEC. 418A. [20 U.S.C. 1070d-2] MAINTENANCE AND EXPANSION OF EX-
ISTING PROGRAMS.
(a) PROGRAM AUTHORITY.The Secretary shall maintain and
expand existing secondary and postsecondary high school equiva-
lency program and college assistance migrant program projects lo-
cated at institutions of higher education or at private nonprofit or-
54-653 99 - 5
r.123
Sec. 418A
HIGHER EDUCATION ACT OF 1965
122
ganizations working in cooperation with institutions of higher edu-
cation.
(b) SERVICES PROVIDED BY HIGH SCHOOL EQUIVALENCY PRO-
GRAM.The services authorized by this subpart for the high school
equivalency program include
(1) recruitment services to reach persons
(A)(i) who are 16 years of age and over; or
(ii) who are beyond the age of compulsory school at-
tendance in the State in which such persons reside and are
not enrolled in school;
(B)(i) who themselves, or whose parents, have spent a
minimum of 75 days during the past 24 months in migrant
and seasonal farmwork; or
(ii) who are eligible to participate, or have participated
within the preceding 2 years, in programs under part C of
title I of the Elementary and Secondary Education Act of
1965 or section 402 of the Job Training Partnership Act 1
or section 167 of the Workforce Investment Act of 1998;
and (C) who lack a high school diploma or its equivalent;
(2) educational services which provide instruction designed
to help students obtain a general education diploma which
meets the guidelines established by the State in which the
project is located for high school equivalency;
(3) supportive services which include the following:
(A) personal, vocational, and academic counseling;
(B) placement services designed to place students in a
university, college, or junior college program, or in military
service or career positions; and
(C) health services;
(4) information concerning, and assistance in obtaining,
available student financial aid;
(5) weekly stipends for high school equivalency program
participants;
(6) housing for those enrolled in residential programs;
(7) exposure to cultural events, academic programs, and
other educational and cultural activities usually not available
to migrant youth; and
(8) other essential supportive services, as needed to ensure
the success of eligible students.
(C) SERVICES PROVIDED BY COLLEGE ASSISTANCE MIGRANT PRO-
GRAM.(1) Services authorized by this subpart for the college as-
sistance migrant program include
(A) outreach and recruitment services to reach persons
who themselves or whose parents have spent a minimum of 75
days during the past 24 months in migrant and seasonal farm-
work or who have participated or are eligible to participate, in
programs under part C of title I of the Elementary and Sec-
ondary Education Act of 1965 (or such part's predecessor au-
'Effective July 1, 2000, section 405(0(12)(A) of the Omnibus Consolidated and Emergency
Supplemental Appropriation Act, 1999 (P.L. 105-277; 112 Stat. 2681-421) amends subsections
(b)(1)(B)(ii) and (c)(1)(A) of section 418A by striking "section 402 of the Job Training Partnership
Act or".
130
123
HIGHER EDUCATION ACT OF 1965
Sec. 418A
thority) or section 402 of the Job Training Partnership Act 1 or
section 167 of the Workforce Investment Act of 1998, and who
meet the minimum qualifications for attendance at a college or
university;
(B) supportive and instructional services which include:
(i) personal, academic, and career counseling as an on-
going part of the program;
(ii) tutoring and academic skill building instruction
and assistance;
(iii) assistance with special admissions;
(iv) health services; and
(v) other services as necessary to assist students in
completing program requirements;
(C) assistance in obtaining student financial aid which in-
cludes, but is not limited to:
(i) stipends;
(ii) scholarships;
(iii) student travel;
(iv) career oriented work study;
(v) books and supplies;
(vi) tuition and fees;
(vii) room and board; and
(viii) other assistance necessary to assist students in
completing their first year of college;
(D) housing support for students living in institutional fa-
cilities and commuting students;
(E) exposure to cultural events, academic programs, and
other activities not usually available to migrant youth; and
(F) other support services as necessary to ensure the suc-
cess of eligible students.
(2) A recipient of a grant to operate a college assistance mi-
grant program under this subpart shall provide followup services
for migrant students after such students have completed their first
year of college, and shall not use more than 10 percent of such
grant for such followup services. Such followup services may
include
(A) monitoring and reporting the academic progress of stu-
dents who participated in the project during such student's
first year of college and during such student's subsequent
years in college; and
(B) referring such students to on- or off-campus providers
of counseling services, academic assistance, or financial aid.
(d) MANAGEMENT PLAN REQUIRED.Each project application
shall include a management plan which contains assurances that
the grant recipient will coordinate the project, to the extent fea-
sible, with other local, State, and Federal programs to maximize
the resources available for migrant students, and that staff shall
have a demonstrated knowledge and be sensitive to the unique
characteristics and needs of the migrant and seasonal farmworker
population, and provisions for:
'Effective July 1, 2000, section 405(0(12)(A) of the Omnibus Consolidated and Emergency
Supplemental Appropriation Act, 1999 (P.L. 105-277; 112 Stat. 2681-421) amends subsections
(b)(1)(B)(ii) and (c)(1)(A) of section 418A by striking "section 402 of the Job Training Partnership
Act or".
BEST COPY AVAILABLE
131
Sec. 419A
HIGHER EDUCATION ACT OF 1965
124
(1) staff in-service training;
(2) training and technical assistance;
(3) staff travel;
(4) student travel;
(5) interagency coordination; and
(6) an evaluation plan.
(e) FIVE-YEAR GRANT PERIOD; CONSIDERATION OF PRIOR EXPE-
RIENCE.Except under extraordinary circumstances, the Secretary
shall award grants for a 5-year period. For the purpose of making
grants under this subpart, the Secretary shall consider the prior
experience of service delivery under the particular project for which
funds are sought by each applicant. Such prior experience shall be
awarded the same level of consideration given this factor for appli-
cants for programs in accordance with section 402A(c)(1).
(f) MINIMUM ALLOCATIONS.The Secretary shall not allocateA
an amount less than
(1) $150,000 for each project under the high school equiva-
lency program, and
(2) $150,000 for each project under the college assistance
migrant program.
(g) DATA COLLECTION.The National Center for Education
Statistics shall collect postsecondary education data on migrant
students.
(h) AUTHORIZATION OF APPROPRIATIONS.(1) There are author-
ized to be appropriated for the high school equivalency program
$15,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(2) There are authorized to be appropriated for the college as-
sistance migrant program $5,000,000 for fiscal year 1999 and such
sums as may be necessary for each of the 4 succeeding fiscal years.
SUBPART 6ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM
SEC. 419A. [20 U.S.C. 10'70d-31] STATEMENT OF PURPOSE.
It is the purpose of this subpart to establish a Robert C. Byrd
Honors Scholarship Program to promote student excellence and
achievement and to recognize exceptionally able students who show
promise of continued excellence.
[Section 419B was repealed by P.L. 102-325, sec. 406(a), 106
Stat. 508.]
SEC. 419C. [20 U.S.C. 1070d-33] SCHOLARSHIPS AUTHORIZED.
(a) PROGRAM AUTHORITY. The Secretary is authorized, in ac-
cordance with the provisions of this subpart, to make grants to
States to enable the States to award scholarships to individuals
who have demonstrated outstanding academic achievement and
who show promise of continued academic achievement.
(b) PERIOD OF AWARD.Scholarships under this section shall
be awarded for a period of not less than 1 or more than 4 years
during the first 4 years of study at any institution of higher edu-
cation eligible to participate in any programs assisted under this
title. The State educational agency administering the program in
a State shall have discretion to determine the period of the award
132
it
125
HIGHER EDUCATION ACT OF 1965
Sec. 419D
(within the limits specified in the preceding sentence), except
that
(1) if the amount appropriated for this subpart for any fis-
cal year exceeds the amount appropriated for this subpart for
fiscal year 1993, the Secretary shall identify to each State edu-
cational agency the number of scholarships available to that
State under section 419D(b) that are attributable to such ex-
cess; 1
(2) the State educational agency shall award not less than
that number of scholarships for a period of 4 years.
(c) USE AT ANY INSTITUTION PERMITTED.A student awarded
a scholarship under this subpart may attend any institution of
higher education.
(d) BYRD SCHOLARS.Individuals awarded scholarships under
this subpart shall be known as "Byrd Scholars".
SEC. 419D. [20 U.S.C. 1070d-34] ALLOCATION AMONG STATES.
(a) ALLOCATION FORMULA.From the sums appropriated pur-
suant to the authority of section 419K for any fiscal year, the Sec-
retary shall allocate to each State that has an agreement under
section 419E an amount equal to $1,500 multiplied by the number
of scholarships determined by the Secretary to be available to such
State in accordance with subsection (b).
(b) NUMBER OF SCHOLARSHIPS AVAILABLE.The number of
scholarships to be made available in a State for any fiscal year
shall bear the same ratio to the number of scholarships made avail-
able to all States as the State's population ages 5 through 17 bears
to the population ages 5 through 17 in all the States, except that
not less than 10 scholarships shall be made available to any State.
(c) USE OF CENSUS DATA.For the purpose of this section, the
population ages 5 through 17 in a State and in all the States shall
be determined by the most recently available data, satisfactory to
the Secretary, from the Bureau of the Census.
(d) CONSOLIDATION BY INSULAR AREAS PROHIBITED.Notwith-
standing section 501 of Public Law 95-11342 (48 U.S.C. 1469a),
funds allocated under this part to an Insular Area described in that
section shall be deemed to be direct payments to classes of individ-
uals, and the Insular Area may not consolidate such funds with
other funds received by the Insular Area from any department or
agency of the United States Government.
(e) FAS ELIGIBILITY.
(1) FISCAL YEARS 2000 THROUGH 2004.Notwithstanding
any other provision of this subpart, in the case of students
from the Freely Associated States who may be selected to re-
ceive a scholarship under this subpart for the first time for any
of the fiscal years 2000 through 2004
(A) there shall be 10 scholarships in the aggregate
awarded to such students for each of the fiscal years 2000
through 2004; and
1So in law (107 Stat. 2460). Probably should end with "and".
2 So in original (107 Stat. 2460). Probably should be "section 501 of Public Law 95-134".
13J
Sec. 419E
HIGHER EDUCATION ACT OF 1965
126
(B) the Pacific Regional Educational Laboratory shall
administer the program under this subpart in the case of
scholarships for students in the Freely Associated States.
(2) TERMINATION OF ELIGIBILITY.A student from the
Freely Associated States shall not be eligible to receive a schol-
arship under this subpart after September 30, 2004.
SEC. 419E. [20 U.S.C. 1070d-35] AGREEMENTS.
The Secretary shall enter into an agreement with each State
desiring to participate in the scholarship program authorized by
this subpart. Each such agreement shall include provisions de-
signed to assure that
(1) the State educational agency will administer the schol-
arship program authorized by this subpart in the State;
(2) the State educational agency will comply with the eligi-
bility and selection provisions of this subpart;
(3) the State educational agency will conduct outreach ac-
tivities to publicize the availability of scholarships under this
subpart to all eligible students in the State, with particular
emphasis on activities designed to assure that students from
low-income and moderate-income families have access to the
information on the opportunity for full participation in the
scholarship program authorized by this subpart; and
(4) the State educational agency will pay to each individ-
ual in the State who is awarded a scholarship under this sub-
part $1,500.
SEC. 419F. [20 U.S.C. 1070d -36] ELIGIBILITY OF SCHOLARS.
(a) HIGH SCHOOL GRADUATION OR EQUIVALENT AND ADMISSION
TO INSTITUTION REQUIRED.Each student awarded a scholarship
under this subpart shall be a graduate of a public or private sec-
ondary school or have the equivalent of a certificate of graduation
as recognized by the State in which the student resides and must
have been admitted for enrollment at an institution of higher edu-
cation.
(b) SELECTION BASED ON PROMISE OF ACADEMIC ACHIEVE-
MENT.Each student awarded a scholarship under this subpart
must demonstrate outstanding academic achievement and show
promise of continued academic achievement.
SEC. 419G. [20 U.S.C. 1070d -37] SELECTION OF SCHOLARS.
(a) ESTABLISHMENT OF CRITERIA.The State educational agen-
cy is authorized to establish the criteria for the selection of scholars
under this subpart.
(b) ADOPTION OF PROCEDURES.The State educational agency
shall adopt selection procedures designed to ensure an equitable
geographic distribution of awards within the State (and in the case
of the Federated States of Micronesia, the Republic of the Marshall
Islands, the Virgin Islands, American Samoa, the Commonwealth
of the Northern Mariana Islands, Guam, or Palau (until such time
as the Compact of Free Association is ratified), not to exceed 10 in-
dividuals will be selected from such entities).
(c) CONSULTATION REQUIREMENT.In carrying out its respon-
sibilities under subsections (a) and (b), the State educational agen-
121
HIGHER EDUCATION ACT OF 1965
Sec. 419N
cy shall consult with school administrators, school boards, teachers,
counselors, and parents.
(d) TIMING OF SELECTION.The selection process shall be com-
pleted, and the awards made, prior to the end of each secondary
school academic year.
SEC. 41911. [20 U.S.C. 1070d-38] STIPENDS AND SCHOLARSHIP CONDI-
TIONS.
(a) AMOUNT OF AWARD.Each student awarded a scholarship
under this subpart shall receive a stipend of $1,500 for the aca-
demic year of study for which the scholarship is awarded, except
that in no case shall the total amount of financial aid awarded to
such student exceed such student's total cost-of-attendance.
(b) USE OF AWARD.The State educational agency shall estab-
lish procedures to assure that a scholar awarded a scholarship
under this subpart pursues a course of study at an institution of
higher education.
SEC. 419J. [20 U.S.C. 1070d -40]' CONSTRUCTION OF NEEDS PROW-
SIONS.
Except as provided in section 471, nothing in this subpart, or
any other Act, shall be construed to permit the receipt of a scholar-
ship under this subpart to be counted for any needs test in connec-
tion with the awarding of any grant or the making of any loan
under this Act or any other provision of Federal law relating to
educational assistance.
SEC. 419K. [20 U.S.C. 1070d-411 AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for this subpart
$45,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
Subpart 7Child Care Access Means Parents in
School
SEC. 419N. [20 U.S.C. 10'70e] CHILD CARE ACCESS MEANS PARENTS IN
SCHOOL.
(a) PURPOSE.The purpose of this section is to support the
participation of low-income parents in postsecondary education
through the provision of campus-based child care services.
(b) PROGRAM AUTHORIZED.
(1) AUTHORITY.The Secretary 'may award grants to insti-
tutions of higher education to assist the institutions in provid-
ing campus-based child care services to low-income students.
(2) AMOUNT OF GRANTS.
(A) IN GENERAL.The amount of a grant awarded to
an institution of higher education under this section for a
fiscal year shall not exceed 1 percent of the total amount
of all Federal Pell Grant funds awarded to students en-
rolled at the institution of higher education for the preced-
ing fiscal year.
(B) MINIMUM.A grant under, this section shall be
awarded in an amount that isnot less than $10;000.
'Section 4191 was repealed by P.L. 102-325, sec. 406(g)(1), 106 Stat. 509.
Sec. 419N
HIGHER EDUCATION ACT OF 1965
128
(3) DURATION; RENEWAL; AND PAYMENTS.
(A) DURATION.The Secretary shall award a grant
under this section for a period of 4 years.
(B) PAYMENTS.Subject to subsection (e)(2), the Sec-
retary shall make annual grant payments under this sec-
tion.
(4) ELIGIBLE INSTITUTIONS.An institution of higher edu-
cation shall be eligible to receive a grant under this section for
a fiscal year if the total amount of all Federal Pell Grant funds
awarded to students enrolled at the institution of higher edu-
cation for the preceding fiscal year equals or exceeds $350,000.
(5) USE OF FUNDS.Grant funds under this section shall
be used by an institution of higher education to support or es-
tablish a campus-based child care program primarily serving
the needs of low-income students enrolled at the institution of
higher education. Grant funds under this section may be used
to provide before and after school services to the extent nec-
essary to enable low-income students enrolled at the institu-
tion of higher education to pursue postsecondary education.
(6) CONSTRUCTION.Nothing in this section shall be con-
strued to prohibit an institution of higher education that re-
ceives grant funds under this section from serving the child
care needs of the community served by the institution.
(7) DEFINITION OF LOW-INCOME STUDENT.For the purpose
of this section, the term "low- income student" means a student
who is eligible to receive a Federal Pell Grant for the fiscal
year for which the determination is made.
(c) APPLICATIONS.An institution of higher education desiring
a grant under this section shall submit an application to the Sec-
retary at such time, in such manner, and accompanied by such in-
formation as the Secretary may require. Each application shall
(1) demonstrate that the institution is an eligible institu-
tion described in subsection (b)(4);
(2) specify the amount of funds requested;
(3) demonstrate the need of low-income students at the in-
stitution for campus-based child care services by including in
the application
(A) information regarding student demographics;
(B) an assessment of child care capacity on or near
campus;
(C) information regarding the existence of waiting lists
for existing child care;
(D) information regarding additional needs created by
concentrations of poverty or by geographic isolation; and
(E) other relevant data;
(4) contain a description of the activities to be assisted, in-
cluding whether the grant funds will support an existing child
care program or a new child care program;
(5) identify the resources, including technical expertise and
financial support, the institution will draw upon to support the
child care program and the participation of low-income stu-
dents in the program, such as accessing social services funding,
using student activity fees to help pay the costs of child care,
using resources obtained by meeting the needs of parents who
129
HIGHER EDUCATION ACT OF 1965
Sec. 419N
are not low-income students, and accessing foundation, cor-
porate or other institutional support, and demonstrate that the
use of the resources will not result in increases in student tui-
tion;
(6) contain an assurance that the institution will meet the
child care needs of low-income students through the provision
of services, or through a contract for the provision of services;
(7) describe the extent to which the child care program will
coordinate with the institution's early childhood education cur-
riculum, to the extent the curriculum is available, to meet the
needs of the students in the early childhood education program
at the institution, and the needs of the parents and children
participating in the child care program assisted under this sec-
tion;
(8) in the case of an institution seeking assistance for a
new child care program
(A) provide a timeline, covering the period from receipt
of the grant through the provision of the child care serv-
ices, delineating the specific steps the institution will take
to achieve the goal of providing low-income students with
child care services;
(B) specify any measures the institution will take to
assist low-income students with child care during the pe-
riod before the institution provides child care services; and
(C) include a plan for identifying resources needed for
the child care services, including space in which to provide
child care services, and technical assistance ifnecessary;
(9) contain an assurance that any child care facility as-
sisted under this section will meet the applicable State or local
government licensing, certification, approval, or registration
requirements; and
(10) contain a plan for any child care facility assisted
under this section to become accredited within 3 years of the
date the institution first receives assistance under this section.
(d) PRIORITY.The Secretary shall give priority in awarding
grants under this section to institutions of higher education that
submit applications describing programs that
(1) leverage significant local or institutional resources, in-
cluding in-kind contributions, to support the activities assisted
under this section; and
(2) utilize a sliding fee scale for child care services pro-
vided under this section in order to support a high number of
low-income parents pursuing postsecondary education at the
institution.
(e) REPORTING REQUIREMENTS; CONTINUING ELIGIBILITY.
(1) REPORTING REQUIREMENTS.
(A) REPORTS.Each institution of higher education re-
ceiving a grant under this section shall report to the Sec-
retary 18 months, and 36 months, after receiving the first
grant payment under this section.
(B) CONTENTS.The report shall include
(i) data on the population served under this
section;
137
Sec. 420D
HIGHER EDUCATION ACT OF 1965
130
(ii) information on campus and community re-
sources and funding used to help low-income students
access child care services;
(iii) information on progress made toward accredi-
tation of any child care facility; and
(iv) information on the impact of the grant on the
quality, availability, and affordability of campus-based
child care services.
(2) CONTINUING ELIGIBILITY.The Secretary shall make
the third annual grant payment under this section to an insti-
tution of higher education only if the Secretary determines, on
the basis of the 18-month report submitted under paragraph
(1), that the institution is making a good faith effort to ensure
that low-income students at the institution have access to af-
fordable, quality child care services.
(f) CONSTRUCTION.No funds provided under this section shall
be used for construction, except for minor renovation or repair to
meet applicable State or local health or safety requirements.
(g) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this section $45,000,000 for fiscal
year 1999 and such sums as may be necessary for each of the 4
succeeding fiscal years.
Subpart 8Learning Anytime Anywhere
Partnerships
SEC. 420D. [20 U.S.C. 1070f1 FINDINGS.
Congress makes the following findings:
(1) The nature of postsecondary education delivery is
changing, and new technology and other related innovations
can provide promising education opportunities for individuals
who are currently not being served, particularly for individuals
without easy access to traditional campus-based postsecondary
education or for whom traditional courses are a poor match
with education or training needs.
(2) Individuals, including individuals seeking basic or tech-
nical skills or their first postsecondary experience, individuals
with disabilities, dislocated workers, individuals making the
transition from welfare-to-work, and individuals who are lim-
ited by time and place constraints can benefit from nontradi-
tional, noncampus-based postsecondary education opportunities
and appropriate support services.
(3) The need for high-quality, nontraditional, technology-
based education opportunities is great, as is the need for skill
competency credentials and other measures of educational
progress and attainment that are valid and widely accepted,
but neither need is likely to be adequately addressed by the
uncoordinated efforts of agencies and institutions acting inde-
pendently and without assistance.
(4) Partnerships, consisting of institutions of higher edu-
cation, community organizations, or other public or private
agencies or organizations, can coordinate and combine institu-
tional resources
131
HIGHER EDUCATION ACT OF 1965
Sec. 420G
(A) to provide the needed variety of education options
to students; and
(B) to develop new means of ensuring accountability
and quality for innovative education methods.
SEC. 420E. [20 U.S.C. 1070f-1] PURPOSE; PROGRAM AUTHORIZED.
(a) PURPOSE.It is the purpose of this subpart to enhance the
delivery, quality, and accountability of postsecondary education and
career-oriented lifelong learning through technology and related in-
novations.
(b) PROGRAM AUTHORIZED.
(1) GRANTS.
(A) IN GENERAL.The Secretary may, from funds ap-
propriated under section 420J make grants to, or enter
into contracts or cooperative agreements with, eligible
partnerships to carry out the authorized activities de-
scribed in section 420G.
(B) DURATION.Grants under this subpart shall be
awarded for periods that do not exceed 5 years.
(2) DEFINITION OF ELIGIBLE PARTNERSHIP.For purposes of
this subpart, the term "eligible partnership" means a partner-
ship consisting of 2 or more independent agencies, organiza-
tions, or institutions. The agencies, organizations, or institu-
tions may include institutions of higher education, community
organizations, and other public and private institutions, agen-
cies, and organizations.
SEC. 420F. [20 U.S.C. 1070f-2] APPLICATION.
(a) REQUIREMENT.An eligible partnership desiring to receive
a grant under this subpart shall submit an application to the Sec-
retary, in such form and containing such information, as the Sec-
retary may require.
(b) CONTENTS.Each application shall include
(1) the name of each partner and a description of the re-
sponsibilities of the partner, including the designation of a
nonprofit organization as the fiscal agent for the partnership;
(2) a description of the need for the project, including a de-
scription of how the project will build on any existing services
and activities;
(3) a listing of human, financial (other than funds provided
under this subpart), and other resources that each member of
the partnership will contribute to the partnership, and a de-
scription of the efforts each member of the partnership will
make in seeking additional resources; and
(4) a description of how the project will operate, including
how funds awarded under this subpart will be used to meet the
purpose of this subpart.
SEC. 420G. [20 U.S.C. 1070f-3] AUTHORIZED ACTIVITIES.
Funds awarded to an eligible partnership under this subpart
shall be used to
(1) develop and assess model distance learning programs
or innovative educational software;
(2) develop methodologies for the identification and meas-
urement of skill competencies;
139
Sec. 420H
HIGHER EDUCATION ACT OF 1965
132
(3) develop and assess innovative student support services;
or
(4) support other activities that are consistent with the
purpose of this subpart.
SEC. 420H. [20 U.S.C. 1070f-4] MATCHING REQUIREMENT.
Federal funds shall provide not more than 50 percent of the
cost of a project under this subpart. The non-Federal share of
project costs may be in cash or in kind, fairly evaluated, including
services, supplies, or equipment.
SEC. 4201. 120 U.S.C. 1070f-5] PEER REVIEW.
The Secretary shall use a peer review process to review appli-
cations under this subpart and to make recommendations for fund-
ing under this subpart to the Secretary.
SEC. 420J. [20 U.S.C. 1070f-6] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this sub-
part $10,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
PART BFEDERAL FAMILY EDUCATION LOAN PROGRAM
SEC. 421. [20 U.S.C. 1071] STATEMENT OF PURPOSE; NONDISCRIMINA-
TION; AND APPROPRIATIONS AUTHORIZED.
(a) PURPOSE; DISCRIMINATION PROHIBITED.
(1) PURPOSE.The purpose of this part is to enable the
Secretary
(A) to encourage States and nonprofit private institu-
tions and organizations to establish adequate loan insur-
ance programs for students in eligible institutions (as de-
fined in section 435),
(B) to provide a Federal program of student loan in-
surance for students or lenders who do not have reason-
able access to a State or private nonprofit program of stu-
dent loan insurance covered by an agreement under sec-
tion 428(b),
(C) to pay a portion of the interest on loans to quali-
fied students which are insured under this part, and
(D) to guarantee a portion of each loan insured
under a program of a State or of a nonprofit private insti-
tution or organization which meets the requirements of
section 428(a)(1)(B).
(2) DISCRIMINATION BY CREDITORS PROHIBITED.No agen-
cy, organization, institution, bank, credit union, corporation, or
other lender who regularly extends, renews, or continues credit
or provides insurance under this part shall exclude from re-
ceipt or deny the benefits of, or discriminate against any bor-
rower or applicant in obtaining, such credit or insurance on the
basis of race, national origin, religion, sex, marital status, age,
or handicapped status.
(b) AUTHORIZATION OF APPROPRIATIONS.For the purpose of
carrying out this part
(1) there are authorized to be appropriated to the student
loan insurance fund (established by section 431) (A) the sum
of $1,000,000, and (B) such further sums, if any, as may be-
140
133
HIGHER EDUCATION ACT OF 1965
Sec. 422
come necessary for the adequacy of the student loan insurance
fund,
(2) there are authorized to be appropriated, for payments
under section 428 with respect to interest on student loans and
for payments under section 437, such sums for the fiscal year
ending June 30, 1966, and succeeding fiscal years, as may be
required therefor,
(3) there is authorized to be appropriated the sum of
$17,500,000 for making advances pursuant to section 422 for
the reserve funds of State and nonprofit private student loan
insurance programs,
(4) there are authorized to be appropriated (A) the sum of
$12,500,000 for making advances after June 30, 1968, pursu-
ant to sections 422 (a) and (b), and (B) such sums as may be
necessary for making advances pursuant to section 422(c), for
the reserve funds of State and nonprofit private student loan
insurance programs, and
(5) there are authorized to be appropriated such sums as
may be necessary for the purpose of paying an administrative
cost allowance in accordance with section 428(f) to guaranty
agencies.
Sums appropriated under paragraphs (1), (2), (4), and (5) of this
subsection shall remain available until expended. 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.
(c) DESIGNATION.The program established under this part
shall be referred to as the "Robert T. Stafford Federal Student
Loan Program". Loans made pursuant to sections 427 and 428
shall be known as "Federal Stafford Loans".
SEC. 422. [20 U.S.C. 1072] ADVANCES FOR RESERVE FUNDS OF STATE
AND NONPROFIT PRIVATE LOAN INSURANCE PROGRAMS.
(a) PURPOSE OF AND AUTHORITY FOR ADVANCES TO RESERVE
FUNDS.
(1) PURPOSE; ELIGIBLE RECIPIENTS.From sums appro-
priated pursuant to paragraphs (3) and (4)(A) of section 421(b),
the Secretary is authorized to make advances to any State
with which the Secretary has made an agreement pursuant to
section 428(b) for the purpose of helping to establish or
strengthen the reserve fund of the student loan insurance pro-
gram covered by that agreement. If for any fiscal year a State
does not have a student loan insurance program covered by an
agreement made pursuant to section 428(b), and the Secretary
determines after consultation with the chief executive officer of
that State that there is no reasonable likelihood that the State
will have such a student loan insurance program for such year,
the Secretary may make advances for such year for the same
purpose to one or more nonprofit private institutions or organi-
zations with which the Secretary has made an agreement pur-
suant to section 428(b) in order to enable students in the State
to participate in a program of student loan insurance covered
by such an agreement. The Secretary may make advances
under this subsection both to a State program (with which he
has such an agreement) and to one or more nonprofit private
I41
Sec. 422
HIGHER EDUCATION ACT OF 1965
134
institutions or organizations (with which he has such an agree-
ment) in that State if he determines that such advances are
necessary in order that students in each eligible institution
have access through such institution to a student loan insur-
ance program which meets the requirements of section
428(b)( 1).
(2) MATCHING REQUIREMENT.No advance shall be made
after June 30, 1968, unless matched by an equal amount from
non-Federal sources. Such equal amount may include the
unencumbered non-Federal portion of a reserve fund. As used
in the preceding sentence, the term "unencumbered non-Fed-
eral portion" means the amount (determined as of the time im-
mediately preceding the making of the advance) of the reserve
fund less the greater of
(A) the sum of
(i) advances made under this section prior to July
1, 1968;
(ii) an amount equal to twice the amount of ad-
vances made under this section after June 30, 1968,
and before the advance for purposes of which the de-
termination is made; and
(iii) the proceeds of earnings on advances made
under this section; or
(B) any amount which is required to be maintained in
such fund pursuant to State law or regulation, or by agree-
ment with lenders, as a reserve against the insurance of
outstanding loans.
Except as provided in section
428(c)(9)(E) or
(F),
such
unencumbered non-Federal portion shall not be subject to
recall, repayment, or recovery by the Secretary.
(3) TERMS AND CONDITIONS; REPAYMENT.Advances pursu-
ant to this subsection shall be upon such terms and conditions
(including conditions relating to the time or times of payment)
consistent with the requirements of section 428(b) as the Sec-
retary determines will best carry out the purpose of this sec-
tion. Advances made by the Secretary under this subsection
shall be repaid within such period as the Secretary may deem
to be appropriate in each case in the light of the maturity and
solvency of the reserve fund for which the advance was made.
(b) LIMITATIONS ON TOTAL ADVANCES.
(1) IN GENERAL.The total of the advances from the sums
appropriated pursuant to paragraph (4)(A) of section 421(b) to
nonprofit private institutions and organizations for the benefit
of students in any State and to such State may not exceed an
amount which bears the same ratio to such sums as the popu-
lation of such State aged 18 to 22, inclusive, bears to the popu-
lation of all the States aged 18 to 22 inclusive, but such ad-
vances may otherwise be in such amounts as the Secretary de-
termines will best achieve the purposes for which they are
made. The amount available for advances to any State shall
not be less than $25,000 and any additional funds needed to
meet this requirement shall be derived by proportionately re-
ducing (but not below $25,000) the amount available for ad-
vances to each of the remaining States.
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135
HIGHER EDUCATION ACT OF 1965
Sec. 422
(2) CALCULATION OF POPULATION.For the purpose of this
subsection, the population aged 18 to 22, inclusive, of each
State and of all the States shall be determined by the Sec-
retary on the basis of the most recent satisfactory data avail-
able to him.
(C) ADVANCES FOR INSURANCE OBLIGATIONS.
(1) USE FOR PAYMENT OF INSURANCE OBLIGATIONS.From
sums appropriated pursuant to section 421(b)(4)(B), the Sec-
retary shall advance to each State which has an agreement
with the Secretary under section 428(c) with respect to a stu-
dent loan insurance program, an amount determined in accord-
ance with paragraph (2) of this subsection to be used for the
purpose of making payments under the State's insurance obli-
gations under such program.
(2) AMOUNT OF ADVANCES.(A) Except as provided in sub-
paragraph (B), the amount to be advanced to each such State
shall be equal to 10 percent of the principal amount of loans
made by lenders and insured by such agency on those loans on
which the first payment of principal became due during the fis-
cal year immediately preceding the fiscal year in which the ad-
vance is made.
(B) The amount of any advance determined according to
subparagraph (A) of this paragraph shall be reduced by
(i) the amount of any advance or advances made to
such State pursuant to this subsection at an earlier date;
and
(ii) the amount of the unspent balance of the advances
made to a State pursuant to subsection (a).
Notwithstanding subparagraph (A) and the preceding sentence
of this subparagraph, but subject to subparagraph (D) of this
paragraph, the amount of any advance to a State described in
paragraph (5)(A) for the first year of its eligibility under such
paragraph, and the amount of any advance to any State de-
scribed in paragraph (5)(B) for each year of its eligibility under
such paragraph; shall not be less than $50,000.
(C) For the purpose of subparagraph (B), the unspent bal-
ance of the advances made, to a State pursuant to subsection
(a) shall be that portion of the balance of the State's reserve
fund (remaining at the time of the State's first request for an
advance pursuant to this subsection) which bears the same
ratio to such balance as the Federal advances made and .not re-
turned by such State, pursuant to subsection (a), bears to the
total of all past contributions to such reserve funds from all
sources (other than interest on investment of any portion of the
reserve fund) contributed since the date such State executed
an agreement pursuant to section 428(b).
(D) If the sums appropriated for any fiscal year for paying
the amounts determined under subparagraphs (A) and (B) are
not sufficient to pay such amounts in full, then such amounts
shall be reduced
(i) by ratably reducing that portion of the amount allo-
cated to each State which exceeds $50,000; and
(ii) if further reduction is required, by equally reduc-
ing the $50,000 minimum allocation of each State.
Sec. 422
HIGHER EDUCATION ACT OF 1965
136
If additional sums become available for paying such amounts
for any fiscal year during which the preceding sentence has
been applied, such reduced amounts shall be increased on the
same basis as they were reduced.
(3) USE OF EARNINGS FOR INSURANCE OBLIGATIONS.The
earnings, if any, on any investments of advances received pur-
suant to this subsection must be used for making payments
under the State's insurance obligations.
(4) REPAYMENT OF ADVANCES.Advances made by the Sec-
retary under this subsection shall, subject to subsection (d), be
repaid within such period as the Secretary may deem to be ap-
propriate and shall be deposited in the fund established by
section 431.
(5) LIMITATION ON NUMBER OF ADVANCES.Except as pro-
vided in paragraph (7), advances pursuant to this subsection
shall be made to a State
(A) in the case of a State which is actively carrying on
a program under an agreement pursuant to section 428(b)
which was entered into before October 12, 1976, upon such
date as such State may request, but not before October 1,
1977, and on the same day of each of the 2 succeeding
calendar years after the date so requested; and
(B) in the case of a State which enters into an agree-
ment pursuant to section 428(b) on or after October 12,
1976, or which is not actively carrying on a program under
an agreement pursuant to such section on such date, upon
such date as such State may request, but not before Octo-
ber 1, 1977, and on the same day of each of the 4 succeed-
ing calendar years after the date so requested of the
advance.
(6) PAYMENT OF ADVANCES WHERE NO STATE PROGRAM.
(A) If for any fiscal year a State does not have a student loan
insurance program covered by an agreement made pursuant to
section 428(b), and the Secretary determines after consultation
with the chief executive officer of that State that there is no
reasonable likelihood that the State will have such a student
loan insurance program for such year, the Secretary may make
advances pursuant to this subsection for such year for the
same purpose to one or more nonprofit private institutions or
organizations with which he has made an agreement pursuant
to subsection (c), as well as subsection (b), of section 428 and
subparagraph (B) of this paragraph in order to enable students
in that State to participate in a program of student loan insur-
ance covered by such agreements.
(B) The Secretary may enter into an agreement with a pri-
vate nonprofit institution or organization for the purpose of
this paragraph under which such institution or organization
(i) agrees to establish within such State at least one
office with sufficient staff to handle written, electronic, and
telephone inquiries from students, eligible lenders, and
other persons in the State, to encourage maximum com-
mercial lender participation within the State, and to con-
duct periodic visits to at least the major eligible lenders
within the State;
144
131
HIGHER EDUCATION ACT OF 1965
Sec. 422
(ii) agrees that its insurance will not be denied any
student because of his or her choice of eligible institutions;
and
(iii) certifies that it is neither an eligible institution,
nor has any substantial affiliation with an eligible institu-
tion.
(7) EMERGENCY ADVANCES.The Secretary is authorized to
make advances, on terms and conditions satisfactory to the
Secretary; to a guaranty agency
(A) in accordance with section 428(j), in order to en-
sure that the guaranty agency shall make loans as the
lender-of-last-resort; or
(B) if the Secretary is seeking to terminate the guar-
anty agency's agreement, or assuming the guaranty agen-
cy's functions, in accordance with section 428(c)(9)(F)(v), in
order to assist the agency in meeting its immediate cash
needs, ensure the uninterrupted payment of claims, or en-
sure that the guaranty agency shall make loans as de-
scribed in subparagraph (A).
(d) RECOVERY OF ADVANCES DURING FISCAL YEARS 1988 AND
1989.
(1) AMOUNT AND USE OF RECOVERED FUNDS.Notwith-
standing any other provision of this section, advances made by
the Secretary under this section shall be repaid in accordance
with this subsection and shall be deposited in the fund estab-
lished by section 431. The Secretary shall, in accordance with
the requirements of paragraph (2), recover (and so deposit) an
amount equal to $75,000,000 during fiscal year 1988 and an
amount equal to $35,000,000 for fiscal year 1989.
(2) DETERMINATION OF GUARANTY AGENCY OBLIGATIONS.
In determining the amount of advances which shall be repaid
by a guaranty agency under paragraph (1), the Secretary
(A) shall consider the solvency and maturity of the re-
serve and insurance funds of the guaranty agency assisted
by such advances, as determined by the Comptroller Gen-
eral taking into account the requirements of State law as
in effect on the date of enactment of the Higher Education
Amendments of 1986;
(B) shall not seek repayment of such advances from
any State described in subsection (c)(5)(B) during any year
of its eligibility under such subsection; and
(C) shall not seek repayment of such advances from
any State if such repayment encumbers the reserve fund
requirement of State law as in effect on such date of enact-
ment.
(e) CORRECTION FOR ERRORS UNDER REDUCTION OF EXCESS
CASH RESERVES.
( 1) IN GENERAL.The Secretary shall pay any guaranty
agency the amount of reimbursement of claims under section
428(c)(1), filed between September 1, 1988, and December 31,
1989, which were previously withheld or canceled in order to
be applied to satisfy such agency's obligation to eliminate ex-
cess cash reserves held by such agency, based on the maximum
cash reserve (as described in subsection (e) of this section as
145
Sec. 422
HIGHER EDUCATION ACT OF 1965
138
in effect on September 1, 1988) permitted at the end of 1986,
if such maximum cash reserve was miscalculated because of er-
roneous financial information provided by such agency to the
Secretary and if (A) such erroneous information is verified by
an audited financial statement of the reserve fund, signed by
a certified public accountant, and (B) such audited financial
statement is provided to the Secretary prior to January 1,
1993.
(2) AMOUNT.The amount of reimbursement for claims
shall be equal to the amount of reimbursement for claims with-
held or canceled in order to be applied to such agency's obliga-
tion to eliminate excess cash reserves which exceeds the
amount of that which would have been withheld or canceled if
the maximum excess cash reserves had been accurately cal-
culated.
(f) REFUND OF CASH RESERVE PAYMENTS.The Secretary shall,
within 30 days after the date of enactment of the Higher Education
Amendments of 1992, pay the full amount of payments withheld or
canceled under paragraph (3) of this subsection to any guaranty
agency which
(1) was required to eliminate excess cash reserves, based
on the maximum cash reserve (as described in subsection (e)
of this section as in effect on September 1, 1988) permitted at
the end of 1986;
(2) appealed the Secretary's demand that such agency
should eliminate such excess cash reserves and received a
waiver of a portion of the amount of such excess cash reserves
to be eliminated;
(3) had payments under section 428(c)(1) or section 428(f)
previously withheld or canceled in order to be applied to satisfy
such agency's obligation to eliminate excess cash reserves held
by such agency, based on the maximum cash reserve (as de-
scribed in subsection (e) of this section as in effect on Septem-.
ber 1, 1988) permitted at the end of 1986; and
(4) according to a Department of Education review that
was completed and forwarded to such guaranty agency prior to
January 1, 1992, is expected to become insolvent during or be-
fore 1996 and the payments withheld or canceled under para-
graph (3) of this subsection are a factor in such agency's im-
pending insolvency.
(g) PRESERVATION AND RECOVERY OF GUARANTY AGENCY RE-
SERVES.
(1) AUTHORITY TO RECOVER FUNDS.Notwithstanding any
other provision of law, the reserve funds of the guaranty agen-
cies, and any assets purchased with such reserve funds, re-
gardless of who holds or controls the reserves or assets, shall
be considered to be the property of the United States to be
used in the operation of the program authorized by this part.
However, the Secretary may not require the return of all re-
serve funds of a guaranty agency to the Secretary unless the
Secretary determines that such return is in the best interest
of the operation of the program authorized by this part, or to
ensure the proper maintenance,of such agency's funds or assets
or the orderly termination of the guaranty agency's operations
139
HIGHER EDUCATION ACT OF 1965
Sec. 422
and the liquidation of its assets. The reserves shall be main-
tained by each guaranty agency to pay program expenses and
contingent liabilities, as authorized by the Secretary, except
that
(A) the Secretary may direct a guaranty agency to re-
turn to the Secretary a portion of its reserve fund which
the Secretary determines is unnecessary to pay the pro-
gram expenses and contingent liabilities of the guaranty
agency;
() the Secretary may direct the guaranty agency to
require the return, to the guaranty agency or to the Sec-
retary, of any reserve funds or assets held by, or under the
control of, any other entity, which the Secretary deter-
mines are necessary to pay the program expenses and con-
tingent liabilities of the guaranty agency, or which are re-
quired
for the orderly termination of the guaranty
agency's operations and the liquidation of its assets;
(C) the Secretary may direct a guaranty agency, or
such agency's officers or directors, to cease any activities
involving expenditure, use or transfer of the guaranty
agency's reserve funds or assets which the Secretary deter-
mines is a misapplication, misuse, or improper expenditure
of such funds or assets; and
(D) any such determination under subparagraph (A) or
(B) shall be based on standards prescribed by regulations
that are developed through negotiated rulemaking and
that include procedures for administrative due process.
(2) TERMINATION PROVISIONS IN CONTRACTS.(A) To en-
sure that the funds and assets of the guaranty agency are pre-
served, any contract with respect to the administration of a
guaranty agency's reserve funds, or the administration of any
assets purchased or acquired with the reserve funds of the
guaranty agency, that is entered into or extended by the guar-
anty agency, or any other party on behalf of or with the con-
currence of the guaranty agency, after the date of enactment
of this subsection shall provide that the contract is terminable
by the Secretary upon 30 days notice to the contracting parties
if the Secretary determines that such contract includes an im-
permissible transfer of the reserve funds or assets, or is other-
wise inconsistent with the terms or purposes of this section.
(B) The Secretary may direct a guaranty agency to sus-
pend or cease activities under any contract entered into by or
on behalf of such agency after January 1, 1993, if the Secretary
determines that the misuse or improper expenditure of such
guaranty agency's funds or assets or such contract provides un-
necessary or improper benefits to such agency's officers or di-
rectors.
(3) PENALTIES.Violation of any direction issued by the
Secretary under this subsection may be subject to the penalties
described in section 490 of this Act.
(4) AVAILABILITY OF FUNDS.Any funds that are returned
or otherwise recovered by the Secretary pursuant to this sub-
section shall be available for expenditure for expenses pursu-
ant to section 458 of this Act.
14 /
Sec. 422
HIGHER EDUCATION ACT OF 1965
140
(h) RECALL OF RESERVES; LIMITATIONS ON USE OF RESERVE
FUNDS AND ASSETS.
(1) IN GENERAL.Notwithstanding any other provision of
law, the Secretary shall, except as otherwise provided in this
subsection, recall $1,000,000,000 from the reserve funds held
by guaranty agencies on September 1, 2002.
(2) DEPOSIT.Funds recalled by the Secretary under this
subsection shall be deposited in the Treasury.
(3) REQUIRED SHARE.The Secretary shall require each
guaranty agency to return reserve funds under paragraph (1)
based on the agency's required share of recalled reserve funds
held by guaranty agencies as of September 30, 1996. For pur-
poses of this paragraph, a guaranty agency's required share of
recalled reserve funds shall be determined as follows:
(A) The Secretary shall compute each guaranty agen-
cy's reserve ratio by dividing (i) the amount held in the
agency's reserve funds as of September 30, 1996 (but re-
flecting later accounting or auditing adjustments approved
by the Secretary), by (ii) the original principal amount of
all loans for which the agency has an outstanding insur-
ance obligation as of such date, including amounts of out-
standing loans transferred to the agency from another
guaranty agency.
(B) If the reserve ratio of any guaranty agency as com-
puted under subparagraph (A) exceeds 2.0 percent, the
agency's required share shall include so much of the
amounts held in the agency's reserve funds as exceed a re-
serve ratio of 2.0 percent.
(C) If any additional amount is required to be recalled
under paragraph (1) (after deducting the total of the re-
quired shares calculated under subparagraph (B)), such
additional amount shall be obtained by imposing on each
guaranty agency an equal percentage reduction in the
amount of the agency's reserve funds remaining after de-
duction of the amount recalled under subparagraph (B),
except that such percentage reduction under this subpara-
graph shall not result in the agency's reserve ratio being
reduced below 0.58 percent. The equal percentage reduc-
tion shall be the percentage obtained by dividing
(i) the additional amount required to be recalled
(after deducting the total of the required shares cal-
culated under subparagraph (B)), by
(ii) the total amount of all such agencies' reserve
funds remaining (after deduction of the required
shares calculated under such subparagraph).
(D) If any additional amount is required to be recalled
under paragraph (1) (after deducting the total of the re-
quired shares calculated under subparagraphs (B) and
(C)), such additional amount shall be obtained by imposing
on each guaranty agency with a reserve ratio (after de-
ducting the required shares calculated under such sub-
paragraphs) in excess of 0.58 percent an equal percentage
reduction in the amount of the agency's reserve funds re-
maining (after such deduction) that exceed a reserve ratio
148
141
HIGHER EDUCATION ACT OF 1965
Sec. 422
of 0.58 percent. The equal percentage reduction shall be
the percentage obtained by dividing
(i) the additional amount to be recalled under
paragraph (1) (after deducting the amount recalled
under subparagraphs (B) and (C)), by
(ii) the total amount of all such agencies' reserve
funds remaining (after deduction of the required
shares calculated under such subparagraphs) that ex-
ceed a reserve ratio of 0.58 percent.
(4) RESTRICTED ACCOUNTS REQUIRED.
(A) IN GENERAL.Within 90 days after the beginning
of each of the fiscal years 1998 through 2002, each guar-
anty agency shall transfer a portion of the agency's re-
quired share determined under paragraph (3) to a re-
stricted account established by the agency that is of a type
selected by the agency with the approval of the Secretary.
Funds transferred to such restricted accounts shall be in-
vested in obligations issued or guaranteed by the United
States or in other similarly low-risk securities.
(B) REQUIREMENT.A guaranty agency shall not use
the funds in such a restricted account for any purpose
without the express written permission of the Secretary,
except that a guaranty agency may use the earnings from
such restricted account for default reduction activities.
(C) INSTALLMENTS.In each of fiscal years
1998
through 2002, each guaranty agency shall transfer the
agency's required share to such restricted account in 5
equal annual installments, except that
(i) a guaranty agency that has a reserve ratio (as
computed under subparagraph (3)(A)) equal to or less
than 1.10 percent may transfer the agency's required
share to such account in 4 equal installments begin-
ning in fiscal year 1999; and
(ii) a guaranty agency may transfer such required
share to such account in accordance with such other
payment schedules as are approved by the Secretary.
(5) SHORTAGE.If, on September 1, 2002, the total amount
in the restricted accounts described in paragraph (4) is less
than the amount the Secretary is required to recall under
paragraph (1), the Secretary shall require the return of the
amount of the shortage from other reserve funds held by guar-
anty agencies under procedures established by the Secretary.
The Secretary shall first attempt to obtain the amount of such
shortage from each guaranty agency that failed to transfer the
agency's required share to the agency's restricted account in
accordance with paragraph (4).
(6) ENFORCEMENT.
(A) IN GENERALThe Secretary may take such rea-
sonable measures, and require such information, as may
be necessary to ensure that guaranty agencies comply with
the requirements of this subsection.
(B) PROHIBITION.If the Secretary determines that a
guaranty agency has failed to transfer to a restricted ac-
count any portion of the agency's required share under this
149
Sec. 422
HIGHER EDUCATION ACT OF 1965
142
subsection, the agency may not receive any other funds
under this part until the Secretary determines that the
agency has so transferred the agency's required share.
(C) WAIVER.The Secretary may waive the require-
ments of subparagraph (B) for a guaranty agency de-
scribed in such subparagraph if the Secretary determines
that there are extenuating circumstances beyond the con-
trol of the agency that justify such waiver.
(7) LIMITATION.
(A) RESTRICTION ON OTHER AUTHORITY.The Secretary
shall not have any authority to direct a guaranty agency
to return reserve funds under subsection (g)(1)(A) during
the period from the date of enactment of the Balanced
Budget Act of 1997 through September 30, 2002.
(B) USE OF TERMINATION COLLECTIONS.Any reserve
funds directed by the Secretary to be returned to the Sec-
retary under subsection (g)(1)(B) during such period that
do not exceed a guaranty agency's required share of re-
called reserve funds under paragraph (3)
(i) shall be used to satisfy the agency's required
share of recalled reserve funds; and
(ii) shall be deposited in the restricted account es-
tablished by the agency under paragraph (4), without
regard to whether such funds exceed the next install-
ment required under such paragraph.
(C) USE OF SANCTIONS COLLECTIONS.Any reserve
funds directed by the Secretary to be returned to the Sec-
retary under subsection (g)(1)(C) during such period that
do not exceed a guaranty agency's next installment under
paragraph (4)
(i) shall be used to satisfy the agency's next in-
stallment; and
(ii) shall be deposited in the restricted account es-
tablished by the agency under paragraph (4).
(D) BALANCE AVAILABLE TO SECRETARY.Any reserve
funds directed by the Secretary to be returned to the Sec-
retary under subparagraph (B) or (C) of subsection (g)(1)
that remain after satisfaction of the requirements of sub-
paragraphs (B) and (C) of this paragraph shall be depos-
ited in the Treasury.
(8) DEFINITIONS.For the purposes of this subsection:
(A) DEFAULT REDUCTION ACTIVITIES.The term "de-
fault reduction activities" means activities to reduce stu-
dent loan defaults that improve, strengthen, and expand
default prevention activities, such as
(i) establishing a program of partial loan cancella-
tion to reward disadvantaged borrowers for good re-
payment histories with their lenders;
(ii) establishing a financial and debt management
counseling program for high-risk borrowers that pro-
vides long-term training (beginning prior to the first
disbursement of the borrower's first student loan and
continuing through the completion of the borrower's
program of education or training) in budgeting and
143
HIGHER EDUCATION ACT OF 1965
Sec. 422
other aspects of financial management, including debt
management;
(iii) establishing a program of placement counsel-
ing to assist high-risk borrowers in identifying employ-
ment or additional training opportunities; and
(iv) developing public service announcements that
would detail consequences of student loan default and
provide information regarding a toll-free telephone
number established by the guaranty agency for use by
borrowers seeking assistance in avoiding default.
(B) RESERVE FUNDS.The term "reserve funds" when
used with respect to a guaranty agency
(i) includes any reserve funds in cash or liquid as-
sets held by the guaranty agency, or held by, or under
the control of, any other entity; and
(ii) does not include buildings, equipment, or other
nonliquid assets.
(i) ADDITIONAL RECALL OF RESERVES.
(1) IN GENERAL.Notwithstanding any other provision of
law and subject to paragraph (4), the Secretary shall recall,
from reserve funds held in the Federal Student Loan Reserve
Funds established under section 422A by guaranty agencies
(A) $85,000,000 in fiscal year 2002;
(B) $82,500,000 in fiscal year 2006; and
(C) $82,500,000 in fiscal year 2007.
(2) DEPOSIT.Funds recalled by the Secretary under this
subsection shall be deposited in the Treasury.
(3) REQUIRED SHARE.The Secretary shall require each
guaranty agency to return reserve funds under paragraph (1)
on the basis of the agency's required share. For purposes of
this paragraph, a guaranty agency's required share shall be de-
termined as follows:
(A) EQUAL PERCENTAGE.The Secretary shall require
each guaranty agency to return an amount representing
an equal percentage reduction in the amount of reserve
funds held by the agency on September 30, 1996.
(B) CALCULATION.The equal percentage reduction
shall be the percentage obtained by dividing
(i) $250,000,000, by
(ii) the total amount of all guaranty agencies' re-
serve funds held on September 30, 1996, less any
amounts subject to recall under subsection (h).
(C) SPECIAL RULE.Notwithstanding subparagraphs
(A) and (B), the percentage reduction under subparagraph
(B) shall not result in the depletion of the reserve funds
of any agency which charges the 1.0 percent insurance pre-
mium pursuant to section 428(b)(1)(H) below an amount
equal to the amount of lender claim payments paid during
the 90 days prior to the date of the return under this sub-
section. If any additional amount is required to be re-
turned after deducting the total of the required shares
under subparagraph (B) and as a result of the preceding
sentence, such additional amount shall be obtained by im-
posing on each guaranty agency to which the preceding
151
Sec. 422A
HIGHER EDUCATION ACT. OF. 1965
144
sentence does not apply, an equal percentage reduction in
the amount of the agency's remaining reserve funds.
(4) OFFSET OF REQUIRED SHARES.If any guaranty agency
returns to the Secretary any reserve funds in excess of the
amount required under this subsection or subsection (h), the
total amount required to be returned under paragraph (1) shall
be reduced by the amount of such excess reserve funds re-
turned.
(5)1 DEFINITION OF RESERVE FUNDS. The term "reserve
funds" when used with respect to a guaranty agency
(A) includes any reserve funds in cash or liquid assets
held by the guaranty agency, or held by, or under the con-
trol of, any other entity; and
(B) does not include buildings, equipment, or other
nonliquid assets.
SEC. 422A. [20 U.S.C. 1072a) FEDERAL STUDENT LOAN RESERVE FUND.
(a) ESTABLISHMENT.Each guaranty agency shall, not later
than 60 days after the date of enactment of this section, deposit all
funds, securities, and other liquid assets contained in the reserve
fund established pursuant to section 422 into a Federal Student
Loan Reserve Fund (in this section and section 422B referred to as
the "Federal Fund"), which shall be an account of a type selected
by the agency, with the approval of the Secretary.
(b) INVESTMENT OF FUNDS.Funds transferred to the Federal
Fund shall be invested in obligations issued or guaranteed by the
United States or a State, or in other similarly low-risk securities
selected by the guaranty agency, with the approval of the Sec-
retary. Earnings from the Federal Fund shall be the sole property
of the Federal Government.
(c) ADDITIONAL DEPOSITS.After the establishment of the Fed-
eral Fund, a guaranty agency shall deposit into the Federal Fund
(1) all amounts received from the Secretary as payment of
reinsurance on loans pursuant to section 428(c)(1);
(2) from amounts collected on behalf of the obligation of a
defaulted borrower, a percentage amount equal to the com-
plement of the reinsurance percentage in effect when payment
under the guaranty agreement was made
(A) with respect to the defaulted loan pursuant to sec-
tions 428(c)(6)(A) and 428F(a)(1)(B); and
(B) with respect to a loan that the Secretary has re-
paid or discharged under section 437;
(3) insurance premiums collected from borrowers pursuant
to sections 428(b)(1)(H) and 428H(h);
(4) all amounts received from the Secretary as payment for
supplemental preclaims activity performed prior to the date of
enactment of this section;
(5) 70 percent of amounts received after such date of enact-
ment from the Secretary as payment for administrative cost al-
lowances for loans upon which insurance was issued prior to
such date of enactment; and
Identical definition of reserve funds appears in section 422(h)(8XB).
152
145
HIGHER EDUCATION ACT OF 1965
Sec. 422A
(6) other receipts as specified in regulations of the Sec-
retary.
(d) USES OF FUNDS.Subject to subsection (f), the Federal
Fund may only be used by a guaranty agency
(1) to pay lender claims pursuant to sections 428(b)(1)(G),
428( j), 437, and 439(q); and
(2) to pay into the Agency Operating Fund established pur-
suant to section 422B (in this section and section 422B referred
to as the "Operating Fund") a default aversion fee in accord-
ance with section 428(1).
(e) OWNERSHIP OF FEDERAL FUND.The Federal Fund, and
any nonliquid asset (such as a building or equipment) developed or
purchased by the guaranty agency in whole or in part with Federal
reserve funds, regardless of who holds or controls the Federal re-
serve funds or such asset, shall be considered to be the property
of the United States, prorated based on the percentage of such
asset developed or purchased with Federal reserve funds, which
property shall be used in the operation of the program authorized
by this part, as provided in subsection (d). The Secretary may re-
strict or regulate the use of such asset only to the extent necessary
to reasonably protect the Secretary's prorated share of the value of
such asset. The Secretary may direct a guaranty agency, or such
agency's officers or directors, to cease any activity involving ex-
penditures, use, or transfer of the Federal Fund administered by
the
guaranty
agency
that
the
Secretary
determines
is
a
misapplication, misuse, or improper expenditure of the Federal
Fund or the Secretary's share of such asset.
(f) TRANSITION.
(1) IN GENERAL.In order to establish the Operating Fund,
each guaranty agency may transfer not more than 180 days'
cash expenses for normal operating expenses (not including
claim payments) as a working capital reserve as defined in Of-
fice of Management and Budget Circular A-87 (Cost Account-
ing Standards) from the Federal Fund for deposit into the Op-
erating Fund for use in the performance of the guaranty agen-
cy's duties under this part. Such transfers may occur during
the first 3 years following the establishment of the Operating
Fund. However, no agency may transfer in excess of 45 percent
of the balance, as of September 30, 1998, of the agency's Fed-
eral Fund to the agency's Operating Fund during such 3-year
period. In determining the amount that may be transferred,
the agency shall ensure that sufficient funds remain in the
Federal Fund to pay lender claims within the required time pe-
riods and to meet the reserve recall requirements of this sec-
tion and subsections (h) and (i) of section 422.
(2) SPECIAL RULE.A limited number of guaranty agencies
may transfer interest earned on the Federal Fund to the Oper-
ating Fund during the first 3 years after the date of enactment
of this section if the guaranty agency demonstrates to the Sec-
retary that
(A) the cash flow in the Operating Fund will be nega-
tive without the transfer of such interest; and
(B) the transfer of such interest will substantially im-
prove the financial circumstances of the guaranty agency.
15 3
Sec. 422A
HIGHER EDUCATION ACT OF 1965
146
(3) REPAYMENT PROVISIONS.Each guaranty agency shall
begin repayment of sums transferred pursuant to this sub-
section not later than the start of the fourth year after the es-
tablishment of the Operating Fund, and shall repay all
amounts transferred not later than 5 years from the date of
the establishment of the Operating Fund. With respect to
amounts transferred from the Federal Fund, the guaranty
agency shall not be required to repay any interest on the funds
transferred and subsequently repaid. The guaranty agency
shall provide to the Secretary a reasonable schedule for repay-
ment of the sums transferred and an annual financial analysis
demonstrating the agency's ability to comply with the schedule
and repay all outstanding sums transferred.
(4) PROHIBITION.If a guaranty agency transfers funds
from the Federal Fund in accordance with this section, and
fails to make scheduled repayments to the Federal Fund, the
agency may not receive any other funds under this part until
the Secretary determines that the agency has made such re-
payments. The Secretary shall pay to the guaranty agency any
funds withheld in accordance with this paragraph immediately
upon making the determination that the guaranty agency has
made all such repayments.
(5) WAIVER.The Secretary may
(A) waive the requirements of paragraph (3), but only
with respect to repayment of interest that was transferred
in accordance with paragraph (2); and
(B) waive paragraph (4);
for a guaranty agency, if the Secretary determines that there
are extenuating circumstances (such as State constitutional
prohibitions) beyond the control of the agency that justify such
a waiver.
(6) EXTENSION OF REPAYMENT PERIOD FOR INTEREST.
(A) EXTENSION PERMITTED.The Secretary shall ex-
tend the period for repayment of interest that was trans-
ferred in accordance with paragraph (2) from 2 years to 5
years if the Secretary determines that
(i) the cash flow of the Operating Fund will be
negative as a result of repayment as required by para-
graph (3);
(ii) the repayment of the interest transferred will
substantially diminish the financial circumstances of
the guaranty agency; and
(iii) the guaranty agency has demonstrated
(I) that the agency is able to repay all trans-
ferred funds by the end of the 8th year following
the date of establishment of the Operating' Fund;
and
(II) that the agency will be financially sound
on the completion of repayment.
(B) REPAYMENT OF INCOME ON TRANSFERRED FUNDS.
All repayments made to the Federal Fund during the 6th,
7th, and 8th years following the establishment of the Op-
erating Fund of interest that was transferred. shall include
154
141
NIGHER EDUCATION ACT OF 1965
Sec. 4228
the sums transferred plus any income earned from the in-
vestment of the sums transferred after the 5th year.
(7) INVESTMENT OF FEDERAL FUNDS.Funds transferred
from the Federal Fund to the Operating Fund for operating ex-
penses shall be invested in obligations issued or guaranteed by
the United States or a State, or in other similarly low-risk se-
curities selected by the guaranty agency, with the approval of
the Secretary.
(8) SPECIAL RULE.In calculating the minimum reserve
level required by section 428(c)(9)(A), the Secretary shall in-
clude all amounts owed to the Federal Fund by the guaranty
agency in the calculation.
SEC. 422B. [20 U.S.C. 1072b1 AGENCY OPERATING FUND.
(a) ESTABLISHMENT.Each guaranty agency shall, not later
than 60 days after the date of enactment of this section, establish
a fund designated as the Operating Fund.
(b) INVESTMENT OF FUNDS.Funds deposited into the Operat-
ing Fund shall be invested at the discretion of the guaranty agency
in accordance with prudent investor standards.
(c) ADDITIONAL DEPOSITS.After the establishment of the Op-
erating Fund, the guaranty agency shall deposit into the Operating
Fund
(1) the loan processing and issuance fee paid by the
Secretary pursuant to section 428(f);
(2) 30 percent of amounts received after the date of enact-
ment of this section from the Secretary as payment for admin-
istrative cost allowances for loans upon which insurance was
issued prior to such date of enactment;
(3) the account maintenance fee paid by the Secretary in
accordance with section 458;
(4) the default aversion fee paid in accordance with section
428(1);
(5) amounts remaining pursuant to section 428(c)(6)(B)
from collection on defaulted loans held by the agency, after
payment of the Secretary's equitable share, excluding amounts
deposited in the Federal Fund pursuant to section 422A(c)(2);
and
(6) other receipts
as
specified in regulations of the
Secretary.
(d) USES OF FUNDS.
( 1) IN GENERAL. Funds in the Operating Fund shall be
used for application processing, loan disbursement, enrollment
and repayment status management, default aversion activities
(including those described in section 422(h)(8)), default collec-
tion activities, school and lender training, financial aid aware-
ness and related outreach activities, compliance monitoring,
and other student financial aid related activities, as selected by
the guaranty agency.
(2) SPECIAL RULE.The guaranty agency may, in the agen-
cy's discretion, transfer funds from the Operating Fund to the
Federal Fund for use pursuant to section 422A. Such transfer
shall be irrevocable, and any funds so transferred shall become
the sole property of the United States.
X55
Sec. 423
HIGHER EDUCATION ACT OF 1965.
148
(3) DEFINITIONS.For purposes of this subsection:
(A) DEFAULT COLLECTION ACTIVITIES.The term "de-
fault collection activities" means activities of a guaranty
agency that are directly related to the collection of the loan
on which a default claim has been paid to the participating
lender, including the due diligence activities required pur-
suant to regulations of the Secretary.
(B) DEFAULT AVERSION ACTIVITIES.The term "default
aversion activities" means activities of a guaranty agency
that are directly related to providing collection assistance
to the lender on a delinquent loan, prior to the loan's being
legally in a default status, including due diligence activi-
ties required pursuant to regulations of the Secretary.
(C) ENROLLMENT AND REPAYMENT
STATUS
MANAGE-
MENT.The term "enrollment and repayment status man-
agement" means activities of a guaranty agency that are
directly related to ascertaining the student's enrollment
status, including prompt notification to the lender of such
status, an audit of the note or written agreement to deter-
mine if the provisions of that note or agreement are con-
sistent with the records of the guaranty agency as to the
principal amount of the loan guaranteed, and an examina-
tion of the note or agreement to assure that the repayment
provisions are consistent with the provisions of this part.
(e) OWNERSHIP AND REGULATION OF OPERATING FUND.
(1) OWNERSHIP.The Operating Fund, with the exception
of funds transferred from the Federal Fund in accordance with
section 422A(f ), shall be considered to be the property of the
guaranty agency.
(2) REGULATION.Except as provided in paragraph (3), the
Secretary may not regulate the uses or expenditure of moneys
in the Operating Fund, but the Secretary may require such
necessary reports and audits as provided in section 428(b)(2).
(3) EXCEPTION.Notwithstanding paragraphs (1) and (2),
during any period in which funds are owed to the Federal
Fund as a result of transfer under section 422A(f )--
(A) moneys in the Operating Fund may only be used
for expenses related to the student loan programs author-
ized under this part; and
(B) the Secretary may regulate the uses or expendi-
ture of moneys in the Operating Fund.
SEC. 423. [20 U.S.C. 1073] EFFECTS OF ADEQUATE NON-FEDERAL PRO-
GRAMS..
(a) FEDERAL INSURANCE BARRED TO LENDERS WITH ACCESS TO
STATE OR PRIVATE INSURANCE.Except as provided in subsection
(b), the Secretary shall not issue certificates of insurance under
section 429 to lenders in a State if the Secretary determines that
every eligible institution has reasonable access in that State to a
State or private nonprofit student loan insurance program which is
covered by an agreement under section 428(b).
(b) EXCEPTIONS.The Secretary may issue certificates of insur-
ance under section 429 to a lender in a State
(1) for insurance of a loan made to a student borrower who
does not, by rearof the borrower's residence, have access to
149
HIGHER EDUCATION ACT OF 1965
Sec. 425
loan insurance under the loan insurance program of such State
(or under any private nonprofit loan insurance program which
has received an advance under section 422 for the benefit of
students in such State);
(2) for insurance of all the loans made to student borrow-
ers by a lender who satisfies the Secretary that, by reason of
the residence of such borrowers, such lender will not have ac-
cess to any single State or nonprofit private loan insurance
program which will insure substantially all of the loans such
lender intends to make to such student borrowers; or
(3) under such circumstances as may be approved by the
guaranty agency in such State, for the insurance of a loan to
a borrower for whom such lender previously was issued such
a certificate if the loan covered by such certificate is not yet re-
paid.
SEC. 424. [20 U.S.C. 1074] SCOPE AND DURATION OF FEDERAL LOAN IN-
SURANCE PROGRAM.
(a) LIMITATIONS ON AMOUNTS OF LOANS COVERED BY FEDERAL
INSURANCE.The total principal amount of new loans made and in-
stallments 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, 2004. 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 stu-
dents, 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 Sep-
tember 30, 2008.
(b) APPORTIONMENT OF AMOUNTS.The Secretary may, if he or
she finds it necessary to do so in order to assure an equitable dis-
tribution of the benefits of this part, assign, within the maximum
amounts specified in subsection (a), Federal loan insurance quotas
applicable to eligible lenders, or to States or areas, and may from
time to time reassign unused portions of these quotas.
SEC. 425. [20 U.S.C. 1075] LIMITATIONS ON INDIVIDUAL FEDERALLY IN-
SURED LOANS AND ON FEDERAL LOAN INSURANCE.
(a) ANNUAL AND AGGREGATE LIMITS.
(1) ANNUAL LIMITS.(A) The total of loans made to a stu-
dent in any academic year or its equivalent (as determined by
the Secretary) which may be covered by Federal loan insurance
under this part may not exceed
(i) in the case of a student at an eligible institution
who has not successfully completed the first year of a pro-
gram of undergraduate education
(I) $2,625, if such student is enrolled in a program
whose length is at least one academic year in length
(as determined under section 481); and
(II) if such student is enrolled in a program of un-
dergraduate education which is less than one aca-
demic year, the maximum annual loan amount that
such student may receive may not exceed the amount
Sec. 425
HIGHER EDUCATION ACT OF 1965
150
that bears the same ratio to the amount specified in
subclause (I) as the length of such program measured
in semester, trimester, quarter, or clock hours bears to
one academic year;
(ii) in the case of a student at an eligible institution
who has successfully completed such first year but has not
successfully completed the remainder of a program of un-
dergraduate education
(I) $3,500; or
(II) if such student is enrolled in a program ofun-
dergraduate education, the remainder of which is less
than one academic year, the maximum annual loan
amount that such student may receive may not exceed
the amount that bears the same ratio to the amount
specified in subclause (I) as such remainder measured
in semester, trimester, quarter, or clock hours bears to
one academic year;
(iii) in the case of a student at an eligible institution
who has successfully completed the first and second years
of a program of undergraduate education but has not suc-
cessfully completed the remainder of such program
(I) $5,500; or
(II) if such student is enrolled in a program of un-
dergraduate education, the remainder of which is less
than one academic year, the maximum annual loan
amount that such student may receive may not exceed
the amount that bears the same ratio to the amount
specified in subclause (I) as such remainder measured
in semester, trimester, quarter, or clock hours bears to
one academic year; and
(iv) in the case of a graduate or professional student
(as defined in regulations of the Secretary) at an eligible
institution, $8,500.
(B) The annual insurable limits contained in subparagraph
(A) shall not apply in cases where the Secretary determines,
pursuant to regulations, that a higher amount is warranted in
order to carry out the purpose of this part with respect to stu-
dents engaged in specialized training requiring exceptionally
high costs of education. The annual insurable limit per student
shall not be deemed to be exceeded by a line of credit under
which actual payments by the lender to the borrower will not
be made in any year in excess of the annual limit.
(C) For the purpose of subparagraph (A), the number of
years that a student has completed in a program of under-
graduate education shall include any prior enrollment in an el-
igible program of undergraduate education for which the stu-
dent was awarded an associate or baccalaureate degree, if such
degree is required by the institution for admission to the pro-
gram in which the student is enrolled.
(2) AGGREGATE LIMITS.-(A) The aggregate insured unpaid
principal amount for all such insured loans made to any stu-
dent shall not at any time exceed
151
HIGHER EDUCATION ACT OF 1965
Sec. 425
(i) $23,000, in the case of any student who has not success-
fully completed a program of undergraduate education, exclud-
ing loans made under section 428A or 428B; and
(ii) $65,500, in the case of any graduate or professional
student (as defined by regulations of the Secretary) and (I) in-
cluding any loans which are insured by the Secretary under
this section, or by a guaranty agency, made to such student be-
fore the student became a graduate or professional student),
but (II) excluding loans made under section 428A or 428B,
except that the Secretary may increase the limit applicable to stu-
dents who are pursuing programs which the Secretary determines
are exceptionally expensive.
(B) The Secretary may increase the aggregate insurable
limit applicable to students who are pursuing programs which
the Secretary determines are exceptionally expensive.
(b) LEVEL OF INSURANCE COVERAGE
BASED ON DEFAULT
RATE. -
(1) REDUCTION FOR DEFAULTS IN EXCESS OF 5 OR 9 PER-
CENT.-(A) Except as provided in subparagraph (B), the insur-
ance liability on any loan insured by the Secretary under this
part shall be 100 percent of the unpaid balance of the principal
amount of the loan plus interest, except that
(i) if, for any fiscal year, the total amount of payments
under section 430 by the Secretary to any eligible lender
as described in section 435(d)(1)(D) exceeds 5 percent of
the sum of the loans made by such lender which are in-
sured by the Secretary and which were in repayment at
the end of the preceding fiscal year, the insurance liability
under this subsection for that portion of such excess which
represents loans insured after the applicable date with re-
spect to such loans, as determined under subparagraph
(C), shall be equal to 90 percent of the amount of such por-
tion; or
(ii) if, for any fiscal year, the total amount of such pay-
ments to such a lender exceeds 9 percent of such sum, the
insurance liability under this subsection for that portion of
such excess which represents loans insured after the appli-
cable date with respect to such loans, as determined under
subparagraph (C), shall be equal to 80 percent of the
amount of such portion.
(B) Notwithstanding subparagraph (A), the provisions of
clauses (i) and (ii) of such subparagraph shall not apply to an
eligible lender as described in section 435(d)(1)(D) for the fiscal
year in which such lender begins to carry on a loan program
insured by the Secretary, or for any of the 4 succeeding fiscal
years.
(C) The applicable date with respect to a loan made by an
eligible lender as described in section 435(d)(1)(D) shall be
(i) the 90th day after the adjournment of the next reg-
ular session of the appropriate State legislature which con-
venes after the date of enactment of the Education Amend-
ments of 1976, or
(ii) if the primary source of lending capital for such
lender is derived from the sale of bonds, and the constitu-
159
Sec. 426
HIGHER EDUCATION ACT OF 1965
152
tion of the appropriate State prohibits a pledge of such
State's credit as security against such bonds, the day
which is one year after such 90th day.
(2) COMPUTATION OF AMOUNTS IN REPAYMENT.For the
purpose of this subsection, the sum of the loans made by a
lender which are insured by the Secretary and which are in re-
payment shall be the original principal amount of loans made
by such lender which are insured by the Secretary reduced
by
(A) the amount the Secretary has been required to pay
to discharge his or her insurance obligations under this
part;
(B) the original principal amount of loans insured by
the Secretary which have been fully repaid;
(C) the original principal amount insured on those
loans for which payment of first installment of principal
has not become due pursuant to section 427(a)(2)(B) or
such first installment need not be paid pursuant to section
427(a)(2)(C); and
(D) the original principal amount of loans repaid by
the Secretary under section 437.
(3) PAYMENTS TO ASSIGNEES.For the purpose of this sub-
section, payments by the Secretary under section 430 to an as-
signee of the lender with respect to a loan shall be deemed
payments made to such lender.
(4) PLEDGE OF FULL FAITH AND CREDIT.The full faith and
credit of the United States is pledged to the payment of all
amounts which may be required to be paid under the provi-
sions of section 430 or 437 of this part.
SEC. 426. [20 U.S.C. 1076] SOURCES OF FUNDS.
Loans made by eligible lenders in accordance with this part
shall be insurable by the Secretary whether made from funds fully
owned by the lender or from funds held by the lender in a trust
or similar capacity and available for such loans.
SEC. 427. [20 U.S.C. 1077] ELIGIBILITY OF STUDENT BORROWERS AND
TERMS OF FEDERALLY INSURED STUDENT LOANS..
(a) LIST OF REQUIREMENTS.Except as provided in section
428C, a loan by an eligible lender shall be insurable by the Sec-
retary under the provisions of this part only if
(1) made to a student who (A) is an eligible student under
section 484, (B) has agreed to notify promptly the holder of the
loan concerning any change of address, and (C) is carrying at
least one-half the normal full-time academic workload for the
course of study the student is pursuing (as determined by the
institution); and
(2) evidenced by a note or other written agreement
which
(A) is made without security and without endorse-
ment;
(B) provides for repayment (except as provided in sub-
section (c)) of the principal amount of the loan in install-
ments over a period of not less than 5 years (unless sooner
153
HIGHER EDUCATION ACT OF 1965
Sec. 427
repaid or unless the student, during the 6 months preced-
ing the start of the repayment period, specifically requests
that repayment be made over a shorter period) nor more
than 10 years beginning 6 months after the month in
which the student ceases to carry at an eligible institution
at least one-half the normal full-time academic workload
as determined by the institution, except
(i) as provided in subparagraph (C);
(ii) that the note or other written instrument may
contain such reasonable provisions relating to repay-
ment in the event of default in the payment of interest
or in the payment of the cost of insurance premiums,
or other default by the borrower, as may be authorized
by regulations of the Secretary in effect at the time
the loan is made; and
(iii) that the lender and the student, after the stu-
dent ceases to carry at an eligible institution at least
one-half the normal full-time academic workload as
determined by the institution, may agree to a repay-
ment schedule which begins earlier, or is of shorter
duration, than required by this subparagraph, but in
the event a borrower has requested and obtained a re-
payment period of less than 5 years, the borrower may
at any time prior to the total repayment of the loan,
have the repayment period extended so that the total
repayment period is not less than 5 years;
(C) provides that periodic installments of principal
need not be paid, but interest shall accrue and be paid,
during any period
(i) during which the borrower
(I) is pursuing at least a half-time course of
study as determined by an eligible institution; or
(II) is pursuing a course of study pursuant to
a graduate fellowship program approved by the
Secretary, or pursuant to a rehabilitation training
program for individuals with disabilities approved
by the Secretary,
except that no borrower shall be
eligible for a
deferment under this clause, or a loan made under
this part (other than a loan made under section 428B
or 428C), while serving in a medical internship or resi-
dency program;
(ii) not in excess of 3 years during which the bor-
rower is seeking and unable to find full-time employ-
ment; or
(iii) not in excess of 3 years for any reason which
the lender determines, in accordance with regulations
prescribed by the Secretary under section 435(o), has
caused or will cause the borrower to have an economic
hardship;
and provides that any such period shall not be included in
determining the 10-year period described in subparagraph
(B);
161
54-653 99 - 6
Sec. 427
HIGHER EDUCATION ACT OF 1965
154
(D) provides for interest on the unpaid principal bal-
ance of the loan at a yearly rate, not exceeding the applica-
ble maximum rate prescribed in section 427A, which inter-
est shall be payable in installments over the period of the
loan except that, if provided in the note or other written
agreement, any interest payable by the student may be de-
ferred until not later than the date upon which repayment
of the first installment of principal falls due, in which case
interest accrued during that period may be added on that
date to the principal;
(E) provides that the lender will not collect or attempt
to collect from the borrower any portion of the interest on
the note which is payable by the Secretary under this part,
and that the lender will enter into such agreements with
the Secretary as may be necessary for the purpose of sec-
tion 437;
(F) entitles the student borrower to accelerate without
penalty repayment of the whole or any part of the loan;
(G)(i) contains a notice of the system, of disclosure of
information concerning such loan to credit bureau organi-
zations under section 430A, and (ii) provides that the lend-
er on request of the borrower will provide information on
the repayment status of the note to such organizations;
(H) provides that, no more than 6 months prior to the
date on which the borrower's first payment on a loan is
due, the lender shall offer the borrower the option of re-
paying the loan in accordance with a graduated or income-
sensitive repayment schedule established by the lender
and in accordance with the regulations of the Secretary;
and
(I) contains such other terms and conditions, consist-
ent with the provisions of this part and with the regula-
tions issued by the Secretary pursuant to this part, as may
be agreed upon by the parties to such loan, including, if
agreed upon, a provision requiring the borrower to pay the
lender, in addition to principal and interest, amounts
equal to the insurance premiums payable by the lender to
the Secretary with respect to such loan;
(3) the funds borrowed by a student are disbursed to the
institution by check or other means that is payable to and re-
quires the endorsement or other certification by such student,
except
(A) that nothing in this title shall be interpreted
(i) to allow the Secretary to require checks to be
made copayable to the institution and the borrower; or
(ii) to prohibit the disbursement of loan proceeds
by means other than by check; and
(B) in the case of any student who is studying outside
the United States in a program of study abroad that is ap-
proved for credit by the home institution at which such
student is enrolled, the funds shall, at the request of the
borrower, be delivered directly to the student and the
checks may be endorsed, and fund transfers authorized,
pursuant to an authorized power-of-attorney; and
162
155
HIGHER EDUCATION ACT OF 1965
Sec. 427A
(4) the funds borrowed by a student are disbursed in ac-
cordance with section 428G.
(b) SPECIAL RULES FOR MULTIPLE DISBURSEMENT.For the
purpose of subsection (a)(4)
(1) all loans issued for the same period of enrollment shall
be considered as a single loan; and
(2) the requirements of such subsection shall not apply in
the case of a loan made under section 428B or 428C, or made
to a student to cover the cost of attendance at an eligible insti-
tution outside the United States.
(c) SPECIAL REPAYMENT RULES.Except as provided in sub-
section (a)(2)(H), the total of the payments by a borrower during
any year of any repayment period with respect to the aggregate
amount of all loans to that borrower which are insured under this
part shall not, unless the borrower and the lender otherwise agree,
be less than $600 or the balance of all such loans (together with
interest thereon), whichever amount is less (but in no instance less
than the amount of interest due and payable).
SEC. 427A. [20 U.S.C. 1077a1 APPLICABLE INTEREST RATES.
(a) RATES To BE CONSISTENT FOR BORROWER'S ENTIRE DEBT.
With respect to any loan to cover the cost of instruction for any pe-
riod of instruction beginning on or after January 1, 1981, the rate
of interest applicable to any borrower shall
(1) not exceed 7 percent per year on the unpaid principal
balance of the loan in the case of any borrower who, on the
date of entering into the note or other written evidence of that
loan, has an outstanding balance of principal or interest on any
loan made, insured, or guaranteed under this part, for which
the interest rate does not exceed 7 percent;
(2) except as provided in paragraph (3), be 9 percent per
year on the unpaid principal balance of the loan in the case of
any borrower who, on the date of entering into the note or
other written evidence of that loan, has no outstanding balance
of principal or interest on any loan described in paragraph (1)
or any loan for which the interest rate is determined under
paragraph (1); or
(3) be 8 percent per year on the unpaid principal balance
of the loan for a loan to cover the cost of education for any pe-
riod of enrollment beginning on or after a date which is 3
months after a determination made under subsection (b) in the
case of any borrower who, on the date of entering into the note
or other written evidence of the loan, has no outstanding bal-
ance of principal or interest on any loan for which the interest
rate is determined under paragraph (1) or (2) of this sub-
section.
(b) REDUCTION FOR NEW
BORROWERS AFTER DECLINE
IN
TREASURY BILL RATES.If for any 12-month period beginning on or
after January 1, 1981, the Secretary, after consultation with the
Secretary of the Treasury, determines that the average of the bond
equivalent rates of 91-day Treasury bills auctioned for such 12-
month period is equal to or less than 9 percent, the interest rate
for loans under this part shall be the rate prescribed in subsection
(a)(3) for borrowers described in such subsection.
16
Sec. 421A
HIGHER EDUCATION ACT OF 1965
156
(C) RATES FOR SUPPLEMENTAL LOANS FOR STUDENTS AND
LOANS FOR PARENTS.
(1) IN GENERAL.Except as otherwise provided in this sub-
section, the applicable rate of interest on loans made pursuant
to section 428A or 428B on or after October 1, 1981, shall be
14 percent per year on the unpaid principal balance of the
loan.
(2) REDUCTION OF RATE AFTER DECLINE IN TREASURY BILL
RATES.If for any 12-month period beginning on or after Octo-
ber 1, 1981, the Secretary, after consultation with the Sec-
retary of the Treasury, determines that the average of the
bond equivalent rates of 91-day Treasury bills auctioned for
such 12-month period is equal to or less than 14 percent, the
applicable rate of interest for loans made pursuant to section
428A or 428B on and after the first day of the first month be-
ginning after the date of publication of such determination
shall be 12 percent per year on the unpaid principal balance
of the loan.
(3) INCREASE OF RATE AFTER INCREASE IN TREASURY BILL
RATES.If for any 12-month period beginning on or after the
date of publication of a determination under paragraph (2), the
Secretary, after consultation with the Secretary of the Treas-
ury, determines that the average of the bond equivalent rates
of 91-day Treasury bills auctioned for such 12-month period ex-
ceeds 14 percent, the applicable rate of interest for loans made
pursuant to section 428A or 428B on and after the first day of
the first month beginning after the date of publication of that
determination under this paragraph shall be 14 percent per
year on the unpaid principal balance of the loan.
(4) AVAILABILITY OF VARIABLE RATES.(A) For any loan
made pursuant to section 428A or 428B and disbursed on or
after July 1, 1987, or any loan made pursuant to such section
prior to such date that is refinanced pursuant to section
428A(d) or 428B(d), the applicable rate of interest during any
12-month period beginning on July 1 and ending on June 30
shall be determined under subparagraph (B), except that such
rate shall not exceed 12 percent.
(B) For any 12-month period beginning on July 1 and end-
ing on June 30, the rate determined under this subparagraph
is determined on the preceding June 1 and is equal to
(i) the bond equivalent rate of 52-week Treasury bills
auctioned at the final auction held prior to such June 1;
plus
(ii) 3.25 percent.
(C) The Secretary shall determine the applicable rate of in-
terest under subparagraph (B) after consultation with the Sec-
retary of the Treasury and shall publish such rate in the Fed-
eral Register as soon as practicable after the date of deter-
mination.
(D) Notwithstanding subparagraph (A)
(i) for any loan made pursuant to section 428A for
which the first disbursement is made on or after October
1, 1992
1
4
151
HIGHER EDUCATION ACT OF 1965
Sec. 421A
(I) subparagraph (B) shall be applied by substitut-
ing "3.1" for "3.25"; and
(II) the interest rate shall not exceed 11 percent;
and
(ii) for any loan made pursuant to section 428B for
which the first disbursement is made on or after October
1, 1992
(I) subparagraph (B) shall be applied by substitut-
ing "3.1" for "3.25"; and
(II) the interest rate shall not exceed 10 percent.
(E) Notwithstanding subparagraphs (A) and (D) for any
loan made pursuant to section 428B for which the first dis-
bursement is made on or after July 1, 1994
(i) subparagraph (B) shall be applied by substituting
"3.1" for "3.25"; and
(ii) the interest rate shall not exceed 9 percent.
(d) INTEREST RATES FOR NEW BORROWERS AFTER JULY
1,
1988.Notwithstanding subsections (a) and (b) of this section, with
respect to any loan (other than a loan made pursuant to sections
428A, 428B, and 428C) to cover the cost of instruction for any pe-
riod of enrollment beginning on or after July 1, 1988, to any bor-
rower who, on the date of entering into the note or other written
evidence of the loan, has no outstanding balance of principal or in-
terest on any loan made, insured, or guaranteed under this part,
the applicable rate of interest shallbe
(1) 8 percent per year on the unpaid principal balance of
the loan during the period beginning on the date of the dis-
bursement of the loan and ending 4 years after the commence-
ment of repayment; and
(2) 10 percent per year on the unpaid principal balance of
the loan during the remainder of the repayment period.
(e) INTEREST RATES FOR NEW BORROWERS AFTER OCTOBER 1,.
1992.
(1) IN GENERALNotwithstanding subsections (a), (b), and
(d) of this section, with respect to any loan (other than a loan
made pursuant to sections 428A, 428B and 428C) for which the
first disbursement is made on or after October 1, 1992, to any
borrower who, on the date of entering into the note or other
written evidence of the loan, has no outstanding balance of
principal or interest on any loan made, insured, or guaranteed
under section 427, 428, or 428H of this part, the applicable
rate of interest shall, during any 12-month period beginning on
July 1 and ending on June 30, be determined on the preceding
June 1 and be equal to
(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction held prior to such June 1;
plus
(B) 3.10 percent,
except that such rate shall not exceed 9 percent.
(2) CONSULTATION.The Secretary shall determine the ap-
plicable rate of interest under paragraph (1) after consultation
with the Secretary of the Treasury and shall publish such rate
in the Federal Register as soon as practicable after the date of
determination.
Sec. 421A
HIGHER EDUCATION ACT OF 1965
158
(f) INTEREST RATES FOR NEW LOANS AFTER JULY 1, 1994.
(1) IN GENERAL.Notwithstanding subsections (a), (b), (d),
and (e) of this section, with respect to any loan made, insured,
or guaranteed under this part (other than a loan made pursu-
ant to section 428B or 428C) for which the first disbursement
is made on or after July 1, 1994, the applicable rate of interest
shall, during any 12-month period beginning on July 1 and
ending on June 30, be determined on the preceding June 1 and
be equal to
(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction held prior to such June 1;
plus
(B) 3.10 percent,
except that such rate shall not exceed 8.25 percent.
(2) CONSULTATION.The Secretary shall determine the ap-
plicable rate of interest under paragraph (1) after consultation
with the Secretary of the Treasury and shall publish such rate
in the Federal Register as soon as practicable after the date of
determination.
(g) IN SCHOOL AND GRACE PERIOD RULES.
(1) GENERAL RULE.Notwithstanding the provisions of
subsection (f), but subject to subsection (h), with respect to any
loan under section 428 or 428H of this part for which the first
disbursement is made on or after July 1, 1995, the applicable
rate of interest for interest which accrues
(A) prior to the beginning of the repayment period of
the loan; or
(B) during the period in which principal need not be
paid (whether or not such principal is in fact paid) by rea-
son of a provision described in section 428(b)(1)(M) or
427(a)(2)(C),
shall not exceed the rate determined under paragraph (2).
(2) RATE DETERMINATION.For purposes of paragraph (1),
the rate determined under this paragraph shall, during any
12-month period beginning on July 1 and ending on June 30,
be determined on the preceding June 1 and be equal to
(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction prior to such June 1; plus
(B) 2.5 percent,
except that such rate shall not exceed 8.25 percent.
(3) CONSULTATION.The Secretary shall determine the ap-
plicable rate of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.
(h) INTEREST RATES FOR NEW LOANS AFTER JULY 1, 1998.
(1) IN GENERAL.Notwithstanding subsections (a), (b), (d),
(e), (f), and (g) of this section, with respect to any loan made,
insured, or guaranteed under this part (other than a loan made
pursuant to sections 428B and 428C) for which the first dis-
bursement is made on or after July 1, 1998, 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
159
HIGHER EDUCATION ACT OF 1965
Sec. 427A
(A) the bond equivalent rate of the securities with a
comparable maturity as established by the Secretary; plus
(B) 1.0 percent,
except that such rate shall not exceed 8.25 percent.
(2) INTEREST RATES FOR NEW PLUS LOANS AFTER JULY 1,
1998.Notwithstanding subsections (a), (b), (d), (e), (f), and (g),
with respect to any loan made under section 428B for which
the first disbursement is made on or after July 1, 1998, para-
graph (1) shall be applied
(A) by substituting "2.1 percent" for "1.0 percent" in
subparagraph (B); and
(B) by substituting "9.0 percent" for "8.25 percent" in
the matter following such subparagraph.
(3) CONSULTATION.The Secretary shall determine the ap-
plicable rate of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.
(i) TREATMENT OF EXCESS INTEREST PAYMENTS ON NEW BOR-
ROWER ACCOUNTS RESULTING FROM DECLINE IN TREASURY BILL
RATES.
(1) EXCESS INTEREST ON 10 PERCENT LOANS.If, with re-
spect to a loan for which the applicable interest rate is 10 per-
cent under subsection (d) of this section at the close of any cal-
endar quarter, the sum of the average of the bond equivalent
rates of 91-day Treasury bills auctioned for that quarter and
3.25 percent is less than 10 percent, then an adjustment shall
be made to a borrower's account
(A) by calculating excess interest in the amount com-
puted under paragraph (2) of this subsection; and
(B)(i) during any period in which a student is eligible
to have interest payments paid on his or her behalf by the
Government pursuant to section 428(a), by crediting the
excess interest to the Government; or
(ii) during any other period, by crediting such excess
interest to the reduction of principal to the extent provided
in paragraph (5) of this subsection.
(2) AMOUNT OF ADJUSTMENT FOR 10 PERCENT LOANS.The
amount of any adjustment of interest on a loan to be made
under this subsection for any quarter shall be equal to
(A) 10 percent minus the sum of (i) the average of the
bond equivalent rates of 91-day Treasury bills auctioned
for such calendar quarter, and (ii) 3.25 percent; multiplied
by
(B) the average daily principal balance of the loan (not
including unearned interest added to principal) during
such calendar quarter; divided by
(C) four.
(3) EXCESS INTEREST ON LOANS AFTER 1992 AMENDMENTS,
TO BORROWERS WITH OUTSTANDING BALANCES
If, with respect
to a loan made on or after the date of enactment of the Higher
Education Amendments of 1992 to a borrower, who on the date
of entering into the note or other written evidence of the loan,
has an outstanding balance of principal or interest on any
167
Sec. 427A
HIGHER EDUCATION ACT OF 1965
160
other loan made, insured, or guaranteed under this part, the
sum of the average of the bond equivalent rates of 91-day
Treasury bills auctioned for that quarter and 3.1 percent is
less than the applicable interest rate, then an adjustment shall
be made
(A) by calculating excess interest in the amount com-
puted under paragraph (4) of this subsection; and
(B)(i) during any period in which a student is eligible
to have interest payments paid on his or her behalf by the
Government pursuant to section 428(a), by crediting the
excess interest to the Government; or
(ii) during any other period, by crediting such excess
interest to the reduction of principal to the extent provided
in paragraph (5) of this subsection.
(4) AMOUNT OF ADJUSTMENT.The amount of any adjust-
ment of interest on a loan to be made under this subsection for
any quarter shall be equal to
(A) the applicable interest rate minus the sum of (i)
the average of the bond equivalent rates of 91-day Treas-
ury bills auctioned for such calendar quarter, and (ii) 3.1
percent; multiplied by
(B) the average daily principal balance of the loan (not
including unearned interest added to principal) during
such calendar quarter; divided by
(C) four.
(5) ANNUAL ADJUSTMENT OF INTEREST AND BORROWER ELI-
GIBILITY FOR CREDIT.Any adjustment amount computed pur-
suant to paragraphs (2) and (4) of this subsection for any quar-
ter shall be credited, by the holder of the loan on the last day
of the calendar year in which such quarter falls, to the loan ac-
count of the borrower so as to reduce the principal balance of
such account. No such credit shall be made to the loan account
of a borrower who on the last day of the calendar year is delin-
quent for more than 30 days in making a required payment on
the loan, but the excess interest shall be calculated and cred-
ited to the Secretary. Any credit which is to be made to a bor-
rower's account pursuant to this subsection shall be made ef-
fective commencing no later than 30 days following the last
day of the calendar year in which the quarter falls for which
the credit is being made. Nothing in this subsection shall be
construed to require refunding any repayment of a loan. At the
option of the lender, the amount of such adjustment may be
distributed to the borrower either by reduction in the amount
of the periodic payment on the loan, by reducing the number
of payments that shall be made with respect to the loan, or by
reducing the amount of the final payment of the loan. Nothing
in this paragraph shall be construed to require the lender to
make additional disclosures pursuant to section 433(b).
(6) PUBLICATION OF TREASURY BILL RATE. For the purpose
of enabling holders of loans to make the determinations and
adjustments provided for in this subsection, the Secretary shall
for each calendar quarter commencing with the quarter begin-
ning on July 1, 1987, publish a notice of the average of the
bond equivalent rates of 91-day Treasury bills auctioned for
168
161
HIGHER EDUCATION ACT OF 1965
Sec. 427A
such quarter. Such notice shall be published not later than 7
days after the end of the quarter to which the notice relates.
(7) CONVERSION TO VARIABLE RATE.(A) Subject to sub-
paragraphs (C) and (D), a lender or holder shall convert the in-
terest rate on a loan that is made pursuant to this part and
is subject to the provisions of this subsection to a variable rate.
Such conversion shall occur not later than January 1, 1995,
and, commencing on the date of conversion, the applicable in-
terest rate for each 12-month period beginning on July 1 and
ending on June 30 shall be determined by the Secretary on the
June 1 preceding each such 12-month period and be equal to
the sum of (i) the bond equivalent rate of the 91-day Treasury
bills auctioned at the final auction prior to such June 1; and
(ii) 3.25 percent in the case of loans described in paragraph (1),
or 3.10 percent in the case of loans described in paragraph (3).
(B) In connection with the conversion specified in subpara-
graph (A) for any period prior to such conversion, and subject
to paragraphs (C) and (D), a lender or holder shall convert the
interest rate to a variable rate on a loan that is made pursuant
to this part and is subject to the provisions of this subsection
to a variable rate. The interest rates for such period shall be
reset on a quarterly basis and the applicable interest rate for
any quarter or portion thereof shall equal the sum of (i) the av-
erage of the bond equivalent rates of 91-Treasury bills auc-
tioned for the preceding 3-month period, and (ii) 3.25 percent
in the case of loans described in paragraph (1) or 3.10 percent
in the case of loans described in paragraph (3). The rebate of
excess interest derived through this conversion shall be pro-
vided to the borrower as specified in paragraph (5) for loans
described in paragraph (1) or to the Government and borrower
as specified in paragraph (3).
(C) A lender or holder of a loan being converted pursuant
to this paragraph shall complete such conversion on or before
January 1, 1995. The lender or holder shall notify the borrower
that the loan shall be converted to a variable interest rate and
provide a description of the rate to the borrower not later than
30 days prior to the conversion. The notice shall advise the
borrower that such rate shall be calculated in accordance with
the procedures set forth in this paragraph and shall provide
the borrower with a substantially equivalent benefit as the ad-
justment otherwise provided for under this subsection. Such
notice may be incorporated into the disclosure required under
section 433(b) if such disclosure has not been previously made.
(D) The interest rate on a loan converted to a variable rate
pursuant to this paragraph shall not exceed the maximum in-
terest rate applicable to the loan prior to such conversion.
(E) Loans on which the interest rate is converted in ac-
cordance with subparagraph (A) or (B) shall not be subject to
any other provisions of this subsection.
(j) INTEREST RATES FOR NEW LOANS BETWEEN JULY 1, 1998
AND OCTOBER 1, 1998.
(1) IN GENERAL.Notwithstanding subsection (h), but sub-
ject to paragraph (2), with respect to any loan made, insured,
or guaranteed under this part (other than a loan made pursu-
169
Sec. 421A
HIGHER EDUCATION ACT OF 1965
162
ant to section 428B or 428C) for which the first disbursement
is made on or after July 1, 1998, and' before October 1, 1998,
the applicable rate of interest shall, during any 12-month pe-
riod beginning on July 1 and ending on June 30, be determined
on the preceding June 1 and be equal to
(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction held prior to such June 1;
plus
(B) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(2) IN SCHOOL AND GRACE PERIOD RULES.Notwithstand-
ing subsection (h), with respect to any loan under this part
(other than a loan made pursuant to section 428B or 428C) for
which the first disbursement is made on or after July 1, 1998,
and before October 1, 1998, the applicable rate of interest for
interest which accrues
(A) prior to the beginning of the repayment period of
the loan; or
(B) during the period in which principal need not be
paid (whether or not such principal is in fact paid) by rea-
son of a provision described in section 428(b)(1)(M) or
427(a)(2)(C),
shall be determined under paragraph (1) by substituting "1.7
percent" for "2.3 percent".
(3) PLUS LOANS.Notwithstanding subsection (h), with re-
spect to any loan under section 428B for which the first dis-
bursement is made on or after July 1, 1998, and before October
1, 1998, 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 the lesser
of
(A)(i) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction held prior to such June 1;
plus
(ii) 3.1 percent; or
(B) 9.0 percent.
(4) CONSULTATION.The Secretary shall determine the ap-
plicable rate of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.
(k) INTEREST RATES FOR NEW LOANS ON OR AFTER OCTOBER 1,
1998, AND BEFORE JULY 1, 2003.
(1) IN GENERAL.Notwithstanding subsection (h) and sub-
ject to paragraph (2) of this subsection, with respect to any
loan made, insured, or guaranteed under this part (other than
a loan made pursuant to section 428B or 428C) for which the
first disbursement is made on or after October 1, 1998, and be-
fore July 1, 2003, the applicable rate of interest shall, during
any 12-month period beginning on July 1 and ending on June
30, be determined on the preceding June 1 and be equal to
(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction held prior to such June 1;
plus
1 '1 0
163
HIGHER EDUCATION ACT OF 1965
Sec. 427A
(B) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(2) IN SCHOOL AND GRACE PERIOD RULES.Notwithstand-
ing subsection (h), with respect to any loan under this part
(other than a loan made pursuant to section 428B or 428C) for
which the first disbursement is made on or after October 1,
1998, and before July 1, 2003, the applicable rate of interest
for interest which accrues
(A) prior to the beginning of the repayment period of
the loan; or
(B) during the period in which principal need not be
paid (whether or not such principal is in fact paid) by rea-
son of a provision described in section 427(a)(2)(C) or
428(b)(1)(M),
shall be determined under paragraph (1) by substituting "1.7
percent" for "2.3 percent".
(3) PLUS LOANS.Notwithstanding subsection (h), with re-
spect to any loan under section 428B for which the first dis-
bursement is made on or after October 1, 1998, and before July
1, 2003, the applicable rate of interest shall be determined
under paragraph (1)
(A) by substituting "3.1 percent" for "2.3 percent"; and
(B) by substituting "9.0 percent" for "8.25 percent".
(4) CONSOLIDATION LOANS.With respect to any consolida-
tion loan under section 428C for which the application is re-
ceived by an eligible lender on or after October 1, 1998, and
before July 1, 2003, the applicable rate of interest shall be at
an annual rate on the unpaid principal balance of the loan that
is equal to the lesser of
(A) the weighted average of the interest rates on the
loans consolidated, rounded to the nearest higher one-
eighth of 1 percent; or
(B) 8.25 percent.
(5) CONSULTATION.The Secretary shall determine the ap-
plicable rate of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.
(1) LESSER RATES PERMITTED.Nothing in this section or sec-
tion 428C shall be construed to prohibit a lender from charging a
borrower interest at a rate less than the rate which is applicable
under this part.
(m) DEFINITIONS.For the purpose of subsections (a) and (d) of
this section
(1) the term "period of instruction" shall, at the discretion
of the lender, be any academic year, semester, trimester, quar-
ter, or other academic period; or shall be the period for which
the loan is made as determined by the institution of higher
education; and
(2) the term "period of enrollment" shall be the period for
which the loan is made as determined by the institution of
higher education and shall coincide with academic terms such
as academic year, semester, trimester, quarter, or other aca-
demic period as defined by such institution.
171
Sec. 428
HIGHER EDUCATION ACT OF 1965
164
SEC. 428. [20 U.S.C. 1078] 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
(A) which is insured by the Secretary under this part;
(B) which is insured under a program of a State or of
a nonprofit private institution or organization which was
contracted for, and paid to the student, within the period
specified in paragraph (5), and which
(i) in the case of a loan insured prior to July 1,
1967, was made by an eligible lender and is insured
under a program which meets the requirements of
subparagraph (E) of subsection (b)(1) and provides
that repayment of such loan shall be in installments
beginning not earlier than 60 days after the student
ceases to pursue a course of study (as described in
subparagraph (D) of subsection (b)(1)) at an eligible in-
stitution, or
(ii) in the case of a loan insured after June 30,
1967, was made by an eligible lender and is insured
under a program covered by an agreement made pur-
suant to subsection (b),
shall be entitled to have paid on his or her behalf and for his
or her account to the holder of the loan a portion of the inter-
est on such loan under circumstances described in paragraph
(2).
or
(2) ADDITIONAL REQUIREMENTS TO RECEIVE SUBSIDY.(A)
Each student qualifying for a portion of an interest payment
under paragraph (1) shall
(i) have provided to the lender a statement from the
eligible institution, at which the student has been accepted
for enrollment, or at which the student is in attendance,
which (I) sets forth the loan amount for which the stu-
dent shows financial need; and
(II) sets forth a schedule for disbursement of the
proceeds of the loan in installments, consistent with
the requirements of section 428G; and
(ii) meet the requirements of subparagraph (B); and
(iii) 2 have provided to the lender at the time of ap-
plication for a loan made, insured, or guaranteed
under this part, the student's driver's number, if any.
(B) For the purpose of clause (ii) of subparagraph (A), a
student shall qualify for a portion of an interest payment
under paragraph (1) if the eligible institution has determined
and documented the student's amount of need for a loan based
on the student's estimated cost of attendance, estimated finan-
cial assistance, and, for the purpose of an interest payment
pursuant to this section, expected family contribution (as de-
1So in law (112 Stat. 1682); "and" should probably not appear.
2 Margin so in law. Margin should be 2 ems to the left.
165
HIGHER EDUCATION ACT OF 1965
Sec. 428
termined under part F), subject to the provisions of subpara-
graph (D).
(C) For the purpose of subparagraph (B) and this
paragraph
(i) a student's cost of attendance shall be determined
under section 472;
(ii) a student's estimated financial assistance means,
for the period for which the loan is sought
(I) the amount of assistance such student will re-
ceive under subpart 1 of part A (as determined in ac-
cordance with section 484(b)), subpart 3 of part A, and
parts C and E;
(II) any veterans' education benefits paid because
of enrollment in a postsecondary education institution,
including veterans' education benefits (as defined in
section 480(c), but excluding benefits described in
paragraph (2)(E) of such section); plus
(III) other scholarship, grant, or loan assistance,
but excluding any national service education award or
post-service benefit under title I of the National and
Community Service Act of 1990; and
(iii) the determination of need and of the amount of a
loan by an eligible institution under subparagraph (B)
with respect to a student shall be calculated in accordance
with part F.
(D) An eligible institution may not, in carrying out the pro-
visions of subparagraphs (A) and (B) of this paragraph, provide
a statement which certifies the eligibility of any student to re-
ceive any loan under this part in excess of the maximum
amount applicable to such loan.
(E) For the purpose of subparagraphs (B) and (C) of this
paragraph, any loan obtained by a student under section 428A
or 428H or a parent under section 428B of this Act or under
any State-sponsored or private loan program for an academic
year for which the determination is made may be used to offset
the expected family contribution of the student for that year.
(3) AMOUNT OF INTEREST SUBSIDY.-(A)(i) Subject to sec-
tion 438(c), the portion of the interest on a loan which a stu-
dent is entitled to have paid, on behalf of and for the account
of the student, to the holder of the loan pursuant to paragraph
(1) of this subsection shall be equal to the total amount of the
interest on the unpaid principal amount of the loan
(I) which accrues prior to the beginning of the repay-
ment period of the loan, or
(II) which accrues during a period in which principal
need not be paid (whether or not such principal is in fact
paid) by reason of a provision described in subsection
(b)(1)(M) of this section or in section 427(a)(2)(C).
(ii) Such portion of the interest on a loan shall not exceed,
for any period, the amount of the interest on that loan which
is payable by the student after taking into consideration the
amount of any interest on that loan which the student is enti-
tled to have paid on his or her behalf for that period under any
State or private loan insurance program.
Sec. 428
HIGHER EDUCATION ACT OF 1965
166
(iii) The holder of a loan with respect to which payments
are required to be made under this section shall be deemed to
have a contractual right, as against the United States, to re-
ceive from the Secretary the portion of interest which has been
so determined without administrative delay after the receipt
by the Secretary of an accurate and complete request for pay-
ment pursuant to paragraph (4).
(iv) The Secretary shall pay this portion of the interest to
the holder of the loan on behalf of and for the account of the
borrower at such times as may be specified in regulations in
force when the applicable agreement entered into pursuant to
subsection (b) was made, or, if the loan was made by a State
or is insured under a program which is not covered by such an
agreement, at such times as may be specified in regulations in
force at the time the loan was paid to the student.
(v) A lender may not receive interest on a loan for any pe-
riod that precedes the date that is
(I) in the case of a loan disbursed by check, 10 days
before the first disbursement of the loan; or
(II) in the case of a loan disbursed by electronic funds
transfer, 3 days before the first disbursement of the loan.
(B) If
(i) a State student loan insurance program is covered
by an agreement under subsection (b),
(ii) a statute of such State limits the interest rate on
loans insured by such program to a rate which is less than
the applicable interest rate under this part, and
(iii) the Secretary determines that subsection (d) does
not make such statutory limitation inapplicable and that
such statutory limitation threatens to impede the carrying
out of the purpose of this part,
then the Secretary may pay an administrative cost allowance
to the holder of each loan which is insured under such program
and which is made during the period beginning on the 60th
day after the date of enactment of the Higher Education
Amendments of 1968 and ending 120 days after the adjourn-
ment of such State's first regular legislative session which ad-
journs after January 1, 1969. Such administrative cost allow-
ance shall be paid over the term of the loan in an amount per
year (determined by the Secretary) which shall not exceed 1
percent of the unpaid principal balance of the loan.
(4) SUBMISSION OF STATEMENTS BY HOLDERS ON AMOUNT OF
PAYMENT.Each holder of a loan with respect to which pay-
ments of interest are required to be made by the Secretary
shall submit to the Secretary, at such time or times and in
such manner as the Secretary may prescribe, statements con-
taining such information as may be required by or pursuant to
regulation for the purpose of enabling the Secretary to deter-
mine the amount of the payment which he must make with re-
spect to that loan.
(5) DURATION OF AUTHORITY TO MAKE INTEREST SUBSIDIZED
LOANS.The period referred to in subparagraph (B) of para-
graph (1) of this subsection shall begin on the date of enact-
ment of this Act and end at the close of September 30, 2004,
161
HIGHER EDUCATION ACT OF 1965
Sec. 428
except that, in the case of a loan made or insured under a stu-
dent 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, 2008.
(6) ASSESSMENT OF BORROWER'S FINANCIAL CONDITION NOT
PROHIBITED OR REQUIRED.Nothing in this or any other Act
shall be construed to prohibit or require, unless otherwise spe-
cifically provided by law, a lender to evaluate the total finan-
cial situation of a student making application for a loan under
this part, or to counsel a student with respect to any such loan,
or to make a decision based on such evaluation and counseling
with respect to the dollar amount of any such loan.
(7) LOANS THAT HAVE NOT BEEN CONSUMMATED.Lenders
may not charge interest or receive interest subsidies or special
allowance payments for loans for which the disbursement
checks have not been cashed or for which electronic funds
transfers have not been completed.
(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 enti-
tling 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 .pro-
vided for in subsection (a) if the Secretary determines that the
student loan insurance program
(A) authorizes the insurance in any academic year, as
defined in section 481(a)(2), or its equivalent (as deter-
mined under regulations of the Secretary) for any student
who is carrying at an eligible institution or in a program
of study abroad approved for credit by the eligible home in-
stitution at which such student is enrolled at least one-half
the normal full-time academic workload (as determined by
the institution) in any amount up to a maximum of
(i) in the case of a student at an eligible institu-
tion who has not successfully completed the first year
of a program of undergraduate education
(I) $2,625, if such student is enrolled in a pro-
gram whose- length is at least one academic year
in length; and
(II) if such student is enrolled in a program of
undergraduate education which is less than 1 aca-
demic year, the maximum annual loan amount
that such student may receive may not exceed the
amount that bears the same ratio to the amount
specified in subclause (I) as the length of such pro-
gram measured in semester, trimester, quarter, or
clock hours bears to 1 academic year;
(ii) in the case of a student. at an eligible institu-
tion who has successfully completed such first year
but has not successfully completed the remainder of a
program of undergraduate education-
1'7
Sec. 428
HIGHER EDUCATION ACT OF 1965
168
(I) $3,500; or
(II) if such student is enrolled in a program of
undergraduate education, the remainder of which
is less than one academic year, the maximum an-
nual loan amount that such student may receive
may not exceed the amount that bears the same
ratio to the amount specified in subclause (I) as
such remainder measured in semester, trimester,
quarter, or clock hours bears to one academic
year;
(iii) in the case of a student at an eligible institu-
tion who has successfully completed the first and sec-
ond years of a program of undergraduate education
but has not successfully completed the remainder of
such program
(I) $5,500; or
(II) if such student is enrolled in a program of
undergraduate education, the remainder of which
is less than one academic year, the maximum an-
nual loan amount that such student may receive
may not exceed the amount that bears the same
ratio to the amount specified in subclause (I) as
such remainder measured in semester, trimester,
quarter, or clock hours bears to one academic
year;
(iv) in the case of a student who has received an
associate or baccalaureate degree and is enrolled in an
eligible program for which the institution requires
such degree for admission, the number of years that a
student has completed in a program of undergraduate
education shall, for the purposes of clauses (ii) and
(iii), include any prior enrollment in the eligible pro-
gram of undergraduate education for which the stu-
dent was awarded such degree;
(v) in the case of a graduate or professional stu-
dent (as defined in regulations of the Secretary) at an
eligible institution, $8,500; and
(vi) in the case of a student enrolled in coursework
specified in sections 484(b)(3)(B) and 484(b)(4)(B)--
(I) $2,625 for coursework necessary for enroll-
ment in an undergraduate degree or certificate
program, and, in the case of a student who has ob-
tained
a
baccalaureate
degree,
$5,500
for
coursework necessary for enrollment in a graduate
or professional degree or certification program;
and
(II) in the case of a student who has obtained
a baccalaureate degree, $5,500 for coursework nec-
essary for a professional credential or certification
from a State required for employment as a teacher
in an elementary school or secondary school;
except in cases where the Secretary determines, pursuant
to regulations, that a higher amount is warranted in order
to carry out the purpose of this part with respect to stu-
169
HIGHER EDUCATION ACT OF 1965
Sec. 428
dents engaged in specialized training requiring exception-
ally high costs of education, but the annual insurable limit
per student shall not be deemed to be exceeded by a line
of credit under which actual payments by the lender to the
borrower will not be made in any years in excess of the an-
nual limit;
(B) provides that the aggregate insured unpaid prin-
cipal amount for all such insured loans made to any stu-
dent shall be any amount up to a maximum of
(i) $23,000, in the case of any student who has not
successfully completed a program of undergraduate
education, excluding loans made under section 428A or
428B; and
(ii) $65,500, in the case of any graduate or profes-
sional student (as defined by regulations of the Sec-
retary), and (I) including any loans which are insured
by the Secretary under this section, or by a guaranty
agency, made to such student before the student be-
came a graduate or professional student, but (II) ex-
cluding loans made under section 428A or 428B,
except that the Secretary may increase the limit applicable
to students who are pursuing programs which the Sec-
retary determines are exceptionally expensive;
(C) authorizes the insurance of loans to any individual
student for at least 6 academic years of study or their
equivalent (as determined under regulations of the Sec-
retary);
(D) provides that (i) the student borrower shall be en-
titled to accelerate without penalty the whole or any part
of an insured loan, (ii) the student borrower may annually
change the selection of a repayment plan under this part,
and (iii) the note, or other written evidence of any loan,
may contain such reasonable provisions relating to repay-
ment in the event of default by the borrower as may be au-
thorized by regulations of the Secretary in effect at the
time such note or written evidence was executed, and shall
contain a notice that repayment may, following a default
by the borrower, be subject to income contingent repay-
ment in accordance with subsection (m);
(E) subject to subparagraphs (D) and (L), and except
as provided by subparagraph (M), provides that
(i) not more than 6 months prior to the date on
which the borrower's first payment is due, the lender
shall offer the borrower of a loan made, insured, or
guaranteed under this section or section 428H, the op-
tion of repaying the loan in accordance with a stand-
ard, graduated, income-sensitive, or extended repay-
ment schedule (as described in paragraph (9)) estab-
lished by the lender in accordance with regulations of
the Secretary; and
(ii) repayment of loans shall be in installments in
accordance with the repayment plan selected under
paragraph (9) and commencing at the beginning of the
repayment period determined under paragraph (7);
177
Sec. 428
HIGHER EDUCATION ACT OF 1965
170
(F) authorizes interest on the unpaid balance of the
loan at a yearly rate not in excess (exclusive of any pre-
mium for insurance which may be passed on to the bor-
rower) of the rate required by section 427A;
(G) insures 98 percent of the unpaid principal of loans
insured under the program, except that such program
shall insure 100 percent of the unpaid principal of loans
made with funds advanced pursuant to section 428(j) or
439(q);
(H) provides for collection of a single insurance pre-
mium equal to not more than 1.0 percent of the principal
amount of the loan, by deduction proportionately from
each installment payment of the proceeds of the loan to
the borrower, and insures that the proceeds of the pre-
mium will not be used for incentive payments to lenders;
(I) provides that the benefits of the loan insurance pro-
gram will not be denied any student who is eligible for in-
terest benefits under subsection (a) (1) and (2);
(J) provides that a student may obtain insurance
under the program for a loan for any year of study at an
eligible institution;
(K) in the case of a State program, provides that such
State program is administered by a single State agency, or
by one or more nonprofit private institutions or organiza-
tions under supervision of a single State agency;
(L) provides that the total of the payments by a
borrower
(i) except as otherwise provided by a repayment
plan selected by the borrower under clause (ii) or (iii)
of paragraph (9XA), during any year of any repayment
period with respect to the aggregate amount of all
loans to that borrower which are insured under this
part shall not, unless the borrower and the lender oth-
erwise agree, be less than $600 or the balance of all
such loans (together with interest thereon), whichever
amount is less (but in no instance less than the
amount of interest due and payable, notwithstanding
any payment plan under paragraph (9)(A)); and
(ii) for a monthly or other similar payment period
with respect to the aggregate of all loans held by the
lender may, when the amount of a monthly or other
similar payment is not a multiple of $5, be rounded to
the next highest whole dollar amount that is a mul-
tiple of $5;
(M) provides that periodic installments of principal
need not be paid, but interest shall accrue and be paid by
the Secretary, during any period
(i) during which the borrower
(I) is pursuing at least a half-time course of
study as determined by an eligible institution, ex-
cept that no borrower, notwithstanding the provi-
sions of the promissory note, shall be required to
borrow an additional loan under this title in order
171
HIGHER EDUCATION ACT OF 1965
Sec. 428
to be eligible to receive a deferment under this
clause; or
(II) is pursuing a course of study pursuant to
a graduate fellowship program approved by the
Secretary, or pursuant to a rehabilitation training
program for disabled individuals approved by the
Secretary,
except that no borrower shall be eligible for a
deferment under this clause, or loan made under this
part (other than a loan made under 428B or 428C),
while serving in a medical internship or residency pro-
gram;
(ii) not in excess of 3 years during which the bor-
rower is seeking and unable to find full-time employ-
ment, except that no borrower who provides evidence
of eligibility for unemployment benefits shall be re-
quired
to
provide
additional
paperwork
for
a
deferment under this clause; or
(iii) not in excess of 3 years for any reason which
the lender determines, in accordance with regulations
prescribed by the Secretary under section 435(o), has
caused or will cause the borrower to have an economic
hardship;
(N) provides that funds borrowed by a student
(i) are disbursed to the institution by check or
other means that is payable to, and requires the en-
dorsement or other certification by, such student; or
(ii) in the case of a student who is studying out-
side the United States in a program of study abroad
that is approved for credit by the home institution at
which such student is enrolled or at an eligible foreign
institution, are, at the request of the student, dis-
bursed directly to the student by the means described
in clause (i), unless such student requests that the
check be endorsed, or the funds transfer authorized,
pursuant to an authorized power-of-attorney;
(0) provides that the proceeds of the loans will be dis-
bursed in accordance with the requirements of section
428G;
(P) requires the borrower to notify the institution con-
cerning any change in local address during enrollment and
requires the borrower and the institution at which the bor-
rower is in attendance promptly to notify the holder of the
loan, directly or through the guaranty agency, concerning
(i) any change of permanent address, (ii) when the student
ceases to be enrolled on at least a half-time basis, and (iii)
any other change in status, when such change in status af-
fects the student's eligibility for the loan;
(Q) provides for the guarantee of loans made to stu-
dents and parents under sections 428A and 428B;
(R) with respect to lenders which are eligible institu-
tions, provides for the insurance of loans by only such in-
stitutions as are located within the geographic area served
by such guaranty agency;
179
Sec. 428
HIGHER EDUCATION ACT OF 1965
112
(S) provides no restrictions with respect to the insur-
ance of loans for students who are otherwise eligible for
loans under such program if such a student is accepted for
enrollment in or is attending an eligible institution within
the State, or if such a student is a legal resident of the
State and is accepted for enrollment in or is attending an
eligible institution outside that State;
(T) authorizes (i) the limitation of the total number of
loans or volume of loans, made under this part to students
attending a particular eligible institution during any aca-
demic year; and (ii) the emergency action, limitation, sus-
pension, or termination of the eligibility of an eligible insti-
tution if
(I) such institution is ineligible for the emergency
action, limitation, suspension, or termination of eligi-
ble institutions under regulations issued by the Sec-
retary or is ineligible pursuant to criteria, rules, or
regulations issued under the student loan insurance
program which are substantially the same as regula-
tions with respect to emergency action, limitation, sus-
pension, or termination of such eligibility issued by
the Secretary;
(II) there is a State constitutional prohibition af-
fecting the eligibility of such an institution;
(III) such institution fails to make timely refunds
to students as required by regulations issued by the
Secretary or has not satisfied within 30 days of
issuance a final judgment obtained by a student seek-
ing such a refund;
(IV) such institution or an owner, director, or offi-
cer of such institution is found guilty in any criminal,
civil, or administrative proceeding, or such institution
or an owner, director, or officer of such institution is
found liable in any civil or administrative proceeding,
regarding the obtaining, maintenance, or disburse-
ment of State or Federal grant, loan, or work assist-
ance funds; or
(V) such institution or an owner, director, or offi-
cer of such institution has unpaid financial liabilities
involving the improper acquisition, expenditure, or re-
fund of State or Federal financial assistance funds;
except that, if a guaranty agency limits, suspends, or ter-
minates the participation of an eligible institution, the Sec-
retary shall apply that limitation, suspension, or termi-
nation to all locations of such institution, unless the Sec-
retary finds, within 30 days of notification of the action by
the guaranty agency, that the guaranty agency's action did
not comply with the requirements of this section;
(U) provides (i) for the eligibility of all lenders de-
scribed in section 435(d)(1) under reasonable criteria, un-
less (I) that lender is eliminated as a lender under regula-
tions for the emergency action, limitation, suspension, or
termination of a lender under the Federal student loan in-
surance program or is eliminated as a lender pursuant to
1 80
173
HIGHER EDUCATION ACT OF 1965
Sec. 428
criteria issued under the student loan insurance program
which are substantially the same as regulations with re-
spect to such eligibility as a lender issued under the Fed-
eral student loan insurance program, or (II) there is a
State constitutional prohibition affecting the eligibility of a
lender, (ii) assurances that the guaranty agency will report
to the Secretary concerning changes in such criteria, in-
cluding any procedures in effect under such program to
take emergency action, limit, suspend, or terminate lend-
ers, and (iii) for (I) a compliance audit of each lender that
originates or holds more than $5,000,000 in loans made
under this title for any lender fiscal year (except that each
lender described in section 435(d)(1)(A)(ii)(III) shall annu-
ally submit the results of an audit required by this clause),
at least once a year and covering the period since the most
recent audit, conducted by a qualified, independent organi-
zation or person in accordance with standards established
by the Comptroller General for the audit of governmental
organizations, programs, and functions, and as prescribed
in regulations of the Secretary, the results of which shall
be submitted to the Secretary, or (II) with regard to a
lender that is audited under chapter 75 of title 31, United
States Code, such audit shall be deemed to satisfy the re-
quirements of subclause (I) for the period covered by such
audit, except that the Secretary may waive the require-
ments of this clause (iii) if the lender submits to the Sec-
retary the results of an audit conducted for other purposes
that the Secretary determines provides the same informa-
tion as the audits required by this clause;
(V) provides authority for the guaranty agency to re-
quire a participation agreement between the guaranty
agency and each eligible institution within the State in
which it is designated, as a condition for guaranteeing
loans made on behalf of students attending the institution;
(W) provides assurances that the agency will imple-
ment all requirements of the Secretary for uniform claims
and procedures pursuant to section 432(1);
(X) provides information to the Secretary in accord-
ance with section 428(c)(9) and maintains reserve funds
determined by the Secretary to be sufficient in relation to
such agency's guarantee obligations; and
(Y) provides that
(i) the lender shall determine the eligibility of a
borrower for a deferment described in subparagraph
(M)(i) based on receipt of
(I) a request for deferment from the borrower
and documentation of the borrower's eligibility for
the deferment;
(II) a newly completed loan application that
documents
the
borrower's
eligibility
for
a
deferment; or
(III) student status information received by
the lender that the borrower is enrolled on at
least a half-time basis; and
I.8
Sec. 428
HIGHER EDUCATION ACT OF 1965
174
(ii) the lender will notify the borrower of the
granting of any deferment under clause (i)(II) or (III)
of this subparagraph and of the option to continue
paying on the loan.
(2) CONTENTS OF INSURANCE PROGRAM AGREEMENT.Such
an agreement shall
(A) provide that the holder of any such loan will be re-
quired to submit to the Secretary, at such time or times
and in such manner as the Secretary may prescribe, state-
ments containing such information as may be required by
or pursuant to regulation for the purpose of enabling the
Secretary to determine the amount of the payment which
must be made with respect to that loan;
(B) include such other provisions as may be necessary
to protect the United States from the risk of unreasonable
loss and promote the purpose of this part, including such
provisions as may be necessary for the purpose of section
437, and as are agreed to by the Secretary and the guar-
anty agency, as the case may be;
(C) provide for making such reports, in such form and
containing such information, including financial informa-
tion, as the Secretary may reasonably require to carry out
the Secretary's functions under this part and protect the fi-
nancial interest of the United States, and for keeping such
records and for affording such access thereto as the Sec-
retary may find necessary to assure the correctness and
verification of such reports;
(D) provide for
(i) conducting, except as provided in clause (ii), fi-
nancial and compliance audits of the guaranty agency
on at least an annual basis and covering the period
since the most recent audit, conducted by a qualified,
independent organization or person in accordance with
standards established by the Comptroller General for
the audit of governmental organizations, programs,
and functions, and as prescribed in regulations of the
Secretary, the results of which shall be submitted to
the Secretary; or
(ii) with regard to a guaranty program of a State
which is audited under chapter 75 of title 31, United
States Code, deeming such audit to satisfy the require-
ments of clause (i) for the period of time covered by
such audit;
(E)(i) provide that any guaranty agency may transfer
loans which are insured under this part to any other guar-
anty agency with the approval of the holder of the loan
and such other guaranty agency; and
(ii) provide that the lender (or the holder of the loan)
shall, not later than 120 days after the borrower has left
the eligible institution, notify the borrower of the date on
which the repayment period begins; and
(F) provide that, if the sale, other transfer, or assign-
ment of a loan made under this part to another holder will
result in a change in the identity of the party to whom the
115
HIGHER EDUCATION ACT OF 1965
Sec. 428
borrower must send subsequent payments or direct any
communications concerning the loans, then
(i) the transferor and the transferee will be re-
quired, not later than 45 days from the date the trans-
feree acquires a legally enforceable right to receive
payment from the borrower on such loan, either jointly
or separately to provide a notice to the borrower of
(I) the sale or other transfer;
(II) the identity of the transferee;
(III) the name and address of the party to
whom subsequent payments or communications
must be sent; and
(IV) the telephone numbers of both the trans-
feror and the transferee; and
(ii) the transferee will be required to notify the
guaranty agency, and, upon the request of an institu-
tion of higher education, the guaranty agency shall no-
tify the last such institution the student attended
prior to the beginning of the repayment period of any
loan made under this part, of
(I) any sale or other transfer of the loan; and
(II) the address and telephone number by
which contact may be made with the new holder
concerning repayment of the loan,
except that this subparagraph (F) shall only apply if the
borrower is in the grace period described in section
427(a)(2)(B) or 428(b)(7) or is in repayment status.
(3) RESTRICTIONS ON INDUCEMENTS, MAILINGS, AND ADVER-
TISING.-A guaranty agency shall not
(A) offer, directly or indirectly, premiums, payments,
or other inducements to any educational institution or its
employees in order to secure applicants for loans under
this part;
(B) offer, directly or indirectly, any premium, incentive
payment, or other inducement to any lender, or any agent,
employee, or independent contractor of any lender or guar-
anty agency, in order to administer or market loans made
under this part (other than a loan made under section
428H or a loan made as part of a guaranty agency's lend-
er-of-last-resort program) for the purpose of securing the
designation of that guaranty agency as the insurer of such
loans;
(C) conduct unsolicited mailings of student loan appli-
cation forms to students enrolled in secondary school or a
postsecondary institution, or to parents of such students,
except that applications may be mailed to borrowers who
have previously received loans guaranteed under this part
by the guaranty agency; or
(D) conduct fraudulent or misleading advertising con-
cerning loan availability.
It shall not be a violation of this paragraph for a guaranty
agency to provide assistance to institutions of higher education
comparable to the kinds of assistance provided to institutions
of higher education by the Department ofEducation.
183
Sec. 428
HIGHER EDUCATION ACT OF 1965
116
(4)
SPECIAL RULE.For the
purpose
of
paragraph
(1)(M)(iXIII) of this subsection, the Secretary shall approve any
course of study at a foreign university that is accepted for the
completion of a recognized international fellowship program by
the administrator of such a program. Requests for deferment
of repayment of loans under this part by students engaged in
graduate or postgraduate 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.
(5) GUARANTY AGENCY INFORMATION TRANSFERS.(A) Until
such time as the Secretary has implemented section 485B and
is able to provide to guaranty agencies the information re-
quired by such section, any guaranty agency may request infor-
mation regarding loans made after January 1, 1987, to stu-
dents who are residents of the State for which the agency is
the designated guarantor, from any other guaranty agency in-
suring loans to such students.
(B) Upon a request pursuant to subparagraph (A), a guar-
anty agency shall provide
(i) the name and the social security number of the bor-
rower; and
(ii) the amount borrowed and the cumulative amount
borrowed.
(C) Any costs associated with fulfilling the request of a
guaranty agency for information on students shall be paid by
the guaranty agency requesting the information.
(6) STATE GUARANTY AGENCY INFORMATION REQUEST OF
STATE LICENSING BOARDS.Each guaranty agency is authorized
to enter into agreements with each appropriate State licensing
board under which the State licensing board, upon request,
will furnish the guaranty agency with the address of a student
borrower in any case in which the location of the student bor-
rower is unknown or unavailable to the guaranty agency.
(7) REPAYMENT PERIOD.(A) In the case of a loan made
under section 427 or 428, the repayment period shall exclude
any period of authorized deferment or forbearance and shall
begin
(i) the day after 6 months after the date the student
ceases to carry at least one-half the normal full-time aca-
demic workload (as determined by the institution); or
(ii) on an earlier date if the borrower requests and is
granted a repayment schedule that provides for repayment
to commence at an earlier date.
(B) In the case of a loan made under section 428H, the re-
payment period
shall exclude any period of authorized
deferment or forbearance, and shall begin as described in
clause (i) or (ii) of subparagraph (A), but interest shall begin
to accrue or be paid by the borrower on the day the loan is dis-
bursed.
(C) In the case of a loan made under section 428A, 428B,
or 428C, the repayment period shall begin on the day the loan
is disbursed, or, if the loan is disbursed in multiple install-
ments, on the day of the last such disbursement, and shall ex-
clude any period of authorized deferment or forbearance.
177
HOER EDUCATION ACT OF 1965
Sec. 428
(D) There shall be excluded from the 6-month period that
begins on the date on which a student ceases to carry at least
one-half the normal full-time academic workload as described
in subparagraph (A)(i) any period not to exceed 3 years during
which a borrower who is a member of a reserve component of
the Armed Forces named in section 10101 of title 10, United
States Code, is called or ordered to active duty for a period of
more than 30 days - (as defined in section 101(d)(2) of such
title). Such period of exclusion shall include the period nec-
essary to resume enrollment at the borrower's next available
regular enrollment period.
(8) MEANS OF DISBURSEMENT OF LOAN PROCEEDS.Nothing
in this title shall be interpreted to prohibit the disbursement
of loan proceeds by means other than by check or to allow the
Secretary to require checks to be made co-payable to the insti-
tution and the borrower.
(9) REPAYMENT PLANS.
(A) DESIGN AND SELECTION.In accordance with regu-
lations promulgated by the Secretary, the lender shall
offer a borrower of a loan made under this part the plans
described in this subparagraph for repayment of such loan,
including principal and interest thereon. No plan may re-
quire a borrower to repay a loan in less than 5 years un-
less the borrower, during the 6 months immediately pre-
ceding the start of the repayment period, specifically re-
quests that repayment be made over of a shorter period.
The borrower may choose from
(i) a standard repayment plan, with a fixed an-
nual repayment amount paid over a fixed period of
time, not to exceed 10 years;
(ii) a graduated repayment plan paid over a fixed
period of time, not to exceed 10 years;
(iii) an income-sensitive repayment plan, with in-
come-sensitive repayment amounts paid over a fixed
period of time, not to exceed 10 years, except that the
borrower's scheduled payments shall not be less than
the amount of interest due; and
(iv) for new borrowers on or after the date of en-
actment of the Higher Education Amendments of 1998
who accumulate (after such date) outstanding loans
under this part totaling more than $30,000, an ex-
tended repayment plan, with a fixed annual or grad-
uated repayment amount paid over an extended period
of time, not to exceed 25 years, except that the bor-
rower shall repay annually a minimum amount deter-
mined in accordance with paragraph (1)(L)(i).
(B) LENDER SELECTION OF OPTION IF BORROWER DOES
NOT SELECT.If a borrower of a loan made under this part
does not select a repayment plan described in subpara-
graph (A), the lender shall provide the borrower with a re-
payment plan described in subparagraph (A)(i).
(c) GUARANTY AGREEMENTS FOR REIMBURSING LOSSES.
(1) AUTHORITY TO ENTER INTO AGREEMENTS.(A) The Sec-
retary may enter into a guaranty agreement with any guar-
185
Sec. 428
HIGHER EDUCATION ACT OF 1965
118
anty agency, whereby the Secretary shall undertake to reim-
burse it, under such terms and conditions as the Secretary
may establish, with respect to losses (resulting from the de-
fault of the student borrower) on the unpaid balance of the
principal and accrued interest of any insured loan. The guar-
anty agency shall, be deemed to have a contractual right
against the United States, during the life of such loan, to re-
ceive reimbursement according to the provisions of this sub-
section. Upon receipt of an accurate and complete request by
a guaranty agency for reimbursement with respect to such
losses, the Secretary shall pay promptly and without adminis-
trative delay. Except as provided in subparagraph (B) of this
paragraph and in paragraph (7), the amount to be paid a guar-
anty agency as reimbursement under this subsection shall be
equal to 95 percent of the amount expended by it in discharge
of its insurance obligation incurred under its loan insurance
program. A guaranty agency shall file a claim for reimburse-
ment with respect to losses under this subsection within 45
days after the guaranty agency discharges its insurance obliga-
tion on the loan.
(B) Notwithstanding subparagraph (A)
(i) if, for any fiscal year, the amount of such reim-
bursement payments by the Secretary under this sub-
section exceeds 5 percent of the loans which are insured by
such guaranty agency under such program and which were
in repayment at the end of the preceding fiscal year, the
amount to be paid as reimbursement under this subsection
for such excess shall be equal to 851 percent of the amount
of such excess; and
(ii) if, for any fiscal year, the amount of such reim-
bursement payments exceeds 9 percent of such loans, the
amount to be paid as reimbursement under this subsection
for such excess shall be equal to 751 percent of the amount
of such excess.
(C) For the purpose of this subsection, the amount of loans
of a guaranty agency which are in repayment shall be the
original principal amount of loans made by a lender which are
insured by such a guaranty agency reduced by
(i) the amount the insurer has been required to pay to
discharge its insurance obligations under this part;
(ii) the original principal amount of loans insured by
it which have been fully repaid; and
(iii) the original principal amount insured on those
loans for which payment of the first installment of prin-
cipal has not become due pursuant to subsection (b)(1)(E)
of this section or such first installment need not be paid
pursuant to subsection (b)(1)(M) of this section.
(D) Reimbursements of losses made by the Secretary on
loans submitted for claim by an eligible lender, servicer, or
guaranty agency designated for exceptional performance under
section 4281 shall not be subject to additional review by the
'The amendments made by section 417(c)(1) of P.L. 105-244, changing the reimbursement
percentages, apply to loans for which the first disbursement is made on or after-October 1,1998.
179
HIGHER EDUCATION ACT OF 1965
Sec. 428
Secretary or repurchase by the guaranty agency for any reason
other than a determination by the Secretary that the eligible
lender, servicer, or guaranty agency engaged in fraud or other
purposeful misconduct in obtaining designation for exceptional
performance.
(E) Notwithstanding any other provisions of this section, in
the case of a loan made pursuant to a lender-of-last-resort pro-
gram, the Secretary shall apply the provisions of
(i) the fourth sentence of subparagraph (A) by sub-
stituting "100 percent" for "95 percent";
(ii) subparagraph (B)(i) by substituting "100 percent"
for "85 percent"; and
(iii) subparagraph (B)(ii) by substituting "100 percent"
for "75 percent".
(F)1 Notwithstanding any other provisions of this section,
in the case of an outstanding loan transferred to a guaranty
agency from another guaranty agency pursuant to a plan ap-
proved by the Secretary in response to the insolvency of the
latter such guarantee agency, the Secretary shall apply the
provision of
(i) the fourth sentence of subparagraph (A) by sub-
stituting "100 percent" for "95 percent";
(ii) subparagraph (B)(i) by substituting "90 percent"
for "85 percent"; and
(iii) subparagraph (B)(ii) by substituting "80 percent"
for "75 percent".
(G) 2 Notwithstanding any other provision of this sec-
tion, the Secretary shall exclude a loan made pursuant to
a lender-of-last-resort program when making reimburse-
ment payment calculations under subparagraphs (B) and
(C).
(2) CONTENTS OF GUARANTY AGREEMENTS.The guaranty
agreement
(A) shall set forth such administrative and fiscal pro-
cedures as may be necessary to protect the United States
from the risk of unreasonable loss thereunder, to ensure
proper and efficient administration of the loan insurance
program, and to assure that due diligence will be exercised
in the collection of loans insured under the program, in-
cluding a requirement that each beneficiary of insurance
on the loan submit proof that the institution was contacted
and other reasonable attempts were made to locate the
borrower (when the location of the borrower is unknown)
and proof that contact was made with the borrower (when
the location is known);
(B) shall provide for making such reports, in such form
and containing such information, as the Secretary may
reasonably require to carry out the Secretary's functions
under this subsection, and for keeping such records and for
affording such access thereto as the Secretary may find
I See footnote on previous page.
2 Margin so in law.
187
Sec. 428
HIGHER EDUCATION ACT OF 1965
180
necessary to assure the correctness and verification of such
reports;
(C) shall set forth adequate assurances that, with re-
spect to so much of any loan insured under the loan insur-
ance program as may be guaranteed by the Secretary pur-
suant to this subsection, the undertaking of the Secretary
under the guaranty agreement is acceptable in full satis-
faction of State law or regulation requiring the mainte-
nance of a reserve;
(D) shall provide that if, after the Secretary has made
payment under the guaranty agreement pursuant to para-
graph (1) of this subsection with resnect to any loan, any
payments are made in discharge of the obligation incurred
by the borrower with respect to such loan (including any
payments of interest accruing on such loan after such pay-
ment by the Secretary), there shall be paid over to the Sec-
retary (for deposit in the fund established by section 431)
such proportion of the amounts of such payments as is de-
termined (in accordance with paragraph (6)) to represent
his equitable share thereof, but (i) shall provide for sub-
rogation of the United States to the rights of any insur-
ance beneficiary only to the extent required for the pur-
pose of paragraph (8); and (ii) except as the Secretary may
otherwise by or pursuant to regulation provide, amounts
so paid by a borrower on such a loan shall be first applied
in reduction of principal owing on such loan;
(E) shall set forth adequate assurance that an amount
equal to each payment made under paragraph (1) will be
promptly deposited in or credited to the accounts main-
tained for the purpose of section 422(c);
(F) set forth adequate assurances that the guaranty
agency will not engage in any pattern or practice which re-
sults in a denial of a borrower's access to loans under this
part because of the borrower's race, sex, color, religion, na-
tional origin, age, handicapped status, income, attendance
at a particular eligible institution within the area served
by the guaranty agency, length of the borrower's edu-
cational program, or the borrower's academic year in
school;
(G) shall prohibit the Secretary from making any re-
imbursement under this subsection to a guaranty agency
when a default claim is based on an inability to locate the
borrower, unless the guaranty agency, at the time of filing
for reimbursement, certifies to the Secretary that diligent
attempts, including contact with the institution, have been
made to locate the borrower through the use of reasonable
skip-tracing techniques in accordance with regulations pre-
scribed by the Secretary; and
(H) set forth assurances that
(i) upon the request of an eligible institution, the
guaranty agency shall, subject to clauses (ii) and (iii),
furnish to the institution information with respect to
students (including the names and addresses of such
students) who received loans made, insured, or guar-
188
181
HIGHER EDUCATION ACT OF 1965
Sec. 428
anteed under this part for attendance at the eligible
institution and for whom preclaims assistance activi-
ties have been requested under subsection (1);
(ii) the guaranty agency shall not require the pay-
ment from the institution of any fee for such informa-
tion; and
(iii) the guaranty agency will require the institu-
tion to use such information only to assist the institu-
tion in reminding students of their obligation to repay
student loans and shall. prohibit the institution from
disseminating the information for any other purpose.
(I) may include such other provisions as may be nec-
essary to promote the purpose of this part.
(3) FORBEARANCE.-A guaranty agreement under this
subsection
(A) shall contain provisions providing that
(i) upon request, a lender shall grant a borrower
forbearance, renewable at 12-month intervals, on
terms agreed to in writing by the parties to the loan
with the approval of the insurer, and otherwise con-
sistent with the regulations of the Secretary, if the
borrower
(I) is serving in a medical or dental internship
or residency program, the successful completion of
which is required to begin professional practice or
service, or is serving in a medical or dental intern-
ship or residency program leading to a degree or
certificate awarded by an institution of higher
education, a hospital, or a health care facility that
offers postgraduate training, provided that if the
borrower qualifies for a deferment under section
427(a)(2)(C)(vii) or subsection (b)(1)(M)(vii) of this
section as in effect prior to the enactment of the
Higher Education Amendments of 1992, or section
427(a)(2)(C) or subsection (b)(1)(M) of this section
as amended by such amendments, the borrower
has exhausted his or her eligibility for such
deferment;
(II) has a debt burden under this title that
equals or exceeds 20 percent of income; or
(III) is serving in a national service position
for which the borrower receives a national service
educational award under the National and Com-
munity Service Trust Act of 1993;
(ii) the length of the forbearance granted by the
lender
(I) under clause (i)(I) shall equal the length of
time remaining in the borrower's medical or den-
tal internship or residency program, if the bor-
rower is not eligible to receive a deferment de-
scribed in such clause, or such length of time re-
maining in the program after the borrower has ex-
hausted
the
borrower's
eligibility
for
such
deferment;
189
Sec. 428
HIGHER EDUCATION ACT OF 1965
182
(II) under clause (i)(II) shall not exceed 3
years; or
(III) under clause (i)(III) shall not exceed the
period for which the borrower is serving in a posi-
tion described in such clause; and
(iii) no administrative or other fee may be charged
in connection with the granting of a forbearance under
clause (i), and no adverse information regarding a bor-
rower may be reported to a credit bureau organization
solely because of the granting of such forbearance;
(B) may, to the extent provided in regulations of the
Secretary, contain provisions that permit such forbearance
for the benefit of the student borrower as may be agreed
upon by the parties to an insured loan and approved by
the insurer;
(C) shall contain provisions that specify that the form
of forbearance granted by the lender for purposes of this
paragraph shall be the temporary cessation of payments,
unless the borrower selects forbearance in the form of an
extension of time for making payments, or smaller pay-
ments than were previously scheduled; and
(D) shall contain provisions that specify that
(i) forbearance for a period not to exceed 60 days
may be granted if the lender reasonably determines
that such a suspension of collection activity is war-
ranted following a borrower's request for deferment,
forbearance, a change in repayment plan, or a request
to consolidate loans, in order to collect or process ap-
propriate supporting documentation related to the re-
quest, and
(ii) during such period interest shall accrue but
not be capitalized.
Guaranty agencies shall not be precluded from permitting the
parties to such a loan from entering into a forbearance agree-
ment solely because the loan is in default. The Secretary shall
permit lenders to exercise administrative forbearances that do
not require the agreement of the borrower, under conditions
authorized by the Secretary. Such forbearances shall include (i)
forbearances for borrowers who are delinquent at the time of
the granting of an authorized period of deferment under sec-
tion 428(b)(1)(M) or 427(a)(2)(C), and (ii) if the borrower is less
than 60 days delinquent on such loans at the time of sale or
transfer, forbearances for borrowers on loans which are sold or
transferred.
(4) DEFINITIONS.For the purpose of this subsection, the
terms "insurance beneficiary" and "default" have the meanings
assigned to them by section 435.
(5) APPLICABILITY TO EXISTING LOANS.In the case of any
guaranty agreement with a guaranty agency, the Secretary
may, in accordance with the terms of this subsection, under-
take to guarantee loans described in paragraph (1) which are
insured by such guaranty agency and are outstanding on the
date of execution of the guaranty agreement, but only with re-
183
HIGHER EDUCATION ACT OF 1965
Sec. 428
spect to defaults occurring after the execution of such guaranty
agreement or, if later, after its effective date.
(6) SECRETARY'S EQUITABLE SHARE.For the purpose of
paragraph (2)(D), the Secretary's equitable share of payments
made by the borrower shall be that portion of the payments re-
maining after the guaranty agency with which the Secretary
has an agreement under this subsection has deducted from
such payments
(A) a percentage amount equal to the complement of
the reinsurance percentage in effect when payment under
the guaranty agreement was made with respect to the
loan; and
(B) an amount equal to 24 percent of such payments
for use in accordance with section 422B, except that, be-
ginning on October 1, 2003, this subparagraph shall be
applied by substituting "23 percent" for "24 percent".
(7) NEW PROGRAMS ELIGIBLE FOR 100 PERCENT REINSUR-
ANCE.(A) Notwithstanding paragraph (1)(C), the amount to
be paid a guaranty agency for any fiscal year
(i) which begins on or after October 1, 1977 and ends
before October 1, 1991; and
(ii) which is either the fiscal year in which such guar-
anty agency begins to actively carry on a student loan in-
surance program which is subject to a guaranty agreement
under subsection (b) of this section, or is one of the 4 suc-
ceeding fiscal years,
shall be 100 percent of the amount expended by such guaranty
agency in discharge of its insurance obligation insured under
such program.
(B) Notwithstanding the provisions of paragraph (1)(C),
the Secretary may pay a guaranty agency 100 percent of the
amount expended by such agency in discharge of such agency's
insurance obligation for any fiscal year which
(i) begins on or after October 1, 1991; and
(ii) is the fiscal year in which such guaranty agency
begins to actively carry on a student loan insurance pro-
gram which is subject to a guaranty agreement under sub-
section (b) or is one of the 4 succeeding fiscal years.
(C) The Secretary shall continuously monitor the oper-
ations of those guaranty agencies to which the provisions of
subparagraph (A) or (B) are applicable and revoke the applica-
tion of such subparagraph to any such guaranty agency which
the Secretary determines has not exercised reasonable pru-
dence in the administration of such program.
(8) ASSIGNMENT TO PROTECT FEDERAL FISCAL INTEREST.If
the Secretary determines that the protection of the Federal fis-
cal interest so requires, a guaranty agency shall assign to the
Secretary any loan of which it is the holder and for which the
Secretary has made a payment pursuant to paragraph (1) of
this subsection.
(9) GUARANTY AGENCY RESERVE LEVEL.(A) Each guaranty
agency which has entered into an agreement with the Sec-
retary pursuant to this subsection shall maintain in the agen-
cy's Federal Student Loan Reserve Fund established under sec-
191.
Sec. 428
HIGHER EDUCATION ACT OF 1965
184
tion 422A a current minimum reserve level of at least 0.25 per-
cent of the total attributable amount of all outstanding loans
guaranteed by such agency. For purposes of this paragraph,
such total attributable amount does not include amounts of
outstanding loans transferred to the guaranty agency from an-
other guaranty agency pursuant to a plan of the Secretary in
response to the insolvency of the latter such guaranty agency.
(B) The Secretary shall collect, on an annual basis, infor-
mation from each guaranty agency having an agreement under
this subsection to enable the Secretary to evaluate the finan-
cial solvency of each such agency. The information collected
shall include the level of such agency's current reserves, cash
disbursements and accounts receivable.
(C) If (i) any guaranty agency falls below the required min-
imum reserve level in any 2 consecutive years, (ii) any guar-
anty agency's Federal reimbursement payments are reduced to
85 percent pursuant to paragraph (1)(B)(i), or (iii) the Sec-
retary determines that the administrative or financial condi-
tion of a guaranty agency jeopardizes such agency's continued
ability to perform its responsibilities under its guaranty agree-
ment, then the Secretary shall require the guaranty agency to
submit and implement a management plan acceptable to the
Secretary within 45 working days of any such event.
(D)(i) If the Secretary is not seeking to terminate the guar-
anty agency's agreement under subparagraph (E), or assuming
the guaranty agency's functions under subparagraph (F), a
management plan described in subparagraph (C) shall include
the means by which the guaranty agency will improve its fi-
nancial and administrative condition to the required level
within 18 months.
(ii) If the Secretary is seeking to terminate the guaranty
agency's agreement under subparagraph (E), or assuming the
guaranty agency's functions under subparagraph (F), a man-
agement plan described in subparagraph (C) shall include the
means by which the Secretary and the guaranty agency shall
work together to ensure the orderly termination of the oper-
ations, and liquidation of the assets, of the guaranty agency:
(E) The Secretary may terminate a guaranty agency's
agreement in accordance with subparagraph (F) if
(i) a guaranty agency required to submit a manage-
ment plan under this paragraph fails to submit a plan that
is acceptable to the Secretary;
(ii) the Secretary determines that a guaranty agency
has failed to improve substantially its administrative and
financial condition;
(iii) the Secretary determines that the guaranty agen-
cy is in danger of financial collapse;
(iv) the Secretary determines that such action is nec-
essary to protect the Federal fiscal interest; or
(v) the Secretary determines that such action is nec-
essary to ensure the continued availability of loans to stu-
dent or parent borrowers.
(F) If a guaranty agency's agreement under this subsection
is terminated pursuant to subparagraph (E), then the Sec-
192
185
HIGHER EDUCATION ACT OF 1965
Sec. 428
retary shall assume responsibility for all functions of the guar-
anty agency under the loan insurance program of such agency.
In performing such functions the Secretary is authorized to
(i) permit the transfer of guarantees to another guar-
anty agency;
(ii) revoke the reinsurance agreement of the guaranty
agency at a specified date, so as to require the merger,
consolidation, or termination of the guaranty agency;
(iii) transfer guarantees to the Department of Edu-
cation for the purpose of payment of such claims and proc-
ess such claims using the claims standards of the guaranty
agency, if such standards are determined by the Secretary
to be in compliance with this Act;
(iv) design and implement a plan to restore the guar-
anty agency's viability;
(v) provide the guaranty agency with additional ad-
vance funds in accordance with section 422(c)(7), with such
restrictions on the use of such funds as is determined ap-
propriate by the Secretary, in order to
(I) meet the immediate cash needs of the guaranty
agency;
(II) ensure the uninterrupted payment of claims;
or
(III) ensure that the guaranty agency will make
loans as the lender-of-last-resort, in accordance with
subsection (j);
(vi) use all funds and assets of the guaranty agency to
assist in the activities undertaken in accordance with this
subparagraph and take appropriate action to require the
return, to the guaranty agency or the Secretary, of any
funds or assets provided by the guaranty agency, under
contract or otherwise, to any person or organization; or
(vii) take any other action the Secretary determines
necessary to ensure the continued availability of loans
made under this part to residents of the State or States in
which the guaranty agency did business, the full honoring
of all guarantees issued by the guaranty agency prior to
the Secretary's assumption of the functions of such agency,
and the proper servicing of loans guaranteed by the guar-
anty agency prior to the Secretary's assumption of the
functions of such agency, and to avoid disruption of the
student loan program.
(G) Notwithstanding any other provision of Federal or
State law, if the Secretary has terminated or is seeking to ter-
minate a guaranty agency's agreement under subparagraph
(E), or has assumed a guaranty agency's functions under sub-
paragraph (F)
(i) no State court may issue any order affecting the
Secretary's actions with respect to such guaranty agency;
(ii) any contract with respect to the administration of
a guaranty agency's reserve funds, or the administration of
any assets purchased or acquired with the reserve funds of
the guaranty agency, that is entered into or extended by
the guaranty agency, or any other party on behalf of or
193
54-653 99 - 7
Sec. 428
HIGHER EDUCATION ACT OF 1965
186
with the concurrence of the guaranty agency, after the
date of enactment of this subparagraph shall provide that
the contract is terminable by the Secretary upon 30 days
notice
to
the
contracting
parties
if
the
Secretary
determines that such contract includes an impermissible
transfer of the reserve funds or assets, or is otherwise in-
consistent with the terms or purposes of this section; and
(iii) no provision of State law shall apply to the actions
of the Secretary in terminating the operations of a guar-
anty agency.
(H) Notwithstanding any other provision of law, the Sec-
retary's liability for any outstanding liabilities of a guaranty
agency (other than outstanding student loan guarantees under
this part), the functions of which the Secretary has assumed,
shall not exceed the fair market value of the reserves of the
guaranty agency, minus any necessary liquidation or other ad-
ministrative costs.
(I) The Secretary shall not take any action under subpara-
graph (E) or (F) without giving the guaranty agency notice and
the opportunity for a hearing that, if commenced after Septem-
ber 24, 1998, shall be on the record.
(J) Notwithstanding any other provision of law, the infor-
mation transmitted to the Secretary pursuant to this para-
graph shall be confidential and exempt from disclosure under
section 552 of title 5, United States Code, relating to freedom
of information, or any other Federal law.
(K) The Secretary, within 3 months after the end of each
fiscal year, shall submit to the House Committee on Education
and the Workforce and the Senate Committee on Labor and
Human Resources a report specifying the Secretary's assess-
ment of the fiscal soundness of the guaranty agency system.
(d) USURY LAWS INAPPLICABLE.No provision of any law of the
United States (other than this Act) or of any State (other than a
statute applicable principally to such State's student loan insur-
ance program) which limits the rate or amount of interest payable
on loans shall apply to a loan
(1) which bears interest (exclusive of any premium for in-
surance) on the unpaid principal balance at a rate not in ex-
cess of the rate specified in this part; and
(2) which is insured (i) by the United States under this
part, or (ii) by a guaranty agency under a program covered by
an agreement made pursuant to subsection (b) of this section.
(e) NOTICE OF AVAILABILITY OF INCOME-SENSITIVE REPAYMENT
OPTION. At the time of offering a borrower a loan under this part,
and at the time of offering the borrower the option of repaying a
loan in accordance with this section, the lender shall provide the
borrower with a notice that informs the borrower, in a form pre-
scribed by the Secretary by regulation
(1) that all borrowers are eligible for income-sensitive re-
payment, including through loan consolidation under section
428C;
(2) the procedures by which the borrower may elect in-
come-sensitive repayment; and
194
187
HIGHER EDUCATION ACT OF 1965
Sec. 428
(3) where and how the borrower may obtain additional in-
formation concerning income-sensitive repayment.
(f) PAYMENTS OF CERTAIN COSTS.
(1) PAYMENT FOR CERTAIN ACTIVITIES.
(A) IN GENERALThe Secretary
(i) for loans originated during fiscal years begin-
ning on or after October 1, 1998, and before October
1, 2003, and in accordance with the provisions of this
paragraph, shall, except as provided in subparagraph
(C), pay to each guaranty agency, a loan processing
and issuance fee equal to 0.65 percent of the total
principal amount of the loans on which insurance was
issued under this part during such fiscal year by such
agency; and
(ii) for loans originated during fiscal years begin-
ning on or after October 1, 2003, and in accordance
with the provisions of this paragraph, shall, except as
provided in subparagraph (C), pay to each guaranty
agency, a loan processing and issuance fee equal to
0.40 percent of the total principal amount of the loans
on which insurance was issued under this part during
such fiscal year by such agency.
(B) PAYMENT.The payment required by subpara-
graph (A) shall be paid on a quarterly basis. The guaranty
agency shall be deemed to have a contractual right against
the United States to receive payments according to the
provisions of this paragraph. Payments shall be made
promptly and without administrative delay to any guar-
anty agency submitting an accurate and complete applica-
tion under this subparagraph.
(C) REQUIREMENT FOR PAYMENT.No payment may be
made under this paragraph for loans for which the dis-
bursement checks have not been cashed or for which elec-
tronic funds transfers have not been completed.
(g) ACTION ON INSURANCE PROGRAM AND GUARANTY AGREE-
MENTS.If a nonprofit private institution or organization
( 1) applies to enter into an agreement with the Secretary
under subsections (b) and (c) with respect to a student loan in-
surance program to be carried on in a State with which the
Secretary does not have an agreement under subsection (b),
and
(2) as provided in the application, undertakes to meet the
requirements of section 422(c)(6)(B) (i), (ii), and (iii),
the Secretary shall consider and act upon such application within
180 days, and shall forthwith notify the Committee on Labor and
Human Resources of the Senate and the Committee on Education
and the Workforce of the House of Representatives of his actions.
(h) LENDING BY GUARANTY AGENCIES.
(1) LENDING FROM SALLIE MAE ADVANCES.From sums ad-
vanced by the Association pursuant to section 439(p), each
guaranty agency or an eligible lender in a State described in
section 435(d)(1) (D) or (F) of the Act is authorized to make
loans directly to students otherwise unable to obtain loans
under this part.
,193
Sec. 428
HIGHER EDUCATION ACT OF 1965
188
(2) AMOUNT OF ADVANCES.(A) Each guaranty agency or
an eligible lender in a State described in section 435(d)(1) (D)
or (F) which has an application approved under section
439(p)(2) may receive advances under section 439(p) for each
fiscal year in an amount necessary to meet the demand for
loans under this section. The amount such agency or lender is
eligible to receive may not exceed 25 percent of the average of
the loans guaranteed by that agency or lender for the 3 years
preceding the fiscal year for which the determination is made.
Whenever the determination required by the preceding sen-
tence cannot be made because the agency or lender does not
have 3 years previous experience, the amount such agency or
lender is eligible to receive may not exceed 25 percent of the
loans guaranteed under a program of a State of comparable
size.
(B) Each guaranty agency and each eligible lender in a
State described in section 435(d)(1) (D) or (F) shall repay ad-
vances made under section 439(p) in accordance with agree-
ments entered into between the Association and such agency
or lender.
(3) LOAN TERM, CONDITIONS, AND BENEFITS.Loans made
pursuant to this subsection shall have the same terms, condi-
tions, and benefits as all other loans made under this part.
(i) MULTIPLE DISBURSEMENT OF LOANS.
(1) ESCROW ACCOUNTS ADMINISTERED BY ESCROW AGENT.
Any guaranty agency or eligible lender (hereafter in this sub-
section referred to as the "escrow agent") may enter into an
agreement with any other eligible lender that is not an eligible
institution or an agency or instrumentality of the State (here-
after in this subsection referred to as the "lender") for the pur-
pose of authorizing disbursements of the proceeds of a loan to
a student. Such agreement shall provide that the lender will
pay the proceeds of such loans into an escrow account to be ad-
ministered by the escrow agent in accordance with the provi-
sions of paragraph (2) of this subsection. Such agreement may
allow the lender to make payments into the escrow account in
amounts that do not exceed the sum of the amounts required
for disbursement of initial or subsequent installments to bor-
rowers and to make such payments not more than 21 days
prior to the date of the disbursement of such installment to
such borrowers. Such agreement shall require the lender to no-
tify promptly the eligible institution when funds are escrowed
under this subsection for a student at such institution.
(2) AUTHORITY OF ESCROW AGENT.Each escrow agent en-
tering into an agreement under paragraph (1) of this sub-
section is authorized to
(A) make the disbursements in accordance with the
note evidencing the loan;
(B) commingle the proceeds of all loans paid to the es-
crow agent pursuant to the escrow agreement entered into
under such paragraph (1);
(C) invest the proceeds of such loans in obligations of
the Federal Government or obligations which are insured
or guaranteed by the Federal Government;
189
HIGHER EDUCATION ACT OF 1965
Sec. 428
(D) retain interest or other earnings on such invest-
ment; and
(E) return to the lender undisbursed funds when the
student ceases to carry at an eligible institution at least
one-half of the normal full-time academic workload as de-
termined by the institution.
(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 make loans directly, or through
an agreement with an eligible lender or lenders, to students el-
igible to receive interest benefits paid on their behalf under
subsection (a) of this section who are otherwise unable to ob-
tain loans under this part. 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.
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.
(2) RULES AND OPERATING PROCEDURES.The guaranty
agency shall develop rules and operating procedures for the
lender-of-last-resort program designed to ensure that
(A) the program establishes operating hours and meth-
ods of application designed to facilitate application by stu-
dents and ensure a response within 60 days after the stu-
dent's original complete application is filed under this sub-
section;
(B) consistent with standards established by the Sec-
retary, students applying for loans under this subsection
shall not be subject to additional eligibility requirements
or requests for additional information beyond what is re-
quired under this title in order to receive a loan under this
part from an eligible lender, nor be required to receive
more than two rejections from eligible lenders in order to
obtain a loan under this subsection;
(C) information about the availability of loans under
the program is made available to institutions of higher
education in the State;
(D) appropriate steps are taken to ensure that borrow-
ers receiving loans under the program are appropriately
counseled on their loan obligation; and
(E) the guaranty agency notifies the Secretary when
the guaranty agency believes or has reason to believe that
the Secretary may need to exercise the Secretary's author-
ity under section 439(q).
(3) ADVANCES TO GUARANTY AGENCIES FOR LENDER-OF-
LAST-RESORT SERVICES.(A) In order to ensure the availability
of loan capital, the Secretary is authorized to provide a guar-
anty agency designated for a State with additional advance
funds in accordance with subparagraph (C) and section
422(c)(7), with such restrictions on the use of such funds as are
determined appropriate by the Secretary, in order to ensure
that the guaranty agency will make loans as the lender-of-last-
197
Sec. 428
HIGHER EDUCATION ACT OF 1965
190
resort. Such agency shall make such loans in accordance with
this subsection and the requirements of the Secretary.
(B) Notwithstanding any other provision in this part, a
guaranty agency serving as a lender-of-last-resort under this
paragraph shall be paid a fee, established by the Secretary, for
making such loans in lieu of interest and special allowance
subsidies, and shall be required to assign such loans to the
Secretary on demand. Upon such assignment, the portion of
the advance represented by the loans assigned shall be consid-
ered repaid by such guaranty agency.
(C) The Secretary shall exercise the authority described in
subparagraph (A) only if the Secretary determines that eligible
borrowers are seeking and are unable to obtain loans under
this part, and that the guaranty agency designated for that
State has the capability to provide lender-of-last-resort loans in
a timely manner, in accordance with the guaranty agency's
obligations under paragraph (1), but cannot do so without ad-
vances provided by the Secretary under this paragraph. If the
Secretary makes the determinations described in the preceding
sentence and determines that it would be cost-effective to do
so, the Secretary may provide advances under this paragraph
to such guaranty agency. If the Secretary determines that such
guaranty agency does not have such capability, or will not pro-
vide such loans in a timely fashion, the Secretary may provide
such advances to enable another guaranty agency, that the
Secretary determines to have such capability, to make lender-
of-last-resort loans to eligible borrowers in that State who are
experiencing loan access problems.
(k) INFORMATION ON DEFAULTS.
(1)
PROVISION OF INFORMATION TO ELIGIBLE INSTITU-
TIONS.Notwithstanding any other provision of law, in order
to notify eligible institutions of former students who are in de-
fault of their continuing obligation to repay student loans, each
guaranty agency shall, upon the request of an eligible institu-
tion, furnish information with respect to students who were en-
rolled at the eligible institution and who are in default on the
repayment of any loan made, insured, or guaranteed under
this part. The information authorized to be furnished under
this subsection shall include the names and addresses of such
students.
(2) PUBLIC DISSEMINATION NOT AUTHORIZED.Nothing in
paragraph (1) of this subsection shall be construed to authorize
public dissemination of the information described in paragraph
(1).
(3) BORROWER LOCATION INFORMATION.Any information
provided by the institution relating to borrower location shall
be used by the guaranty agency in conducting required skip-
tracing activities.
(1) DEFAULT AVERSION ASSISTANCE.
(1) ASSISTANCE REQUIRED.Upon receipt of a complete re-
quest from a lender received not earlier than the 60th day of
delinquency, a guaranty agency having an agreement with the
Secretary under subsection (c) shall engage in default aversion
191
HIGHER EDUCATION ACT OF 1965
Sec. 428
activities designed to prevent the default by a borrower on a
loan covered by such agreement.
(2) REIMBURSEMENT.
(A) IN GENERALA guaranty agency, in accordance
with the provisions of this paragraph, may transfer from
the Federal Student Loan Reserve Fund under section
422A to the Agency Operating Fund under section 422B a
default aversion fee. Such fee shall be paid for any loan on
which a claim for default has not been paid as a result of
the loan being brought into current repayment status by
the guaranty agency on or before the 300th day after the
loan becomes 60 days delinquent.
(B) AMOUNT.The default aversion fee shall be equal
to 1 percent of the total unpaid principal and accrued in-
terest on the loan at the time the request is submitted by
the lender. A guaranty agency may transfer such fees
earned under this subsection not more frequently than
monthly. Such a fee shall not be paid more than once on
any loan for which the guaranty agency averts the default
unless
(i) at least 18 months has elapsed between the
date the borrower entered current repayment status
and the date the lender filed a subsequent default
aversion assistance request; and
(ii) during the period between such dates, the bor-
rower was not more than 30 days past due on any
payment of principal and interest on the loan.
(C) DEFINITION.For the purpose of earning the de-
fault aversion fee, the term "current repayment status"
means that the borrower is not delinquent in the payment
of any principal or interest on the loan.
(m) INCOME CONTINGENT REPAYMENT.
(1) AUTHORITY OF SECRETARY TO REQUIRE.The Secretary
may require borrowers who have defaulted on loans made
under this part that are assigned to the Secretary under sub-
section (c)(8) to repay those loans under an income contingent
repayment plan, the terms and conditions of which shall be es-
tablished by the Secretary and the same as, or similar to, an
income contingent repayment plan established for purposes of
part D of this title.
(2) LOANS FOR WHICH INCOME CONTINGENT REPAYMENT
MAY BE REQUIRED.A loan made under this part may be re-
quired to be repaid under this subsection if the note or other
evidence of the loan has been assigned to the Secretary pursu-
ant to subsection (c)(8).
(n) BLANKET CERTIFICATE OF LOAN GUARANTY.
(1) IN GENERAL.Subject to paragraph (3), any guaranty
agency that has entered into or enters into any insurance pro-
gram agreement with the Secretary under this part may
(A) offer eligible lenders participating in the agency's
guaranty program a blanket certificate of loan guaranty
that permits the lender to make loans without -receiving
prior approval from the guaranty agency of individual
1,93
Sec. 428A
HIGHER EDUCATION ACT OF 1965
192
loans for eligible borrowers enrolled in eligible programs at
eligible institutions; and
(B) provide eligible lenders with the ability to transmit
electronically data to the agency concerning loans the lend-
er has elected to make under the agency's insurance pro-
gram via standard reporting formats, with such reporting
to occur at reasonable and standard intervals.
(2) LIMITATIONS ON BLANKET CERTIFICATE OF GUARANTY.
(A) An eligible lender may not make a loan to a borrower
under this section after such lender receives a notification from
the guaranty agency that the borrower is not an eligible bor-
rower.
(B) A guaranty agency may establish limitations or restric-
tions on the number or volume of loans issued by a lender
under the blanket certificate of guaranty.
(3) PARTICIPATION LEVEL.During fiscal years 1999 and
2000, the Secretary may permit, on a pilot basis, a limited
number of guaranty agencies to offer blanket certificates of
guaranty under this subsection. Beginning in fiscal year 2001,
any guaranty agency that has an insurance program agree-
ment with the Secretary may offer blanket certificates ofguar-
anty under this subsection.
(4) REPORT REQUIRED.The Secretary shall, at the conclu-
sion of the pilot program under paragraph (3), provide a report
to the Committee on Education and the Workforce of the
House of Representatives and the Committee on Labor and
Human Resources of the Senate on the impact of the blanket
certificates of guaranty on program efficiency and integrity.
SEC. 428A. [20 U.S.C. 1078-1] VOLUNTARY FLEXIBLE AGREEMENTS
WITH GUARANTY AGENCIES.
(a) VOLUNTARY AGREEMENTS.
(1) AUTHORITY.Subject to paragraph (2), the Secretary
may enter into a voluntary, flexible agreement with a guaranty
agency under this section, in lieu of agreements with a guar-
anty agency under subsections (b) and (c) of section 428. The
Secretary may waive or modify any requirement under such
subsections, except that the Secretary may not waive
(A) any statutory requirement pertaining to the terms
and conditions attached to student loans or default claim
payments made to lenders; or
(B) the prohibitions on inducements contained in sec-
tion 428(b)(3) unless the Secretary determines that such a
waiver is consistent with the purposes of this section and
is limited to activities of the guaranty agency within the
State or States for which the guaranty agency serves as
the designated guarantor.
(2) SPECIAL RULE.If the Secretary grants a waiver pursu-
ant to paragraph (1)(B), any guaranty agency doing business
within the affected State or States may request, and the Sec-
retary shall grant, an identical waiver to such guaranty agency
under the same terms and conditions (including service area
limitations) as govern the original waiver.
(2 0 0
193
HIGHER EDUCATION ACT OF 1965.
Sec. 428A
(3) ELIGIBILITY.During fiscal years 1999, 2000, and 2001,
the Secretary may enter into a voluntary, flexible agreement
with not more than 6 guaranty agencies that had 1 or more
agreements with the Secretary under subsections (b) and (c) of
section 428 as of the day before the date of enactment of the
Higher Education Amendments of 1998. Beginning in fiscal
year 2002, any guaranty agency or consortium thereof may
enter into a voluntary flexible agreement with the Secretary.
(4) REPORT REQUIRED.Not later than September
30,
2001, the Secretary shall report to the Committee on Labor
and Human Resources of the Senate and the Committee on
Education and the Workforce of the House of Representatives
regarding the impact that the voluntary flexible agreements
have had upon program integrity, program and cost effi-
ciencies, and the availability and delivery of student financial
aid. Such report shall include
(A) a description of each voluntary flexible agreement
and the performance goals established by the Secretary for
each agreement;
(B) a list of participating guaranty agencies and the
specific statutory or regulatory waivers provided to each
guaranty agency and any waivers provided to other guar-
anty agencies under paragraph (2);
(C) a description of the standards by which each
agency's performance under the agency's voluntary flexible
agreement was assessed and the degree to which each
agency achieved-the performance standards; and
(D) an analysis of the fees paid by the Secretary, and
the costs and efficiencies achieved under each voluntary
agreement.
(b) TERMS OF AGREEMENT.An agreement between the Sec-
retary and a guaranty agency under this section
(1) shall be developed by the Secretary, in consultation
with the guaranty agency, on a case-by-case basis;
(2) may only include provisions
(A) specifying the responsibilities of the guaranty
agency under the agreement, with respect to
(i) administering the issuance of insurance on
loans made under this part on behalf of the Secretary;
(ii) monitoring insurance commitments made
under this part;
(iii) default aversion activities;
(iv) review of default claims made by lenders;
(v) payment of default claims;
(vi) collection of defaulted loans;
(vii) adoption of internal systems of accounting
and auditing that are acceptable to the Secretary, and
reporting the result thereof to the Secretary in a time-
ly manner, and on an accurate, and auditable basis;
(viii) timely and accurate collection and reporting
of such other data as the Secretary may require to
carry out the purposes of the programs under this
title;
201
Sec. 428A
HIGHER EDUCATION ACT OF 1965
194
(ix) monitoring of institutions and lenders partici-
pating in the program under this part; and
(x) informational outreach to schools and students
in support of access to higher education;
(B) regarding the fees the Secretary shall pay, in lieu
of revenues that the guaranty agency may otherwise re-
ceive under this part, to the guaranty agency under the
agreement, and other funds that the guaranty agency may
receive or retain under the agreement, except that in no
case may the cost to the Secretary of the agreement, as
reasonably projected by the Secretary, exceed the cost to
the Secretary, as similarly projected, in the absence of the
agreement;
(C) regarding the use of net revenues, as described in
the agreement under this section, for such other activities
in support of postsecondary education as may be agreed to
by the Secretary and the guaranty agency;
(D) regarding the standards by which the guaranty
agency's performance of the agency's responsibilities under
the agreement will be assessed, and the consequences for
a guaranty agency's failure to achieve a specified level of
performance on 1 or more performance standards;
(E) regarding the circumstances in which a guaranty
agency's agreement under this section may be ended in ad-
vance of the agreement's expiration date;
(F) regarding such other businesses, previously pur-
chased or developed with reserve funds, that relate to the
program under this part and in which the Secretary per-
mits the guaranty agency to engage; and
(G) such other provisions as the Secretary may deter-
mine to be necessary to protect the United States from the
risk of unreasonable loss and to promote the purposes of
this part;
(3) shall provide for uniform lender participation with the
guaranty agency under the terms of the agreement; and
(4) shall not prohibit or restrict borrowers from selecting
a lender of the borrower's choosing, subject to the prohibitions
and restrictions applicable to the selection under this Act.
(c) PUBLIC NOTICE.
(1) IN GENERAL.The Secretary shall publish in the
Federal Register a notice to all guaranty agencies that sets
forth
(A) an invitation for the guaranty agencies to enter
into agreements under this section; and
(B) the criteria that the Secretary will use for selecting
the guaranty agencies with which the Secretary will enter
into agreements under this section.
(2) AGREEMENT NOTICE.The Secretary shall notify the
Chairperson and the Ranking Minority Member of the Com-
mittee on Labor and Human Resources of the Senate and the
Committee on Education and the Workforce of the House of
Representatives not later than 30 days prior to concluding an
agreement under this section. The notice shall contain
195
HIGHER EDUCATION ACT OF 1965
Sec. 428A
(A) a description of the voluntary flexible agreement
and the performance goals established by the Secretary for
the agreement;
(B) a list of participating guaranty agencies and the
specific statutory or regulatory waivers provided to each
guaranty agency;
(C) a description of the standards by which each guar-
anty agency's performance under the agreement will be as-
sessed; and
(D) a description of the fees that will be paid to each
participating guaranty agency.
(3) WAIVER NOTICE.The Secretary shall notify the Chair-
person and the Ranking Minority Member of the Committee on
Labor and Human Resources of the Senate and the Committee
on Education and the Workforce of the House of Representa-
tives not later than 30 days prior to the granting of a waiver
pursuant to subsection (a)(2) to a guaranty agency that is not
a party to a voluntary flexible agreement.
(4) PUBLIC AVAILABILITY.The text of any voluntary flexi-
ble agreement, and any subsequent revisions, and any waivers
related to section 428(b)(3) that are not part of such an agree-
ment, shall be readily available to the public.
(5) MODIFICATION NOTICE.The Secretary shall notify the
Chairperson and the Ranking Minority Members of the Com-
mittee on Labor and Human Resources of the Senate and the
Committee on Education and the Workforce of the House of
Representatives 30 days prior to any modifications to an agree-
ment under this section.
(d) TERMINATION.At the expiration or early termination of an
agreement under this section, the Secretary shall reinstate the
guaranty agency's prior agreements under subsections (b) and (c)
of section 428, subject only to such additional requirements as the
Secretary determines to be necessary in order to ensure the effi-
cient transfer of responsibilities between the agreement under this
section and the agreements under subsections (b) and (c) of section
428, and including the guaranty agency's compliance with reserve
requirements under sections 422 and 428.
SEC. 428B. [20 U.S.C. 1078-21 FEDERAL PLUS LOANS.
(a) AUTHORITY To BORROW.
(1) AUTHORITY AND ELIGIBILITY.Parents of a dependent
student shall be eligible to borrow funds under this section in
amounts specified in subsection (b), if
(A) the parents do not have an adverse credit history
as determined pursuant to regulations promulgated by the
Secretary; and
(B) the parents meet such other eligibility criteria as
the Secretary may establish by regulation, after consulta-
tion with guaranty agencies, eligible lenders, and other or-
ganizations involved in student financial assistance.
(2) TERMS, CONDITIONS, AND BENEFITS.Except as pro-
vided in subsections (c), (d), and (e), loans made under this sec-
tion shall have the same terms, conditions, and benefits as all
other loans made under this part.
203
Sec. 428B
HIGHER EDUCATION ACT OF 1965
196
(3) SPECIAL RULE.Whenever necessary to carry out the
provisions of this section, the terms 'student' and 'borrower' as
used in this part shall include a parent borrower under this
section.
(b) LIMITATION BASED ON NEED.Any loan under this section
may be counted as part of the expected family contribution in the
determination of need under this title, but no loan may be made
to any parent under this section for any academic year in excess
of (A) the student's estimated cost of attendance, minus (B) other
financial aid as certified by the eligible institution under section
428(a)(2)(A). The annual insurable limit on account of any student
shall not be deemed to be exceeded by a line of credit under which
actual payments to the borrower will not be made in any year in
excess of the annual limit.
(c) PLUS LOAN DISBURSEMENT.All loans made under this
section shall be disbursed in accordance with the requirements of
section 428G and shall be disbursed by
(1) an electronic transfer of funds from the lender to the
eligible institution; or
(2) a check copayable to the eligible institution and the
parent borrower.
(d) PAYMENT OF PRINCIPAL AND INTEREST.
(1) COMMENCEMENT OF REPAYMENT.Re payrnent of prin-
cipal on loans made under this section shall commence not
later than 60 days after the date such loan is disbursed by the
lender, subject to deferral during any period during which the
parent meets the conditions required for a deferral under sec-
tion 427(a)(2)(C) or 428(b)(1)(M).
(2) CAPITALIZATION OF INTEREST.Interest on loans made
under this section for which payments of principal are deferred
pursuant to paragraph (1) of this subsection shall, if agreed
upon by the borrower and the lender (A) be paid monthly or
quarterly, or (B) be added to the principal amount of the loan
not more frequently than quarterly by the lender. Such capital-
ization of interest shall not be deemed to exceed the annual in-
surable limit on account of the borrower.
(3) SUBSIDIES PROHIBITED.No payments to reduce inter-
est costs shall be paid pursuant to section 428(a) of this part
on loans made pursuant to this section.
(4) APPLICABLE RATES OF INTEREST.Interest on loans
made pursuant to this section shall be at the applicable rate
of interest provided in section 427A for loans made under this
section.'
(5) AMORTIZATION.The amount of the periodic payment
and the repayment schedule for any loan made pursuant to
this section shall be established by assuming an interest rate
equal to the applicable rate of interest at the time the repay-
ment of the principal amount of the loan commences. At the
option of the lender, the note' or other written evidence of the
loan may require that
'Section 416(aX2) of the Higher Education Amendments of 1998 (P.L. 105-244; 112 Stat.
1680) contained an amendment that could not be executed and was redundant because of an
earlier amendment in section 8301(a)(2) of the Transportation Equity Act for the 21st Century
(P.L. 105-178; 112 Stat. 497).
191
HIGHER EDUCATION ACT OF 1965
Sec. 4288
(A) the amount of the periodic payment will be ad-
justed annually, or
(B) the period of repayment of principal will be length-
ened or shortened,
in order to reflect adjustments in interest rates occurring as a
consequence of section 427A(c)(4).
(e) REFINANCING.
(1) REFINANCING TO SECURE COMBINED PAYMENT.An eli-
gible lender may at any time consolidate loans held by it which
are made under this section to a borrower, including loans
which were made under section 428B as in effect prior to the
enactment of the Higher Education Amendments of 1986,
under a single repayment schedule which provides for a single
principal payment and a single payment of interest, and shall
calculate the repayment period for each included loan from the
date of the commencement of repayment of the most recent in-
cluded loan. Unless the consolidated loan is obtained by a bor-
rower who is electing to obtain variable interest under para-
graph (2) or (3), such consolidated loan shall bear interest at
the weighted average of the rates of all included loans. The ex-
tension of any repayment period of an included loan pursuant
to this paragraph shall be reported (if required by them) to the
Secretary or guaranty agency insuring the loan, as the case
may be, but no additional insurance premiums shall be pay-
able with respect to any such extension. The extension of the
repayment period of any included loan shall not require the
formal extension of the promissory note evidencing the in-
cluded loan or the execution of a new promissory note, but
shall be treated as an administrative forbearance of the repay-
ment terms of the included loan.
(2) REFINANCING TO SECURE VARIABLE INTEREST RATE.An
eligible lender may reissue a loan which was made under this
section before July 1, 1987, or under section 428B as in effect
prior to the enactment of the Higher Education Amendments
of 1986 in order to permit the borrower to obtain the interest
rate provided under section 427A(c)(4). A lender offering to re-
issue a loan or loans for such purpose may charge a borrower
an amount not to exceed $100 to cover the administrative costs
of reissuing such loan or loans, not more than one-half of
which shall be paid to the guarantor of the loan being reissued
to cover costs of reissuance. Reissuance of a loan under this
paragraph shall not affect any insurance applicable with re-
spect to the loan, and no additional insurance fee may be
charged to the borrower with respect to the loan.
(3) REFINANCING BY DISCHARGE OF PREVIOUS LOAN.A bor-
rower who has applied to an original lender for reissuance of
a loan under paragraph (2) and who is denied such reissuance
may obtain a loan from another lender for the purpose of dis-
charging the loan from such original lender. A loan made for
such purpose
(A) shall bear interest at the applicable rate of interest
provided under section 427A(c)(4);
205
Sec. 428C
HIGHER EDUCATION ACT OF 1965
198
(B) shall not result in the extension of the duration of
the note (other than as permitted under subsection
(c)(5)(B));
(C) may be subject to an additional insurance fee but
shall not be subject to the administrative cost charge per-
mitted by paragraph (2) of this subsection; and
(D) shall be applied to discharge the borrower from
any remaining obligation to the original lender with re-
spect to the original loan.
(4) CERTIFICATION IN LIEU OF PROMISSORY NOTE PRESEN-
TATION.Each new lender may accept certification from the
original lender of the borrower's original loan in lieu of presen-
tation of the original promissory note.
(5) NOTIFICATION TO BORROWERS OF AVAILABILITY OF REFI-
NANCING OPTIONS.Each holder of a loan made under this sec-
tion or under section 428B as in effect prior to the date of en-
actment of this Act shall, not later than October 1, 1987, in the
case of loans made before the date of enactment of this Act, no-
tify the borrower of such loan
(A) of the refinancing options for which the borrower
is eligible under this subsection;
(B) of those options which will be made available by
the holder and of the practical consequences of such op-
tions in terms of interest rates and monthly and total pay-
ments for a set of loan examples; and
(C) that, with respect to any option that the holder
will not make available, the holder will, to the extent prac-
ticable, refer the borrower to an eligible lender offering
such option.
(f)
VERIFICATION OF
IMMIGRATION STATUS AND SOCIAL
SECURITY NUMBER.A parent who wishes to borrow funds under
this section shall be subject to verification of the parent's
(1) immigration status in the same manner as immigration
status is verified for students under section 484(g); and
(2) social security number in the same manner as social se-
curity numbers are verified for students under section 484(p).
SEC. 428C. [20 U.S.C. 1078-3] FEDERAL CONSOLIDATION LOANS.
(a) AGREEMENTS WITH ELIGIBLE LENDERS.
(1) AGREEMENT REQUIRED FOR INSURANCE COVERAGE.For
the purpose of providing loans to eligible borrowers for consoli-
dation of their obligations with respect to eligible student
loans, the Secretary or a guaranty agency shall enter into
agreements in accordance with subsection (b) with the follow-
ing eligible lenders:
(A) the Student Loan Marketing Association or the
Holding Company of the Student Loan Marketing Associa-
tion, including any subsidiary of the Holding Company,
created pursuant to section 440;
(B) State agencies described in subparagraphs (D) and
(F) of section 435(d)(1); and
(C) other eligible lenders described in subparagraphs
(A), (B), (C), (E), and (J) of such section.
206
199
NIGHER EDUCATION ACT OF 1965
Sec. 428C
(2) INSURANCE COVERAGE OF CONSOLIDATION LOANS.Ex-
cept as provided in section 429(e), no contract of insurance
under this part shall apply to a consolidation loan unless such
loan is made under an agreement pursuant to this section and
is covered by a certificate issued in accordance with subsection
(b)(2). Loans covered by such a certificate that is issued by a
guaranty agency shall be considered to be insured loans for the
purposes of reimbursements under section 428(c), but no pay-
ment shall be made with respect to such loans under section
428(f) to any such agency.
(3)
DEFINITION OF ELIGIBLE BORROWER.(A) For the
purpose of this section, the term "eligible borrower" means a
borrower who
(i) is not subject to a judgment secured through litiga-
tion with respect to a loan under this title or to an order
for wage garnishment under section 488A; and
(ii) at the time of application for a consolidation loan
(I) is in repayment status;
(II)
is
in a grace
period
preceding
repay-
ment; or
(III) is a defaulted borrower who has made ar-
rangements to repay the obligation on the defaulted
loans satisfactory to the holders of the defaulted loans.
(B)(i) An individual's status as an eligible borrower under
this section terminates upon receipt of a consolidation loan
under this section, except that
(I) an individual who receives eligible student loans
after the date of receipt of the consolidation loan may re-
ceive a subsequent consolidation loan;
(II) loans received prior to the date of the consolida-
tion loan may be added during the 180-day period follow.
ing the making of the consolidation loan;
(III) loans received following the making of the consoli-
dation loan may be added during the 180-day period fol-
lowing the making of the consolidation loan; and
(IV) loans received prior to the date of the first consoli-
dation loan may be added to a subsequent consolidation
loan.
(C)(i) A married couple, each of whom has eligible student
loans, may be treated as if such couple were an individual bor-
rowing under subparagraphs (A) and (B) if such couple agrees
to be held jointly and severally liable for the repayment of a
consolidation loan, without regard to the amounts of the re-
spective loan obligations that are to be consolidated, and with-
out regard to any subsequent change that may occur in such
couple's marital status.
(ii) Only one spouse in a married couple applying for a con-
solidation loan under this subparagraph need meet any of the
requirements of subsection (b) of this section, except that each
spouse shall
(I) individually make the initial certification that no
other application is pending in accordance. with subsection
(b)(1)(A); and
207
Sec. 428C
NIGHER EDUCATION ACT OF 1965
200
(II) agree to notify the holder concerning any change
of address in accordance with subsection (b)(4).
(4) DEFINITION OF ELIGIBLE STUDENT LOANS.For the pur-
pose of paragraph (1), the term "eligible student loans" means
loans
(A) made, insured, or guaranteed under this part, in-
cluding loans on which the borrower has defaulted (but
has made arrangements to repay the obligation on the de-
faulted loans satisfactory to the Secretary or guaranty
agency; whichever insured the loans);
(B) made under part E of this title;
(C) made under part D of this title;
(D) made under subpart II of part A of title VII of the
Public Health Service Act; or
(E) made under subpart II of part B of title VIII of the
Public Health Service Act.
(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) that, in the case of all lenders described in sub-
section (a)(1), the lender will make a consolidation loan to
an eligible borrower (on request of that borrower) only if
the borrower certifies that the borrower has no other appli-
cation pending for a loan under this section and (i) the
lender holds an outstanding loan of that borrower which is
selected by the borrower for consolidation under this sec-
tion, except that this clause shall not apply in the case of
a borrower with multiple holders of loans under this part,
or (ii) the borrower certifies that the borrower has sought
and has been unable to obtain a consolidation loan with in-
come-sensitive repayment terms from the holders of the
outstanding loans of that borrower (which are so selected
for consolidation);
(B) that each consolidation loan made by the lender
will bear interest, and be subject to repayment, in accord-
ance with subsection (c);
(C) that each consolidation loan will be made, notwith-
standing any other provision of this part limiting the an-
nual or aggregate principal amount for all insured loans
made to a borrower, in an amount (i) which is not less
than the minimum amount required for eligibility of the
borrower under subsection (a)(3), and (ii) which is equal to
the sum of the unpaid principal and accrued unpaid inter-
est and late charges of all eligible student loans received
by the eligible borrower which are selected by the borrower
for consolidation;
(D) that the proceeds of each consolidation loan will be
paid by the lender to the holder or holders of the loans so
selected to discharge the liability on such loans;
208
201
HIGHER EDUCATION ACT OF 1965
Sec. 428C
(E) that the lender shall offer an income-sensitive re-
payment 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
(F) such other terms and conditions as the Secretary
or the guaranty agency may specifically require of the
lender to carry out this section.
(2) ISSUANCE OF CERTIFICATE OF COMPREHENSIVE INSUR-
ANCE COVERAGE.The Secretary shall issue a certificate of
comprehensive insurance coverage under section 429(b) to a
lender which has entered into an agreement with the Secretary
under paragraph (1) of this subsection. The guaranty agency
may issue a certificate of comprehensive insurance coverage to
a lender with which it has an agreement under such para-
graph. The Secretary shall not issue a certificate to a lender
described in subparagraph (B) or (C) of subsection (a)(1) unless
the Secretary determines that such lender has first applied to,
and has been denied a certificate of insurance by, the guaranty
agency which insures the preponderance of its loans (by value).
(3) CONTENTS OF CERTIFICATE.A certificate issued under
paragraph (2) shall, at a minimum, provide
(A) that all consolidation loans made by such lender in
conformity with the requirements of this section will be in-
sured by the Secretary or the guaranty agency (whichever
is applicable) against loss of principal and interest;
(B) that a consolidation loan will not be insured unless
the lender has determined to its satisfaction, in accordance
with reasonable and prudent business practices, for each
loan being consolidated
(i) that the loan is a legal, valid, and binding obli-
gation of the borrower;
(ii) that each such loan was made and serviced in
compliance with applicable laws and regulations; and
(iii) in the case of loans under this part, that the
insurance on such loan is in full force and effect;
(C) the effective date and expiration date ofthe certifi-
cate;
(D) the aggregate amount to which the certificate ap-
plies;
(E) the reporting requirements of the Secretary on the
lender and an identification of the office of the Department
of Education or of the guaranty agency which will process
claims and perform other related administrative functions;
(F) the alternative repayment terms which will be of-
fered to borrowers by the lender;
(G) that, if the lender prior to the expiration of the
certificate no longer proposes to make consolidation loans,
the lender will so notify the issuer of the certificate in
order that the certificate may be terminated (without af-
fecting the insurance on any consolidation loan made prior
to such termination); and
(H) the terms upon which the issuer of the certificate
may limit, suspend, or terminate the lender's authority to
209
Sec. 428C
HIGHER EDUCATION ACT OF 1965
202
make consolidation loans under the certificate (without af-
fecting the insurance on any consolidation loan made prior
to such limitation, suspension, or termination).
(4) TERMS AND CONDITIONS OF LOANS.-A consolidation
loan made pursuant to this section shall be insurable by the
Secretary or a guaranty agency pursuant to paragraph (2) only
if the loan is made to an eligible borrower who has agreed to
notify the holder of the loan promptly concerning any change
of address and the loan is evidenced by a note or other written
agreement which
(A) is made without security and without endorse-
ment, except that if the borrower is a minor and such note
or other written agreement executed by him or her would
not, under applicable law, create a binding obligation, en-
dorsement may be required;
(B) provides for the payment of interest and the repay-
ment of principal in accordance with subsection (c) of this
section;
(C)(i) provides that periodic installments of principal
need not be paid, but interest shall accrue and be paid in
accordance with clause (ii), during any period for which
the borrower would be eligible for a deferral under section
428(b)(1)(M), and that any such period shall not be in-
cluded in determining the repayment schedule pursuant to
subsection (c)(2) of this section; and
(ii) provides that interest shall accrue and be paid dur-
ing any such period
(I) by the Secretary, in the case of a consolidation
loan for which the application is received by an eligi-
ble lender before the date of enactment of the Emer-
gency Student Loan Consolidation Act of 1997 that
consolidated only Federal Stafford Loans for which the
student borrower received an interest subsidy under
section 428;
(II) by the Secretary, in the case of a consolidation
loan for which the application is received by an eligi-
ble lender on or after the date of enactment of the
Emergency Student Loan Consolidation Act of 1997
except that the Secretary shall pay such interest only
on that portion of the loan that repays Federal Staf-
ford Loans for which the student borrower received an
interest subsidy under section 428 or Federal Direct
Stafford Loans for which the borrower received an in-
terest subsidy under section 455; or
(III) by the borrower, or capitalized, in the case of
a consolidation loan other than a loan described in
subclause (I) or (II);
(D) entitles the borrower to accelerate without penalty
repayment of the whole or any part of the loan; and
(E)(i) contains a notice of the ,system of disclosure con-
cerning such loan to credit bureau organizations under
section 430A, and (ii) provides that the lender on request
of the borrower will provide information on the repayment
status of the note to such organizations.
203
HIGHER EDUCATION ACT OF 1965
Sec. 428C
(5) DIRECT LOANS.In the event that 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 acceptable to the
borrower from such a lender, the Secretary shall offer any such
borrower who applies for it, a direct consolidation loan. Such
direct consolidation loan shall, as requested by the borrower,
be repaid either pursuant to income contingent repayment
under part D of this title or pursuant to any other repayment
provision under this section. The Secretary shall not offer such
loans if, in the Secretary's judgment, the Department of Edu-
cation does not have the necessary origination and servicing
arrangements in place for such loans.
(6) NONDISCRIMINATION IN LOAN CONSOLIDATION.An eli-
gible lender that makes consolidation loans under this section
shall not discriminate against any borrower seeking such a
loan
(A) based on the number or type of eligible student
loans the borrower seeks to consolidate, except that a lend-
er is not required to consolidate loans described in sub-
paragraph (D) or (E) of subsection (a)(4) or subsection
(d)(1)(C)(ii);
(B) based on the type or category of institution of high-
er education that the borrower attended;
(C) based on the interest rate to be charged to the bor-
rower with respect to the consolidation loan; or
(D) with respect to the types of repayment schedules
offered to such borrower.
(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 on
or after October 1, 1998, and before July 1, 2003, the applica-
ble interest rate shall be determined under section 427A(k)(4).
(B) A consolidation loan made before July 1, 1994, shall
bear interest at an annual rate on the unpaid principal balance
of the loan that is equal to the greater of
(i) the weighted average of the interest rates on the
loans consolidated, rounded to the nearest whole percent;
or
(ii) 9 percent.
(C) A consolidation loan made on or after July 1, 1994,
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.
(D) A consolidation loan for which the application is re-
ceived by an eligible lender on or after the date of enactment
of the Emergency Student Loan Consolidation Act of 1997 and
before October 1, 1998, shall bear interest at an annual rate
on the unpaid principal balance of the loan that is equal to the
rate specified in section 427A(f), except that the eligible lender
may continue to calculate interest on such a loan at the rate
previously in effect and defer, until not later than April 1,
211
Sec. 428C
HIGHER EDUCATION ACT OF 1965
204
1998, the recalculation of the interest on such a loan at the
rate required by this subparagraph if the recalculation is ap-
plied retroactively to the date on which the loan is made.
(2) REPAYMENT SCHEDULES.(A) Notwithstanding any
other provision of this part, to the extent authorized by its cer-
tificate of insurance under subsection (b)(2)(F) and approved by
the issuer of such certificate, the lender of a consolidation loan
shall establish repayment terms as will promote the objectives
of this section, which shall include the establishment of grad-
uated or income-sensitive repayment schedules, established by
the lender in accordance with the regulations of the Secretary.
Except as required by such income-sensitive repayment sched-
ules, or by the terms of repayment pursuant to income contin-
gent repayment offered by the Secretary under subsection
(b)(5), such repayment terms shall require that if the sum of
the consolidation loan and the amount outstanding on other
student loans to the individual
(i) is less than $7,500, then such consolidation loan
shall be repaid in not more than 10 years;
(ii) is equal to or greater than $7,500 but less than
$10,000, then such consolidation loan shall be repaid in
not more than 12 years;
(iii) is equal to or greater than $10,000 but less than
$20,000, then such consolidation loan shall be repaid in
not more than 15 years;
(iv) is equal to or greater than $20,000 but less than
$40,000, then such consolidation loan shall be repaid in
not more than 20 years;
(v) is equal to or greater than $40,000 but less than
$60,000, then such consolidation loan shall be repaid in
not more than 25 years; or
(vi) is equal to or greater than $60,000, then such con-
solidation loan shall be repaid in not more than 30 years.
(B) The amount outstanding on other student loans which
may be counted for the purpose of subparagraph (A) may not
exceed the amount of the consolidation loan.
(3)
ADDITIONAL REPAYMENT REQUIREMENTS.Notwith-
standing paragraph (2)
(A) a repayment schedule established with respect to
a consolidation loan shall require that the minimum in-
stallment payment be an amount equal to not less than
the accrued unpaid interest; and
(B) except as required by the terms of repayment pur-
suant to income contingent repayment offered by the Sec-
retary under subsection (b)(5), the lender of a consolidation
loan may, with respect to repayment on the loan, when the
amount of a monthly or other similar payment on the loan
is not a multiple of $5, round the payment to the next
highest whole dollar amount that is a multiple of $5.
(4) COMMENCEMENT OF REPAYMENT.Repayment of a con-
solidation loan shall commence within 60 days after all holders
have, pursuant to subsection (b)(1)(D), discharged the liability
of the borrower on the loans selected for consolidation.
205
HIGHER EDUCATION ACT OF 1965
Sec. 428C
(5) INSURANCE PREMIUMS PROHIBITED.No insurance pre-
mium shall be charged to the borrower on any consolidation
loan, and no insurance premium shall be payable by the lender
to the Secretary with respect to any such loan, but a fee may
be payable by the lender to the guaranty agency to cover the
costs of increased or extended liability with respect to such
loan.
(d) SPECIAL PROGRAM AUTHORIZED.
(1) GENERAL RULE AND DEFINITION OF ELIGIBLE STUDENT
(A) IN GENERAL.Subject to the provisions of this sub-
section, the Secretary or a guaranty agency shall enter
into agreements with eligible lenders described in subpara-
graphs (A), (B), and (C) of subsection (a)(1) for the consoli-
dation of eligible student loans.
(B) APPLICABILITY RULE.Unless otherwise provided
in this subsection, the agreements entered into under sub-
paragraph (A) and the loans made under such agreements
for the consolidation of eligible student loans under this
subsection shall have the same terms, conditions, and ben-
efits as all other agreements and loans made under this
section.
(C) DEFINITION.For the purpose of this subsection,
the term "eligible student loans" means loans
(i) of the type described in subparagraphs (A), (B),
and (C) of subsection (a)(4); and
(ii) made under subpart I of part A of title WI of
the Public Health Service Act.
(2) INTEREST RATE RULE.
(A) IN GENERAL.The portion of each consolidated
loan that is attributable to an eligible student loan de-
scribed in paragraph (1)(C)(ii) shall bear interest at a rate
not to exceed the rate determined under subparagraph (B).
(B)
DETERMINATION OF THE
MAXIMUM INTEREST
RATE.For the 12-month period beginning after July 1,
1992, and for each 12-month period thereafter, beginning
on July 1 and ending on June 30, the interest rate applica-
ble under subparagraph (A) shall be equal to the average
of the bond equivalent rates of the 91-day Treasury bills
auctioned for the quarter prior to July 1, for each 12-
month period for which the determination is made, plus 3
percent.
(C) PUBLICATION OF MAXIMUM INTEREST RATE.The
Secretary shall determine the applicable rate of interest
under subparagraph (B) after consultation with the Sec-
retary of the Treasury and shall publish such rate in the
Federal Register as soon as practicable after the date of
such determination.
(3) SPECIAL RULES.
(A) No SPECIAL ALLOWANCE RULE.No special allow-
ance under section 438 shall be paid with respect to the
portion of any consolidated loan under this subsection that
is attributable to any loan
described in paragraph
(1)(C)(ii).
213
Sec. 428D
HIGHER EDUCATION ACT OF 1965
206
(B) No INTEREST SUBSIDY RULE.No interest subsidy
under section 428(a) shall be paid on behalf of any eligible
borrower for any portion of a consolidated loan under this
subsection that is attributable to any loan described in
paragraph (1)(C)(ii).
(C) ADDITIONAL RESERVE RULE.Notwithstanding any
other provision of this Act, additional reserves shall not be
required for any guaranty agency with respect to a loan
made under this subsection.
(D) INSURANCE RULE.Any insurance premium paid
by the borrower under subpart I of part A of title VII of
the Public Health Service Act with respect to a loan made
under that subpart and consolidated under this subsection
shall be retained by the student loan insurance fund estab-
lished under section 710 of the Public Health Service Act.
(4) REGULATIONS.The Secretary is authorized to promul-
gate such regulations as may be necessary to facilitate carrying
out the provisions of this subsection.
(e) TERMINATION OF AUTHORITY.The authority to make loans
under this section expires at the close of September 30, 2004. Noth-
ing 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).
(f) INTEREST PAYMENT REBATE FEE.
(1) IN GENERAL.For any month beginning on or after Oc-
tober 1, 1993, each holder of a consolidation loan under this
section for which the first disbursement was made on or after
October 1, 1993, shall pay to the Secretary, on a monthly basis
and in such manner as the Secretary shall prescribe, a rebate
fee calculated on an annual basis equal to 1.05 percent of the
principal plus accrued unpaid interest on such loan.
(2) SPECIAL RULE.For consolidation loans based on appli-
cations received during the period from October
1,
1998
through January 31, 1999, inclusive, the rebate described in
paragraph (1) shall be equal to 0.62 percent of the principal
plus accrued unpaid interest on such loan.
(3) DEPOSIT.The Secretary shall deposit all fees collected
pursuant to subsection (a) into the insurance fund established
in section 431.
SEC. 428D. [20 U.S.C. 1078-4] COMMINGLING OF FUNDS.
Notwithstanding any other provision of this part regarding
permissible uses of funds from any source, funds received by a
guaranty agency under any provision of this part may be commin-
gled with funds received under any other provision of this part and
may be used to carry out the purposes of such other provision, ex-
cept that
(1) the total amount expended for the purposes of such
other provision shall not exceed the amount the guaranty
agency would otherwise be authorized to expend; and
21. A
207
HIGHER EDUCATION ACT OF 1965
Sec. 428F
(2) the authority to commingle such funds shall not relieve
such agency of any accounting or auditing obligations under
this part.
[Section 428E was repealed by section 605(b) of Public Law
102-164; 105 Stat. 1068.]
SEC. 42SF. [20 U.S.C. 1078-61 DEFAULT REDUCTION PROGRAM.
(a) OTHER REPAYMENT INCENTIVES.
(1) SALE OF LOAN.
(A) Each guaranty agency shall enter into an agree-
ment with the Secretary which shall provide that upon se-
curing consecutive payments for 12 months of amounts
owed on a loan for which the Secretary has made a pay-
ment under paragraph (1) of section 428(c), the guaranty
agency (pursuant to an agreement with the Secretary) or
the Secretary shall, if practicable, sell the loan to an eligi-
ble lender. Such loan shall not be sold to an eligible lender
who has been found by the guaranty agency or the Sec-
retary to have substantially failed to exercise the due dili-
gence required of lenders under this part. Neither the
guaranty agency nor the Secretary shall demand from a
borrower as monthly payment amounts referred to in this
paragraph more than is reasonable and affordable based
upon the borrower's total financial circumstances.
(B) An agreement between the guaranty agency and
the Secretary for purposes of this paragraph shall
provide
(i) for the repayment by the agency to the Sec-
retary of 81.5 percent of the amount of the principal
balance outstanding at the time of such sale, multi-
plied by the reinsurance percentage in effect when
payment under the guaranty agreement was made
with respect to the loan; and
(ii) for the reinstatement by the Secretary (I) of
the obligation to reimburse such agency for the
amount expended by it in discharge of its insurance
obligation under its loan insurance program, and (II)
of the obligation to pay to the holder of such loan a
special allowance pursuant to section 438.
(C) A loan which does not meet the requirements of
subparagraph (A) may also be eligible for sale under this
paragraph upon a determination that the loan was in de-
fault due to clerical or data processing error and would
not, in the absence of such error, be in a delinquent status.
(2) USE OF PROCEEDS OF SALES.Amounts received by the
Secretary pursuant to the sale of such loans by a guaranty
agency under paragraph (1) of this subsection shall be de-
ducted from the calculations of the amount of reimbursement
for which the agency is eligible under paragraph (1)(B)(ii) of
this subsection for the fiscal year in which the amount was re-
ceived, notwithstanding the fact that the default occurred in a
prior fiscal year.
2 c
Sec. 4286
HIGHER EDUCATION ACT OF 1965
208
(3) BORROWER ELIGIBILITY.Any borrower whose loan is
sold under paragraph (2) shall not be precluded by section 484
from receiving additional loans or grants under this title (for
which he or she is otherwise eligible) on the basis of defaulting
on the loan prior to such loan sale.
(4) APPLICABILITY OF GENERAL LOAN CONDITIONS.A loan
which is sold under paragraph (1) of this subsection shall, so
long as the borrower continues to make scheduled repayments
thereon, be subject to the same terms and conditions and qual-
ify for the same benefits and privileges as other loans made
under this part.
(b) SATISFACTORY REPAYMENT ARRANGEMENTS To RENEW ELI-
GIBILITY.Each guaranty agency shall establish a program which
allows a borrower with a defaulted loan or loans to renew eligibility
for all title IV student financial assistance (regardless of whether
the defaulted loan has been sold to an eligible lender) upon the bor-
rower's payment of 6 consecutive monthly payments. The guaranty
agency shall not demand from a borrower as a monthly payment
amount under this subsection more than is reasonable and afford-
able based upon the borrower's total financial .circumstances. A bor-
rower may only obtain the benefit of this subsection with respect
to renewed eligibility once.
SEC. 428G. [20 -U.S.C. 1078-7] REQUIREMENTS FOR DISBURSEMENT OF
STUDENT LOANS.
(a) MULTIPLE DISBURSEMENT REQUIRED.
(1) TWO DISBURSEMENTS REQUIRED.The proceeds of any
loan made, insured, or guaranteed under this part that is
made for any period of enrollment shall be disbursed in 2 or
more installments, none of which exceeds one-half of the loan.
(2) MINIMUM INTERVAL REQUIRED.The interval between
the first and second such installments shall be not less than
one-half of such period of enrollment, except as necessary to
permit the second installment to be disbursed at the beginning
of the second semester, quarter, or similar division of such pe-
riod of enrollment.
(3)1 SPECIAL RULE.An institution whose cohort default
rate (as determined under section 435(m)) for each of the 3
most recent fiscal years for which data are available is less
than 10 percent may disburse any loan made, insured, or guar-
anteed under this part in a single installment for any period
of enrollment that is not more than 1 semester, 1 trimester, 1
quarter, or 4 months.
(b) DISBURSEMENT AND ENDORSEMENT REQUIREMENTS.
(1) FIRST YEAR STUDENTS.The first installment of the
proceeds of any loan made, insured, or guaranteed under this
part that is made to a student borrower who is entering the
first year of a program of undergraduate education, and who
has not previously obtained a loan under this part, shall not
(regardless of the amount of such loan or the duration of the
period of enrollment) be presented by the institution to the stu-
'Section 422(a) of Public Law 105-244 added paragraph (3). Section 422(d) of such Act states
the amendments made by subsections (a) and (b) of section 422 shall be effective during the
period beginning on October 1, 1998, and ending on September 30, 2002.
216
209
HIGHER EDUCATION ACT OF 1965
Sec. 4286
dent for endorsement until 30 days after the borrower begins
a course of study, but may be delivered to the eligible institu-
tion prior to the end of that 30-day period. An institution
whose cohort default rate (as determined under section 435(m))
for each of the three most recent fiscal years for which data are
available is less than 10 percent shall be exempt from the re-
quirements of this paragraph.'
(2) OTHER STUDENTS.The proceeds of any loan made, in-
sured, or guaranteed under this part that is made to any stu-
dent other than a student described in paragraph (1) shall not
be disbursed more than 30 days prior to the beginning of the
period of enrollment for which the loan is made.
(c) METHOD OF MULTIPLE DISBURSEMENT.Disbursements
under subsection (a)
(1) shall be made in accordance with a schedule provided
by the institution (under section 428(a)(2)(A)(i)(III)) that com-
plies with the requirements ofthis section;
(2) may be made directly by the lender or, in the case of
a loan under sections 428 and 428A, may be disbursed pursu-
ant to the escrow provisions of section 428(i); and
(3) notwithstanding subsection (a)(2), may, with the per-
mission of the borrower, be disbursed by the lender2 on a
weekly or monthly basis, provided that the proceeds of the loan
are disbursed2 in substantially equal weekly or monthly in-
stallments, as the case may be, over the period of enrollment
for which the loan is made.
(d) WITHHOLDING OF SECOND DISBURSEMENT.
(1) WITHDRAWING STUDENTS.A lender or escrow agent
that is informed by the borrower or the institution that the
borrower has ceased to be enrolled before the disbursement of
the second or any succeeding installment shall withhold such
disbursement. Any disbursement which is so withheld shall be
credited to the borrower's loan and treated as a prepayment
thereon.
(2) STUDENTS RECEIVING OVER-AWARDS.If the sum of a
disbursement for any student and the other financial aid ob-
tained by such student exceeds the amount of assistance for
which the student is eligible under this title, the institution
such student is attending shall withhold and return to the
lender or escrow agent the portion (or all) of such installment
that exceeds such eligible amount, except that overawards per-
mitted pursuant to section 443(b)(4) of the Act shall not be con-
strued to be overawards for purposes of this paragraph. Any
portion (or all) of a disbursement installment which is so re-
turned shall be credited to the borrower's loan and treated as
a prepayment thereon.
Section 422(b) of Public Law 105-244 added a new sentence at the end. Section 422(d) of
such Act states the amendments made by subsections (a) and (b) shall be effective during the
period beginning on October 1, 1998, and ending on September 30, 2002.
2Error in amendment made to this paragraph by paragraph (41) of section 2(c) of the Higher
Education Technical Amendments of 1993 (P.L. 103-208; 107 Stat. 2466). The amendment
strikes "disbursed" and inserts "disbursed by the lender". The amendment does not specify the
lace at which the amendment is to be executed (probably should be the first place the term
disbursed" appears).
217
BEST COPY AVAILABLE
Sec. 42811
HIGHER EDUCATION ACT OF 1965
210
(e)
EXCLUSION OF CONSOLIDATION AND FOREIGN STUDY
LOANS.The provisions of this section shall not apply in the case
of a loan made under section 428C, made to a student to cover the
cost of attendance at an eligible institution outside the United
States, or made to a student to cover the cost of attendance in a
program of study abroad approved by the home eligible institution
if the home eligible institution has a cohort default rate (as cal-
culated under section 435(m)) of less than 5 percent.
(0 BEGINNING OF PERIOD OF ENROLLMENT.For purposes of
this section, a period of enrollment begins on the first day that
classes begin for the applicable period of enrollment.
(g) SALES PRIOR TO DISBURSEMENT PROHIBITED.An eligible
lender shall not sell or transfer a promissory note for any loan
made, insured, or guaranteed under this part until the final dis-
bursement of such loan has been made, except that the prohibition
of this subsection shall not apply if
(1) the sale of the loan does not result in a change in the
identity of the party to whom payments will be made for the
loan; and
(2) the first disbursement of such loan has been made.
SEC. 428H. [20 U.S.C. 1078-8] UNSUBSIDIZED STAFFORD LOANS FOR
MIDDLE-INCOME BORROWERS.
(a) IN GENERAL.It is the purpose of this section to authorize
insured loans under this part 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 Fed-
eral Stafford loans established under section 428 shall apply to
loans made pursuant to this section.
(b) ELIGIBLE BORROWERS.Any student meeting the require-
ments for student eligibility under section 484 (including graduate
and professional students as defined in regulations promulgated by
the Secretary) shall be entitled to borrow an unsubsidized Federal
Stafford Loan if the eligible institution at which the student has
been accepted for enrollment, or at which the student is in attend-
ance, has
(1) determined and documented the student's need for the
loan based on the student's estimated cost of attendance (as
determined under section 472) and the student's estimated fi-
nancial assistance, including a loan which qualifies for interest.
subsidy payments under section 428; and
(2) provided the lender a statement
(A) certifying the eligibility of the student to receive a
loan under this section and the amount of the loan for
which such student is eligible, in accordance with sub-
section (c); and
(B) setting forth a schedule for disbursement of the
proceeds of the loan in installments, consistent with the
requirements of section 428G.
(c) DETERMINATION OF AMOUNT OF LOAN.The determination
of the amount of a loan by an eligible institution under subsection
(b) shall be calculated by subtracting from the estimated cost of at-
tendance at the eligible institution any estimated financial assist-
ance reasonably available to such student. An eligible institution
211
HIGHER EDUCATION ACT OF 1965
Sec. 428H
may not, in carrying out the provisions of subsection (b) of this sec-
tion, provide a statement which certifies the eligibility of any stu-
dent to receive any loan under this section in excess of the amount
calculated under the preceding sentence.
(d) LOAN LIMITS.
(1) IN GENERAL.Except as provided in paragraphs (2) and
(3), the annual and aggregate limits for loans under this sec-
tion shall be the same as those established under section
428(b)(1), less any amount received by such student pursuant
to the subsidized loan program established under section 428.
(2) ANNUAL LIMITS FOR INDEPENDENT, GRADUATE, AND PRO-
FESSIONAL STUDENTS.The maximum annual amount of loans
under this section an independent student (or a student whose
parents are unable to borrow under section 428B or the Fed-
eral Direct PLUS Loan Program) may borrow in any academic
year (as defined in section 481(a)(2)) or its equivalent shall be
the amount determined under paragraph (1), plus
(A) in the case of such a student attending an eligible
institution who has not completed such student's first 2
years of undergraduate study
(i) $4,000, if such student is enrolled in a program
whose length is at least one academic year in length;
and
(ii) if such student is enrolled in a program of un-
dergraduate education which is less than one aca-
demic year, the maximum annual loan amount that
such student may receive may not exceed the amount
that bears the same ratio to the amount specified in
clause (i) as the length of such program measured in
semester, trimester, quarter, or clock hours bears to
one academic year;
(B) in the case of a student at an eligible institution
who has successfully completed such first and second years
but has not successfully completed the remainder of a pro-
gram of undergraduate education
(i) $5,000; or
(ii) if such student is enrolled in a program of un-
dergraduate education, the remainder of which is less
than one academic year, the maximum annual loan
amount that such student may receive may not exceed
the amount that bears the same ratio to the amount
specified in subclause (I) as such remainder measured
in semester, trimester, quarter, or clock hours bears to
one academic year;
(C) in the case of such a student who is a graduate or
professional student attending an eligible institution,
$10,000; and
(D) in the case of a student enrolled in coursework
specified in sections 484(b)(3)(B) and 484(b)(4)(B)
(i) $4,000 for coursework necessary for enrollment
in an undergraduate degree or certificate program,
and, in the case of a student who has obtained a bac-
calaureate degree, $5,000 for coursework necessary for
enrollment in a graduate or professional program; and
219
Sec. 42811
HIGHER EDUCATION ACT OF 1965
212
(ii) in the case of a student who has obtained a
baccalaureate degree, $5,000 for coursework necessary
for a professional credential or certification from a
State required for employment as a teacher in an ele-
mentary or secondary school;
'except in cases where the Secretary determines, that a higher
amount is warranted in order to carry out the purpose of this part
with respect to students engaged in specialized training requiring
exceptionally high costs of education, but the annual insurable
limit per student shall not be deemed to be exceeded by a line of
credit under which actual payments by the lender to the borrower
will not be made in any years in excess of the annual limit.
(3) AGGREGATE LIMITS FOR INDEPENDENT, GRADUATE, AND
PROFESSIONAL STUDENTS.The maximum aggregate amount of
loans under this section a student described in paragraph (2)
may borrow shall be the amount described in paragraph (1),
adjusted to reflect the increased annual limits described in
paragraph (2), as prescribed by the Secretary by regulation. In-
terest capitalized shall not be deemed to exceed such maximum
aggregate amount.
(e) PAYMENT OF PRINCIPAL AND INTEREST.
(1) COMMENCEMENT OF REPAYMENT. Repayment of prin-
cipal on loans made under this section shall begin at the begin-
ning of the repayment period described in section 428(b)(7).
Not less than 30 days prior to the anticipated commencement
of such repayment period, the holder of such loan shall provide
notice to the borrower that interest will accrue before repay -.
ment begins and of the borrower's option to begin loan repay-
ment at an earlier date.
(2) CAPITALIZATION OF INTEREST.(A) Interest on loans
made under this section for which payments of principal are
not required during the in-school and grace periods or for
which payments are deferred under sections 427(a)(2)(C) and
428(b)(1)(M) shall, if agreed upon by the borrower and the
lender
(i) be paid monthly or quarterly; or
(ii) be added to the principal amount of the loan by the
lender only
(I) when the loan enters repayment;
(II) at the expiration of a grace period, in the case
of a loan that qualifies for a grace period;
(III) at the expiration of a period of deferment or
forbearance; or
(IV) when the borrower defaults.
(B) The capitalization of interest described in subpara-
graph (A) shall not be deemed to exceed the annual insurable
limit on account of the student.
(3) SUBSIDIES PROHIBITED.No payments to reduce inter-
est costs shall be paid pursuant to section 428(a) of this part
on loans made pursuant to this section.
Margin so in law, probably should be moved two ems to the right.
213
HIGHER EDUCATION ACT OF 1965
Sec. 428H
(4) APPLICABLE RATES OF INTEREST.Interest on loans
made pursuant to this section shall be at the applicable rate
of interest provided in section 427A.
(5) AMORTIZATION.The amount of the periodic payment
and the repayment schedule for any loan made pursuant to
this section shall be established by assuming an interest rate
equal to the applicable rate of interest at the time the repay-
ment of the principal amount of the loan commences. At the
option of the lender, the note or other written evidence of the
loan may require that
(A) the amount of the periodic payment will be ad-
justed annually; or
(B) the period of repayment of principal will be length-
ened or shortened,
in order to reflect adjustments in interest rates occurring as a
consequence of section 427A(c)(4).
(6) REPAYMENT PERIOD.For purposes of calculating the
repayment period under section 428(b)(9), such period shall
commence at the time the first payment of principal is due
from the borrower.
(7) QUALIFICATION FOR FORBEARANCE.A lender may
grant the borrower of a loan under this section a forbearance
for a period not to exceed 60 days if the lender reasonably de-
termines that such a forbearance from collection activity is
warranted following a borrower's request for forbearance,
deferment, or a change in repayment plan, or a request to con-
solidate loans in order to collect or process appropriate sup-
porting documentation related to the request. During any such
period, interest on the loan shall accrue but not be capitalized.
[(f) Repealed]
(g) SINGLE APPLICATION FORM AND LOAN REPAYMENT SCHED-
ULE.A guaranty agency shall use a single application form and
a single repayment schedule for subsidized Federal Stafford loans
made pursuant to section 428 and for unsubsidized Federal Staf-
ford loans made pursuant to this section.
(h) INSURANCE PREMIUM.Each State or nonprofit private in-
stitution 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.
SEC. 428L [20 U.S.C. 1078-9] SPECIAL INSURANCE AND REINSURANCE
RULES.
(a) DESIGNATION OF LENDERS,
SERVICERS, AND GUARANTY
AGENCIES.
(1) AUTHORITY.Whenever the Secretary determines that
an eligible lender, servicer, or guaranty agency has a compli-
ance performance rating that equals or exceeds 97 percent, the
Secretary shall designate the eligible lender, servicer, or guar-
anty agency, as the case may be, for exceptional performance.
The Secretary shall notify each appropriate guaranty agency of
the eligible lenders and servicers designated under this section.
221
Sec. 4281
HIGHER EDUCATION ACT OF 1965
214
(2) COMPLIANCE PERFORMANCE RATING.For purposes of
paragraph (1), a compliance performance rating is determined
with respect to compliance with due diligence in the collection
of loans under this part for each year for which the determina-
tion is made. Such rating is equal to the percent of all due dili-
gence requirements applicable to each loan, on average, as es-
tablished by the Secretary by regulation, with respect to
(A) loans serviced during the period by the eligible
lender or servicer; or
(B) loans on which loan collection was attempted by
the guaranty agency.
(b) PAYMENT TO LENDERS AND SERVICERS.
(1) 100 PERCENT PAYMENT RULE.Each guaranty agency
shall pay each eligible lender or servicer (as agent for an eligi-
ble lender) designated under subsection (a) 100 percent of the
unpaid principal and interest of all loans for which claims are
submitted for payment by that eligible lender or servicer for
the one-year period following the receipt by the guaranty agen-
cy of the notification of designation under this section or until
the guaranty agency receives notice from the Secretary that
the designation of the lender or servicer under subsection (a)
has been revoked.
(2) REVOCATION AUTHORITY.The Secretary shall revoke
the designation of a lender or servicer under subsection (a) if
any quarterly audit required under subsection (c)(5) is not re-
ceived by the Secretary by the date established by the Sec-
retary or if the audit indicates the lender or servicer failed to
maintain 97 percent or higher compliance with program regu-
lations, as reflected in the performance of not less than 97 per-
cent of all due diligence requirements applicable to each loan,
on average, as established by the Secretary for the purpose of
this section, for 2 consecutive months or 90 percent for 1
month.
(3) DOCUMENTATION.Nothing in this section shall restrict
or limit the authority of guaranty agencies to require the sub-
mission of claims documentation evidencing servicing per-
formed on loans, except that the guaranty agency may not re-
quire greater documentation than that required for lenders and
servicers not designated under subsection (a).
(4) PAYMENTS TO GUARANTY AGENCIES.The Secretary
shall pay to each guaranty agency designated under subsection
(a) the appropriate percentage under this subsection for the 1-
year period following the receipt by the guaranty agency of the
notification of designation under subsection (a).
(C) SUPERVISION OF DESIGNATED LENDERS AND SERVICERS.
(1) AUDITS FOR LENDERS AND SERVICERS.Each eligible
lender or servicer desiring a designation under subsection (a)
shall have a financial and compliance audit of the loan port-
folio of such eligible lender or servicer conducted annually by
a qualified independent organization from a list of qualified or-
ganizations promulgated by the Secretary in accordance with
standards established by the Comptroller General and the Sec-
retary. The standards shall measure the lender's or servicer's
compliance with the due diligence standards and shall include
215
HIGHER EDUCATION ACT OF 1965
Sec. 4281
a defined statistical sampling technique designed to measure
the performance rating of the eligible lender or servicer for the
purpose of this section. Each eligible lender or servicer shall
submit the audit required by this section to the Secretary and
to each appropriate guaranty agency.
(2)
ADDITIONAL
INFORMATION
ON
LENDERS
AND
SERVICERS.Each appropriate guaranty agency shall provide
the Secretary with such other information in its possession re-
garding an eligible lender or servicer desiring designation as
may relate to the Secretary's determination under subsection
(a), including but not limited to any information suggesting
that the application of a lender or servicer for designation
under subsection (a) should not be approved.
(3) SECRETARY'S DETERMINATIONS.The Secretary shall
make the determination under subsection (a) based upon the
audits submitted under this section, such other information as
provided by any guaranty agency under paragraph (2), and any
information in the possession of the Secretary or submitted by
any other agency or office of the Federal Government. If the
results of the audit are not persuasively rebutted by such other
information, the Secretary shall inform the eligible lender or
servicer and the appropriate guaranty agency that its applica-
tion for designation as an exceptional lender or servicer has
been approved.
(4) COST OF AUDIT.Each eligible lender or servicer shall
pay for all the costs of the audits required under this section.
(5) COMPLIANCE AUDIT.In order to maintain its status as
an exceptional eligible lender or servicer, the lender or servicer
shall undergo a quarterly compliance audit at the end of each
quarter (other than the quarter in which status as an excep-
tional lender or servicer is established through a financial and
compliance audit, as described in subsection (c)(1)), and submit
the results of such audit to the Secretary and such appropriate
guaranty agency. The compliance audit will review compliance
with due diligence requirements for the period since the last
audit.
(6) LOSS OF DESIGNATION.If the audit performed pursu-
ant to paragraph (5) fails to meet the standards for designation
as an exceptional lender or servicer under subsection (a)(1), the
lender or servicer shall lose its designation as an exceptional
lender or servicer. A lender or servicer receiving a compliance
audit not meeting the standard for designation as an excep-
tional lender or servicer may reapply for designation under
subsection (a) at any time.
(7) DUE DILIGENCE STANDARDS.Due diligence standards
used for determining compliance under paragraph (5) shall be
promulgated by the Secretary after consultation with lenders,
guaranty agencies and servicers and shall consist of a list of
specific elements for the Federal regulations selected to provide
an indication of systems degradation.
(8) ADDITIONAL REVOCATION AUTHORITY.Notwithstanding
any other provision of this section, designation under sub-
section (a) may be revoked at any time by the Secretary if the
Secretary determines that the eligible lender or servicer has
2 2
Sec. 4281
HIGHER EDUCATION ACT OF 1965
216
failed to maintain an overall level of regulatory compliance
consistent with the audit submitted by the eligible lender or
servicer under this section or if the Secretary believes the lend-
er or servicer may have engaged in fraud in securing designa-
tion under subsection (a) or is failing to service loans in accord-
ance with program regulations.
(d) SUPERVISION OF DESIGNATED GUARANTY AGENCIES.
(1) AUDIT OF GUARANTY AGENCIES.Each guaranty agency
desiring a designation under subsection (a) shall have a finan-
cial and compliance audit of the defaulted loan portfolio of such
guaranty agency conducted annually by a qualified independ-
ent organization or person from a list of qualified organizations
or persons promulgated by the Secretary in accordance with
standards established by the Comptroller General and the Sec-
retary. The standards shall include defined statistical sampling
techniques designed to measure the performance rating of the
guaranty agency for the purpose of this section. Each guaranty
agency shall submit the audit required by this paragraph to
the Secretary.
(2) QUARTERLY SAMPLE AUDITS.The Secretary may re-
quire quarterly sample audits as a means of determining con-
tinued qualification of the guaranty agency for designation as
an exceptional guaranty agency.
(3) SECRETARY'S DETERMINATIONS.The Secretary shall
make the determination under subsection (a) based upon the
audits submitted under this section and other information in
his possession. If the results of the audit are not persuasively
rebutted by such other information, the Secretary shall inform
the guaranty -agency that its application for designation as an
exceptional guaranty agency has been approved.
(4) COSTS OF AUDITS.Each guaranty agency shall pay for
all of the costs of the audits regulated by this section.
(5) REVOCATION FOR FRAUD.The Secretary may revoke
the designation of a guaranty agency under subsection (a) at
any time if the Secretary has reason to believe the guaranty
agency secured its designation under subsection (a) through
fraud or fails to comply with applicable regulations.
(6) REVOCATION BASED ON PERFORMANCE.Designation as
an exceptional guaranty agency may be revoked at any time by
the Secretary upon 30 days notice and an opportunity for a
hearing before the Secretary upon a finding by the Secretary
that the guaranty agency has failed to maintain an acceptable
overall level of regulatory compliance.
(e) SPECIAL RULE.Reimbursements made by the Secretary on
loans submitted for claim by an eligible lender or loan servicer des-
ignated for exceptional performance under this section shall not be
subject to additional review by the Secretary or repurchase by the
guaranty agency for any reason other than a determination by the
Secretary that the eligible lender, loan servicer, or guaranty agency
engaged in fraud or other purposeful misconduct in obtaining des-
ignation for exceptional performance.
(0 LIMITATION.
Nothing in this section shall be construed to
affect the processing of claims on student loans of eligible lenders
not subject to this paragraph.
211
HIGHER EDUCATION ACT OF 1965
Sec. 4281
(g) CLAIMS.A lender, servicer, or guaranty agency designated
under subsection (a) failing to service loans or otherwise comply
with applicable program regulations shall be considered in viola-
tion of section 3729 of title 31, United States Code, 1.
(h) EVALUATION.Not later than 3 years after the date of en-
actment of this Act, the Comptroller General shall submit to the
Chairman of the Senate Labor and Human Resources Committee
and the House Committee on Education and Labor, an evaluation
of the provisions of this section including, but not limited to, the
following:
(1) The effectiveness of due diligence performed by lenders
and servicers receiving designation as exceptional lenders or
servicers from the perspective of securing maximum collections
from borrowers.
(2) A quantification of the dollar volume of claims that
were paid to exceptional lenders and servicers that would not
have been paid under applicable program provisions prior to
the enactment of this section.
(3) An assessment of the impact of this section on the fi-
nancial condition of guaranty agencies.
(4) An assessment of the savings to lenders, servicers, and
guaranty agencies resulting from designation as exceptional
performance.
(5) An identification of specific administration steps that
lenders, servicers, and guaranty agencies do not have to per-
form as a result of designation as exceptional
lenders,
servicers, or guaranty agencies.
(6) A recommendation for program modifications applicable
to all program participants based on the findings of the evalua-
tion.
(7) A recommendation for modifications to this section and
whether the program should be continued.
(i) TERMINATION.After receipt of the study authorized in sub-
section (h), the Secretary may terminate such program if he deter-
mines such termination to be in the fiscal interest of the United
States.
(j) DEFINITIONS.For the purpose of this section
(1) the term "due diligence requirements" means the ac-
tivities required to be performed by lenders on delinquent
loans pursuant to regulations issued by the Secretary;
(2) the term "eligible loan" means a loan made, insured or
guaranteed under part B of title IV;
(3) the term "servicer" means an entity servicing and col-
lecting student loans which
(A) has substantial experience in servicing and collect-
ing consumer loans or student loans;
(B) has an independent financial audit annually which
is furnished to the Secretary and any other parties des-
ignated by the Secretary;
(C) has business systems which are capable of meeting
the requirements of part B of title IV;
1So in law. The comma probably should be deleted. Section 2(c)(46) of the Higher Education
Technical Amendments of 1993 struck "the Federal False Claims Act" and inserted "section
3729 of title 31, United States Code,".
54-653 99 - 8
225
Sec. 428.1
HIGHER EDUCATION ACT OF 1965
218
(D) has adequate personnel who are knowledgeable
about the student loan programs authorized by part B of
title IV; and
(E) does not have any owner, majority shareholder, di-
rector, or officer of the entity who has been convicted of a
felony.
SEC. 428J. [20 U.S.C. 1078-10] LOAN FORGIVENESS FOR TEACHERS.
(a) STATEMENT OF PURPOSE.It is the purpose of this section
to encourage individuals to enter, and continue in the teaching pro-
fession.
(b) PROGRAM AUTHORIZED.The Secretary shall carry out a
program, through the holder of the loan, of assuming the obligation
to repay a qualified loan amount for a loan made under section 428
or 428H, in accordance with subsection (c), for any new borrower
on or after October 1, 1998, who
(1) has been employed as a full-time teacher for 5 consecu-
tive complete school years
(A) in a school that qualifies under section 465(a)(2)(A)
for loan cancellation for Perkins loan recipients who teach
in such schools;
(B) if employed as a secondary school teacher, is teach-
ing a subject area that is relevant to the borrower's aca-
demic major as certified by the chief administrative officer
of the public or nonprofit private secondary school in which
the borrower is employed; and
(C) if employed as an elementary school teacher, has
demonstrated, as certified by the chief administrative offi-
cer of the public or nonprofit private elementary school in
which the borrower is employed, knowledge and teaching
skills in reading, writing, mathematics, and other areas of
the elementary school curriculum; and
(2) is not in default on a loan for which the borrower seeks
forgiveness.
(C) QUALIFIED LOANS AMOUNT.
(1) IN GENERAL.The Secretary shall repay not more than
$5,000 in the aggregate of the loan obligation on a loan made
under section 428 or 428H that is outstanding after the com-
pletion of the fifth complete school year of teaching described
in subsection (b)(1). No borrower may receive a reduction of
loan obligations under both this section and section 460.
(2) TREATMENT OF CONSOLIDATION LOANS.A loan amount
for a loan made under section 428C may be a qualified loan
amount for the purposes of this subsection only to the extent
that such loan amount was used to repay a Federal Direct
Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or
a loan made under section 428 or 428H for a borrower who
meets the requirements of subsection (b), as determined in ac-
cordance with regulations prescribed by the Secretary.
(d) REGULATIONS.The Secretary is authorized to issue such
regulations as may be necessary to carry out the provisions of this
section.
(e) CONSTRUCTION.Nothing in this section shall be construed
to authorize any refunding of any repayment of a loan.
219
HIGHER EDUCATION ACT OF 1965
Sec. 428K
(f) LIST.If the list of schools in which a teacher may perform
service pursuant to subsection (b) is not available before May 1 of
any year, the Secretary may use the list for the year preceding the
year for which the determination is made to make such service de-
termination.
(g) ADDITIONAL ELIGIBILITY PROVISIONS.
(1) CONTINUED ELIGIBILITY.Any teacher who performs
service in a school that
(A) meets the requirements of subsection (b)(1)(A) in
any year during such service; and
(B) in a subsequent year fails to meet the require-
ments of such subsection,
may continue to teach in such school and shall be eligible for
loan forgiveness pursuant to subsection (b).
(2) PREVENTION OF DOUBLE BENEFITS.No borrower may,
for the same service, receive a benefit under both this sub-
section and subtitle D of title I of the National and Community
Service Act of 1990 (42 U.S.C. 12571 et seq.).
(h) DEFINITION.For purposes of this section, the term "year",
where applied to service as a teacher, means an academic year as
defined by the Secretary.
SEC. 428K [20 U.S.C. 1078-11) LOAN FORGIVENESS FOR CHILD CARE
PROVIDERS.
(a) PURPOSE.It is the purpose of this section
(1) to bring more highly trained individuals into the early
child care profession; and
(2) to keep more highly trained child care providers in the
early child care field for longer periods of time.
(b) DEFINITIONS.In this section:
(1) CHILD CARE FACILITY.The term "child care facility"
means a facility, including a home, that
(A) provides child care services; and
(B) meets applicable State or local government licens-
ing, certification, approval, or registration requirements, if
any.
(2) CHILD CARE SERVICES.The term "child care services"
means activities and services provided for the education and
care of children from birth through age 5 by an individual who
has a degree in early childhood education.
(3) DEGREE.The term "degree" means an associate's or
bachelor's degree awarded by an institution of higher edu-
cation.
(4) EARLY CHILDHOOD EDUCATION.The term "early child-
hood education" means education in the areas of early child
education, child care, or any other educational area related to
child care that the Secretary determines appropriate.
(5) INSTITUTION OF HIGHER EDUCATION.Notwithstanding
section 102, the term "institution of higher education" has the
meaning given the term in section 101.
(c) DEMONSTRATION PROGRAM.
(1) IN GENERAL.The Secretary may carry out a dem-
onstration program of assuming the obligation to repay, pursu-
ant to subsection (d), a loan made, insured, or guaranteed
under this part or part D (excluding loans made under sections
227
Sec. 428K
HIGHER EDUCATION ACT OF 1965
220
428B and 428C or comparable loans made under part D) for
any new borrower after the date of enactment of the Higher
Education Amendments of 1998, who
(A) completes a degree in early childhood education;
(B) obtains employment in a child care facility; and
(C) has worked full time for the 2 consecutive years
preceding the year for which the determination is made as
a child care provider in a low-income community.
(2) LOW-INCOME COMMUNITY.For the purposes of this
subsection, the term "low-income community" means a commu-
nity in which 70 percent of households within the community
earn less than 85 percent of the State median household in-
come.
(3) AWARD BASIS; PRIORITY.
(A) AWARD BASIS.Subject to subparagraph (B), loan
repayment under this section shall be on a first-come,
first-served basis and subject to the availability of appro-
priations.
(B) PRIORITY.The Secretary shall give priority in
providing loan repayment under this section for a fiscal
year to student borrowers who received loan repayment
under this section for the preceding fiscal year.
(4) REGULATIONS.The Secretary is authorized to pre-
scribe such regulations as may be necessary to carry out the
provisions of this section.
(d) LOAN REPAYMENT.
(1) IN GENERALThe Secretary shall assume the obliga-
tion to repay
(A) after the second consecutive year of employment
described in subparagraphs (B) and (C) of subsection (c)(1),
20 percent of the total amount of all loans made after date
of enactment of the Higher Education Amendments of
1998, to a student under this part or part D;
(B) after the third consecutive year of such employ-
ment, 20 percent of the total amount of all such loans; and
(C) after each of the fourth and fifth consecutive years
of such employment, 30 percent of the total amount of all
such loans.
(2) CONSTRUCTION.Nothing in this section shall be con-
strued to authorize the refunding of any repayment of a loan
made under this part or part D.
(3) INTEREST.If a portion of a loan is repaid by the Sec-
retary under this section for any year, the proportionate
amount of interest on such loan which accrues for such year
shall be repaid by the Secretary.
(4) SPECIAL RULE.In the case where a student borrower
who is not participating in loan repayment pursuant to this
section returns to an institution of higher education after grad-
uation from an institution of higher education for the purpose
of obtaining a degree in early childhood education, the Sec-
retary is authorized to assume the obligation to repay the total
amount of loans made under this part or part D incurred for
a maximum of two academic years in returning to an institu-
tion of higher education for the purpose of obtaining a degree
228
221
HIGHER EDUCATION ACT OF 1965
Sec. 428K
in early childhood education. Such loans shall only be repaid
for borrowers who qualify for loan repayment pursuant to the
provisions of this section, and shall be repaid in accordance
with the provisions of paragraph (1).
(5) INELIGIBILITY OF NATIONAL SERVICE AWARD RECIPI-
ENTS.No student borrower may, for the same volunteer serv-
ice, receive a benefit under both this section and subtitle D of
title I of the National and Community Service Act of 1990 (42
U.S.C. 12601 et seq.).
(e) REPAYMENT TO ELIGIBLE LENDERS.The Secretary shall
pay to each eligible lender or holder for each fiscal year an amount
equal to the aggregate amount of loans which are subject to repay-
ment pursuant to this section for such year.
(f) APPLICATION FOR REPAYMENT.
(1) IN GENERAL.Each eligible individual desiring loan re-
payment under this section shall submit a complete and accu-
rate application to the Secretary at such time, in such manner,
and containing such information as the Secretary may require.
(2) CONDITIONS.An eligible individual may apply for loan
repayment under this section after completing each year of
qualifying employment. The borrower shall receive forbearance
while engaged in qualifying employment unless the borrower is
in deferment while so engaged.
(g) EVALUATION.
(1) IN GENERAL.The Secretary shall conduct, by grant or
contract, an independent national evaluation of the impact of
the demonstration program assisted under this section on the
field of early childhood education.
(2) COMPETITIVE BASIS.The grant or contract described in
subsection (b) shall be awarded on a competitive basis.
(3) CoNTENTs.The evaluation described in this sub-
section shall
(A) determine the number of individuals who were en-
couraged by the demonstration program assisted under
this section to pursue early childhood education;
(B) determine the number of individuals who remain
employed in a child care facility as a result of participation
in the program;
(C) identify the barriers to the effectiveness of the pro-
gram;
(D) assess the cost-effectiveness of the program in im-
proving the quality of
(i) early childhood education; and
(ii) child care services;
(E) identify the reasons why participants in the pro-
gram have chosen to take part in the program;
(F) identify the number of individuals participating in
the program who received an associate's degree and the
number of such individuals who received a bachelor's de-
gree; and
(G) identify the number of years each individual par-
ticipates in the program.
(4) INTERIM AND FINAL EVALUATION REPORTS.The Sec-
retary shall prepare and submit to the President and the Con-
Sec. 429
HIGHER EDUCATION ACT OF 1965
222
gress such interim reports regarding the evaluation described
in this subsection as the Secretary deems appropriate, and
shall prepare and so submit a final report regarding the eval-
uation by January 1, 2002.
(h) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this section $10,000,000 for fiscal
year 1999, and such sums as may be necessary for each of the 4
succeeding fiscal years.
SEC. 429. [20 U.S.C. 1079] CERTIFICATE OF FEDERAL LOAN INSUR-
ANCEEFFECTIVE DATE OF INSURANCE.
(a) LOAN-BY-LOAN INSURANCE.
(1) AUTHORITY TO ISSUE CERTIFICATES ON APPLICATION.If,
upon application by an eligible lender, made upon such form,
containing such information, and supported by such evidence
as the Secretary may require, and otherwise in conformity with
this section, the Secretary finds that the applicant has made
a loan to an eligible student which is insurable under the pro-
visions of this part, he may issue to the applicant a certificate
of insurance covering the loan and setting forth the amount
and terms of the insurance.
(2) EFFECTIVENESS OF CERTIFICATE.Insurance evidenced
by a certificate of insurance pursuant to subsection (a)(1) shall
become effective upon the date of issuance of the certificate, ex-
cept that the Secretary is authorized, in accordance with regu-
lations, to issue commitments with respect to proposed loans,
or with respect to lines (or proposed lines) of credit, submitted
by eligible lenders, and in that event, upon compliance with
subsection (a)(1) by the lender, the certificate of insurance may
be issued effective as of the date when any loan, or any pay-
ment by the lender pursuant to a line of credit, to be covered
by such insurance was made. Such insurance shall cease to be
effective upon 60 days' default by the lender in the payment
of any installment of the premiums payable pursuant to sub-
section (c).
(3) CONTENTS OF APPLICATIONS.An application submitted
pursuant to subsection (a)(1) shall contain (A) an agreement by
the applicant to pay, in accordance with regulations, the pre-
miums fixed by the Secretary pursuant to subsection (c), and
(B) an agreement by the applicant that if the loan is covered
by insurance the applicant will submit such supplementary re-
ports and statement during the effective period of the loan
agreement, upon such forms, at such times, and containing
such information as the Secretary may prescribe by or pursu-
ant to regulation.
(b) COMPREHENSIVE INSURANCE COVERAGE CERTIFICATE.
(1) ESTABLISHMENT OF SYSTEM BY REGULATION.In lieu of
requiring a separate insurance application and issuing a sepa-
rate certificate of insurance for each student loan made by an
eligible lender as provided in subsection (a), the Secretary may,
in accordance with regulations consistent with section 424,
issue to any eligible lender applying therefor a certificate of
comprehensive insurance coverage which shall, without further
action by the Secretary, insure all insurable loans made by
that lender, on or after the date of the certificate and before
223
HIGHER EDUCATION ACT OF 1965
Sec. 429
a specified cutoff date, within the limits of an aggregate maxi-
mum amount stated in the certificate. Such regulations may
provide for conditioning such insurance, with respect to any
loan, upon compliance by the lender with such requirements
(to be stated or incorporated by reference in the certificate) as
in the Secretary's judgment will best achieve the purpose of
this subsection while protecting the United States from the
risk of unreasonable loss and promoting the objectives of this
part, including (but not limited to) provisions as to the report-
ing of such loans and information relevant thereto to the Sec-
retary and as to the payment of initial and other premiums
and the effect of default therein, and including provision for
confirmation by the Secretary from time to time (through en-
dorsement of the certificate) of the coverage of specific new
loans by such certificate, which confirmation shall be incontest-
able by the Secretary in the absence of fraud or misrepresenta-
tion of fact or patent error.
(2) UNCOVERED LOANS.If the holder of a certificate of
comprehensive insurance coverage issued under this subsection
grants to a student a line of credit extending beyond the cutoff
date specified in that certificate, loans or payments thereon
made by the holder after that date pursuant to the line of cred-
it shall not be deemed to be included in the coverage of that
certificate except as may be specifically provided therein; but,
subject to the limitations of section 424, the Secretary may, in
accordance with regulations, make commitments to insure such
future loans or payments, and such commitments may be hon-
ored either as provided in subsection (a) or by inclusion of such
insurance on comprehensive coverage under the subsection for
the period or periods in which such future loans or payments
are made.
(c) CHARGES FOR FEDERAL INSURANCE.The Secretary shall,
pursuant to regulations, charge for insurance on each loan under
this part a premium in an amount not to exceed one-fourth of 1
percent per year of the unpaid principal amount of such loan (ex-
cluding interest added to principal), payable in advance, at such
times and in such manner as may be prescribed by the Secretary.
Such regulations may provide that such premium shall not be pay-
able, or if paid shall be refundable, with respect to any period after
default in the payment of principal or interest or after the borrower
has died or becomes totally and permanently disabled, if (1) notice
of such default or other event has been duly given, and (2) requests
for payment of the loss insured against has been made or the Sec-
retary has made such payment on his own motion pursuant to sec-
tion 430(a).
(d) ASSIGNABILITY OF INSURANCE.The rights of an eligible
lender arising under insurance evidenced by a certificate of insur-
ance issued to it under this section may be assigned as security by
such lender only to another eligible lender, and subject- to regula-
tion by the Secretary.
(e) CONSOLIDATION NOT TO AFFECT. INSURANCE.The consoli-
dation of the obligations of two or more federally insured loans ob-
tained by a student borrower in any fiscal year into a single obliga-
tion evidenced by a single instrument of indebtedness shall not af-
Sec. 430
HIGHER EDUCATION ACT OF 1965
224
fect the insurance by the United States. If the loans thus consoli-
dated are covered by separate certificates of insurance issued under
subsection (a), the Secretary may upon surrender of the original
certificates issue a new certificate of insurance in accordance with
that subsection upon the consolidated obligation; if they are cov-
ered by a single comprehensive certificate issued under subsection
(b), the Secretary may amend that certificate accordingly.
SEC. 430. [20 U.S.C. 1080] DEFAULT OF STUDENT UNDER FEDERAL
LOAN INSURANCE PROGRAM.
(a) NOTICE TO SECRETARY AND PAYMENT OF Loss.Upon de-
fault by the student borrower on any loan covered by Federal loan
insurance pursuant to this part, and prior to the commencement of
suit or other enforcement proceedings upon security for that loan,
the insurance beneficiary shall promptly notify the Secretary, and
the Secretary shall if requested (at that time or after further collec-
tion efforts) by the beneficiary, or may on the Secretary's own mo-
tion, if the insurance is still in effect, pay to the beneficiary the
amount of the loss sustained by the insured upon that loan as soon
as that amount has been determined. The "amount of the loss" on
any loan shall, for the purposes of this subsection and subsection
(b), be deemed to be an amount equal to the unpaid balance of the
principal amount and accrued interest, including interest accruing
from the date of submission of a valid default claim (as determined
by the Secretary) to the date on which payment is authorized by
the. Secretary, reduced to the extent required by section 425(b).
Such beneficiary shall be required to meet the standards of due
diligence in the collection of the loan and shall be required to sub-
mit proof that the institution was contacted and other reasonable
attempts were made to locate the borrower (when the location of
the borrower is unknown) and proof that contact was made with
the borrower (when the location is known). The Secretary shall
make the determination required to carry out the provisions of this
section not later than 90 days after the notification by the insur-
ance beneficiary and shall make payment in full on the amount of
the beneficiary's loss pending completion of the due diligence inves-
tigation.
(b) EFFECT OF PAYMENT OF Loss. Upon payment of the
amount of the loss pursuant to subsection (a), the United States
shall be subrogated for all of the rights of the holder of the obliga-
tion upon the insured loan and shall be entitled to an assignment
of the note or other evidence of the insured loan by the insurance
beneficiary. If the net recovery made by the Secretary on a loan
after deduction of the cost of that recovery (including reasonable
administrative costs and collection costs, to the extent set forth in
regulations issued by the Secretary) exceeds the amount of the loss,
the excess shall be paid over to the insured. The Secretary may,
in attempting to make recovery on such loans, contract with pri-
vate business concerns, State student loan insurance agencies, or
State guaranty agencies, for payment for services rendered by such
concerns or agencies in assisting the Secretary in making such re-
covery. Any contract under this subsection entered into by the Sec-
retary shall provide that attempts to make recovery on such loans
shall be fair and reasonable, and do not involve harassment, in-
225
HIGHER EDUCATION ACT OF 1965
Sec. 430
timidation, false or misleading representations, or unnecessary
communications concerning the existence of any such loan to per-
sons other than the student borrower.
(c) FORBEARANCE NOT PRECLUDED.Nothing in this section or
in this part shall be construed to preclude any forbearance for the
benefit of the student borrower which may be agreed upon by the
parties to the insured loan and approved by the Secretary, or to
preclude forbearance by the Secretary in the enforcement of the in-
sured obligation after payment on that insurance. Any forbearance
which is approved by the Secretary under this subsection with re-
spect to the repayment of a loan, including a forbearance during
default, shall not be considered as indicating that a holder of a fed-
erally insured loan has failed to exercise reasonable care and due
diligence in the collection of the loan.
(d) CARE AND DILIGENCE REQUIRED OF HOLDERS.Nothing in
this section or in this part shall be construed to excuse the holder
of a federally insured loan from exercising reasonable care and dili-
gence in the making and collection of loans under the provisions of
this part. If the Secretary, after a reasonable notice and oppor-
tunity for hearing to an eligible lender, finds that it has substan-
tially failed to exercise such care and diligence or to make the re-
ports and statements required under section 428(a)(4) and section
429(a)(3), or to pay the required Federal loan insurance premiums,
the Secretary shall disqualify that lender for-further Federal insur-
ance on loans granted pursuant to this part until the Secretary is
satisfied that its failure has ceased and finds that there is reason-
able assurance that the lender will in the' future exercise necessary
care and diligence or comply with such requirements, as the case
may be.
(e) DEFAULT RATE OF LENDERS, HOLDERS,
AND GUARANTY
AGENCIES.
(1) IN GENERAL.The Secretary shall annually publish a
list indicating the cohort default rate (determined in accord-
ance with section 435(m)) for each originating lender, subse-
quent holder, and guaranty agency participating in the pro-
gram assisted under this part and an average cohort default
rate for all institutions of higher education within each State.
(2) REGULATIONS.The Secretary shall prescribe regula-
tions designed to prevent an institution from evading the appli-
cation to that institution of a cohort default rate through the
use of such measures as branching, consolidation, change of
ownership or control, or any similar device.
(3) RATE ESTABLISHMENT AND CORRECTION.The Secretary
shall establish a cohort default rate for lenders, holders, and
guaranty agencies (determined consistent with section 435(m)),
except that the rate for lenders, holders, and guaranty agencies
shall not reflect any loans issued in accordance with section
428(j).The Secretary shall allow institutions, lenders, holders,
and guaranty agencies the opportunity to correct such cohort
default rate information.
233
Sec. 430A
HIGHER EDUCATION ACT OF 1965
226
SEC. 430A. [20 U.S.C. 1080a] REPORTS TO CREDIT BUREAUS AND INSTI-
TUTIONS OF HIGHER EDUCATION.
(a) AGREEMENTS TO EXCHANGE INFORMATION.For the pur-
pose of promoting responsible repayment of loans covered by Fed-
eral loan insurance pursuant to this part or covered by a guaranty
agreement pursuant to section 428, the Secretary, each guaranty
agency, eligible lender, and subsequent holder shall enter into
agreements with credit bureau organizations to exchange informa-
tion concerning student borrowers, in accordance with the require-
ments of this section. For the purpose of assisting such organiza-
tions in complying with the Fair Credit Reporting Act, such agree-
ments may provide for timely response by the Secretary (concern-
ing loans covered by Federal loan insurance), by a guaranty agen-
cy, eligible lender, or subsequent holder (concerning loans covered
by a guaranty agreement), or to requests from such organizations
for responses to objections raised by borrowers. Subject to the re-
quirements of subsection (c), such agreements shall require the
Secretary, the guaranty agency, eligible lender, or subsequent hold-
er, as appropriate, to disclose to such organizations, with respect
to any loan under this part that has not been repaid by the
borrower
(1) the total amount of loans made to any borrower under
this part and the remaining balance of the loans;
(2) information concerning the date of any default on the
loan and the collection of the loan, including information con-
cerning the repayment status of any defaulted loan on which
the Secretary has made a payment pursuant to section 430(a)
or the guaranty agency has made a payment to the previous
holder of the loan; and
(3) the date of cancellation of the note upon completion of
repayment by the borrower of the loan or payment by the Sec-
retary pursuant to section 437.
(b) ADDITIONAL INFORMATION.Such agreements may also pro-
vide for the disclosure by such organizations to the Secretary or a
guaranty agency, whichever insures or guarantees a loan, upon re-
ceipt of a notice under subsection (a)(2) that such a loan is in de-
fault, of information concerning the borrower's location or other in-
formation which may assist the Secretary, the guaranty agency,
the eligible lender, or the subsequent holder in collecting the loan.
(c) CONTENTS OF AGREEMENTS.Agreements entered into pur-
suant to this section shall contain such provisions as may be nec-
essary to ensure that
(1) no information is disclosed by the Secretary or the
guaranty agency, eligible lender, or subsequent holder unless
its accuracy and completeness have been verified and the Sec-
retary or the guaranty agency has determined that disclosure
would accomplish the purpose of this section;
(2) as to any information so disclosed, such organizations
will be promptly notified of, and will promptly record, any
change submitted by the Secretary, the guaranty agency, eligi-
ble lender, or subsequent holder with respect to such informa-
tion, or any objections by the borrower with respect to any
such information, as required by section 611 of the Fair Credit
Reporting Act (15 U.S.C. 1681i);
227
HIGHER EDUCATION ACT OF 1965
Sec. 430A
(3) no use will be made of any such information which
would result in the use of collection practices with respect to
such a borrower that are not fair and reasonable or that in-
volve harassment, intimidation, false or misleading representa-
tions, or unnecessary communication concerning the existence
of such loan or concerning any such information; and
(4) with regard to notices of default under subsection (a)(2)
of this section, except for disclosures made to obtain the bor-
rower's location, the Secretary, or the guaranty agency, eligible
lender, or subsequent holder whichever is applicable (A) shall
not disclose any such information until the borrower has been
notified that such information will be disclosed to credit bureau
organizations unless the borrower enters into repayment of his
or her loan, but (B) shall, if the borrower has not entered into
repayment within a reasonable period of time, but not less
than 30 days, from the date such notice has been sent to the
borrower, disclose the information required by this subsection.
(d) CONTRACTOR STATUS OF PARTICIPANTS.A guaranty agen-
cy, eligible lender, or subsequent holder or credit bureau organiza-
tion which discloses or receives information under this section shall
not be considered a Government contractor within the meaning of
section 552a of title 5, United States Code.
(e) DISCLOSURE TO INSTITUTIONS.The Secretary and each
guaranty agency, eligible lender, and subsequent holder of a loan
are authorized to disclose information described in subsections (a)
and (b) concerning student borrowers to the eligible institutions
such borrowers attend or previously attended. To further the pur-
pose of this section, an eligible institution may enter into an ar-
rangement with any or all of the holders ofdelinquent loans made
to borrowers who attend or previously attended such institution for
the purpose of providing current information regarding the borrow-
er's location or employment or for the purpose of assisting the hold-
er in contacting and influencing borrowers to avoid default.
(f) DURATION OF AUTHORITY.Notwithstanding paragraphs (4)
and (6) of subsection (a) of section 605 of the Fair Credit Reporting
Act (15 U.S.C. 1681c (a)(4), (a)(6)), a consumer reporting agency
may make a report containing information received from the Sec-
retary or a guaranty agency, eligible lender, or subsequent holder
regarding the status of a borrower's defaulted account on a loan
guaranteed under this part until
(1) 7 years from the date on which the Secretary or the
agency paid a claim to the holder on the guaranty;
(2) 7 years from the date the Secretary, guaranty agency,
eligible lender, or subsequent holder first reported the account
to the consumer reporting agency; or
(3) in the case of a borrower who reenters repayment after
defaulting on a loan and subsequently goes into default on
such loan, 7 years from the date the loan entered default such
subsequent time.
SEC. 431. [20 U.S.C. 1081] INSURANCE FUND.
(a) ESTABLISHMENT.There is hereby established a student
loan insurance fund (hereinafter in this section called the "fund")
which shall be available without fiscal year limitation to the Sec-
233
Sec. 431
HIGHER EDUCATION ACT OF 1965
228
retary for making payments in connection with the default of loans
insured by the Secretary under this part, or in connection with
payments under a guaranty agreement under section 428(c). All
amounts received by the Secretary as premium charges for insur-
ance and as receipts, earnings, or proceeds derived from any claim
or other assets acquired by the Secretary in connection with oper-
ations under this part, any excess advances under section 422, and
any other moneys, property, or assets derived by the Secretary
from operations in connection with this section, shall be deposited
in the fund. All payments in connection with the default of loans
insured by the Secretary under this part, or in connection with
such guaranty agreements shall be paid from the fund. Moneys in
the fund not needed for current operations under this section may
be invested in bonds or other obligations guaranteed as to principal
and interest by the United States.
(b) BORROWING AUTHORITY.If at any time the moneys in the
fund are insufficient to make payments in connection with the de-
fault of any loan insured by the Secretary under this part, or in
connection with any guaranty agreement made under section
428(c), the Secretary is authorized, to the extent provided in ad-
vance by appropriations Acts, to issue to the Secretary of the
Treasury notes or other obligations in such forms and denomina-
tions, bearing such maturities, and subject to such terms and con-
ditions as may be prescribed by the Secretary with the approval of
the Secretary of the Treasury. Such notes or other obligations shall
bear interest at a rate determined by the Secretary of the Treas-
ury, taking into consideration the current average market yield on
outstanding marketable obligations of the United States of com-
parable maturities during the month preceding the issuance of the
notes or other obligations. The Secretary of the Treasury is author-
ized and directed to purchase any notes and other obligations
issued hereunder and for that purpose is authorized to use as a
public debt transaction the proceeds from the sale of any securities
issued under the Second Liberty Bond Act, as amended, and the
purposes for which securities may be issued under that Act, as
amended, are extended to include any purchase of such notes and
obligations. The Secretary of the Treasury may at any time sell any
of the notes or other obligations acquired under this subsection. All
redemptions, purchases, and sales by the Secretary of the Treasury
of such notes or other obligations shall be treated as public debt
transactions of the United States. Sums borrowed under the sub-
section shall be deposited in the fund and redemption of such notes
and obligations shall be made by the Secretary from such fund.
SEC. 432. [20 U.S.C. 1082] LEGAL POWERS AND RESPONSIBILITIES.
(a) GENERAL POWERS.In the performance of, and with respect
to, the functions, powers, and duties, vested in him by this part,
the Secretary may
(1) prescribe such regulations as may be necessary to carry
out the purposes of this part, including regulations applicable
to third party servicers (including regulations concerning fi-
nancial responsibility standards for, and the assessment of li-
abilities for program violations against, such servicers) to es-
tablish minimum standards with respect to sound management
229
HIGHER EDUCATION ACT OF 1965
Sec. 432
and accountability of programs under this part, except that in
no case shall damages be assessed against the United States
for the actions or inactions of such servicers;
(2) sue and be sued in any court of record of a State hav-
ing general jurisdiction or in any district court of the United
States, and such district courts shall have jurisdiction of civil
actions arising under this part without regard to the amount
in controversy, and action instituted under this subsection by
or against the Secretary shall survive notwithstanding any
change in the person occupying the office of Secretary or any
vacancy in that office; but no attachment, injunction, garnish-
ment, or other similar process, mesne or final, shall be issued
against the Secretary or property under the Secretary's control
and nothing herein shall be construed to except litigation aris-
ing out of activities under this part from the application of sec-
tions 509, 517, 547, and 2679 of title 28 of the United States
Code;
(3) include in any contract for Federal loan insurance such
terms, conditions, and covenants relating to repayment of prin-
cipal and payment of interest, relating to the Secretary's obli-
gations and rights to those of eligible lenders, and borrowers
in case of default, and relating to such other matters as the
Secretary determines to be necessary to assure that the pur-
poses of this part will be achieved; and any term, condition,
and covenant made pursuant to this paragraph or pursuant to
any other provision of this part may be modified by the Sec-
retary, after notice and opportunity for a hearing, if the Sec-
retary finds that the modification is necessary to protect the
United States from the risk of unreasonable loss;
(4) subject to the specific limitations in this part, consent
to modification, with respect to rate of interest, time of pay-
ment of any installment of principal and interest or any por-
tion thereof, or any other provision of any note or other instru-
ment evidencing a loan which has been insured by the Sec-
retary under this part;
(5) enforce, pay, or compromise, any claim on, or arising
because of, any such insurance or any guaranty agreement
under section 428(c); and
(6) enforce, pay, compromise, waive, or release any right,
title, claim, lien, or demand, however acquired, including any
equity or any right of redemption.
(b) FINANCIAL OPERATIONS RESPONSIBILITIES.The Secretary
shall, with respect to the financial operations arising by reason of
this part prepare annually and submit a budget program as pro-
vided for wholly owned Government corporations by chapter 91 of
title 31, United States Code. The transactions of the Secretary, in-
cluding the settlement of insurance claims and of claims for pay-
ments pursuant to section 1078 of this title, and transactions relat-
ed thereto and vouchers approved by the Secretary in connection
with such transactions, shall be final and conclusive upon all ac-
counting and other officers ofthe Government.
(C)-DATA COLLECTION.
(1) COLLECTION BY CATEGORY OF LOAN.(A) For loans in-
sured after December 31, 1976, or in the case of each insurer
23 7
4
Sec. 432
NIGHER EDUCATION ACT OF 1965
230
after such earlier date where the data required by this sub-
section are available, the Secretary and all other insurers
under this part shall collect and accumulate all data relating
to (i) loan volume insured and (ii) defaults reimbursed or de-
fault rates according to the categories of loans listed in sub-
paragraph (B) of this paragraph.
(B) The data indicated in subparagraph (A) of this para-
graph shall be accumulated according to the category of lender
making the loan and shall be accumulated separately for lend-
ers who are (i) eligible institutions, (ii) State or private, non-
profit direct lenders, (iii) commercial financial institutions who
are banks, savings and loan associations, or credit unions, and
(iv) all other types of institutions or agencies.
(C) The Secretary may designate such additional subcat-
egories within the categories specified in subparagraph (B) of
this paragraph as the Secretary deems appropriate.
(D) The category or designation of a loan shall not be
changed for any reason, including its purchase or acquisition
by a lender of another category.
(2) COLLECTION AND REPORTING REQUIREMENTS.(A) The
Secretary shall collect data under this subsection from all in-
surers under this part and shall publish not less often than
once every fiscal year a report showing loan volume guaran-
teed and default data for each category specified in subpara-
graph (B) of paragraph (1) of this subsection and for the total
of all lenders.
(B) The reports specified in subparagraph (A) of this para-
graph shall include a separate report for each insurer under
this part including the Secretary, and where an insurer insures
loans for lenders in more than one State, such insurer's report
shall list all data separately for each State.
(3) INSTITUTIONAL, PUBLIC, OR NONPROFIT LENDERS.For
purposes of clarity in communications, the Secretary shall sep-
arately identify loans made by the lenders referred to in clause
(i) and loans made by the lenders referred to in clause (ii) of
paragraph (1)(B) of this subsection.
(d) DELEGATION.
(1) REGIONAL OFFICES.The functions of the Secretary
under this part listed in paragraph (2) of this subsection may
be delegated to employees in the regional office of the Depart-
ment.
(2) DELEGABLE FUNCTIONS.The functions which may be
delegated pursuant to this subsection are
(A) reviewing applications for loan insurance under
section 429 and issuing contracts for Federal loan insur-
ance, certificates of insurance, and certificates of com-
prehensive insurance coverage to eligible lenders which
are financial or credit institutions subject to examination
and supervision by an agency of the United States or of
any State;
(B) receiving claims for payments under section
430(a), examining those claims, and pursuant to regula-
tions of the Secretary, approving claims for payment, or re-
231
HIGHER TDUCATION ACT OF 1965
Sec. 432
quiring lenders to take additional collection action as a
condition for payment of claims; and
(C) certifying to the central office when collection of
defaulted loans has been completed, compromising or
agreeing to the modification of any Federal claim against
a borrower (pursuant to regulations of the Secretary issued
under section 432(a)), and recommending litigation with
respect to any such claim.
(e) USE OF INFORMATION ON BORROWERS.Notwithstanding
any other provision of law, the Secretary may provide to eligible
lenders, and to any guaranty agency having a guaranty agreement
under section 428(c)(1), any information with respect to the names
and addresses of borrowers or other relevant information which is
available to the Secretary, from whatever source such information
may be derived.
(f) AUDIT OF FINANCIAL TRANSACTIONS.
(1) COMPTROLLER GENERAL AND INSPECTOR GENERAL AU-
THORITY.The Comptroller General and the Inspector General
of the Department of Education shall each have the authority
to conduct an audit of the financial transactions of
(A) any guaranty agency operating under an agree-
ment with the Secretary pursuant to section 428(b);
(B) any eligible lender as defined in section 435(d)(1);
and
(C) a representative sample of eligible lenders under
this part, upon the request of the Committee on Education
and the Workforce of the House of Representatives or the
Committee on Labor and Human Resources of the Senate,
with respect to the payment of the special allowance under
section 438 in order to evaluate the program authorized by
this part.
(2) ACCESS TO RECORDS.For the purpose of carrying out
this subsection, the records of any entity described in subpara-
graph (A), (B), (C), or (D) of paragraph (1) shall be available
to the Comptroller General and the Inspector General of the
Department of Education. For the purpose of section 716(c) of
title 31, United States Code,: such records- shall be considered
to be records to which the Comptroller General has access by
law, and for the purpose of section 6(a)(4) of the. Inspector Gen-
eral Act of 1978, such records shall be considered to be records
necessary in the performance of functions assigned by that Act
to the Inspector General.
(3) DEFINITION OF RECORDS.For the purpose of this sub-
section, the term "record" includes any information, document,
report, answer, account, paper, or other data or documentary
evidence.
(4) AUDIT PROCEDURES.In conducting audits pursuant to
this subsection, the Comptroller General and the Inspector
General of the Department of
shall audit the records
to determine the extent to which they, at a minimum;. comply
with Federal statutes, and rules and regulations prescribed by
the Secretary, in effect at the time that the record was made,
and in no case shall the Comptroller General or the Inspector
General apply subsequently determined standards, procedures,
239
Ohl
vs),
Sec. 432
HIGHER EDUCATION ACT, OF 1965
232
or regulations to the records of such agency, lender, or Author-
ity.
(g) CIVIL PENALTIES.
(1) AUTHORITY TO IMPOSE PENALTIES.Upon determina-
tion, after reasonable notice and opportunity for a hearing,
that a lender or a guaranty agency
(A) has violated or failed to carry out any provision of
this part or any regulation prescribed under this part, or
(B) has engaged in substantial misrepresentation of
the nature of its financial charges,
the Secretary may impose a civil penalty upon such lender or
agency of not to exceed $25,000 for each violation, failure, or
misrepresentation.
(2) LIMITATIONS.No civil penalty may be imposed under
paragraph (1) of this subsection unless the Secretary deter-
mines that
(A) the violation, failure, or substantial misrepresenta-
tion referred to in that paragraph resulted from a viola-
tion, failure, or misrepresentation that is material; and
(B) the lender or guaranty agency knew- or should
have known that its actions violated or failed to carry out
the provisions of this part or the regulations thereunder.
(3) CORRECTION OF FAILURE.A lender or guaranty agency
has no liability under paragraph (1) of this subsection if, prior
to the notification by the Secretary under that paragraph, the
lender or guaranty agency cures or corrects the violation or
failure or notifies the person who received the substantial mis-
representation of the actual nature of the financial charges in-
volved.
(4) CONSIDERATION AS SINGLE VIOLATION.For the purpose
of paragraph (1) of this subsection, violations, failures, or sub-
stantial misrepresentations arising from a specific practice of
a lender or guaranty agency, and occurring prior to notification
by the Secretary under that paragraph, shall be deemed to be
a single violation, failure, or substantial misrepresentation
even if the violation, failure, or substantial misrepresentation
affects more than one loan or more than one borrower, or both.
The Secretary may only impose a single civil penalty for each
such violation, failure, or substantial misrepresentation.
(5) ASSIGNEES NOT LIABLE FOR VIOLATIONS BY OTHERS.If
a loan affected by a violation, failure, or substantial misrepre-
sentation is assigned to another holder, the lender or guaranty
agency responsible for the violation, failure, or substantial mis-
representation shall remain liable for any civil money penalty
provided for under paragraph (1) of this subsection, but the as-
signee shall not be liable for any such civil money penalty.
(6) COMPROMISE.Until a matter is referred to the Attor-
ney General, any civil penalty under paragraph (1) of this sub-
section may be compromised by the Secretary. In determining
the amount of such penalty, or the amount agreed upon in
compromise, the Secretary shall consider the appropriateness
of the penalty to the resources of the lender or guaranty agen-
cy subject to the determination; the gravity of the violation,
failure, or substantial misrepresentation; the frequency and
240
233
HIGHER EDUCATION ACT OF 1965
Sec. 432
persistence of the violation, failure, or substantial misrepresen-
tation; and the amount of any losses resulting from the viola-
tion, failure, or substantial misrepresentation. The amount of
such penalty, when finally determined, or the amount agreed
upon in compromise, may be deducted from any sums owing by
the United States to the lender or agency charged, unless the
lender or agency has, in the case of a final agency determina-
tion, commenced proceedings for judicial review within 90 days
of the determination, in which case the deduction may not be
made during the pendency of the proceeding
(h) AUTHORITY OF THE SECRETARY To IMPOSE AND ENFORCE
LIMITATIONS, SUSPENSIONS, AND TERMINATIONS.
(1) IMPOSITION OF SANCTIONS.-(A) If the Secretary, after
a reasonable notice and opportunity for hearing to an eligible
lender, finds that the eligible lender
(i) has substantially failed
(I) to exercise reasonable care and diligence in the
making and collecting of loans under the provisions of
this part,
(II) to make the reports or statements under sec-
tion 428(a)(4), or
(III) to pay the required loan insurance premiums
to any guaranty agency, or
(ii) has engaged in
(I) fraudulent or misleading advertising or in so-
licitations that have resulted in the making of loans
insured or guaranteed under this part to borrowers
who are ineligible; or
(II) the practice of making loans that violate the
certification for eligibility provided in section 428,
the Secretary shall limit, suspend, or terminate that lender
from participation in the insurance programs operated by guar-
anty agencies under this part.
(B) The Secretary shall not lift any such limitation, sus-
pension, or termination until the Secretary is satisfied that the
lender's failure under subparagraph (A)(i) of this paragraph or
practice under subparagraph (A)(ii) of this paragraph has
ceased and finds that there are reasonable assurances that the
lender will
(i) exercise the necessary care and diligence,
(ii) comply with the requirements described in sub-
paragraph (A)(i), or
(iii) cease to engage in the practices described in sub-
paragraph (A)(ii),
as the case may be.
(2) REVIEW OF SANCTIONS ON LENDERS.-(A) The Secretary
shall review each limitation, suspension, or termination im-
posed by any guaranty agency pursuant to section 428(b)(1)(U)
within 60 days after receipt by the Secretary of a notice from
the guaranty agency of the imposition of such limitation, sus-
pension, or termination, unless the right to such review is
waived in writing by the lender. The Secretary shall uphold
the imposition of such limitation, suspension, or termination in
the student loan insurance program of each of the guaranty
2 4 I
Sec. 432
HIGHER EDUCATION ACT OF 1965
234
agencies under this part, and shall notify such guaranty agen-
cies of such sanction
(i) if such review is waived; or
(ii) if such review is not waived, unless the Secretary
determines that the limitation, suspension, or termination
was not imposed in accordance with requirements of such
section.
(B) The Secretary's review under this paragraph of the
limitation, suspension, or termination imposed by a guaranty
agency pursuant to section 428(b)(1)(U) shall be limited to
(i) a review of the written record of the proceedings in
which the guaranty agency imposed such sanctions; and
(ii) a determination as to whether the guaranty agency
complied with section 428(b)(1)(U) and any notice and
hearing requirements prescribed in regulations of the Sec-
retary under this part.
(C) The Secretary shall not lift any such sanction until the
Secretary is satisfied that the lender has corrected the failures
which led to the limitation, suspension, or termination, and
finds that there are reasonable assurances that the lender will,
in the future, comply with the requirements of this part. The
Secretary shall notify each guaranty agency of the lifting of
any such sanction.
(3) REVIEW OF SANCTIONS ON ELIGIBLE INSTITUTIONS.-(A)
The Secretary shall review each limitation, suspension, or ter-
mination imposed by any guaranty agency pursuant to section
428(b)(1)(T) within 60 days after receipt by the Secretary of a
notice from the guaranty of the imposition of such limitation,
suspension, or termination, unless the right to such review is
waived in writing by the institution. The Secretary shall up-
hold the imposition of such limitation, suspension, or termi-
nation in the student loan insurance program of each of the
guaranty agencies under this part, and shall notify such guar-
anty agencies of such sanctions
(i) if such review is waived; or
(ii) if such review is not waived, unless the Secretary
determines that the limitation, suspension, or termination
was not imposed in accordance with requirements of such
section.
(B) The Secretary's review under this paragraph of the
limitation, suspension, or termination imposed by a guaranty
agency pursuant to section 428(b)(1)(T) shall be limited to
(i) a review of the written record of the proceedings in
which the guaranty agency imposed such sanctions; and
(ii) a determination as to whether the guaranty agency
complied with section 428(b)(1)(T) and any notice and
hearing requirements prescribed in regulations of the Sec-
retary under this part.
(C) The Secretary shall not lift any such sanction until the
Secretary is satisfied that the institution has corrected the fail-
ures which led to the limitation, suspension, or termination,
and finds that there are reasonable assurances that the insti-
tution will, in the future, comply with the requirements of this
2 4
235
HIGHER EDUCATION ACT OF 1965
Sec. 432
part. The Secretary shall notify each guaranty agency of the
lifting of any such sanction.
(i) AUTHORITY To SELL DEFAULTED LOANS.In the event that
all other collection efforts have failed, the Secretary is authorized
to sell defaulted student loans assigned to the United States under
this part to collection agencies, eligible lenders, guaranty agencies,
or other qualified purchaser on such terms as the Secretary deter-
mines are in the best financial interests of the United States. A
loan may not be sold pursuant to this subsection if such loan is in
repayment status.
(j) AUTHORITY OF THE SECRETARY To TAKE EMERGENCY AC-
TIONS AGAINST LENDERS.
(1) IMPOSITION OF SANCTIONS.If the Secretary
(A) receives information, determined by the Secretary
to be reliable, that a lender is violating any provision of
this title, any regulation prescribed under this title, or any
applicable special arrangement, agreement, or limitation;
(B) determines that immediate action is necessary to
prevent misuse of Federal funds; and
(C) determines that the likelihood of loss outweighs
the importance of following the limitation, suspension, or
termination procedures authorized in subsection (h);
the Secretary shall, effective on the date on which a notice and
statement of the basis of the action is mailed to the lender (by
registered mail, return receipt requested), take emergency ac-
tion to stop the issuance of guarantee commitments and the
payment of interest benefits and special allowance to the lend-
er.
(2) LENGTH OF EMERGENCY ACTION.An emergency action
under this subsection may not exceed 30 days unless a limita-
tion, suspension, or termination proceeding is initiated against
the lender under subsection (h) before the expiration of that
period.
(3) OPPORTUNITY TO SHOW CAUSE.The Secretary shall
provide the lender, if it so requests, an opportunity to show
cause that the emergency action is unwarranted.
(k) PROGRAM OF ASSISTANCE FOR BORROWERS.
(1) IN GENERAL.The Secretary shall undertake a program
to encourage corporations and other private and public employ-
ers, including the Federal Government, to assist borrowers in
repaying loans received under this title, including providing
employers with options for payroll deduction of loan payments
and offering loan repayment matching provisions as part of
employee benefit packages.
(2) PUBLICATION.The Secretary shall publicize models for
providing the repayment assistance described in paragraph (1)
and each year select entities that deserve recognition, through
means devised by the Secretary, for the development of innova-
tive plans for providing such assistance to employees.
(3) RECOMMENDATION.The Secretary shall recommend to
the appropriate committees in the Senate and House of Rep-
resentatives changes to statutes that could be made in order
to further encourage such efforts.
(1) UNIFORM ADMINISTRATIVE AND CLAIMS PROCEDURES.
243
Sec. 432
HIGHER EDUCATION ACT OF 1965
236
(1) IN GENERAL.The Secretary shall, by regulation devel-
oped in consultation with guaranty agencies, lenders, institu-
tions of higher education, secondary markets, students, third
party servicers and other organizations involved in providing
loans under this part, prescribe standardized forms and proce-
dures regarding
(A) origination of loans;
(B) electronic funds transfer;
(C) guaranty of loans;
(D) deferments;
(E) forbearance;
(F) servicing;
(G) claims filing;
(H) borrower status change; and
(I) cures.
(2) SPECIAL RULES.(A) The forms and procedures de-
scribed in paragraph (1) shall include all aspects of the loan
process as such process involves eligible lenders and guaranty
agencies and shall be designed to minimize administrative
costs and burdens (other than the costs and burdens involved
in the transition to new forms and procedures) involved in ex-
changes of data to and from borrowers, schools, lenders, sec-
ondary markets, and the Department.
(B) Nothing in this paragraph shall be construed to limit
the development of electronic forms and procedures.
(3)
SIMPLIFICATION
REQUIREMENTS.Such
regulations
shall include
(A) standardization of computer formats, forms design,
and guaranty agency procedures relating to the origina-
tion, servicing, and collection of loans made under this
part;
(B) authorization of alternate means of document re-
tention, including the use of microfilm, microfiche, laser
disc, compact disc, and other methods allowing the produc-
tion of a facsimile of the original documents;
(C) authorization of the use of computer or similar
electronic methods of maintaining records relating to the
performance of servicing, collection, and other regulatory
requirements under this Act; and
(D) authorization and implementation of electronic
data linkages for the exchange of information to and from
lenders, guarantors, institutions of higher education, third
party servicers, and the Department of Education for stu-
dent status confirmation reports, claim filing, interest and
special allowance billing, deferment processing, and all
other administrative steps relating to loans made pursuant
to this part where using electronic data linkage is feasible.
(4) ADDITIONAL RECOMMENDATIONS.The Secretary shall
review regulations prescribed pursuant to paragraph (1) and
seek additional recommendations from guaranty agencies,
lenders, institutions of higher education, students, secondary
markets, third party servicers and other organizations involved
in providing loans under this part, not less frequently than an-
237
HIGHER EDUCATION ACT OF 1965
Sec. 432
nually, for additional methods of simplifying and standardizing
the administration of the programs authorized by this part.
(m) COMMON FORMS AND FORMATS.
(1) COMMON GUARANTEED STUDENT LOAN APPLICATION
FORM AND PROMISSORY NOTE.
(A) IN GENERAL.The Secretary, in cooperation with
representatives of guaranty agencies, eligible lenders, and
organizations involved in student financial assistance,
shall prescribe common application forms and promissory
notes, or master promissory notes, to be used for applying
for loans under part B of this title.
(B) REQUIREMENTS.The forms prescribed by the Sec-
retary shall
(i) use clear, concise, and simple language to facili-
tate understanding of loan terms and conditions by ap-
plicants;
(ii) be formatted to require the applicant to clearly
indicate a choice of lender; and
(C) FREE APPLICATION FORM.For academic year
1999-2000 and succeeding academic years, the Secretary
shall prescribe the form developed under section 483 as
the application form under this part, other than for loans
under sections 428B and 428C.
(D) MASTER PROMISSORY NOTE.
(i) IN GENERALThe Secretary shall develop and
require the use of master promissory note forms for
loans made under this part and part D. Such forms
shall be available for periods of enrollment beginning
not later than July 1, 2000. Each form shall allow eli-
gible borrowers to receive, in addition to initial loans,
additional loans for the same or subsequent periods of
enrollment through a student confirmation process ap-
proved by the Secretary. Such forms shall be used for
loans made under this part or part D as directed by
the Secretary.
(ii) CONSULTATION.In developing the master
promissory note under this subsection, the Secretary
shall consult with representatives of guaranty agen-
cies, eligible lenders, institutions of higher education,
students, and organizations involved in student finan-
cial assistance.
(iii)
SALE; ASSIGNMENT; ENFORCEABILITY.Not-
withstanding any other provision of law, each loan
made under a master promissory note under this sub-
section may be sold or assigned independently of any
other loan made under the same promissory note and
each such loan shall be separately enforceable in all
Federal and State courts on the basis of an original or
copy of the master promissory note in accordance with
the terms of the master promissory note.
So in law. (112 Stat. 1703) There probably should be an "and" at the end of clause (i). In
addition, a period at the end of clause (ii) probably should replace "; and".
2 zi
Sec. 432
HIGHER EDUCATION ACT OF 1965
238
(iv) PERFECTION OF SECURITY INTERESTS IN STU-
DENT LOANS.Notwithstanding the provisions of any
State law to the contrary, including the Uniform Com-
mercial Code as in effect in any State, a security inter-
est in loans made under this part created on behalf of
any eligible lender as defined in section 435(d) may be
perfected either through the taking of possession of
such loans (which can be through taking possession of
an original or copy of the master promissory note) or
by the filing of notice of such security interest in such
loans in the manner provided by such State law for
perfection of security interests in accounts.
(2) COMMON DEFERMENT FORM.The Secretary, in coopera-
tion with representatives of guaranty agencies, institutions of
higher education, and lenders involved in loans made under
part B of this title, shall prescribe a common deferment report-
ing form to be used for the processing of deferments of loans
made under this title.
(3) COMMON REPORTING FORMATS.The Secretary shall
promulgate standards including necessary rules, regulations
(including the definitions of all relevant terms), and procedures
so as to require all lenders and guaranty agencies to report in-
formation on all aspects of loans made under this part in uni-
form formats, so as to permit the direct comparison of data
submitted by individual lenders, servicers, or guaranty agen-
cies.
(4) ELECTRONIC FORMS.Nothing in this section shall be
construed to limit the development and use of electronic forms
and procedures.
(n) DEFAULT REDUCTION MANAGEMENT.
(1) AUTHORIZATION.There are authorized to be appro-
priated $25,000,000 for fiscal year 1999 and each of the four
succeeding fiscal years, for the Secretary to expend for default
reduction management activities for the purposes of establish-
ing a performance measure that will reduce defaults by 5 per-
cent relative to the prior fiscal year. Such funds shall be in ad-
dition to, and not in lieu of, other appropriations made for such
purposes.
(2) ALLOWABLE ACTIVITIES.Allowable activities for which
such funds shall be expended by the Secretary shall include
the following: (A) program reviews; (B) audits; (C) debt man-
agement programs; (D) training activities; and (E) such other
management improvement activities approved by the Sec-
retary.
(3) PLAN FOR USE REQUIRED.The Secretary shall submit
a plan, for inclusion in the materials accompanying the Presi-
dent's budget each fiscal year, detailing the expenditure of
funds authorized by this section to accomplish the 5 percent re-
duction in defaults. At the conclusion of the fiscal year, the
Secretary shall report the Secretary's findings and activities
concerning the expenditure of funds and whether the perform-
ance measure was met. If the performance measure was not
met, the Secretary shall report the following:
2 4 6
239
HIGHER EDUCATION ACT OF 1965
Sec. 432
(A) why the goal was not met, including an indication
of any managerial deficiencies or of any legal obstacles;
(B) plans and a schedule for achieving the established
performance goal;
(C) recommended legislative or regulatory changes
necessary to achieve the goal; and
(D) if the performance standard or goal is impractical
or infeasible, why that is the case and what action is rec-
ommended, including whether the goal should be changed
or the program altered or eliminated.
This report shall be submitted to the Appropriations Commit-
tees of the House of Representatives and the Senate and to the
Committee on Education and the Workforce of the House of
Representatives and the Committee on Labor and Human Re-
sources of the Senate.
(o) CONSEQUENCES OF GUARANTY AGENCY INSOLVENCY.In the
event that the Secretary has determined that a guaranty agency is
unable to meet its insurance obligations under this part, the holder
of loans insured by the guaranty agency may submit insurance
claims directly to the Secretary and the Secretary shall pay to the
holder the full insurance obligation of the guaranty agency, in ac-
cordance with insurance requirements no more stringent than
those of the guaranty agency. Such arrangements shall continue
until the Secretary is satisfied that the insurance obligations have
been transferred to another guarantor who can meet those obliga-
tions or a successor will assume the outstanding insurance obliga-
tions.
(p) REPORTING REQUIREMENT.All officers and directors, and
those employees and paid consultants of eligible institutions, eligi-
ble lenders, guaranty agencies, loan servicing agencies, accrediting
agencies or associations, State licensing agencies or boards, and en-
tities acting as secondary markets (including the Student Loan
Marketing Association), who are engaged in making decisions as to
the administration of any program or funds under this title or as
to the eligibility of any entity or individual to participate under
this title, shall report to the Secretary, in such manner and at such
time as the Secretary shall require, on any financial interest which
such individual may hold in any other entity participating in any
program assisted under this title.
SEC. 433. [20 U.S.C. 1083] STUDENT LOAN INFORMATION BY ELIGIBLE
LENDERS.
(a) REQUIRED DISCLOSURE BEFORE DISBURSEMENT.Each eligi-
ble lender, at or prior to the time such lender disburses a loan that
is insured or guaranteed under this part (other than a loan made
under section 428C), shall provide thorough and accurate loan in-
formation on such loan to the borrower in simple and understand-
able terms. Any disclosure required by this subsection may be
made by an eligible lender by written or electronic means, includ-
ing as part of the application material provided to the borrower, as
part of the promissory note evidencing the loan, or on a separate
written form provided to the borrower. Each lender shall provide
to each borrower a telephone number, and may provide an elec-
247
Sec. 433
HIGHER EDUCATION ACT OF 1965
240
tronic address, through which additional loan information can be
obtained. The disclosure shall include
(1) a statement prominently and clearly displayed and in
bold print that the borrower is receiving a loan that must be
repaid;
(2) the name of the eligible lender, and the address to
which communications and payments should be sent;
(3) the principal amount of the loan;
(4) the amount of any charges, such as the origination fee
and insurance premium, collected by the lender at or prior to
the disbursal of the loan and whether such charges are de,
ducted from the proceeds of the loan or paid separately by the
borrower;
(5) the stated interest rate on the loan;
(6) the yearly and cumulative maximum amounts that may
be borrowed;
(7) an explanation of when repayment of the loan will be
required and when the borrower will be obligated to pay inter-
est that accrues on the loan;
(8) a statement as to the minimum and maximum repay-
ment term which the lender may impose, and the minimum
annual payment required by law;
(9) a statement of the total cumulative balance, including
the loan applied for, owed by the student to that lender, and
an estimate of the projected monthly payment, given such cu-
mulative balance;
(10) an explanation of any special options the borrower
may have for loan consolidation or other refinancing of the
loan;
(11) a statement that the borrower has the right to prepay
all or part of the loan, at any time, without penalty, a state-
ment summarizing circumstances in which repayment of the
loan or interest that accrues on the loan may be deferred, and
a brief notice of the program for repayment of loans, on the
basis of military service, pursuant to section 902 of the Depart-
ment of Defense Authorization Act, 1981 (10 U.S.C. 2141,
note);(12) a definition of default and the consequences to the
borrower if the borrower defaults, including a statement that
the default will be reported to a credit bureau or credit report-
ing agency;
(13) to the extent practicable, the effect of accepting the
loan on the eligibility of the borrower for other forms of stu-
dent assistance; and
(14) an explanation of any cost the borrower may incur in
the making or collection of the loan.
(b) REQUIRED DISCLOSURE BEFORE REPAYMENT.Each eligible
lender shall, at or prior to the start of the repayment period of the
student borrower on loans made, insured, or guaranteed under this
part, disclose to the borrower by written or electronic means the in-
formation required under this subsection in simple and under-
standable terms. Each eligible lender shall provide to each bor-
rower a telephone number, and may provide an electronic address,
through which additional loan information can be obtained. For
241
HIGHER EDUCATION ACT OF 1965
Sec. 433
any loan made, insured, or guaranteed under this part, other than
a loan made under section 428B or 428C, such disclosure required
by this subsection shall be made not less than 30 days nor more
than 240 days before the first payment on the loan is due from the
borrower. The disclosure shall include
(1) the name of the eligible lender, and the address to
which communications and payments should be sent;
(2) the scheduled date upon which the repayment period is
to begin;
(3) the estimated balance owed by the borrower on the
loan or loans covered by the disclosure as of the scheduled date
on which the repayment period is to begin (including, if appli-
cable, the estimated amount of interest to be capitalized);
(4) the stated interest rate on the loan or loans, or the
combined interest rate of loans with different stated interest
rates;
(5) the nature of any fees which may accrue or be charged
to the borrower during the repayment period;
(6) the repayment schedule for all loans covered by the dis-
closure including the date the first installment is due, and the
number, amount, and frequency of required payments;
(7) an explanation of any special options the borrower may
have for loan consolidation or other refinancing of the loan and
of the availability and terms of such other options, except that
such explanation is not required when the loan being made is
a consolidation loan under section 428C;
(8) except as provided in subsection (e), the projected total
of interest charges which the borrower will pay on the loan or
loans, assuming that the borrower makes payments exactly in
accordance with the repayment schedule; and
(9) a statement that the borrower has the right to prepay
all or part of the loan or loans covered by the disclosure at any
time without penalty.
(C) COST OF DISCLOSURE AND CONSEQUENCES OF NONDISCLO-
SURE.Such information shall be available without cost to the bor-
rower. The failure of an eligible lender to provide information as
required by this section shall not (1) relieve a borrower of the obli-
gation to repay a loan in accordance with its terms, (2) provide a
basis for a claim for civil damages, or (3) be deemed to abrogate
the obligation of the Secretary under a contract of insurance or re-
insurance, or the obligation of a guaranty agency under a contract
of guaranty. Nothing in this section shall be construed as subject-
ing the lender to the Truth in Lending Act with regard to loans
made under this part. The Secretary may limit, suspend, or termi-
nate the continued participation of an eligible lender in making
loans under this part for failure by that lender to comply with this
section.
(d) SEPARATE STATEMENT.Each eligible lender shall, at the
time such lender notifies a borrower of approval of a loan which is
insured or guaranteed under this part, provide the borrower with
a separate paper which summarizes (in plain English) the rights
and responsibilities of the borrower with respect to the loan, in-
cluding a statement of the consequences of defaulting on the loan
and a statement that each borrower who defaults will be reported
243
Sec. 434
HIGHER EDUCATION ACT OF 1965
242
to a credit bureau. The requirement of this subsection shall be in
addition to the information required by subsection (a) of this sec-
tion.
(e) SPECIAL DISCLOSURE RULES ON SLS LOANS AND PLUS
LOANS AND UNSUBSIDIZED LOANS.Loans made under sections
428A, 428B, and 428H shall not be subject to the disclosure of pro-
jected monthly payment amounts required under subsection (b)(8)
if the lender, in lieu of such disclosure, provides the borrower with
sample projections of monthly repayment amounts assuming dif-
ferent levels of borrowing and interest accruals resulting from cap-
italization of interest while the borrower is in school. Such sample
projections shall disclose the cost to the student of capitalizing
(1) principal and interest; and
(2) interest only.
SEC. 434. [20 U.S.C. 1084] PARTICIPATION BY FEDERAL CREDIT
UNIONS IN FEDERAL, STATE, AND PRIVATE STUDENT
LOAN INSURANCE PROGRAMS.
Notwithstanding any other provision of law, Federal credit
unions shall, pursuant to regulations of the National Credit Union
Administration, have power to make insured loans to student mem-
bers in accordance with the provisions of this part relating to feder-
ally insured loans, or in accordance with the provisions of any
State or nonprofit private student loan insurance program which
meets the requirements of section 428(aX1)(B).
SEC. 435. [20 U.S.C. 1085] DEFINITIONS FOR STUDENT LOAN INSUR-
ANCE PROGRAM.
As used in this part:
(a) ELIGIBLE INSTITUTION.
(1) IN GENERALExcept as provided in paragraph (2), the
term "eligible institution" means an institution of higher edu-
cation, as defined in section 102, except that, for the purposes
of sections 427(a)(2XC)(i) and 428(bX1XM)(i), an eligible insti-
tution includes any institution that is within this definition
without regard to whether such institution is participating in
any program under this title and includes any institution ineli-
gible for participation in any program under this part pursuant
to paragraph (2) of this subsection.
(2) INELIGIBILITY BASED ON HIGH DEFAULT RATES.(A) An
institution whose cohort default rate is equal to or greater than
the threshold percentage specified in subparagraph (B) for each
of the three most recent fiscal years for which data are avail-
able shall not be eligible to participate in a program under this
part for the fiscal year for which the determination is made
and for the two succeeding fiscal years, unless, within 30 days
of receiving notification from the Secretary of the loss of eligi-
bility under this paragraph, the institution appeals the loss of
its eligibility to the Secretary. The Secretary shall issue a deci-
sion on any such appeal within 45 days after its submission.
Such decision may permit the institution to continue to partici-.
pate in a program. under -this part if
(i) the institution demonstrates to the satisfaction of
the Secretary that the Secretary's calculation of its cohort
default rate is not accurate, and that recalculation would
243
HIGHER EDUCATION ACT OF 1965
Sec. 435
reduce its cohort default rate for any of the three fiscal
years below the threshold percentage specified in subpara-
graph (B);
(ii) there are exceptional mitigating circumstances
within the meaning of paragraph (4); or
(iii) there are, in the judgment of the Secretary, other
exceptional mitigating circumstances that would make the
application of this paragraph inequitable.
If an institution continues to participate in a program under
this part, and the institution's appeal of the loss of eligibility
is unsuccessful, the institution shall be required to pay to the
Secretary an amount equal to the amount of interest, special
allowance, reinsurance, and any related payments made by the
Secretary (or which the Secretary is obligated to make) with
respect to loans made under this part to students attending, or
planning to attend, that institution during the pendency of
such appeal. During such appeal, the Secretary may permit the
institution to continue to participate in a program under this
part.
(B) For purposes of determinations under subparagraph
(A), the threshold percentage is
(i) 35 percent for fiscal year 1991 and 1992;
(ii) 30 percent for fiscal year 1993; and
(iii) 25 percent for any succeeding fiscal year.
(C) Until July 1, 1999, this paragraph shall not apply to
any institution that is
(i) a part B institution within the meaning of section
322(2) of this Act;
(ii) a tribally controlled community college within the
meaning of section 2(a)(4) of the Tribally Controlled Com-
munity College Assistance Act of 1978; or
(iii) a Navajo Community College under the Navajo
Community College Act.
(3) APPEALS BASED UPON ALLEGATIONS OF IMPROPER LOAN
SERVICING.An institution that
(A) is subject to loss of eligibility for the Federal Fam-
ily Education Loan Program pursuant to paragraph (2)(A)
of this subsection;
(B) is subject to loss of eligibility for the Federal Sup-
plemental
Loans
for
Students
pursuant
to
section
428A(a)(2); or
(C) is an institution whose cohort default rate equals
or exceeds 20 percent for the most recent year for which
data are available;
may include in its appeal of such loss or rate a defense based
on improper loan servicing (in addition to other defenses). In
any such appeal, the Secretary shall take whatever steps are
necessary to ensure that such institution has access for a rea-
sonable period of time, not to exceed 30 days, to a representa-
tive sample (as determined by the Secretary) of the relevant
loan servicing and collection records used by a guaranty agency
in determining whether to pay a claim on a defaulted loan or
by the Department in determining an institution's default rate
in the loan program under part D of this title. The Secretary
Sec. 435
HIGHER EDUCATION ACT OF 1965
244
shall reduce the institution's cohort default rate to reflect the
percentage of defaulted loans in the representative sample that
are required to be excluded pursuant to subsection (m)(1)(B).
(4) DEFINITION OF MITIGATING CIRCUMSTANCES.-(A) For
purposes of paragraph (2)(A)(ii), an institution of higher edu-
cation shall be treated as having exceptional mitigating cir-
cumstances that make application of that paragraph inequi-
table if such institution, in the opinion of an independent audi-
tor, meets the following criteria:
(i) For a 12-month period that ended during the 6
months immediately preceding the fiscal year for which
the cohort of borrowers used to calculate the institution's
cohort default rate is determined, at least two-thirds of the
students enrolled on at least a half-time basis at the
institution
(I) are eligible to receive a Federal Pell Grant
award that is at least equal to one-half the maximum
Federal Pell Grant award for which a student would
be eligible based on the student's enrollment status; or
(II) have an adjusted gross income that when
added with the adjusted gross income of the student's
parents
(unless
the
student
is
an independent
student), of less than the poverty level, as determined
by the Department of Health and Human Services.
(ii) In the case of an institution of higher education
that offers an associate, baccalaureate, graduate or profes-
sional degree, 70 percent or more of the institution's regu-
lar students who were initially enrolled on a full-time
basis and were scheduled to complete their programs dur-
ing the same 12-month period described in clause (i)--
(I) completed the educational programs in which
the students were enrolled;
(II) transferred from the institution to a higher
level educational program;
(III) at the end of the 12-month period, remained
enrolled and making satisfactory progress toward com-
pletion of the student's educational programs; or
(IV) entered active duty in the Armed Forces of
the United States.
(iii)(I) In the case of an institution of higher education
that does not award a degree described in clause (ii), had
a placement rate of 44 percent or more with respect to the
institution's former regular students who
(aa) remained in the program beyond the point
the students would have received a 100 percent tuition
refund from the institution;
(bb) were initially enrolled on at least a half-time
basis; and
(cc) were originally scheduled, at the time of en-
rollment, to complete their educational programs dur-
ing the same 12-month period described in clause (i).
(II) The placement rate shall not include students who
are still enrolled and making satisfactory progress in the
educational programs in which the students were origi-
245
HIGHER EDUCATION ACT OF 1965
Sec. 435
nally enrolled on the date following 12 months after the
date of the student's last date of attendance at the institu-
tion.
(III) The placement rate is calculated by determining
the percentage of all those former regular students who
(aa) are employed, in an occupation for which the
institution provided training, on the date following 12
months after the date of their last day of attendance
at the institution;
(bb) were employed, in an occupation for which
the institution provided training, for at least 13 weeks
before the date following 12 months after the date of
their last day of attendance at the institution; or
(cc) entered active duty in the Armed Forces of the
United States.
(IV) The placement rate shall not include as place-
ments a student or former student for whom the institu-
tion is the employer.
(B) For purposes of determining a rate of completion and
a placement rate under this paragraph, a student is originally
scheduled, at the time of enrollment, to complete the edu-
cational program on the date when the student will have been
enrolled in the program for the amount of time normally re-
quired to complete the program. The amount of time normally
required to complete the program for a student who is initially
enrolled full-time is the period of time specified in the institu-
tion's enrollment contract, catalog, or other materials, for com-
pletion of the program by a full-time student. For a student
who is initially enrolled less than full-time, the period is the
amount of time it would take the student to complete the pro-
gram if the student remained enrolled at that level of enroll-
ment throughout the program.
(5) REDUCTION OF DEFAULT RATES AT CERTAIN MINORITY IN-
STITUTIONS.
(A) BENEFICIARIES OF EXCEPTION REQUIRED TO ESTAB-
LISH MANAGEMENT PLAN.After July 1, 1999, any institu-
tion that has a cohort default rate that equals or exceeds
25 percent for each of the three most recent fiscal years for
which data are available and that relies on the exception
in subparagraph (B) to continue to be an eligible institu-
tion shall
(i) submit to the Secretary a default management
plan which the Secretary, in the Secretary's discretion,
after consideration of the institution's history, re-
sources, dollars in default, and targets for default re-
duction, determines is acceptable and provides reason-
able assurance that the institution will, by July 1,
2002, have a cohort default rate that is less than 25
percent;
(ii) engage an independent third party (which may
be paid with funds received under section 317 or part
B of title III) to provide technical assistance in imple-
menting such default management plan; and
253
Sec. 435
HIGHER EDUCATION ACT OF 1965
246
(iii) provide to the Secretary, on an annual basis
or at such other intervals as the Secretary may re-
quire, evidence of cohort default rate improvement and
successful implementation of such default manage-
ment plan.
(B) DISCRETIONARY ELIGIBILITY CONDITIONED ON IM-
PROVEMENT.Notwithstanding the expiration of the excep-
tion in paragraph (2XC), the Secretary may, in the Sec-
retary's discretion, continue to treat an institution de-
scribed in subparagraph (A) of this paragraph as an eligi-
ble institution for each of the 1-year periods beginning on
July 1 of 1999, 2000, and 2001, only if the institution sub-
mits by the beginning of such period evidence satisfactory
to the Secretary that
(i) such institution has complied and is continuing
to comply with the requirements of subparagraph (A);
and
(ii) such institution has made substantial improve-
ment, during each of the preceding 1-year periods, in
the institution's cohort default rate.
(6) PARTICIPATION RATE INDEX.
(A) IN GENERAL.An institution that demonstrates to
the Secretary that the institution's participation rate index
is equal to or less than 0 0375 for any of the 3 most recent
fiscal years for which data is available shall not be subject
to paragraph (2). The participation rate index shall be de-
termined by multiplying the institution's cohort default
rate for loans under part B or D, or weighted average co-
hort default rate for loans under parts B and D, by the
percentage of the institution's regular students, enrolled
on at least a half-time basis, who received a loan made
under part B or D for a 12-month period ending during the
6 months immediately preceding the fiscal year for which
the cohort of borrowers used to calculate the institution's
cohort default rate is determined.
(B) DATA.An institution shall provide the Secretary
with sufficient data to determine the institution's partici-
pation rate index within 30 days after receiving an initial
notification of the institution's draft cohort default rate.
(C) NOTIFICATION.Prior to publication of a final co-
hort default rate for an institution that provides the data
described in subparagraph (B), the Secretary shall notify
the institution of the institution's compliance or non-
compliance with subparagraph (A).
(d)1 ELIGIBLE LENDER.
(1) IN GENERAL.Except as provided in paragraphs (2)
through (6), the term "eligible lender"means
(A) a National or State chartered bank, a mutual sav-
ings bank, a savings and loan association, a stock savings
bank, or a credit union which
'Subsections (b) and (c) were repealed by P.L. 102-325, sec. 427(b)(1) and (2), 106 Stat. 549.
241
HIGHER EDUCATION ACT OF 1965
Sec. 435
(i) is subject to examination and supervision by an
agency of the United States or of the State in which
its principal place of operation is established, and
(ii) does not have as its primary consumer credit
function the making or holding of loans made to stu-
dents under this part unless (I) it is a bank which is
wholly owned by a State, or a bank which is subject
to examination and supervision by an agency of the
United States, makes student loans as a trustee pur-
suant to an express trust, operated as a lender under
this part prior to January 1, 1975, and which meets
the requirements of this provision prior to the enact-
ment of the Higher Education Amendments of 1992,
(II) it is a single wholly owned subsidiary of a bank
holding company which does not have as its primary
consumer credit function the making or holding of
loans made to students under this part, or (III) it is
a bank (as defined in section 3(a)(1) of the Federal De-
posit Insurance Act (12 U.S.C. 1813(a)(1)) that is a
wholly owned subsidiary of a nonprofit foundation, the
foundation is described in section 501(c)(3) of the In-
ternal Revenue Code of 1986 and exempt from tax-
ation under section 501(1) of such Code, and the bank
makes loans under this part only to undergraduate
students who are age 22 or younger and has a port-
folio of such loans that is not more than $5,000,000;
(B) a pension fund as defined in the Employee Retire-
ment Income Security Act;
(C) an insurance company which is subject to exam-
ination and supervision by an agency of the United States
or a State;
(D) in any State, a single agency of the State or a sin-
gle nonprofit private agency designated by the State;
(E) an eligible institution which meets the require-
ments of paragraphs (2) through (5) of this subsection;
(F) for purposes only of purchasing and holding loans
made by other lenders under this part, the Student Loan
Marketing Association or the Holding Company of the Stu-
dent Loan Marketing Association, including any subsidiary
of the Holding Company, created pursuant to section 440,
or an agency of any State functioning as a secondary mar-
ket;
(G) for purposes of making loans under sections
428A(d), 428B(d), 428C, and 439(q), the Student Loan
Marketing Association or the Holding Company of the Stu-
dent Loan Marketing Association, including any subsidiary
of the Holding Company, created pursuant to section 440;
(H) for purposes of making loans under sections 428(h)
and 428(j), a guaranty agency;
(I) a Rural Rehabilitation Corporation, or its successor
agency, which has received Federal funds under Public
Law 499, Eighty-first Congress (64 Stat. 98 (1950));
253
Sec. 435
HIGHER EDUCATION ACT OF 1965
248
(J) for purpose of making loans under section 428C,
any nonprofit private agency functioning in any State as
a secondary market; and
(K) a consumer finance company subsidiary of a na-
tional bank which, as of the date of enactment of this sub-
paragraph, through one or more subsidiaries: (i) acts as a
small business lending company, as determined under reg-
ulations of the Small Business Administration under sec-
tion 120.470 of title 13, Code of Federal Regulations (as
such section is in effect on the date of enactment of this
subparagraph); and (ii) participates in the program author-
ized by this part pursuant to subparagraph (C), provided
the national bank and all of the bank's direct and indirect
subsidiaries taken together as a whole, do not have, as
their primary consumer credit function, the making or
holding of loans made to students under this part.
(2) ADDITIONAL REQUIREMENTS OF ELIGIBLE
INSTITU-
TIONS.To be an eligible lender under this part, an eligible
institution
(A) shall employ at least one person whose full-time
responsibilities are limited to the administration of pro-
grams of financial aid for students attending such institu-
tion;
(B) shall not be a home study school;
(C) shall make loans to not more than 50 percent of
the undergraduate students at the institution;
(D) shall not make a loan, other than a loan to a grad-
uate or professional student, unless the borrower has pre-
viously received a loan from the school or has been denied
a loan by an eligible lender;
(E) shall not have a cohort default rate (as defined in
section 435(m)) greater than 15 percent; and
(F) shall use the proceeds from special allowance pay-
ments and interest payments from borrowers for need-
based grant programs, except for reasonable reimburse-
ment for direct administrative expenses;
except that the requirements of subparagraphs (C) and (D)
shall not apply with respect to loans made, and loan commit-
ments made, after the date of enactment of the Higher Edu-
cation Amendmexfts of 1986 and prior to July. 1, 1987.
(3) DISQUALIFICATION FOR HIGH DEFAULT RATES.The term
"eligible lender" does not include any eligible institution in any
fiscal year immediately after the fiscal year in which the Sec-
retary determines, after notice and opportunity for a hearing,
that for each of 2 consecutive years, 15 percent or more of the
total amount of such loans as are described in section 428(a)(1)
made by the institution with respect to students at that insti-
tution and repayable in each such year, are in default, as de-
fined in section 435(m).
(4) WAIVER OF DISQUALIFICATION.Whenever the Sec-
retary determines that
(A) there is reasonable possibility that an eligible in-
stitution may, within 1 year after a determination is made
under paragraph (3), improve the collection of loans de-
249
HIGHER EDUCATION ACT OF 1965
Sec. 435
scribed in section 428(a)(1), so that the application of para-
graph (3) would be a hardship to that institution, or
(B) the termination of the lender's status under para-
graph (3) would be a hardship to the present or for pro-
spective students of the eligible institution, after consider-
ing the management of that institution, the ability of that
institution to improve the collection of loans, the opportu-
nities that institution offers to economically disadvantaged
students, and other related factors,
the Secretary shall waive the provisions of paragraph (3) with
respect to that institution. Any determination required under
this paragraph shall be made by the Secretary prior to the ter-
mination of an eligible institution as a lender under the excep-
tion of paragraph (3). Whenever the Secretary grants a waiver
pursuant to this paragraph, the Secretary shall provide tech-
nical assistance to the institution concerned in order to im-
prove the collection rate of such loans.
(5) DISQUALIFICATION FOR USE OF CERTAIN INCENTIVES.
The term "eligible lender" does not include any lender that the
Secretary determines, after notice and opportunity for a hear-
ing, has after the date of enactment of this paragraph
(A) offered, directly or indirectly, points, premiums,
payments, or other inducements, to any educational insti-
tution or individual in order to secure applicants for loans
under this part;
(B) conducted unsolicited mailings to students of stu-
dent loan application forms, except to students who have
previously received loans under this part from such lender;
(C) offered, directly or indirectly, loans under this part
as an inducement to a prospective borrower to purchase a
policy of insurance or other product; or
(D) engaged in fraudulent or misleading advertising.
It shall not be a violation of this paragraph for a lender to pro-
vide assistance to institutions of higher education comparable
to the kinds of assistance provided to institutions of higher
education by the Department of Education.
(6) REBATE FEE REQUIREMENT.To be an eligible lender
under this part, an eligible lender shallj?ay rebate fees in ac-
cordance with section 428C(f).
(e) LINE OF CREDIT.The term "line of credit" means an ar-
rangement or agreement between the lender and the borrower
whereby a loan is paid out by the lender to the borrower in annual
installments, or whereby the lender agrees to make, in addition to
the initial loan, additional loans in subsequent years.
(f) DUE DILIGENCE.The term "due diligence" requires the uti-
lization by a lender, in the servicing and collection of loans insured
under this part, of servicing and collection practices at least as ex-
tensive and forceful as those generally practiced by financial insti-
tutions for the collection of consumer loans.
BEST COPY AVAILABLE
25 i
Sec. 435
HIGHER EDUCATION ACT OF 1965
250
(i) 1 HOLDER. The term "holder" means an eligible lender who
owns a loan.
(j) GUARANTY AGENCY.The term "guaranty agency" means
any State or nonprofit private institution or organization with
which the Secretary has an agreement under section 428(b).
(k) INSURANCE BENEFICIARY.The term "insurance bene-
ficiary" means the insured or its authorized representative as-
signed in accordance with section 429(d).
(1) DEFAULT.Except as provided in subsection (m), the term
"default" includes only such defaults as have existed for (1) 270
days in the case of a loan which is repayable in monthly install-
ments, or (2) 330 days in the case of a loan which is repayable in
less frequent installments. 2
(m) COHORT DEFAULT RATE.
(1) IN GENERAL.(A) Except as provided in paragraph (2),
the term "cohort default rate" means, for any fiscal year in
which 30 or more current and former students at the institu-
tion enter repayment on loans under section 428, 428A, or
428H, received for attendance at the institution, the percent-
age of those current and former students who enter repayment
on such loans (or on the portion of a loan made under section
428C that is used to repay any such loans) received for attend-
ance at that institution in that fiscal year who default before
the end of the following fiscal year. The Secretary shall require
that each guaranty agency that has insured loans for current
or former students of the institution afford such institution a
reasonable opportunity (as specified by the Secretary) to review
and correct errors in the information required to be provided
to the Secretary by the guaranty agency for the purposes of
calculating a cohort default rate for such institution, prior to
the calculation of such rate.
(B) In determining the number of students who default be-
fore the end of such fiscal year, the Secretary shall include
only loans for which the Secretary or a guaranty agency has
paid claims for insurance. In considering appeals with respect
to cohort default rates pursuant to subsection (a)(3), the Sec-
retary shall exclude, from the calculation of the number of stu-
dents who entered repayment and from the calculation of the
number of students who default, any loans which, due to im-
proper servicing or collection, would, as demonstrated by the
evidence submitted in support of the institution's timely appeal
to the Secretary, result in an inaccurate or incomplete calcula-
tion of such cohort default rate.
(C) For any fiscal year in which fewer than 30 of the insti-
tution's current and former students enter repayment, the
term "cohort default rate" means the percentage of such cur-
rent and former students who entered repayment on such
loans (or on the portion of a loan made under section 428C
1Section 427(f) of the Higher Education Amendments of 1992 (P.L. 102-325; 106 Stat. 550)
amended section 435 of the Higher Education Act of 1965 by striking subsections (g), (h), and
(n), but did not to redesignate remaining subsections.
2Section 429(c)(2) of the Higher Education Amendments of 1998 (P.L. 105-244; 112 Stat.
1708) amended subsection (1) of the Higher Education Act of 1965 by striking "180 days" and
"240 days" and inserting "270 days" and "330 days", respectively, with respect to loans for which
the first day of delinquency occurred on or after the date of enactment of that Act.
258
251
HIGHER EDUCATION ACT OF 1965
Sec. 435
that is used to repay any such loans) in any of the three most
recent fiscal years, who default before the end of the fiscal year
immediately following the year in which they entered repay-
ment.
(2) SPECIAL RULES.(A) In the case of a student who has
attended and borrowed at more than one school, the student
(and such student's subsequent repayment or default) is attrib-
uted to each school for attendance at which the student re-
ceived a loan that entered repayment in the fiscal year.
(B) A loan on which a payment is made by the school, such
school's owner, agent, contractor, employee, or any other entity
or individual affiliated with such school, in order to avoid de-
fault by the borrower, is considered as in default for purposes
of this subsection.
(C) Any loan which has been rehabilitated before the end
of such following fiscal year is not considered as in default for
the purposes of this subsection. The Secretary may require
guaranty agencies to collect data with respect to defaulted
loans in a manner that will permit the identification of any de-
faulted loan for which (i) the borrower is currently making
payments and has made not less than 6 consecutive on-time
payments by the end of such following fiscal year, and (ii) a
guaranty agency has renewed the borrower's title IV eligibility
as provided in section 428F(b).
(D) For the purposes of this subsection, a loan made in ac-
cordance with section 428A (or the portion of a loan made
under section 428C that is used to repay a loan made under
section 428A) shall not be considered to enter repayment until
after the borrower has ceased to be enrolled in a course of
study leading to a degree or certificate at an eligible institution
on at least a half-time basis (as determined by the institution)
and ceased to be in a period of forbearance based on such en-
rollment. Each eligible lender of a loan made under section
428A (or a loan made under section 428C a portion of which
is used to repay a loan made under section 428A) shall provide
the guaranty agency with the information necessary to deter-
mine when the loan entered repayment for purposes of this
subsection, and the guaranty agency shall provide such infor-
mation to the Secretary.
(3) REGULATIONS TO PREVENT EVASIONS.The Secretary
shall prescribe regulations designed to prevent an institution
from evading the application to that institution of a default
rate determination under this subsection through the use of
such measures as branching, consolidation, change of owner-
ship or control, or any similar device.
(4) COLLECTION AND REPORTING
OF COHORT DEFAULT
RATES.(A) The Secretary shall collect data from all insurers
under this part and shall publish not less often than once
every fiscal year a report showing default data for each cat-
egory of institution, including (i) 4-year public institutions, (ii)
4-year private institutions, (iii) 2-year public institutions, (iv)
2-year private institutions, (v) 4-year proprietary institutions,
(vi) 2-year proprietary institutions, and (vii) less than 2-year
proprietary institutions.
259
Sec. 436
HIGHER EDUCATION ACT OF 1965
252
(B) The Secretary may designate such additional subcat-
egories within the categories specified in subparagraph (A) as
the Secretary deems appropriate.
(C) The Secretary shall publish not less often than once
every fiscal year a report showing default data for each institu-
tion for which a cohort default rate is calculated under this
subsection.
(D) The Secretary shall publish the report described in
subparagraph (C) by September 30 of each year.
(o) 1 ECONOMIC HARDSHIP.
(1) IN GENERAL.For purposes of this part and part E, a
borrower shall be considered to have an economic hardship if
(A) such borrower is working full-time and is earning
an amount which does not exceed the greater of
(i) the minimum wage rate described in section 6
of the Fair Labor Standards Act of 1938; or
(ii) an amount equal to 100 percent of the poverty
line for a family of 2 as determined in accordance with
section 673(2) of the Community Service Block Grant
Act;
(B) such borrower is working full-time and has a Fed-
eral educational debt burden that equals or exceeds 20
percent of such borrower's adjusted gross income, and the
difference between such borrower's adjusted gross income
minus such burden is less than 220 percent of the greater
of
(i) the annual earnings of an individual earning
the minimum wage under section 6 of the Fair Labor
Standards Act of 1938; or
(ii) the income official poverty line (as defined by
the Office of Management and Budget, and revised an-
nually in accordance with section 673(2) of the Com-
munity Services Block Grant Act) applicable to a fam-
ily of two; or
(C) such borrower meets such other criteria as are es-
tablished by the Secretary by regulation in accordance
with paragraph (2).
(2) CONSIDERATIONS.In establishing criteria for purposes
of paragraph (1)(C), the Secretary shall consider the borrower's
income and debt-to-income ratio as primary factors.
SEC. 436. [20 U.S.C. 1086] DELEGATION OF FUNCTIONS.
(a) IN GENERAL.An eligible lender or guaranty agency that
contracts with another entity to perform any of the lender's or
agency's functions under this title, or otherwise delegates the per-
formance of such functions to such other entity
(1) shall not be relieved of the lender's or agency's duty to
comply with the requirements of this title; and
(2) shall monitor the activities of such other entity for com-
pliance with such requirements.
(b) SPECIAL RULE.A ,lender that holds a loan made under
part B in the lender's capacity as a trustee is responsible for com-
I Subsection (n) repealed by sec. 427(f) of P.L. 102-325. See footnote 1 on page 250.
253
HIGHER EDUCATION ACT OF 1965
Sec. 437
plying with all statutory and regulatory requirements imposed on
any other holder of a loan made under this part.
SEC. 437. [20 U.S.C. 1087] REPAYMENT BY THE SECRETARY OF LOANS
OF BANKRUPT, DECEASED, OR DISABLED BORROWERS;
TREATMENT OF BORROWERS ATTENDING CLOSED
SCHOOLS OR FALSELY CERTIFIED AS ELIGIBLE TO BOR-
ROW.
(a) REPAYMENT IN FULL FOR DEATH AND DISABILITY.If a stu-
dent borrower who has received a loan described in subparagraph
(A) or (B) of section 428(a)(1) dies or becomes permanently and to-
tally disabled (as determined in accordance with regulations of the
Secretary), then the Secretary shall discharge the borrower's liabil-
ity on the loan by repaying the amount owed on the loan.
(b) PAYMENT OF CLAIMS ON LOANS IN BANKRUPTCY.The Sec-
retary shall pay to the holder of a loan described in section
428(a)(1) (A) or (B), 428A, 428B, 428C, or 428H, the amount of the
unpaid balance of principal and interest owed on such loan
(1) when the borrower files for relief under chapter 12 or
13 of title 11, United States Code;
(2) when the borrower who has filed for relief under chap-
ter 7 or 11 of such title commences an action for a determina-
tion of dischargeability under section 523(a)(8)(B) of such title;
or
(3) for loans described in section 523(a)(8)(A) of such title,
when the borrower files for relief under chapter 7 or 11 of such
title.
(C) DISCHARGE.
(1) IN GENERAL.If a borrower who received, on or after
January 1, 1986, a loan made, insured, or guaranteed under
this part and the student borrower, or the student on whose
behalf a parent borrowed, is unable to complete the program
in which such student is enrolled due to the closure of the in-
stitution or if such student's eligibility to borrow under this
part was falsely certified by the eligible institution, or if the in-
stitution failed to make a refund of loan proceeds which th e
institution owed to such student's lender, then the Secretary
shall discharge the borrower's liability on the loan (including
interest and collection fees) by repaying the amount owed on
the loan and shall subsequently pursue any claim available to
such borrower against the institution and its affiliates and
principals or settle the loan obligation pursuant to the finan-
cial responsibility authority under subpart 3 of part H. In the
case of a discharge based upon a failure to refund, the amount
of the discharge shall not exceed that portion of the loan which
should have been refunded. The Secretary shall report to the
Committee on Education and the Workforce of the House of
Representatives and the Committee on Labor and Human Re-
sources of the Senate annually as to the dollar amount of loan
discharges attributable to failures to make refunds.
(2) ASSIGNMENT.A borrower whose loan has been dis-
charged pursuant to this subsection shall be deemed to have
assigned to the United States the right to a loan refund up to
the amount discharged against the institution and its affiliates
and principals.
2 b'
Sec. 438
HIGHER EDUCATION ACT OF 1965
254
(3) ELIGIBILITY FOR ADDITIONAL ASSISTANCE.The period
of a student's attendance at an institution at which the student
was unable to complete a course of study due to the closing of
the institution shall not be considered for purposes of calculat-
ing the student's period of eligibility for additional assistance
under this title.
(4) SPECIAL RULE.A borrower whose loan has been dis-
charged pursuant to this subsection shall not be precluded
from receiving additional grants, loans, or work assistance
under this title for which the borrower would be otherwise eli-
gible (but for the default on such discharged loan). The amount
discharged under this subsection shall be treated the same as
loans under section 465(a)(5) of this title.
(5) REPORTING.The Secretary shall report to credit bu-
reaus with respect to loans which have been discharged pursu-
ant to this subsection.
(d) REPAYMENT OF LOANS TO PARENTS.If a student on whose
behalf a parent has received a loan described in section 428B dies,
then the Secretary shall discharge the borrower's liability on the
loan by repaying the amount owed on the loan.
[Section 437A repealed by P.L. 105-244, sec. 432, 112 Stat.
17103
SEC. 438. [20 U.S.C. 1087-1] SPECIAL ALLOWANCES.
(a) FINDINGS.In order to assure (1) that the limitation on in-
terest payments or other conditions (or both) on loans made or in-
sured under this part, do not impede or threaten to impede the car-
rying out of the purposes of this part or do not cause the return
to holders of loans to be less than equitable, (2) that incentive pay-
ments on such loans are paid promptly to eligible lenders, and (3)
that appropriate consideration of relative administrative costs and
money market conditions is made in setting the quarterly rate of
such payments, the Congress finds it necessary to establish an im-
proved method for the determination of the quarterly rate of the
special allowances on such loans, and to provide for a thorough, ex-
peditious, and objective examination of alternative methods for the
determination of the quarterly rate of such allowances.
(b) COMPUTATION AND PAYMENT.
(1) QUARTERLY PAYMENT BASED ON UNPAID BALANCE.A
special allowance shall be paid for each of the 3-month periods
ending March 31, June 30, September 30, and December 31 of
every year and the amount of such allowance paid to any hold-
er with respect to any 3-month period shall be a percentage of
the average unpaid balance of principal (not including un-
earned interest added to principal) of all eligible loans held by
such holder during such period.
(2) RATE OF SPECIAL ALLOWANCE.(A) Subject to subpara-
graphs (B), (C), (D), (E), (F), (G), and (H) and paragraph (4),
the special allowance paid pursuant to this subsection on loans
shall be computed (i) by determining the average of the bond
equivalent rates of 91-day Treasury bills auctioned for such 3-
month period, (ii) by subtraCting the applicable interest rate on
such loans from such average, (iii) by adding 3.10 percent to
the resultant percent, and (iv) by dividing the resultant per-
255
HIGHER EDUCATION ACT OF 1965
Sec. 438
cent by 4. If such computation produces a number less than
zero, such loans shall be subject to section 427A(f).
(B)(i) The quarterly rate of the special allowance for hold-
ers of loans which were made or purchased with funds ob-
tained by the holder from the issuance of obligations, the in-
come from which is exempt from taxation under the Internal
Revenue Code of 1954 shall be one-half the quarterly rate of
the special allowance established under subparagraph (A), ex-
cept that, in determining the rate for the purpose of this divi-
sion, subparagraph (A)(iii) shall be applied by substituting "3.5
percent" for "3.10 percent" . Such rate shall also apply to hold-
ers of loans which were made or purchased with funds ob-
tained by the holder from collections or default reimburse-
ments on, or interests or other income pertaining to, eligible
loans made or purchased with funds described in the preceding
sentence of this subparagraph or from income on the invest-
ment of such funds. This subparagraph shall not apply to loans
which were made or insured prior to October 1, 1980.
(ii) The quarterly rate of the special allowance set under
division (i) of this subparagraph shall not be less than 9.5 per-
cent minus the applicable interest rate on such loans, divided
by 4.
(iii) No special allowance may be paid under this subpara-
graph unless the issuer of such obligations complies with sub-
section (d) of this section.
(iv) Notwithstanding clauses (i) and (ii), the quarterly rate
of the special allowance for holders of loans which are financed
with funds obtained by the holder from the issuance of obliga-
tions originally issued on or after October 1, 1993, the income
from which is excluded from gross income under the Internal
Revenue Code of 1986, shall be the quarterly rate of the special
allowance established under subparagraph (A), (E), (F), (G), or
(H) as the case may be. Such rate shall also apply to holders
of loans which were made or purchased with funds obtained by
the holder from collections or default reimbursements on, or in-
terest or other income pertaining to, eligible loans made or
purchased with funds described in the preceding sentence of
this subparagraph or from income on the investment of such
funds.
(C)(i) In the case of loans made before October 1, 1992,
pursuant to section 428A or 428B for which the interest rate
is determined under section 427A(c)(4), a special allowance
shall not be paid unless the rate determined for any 12-month
period under subparagraph (B) of such section exceeds 12 per-
cent.
(ii) Subject to subparagraphs (G) and (H), in the case of
loans disbursed on or after October 1, 1992, pursuant to sec-
tion 428A or 428B for which the interest rate is determined
under section 427A(c)(4), a special allowance shall not be paid
unless the rate determined for any 12-month period under sec-
tion 427A(c)(4)(B) exceeds
'So in law. Should refer to section 427A(i).
263
Sec. 438
HIGHER EDUCATION ACT OF 1965
256
(I) 11 percent in the case of a loan under section 428A;
(II) 10 percent in the case of a loan under section
428B.
(D)(i) In the case of loans made or purchased directly from
funds loaned or advanced pursuant to a qualified State obliga-
tion, subparagraph (A)(iii) shall be applied by substituting "3.5
percent" for "3.10 percent".
(ii) For the purpose of division (i) of this subparagraph, the
term "qualified State obligation" means
(I) an obligation of the Maine Educational Loan Mar-
keting Corporation to the Student Loan Marketing Asso-
ciation pursuant to an agreement entered into on January
31, 1984; or
(II) an obligation of the South Carolina Student Loan
Corporation to the South Carolina National Bank pursu-
ant to an agreement entered into on July 30, 1986.
(E) In the case of any loan for which the applicable rate
of interest is described in section 427A(g)(2), subparagraph
(A)(iii) shall be applied by, substituting "2.5 percent" for "3.10
percent".
(F) Subject to paragraph (4), the special allowance paid
pursuant to this subsection on loans for which the applicable
rate of interest is determined under section 427A(h) shall be
computed (i) by determining the applicable bond equivalent
rate of the security with a comparable maturity, as established
by the Secretary, (ii) by subtracting the applicable interest
rates on such loans from such applicable bond equivalent rate,
(iii) by adding 1.0 percent to the resultant percent, and (iv) by
dividing the resultant percent by 4. If such computation pro-
duces a number less than zero, such loans shall be subject to
section 427A(f). 1
(G) LOANS DISBURSED BETWEEN JULY 1, 1998, AND OCTOBER
1, 1998.
(i) IN GENERAL.Subject to paragraph (4) and clauses
(ii), (iii), and (iv) of this subparagraph, and except as pro-
vided in subparagraph (B), the special allowance paid pur-
suant to this subsection on loans for which the first dis-
bursement is made on or after July 1, 1998, and before Oc-
tober 1, 1998, shall be computed
(I) by determining the average of the bond equiva-
lent rates of 91-day Treasury bills auctioned for such
3-month period;
(II) by subtracting the applicable interest rates on
such loans from such average bond equivalent rate;
(III) by adding 2.8 percent to the resultant per-
cent; and
(IV) by dividing the resultant percent by 4.
(ii) IN SCHOOL AND GRACE PERIOD.In the case of any
loan for which the first disbursement is made on or after
July 1, 1998, and before October 1, 1998, and for which the
applicable
rate
of
interest
is
described
in
section
or
1So in law. Should refer to section 427A(i).
257
HIGHER EDUCATION ACT OF 1965.
Sec. 438
427A(j)(2), clause (i)(III) of this subparagraph shall be ap-
plied by substituting "2.2 percent" for "2.8 percent".
(iii) PLUS LOANS.In the case of any loan for which
the first disbursement is made on or after July 1, 1998,
and before October 1, 1998, and for which the applicable
rate of interest is described in section 427A(j)(3), clause
(i)(III) of this subparagraph shall be applied by substitut-
ing "3.1 percent" for "2.8 percent", subject to clause (v) of
this subparagraph.
(iv) CONSOLIDATION LOANS.This subparagraph shall
not apply in the case of any consolidation loan.
(v) LIMITATION ON SPECIAL ALLOWANCES FOR PLUS
LOANS.In the case of PLUS loans made under section
428B and disbursed on or after July 1, 1998, and before
October 1, 1998, for which the interest rate is determined
under 427A(j)(3), a special allowance shall not be paid for
such loan for such unless the rate determined under sub-
paragraph (A) of such section (without regard to subpara-
graph (B) of such section) exceeds 9.0 percent.
(H) 1 LOANS DISBURSED. ON OR AFTER OCTOBER 1, 1998,
AND BEFORE JULY 1, 2003.
(i) IN GENERAL.Subject to paragraph (4) and
clauses (ii), (iii), and (iv) of this subparagraph, and ex-
cept as provided in subparagraph (B), the special al-
lowance paid pursuant to this subsection on loans for
which the first disbursement is made on or after Octo-
ber
1, 1998, and before July
1, 2003, shall be
computed
(I) by determining the average of the bond
equivalent rates of 91-day Treasury bills auc-
tioned for such 3-month period;
(II) by subtracting the applicable interest
rates on such loans from such average bond equiv-
alent rate;
(III) by adding 2.8 percent to the resultant
percent; and
(IV) by dividing the resultant percent by 4.
(ii) IN SCHOOL AND GRACE PERIOD.In the case of
any loan for which the first disbursement is made on
or after October 1, 1998, and before July 1, 2003, and
for which the applicable rate of interest is described in
section 427A(k)(2), clause (i)(III) of this subparagraph
shall be applied by substituting "2.2 percent" for "2.8
percent".
(iii) PLUS LOANS.In the case of any loan for
which the first disbursement is made on or after Octo-
ber 1, 1998, and before July 1, 2003, and for which the
applicable rate of interest is described in section
427A(k)(3), clause (i)(III) of this subparagraph shall be
applied by substituting "3.1 percent" for "2.8 percent",
subject to clause (v) of this subparagraph.
'Margin so in law.
265
Sec. 438
HIGHER EDUCATION ACT OF 1965
258
(iv) CONSOLIDATION LOANS.In the case of any
consolidation loan for which the application is received
by an eligible lender on or after October 1, 1998, and
before July 1, 2003, and for which the applicable inter-
est rate is determined under section 427A(k)(4), clause
(i)(III) of this subparagraph shall be applied by sub-
stituting "3.1 percent" for "2.8 percent", subject to
clause (vi) of this subparagraph.
(v) LIMITATION ON SPECIAL ALLOWANCES FOR PLUS
LOANS.In the case of PLUS loans made under sec-
tion 428B and first disbursed on or after October 1,
1998, and before July 1, 2003, for which the interest
rate is determined under section 427A(k)(3), a special
allowance shall not be paid for such loan during any
12-month period beginning on July 1 and ending on
June 30 unless, on the June 1 preceding such July 1
(I) the bond equivalent rate of 91-day Treas-
ury bills auctioned at the final auction held prior
to such June 1 (as determined by the Secretary for
purposes of such section); plus
(II) 3.1 percent,
exceeds 9.0 percent.
(vi) LIMITATION ON SPECIAL ALLOWANCES FOR CON-
SOLIDATION LOANS.In the case of consolidation loans
made under section 428C and for which the applica-
tion is received on or after October 1, 1998, and before
July 1, 2003, for which the interest rate is determined
under section 427A(k)(4), a special allowance shall not
be paid for such loan during any 3-month period end-
ing March 31, June 30, September 30, or December 31
unless
(I) the average of the bond equivalent rate of
91-day Treasury bills auctioned for such 3-month
period; plus
(II) 3.1 percent,
exceeds the rate determined under section 427A(k)(4).
(3) CONTRACTUAL RIGHT OF HOLDERS TO SPECIAL ALLOW-
ANCE.The holder of an eligible loan shall be deemed to have
a contractual right against the United States, during the life
of such loan, to receive the special allowance according to the
provisions of this section. The special allowance determined for
any such 3-month period shall be paid promptly after the close
of such period, and without administrative delay after receipt
of an accurate and complete request for payment, pursuant to
procedures established by regulations promulgated under this
section.
(4) PENALTY FOR LATE PAYMENT.(A) If payments of the
special allowances payable under this section or of interest
payments under section 428(a) with respect to a loan have not
been made within 30 days after the Secretary has received an
accurate, timely, and complete request for payment thereof, the
special allowance payable to such holder shall be increased by
an amount equal to the daily interest accruing on the special
allowance and interest benefits payments due the holder.
2 66
259
HIGHER EDUCATION ACT OF 1965
Sec. 438
(B) Such daily interest shall be computed at the daily
equivalent rate of the sum of the special allowance rate com-
puted pursuant to paragraph (2) and the interest rate applica-
ble to the loan and shall be paid for the later of (i) the 31st
day after the receipt of such request for payment from the
holder, or (ii) the 31st day after the final day of the period or
periods covered by such request, and shall be paid for each suc-
ceeding day until, and including, the date on which the Sec-
retary authorizes payment.
(C) For purposes of reporting to the Congress the amounts
of special allowances paid under this section, amounts of spe-
cial allowances paid pursuant to this paragraph shall be seg-
regated and reported separately.
(5) DEFINITION OF ELIGIBLE LOAN.As used in this section,
the term "eligible loan" means a loan
(A)(i) on which a portion of the interest is paid on be-
half of the student and for the student's account to the
holder of the loan under section 428(a);
(ii) which is made under section 428A, 428B, 428C,
428H, or 439(o); or
(iii) which was made prior to October 1, 1981; and
(B) which is insured under this part, or made under
a program covered by an agreement under section 428(b)
of this Act.
As used in this section, the term "eligible loan" includes all loans
subject to section 4281.1
(6) REGULATION OF TIME AND MANNER OF PAYMENT.The
Secretary shall pay the holder of an eligible loan, at such time
or times as are specified in regulations, a special allowance
prescribed pursuant to this subsection subject to the condition
that such holder shall submit to the Secretary, at such time or
times and in such a manner as the Secretary may deem prop-
er, such information as may be required by regulation for the
purpose of enabling the Secretary to carry out his functions
under this section and to carry out the purposes of this section.
(7) USE OF AVERAGE QUARTERLY BALANCE.The Secretary
shall permit lenders to calculate interest benefits and special
allowance through the use of the average quarterly balance
method until July 1, 1988.
(c) ORIGINATION FEES FROM STUDENTS.
(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE
SUBSIDIES.(A) Notwithstanding subsection (b), the Secretary
shall collect the amount the lender is authorized to charge as
an origination fee in accordance with paragraph (2) of this
subsection
(i) by reducing the total amount of interest and special
allowance payable under section 428(a)(3)(A) and sub-
section (b) of this section, respectively, to any holder; or
(ii) directly from the holder of the loan, if the lender
fails or is not required to bill the Secretary for interest and
special allowance or withdraws from the program with un-
paid loan origination fees.
lIndentation so in law.
267
Sec. 438
HIGHER EDUCATION ACT OF 1965
260
(B) If the Secretary collects the origination fee under this
subsection through the reduction of interest and special allow-
ance, and the total amount of interest and special allowance
payable under section 428(a)(3)(A) and subsection (b) of this
section, respectively, is less than the amount the lender was
authorized to charge borrowers for origination fees in that
quarter, the Secretary shall deduct the excess amount from the
subsequent quarters' payments until the total amount has
been deducted.
(2) AMOUNT OF ORIGINATION FEES.Subject to paragraph
(6) of this subsection, with respect to any loan (including loans
made under section 428H, but excluding loans made under sec-
tions 428C and 439(o)) for which a completed note or other
written evidence of the loan was sent or delivered to the bor-
rower for signing on or after 10 days after the date of enact-
ment of the Postsecondary Student Assistance Amendments of
1981, each eligible lender under this part is authorized to
charge the borrower an origination fee in an amount not to ex-
ceed 3.0 percent of the principal amount of the loan, to be de-
ducted proportionately from each installment payment of the
proceeds of the loan prior to payment to the borrower. Except
as provided in paragraph (8), a lender that charges an origina-
tion fee under this paragraph shall assess the same fee to all
student borrowers.
(3) RELATION TO APPLICABLE INTEREST.Such origination
fee shall not be taken into account for purposes of determining
compliance with section 427A.
(4) DISCLOSURE REQUIRED.The lender shall disclose to
the borrower the amount and method of calculating the origi-
nation fee.
(5) PROHIBITION ON DEPARTMENT COMPELLING ORIGINATION
FEE COLLECTIONS BY LENDERS.Nothing in this subsection
shall be construed to permit the Secretary to require any lend-
er that is making loans that are insured or guaranteed under
this part, but for which no amount will be payable for interest
under section 428(a)(3)(A) or for special allowances under sub-
section (b) of this section, to collect any origination fee or to
submit the sums collected as origination fees to the United
States. The Secretary shall, not later than January 1, 1987, re-
turn to any such lender any such sums collected before the en-
actment of this paragraph, together with interest thereon.
(6) SLS AND PLUS LOANS.With respect to any loans made
under section 428A or 428B on or after October 1, 1992, 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 pay-
ment of the proceeds of the loan prior to payments to the bor-
rower.
(7) DISTRIBUTION OF ORIGINATION FEES.All origination
fees collected pursuant to this section on loans authorized
under section 428A or 428B shall be paid to the Secretary by
the lender and deposited in the fund authorized under section
431 of this part.
261
HIGHER EDUCATION ACT OF 1965
Sec. 438
(8) EXCEPTION.Notwithstanding paragraph (2), a lender
may assess a lesser origination fee for a borrower demonstrat-
ing greater financial need as determined by such borrower's
adjusted gross family income.
(d) LOAN FEES FROM LENDERS.
(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE
SUBSIDIES.
(A) IN GENERAL.Notwithstanding subsection (b), the
Secretary shall collect a loan fee in an amount determined
in accordance with paragraph (2)
(i) by reducing the total amount of interest and
special allowance payable under section 428(a)(3)(A)
and subsection (b), respectively, to any holder of a
loan; or
(ii) directly from the holder of the loan, if the
lender
(I) fails or is not required to bill the Secretary
for interest and special allowance payments; or
(II) withdraws from the program with unpaid
loan fees.
(B) SPECIAL RULE.If the Secretary collects loan fees
under this subsection through the reduction of interest and
special allowance payments, and the total amount of inter-
est
and
special
allowance
payable
under
section
428(a)(3)(A) and subsection (b), respectively, is less than
the amount of such loan fees, then the Secretary shall de-
duct the amount of the loan fee balance from the amount
of interest and special allowance payments that would oth-
erwise be payable, in subsequent quarterly increments
until the balance has been deducted.
(2) AMOUNT OF LOAN FEES.With respect to any loan
under this part for which the first disbursement was made on
or after October 1, 1993, the amount of the loan fee which shall
be deducted under paragraph (1) shall be equal to 0.50 percent
of the principal amount of the loan.
(3) DISTRIBUTION OF LOAN FEES.The Secretary shall de-
posit all fees collected pursuant to paragraph (3) into the in-
surance fund established in section 431.
(e) NONDISCRIMINATION.In order for the holders of loans
which were made or purchased with funds obtained by the holder
from an Authority issuing obligations, the income from which is ex-
empt from taxation under the Internal Revenue Code of 1986, to
be eligible to receive a special allowance under subsection (b)(2) on
any such loans, the Authority shall not engage in any pattern or
practice which results in a denial of a borrower's access to loans
under this part because of the borrower's race, sex, color, religion,
national origin, age, disability status, income, attendance at a par-
ticular eligible institution within the area served by the Authority,
length of the borrower's educational program, or the borrower's
academic year in school.
f) REGULATIONS To PREVENT DENIAL OF LOANS TO ELIGIBLE
STUDENTS.The Secretary shall adopt or amend appropriate regu-
lations pertaining to programs carried out under this part to pre-
269
Sec. 439
HIGHER EDUCATION ACT OF 1965
262
vent, where practicable, any practices which the Secretary finds
have denied loans to a substantial number of eligible students.
SEC. 439. [20 U.S.C. 1087-211 STUDENT LOAN MARKETING ASSOCIA-
TION.
(a) PURPOSE.The Congress hereby declares that it is the pur-
pose of this section (1) to establish a private corporation which will
be financed by private capital and which will serve as a secondary
market and warehousing facility for student loans, including loans
which are insured by the Secretary under this part or by a guar-
anty agency, and which will provide liquidity for student loan in-
vestments; (2) in order to facilitate secured transactions involving
student loans, to provide for perfection of security interests in stu-
dent loans either through the taking of possession or by notice fil-
ing; and (3) to assure nationwide the establishment of adequate
loan insurance programs for students, to provide for an additional
program of loan insurance to be covered by agreements with the
Secretary.
(b) ESTABLISHMENT.
(1) IN GENERAL.There is hereby created a body corporate
to be known as the Student Loan Marketing Association (here-
inafter referred to as the "Association"). The Association shall
have succession until dissolved. It shall maintain its principal
office in the District of Columbia and shall be deemed, for pur-
poses of venue and jurisdiction in civil actions, to be a resident
and citizen thereof. Offices may be established by the Associa-
tion in such other place or places as it may deem necessary or
appropriate for the conduct of its business.
(2) EXEMPTION FROM STATE AND LOCAL TAXES.The Asso-
ciation, including its franchise, capital, reserves, surplus, mort-
gages, or other security holdings, and income shall be exempt
from all taxation now or hereafter imposed by any State, terri-
tory, possession, Commonwealth, or dependency of the United
States, or by the District of Columbia, or by any county, mu-
nicipality, or local taxing authority, except that any real prop-
erty of the Association shall be subject to State, territorial,
county, municipal, or local taxation to the same extent accord-
ing to its value as other real property is taxed.
(3) APPROPRIATIONS AUTHORIZED FOR ESTABLISHMENT.
There is hereby authorized to be appropriated to the Secretary
$5,000,000 for making advances for the purpose of helping to
establish the Association. Such advances shall be repaid within
such period as the Secretary may deem to be appropriate in
light of the maturity and solvency of the Association. Such ad-
vances shall bear interest at a rate not less than (A) a rate de-
termined by the Secretary of the Treasury taking into consider-
1Section 602(d) of Public Law 104-208 (110 Stat. 3009-300) provides for the following repeals:
(d) REPEALS.
(1) IN GENERAL.Sections 439 of the Higher Education Act of 1965 (20 U.S.C. 1087-2)
and 440 of such Act (as added by subsection (a) of this section) are repealed.
(2) EFFECTIVE DATE.The repeals made by paragraph (1) shall be effective one year after
(A) the date on which all of the obligations of the trust established under section
440(d)(1) of the Higher Education Act of 1965 (as added by subsection (a)) have been
extinguished, if a reorganization occurs in accordance with section 440 of such Act; or
(B) the date on which all of the obligations of the trust established under subsection
439(sX3)(A) of such Act (as added by subsection (c)) have been extinguished, if a reorga-
nization does not occur in accordance with section 440 of such Act.
263
HIGHER EDUCATION ACT OF 1965
Sec. 439
ation the current average market yield on outstanding market-
able obligations of the United States with remaining period to
maturity comparable to the maturity of such advances, ad-
justed to the nearest one-eighth of 1 percent, plus (B) an allow-
ance adequate in the judgment of the Secretary to cover ad-
ministrative costs and probable losses. Repayments of such ad-
vances shall be deposited into miscellaneous receipts of the
Treasury.
(C) BOARD OF DIRECTORS.
(1) COMPOSITION OF BOARD; CHAIRMAN.(A) The Associa-
tion shall have a Board of Directors which shall consist of 21
persons, 7 of whom shall be appointed by the President and
shall be representative of the general public. The remaining 14
directors shall be elected by the common stockholders of the
Association entitled to vote pursuant to subsection (f). Com-
mencing with the annual shareholders meeting to be held in
1993
(i) 7 of the elected directors shall be affiliated with an
eligible institution; and
(ii) 7 of the elected directors shall be affiliated with an
eligible lender.
(B) The President shall designate 1 of the directors to
serve as Chairman.
(2) TERMS OF APPOINTED AND ELECTED MEMBERS.The di-
rectors appointed by the President shall serve at the pleasure
of the President and until their successors have been appointed
and have qualified. The remaining directors shall each be elect-
ed for a term ending on the date of the next annual meeting
of the common stockholders of the Association, and shall serve
until their successors have been elected and have qualified.
Any appointive seat on the Board which becomes vacant shall
be filled by appointment of the President. Any elective seat .on
the Board which becomes vacant after the annual election of
the directors shall be filled by the Board, but only for the unex-
pired portion of the term.
(3) AFFILIATED MEMBERS.For the purpose of this sub-
section, the references to a director "affiliated with the eligible
institution" or a director "affiliated with an eligible lender"
means an individual who is, or within 5 years of election to the
Board has been, an employee, officer, director, or similar offi-
cial of
(A) an eligible institution-or an eligible lender;
(B) an association whose members consist primarily of
eligible institutions or eligible lenders; or
(C) a State agency, authority, instrumentality, com-
mission, or similar institution, the primary purpose of
which relates to educational matters or banking matters.
(4) MEETINGS AND FUNCTIONS OF THE BOARD.The Board
of Directors shall meet at the call of its Chairman, but at least
semiannually. The Board shall determine the general policies
which shall govern the operations_ of the Association. The
Chairman of the Board shall, with the approval of the Board,
select, appoint, and .compensate qualified persons to fill the of-
fices as may be provided for in the bylaws, with such functions,
2 7.1.'
Sec. 439
HIGHER EDUCATION ACT OF 1965
264
powers, and duties as may be prescribed by the bylaws or by
the Board of Directors, and such persons shall be the officers
of the Association and shall discharge all such functions, pow-
ers, and duties.
(d) AUTHORITY OF ASSOCIATION.
(1) IN GENERAL. The Association is authorized, subject to
the provisions of this section
(A) pursuant to commitments or otherwise to make ad-
vances on the security of, purchase, or repurchase, service,
sell or resell, offer participations, or pooled interests or
otherwise deal in, at prices and on terms and conditions
determined by the Association, student loans which are in-
sured by the Secretary under this part or by a guaranty
agency;
(B) to buy, sell, hold, underwrite, and otherwise deal
in obligations, if such obligations are issued, for the pur-
pose of making or purchasing insured loans, by a guaranty
agency or by an eligible lender in a State described in sec-
tion 435(d)(1) (D) or (F);
(C) to buy, sell, hold, insure, underwrite, and other-
wise deal in obligations issued for the purpose of financing
or refinancing the construction, reconstruction, renovation,
improvement, or purchase at institutions of higher edu-
cation of any of the following facilities (including the un-
derlying property) and materials (including related equip-
ment, instrumentation, '-and furnishings) at an eligible in-
stitution of higher education:
(i) educational and training facilities;
(ii) housing for students and faculties, dining
halls, student unions, and facilities specifically de-
signed to promote fitness and health for students, fac-
ulty, and staff or for physical education courses; and
(iii) library facilities, including the acquisition of
library materials at institutions of higher education;
except that not more than 30 percent of the value of trans-
actions entered into under this subparagraph shall involve
transactions of the types described in clause (ii);
(D) to undertake a program of loan insurance pursu-
ant to agreements with the Secretary under section 428,
and except with respect to loans under subsection (o) of
this section or under section 428C, the Secretary may
enter into an agreement with the Association for such pur-
pose only if the Secretary determines that (i) eligible bor-
rowers are seeking and unable to obtain loans under this
part, and (ii) no guaranty agency is capable of or willing
to provide a program of loan insurance for such borrowers;
and
(E) to undertake any other activity which the Board of
Directors of the Association determines to be in further-
ance of the programs of insured student loans authorized
under this part or will otherwise support the credit needs
of students, except that
(i) in carrying out all such activities the purpose
shall always be to provide secondary market and other
265
HIGHER EDUCATION ACT OF 1965
Sec. 439
support for lending programs offered by other organi-
zations and not to replace or compete with such other
programs;
(ii) nothing in this subparagraph (E) shall be
deemed to authorize the Association to acquire, own,
operate, or control any bank, savings and loan associa-
tion, savings bank or credit union; and
(iii) not later than 30 days prior to the initial im-
plementation of a program undertaken pursuant to
this subparagraph (E), the Association shall advise the
Chairman and the Ranking Member on the Committee
on Labor and Human Resources of the Senate and the
Chairman and the Ranking Member of the Committee
on Education and Labor of the House of Representa-
tives in writing of its plans to offer such program and
shall provide information relating to the general terms
and conditions of such program.
The Association is further authorized to undertake any activity
with regard to student loans which are not insured or guaran-
teed as provided for in this subsection as it may undertake
with regard to insured or guaranteed student loans. Any
warehousing advance made on the security of such loans shall
be subject to the provisions of paragraph (3) of this subsection
to the same extent as a warehousing advance made on the se-
curity of insured loans.
(2) WAREHOUSING ADVANCES.Any warehousing advance
made under paragraph (1)(A) of this subsection shall be made
on the security of (A) insured loans, (B) marketable obligations
and securities issued, guaranteed, or insured by, the United
States, or for which the full faith and credit of the United
States is pledged for the repayment of principal and interest
thereof, or (C) marketable obligations issued, guaranteed, or
insured by any agency, instrumentality, or corporation of the
United States for which the credit of such agency, instrumen-
tality, or corporation is pledged for the repayment of principal
and interest thereof, in an amount equal to the amount of such
advance. The proceeds of any such advance secured by insured
loans shall either be invested in additional insured loans or the
lender shall provide assurances to the Association that during
the period of the borrowing it will maintain a level of insured
loans in its portfolio not less than the aggregate outstanding
balance of such loans held at the time of the borrowing. The
proceeds from any such advance secured by collateral described
in clauses (B) and (C) shall be invested in additional insured
student loans.
(3)
PERFECTION OF SECURITY INTERESTS
IN STUDENT
LOANS.Notwithstanding the provisions of any State law to
the contrary, including the Uniform Commercial Code as in ef-
fect in any State, a security interest in insured student loans
created on behalf of the Association or any eligible lender as
defined in section 435(a) may be perfected either through the
taking of possession of such loans or by the filing of notice of
such security interest in such loans in the manner provided by
such State law for perfection of security interests in accounts.
2 7 3
Sec. 439
HIGHER EDUCATION ACT OF 1965
266
(4) FORM OF SECURITIES.Securities issued pursuant to
the offering of participations or pooled interests under para-
graph (1) of this subsection may be in the form of debt obliga-
tions, or trust certificates of beneficial ownership, or both. Stu-
dent loans set aside pursuant to the offering of participations
or pooled interests shall at all times be adequate to ensure the
timely principal and interest payments on such securities.
(5) RESTRICTIONS ON FACILITIES AND HOUSING ACTIVITIES.
Not less than 75 percent of the aggregate dollar amount of ob-
ligations bought, sold, held, insured, underwritten, and other-
wise supported in accordance with the authority contained in
paragraph (1)(C) shall be obligations which are listed by a na-
tionally recognized statistical rating organization at a rating
below the second highest rating of such organization.
(e) ADVANCES TO LENDERS THAT Do NOT DISCRIMINATE.The
Association, pursuant to such criteria as the Board of Directors
may prescribe, shall make advances on security or purchase stu-
dent loans pursuant to subsection (d) only after the Association is
assured that the lender (1) does not discriminate by pattern or
practice against any particular class or category of students by re-
quiring that, as a condition to the receipt of a loan, the student or
his family maintain a business relationship with the lender, except
that this clause shall not apply in the case of a loan made by a
credit union, savings and loan association, mutual savings bank,
institution of higher education, or any other lender with less than
$75,000,000 in deposits, and (2) does not discriminate on the basis
of race, sex, color, creed, or national origin.
(f) STOCK OF THE ASSOCIATION.
(1) VOTING COMMON STOCK.The Association shall have
voting common stock having such par value as may be fixed by
its Board of Directors from time to time. Each share of voting
common stock shall be entitled to one vote with rights of cumu-
lative voting at all elections of directors.
(2) NUMBER OF SHARES; TRANSFERABILITY.The maximum
number of shares of voting common stock that the Association
may issue and have outstanding at any one time shall be fixed
by the Board of Directors from time to time. Any voting com-
mon stock issued shall be fully transferable, except that, as to
the Association, it shall be transferred only on the books of the
Association.
(3) DIVIDENDS. To the extent that net income is earned
and realized, subject to subsection (g)(2), dividends may be de-
clared on voting common stock by the Board of Directors. Such
dividends as may be declared by the Board of Directors shall
be paid to the holders of outstanding shares of voting common
stock, except that no such dividends shall be payable with re-
spect to any share which has been called for redemption past
the effective date of such call.
(4) SINGLE CLASS OF VOTING COMMON STOCK.As of the ef-
fective date of the Higher Education Amendments of 1992, all
of the previously authorized shares of voting common stock and
nonvoting common stock of the Association shall be converted
to shares of. a. single class of voting common stock on a share-
for-share basis, without any further action on the part of the
274
267
HIGHER EDUCATION ACT OF 1965.
Sec. 439
Association or any holder. Each outstanding certificate for vot-
ing or nonvoting common stock shall evidence ownership of the
same number of shares of voting stock into which it is con-
verted. All preexisting rights and obligations with respect to
any class of common stock of the Association shall be deemed
to be rights and obligations with respect to such converted
shares.
(g) PREFERRED STOCK.
(1) AUTHORITY OF BOARD.The Association is authorized
to issue nonvoting preferred stock having such par value as
may be fixed by its Board of Directors from time to time. Any
preferred share issued shall be freely transferable, except that,
as to the Association, it shall be transferred only on the books
of the Association.
(2) RIGHTS OF PREFERRED STOCK.The holders of the pre-
ferred shares shall be entitled to such rate of cumulative divi-
dends and such shares shall be subject to such redemption or
other conversion provisions as may be provided for at the time
of issuance. No dividends shall be payable on any share of com-
mon stock at any time when any dividend is due on any share
of preferred stock and has not been paid.
(3) PREFERENCE ON TERMINATION OF BUSINESS.In the
event of any liquidation, dissolution, or winding up of the Asso-
ciation's business, the holders of the preferred shares shall be
paid in full at par value thereof, plus all accrued dividends, be-
fore the holders of the common shares receive any payment.
(h) DEBT OBLIGATIONS.
(1) APPROVAL BY SECRETARIES OF EDUCATION AND
THE
TREASURY.The Association is authorized with the approval of
the Secretary of Education and the Secretary of the Treasury
to issue and have outstanding obligations having such matu-
rities and bearing such rate or rates of interest as may be de-
termined by the Association. The authority of the Secretary of
Education to approve the issuance of such obligations is lim-
ited to obligations issued by the Association and guaranteed by
the Secretary pursuant to paragraph (2) of this subsection.
Such obligations may be redeemable at the option of the Asso-
ciation before maturity in such manner as may be stipulated
therein. The Secretary of the Treasury may not direct as a con-
dition of his approval that any such issuance of obligations by
the Association be made or sold to the Federal Financing
Bank. To the extent that the average outstanding amount of
the obligations owned by the Association pursuant to the au-
thority contained in subsection (d)(1) (B) and (C) of this section
and as to which the income is exempt from taxation under the
Internal Revenue Code of 1986 does not exceed the average
stockholders' equity of the Association, the interest on obliga-
tions issued under this paragraph shall not be deemed to be
interest on indebtedness incurred or continued to purchase or
carry obligations for the purpose of section 265 of the Internal
Revenue Code of 1986.
(2) GUARANTEE OF DEBT.The Secretary is authorized,
prior to October 1, 1984, to guarantee payment when due of
principal and interest on obligations issued by the Association
Sec. 439
HIGHER EDUCATION ACT OF 1965
268
in an aggregate amount determined by the Secretary in con-
sultation with the Secretary of the Treasury. Nothing in this
section shall be construed so as to authorize the Secretary of
Education or the Secretary of the Treasury to limit, control, or
constrain programs of the Association or support of the Guar-
anteed Student Loan Program by the Association.
(3) BORROWING AUTHORITY TO MEET GUARANTEE OBLIGA-
TIONS.To enable the Secretary to discharge his responsibil-
ities under guarantees issued by him, he is authorized to issue
to the Secretary of the Treasury notes or other obligations in
such forms and denominations, bearing such maturities, and
subject to such terms and conditions, as may be prescribed by
the Secretary with the approval of the Secretary of the Treas-
ury. Such notes or other obligations shall bear interest at a
rate determined by the Secretary of the Treasury, taking into
consideration the current average market yield on outstanding
marketable obligations of the United States of comparable ma-
turities during the months preceding the issuance of the notes
or other obligations. The Secretary of the Treasury is author-
ized and directed to purchase any notes and other obligations
issued hereunder and for that purpose he is authorized to use
as a public debt transaction the proceeds from the sale of any
securities issued under the Second Liberty Bond Act, as
amended, and the purposes for which securities may be issued
under that Act, as amended, are extended to include any pur-
chase of such notes and obligations. The Secretary of the
Treasury may at any time sell any of the notes or other obliga-
tions acquired by him under this subsection. All redemptions,
purchases, and sales by the Secretary of the Treasury of such
notes or other obligations shall be treated as public debt trans-
actions of the United States. There is authorized to be appro-
priated to the Secretary such sums as may be necessary to pay
the principal and interest on the notes or obligations issued by
him to the Secretary of the Treasury.
(4) ACTION ON REQUEST FOR GUARANTEES.Upon receipt of
a request from the Association under this subsection requiring
approvals by the Secretary of Education or the Secretary of the
Treasury, the Secretary of Education or the Secretary of the
Treasury shall act promptly either to grant approval or to ad-
vise the Association of the reasons for withholding approval. In
no case shall such an approval be withheld for a period longer
than 60 days unless, prior to the end of such period, the Sec-
retary of Education and the Secretary of the Treasury submit
to the Congress a detailed explanation of reasons for doing so.
(5) AUTHORITY OF TREASURY TO PURCHASE DEBT.The Sec-
retary of the Treasury is authorized to purchase any obliga-
tions issued by the Association pursuant to this subsection as
now or hereafter in force, and for such purpose the Secretary
of the Treasury is authorized to use as a public debt trans-
action the proceeds of the sale of any securities hereafter
issued under the Second Liberty Bond Act, as now or hereafter
in force, and the purposes for which securities may be issued
under the Second Liberty Bond Act, as now or hereafter in
force are extended to include such purchases. The Secretary of
276
269
HIGHER EDUCATION ACT OF 1965
Sec. 439
the Treasury shall not at any time purchase any obligations
under this subsection if such purchase would increase the ag-
gregate principal amount of his then outstanding holdings of
such obligations under this subsection to an amount greater
than $1,000,000,000. Each purchase of obligations by the Sec-
retary of the Treasury under this subsection shall be upon
such terms and conditions as to yield a return at a rate deter-
mined by the Secretary of the Treasury, taking into consider-
ation the current average rate on outstanding marketable obli-
gations of the United States of comparable maturities as of the
last day of the month preceding the making of such purchase.
The Secretary of the Treasury may, at any time, sell, upon
such terms and conditions and at such price or prices as he
shall determine, any of the obligations acquired by him under
this subsection. All redemptions, purchases, and sales by the
Secretary of the Treasury of such obligations under this sub-
section shall be treated as public debt transactions of the
United States.
(6) SALE OF DEBT TO FEDERAL FINANCING BANK.Notwith-
standing any other provision of law the Association is author-
ized to sell or issue obligations on the security of student loans,
the payment of interest or principal of which has at any time
been guaranteed under section 428 or 429 of this part, to the
Federal Financing Bank.
(7) OFFSET FEE.(A) The Association shall pay to the Sec-
retary, on a monthly basis, an offset fee calculated on an an-
nual basis in an amount equal to 0.30 percent of the principal
amount of each loan made, insured or guaranteed under this
part that the Association holds (except for loans made pursu-
ant to sections 428C, 439(o), or 439(q)) and that was acquired
on or after the date of enactment of this paragraph.
(B) If the Secretary determines that the Association has
substantially failed to comply with subsection (q), subpara-
graph (A) shall be applied by substituting "1.0 percent" for "0.3
percent".
(C) The Secretary shall deposit all fees collected pursuant
to this paragraph into the insurance fund established in sec-
tion 431.
(i) GENERAL CORPORATE POWERS.The Association shall have
power
(1) to sue and be sued, complain and defend, in its cor-
porate name and through its own counsel;
(2) to adopt, alter, and use the corporate seal, which shall
be judicially noticed;
(3) to adopt, amend, and repeal by its Board of Directors,
bylaws, rules, and regulations as may be necessary for the con-
duct of its business;
(4) to conduct its business, carry on its operations, and
have officers and exercise the power granted by this section in
any State without regard to any qualification or similar statute
in any State;
(5) to lease, purchase, or otherwise acquire, own, hold, im-
prove, use, or otherwise deal in and with any property, real,
personal, or mixed, or any interest therein, wherever situated;
277
Sec. 439
HIGHER EDUCATION ACT OF 1965
210
(6) to accept gifts or donations of services, or of property,
real, personal, or mixed, tangible or intangible, in aid of any
of the purposes of the Association;
(7) to sell, convey, mortgage, pledge, lease, exchange, and
otherwise dispose of its property and assets;
(8) to appoint such officers, attorneys, employees, and
agents as may be required, to determine their qualifications, to
define their duties, to fix their salaries, require bonds for them,
and fix the penalty thereof; and
(9) to enter into contracts, to execute instruments, to incur
liabilities, and to do all things as are necessary or incidental
to the proper management of its affairs and the proper conduct
of its business.
(j) ACCOUNTING, AUDITING, AND REPORTING.The accounts of
the Association shall be audited annually. Such audits shall be con-
ducted in accordance with generally accepted auditing standards by
independent certified public accountants or by independent licensed
public accountants, licensed on or before December 31, 1970, who
are certified or licensed by a regulatory authority of a State or
other political subdivision of the United States, except that inde-
pendent public accountants licensed to practice by such regulatory
authority after December 31, 1970, and persons who, although not
so certified or licensed, meet, in the opinion of the Secretary, stand-
ards of education and experience representative of the highest
standards prescribed by the licensing authorities of the several
States which provide for the continuing licensing of public account-
ants and which are prescribed by the Secretary in appropriate reg-
ulations may perform such audits until December 31, 1975. A re-
port of each such audit shall be furnished to the Secretary of the
Treasury. The audit shall be conducted at the place or places where
the accounts are normally kept. The representatives of the Sec-
retary shall have access to all books, accounts, financial records, re-
ports, files, and all other papers, things, or property belonging to
or in use by the Association and necessary to facilitate the audit,
and they shall be afforded full facilities for verifying transactions
with the balances or securities held by depositaries, fiscal agents,
and custodians
(k) REPORT ON AUDITS BY TREASURY.A report of each such
audit for a fiscal year shall be made by the Secretary of the Treas-
ury to the President and to the Congress not later than 6 months
following the close of such fiscal year. The report shall set forth the
scope of the audit and shall include a statement (showing intercor-
porate relations) of assets and liabilities, capital and surplus or def-
icit; a statement of surplus or deficit analysis; a statement of in-
come and expense; a statement of sources and application of funds;
and such comments and information as may be deemed necessary
to keep the President and the Congress informed of the operations
and financial condition of the Association, together with such rec-
ommendations with respect thereto as the Secretary may deem ad-
visable, including a report of any impairment of capital or lack of
sufficient capital noted in the audit. A copy of each report shall be
furnished to the Secretary, and to the Association.
(1) LAWFUL INVESTMENT INSTRUMENTS; EFFECT OF AND EXEMP-
TIONS FROM OTHER LAWS.All obligations issued by the Associa-
2 7 8
271
HIGHER EDUCATION ACT OF 1965
Sec. 439
tion including those made under subsection (d)(4) shall be lawful
investments, and may be accepted as security for all fiduciary,
trust, and public funds, the investment or deposit of which shall be
under authority or control of the United States or of any officer or
officers thereof. All stock and obligations issued by the Association
pursuant to this section shall be deemed to be exempt securities
within the meaning of laws administered by the Securities and Ex-
change Commission, to the same extent as securities which are di-
rect obligations of, or obligations guaranteed as to principal or in-
terest by, the United States. The Association shall, for the purposes
of section 14(b)(2) of the Federal Reserve Act, be deemed to be an
agency of the United States. The obligations of the Association
shall be deemed to be obligations of the United States for the pur-
pose of section 3124 of title 31, United States Code. For the pur-
pose of the distribution of its property pursuant to section 726 of
title 11, United States Code, the Association shall be deemed a per-
son within the meaning of such title. The priority established in
favor of the United States by section 3713 of title 31, United States
Code, shall not establish a priority over the indebtedness of the As-
sociation issued or incurred on or before September 30, 1992. The
Federal Reserve Banks are authorized to act as depositaries,
custodians, or fiscal agents, or a combination thereof, for the Asso-
ciation in the general performance of its powers under this section.
(m) PREPARATION OF OBLIGATIONS.In order to furnish obliga-
tions for delivery by the Association, the Secretary of the Treasury
is authorized to prepare such obligations in such form as the Board
of Directors may approve, such obligations when prepared to be
held in the Treasury subject to delivery upon order by the Associa-
tion. The engraved plates, dies, bed pieces, and so forth, executed
in connection therewith shall remain in the custody of the Sec-
retary of the Treasury. The Association shall reimburse the Sec-
retary of the Treasury for any expenditures made in the prepara-
tion, custody, and delivery of such obligations. The Secretary of the
Treasury is authorized to promulgate regulations on behalf of the
Association so that the Association may utilize the book-entry sys-
tem of the Federal Reserve Banks.
(n) REPORT ON OPERATIONS AND ACTIVITIES.The Association
shall, as soon as practicable after the end of each fiscal year, trans-
mit to the President and the Congress a report of the Association's
operations and activities, including a report with respect to all fa-
cilities transactions, during each year.
(0) LOAN CONSOLIDATIONS.
(1) IN GENERAL. The Association or its designated agent
may, upon request of a borrower, consolidate loans received
under this title in accordance with section 428C.
(2) USE OF EXISTING AGENCIES AS AGENT.The Association
in making loans pursuant to this subsection in any State
served by a guaranty agency or an eligible lender in a State
described in section 435(d)(1) (D) or (F) may designate as its
agent such agency or lender to perform such functions as the
Association determines appropriate. Any agreements made
pursuant to this subparagraph shall be on such terms and con-
ditions as agreed upon by the Association and such agency or
lender.
279
Sec. 439
HIGHER EDUCATION ACT OF .1965
212
(p) ADVANCES FOR DIRECT LOANS BY GUARANTY AGENCIES.
(1) IN GENERAL.The Association shall make advances in
each fiscal year from amounts available to it to each guaranty
agency and eligible lender described in subsection 428(h)(1)
which has an agreement with the Association which sets forth
that advances are necessary to enable such agency or lender to
make student loans in accordance with section 428(h) and that
such advances will be repaid to the Association in accordance
with such terms and conditions as may be set forth in the
agreement and agreed to by the Association and such agency
or lender. Advances made under this subsection shall not be
subject to subsection (d)(2) of this section.
(2) LIMITATION.No advance may be made under this sub-
section unless the guaranty agency or lender makes an applica-
tion to the Association, which shall be accompanied by such in-
formation as the Association determines to be reasonably nec-
essary.
(q) LENDER-OF- LAST - RESORT.
(1) ACTION AT REQUEST OF SECRETARY.(A) Whenever the
Secretary determines that eligible borrowers are seeking and
are unable to obtain loans under this part, the Association or
its designated agent shall, not later than 90 days after the date
of enactment of the Student Loan Reform Act of 1993, begin
making loans to such eligible borrowers in accordance with this
subsection at the request of the Secretary. The Secretary may
request that the Association make loans to borrowers within a
geographic area or for the benefit of students attending institu-
tions of higher education that certify, in accordance with stand-
ards established by the Secretary, that their students are seek-
ing and unable to obtain loans.
(B) Loans made pursuant to this subsection shall be insur-
able by the Secretary under section 429 with a certificate of
comprehensive insurance coverage provided for under section
429(bX1) or by a guaranty agency under paragraph (2)(A) of
this subsection.
(2) ISSUANCE AND COVERAGE OF LOANS.(A) Whenever the
Secretary, after consultation with, and with the agreement of,
representatives of the guaranty agency in a State, or an eligi-
ble lender in a State described in section 435(d)(1)(D), deter-
mines that a substantial portion of eligible borrowers in such
State or within an area of such State are seeking and are un-
able to obtain loans under this part, the Association or its des-
ignated agent shall begin making such loans to borrowers in
such State or within an area of such State in accordance with
this subsection at the request of the Secretary.
(B) Loans made pursuant to this subsection shall be insur-
able by the agency identified in subparagraph (A) having an
agreement pursuant to section 428(b). For loans insured by
such agency, the agency shall provide the Association with a
certificate of comprehensive insurance coverage,, if the Associa-
tion and the agency have mutually agreed upon a means to de-
termine that the agency has not already guaranteed a loan
under this part to a student which would cause a subsequent
2
273
HIGHER EDUCATION ACT OF 1965
Sec. 439
loan made by the Association to be in violation of any provision
under this part.
(3) TERMINATION OF LENDING.The Association or its des-
ignated agent shall cease making loans under this subsection
at such time as the Secretary determines that the conditions
which caused the implementation of this subsection have
ceased to exist.
(r) SAFETY AND SOUNDNESS OF ASSOCIATION.
(1) REPORTS BY THE ASSOCIATION.The Association shall
promptly furnish to the Secretary of Education and Secretary
of the Treasury copies of all
(A) periodic financial reports publicly distributed by
the Association;
(B) reports concerning the Association that are re-
ceived by the Association and prepared by nationally rec-
ognized statistical rating organizations; and
(C)(i) financial statements of the Association within 45
days of the end of each fiscal quarter; and
(ii) reports setting forth the calculation of the capital
ratio of the Association within 45 days of the end of each
fiscal quarter.
(2) AUDIT BY SECRETARY OF THE TREASURY.(A) The Sec-
retary of the Treasury may
(i) appoint auditors or examiners to conduct audits of
the Association from time to time to determine the condi-
tion of the Association for the purpose of assessing the As-
sociation's financial safety and soundness and to determine
whether the requirements of this section and section 440
are being met; and
(ii) obtain the services of such experts as the Secretary
of the Treasury determines necessary and appropriate, as
authorized by section 3109 of title 5, United States Code,
to assist in determining the condition of the Association for
the purpose of assessing the Association's financial safety
and soundness, and to determine whether the require-
ments of this section and section 440 are being met.
(B) Each auditor appointed under this paragraph shall
conduct an audit of the Association to the extent requested by
the Secretary of the Treasury and shall prepare and submit a
report to the Secretary of the Treasury concerning the results
of such audit. A copy of such report shall be furnished to the
Association and the Secretary of Education on the date on
which it is delivered to the Secretary of the Treasury.
(C) The Association shall provide full and prompt access to
the Secretary of the Treasury to its books and records and
other information requested by the Secretary of the Treasury.
(D) ANNUAL ASSESSMENT.
(i) IN GENERAL.For each fiscal year beginning on or
after October 1, 1996, the Secretary of the Treasury may
establish and collect from the Association an assessment
(or assessments) in amounts sufficient to provide for rea-
sonable costs and expenses of carrying out the duties of
the Secretary of the Treasury under this section and sec-
tion 440 during such fiscal year. In no event may the total
Sec. 439
HIGHER EDUCATION ACT OF 1965
214
amount so assessed exceed, for any fiscal year, $800,000,
adjusted for each fiscal year ending after September 30,
1997, by the ratio of the Consumer Price Index for All
Urban Consumers (issued by the Bureau of Labor Statis-
tics) for the final month of the fiscal year preceding the fis-
cal year for which the assessment is made to the Con-
sumer Price Index for All Urban Consumers for September
1997.
(ii) DEPOSIT. Amounts collected from assessments
under this subparagraph shall be deposited in an account
within the Treasury of the United States as designated by
the Secretary of the Treasury for that purpose. The Sec-
retary of the Treasury is authorized and directed to pay
out of any funds available in such account the reasonable
costs and expenses of carrying out the duties of the Sec-
retary of the Treasury under this section and section 440.
None of the funds deposited into such account shall be
available for any purpose other than making payments for
such costs and expenses.
(E) OBLIGATION TO OBTAIN, MAINTAIN, AND REPORT INFOR-
MATION.
(i) IN GENERALThe Association shall obtain such in-
formation and make and keep such records as the Sec-
retary of the Treasury may from time to time prescribe
concerning
(I) the financial risk to the Association resulting
from the activities of any associated person, to the ex-
tent such activities are reasonably likely to have a ma-
terial impact on the financial condition of the Associa-
tion, including the Association's capital ratio, the Asso-
ciation's liquidity, or the Association's ability to con-
duct and finance the Association's operations; and
(II) the Association's policies, procedures, and sys-
tems for monitoring and controlling any such financial
risk.
(ii) SUMMARY REPORTS.The Secretary of the Treasury
may require summary reports of such information to be
filed no more frequently than quarterly. If, as a result of
adverse market conditions or based on reports provided
pursuant to this subparagraph or other available informa-
tion, the Secretary of the Treasury has concerns regarding
the financial or operational condition of the Association,
the Secretary of the Treasury may, notwithstanding the
preceding sentence and clause (i), require the Association
to make reports concerning the activities of any associated
person, whose business activities are reasonably likely to
have a material impact on the financial or operational con-
dition of the Association.
(iii) DEFINITION.For purposes of this subparagraph,
the term "associated person" means any person, other than
a natural person, directly or indirectly controlling, con-
trolled by, or under common control with the Association.
(3) MONITORING OF SAFETY AND SOUNDNESS.The Sec-
retary of the:. Treasury shall conduct such studies as may be
28,
215
HIGHER EDUCATION ACT OF 1965
Sec. 439
necessary to monitor the financial safety and soundness of the
Association. In the event that the Secretary of the Treasury de-
termines that the financial safety and soundness of the Asso-
ciation is at risk, the Secretary of the Treasury shall inform
the Chairman and ranking minority member of the Committee
on Labor and Human Resources of the Senate, the Chairman
and ranking minority member of the Committee on Education
and Labor of the House of Representatives, and the Secretary
of Education of such determination and identify any corrective
actions that should be taken to ensure the safety and sound-
ness of the Association.
(4) CAPITAL STANDARD.-If the capital ratio is less than 2
percent and is greater than or equal to 1.75 percent at the end
of the Association's most recent calendar quarter the Associa-
tion shall, within 60 days of such occurrence, submit to the
Secretary of the Treasury a capital restoration plan, in reason-
able detail, that the Association believes is adequate to cause
the capital ratio to equal or exceed 2 percent within 36 months.
(5) CAPITAL RESTORATION PLAN.-
(A) SUBMISSION, APPROVAL, AND IMPLEMENTATION.-
The Secretary of the Treasury and the Association shall
consult with respect to any capital restoration plan sub-
mitted pursuant to paragraph (4) and the Secretary of the
Treasury shall approve such plan (or a modification there-
of accepted by the Association) or disapprove such plan
within 30 days after such plan is first submitted to the
Secretary of the Treasury by the Association, unless the
Association and Secretary of the Treasury mutually agree
to a longer consideration period. If the Secretary of the
Treasury approves a capital restoration plan (including a
modification of a plan accepted by the Association), the As-
sociation shall forthwith proceed with diligence to imple-
ment such plan to the best of its ability.
(B) DISAPPROVAL.-If the Secretary of the Treasury
does not approve a capital restoration plan as provided in
subparagraph (A), then not later than the earlier of the
date the Secretary of the Treasury disapproves of such
plan by written notice to the Association or the expiration
of the 30-day consideration period referred to in subpara-
graph (A) (as such period may have been extended by mu-
tual agreement), the Secretary of the Treasury shall sub-
mit the Association's capital restoration plan, in the form
most recently proposed to the Secretary of the Treasury by
the Association, together with a report on the Secretary of
the Treasury's reasons for disapproval of such plan and an
alternative capital restoration plan, to the Chairman and
ranking minority member of the Senate Committee on
Labor and Human Resources and to the Chairman and
ranking minority member of the House Committee on Edu-
cation and Labor. A copy of such submission simulta-
neously shall be sent to the Association and the Secretary
of Education by the Secretary of the Treasury.
(C) ASSOCIATION IMPLEMENTATION AND RESPONSE.-
Upon receipt of the submission by the As
ti9n, the As-
%,)
Sec. 439
HIGHER EDUCATION ACT OF 1965
216
sociation shall forthwith proceed with diligence to imple-
ment the most recently proposed capital restoration plan of
the Association. The Association, within 30 days after re-
ceipt from the Secretary of the Treasury of such submis-
sion, shall submit to such Chairmen and ranking minority
members a written response to such submission, setting
out fully the nature and extent of the Association's agree-
ment or the disagreement with the Secretary of the Treas-
ury with respect to the capital restoration plan submitted
to the Secretary of the Treasury and any findings of the
Secretary of the Treasury.
(6) SUBSTANTIAL CAPITAL RATIO REDUCTION.
(A) ADDITIONAL PLAN REQUIRED.-If the capital ratio is
less than 1.75 percent and is greater than or equal to 1
percent at the end of the Association's most recent cal-
endar quarter, the Association shall submit to the Sec-
retary of the Treasury within 60 days after such occur-
rence a capital restoration plan (or an appropriate modi-
fication of any plan previously submitted or approved
under paragraph (4)) to increase promptly its capital ratio
to equal or exceed 1.75 percent. The Secretary of the
Treasury and the Association shall consult with respect to
any plan or modified plan submitted pursuant to this
paragraph. The Secretary of the Treasury shall approve
such plan or modified plan (or a modification thereof ac-
cepted by the Association) or disapprove such plan or
modified plan within 30 days after such plan or modified
plan is first submitted to the Secretary of the Treasury by
the Association, unless the Association and Secretary of
the Treasury mutually agree to a longer consideration pe-
riod. If the Secretary of the Treasury approves a plan or
modified plan (including a modification of a plan accepted
by the Association), the Association shall forthwith proceed
with diligence to implement such plan or modified plan to
the best of the Association's ability.
(B) DISAPPROVAL.-If the Secretary of the Treasury
disapproves a capital restoration plan or modified plan
submitted pursuant to subparagraph (A), then, not later
than the earlier of the date the Secretary of the Treasury
disapproves of such plan or modified plan (by written no-
tice to the Association) or the expiration of the 30-day con-
sideration period described in subparagraph (A) (as such
period may have been extended by mutual agreement), the
Secretary of the Treasury shall prepare and submit an al-
ternative capital restoration plan, together with a report
on his reasons for disapproval of the Association's plan or
modified plan, to the Chairman and ranking minority
member of the Committee on Labor and Human Resources
of the Senate and to the Chairman and ranking minority
member of the Committee on Education and Labor of the
House of Representatives. A copy of such submission si-
multaneously shall be sent to the Association and the Sec-
retary of Education by the Secretary of the Treasury. The
Association, within 5 days after receipt from the Secretary
284
271
HIGHER EDUCATION ACT OF 1965
Sec. 439
of the Treasury of such submission, shall submit to the
Chairmen and ranking minority members of such Commit-
tees, and the Secretary of the Treasury, a written response
to such submission, setting out fully the nature and extent
of the Association's agreement or disagreement with the
Secretary of the Treasury with respect to the disapproved
plan and the alternative plan of the Secretary of the
Treasury and any findings of the Secretary of the Treas-
ury.
(C) REVIEW BY CONGRESS; ASSOCIATION IMPLEMENTA-
TION.Congress shall have 60 legislative days after the
date on which Congress receives the alternative plan
under subparagraph (B) from the Secretary of the Treas-
ury to review such plan. If Congress does not take statu-
tory action with respect to any such plan within such 60-
day period, the Association shall immediately proceed with
diligence to implement the alternative capital restoration
plan of the Secretary of the Treasury under subparagraph
(B). If Congress is out of session when any such alter-
native plan is received, such 60-day period shall begin on
the first day of the next session of Congress.
(7) ACTIONS BY SECRETARY OF THE TREASURY.If the cap-
ital ratio of the Association does not equal or exceed 1.75 per-
cent at the end of the Association's most recent calendar quar-
ter, the Secretary of the Treasury may, until the capital ratio
equals or exceeds 1.75 percent, take any one or more of the fol-
lowing actions:
(A) LIMIT INCREASE IN LIABILITIES.Limit any in-
crease in, or order the reduction of, any liabilities of the
Association, except as necessary to fund student loan pur-
chases and warehousing advances.
(B) RESTRICT GROWTH.Restrict or eliminate growth
of the Association's assets, other than student loans pur-
chases and warehousing advances.
(C) RESTRICT DISTRIBUTIONS.Restrict the Association
from making any capital distribution.
(D) REQUIRE ISSUANCE OF NEW CAPITAL.Require the
Association to issue new capital in any form and in any
amount sufficient to restore at least a 1.75 percent capital
ratio.
(E) LIMIT EXECUTIVE COMPENSATION.Prohibit the As-
sociation from increasing for any executive officer any com-
pensation including bonuses at a rate exceeding that offi-
cer's average rate of compensation during the previous 12
calendar months and prohibiting the Board from adopting
any new employment severance contracts.
(8) CRITICAL CAPITAL STANDARD.(A) If the capital ratio is
less than 1 percent at the end of the Association's most recent
calendar quarter and the Association has already submitted a
capital restoration plan to the Secretary of the Treasury pursu-
ant to paragraph (4) or (6)(A), the Association shall forthwith
proceed with diligence to implement the most recently pro-
posed plan with such modifications as the Secretary of the
28
Sec. 439
HIGHER EDUCATION ACT OF 1965
278
Treasury determines are necessary to cause the capital ratio to
equal or exceed 2 percent within 60 months.
(B) If the capital ratio is less than 1 percent at the end of
the Association's most recent calendar quarter and the Associa-
tion has not submitted a capital restoration plan to the Sec-
retary of the Treasury pursuant to paragraph (4) or (6)(A), the
Association shall
(i) within 14 days of such occurrence submit a capital
restoration plan to the Secretary of the Treasury which the
Association believes is adequate to cause the capital ratio
to equal or exceed 2 percent within 60 months; and
(ii) forthwith proceed with diligence to implement such
plan with such modifications as the Secretary of the Treas-
ury determines are necessary to cause the capital ratio to
equal or exceed 2 percent within 60 months.
(C) Immediately upon a determination under subpara-
graph (A) or (B) to implement a capital restoration plan, the
Secretary of the Treasury shall submit the capital restoration
plan to be implemented to the Chairman and ranking minority
member of the Committee on Labor and Human Resources of
the Senate, the Chairman and ranking minority member of the
Committee on Education and Labor of the House of Represent-
atives, and the Secretary of Education.
(9) ADDITIONAL REPORTS TO COMMITTEES.The Association
shall submit a copy of its capital restoration plan, modifica-
tions proposed to the Secretary of the Treasury, and proposed
modifications received from the Secretary of the Treasury to
the Congressional Budget Office and General Accounting Office
upon their submission to the Secretary of the Treasury or re-
ceipt from the Secretary of the Treasury. Notwithstanding any
other provision of law, the Congressional Budget Office and
General Accounting Office shall maintain the confidentiality of
information received pursuant to the previous sentence. In the
event that the Secretary of the Treasury does not approve a
capital restoration plan as provided in paragraph (5)(A) or
(6)(A), or in the event that a capital restoration plan is modi-
fied by the Secretary of the Treasury pursuant to paragraph
(6)(B) or (8), the Congressional Budget Office and General Ac-
counting Office shall each submit a report within 30 days of
the Secretary of the Treasury's submission to the Chairmen
and ranking minority members as required in paragraphs
(5)(B), (6)(B), and (8)(C) to such Chairmen and ranking
members
(A) analyzing the financial condition of the Associa-
tion;(B) analyzing the capital restoration plan and reasons
for disapproval of the plan contained in the Secretary of
the Treasury's submission made pursuant to paragraph
(5X13), or the capital restoration plan proposed by the As-
sociation and the modifications made by the Secretary of
the Treasury pursuant to paragraph (6)(B) or (8);
(C) analyzing the impact of the capital restoration
plan and reasons for disapproval of the plan contained in
the Secretary of the Treasury's submission made pursuant
2 86
219
HIGHER EDUCATION ACT OF 1965
Sec. 439
to paragraph (5)(B), or the impact of the capital restoration
plan proposed by the Association and the modifications
made by the Secretary of the Treasury pursuant to para-
graph (6)(B) or (8), and analyzing the impact of the rec-
ommendations made pursuant to subparagraph (D) of this
paragraph, on
(i) the ability of the Association to fulfill its pur-
pose and authorized activities as provided in this sec-
tion, and
(ii) the operation of the student loan programs;
and
(D) recommending steps which the Association should
take to increase its capital ratio without impairing its abil-
ity to perform its purpose and authorized activities as pro-
vided in this section.
(10) REVIEW BY SECRETARY OF EDUCATION.The Secretary
of Education shall review the Secretary of the Treasury's sub-
mission required pursuant to paragraph (5)(B), (6)(B), or (8)
and shall submit a report within 30 days to the Chairman and
ranking minority member of the Senate Committee on Labor
and Human Resources and to the Chairman and ranking mi-
nority member of the House Committee on Education and
Labor
(A) describing any administrative or legislative provi-
sions governing the student loan programs which contrib-
uted to the decline in the Association's capital ratio; and
(B)
recommending administrative
and
legislative
changes in the student loan programs to maintain the or-
derly operation of such programs and to enable the Asso-
ciation to fulfill its purpose and authorized activities con-
sistent with the capital ratio specified in paragraph (4).
(11) SAFE HARBOR.The Association shall be deemed in
compliance with the capital ratios described in paragraphs (4)
and (6)(A) if the Association is rated in 1 of the 2 highest full
rating categories (such categories to be determined without re-
gard to designations within categories) by 2 nationally recog-
nized statistical rating organizations, determined without re-
gard to the Association's status as a federally chartered cor-
poration.
(12) TREATMENT OF CONFIDENTIAL INFORMATION.Not-
withstanding any other provision of law, the Secretary of the
Treasury, the Secretary of Education, the Congressional Budg-
et Office, and the General Accounting Office shall not disclose
any information treated as confidential by the Association or
the Association's associated persons and obtained pursuant to
this subsection. Nothing in this paragraph shall authorize the
Secretary of the Treasury, the Secretary of Education, the Con-
gressional Budget Office, and the General Accounting Office to
withhold information from Congress, or prevent the Secretary
of Education, the Congressional Budget Office, and the General
Accounting Office from complying with a request for informa-
tion from any other Federal department or agency requesting
the information for purposes within the scope of its jurisdic-
tion, or complying with an order of a court of the United States
287
Sec. 439
HIGHER EDUCATION ACT OF 1965
280
in an action brought by the United States. For purposes of sec-
tion 552 of title 5, United States Code, this paragraph shall be
considered a statute described in subsection (b)(3) of such sec-
tion 552.
(13) ENFORCEMENT OF SAFETY AND SOUNDNESS REQUIRE-
MENTS.The Secretary of Education or the Secretary of the
Treasury, as appropriate, may request that the Attorney Gen-
eral bring an action in the United States District Court for the
District of Columbia for the enforcement of any provision of
this section, or may, under the direction or control of the Attor-
ney General, bring such an action. Such court shall have juris-
diction and power to order and require compliance with this
section.
(14) ACTIONS BY SECRETARY.
(A) IN GENERAL.For any fiscal quarter ending after
January 1, 2000, the Association shall have a capital ratio
of at least 2.25 percent. The Secretary of the Treasury
may, whenever such capital ratio is not met, take any one
or more of the actions described in paragraph (7), except
that (i) the capital ratio to be restored pursuant to
paragraph (7)(D) shall be 2.25 percent; and
(ii) if the relevant capital ratio is in excess of or
equal to 2 percent for such quarter, the Secretary of
the Treasury shall defer taking any of the actions set
forth in paragraph (7) until the next succeeding quar-
ter and may then proceed with any such action only
if the capital ratio of the. Association remains below
2.25 percent.
(B) APPLICABILITY.The provisions of paragraphs (4),
(5), (6), (8), (9), (10), and (11) shall be of no further applica-
tion to the Association for any period after January 1,
2000.
(15) DEFINITIONS. As used in this subsection:
(A) The term "nationally recognized statistical rating
organization" means any entity recognized as such by the
Securities and Exchange Commission.
(B) The term "capital ratio" means the ratio of total
stockholders' equity, as shown on the Association's most
recent quarterly consolidated balance sheet prepared in
the ordinary course of its business, to the sum of
(i) the total assets of the Association, as shown on
the balance sheet prepared in the ordinary course of
its business; and
(ii) 50 percent of the credit equivalent amount of
the following off-balance sheet items of the Association
as of the date of such balance sheet
(I) all financial standby letters of credit and
other irrevocable guarantees of the repayment of
financial obligations of others; and
(II) all interest rate contracts and exchange
rate contracts, including interest exchange agree-
ments, floor, cap, and collar agreements and simi-
lar arrangements.
288
281
HIGHER EDUCATION ACT OF 1965
Sec. 439
For purposes of this subparagraph, the calculation of the
credit equivalent amount of the items set forth in clause
(ii) of this subparagraph, the netting of such items and
eliminations for the purpose of avoidance of double-count-
ing of such items shall be made in accordance with the
measures for computing credit conversion factors for off-
balance sheet items for capital maintenance purposes es-
tablished for commercial banks from time to time by the
Federal Reserve Board, but without regard to any risk
weighting provisions in such measures.
(C) The term "legislative days" means only days on
which either House of Congress is in session.
(16) DIVIDENDS.The Association may pay dividends in
the form of cash or noncash distributions so long as at the time
of the declaration of such dividends, after giving effect to the
payment of such dividends as of the date of such declaration
by the Board of Directors of the Association, the Association's
capital would be in compliance with the capital standards set
forth in this section.
(17) CERTIFICATION PRIOR TO PAYMENT OF DIVIDEND.Prior
to the payment of any dividend .under paragraph (16), the As-
sociation shall certify to the Secretary of the Treasury that the
payment of the dividend will be made in compliance with para-
graph (16) and shall provide copies of all calculations needed
to make such certification.
(S) CHARTER SUNSET.
(1) APPLICATION OF PROVISIONS.This subsection applies
beginning 18 months and one day after the date of enactment
of this subsection if no reorganization of the Association occurs
in accordance with the provisions of section 440.
(2) SUNSET PLAN.
(A) PLAN SUBMISSION BY THE ASSOCIATION.Not later
than July 1, 2007, the Association shall submit to the Sec-
retary of the Treasury and to the Chairman and Ranking
Member of the Committee on Labor and Human Resources
of the Senate and the Chairman and Ranking Member of
the Committee on Economic and Educational Opportuni-
ties of the House of Representatives, a detailed plan for
the orderly winding up, by July 1, 2013, of business activi-
ties conducted pursuant to the charter set forth in this sec-
tion. Such plan shall
(i) ensure that the Association will have adequate
assets to transfer to a trust, as provided in this sub-
section, to ensure full payment of remaining obliga-
tions of the Association in accordance with the terms
of such obligations;
(ii) provide that all assets not used to pay liabil-
ities shall be distributed to shareholders as provided
in this subsection; and
(iii) provide that the operations of the Association
shall remain separate and distinct from that of any
entity to which the assets of the Association are trans-
ferred.
Z83
54-653 99 -10
Sec. 439
HIGHER EDUCATION ACT OF 1965
282
(B) AMENDMENT OF THE PLAN BY THE ASSOCIATION.
The Association shall from time to time amend such plan
to reflect changed circumstances, and submit such amend-
ments to the Secretary of the Treasury and to the Chair-
man and Ranking Minority Member of the Committee on
Labor and Human Resources of the Senate and Chairman
and Ranking Minority Member of the Committee on Eco-
nomic and Educational Opportunities of the House of Rep-
resentatives. In no case may any amendment extend the
date for full implementation of the plan beyond the dis-
solution date provided in paragraph (3).
(C) PLAN MONITORING.The Secretary of the Treasury
shall monitor the Association's compliance with the plan
and shall continue to review the plan (including any
amendments thereto).
(D) AMENDMENT OF THE PLAN BY THE SECRETARY OF
THE TREASURY.The Secretary of the Treasury may re-
quire the Association to amend the plan (including any
amendments to the plan), if the Secretary of the Treasury
deems such amendments necessary to ensure full payment
of all obligations of the Association.
(E) IMPLEMENTATION BY THE ASSOCIATION.The Asso-
ciation shall promptly implement the plan (including any
amendments to the plan, whether such amendments are
made by the Association or are required to be made by the
Secretary of the Treasury).
(3) DISSOLUTION OF THE ASSOCIATION.The Association
shall dissolve and the Association's separate existence shall
terminate on July 1, 2013, after discharge of all outstanding
debt obligations and liquidation pursuant to this subsection.
The Association may dissolve pursuant to this subsection prior
to such date by notifying the Secretary of Education and the
Secretary of the Treasury of the Association's intention to dis-
solve, unless within 60 days of receipt of such notice the Sec-
retary of Education notifies the Association that the Associa-
tion continues to be needed to serve as a lender of last resort
pursuant to subsection (q) or continues to be needed to pur-
chase loans under an agreement with the Secretary described
in paragraph (4)(A). On the dissolution date, the Association
shall take the following actions:
(A) ESTABLISHMENT OF A TRUST.The Association
shall, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Secretary of the
Treasury, the Association, and the appointed trustee, ir-
revocably transfer all remaining obligations of the Associa-
tion to a trust and irrevocably deposit or cause to be depos-
ited into such trust, to be held as trust funds solely for the
benefit of holders of the remaining obligations, money or
direct noncallable obligations of the United States or any
agency thereof for which payment the full faith and credit
of the United States is pledged, maturing as to principal
and interest in such amounts and at such times as are de-
termined by the Secretary of the Treasury to be sufficient,
without consideration of any significant reinvestment of
23 0
283
HIGHER EDUCATION ACT OF 1965
Sec. 439
such interest, to pay the principal of, and interest on, the
remaining obligations in accordance with their terms.
(B) USE OF TRUST ASSETS.All money, obligations, or
financial assets deposited into the trust pursuant to this
subsection shall be applied by the trustee to the payment
of the remaining obligations assumed by the trust. Upon
the fulfillment of the trustee's duties under the trust, any
remaining assets of the trust shall be transferred to the
persons who, at the time of the dissolution, were the
shareholders of the Association, or to the legal successors
or assigns of such persons.
(C) OBLIGATIONS NOT TRANSFERRED TO THE TRUST.
The Association shall make proper provision for all other
obligations of the Association, including the repurchase or
redemption, or the making of proper provision for the re-
purchase or redemption, of any preferred stock of the Asso-
ciation outstanding.
(D) TRANSFER OF REMAINING ASSETS.After compli-
ance with subparagraphs (A) and (C), the Association shall
transfer to the shareholders of the Association any remain-
ing assets of the Association.
(4) RESTRICTIONS RELATING TO WINDING UP.
(A) RESTRICTIONS ON NEW BUSINESS ACTIVITY OR AC-
QUISITION OF ASSETS BY THE ASSOCIATION.
(i) IN GENERAL.Beginning on July 1, 2009, the
Association shall not engage in any new business ac-
tivities or acquire any additional program assets (in-
cluding acquiring assets pursuant to contractual com-
mitments) described in subsection (d) other than in
connection with the Association
(I) serving as a lender of last resort pursuant
to subsection (q); and
(II) purchasing loans insured under this part,
if the Secretary, with the approval of the Sec-
retary of the Treasury, enters into an agreement
with the Association for the continuation or re-
sumption of the Association's secondary market
purchase program because the Secretary deter-
mines there is inadequate liquidity for loans made
under this part.
(ii) AGREEMENT.The Secretary is authorized to
enter into an agreement described in subclause (II) of
clause (i) with the Association covering such secondary
market activities. Any agreement entered into under
such subclause shall cover a period of 12 months, but
may be renewed if the Secretary determines that li-
quidity remains inadequate. The fee provided under
subsection (h)(7) shall not apply to loans acquired
under any such agreement with the Secretary.
(B) ISSUANCE OF DEBT OBLIGATIONS DURING THE WIND
UP PERIOD; ATTRIBUTES OF DEBT OBLIGATIONS.The Asso-
ciation shall not issue debt obligations which mature later
than July 1, 2013, except in connection with serving as a
lender of last resort pursuant to subsection (q) or with pur-
29 I
Sec. 440
HIGHER EDUCATION ACT OF 1965
284
chasing loans under an agreement with the Secretary as
described in subparagraph (A). Nothing in this subsection
shall modify the attributes accorded the debt obligations of
the Association by this section, regardless of whether such
debt obligations are transferred to a trust in accordance
with paragraph (3).
(C) USE OF ASSOCIATION NAME.The Association may
not transfer or permit the use of the name "Student Loan
Marketing Association", "Sallie Mae", or any variation
thereof, to or by any entity other than a subsidiary of the
Association.
SEC. 440.1 REORGANIZATION OF THE STUDENT LOAN MARKETING AS-
SOCIATION THROUGH THE FORMATION OF A HOLDING
COMPANY.
(a) ACTIONS BY THE ASSOCIATION'S BOARD OF DIRECTORS.The
Board of Directors of the Association shall take or cause to be
taken all such action as the Board of Directors deems necessary or
appropriate to effect, upon the shareholder approval described in
subsection (b), a restructuring of the common stock ownership of
the Association, as set forth in a plan of reorganization adopted by
the Board of Directors (the terms of which shall be consistent with
this section) so that all of the outstanding common shares of the
Association shall be directly owned by a Holding Company. Such
actions may include, in the Board of Director's discretion, a merger
of a wholly owned subsidiary of the Holding Company with and
into the Association, which would have the effect provided in the
plan of reorganization and the law of the jurisdiction in which such
subsidiary is incorporated. As part of the restructuring, the Board
of Directors may cause
(1) the common shares of the Association to be converted,
on the reorganization effective date, to common shares of the
Holding Company on a one for one basis, consistent with appli-
cable State or District of Columbia law; and
(2) Holding Company common shares to be registered with
the Securities and Exchange Commission.
(b) SHAREHOLDER APPROVALThe plan of reorganization
adopted by the Board of Directors pursuant to subsection (a) shall
be submitted to common shareholders of the Association for their
approval. The reorganization shall occur on the reorganization ef-
fective date, provided that the plan of reorganization has been ap-
proved by the affirmative votes, cast in person or by proxy, of the
holders of a majority of the issued and outstanding shares of the
Association common stock.
(c) TRANSITION.In the event the shareholders of the Associa-
tion approve the plan of reorganization under subsection (b), the
following provisions shall apply beginning on the reorganization ef-
fective date:
(1) IN GENERAL.Except as specifically provided in this
section, until the dissolution date the Association shall con-
tinue to have all of the rights, privileges and obligations set
forth in, and shall be subject to all of the limitations and re-
strictions of, section 439, and the Association shall continue to
'See footnote for section 439 above.
29 2
285
HIGHER EDUCATION ACT OF 1965
Sec. 440
carry out the purposes of such section. The Holding Company
and any subsidiary of the Holding Company (other than the
Association) shall not be entitled to any of the rights, privi-
leges, and obligations, and shall not be subject to the limita-
tions and restrictions, applicable to the Association under sec-
tion 439, except as specifically provided in this section. The
Holding Company and any subsidiary of the Holding Company
(other than the Association or a subsidiary of the Association)
shall not purchase loans insured under this Act until such time
as the Association ceases acquiring such loans, except that the
Holding Company may purchase such loans if the Association
is merely continuing to acquire loans as a lender of last resort
pursuant to section 439(q) or under an agreement with the
Secretary described in paragraph (6).
(2) TRANSFER OF CERTAIN PROPERTY.
(A) IN GENERALExcept as provided in this section,
on the reorganization effective date or as soon as prac-
ticable thereafter, the Association shall use the Associa-
tion's best efforts to transfer to the Holding Company or
any subsidiary of the Holding Company (or both), as di-
rected by the Holding Company, all real and personal
property of the Association (both tangible and intangible)
other than the remaining property. Subject to the preced-
ing sentence, such transferred property shall include all
right, title, and interest in
(i) direct or indirect subsidiaries of the Association
(excluding special purpose funding companies in exist-
ence on the date of enactment of this section and any
interest in any government-sponsored enterprise);
(ii) contracts, leases, and other agreements of the
Association;
(iii) licenses and other intellectual property of the
Association; and
(iv) any other property of the Association.
(B) CONSTRUCTION.Nothing in this paragraph shall
be construed to prohibit the Association from transferring
remaining property from time to time to the Holding Com-
pany or any subsidiary of the Holding Company, subject to
the provisions of paragraph (4).
(3) TRANSFER OF PERSONNEL.On the reorganization effec-
tive date, employees of the Association shall become employees
of the Holding Company (or any subsidiary of the Holding
Company), and the Holding Company (or any subsidiary of the
Holding Company) shall provide all necessary and appropriate
management and operational support (including loan servicing)
to the Association, as requested by the Association. The Asso-
ciation, however, may obtain such management and oper-
ational support from persons or entities not associated with the
Holding Company.
(4) DIVIDENDS.The Association may pay dividends in the
form of cash or noncash distributions so long as at the time of
the declaration of such dividends, after giving effect to the pay-
ment of such dividends as of the date of such declaration by
the Board of Directors of the Association, the Association's cap-
293
Sec. 440
HIGHER EDUCATION ACT OF 1965
286
ital would be in compliance with the capital standards and re-
quirements set forth in section 439(r). If, at any time after the
reorganization effective date, the Association fails to comply
with such capital standards, the Holding Company shall trans-
fer with due diligence to the Association additional capital in
such amounts as are necessary to ensure that the Association
again complies with the capital standards.
(5) CERTIFICATION PRIOR TO DIVIDEND.Prior to the pay-
ment of any dividend under paragraph (4), the Association
shall certify to the Secretary of the Treasury that the payment
of the dividend will be made in compliance with paragraph (4)
and shall provide copies of all calculations needed to make
such certification.
(6) RESTRICTIONS ON NEW BUSINESS ACTIVITY OR ACQUISI-
TION OF ASSETS BY ASSOCIATION.
(A) IN GENERAL.After the reorganization effective
date, the Association shall not engage in any new business
activities or acquire any additional program assets de-
scribed in section 439(d) other than in connection with
(i) student loan purchases through September 30,
2007;
(ii)
contractual
commitments
for
future
warehousing advances, or pursuant to letters of credit
or standby bond purchase agreements, which are out-
standing as of the reorganization effective date;
(iii) the Association serving as a lender-of-last-re-
sort pursuant to section 439(q); and
(iv) the Association's purchase of loans insured
under this part, if the Secretary, with the approval of
the Secretary of the Treasury, enters into an agree-
ment with the Association for the continuation or re-
sumption of the Association's secondary market pur-
chase program because the Secretary determines there
is inadequate liquidity for loans made under this part.
(B) AGREEMENT.The Secretary is authorized to enter
into an agreement described in clause (iv) of subparagraph
(A) with the Association covering such secondary market
activities. Any agreement entered into under such clause
shall cover a period of 12 months, but may be renewed if
the Secretary determines that liquidity remains inad-
equate. The fee provided under section 439(h)(7) shall not
apply to loans acquired under any such agreement with
the Secretary.
(7) ISSUANCE OF DEBT OBLIGATIONS DURING THE TRANSI-
TION PERIOD; ATTRIBUTES OF DEBT OBLIGATIONS.After the re-
organization effective date, the Association shall not issue debt
obligations which mature later than September 30, 2008, ex-
cept in connection with serving as a lender-of-last-resort pursu-
ant to section 439(q) or with purchasing loans under an agree-
ment with the Secretary as described in paragraph (6). Noth-
ing in this section shall modify the attributes accorded the debt
obligations of the Association by section 439, regardless of
whether such debt obligations are incurred prior to, or at any
294
281
HIGHER EDUCATION ACT OF 1965
Sec. 440
time following, the reorganization effective date or are trans-
ferred to a trust in accordance with subsection (d).
(8) MONITORING OF SAFETY AND SOUNDNESS.
(A) OBLIGATION TO OBTAIN, MAINTAIN, AND REPORT IN-
FORMATION.The Association shall obtain such informa-
tion and make and keep such records as the Secretary of
the
Treasury
may
from
time
to
time
prescribe
concerning
(i) the financial risk to the Association resulting
from the activities of any associated person, to the ex-
tent such activities are reasonably likely to have a ma-
terial impact on the financial condition of the Associa-
tion, including the Association's capital ratio, the Asso-
ciation's liquidity, or the Association's ability to con-
duct and finance the Association's operations; and
(ii) the Association's policies, procedures, and sys-
tems for monitoring and controlling any such financial
risk.
(B) SUMMARY REPORTS.The Secretary of the Treas-
ury may require summary reports of the information de-
scribed in subparagraph (A) to be filed no more frequently
than quarterly. If, as a result of adverse market conditions
or based on reports provided pursuant to this subpara-
graph or other available information, the Secretary of the
Treasury has concerns regarding the financial or oper-
ational condition of the Association, the Secretary of the
Treasury may, notwithstanding the preceding sentence
and subparagraph (A), require the Association to make re-
ports concerning the activities of any associated person
whose business activities are reasonably likely to have a
material impact on the financial or operational condition of
the Association.
(C) SEPARATE OPERATION OF CORPORATIONS.
(i) IN GENERAL.The funds and assets of the As-
sociation shall at all times be maintained separately
from the funds and assets of the Holding Company or
any subsidiary of the Holding Company and may be
used by the Association solely to carry out the Associa-
tion's purposes and to fulfill the Association's obliga-
tions.
(ii) BOOKS AND RECORDS.The Association shall
maintain books and records that clearly reflect the as-
sets and liabilities of the Association, separate from
the assets and liabilities of the Holding Company or
any subsidiary of the Holding Company.
(iii) CORPORATE OFFICE.The Association shall
maintain a corporate office that is physically separate
from any office of the_ Holding Company or any sub-
sidiary of the Holding Company.
(iv) DIRECTOR.No director of the Association who
is appointed by the President, pursuant to section
439(c)(1)(A) may serve -.as a. director of the Holding
Company.
295
Sec. 440
HIGHER EDUCATION ACT OF 1965
288
(v) ONE OFFICER REQUIREMENT.At least one offi-
cer of the Association shall be an officer solely of the
Association.
(vi) TRANSACTIONS.Transactions between the As-
sociation and the Holding Company or any subsidiary
of the Holding Company, including any loan servicing
arrangements, shall be on terms no less favorable to
the Association than the Association could obtain from
an unrelated third party offering comparable services.
(vii) CREDIT PROHIBITION.The Association shall
not extend credit to the Holding Company or any sub-
sidiary of the Holding Company nor guarantee or pro-
vide any credit enhancement to any debt obligations of
the Holding Company or any subsidiary of the Holding
Company.
(viii) AMOUNTS COLLECTED.Any amounts col-
lected on behalf of the Association by the Holding
Company or any subsidiary of the Holding Company
with respect to the assets of the Association, pursuant
to a servicing contract or other arrangement between
the Association and the Holding Company or any sub-
sidiary of the Holding Company, shall be collected
solely for the benefit of the Association and shall be
immediately deposited by the Holding Company or
such subsidiary to an account under the sole control of
the Association.
_
(D) ENCUMBRANCE OF ASSETS.Notwithstanding any
Federal or State law, rule, or regulation, or legal or equi-
table principle, doctrine, or theory to the contrary, under
no circumstances shall the assets of the Association be
available or used to pay claims or debts of or incurred by
the Holding Company. Nothing in this subparagraph shall
be construed to limit the right of the Association to pay
dividends not otherwise prohibited under this subpara-
graph or to limit any liability of the Holding Company ex-
plicitly provided for in this section.
(E) HOLDING COMPANY ACTIVITIES.After the reorga-
nization effective date and prior to the dissolution date, all
business activities of the Holding Company shall be con-
ducted through subsidiaries of the Holding Company.
(F) CONFIDENTIALITY.Any information provided by
the Association pursuant to this section shall be subject to
the same confidentiality obligations contained in section
439(0(12).
(G) DEFINITION.For purposes of this paragraph, the
term associated person" means any person, other than a
natural person, who is directly or indirectly controlling,
controlled by, or under common control with, the Associa-
tion.
(9) ISSUANCE OF STOCK WARRANTS.
(A) IN GENERAL.On the reorganization effective date,
the Holding Company shall issue to the District of Colum-
bia Financial Responsibility and Management Assistance
Authority a number of stock warrants that is equal to one
296
289
HIGHER EDUCATION ACT OF 1965
Sec. 440
percent of the outstanding shares of the Association, deter-
mined as of the last day of the fiscal quarter preceding the
date of enactment of this section, with each stock warrant
entitling the holder of the stock warrant to purchase from
the Holding Company one share of the registered common
stock of the Holding Company or the Holding Company's
successors or assigns, at any time on or before September
30, 2008. The exercise price for such warrants shall be an
amount equal to the average closing price of the common
stock of the Association for the 20 business days prior to
the date of enactment of this section on the exchange or
market which is then the primary exchange or market for
the common stock of the Association. The number of
shares of Holding Company common stock subject to each
stock warrant and the exercise price of each stock warrant
shall be adjusted as necessary to reflect
(i) the conversion of Association common stock
into Holding Company common stock as part of the
plan of reorganization approved by the Association's
shareholders; and
(ii) any issuance or sale of stock (including
issuance or sale of treasury stock), stock split, recapi-
talization, reorganization, or other corporate event, if
agreed to by the Secretary of the Treasury and the As-
sociation.
(B) AUTHORITY TO SELL OR EXERCISE STOCK WARRANTS;
DEPOSIT OF PROCEEDS.The District of Columbia Financial
Responsibility and Management Assistance Authority is
authorized to sell or exercise the stock warrants described
in subparagraph (A). The District of Columbia Financial
Responsibility and Management Assistance Authority shall
deposit into the account established under section 3(e) of
the Student Loan Marketing Association Reorganization
Act of 1996 amounts collected from the sale and proceeds
resulting from the exercise of the stock warrants pursuant
to this subparagraph.
(10) RESTRICTIONS ON TRANSFER OF ASSOCIATION SHARES
AND BANKRUPTCY OF ASSOCIATION.After the reorganization ef-
fective date, the Holding Company shall not sell, pledge, or
otherwise transfer the outstanding shares of the Association,
or agree to or cause the liquidation of the Association or cause
the Association to file a petition for bankruptcy under title 11,
United States Code, without prior approval of the Secretary of
the Treasury and the Secretary of Education.
(d) TERMINATION OF THE ASSOCIATION.In the event the share-
holders of the Association approve a plan of reorganization under
subsection (b), the Association shall dissolve, and the Association's
separate existence shall terminate on September 30, 2008, after
discharge of all outstanding debt obligations and liquidation pursu-
ant to this subsection. The Association may dissolve pursuant to
this subsection prior to such date by notifying the Secretary of
Education and the Secretary of the Treasury of the Association's in-
tention to dissolve, unless within 60 days after receipt of such no-
tice the Secretary of Education notifies the Association that the As-
297
Sec. 440
HIGHER EDUCATION ACT OF 1965
290
sociation continues to be needed to serve as a lender of last resort
pursuant to section 439(q) or continues to be needed to purchase
loans under an agreement with the Secretary described in sub-
section (c)(6). On the dissolution date, the Association shall take
the following actions:
(1) ESTABLISHMENT OF A TRUST.The Association shall,
under the terms of an irrevocable trust agreement that is in
form and substance satisfactory to the Secretary of the Treas-
ury, the Association and the appointed trustee, irrevocably
transfer all remaining obligations of the Association to the
trust and irrevocably deposit or cause to be deposited into such
trust, to be held as trust funds solely for the benefit of holders
of the remaining obligations, money or direct noncallable obli-
gations of the United States or any agency thereof for which
payment the full faith and credit of the United States is
pledged, maturing as to principal and interest in such amounts
and at such times as are determined by the Secretary of the
Treasury to be sufficient, without consideration of any signifi-
cant reinvestment of such interest, to pay the principal of, and
interest on, the remaining obligations in accordance with their
terms. To the extent the Association cannot provide money or
qualifying obligations in the amount required, the Holding
Company shall be required to transfer money or qualifying ob-
ligations to the trust in the amount necessary to prevent any
deficiency.
(2) USE OF TRUST ASSETS.All money, obligations, or fi-
nancial assets deposited into the trust pursuant to this sub-
section shall be applied by the trustee to the payment of the
remaining obligations assumed by the trust.
(3) OBLIGATIONS NOT TRANSFERRED TO THE TRUST.The
Association shall make proper provision for all other obliga-
tions of the Association not transferred to the trust, including
the repurchase or redemption, or the making of proper provi-
sion for the repurchase or redemption, of any preferred stock
of the Association outstanding. Any obligations of the Associa-
tion which cannot be fully satisfied shall become liabilities of
the Holding Company as of the date of dissolution.
(4) TRANSFER OF REMAINING ASSETS.After compliance
with paragraphs (1) and (3), any remaining assets of the trust
shall be transferred to the Holding Company or any subsidiary
of the Holding Company, as directed by the Holding Company.
(e) OPERATION OF THE HOLDING COMPANY.In the event the
shareholders of the Association approve the plan of reorganization
under subsection (b), the following provisions shall apply beginning
on the reorganization effective date:
(1) HOLDING COMPANY BOARD OF DIRECTORS.The number
of members and composition of the Board of Directors of the
Holding Company shall be determined as set forth in the Hold-
ing Company's charter or like instrument (as amended from
time to time) or bylaws (as amended from time to time) and
as permitted under the laws of the jurisdiction of the Holding
Company's incorporation.
298
291
HIGHER EDUCATION ACT OF 1965
Sec. 440
(2) HOLDING COMPANY NAME. The names of the Holding
Company and any subsidiary of the Holding Company (other
than the Association)
(A) may not contain the name "Student Loan Market-
ing Association "; and
(B) may contain, to the extent permitted by applicable
State or District of Columbia law, "Sallie Mae" or vari-
ations thereof, or such other names as the Board of Direc-
tors of the Association or the Holding Company deems ap-
propriate.
(3) USE OF SALLIE MAE NAME.Subject to paragraph (2),
the Association may assign to the Holding Company, or any
subsidiary of the Holding Company, the "Sallie Mae" name as
a trademark or service mark, except that neither the Holding
Company nor any subsidiary of the Holding Company (other
than the Association or any subsidiary of the Association) may
use the "Sallie Mae" name on, or to identify the issuer of, any
debt obligation or other security offered or sold by the Holding
Company or any subsidiary of the Holding Company (other
than a debt obligation or other security issued to and held by
the Holding Company or any subsidiary of the Holding Com-
pany). The Association shall remit to the account established
under section 3(e) of the Student Loan Marketing Association
Reorganization Act of 1996, $5,000,000, within 60 days of the
reorganization effective date as compensation for the right to
assign the "Sallie Mae" name as a trademark or service mark.
(4) DISCLOSURE REQUIRED.Until 3 years after the dissolu-
tion date, the Holding Company, and any subsidiary of the
Holding Company (other than the Association), shall promi-
nently display
(A) in any document offering the Holding Company's
securities, a statement that the obligations of the Holding
Company and any subsidiary of the Holding Company are
not guaranteed by the full faith and credit of the United
States; and
(B) in any advertisement or promotional materials
which use the "Sallie Mae" name or mark, a statement
that neither the Holding Company nor any subsidiary of
the Holding Company is a government-sponsored enter-
prise or instrumentality of the United States.
(f) STRICT CONSTRUCTION.Except as specifically set forth in
this section, nothing in this section shall be construed to limit the
authority of the Association as a federally chartered corporation, or
of the Holding Company as a State or District of Columbia char-
tered corporation.
(g) RIGHT To ENFORCE.The Secretary of Education or the
Secretary of the Treasury, as appropriate, may request that the At-
torney General bring an action in the United States District Court
for the District of Columbia for the enforcement of any provision
of this section, or may, under the direction or control of the Attor-
ney General, bring such an action. Such court shall have jurisdic-
tion and power to order and require compliance with this section.
(h) DEADLINE FOR REORGANIZATION EFFECTIVE DATE.This
section shall be of no further force and effect in the event that the
2 93
Sec. 440
HIGHER EDUCATION ACT OF 1965
292
reorganization effective date does not occur on or before 18 months
after the date of enactment of this section.
(i) DEFINITIONS.For purposes of this section:
(1) ASSOCIATION.The term "Association" means the Stu-
dent Loan Marketing Association.
(2) DissoLunoN DATE.The term "dissolution date" means
September 30, 2008, or such earlier date as the Secretary of
Education permits the transfer of remaining obligations in ac-
cordance with subsection (d).
(3) HOLDING COMPANY.The term "Holding Company"
means the new business corporation established pursuant to
this section by the Association under the laws of any State of
the United States or the District of Columbia for the purposes
of the reorganization and restructuring described in subsection
(a).
(4) REMAINING OBLIGATIONS.The term "remaining obliga-
tions" means the debt obligations of the Association outstand-
ing as of the dissolution date.
(5) REMAINING PROPERTY.The term "remaining property"
means the following assets and liabilities of the Association
which are outstanding as of the reorganization effective date:
(A) Debt obligations issued by the Association.
(B) Contracts relating to interest rate, currency, or
commodity positions or protections.
(C) Investment securities owned by the Association.
(D) Any instruments, assets, or agreements described
in section 439(d) (including, without limitation, all student
loans and agreements relating to the purchase and sale of
student loans, forward purchase and lending commit-
ments, warehousing advances, academic facilities obliga-
tions, letters of credit, standby bond purchase agreements,
liquidity agreements, and student loan revenue bonds or
other loans).
(E) Except as specifically prohibited by this section or
section 439, any other nonmaterial assets or liabilities of
the Association which the Association's Board of Directors
determines to be necessary or appropriate to the Associa-
tion's operations.
(6) REORGANIZATION.The term "reorganization' means
the restructuring event or events (including any merger event)
giving effect to the Holding Company structure described in
subsection (a).
(7) REORGANIZATION EFFECTIVE DATE.The term "reorga-
nization effective date" means the effective date of the reorga-
nization as determined by the Board of Directors of the Asso-
ciation, which shall not be earlier than the date that share-
holder approval is obtained pursuant to subsection (b) and
shall not be later than the date that is 18 months after the
date of enactment of this section.
(8) SUBSIDIARY.The term "subsidiary" means one or more
direct or indirect subsidiaries.
293
HIGHER EDUCATION ACT OF 1965
Sec. 441
SEC. 440A. DISCRIMINATION IN SECONDARY MARKETS PROHIBITED.
The Student Loan Marketing Association (and, if the Associa-
tion is privatized under section 440, any successor entity function-
ing as a secondary market for loans under this part, including the
Holding Company described in such section) shall not engage di-
rectly or indirectly in any pattern or practice that results in a de-
nial of a borrower's access to loans under this part because of the
borrower's race, sex, color, religion, national origin, age, disability
status, income, attendance at a particular eligible institution,
length of the borrower's educational program, or the borrower's
academic year at an eligible institution.
PART CFEDERAL WORK-STUDY PROGRAMS
SEC. 441. [42 U.S.C. 2751] PURPOSE; APPROPRIATIONS AUTHORIZED.
(a) PURPOSE.The purpose of this part is to stimulate and pro-
mote the part-time employment of students who are enrolled as un-
dergraduate, graduate, or professional students and who are in
need of earnings from employment to pursue courses of study at el-
igible institutions, and to encourage students receiving Federal stu-
dent financial assistance to participate in community service activi-
ties that will benefit the Nation and engender in the students a
sense of social responsibility and commitment to the community.
(b) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this part, $1,000,000,000 for fiscal
year 1999 and such sums as may be necessary for each of the 4
succeeding fiscal years.
(c) COMMUNITY SERVICES.For purposes of this part, the term
"community services" means services which are identified by an in-
stitution of higher education, through formal or informal consulta-
tion with local nonprofit, governmental, and community-based or-
ganizations, as designed to improve the quality of life for commu-
nity residents, particularly low-income individuals, or to solve par-
ticular problems related to their needs, including
(1) such fields as health care, child care (including child
care services provided on campus that are open and accessible
to the community), literacy training, education (including tuto-
rial services), welfare, social services, transportation, housing
and neighborhood improvement, public safety, crime preven-
tion and control, recreation, rural development, and community
improvement;
(2) work in a project, as defined in section 101(20) of the
National and Community Service Act of 1990 (42 U.S.C.
12511(20));
(3) support services to students with disabilities, including
students with disabilities who are enrolled at the institution;
and
(4) activities in which a student serves as a mentor for
such purposes as
(A) tutoring;
(B) supporting educational and recreational activities;
and
(C) counseling, including career counseling.
301
Sec. 442
HIGHER EDUCATION ACT OF 1965
294
SEC. 442. [42 U.S.C. 2752] ALLOCATION OF FUNDS.
(a) ALLOCATION BASED ON PREVIOUS ALLOCATION 1.(1) From
the amount appropriated pursuant to section 441(b) for each fiscal
year, the Secretary shall first allocate to each eligible institution
for each succeeding fiscal year, an amount equal to 100 percent of
the amount such institution received under subsections (a) and (b)
for fiscal year 1999 (as such subsections were in effect with respect
to allocations for such fiscal year).
(2)(A) From the amount so appropriated, the Secretary shall
next allocate to each eligible institution that began participation in
the program under this part after fiscal year 1999 but is not a first
or second time participant, an amount equal to the greater of
(i) $5,000; or
(ii) 90 percent of the amount received and used under this
part for the first year it participated in the program.
(B) From the amount so appropriated, the Secretary shall next
allocate to each eligible institution that began participation in the
program under this part after fiscal year 1999 and is a first or sec-
ond time participant, an amount equal to the greatest of
(i) $5,000;
(ii) an amount equal to (I) 90 percent of the amount re-
ceived and used under this part in the second preceding fiscal
year by eligible institutions offering comparable programs of
instruction, divided by (II) the number of students enrolled at
such comparable institutions in such fiscal year, multiplied by
(III) the number of students enrolled at the applicant institu-
tion in such fiscal year; or
(iii) 90 percent of the institution's allocation under this
part for the preceding fiscal year.
(C) Notwithstanding subparagraphs (A) and (B) of this para-
graph, the Secretary shall allocate to each eligible institution
which
(i) was a first-time participant in the program in fiscal
year 2000 or any subsequent fiscal year, and
(ii) received a larger amount under this subsection in the
second year of participation,
an amount equal to 90 percent of the amount it received under this
subsection in its second year of participation.
(3)(A) If the amount appropriated for any fiscal year is less
than the amount required to be allocated to all institutions under
paragraph (1) of this subsection, then the amount of the allocation
to each such institution shall be ratably reduced.
(B) If the amount appropriated for any fiscal year is more than
the amount required to be allocated to all institutions under para-
graph (1) but less than the amount required to be allocated to all
institutions under paragraph (2), then
(i) the Secretary shall allot the amount required to be allo-
cated to all institutions under paragraph (1), and
1The allocation provisions of section 413D of the Higher Education Act of 1965 were amended
by section 442 of the Higher Education Amendments of 1998 (P.L. 105-244; 112 Stat. 1712).
Subsection (c) of that section 442 contained the following effective date provision:
(c) EFFECTIVE DATE.The amendments made by this section shall apply with respect to allo-
cations of amounts appropriated pursuant to section 441(b) for fiscal year 2000 or any succeed-
ing fiscal year.
295
HIGHER EDUCATION ACT OF 1965
Sec. 442
(ii) the amount of the allocation to each institution under
paragraph (2) shall be ratably reduced.
(C) If additional amounts are appropriated for any such fiscal
year, such reduced amounts shall be increased on the same basis
as they were reduced (until the amount allocated equals the
amount required to be allocated under paragraphs (1) and (2) of
this subsection).
(4)(A) Notwithstanding any other provision of this section, the
Secretary may allocate an amount equal to not more than 10 per-
cent of the amount by which the amount appropriated in any fiscal
year to carry out this part exceeds $700,000,000 among eligible in-
stitutions described in subparagraph (B).
(B) In order to receive an allocation pursuant to subparagraph
(A) an institution shall be an eligible institution from which 50 per-
cent or more of the Pell Grant recipients attending such eligible in-
stitution graduate or transfer to a 4-year institution of higher edu-
cation.
(b) ALLOCATION OF EXCESS BASED ON SHARE OF EXCESS ELIGI-
BLE AMOUNTS.-(1) From the remainder of the amount appro-
priated pursuant to section 441(b) after making the allocations re-
quired by subsection (a), the Secretary shall allocate to each eligi-
ble institution which has an excess eligible amount an amount
which bears the same ratio to such remainder as such excess eligi-
ble amount bears to the sum of the excess eligible amounts of all
such eligible institutions (having such excess eligible amounts).
(2) For any eligible institution, the excess eligible amount is
the amount, if any, by which
(A)(i) the amount of that institution's need (as determined
under subsection (c)), divided by (ii) the sum of the need of all
institutions (as so determined), multiplied by (iii) the amount
appropriated pursuant to section 441(b) for the fiscal year; ex-
ceeds
(B) the amount required to be allocated to that institution
under subsection (a).
(c) DETERMINATION OF INSTITUTION'S NEED.-(1) The amount of
an institution's need is equal to the sum of the self-help need of
the institution's eligible undergraduate students and the self-help
need of the institution's eligible graduate and professional stu-
dents.
(2) To determine the self-help need of an institution's eligible
undergraduate students, the Secretary shall
(A) establish various income categories for dependent and
independent undergraduate students;
(B) establish an expected family contribution for each in-
come category of dependent and independent undergraduate
students, determined on the basis of the average expected fam-
ily contribution (computed in accordance with part F of this
title) of a representative sample within .each income category
for the second preceding fiscal year;
(C) compute 25 percent of the average cost of attendance
for all undergraduate students;
(D) multiply the number of eligible dependent students in
each income category by the lesser of
303
Sec. 442
HIGHER EDUCATION ACT OF 1965
296
(i) 25 percent of the average cost of attendance for all
undergraduate students determined under subparagraph
(C); or
(ii) the average cost of attendance for all undergradu-
ate students minus the expected family contribution deter-
mined under subparagraph (B) for that income category,
except that the amount computed by such subtraction
shall not be less than zero;
(E) add the amounts determined under subparagraph (D)
for each income category of dependent students; and
(F) multiply the number of eligible independent students
in ach income category by the lesser of
(i) 25 percent of the average cost of attendance for all
undergraduate students determined under subparagraph
(C); or(ii) the average cost of attendance for all undergradu-
ate students minus the expected family contribution deter-
mined under subparagraph (B) for that income category,
except that the amount computed by such subtraction for
any income category shall not be less than zero;
(G) add the amounts determined under subparagraph (F)
for each income category of independent students; and
(H) add the amounts determined under subparagraphs (E)
and (G).
(3) To determine the self -help need of an institution's eligible
graduate and professional students, the Secretary shall
(A) establish various income categories of graduate and
professional students;
(B) establish an expected family contribution for each in-
come category of graduate and professional students, deter-
mined on the basis of the average expected family contribution
(computed in accordance with part F of this title) of a rep-
resentative sample within each income category for the second
preceding fiscal year;
(C) determine the average cost of attendance for all grad-
uate and professional students;
(D) subtract from the average cost of attendance for all
graduate and professional students (determined under sub-
paragraph (C)), the expected family contribution (determined
under subparagraph (B)) for each income category, except that
the amount computed by such subtraction for any income cat-
egory shall not be less than zero;
(E) multiply the amounts determined under subparagraph
(D) by the number of eligible students in each category; and
(F) add the amounts determined under subparagraph (E)
of this paragraph for each income category.
(4)(A) For purposes of paragraphs (2) and (3), the term "aver-
age cost of attendance" means the average of the attendance costs
for undergraduate students and for graduate and professional stu-
dents, which shall include (i) tuition and fees determined in accord-
ance with subparagraph (B), (ii) standard living expenses deter-
mined in accordance with subparagraph (C), and (iii) books and
supplies determined in accordance with subparagraph (D).
297
HIGHER EDUCATION ACT OF 1965
Sec. 443
(B) The average undergraduate and graduate and professional
tuition and fees described in subparagraph (A)(i) shall be computed
on the basis of information reported by the institution to the Sec-
retary, which shall include (i) total revenue received by the institu-
tion from undergraduate and graduate tuition and fees for the sec-
ond year preceding the year for which it is applying for an alloca-
tion, and (ii) the institution's enrollment for such second preceding
year.
(C) The standard living expense described in subparagraph
(A)(ii) is equal to 150 percent of the difference between the income
protection allowance for a family of five with one in college and the
income protection allowance for a family of six with one in college
for a single independent student.
(D) The allowance for books. and supplies described in subpara-
graph (A)(iii) is equal to $450.
(d) REALLOCATION OF EXCESS ALLOCATIONS.(1) If institutions
return to the Secretary any portion of the sums allocated to such
institutions under this section for any fiscal year, the Secretary
shall reallot such excess to eligible institutions which used at least
5 percent of the total amount of funds granted to such institution
under this section to compensate students employed in tutoring in
reading and family literacy activities in the preceding fiscal year.
Such excess funds shall be reallotted to institutions which qualify
under this subsection on the same basis as excess eligible amounts
are allocated to institutions pursuant to subsection (b). Funds re-
ceived by institutions pursuant to this subsection shall be used to
compensate students employed in community service.
(2) If, under paragraph (1) of this subsection, an institution re-
turns more than 10 percent of its allocation, the institution's alloca-
tion for the next fiscal year shall be reduced by the amount re-
turned. The Secretary may waive this paragraph for a specific in-
stitution if the Secretary finds that enforcing this paragraph would
be contrary to the interest of the program.
(e) FILING DEADLINES.The Secretary shall, from time to time,
set dates before which institutions must file applications for alloca-
tions under this part.
SEC. 443. [42 U.S.C. 2753) GRANTS FOR FEDERAL. WORK-STUDY PRO-
GRAMS.
(a) AGREEMENTS REQUIRED.The Secretary is authorized to
enter into agreements with institutions of higher education under
which the Secretary will make grants to such institutions to assist
in the operation of work-study programs as provided in this part.
(b) CONTENTS OF AGREEMENTS.An agreement entered into
pursuant to this section shall
(1) provide for the operation by the institution of a pro-
gram for the part-time employment, including internships,
practica, or research assistantships as determined by the Sec-
retary, of its students in work for the institution itself, work
in community service or work in the public interest for a Fed-
eral, State, or local public agency or private nonprofit organiza-
tion under an arrangement between the institution and such
agency or organization, and such work-
305
Sec. 443
HIGHER EDUCATION ACT OF 1965
298
(A) will not result in the displacement of employed
workers or impair existing contracts for services;
(B) will be governed by such conditions of employment
as will be appropriate and reasonable in light of such fac-
tors as type of work performed, geographical region, and
proficiency of the employee;
(C) does not involve the construction, operation, or
maintenance of so much of any facility as is used or is to
be used for sectarian instruction or as a place for religious
worship; and
(D) will not pay any wage to students employed under
this subpart that is less than the current Federal mini-
mum wage as mandated by section 6(a) of the Fair Labor
Standards Act of 1938;
(2) provide that funds granted an institution of higher edu-
cation, pursuant to section 443, may be used only to make pay-
ments to students participating in work-study programs, ex-
cept that
(A) for fiscal year 1999, an institution shall use at
least 5 percent of the total amount of funds granted to
such institution under this section in any fiscal year to
compensate students employed in community service (in-
cluding a reasonable amount of time spent in travel or
training directly related to such community service), ex-
cept that the Secretary may waive this subparagraph if
the Secretary determines that enforcing it would cause
hardship for students at an institution;
(B) for fiscal year 2000 and succeeding fiscal years, an
institution shall use at least 7 percent of the total amount
of funds granted to such institution under this section for
such fiscal year to compensate students employed in com-
munity service, and shall ensure that not less than 1 tu-
toring or family literacy project (as described in subsection
(d)) is included in meeting the requirement of this sub-
paragraph, except that the Secretary may waive this sub-
paragraph if the Secretary determines that enforcing this
subparagraph would cause hardship for students at the in-
stitution; and
(C) an institution may use a portion of the sums
granted to it to meet administrative expenses in accord-
ance with section 489 of this Act, may use a portion of the
sums granted to it to meet the cost of a job location and
development program in accordance with section 446 of
this part, and may transfer funds in accordance with the
provisions of section 488 of this Act;
(3) provide that in the selection of students for employ-
ment under such work-study program, only students who dem-
onstrate financial need in accordance with part F and meet the
requirements of section 484 will be assisted, except that if the
institution's grant under this part is directly or indirectly'
based in part on the financial need demonstrated by students
who are (A) attending the institution on less than a full-time
basis, or (B) independent students, a reasonable portion of the
grant shall be made available to such students;
3 0
299
HIGHER EDUCATION ACT OF 1965
Sec. 443
(4) provide that for a student employed in a work-study
program under this part, at the time income derived from any
need-based employment is in excess of the determination of the
amount of such student's need by more than $300, continued
employment shall not be subsidized with funds appropriated
under this part;
(5) provide that the Federal share of the compensation of
students employed in the work-study program in accordance
with the agreement shall not exceed 75 percent, except that
(A) the Federal share may exceed 75 percent, but not
exceed 90 percent, if, consistent with regulations of the
Secretary
(i) the student is employed at a nonprofit private
organization or a government agency that
(I) is not a part of, and is not owned, oper-
ated, or controlled by, or under common owner-
ship, operation, or control with, the institution;
(II) is selected by the institution on an indi-
vidual case-by-case basis for such student; and
(III) would otherwise be unable to afford the
costs of such employment; and
(ii) not more than 10 percent of the students com-
pensated through the institution's grant under this
part during the academic year are employed in posi-
tions for which the Federal share exceeds 75 percent;
and
(B) the Federal share may exceed 75 percent if the
Secretary determines, pursuant to regulations promul-
gated by the Secretary establishing objective criteria for
such determinations, that a Federal share in excess of
such amounts is required in furtherance of the purpose of
this part;
(6) include provisions to make employment under such
work-study program reasonably available (to the' extent of
available funds) to all eligible students in the institution in
need thereof;
(7) provide assurances that employment made available
from funds under this part will, to the maximum extent prac-
ticable, complement and reinforce the educational program or
vocational goals of each student receiving assistance under this
part;
(8) provide assurances, in the case of each proprietary in-
stitution, that students attending the proprietary institution
receiving assistance under this part who are employed by the
institution may be employed in jobs
(A) that are only on campus and that
(i) to the maximum extent practicable,
com-
plement and reinforce the education programs or voca-
tional goals of such 'students; and
(ii) furnish student services that are directly relat-
ed to the student's education, as determined by the
Secretary pursuant to regulations, except that no stu-
dent shall be employed in any position that would in-
307
Sec. 443
HIGHER EDUCATION ACT OF 1965
300
volve the solicitation of other potential students to en-
roll in the school; or
(B) in community service in accordance with para-
graph (2)(A) of this subsection;
(9) provide assurances that employment made available
from funds under this part may be used to support programs
for supportive services to students with disabilities;
(10) provide assurances that the institution will inform all
eligible students of the opportunity to perform community serv-
ice, and will consult with local nonprofit, governmental, and
community-based organizations to identify such opportunities;
and
(11) include such other reasonable provisions as the Sec-
retary shall deem necessary or appropriate to carry out the
purpose of this part.
(c) PRIVATE SECTOR EMPLOYMENT AGREEMENT.As part of its
agreement described in subsection (b), an institution of higher edu-
cation may, at its option, enter into an additional agreement with
the Secretary which shall
(1) provide for the operation by the institution of a pro-
gram of part-time employment of its students in work for a pri-
vate for-profit organization under an arrangement between the
institution and such organization that complies with the re-
quirements of subparagraphs (A) through (D) of subsection
(bX1) and subsection (b)(3);
(2) provide that the institution will use not more than 25
percent of the funds made available to such institution under
this part for any fiscal year for the operation of the program
described in paragraph (1);
(3) provide that, notwithstanding subsection (b)(5), the
Federal share of the compensation of students employed in
such program will not exceed 60 percent for academic years
1987-1988 and 1988-1989, 55 percent for academic year 1989-
1990, and 50 percent for academic year 1990-1991 and suc-
ceeding academic years, and that the non-Federal share of
such compensation will be provided by the private for-profit or-
ganization in which the student is employed;
(4) provide that jobs under the work study program will be
academically relevant, to the maximum extent practicable; and
(5) provide that the for-profit organization will not use
funds made available under this part to pay any employee who
would otherwise be employed by the organization.
(d) TUTORING AND LITERACY ACTIVITIES.
(1) USE OF FUNDS.In any academic year to which sub-
section (b)(2)(B) applies, an institution shall ensure that funds
granted to such institution under this section are used in ac-
cordance with such subsection to compensate (including com-
pensation for time spent in training and travel directly related
to tutoring in reading and family literacy activities) students
(A) employed as reading tutors for children who are
preschool age or are in elementary school; or
(B) employed in family literacy projects.
(2) PRIORITY FOR SCHOOLS.To the extent practicable, an
institution shall-
308
301
HIGHER EDUCATION ACT OF 1965
Sec. 445
(A) give priority to the employment of students in the
provision of tutoring in reading in schools that are partici-
pating in a reading reform project that
(i) is designed to train teachers how to teach read-
ing on the basis of scientifically-based research on
reading; and
(ii) is funded under the Elementary and Second-
ary Education Act of 1965; and
(B) ensure that any student compensated with the
funds described in paragraph (1) who is employed in a
school participating in a reading reform project described
in subparagraph (A) receives training from the employing
school in the instructional practices used by the school.
(3) FEDERAL SHARE.The Federal share of the compensa-
tion of work-study students compensated under this subsection
may exceed 75 percent.
SEC. 444. [20 U.S.C. 2754] SOURCES OF MATCHING FUNDS.
Nothing in this part shall be construed as restricting the
source (other than this part) from which the institution may pay
its share of the compensation of a student employed under a work-
study program covered by an agreement under this part, and such
share may be paid to such student in the form of services and
equipment (including tuition, room, board, and books) furnished by
such institution.
SEC. 445. [42 U.S.C. 2755] FLEXIBLE USE OF FUNDS.
(a) CARRY-OVER AUTHORITY.(1) Of the sums granted to an el-
igible institution under this part for any fiscal year, 10 percent
may, at the discretion of the institution, remain available for ex-
penditure during the succeeding fiscal year to carry out programs
under this part.
(2) Any of the sums so granted to an institution for a fiscal
year which are not needed by that institution to operate work-
study programs during that fiscal year, and which it does not wish
to use during the next fiscal year as authorized in the preceding
sentence, shall remain available to the Secretary for making grants
under section 443 to other institutions in the same State until the
close of the second fiscal year next succeeding the fiscal year for
which such funds were appropriated.
(b) CARRY-BACK AUTHORITY.(1) Up to 10 percent of the sums
the Secretary determines an eligible institution may receive from
funds which have been appropriated for a fiscal year may be used
by the Secretary to make grants under this part to such institution
for expenditure during the fiscal year preceding the fiscal year for
which the sums were appropriated.
(2) An eligible institution may make payments to students of
wages earned after the end of the academic year, but prior to the
beginning of the succeeding fiscal year, from such succeeding fiscal
year's appropriations.
(c) FLEXIBLE USE OF FUNDS.An eligible institution may, upon
the request of a student, make payments to the student under this
part by crediting the student's account at the institution or by
making a direct deposit to the student's account at a depository in-
309
Sec. 446
HIGHER EDUCATION ACT OF 1965
302
stitution. An eligible institution may only credit the student's ac-
count at the institution for (1) tuition and fees, (2) in the case of
institutionally owned housing, room and board, and (3) other insti-
tutionally provided goods and services.
SEC. 446. [42 U.S.C. 2756] JOB LOCATION AND DEVELOPMENT PRO-
GRAMS.
(a) AGREEMENTS REQUIRED.(1) The Secretary is authorized to
enter into agreements with eligible institutions under which such
institution may use not more than 10 percent or $50,000 of its al-
lotment under section 442, whichever is less, to establish or expand
a program under which such institution, separately or in combina-
tion with other eligible institutions, locates and develops jobs, in-
cluding community service jobs, for currently enrolled students.
(2) Jobs located and developed under this section shall be jobs
that are suitable to the scheduling and other needs of such stu-
dents and that, to the maximum extent practicable, complement
and reinforce the educational programs or vocational goals of such
students.
(b) CONTENTS OF AGREEMENTS.Agreements under subsection
(a) shall
(1) provide that the Federal share of the cost of any pro-
gram under this section will not exceed 80 percent of such cost;
(2) provide satisfactory assurance that funds available
under this section will not be used to locate or develop jobs at
an eligible institution;
(3) provide satisfactory assurance that funds available
under this section will not be used for the location or develop-
ment of jobs for students to obtain upon graduation, but rather
for the location and development of jobs available to students
during and between periods of attendance at such institution;
(4) provide satisfactory assurance that the location or de-
velopment of jobs pursuant to programs assisted under this
section will not result in the displacement of employed workers
or impair existing contracts for services;
(5) provide satisfactory assurance that Federal funds used
for the purpose of this section can realistically be expected to
help generate student wages exceeding, in the aggregate, the
amount of such funds, and that if such funds are used to con-
tract with another organization,
appropriate performance
standards are part of such contract; and
(6) provide that the institution will submit to the Secretary
an annual report on the uses made of funds provided under
this section and an evaluation of the effectiveness of such pro-
gram in benefiting the students of such institution.
SEC. 447. [42 U.S.C. 2756a] ADDITIONAL FUNDS TO CONDUCT COMMU-
NITY SERVICE WORK-STUDY PROGRAMS.
Each institution participating under this part may use up to
10 percent of the funds made available under section 489(a) and at-
tributable to the amount of the institution's expenditures under
this part to conduct that institution's program of community serv-
ice-learning, including
(1) development of mechanisms to assure the academic
quality of the student experience,
303
HIGHER EDUCATION ACT OF 1965
Sec. 448
(2) assuring student access to educational resources, exper-
tise, and supervision necessary to achieve community service
objectives, and
(3) collaboration with public and private nonprofit agen-
cies, and programs assisted under the National and Commu-
nity Service Act of 1990 in the planning, development, and ad-
ministration of such programs.
SEC. 448. [42 U.S.C. 2756b] WORK COLLEGES.
(a) PURPOSE.The purpose of this section is to recognize, en-
courage, and promote the use of comprehensive work-learning pro-
grams as a valuable educational approach when it is an integral
part of the institution's educational program and a part of a finan-
cial plan which decreases reliance on grants and loans.
(b) SOURCE AND USE FUNDS.
(1) SOURCE OF FUNDS.In addition to the sums appro-
priated under subsection (f), funds allocated to the institution
under part C and part E of this title may be transferred for
use under this section to provide flexibility in strengthening
the self-help-through-work element in financial aid packaging.
(2) ACTIVITIES AUTHORIZED.From the sums appropriated
pursuant to subsection (f), and from the funds available under
paragraph (1), eligible institutions may, following approval of
an application under subsection (c) by the Secretary
(A) support the educational costs of qualified students
through self-help payments or credits provided under the
work-learning program of the institution within the limits
of part F of this title;
(B) promote the work-learning-service experience as a
tool of postsecondary education, financial self-help and
community service-learning opportunities;
(C) carry out activities described in section 443 or 446;
(D) be used for the administration, development and
assessment of comprehensive work-learning
programs,
including
(i) community-based work-learning alternatives
that expand opportunities for community service and
career-related work; and
(ii) alternatives that develop sound citizenship, en-
courage student persistence, and make optimum use of
assistance under this part in education and student
development;
(E) coordinate and carry out joint projects and activi-
ties to promote work service learning; and
(F) carry out a comprehensive, longitudinal study of
student academic progress and academic and career out-
comes, relative to student self-sufficiency in financing their
higher education, repayment of student loans, continued
community service, kind and quality of service performed,
and career choice and community service selected after
graduation.
(c) APPLICATION.Each eligible institution may submit an ap-
plication for funds authorized by subsection (f) to use funds under
311
Sec. 451
HIGHER EDUCATION ACT OF 1965
304
subsection (b)(1) at such time and in such manner as the Secretary,
by regulation, may reasonably require.
(d) MATCH REQUIRED.Funds made available to work-colleges
pursuant to this section shall be matched on a dollar-for-dollar
basis from non-Federal sources.
(e) DEFINITIONS.For the purpose of this section
(1) the term "work-college" means an eligible institution
that
(A) has been a public or private nonprofit institution
with a commitment to community service;
(B) has operated a comprehensive work-learning pro-
gram for at least 2 years;
(C) requires all resident students who reside on cam-
pus to participate in a comprehensive work-learning pro-
gram and the provision of services as an integral part of
the institution's educational program and as part of the in-
stitution's educational philosophy; and
(D) provides students participating in the comprehen-
sive work-learning program with the opportunity to con-
tribute to their education and to the welfare of the commu-
nity as a whole; and
(2) the term "comprehensive student work-learning pro-
gram" means a student work/service program that is an inte-
gral and stated part of the institution's educational philosophy
and program; requires participation of all resident students for
enrollment, participation, and graduation; includes learning
objectives, evaluation and a record of work performance as part
of the student's college record; provides programmatic leader-
ship by college personnel at levels comparable to traditional
academic programs; recognizes the educational role of work-
learning supervisors; and includes consequences for non-
performance or failure in the work-learning program similar to
the consequences for failure in the regular academic program.
(f) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this section $5,000,000 for fiscal
year 1999 and such sums as may be necessary for each of the 4
succeeding fiscal years.
PART D-WILLIAM D. FORD FEDERAL DIRECT
LOAN PROGRAM
SEC. 451. [20 U.S.C. 1087a] PROGRAM AUTHORITY.
(a) IN GENERAL.There are hereby made available, in accord-
ance with the provisions of this part, such sums as may be nec-
essary to make loans to all eligible students (and the eligible par-
ents of such students) in attendance at participating institutions of
higher education selected by the Secretary, to enable such students
to pursue their courses of study at such institutions during the pe-
riod beginning July 1, 1994. Such loans shall be made by partici-
pating institutions, or consortia thereof, that have agreements with
the Secretary to originate loans, or by alternative originators des-
ignated by the Secretary to make loans for students in attendance
at participating institutions (and their parents).
305
HIGHER EDUCATION ACT OF 1965
Sec. 452
(b) DESIGNATION.
(1) PROGRAM.The program established under this part
shall be referred to as the "William D. Ford Federal Direct
Loan Program".
(2) DIRECT LOANS.Notwithstanding any other provision
of this part, loans made to borrowers under this part that, ex-
cept as otherwise specified in this part, have the same terms,
conditions, and benefits as loans made to borrowers under sec-
tion 428, shall be known as "Federal Direct Stafford/Ford
Loans".
SEC. 452. [20 U.S.C. 1087b] FUNDS FOR ORIGINATION OF DIRECT STU-
DENT LOANS.
(a) IN GENERAL. The Secretary .shall provide, on the basis of
the need and the eligibility of students at each participating insti-
tution, and parents of such students, for such loans, funds for stu-
dent and parent loans under this part
(1) directly to an institution of higher education that has
an agreement with the Secretary under section 454(a) to par-
ticipate in the direct student loan programs under this part
and that also has an agreement with the Secretary under sec-
tion 454(b) to originate loans under this part; or
(2) through an alternative originator designated by the
Secretary to students (and parents of students) attending insti-
tutions of higher education that have an agreement with the
Secretary under section 454(a) but that do not have an agree-
ment with the Secretary under section 454(b).
(b) No ENTITLEMENT TO PARTICIPATE OR ORIGINATE.No insti-
tution of higher education shall have a right to participate in the
programs authorized by this part, to originate loans, or to perform
any program function under this part. Nothing in this subsection
shall be construed so as to limit the entitlement of an eligible stu-
dent attending a participating institution (or the eligible parent of
such student) to borrow under this part.
(c) DELIVERY OF LOAN FUNDS.Loan funds shall be paid and
delivered to an institution by the Secretary prior to the beginning
of the payment period established by the Secretary in a manner
that is consistent with payment and delivery of Federal Pell Grants
under subpart 1 of part A of this title.
SEC. 453. [20 U.S.C. 1087c] SELECTION OF INSTITUTIONS FOR PARTICI-
PATION AND ORIGINATION.
(a) GENERAL AUTHORITY.The Secretary shall enter into
agreements pursuant to section 454(a) with institutions of higher
education to participate in the direct student loan program under
this part, and agreements pursuant to section 454(b) with institu-
tions of higher education, or consortia thereof, to originate loans in
such program, for academic years beginning on or after July 1,
1994. Alternative origination services, through which an entity
other than the participating institution at which the student is in
attendance originates the loan, shall be provided by the Secretary,
through 1 or more contracts under section 456(b) or such other
means as the Secretary may provide, for students attending partici-
pating institutions that do not originate direct student loans under
this part. Such agreements for the academic year 1994-1995 shall,
313
Sec. 452
HIGHER EDUCATION ACT OF 1965
306
to the extent feasible, be entered into not later than January 1,
1994.
(b) SELECTION CRITERIA.
(1) APPLICATION.Each institution of higher education de-
siring to participate in the direct student loan program under
this part shall submit an application satisfactory to the Sec-
retary containing such information and assurances as the Sec-
retary may require.
(2) SELECTION PROCEDURE.The Secretary shall select in-
stitutions for participation in the direct student loan program
under this part, and shall enter into agreements with such in-
stitutions under section 454(a), from among those institutions
that submit the applications described in paragraph (1), and
meet such other eligibility requirements as the Secretary shall
prescribe.
(c) SELECTION CRITERIA FOR ORIGINATION.
(1) IN GENERAL.The Secretary may enter into a supple-
mental agreement with an institution (or a consortium of such
institutions) that
(A) has an agreement under subsection 454(a);
(B) desires to originate loans under this part; and
(C) meets the criteria described in paragraph (2).
(2) SELECTION CRITERIA.The Secretary may approve an
institution to originate loans only if such institution
(A) is not on the reimbursement system of payment for
any of the programs under subpart 1 or 3 of part A, part
C, or part E of this title;
(B) is not overdue on program or financial reports or
audits required under this title;
(C) is not subject to an emergency action, or a limita-
tion, suspension, or termination under section 428(b)(1)(T),
432(h), or 487(c);
(D) in the opinion of the Secretary, has not had severe
performance deficiencies for any of the programs under
this title, including such deficiencies demonstrated by au-
dits or program reviews submitted or conducted during the
5 calendar years immediately preceding the date of appli-
cation;
(E) provides an assurance that such institution has no
delinquent outstanding debts to the Federal Government,
unless such debts are being repaid under or in accordance
with a repayment arrangement satisfactory to the Federal
Government, or the Secretary in the Secretary's discretion
determines that the existence or amount of such debts has
not been finally determined by the cognizant Federal agen-
cy; and
(F) meets such other criteria as the Secretary may es-
tablish to protect the financial interest of the United
States and to promote the purposes of this part.
(3) REGULATIONS GOVERNING APPROVAL.The Secretary
shall promulgate and publish in the Federal Register regular
tions governing the approval of institutions to originate loans
under this part in accordance with section- 457(a)(2).
307
HIGHER EDUCATION ACT OF 1965
Sec. 454
(d) ELIGIBLE INSTITUTIONS.The Secretary may not select an
institution of higher education for participation under this section
unless such institution is an eligible institution under section
435(a).
(e) CONSORTIA.
Subject to such requirements as the Secretary
may prescribe, eligible institutions of higher education (as deter-
mined under subsection (d)) with agreements under section 454(a)
may apply to the Secretary as consortia to originate loans under
this part for students in attendance at such institutions. Each such
institution shall be required to meet the requirements of subsection
(c) with respect to loan origination.
SEC. 454. [20 U.S.C. 1087d] AGREEMENTS WITH INSTITUTIONS.
(a) PARTICIPATION AGREEMENTS.An agreement with any in-
stitution of higher education for participation in the direct student
loan program under this part shall
(1) provide for the establishment and maintenance of a di-
rect student loan program at the institution under which the
institution will
(A) identify eligible students who seek student finan-
cial assistance at such institution in accordance with sec-
tion 484;
(B) estimate the need of each such student as required
by part F of this title for an academic year, except that,
any loan obtained by a student under this part with the
same terms as loans made under section 428H (except as
otherwise provided in this part), or a loan obtained by a
parent under this part with the same terms as loans made
under section 428B (except as otherwise provided in this
part), or obtained under any State-sponsored or private
loan program, may be used to offset the expected family
contribution of the student for that year;
(C) provide a statement that certifies the eligibility of
any student to receive a loan under this part that is not
in excess of the annual or aggregate limit applicable to
such loan, except that the institution may, in exceptional
circumstances identified by the Secretary, refuse to certify
a statement that permits a student to receive a loan under
this part, or certify a loan amount that is less than the
student's determination of need (as determined under part
F of this title), if the reason for such action is documented
and provided in written form to such student;
(D) set forth a schedule for disbursement of the pro-
ceeds of the loan in installments, consistent with the re-
quirements of section 428G; and
(E) provide timely and accurate information
(i) concerning the status of student borrowers (and
students on whose behalf parents borrow under this
part) while such students are in attendance at the in-
stitution and concerning any new information of which
the institution becomes aware for such students (or
their parents) after such borrowers leave the institu-
tion, to the Secretary for the servicing and collecting
of loans made under this part; and
315
Sec. 454
HIGHER EDUCATION ACT OF 1965
308
(ii) if the institution does not have an agreement
with the Secretary under subsection (b), concerning
student eligibility and need, as determined under sub-
paragraphs (A) and (B), to the Secretary as needed for
the alternative origination of loans to eligible students
and parents in accordance with this part;
(2) provide assurances that the institution will comply
with requirements established by the Secretary relating to stu-
dent loan information with respect to loans made under this
part;
(3) provide that the institution accepts responsibility and
financial liability stemming from its failure to perform its func-
tions pursuant to the agreement;
(4) provide that students at the institution and their par-
ents (with respect to such students) will be eligible to partici-
pate 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) provide for the implementation of a quality assurance
system, as established by the Secretary and developed in con-
sultation with institutions of higher education, to ensure that
the institution is complying with program requirements and
meeting program objectives;
(6) 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) include such other provisions as the Secretary deter-
mines 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) supplement the agreement entered into in accordance
with subsection (a);
(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) of subsection
(a), as modified to relate to the origination of loans by the in-
stitution or consortium;
(3) provide that the institution or consortium will originate
loans to eligible students and parents in accordance with this
part; and
(4) provide that the note or evidence of obligation on the
loan shall be the property of the Secretary.
(c) WITHDRAWAL AND TERMINATION PROCEDURES. The Sec-
retary shall establish procedures by which institutions or consortia
may withdraw or be terminated from the program under this part.
SEC. 455. [20 U.S.C. 1087e] TERMS AND CONDITIONS OF LOANS.
(a) IN GENERAL.
309
HIGHER EDUCATION ACT OF 1965
Sec. 455
(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, condi-
tions, and benefits, and be available in the same amounts, as
loans made to borrowers under sections 428, 428B, and 428H
of this title.
(2) DESIGNATION OF LOANS.Loans made to borrowers
under this part that, except as otherwise specified in this part,
have the same terms, conditions, and benefits as loans made
to borrowers under
(A) section 428 shall be known as "Federal Direct Staf-
ford Loans";
(B) section 428B shall be known as "Federal Direct
PLUS Loans"; and
(C) section 428H shall be known as "Federal Direct
Unsubsidized Stafford Loans".
(b) INTEREST RATE.
(1) RATES FOR FDSL AND FDUSL.For Federal Direct Staf-
ford Loans and Federal Direct Unsubsidized Stafford Loans for
which the first disbursement is made on or after July 1, 1994,
the applicable rate of interest shall, during any 12-month pe-
riod beginning on July 1 and ending on June 30, be determined
on the preceding June 1 and be equal to
(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction held prior to such June 1;
plus
(B) 3.1 percent,
except that such rate shall not exceed 8.25 percent.
(2) IN SCHOOL AND GRACE PERIOD RULES.(A) Notwith-
standing the provisions of paragraph (1), but subject to para-
graph (3), with respect to any Federal Direct Stafford Loan or
Federal Direct Unsubsidized Stafford Loan for which the first
disbursement is made on or after July 1, 1995, the applicable
rate of interest for interest which accrues
(i) prior to the beginning of the repayment period of
the loan; or
(ii) during the period in which principal need not be
paid (whether or not such principal is in fact paid) by rea-
son of a provision described in section 428(b)(1)(M) or
427(a)(2)(C),
shall not exceed the rate determined under subparagraph (B).
(B) For the purpose of subparagraph (A), the rate deter-
mined under this subparagraph shall, during any 12-month pe-
riod 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 prior to such June 1; plus
(ii) 2.5 percent,
except that such rate shall not exceed 8.25 percent.
(3) OUT-YEAR RULE.Notwithstanding paragraphs (1) and
(2), for Federal Direct Stafford Loans and Federal Direct Un-
subsidized Stafford Loans made on or after July 1, 1998, the
applicable rate of interest shall, during any 12-month period
317
Sec. 455
HIGHER EDUCATION ACT OF 1965
310
beginning on July 1 and ending on June 30, be determined on
the preceding June 1 and be equal to
(A) the bond equivalent rate of the security with a
comparable maturity as established by the Secretary; plus
(B) 1.0 percent,
except that such rate shall not exceed 8.25 percent.
(4) RATES FOR FDPLUS.(A) For Federal Direct PLUS
Loans for which the first disbursement is made on or after
July 1, 1994, 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 52-week Treasury bills
auctioned at final auction held prior to such June 1; plus
(ii) 3.1 percent,
except that such rate shall not exceed 9 percent.
(B) For Federal Direct PLUS loans made on or after July
1, 1998, 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 the security with a com-
parable maturity as established by the Secretary; plus
(ii) 2.1 percent,
except that such rate shall not exceed 9 percent.
(5) TEMPORARY INTEREST RATE PROVISION.
(A) RATES FOR FDSL AND FDUSL.Notwithstanding the
preceding paragraphs of this subsection, for Federal Direct
Stafford Loans and Federal Direct Unsubsidized Stafford
Loans for which the first disbursement is made on or after
July 1, 1998, and before October 1, 1998, the applicable
rate of interest shall, during any 12-month period begin-
ning on July 1 and ending on June 30, be determined on
the preceding June 1 and be equal to
(i) the bond equivalent rate of 91-day Treasury
bills auctioned at the final auction held prior to such
June 1; plus
(ii) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(B) IN SCHOOL AND GRACE PERIOD RULES.Notwith-
standing the preceding paragraphs of this subsection, with
respect to any Federal Direct Stafford Loan or Federal Di-
rect Unsubsidized Stafford Loan for which the first dis-
bursement is made on or after July 1, 1998, and before Oc-
tober 1, 1998, the applicable rate of interest for interest
which accrues
(i) prior to the beginning of the repayment period
of the loan; or
(ii) during the period in which principal need not
be paid (whether or not such principal is in fact paid)
by reason of a
provision
described
in
section
428(b)(1)(M) or 427(a)(2)(C),
shall be determined under subparagraph (A) by substitut-
ing "1.7 percent" for "2.3 percent".
(C) PLUS LOANS.Notwithstanding the preceding
paragraphs of this subsection, with respect to Federal Di-
318
311
HIGHER EDUCATION ACT OF. 1965
Sec. 455
rect PLUS Loan for which the first disbursement is made
on or after July 1, 1998, and before October 1, 1998, the
applicable rate of interest shall be determined under sub-
paragraph (A)
(i) by substituting "3.1 percent" for "2.3 percent";
and
(ii) by substituting "9.0 percent" for "8.25 percent".
(6)1 PUBLICATION.The Secretary shall determine the ap-
plicable rates of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.
(6)1 INTEREST RATE PROVISION FOR NEW LOANS ON OR
AFTER OCTOBER 1, 1998, AND BEFORE JULY 1, 2003.
(A) RATES FOR FDSL AND FDUSL.Notwithstanding the
preceding paragraphs of this subsection, for Federal Direct
Stafford Loans and Federal Direct Unsubsidized Stafford
Loans for which the first disbursement is made on or after
October 1, 1998, and before July 1, 2003, the applicable
rate of interest shall, during any 12-month period begin-
ning on July 1 and ending on June 30, be determined on
the preceding June 1 and be equal to
(i) the bond equivalent rate of 91-day Treasury
bills auctioned at the final auction held prior to such
June 1; plus
(ii) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(B) IN SCHOOL AND GRACE PERIOD RULES.Notwith-
standing the preceding paragraphs of this subsection, with
respect to any Federal Direct Stafford Loan or Federal Di-
rect Unsubsidized Stafford Loan for which the first dis-
bursement is made on or after October 1, 1998, and before
July 1, 2003, the applicable rate of interest for interest
Which accrues
(i) prior to the beginning of the repayment period
of the loan; or
(ii) during the period in which principal need not
be paid (whether or not such principal is in fact paid)
by reason of a
provision
described
in
section
428(b)(1)(M) or 427(a)(2)(C),
shall be determined under subparagraph (A) by substitut-
ing "1.7 percent" for "2.3 percent".
(C) PLUS LOANS.Notwithstanding the preceding
paragraphs of this subsection, with respect to Federal Di-
rect PLUS Loan for which the first disbursement is made
on or after October 1, 1998, and before July 1, 2003, the
applicable rate of interest shall be determined under sub-
paragraph (A)
(i) by substituting "3.1 percent" for "2.3 percent";
and
(ii) by substituting "9.0 percent" for "8.25 percent".
1So in law. The first paragraph (6) probably should be redesignated as paragraph (8) and
moved after paragraph (7) (112 Stat. 498 and 112 Stat. 1715-1716).
319
Sec. 455
HIGHER EDUCATION ACT OF 1965
312
(D) CONSOLIDATION LOANS.Notwithstanding the pre-
ceding paragraphs of this subsection, any Federal Direct
Consolidation loan for which the application is received on
or after February 1, 1999, and before July 1, 2003, shall
bear interest at an annual rate on the unpaid principal
balance of the loan that is equal to the lesser of
(i) the weighted average of the interest rates on
the loans consolidated, rounded to the nearest higher
one-eighth of one percent; or
(ii) 8.25 percent.
(E) TEMPORARY RULES FOR CONSOLIDATION LOANS.
Notwithstanding the preceding paragraphs of this sub-
section, any Federal Direct Consolidation loan for which
the application is received on or after October 1, 1998, and
before February 1, 1999, shall bear interest at an annual
rate on the unpaid principal balance of the loan that is
equal to
(i) the bond equivalent rate of 91-day Treasury
bills auctioned at the final auction held prior to such
June 1; plus
(ii) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(7) REPAYMENT INCENTIVES.
(A) IN GENERAL.Notwithstanding any other provision
of this part, the Secretary is authorized to prescribe by
regulation such reductions in the interest rate paid by a
borrower of a loan made under this part as the Secretary
determines appropriate to encourage on-time repayment of
the loan. Such reductions may be offered only if the Sec-
retary determines the reductions are cost neutral and in
the best financial interest of the Federal Government. Any
increase in subsidy costs resulting from such reductions
shall be completely offset by corresponding savings in
funds available for the William D. Ford Federal Direct
Loan Program in that fiscal year from section 458 and
other administrative accounts.
(B) ACCOUNTABILITY.Prior to publishing regulations
proposing repayment incentives, the Secretary shall ensure
the cost neutrality of such reductions. The Secretary shall
not prescribe such regulations in final form unless an offi-
cial report from the Director of the Office of Management
and Budget to the Secretary and a comparable report from
the Director of the Congressional Budget Office to the Con-
gress each certify that any such reductions will be com-
pletely cost neutral. Such reports shall be transmitted to
the Committee on Labor and Human Resources of the Sen-
ate and the Committee on Education and the Workforce of
the House of Representatives not less than 60 days prior
to the publication of regulations proposing such reductions.
(c) LOAN FEE.The Secretary shall charge the borrower of a
loan made under this part an origination fee of 4.0 percent of the
principal amount of loan.
(d) REPAYMENT PLANS.
313
HIGHER EDUCATION ACT OF 1965
Sec. 455
(1) DESIGN AND SELECTION.Consistent with criteria es-
tablished by the Secretary,. the Secretary shall offer a borrower
of a loan made under this part a variety of plans for repayment
of such loan, including principal and interest on the loan. The
borrower shall be entitled to accelerate, without penalty, re-
payment on the borrower's loans under this part. The borrower
may choose
(A) a standard repayment plan, with a fixed annual
repayment amount paid over a fixed period of time, con-
sistent with subsection (a)(1) of this section;
(B) an extended repayment plan, with a fixed annual
repayment amount paid over an extended period of time,
except that the borrower shall annually repay a minimum
amount determined by the Secretary in accordance with
section 428(b)(1)(L);
(C) a graduated repayment plan, with annual repay-
ment amounts established at 2 or more graduated levels
and paid over a fixed or extended period of time, except
that the borrower's scheduled payments shall not be less
than 50 percent, nor more than 150 percent, of what the
amortized payment on the amount owed would be if the
loan were repaid under the standard repayment plan; and
(D) an income contingent repayment plan, with vary-
ing annual repayment amounts based on the income of the
borrower, paid over an extended period of time prescribed
by the Secretary, not to exceed 25 years, except that the
plan described in this subparagraph shall not be available
to the borrower of a Federal Direct PLUS loan.
(2) SELECTION BY SECRETARY.If a borrower of a loan
made under this part does not select a repayment plan de-
scribed in paragraph (1), the Secretary may provide the bor-
rower with a repayment plan described in subparagraph (A),
(B), or (C) of paragraph (1).
(3) CHANGES IN SELECTIONS.The borrower of a loan made
under this part may change the borrower's selection of a repay-
ment plan under paragraph (1), or the Secretary's selection of
a plan for the borrower under paragraph (2), as the case may
be, under such terms and conditions as may be established by
the Secretary.
(4) ALTERNATIVE REPAYMENT PLANS.The Secretary may
provide, on a case by case basis, an alternative repayment plan
to a borrower of a loan made under this part who demonstrates
to the satisfaction of the Secretary that the terms and condi-
tions of the repayment plans available under paragraph (1) are
not adequate to accommodate the borrower's exceptional cir-
cumstances. In designing such alternative repayment plans,
the Secretary shall ensure that such plans do not exceed the
cost to the Federal Government, as determined on the basis of
the present value of future payments by such borrowers, of
loans made using the plans available under paragraph (1).
(5) REPAYMENT AFTER DEFAULT.The Secretary may re-
quire any borrower who has defaulted on a loan made under
this part to-
321
54-653 99 - 11
Sec. 455
HIGHER EDUCATION ACT OF 1965
314
(A) pay all reasonable collection costs associated with
such loan; and
(B) repay the loan pursuant to an income contingent
repayment plan.
(e) INCOME CONTINGENT REPAYMENT.
(1) INFORMATION AND PROCEDURES.The Secretary may
obtain such information as is reasonably necessary regarding
the income of a borrower (and the borrower's spouse, if applica-
ble) of a loan made under this part that is, or may be, repaid
pursuant to income contingent repayment, for the purpose of
determining the annual repayment obligation of the borrower.
Returns and return information (as defined in section 6103 of
the Internal Revenue Code of 1986) may be obtained under the
preceding sentence only to the extent authorized by section
6103(1)(13) of such Code. The Secretary shall establish proce-
dures for determining the borrower's repayment obligation on
that loan for such year, and such other procedures as are nec-
essary to implement effectively income contingent repayment.
(2) REPAYMENT BASED ON ADJUSTED GROSS INCOME.A re-
payment schedule for a loan made under this part and repaid
pursuant to income contingent repayment shall be based on
the adjusted gross income (as defined in section 62 of the Inter-
nal Revenue Code of 1986) of the borrower or, if the borrower
is married and files a Federal income tax return jointly with
the borrower's spouse, on the adjusted gross income of the bor-
rower and the borrower's spouse.
(3) ADDITIONAL DOCUMENTS.A borrower who chooses, or
is required, to repay a loan made under this part pursuant to
income contingent repayment, and for whom adjusted gross in-
come is unavailable or does not reasonably reflect the bor-
rower's current income, shall provide to the Secretary other
documentation of income satisfactory to the Secretary, which
documentation the Secretary may use to determine an appro-
priate repayment schedule.
(4) REPAYMENT SCHEDULES.Income contingent repayment
schedules shall be established by regulations promulgated by
the Secretary and shall require payments that vary in relation
to the appropriate portion of the annual income of the borrower
(and the borrower's spouse, if applicable) as determined by the
Secretary.
(5) CALCULATION OF BALANCE DUE.The balance due on a
loan made under this part that is repaid pursuant to income
contingent repayment shall equal the unpaid principal amount
of the loan, any accrued interest, and any fees, such as late
charges, assessed on such loan. The Secretary may promulgate
regulations limiting the amount of interest that may be cap-
italized on such loan, and the timing of any such capitalization.
(6) NOTIFICATION TO BORROWERS.The Secretary shall es-
tablish procedures under which a borrower of a loan made
under this part who chooses or is required to repay such loan
pursuant to income contingent repayment is notified of the
terms and conditions of such plan, including notification of
such borrower
315
HIGHER EDUCATION ACT OF 1965
Sec. 455
(A) that the Internal Revenue Service will disclose to
the Secretary tax return information as authorized under
section 6103(1)(13) of the Internal Revenue Code of 1986;
and
(B) that if a borrower considers that special cir-
cumstances, such as a loss of employment by the borrower
or the borrower's spouse, warrant an adjustment in the
borrower's loan repayment as determined using the infor-
mation described in subparagraph (A), or the alternative
documentation described in paragraph (3), the borrower
may contact the Secretary, who shall determine whether
such adjustment is appropriate, in accordance with criteria
established by the Secretary.
(f) DEFERMENT.
(1) EFFECT ON PRINCIPAL AND INTEREST.-A borrower of a
loan made under this part who meets the requirements de-
scribed in paragraph (2) shall be eligible for a deferment, dur-
ing which periodic installments of principal need not be paid,
and interest
(A) shall not accrue, in the case ofa
(i) Federal Direct Stafford Loan; or
(ii) a Federal Direct Consolidation Loan that con-
solidated only Federal Direct Stafford Loans, or a com-
bination of such loans and Federal Stafford Loans for
which the student borrower received an interest sub-
sidy under section 428; or
(B) shall accrue and be capitalized or paid by the bor-
rower, in the case of a Federal Direct PLUS Loan, a Fed-
eral Direct Unsubsidized Stafford Loan, or a Federal Di-
rect Consolidation Loan not described in subparagraph
(A)(ii).
(2) ELIGIBILITY.-A borrower of a loan made under this
part shall be eligible for a deferment during any period
(A) during which the borrower
(i) is carrying at least one-half the normal full-
time work load for the course of study that the
borrower is pursuing, as determined by the eligible in-
stitution (as such term is defined in section 435(a)) the
borrower is attending; or
(ii) is pursuing a course of study pursuant to a
graduate fellowship program approved by the Sec-
retary, or pursuant to a rehabilitation training pro-
gram for individuals with disabilities approved by the
Secretary,
except that no borrower shall be eligible for a deferment
under this subparagraph, or a loan made under this part
(other than a Federal Direct PLUS Loan or a Federal Di-
rect Consolidation Loan), while serving in a medical in-
ternship or residency program;
(B) not in excess of 3 years during which the borrower
is seeking and unable to find full-time employment;
(C) not in excess of 3 years during which the Secretary
determines, in accordance with regulations prescribed
3 9 ()
Sec. 455
HIGHER EDUCATION ACT OF 1965
316
under section 435(o), that the borrower has experienced or
will experience an economic hardship.
(3) DEFINITION OF BORROWER.For the purpose of this
subsection, the term "borrower" means an individual who is a
new borrower on the date such individual applies for a loan
under this part for which the first disbursement is made on or
after July 1, 1993.
(4) DEFERMENTS FOR PREVIOUS PART B LOAN BORROWERS.
A borrower of a loan made under this part, who at the time
such individual applies for such loan, has an outstanding bal-
ance of principal or interest owing on any loan made, insured,
or guaranteed under part B of title N prior to July 1, 1993,
shall be eligible for a deferment under section 427(a)(2)(C) or
section 428(b)(1)(M) as such sections were in effect on July 22,
1992.
(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). Loans made under this sub-
section shall be known as "Federal Direct Consolidation Loans".
(h) BORROWER DEFENSES.Notwithstanding any other provi-
sion of State or Federal law, the Secretary shall specify in regula-
tions (except as authorized under section 457(a)(1)) which acts or
omissions of an institution of higher education a borrower may as-
sert as a defense to repayment of a loan made under this part, ex-
cept that in no event may a borrower recover from the Secretary,
in any action arising from or relating to a loan made under this
part, an amount in excess of the amount such borrower has repaid
on such loan.
(i) LOAN APPLICATION AND PROMISSORY NOTE.The common fi-
nancial reporting form required in section 483(a)(1) shall constitute
the application for loans made under this part (other than a Fed-
eral Direct PLUS loan). The Secretary shall develop, print, and dis-
tribute to participating institutions a standard promissory note and
loan disclosure form.
(j) LOAN DISBURSEMENT.
(1) IN GENERAL.Proceeds of loans to students under this
part shall be applied to the student's account for tuition and
fees, and, in the case of institutionally owned housing, to room
and board. Loan proceeds that remain after the application of
the previous sentence shall be delivered to the borrower by
check or other means that is payable to and requires the en-
dorsement or other certification by such borrower.
(2) PAYMENT PERIODS.The Secretary shall establish peri-
ods for the payments described in paragraph (1) in a manner
consistent with payment of Federal Pell Grants under subpart
1 of part A of this title.
(k) FISCAL CONTROL AND FUND ACCOUNTABILITY.
(1) IN GENERAL.(A) An institution shall maintain finan-
cial records in a manner consistent with records maintained for
other programs under this title.
(B) Except as otherwise required by regulations of the Sec-
retary, or in a notice under section 457(a)(1), an institution
may maintain loan funds under this part in the same account
as other Federal student financial assistance.
317
HIGHER EDUCATION ACT OF 1965
Sec. 456
(2) PAYMENTS AND REFUNDS.Payments and refunds shall
be reconciled in a manner consistent with the manner set forth
for the submission of a payment summary report required of
institutions participating in the program under subpart 1 of
part A, except that nothing in this paragraph shall prevent
such reconciliations on a monthly basis.
(3) TRANSACTION HISTORIES.All transaction
histories
under this part shall be maintained using the same system
designated by the Secretary for the provision of Federal Pell
Grants under subpart 1 of part A of this title.
SEC. 456. [20 U.S.C. 1087f1 CONTRACTS.
(a) CONTRACTS FOR SUPPLIES AND SERVICES.
(1) IN GENERAL.The Secretary shall, to the extent prac-
ticable, award contracts for origination, servicing, and collec-
tion described in subsection (b). In awarding such contracts,
the Secretary shall ensure that such services and supplies are
provided at competitive prices.
(2) ENTITIES.The entities with which the Secretary may
enter into contracts shall include only entities which the Sec-
retary 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 ex-
tent 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.
(3) RULE OF CONSTRUCTION.Nothing in this section shall
be construed as a limitation of the authority ofany State agen-
cy to enter into an agreement for the purposes of this section
as a member of a consortium of State agencies.
(b) CONTRACTS FOR ORIGINATION, SERVICING, AND DATA SYS-
TEMS.The Secretary may enter into contracts for
(1) the alternative origination of loans to students attend-
ing institutions of higher education with agreements to partici-
pate in the program under this part (or their parents), if such
institutions do not have agreements with the Secretary under
section 454(b);
(2) the servicing and collection of loans made under this
part;
(3) the establishment and operation of 1 or more data sys-
tems for the maintenance of records on all loans made under
this part; and
325
Sec. 451
HIGHER EDUCATION ACT OF 1965
318
(4) such other aspects of the direct student loan program
as the Secretary determines are necessary to ensure the suc-
cessful operation of the program.
SEC. 457. [20 U.S.C. 1087g] REGULATORY ACTIVITIES.
(a) NOTICE IN LIEU OF REGULATIONS FOR FIRST YEAR OF PRO -
GRAM.
(1) NOTICE IN LIEU OF REGULATIONS FOR FIRST YEAR OF
PROGRAM.The Secretary shall publish in the Federal Register
whatever standards, criteria, and procedures, consistent with
the provisions of this part, the Secretary, in consultation with
members of the higher education community, determines are
reasonable and necessary to the successful implementation of
the first year of the direct student loan program authorized by
this part. Section 431 of the General Education Provisions Act
shall not apply to the publication of such standards, criteria,
and procedures.
(2) NEGOTIATED RULEMAKING.Beginning with academic
year 1995-1996, all standards, criteria, procedures, and regula-
tions implementing this part as amended by the Student Loan
Reform Act of 1993 shall, to the extent practicable, be subject
to negotiated rulemaking, including all such standards, cri-
teria, procedures, and regulations promulgated from the date
of enactment of such Act.
(b) CLOSING DATE FOR APPLICATIONS FROM INSTITUTIONS.The
Secretary shall establish a date not later than October 1, 1993, as
the closing date for receiving applications from institutions of high-
er education desiring to participate in the first year of the direct
loan program under this part.
(C) PUBLICATION OF LIST OF PARTICIPATING INSTITUTIONS.Not
later than January 1, 1994, the Secretary shall publish in the Fed-
eral Register a list of the institutions of higher education selected
to participate in the first year of the direct loan program under this
part.
SEC. 458. [20 U.S.C. 1087h] FUNDS FOR ADMINISTRATIVE EXPENSES.
(a) ADMINISTRATIVE EXPENSES.
(1) IN GENERAL.Each fiscal year there shall be available
to the Secretary, from funds not otherwise appropriated, funds
to be obligated for
(A) administrative costs under this part and part B,
including the costs of the direct student loan programs
under this part; and
(B) account maintenance fees payable to guaranty
agencies under part B and calculated in accordance with
subsections (b) and (c),
not to exceed (from such funds not otherwise appropriated)
$617,000,000 in fiscal year 1999, $735,000,000 in fiscal year
2000, $770,000,000 in fiscal year 2001, $780,000,000 in fiscal
year 2002, and $795,000,000 in fiscal year 2003.
(2) ACCOUNT MAINTENANCE FEES.Account maintenance
fees under paragraph (1)(B) shall be paid quarterly and depos-
ited in the Agency Operating Fund established under section
422B.
319
HIGHER EDUCATION ACT OF 1965
Sec. 459
(3) CARRYOVER. The Secretary may carry over funds
made available under this section to a subsequent fiscal year.
(b) CALCULATION BASIS.Except as provided in subsection (c),
account maintenance fees payable to guaranty agencies under
paragraph (1)(B) shall be calculated
(1) for fiscal years 1999 and 2000, on the basis of 0.12 per-
cent of the original principal amount of outstanding loans on
which insurance was issued under part B; and
(2) for fiscal years 2001, 2002, and 2003, on the basis of
0.10 percent of the original principal amount of outstanding
loans on which insurance was issued under part B.
(C) SPECIAL RULES.
(1) FEE CAP.The total amount of account maintenance
fees payable under this section
(A) for fiscal year 1999, shall not exceed $177,000,000;
(B) for fiscal year 2000, shall not exceed $180,000,000;
(C) for fiscal year 2001, shall not exceed $170,000,000;
(D) for fiscal year 2002, shall not exceed $180,000,000;
and
(E) for fiscal year 2003, shall not exceed $195,000,000.
(2) INSUFFICIENT FUNDING.
(A) IN GENERAL.If the amounts set forth in para-
graph (1) are insufficient to pay the account maintenance
fees payable to guaranty agencies pursuant to subsection
(b) for a fiscal year, the Secretary shall pay the insuffi-
ciency by requiring guaranty agencies to transfer funds
from the Federal Student Loan Reserve Funds under sec-
tion 422A to the Agency Operating Funds under section
422B.
(B) ENTITLEMENT.A guaranty
agency
shall
be
deemed to have a contractual right against the United
States to receive payments according to the provisions of
subparagraph (A).
(d) BUDGET JUSTIFICATION.No funds may be expended under
this section unless the Secretary includes in the Department of
Education's annual budget justification to Congress a detailed de-
scription of the specific activities for which the funds made avail-
able by this section have been used in the prior and current years
(if applicable), the activities and costs planned for the budget year,
and the projection of activities and costs for each remaining year
for which administrative expenses under this section are made
available.
SEC. 459. [20 U.S.C. 10871] AUTHORITY TO SELL LOANS.
The Secretary, in consultation with the Secretary of the Treas-
ury, is authorized to sell loans made under this part on such terms
as the Secretary determines are in the best interest of the United
States, except that any such sale shall not result in any cost to the
Federal Government. Notwithstanding any other provision of law,
the proceeds of any such sale may be used by the Secretary to offer
reductions in the interest rate- paid- by a borrower of a loan made
under this part as the Secretary determines appropriate to encour-
age on-time repayment in accordance with section- 455(b)(7). Such
reductions may be offered only if the Secretary determines the re-
3 2 7
Sec. 460
HIGHER EDUCATION ACT OF 1965
320
ductions are in the best financial interests of the Federal Govern-
ment.
SEC. 460. [20 U.S.C. 1087j] LOAN CANCELLATION FOR TEACHERS.
(a) STATEMENT OF PURPOSE.It is the purpose of this section
to encourage individuals to enter and continue in the teaching pro-
fession.
(b) PROGRAM AUTHORIZED.
(1) IN GENERAL.The Secretary shall carry out a program
of canceling the obligation to repay a qualified loan amount in
accordance with subsection (c) for Federal Direct Stafford
Loans and Federal Direct Unsubsidized Stafford Loans made
under this part for any new borrower on or after October 1,
1998, who
(A) has been employed as a full-time teacher for 5 con-
secutive complete school years
(i)
in
a
school that qualifies under section
465(a)(2)(A) for loan cancellation for Perkins loan re-
cipients who teach in such schools;
(ii) if employed as a secondary school teacher, is
teaching a subject area that is relevant to the borrow-
er's academic major as certified by the chief adminis-
trative officer of the public or non-profit private sec-
ondary school in which the borrower is employed; and
(iii) if employed as an elementary school teacher,
has demonstrated, as certified by the chief administra-
tive officer of the public or nonprofit private elemen-
tary school in which the borrower is employed, knowl-
edge and teaching skills in reading, writing, mathe-
matics and other areas of the elementary school cur-
riculum; and
(B) is not in default on a loan for which the .borrower
seeks forgiveness.
(2) SPECIAL RULE.No borrower may obtain a reduction of
loan obligations under both this section and section 428J.
(C) QUALIFIED LOAN AMOUNTS.
(1) IN GENERAL.The Secretary shall cancel not more than
$5,000 in the aggregate of the loan obligation on a Federal Di-
rect Stafford Loan or a Federal Direct Unsubsidized Stafford
Loan that is outstanding after the completion of the fifth com-
plete school year of teaching described in subsection (b)(1)(A).
(2) TREATMENT OF CONSOLIDATION LOANS.A loan amount
for a Federal Direct Consolidation Loan may be a qualified
loan amount for the purposes of this subsection only to the ex-
tent that such loan amount was used to repay a Federal Direct
Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or
a loan made under section 428 or 428H, for a borrower who
meets the requirements of subsection (b), as determined in ac-
cordance with regulations prescribed by the Secretary.
(d) REGULATIONS.The Secretary is authorized to issue such
regulations as may be necessary to carry out the provisions of this
section.
(e) CONSTRUCTION.Nothing in this section shall be construed
to authorize any refunding of any canceled loan.
321
HIGHER EDUCATION ACT OF 1965
Sec. 461
(f) LIST.If the list of schools in which a teacher may perform
service pursuant to subsection (b) is not available before May 1 of
any year, the Secretary may use the list for the year preceding the
year for which the determination is made to make such service de-
termination.
(g) ADDITIONAL ELIGIBILITY PROVISIONS.
(1) CONTINUED ELIGIBILITY.Any teacher who performs
service in a school that
(A) meets the requirements of subsection (b)(1)(A) in
any year during such service; and
(B) in a subsequent year fails to meet the require-
ments of such subsection, may continue to teach in such
school and shall be eligible for loan cancellation pursuant
to subsection' (b)..
(2) PREVENTION OF DOUBLE BENEFITS.No borrower may,
for the same volunteer service, receive a benefit under both
this section and subtitle D of title I of the National and Com-
munity Service Act of 1990 (42 U.S.C. 12571 et seq.).
(h) DEFINITION.For the purpose of this section, the term
"year" where applied to service as a. teacher means an academic
year as defined by the Secretary.
PART EFEDERAL PERKINS LOANS
SEC. 461. [20 U.S.C. 1087aa] APPROPRIATIONS AUTHORIZED.
(a) PROGRAM AUTHORITY.The Secretary shall carry out a pro-
gram of stimulating and assisting in the establishment and mainte-
nance 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 of
enabling the Secretary to make contributions to student loan funds
established under this part, there are authorized to be appro-
priated $250,000,000 for fiscal year 1999 and such sums as may be
necessary for each of the 4 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 2003 and each of the 5 succeeding fiscal years as may be nec-
essary to enable students who have received loans for academic
years ending prior to October 1, 2003, 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 apportion-
ment 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 Fed-
eral capital contributions and all contributions from such institu-
tions shall be used for the establishment, expansion, and mainte-
nance of student loan funds.
SEC. 462. [20 U.S.C. 1087bb] ALLOCATION OF FUNDS.
(a) ALLOCATION BASED ON PREVIOUS ALLOCATION.(1) From
the amount appropriated pursuant to section 461(b) for each fiscal
Sec. 462
HIGHER EDUCATION ACT OF 1965
322
year, the Secretary shall first allocate to each eligible institution an
amount equal to
(A) 100 percent of the amount received under subsections
(a) and (b) of this section for fiscal year 1999 (as such sub-
sections were in effect with respect to allocations for such fiscal
year)', multiplied by
(B) the institution's default penalty, as determined under
subsection (e),
except that if the institution has a cohort default rate in excess of
the applicable maximum cohort default rate under subsection (f),
the institution may not receive an allocation under this paragraph.
(2)(A) From the amount so appropriated, the Secretary shall
next allocate to each eligible institution that began participation in
the program under this part after fiscal year 1999 but is not a first
or second time participant, an amount equal to the greater of
(i) $5,000; or
(ii) 100 percent of the amount received and expended
under this part for the first year it participated in the pro-
gram.
(B) From the amount so appropriated, the Secretary shall next
allocate to each eligible institution that began participation in the
program under this part after fiscal year 1999 and is a first or sec-
ond time participant, an amount equal to the greatest of
(i) $5,000;
(ii) an amount equal to (I) 90 percent of the amount re-
ceived and used under this part in the second preceding fiscal
year by eligible institutions offering comparable programs of
instruction, divided by (II) the number of students enrolled at
such comparable institutions in such fiscal year, multiplied by
(III) the number of students enrolled at the applicant institu-
tion in such fiscal year; or
(iii) 90 percent of the institution's allocation under this
part for the preceding fiscal year.
(C) Notwithstanding subparagraphs (A) and (B) of this para-
graph, the Secretary shall allocate to each eligible institution
which
(i) was a first-time participant in the program in fiscal
year 2000 or any subsequent fiscal year, and
(ii) received a larger amount under this subsection in the
second year of participation,
an amount equal to 90 percent of the amount it received under this
subsection in its second year of participation.
(D) For any fiscal year after a fiscal year in which an institu-
tion receives an allocation under subparagraph (A), (B), or (C), the
Secretary shall allocate to such institution an amount equal to the
product of
(i) the amount determined under subparagraph (A), (B), or
(C), multiplied by
'Section 462(aX1)(A) of P.L. 105-244 (112 Stat. 1720) amended this subparagraph by striking
"the amount of the Federal capital contribution allocated to such institution under this part for
fiscal year 1985" and inserting "the amount received under" through "fiscal year)'. The amend-
ment was executed to reflect the probable intent of Congress even though the italized "the" was
not in law.
3 9
323
HIGHER EDUCATION ACT OF 1965
Sec. 462
(ii) the institution's default penalty, as determined under
subsection (e),
except that if the institution has a cohort default rate in excess of
the applicable maximum cohort default rate under subsection (f),
the institution may not receive an allocation under this paragraph.
(3)(A) If the amount appropriated for any fiscal year is less
than the amount required to be allocated to all institutions under
paragraph (1) of this subsection, then the amount of the allocation
to each such institution shall be ratably reduced.
(B) If the amount appropriated for any fiscal year is more than
the amount required to be allocated to all institutions under para-
graph (1) but less than the amount required to be allocated to all
institutions under paragraph (2), then
(i) the Secretary shall allot the amount required to be allo-
cated to all institutions under paragraph (1), and
(ii) the amount of the allocation to each institution under
paragraph (2) shall be ratably reduced.
(C) If additional amounts are appropriated for any such fiscal
year, such reduced amounts shall be increased on the same basis
as they were reduced (until the amount allocated equals the
amount required to be allocated under paragraphs (1) and (2) of
this subsection).
(b) ALLOCATION OF EXCESS BASED ON SHARE OF EXCESS ELIGI-
BLE AMOUNTS.-(1) From the remainder of the amount appro-
priated pursuant to section 461(b) after making the allocations re-
quired by subsection (a) of this section, the Secretary shall allocate
to each eligible institution which has an excess eligible amount an
amount which bears the same ratio to such remainder as such ex-
cess eligible amount bears to the sum of the excess eligible
amounts of all such eligible institutions (having such excess eligible
amounts).
(2) For any eligible institution, the excess eligible amount is
the amount, if any, by which
(A)(i) that institution's eligible amount (as determined
under paragraph (3)), divided by (ii) the sum of the eligible
amounts of all institutions (as so determined), multiplied by
(iii) the amount appropriated pursuant to section 461(b) for the
fiscal year; exceeds
(B) the amount required to be allocated to that institution
under subsection (a),
except that an eligible institution which has a cohort default rate
in excess of the applicable maximum cohort default rate under sub-
section (f) may not receive an allocation under this paragraph.
(3) For any eligible institution, the eligible amount of that in-
stitution is equal to
(A) the amount of the institution's self-help need, as deter-
mined under subsection (c); minus
(B) the institution's anticipated collections; multiplied by
(C) the institution's default penalty, as determined under
subsection (e);
except that, if the institution has a cohort default rate in excess of
the applicable maximum cohort default rate under subsection (0,
the eligible amount of that institution is zero.
3 3 1
Sec. 462
HIGHER EDUCATION ACT OF 1965
324
(C) DETERMINATION OF INSTITUTION'S SELF-HELP NEED.-(1)
The amount of an institution's self-help need is equal to the sum
of the self-help need of the institution's eligible undergraduate stu-
dents and the self-help need of the institution's eligible graduate
and professional students.
(2) To determine the self-help need of an institution's eligible
undergraduate students, the Secretary shall
(A) establish various income categories for dependent and
independent undergraduate students;
(B) establish an expected family contribution for each in-
come category of dependent and independent undergraduate
students, determined on the basis of the average expected fam-
ily contribution (computed in accordance with part F of this
title) of a representative sample within each income category
for the second preceding fiscal year;
(C) compute 25 percent of the average cost of attendance
for all undergraduate students;
(D) multiply the number of eligible dependent students in
each income category by the lesser of
(i) 25 percent of the average cost of attendance for all
undergraduate students determined under subparagraph
(C); or
(ii) the average cost of attendance for all undergradu-
ate students minus the expected family contribution deter-
mined under subparagraph (B) for that income category,
except that the amount computed by such subtraction
shall not be less than zero;
(E) add the amounts determined under subparagraph (D)
for each income category of dependent students;
(F) multiply the number of eligible independent students
in each income category by the lesser of
(i) 25 percent of the average cost of attendance for all
undergraduate students determined under subparagraph
(C); or
(ii) the average cost of attendance for all undergradu-
ate students minus the expected family contribution deter-
mined under subparagraph (B) for that income category,
except that the amount computed by such subtraction for
any income category shall not be less than zero;
(G) add the amounts determined under subparagraph (F)
for each income category of independent students; and
(H) add the amounts determined under subparagraphs (E)
and (G).
(3) To determine the self-help need of an institution's eligible
graduate and professional students, the Secretary shall
(A) establish various income categories for graduate and
professional students;
(B) establish an expected family contribution for each in-
come category of graduate and professional students, deter-
mined on the basis of the average expected family contribution
(computed in accordance with part F of this title) of a rep-
resentative sample within each income category for the second
preceding fiscal year;
332
325
HIGHER EDUCATION ACT OF 1965
Sec. 462
(C) determine the average cost of attendance for all grad-
uate and professional students;
(D) subtract from the average cost of attendance for all
graduate and professional students (determined under sub-
paragraph (C)), the expected family contribution (determined
under subparagraph (B)) for each income category, except that
the amount computed by such subtraction for any income cat-
egory shall not be less than zero;
(E) multiply the amounts determined under subparagraph
(D) by the number of eligible students in each category;
(F) add the amounts determined under subparagraph (E)
for each income category.
(4)(A) For purposes of paragraphs (2) and (3), the term "aver-
age cost of attendance" means the average of the attendance costs
for undergraduate students and for graduate and professional stu-
dents, which shall include (i) tuition and fees determined in accord-
ance with subparagraph (B), (ii) standard living expenses deter-
mined in accordance with subparagraph (C), and (iii) books and
supplies determined in accordance with subparagraph (D).
(B) The average undergraduate and graduate and professional
tuition and fees described in subparagraph (A)(i) shall be computed
on the basis of information reported by the institution to the Sec-
retary, which shall include (i) total revenue received by the institu-
tion from undergraduate and graduate tuition and fees for the sec-
ond year preceding the year for which it is applying for an alloca-
tion, and (ii) the institution's enrollment for such second preceding
year.
(C) The standard living expense described in subparagraph
(A)(ii) is equal to 150 percent of the difference between the income
protection allowance for a family of five with one in college and the
income protection allowance for a family of six with one in college
for a single independent student.
(D) The allowance for books and supplies described in subpara-
graph (A)(iii) is equal to $450.
(d) ANTICIPATED COLLECTIONS.(1) An institution's anticipated
collections are equal to the amount which was collected during the
second year preceding the beginning of the award period, multi-
plied by 1.21.
(2) The Secretary shall establish an appeals process by which
the anticipated collections required in paragraph (1) may be waived
for institutions with low cohort default rates in the program as-
sisted under this part.
(e) DEFAULT PENALTIES.
(1) YEARS PRECEDING FISCAL YEAR 2000.For any fiscal
year preceding fiscal year 2000, any institution with a cohort
default rate that
(A) equals or exceeds 15 percent, shall establish a de-
fault reduction plan pursuant to regulations prescribed by
the Secretary, except that such plan shall not be required
with respect to an institution that has a default rate of
less than 20 percent and that has less than 100 students
who have loans under this part in such academic year;
(B) equals or exceeds 20 percent, but is less than 25
percent, shall have a default penalty of 0.9;
3
Sec. 462
HIGHER EDUCATION ACT OF 1965
326
(C) equals or exceeds 25 percent, but is less than 30
percent, shall have a default penalty of 0.7; and
(D) equals or exceeds 30 percent shall have a default
penalty of zero.
(2) YEARS FOLLOWING FISCAL YEAR 2000.For fiscal year
2000 and any succeeding fiscal year, any institution with a co-
hort default rate (as defined under subsection (g)) that equals
or exceeds 25 percent shall have a default penalty of zero.
(3) INELIGIBILITY.
(A) IN GENERAL.For fiscal year 2000 and any suc-
ceeding fiscal year, any institution with a cohort default
rate (as defined in subsection (g)) that equals or exceeds
50 percent for each of the 3 most recent years for which
data are available shall not be eligible to participate in a
program under this part for the fiscal year for which the
determination is made and the 2 succeeding fiscal years,
unless, within 30 days of receiving notification from the
Secretary of the loss of eligibility under this paragraph,
the institution appeals the loss of eligibility to the Sec-
retary. The Secretary shall issue a decision on any such
appeal within 45 days after the submission of the appeal.
Such decision may permit the institution to continue to
participate in a program under this part if
(i) the institution demonstrates to the satisfaction
of the Secretary that the calculation of the institu-
tion's cohort default rate is not accurate, and that re-
calculation would reduce the institution's cohort de-
fault rate for any of the 3 fiscal years below 50 per-
cent; or
(ii) there are, in the judgment of the Secretary,
such a small number of borrowers entering repayment
that the application of this subparagraph would be in-
equitable.
(B) CONTINUED PARTICIPATION.During an appeal
under subparagraph (A), the Secretary may permit the in-
stitution to continue to participate in a program under this
part.
(C) RETURN OF FUNDS.Within 90 days after the date
of any termination pursuant to subparagraph (A), or the
conclusion of any appeal pursuant to subparagraph (B),
whichever is later, the balance of the student loan fund es-
tablished under this part by the institution that is the sub-
ject of the termination shall be distributed as follows:
(i) The Secretary shall first be paid an amount
which bears the same ratio to such balance (as of the
date of such distribution) as the total amount of Fed-
eral capital contributions to such fund by the Sec-
retary under this part bears to the sum of such Fed-
eral capital contributions and the capital contributions
to such fund made by the institution.
(ii) The remainder of such student loan fund shall
be paid to the institution.
327
HIGHER EDUCATION ACT OF 1965
Sec. 462
(D) USE OF RETURNED FUNDS. Any funds returned to
the Secretary under this paragraph shall be reallocated to
institutions of higher education pursuant to subsection (i).
(E) DEFINITION.For the purposes of subparagraph
(A), the term "loss of eligibility" shall be defined as the
mandatory liquidation of an institution's student loan
fund, and assignment of the institution's outstanding loan
portfolio to the Secretary.
(f) APPLICABLE MAXIMUM COHORT DEFAULT RATE.
(1) AWARD YEARS PRIOR TO 2000.For award years prior to
award year 2000, the applicable maximum cohort default rate
is 30 percent.
(2) AWARD YEAR 2000 AND SUCCEEDING AWARD YEARS.For
award year 2000 and subsequent years, the applicable maxi-
mum cohort default rate is 25 percent.
(g) DEFINITION OF COHORT DEFAULT RATE.
(1)(A) The term "cohort default rate" means, for any award
year in which 30 or more current and former students at the
institution enter repayment on loans under this part (received
for attendance at the institution), the percentage of those cur-
rent and former students who enter repayment on such loans
(received for attendance at that institution) in that award year
who default before the end of the following award year.
(B) For any award year in which less than 30 of the insti-
tution's current and former students enter repayment, the
term "cohort default rate" means the percentage of such cur-
rent and former students who entered repayment on such
loans in any of the three most recent award years and who de-
fault before the end of the award year immediately following
the year in which they entered repayment.
(C) A loan on which a payment is made by the institution
of higher education, its owner, agency, contractor, employee, or
any other entity or individual affiliated with such institution,
in order to avoid default by the borrower, is considered as in
default for the purposes of this subsection.
(D) In the case of a student who has attended and bor-
rowed at more than one school, the student (and his or her
subsequent repayment or default) is attributed to the school for
attendance at which the student received the loan that entered
repayment in the award year.
(E) In determining the number of students who default be-
fore the end of such award year, the institution, in calculating
the cohort default rate, shall exclude
(i) any loan on which the borrower has, after the time
periods specified in paragraph (2)
(I) voluntarily made 6 consecutive payments;
(II) voluntarily made all .payments currently due;
(III) repaid in full the amount due on the
loan; or
(IV) received a deferment or forbearance, based on
a condition that began prior to such time periods;
(ii) any loan which has, after the time periods speci-
fied in paragraph (2), been rehabilitated or canceled; and
335
Sec. 462
HIGHER EDUCATION ACT OF 1965
328
(iii) any other loan that the Secretary determines
should be excluded from such determination.
(F) The Secretary shall prescribe regulations designed to
prevent an institution from evading the application to that in-
stitution of a cohort default rate determination under this sub-
section through the use of such measures as branching, con-
solidation, change of ownership or control or other means as
determined by the Secretary.
(2) For purposes of calculating the cohort default rate
under this subsection, a loan shall be considered to be in
default
(A) 240 days (in the case of a loan repayable monthly),
or
(B) 270 days (in the case of a loan repayable quar-
terly),
after the borrower fails to make an installment payment when
due or to comply with other terms of the promissory note.
(h) FILING DEADLINES.The Secretary shall, from time to time,
set dates before which institutions must file applications for alloca-
tions under this part.
(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, the Sec-
retary shall reallocate 80 percent of such returned portions to
participating institutions in an amount not to exceed such par-
ticipating institution's excess eligible amounts as determined
under paragraph (2).
(B) For the purpose of this subsection, the term "partici-
pating institution" means an institution of higher education
that
(i) was a participant in the program assisted under
this part in fiscal year 1999; and
(ii) did not receive an allocation under subsection (a)
in the fiscal year for which the reallocation determination
is made.
(2) EXCESS ELIGIBLE AMOUNT.For any participating insti-
tution, the excess eligible amount is the amount, if any, by
which
(A)(i) that institution's eligible amount (as determined
under subsection (b)(3)), divided by (ii) the sum of the eli-
gible amounts of all participating institutions (as deter-
mined under paragraph (3)), multiplied by (iii) the amount
of funds available for reallocation under this subsection;
exceeds
(B) the amount required to be allocated to that institu-
tion under subsection (b).
(3) REMAINDER.The Secretary shall reallocate the re-
mainder of such returned portions in accordance with regula-
tions of the Secretary.
(4) ALLOCATION REDUCTIONS.If under paragraph (1) of
this subsection an institution returns more than 10 percent of
its allocation, the institution's allocation for the next fiscal year
shall be reduced by the amount returned. The Secretary may
329
HIGHER EDUCATION ACT OF 1965
Sec. 463
waive this paragraph for a specific institution if the Secretary
finds that enforcing it is contrary to the interest of the pro-
gram.
SEC. 463. [20 U.S.C. 1087cc] AGREEMENTS WITH INSTITUTIONS OF
HIGHER EDUCATION.
(a) CONTENTS OF AGREEMENTS.An agreement with any insti-
tution of higher education for the payment of Federal capital con-
tributions under this part shall
(1) provide for the establishment and maintenance of a
student loan fund for the purpose of this part;
(2) provide for the deposit in such fund of
(A) Federal capital contributions from funds appro-
priated under section 461;
(B) a capital contribution by an institution in an
amount equal to one-third of the Federal capital contribu-
tions described in subparagraph (A);
(C) collections of principal and interest on student
loans made from deposited funds;
(D) charges collected pursuant to regulations under
section 464(c)(1)(H); and
(E) any other earnings of the funds;
(3) provide that such student loan fund shall be used only
for
(A) loans to students, in accordance with the provi-
sions of this part;
(B) administrative expenses, as provided in subsection
(b);
(C) capital distributions, as provided in section 466;
and
(D) costs of litigation, and other collection costs agreed
to by the Secretary in connection with the collection of a
loan from the fund (and interest thereon) or a charge as-
sessed pursuant to regulations under section 464(c)(1)(H);
(4) provide that where a note or written agreement evi-
dencing 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 subpara-
graph (A), the Secretary may
(i) allow such institution to transfer its interest in
such loan to the Secretary, for collection, and the Sec-
retary may use any collections thereon (less
an
amount not to exceed 30 percent of any such sums col-
_
337
Sec. 463
HIGHER EDUCATION ACT OF. 1965
330
lected to cover the Secretary's collection costs) to make
allocations to institutions of additional capital con-
tributions in accordance with section 462; or
(ii) allow such institution to refer such note or
agreement to the Secretary, without recompense, ex-
cept that any sums collected on such a loan (less an
amount not to exceed 30 percent of any such sums col-
lected to cover the Secretary's collection costs) shall be
repaid to such institution no later than 180 days after
collection by the Secretary and treated as an addi-
tional capital contribution;
(5) provide that, if an institution of higher education deter-
mines 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 obliga-
tions 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;
(6) provide that, notwithstanding any other provision of
law, the Secretary will provide to the institution any informa-
tion with respect to the names and addresses of borrowers or
other relevant information which is available to the Secretary,
from whatever source such information may be derived;
(7) provide assurances that the institution will comply
with the provisions of section 463A;
(8) provide that the institution of higher education will
make loans first to students with exceptional need; and
(9) include such other reasonable provisions as may be nec-
essary to protect the United States from unreasonable risk of
loss and as are agreed to by the Secretary and the institution.
(b) ADMINISTRATIVE EXPENSES.An institution which has en-
tered into an agreement under subsection (a) shall be entitled, for
each fiscal year during which it makes student loans from a stu-
dent 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.
(C) COOPERATIVE AGREEMENTS WITH CREDIT BUREAU ORGANI-
ZATIONS.(1) For the purpose of promoting responsible repayment
of loans made pursuant to this part,. the Secretary and each insti-
tution of higher education participating in the program under this
part shall enter into cooperative agreements with credit bureau or-
ganizations to provide for the exchange of information concerning
student borrowers concerning whom the Secretary has received a
referral pursuant to section 467 and regarding loans held by the
Secretary or an institution.
(2) Each cooperative agreement made pursuant to paragraph
(1) shall be made in accordance with the requirements of section
430A except that such agreement shall provide for the disclosure
by the Secretary or an institution, as the case may be, to such or-
ganizations, with respect to any loan held by the Secretary or the
institution, respectively, of-
338
331
HIGHER EDUCATION ACT OF 1965
Sec. 463
(A)1 the date of disbursement and the amount of such
loans made to any borrower under this part at the time of
disbursement of the loan;
(B) information concerning the repayment and2 collection
of any such loan, including information concerning the repay-
ment and 2 the status of such loan; and
(C) the date of cancellation of the note upon completion of
repayment by the borrower of any such loan, or upon cancella-
tion or discharge of the borrower's obligation on the loan for
any reason.
(3) Notwithstanding paragraphs (4) and (6) of subsection (a) of
section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c (a)(4),
(a)(6)), a consumer reporting agency may make a report containing
information received from the Secretary or an institution regarding
the status of a borrower's account on a loan made under this part
until the loan is paid in full.
(4)(A) Except as provided in subparagraph (B), an institution
of higher education, after consultation with the Secretary and pur-
suant to the agreements entered into under paragraph (1), shall
disclose at least annually to any credit bureau organization with
which the Secretary has such an agreement the information set
forth in paragraph (2), and shall disclose promptly to such credit
bureau organization any changes to the information previously dis-
closed.
(B) The Secretary may promulgate regulations establishing cri-
teria under which an institution of higher education may cease re-
porting the information described in paragraph (2) before a loan is
paid in full.
(5) Each institution of higher education shall notify the appro-
priate credit bureau organizations whenever a borrower of a loan
that is made and held by the institution and that is in default
makes 6 consecutive monthly payments on such loan, for the pur-
pose of encouraging such organizations to update the status of in-
formation maintained with respect to that borrower.
(d) LIMITATION ON USE OF INTEREST BEARING ACCOUNTS.In
carrying out the provisions of subsection (a)(9), the Secretary may
not require that any collection agency, collection attorney, or loan
servicer collecting loans made under this part deposit amounts col-
lected on such loans in interest bearing accounts, unless such agen-
cy, attorney, or servicer holds such amounts for more than 45 days.
(e) SPECIAL DUE DILIGENCE RULE.In carrying out the provi-
sions of subsection (a)(5) relating to due diligence, the Secretary
shall make every effort to ensure that institutions of higher edu-
cation may use Internal Revenue Service skip-tracing collection
procedures on loans made under this part.
SEC. 463A. [20 U.S.C. 1087cc-1] STUDENT LOAN INFORMATION BY
ELIGIBLE INSTITUTIONS.
(a) DISCLOSURE REQUIRED PRIOR TO DISBURSEMENT.Each in-
stitution of higher education, in order to carry out the provisions
Margin so in law.
2 Section 463(b)(2)(C)(i) of the Higher Education Amendments of 1998 (P.L. 105-244) amended
this subparagraph by inserting "the repayment and" after "concerning". The amendatory in-
structions did not state which occurrence of "concerning" and therefore was executed both places
it appears.
333
Sec. 463A
HIGHER EDUCATION ACT OF 1965
332
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) the name of the institution of higher education, and the
address to which communications and payments should be
sent;
(2) the principal amount of the loan;
(3) the amount of any charges collected by the institution
at or prior to the disbursal of the loan and whether such
charges are deducted from the proceeds of the loan or paid sep-
arately by the borrower;
(4) the stated interest rate on the loan;
(5) the yearly and cumulative maximum amounts that may
be borrowed;
(6) an explanation of when repayment of the loan will be
required and when the borrower will be obligated to pay inter-
est that accrues on the loan;
(7) a statement as to the minimum and maximum repay-
ment term which the institution may impose, and the mini-
mum monthly payment required by law and a description of
any penalty imposed as a consequence of default, such as li-
ability for expenses reasonably incurred in attempts by the
Secretary or institutions to collect on a loan;
(8) a statement of the total cumulative balance, including
the loan applied for, owed by the student to that lender, and
an estimate of the projected monthly payment, given such cu-
mulative balance;
(9) an explanation of any special options the borrower may
have for loan consolidation or other refinancing of the loan;
(10) a statement that the borrower has the right to prepay
all or part of the loan, at any time, without penalty, a state-
ment summarizing circumstances in which repayment of the
loan or interest that accrues on the loan may be deferred, and
a brief notice of the program for repayment of loans, on the
basis of military service, pursuant to the Department of De-
fense educational loan repayment program (10 U.S.C. 16302);
(11) a definition of default and the consequences to the
borrower if the borrower defaults, together with a statement
that the disbursement of, and the default on, a loan under this
part, shall be reported to a credit bureau or credit reporting
agency;
(12) to the extent practicable, the effect of accepting the
loan on the eligibility of the borrower for other forms of stu-
dent assistance; and
(13) an explanation of any cost the borrower may incur in
the making or collection of the loan.
(b) DISCLOSURE REQUIRED. PRIOR TO REPAYMENT.Each insti-
tution of higher education shall enter into an agreement with the
Secretary under which the institution will, prior to the start of the
34
333
HIGHER EDUCATION ACT OF 1965
Sec. 464
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 state-
ment provided to the borrower. The disclosures shall include
(1) the name of the institution of higher education, and the
address to which communications and payments should be
sent;
(2) the scheduled date upon which the repayment period is
to begin;
(3) the estimated balance owed by the borrower on the
loan or loans covered by the disclosure as of the scheduled date
on which the repayment period is to begin (including, if appli-
cable, the estimated amount of interest to be capitalized);
(4) the stated interest rate on the loan or loans, or the
combined interest rate of loans with different stated interest
rates;
(5) the nature of any fees which may accrue or be charged
to the borrower during the repayment period;
(6) the repayment schedule for all loans covered by the dis-
closure including the date the first installment is due, and the
number, amount, and frequency of required payments;
(7) an explanation of any special options the borrower may
have for loan consolidation or other refinancing of the loan;
(8) the projected total of interest charges which the bor-
rower will pay on the loan or loans, assuming that the bor-
rower makes payments exactly in accordance with the repay-
ment schedule; and
(9) a statement that the borrower has the right to prepay
all or part of the loan or loans covered by the disclosure at any
time without penalty.
(c) COSTS AND EFFECTS OF DISCLOSURES.Such information
shall be available without cost to the borrower. The failure of an
eligible institution to provide information as required by this sec-
tion shall not (1) relieve a borrower of the obligation to repay a
loan in accordance with its terms, (2) provide a basis for a claim
for civil damages, or (3) be deemed to abrogate the obligation of the
Secretary to make payments with respect to such loan.
SEC. 464. [20 U.S.C. 1087dd] TERMS OF LOANS.
(a) TERMS AND CONDITIONS.(1) Loans from any student loan
fund established pursuant to an agreement under section 463 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.
(2)(A) Except as provided in paragraph (4), the total of loans
made to a student in any academic year or its equivalent by an in-
stitution of higher education from a loan fund established pursuant
to an agreement under this part shall not exceed
(i) $4,000, in the case of a student who has not successfully
completed a program of undergraduate education; or
34 J.
Sec. 464
HIGHER EDUCATION ACT OF 1965
334
(ii) $6,000, in the case of a graduate or professional stu-
dent (as defined in regulations issued by the Secretary).
(B) Except as provided in paragraph (4), the aggregate unpaid
principal amount for all loans made to a student by institutions of
higher education from loan funds established pursuant to agree-
ments under this part may not exceed
(i) $40,000, in the case of any graduate or professional stu-
dent (as defined by regulations issued by the Secretary, and in-
cluding any loans from such funds made to such person before
such person became a graduate or professional student);
(ii) $20,000, in the case of a student who has successfully
completed 2 years of a program of education leading to a bach-
elor's degree but who has not completed the work necessary for
such a degree (determined under regulations issued by the Sec-
retary), and including any loans from such funds made to such
person before such person became such a student; and
(iii) $8,000, in the case of any other student.
(3) Regulations of the Secretary under paragraph (1) shall be
designed to prevent the impairment of the capital student loan
funds to the maximum extent practicable and with a view toward
the objective of enabling the student to complete his course of
study.
(4) In the case of a program of study abroad that is approved
for credit by the home institution at which a student is enrolled
and that has reasonable costs in excess of the home institution's
budget, the annual and aggregate loan limits for the student may
exceed the amounts described in paragraphs (2)(A) and (2)(B) by 20
percent.
(b) DEMONSTRATION OF NEED AND ELIGIBILITY REQUIRED.-(1)
A loan from a student loan fund assisted under this part may be
made only to a student who demonstrates financial need in accord-
ance with part F of this title, who meets the requirements of sec-
tion 484, and who provides the institution with the student's driv-
ers 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).
(2) If the institution's capital contribution under section 462 is
directly or indirectly based in part on the financial need dem-
onstrated by students who are (A) attending the institution less
than full time, or (B) independent students, then a reasonable por-
tion of the loans made from the institution's student loan fund con-
taining the contribution shall be made available to such students.
(c) CONTENTS OF LOAN AGREEMENT.-(1) Any agreement be-
tween an institution and a student for a loan from a student loan
fund assisted under this part
(A) shall be evidenced by note or other written instrument
which, except as provided in paragraph (2), provides for repay-
ment of the principal amount of the loan, together with inter-
est thereon, in equal installments (or, if the borrower so re-
quests, in graduated periodic installments determined in ac-
cordance with such schedules as may be approved by the Sec-
retary) payable quarterly, bimonthly, or monthly, at the option
of the institution, over a period beginning nine months after
335
HIGHER EDUCATION ACT OF 1965
Sec. 464
the date on which the student ceases to carry, at an institution
of higher education or a comparable institution outside the
United States approved for this purpose by the Secretary, at
least one-half the normal full-time academic workload, and
ending 10 years and 9 months after such date except that such
period may begin earlier than 9 months after such date upon
the request of the borrower;
(B) shall include provision for acceleration of repayment of
the whole, or any part, of such loan, at the option of the bor-
rower;
(C)(i) may provide, at the option of the institution, in ac-
cordance with regulations of the Secretary, that during the re-
payment period of the loan, payments of principal and interest
by the borrower with respect to all outstanding loans made to
the student from a student loan fund assisted under this part
shall be at a rate equal to not less than $40 per month, except
that the institution may, subject to such regulations, permit a
borrower to pay less than $40 per month for a period of not
more than one year where necessary to avoid hardship to the
borrower, but without extending the 10-year maximum repay-
ment period provided for in subparagraph (A) of this para-
graph; and
(ii) may provide that the total payments by a borrower for
a monthly or similar payment period with respect to the aggre-
gate of all loans held by the institution may, when the amount
of a monthly or other similar payment is not a multiple of $5,
be rounded to the next highest whole dollar amount that is a
multiple of $5;
(D) shall provide that the loan shall bear interest, on the
unpaid balance of the, loan, at the rate of 5 percent per year
in the case of any loan made on or after October 1, 1981, ex-
cept that no interest shall accrue (I)' prior to the beginning
date of repayment determined under paragraph (2)(A)(i), or
(II)1 during any period in which repayment is suspended by
reason of paragraph (2);
(E) shall provide that the loan shall be made without secu-
rity and without endorsement;
(F) shall provide that the liability to repay the loan shall
be canceled upon the death of the borrower, or if he becomes
permanently and totally disabled as determined in accordance
with regulations of the Secretary;
(G) shall provide that no note or evidence of obligation
may be assigned by the lender, except upon the transfer of the
borrower to another institution participating under this part
(or, if not so participating, is eligible to do so and is approved
by the Secretary for such purpose), to such institution, and ex-
cept as necessary to carry out section 463(a)(6);
(H) pursuant to regulations of the Secretary, shall provide
for an assessment of a charge with respect to the loan for fail-
ure of the borrower to pay all or part of an installment when
due, which shall include the expenses reasonably incurred in
attempting collection of the loan, to the extent permitted by
150 in law (112 Stat. 1726). Probably should be redesignated as clauses (i) and (ii).
343
Sec. 464
HIGHER EDUCATION ACT OF 1965
336
the Secretary, except that no charge imposed under this sub-
paragraph shall exceed 20 percent of the amount of the month-
ly payment of the borrower; and
(I) shall contain a notice of the system of disclosure of in-
formation_ concerning default on such loan to credit bureau or-
ganizations under section 463(c).
(2)(A) No repayment of principal of, or interest on, any loan
from a student loan fund assisted under this part shall be required
during any period
(i) during which the borrower
(I) is pursuing at least a half-time course of study as
determined by an eligible institution; or
(II) is pursuing a course of study pursuant to a grad-
uate fellowship program approved by the Secretary, or
pursuant to a rehabilitation training program for disabled
individuals approved by the Secretary,
except that no borrower shall be eligible for a deferment under
this clause, or loan made under this part while serving in a
medical internship or residency program;
(ii) not in excess of 3 years during which the borrower is
seeking and unable to find full-time employment;
(iii) not in excess of 3 years for any reason which the lend-
er determines, in accordance with regulations prescribed by the
Secretary under section 435(o), has caused or will cause the
borrower to have an economic hardship; or
(iv) during which the borrower is engaged in service de-
scribed in section 465(a)(2);
and provides that any such period shall not be included in deter-
mining the 10-year period described in subparagraph (A) of para-
graph (1).
(B) No repayment of principal of, or interest on, any loan for
any period described in subparagraph (A) shall begin until 6
months after the completion of such period.
(C) An individual with an outstanding loan balance who meets
the eligibility criteria for a deferment described in subparagraph
(A) as in effect on the date of enactment of this subparagraph shall
be eligible for deferment under this paragraph notwithstanding any
contrary provision of the promissory note under which the loan or
loans were made, and notwithstanding any amendment (or effec-
tive date provision relating to any amendment) to this section
made prior to the date of such deferment.
(3)(A) The Secretary is authorized, when good cause is shown,
to extend, in accordance with regulations, the 10-year maximum re-
payment period provided for in subparagraph (A) of paragraph (1)
with respect to individual loans.
(B) Pursuant to uniform criteria established by the Secretary,
the repayment period for any student borrower who during the re-
payment period 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 under this part shall
begin on the day immediately following the expiration of the pe-
riod, specified in paragraph (1)(A), after the student ceases to carry
the required academic workload, unless the borrower requests and
331
HIGHER EDUCATION ACT OF 1965
Sec. 464
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 may elect
(A) to add the amount of any charge imposed under para-
graph (1)(H) to the principal amount of the loan as of the first
day after the day on which the installment was due and to no-
tify the borrower of the assessment of the charge; or
(B) to make the amount of the charge payable to the insti-
tution not later than the due date of the next installment.
(6) Requests for deferment of repayment of loans 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.
(7) There shall be excluded from the 9-month period that be-
gins on the date on which a student ceases to carry at least one-
half the normal full-time academic workload (as described in para-
graph (1)(A)) any period not to exceed 3 years during which a bor-
rower who is a member of a reserve component of the Armed
Forces named in section 10101 of title 10, United States Code, is
called or ordered to active duty for a period of more than 30 days
(as defined in section 101(d)(2) of such title). Such period of exclu-
sion shall include the period necessary to resume enrollment at the
borrower's next available regular enrollment period.
(d) AVAILABILITY OF LOAN FUND TO ALL ELIGIBLE STUDENTS.
An agreement under this part for payment of Federal capital con-
tributions shall include provisions designed to make loans from the
student loan fund established pursuant to such agreement reason-
ably available (to the extent of the available funds in such fund)
to all eligible students in such institutions in need thereof.
(e) FORBEARANCE.The Secretary shall ensure that, upon writ-
ten request, an institution of higher education shall grant a bor-
rower forbearance of principal and interest or principal only, re-
newable 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
(1) the borrower's debt burden equals or exceeds 20 per-
cent of such borrower's gross income; or
(2) the institution determines that the borrower should
qualify for forbearance for other reasons.
(0 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 institu-
tion 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 Fed-
eral capital contribution to the institution's loan fund under this
part bears to the institution's capital contribution to such fund.
345
Sec. 464
HIGHER EDUCATION ACT OF 1965
338
(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, is un-
able 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 in-
terest 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 obli-
gation pursuant to the financial responsibility standards de-
scribed in section 498(c).
(2) ASSIGNMENT.A borrower whose loan has been dis-
charged pursuant to this subsection shall be deemed to have
assigned to the United States the right to a loan refund in an
amount that does not exceed the amount discharged against
the institution and the institution's affiliates and principals.
(3) ELIGIBILITY FOR ADDITIONAL ASSISTANCE.The period
during which a student was unable to complete a course of
study due to the closing of the institution shall not be consid-
ered for purposes of calculating the student's period of eligi-
bility for additional assistance under this title.
(4) SPECIAL RULE.A borrower whose loan has been dis-
charged pursuant to this subsection shall not be precluded, be-
cause of that discharge, from receiving additional grant, loan,
or work assistance under this title for which the borrower
would be otherwise eligible (but for the default on the dis-
charged loan). The amount discharged under this subsection
shall be treated as an amount canceled under section 465(a).
(5) REPORTING.The Secretary or institution, as the case
may be, shall report to credit bureaus with respect to loans
that have been discharged pursuant to this subsection.
(h) REHABILITATION OF LoANs.
(1) REHABILITATION.
(A) IN GENERAL.If the borrower of a loan made
under this part who has defaulted on the loan makes 12
ontime, consecutive, monthly payments of amounts owed
on the loan, as determined by the institution, or by the
Secretary in the case of a loan held by the Secretary, the
loan shall be considered rehabilitated, and the institution
that made that loan (or the Secretary, in the ease of a loan
held by the Secretary) shall request that any credit bureau
organization or credit reporting agency to which the de-
fault was reported remove the default from the borrower's
credit history.
(B) COMPARABLE CONDITIONS.As long as the bor-
rower continues to make scheduled repayments on a loan
rehabilitated under this paragraph, the rehabilitated loan
shall be subject to the same- terms and conditions, and
339
HIGHER EDUCATION ACT OF 1965
Sec. 465
qualify for the same benefits and privileges, as other loans
made under this part.
(C) ADDITIONAL ASSISTANCE.The borrower of a reha-
bilitated loan shall not be precluded by section 484 from
receiving additional grant, loan, or work assistance under
this title (for which the borrower is otherwise eligible) on
the basis of defaulting on the loan prior to such rehabilita-
tion.
(D) LIMITATIONS.A borrower only once may obtain
the benefit of this paragraph with respect to rehabilitating
a loan under this part.
(2) RESTORATION OF ELIGIBILITY.If the borrower of a loan
made under this part who has defaulted on that loan makes
6 ontime, consecutive, monthly payments of amounts owed on
such loan, the borrower's eligibility for grant, loan, or work as-
sistance under this title shall be restored to the extent that the
borrower is otherwise eligible. A borrower only once may ob-
tain the benefit of this paragraph with respect to restored eligi-
bility.
(i) INCENTIVE REPAYMENT PROGRAM.
(1) IN GENERAL.Each institution of higher education may
establish, with the approval of the Secretary, an incentive re-
payment program designed to reduce default and to replenish
student loan funds established under this part. Each such in-
centive repayment program may
(A) offer a reduction of the interest rate on a loan on
which the borrower has made 48 consecutive, monthly re-
payments, but in no event may the rate be reduced by
more than 1 percent;
(B) provide for a discount on the balance owed on a
loan on which the borrower pays the principal and interest
in full prior to the end of the applicable repayment period,
but in no event may the discount exceed 5 percent of the
unpaid principal balance due on the loan at the time the
early repayment is made; and
(C) include such other incentive repayment options as
the institution determines will carry out the objectives of
this subsection.
(2) LIMITATION.No incentive repayment option under an
incentive repayment program authorized by this subsection
may be paid for with Federal funds, including any Federal
funds from the student loan fund, or with institutional funds
from the student loan fund.
SEC. 465. [20 U.S.C. 1087ee] 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, 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).
(2) Loans shall be canceled under paragraph (1) for service
(A) as a full-time teacher for service in an academic year
in a public or other nonprofit private elementary or secondary
347
Sec. 465
HIGHER EDUCATION. ACT OF 1965
340
school which is in the school district of a local educational
agency which is eligible in such year for assistance pursuant
to title I of the Elementary and Secondary Education Act of
1965, and which for the purpose of this paragraph and for that
year has been determined by the Secretary (pursuant to regu-
lations and after consultation with the State educational agen-
cy of the State in which the school is located) to be a school
in which the enrollment of children counted under section
111(c) of the Elementary and Secondary Education Act of 1965
exceeds 30 percent of the total enrollment of that school;
(B) as a full-time staff member in a preschool program car-
ried on under the Head Start Act which is operated for a pe-
riod which is comparable to a full school year in the locality
if the salary of such staff member is not more than the salary
of a comparable employee of the local educational agency;
(C) as a full-time special education teacher, including
teachers of infants, toddlers, children, or youth with disabil-
ities in a public or other nonprofit elementary or secondary
school system, or as a full-time qualified professional provider
of early intervention services in a public or other nonprofit pro-
gram under public supervision by the lead agency as author-
ized in section 635(a)(10) of the Individuals With Disabilities
Education Act 1 ;
(D) as a member of the Armed Forces of the United States,
for service that qualifies for special pay under section 310 of
title 37, United States Code, as an area of hostilities;
(E) as a volunteer under the Peace Corps Act or a volun-
teer under the Domestic Volunteer Service Act of 1973;
(F) as a full-time law enforcement officer or corrections of-
ficer for service to local, State, or Federal law enforcement or
corrections agencies;
(G) as a full-time teacher of mathematics, science, foreign
languages, bilingual education, or any other field of expertise
where the State educational agency determines there is a
shortage of qualified teachers;
(H) as a full-time nurse or medical technician providing
health care services; or
(I) as a full-time employee of a public or private nonprofit
child or family service agency who is providing, or supervising
the provision of, services to high-risk children who are from
low-income communities and the families of such children.
For the purpose of this paragraph, the term "children with disabil-
ities" has the meaning set forth in section 602 of the Individuals
with Disabilities Education Act.
(3XA) The percent of a loan which shall be canceled under
paragraph (1) of this subsection is
(i) in the case of service described in subparagraph (A),
(C), (F), (G), (H), or (I) of paragraph (2), at the rate of 15 per-
cent for the first or second year of such service, 20 percent for
the third or fourth year of such service, and 30 percent for the
fifth year of such service;
1So in law. "With" should be "with". See P.L. 105-17; 111 Stat. 37.
348
341
HIGHER EDUCATION ACT OF 1965
Sec. 465
(ii) in the case of service described in subparagraph (B) of
paragraph (2), at the rate of 15 percent for each year of such
service;
(iii) in the case of service described in subparagraph (D) of
paragraph (2), not to exceed a total of 50 percent of such loan
at the rate of 12% percent for each year of qualifying service;
or
(iv) in the case of service described in subparagraph (E) of
paragraph (2) at the rate of 15 percent for the first or second
year of such service and 20 percent for the third or fourth year
of such service.
(B) If a portion of a loan is canceled under this subsection for
any year, the entire amount of interest on such loan which accrues
for such year shall be canceled.
(C) Nothing in this subsection shall be construed to authorize
refunding of any repayment of a loan.
(4) For the purpose of this subsection, the term "year" where
applied to service as a teacher means academic year as defined by
the Secretary.
(5) The amount of a loan, and interest on a loan, which is can-
celed under this section shall not be considered income for purposes
of the Internal Revenue Code of 1986.
(6) No borrower may, for the same volunteer service, receive a
benefit under both this section and subtitle D of title I of the Na-
tional and Community Service Act of 1990 (42 U.S.C. 12571 et
seq.).
(7) An individual with an outstanding loan obligation under
this part who performs service of any type that is described in
paragraph (2) as in effect on the date of enactment of this para-
graph shall be eligible for cancellation under this section for such
service notwithstanding any contrary provision of the promissory
note under which the loan or loans were made, and notwithstand-
ing any amendment (or effective date provision relating to any
amendment) to this section made prior to the date of such service.
(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 institu-
tion qualifies under this subsection not later than 3 months after
the institution files an institutional application for campus-based
funds.
(c) SPECIAL RULES.
(1) LIST.If the list of schools in which a teacher may per-
form service pursuant to subsection (a)(2)(A) is not available
before May 1 of any year, the Secretary may use the list for
the year preceding the year for which the determination is
made to make such service determination.
343
Sec. 466
HIGHER EDUCATION ACT OF 1965
342
(2) CONTINUING ELIGIBILITY.Any teacher who performs
service in a school which
(A) meets the requirements of subsection (a)(2)(A) in
any year; and
(B) in a subsequent year fails to meet the require-
ments of such subsection,
may continue to teach in such school and shall be eligible for
loan cancellation pursuant to subsection (a)(1) such subsequent
years.
SEC. 466. 120 U.S.C. 1087ff] 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 insti-
tution 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 cap-
ital contributions to such fund by the Secretary under this part
bears to the sum of such Federal contributions and the institu-
tion's capital contributions to such fund.
(2) The remainder of such balance shall be paid to the in-
stitution.
(b) DISTRIBUTION OF LATE COLLECTIONS.After March 31,
2012, each institution with which the Secretary has made an agree-
ment under this part, shall pay to the Secretary the same propor-
tionate share of amounts received by this institution after Septem-
ber 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 in-
terest on loans from the fund and not already reimbursed from the
fund or from such payments of principal or interest), as was deter-
mined 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 institu-
tion or to the Secretary, as the case may be, there shall be, subject
to such limitations as may be included in regulations of the Sec-
retary 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 Fed-
eral 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 es-
tablished under this part exceed the amount required under para-
343
HIGHER EDUCATION ACT OF 1965
Sec. 468
graph (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. 467. [20 U.S.C. 1087gg] COLLECTION OF DEFAULTED LOANS: PER-
KINS LOAN REVOLVING FUND.
(a) AUTHORITY OF SECRETARY To COLLECT REFERRED, TRANS-
FERRED, OR ASSIGNED LOANS.With respect to any loan
(1) which was made under this part, and
(2) which is referred, transferred, or assigned to the Sec-
retary by an institution with an agreement under section
463(a),
the Secretary is authorized to attempt to collect such loan by any
means authorized by law for collecting claims of the United States
(including referral to the Attorney General for litigation) and under
such terms and conditions as the Secretary may prescribe, includ-
ing reimbursement for expenses reasonably incurred in attempting
such collection.
(b) COLLECTION OF REFERRED, TRANSFERRED, OR ASSIGNED
LOANS.The Secretary shall continue to attempt to collect any loan
referred, transferred, or assigned under paragraph (5)(A), (5)(B)(i),
or (6) of section 463(a) until all appropriate collection efforts, as de-
termined by the Secretary, have been expended.
SEC. 468. [20 U.S.C. 1087hh] GENERAL AUTHORITY OF SECRETARY.
In carrying out the provisions of this part, the Secretary is
authorized
(1) to consent to modification, with respect to rate of inter-
est, time of payment of any installment of principal and inter-
est or any portion thereof, or any other provision of any note
evidencing a loan which has been made under this part;
(2) to enforce, pay, compromise, waive, or release any
right, title, claim, lien, or demand, however acquired, including
any equity or any right of redemption;
(3) to conduct litigation in accordance with the provisions
of section 432(a)(2); and
(4) to enter into a contract or other arrangement with
State or nonprofit agencies and, on a competitive basis, with
collection agencies for servicing and collection of loans under
this part.
SEC. 469. [20 U.S.C. 1087in DEFINITIONS.
(a) Low-INCOME COMMUNITIES.For the purpose of this part,
the term "low-income communities" means communities in which
there is a high concentration of children eligible to be counted
under title I of the Elementary and Secondary Education Act of
1965.
(b) HIGH-RISK CHILDREN.For the purposes of this part, the
term "high-risk children" means individuals under the age of 21
who are low-income or at risk of abuse or neglect, have been
abused or neglected, have serious emotional, mental, or behavioral
disturbances, reside in placements outside their homes, or are in-
volved in the juvenile justice system.
(c) INFANTS, TODDLERS, CHILDREN, AND YOUTH WITH DISABIL-
ITIES.For purposes of this part, the term "infants, toddlers, chil-
351
Sec. 471
HIGHER EDUCATION ACT OF 1965
344
dren, and youth with disabilities" means children with disabilities
and infants and toddlers with disabilities as defined in sections
602(a)(1) and 672(1), respectively, of the Individuals with Disabil-
ities Education Act, and the term "qualified professional provider
of early intervention services" has the meaning specified in section
672(2) of such Act.
PART F-NEED ANALYSIS
SEC. 471. [20 U.S.C. 1087kk] AMOUNT OF NEED.
Except as otherwise provided therein, the amount of need of
any student for financial assistance under this title (except sub-
parts 1 or 2 of part A) is equal to
(1) the cost of attendance of such student, minus
(2) the expected family contribution for such student,
minus(3) estimated financial assistance not received under this
title (as defined in section 480(j)).
SEC. 472. [20 U.S.C. 108711] COST OF ATTENDANCE.
For the purpose of this title, the term "cost of attendance"
means(1) tuition and fees normally assessed a student carrying
the same academic workload as determined by the institution,
and including costs for rental or purchase of any equipment,
materials, or supplies required of all students in the same
course of study;
(2) an allowance for books, supplies, transportation, and
miscellaneous personal expenses, including a reasonable allow-
ance for the documented rental or purchase of a personal com-
puter, for a student attending the institution on at least a half-
time basis, as determined by the institution;
(3) an allowance (as determined by the institution) for
room and board costs incurred by the student which
(A) shall be an allowance determined by the institu-
tion for a student without dependents residing at home
with parents;
(B) for students without dependents residing in insti-
tutionally owned or operated housing, shall be a standard
allowance determined by the institution based on the
amount normally assessed most of its residents for room
and board; and
(C) for all other students shall be an allowance based
on the expenses reasonably incurred by such students for
room and board;
(4) for less than half-time students (as determined by the
institution) tuition and fees and an allowance for only books,
supplies, and transportation (as determined by the institution)
and dependent care expenses (in accordance with paragraph
(8));(5) for a student engaged in a program of study by cor-
respondence, only tuition and fees and, if required, books and
supplies, travel, and room and board costs incurred specifically
in fulfilling a required period of residential training;
345
HIGHER EDUCATION ACT OF 1965
Sec. 414
(6) for incarcerated students only tuition and fees and, if
required, books and supplies;
(7) for a student enrolled in an academic program in a pro-
gram of study abroad approved for credit by the student's
home institution, reasonable costs associated with such study
(as determined by the institution at which such student is en-
rolled);
(8) for a student with one or more dependents, an allow-
ance based on the estimated actual expenses incurred for such
dependent care; based on the number and age of such depend-
ents, except that
(A) such allowance shall not exceed the reasonable
cost in the community in which such student resides for
the kind of care provided; and
(B) the period for which dependent care is required in-
cludes, but is not limited. to, class-time, study-time, field
work, internships, and commuting time;
(9) for a student with a disability, an allowance (as deter-
mined by the institution) for those expenses related to the stu-
dent's disability, including special services, personal assistance,
transportation, equipment, and supplies that are reasonably
incurred and not provided for by other assisting agencies;
(10) for a student receiving all or part of the student's in-
struction by means of telecommunications technology, no dis-
tinction shall be made with respect to the mode of instruction
in determining costs;
(11) for a student engaged in a work experience under a
cooperative education program, an allowance for reasonable
costs associated with such employment (as determined by the
institution); and
(12) for a student who receives a loan under this or any
other Federal law, or, at the option of the institution, a conven-
tional student loan incurred by the student to cover a student's
cost of attendance at the institution, an allowance for the ac-
tual cost of any loan fee, origination fee, or insurance premium
charged to such student or such parent on such loan, or the av-
erage cost of any such fee or premium charged by the Sec-
retary, lender, or guaranty agency making or insuring such
loan, as the case may be.
SEC. 473. [20 U.S.C. 1087mm] FAMILY CONTRIBUTION.
For the purpose of this title, except subpart 2 of part A, the
term "family contribution" with respect to any student means the
amount which the student and the student's family may be reason-
ably expected to contribute toward the student's postsecondary edu-
cation for the academic year for which the determination is made,
as determined in accordance with this part.
SEC. 474. [20 U.S.C. 1087nn] DETERMINATION OF EXPECTED FAMILY
CONTRIBUTION; DATA ELEMENTS.
(a) GENERAL RULE FOR DETERMINATION OF EXPECTED FAMILY
CONTRIBUTION.The expected family contribution
(1) for a dependent student shall be determined in accord-
ance with section 475;
353
54-653 99 -12
Sec. 415
HIGHER EDUCATION ACT OF 1965
346
(2) for a single independent student or a married inde-
pendent student without dependents .(other than a spouse)
shall be determined in accordance with section 476; and
(3) for an independent student with dependents other than
a spouse shall be determined in accordance with section 477.
(b) DATA ELEMENTS.The following data elements are consid-
ered in determining the expected family contribution:
(1) the available income of (A) the student and the stu-
dent's spouse, or (B) the student and the student's parents, in
the case of a dependent student;
(2) the number of dependents in the family of the student;
(3) the number of dependents in the family of the student,
excluding the student's parents, who are enrolled or accepted
for enrollment, on at least a half-time basis, in a degree, cer-
tificate, or other program leading to a recognized educational
credential at an institution of higher education that is an eligi-
ble institution in accordance with the provisions of section 487
and for whom the family may reasonably be expected to con-
tribute to their postsecondary education;
(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) the marital status of the student;
(6) the age of the older parent, in the case of a dependent
student, and the student; and
(7) the additional expenses incurred (A) in the case of a de-
pendent student, when both parents of the student are em-
ployed 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. [20 U.S.C. 10S7oo] 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 in-
come (determined in accordance with subsection (b));
(2) the student contribution from available income (deter-
mined in accordance with subsection (g)); and
(3) the student contribution from assets (determined in ac-
cordance with subsection (h)).
(b) PARENTS' CONTRIBUTION FROM ADJUSTED AVAILABLE IN-
COME.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 ac-
cordance with subsection (c)); and
(B) the parents' contribution from assets (determined
in accordance with subsection (d));
(2) assessing such adjusted available income in accordance
with the assessment schedule set forth in subsection (e); and
354
341
HIGHER EDUCATION ACT OF 1965
Sec. 475
(3) dividing the assessment resulting under paragraph (2)
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 pro-
gram leading to a recognized educational credential at an insti-
tution of higher education that is an eligible institution in ac-
cordance with the provisions of section 487 during the award
period for which assistance under this title is requested;
except that the amount determined under this subsection shall not
be less than zero.
(C) PARENTS' AVAILABLE INCOME.
(1) IN GENERAL.The parents' available income is deter-
mined by deducting from total income (as defined in section
480)
(A) Federal income taxes;
(B) an allowance for State and other taxes, determined
in accordance with paragraph (2);
(C) an allowance for social security taxes, determined
in accordance with paragraph (3);
(D) an income protection allowance, determined in ac-
cordance with paragraph (4);
(E) an employment expense allowance, determined in
accordance with paragraph (5); and
(F) the amount of any tax credit taken by the parents
under section 25A of the Internal Revenue Code of 1986.
(2) ALLOWANCE FOR STATE AND OTHER TAXES.The allow-
ance for State and other taxes is equal to an amount deter-
mined by multiplying total income (as defined in section 480)
by a percentage determined according to the following table (or
a successor table prescribed by the Secretary under section
478):
355
Sec. 475
HIGHER EDUCATION ACT OF 1965
348
Percentages for Computation of State and Other Tax Allowance
If parents' State or territory of residence is
And parents' total
income is
less than
;)15,000
$15 ,000
or more
or
then the percentage
is
Alaska, Puerto Rico, Wyoming
3
2
American Samoa, Guam, Louisiana, Nevada, Texas, Trust
Territory, Virgin Islands
4
3
Florida, South Dakota, Tennessee, New Mexico
5
4
North Dakota, Washington
6
5
Alabama, Arizona, Arkansas, Indiana, Mississippi, Missouri,
Montana, New Hampshire, Oklahoma, West Virginia
7
6
Colorado, Connecticut, Georgia, Illinois, Kansas, Kentucky
8
7
California, Delaware, Idaho, Iowa, Nebraska, North Caro-
lina, Ohio, Pennsylvania, South Carolina, Utah, Vermont,
Virginia, Canada, Mexico
9
8
Maine, New Jersey
10
9
District of Columbia, Hawaii, Maryland, Massachusetts, Or-
egon, Rhode Island
11
10
Michigan, Minnesota
12
11
Wisconsin
13
12
New York
14
13
Other
9
8
(3) ALLOWANCE FOR SOCIAL SECURITY TAXES.The allow-
ance for social security taxes is equal to the amount earned by
each parent multiplied by the social security withholding rate
appropriate to the tax year of the earnings, up to the maxi-
mum statutory social security tax withholding amount for that
same tax year.
(4) INCOME PROTECTION ALLOWANCE.The income protec-
tion allowance is determined by the following table (or a suc-
cessor table prescribed by the Secretary under section 478):
349
HIGHER EDUCATION ACT OF 1965
Sec. 415
Income Protection Allowance
Family Size
Number in College
For each
(including student)
1
2
3
4
5
additional
subtract:
2
$10,520
$8,720
$1,790
3
13,100
11,310
$9,510
4
16,180
14,380
12,590
$10,790
5
19,090
17,290
15,500
13,700
$11,910
6
22,330
20,530
18,740
16,940
15,150
For each
additional
add:
2,520
2,520
2,520
2,520
2,520
(5) EMPLOYMENT EXPENSE ALLOWANCE.The employment
expense allowance is determined as follows (or using a succes-
sor provision prescribed by the Secretary under section 478):
(A) If both parents were employed in the year for
which their income is reported and both have their in-
comes reported in determining the expected family con-
tribution, such allowance is equal to the lesser of $2,500
or 35 percent of the earned income of the parent with the
lesser earned income.
(B) If a parent qualifies as a surviving spouse or as a
head of household as defined in section 2 of the Internal
Revenue Code, such allowance is equal to the lesser of
$2,500 or 35 percent of such parent's earned income.
(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 allow-
ance. (determined in accordance with paragraph (3)); multi-
plied by
(C) the asset conversion rate (determined in accord-
ance with paragraph (4)), except that the result shall not
be less than zero.
Sec. 475
HIGHER EDUCATION ACT OF 1965
350
(2) PARENTAL NET WORTH.The parental net worth is cal-
culated by adding
(A) the current balance of checking and savings ac-
counts and cash on hand;
(B) the net value of investments and real estate, ex-
cluding the net value of the principal place of residence;
and
(C) the adjusted net worth of a business or farm, com-
puted on the basis of the net worth of such business or
farm (hereafter in this subsection referred to as "NW"), de-
termined in accordance with the following table (or a suc-
cessor 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
$75,0014225,000
$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 ALLOW-
ANCE.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):
351
HIGHER EDUCATION ACT OF 1965
Sec. 415
Education Savings and Asset Protection Allowances for Families and Students
If the age of the oldest parent is-
And there are
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,"Afil") is assessed= according to the following table (or
a successor table prescribed by the Secretary under section 478):
Sec. 415
HIGHER EDUCATION ACT OF 1965
352
Parents' Assessment From Adjusted Available Income (MI)
If AM is
Then the assessment is
Less than
$3,409
$750
$3,409 to $9,400
22% of AAI
$9,401 to $11,800
$2,068 + 25% of AAI over $9,400
$11,801 to $14,200
$2,668 + 29% of AM over $11,800
$14,201 to $16,600
$3,364 + 34% of AAI over $14,200
$16,601 to $19,000
$4,180 + 40% of AAI over $16,600
$19,001 or more
$5,140 + 47% of AAI over $19,000
(f) COMPUTATIONS IN CASE OF SEPARATION, DIVORCE, REMAR-
RIAGE, OR DEATH.
(1) DIVORCED OR SEPARATED PARENTS.Parental income
and assets for a student whose parents are divorced or sepa-
rated 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 re-
port any parental income or assets.
(3) REMARRIED PARENTS.If a parent whose income and
assets are taken into account under paragraph (1) of this sub-
section, or if a parent who is a widow or widower and whose
income is taken into account under paragraph (2) of this sub-
section, has remarried, the income of that parent's spouse shall
be included in determining the parent's adjusted available in-
come only if
(A) the student's parent and the stepparent are mar-
ried as of the date of application for the award year con-
cerned; and
(B) the student is not an independent student.
(g) STUDENT CONTRIBUTION FROM AVAILABLE INCOME.
(1) IN GENERAL.The student contribution from available
income is equal to
(A) the student's total income (determined in accord-
ance with section 480); minus
(B) the adjustment to student income (determined in
accordance with paragraph (2)); multiplied by
353
HIGHER EDUCATION ACT OF 1965
Sec. 415
(C) the assessment rate as determined in paragraph
(5);
except that the amount determined under this subsection shall
not be less than zero.
(2) ADJUSTMENT TO STUDENT INCOME.The adjustment to
student income is equal to the sum of
(A) Federal income taxes of the student;
(B) an allowance for State and other income taxes (de-
termined in accordance with paragraph (3));
(C) an allowance for social security taxes determined
in accordance with paragraph (4);
(D) an income protection allowance of $2,200 (or a suc-
cessor amount prescribed by the Secretary under section
478);
(E) the amount of any tax credit taken by the student
under section 25A of the Internal Revenue Code of 1986;
and
(F) an allowance for parents' negative available in-
come, determined in accordance with paragraph (6).
(3) ALLOWANCE FOR STATE AND OTHER INCOME TAXES.The
allowance for State and other income taxes is equal to an
amount determined by multiplying total income (as defined in
section 480) by a percentage determined according to the fol-
lowing table (or a successor table prescribed by the Secretary
under section 478):
Percentages for Computation of State and Other Tax Allowance
If the students' State or territory of residence is
The per-
centage
is
Alaska, American Samoa, Florida, Guam, Nevada, South Dakota, Ten-
nessee, Texas, Trust Territory, Virgin Islands, Washington, Wyoming
0
Connecticut, Louisiana, Puerto Rico
1
Arizona, New Hampshire, New Mexico, North Dakota
2
Alabama, Colorado, Illinois, Indiana, Kansas, Mississippi, Missouri,
Montana, Nebraska, New Jersey, Oklahoma
3
Arkansas, Georgia, Iowa, Kentucky, Maine, Pennsylvania, Utah, Ver-
mont, Virginia, West Virginia, Canada, Mexico
4
California, Idaho, Massachusetts, North Carolina, Ohio, Rhode Island,
South Carolina
5
Hawaii, Maryland, Michigan, Wisconsin
6
Delaware, District of Columbia, Minnesota, Oregon
7
New York
8
Other
4
(4) ALLOWANCE FOR SOCIAL SECURITY TAXES.The allow-
ance for social security taxes is equal to the amount earned by
the student multiplied by the social security withholding rate
appropriate to the tax year of the earnings, up to the maxi-
mum statutory social security tax withholding amount for that
same tax year.
361
Sec. 475
HIGHER EDUCATION ACT OF 1965
354
(5) The student's available income (determined in accord-
ance with paragraph (1) of this subsection) is assessed at 50
percent.
(6) ALLOWANCE FOR PARENTS' NEGATIVE AVAILABLE IN-
COME.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) ex-
ceeds the sum of the parents' total income (as defined in sec-
tion 480) and the parents' contribution from assets (as deter-
mined in accordance with subsection (d)).
(h) STUDENT CONTRIBUTION FROM ASSETS.The student con-
tribution from assets is determined by calculating the net assets of
the student and multiplying such amount by 35 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 SUB-
PART 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 fol-
lows for purposes other than subpart 2 of part A of this title:
(1) For periods of enrollment less than 9 months, the par-
ents' 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 (deter-
mined 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 par-
ents' 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 re-
sult 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 month-
ly adjustment amount multiplied by the number of months
greater than 9 for which the student will be enrolled.
( j) ADJUSTMENTS TO STUDENT'S CONTRIBUTION FOR ENROLL-
MENT PERIODS OF LESS THAN NINE MONTHS.For periods of enroll-
ment of less than 9 months, the student's contribution from ad-
justed available income (as determined under subsection (g)) is de-
termined, for purposes other than subpart 2 of part A, by dividing
the amount determined under such subsection by 9, and multiply-
ing the result by the number of months in the period of enrollment.
355
HIGHER EDUCATION ACT OF 1965
Sec. 476
SEC. 476. [20 U.S.C. 1087pp] FAMILY CONTRIBUTION FOR INDEPEND-
ENT 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 determinedby
(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) dividing the sum resulting under paragraph (1) by the
number of students who are enrolled or accepted for enroll-
ment, 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) for periods of enrollment of less than 9 months, for pur-
poses other than subpart 2 of part A
(A) dividing the quotient resulting under paragraph
(2) by 9; and
(B) multiplying the result by the number of months in
the period of enrollment;
except that the amount determined under this subsection shall not
be less than zero.
(b) FAMILY'S CONTRIBUTION FROM AVAILABLE INCOME.
(1) IN GENERAL.The family's contribution from income is
determined by
(A) deducting from total income (as defined in section
480)
(i) Federal income taxes;
(ii) an allowance for State and other taxes, deter-
mined in accordance with paragraph (2);
(iii) an allowance for social security taxes, deter-
mined in accordance with paragraph (3);
(iv) an income protection allowance of the follow-
ing amount (or a successor amount prescribed by the
Secretary under section 478)
(I) $5,000 for single students;
(II) $5,000 for married students where both
are enrolled pursuant to subsection (a)(2); and
(III) $8,000 for married students where one is
enrolled pursuant to subsection (a)(2);
(v) in the case where a spouse is present, an em-
ployment expense allowance, as determined in accord-
ance with paragraph (4); and
(vi) the amount of any tax credit taken under sec-
tion 25A of the Internal Revenue Code of 1986; and
(B) assessing such available income in accordance with
paragraph (5).
(2) ALLOWANCE FOR STATE AND OTHER TAXES.The allow-
ance for State and other taxes is equal to an amount deter-
3
Sec. 416
HIGHER EDUCATION ACT OF 1965
356
mined by multiplying total income (as defined in section 480)
by a percentage determined according to the following table (or
a successor table prescribed by the Secretary under section
478):
Percentages for Computation of State and Other Tax Allowance
If the students' State or territory of residence is
The per-
centage
is
Alaska, American Samoa, Florida, Guam, Nevada, South Dakota, Ten-
nessee, Texas, Trust Territory, Virgin Islands, Washington, Wyoming
0
Connecticut, Louisiana, Puerto Rico
1
Arizona, New Hampshire, New Mexico, North Dakota
2
Alabama, Colorado, Illinois, Indiana, Kansas, Mississippi, Missouri,
Montana, Nebraska, New Jersey, Oklahoma
3
Arkansas, Georgia, Iowa, Kentucky, Maine, Pennsylvania, Utah, Ver-
mont, Virginia, West Virginia, Canada, Mexico
4
California, Idaho, Massachusetts, North Carolina, Ohio, Rhode Island,
South Carolina
5
Hawaii, Maryland, Michigan, Wisconsin
6
Delaware, District of Columbia, Minnesota, Oregon
7
New York
8
Other
4
(3) ALLOWANCE FOR SOCIAL SECURITY TAXES.The allow-
ance for social security taxes is equal to the amount earned by
the student (and spouse, if appropriate), multiplied by the so-
cial security withholding rate appropriate to the tax year pre-
ceding the award year, up to the maximum statutory social se-
curity tax withholding amount for that same tax year.
(4) EMPLOYMENT EXPENSES ALLOWANCE.The employment
expense allowance is determined as follows (or using a succes-
sor provision prescribed by the Secretary under section 478):
(A) If the student is married and the student's spouse
is employed in the year for which income is reported, such
allowance is equal to the lesser of $2,500 or 35 percent of
the earned income of the student or spouse with the lesser
earned income.
(B) If a student is not married, the employment ex-
pense allowance is zero.
(5) ASSESSMENT OF AVAILABLE INCOME.The family's
available income (determined in accordance with paragraph
(1)(A) of this subsection) is assessed at 50 percent.
(C) FAMILY CONTRIBUTION FROM ASSETS.
(1) IN GENERALThe 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 ac-
cordance with paragraph (3)); multiplied by
(C) the asset conversion rate (determined in accord-
ance with paragraph (4));
except that the family's contribution from assets shall not be
less than zero.
357
HIGHER EDUCATION ACT OF 1965
Sec. 476
(2) FAMILY'S NET WORTH.The family's net worth is cal-
culated by adding
(A) the current balance of checking and savings ac-
counts and cash on hand;
(B) the net value of investments and real estate, ex-
cluding the net value in the principal place of residence;
and
(C) the adjusted net worth of a business or farm, com-
puted on the basis of the net worth of such business or
farm (hereafter referred to as "NW"), determined in ac-
cordance with the following table (or a successor table pre-
scribed by the Secretary under section 478), except as pro-
vided 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
$1475,000
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):
Sec. 476
HIGHER EDUCATION ACT OF 1965
358
Asset Protection Allowances for Families and Students
If the age of the student is-
And 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
35 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
366
359
HIGHER EDUCATION ACT OF 1965
Sec. 477
considered in determining the family's contribution from income or
assets.
SEC. 477. 120 U.S.C. 10137q q] FAMILY CONTRIBUTION FOR INDEPEND-
ENT 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 ac-
cordance with subsection (b)); and
(B) the family's contribution from assets (determined
in accordance with subsection (c));
(2) assessing such adjusted available income in accordance
with an assessment schedule set forth in subsection (d);
(3) dividing the assessment resulting under paragraph (2)
by the number of family members who are enrolled or accepted
for enrollment, on at least a half-time basis, in a degree, cer-
tificate, or other program leading to a recognized educational
credential at an institution of higher education that is an eligi-
ble institution in accordance with the provisions of section 487
during the award period for which assistance under this title
is requested; and
(4) for periods of enrollment of less than 9 months, for pur-
poses other than subpart 2 of part A
(A) dividing the quotient resulting under paragraph
(3) by 9; and
(B) multiplying the result by the number of months in
the period of enrollment;
except that the amount determined under this subsection shall not
be less than zero.
(b) FAMILY'S AVAILABLE INCOME.
(1) IN GENERAL.The family's available income is deter-
mined by deducting from total income (as defined in section
480)
(A) Federal income taxes;
(B) an allowance for State and other taxes, determined
in accordance with paragraph (2);
(C) an allowance for social security taxes, determined
in accordance with paragraph (3);
(D) an income protection allowance, determined in ac-
cordance with paragraph (4);
(E) an employment expense allowance, determined in
accordance with paragraph (5); and
(F) the amount of any tax credit taken under section.
25A of the Internal Revenue Code of 1986.
(2) ALLOWANCE FOR STATE AND OTHER_ TAXES.The allow-
ance for State and other taxes is equal to an amount deter-
mined by multiplying total income (as defined in section 480)
by a percentage determined according to the following table (or
a successor table prescribed by the Secretary under... section
478):
367
Sec. 417
HIGHER EDUCATION ACT OF 1965
360
Percentages for Computation of State and Other Tax Allowance
If student's State or territory of residence is-
And family's total
income is
less than
$15,000
$15,000
or more
then the percentage
is
Alaska, Puerto Rico, Wyoming
3
2
American Samoa, Guam, Louisiana, Nevada, Texas, Trust
Territory, Virgin Islands
4
3
Florida, South Dakota, Tennessee, New Mexico
5
4
North Dakota, Washington
6
5
Alabama, Arizona, Arkansas, Indiana, Mississippi, Missouri,
Montana, New Hampshire, Oklahoma, West Virginia
7
6
Colorado, Connecticut, Georgia, Illinois, Kansas, Kentucky
8
7
California, Delaware, Idaho, Iowa, Nebraska, North Caro-
lina, Ohio, Pennsylvania, South Carolina, Utah, Vermont,
Virginia, Canada, Mexico
9
8
Maine, New Jersey
10
9
District of Columbia, Hawaii, Maryland, Massachusetts, Or-
egon, Rhode Island
11
10
Michigan, Minnesota
12
11
Wisconsin
13
12
New York
14
13
Other
9
8
(3) ALLOWANCE FOR SOCIAL SECURITY TAXES.The allow-
ance for social security taxes is equal to the amount estimated
to be earned by the student (and spouse, if appropriate) multi-
plied by the social security withholding rate appropriate to the
tax year preceding the award year, up to- the maximum statu-
tory social security tax withholding amount for that same tax
year.
(4) INCOME PROTECTION ALLOWANCE.The income protec-
tion allowance is determined by the following table (or a suc-
cessor table prescribed by the Secretary under section 478):
368
361
HIGHER EDUCATION ACT OF 1965
Sec. 477
Income Protection Allowance
Family Size
Number in College
For each
(including student)
1
2
3
4
5
additional
subtract:
2
$10,520
$8,720
$1,790
3
13,100
11,310
$9,510
4
16,180
14,380
12,590
$10,790
5
19,090
17,290
15,500
13,700
$11,910
6
22,330
20,530
18,740
16,940
15,150
For each
additional
add:
2,520
2,520
2,520
2,520
2,520
(5) EMPLOYMENT EXPENSE ALLOWANCE.The employment
expense allowance is determined as follows (or a successor
table prescribed by the Secretary under section 478):
(A) If the student is married and the student's spouse
is employed in the year for which their income is reported,
such allowance is equal to the lesser of $2,500 or 35 per-
cent of the earned income of the student or spouse with
the lesser earned income.
(B) If a student qualifies as a surviving spouse or as
a head of household as defined in section 2 of the Internal
Revenue Code, such allowance is equal to the lesser of
$2,500 or 35 percent of the student's earned income.
(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 ac-
cordance with paragraph (3)); multiplied by
(C) the asset conversion rate (determined in accord-
ance with paragraph (4)), except that the result shall not
be less than zero.
Sec. 411
HIGHER EDUCATION ACT OF 1965
362
(2) FAMILY NET WORTH.The family net worth is cal-
culated by adding
(A) the current balance of checking and savings ac-
counts and cash on hand;
(B) the net value of investments and real estate, ex-
cluding the net value in the principal place, of residence;
and
(C) the adjusted net worth of a business or farm, com-
puted on the basis of the net worth of such business or
farm (hereafter referred to as "NW"), determined in ac-
cordance with the following table (or a successor table pre-
scribed by the Secretary under section 478), except as pro-
vided 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) 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):
363
HIGHER EDUCATION ACT OF 1965
Sec. 477
Asset Protection Allowances for Families and Students
If the age of the student is-
And 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
12 percent.
(d) ASSESSMENT SCHEDULE.-The adjusted available income (as
determined under subsection (a)(1) and hereafter referred to as
"AAI") is assessed according to the following table (or a successor
table prescribed by the Secretary under section 478):
Sec. 478
HIGHER EDUCATION ACT OF 1965
364
Assessment From Adjusted Available Income (AAI)
If AAI is
Then the assessment is
Less than
$3,409
$750
$3,409 to $9,400
22% of AAI
$9,401 to $11,800
$2,068 + 25% of AAI over $9,400
$11,801 to $14,200
$2,668 + 29% of AAI over $11,800
$14,201 to $16,600
$3,364 + 34% of AAI over $14,200
$16,601 to $19,000
$4,180 + 40% of AAI over $16,600
$19,001 or more
$5,140 + 47% of AAI 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. [20 U.S.C. 1087rr] 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 in accordance with sub-
sections (b) through (h) of this section; or
(B) to propose modifications in the need analysis methodol-
ogy required by this part.
(2) Any regulation proposed by the Secretary that (A) updates
tables 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 ap-
proved by joint resolution of the Congress by May 1 following the
date such regulations are published in the Federal Register in ac-
cordance with section 482. If the Congress fails to approve such
regulations by such May 1, the Secretary shall publish in the Fed-
eral Register in accordance with section 482 updated tables for the
applicable award year that are prescribed in accordance with sub-
sections (b) through (h) of this section.
(b) INCOME PROTECTION ALLOWANCE.
( 1) REVISED TABLES.For each academic year after aca-
demic year 1993-1994, the Secretary shall publish in the Fed-
eral Register a revised table of income protection allowances
for the purpose of sections 475(c)(4) and 477(b)(4). Such revised
table shall be developed by increasing each of the dollar
amounts contained in the table in each such section by a per-
centage equal to the estimated percentage increase in the Con-
sumer Price Index (as determined by the Secretary) between
December 1992 and the December next preceding the begin-
ning of such academic year, and rounding the result to the
nearest $10.
(2) REVISED AMOUNTS.For each academic year after aca-
demic year 2000-2001, the Secretary shall publish in the: Fed.
eral Register revised income protection allowances for the pur-
pose of sections 475(g)(2)(D) and 476(b)(1)(A)(iv). Such revised
allowances shall be developed by increasing each of the dollar
amounts contained in such section by a percentage equal to the
estimated percentage increase in the Consumer Price Index (as
365
HIGHER EDUCATION ACT OF 1965
Sec. 478
determined by the Secretary) between December 1999 and the
December next preceding the beginning of such academic year,
and rounding the result to the nearest $10.
(c) ADJUSTED NET WORTH OF A FARM OR BUSINESS.For each
award year after award year 1993-1994, the Secretary shall pub-
lish 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 esti-
mated percentage increase in the Consumer Price Index (as de-
termined 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 para-
graph (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 pro-
vide, 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 up-
dated, 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.
(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 ad-
justed available income by a percentage equal to the estimated
percentage increase in the Consumer Price Index (as deter-
mined by the Secretary) between December 1992 and the De-
cember 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).
(f) DEFINITION OF CONSUMER PRICE INDEX.As used in this
section, the term "Consumer Price Index" means the Consumer
Price Index for All Urban Consumers published by the Department
Sec. 479
HIGHER EDUCATION ACT OF 1965
366
of Labor. Each annual update of tables to reflect changes in the
Consumer Price Index shall be corrected for misestimation of ac-
tual changes in such Index in previous years.
(g) STATE AND OTHER TAX ALLOWANCE.For each award year
after award year 1993-1994, the Secretary shall publish in the
Federal Register a revised table of State and other tax allowances
for the purpose of sections 475(c)(2), 475(g)(3), 476(b)(2), and
477(b)(2). The Secretary shall develop such revised table after re-
view of the Department of the Treasury's Statistics of Income file
and determination of the percentage of income that each State's
taxes represent.
(h) EMPLOYMENT EXPENSE ALLOWANCE.For each award year
after award year 1993-1994, the Secretary shall publish in the
Federal Register a revised table of employment expense allowances
for the purpose of sections 475(c)(5), 476(b)(4), and 477(b)(5). Such
revised table shall be developed by increasing the dollar amount
specified
in
sections
475(c)(5)(A),
475(c)(5)(B),
476(b)(4)(A),
476(b)(4)(B), 477(b)(5)(A), and 477(b)(5)(B) to reflect increases in
the amount and percent of the Bureau of Labor Statistics budget
of the marginal costs for meals away from home, apparel and up-
keep, transportation, and housekeeping services for a two-worker
versus one-worker family.
SEC. 479. [20 U.S.C. 1087ss] SIMPLIFIED NEEDS TESTS.
(a) SIMPLIFIED APPLICATION SECTION.
(1) IN GENERAL.The Secretary shall develop and use an
easily identifiable simplified application section as part of the
common financial reporting form prescribed under section
483(a) for families described in subsections (b) and (c) of this
section.
(2) REDUCED DATA REQUIREMENTS.The simplified applica-
tion form shall
(A) in the case of a family meeting the requirements
of subsection (b)(1), permit such family to submit only the
data elements required under subsection (b)(2) for the pur-
poses of establishing eligibility for student financial aid
under this part; and
(B) in the case of a family meeting the requirements
of subsection (c), permit such family to be treated as hav-
ing an expected family contribution equal to zero for pur-
poses of establishing such eligibility and to submit only the
data elements required to make a determination under
subsection (c).
(b) SIMPLIFIED NEEDS TEST.
(1) ELIGIBILITY.An applicant is eligible to file a sim-
plified form containing the elements required by paragraph (2)
if
(A) in the case of an applicant who is a dependent
student
(i) the student's parents file or are eligible to file
a form described in paragraph (3) or certify that they
are not required to file an income tax return and the
student files or is eligible to file such a form or cer-
367
HIGHER EDUCATION ACT OF 1965
Sec. 479
tifies that the student is not required to file an income
tax return; and
(ii) the total adjusted gross income of the parents
(excluding any income of the dependent student) is
less than $50,000; or
(B) in the case of an applicant who is an independent
student
(i) the student (and the student's spouse, if any)
files or is eligible to file a form described in paragraph
(3) or certifies that the student (and the student's
spouse, if any) is not required to file an income tax re-
turn; and
(ii) the adjusted gross income of the student (and
the student's spouse, if any) is less than $50,000.
(2) SIMPLIFIED TEST ELEMENTS.The six elements to be
used for the simplified needs analysis are
(A) adjusted gross income,
(B) Federal taxes paid,
(C) untaxed income and benefits,
(D) the number of family members,
(E) the number of family members in postsecondary
education, and
(F) an allowance (A) for State and other taxes, as de-
fined in section 475(c)(2) for dependent students and in
section 477(b)(2) for independent students with dependents
other than a spouse, or (B) for State and other income
taxes, as defined in section 476(b)(2) for independent stu-
dents without dependents other than a spouse.
(3) QUALIFYING FORMS.A student or family files a form
described in this subsection, or subsection (c), as the case may
be, if the student or family, respectively, files
(A) a form 1040A or 1040EZ (including any prepared
or electronic version of such form) required pursuant to the
Internal Revenue Code of 1986;
(B) a form 1040 (including any prepared or electronic
version of such form) required pursuant to the Internal
Revenue Code of 1986, except that such form shall be con-
sidered a qualifying form only if the student or family files
such form in order to take a tax credit under section 25A
of the Internal Revenue Code of 1986, and would otherwise
be eligible to file a form described in subparagraph (A); or
(C) an income tax return (including any prepared or
electronic version of such return) required pursuant to the
tax code of the Commonwealth of Puerto Rico, Guam,
American Samoa, the Virgin Islands, the Republic of the
Marshall Islands, the Federated States of Micronesia, or
Palau.
(c) ZERO EXPECTED FAMILY CONTRIBUTION.The Secretary
shall consider an applicant to have an expected family contribution
equal to zero if
(1) in the case of a dependent student
(A) the student's parents file, or are eligible to file, a
form described in subsection (b)(3), or certify that the par-
ents are not required to file an income tax return and the
Sec. 419A
HIGHER EDUCATION ACT OF 1965
368
student files, or is eligible to file, such a form, or certifies
that the student is not required to file an income tax re-
turn; and
(B) the sum of the adjusted gross income of the par-
ents is less than or equal to the maximum amount of in-
come (rounded annually to the nearest thousand dollars)
that may be earned in 1992 or the current year, whichever
is higher, in order to claim the maximum Federal earned
income credit; or
(2) in the case of an independent student with dependents
other than a spouse
(A) the student (and the student's spouse, if any) files,
or is eligible to file, a form described in subsection (b)(3),
or certifies that the student (and the student's spouse, if
any) is not required to file an income tax return; and
(B) the sum of the adjusted gross income of the stu-
dent and spouse (if appropriate) is less than or equal to
the maximum amount of income (rounded annually to the
nearest thousand dollars) that may be earned in 1992 or
the current year, whichever is higher, in order to claim the
maximum Federal earned income credit.
An individual is not required to qualify or file for the earned in-
come credit in order to be eligible under this subsection.
SEC. 479A. [20 U.S.C. 1087tt] DISCRETION OF STUDENT FINANCIAL AID
ADMINISTRATORS.
(a) IN GENERAL.Nothing in this part shall be interpreted as
limiting the authority of the financial aid administrator, on the
basis of adequate documentation, to make adjustments on a case-
by-case basis to the cost of attendance or the values of the data
items required to calculate the expected student or parent contribu-
tion (or both) to allow for treatment of an individual eligible appli-
cant with special circumstances. However, this authority shall not
be construed to permit aid administrators to deviate from the con-
tributions expected in the absence of special circumstances. Special
circumstances may include tuition expenses at an elementary or
secondary school, medical or dental expenses not covered by insur-
ance, unusually high child care costs, recent unemployment of a
family member, the number of parents enrolled at least half-time
in a degree, certificate, or other program leading to a recognized
educational credential at an institution with a program participa-
tion agreement under section 487, or other changes in a family's in-
come, a family's assets, or a student's status. Special circumstances
shall be conditions that differentiate an individual student from a
class of students rather than conditions that exist across a class of
students. Adequate documentation for such adjustments shall sub-
stantiate such special circumstances of individual students. In ad-
dition, nothing in this title shall be interpreted as limiting the au-
thority of the student financial aid administrator in such cases to
request and use supplementary information about the financial sta-
tus or personal circumstances of eligible applicants in selecting re-
cipients and determining the amount of awards under this title.. No
student or parent shall be charged a fee for collecting, processing,
or delivering such supplementary information.
369
HIGHER EDUCATION ACT OF 1965
Sec. 480
(b) ADJUSTMENTS TO ASSETS TAKEN INTO ACCOUNT. A student
financial aid administrator shall be considered to be making a nec-
essary adjustment in accordance with subsection (a) if
(1) the administrator makes adjustments excluding from
family income any proceeds of a sale of farm or business assets
of a family if such sale results from a voluntary or involuntary
foreclosure, forfeiture, or bankruptcy or an involuntary liquida-
tion; or
(2) the administrator makes adjustments in the award
level of a student with a disability so as to take into consider-
ation the additional costs such student incurs as a result of
such student's disability.
(c) REFUSAL OR ADJUSTMENT OF LOAN CERTIFICATIONS.On a
case-by-case basis, an eligible institution may refuse to certify a
statement that permits a student to receive a loan under part B
or D, or may certify a loan amount or make a loan that is less than
the student's determination of need (as determined under this
part), if the reason for the action is documented and provided in
written form to the student. No eligible institution shall discrimi-
nate against any borrower or applicant in obtaining a loan on the
basis of race, national origin, religion, sex, marital status, age, or
disability status.
SEC. 479B. [20 U.S.C. 1087ma DISREGARD OF STUDENT AID IN OTHER
FEDERAL PROGRAMS.
Notwithstanding any other provision of law, student financial
assistance received under this title, or under Bureau of Indian Af-
fairs student assistance programs, shall not be taken into account
in determining the need or eligibility of any person for benefits or
assistance, or the amount of such benefits or assistance, under any
Federal, State, or local program financed in whole or in part with
Federal funds.
SEC. 479C. [20 U.S.C. 1087uu-I] NATIVE AMERICAN STUDENTS.
In determining family contributions for Native American stu-
dents, computations performed pursuant to this
part
shall
exclude
(1) any income and assets of $2,000 or less per individual
payment received by the student (and spouse) and student's
parents under the Per Capita Act or the Distribution of Judg-
ment Funds Act; and
(2) any income received by the student (and spouse) and
student's parents under the Alaskan Native Claims Settlement
Act or the Maine Indian Claims Settlement Act.
SEC. 480. [20 U.S.C. 1087vv] DEFINITIONS.
As used in this part:
(a) TOTAL INCOME. (1) Except as provided in paragraph (2),
the term "total income" is equal to adjusted gross income plus
untaxed income and benefits for the preceding tax year minus ex-
cludable income (as defined in subsection (e)).
(2) No portion of any student financial assistance received from
any program by an individual, no portion of a national service edu-
cational award or post-service benefit received by an individual
under title I of the National and Community Service Act of 1990
(42 U.S.C. 12571 et seq.), and no portion of any tax credit taken
377
Sec. 480
HIGHER EDUCATION ACT OF 1965
310
under section 25A of the Internal Revenue Code of 1986, shall be
included as income or assets in the computation of expected family
contribution for any program funded in whole or in part under this
Act.
(b) UNTAXED INCOME AND BENEFITS.The term "untaxed in-
come and benefits" means
(1) child support received;
(2) welfare benefits, including assistance under a State
program funded under part A of title IV of the Social Security
Act and aid to dependent children;
(3) workman's compensation;
(4) veterans' benefits such as death pension, dependency,
and indemnity compensation, but excluding veterans' education
benefits as defined in subsection (c);
(5) interest on tax-free bonds;
(6) housing, food, and other allowances (excluding rent
subsidies for low-income housing) for military, clergy, and oth-
ers (including cash payments and cash value of benefits);
(7) cash support or any money paid on the student's be-
half, except, for dependent students, funds provided by the stu-
dent's parents;
(8) the amount of earned income credit claimed for Federal
income tax purposes;
(9) untaxed portion of pensions;
(10) credit for Federal tax on special fuels;
(11) the amount of foreign income excluded for purposes of
Federal income taxes;
(12) untaxed social security benefits;
(13) payments to individual retirement accounts and
Keogh accounts excluded from income for. Federal income tax
purposes; and
(14) any other untaxed income and benefits, such as Black
Lung Benefits, Refugee Assistance, railroad retirement bene-
fits, or Job Training Partnership Act noneducational benefits
or benefits received through participation in employment and
training activities under title I of the Workforce Investment
Act of 1998.
(c) VETERAN AND VETERANS' EDUCATION BENEFITS.(1) The
term "veteran" means any individual who
(A) has engaged in the active duty in the United States
Army, Navy, Air Force, Marines, or Coast Guard; and
(B) was released under a condition other than dishonor-
able.
(2) The term "veterans' education benefits" means veterans'
benefits the student will receive during the award year, including
but not limited to the following:
(A) United _States Code, title 10, chapter 2: Reserve Officer
Training Corps 'scholarship.
(B) United States- Code, title 10, chapter 106: Selective
Reserve.
Effective July 1,2000, section 405(gX2)(B) of the Omnibus Consolidated and Emergency Sup-
blemental Appropriation Act, 1999 (P.L. 105-277; 112 Stat. 2681-421) amends section 480(bX14)
y striking "Job Training Partnership Act noneducational benefits or".
311
HIGHER EDUCATION ACT OF 1965
Sec. 480
(C) United States Code, title 10, chapter 107: Selective Re-
serve Educational Assistance Program.
(D) United States Code, title 37, chapter 2: Reserve Officer
Training Corps Program.
(E) United States Code, title 38, chapter 30: Montgomery
GI Billactive duty.
(F) United States Code, title 38, chapter 31: vocational re-
habilitation.
(G) United States Code, title 38, chapter 32: Post-Vietnam
Era Veterans' Educational Assistance Program.
(H) United States Code, title 38, chapter 35: Dependents
Educational Assistance Program.
(I) Public Law 97-376, section 156: Restored Entitlement
Program for Survivors (or Quayle benefits).
(J) Public Law 96-342, section 903: Educational Assistance
Pilot Program.
(d) INDEPENDENT STUDENT.The term "independent", when
used with respect to a student, means any individual who
(1) is 24 years of age or older by December 31 of the award
year;
(2) is an orphan or ward of the court or was a ward of the
court until the individual reached the age of 18;
(3) is a veteran of the Armed Forces of the United States
(as defined in subsection (cX1));
(4) is a graduate or professional student;
(5) is a married individual;
(6) has legal dependents other than a spouse; or
(7) is a student for whom a financial aid administrator
makes a documented determination of independence by reason
of other unusual circumstances.
(e) EXCLUDABLE INCOME.The term "excludable
income"
means
(1) any student financial assistance awarded based on
need as determined in accordance with the provisions of this
part, including any income earned from work under part C of
this title;
(2) any living allowance received by a participant in a pro-
gram established under the National and Community Service
Act of 1990;
(3) child support payments made by the student or parent;
and
(4) payments made and services provided under part E of
title W of the Social Security Act.
(f) ASSETS.(1) The term "assets" means cash on hand, includ-
ing the amount in checking and savings accounts, time deposits,
money market funds, trusts, stocks, bonds, other securities, mutual
funds, tax shelters, and the net value of real estate, income produc-
ing property, and business and farm assets.
(2) With respect to determinations of need under this title,
other than for subpart 4 of part A, the term "assets" shall not in-
clude the net value of
(A) the family's principal place of residence; or
(B) a family farm on which the family resides.
Sec. 480
HIGHER EDUCATION ACT OF 1965
372
(g) NET ASSETS.The term "net assets" means the current
market value at the time of application of the assets (as defined in
subsection (0), minus the outstanding liabilities or indebtedness
against the assets.
(h) TREATMENT OF INCOME TAXES PAID TO OTHER JURISDIC-
TIONS.(1) The tax on income paid to the Governments of the Com-
monwealth of Puerto Rico, Guam, American Samoa, the Virgin Is-
lands, or the Commonwealth of the Northern Mariana Islands, the
Republic of the Marshall Islands, the Federated States of Microne-
sia, or Palau under the laws applicable to those jurisdictions, or the
comparable tax paid to the central government of a. foreign country,
shall be treated as Federal income taxes.
(2) References in this part to the Internal Revenue Code of
1986, Federal income tax forms, and the Internal Revenue Service
shall, for purposes of the tax described in paragraph (1), be treated
as references to the corresponding laws, tax forms, and tax collec-
tion agencies of those jurisdictions, respectively, subject to such ad-
justments as the Secretary may provide by regulation.
(i) CURRENT BALANCE.The term "current balance of checking
and savings accounts" does not include any funds over which an in-
dividual is barred from exercising discretion and control because of
the actions of any State in declaring a bank emergency due to the
insolvency of a private deposit insurance fund.
(j)
OTHER FINANCIAL ASSISTANCE;
TUITION PREPAYMENT
PLANS.(1) For purposes of determining a student's eligibility for
funds under this title, estimated financial assistance not received
under this title shall include all scholarships, grants, loans, or
other assistance known to the institution at the time the deter-
mination of the student's need is made, including veterans' edu-
cation benefits as defined in subsection (c), and national service
educational awards or post-service benefits under title I of the Na-
tional and Community Service Act of 1990 (42 U.S.C. 12571 et
seq.).
(2)(A) Except as provided in subparagraph (B), for purposes of
determining a student's eligibility for funds under this title, tuition
prepayment plans shall reduce the cost of attendance (as deter-
mined under section 472) by the amount of the prepayment, and
shall not be considered estimated financial assistance.
(B) If the institutional expense covered by the prepayment
must be part of the student's cost of attendance for accounting pur-
poses, the prepayment shall be considered estimated financial as-
sistance.
(3) Notwithstanding paragraph (1), a tax credit taken under
section 25A of the Internal Revenue Code of 1986 shall not be
treated as estimated financial assistance for purposes of section
471(3).
(k) DEPENDENTS.(1) Except as otherwise provided, the term
"dependent of the parent" means the student, dependent children
of the student's parents, including those children who are deemed
to be dependent students when applying for aid under this title,
and other persons who live with and receive more than one-half of
their support from the parent and will continue to receive more
than half of their support from the parent during the award year.
313
HIGHER EDUCATION ACT OF 1965
Sec. 481
(2) Except as otherwise provided, the term "dependent of the
student" means the student's dependent children and other persons
(except the student's spouse) who live with and receive more than
one-half of their support from the student and will continue to re-
ceive more than half of their support from the student during the
award year.
(1) FAMILY SIZE.(1) In determining family size in the case of
a dependent student
(A) if the parents are not divorced or separated, family
members include the student's parents, and the dependents of
the student's parents including the student;
(B) if the parents are divorced or separated, family mem-
bers include the parent whose income is included in computing
available income and that parent's dependents, including the
student; and
(C) if the parents are divorced and the parent whose in-
come is so included is remarried, or if the parent was a widow
or widower who has remarried, family members also include,
in addition to those individuals referred to in subparagraph
(B), the new spouse and any dependents of the new spouse if
that spouse's income is included in determining the parents'
adjusted available income.
(2) In determining family size in the case of an independent
student
(A) family members include the student, the student's
spouse, and the dependents of the student; and
(B) if the student is divorced or separated, family members
do not include the spouse (or ex-spouse), but do include the
student and the student's dependents.
(m) BUSINESS ASSETS.The term "business assets" means
property that is used in the operation of a trade or business, in-
cluding real estate, inventories, buildings, machinery, and other
equipment, patents, franchise rights, and copyrights.
PART G---GENERAL PROVISIONS RELATING TO STUDENT ASSISTANCE
PROGRAMS
SEC. 481. f20 U.S.C. 10881 DEFINITIONS.
(a) ACADEMIC AND AwARD YEAR.(1) For the purpose of any
program under this title, the term "award year" shall be defined as
the period beginning July 1 and ending June 30 of the following
year.
(2) For the purpose of any program under this title, the term
"academic year" shall require a minimum of 30 weeks of instruc-
tional time, and, with respect to an undergraduate course of study,
shall require that during such minimum period of instructional
time a full-time student is expected to complete at least 24 semes-
ter or trimester hours or 36 quarter hours at an institution that
measures program length in credit hours, or at least 900 clock
hours at an institution that measures program length in clock
hours. The Secretary may reduce such minimum of 30 weeks to not
less than 26 weeks for good cause, as determined by the Secretary
on a case-by-case basis, in the case of an institution of higher edu-
33 1
Sec. 481A
HIGHER EDUCATION ACT OF 1965
314
cation that provides a 2-year or 4-year program of instruction for
which the institution awards an associate or baccalaureate degree.
(b) ELIGIBLE PROGRAM.(1) For purposes of this title, the term
"eligible program" means a program of at least
(A) 600 clock hours of instruction, 16 semester hours, or 24
quarter hours, offered during a minimum of 15 weeks, in the
case of a program that
(i) provides a program of training to prepare students
for gainful employment in a. recognized profession; and
(ii) admits students who have not completed the equiv-
alent of an associate degree; or
(B) 300 clock hours of instruction, 8 semester hours, or 12
hours, offered during a minimum of 10 weeks, in the case of
(i) an undergraduate program that requires the equiv-
alent of an associate degree for admissions; or
(ii) a graduate or professional program.
(2)(A) A program is an eligible program for purposes of part B
of this title if it is a program of at least 300 clock hours of instruc-
tion, but less than 600 clock hours of instruction, offered during a
minimum of 10 weeks, that
(i) has a verified completion rate of at least 70 percent, as
determined in accordance with the regulations of the Sec-
retary;
(ii) has a verified placement rate of at least 70 percent, as
determined in accordance with the regulations of the Sec-
retary; and
(iii) satisfies such further criteria as the Secretary may
prescribe by regulation.
(B) In the case of a program being determined eligible for the
first time under this paragraph, such determination shall be made
by the Secretary before such program is considered to have satis-
fied the requirements of this paragraph.
(c) THIRD PARTY SERVICER.For purposes of this title, the
term "third party service? means any individual, or any State, or
private, profit or nonprofit organization which enters into a con-
tract with
(1) any eligible institution of higher education to admin-
ister, through either manual or automated processing, any as-
pect of such institution's student assistance programs under
this title; or
(2) any guaranty agency, or any eligible lender, to admin-
ister, through either manual or automated processing, any as-
pect of such guaranty agency's or lender's student loan pro-
grams under part B of this title, including originating, guaran-
teeing, monitoring, processing, servicing, or collecting loans.
SEC. 481A. [20 U.S.C. 1088a] CLOCK AND CREDIT HOUR TREATMENT
OF DIPLOMA NURSING SCHOOLS.
Notwithstanding any other provision of this Act, any regula-
tions promulgated by the Secretary concerning the relationship be-
tween clock hours and semester, trimester, or quarter hours in cal-
culating student grant, loan, or work assistance under this title,
shall not apply to a public or private nonprofit hospital-based
school of nursing that awards a diploma at the completion of the
school's program of education.
315
HIGHER EDUCATION ACT OF 1965
Sec. 482
SEC. 482. [20 U.S.C. 1089] MASTER CALENDAR.
(a) SECRETARY REQUIRED To COMPLY WITH SCHEDULE.To as-
sure adequate notification and timely delivery of student aid funds
under this title, the Secretary shall adhere to the following cal-
endar dates in the year preceding the award year:
(1) Development and distribution of Federal and multiple
data entry forms
(A) by February 1: first meeting of the technical com-
mittee on forms design of the Department;
(B) by March 1: proposed modifications and updates
pursuant to section 478 published in the Federal Register;
(C) by June 1- final modifications and updates pursu-
ant to section 478 published in the Federal Register;
(D) by August 15: application for Federal student as-
sistance and multiple data entry data elements and in-
structions approved;
(E) by August 30: final approved forms delivered to
servicers and printers;
(F) by October 1: Federal and multiple data entry
forms and instructions printed; and
(G) by November 1: Federal and multiple data entry
forms, instructions, and training materials distributed.
(2) Allocations of campus-based and Pell Grant funds
(A) by August 1: distribution of institutional applica-
tion for campus-based funds (FISAP) to institutions;
(B) by October 1: final date for submission of FISAP
by institutions to the Department;
(C) by November 15: edited FISAP and computer
printout received by institutions;
(D) by December 1: appeals procedures received by in-
stitutions;
(E) by December 15: edits returned by institutions to
the Department;
(F) by February 1: tentative award levels received by
institutions and final Pell Grant payment schedule;
(G) by February 15: closing date. for receipt of institu-
tional appeals by the Department;
(H) by March 1: appeals process completed;
(I) by April 1: final award notifications sent to institu-
tions; and
(J) by June 1: Pell Grant authorization levels sent to
institutions.
(3) The Secretary shall, to the extent practicable, notify eli-
gible institutions, guaranty agencies, lenders, interested soft-
ware providers, and, upon request, other interested parties, by
December 1 prior to the start of an award year of minimal
hardware and software requirements necessary to administer
programs under this title.
(4) The Secretary shall attempt to conduct training activi-
ties for financial aid administrators and others in an expedi-
tious and timely manner prior to the start of an award year
in order to ensure that all participants are informed of all
administrative requirements.
383
Sec. 483
HIGHER EDUCATION ACT OF 1965
376
(b) TIMING FOR REALLOCATIONS.With respect to any funds re-
allocated under section 413D(e), 442(e), or 462(j), the: Secretary
shall reallocate such funds at any time during the course of the
year that will best meet the purpose of the programs under subpart
3 of part A, part C, and part E, respectively. However, such re-
allocation shall occur at least once each year, not later than Sep-
tember 30 of that year.
(C) DELAY OF EFFECTIVE DATE OF LATE PUBLICATIONS.(1) Ex-
cept as provided in paragraph. (2), any regulatory changes initiated
by the Secretary affecting the programs under this title that have
not been published in final form by November 1 prior to the start
of the award year shall not become effective until the beginning of
the second award year after such November 1 date.
(2)(A) The Secretary may designate any regulatory provision
that affects the programs under this title and is published in final
form after November 1 as one that an entity subject to the provi-
sion may, in the entity's discretion, choose to implement prior to
the effective date described in paragraph (1). The Secretary may
specify in the designation when, and under what conditions, an en-
tity may implement the provision prior to that effective date. The
Secretary shall publish any designation under this subparagraph in
the Federal Register.
(B) If an entity chooses to implement- a regulatory provision
prior to the effective date described in paragraph (1), as permitted
by subparagraph (A), the provision shall be effective with respect
to that entity in accordance with the terms of the Secretary's des-
ignation.
(d) NOTICE TO CONGRESS.The Secretary shall notify the Com-
mittee on Labor and Human Resources of the Senate and the Com-
mittee on Education and Labor of the House of Representatives
when a deadline included in the calendar described in subsection
(a) is not met. Nothing in this section shall be interpreted to penal-
ize institutions or deny them the specified times allotted to enable
them to return information to the Secretary based on the failure
of the Secretary to adhere to the dates specified in this section.
SEC. 483. [20 U.S.C. 1090] FORMS AND REGULATIONS.
(a) COMMON FINANCIAL AID FORM DEVELOPMENT AND PROCESS-
ING.
(1) SINGLE FORM REQUIRED.The Secretary, in cooperation
with representatives of agencies and organizations involved in
student financial assistance, shall produce, distribute, and
process free of charge a common financial reporting form to be
used to determine the need and eligibility of a student for fi-
nancial assistance under parts A through E of this title (other
than under subpart 4 of part A). The Secretary shall include
on the form developed under this subsection such data items
as the Secretary determines are appropriate for inclusion. Such
items shall be selected in consultation with States to assist in
the awarding of State fmancial assistance. In no case shall the
number of such data items be less than the number included
on the form on the date of enactment of the Higher Education
Amendments of 1998. Such form shall satisfy the requirements
of section 401(d) of this title.
311
HIGHER EDUCATION ACT OF 1965
Sec. 483
(2) CHARGES TO STUDENTS AND PARENTS FOR USE OF FORM
PROHIBITED.The common financial reporting form prescribed
by the Secretary under paragraph (1) shall be produced, dis-
tributed, and processed by the Secretary and no parent or stu-
dent shall be charged a fee for the collection, processing, or de-
livery of financial aid through the use of such form. The need
and eligibility of a student for financial assistance under parts
A through E of this title (other than under subpart 4 of part
A) may only be determined by using the form developed by the
Secretary pursuant to paragraph (1) of this subsection. No stu-
dent may receive assistance under parts A through E of this
title (other than under subpart 4 of part A), except by use of
the form developed by the Secretary pursuant to this section.
No data collected on a form for which a fee is charged shall be
used to complete the form prescribed under paragraph (1).
(3) DISTRIBUTION OF DATA.Institutions of higher edu-
cation, guaranty agencies, and States shall receive, without
charge, the data collected by the Secretary using the form de-
veloped pursuant to this section for the purposes of processing
loan applications and determining need and eligibility for insti-
tutional and State financial aid awards. Entities designated by
institutions of higher education, guaranty agencies, or States
to receive such data shall be subject to all the requirements of
this section, unless such requirements are waived by the Sec-
retary.
(4) CONTRACTS FOR COLLECTION AND PROCESSING.(A) The
Secretary shall, to the extent practicable, enter into not less
than 5 contracts with States, institutions of higher education,
or private organizations for the purposes of the timely collec-
tion and processing of the form developed pursuant to para-
graph (1) and the timely delivery of the data submitted on
such form. The Secretary shall use such contracts to assist
States and institutions of higher education with the collection
of additional data required to award State or institutional fi-
nancial assistance, except that the Secretary shall not include
these additional data items on the common financial reporting
form developed pursuant to this section. The Secretary shall
include in each such contract a requirement that
(i) any charges by the contractor to the student or par-
ent for additional data items required by a State or insti-
tution for any purpose (regardless of the method of collec-
tion) shall be reasonable and shall not exceed the marginal
cost of collecting, processing, and delivering such addi-
tional data, taking into account any payment received by
the contractor to produce, distribute, and process the com-
mon financial reporting form prescribed by the Secretary
pursuant to paragraph (1); and
(ii) the contractor will require any person or entity to
whom the contractor provides such additional data to
agree not to collect from any student or parent any charge
that would not be permitted under this subparagraph for
any such additional data.
385
54-653 99 -13
Sec. 483
HIGHER EDUCATION ACT OF 1965
318
(B) To the extent practicable, the Secretary shall ensure
that at least one contractor, or a portion of one contract, under
this paragraph will serve graduate and professional students.
(C) As part of the procurement process for the 1993-1994
award year, and for all procurements thereafter pertaining to
the contracts under this paragraph, the Secretary shall require
all entities competing for such contracts to comply with all re-
quirements of this subsection and to
(i) use the common financial reporting form as pre-
scribed in paragraph (1), which shall be clearly identified
as the "Free Application for Federal Student Aid"; and
(ii) use a common, simplified reapplication form as the
Secretary shall prescribe pursuant to subsection (b), in
each award year.
(D) The Secretary shall reimburse all approved contractors
at a reasonable predetermined rate for processing such applica-
tions, for issuing eligibility reports, and for carrying out other
services or requirements that may be prescribed by the Sec-
retary.
(E) All approved contractors shall be required to adhere to
all editing, processing, and reporting requirements established
by the Secretary to ensure consistency.
(F) No approved contractor shall enter into exclusive ar-
rangements with guarantors, lenders, secondary markets, or
institutions of higher education for the purpose of reselling or
sharing of data collected for the multiple data entry process.
All data collected under a contract issued by the Secretary pur-
suant to this paragraph for the multiple data entry process is
the exclusive property of the Secretary and may not be trans-
ferred to a third party by an approved contractor without the
Secretary's express written approval.
(5) ELECTRONIC FORMS.-(A) The Secretary, in cooperation
with representatives of agencies and organizations involved in
student financial assistance, including private computer soft-
ware providers, shall develop an electronic version of the form
described in paragraph (1). As permitted by the Secretary,
such an electronic version shall not require a signature to be
collected at the time such version is submitted, if a signature
is subsequently submitted by the applicant. The Secretary
shall prescribe such version not later than 120 days after the
date of enactment of the Higher Education Amendments of
1998.
(B) Nothing in this section shall be construed to prohibit
the use of the form developed by the Secretary pursuant to
subparagraph (A) by an eligible institution, eligible lender,
guaranty agency, State grant agency, private computer soft-
ware providers, a consortium thereof, or such other entities as
the Secretary may designate.
(C) No fee shall be charged to students in connection with
the use of the electronic version of the form, or of any other
electronic forms used in conjunction with such form in applying
for Federal or State student financial assistance.
(D) The Secretary shall ensure that data collection com-
plies with section 552a of title 5, United States Code, and that
3 8ii
319
HIGHER EDUCATION ACT OF 1965
Sec. 483
any entity using the electronic version of the form developed
by the Secretary pursuant to subparagraph (A) shall maintain
reasonable and appropriate administrative, technical, and
physical safeguards to ensure the integrity and confidentiality
of the information, and to protect against security threats, or
unauthorized uses or disclosures of the information provided
on the electronic version of the form. Data collected by such
version of the form shall be used only for the application,
award, and administration of aid awarded under this title,
State aid, or aid awarded by eligible institutions or such enti-
ties as the Secretary may designate. No data collected by such
version of the form shall be used for making final aid awards
under this title until such data have been processed by the
Secretary or a contractor or designee of the Secretary.
(6) THIRD PARTY SERVICERS AND PRIVATE SOFTWARE PRO-
VIDERS.To the extent practicable and in a timely manner, the
Secretary shall provide, to private organizations and consortia
that develop software used by eligible institutions for the ad-
ministration of funds under this title, all the necessary speci-
fications that the organizations and consortia must meet for
the software the organizations and consortia develop, produce,
and distribute (including any diskette, modem, or network
communications) which are so used. The specifications shall
contain record layouts for required data. The Secretary shall
develop in advance of each processing cycle an annual schedule
for providing such specifications. The Secretary, to the extent
practicable, shall use means of providing such specifications,
including conferences and other meetings, outreach, and tech-
nical support mechanisms (such as training and printed ref-
erence materials). The Secretary shall, from time to time, so-
licit from such organizations and consortia means of improving
the support provided by the Secretary.
(7) PARENT'S SOCIAL SECURITY NUMBER AND BIRTH DATE.
The Secretary is authorized to include on the form developed
under this subsection space for the social security number and
birth date of parents of dependent students seeking financial
assistance under this title.
(b) STREAMLINED REAPPLICATION PROCESS.(1) The Secretary
shall develop a streamlined reapplication form and process, includ-
ing electronic reapplication process, consistent with the require-
ments of subsection (a), for those recipients who apply for financial
aid funds under this title in the next succeeding academic year
subsequent to the initial year in which such recipients apply.
(2) The Secretary shall develop appropriate mechanisms to
support reapplication.
(3) The Secretary shall determine, in cooperation with States,
institutions of higher education, agencies and organizations in-
volved in student financial assistance, the data elements that can
be updated from the previous academic year's application.
(4) Nothing in this title shall be interpreted as limiting the au-
thority of the Secretary to reduce the number of data elements re-
quired of reapplicants.
(5) Individuals determined to have a zero family contribution
pursuant to section 479 shall not be required to provide any finan-
387
Sec. 484
HIGHER EDUCATION ACT OF 1965
380
cial data, except that which is necessary to determine eligibility
under that section.
(c) INFORMATION TO COMMITTEES OF CONGRESS.
Copies of all
rules, regulations, guidelines, instructions, and application forms
published or promulgated pursuant to this title shall be provided
to the Committee on Labor and Human Resources of the Senate
and the Committee on Education and the Workforce of the House
of Representatives at least 45 days prior to their effective date.
(d) TOLL-FREE INFORMATION.The Secretary shall contract for,
or establish, and publicize a toll-free telephone service to provide
timely and accurate information to the general public. The informa-
tion provided shall include specific instructions on completing the
application form for assistance under this title. Such service shall
also include a service accessible by telecommunications devices for
the deaf (TDD's) and shall, in addition to the services provided for
in the previous sentence, refer such students to the national clear-
inghouse on postsecondary education that is authorized under sec-
tion 685(d)(2)(C) of the Individuals with Disabilities Education Act.
(e) PREPARER.Any financial aid application required to be
made under this title shall include the name, signature, address or
employer's address, social security number or employer identifica-
tion number, and organizational affiliation of the preparer of such
financial aid application.
SEC. 484. [20 U.S.C. 1091] STUDENT ELIGIBILITY.
(a) IN GENERAL.In order to receive any grant, loan, or work
assistance under this title, a student must
(1) be enrolled or accepted for enrollment in a degree, cer-
tificate, or other program (including a program of study abroad
approved for credit by the eligible institution at which such
student is enrolled) leading to a recognized educational creden-
tial at an institution of higher education that is an eligible in-
stitution in accordance with the provisions of section 487, ex-
cept as provided in subsections (b)(3) and (b)(4), and not be en-
rolled in an elementary or secondary school;
(2) if the student is presently enrolled at an institution, be
maintaining satisfactory progress in the course of study the
student is pursuing in accordance with the provisions of sub-
section (c);
(3) not owe a refund on grants previously received at any
institution under this title, or be in default on any loan from
a student loan fund at any institution provided for in part E,
or a loan made, insured, or guaranteed by the Secretary under
this title for attendance at any institution;
(4) file with the Secretary, as part of the original financial
aid application process, a certification 1 which need not be no-
tarized, but which shall include
(A) a statement of educational purpose stating that
the money attributable to such grant, loan, or loan guaran-
tee will be used solely for expenses related to attendance
or continued attendance at such institution; and
(B) such student's social security number, except that
the provisions of this subparagraph shall not apply to a
'So in law (112 Stat. 1735). The second comma probably should be deleted.
381
HIGHER EDUCATION ACT OF 1965
Sec. 484
student from the Republic of the Marshall Islands, the
Federated States of Micronesia, or the Republic of Palau;
(5) be a citizen or national of the United States, a perma-
nent resident of the United States, able to provide evidence
from the Immigration and Naturalization Service that he or
she is in the United States for other than a temporary purpose
with the intention of becoming a citizen or permanent resident,
a citizen of any one of the Freely Associated States.
(b) ELIGIBILITY FOR STUDENT LOANS.-(1) In order to be eligi-
ble to receive any loan under this title (other than a loan under
section 428B or 428C) for any period of enrollment, a student who
is not a graduate or professional student (as defined in regulations
of the Secretary), and who is enrolled in a program at an institu-
tion which has a participation agreement with the Secretary to
make awards under subpart 1 of part A of this title, shall
(A)(i) have received a determination of eligibility or ineli-
gibility for a Pell Grant under such subpart 1 for such period
of enrollment; and (ii) if determined to be eligible, have filed
an application for a Pell Grant for such enrollment period; or
(B) have (A) filed an application with the Pell Grant proc-
essor for such institution for such enrollment period, and (B)
received from the financial aid administrator of the institution
a preliminary determination of the student's eligibility or ineli-
gibility for a grant under such subpart 1.
(2) In order to be eligible to receive any loan under section
428A for any period of enrollment, a student shall
(A) have received a determination of need for a loan under
section 428(a)(2)(B) of this title;
(B) if determined to have need for a loan under section
428, have applied for such a loan; and
(C) has applied for a loan under section 428H, if such stu-
dent is eligible to apply for such a loan.
(3) A student who
(A) is carrying at least one-half the normal full-time work
load for the course of study that the student is pursuing, as de-
termined by an eligible institution, and
(B) is enrolled in a course of study necessary for enroll-
ment in a program leading to a degree or certificate,
shall be, notwithstanding paragraph (1) of subsection (a), eligible
to apply for loans under part B or D of this title. The eligibility de-
scribed in this paragraph shall be restricted to one 12-month pe-
riod.
(4) A student who
(A) is carrying at least one-half the normal full-time work
load for the course of study the student is pursuing, as deter-
mined by the institution, and
(B) is enrolled or accepted for enrollment in a program at
an eligible institution necessary for a professional credential or
certification from a State that is required for employment as
a teacher in an elementary or secondary school in that State,
shall be, notwithstanding paragraph (1) of subsection (a), eligible
to apply for loans under part B, D, or E or work-study assistance
under part C of this title.
383
Sec. 484
HIGHER EDUCATION ACT OF 1965
382
(5) Notwithstanding any other provision of this subsection, no
incarcerated student is eligible to receive a loan under this title.
(c) SATISFACTORY PROGRESS.(1) For the purpose of subsection
(a)(2), a student is maintaining satisfactory progress if
(A) the institution at which the student is in attendance,
reviews the progress of the student at the end of each aca-
demic year, or its equivalent, as determined by the institution,
and
(B) the student has a cumulative C average, or its equiva-
lent or academic standing consistent with the requirements for
graduation, as determined by the institution, at the end of the
second such academic year.
(2) Whenever a student fails to meet the eligibility require-
ments of subsection (a)(2) as a result of the application of this sub-
section and subsequent to that failure the student has academic
standing consistent with the requirements for graduation, as deter-
mined by the institution, for any grading period, the student may,
subject to this subsection, again be eligible under subsection (a)(2)
for a grant, loan, or work assistance under this title.
(3) Any institution of higher education at which the student is
in attendance may waive the provisions of paragraph (1) or para-
graph (2) of this subsection for undue hardship based on
(A) the death of a relative of the student,
(B) the personal injury or illness of the student, or
(C) special circumstances as determined by the institution.
(d) STUDENTS WHO ARE NOT HIGH SCHOOL GRADUATES.In
order for a student who does not have a certificate of graduation
from a school providing secondary education, or the recognized
equivalent of such certificate, to be eligible for any assistance
under subparts 1, 3, and 4 of part A and parts B, C, D, and E of
this title, the student shall meet one of the following standards:
(1) The student shall take an independently administered
examination and shall achieve a score, specified by the Sec-
retary, demonstrating that such student can benefit from the
education or training being offered. Such examination shall be
approved by the Secretary on the basis of compliance with such
standards for development, administration, and scoring as the
Secretary may prescribe in regulations.
(2) The student shall be determined as having the ability
to benefit from the education or training in accordance with
such process as the State shall prescribe. Any such process de-
scribed or approved by a State for the purposes of this section
shall be effective 6 months after the date of submission to the
Secretary unless the Secretary disapproves such process. In de-
termining whether to approve or disapprove such process, the
Secretary shall take into account the effectiveness of such proc-
ess in enabling students without high school diplomas or the
equivalent thereof to benefit from the instruction offered by in-
stitutions utilizing such process, and shall also take into ac-
count the cultural diversity, economic circumstances, and edu-
cational preparation of the populations served by the institu-
tions.
383
HIGHER EDUCATION ACT OF 1965
Sec. 484
(3) The student has completed a secondary school edu-
cation in a home school setting that is treated as a home school
or private school under State law.
(e) CERTIFICATION FOR GSL ELIGIBILITY.Each eligible institu-
tion may certify student eligibility for a loan by an eligible lender
under part B of this title prior to completing the review for accu-
racy of the information submitted by the applicant required by reg-
ulations issued under this title, if
(1) checks for the loans are mailed to the eligible institu-
tion prior to disbursements;
(2) the disbursement is not made until the review is com-
plete; and
(3) the eligible institution has no evidence or documenta-
tion on which the institution may base a determination that
the information submitted by the applicant is incorrect.
(f) LOSS OF ELIGIBILITY FOR VIOLATION OF LOAN LIMITS.(1)
No student shall be eligible to receive any grant, loan, or work as-
sistance under this title if the eligible institution determines that
the student fraudulently borrowed in violation of the annual loan
limits under part B, part D, 1 or part E of this title in the same
academic year, or if the student fraudulently borrowed in excess of
the aggregate maximum loan limits under such part B, part D,1 or
part E.
(2) If the institution determines that the student inadvertently
borrowed amounts in excess of such annual or aggregate maximum
loan limits, such institution shall allow the student to repay any
amount borrowed in excess of such limits prior to certifying the
student's eligibility for further assistance under this title.
(g) VERIFICATION OF IMMIGRATION STATUS.
(1) IN GENERAL.The Secretary shall implement a system
under which the statements and supporting documentation, if
required, of an individual declaring that such individual is in
compliance with the requirements of subsection (a)(5) shall be
verified prior to the individual's receipt of a grant, loan, or
work assistance under this title.
(2) SPECIAL RULE.The documents collected and main-
tained by an eligible institution in the admission of a student
to the institution may be used by the student in lieu of the doc-
uments used to establish both employment authorization and
identity under section 274A(b)(1)(B) of the Immigration and
Nationality Act (8 U.S.C. 1324a) to verify eligibility to partici-
pate in work-study programs under part C of this title.
(3) VERIFICATION MECHANISMS.The Secretary is author-
ized to verify such statements and supporting documentation
through a data match, using an automated or other system,
with other Federal agencies that may be in possession of infor-
mation relevant to such statements and supporting documenta-
tion.
(4) REVIEW.In the case of such an individual who is not
a citizen or national of the United States, if the statement de-
scribed in paragraph (1) is submitted but the documentation
'Error in amendment made to this subsection by section 2(h)(18) of the. Higher Education.
Technical Amendments of 1993 (P.L. 103-208; 107 Stat. 2477). The instructions were to insert
a comma after "Part D" each place it appears.
391
BEST COPY AVAILABLE
Sec. 484
HIGHER EDUCATION ACT OF 1965
384
required under paragraph (2) is not presented or if the docu-
mentation required under paragraph (2)(A) is presented but
such documentation is not verified under paragraph (3)
(A) the institution
(i) shall provide a reasonable opportunity to sub-
mit to the institution evidence indicating a satisfactory
immigration status, and
(ii) may not delay, deny, reduce, or terminate the
individual's eligibility for the grant, loan, or work as-
sistance on the basis of the individual's immigration
status until such a reasonable opportunity has been
provided; and
(B) if there are submitted documents which the insti-
tution determines constitute reasonable evidence indicat-
ing such status
(i) the institution shall transmit to the Immigra-
tion and Naturalization Service either photostatic or
other similar copies of such documents, or information
from such documents, as specified by the Immigration
and Naturalization Service, for official verification,
(ii) pending such verification, the institution may
not delay, deny, reduce, or terminate the individual's
eligibility for the grant, loan, or work assistance on
the basis of the individual's immigration status, and
(iii) the institution shall not be liable for the con-
sequences of any action, delay, or failure of the Service
to conduct such verification.
(h) LIMITATIONS OF ENFORCEMENT ACTIONS AGAINST INSTITU-
TIONS.The Secretary shall not take any compliance, disallowance,
penalty, or other regulatory action against an institution of higher
education with respect to any error in the institution's determina-
tion to make a student eligible for a grant, loan, or work assistance
based on citizenship or immigration status
(1) if the institution has provided such eligibility based on
a verification of satisfactory immigration status by the Immi-
gration and Naturalization Service,
(2) because the institution, under subsection (h)(4)(A)(i),
was required to provide a reasonable opportunity to submit
documentation, or
(3) because the institution, under subsection (h)(4)(B)(i),
was required to wait for the response of the Immigration and
Naturalization Service to the institution's request for official
verification of the immigration status of the student.
(i) VALIDITY OF LOAN GUARANTEES FOR LOAN PAYMENTS MADE
BEFORE IMMIGRATION STATUS VERIFICATION COMPLETED.Notwith-
standing subsection (h), if
(1) a guaranty is made under this title for a loan made
with respect to an individual,
(2) at the time the guaranty is entered into, the provisions
of subsection (h) had been complied with,
(3) amounts are paid under the loan subject to such guar-
anty, and
385
HIGHER EDUCATION ACT OF 1965
Sec. 484
(4) there is a subsequent determination that, because of an
unsatisfactory immigration status, the individual is not eligible
for the loan,
the official of the institution making the determination shall notify
and instruct the entity making the loan to cease further payments
under the loan, but such guaranty shall not be voided or otherwise
nullified with respect to such payments made before the date the
entity receives the notice.
( j) ASSISTANCE UNDER SUBPARTS 1 AND 3 OF PART A, AND PART
C.Notwithstanding any other provision of law, a student shall be
eligible until September. 30, 2004, for assistance under subparts 1
and 3 of part A, and part C, if the student is otherwise qualified
and
(1) is a citizen of any one of the Freely Associated States
and attends an institution of higher education in a State or a
public or nonprofit private institution of higher education in
the Freely Associated States; or
(2) meets the requirements of subsection (a)(5) and attends
a public or nonprofit private institution of higher education in
any one of the Freely Associated States.
(k) SPECIAL RULE FOR CORRESPONDENCE COURSES.A student
shall not be eligible to receive grant, loan, or work assistance under
this title for a correspondence course unless such course is part of
a program leading to an associate, bachelor or graduate degree.
(1) COURSES OFFERED THROUGH TELECOMMUNICATIONS.
(1) RELATION TO CORRESPONDENCE COURSES.
(A) IN GENERALA student enrolled in a course of in-
struction at an institution of higher education that is of-
fered in whole or in part through telecommunications and
leads to a recognized certificate for a program of study of
1 year or longer, or a recognized associate, baccalaureate,
or graduate degree, conferred by such institution, shall not
be considered to be enrolled in correspondence courses un-
less the total amount of telecommunications and cor-
respondence courses at such institution equals or exceeds
50 percent of the total amount of all courses at the institu-
tion.
(B) REQUIREMENT.An institution of higher education
referred to in subparagraph (A) is an institution of higher
education
(i) that is not an institute or school described in
section 521(4)(C) of the Carl D. Perkins Vocational
and Applied Technology Education Act; and
(ii) for which at least 50 percent of the programs
of study offered by the institution lead to the award of
a recognized associate, baccalaureate, or graduate de-
gree.
(2) RESTRICTION OR REDUCTIONS OF FINANCIAL AID.A stu-
dent's eligibility to receive grants, loans, or work assistance
under this title shall be reduced if a financial aid officer deter-
mines under the discretionary authority provided in section
479A that telecommunications instruction results in a substan-
tially reduced cost of attendance to such student.
393
Sec. 484
HIGHER EDUCATION ACT OF 1965
386
(3) SPECIAL RULE.For award years prior to the date of
enactment of this subsection, the Secretary shall not take any
compliance, disallowance, penalty, or other action against a
student or an eligible institution when such action arises out
of such institution's prior award of student assistance under
this title if the institution demonstrates to the satisfaction of
the Secretary that its course of instruction would have been in
conformance with the requirements of this subsection.
(4) DEFINITION.For the purposes of this subsection, the
term "telecommunications" means the use of television, audio,
or computer transmission, including open broadcast, closed cir-
cuit, cable, microwave, or satellite, audio conferencing, com-
puter conferencing, or video cassettes or discs, except that such
term does not include a course that is delivered using video
cassette or disc recordings at such institution and that is not
delivered in person to other students of that institution.
(m) STUDENTS WITH A FIRST BACCALAUREATE OR PROFES-
SIONAL DEGREE.A student shall not be ineligible for assistance
under parts B, C, D, and E of this title because such student has
previously received a baccalaureate or professional degree.
(n) DATA BASE MATCHING.To enforce the Selective Service
registration provisions of section 1113 of Public Law 97-252, the
Secretary shall conduct data base matches with the Selective Serv-
ice, using common demographic data elements. Appropriate con-
firmation, through an application output document or through
other means, of any person's registration shall fulfill the require-
ment to file a separate statement of compliance. In the absence of
a confirmation from such data matches, an institution may also use
data or documents that support either the student's registration, or
the absence of a registration requirement for the student, to fulfill
the requirement to file a separate statement of compliance. The
mechanism for reporting the resolution of nonconfirmed matches
shall be prescribed by the Secretary in regulations.
(o) STUDY ABROAD.Nothing in this Act shall be construed to
limit or otherwise prohibit access to study abroad programs ap-
proved by the home institution at which a student is enrolled. An
otherwise eligible student who is engaged in a program of study
abroad approved for academic credit by the home institution at
which the student is enrolled shall be eligible to receive grant,
loan, or work assistance under this title, without regard to whether
such study abroad program is required as part of the student's de-
gree program.
(p) VERIFICATION OF SOCIAL SECURITY NUMBER.The Sec-
retary of Education, in cooperation with the Commissioner of the
Social Security Administration, shall verify any social security
number provided by a student to an eligible institution under sub-
section (a)(4) and shall enforce the following conditions:
(1) Except as provided in paragraphs (2) and (3), an insti-
tution shall not deny, reduce, delay, or terminate a student's
eligibility for assistance under this part because social security
number verification is pending.
(2) If there is a determination by the Secretary that the so-
cial security number provided to an eligible institution by a
student is incorrect, the institution shall deny or terminate the
381
HIGHER EDUCATION ACT OF 1965
Sec. 484
student's eligibility for any grant, loan, or work assistance
under this title until such time as the student provides docu-
mented evidence of a social security number that is determined
by the institution to be correct.
(3) If there is a determination by the Secretary that the so-
cial security number provided to an eligible institution by a
student is incorrect, and a correct social security number can-
not be provided by such student, and a loan has been guaran-
teed for such student under part B of this title, the institution
shall notify and instruct the lender and guaranty agency mak-
ing and guaranteeing the loan, respectively, to cease further
disbursements of the loan, but such guaranty shall not be void-
ed or otherwise nullified with respect to such disbursements
made before the date that the lender and the guaranty agency
receives such notice.
(4) Nothing in this subsection shall permit the Secretary
to take any compliance, disallowance, penalty, or other regu-
latory action against
(A) any institution of higher education with respect to
any error in a social security number, unless such error
was a result of fraud on the part of the institution; or
(B) any student with respect to any error in a social
security number, unless such error was a result of fraud
on the part of the student.
(q) VERIFICATION OF INCOME DATA.
(1) CONFIRMATION WITH IRS.The Secretary of Education,
in cooperation with the Secretary of the Treasury, is author-
ized to confirm with the Internal Revenue Service the adjusted
gross income, Federal income taxes paid, filing status, and ex-
emptions reported by applicants (including parents) under this
title on their Federal income tax returns for the purpose of
verifying the information reported by applicants on student fi-
nancial aid applications.
(2) NOTIFICATION.The Secretary shall establish proce-
dures under which an applicant is notified that the Internal
Revenue Service will disclose to the Secretary tax return infor-
mation as authorized under section 6103(1)(13) of the Internal
Revenue Code of 1986.
(r)
SUSPENSION OF ELIGIBILITY FOR DRUG-RELATED OF-
FENSES.
(1) IN GENERALA student who has been convicted of any
offense under any Federal or State law involving the posses-
sion or sale of a controlled substance shall not be eligible to re-
ceive any grant, loan, or work assistance under this title dur-
ing the period beginning on the date of such conviction and
ending after the interval specified in the following table:
395
Sec. 484A
HIGHER EDUCATION ACT OF 1965
388
If convicted of an offense involving:
The possession of a con-
trolled substance:
First offense
Second offense
Third offense
The sale of a controlled
substance:
First offense
Second offense
Ineligibility period is:
1 year
2 years
Indefinite.
Ineligibility period is:
2 years
Indefinite.
(2) REHABILITATION.A student whose eligibility has been
suspended under paragraph (1) may resume eligibility before
the end of the ineligibility period determined under such para-
graph if(A) the student satisfactorily completes a drug reha-
bilitation program that
(i) complies with such criteria as the Secretary
shall prescribe in regulations for purposes of this para-
graph; and
(ii) includes two unannounced drug tests; or
(B) the conviction is reversed, set aside, or otherwise
rendered nugatory.
(3) DEFINITIONS.In this subsection, the term "controlled
substance" has the meaning given the term in section 102(6)
of the Controlled Substances Act (21 U.S.C. 802(6)).
SEC. 484A. 120 U.S.C. 1091a1 STATUTE OF LIMITATIONS, AND STATE
COURT JUDGMENTS.
(a) IN GENERAL.(1) It is the purpose of this subsection to en-
sure that obligations to repay loans and grant overpayments are
enforced without regard to any Federal or State statutory, regu-
latory, or administrative limitation on the period within which
debts may be enforced.
(2) Notwithstanding any other provision of statute, regulation,
or administrative limitation, no limitation shall terminate the pe-
riod within which suit may be filed, a judgment may be enforced,
or an offset, garnishment, or other action initiated or taken by
(A) an institution that receives funds under this title that
is seeking to collect a refund due from a student on a grant
made, or work assistance awarded, under this title;
(B) a guaranty agency that has an agreement with the
Secretary under section 428(c) that is seeking the repayment
of the amount due from a borrower on a loan made under part
B of this title after such guaranty agency reimburses the pre-
vious holder of the loan for its loss on account of the default
of the borrower;
(C) an institution that has an agreement with the Sec-
retary pursuant to section 453 or 463(a) that is seeking the re-
payment of the amount due from a borrower on a loan made
under part D or E of this title after the default of the borrower
on such loan; or
(D) the Secretary, the Attorney General, or the administra-
tive head of another Federal agency, as the case may be, for
payment of a refund due from a student on a grant made
under this title, or for the repayment of the amount due from
389
NIGHER EDUCATION ACT OF 1965
Sec. 4848
a borrower on a loan made under this title that has been as-
signed to the Secretary under this title.
(b) ASSESSMENT OF COSTS AND OTHER CHARGES.Notwith-
standing any provision of State law to the contrary
(1) a borrower who has defaulted on a loan made under
this title shall be required to pay, in addition to other charges
specified in this title, reasonable collection costs; and
(2) in collecting any obligation arising from a loan made
under part B of this title, a guaranty agency or the Secretary
shall not be subject to a defense raised by any borrower based
on a claim of infancy.
(c) STATE COURT JUDGMENTS.A judgment of a State court for
the recovery of money provided as grant, loan, or work assistance
under this title that has been assigned or transferred to the Sec-
retary under this title may be registered in any district court of the
United States by filing a certified copy of the judgment and a copy
of the assignment or transfer. A judgment so registered shall have
the same force and effect, and may be enforced in the same man-
ner, as a judgment of the district court of the district in which the
judgment is registered.
SEC. 484B. [20 U.S.C. 1091b] INSTITUTIONAL REFUNDS.
(a) RETURN OF TITLE IV FUNDS.
(1) IN GENERAL.If a recipient of assistance under this
title withdraws from an institution during a payment period or
period of enrollment in which the recipient began attendance,
the amount of grant or loan assistance (other than assistance
received under part C) to be returned to the title IV programs
is calculated according to paragraph (3) and returned in ac-
cordance with subsection (b).
(2) LEAVE OF ABSENCE.
(A) LEAVE NOT TREATED AS WITHDRAWAL.In the case
of a student who takes a leave of absence from an institu-
tion for not more than a total of 180 days in any 12-month
period, the institution may consider the student as not
having withdrawn from the institution during the leave of
absence, and not calculate the amount of grant and loan
assistance provided under this title that is to be returned
in accordance with this section if
(i) the institution has a formal policy regarding
leaves of absence;
(ii) the student followed the institution's policy in
requesting a leave of absence; and
(iii) the institution approved the student's request
in accordance with the institution's policy.
(B) CONSEQUENCES OF FAILURE TO RETURN.If a stu-
dent does not return to the institution at the expiration of
an approved leave of absence that meets the requirements
of subparagraph (A), the institution shall calculate the
amount of grant and loan assistance provided under this
title that is to be returned in accordance with this section
based on the day the student withdrew (as determined
under subsection (c)).
337
Sec. 484B
HIGHER EDUCATION ACT OF 1965
390
(3) CALCULATION OF AMOUNT OF TITLE IV ASSISTANCE
EARNED.
(A) IN GENERAL.The amount of grant or loan assist-
ance under this title that is earned by the recipient for
purposes of this section is calculated by
(i) determining the percentage of grant and loan
assistance under this title that has been earned by the
student, as described in subparagraph (B); and
(ii) applying such percentage to the total amount
of such grant and loan assistance that was disbursed
(and that could have been disbursed) to the student,
or on the student's behalf, for the payment period or
period of enrollment for which the assistance was
awarded, as of the day the student withdrew.
(B) PERCENTAGE EARNED.For purposes of subpara-
graph (A)(i), the percentage of grant or loan assistance
under this title that has been earned by the student is
(i) equal to the percentage of the payment period
or period of enrollment for which assistance was
awarded that was completed (as determined in accord-
ance with subsection (d)) as of the day the student
withdrew, provided that such date occurs on or before
the completion of 60 percent of the payment period or
period of enrollment; or
(ii) 100 percent, if the day the student withdrew
occurs after the student has completed 60 percent of
the payment period or period of enrollment.
(C) PERCENTAGE AND AMOUNT NOT EARNED.For pur-
poses of subsection (b), the amount of grant and loan as-
sistance awarded under this title that has not been earned
by the student shall be calculated by
(i) determining the complement of the percentage
of grant or loan assistance under this title that has
been earned by the student described in subparagraph
(B); and
(ii) applying the percentage determined under
clause (i) to the total amount of such grant and loan
assistance that was disbursed (and that could have
been disbursed) to the student, or on the student's be-
half, for the payment period or period of enrollment,
as of the day the student withdrew.
(4) DIFFERENCES BETWEEN AMOUNTS EARNED AND AMOUNTS
RECEIVED.
(A) IN GENERAL.If the student has received less
grant or loan assistance than the amount earned as cal-
culated under subparagraph (A) of paragraph (3), the insti-
tution of higher education shall comply with the proce-
dures for late disbursement specified by the Secretary in
regulations.
(B) RETURN.If the student has received more grant
or loan assistance than the amount earned as calculated
under paragraph (3)(A), the unearned funds shall be re-
turned by the institution or the student, or both, as may
be required under paragraphs (1) and (2) of subsection (b),
398
391
HIGHER EDUCATION ACT OF 1965
Sec. 4848
to the programs under this title in the order specified in
subsection (b)(3).
(b) RETURN OF TITLE IV PROGRAM FUNDS.
(1) RESPONSIBILITY OF THE INSTITUTION.The institution
shall return, in the order specified in paragraph (3), the lesser
of
(A) the amount of grant and loan assistance awarded
under this title that has not been earned by the student,
as calculated under subsection (a)(3)(C); or
(B) an amount equal to
(i) the total institutional charges incurred by the
student for the payment period or period of enrollment
for which such assistance was awarded; multiplied by
(ii) the percentage of grant and loan assistance
awarded under this title that has not been earned by
the student, as described in subsection (a)(3)(C)(i).
(2) RESPONSIBILITY OF THE STUDENT.
(A) IN GENERAL.The student shall return assistance
that has not been earned by the student as described in
subsection (a)(3)(C)(ii) in the order specified in paragraph
(3) minus the amount the institution is required to return
under paragraph (1).
(B) SPECIAL RULE.The student (or parent in the case
of funds due to a loan borrowed by a parent under part B
or D) shall return or repay, as appropriate, the amount de-
termined under subparagraph (A) to
(i) a loan program under this title in accordance
with the terms of the loan; and
(ii) a grant program under this title, as an over-
payment of such grant and shall be subject to
(I) repayment arrangements satisfactory to
the institution; or
(II) overpayment collection procedures pre-
scribed by the Secretary.
(C) REQUIREMENT.Notwithstanding subparagraphs
(A) and (B), a student shall not be required to return 50
percent of the grant assistance received by the student
under this title, for a payment period or period of enroll-
ment, that is the responsibility of the student to repay
under this section.
(3) ORDER OF RETURN OF TITLE IV FUNDS.
(A) IN GENERAL.Excess funds returned by the insti-
tution or the student, as appropriate, in accordance with
paragraph (1) or (2), respectively, shall be credited to out-
standing balances on loans made under this title to the
student or on behalf of the student for the payment period
or period of enrollment for which a return of funds is re-
quired. Such excess funds shall be credited in the following
order:
(i) To outstanding balances on loans made under
section 428H for the payment period or period of en-
rollment for which a return of funds is required.
393
Sec. 484B
HIGHER EDUCATION ACT OF 1965
392
(ii) To outstanding balances on loans made under
section 428 for the payment period or period of enroll-
ment for which a return of funds is required.
(iii) To outstanding balances on unsubsidized
loans (other than parent loans) made under part D for
the payment period or period of enrollment for which
a return of funds is required.
(iv) To outstanding balances on subsidized loans
made under part D for the payment period or period
of enrollment for which a return of funds is required.
(v) To outstanding balances on loans made under
part E for the payment period or period of enrollment
for which a return of funds is required.
(vi) To outstanding balances on loans made under
section 428B for the payment period or period of en-
rollment for which a return of funds is required.
(vii) To outstanding balances on parent loans
made under part D for the payment period or period
of enrollment for which a return of funds is required.
(B) REMAINING EXCESSES.If excess funds remain
after repaying all outstanding loan amounts, the remain-
ing excess shall be credited in the following order:
(i) To awards under subpart 1 of part A for the
payment period or period of enrollment for which a re-
turn of funds is required.
(ii) To awards under subpart .3 of part A for the
payment period or period of enrollment for which a re-
turn of funds is required.
(iii) To other assistance awarded under this title
for which a return of funds is required.
(C) WITHDRAWAL DATE.
(1) IN GENERAL.In this section, the term "day the student
withdrew"
(A) is the date that the institution determines
(i) the student began the withdrawal process pre-
scribed by the institution;
(ii) the student otherwise provided official notifica-
tion to the institution of the intent to withdraw; or
(iii) in the case of a student who does not begin
the withdrawal process or otherwise notify the institu-
tion of the intent to withdraw, the date that is the
mid-point of the payment period for which assistance
under this title was disbursed or a later date docu-
mented by the institution; or
(B) for institutions required to take attendance, is de-
termined by the institution from such attendance records.
(2) SPECIAL RULE.Notwithstanding paragraph (1), if the
institution determines that a student did not begin the with-
drawal process, or otherwise notify the institution of the intent
to withdraw, due to illness, accident, grievous personal loss, or
other such circumstances beyond the student's control, the in-
stitution may determine the appropriate withdrawal date.
(d) PERCENTAGE OF THE PAYMENT PERIOD OR PERIOD OF EN-
ROLLMENT COMPLETED.For purposes of subsection (a)(3)(B)(i), the
400
393
HIGHER EDUCATION ACT OF 1965
Sec. 485
percentage of the payment period or period of enrollment for which
assistance was awarded that was completed, is determined
(1) in the case of a program that is measured in credit
hours, by dividing the total number of calendar days compris-
ing the payment period or period of enrollment for which as-
sistance is awarded into the number of calendar days com-
pleted in that period as of the day the student withdrew; and
(2) in the case of a program that is measured in clock
hours, by dividing the total number of clock hours comprising
the payment period or period of enrollment for which assist-
ance is awarded into the number of clock hours
(A) completed by the student in that period as of the
day the student withdrew; or
(B) scheduled to be completed as of the day the stu-
dent withdrew, if the clock hours completed in the period
are not less than a percentage, to be determined by the
Secretary in regulations, of the hours that were scheduled
to be completed by the student in the period.
(e) EFFECTIVE DATE.The provisions of this section shall take
effect 2 years after the date of enactment of the Higher Education
Amendments of 1998. An institution of higher education may
choose to implement such provisions prior to that date.
SEC. 485. [20 U.S.C. 1092] INSTITUTIONAL AND FINANCIAL ASSISTANCE
INFORMATION FOR STUDENTS.
(a) INFORMATION DISSEMINATION ACTIVITIES.(1) Each eligible
institution participating in any program under this title shall carry
out information dissemination activities for prospective and en-
rolled students (including those attending or planning to attend
less than full time) regarding the institution and all financial as-
sistance under this title. The information required by this section
shall be produced and be made readily available upon request,
through appropriate publications, mailings, and electronic media,
to an enrolled student and to any prospective student. Each eligible
institution shall, on an annual basis, provide to all enrolled stu-
dents a list of the information that is required to be provided by
institutions to students by this section and section 444 of the Gen-
eral Education Provisions Act (also referred to as the Family Edu-
cational Rights and Privacy Act of 1974), together with a statement
of the procedures required to obtain such information. The informa-
tion required by this section shall accurately describe
(A) the student financial assistance programs available to
students who enroll at such institution;
(B) the methods by which such assistance is distributed
among student recipients who enroll at such institution;
(C) any means, including forms, by which application for
student financial assistance is made and requirements for ac-
curately preparing such application;
(D) the rights and responsibilities of students receiving fi-
nancial assistance under this title;
(E) the cost of attending the institution, including (i) tui-
tion and fees, (ii) books and supplies, (iii) estimates of typical
student room and board costs or typical commuting costs, and
(iv) any additional cost of the program in which the student is
enrolled or expresses a specific interest;
-
401
Sec. 485
HIGHER EDUCATION ACT OF 1965
394
(F) a statement of
(i) the requirements of any refund policy with which
the institution is required to comply;
(ii) the requirements under section 484B for the return
of grant or loan assistance provided under this title; and
(iii) the requirements for officially withdrawing from
the institution;
(G) the academic program of the institution, including (i)
the current degree programs and other educational and train-
ing programs, (ii) the instructional, laboratory, and other phys-
ical plant facilities which relate to the academic program, and
(iii) the faculty and other instructional personnel;
(H) each person designated under subsection (c) of this sec-
tion, and the methods by which and locations in which any
person so designated may be contacted by students and pro-
spective students who are seeking information required by this
subsection;
(I) special facilities and services available to handicapped
students;
(J) the names of associations, agencies, or governmental
bodies which accredit, approve, or license the institution and
its programs, and the procedures under which any current or
prospective student may obtain or review upon request a copy
of the documents describing the institution's accreditation, ap-
proval, or licensing;
(K) the stand ds which the student must maintain in
order to be considered to be making satisfactory progress, pur-
suant to section 484(a)(2);
(L) the completion or graduation rate of certificate- or de-
gree-seeking, full-time, undergraduate 1 students entering such
institutions;
(M) the terms and conditions under which students receiv-
ing guaranteed student loans under part B of this title or di-
rect student loans under part E of this title, or both, may
(i) obtain deferral of the repayment of the principal
and interest for service under the Peace Corps Act (as es-
tablished by the Peace Corps Act (22 U.S.C. 2501) et seq.))
or under the Domestic Volunteer Service Act of 1973 (42
U.S.C. 4951 et seq.), or for comparable full-time 1 service
as a volunteer for a tax-exempt organization of dem-
onstrated effectiveness in the field of community service,
and
(ii) obtain partial cancellation of the student loan for
service under the Peace Corps Act (as established by the
Peace Corps. Act (22 U.S.C. 2501 et seq.)) under the Do-
mestic Volunteer Service Act of 1973 (42 U.S.C. 4951 et
seq.) or, for comparable full-time 1 service as a volunteer
for a tax-exempt organization of demonstrated effective-
ness in the field of community service;
(N) that enrollment in a. program of study abroad approved
for credit by the home institution may be considered enroll-
'Amendment made by sec. 10(a) of P.L. 102-26, 105 Stat. 128, inserted "undergraduate" after
"fulltime" without specifying which location. This compilation inserts it in only the first
location.
395
HIGHER EDUCATION ACT OF 1965
Sec. 485
ment in the home institution for purposes of applying for Fed-
eral student financial assistance; and
(0) the campus crime report prepared by the institution
pursuant to subsection (f ), including all required reporting cat-
egories.
(2) For the purpose of this section, the term "prospective stu-
dent" means any individual who has contacted an eligible institu-
tion requesting information concerning admission to that institu-
tion.
(3) In calculating the completion or graduation rate under sub-
paragraph (L) of paragraph (1) of this subsection or under sub-
section (e), a student shall be counted as a completion or gradua-
tion if, within 150 percent of the normal time for completion of or
graduation from the program, the student has completed or grad-
uated from the program, or enrolled in any program of an eligible
institution for which the prior program provides substantial prepa-
ration. The information required to be disclosed under such
subparagraph
(A) shall be made available by July 1 each year to enrolled
students and prospective students prior to the students enroll-
ing or entering into any financial obligation; and
(B) shall cover the one-year period ending on August 31 of
the preceding year.
(4) For purposes of this section, institutions may exclude from
the information disclosed in accordance with subparagraph (L) of
paragraph (1) the completion or graduation rates of students who
leave school to serve in the armed services, on official church mis-
sions, or with a recognized foreign aid service of the Federal Gov-
ernment.
(5) The Secretary shall permit any institution of higher edu-
cation that is a member of an athletic association or athletic con-
ference that has voluntarily published completion or graduation
rate data or has agreed to publish data that, in the opinion of the
Secretary, is substantially comparable to the information required
under this subsection, to use such data to satisfy the requirements
of this subsection; and
(6) Each institution may provide supplemental information to
enrolled and prospective students showing the completion or grad-
uation rate for students described in paragraph (4) or for students
transferring into the institution or information showing the rate at
which students transfer out of the institution.
(b) EXIT COUNSELING FOR BORROWERS.-(1)(A) Each eligible in-
stitution shall, through financial aid officers or otherwise, make
available counseling to borrowers of loans which are made, insured,
or guaranteed under part B (other than loans made pursuant to
section 428B) of this title or made under part D or E of this title
prior to the completion of the course of study for which the bor-
rower enrolled at the institution or at the time of departure from
such institution. The counseling required by this subsection shall
include
(i) the average anticipated monthly repayments, a review
of the repayment options available, and such debt and manage-
ment strategies as the institution determines are designed to
facilitate the repayment of such indebtedness; and
403
Sec. 485
HIGHER EDUCATION ACT OF 1965
396
(ii) the terms and conditions under which the student may
obtain partial cancellation or defer repayment of the principal
and interest pursuant to sections 428(b), 464(c)(2), and 465.
(B) In the case of borrower who leaves an institution without
the prior knowledge of the institution, the institution shall attempt
to provide the information described in subparagraph (A) to the
student in writing.
(2)(A) Each eligible institution shall require that the borrower
of a loan made under part B, D, or E submit to the institution, dur-
ing the exit interview required by this subsection
(i) the borrower's expected permanent address after leav-
ing the institution (regardless of the reason for leaving);
(ii) the name and address of the borrower's expected em-
ployer after leaving the institution;
(iii) the address of the borrower's next of kin; and
(iv) any corrections in the institution's records relating the
borrower's name, address, social security number, references,
and driver's license number.
(B) The institution shall, within 60 days after the interview,
forward any corrected or completed information received from the
borrower to the guaranty agency indicated on the borrower's stu-
dent aid records.
(C) Nothing in this subsection shall be construed to prohibit an
institution of higher education from utilizing electronic means to
provide personalized exit counseling.
(c) FINANCIAL ASSISTANCE INFORMATION PERSONNEL.Each el-
igible institution shall designate an employee or group of employ-
ees who shall be available on a full-time basis to assist students
or potential students in obtaining information as specified in sub-
section (a). The Secretary may, by regulation, waive the require-
ment that an employee or employees be available on a full-time
basis for carrying out responsibilities required under this section
whenever an institution in which the total enrollment, or the por-
tion of the enrollment participating in programs under this title at
that institution, is too small to necessitate such employee or em-
ployees being available on a full-time basis. No such waiver may
include permission to exempt any such institution from designating
a specific individual or a group of individuals to carry out the pro-
visions of this section.
(d) DEPARTMENTAL PUBLICATION OF DESCRIPTIONS OF ASSIST-
ANCE PROGRAMS.(1) The Secretary shall make available to eligi-
ble institutions, eligible lenders, and secondary schools descriptions
of Federal student assistance programs including the rights and re-
sponsibilities of student and institutional participants, in order to
(A) assist students in gaining information through institutional
sources, and (B) assist institutions in carrying out the provisions
of this section, so that individual and institutional participants will
be fully aware of their rights and responsibilities under such pro-
grams. In particular, such information shall include information to
enable students and prospective students to assess the debt burden
and monthly and total repayment obligations that will be incurred
as a result of receiving loans of varying amounts under this title.
In addition, such information shall include information to enable
borrowers to assess the practical consequences of loan consolida-
391
HIGHER EDUCATION ACT OF 1965
Sec. 485
tion, including differences in deferment eligibility, interest rates,
monthly payments, and finance charges, and samples of loan con-
solidation profiles to illustrate such consequences. The Secretary
shall provide information concerning the specific terms and condi-
tions under which students may obtain partial or total cancellation
or defer repayment of loans for service, shall indicate (in terms of
the Federal minimum wage) the maximum level of compensation
and allowances that a student borrower may receive from a tax-ex-
empt organization to qualify for a deferment, and shall explicitly
state that students may qualify for such partial cancellations or
deferments when they serve as a paid employee of a tax-exempt or-
ganization. Such information shall be provided by eligible institu-
tions and eligible lenders at any time that information regarding
loan availability is provided to any student.
(2) The Secretary, to the extent the information is available,
shall compile information describing State and other prepaid tui-
tion programs and savings programs and disseminate such infor-
mation to States, eligible institutions, students, and parents in de-
partmental publications.
(3) The Secretary, to the extent practicable, shall update the
Department's Internet site to include direct links to databases that
contain information on public and private financial assistance pro-
grams The Secretary shall only provide direct links to databases
that can be accessed without charge and shall make reasonable ef-
forts to verify that the databases included in a direct link are not
providing fraudulent information. The Secretary shall prominently
display adjacent to any such direct link a disclaimer indicating that
a direct link to a database does not constitute an endorsement or
recommendation of the database, the provider of the database, or
any services or products of such provider. The Secretary shall pro-
vide additional direct links to information resources from which
students may obtain information about fraudulent and deceptive
practices in the provision of services related to student financial
aid.
(e) DISCLOSURES REQUIRED WITH RESPECT TO ATHLETICALLY
RELATED STUDENT AID.-(1) Each institution of higher education
which participates in any program under this title and is attended
by students receiving athletically related student aid shall annu-
ally submit a report to the Secretary which contains
(A) the number of students at the institution of higher
education who received athletically related student aid broken
down by race and sex in the following sports: basketball, foot-
ball, baseball, cross country/track, and all other sports com-
bined;
(B) the number of students at the institution of higher
education, broken down by race and sex;
(C) the completion or graduation rate for students at the
institution of higher education who received athletically related
student aid broken down by race and sex in the following
sports: basketball,
, football, baseball, cross country/track and
all other sports combined;
(D) the completion or graduation rate for students at the
institution of higher education, broken down by race and sex;
Sec. 485
HIGHER EDUCATION ACT OF 1965
398
(E) the average completion or graduation rate for the 4
most recent completing or graduating classes of students at the
institution of higher education who received athletically related
student aid broken down by race and sex in the following cat-
egories: basketball, football, baseball, cross country/track, and
all other sports combined; and
(F) the average completion or graduation rate for the 4
most recent completing or graduating classes of students at the
institution of higher education broken down by race and sex.
(2) When an institution described in paragraph (1) of this sub-
section offers a potential student athlete athletically related stu-
dent aid, such institution shall provide to the student and the stu-
dent's parents, guidance counselor, and coach the information con-
tained in the report submitted by such institution pursuant to
paragraph (1). If the institution is a member of a national colle-
giate athletic association that compiles graduation rate data on be-
half of the association's member institutions that the Secretary de-
termines is substantially comparable to the information described
in paragraph (1), the distribution of the compilation of such data
to all secondary schools in the United States shall fulfill the re-
sponsibility of the institution to provide information to a prospec-
tive student athlete's guidance counselor and coach.
(3) For purposes of this subsection, institutions may exclude
from the reporting requirements under paragraphs (1) and (2) the
completion or graduation rates of students and student athletes
who leave school to serve in the armed services, on official church
missions, or with a recognized foreign aid service of the Federal
Government.
(4) Each institution of higher education described in paragraph
(1) may provide supplemental information to students and the Sec-
retary showing the completion or graduation rate when such com-
pletion or graduation rate includes students transferring into and
out of such institution.
(5) The Secretary, using the reports submitted under this sub-
section, shall compile and publish a report containing the informa-
tion required under paragraph (1) broken down by
(A) individual institutions of higher education; and
(B) athletic conferences recognized by the National Colle-
giate Athletic Association and the National Association of
Intercollegiate Athletics.
(6) The Secretary shall waive the requirements of this sub-
section for any institution of higher education that is a member of
an athletic association or athletic conference that has voluntarily
published completion or graduation rate data or has agreed to pub-
lish data that, in the opinion of the Secretary, is substantially com-
parable to the information required under this subsection.
(7) The Secretary, in conjunction with the National Junior Col-
lege Athletic Association, shall develop and obtain data on comple-
tion or graduation rates from two-year colleges that award athlet-
ically related student aid. Such data shall, to the extent prac-
ticable, be consistent with the reporting requirements set forth in
this section.
(8) For purposes of this subsection, the term "athletically relat-
ed student aid" means any scholarship, grant, or other form of fi-
406
399
HIGHER EDUCATION ACT OF 1965
Sec. 485
nancial assistance the terms of which require the recipient to par-
ticipate in a program of intercollegiate athletics at an institution
of higher education in order to be eligible to receive such assist-
ance.
(9) The reports required by this subsection shall be due each
July 1 and shall cover the 1-year period ending August 31 of the
preceding year.
(f) DISCLOSURE OF CAMPUS SECURITY POLICY AND CAMPUS
CRIME STATISTICS.-(1) Each eligible institution participating in
any program under this title shall on August 1, 1991, begin to col-
lect the following information with respect to campus crime statis-
tics and campus security policies of that institution, and beginning
September 1, 1992, and each year thereafter, prepare, publish, and
distribute, through appropriate publications or mailings, to all cur-
rent students and employees, and to any applicant for enrollment
or employment upon request, an annual security report containing
at least the following information with respect to the campus secu-
rity policies and campus crime statistics of that institution:
(A) A statement of current campus policies regarding pro-
cedures and facilities for students and others to report criminal
actions or other emergencies occurring on campus and policies
concerning the institution's response to such reports.
(B) A statement of current policies concerning security and
access to campus facilities, including campus residences, and
security considerations used in the maintenance of campus fa-
cilities.
(C) A statement of current policies concerning campus law
enforcement, including
(i) the enforcement authority of security personnel, in-
cluding their working relationship with State and local po-
lice agencies; and
(ii) policies which encourage accurate and prompt re-
porting of all crimes to the campus police and the appro-
priate police agencies.
(D) A description of the type and frequency of programs
designed to inform students and employees about campus secu-
rity procedures and practices and to encourage students and
employees to be responsible for their own security and the se-
curity of others.
(E) A description of programs designed to inform students
and employees about the prevention of crimes.
(F) Statistics concerning the occurrence on campus, in or
on noncampus buildings or property, and on public property
during the most recent calendar year, and during the 2 preced-
ing calendar years for which data are available
(i) of the following criminal offenses reported to cam-
pus security authorities or local police agencies:
(I) murder;
(II) sex offenses, forcible or nonforcible;
(III) robbery;
(IV) aggravated assault;
(V) burglary;
(VI) motor vehicle theft;
(VII) manslaughter;
407
Sec. 485
HIGHER EDUCATION ACT OF 1965
400
(VIII) arson; and
(IX) arrests or persons referred for campus dis-
ciplinary action for liquor law violations, drug-related
violations, and weapons possession; and
(ii) of the crimes described in subclauses (I) through
(VIII) of clause (i), and other crimes involving bodily injury
to any person in which the victim is intentionally selected
because of the actual or perceived race, gender, religion,
sexual orientation, ethnicity, or disability of the victim
that are reported to campus security authorities or local
police agencies, which data shall be collected and reported
according to category of prejudice.
(G) A statement of policy concerning the monitoring and
recording through local police agencies of criminal activity at
off-campus student organizations which are recognized by the
institution and that are engaged in by students attending the
institution, including those student organizations with off-cam-
pus housing facilities.
(H) A statement of policy regarding the possession, use,
and sale of alcoholic beverages and enforcement of State under-
age drinking laws and a statement of policy regarding the pos-
session, use, and sale of illegal drugs and enforcement of Fed-
eral and State drug laws and a description of any drug or alco-
hol abuse education programs as required under section 120 of
this Act.
(2) Nothing in this subsection shall be construed to authorize
the Secretary to require particular policies, procedures, or practices
by institutions of higher education with respect to campus crimes
or campus security.
(3) Each institution participating in any program under this
title shall make timely reports to the campus community on crimes
considered to be a threat to other students and employees de-
scribed in paragraph (1)(F) that are reported to campus security or
local law police agencies. Such reports shall be provided to students
and employees in a manner that is timely and that will aid in the
prevention of similar occurrences.
(4)(A) Each institution participating in any program under this
title that maintains a police or security department of any kind
shall make, keep, and maintain a daily log, written in a form that
can be easily understood, recording all crimes reported to such po-
lice or security department, including
(i) the nature, date, time, and general location of each
crime; and
(ii) the disposition of the complaint, if known.
(B)(i) All entries that are required pursuant to this paragraph
shall, except where disclosure of such information is prohibited by
law or such disclosure would jeopardize the cr ifidentiality of the
victim, be open to public inspection within two business days of the
initial report being made to the department or a campus security
authority.
(ii) If new information about an entry into a log becomes avail-
able to a police or security department, then the new information
shall be recorded in the log not later than two business days after
408
401
HIGHER EDUCATION ACT OF 1965
Sec. 485
the information becomes available to the police or security depart-
ment.
(iii) If there is clear and convincing evidence that the release
of such information would jeopardize an ongoing criminal investiga-
tion or the safety of an individual, cause a suspect to flee or evade
detection, or result in the destruction of evidence, such information
may be withheld until that damage is no longer likely to occur from
the release of such information.
(5) On an annual basis, each institution participating in any
program under this title shall submit to the Secretary a copy of the
statistics required to be made available under paragraph (1)(F).
The Secretary shall
(A) review such statistics and report to the Committee on
Education and the Workforce of the House of Representatives
and the Committee on Labor and Human Resources of the Sen-
ate on campus crime statistics by September 1, 2000;
(B) make copies of the statistics submitted to the Secretary
available to the public; and
(C) in coordination with representatives of institutions of
higher education, identify exemplary campus security policies,
procedures, and practices and disseminate information con-
cerning those policies, procedures, and practices that have
proven effective in the reduction of campus crime.
(6XA) In this subsection:
(i) The term "campus" means
(I) any building or property owned or controlled by an
institution of higher education within the same reasonably
contiguous geographic area of the institution and used by
the institution in direct support of, or in a manner related
to, the institution's educational purposes, including resi-
dence halls; and
(II) property within the same reasonably contiguous
geographic area of the institution that is owned by the in-
stitution but controlled by another person, is used by stu-
dents, and supports institutional purposes (such as a food
or other retail vendor).
(ii) The term "noncampus building or property" means
(I) any building or property owned or controlled by a
student organization recognized by the institution; and
(II) any building or property (other than a branch
campus) owned or controlled by an institution of higher
education that is used in direct support of, or in relation
to, the institution's educational purposes, is used by stu-
dents, and is not within the same reasonably contiguous
geographic area of the institution.
(iii) The term "public property" means all public property
that is within the same reasonably contiguous geographic area
of the institution, such as a sidewalk, a street, other thorough-
fare, or parking facility, and is adjacent to a facility owned or
controlled by the institution if the facility is used by the insti-
tution in direct support of, or in a manner related to the insti-
tution's educational purposes.
(B) In cases where branch campuses of an institution of higher
education, schools within an institution of higher education, or ad-
403
Sec. 485
HIGHER EDUCATION ACT OF 1965
402
ministrative divisions within an institution are not within a rea-
sonably contiguous geographic area, such entities shall be consid-
ered separate campuses for purposes of the reporting requirements
of this section.
(7) The statistics described in paragraph (1)(F) shall be com-
piled in accordance with the definitions used in the uniform crime
reporting system of the Department of Justice, Federal Bureau of
Investigation, and the modifications in such definitions as imple-
mented pursuant to the Hate Crime Statistics Act. Such statistics
shall not identify victims of crimes or persons accused of crimes.
(8)(A) Each institution of higher education participating in any
program under this title shall develop and distribute as part of the
report described in paragraph (1) a statement of policy regarding
(i) such institution's campus sexual assault programs,
which shall be aimed at prevention of sex offenses; and
(ii) the procedures followed once a sex offense has oc-
curred.
(B) The policy described in subparagraph (A) shall address the
following areas:
(i) Education programs to promote the awareness of rape,
acquaintance rape, and other sex offenses.
(ii) Possible sanctions to be imposed following the final de-
termination of an on-campus disciplinary procedure regarding
rape, acquaintance rape, or other sex offenses, forcible or non-
forcible.
(iii) Procedures students should follow if a sex offense oc-
curs, including who should be contacted, the importance of pre-
serving evidence as may be necessary to the proof of criminal
sexual assault, and to whom the alleged offense should be re-
ported.
(iv) Procedures for on-campus disciplinary action in cases
of alleged sexual assault, which shall include a clear statement
that (I) the accuser and the accused are entitled to the
same opportunities to have others present during a cam-
pus disciplinary proceeding; and
(II) both the accuser and the accused shall be informed
of the outcome of any campus disciplinary proceeding
brought alleging a sexual assault.
(v) Informing students of their options to notify proper law
enforcement authorities, including on-campus and local police,
and the option to be assisted by campus authorities in notify-
ing such authorities, if the student so chooses.
(vi) Notification of students of existing counseling, mental
health or student services for victims of sexual assault, both on
campus and in the community.
(vii) Notification of students of options for, and available
assistance in, changing academic and living situations after an'
alleged sexual assault incident, if so requested by the victim
and if such changes are reasonably available..
(C) Nothing' in this paragraph shall be construed to confer a
private right of action upon any person to enforce the provisions of
this paragraph.
403
HIGHER EDUCATION ACT OF 1965
Sec. 485
(9) The Secretary shall provide technical assistance in comply-
ing with the provisions of this section to an institution of higher
education who requests such assistance.
(10) Nothing in this section shall be construed to require the
reporting or disclosure of privileged information.
(11) The Secretary shall report to the appropriate committees
of Congress each institution of higher education that the Secretary
determines is not in compliance with the reporting requirements of
this subsection.
(12) For purposes of reporting the statistics with respect to
crimes described in paragraph (1)(F), an institution of higher edu-
cation shall distinguish, by means of separate categories, any
criminal offenses that occur
(A) on campus;
(B) in or on a noncampus building or property;
(C) on public property; and
(D) in dormitories or other residential facilities for stu-
dents on campus.
(13) Upon a determination pursuant to section 487(c)(3)(B) that
an institution of higher education has substantially misrepresented
the number, location, or nature of the crimes required to be re-
ported under this subsection, the Secretary shall impose a civil
penalty upon the institution in the same amount and pursuant to
the same procedures as a civil penalty is imposed under section
487(c)(3)(B).
(14)(A) Nothing in this subsection may be construed to
(i) create a cause of action against any institution of higher
education or any employee of such an institution for any civil
liability; or
(ii) establish any standard of care.
(B) Notwithstanding any other provision of law, evidence re-
garding compliance or noncompliance with this subsection shall not
be admissible as evidence in any proceeding of any court, agency,
board, or other entity, except with respect to an action to enforce
this subsection.
(15) This subsection may be cited as the "Jeanne Clery Disclo-
sure of Campus Security Policy and Campus Crime Statistics Act".
(g) DATA REQUIRED.
(1) IN GENERAL.Each coeducational institution of higher
education that participates in any program under this title,
and has an intercollegiate athletic program, shall annually, for
the immediately preceding academic year, prepare a report
that contains the following information regarding intercolle-
giate athletics:
(A) The number of male and female full-time under-
graduates that attended the institution.
(B) A listing of the varsity teams that competed in
intercollegiate athletic competition and for each such team
the following data:
(i) The total number of participants, by team, as
of the day of the first scheduled contest for the team.
(ii) Total operating expenses attributable to such
teams, except that an institution may also report such
expenses on a per capita basis for each team and ex-
Sec. 485
NIGHER EDUCATION ACT OF 1965
404
penditures attributable to closely related teams such
as track and field or swimming and diving, may be re-
ported together, although such combinations shall be
reported separately for men's and women's teams.
(iii) Whether the head coach is male or female and
whether the head coach is assigned to that team on a
full-time or part-time basis. Graduate assistants and
volunteers who serve as head coaches shall be consid-
ered to be head coaches for the purposes of this clause.
(iv) The number of assistant coaches who are male
and the number of assistant coaches who are female
for each team and whether a particular coach is as-
signed to that team on a full-time or part-time basis.
Graduate assistants and volunteers who serve as as-
sistant coaches shall be considered to be assistant
coaches for the purposes of this clause.
(C) The total amount of money spent on athletically
related student aid, including the value of waivers of edu-
cational expenses, separately for men's and women's teams
overall.
(D) The ratio of athletically related student aid award-
ed male athletes to athletically related student aid award-
ed female athletes.
(E) The total amount of expenditures on recruiting,
separately for men's and women's teams overall.
(F) The total annual revenues generated across all
men's teams and across all women's teams, except that an
institution may also report such revenues by individual
team.
(G) The average annual institutional salary of the
head coaches of men's teams, across all offered sports, and
the average annual institutional salary of the head coaches
of women's teams, across all offered sports.
(H) The average annual institutional salary of the as-
sistant coaches of men's teams, across all offered sports,
and the average annual institutional salary of the assist-
ant coaches of women's teams, across all offered sports.
(I)(i) The total revenues, and the revenues from foot-
ball, men's basketball, women's basketball, all other men's
sports combined and all other women's sports combined,
derived by the institution from the institution's intercolle-
giate athletics activities.
(ii) For the purpose of clause (i), revenues from inter-
collegiate athletics activities allocable to a sport shall in-
clude (without limitation) gate receipts, broadcast reve-
nues, appearance guarantees and options, concessions, and
advertising, but revenues such as student activities fees or
alumni contributions not so allocable shall be included in
the calculation of total revenues only.
(J)(i) The total expenses, and the expenses attrib-
utable to football, men's basketball, women's basketball,
all other men's sports combined, and all other women's
sports combined, made by the institution for the institu-
tion's intercollegiate athletics activities.
405
HIGHER EDUCATION ACT OF 1965
Sec. 485
(ii) For the purpose of clause (i), expenses for inter-
collegiate athletics activities allocable to a sport shall in-
clude (without limitation) grants-in-aid, salaries, travel,
equipment, and supplies, but expenses such as general and
administrative overhead not so allocable shall be included
in the calculation of total expenses only.
(2) SPECIAL RULE.For the purposes of subparagraph (G),
if a coach has responsibilities for more than one team and the
institution does not allocate such coach's salary by team, the
institution should divide the salary by the number of teams for
which the coach has responsibility and allocate the salary
among the teams on a basis consistent with the coach's respon-
sibilities for the different teams.
(3) DISCLOSURE OF INFORMATION TO STUDENTS AND PUB-
LIC.An institution of higher education described in paragraph
(1) shall make available to students and potential students,
upon request, and to the public, the information contained in
the report described in paragraph (1), except that all students
shall be informed of their right to request such information.
(4) SUBMISSION; REPORT; INFORMATION AVAILABILITY.(A)
On an annual basis, each institution of higher education de-
scribed in paragraph (1) shall provide to the Secretary, within
15 days of the date that the institution makes available the re-
port under paragraph (1), the information contained in the re-
port.
(B) The Secretary shall prepare a report regarding the in-
formation received under subparagraph (A) and submit such
report to the Committee on Education and the Workforce of the
House of Representatives and the Committee on Labor and
Human Resources of the Senate by April 1, 2000. The report
shall
(i) summarize the information and identify trends in
the information;
(ii) aggregate the information by divisions of the Na-
tional Collegiate Athletic Association; and
(iii) contain information on each individual institution
of higher education.
(C) The Secretary shall ensure that the reports described
in subparagraph (A) and the report to Congress described in
subparagraph (B) are made available to the public within a
reasonable period of time.
(D) Not later than 180 days after the date of enactment of
the Higher Education Amendments of 1998, the Secretary shall
notify all secondary schools in all States regarding the avail-
ability of the information reported under subparagraph (B) and
the information made available under paragraph (1), and how
such information may be accessed.
(5) DEFINITION.For the purposes of this subsection, the
term "operating expenses" means expenditures on lodging and
meals, transportation, officials, uniforms and equipment.
SEC. 485A. [20 U.S.C. 1092a] COMBINED PAYMENT PLAN.
(a) ELIGIBILITY FOR PLAN.Upon the request of the borrower,
a lender described in subparagraph (A), (B), or (C) of section
41
Sec. 485A
HIGHER EDUCATION ACT OF 1965
406
428C(a)(1) of this Act, or defined in subpart I of part C of title VII
of the Public Health Service Act may, with respect to a consolida-
tion loan made under section 428C of this Act (and section 439(o)
of this Act as in effect prior to the enactment of section 428C) and
loans guaranteed under subpart I of part C of title VII of the Public
Health Service Act (known as Health Education Assistance Loans),
offer a combined payment plan under which the lender shall sub-
mit one bill to the borrower for the repayment of all such loans for
the monthly or other similar period of repayment.
(b) APPLICABILITY OF OTHER REQUIREMENTS.A lender offering
a combined payment plan shall comply with all provisions of sec-
tion 428C applicable to loans consolidated or to be consolidated and
shall comply with all provisions of subpart I of part C of title VII
of the Public Health Service Act applicable to loans under that sub-
part which are made part of the combined payment plan, except
that a lender offering a combined payment plan under this section
may offer consolidation loans pursuant to section 428C(b)(1)(A) if
such lender holds any outstanding loan of a borrower which is se-
lected for inclusion in a combined payment plan.
(c) LENDER ELIGIBILITY.Such lender may offer a combined
payment plan only if
(1) the lender holds an outstanding loan of that borrower
which is selected by the borrower for incorporation into a com-
bined payment plan pursuant to this section (including loans
which are selected by the borrower for consolidation under this
section); or
(2) the borrower certifies that the borrower has sought and
has been unable to obtain a combined payment plan from the
holders of the outstanding loans of that borrower.
(d) BORROWER SELECTION OF COMPETING OFFERS.In the case
of multiple offers by lenders to administer a combined payment
plan for a borrower, the borrower shall select from among them the
lender to administer the combined payment plan including its loan
consolidation component.
(e) EFFECT OF PLAN.Upon selection of a lender to administer
the combined payment plan, the lender may reissue any Health
Education Assistance Loan selected by the borrower for incorpora-
tion in the combined payment plan which is not held by such lend-
er and the proceeds of such reissued loan shall be paid by the lend-
er to the holder or holders of the loans so selected to discharge the
liability on such loans, if
(1) the lender selected to administer the combined pay-
ment plan has determined to its satisfaction, in accordance
with reasonable and prudent business practices, for each loan
being reissued (A) that the loan is a legal, valid, and binding
obligation of the borrower; (B) that each such loan was made
and serviced in compliance with applicable laws and regula-
tions; and (C) the insurance on such loan is in full force and
effect; and
(2) the loan being reissued was not in default (as defined
in section 733(e)(3) of the Public Health Service Act) at the
time the request for a combined payment plan is made.
(0 NOTES AND INSURANCE CERTIFICATES.(1) Each loan re-
issued under subsection (e) shall be evidenced by a note executed
41 cl
407
HIGHER EDUCATION ACT OF 1965
Sec. 485B
by the borrower. The Secretary of Health and Human Services
shall insure such loan under a certificate of comprehensive insur-
ance with no insurance limit, but any such certificate shall only be
issued to an authorized holder of loans insured under subpart I of
part C of title WI of the Public Health Service Act (including the
Student Loan Marketing Association). Such certificates shall pro-
vide that all loans reissued under this section shall be fully insured
against loss of principal and interest. Any insurance issued with re-
spect to loans reissued under this section shall be excluded from
the limitation on maximum insurance authority set forth in section
728(a) of the Public Health Service Act. Notwithstanding the provi-
sions of section 729(a) of the Public Health Service Act, the re-
issued loan shall be made in an amount, including outstanding
principal, capitalized interest, accrued unpaid interest not yet cap-
italized, and authorized late charges. The proceeds of each such
loan will be paid by the lender to the holder of the original loan
being reissued and the borrower's obligation to that holder on that
loan shall be discharged.
(2) Except as otherwise specifically provided for under the pro-
visions of this section, the terms of any reissued loan shall be the
same as the terms of the original loan. The maximum repayment
period for a loan reissued under this section shall not exceed the
remainder of the period which would have been permitted on the
original loan. If the lender holds more than one loan insured under
subpart I of part C of title VII of the Public Health Service Act,
the maximum repayment period for all such loans may extend to
the latest date permitted for any individual loan. Any reissued loan
may be consolidated with any other Health Education Assistance
Loan as provided in the Public Health Service Act, and, with the
concurrence of the borrower, repayment of any such loans during
any period may be made in amounts that are less than the interest
that accrues on such loans during that period.
(g) TERMINATION OF BORROWER ELIGIBILITY.The status of an
individual as an eligible combined payment plan borrower termi-
nates upon receipt of a combined payment plan.
(h) FEES AND PREMIUMS.No origination fee or insurance pre-
mium shall be charged to the borrower on any combined payment
plan, and no origination fee or insurance premium shall be payable
by the lender to the Secretary of Health and Human Services.
(i) COMMENCEMENT OF REPAYMENT.Repayment of a combined
payment plan shall commence within 60 days after the later of the
date of acceptance of the lender's offer to administer a combined
payment plan, the making of the consolidation loan or the
reissuance of any Health Education Assistance Loans pursuant to
subsection (e).
SEC. 485B. [20 U.S.C. 109213] NATIONAL STUDENT LOAN DATA SYSTEM.
(a) DEVELOPMENT OF THE SYSTEM.The Secretary shall con-
sult with a representative group of guaranty agencies, eligible lend-
ers, and eligible institutions to develop a mutually agreeable pro-
posal for the establishment of a National Student Loan Data Sys-
tem containing information regarding loans made, insured, or guar-
anteed under part B and loans made under parts D and E, and for
allowing the electronic exchange of data between program partici-
415
Sec. 485B
HIGHER EDUCATION ACT OF 1965
408
pants and the system. In establishing such data system, the Sec-
retary shall place a priority on providing for the monitoring of en-
rollment, student status, information about current loan holders
and servicers, and internship and residency information. Such data
system shall also permit borrowers to use the system to identify
the current loan holders and servicers of such borrower's loan not
later than one year after the date of enactment of the Higher Edu-
cation Amendments of 1998. The information in the data system
shall include (but is not limited to)
(1) the amount and type of each such loan made;
(2) the names and social security numbers of the
borrowers;
(3) the guaranty agency responsible for the guarantee of
the loan;
(4) the institution of higher education or organization re-
sponsible for loans made under parts D and E;
(5)1 the exact amount of loans partially or totally canceled
or in deferment for service under the Peace Corps Act (22
U.S.C. 2501 et seq.)),2 for service under the Domestic Volun-
teer Service Act of 1973 (42. U.S.C. 4951 et seq.), and for com-
parable full-time service as a volunteer for a tax-exempt orga-
nization of demonstrated effectiveness. 3
(5)1 the eligible institution in which the student was en-
rolled or accepted for enrollment at the time the loan was
made, and any additional
institutions attended by the
borrower;
(6) the total amount of loans made to any borrower and
the remaining balance of the loans;
(7) the lender, holder, and servicer of such loans;
(8) information concerning the date of any default on the
loan and the collection of the loan, including any information
concerning the repayment status of any defaulted loan on
which the Secretary has made a payment pursuant to section
430(a) or the guaranty agency has made a payment to the pre-
vious holder of the loan;
(9) information regarding any deferments or forbearance
granted on such loans; and
(10) the date of cancellation of the note upon completion of
repayment by the borrower of the loan or payment by the Sec-
retary pursuant to section 437.
(b) ADDITIONAL INFORMATION.For the purposes of research
and policy analysis, the proposal shall also contain provisions for
obtaining additional data concerning the characteristics of borrow-
ers and the extent of student loan indebtedness on a statistically
valid sample of borrowers under part B. Such data shall include
(1) information concerning the income level of the borrower
and his family and the extent of the borrower's need for stu-
dent financial assistance, including loans;
(2) information concerning the type of institution attended
by the borrower and the year of the program of education for
which the loan was obtained;
1So in original. Two paragraphs (5) have been enacted.
2 So in original.
3 So in original. The period probably should be a semicolon.
409
HIGHER EDUCATION ACT OF 1965
Sec. 485B
(3) information concerning other student financial assist-
ance received by the borrower; and
(4) information concerning Federal costs associated with
the student loan program under part B of this title, including
the costs of interest subsidies, special allowance payments, and
other subsidies.
(c) VERIFICATION.The Secretary may require lenders, guar-
anty agencies, or institutions of higher education to verify informa-
tion or obtain eligibility or other information through the National
Student Loan Data System prior to making; guaranteeing, or cer-
tifying a loan made under part B, D, or E.
(d) REPORT TO CONGRESS.---The Secretary shall prepare and
submit to the appropriate committees of the Congress, in each fis-
cal year, a report describing the results obtained by the establish-
ment and operation of the student loan data system authorized by
this section.
(e) STANDARDIZATION OF DATA REPORTING.
(1) IN GENERAL.The Secretary shall by regulation pre-
scribe standards and procedures (including relevant defini-
tions) that require all lenders and guaranty agencies to report
information on all aspects of loans made under this title in uni-
form formats in order to permit the direct comparison of data
submitted by individual lenders, servicers or guaranty agen.
cies.
(2) ACTIVITIES. For the purpose of establishing standards
under this section, the Secretary shall
(A) consult with guaranty agencies, lenders, institu-
tions of higher education, and organizations representing
.
the groups described in paragraph (1);
(B) develop standards designed to be implemented by
all guaranty agencies and lenders with minimum modifica-
tions to existing data processing hardware and software;
and
(C) publish the specifications selected to be used to en-
courage the automation of exchanges of information be-
tween all parties involved in loans under this title.
(f) COMMON IDENTIFIERS.The Secretary shall, not later than
July 1, 1993
(1) revise the codes used to identify institutions and stu-
dents in the student loan data system authorized by this sec-
tion to make such codes consistent with the codes used in each
database used by the Department of Education that contains
information of participation in programs under this title; and
(2) modify the design or operation of the system authorized
by this section to ensure that data relating to any institution
is readily accessible and can be used in a form compatible with
the integrated postsecondary education data system (IPEDS).
(g) INTEGRATION OF DATABASES.The Secretary shall integrate
the National Student Loan Data System with the Pell Grant appli-
cant and recipient databases as of January 1, 1994, and any other
databases containing information on participation in programs
under this title.
417
54-653 99 - 14
Sec. 485C
HIGHER EDUCATION ACT OF 1965
410
SEC. 4850. [20 U.S.C. 1092c] SIMPLIFICATION OF THE LENDING PROC-
ESS FOR BORROWERS.
(a) ALL LIKE LOANS TREATED AS ONE.To the extent prac-
ticable, and with the cooperation of the borrower, eligible lenders
shall treat all loans made to a borrower under the same section of
part B as one loan and shall submit one bill to the borrower for
the repayment of all such loans for the monthly or other similar
period of repayment. Any deferments on one such loan will be con-
sidered a deferment on the total amount of all such loans.
(b) ONE LENDER, ONE GUARANTY AGENCY. To the extent prac-
ticable, and with the cooperation of the borrower, the guaranty
agency shall ensure that a borrower only have one lender, one
holder, one guaranty agency, and one servicer with which to main-
tain contact.
SEC. 486. [20 U.S.C. 1093] DISTANCE EDUCATION DEMONSTRATION
PROGRAMS.
(a) PURPOSE.It is the purpose of this section
(1) to allow demonstration programs that are strictly mon-
itored by the Department of Education to test the quality and
viability of expanded distance education programs currently re-
stricted under this Act;
(2) to provide for increased student access to higher edu-
cation through distance education programs; and
(3) to help determine
(A) the most effective means of delivering quality edu-
cation via distance education course offerings;
(B) the specific statutory and regulatory requirements
which should be altered to provide greater access to high
quality distance education programs; and
(C) the appropriate level of Federal assistance for stu-
dents enrolled in distance education programs.
(b) DEMONSTRATION PROGRAMS AUTHORIZED.
(1) IN GENERAL.In accordance with the provisions of sub-
section (d), the Secretary is authorized to select institutions of
higher education, systems of such institutions, or consortia of
such institutions for voluntary participation in a Distance Edu-
cation Demonstration Program that provides participating in-
stitutions with the ability to offer distance education programs
that do not meet all or a portion of the sections or regulations
described in paragraph (2).
(2) WAIVERS.The Secretary is authorized to waive for any
institution of higher education, system of institutions of higher
education, or consortium participating in a Distance Education
Demonstration Program, the requirements of section 472(5) as
the section relates to computer costs, sections 481(a) and
481(b) as such sections relate to requirements for a minimum
number
of
weeks
of
instruction,
sections
102(a)(3)(A),
102(a)(3)(B), and 484(1)(1), or one or more of the regulations
prescribed under this part or part F which inhibit the oper-
ation of quality distance education programs.
(3) ELIGIBLE APPLICANTS.
(A) ELIGIBLE INSTITUTIONS.Except as provided in
subparagraphs (B), (C), and (D), only an institution of
higher education that is eligible to participate in programs
418
411
HIGHER EDUCATION ACT OF 1965
Sec. 486
under this title shall be eligible to participate in the dem-
onstration program authorized under this section.
(B) PROHIBITION.An institution of higher education
described in section 102(a)(1)(C) shall not be eligible to
participate in the demonstration program authorized
under this section.
(C) SPECIAL RULE.Subject to subparagraph (B), an
institution of higher education that meets the require-
ments of subsection (a) of section 102, other than the re-
quirement of paragraph (3)(A) or (3)(B) of such subsection,
and that provides a 2-year or 4-year program of instruction
for which the institution awards an associate or bacca-
laureate degree, shall be eligible to participate in the dem-
onstration program authorized under this section.
(D) REQUIREMENT.Notwithstanding any other provi-
sion of this paragraph, Western Governors University shall
be considered eligible to participate in the demonstration
program authorized under this section. In addition to the
waivers described in paragraph (2), the Secretary may
waive the provisions of title I and parts G and H of this
title for such university that the Secretary determines to
be appropriate because of the unique characteristics of
such university. In carrying out the preceding sentence,
the Secretary shall ensure that adequate program integ-
rity and accountability measures apply to such university's
participation in the demonstration program authorized
under this section.
(c) APPLICATION.
(1) IN GENERAL.Each institution, system, or consortium
of institutions desiring to participate in a demonstration pro-
gram under this section shall submit an application to the Sec-
retary at such time and in such manner as the Secretary may
require.
(2) CONTENTS.Each application shall include
(A) a description of the institution, system, or consor-
tium's consultation with a recognized accrediting agency or
association with respect to quality assurances for the dis-
tance education, programs to be offered;
(B) a description of the statutory and regulatory re-
quirements described in subsection (b)(2) or, if applicable,
subsection (b)(3)(D) for which a waiver is sought and the
reasons for which the waiver is sought;
(C) a description of the distance education programs to
be offered;
(D) a description of the students to whom distance
education programs will be offered;
(E) an assurance that the institution, system, or con-
sortium will offer full cooperation with the ongoing evalua-
tions of the demonstration program provided for in this
section; and
(F) such other information as the Secretary may re-
quire.
(d) SELECTION.
4 19
Sec. 486
HIGHER EDUCATION ACT OF 1965
412
(1) IN GENERAL.For the first year of the demonstration
program authorized under this section, the Secretary is author-
ized to select for participation in the program not more than
15 institutions, systems of institutions, or consortia of institu-
tions. For the third year of the demonstration program author-
ized under this section, the Secretary may select not more than
35 institutions, systems, or consortia, in addition to the institu-
tions, systems, or consortia selected pursuant to the preceding
sentence, to participate in the demonstration program if the
Secretary determines that such expansion is warranted based
on the evaluations conducted in accordance with subsections
(f) and (g).
(2) CONSIDERATIONS.In selecting institutions to partici-
pate in the demonstration program in the first or succeeding
years of the program, the Secretary shall take into account
(A) the number and quality of applications received;
(B) the Department's capacity to oversee and monitor
each institution's participation;
(C) an institution's
(i) financial responsibility;
(ii) administrative capability; and
(iii) program or programs being offered via dis-
tance education; and
(D) ensuring the-participation of a diverse group of in-
stitutions with respect to size, mission, and geographic dis-
tribution.
(e) NOTIFICATION.The Secretary shall make available to the
public and to the Committee on Labor and Human Resources of the
Senate and the Committee on Education and the Workforce of the
House of Representatives a list of institutions, systems or consortia
selected to participate in the demonstration program authorized by
this section. Such notice shall include a listing of the specific statu-
tory and regulatory requirements being waived for each institution,
system or consortium and a description of the distance education
courses to be offered.
(f) EVALUATIONS AND REPORTS.
(1) EVALUATION.The Secretary shall evaluate the dem-
onstration programs authorized under this section on an an-
nual basis. Such evaluations specifically shall review
(A) the extent to which the institution, system or con-
sortium has met the goals set forth in its application to the
Secretary, including the measures of program quality as-
surance;
(B) the number and types of students participating in
the programs offered, including the progress of participat-
ing students toward recognized certificates or degrees and
the extent to which participation in such programs in-
creased;
(C) issues related to student financial assistance for
distance education;
(D) effective technologies for delivering distance edu-
cation course offerings; and
4 2 0
413
HIGHER EDUCATION ACT OF 1965
Sec. 486
(E) the extent to which statutory or regulatory re-
quirements not waived under the demonstration program
present difficulties for students or institutions.
(2) POLICY ANALYSIS.The Secretary shall review current
policies and identify those policies that present impediments to
the development and use of distance education and other non-
traditional methods of expanding access to education.
(3) REPORTS.
(A) IN GENERAL.Within 18 months of the initiation of
the demonstration program, the Secretary shall report to
the Committee on Labor and Human Resources of the Sen-
ate and the Committee on Education and the Workforce of
the House of Representatives with respect to
(i) the evaluations of the demonstration programs
authorized under this section; and
(ii) any proposed statutory changes designed to
enhance the use of distance education.
(B) ADDITIONAL REPORTS.The Secretary shall provide
additional reports to the Committee on Labor and Human
Resources of the Senate and the Committee on Education
and the Workforce of the House of Representatives on an
annual basis regarding
(i) the demonstration programs authorized under
this section; and
(ii) the number and types of students receiving as-
sistance under this title for instruction leading to a
recognized
certificate, as provided
for in
section
484(1)(1), including the progress of such students to-
ward recognized certificates and the degree to which
participation in such programs leading to such certifi-
cates increased.
(g) OVERSIGHT.In conducting the demonstration program au-
thorized under this section, the Secretary shall, on a continuing
basis
(1) assure compliance of institutions, systems or consortia
with the requirements of this title (other than the sections and
regulations that are waived under subsections (b)(2) and
(b)(3)(D));
(2) provide technical assistance;
(3) monitor fluctuations in the student population enrolled
in the participating institutions, systems or consortia; and
(4) consult with appropriate accrediting agencies or asso-
ciations and appropriate State regulatory authorities.
(h) DEFINITION.For the purpose of this section, the term "dis-
tance education" means an educational process that is character-
ized by the separation, in time or place, between instructor and
student. Such term may include courses offered principally through
the use of
(1) television, audio, or computer transmission, such as
open broadcast, closed circuit, cable, microwave, or satellite
transmission;
(2) audio or computer conferencing;
(3) video cassettes or discs; or
(4) correspondence.
421
Sec. 487
HIGHER EDUCATION ACT OF 1965
414
SEC. 487. [20 U.S.C. 10941 PROGRAM PARTICIPATION AGREEMENTS.
(a) REQUIRED FOR PROGRAMS OF ASSISTANCE; CONTENTS.In
order to be an eligible institution for the purposes of any program
authorized under this title, an institution must be an institution of
higher education or an eligible institution (as that term is defined
for the purpose of that program) and shall, except with respect to
a program under subpart 4 of part A, enter into a program partici-
pation agreement with the Secretary. The agreement shall condi-
tion the initial and continuing eligibility of an institution to partici-
pate in a program upon compliance with the following require-
ments:
(1) The institution will use funds received by it for any
program under this title and any interest or other earnings
thereon solely for the purpose specified in and in accordance
with the provision of that program.
(2) The institution shall not charge any student a fee for
processing or handling any application, form, or data required
to determine the student's eligibility for assistance under this
title or the amount of such assistance.
(3) The institution will establish and maintain such ad-
ministrative and fiscal procedures and records as may be nec-
essary to ensure proper and efficient administration of funds
received from the Secretary or from students under this title,
together with assurances that the institution will provide,
upon request and in a timely fashion, information relating to
the administrative capability and financial responsibility of the
institution to
(A) the Secretary;
(B) the appropriate guaranty agency; and
(C) the appropriate accrediting agency or association.
(4) The institution will comply with the provisions of sub-
section (c) of this section and the regulations prescribed under
that subsection, relating to fiscal eligibility.
(5) The institution will submit reports to the Secretary
and, in the case of an institution participating in a program
under part B or part E, to holders of loans made to the institu-
tion's students under such parts at such times and containing
such information as the Secretary may reasonably require to
carry out the purpose of this title.
(6) The institution will not provide any student with any
statement or certification to any lender under part B that
qualifies the student for a loan or loans in excess of the
amount that student is eligible to borrow in accordance with
sections 425(a), 428(a)(2), and 428(b)(1) (A) and (B).
(7) The institution will comply with the requirements of
section 485.
(8) In the case of an institution that advertises job place-
ment rates as a means of attracting students to enroll in the
institution, the institution will make available to prospective
students, at or before the time of application (A) the most re-
cent available data concerning employment statistics, gradua-
tion statistics, and any other information necessary to substan-
tiate the truthfulness of the advertisements, and (B) relevant
State licensing requirements of the State in which such institu-
415
HIGHER EDUCATION ACT OF 1965
Sec. 487
tion is located for any job for which the course of instruction
is designed to prepare such prospective students.
(9) In the case of an institution participating in a program
under part B or D, the institution will inform all eligible bor-
rowers enrolled in the institution about the availability and eli-
gibility of such borrowers for State grant assistance from the
State in which the institution is located, and will inform such
borrowers from another State of the source for further informa-
tion concerning such assistance from that State.
(10) The institution certifies that it has in operation a drug
abuse prevention program that is determined by the institution
to be accessible to any officer, employee, or student at the in-
stitution.
(11) In the case of any institution whose students receive
financial assistance pursuant to section 484(d), the institution
will make available to such students a program proven suc-
cessful in assisting students in obtaining a certificate of high
school equivalency.
(12) The institution certifies that
(A) the institution has established a campus security
policy; and
(B) the institution has complied with the disclosure re-
quirements of section 485(0.
(13) The institution will not deny any form of Federal fi-
nancial aid to any student who meets the eligibility require-
ments of this title on the grounds that the student is partici-
pating in a program of study abroad approved for credit by the
institution.
(14)(A) The institution, in order to participate as an eligi-
ble institution under part B or D, will develop a Default Man-
agement Plan for approval by the Secretary as part of its ini-
tial application for certification as an eligible institution and
will implement such Plan for two years thereafter.
(B) Any institution of higher education which changes
ownership and any eligible institution which changes its status
as a parent or subordinate institution shall, in order to partici-
pate as an eligible institution under part B or D, develop a De-
fault Management Plan for approval by the Secretary and im-
plement such Plan for two years after its change of ownership
or status.
(C) This paragraph shall not apply in the case of an insti-
tution in which (i) neither the parent nor the subordinate insti-
tution has a cohort default rate in excess of 10 percent, and (ii)
the new owner of such parent or subordinate institution does
not, and has not, owned any other institution with a cohort de-
fault rate in excess of 10 percent.
(15) The institution acknowledges the authority of the Sec-
retary, guaranty agencies, lenders, accrediting agencies, the
Secretary of Veterans Affairs, and the State agencies under
subpart 1 of part H to share with each other any information
pertaining to the institution's eligibility to participate in pro-
grams under this title or any information on fraud and abuse.
(16)(A) The institution will not knowingly employ an indi-
vidual in a capacity that involves the administration of pro-
Sec. 481
HIGHER EDUCATION ACT OF 1965
416
grams under this title, or the receipt of program funds under
this title, who has been convicted
of, or has pled nolo
contendere or guilty to, a crime involving the acquisition, use,
or expenditure of funds under this title, or has been judicially
determined to have committed fraud involving funds under
this title or contract with an institution or third party servicer
that has been terminated under section 432 involving the ac-
quisition, use, or expenditure of funds under this title, or who
has been judicially determined to have committed fraud involv-
ing funds under this title.
(B) The institution will not knowingly contract with or em-
ploy any individual, agency, or organization that has been, or
whose officers or employees have been
(i) convicted of, or pled nolo contendere or guilty to, a
crime involving the acquisition, use, or expenditure of
funds under this title; or
(ii) judicially determined to have committed fraud in-
volving funds under this title.
(17) The institution will complete surveys conducted as a
part of the Integrated Postsecondary Education Data System
(IPEDS) or any other Federal postsecondary institution data
collection effort, as designated by the Secretary, in a timely
manner and to the satisfaction of the Secretary.
(18) The institution will meet the requirements established
pursuant to section 485(g).
(19) The institution will not impose any penalty, including
the assessment of late fees, the denial of access to classes, li-
braries, or other institutional facilities, or the requirement that
the student borrow additional funds, on any student because of
the student's inability to meet his or her financial obligations
to the institution as a result of the delayed disbursement of the
proceeds of a loan made under this title due to compliance with
the provisions of this title, or delays attributable to the institu-
tion.
(20) The institution will not provide any commission,
bonus, or other incentive payment based directly or indirectly
on success in securing enrollments or financial aid to any per-
sons or entities engaged in any student recruiting or admission
activities or in making decisions regarding the award of stu-
dent financial assistance, except that this paragraph shall not
apply to the recruitment of foreign students residing in foreign
countries who are not eligible to receive Federal student assist-
ance.
(21) The institution will meet the requirements established
by the Secretary and accrediting agencies or associations, and
will provide evidence to the Secretary that the institution has
the authority to operate within a State.
(22) The institution will comply with the refund policy es-
tablished pursuant to section 484B.
(23)(A) The institution, if located in a State to which sec-
tion 4(b) of the National Voter Registration Act (42 U.S.C.
1973gg-2(b)) does not apply, will make a good faith effort to
distribute a mail voter registration form, requested and re-
ceived from the State, to each student enrolled in a degree or
411
HIGHER EDUCATION ACT OF 1965
Sec. 481
certificate program and physically in attendance at the institu-
tion, and to make such forms widely available to students at
the institution.
(B) The institution shall request the forms from the State
120 days prior to the deadline for registering to vote within the
State. If an institution has not received a sufficient quantity of
forms to fulfill this section from the State within 60 days prior
to the deadline for registering to vote in the State, the institu-
tion shall not be held liable for not meeting the requirements
of this section during that election year.
(C) This paragraph shall apply to elections as defined in
section 301(1) of the Federal Election Campaign Act of 1971 (2
U.S.C. 431(1)), and includes the election for Governor or other
chief executive within such State).
(b) HEARINGS.(1) An institution that has received written no-
tice of a final audit or program review determination and that de-
sires to have such determination reviewed by the Secretary shall
submit to the Secretary a written request for review not later than
45 days after receipt of notification of the final audit or program
review determination.
(2) The Secretary shall, upon receipt of written notice under
paragraph (1), arrange for a hearing and notify the institution
within 30 days of receipt of such notice the date, time, and place
of such hearing. Such hearing shall take place not later than 120
days from the date upon which the Secretary notifies the institu-
tion.
(c)
AUDITS; FINANCIAL RESPONSIBILITY; ENFORCEMENT OF
STANDARDS.(1) Notwithstanding any other provisions of this title,
the Secretary shall prescribe such regulations as may be necessary
to provide for
(A)(i) except as provided in clauses (ii) and (iii), a financial
audit of an eligible institution with regard to the financial con-
dition of the institution in its entirety, and a compliance audit
of such institution with regard to any funds obtained by it
under this title or obtained from a student or a parent who has
a loan insured or guaranteed by the Secretary under this title,
on at least an annual basis and covering the period since the
most recent audit, conducted by a qualified, independent orga-
nization or person in accordance with standards established by
the Comptroller General for the audit of governmental organi-
zations, programs, and functions, and as prescribed in regula-
tions of the Secretary, the results of which shall be submitted
to the Secretary and shall be available to cognizant guaranty
agencies, eligible lenders, State agencies, and the appropriate
State agency notifying the Secretary under subpart 1 of part
H;
(ii) with regard to an eligible institution which is audited
under chapter 75 of title 31, United States Code, deeming such
audit to satisfy the requirements of clause (i) for the period
covered by such audit; or
(iii) at the discretion of the Secretary, with regard to an
eligible institution (other than an eligible institution described
in section 102(a)(1)(C)) that has obtained less than $200,000 in
funds under this title during each of the 2 award years that
425
Sec. 481
HIGHER EDUCATION ACT OF 1965
418
precede the audit period and submits a letter of credit payable
to the Secretary equal to not less than Y2 of the annual poten-
tial liabilities of such institution as determined by the Sec-
retary, deeming an audit conducted every 3 years to satisfy the
requirements of clause (i), except for the award year imm-
diately preceding renewal of the institution's eligibility under
section 498(g);
(B) in matters not governed by specific program provisions,
the establishment of reasonable standards of financial respon-
sibility and appropriate institutional capability for the admin-
istration by an eligible institution of a program of student fi-
nancial aid under this title, including any matter the Secretary
deems necessary to the sound administration of the financial
aid programs, such as the pertinent actions of any owner,
shareholder, or person exercising control over an eligible insti-
tution;
(C)(i) except as provided in clause (ii), a compliance audit
of a third party servicer (other than with respect to the
servicer's functions as a lender if such functions are otherwise
audited under this part and such audits meet the requirements
of this clause), with regard to any contract with an eligible in-
stitution, guaranty agency, or lender for administering or serv-
icing any aspect of the student assistance programs under this
title, at least once every year and covering the period since the
most recent audit, conducted by a qualified, independent orga-
nization or person in accordance with standards established by
the Comptroller General for the audit of governmental organi-
zations, programs, and functions, and as prescribed in regula-
tions of the Secretary, the results of which shall be submitted
to the Secretary; or
(ii) with regard to a third party servicer that is audited
under chapter 75 of title 31, United States Code, such audit
shall be deemed to satisfy the requirements of clause (i) for the
period covered by such audit;
(D)(i) a compliance audit of a secondary market with re-
gard to its transactions involving, and its servicing and collec-
tion of, loans made under this title, at least once a year and
covering the period since the most recent audit, conducted by
a qualified, independent organization or person in accordance
with standards established by the Comptroller General for the
audit of governmental organizations, programs, and functions,
and as prescribed in regulations of the Secretary, the results
of which shall be submitted to the Secretary; or
(ii) with regard to a secondary market that is audited
under chapter 75 of title 31, United States Code, such audit
shall be deemed to satisfy the requirements of clause (i) for the
period covered by the audit;
(E) the establishment, by each eligible institution under
part B responsible for furnishing to the lender the statement
required by section 428(a)(2)(A)(i), of policies and procedures by
which the latest known address and enrollment status of any
student who has had a loan insured under this part and who
has either formally terminated his enrollment, or failed to re-
enroll on at least a half-time basis, at such institution, shall
419
HIGHER EDUCATION ACT OF 1965
Sec. 487
be furnished either to the holder (or if unknown, the insurer)
of the note, not later than 60 days after such termination or
failure to re-enroll;
(F) the limitation, suspension, or termination of the par-
ticipation in any program under this title of an eligible institu-
tion, or the imposition of a civil penalty under paragraph (2)(B)
whenever the Secretary has determined, after reasonable no-
tice and opportunity for hearing, that such institution has vio-
lated or failed to carry out any provision of this title, any regu-
lation prescribed under this title, or any applicable special ar-
rangement, agreement, or limitation, except that no period of
suspension under this section shall exceed 60 days unless the
institution and the Secretary agree to an extension or unless
limitation or termination proceedings are initiated by the Sec-
retary within that period of time;
(G) an emergency action against an institution, under
which the Secretary shall, effective on the date on which a no-
tice and statement of the basis of the action is mailed to the
institution (by registered mail, return receipt requested), with-
hold funds from the institution or its students and withdraw
the institution's authority to obligate funds under any program
under this title, if the Secretary
(i) receives information, determined by the Secretary
to be reliable, that the institution is violating any provi-
sion of this title, any regulation prescribed under this title,
or any applicable special arrangement, agreement, or limi-
tation,
(ii) determines that immediate action is necessary to
prevent misuse of Federal funds, and
(iii) determines that the likelihood of loss outweighs
the importance of the procedures prescribed under sub-
paragraph (D) for limitation, suspension, or termination,
except that an emergency action shall not exceed 30 days un-
less limitation,. suspension, or termination proceedings are ini-
tiated by the Secretary against the institution within that pe-
riod of time, and except that the Secretary shall provide the in-
stitution an opportunity to show cause, if it so requests, that
the emergency action is unwarranted;
(H) the limitation, suspension, or termination of the eligi-
bility .of a third party servicer to contract with any institution
to administer any aspect of an institution's student assistance
program under this title, or the imposition of a civil penalty
under paragraph (2)(B), whenever the Secretary has deter-
mined, after reasonable notice and opportunity for a hearing,
that such organization, acting on behalf of an institution, has
violated or failed to carry out any provision of this title, any
regulation prescribed under this title, or any applicable special
arrangement, agreement, or limitation, except that no period of
suspension under this subparagraph shall exceed 60 days un-
less the organization and the Secretary agree to an extension,
or unless limitation or termination proceedings are initiated by
the Secretary against the individual or organization within
that period of time; and
427
Sec. 481
HIGHER EDUCATION ACT OF 1965
420
(I) an emergency action against a third party servicer that
has contracted with an institution to administer any aspect of
the institution's student assistance program under this title,
under which the Secretary shall, effective on the date on which
a notice and statement of the basis of the action is mailed to
such individual or organization (by registered mail, return re-
ceipt requested), withhold funds from the individual or organi-
zation and withdraw the individual or organization's authority
to act on behalf of an institution under any program under this
title, if the Secretary
(i) receives information, determined by the Secretary
to be reliable, that the individual or organization, acting
on behalf of an institution, is violating any provision of
this title, any regulation prescribed under this title, or any
applicable special arrangement, agreement, or limitation,
(ii) determines that immediate action is necessary to
prevent misuse of Federal funds, and
(iii) determines that the likelihood of loss outweighs
the importance of the procedures prescribed under sub-
paragraph (F), for limitation, suspension, or termination,
except that an emergency action shall not exceed 30 days un-
less the limitation, suspension, or termination proceedings are
initiated by the Secretary against the individual or organiza-
tion within that period of time, and except that the Secretary
shall provide the individual or organization an opportunity to
show cause, if it so requests, that the emergency action is un-
warranted.
(2) If an individual who, or entity that, exercises substantial
control, as determined by the Secretary in accordance with the defi-
nition of substantial control in subpart 3 of part H, over one or
more institutions participating in any program under this title, or,
for purposes of paragraphs (1) (H) and (I), over one or more organi-
zations that contract with an institution to administer any aspect
of the institution's student assistance program under this title, is
determined to have committed one or more violations of the re-
quirements of any program under this title, or has been suspended
or debarred in accordance with the regulations of the Secretary, the
Secretary may use such determination, suspension, or debarment
as the basis for imposing an emergency action on, or limiting, sus-
pending, or terminating, in a single proceeding, the participation of
any or all institutions under the substantial control of that individ-
ual or entity.
(3)(A) Upon determination, after reasonable notice and oppor-
tunity for a hearing, that an eligible institution has engaged in
substantial misrepresentation of the nature of its educational pro-
gram, its financial charges, or the employability of its graduates,
the Secretary may suspend or terminate the eligibility status for
any or all programs under this title of any otherwise eligible insti-
tution, in accordance with procedures specified in paragraph (1)(D)
of this subsection, until the Secretary finds that such practices
have been corrected.
(B)(i) Upon determination, after reasonable notice and oppor-
tunity for a hearing, that an eligible institution
421
HIGHER EDUCATION ACT OF 1965
Sec. 487
(I) has violated or failed to carry out any provision of this
title or any regulation prescribed under this title; or
(II) has engaged in substantial misrepresentation of the
nature of its educational program, its financial charges, and
the employability of its graduates,
the Secretary may impose a civil penalty upon such institution of
not to exceed $25,000 for each violation or misrepresentation.
(ii) Any civil penalty may be compromised by the Secretary. In
determining the amount of such penalty, or the amount agreed
upon in compromise, the appropriateness of the penalty to the size
of the institution of higher education subject to the determination,
and the gravity of the violation, failure, or misrepresentation shall
be considered. The amount of such penalty, when finally deter-
mined, or the amount agreed upon in compromise, may be deducted
from any sums owing by the United States to the institution
charged.
(4) The Secretary shall publish a list of State agencies which
the Secretary determines to be reliable authority as to the quality
of public postsecondary vocational education in their respective
States for the purpose of determining eligibility for all Federal stu-
dent assistance programs.
(5) The Secretary shall make readily available to appropriate
guaranty agencies, eligible lenders, State agencies notifying the
Secretary under subpart 1 of part H, and accrediting agencies or
associations the results of the audits of eligible institutions con-
ducted pursuant to paragraph (1)(A).
(6) The Secretary is authorized to provide any information col-
lected as a result of audits conducted under this section, together
with audit information collected by guaranty agencies, to any Fed-
eral or State agency having responsibilities with respect to student
financial assistance, including those referred to in subsection
(a)(15) of this section.
(7) Effective with respect to any audit conducted under this
subsection after December 31, 1988, if, in the course of conducting
any such audit, the personnel of the Department of Education dis-
cover, or are informed of, grants or other assistance provided by an
institution in accordance with this title for which the institution
has not received funds appropriated under this title (in the amount
necessary to provide such assistance), including funds for which re-
imbursement was not requested prior to such discovery or informa-
tion, such institution shall be permitted to offset that amount
against any sums determined to be owed by the institution pursu-
ant to such audit, or to receive reimbursement for that amount (if
the institution does not owe any such sums).
(d) DEFINITION OF ELIGIBLE INSTITUTION.For the purpose of
this section, the term "eligible institution" means any such institu-
tion described in section 102 of this Act.
(e) CONSTRUCTION.Nothing in the amendments made by the
Higher Education Amendments of 1992 shall be construed to pro-
hibit an institution from recording, at the cost of the institution, a
hearing referred to in subsection (b)(2), subsection (c)(1)(D), or sub-
paragraph (A) or (B)(i) of subsection (c)(2), of this section to create
a record of the hearing, except the unavailability of a recording
shall not serve to delay the completion of the proceeding. The Sec-
Sec. 487A
HIGHER EDUCATION ACT OF 1965
422
retary shall allow the institution to use any reasonable means, in-
cluding stenographers, of recording the hearing.
SEC. 487A. [20 U.S.C. 1094a] REGULATORY RELIEF AND IMPROVEMENT.
(a) QUALITY ASSURANCE PROGRAM.
(1) IN GENERAL.The Secretary is authorized to select in-
stitutions for voluntary participation in a Quality Assurance
Program that provides participating institutions with an alter-
native management approach through which individual schools
develop and implement their own comprehensive systems, re-
lated to processing and disbursement of student financial aid,
verification of student financial aid application data, and en-
trance and exit interviews, thereby enhancing program integ-
rity within the student aid delivery system.
(2) CRITERIA AND CONSIDERATION.The Quality Assurance
Program authorized by this section shall be based on criteria
that include demonstrated institutional performance, as deter-
mined by the Secretary, and shall take into consideration cur-
rent quality assurance goals, as determined by the Secretary.
The selection criteria shall ensure the participation of a diverse
group of institutions of higher education with respect to size,
mission, and geographical distribution.
(3) WAIVER.The Secretary is authorized to waive for any
institution participating in the Quality Assurance Program any
regulations dealing with reporting or verification requirements
in this title that are addressed by the institution's alternative
management system, and may substitute such quality assur-
ance reporting as the Secretary determines necessary to ensure
accountability and compliance with the purposes of the pro-
grams under this title. The Secretary shall not modify or waive
any statutory requirements pursuant to this paragraph.
(4)
DETERMINATION.The Secretary
is
authorized
to
determine
(A) when an institution that is unable to administer
the Quality Assurance Program shall be removed from
such program; and
(B) when institutions desiring to cease participation in
such program will be required to complete the current
award year under the requirements of the Quality Assur-
ance Program.
(5) REVIEW AND EVALUATION.The Secretary shall review
and evaluate the Quality Assurance Program conducted by
each participating institution and, on the basis of that evalua-
tion, make recommendations regarding amendments to this
Act that will streamline the administration and enhance the
integrity of Federal student assistance programs. Such rec-
ommendations shall be submitted to the Committee on Labor
and Human Resources of the Senate and the Committee on
Education and the Workforce of the House of Representatives.
(b) REGULATORY IMPROVEMENT AND STREAMLINING EXPERI-
MENTS.
(1) IN GENERAL. The Secretary may continue any experi-
mental sites in existence on the date of enactment of the High-
er Education Amendments of 1998. Any activities approved by
423
HIGHER EDUCATION ACT OF 1965
Sec. 487A
the Secretary prior to such date that are inconsistent with this
section shall be discontinued not later than June 30, 1999.
(2) REPORT.The Secretary shall review and evaluate the
experience of institutions participating as experimental sites
during the period of 1993 through 1998 under this section (as
such section was in effect on the day before the date of enact-
ment of the Higher Education Amendments of 1998), and shall
submit a report based on this review and evaluation to the
Committee on Labor and Human Resources of the Senate and
the Committee on Education and the Workforce of the House
of Representatives not later than 6 months after the enactment
of the Higher Education Amendments of 1998. Such report
shall include
(A) a list of participating institutions and the specific
statutory or regulatory waivers granted to each institution;
(B) the findings and conclusions reached regarding
each of the experiments conducted; and
(C) recommendations for amendments to improve and
streamline this Act, based on the results of the experi-
ment.
(3) SELECTION.
(A) IN GENERAL.Upon the submission of the report
required by paragraph (2), the Secretary is authorized to
select a limited number of additional institutions for vol-
untary participation as experimental sites to provide rec-
ommendations to the Secretary on the impact and effec-
tiveness of proposed regulations or new management ini-
tiatives.
(B) CONSULTATION.Prior to approving any additional
experimental sites, the Secretary shall consult with the
Committee on Labor and Human Resources of the Senate
and the Committee on Education and the Workforce of the
House of Representatives and shall provide to such
Committees
(i) a list of institutions prOposed for participation
in the experiment and the specific statutory or regu-
latory waivers proposed to be granted to each institu-
tion;
(ii) a statement of the objectives to be achieved
through the experiment; and
(iii) an identification of the period of time over
which the experiment is to be conducted.
(C) WAIVERS.The Secretary is authorized to waive,
for any institution participating as an experimental site
under subparagraph (A), any requirements in this title, or
regulations prescribed under this title, that will bias the
results of the experiment, except that the Secretary shall
not waive any provisions with respect to award rules,
grant and loan maximum award amounts, and need analy-
sis requirements.
(c) DEFINITIONS. For purposes of this section, the term "cur-
rent award year" means the award year during which the partici-
pating institution indicates the institution's intention to cease par-
ticipation.
Sec. 4878
HIGHER EDUCATION ACT OF 1965
424
SEC. 487B. [20 U.S.C. 1094b1 ASSIGNMENT OF IDENTIFICATION NUM-
BERS.
The Secretary shall assign to each participant in title IV pro-
grams, including institutions, lenders, and guaranty agencies, a
single Department of Education identification number to be used to
identify its participation in each of the title IV programs.
SEC. 488. [20 U.S.C. 1095] TRANSFER OF ALLOTMENTS.
In order to offer an arrangement of types of aid, including in-
stitutional and State aid which best fits the needs of each individ-
ual student, an institution may (1) transfer a total of 25 percent
of the institutions allotment under section 462 to the institution's
allotment under section 413D or 442 (or both); and (2) transfer 25
percent of the institution's allotment under section 442 to the insti-
tution's allotment under section 413D. Funds transferred to an in-
stitution's allotment under another section may be used as a part
of and for the same purposes as funds allotted under that section.
The Secretary shall have no control over such transfer, except as
specifically authorized, except for the collection and dissemination
of information.
SEC. 488A. [20 U.S.C. 1095a] WAGE GARNISHMENT REQUIREMENT.
(a) GARNISHMENT REQUIREMENTS.Notwithstanding any provi-
sion of State law, a guaranty agency, or the Secretary in the case
of loans made, insured or guaranteed under this title that are held
by the Secretary, may garnish the disposable pay of an individual
to collect the amount owed by the individual, if he or she is not cur-
rently making required repayment under a repayment agreement
with the Secretary, or, in the case of a loan guaranteed under part
B on which the guaranty agency received reimbursement from the
Secretary under section 428(c), with the guaranty agency holding
the loan, as appropriate, provided that
(1) the amount deducted for any pay period may not ex-
ceed 10 percent of disposable pay, except that a greater per-
centage may be deducted with the written consent of the indi-
vidual involved;
(2) the individual shall be provided written notice, sent by
mail to the individual's last known address, a minimum of 30
days prior to the initiation of proceedings, from the guaranty
agency or the Secretary, as appropriate, informing such indi-
vidual of the nature and amount of the loan obligation to be
collected, the intention of the guaranty agency or the Sec-
retary, as appropriate, to initiate proceedings to collect the
debt through deductions from pay, and an explanation of the
rights of the individual under this section;
(3) the individual shall be provided an opportunity to in-
spect and copy records relating to the debt;
(4) the individual shall be provided an opportunity to enter
into a written agreement with the guaranty agency or the Sec-
retary, under terms agreeable to the Secretary, or the head of
the guaranty agency or his designee, as appropriate, to estab-
lish a schedule for the repayment of the debt;
(5) the individual shall be provided an opportunity for a
hearing in accordance with subsection (b) on the determination
of the Secretary or the guaranty agency, as appropriate, con-
425
HIGHER EDUCATION ACT OF 1965
Sec. 488A
cerning the existence or the amount of the debt, and, in the
case of an individual whose repayment schedule is established
other than by a written agreement pursuant to paragraph (4),
concerning the terms of the repayment schedule;
(6) the employer shall pay to the Secretary or the guaranty
agency as directed in the withholding order issued in this
action, and shall be liable for, and the Secretary or the guar-
anty agency, as appropriate, may sue the employer in a State
or Federal court of competent jurisdiction to recover, any
amount that such employer fails to withhold from wages due
an employee following receipt of such employer of notice of the
withholding order, plus attorneys' fees, costs, and, in the
court's discretion, punitive damages, but such employer shall
not be required to vary the normal pay and disbursement cy-
cles in order to comply with this paragraph;
(7) if an individual has been reemployed within 12 months
after having been involuntarily separated from employment, no
amount may be deducted from the disposable pay of such indi-
vidual until such individual has been reemployed continuously
for at least 12 months; and
(8) an employer may not discharge from employment,
refuse to employ, or take disciplinary action against an individ-
ual subject to wage withholding in accordance with this section
by reason of the fact that the individual's wages have been
subject to garnishment under this section, and such individual
may sue in a State or Federal court of competent jurisdiction
any employer who takes such action. The court shall award at-
torneys' fees to a prevailing employee and, in its discretion,
may order reinstatement of the individual, award punitive
damages and back pay to the employee, or order such other
remedy as may be reasonably necessary.
(b) HEARING REQUIREMENTS.A hearing described in sub-
section (a)(5) shall be provided prior to issuance of a garnishment
order if the individual, on or before the 15th day following the
mailing of the notice described in subsection (a)(2), and in accord-
ance with such procedures as the Secretary or the head of the
guaranty agency, as appropriate, may prescribe, files a petition re-
questing such a hearing. If the individual does not file a petition
requesting a hearing prior to such date, the Secretary or the guar-
anty agency, as appropriate, shall provide the individual a hearing
under subsection (a)(5) upon request, but such hearing need not be
provided prior to issuance of a garnishment order. A hearing under
subsection (a)(5) may not be conducted by an individual under the
supervision or control of the head of the guaranty agency, except
that nothing in this sentence shall be construed to prohibit the ap-
pointment of an administrative law judge. The hearing official shall
issue a final decision at the earliest practicable date, but not later
than 60 days after the filing of the petition requesting the hearing.
(c) NOTICE REQUIREMENTS.The notice to the employer of the
withholding order shall contain only such information as may be
necessary for the employer to comply with the withholding order.
(d) No ATTACHMENT OF STUDENT ASSISTANCE.Except as au-
thorized in this section, notwithstanding any other provision of
Federal or State law, no grant, loan, or work assistance awarded
4 3 3
Sec. 489
HIGHER EDUCATION ACT OF 1965
426
under this title, or property traceable to such assistance, shall be
subject to garnishment or attachment in order to satisfy any debt
owed by the student awarded such assistance, other than a debt
owed to the Secretary and arising under this title.
(e) DEFINITION.For the purpose of this section, the term "dis-
posable pay" means that part of the compensation of any individual
from an employer remaining after the deduction of any amounts re-
quired by law to be withheld.
SEC. 489. [20 U.S.C. 1096] 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 agree-
ment 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 Sec-
retary and shall be equal to 5 percent of the institution's first
$2,750,000 of expenditures plus 4 percent of the institution's ex-
penditures 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, 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 es-
tablished under part E, excluding the principal amount of any such
loans which the institution has agreed to assign under section
463(a)(6)(B). In addition, the Secretary shall provide for payment
to each institution of higher education an amount equal to 100 per-
cent of the costs incurred by the institution in implementing and
operating the immigration status verification system under section
484(h).
(b) PURPOSE OF PAYMENTS.(1) The sums paid to institutions
under this part are for the sole purpose of offsetting the adminis-
trative costs of the programs described in subsection (a).
(2) If the institution enrolls a significant number of students
who are (A) attending the institution less than full time, or (B)
independent students, the institution shall use a reasonable pro-
portion of the funds available under this section for financial aid
services during times and in places that will most effectively ac-
commodate the needs of such students.
SEC. 490. [20 U.S.C. 1097] CRIMINAL PENALTIES.
(a) IN GENERAL.Any person who knowingly and willfully em-
bezzles, misapplies, steals, obtains by fraud, false statement, or for-
gery, or fails to refund any funds, assets, or property provided or
insured under this title or attempts to so embezzle, misapply, steal,
obtain by fraud, false statement or forgery, or fail to refund any
434
427
HIGHER EDUCATION ACT OF 1965
Sec. 491
funds, assets, or property, shall be fined not more than $20,000 or
imprisoned for not more than 5 years, or both, except if the amount
so embezzled, misapplied, stolen, obtained by fraud, false state-
ment, or forgery, or failed to be refunded does not exceed $200,
then the fine shall not be more than $5,000 and imprisonment
shall not exceed one year, or both.
(b) ASSIGNMENT OF LOANS.Any person who knowingly and
willfully makes any false statement, furnishes any false informa-
tion, or conceals any material information in connection with the
assignment of a loan which is made or insured under this title or
attempts to so make any false statement, furnish any false infor-
mation, or conceal any material information in connection with
such assignment shall, upon conviction thereof, be fined not more
than $10,000 or imprisoned for not more than one year, or both.
(c) INDUCEMENTS TO LEND OR ASSIGN.Any person who know-
ingly and willfully makes an unlawful payment to an eligible lend-
er under part B or attempts to make such unlawful payment as an
inducement to make, or to acquire by assignment, a loan insured
under such part shall, upon conviction thereof, be fined not more
than $10,000 or imprisoned for not more than one year, or both.
(d) OBSTRUCTION OF JUSTICE.Any person who knowingly and
willfully destroys or conceals any record relating to the provision
of assistance under this title or attempts to so destroy or conceal
with intent to defraud the United States or to prevent the United
States from enforcing any right obtained by subrogation under this
part, shall upon conviction thereof, be fined not more than $20,000
or imprisoned not more than 5 years, or both.
SEC. 490A. [20 U.S.C. 1097a] ADMINISTRATIVE SUBPOENAS.
(a) AUTHORITY.To assist the Secretary in the conduct of in-
vestigations of possible violations of the provisions of this title, the
Secretary is authorized to require by subpoena the production of in-
formation, documents, reports, answers, records, accounts, papers,
and other documentary evidence pertaining to participation in any
program under this title. The production of any such records may
be required from any place in a State.
(b) ENFORCEMENT.In case of contumacy by, or refusal to obey
a subpoena issued to, any person, the Secretary may request the
Attorney General to invoke the aid of any court of the United
States where such person resides or transacts business for a court
order for the enforcement of this section.
SEC. 491. [20 U.S.C. 1098] ADVISORY COMMITTEE ON STUDENT FINAN-
CIAL ASSISTANCE.
(a) ESTABLISHMENT AND PURPOSE.(1) There is established in
the Department an independent Advisory Committee on Student
Financial Assistance (hereafter in this section referred to as the
"Advisory Committee") which shall provide advice and counsel to
the Congress and to the Secretary on student financial aid matters.
(2) The purpose of the Advisory Committee is
(A) to provide extensive knowledge and understanding of
the Federal, State, and institutional programs of postsecondary
student assistance;
(B) to provide technical expertise with regard to systems
of needs analysis and application forms; and
43'
Sec. 491
HIGHER EDUCATION ACT OF 1965
428
(C) to make recommendations that will result in the main-
tenance of access to postsecondary education for low- and mid-
dle-income students.
(b) INDEPENDENCE OF ADVISORY COMMITTEE.In the exercise
of its functions, powers, and duties, the Advisory Committee shall
be independent of the Secretary and the other offices and officers
of the Department. Notwithstanding Department of Education poli-
cies and regulations, the Advisory Committee shall exert independ-
ent control of its budget allocations, expenditures and staffing lev-
els, personnel decisions and processes, procurements, and other ad-
ministrative and management functions. The Advisory Committee's
administration and management shall be subject to the usual and
customary Federal audit procedures. Reports, publications, and
other documents of the Advisory Committee, including such re-
ports, publications, and documents in electronic form, shall not be
subject to review by the Secretary. Notwithstanding Department of
Education policies and regulations, the Advisory Committee shall
exert independent control of its budget allocations and expendi-
tures, personnel decisions and processes, procurements, and other
administrative and management functions. The Advisory Commit-
tee's administration and management shall be subject to the usual
and customary Federal audit procedures. The recommendations of
the Committee shall not be subject to review or approval by any
officer in the executive branch, but may be submitted to the Sec-
retary for comment prior to submission to the Congress in accord-
ance with subsection (f). The Secretary's authority to terminate ad-
visory committees of the Department pursuant to section 448(b) of
the General Education Provisions Act ceased to be effective on
June 23, 1983.
(C) MEMBERSHIP.(1) The Advisory Committee shall have 11
members of which
(A) 3 members shall be appointed by the President pro
tempore of the Senate upon the recommendation of the Major-
ity Leader and the Minority Leader,
(B) 3 members shall be appointed by the Speaker of the
House of Representatives upon the recommendation of the Ma-
jority Leader and the Minority Leader, and
(C) 5 members shall be appointed by the Secretary includ-
ing, but not limited to representatives of States, institutions of
higher education, secondary schools, credit institutions, stu-
dents, and parents.
(2) Not less than 7 members of the Advisory Committee shall
be individuals who have been appointed on the basis of technical
qualifications, professional standing and demonstrated knowledge
in the fields of higher education and student aid administration,
need analysis, financing postsecondary education, student aid de-
livery, and the operations and financing of student loan guarantee
agencies.
(d) FUNCTIONS OF THE COMMITTEE.The Advisory Committee
shall
(1) develop, review, and comment annually upon the sys-
tem of needs analysis established under part F of this title;
(2) monitor, apprise, and evaluate the effectiveness of stu-
dent aid delivery and recommend improvements;
4 3
429
HIGHER EDUCATION ACT OF 1965
Sec. 491
(3) recommend data collection needs and student informa-
tion requirements which would improve access and choice for
eligible students under this title and assist the Department of
Education in improving the delivery of student aid;
(4) assess the impact of legislative and administrative
policy proposals;
(5) review and comment upon, prior to promulgation, all
regulations affecting programs under this title, including pro-
posed regulations;
(6) recommend to the Congress and to the Secretary such
studies, surveys, and analyses of student financial assistance
programs, policies, and practices, including the special needs of
low-income, disadvantaged, and nontraditional students, and
the means by which the needs may be met, but nothing in this
section shall authorize the committee to perform such studies,
surveys, or analyses;
(7) review and comment upon standards by which financial
need is measured in determining eligibility for Federal student
assistance programs;
(8) appraise the adequacies and deficiencies of current stu-
dent financial aid information resources and services and
evaluate the effectiveness of current student aid information
programs; and
(9) make special efforts to advise Members of Congress and
such Members' staff of the findings and recommendations
made pursuant to this paragraph.
(e) OPERATIONS OF THE COMMITTEE.(1) Each member of the
Advisory Committee shall be appointed for a term of 3 years, ex-
cept that, of the members first appointed
(A) 4 shall be appointed for a term of 1 year;
(B) 4 shall be appointed for a term of 2 years; and
(C) 3 shall be appointed for a term of 3 years,
as designated at the time of appointment by the Secretary.
(2) Any member appointed to fill a vacancy occurring prior to
the expiration of the term of a predecessor shall be appointed only
for the remainder of such term. A member of the Advisory Commit-
tee shall, upon request, continue to serve after the expiration of a
term until a successor has been appointed. A member of the Advi-
sory Committee may be reappointed to successive terms on the Ad-
visory Committee.
(3) No officers or full-time employees of the Federal Govern-
ment shall serve as members of the Advisory Committee.
(4) The Advisory Committee shall elect a Chairman and a Vice
Chairman from among its members.
(5) Six members of the Advisory Committee shall constitute a
quorum.
(6) The Advisory Committee shall meet at the call of the Chair-
man or a majority of its members.
(0 SUBMISSION TO DEPARTMENT FOR COMMENT.The Advisory
Committee may submit its proposed recommendations to the De-
partment of Education for comment for a period not to exceed 30
days in each instance.
(g) COMPENSATION AND EXPENSES.Members of the Advisory
Committee may each receive reimbursement for travel expenses in-
437
Sec. 491
HIGHER EDUCATION ACT OF 1965
430
cident to attending Advisory Committee meetings, including per
diem in lieu of subsistence, as authorized by section 5703 of title
5, United States Code, for persons in the Government service em-
ployed intermittently.
(h) PERSONNEL AND RESOURCES.(1) The Advisory Committee
may appoint such personnel as may be determined necessary by
the Chairman without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service,
and may be paid without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of such title relating to classification
and General Schedule pay rates, but no individual so appointed
shall be paid in excess of the rate authorized for GS-18 of the Gen-
eral Schedule. The Advisory Committee may appoint not more than
1 full-time equivalent, nonpermanent, consultant without regard to
the provisions of title 5, United States Code. The Advisory Commit-
tee shall not be required by the Secretary to reduce personnel to
meet agency personnel reduction goals.
(2) In carrying out its duties under the Act, the Advisory Com-
mittee shall consult with other Federal agencies, representatives of
State and local governments, and private organizations to the ex-
tent feasible.
(3)(A) The Advisory Committee is authorized to secure directly
from any executive department, bureau, agency, board, commis-
sion, office, independent establishment, or instrumentality informa-
tion, suggestions, estimates, and statistics for the purpose of this
section and each such department, bureau, agency, board, commis-
sion, office, independent establishment, or instrumentality is au-
thorized and directed, to the extent permitted by law, to furnish
such information, suggestions, estimates, and statistics directly to
the Advisory Committee, upon request made by the Chairman.
(B) The Advisory Committee may enter into contracts for the
acquisition of information, suggestions, estimates, and statistics for
the purpose of this section.
(4) The Advisory Committee is authorized to obtain the serv-
ices of experts and consultants without regard to section 3109 of
title 5, United States Code and to set pay in accordance with such
section.
(5) The head of each Federal agency shall, to the extent not
prohibited by law, cooperate with the Advisory Committee in carry-
ing out this section.
(6) The Advisory Committee is authorized to utilize, with their
consent, the services, personnel, information, and facilities of other
Federal, State, local, and private agencies with or without reim-
bursement.
(i) AVAILABILITY OF FUNDS.In each fiscal year not less than
$800,000, shall be available from the amount appropriated for each
such fiscal year from salaries and expenses of the Department for
the costs of carrying out the provisions of this section.
( j)
SPECIAL
ANALYSES
AND
ACTIVITIES.The
Advisory
Committee shall
(1) monitor and evaluate the modernization of student fi-
nancial aid systems and delivery processes, including the im-
plementation of a performance-based organization within the
Department, and report to Congress regarding such moderniza-
438
431
HIGHER EDUCATION ACT OF 1965
Sec. 492
tion on not less than an annual basis, including recommenda-
tions for improvement;
(2) assess the adequacy of current methods for disseminat-
ing information about programs under this title and rec-
ommend improvements, as appropriate, regarding early needs
assessment and information for first-year secondary school stu-
dents;
(3) assess and make recommendations concerning the fea-
sibility and degree of use of appropriate technology in the ap-
plication for, and delivery and management of, financial assist-
ance under this title, as well as policies that promote use of
such technology to reduce cost and enhance service and pro-
gram integrity, including electronic application and reapplica-
tion, just-in-time delivery of funds, reporting of disbursements
and reconciliation;
(4) assess the implications of distance education on student
eligibility and other requirements for financial assistance
under this title, and make recommendations that will enhance
access to postsecondary education through distance education
while maintaining access, through on-campus instruction at el-
igible institutions, and program integrity; and
(5) make recommendations to the Secretary regarding re-
dundant or outdated provisions of and regulations under this
Act, consistent with the Secretary's requirements under section
498B.
(k) TERM OF THE COMMITTEE. Notwithstanding the sunset
and charter provisions of the Federal Advisory Committee Act (5
U.S.C. App. I) or any other statute or regulation, the Advisory
Committee shall be authorized until October 1, 2004.
SEC. 492. [20 U.S.C. 1098a] REGIONAL MEETINGS AND NEGOTIATED
RULEMAKING.
(a) MEETINGS.
(1) IN GENERAL.The Secretary shall obtain public in-
volvement in the development of proposed regulations for this
title.' The Secretary shall obtain the advice of and rec-
ommendations from individuals and representatives of the
groups involved in student financial assistance programs under
this title, such as students, legal assistance organizations that
represent students, institutions of higher education, guaranty
agencies, lenders, secondary markets, loan servicers, guaranty
agency servicers, and collection agencies.
(2) ISSUES.The Secretary 2 shall provide for a comprehen-
sive discussion and exchange of information concerning the im-
plementation of this title, as amended by the Higher Education
Amendments of 1998 through such mechanisms as regional
meetings and electronic exchanges of information. The Sec-
retary shall take into account the information received through
such mechanisms in the development of proposed regulations
'Section 490D(aX1XB) of the Higher Education Amendments of 1998 (P.L. 105-244; 112 Stat.
1755) amended this paragraph by striking "parts B, G, and H of this title," and inserting "this
title; ". The amendment was executed to reflect the probable intent of Congress.
2Section 490D(aX2)(A) of P.L. 105-244 (112 Stat. 1755) purported to amend this paragraph
by striking "During such meetings the" although the prior statute read "During such meetings,
the". The amendment was executed to reflect the probable intent of Congress.
Sec. 492
HIGHER EDUCATION ACT OF 1965
432
and shall publish a summary of such information in the Fed-
eral Register together with such proposed regulations.
(b) DRAFT REGULATIONS.
(1) IN GENERAL.After obtaining the advice and rec-
ommendations described in subsection (a)(1) and before pub-
lishing proposed regulations in the Federal Register, the Sec-
retary shall prepare draft regulations implementing this title
as amended by the Higher Education Amendments of 1998 and
shall submit such regulations to a negotiated rulemaking proc-
ess. Participants in the negotiations process shall be chosen by
the Secretary from individuals nominated by groups described
in subsection (a)(1), and shall include both representatives of
such groups from Washington, D.C., and industry participants.
To the extent possible, the Secretary shall select individuals
reflecting the diversity in the industry, representing both large
and small participants, as well as individuals serving local
areas and national markets. The negotiation process shall be
conducted in a timely manner in order that the final regula-
tions may be issued by the Secretary within the 360-day period
described in section 437(e) of the General Education Provisions
Act.
(2) EXPANSION OF NEGOTIATED RULEMAKING.All regula-
tions pertaining to this title that are promulgated after the
date of enactment of this paragraph shall be subject to a nego-
tiated rulemaking (including the selection of the issues to be
negotiated), unless the Secretary determines that applying
such a requirement with respect to given regulations is imprac-
ticable, unnecessary, or contrary to the public interest (within
the meaning of section 553(b)(3)(B) of title 5, United. States
Code), and publishes the basis for such determination in the
Federal Register at the same time as the proposed regulations
in question are first published. All published proposed regula-
tions shall conform to agreements resulting from such nego-
tiated rulemaking unless the Secretary reopens the negotiated
rulemaking process or provides a written explanation to the
participants in that process why the Secretary has decided to
depart from such agreements. Such negotiated rulemaking
shall be conducted in accordance with the provisions of para-
graph (1), and the Secretary shall ensure that a clear and reli-
able record of agreements reached during the negotiations
process is maintained.
(C) APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT.
The Federal Advisory Committee Act shall not apply to activities
carried out under this section.
(d) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated in any fiscal year or made available from funds
appropriated to carry out this part in any fiscal year such sums as
may be necessary to carry out the provisions of this section, except
that if no funds are appropriated pursuant to this subsection, the
Secretary shall make funds available to carry out this section from
amounts appropriated for the operations and expenses of the De-
partment of Education.
433
HIGHER EDUCATION ACT OF 1965
Sec. 493A
SEC. 493. [20 U.S.C. 1098b] AUTHORIZATION OF APPROPRIATIONS FOR
ADMINISTRATIVE EXPENSES.
There are authorized to be appropriated such sums as may be
necessary for fiscal year 1993 and for each succeeding fiscal year
thereafter for administrative expenses necessary for carrying out
this title, including expenses for staff personnel, program reviews,
and compliance activities.
SEC. 493A. [20 U.S.C. 1098c] YEAR 2000 REQUIREMENTS AT THE DE-
PARTMENT.
(a) PREPARATIONS FOR YEAR 2000.In order to ensure that the
processing, delivery, and administration of grant, loan, and work
assistance provided under this title is not interrupted due to oper-
ational problems related to the inability of computer systems to in-
dicate accurately dates after December 31, 1999, the Secretary of
Education shall
(1) take such actions as are necessary to ensure that all in-
ternal and external systems, hardware, and data exchange in-
frastructure administered by the Department that are nec-
essary for the processing, delivery, and administration of the
grant, loan, and work assistance are Year 2000 compliant by
March 31, 1999, such that there will be no business interrup-
tion after December 31, 1999;
(2) ensure that the Robert T. Stafford Federal Student
Loan Program and the William D. Ford Federal Direct Loan
Program are equal in level of priority with respect to address-
ing, and that resources are managed to equally provide for suc-
cessful resolution of, the Year 2000 computer problem in both
programs by December 31, 1999;
(3) work with the Department's various data exchange
partners under this title to fully test all data exchange routes
for Year 2000 compliance via end-to-end testing, and submit a
report describing the parameters and results of such tests to
the Comptroller General not later than March 31, 1999;
(4) ensure that the Inspector General of the Department
(or an external, independent entity selected by the Inspector
General) performs and publishes a risk assessment of the sys-
tems and hardware under the Department's management, that
has been reviewed by an independent entity, and make such
assessment publicly available not later than 60 days after the
date of enactment of the Higher Education Amendments of
1998;
(5) not later than June 30, 1999, ensure that the Inspector
General (or an external, independent entity selected by the In-
spector General) conducts a review of the Department's Year
2000 compliance for the processing, delivery, and administra-
tion of grant, loan, and work assistance, and submits a report
reflecting the results of that review to the Chairperson of the
Committee on Labor and Human Resources of the Senate and
the Chairperson of the Committee on Education and the Work-
force of the House of Representatives;
(6) develop a contingency plan to ensure the programs
under this title will continue to run uninterrupted in the event
of widespread disruptions in the flow of accurate computerized
data, which contingency plan shall include a prioritization of
441
Sec. 493A
HIGHER EDUCATION ACT OF 1965
434
mission critical systems and strategies to allow data partners
to transfer data through alternate means; and
(7) alert Congress at the earliest possible time if mission
critical deadlines will not be met.
(b) POSTPONEMENT AUTHORITY FOR THE YEAR 2000.
(1) PURPOSE.It is the purpose of this subsection to
provide the Secretary with the flexibility necessary to
(A) ensure that the resources and capabilities of insti-
tutions, lenders, and guaranty agencies are not overbur-
dened by the combination of student aid processing and
delivery requirements added or modified by the amend-
ments made by the Higher Education Amendments of 1998
and by the changes required to ensure that the systems of
the institutions, lenders and guaranty agencies are Year
2000 compliant; and
(B) avoid the disruption of grant, loan, or work assist-
ance funds awarded to students because of Year 2000 com-
pliance problems at a substantial number of institutions,
lenders, and guaranty agencies.
(2) AUTHORITY TO POSTPONE.The Secretary may post-
pone, for a period of time described in paragraph (3), the im-
plementation of any requirements under part B, D, E, or G
that are added or modified by the amendments made by the
Higher Education Amendments of 1998 related to the process-
ing or delivery of grant, loan, and work assistance (which shall
not include the determination of need for such assistance) pro-
vided under this title, if the Secretary
(A) determines that
(i) implementation of such requirements would re-
quire extensive changes to the existing systems of in-
stitutions, lenders, or guaranty agencies; and
(ii) postponement is necessary to avoid jeopardiz-
ing the ability of a substantial number of institutions,
lenders, or guaranty agencies to ensure that all of the
systems of the institutions, lenders, or guaranty agen-
cies related to the processing or delivery of such as-
sistance function successfully after December 31, 1999;
and
(B) promptly publishes in the Federal Register a list
of, and notifies Congress of, any provisions, the implemen-
tation of which the Secretary intends to postpone, with the
reasons for such postponement.
(3) EXCEPTIONS TO AUTHORITY.The Secretary may not
postpone the implementation of one or more provisions de-
scribed in this subsection longer than the earlier of
(A) the period of time that the Secretary determines
necessary to ensure that the processing and delivery sys-
tems of the institutions, lenders, and guaranty agencies re-
ferred to in paragraph (1)(A)(ii) are capable of functioning
successfully after December 31, 1999; or.
(B) one award year after the effective date applicable
to such provision under the Higher Education Amend-
ments of 1998.
442
435
HIGHER EDUCATION ACT OF 1965
Sec. 493A
SEC. 493B. [20 U.S.C. 1098d] PROCEDURES FOR CANCELLATIONS AND
DEFERMENTS FOR ELIGIBLE DISABLED VETERANS.
The Secretary, in consultation with the Secretary of Veterans
Affairs, shall develop and implement a procedure to permit Depart-
ment of Veterans Affairs physicians to provide the certifications
and affidavits needed to enable disabled veterans enrolled in the
Department of Veterans Affairs health care system to document
such veterans' eligibility for deferments or cancellations of student
loans made, insured, or guaranteed under this title. Not later than
6 months after the date of enactment of the Higher Education
Amendments of 1998, the Secretary and the Secretary of Veterans
Affairs jointly shall report to Congress on the progress made in de-
veloping and implementing the procedure.
PART H PROGRAM INTEGRITY
Subpart 1 State Role
SEC. 495. [20 U.S.C. 1099a1 STATE RESPONSIBILITIES.
(a) STATE RESPONSIBILITIES.As part of the integrity program
authorized by this part, each State, through one State agency or
several State agencies selected by the State, shall
(1) furnish the Secretary, upon request, information with
respect to the process for licensing or other authorization for
institutions of higher education to operate within the State;
(2) notify the Secretary promptly whenever the State re-
vokes a license or other authority to operate an institution of
higher education; and
(3) notify the Secretary promptly whenever the State has
credible evidence that an institution of higher education within
the State
(A) has committed fraud in the administration of the
student assistance programs authorized by this title; or
(B) has substantially violated a provision of this title.
(b) INSTITUTIONAL RESPONSIBILITY.Each institution of higher
education shall provide evidence to the Secretary that the institu-
tion has authority to operate within a State at the time the institu-
tion is certified under subpart 3.
Subpart 2Accrediting Agency Recognition
SEC. 496. [20 U.S.C. 1099b1 RECOGNITION OF ACCREDITING AGENCY
OR ASSOCIATION.
(a) CRITERIA REQUIRED.No accrediting agency or association
may be determined by the Secretary to be a reliable authority as
to the quality of education or training offered for the purposes of
this Act or for other Federal purposes, unless the agency or asso-
ciation meets criteria established by the Secretary pursuant to this
section. The Secretary shall, after notice and opportunity for a
hearing, establish criteria for such determinations. Such criteria
shall include an appropriate measure or measures of student
achievement. Such criteria shall require that-
44 3
Sec. 496
HIGHER EDUCATION ACT OF 1965
436
(1) the accrediting agency or association shall be a State,
regional, or national agency or association and shall dem-
onstrate the ability and the experience to operate as an accred-
iting agency or association within the State, region, or nation-
ally, as appropriate;
(2) such agency or association
(A)(i) for the purpose of participation in programs
under this Act, has a voluntary membership of institutions
of higher education and has as a principal purpose the ac-
crediting of institutions of higher education; or
(ii) for the purpose of participation in other programs
administered by the Department of Education or other
Federal agencies, has a voluntary membership and has as
its principal purpose the accrediting of institutions of high-
er education or programs;
(B) is a State agency approved by the Secretary for the
purpose described in subparagraph (A); or
(C) is an agency or association that, for the purpose of
determining eligibility for student assistance under this
title, conducts accreditation through (i) a voluntary mem-
bership organization of individuals participating in a pro-
fession, or (ii) an agency or association which has as its
principal purpose the accreditation of programs within in-
stitutions, which institutions are accredited by another
agency or association recognized by the Secretary;
(3) if such agency or association is an agency or association
described in
(A) subparagraph (A)(i) of paragraph (2), then such
agency or association is separate and independent, both
administratively and financially of any related, associated,
or affiliated trade association or membership organization;
(B) subparagraph (B) of paragraph (2), then such
agency or association has been recognized by the Secretary
on or before October 1, 1991; or
(C) subparagraph (C) of paragraph (2) and such agen-
cy or association has been recognized by the Secretary on
or before October 1, 1991, then the Secretary may waive
the requirement that such agency or association is sepa-
rate and independent, both administratively and finan-
cially of any related, associated, or affiliated trade associa-
tion or membership organization upon a demonstration
that the existing relationship has not served to com-
promise the independence of its accreditation process;
(4) such agency or association consistently applies and en-
forces standards that ensure that the courses or programs of
instruction, training, or study offered by the institution of
higher education, including distance education courses or pro-
grams, are of sufficient quality to achieve, for the duration of
the accreditation period, the stated objective for which the
courses or the programs are offered;
(5) the standards for accreditation of the agency or associa-
tion assess the institution's
(A) success with respect to student achievement in re-
lation to the institution's mission, including, as appro-
437
HIGHER EDUCATION ACT OF 1965
Sec. 496
priate, consideration of course completion, State licensing
examinations, and job placement rates;
(B) curricula;
(C) faculty;
(D) facilities, equipment, and supplies;
(E) fiscal and administrative capacity as appropriate
to the specified scale of operations;
(F) student support services;
(G) recruiting and admissions practices, academic cal-
endars, catalogs, publications, grading and advertising;
(H) measures of program length and the objectives of
the degrees or credentials offered;
(I) record of student complaints received by, or avail-
able to, the agency or association; and
(J) record of compliance with its program responsibil-
ities under title IV of this Act based on the most recent
student loan default rate data provided by the Secretary,
the results of financial or compliance audits, program re-
views, and any such other information as the Secretary
may provide to the agency or association;
except that subparagraphs (A), (H), and (J) shall not apply to
agencies or associations described in paragraph (2)(A)(ii) of this
subsection;
(6) such agency or association shall apply procedures
throughout the accrediting process, including evaluation and
withdrawal
proceedings,
that comply with due
process,
including
(A) adequate specification of requirements and defi-
ciencies at the institution of higher education or program
being examined;
(B) notice of an opportunity for a hearing by any such
institution;
(C) the right to appeal any adverse action against any
such institution; and
(D) the right to representation by counsel for any such
institution;
(7) such agency or association shall notify the Secretary
and the appropriate State licensing or authorizing agency
within 30 days of the accreditation of an institution or any
final denial, withdrawal, suspension, or termination of accredi-
tation or placement on probation of an institution, together
with any other adverse action taken with respect to an institu-
tion; and
(8) such agency or association shall make available to the
public, upon request, and to the Secretary, and the State li-
censing or authorizing agency a summary of any review result-
ing in a final accrediting decision involving denial, termination,
or suspension of accreditation, together with the comments of
the affected institution.
(b) SEPARATE AND INDEPENDENT DEFINED.For the purpose of
subsection (a)(3), the term "separate and independent" means
that
(1) the members of the postsecondary education governing
body of the accrediting agency or association are not elected or
4 j
Sec. 496
HIGHER EDUCATION ACT OF 1965
438
selected by the board or chief executive officer of any related,
associated, or affiliated trade association or membership orga-
nization;
(2) among the membership of the board of the accrediting
agency or association there shall be one public member (who
is not a member of any related trade or membership organiza-
tion) for each six members of the board, with a minimum of
one such public member, and guidelines are established for
such members to avoid conflicts of interest;
(3) dues to the accrediting agency or association are paid
separately from any dues paid to any related, associated, or af-
filiated trade association or membership organization; and
(4) the budget of, the accrediting agency or association is
developed and determined by the accrediting agency or associa-
tion without review or resort to consultation with any other en-
tity or organization.
(c) OPERATING PROCEDURES REQUIRED.No accrediting agency
or association may be recognized by the Secretary as a reliable au-
thority as to the quality of education or training offered by an insti-
tution seeking to participate in the programs authorized under this
title, unless the agency or association
(1) performs, at regularly established intervals, on-site in-
spections and reviews of institutions of higher education
(which may include unannounced site visits) with particular
focus on educational quality and program effectiveness, and en-
sures that accreditation team members are well-trained and
knowledgeable with respect to their responsibilities;
(2) requires that any institution of higher education sub-
ject to its jurisdiction which plans to establish a branch cam-
pus submit a business plan, including projected revenues and
expenditures, prior to opening the branch campus;
(3) agrees to conduct, as soon as practicable, but within a
period of not more than 6 months of the establishment of a
new branch campus or a change of ownership of an institution
of higher education, an on-site visit of that branch campus or
of the institution after a change of ownership;
(4) requires that teach-out agreements among institutions
are subject to approval by the accrediting agency or association
consistent with standards promulgated by such agency or asso-
ciation;
(5) maintains and makes publicly available written mate-
rials regarding standards and procedures for accreditation, ap-
peal procedures, and the accreditation status of each institu-
tion subject to its jurisdiction; and
(6) discloses publicly whenever an institution of higher
education subject to its jurisdiction is being considered for ac-
creditation or reaccreditation.
(d) LENGTH OF RECOGNITION.No accrediting agency or asso-
ciation may be recognized by the Secretary for the purpose of this
Act for a period of more than 5 years.
(e) INITIAL ARBITRATION RULE. The Secretary may not recog-
nize the accreditation of any institution of higher education unless
the institution of higher education agrees to submit any dispute in-
439
HIGHER EDUCATION ACT OF 1965
Sec. 496
volving the final denial, withdrawal, or termination of accreditation
to initial arbitration prior to any other' egal action.
(f) JURISDICTION.Notwithstanding any other provision of law,
any civil action brought by an institution of higher education seek-
ing accreditation from, or accredited by, an accrediting agency or
association recognized by the Secretary for the purpose of this title
and involving the denial, withdrawal, or termination of accredita-
tion of the institution of higher education, shall be brought in the
appropriate United States district court.
(g) LIMITATION ON SCOPE OF CRITERIA.Nothing in this Act
shall be construed to permit the Secretary to establish criteria for
accrediting agencies or associations that are not required by this
section. Nothing in this Act shall be construed to prohibit or limit
any accrediting agency or association from adopting additional
standards not provided for in this section.
(h) CHANGE OF ACCREDITING AGENCY.The Secretary shall not
recognize the accreditation of any otherwise eligible institution of
higher education if the institution of higher education is in the
process of changing its accrediting agency or association, unless the
eligible institution submits to the Secretary all materials relating
to the prior accreditation, including materials demonstrating rea-
sonable cause for changing the accrediting agency or association.
(i) DUAL ACCREDITATION RULE.The Secretary shall not recog-
nize the accreditation of any otherwise eligible institution of higher
education if the institution of higher education is accredited, as an
institution, by more than one accrediting agency or association, un-
less the institution submits to each such agency and association
and to the Secretary the reasons for accreditation by more than one
such agency or association and demonstrates to the Secretary rea-
sonable cause for its accreditation by more than one agency or as-
sociation. If the institution is accredited, as an institution, by more
than one accrediting agency or association, the institution shall
designate which agency's accreditation shall be utilized in deter-
mining the institution's eligibility for programs under this Act.
(j) IMPACT OF LOSS OF ACCREDITATION.An institution may
not be certified or recertified as an institution of higher education
under section 102 and subpart 3 of this part or participate in any
of the other programs authorized by this Act if such institution
(1) is not currently accredited by any agency or association
recognized by the Secretary;
(2) has had its accreditation withdrawn, revoked, or other-
wise terminated for cause during the preceding 24 months, un-
less such withdrawal, revocation, or termination has been re-
scinded by the same accrediting agency; or
(3) has withdrawn from accreditation voluntarily under a
show cause or suspension order during the preceding 24
months, unless such order has been rescinded by the same ac-
crediting agency.
(k) RELIGIOUS INSTITUTION RULE.Notwithstanding subsection
(j), the Secretary shall allow an institution that has had its accredi-
tation withdrawn, revoked, or otherwise terminated, or has volun-
tarily withdrawn from an accreditation agency, to remain certified
as an institution of higher education under section 102 and subpart
3 of this part for a period sufficient to allow such institution to ob-
447
Sec. 496
HIGHER EDUCATION ACT OF 1965
440
tain alternative accreditation, if the Secretary determines that the
reason for the withdrawal, revocation, or termination
(1) is related to the religious mission or affiliation of the
institution; and
(2) is not related to the accreditation criteria provided for
in this section.
(1) LIMITATION, SUSPENSION, OR TERMINATION OF RECOGNI-
TION.(1) If the Secretary determines that an accrediting agency
or association has failed to apply effectively the criteria in this sec-
tion, or is otherwise not in compliance with the requirements of
this section, the Secretary shall
(A) after notice and opportunity for a hearing, limit, sus-
pend, or terminate the recognition of the agency or association;
or
(B) require the agency or association to take appropriate
action to bring the agency or association into compliance with
such requirements within a timeframe specified by the Sec-
retary, except that
(i) such timeframe shall not exceed 12 months unless
the Secretary extends such period for good cause; and
(ii) if the agency or association fails to bring the agen-
cy or association into compliance within such timeframe,
the Secretary shall, after notice and opportunity for a
hearing, limit, suspend, or terminate the recognition of the
agency or association.
(2) The Secretary may determine that an accrediting agency or
association has failed to apply effectively the standards provided in
this section if an institution of higher education seeks and receives
accreditation from the accrediting agency or association during any
period in which the institution is the subject of any interim action
by another accrediting agency or association, described in para-
graph (2)(A)(i), (2)(B), or (2)(C) of subsection (a) of this section,
leading to the suspension, revocation, or termination of accredita-
tion or the institution has been notified of the threatened loss of
accreditation, and the due process procedures required by such sus-
pension, revocation, termination, or threatened loss have not been
completed.
(m) LIMITATION ON THE SECRETARY'S AUTHORITY.The Sec-
retary may only recognize accrediting agencies . or associations
which accredit institutions of higher education for the purpose of
enabling such institutions to establish eligibility to participate in
the programs under this Act or which accredit institutions of high-
er education or higher education programs for the purpose of ena-
bling them to establish eligibility to participate in other programs
administered by the Department of Education or other Federal
agencies.
(n) INDEPENDENT EVALUATION.(1) The Secretary shall con-
duct a comprehensive review and evaluation of the performance of
all accrediting agencies or associations which seek recognition by
the Secretary in order to determine whether such accrediting agen-
cies or associations meet the criteria established by this section.
The Secretary shall conduct an independent evaluation of the infor-
mation provided by such agency or association. Such evaluation
shall include-
448
441
HIGHER EDUCATION ACT OF 1965
Sec. 498
(A) the solicitation of third-party information concerning
the performance of the accrediting agency or association; and
(B) site visits, including unannounced site
as appro-
priate, at accrediting agencies and associations, and, at the
Secretary's discretion, at representative member institutions.
(2) The Secretary shall place a priority for review of accrediting
agencies or associations on those agencies or associations that ac-
credit institutions of higher education that participate most exten-
sively in the programs authorized by this title and on those agen-
cies or associations which have been the subject of the most com-
plaints or legal actions.
(3) The Secretary shall consider all available relevant informa-
tion concerning the compliance of the accrediting agency or associa-
tion with the criteria provided for in this section, including any
complaints or legal actions against such agency or association. In
cases where deficiencies in the performance of an accreditation
agency or association with respect to the requirements of this sec-
tion are noted, the Secretary shall take these deficiencies into ac-
count in the recognition process. The Secretary shall not, under
any circumstances, base decisions on the recognition or denial of
recognition of accreditation agencies or associations on criteria
other than those contained in this section. When the Secretary de-
cides to recognize an accrediting agency or association, the Sec-
retary shall determine the agency or association's scope of recogni-
tion. If the agency or association reviews institutions offering dis-
tance education courses or programs and the Secretary determines
that the agency or association meets the requirements of this sec-
tion, then the agency shall be recognized and the scope of recogni-
tion shall include accreditation of institutions offering distance edu-
cation courses or programs.
(4) The Secretary shall maintain sufficient documentation to
support the conclusions reached in the recognition process, and, if
the Secretary does not recognize any accreditation agency or asso-
ciation, shall make publicly available the reason for denying rec-
ognition, including reference to the specific criteria under this sec-
tion which have not been fulfilled.
(o) REGULATIONS.The Secretary shall by regulation provide
procedures for the recognition of accrediting agencies or associa-
tions and for the appeal of the Secretary's decisions.
Subpart 3Eligibility and Certification
Procedures
SEC. 498. [20 U.S.C. 1099c] ELIGIBILITY AND CERTIFICATION PROCE-
DURES.
(a) GENERAL REQUIREMENT.For purposes of qualifying insti-
tutions of higher education for participation in programs under this
title, the Secretary shall determine the legal authority to operate
within a State, the accreditation status, and the administrative ca-
pability and financial responsibility of an institution of higher edu-
cation in accordance with the requirements of this section.
(b) SINGLE APPLICATION FORM.The Secretary shall prepare
and prescribe a single application form which-
449
54-653 99 - 15
Sec. 498
HIGHER EDUCATION ACT OF 1965
442
(1) requires sufficient information and documentation to
determine that the requirements of eligibility, accreditation, fi-
nancial responsibility, and administrative capability of the in-
stitution of higher education are met;
(2) requires a specific description of the relationship be-
tween a main campus of an institution of higher education and
all of its branches, including a description of the student aid
processing that is performed by the main campus and that
which is performed at its branches;
(3) requires
(A) a description of the third party servicers of an in-
stitution of higher education; and
(B) the institution to maintain a copy of any contract
with a financial aid service provider or loan servicer, and
provide a copy of any such contract to the Secretary upon
request;
(4) requires such other information as the Secretary deter-
mines will ensure compliance with the requirements of this
title with respect to eligibility, accreditation, administrative ca-
pability and financial responsibility; and
(5) provides, at the option of the institution, for participa-
tion in one or more of the programs under part B or D.
(c) FINANCIAL RESPONSIBILITY STANDARDS.(1) The Secretary
shall determine whether an institution has the financial respon-
sibility required by this title on the basis of whether the institution
is able
(A) to provide the services described in its official publica-
tions and statements;
(B) to provide the administrative resources necessary to
comply with the requirements of this title; and
(C) to meet all of its financial obligations, including (but
not limited to) refunds of institutional charges and repayments
to the Secretary for liabilities and debts incurred in programs
administered by the Secretary.
(2) Notwithstanding paragraph (1), if an institution fails to
meet criteria prescribed by the Secretary regarding ratios that
demonstrate financial responsibility, then the institution shall pro-
vide the Secretary with satisfactory evidence of its financial respon-
sibility in accordance with paragraph (3). Such criteria shall take
into account any differences in generally accepted accounting prin-
ciples, and the financial statements required thereunder, that are
applicable to for profit 1, public, and nonprofit institutions. The Sec-
retary shall take into account an institution's total financial cir-
cumstances in making a determination of its ability to meet the
standards herein required.
(3) The Secretary shall determine an institution to be finan-
cially responsible, notwithstanding the institution's failure to meet
the criteria under paragraphs (1) and (2), if
(A) such institution submits to the Secretary third-party fi-
nancial guarantees that the Secretary determines are reason-
able, such as performance bonds or letters of credit payable to
the Secretary, which third-party financial guarantees shall
iSo in law. Probably should be "for-profit".
?
443
HIGHER EDUCATION ACT OF 1965
Sec. 498
equal not less than one-half of the annual potential liabilities
of such institution to the Secretary for funds under this title,
including loan obligations discharged pursuant to section 437,
and to students for refunds of institutional charges, including
funds under this title;
(B) such institution has its liabilities backed by the full
faith and credit of a State, or its equivalent;
(C) such institution establishes to the satisfaction of the
Secretary, with the support of a financial statement audited by
an independent certified public accountant in accordance with
generally accepted auditing standards, that the institution has
sufficient resources to ensure against the precipitous closure of
the institution, including the ability to meet all of its financial
obligations (including refunds of institutional charges and re-
payments to the Secretary for liabilities and debts incurred in
programs administered by the Secretary); or
(D) such institution has met standards of financial respon-
sibility, prescribed by the Secretary by regulation, that indicate
a level of financial strength not less than those required in
paragraph (2).
(4) If an institution of higher education that provides a 2-year
or 4-year program of instruction for which the institution awards
an associate or baccalaureate degree fails to meet the criteria im-
posed by the Secretary pursuant to paragraph (2), the Secretary
shall waive that particular requirement for that institution if the
institution demonstrates to the satisfaction of the Secretary that
(A) there is no reasonable doubt as to its continued sol-
vency and ability to deliver quality educational services;
(B) it is current in its payment of all current liabilities, in-
cluding student refunds, repayments to the Secretary, payroll,
and payment of trade creditors and withholding taxes; and
(C) it has substantial equity in school-occupied facilities,
the acquisition of which was the direct cause of its failure to
meet the criteria.
(5) The determination as to whether an institution has met the
standards of financial responsibility provided for in paragraphs (2)
and (3)(C) shall be based on an audited and certified financial
statement of the institution. Such audit shall be conducted by a
qualified independent organization or person in accordance with
standards established by the American Institute of Certified Public
Accountants. Such statement shall be submitted to the Secretary at
the time such institution is considered for certification or recertifi-
cation under this section. If the institution is permitted to be cer-
tified (provisionally or otherwise) and such audit does not establish
compliance with paragraph (2), the Secretary may require that ad-
ditional audits be submitted.
(6)(A) The Secretary shall establish requirements for the main-
tenance by an institution of higher education of sufficient cash re-
serves to ensure repayment of any required refunds.
(B) The Secretary shall provide for a process under which the
Secretary shall exempt an institution of higher education from the
requirements described in subparagraph (A) if the Secretary deter-
mines that the institution-
451
Sec. 498
HIGHER EDUCATION ACT OF 1965
444
(i) is located in a State that has a tuition recovery fund
that ensures that the institution meets the requirements of
subparagraph (A);
(ii) contributes to the fund; and
(iii) otherwise has legal authority to operate within the
State.
(d) ADMINISTRATIVE CAPACITY STANDARD.The Secretary is
authorized
(1) to establish procedures and requirements relating to
the administrative capacities of institutions of higher edu-
cation, including
(A) consideration of past performance of institutions or
persons in control of such institutions with respect to stu-
dent aid programs; and
(B) maintenance of records; 1
(2) to establish such other reasonable procedures as the
Secretary determines will contribute to ensuring that the insti-
tution of higher education will comply with administrative ca-
pability required by this title.
(e) FINANCIAL GUARANTEES FROM OWNERS.(1) Notwithstand-
ing any other provision of law, the Secretary may, to the extent
necessary to protect the financial interest of the United States,
require
(A) financial guarantees from an institution participating,
or seeking to participate, in :a program under this title, or from
one or more individuals who the Secretary determines, in ac-
cordance with paragraph (2), exercise substantial control over
such institution, or both, in an amount determined by the Sec-
retary to be sufficient to satisfy the institution's potential li-
ability to the Federal Government, student assistance recipi-
ents, and other program participants for funds under this title;
and
(B) the assumption of personal liability, by one or more in-
dividuals who exercise substantial control over such institu-
tion, as determined by the Secretary in accordance with para-
graph (2), for financial losses to the Federal Government, stu-
dent assistance recipients, and other program participants for
funds under this title, and civil and criminal monetary pen-
alties authorized under this title.
(2XA) The Secretary may determine that an individual exer-
cises substantial control over one or more institutions participating
in a program under this title if the Secretary determines that
(i) the individual directly or indirectly controls a substan-
tial ownership interest in the institution;
(ii) the individual, either alone or together with other indi-
viduals, represents, under a voting trust, power of attorney,
proxy, or similar agreement, one or more persons who have, in-
dividually or in combination with the other persons rep-
resented or the individual representing them, a substantial
ownership interest in the institution; or
(iii) the individual is a member of the board of directors,
the chief executive officer, or other executive officer of the in-
So in law. Probably should end with "and".
4
445
HIGHER EDUCATION ACT OF 1965
Sec. 498
stitution or of an entity that holds a substantial ownership in-
terest in the institution.
(B) The Secretary may determine that an entity exercises sub-
stantial control over one or more institutions participating in a pro-
gram under this title if the Secretary determines that the entity di-
rectly or indirectly holds a substantial ownership interest in the in-
stitution.
(3) For purposes of this subsection, an ownership interest is de-
fined as a share of the legal or beneficial ownership or control of,
or a right to share in the proceeds of the operation of, an institu-
tion or institution's parent corporation. An ownership interest may
include, but is not limited to
(A) a sole proprietorship;
(B) an interest as a tenant-in-common, joint tenant, or ten-
ant by the entireties;
(C) a partnership; or
(D) an interest in a trust.
(4) The Secretary shall not impose the requirements described
in subparagraphs (A) and (B) of paragraph (1) on an institution
that
(A) has not been subjected to a limitation, suspension, or
termination action by the Secretary or a guaranty agency with-
in the preceding 5 years;
(B) has not had, during its 2 most recent audits of the in-
stitutions conduct of programs under this title, an audit find-
ing that resulted in the institution being required to repay an
amount greater than 5 percent of the funds the institution re-
ceived from programs under this title for any year;
(C) meets and has met, for the preceding 5 years, the fi-
nancial responsibility standards under subsection (c); and
(D) has not been cited during the preceding 5 years for
failure to submit audits required under this title in a timely
fashion.
(5) For purposes of section 487(c)(1)(G), this section shall also
apply to individuals or organizations that contract with an institu-
tion to administer any aspect of an institution's student assistance
program under this title.
(6) Notwithstanding any other provision of law, any individual
who
(A) the Secretary determines, in accordance with para-
graph (2), exercises substantial control over an institution par-
ticipating in, or seeking to participate in, a program under this
title;
(B) is required to pay, on behalf of a student or borrower,
a refund of unearned institutional charges to a lender, or to
the Secretary; and
(C) willfully fails to pay such refund or willfully attempts
in any manner to evade payment of such refund,
shall, in addition to other penalties provided by law, be liable to
the Secretary for the amount of the refund not paid, to the same
extent with respect to such refund that such an individual would
be liable as a responsible person for a penalty under section
Sec. 498
HIGHER EDUCATION ACT OF 1965
446
6672(a) of Internal Revenue Code of 1986 with respect to the non-
payment of taxes. 1
(f) ACTIONS ON APPLICATIONS AND SITE VISITS.The Secretary
shall ensure that prompt action is taken by the Department on any
application required under subsection (b). The personnel of the De-
partment of Education may conduct a site visit at each institution
before certifying or recertifying its eligibility for purposes of any
program under this title. The Secretary shall establish priorities by
which institutions are to receive site visits, and shall, to the extent
practicable, coordinate such visits with site visits by States, guar-
anty agencies, and accrediting bodies in order to eliminate duplica-
tion, and reduce administrative burden.
(g) TIME LIMITATIONS ON, AND RENEWAL OF, ELIGIBILITY.
(1) GENERAL RULE.After the expiration of the certifi-
cation of any institution under the schedule prescribed under
this section (as this section was in effect prior to the enactment
of the Higher Education Act Amendments of 1998), or upon re-
quest for initial certification from an institution not previously
certified, the Secretary may certify the eligibility for the pur-
poses of any program authorized under this title of each such
institution for a period not to exceed 6 years.
(2) NOTIFICATION.The Secretary shall notify each institu-
tion of higher education not later than 6 months prior to the
date of the expiration of the institution's certification.
(3)
INSTITUTIONS
OUTSIDE THE UNITED STATES.The
Secretary shall promulgate regulations regarding the recertifi-
cation requirements applicable to an institution of higher edu-
cation outside of the United States that meets the require-
ments of section 102(a)(1)(C) and received less than $500,000
in funds under part B for the most recent year for which data
are available.
(h)
PROVISIONAL CERTIFICATION
OF INSTITUTIONAL ELIGI-
BILITY.(1) Notwithstanding subsections (d) and (g), the Secretary
may provisionally certify an institution's eligibility to participate in
programs under this title
(A) for not more than one complete award year in the case
of an institution of higher education seeking an initial certifi-
cation; and
(B) for not more than 3 complete award years if
(i) the institution's administrative capability and fi-
nancial responsibility is being determined for the first
time;
(ii) there is a complete or partial change of ownership,
as defined under subsection (i), of an eligible institution; or
(iii) the Secretary determines that an institution that
seeks to renew its certification is, in the judgment of the
Secretary, in an administrative or financial condition that
may jeopardize its ability to perform its financial respon-
sibilities under a program participation agreement.
Section 493(cX2) of the Higher Education Amendments of 1998 provided that the amendment
adding paragraph (6) was effective with respect to any unpaid refunds that were first required
to be paid to a lender or to the Secretary on or after 90 days after the date of enactment of
that Act.
441
HIGHER EDUCATION ACT OF 1965
Sec. 498
(2) Whenever the Secretary withdraws the recognition of any
accrediting agency, an institution of higher education which meets
the requirements of accreditation, eligibility, and certification on
the day prior to such withdrawal, the Secretary may, notwithstand-
ing the withdrawal, continue the eligibility of the institution of
higher education to participate in the programs authorized by this
title for a period not to exceed 18 months from the date of the with-
drawal of recognition.
(3) If, prior to the end of a period of provisional certification
under this subsection, the Secretary determines that the institution
is unable to meet its responsibilities under its program participa-
tion agreement, the Secretary may terminate the institution's par-
ticipation in programs under this title.
(i) TREATMENT OF CHANGES OF OWNERSHIP.-(1) An eligible in-
stitution of higher education that has had a change in ownership
resulting in a change of control shall not qualify to participate in
programs under this title after the change in control (except as pro-
vided in paragraph (3)) unless it establishes that it meets the re-
quirements of section 102 (other than the requirements in sub-
sections (b)(5) and (c)(3)) and this section after such change in con-
trol.
(2) An action resulting in a change in control may include (but
is not limited to)
(A) the sale of the institution or the majority of its assets;
(B) the transfer of the controlling interest of stock of the
institution or its parent corporation;
(C) the merger of two or more eligible institutions;
(D) the division of one or more institutions into two or
more institutions;
(E) the transfer of the controlling interest of stock of the
institutions to its parent corporation; or
(F) the transfer of the liabilities of the institution to its
parent corporation.
(3) An action that may be treated as not resulting in a change
in control includes (but is not limited to)
(A) the sale or transfer, upon the death of an owner of an
institution, of the ownership interest of the deceased in that in-
stitution to a family member or to a person holding an owner-
ship interest in that institution; or
(B) another action determined by the Secretary to be a
routine business practice.
(4)(A) The Secretary may provisionally certify an institution
seeking approval of a change in ownership based on the prelimi-
nary review by the Secretary of a materially complete application
that is received by the Secretary within 10 business days of the
transaction for which the approval is sought.
(B) A provisional certification under this paragraph shall ex-
pire not later than the end of the month following the month in
which the transaction occurred, except-that if the Secretary has not
issued a decision - on the application for the change of ownership
within that period, the Secretary ~may continue such provisional
certification_ on a month-to-month basis until such decision has
been issued.
455
Sec. 498A
HIGHER EDUCATION ACT OF 1965
448
(j) TREATMENT OF BRANCHES.-(1) A branch of an eligible insti-
tution of higher education, as defined pursuant to regulations of
the Secretary, shall be certified under this subpart before it may
participate as part of such institution in a program under this title,
except that such branch shall not be required to meet the require-
ments of sections 102(b)(1)(E) and 102(c)(1)(C) prior to seeking such
certification. Such branch is required to be in existence at least 2
years after the branch is certified by the Secretary as a branch
campus participating in a program under this title, prior to seeking
certification as a main campus or free-standing institution.
(2) The Secretary may waive the requirement of section
101(a)(2) for a branch that (A) is not located in a State, (B) is affili-
ated with an eligible institution, and (C) was participating in one
or more programs under this title on or before January 1, 1992.
SEC. 498A. [20 U.S.C. 1099c-1] PROGRAM REVIEW AND DATA.
(a) GENERAL AUTHORITY. In order to strengthen the adminis-
trative capability and financial responsibility provisions of this
title, the Secretary
(1) shall provide for the conduct of program reviews on a
systematic basis designed to include all institutions of higher
education participating in programs authorized by this title;
(2) shall give priority for program review to institutions of
higher education that are
(A) institutions with a cohort default rate for loans
under part B of this title in excess of 25 percent or which
places such institutions in the highest 25 percent of such
institutions;
(B) institutions with a default rate in dollar volume for
loans under part B of this title which places the institu-
tions in the highest 25 percent of such institutions;
(C) institutions with a significant fluctuation in Fed-
eral Stafford Loan volume, Federal Direct Stafford/Ford
Loan volume, or Federal Pell Grant award volume, or any
combination thereof, in the year for which the determina-
tion is made, compared to the year prior to such year, that
are not accounted for by changes in the Federal Stafford
Loan program, the Federal Direct Stafford/Ford Loan pro-
gram, or the Pell Grant program, or any combination
thereof;
(D) institutions reported to have deficiencies or finan-
cial aid problems by the State licensing or authorizing
agency, or by the appropriate accrediting agency or asso-
ciation;
(E) institutions with high annual dropout rates; and
(F) such other institutions that the Secretary deter-
mines may pose a significant risk of failure to comply with
the administrative capability or financial responsibility
provisions of this title; and
(3) shall establish and operate a central data base of infor-
mation on institutional accreditation, eligibility, and certifi-
cation that includes
(A) all relevant information available to the Depart-
ment;
449
HIGHER EDUCATION ACT OF 1965
Sec. 498A
(B) all relevant information made available by the Sec-
retary of Veterans Affairs;
(C) all relevant information from accrediting agencies
or associations;
(D) all relevant information available from a guaranty
agency; and
(E) all relevant information available from States
under subpart 1.
(b) SPECIAL ADMINISTRATIVE RULES.In carrying out para-
graphs (1) and (2) of subsection (a) and any other relevant provi-
sions of this title, the Secretary shall
(1) establish guidelines designed to ensure uniformity of
practice in the conduct of program reviews of institutions of
higher education;
(2) make available to each institution participating in pro-
grams authorized under this title complete copies of all review
guidelines and procedures used in program reviews;
(3) permit the institution to correct or cure an administra-
tive, accounting, or recordkeeping error if the error is not part
of a pattern of error and there is no evidence of fraud or mis-
conduct related to the error;
(4) base any civil penalty assessed against an institution
of higher education resulting from a program review or audit
on the gravity of the violation, failure, or misrepresentation;
and
(5) inform the appropriate State and accrediting agency or
association whenever the Secretary takes action against an in-
stitution of higher education under this section, section 498, or
section 432.
(c) DATA COLLECTION RULES.The Secretary shall develop and
carry out a plan for the data collection responsibilities described in
paragraph (3) of subsection (a). The Secretary shall make the infor-
mation obtained under such paragraph (3) readily available to all
institutions of higher education, guaranty agencies, States, and
other organizations participating in the programs authorized by
this title.
(d) TRAINING.The Secretary shall provide training to person-
nel of the Department, including criminal investigative training,
designed to improve the quality of financial and compliance audits
and program reviews conducted under this title.
(e) SPECIAL RULE.The provisions of section 103(b) of the De-
partment of Education Organization Act shall not apply to Sec-
retarial determinations made regarding the appropriate length of
instruction for programs measured in clock hours.
SEC. 498B. [20 U.S.C. 1099c-2] REVIEW OF REGULATIONS.
(a) REVIEW REQUIRED.The Secretary shall review each regu-
lation issued under this title that is in effect at the time of the re -.
view and applies to the operations or activities of any participant
in the programs assisted under this title. The review shall include
a determination of whether the regulation is duplicative, or is no
longer necessary. The review may involve one or more of the follow-
ing:
457
Sec. 498B
HIGHER EDUCATION ACT OF 1965
450
(1) An assurance of the uniformity of interpretation and
application of such regulations.
(2) The establishment of a process for ensuring that eligi-
bility and compliance issues, such as institutional audit, pro-
gram review, and recertification, are considered simulta-
neously.
(3) A determination of the extent to which unnecessary
costs are imposed on institutions of higher education as a con-
sequence of the applicability to the facilities and equipment of
such institutions of regulations prescribed for purposes of regu-
lating industrial and commercial enterprises.
(b) REGULATORY AND STATUTORY RELIEF FOR SMALL VOLUME
INSTITUTIONS.The Secretary shall review and evaluate ways in
which regulations under and provisions of this Act affecting institu-
tion of higher education (other than institutions described in sec-
tion 102(a)(1)(C)), that have received in each of the two most recent
award years prior to the date of the enactment of the Higher Edu-
cation Amendments of 1998 less than $200,000 in funds through
this title, may be improved, streamlined, or eliminated.
(c) CONSULTATION.In carrying out subsections (a) and (b), the
Secretary shall consult with relevant representatives of institutions
participating in the programs authorized by this title.
(d) REPORTS TO CONGRESS.
(1) IN GENERAL. The Secretary shall submit, not later
than 1 year after the date of the enactment of the Higher Edu-
cation Amendments of 1998, a report to the Committee on
Labor and Human Resources of the Senate and the Committee
on Education and the Workforce of the House of Representa-
tives detailing the Secretary's findings and recommendations
based on the reviews conducted under subsections (a) and (b),
including a timetable for implementation of any recommended
changes in regulations and a description of any recommenda-
tions for legislative changes.
(2) ADDITIONAL REPORTS.Not later than January 1, 2003,
the Secretary shall submit a report to the Committee on Labor
and Human Resources of the Senate and the Committee on
Education and the Workforce of the House of Representatives
detailing the Secretary's findings and recommendations based
on the review conducted .under subsection (a), including a time-
table for implementation of any recommended changes in regu-
lations and a description of any recommendations for legisla-
tive changes.
TITLE V-DEVELOPING INSTITUTIONS
PART A-HISPANIC-SERVING INSTITUTIONS
SEC. 501. [20 U.S.C. 1101] FINDINGS; PURPOSE; AND PROGRAM AU-
THORITY.
(a) FINDINGS.Congress makes the following findings:
(1) Hispanic Americans are at high risk of not enrolling or
graduating from institutions of higher education.
458
451
HIGHER EDUCATION ACT OF 1965
Sec. 502
(2) Disparities between the enrollment of non-Hispanic
white students and Hispanic students in postsecondary edu-
cation are increasing. Between 1973 and 1994, enrollment of
white secondary school graduates in 4-year institutions of high-
er education increased at a rate two times higher than that of
Hispanic secondary school graduates.
(3) Despite significant limitations in resources, Hispanic-
serving institutions provide a significant proportion of post-
secondary opportunities for Hispanic students.
(4) Relative to other institutions of higher education, His-
panic-serving institutions are underfunded. Such institutions
receive significantly less in State and local funding, per full-
time equivalent student, than other institutions of higher edu-
cation.
(5) Hispanic-serving institutions are succeeding in educat-
ing Hispanic students despite significant resource problems
that
(A) limit the ability of such institutions to expand and
improve the academic programs of such institutions; and
(B) could imperil the financial and administrative sta-
bility of such institutions.
(6) There is a national interest in remedying the dispari-
ties described in paragraphs (2) and (4) and ensuring that His-
panic students have an equal opportunity to pursue post-
secondary opportunities.
(b) PURPOSE.The purpose of this title is to
(1) expand educational opportunities for, and improve the
academic attainment of, Hispanic students; and
(2) expand and enhance the academic offerings, program
quality, and institutional stability of colleges and universities
that are educating the majority of Hispanic college students
and helping large numbers of Hispanic students and other low-
income individuals complete postsecondary degrees.
(c) PROGRAM AUTHORITY.The Secretary shall provide grants
and related assistance to Hispanic-serving institutions to enable
such institutions to improve and expand their capacity to serve
Hispanic students and other low-income individuals.
SEC. 502. [20 U.S.C. 1101a] DEFINITIONS; ELIGIBILITY.
(a) DEFINITIONS.For the purpose of this title:
(1) EDUCATIONAL AND GENERAL EXPENDITURES.The term
"educational and general expenditures" means the
total
amount expended by an institution for instruction, research,
public service, academic support (including library expendi-
tures), student services, institutional support, scholarships and
fellowships, operation and maintenance expenditures for the
physical plant, and any mandatory transfers that the institu-
tion is required to pay by law.
(2) ELIGIBLE INSTITUTION.The term "eligible institution"
means
(A) an institution of higher education
(i) that has an enrollment of needy students as re-
quired by subsection (b);
453
Sec. 502
HIGHER EDUCATION ACT OF 1965
452
(ii) except as provided in section 512(b), the aver-
age educational and general expenditures of which are
low, per full-time equivalent undergraduate student,
in comparison with the average educational and gen-
eral expenditures per full-time equivalent undergradu-
ate student of institutions that offer similar instruc-
tion;(iii) that is
(I) legally authorized to provide, and provides
within the State, an educational program for
which the institution awards a bachelor's degree;
or
(II) a junior or community college;
(iv) that is accredited by a nationally recognized
accrediting agency or association determined by the
Secretary to be reliable authority as to the quality of
training offered or that is, according to such an agency
or association, making reasonable progress toward ac-
creditation;
(v) that meets such other requirements as the Sec-
retary may prescribe; and
(vi) that is located in a State; and
(B) any branch of any institution of higher education
described under subparagraph (A) that by itself satisfies
the requirements contained in clauses (i) and (ii) of such
subparagraph.
For purposes of the determination of whether an institution is
an eligible institution under this paragraph, the factor de-
scribed under subparagraph (A)(i) shall be given twice the
weight of the factor described under subparagraph (A)(ii).
(3) ENDOWMENT FUND.The term "endowment fund"
means a fund that
(A) is established by State law, by a Hispanic-serving
institution, or by a foundation that is exempt from Federal
income taxation;
(B) is maintained for the purpose of generating income
for the support of the institution; and
(C) does not include real estate.
(4) FULL-TIME EQUIVALENT STUDENTS.The term "full-time
equivalent students" means the sum of the number of students
enrolled full time at an institution, plus the full-time equiva-
lent of the number of students enrolled part time (determined
on the basis of the quotient of the sum of the credit hours of
all part-time students divided by 12) at such institution.
(5) HISPANIC-SERVING INSTITUTION.The term "Hispanic-
serving institution" means an institution of higher education
that
(A) is an eligible institution;
(B) at the time of application, has an enrollment of un-
dergraduate full-time equivalent students that is at least
25 percent Hispanic students; and
(C) provides assurances that not less than 50 percent
of the institution's Hispanic students are low-income indi-
viduals.
4 0
453
HIGHER EDUCATION ACT OF 1965
Sec. 503
(6) JUNIOR OR COMMUNITY COLLEGE.The term "junior or
community college" means an institution of higher education
(A) that admits as regular students persons who are
beyond the age of compulsory school attendance in the
State in which the institution is located and who have the
ability to benefit from the training offered by the institu-
tion;
(B) that does not provide an educational program for
which the institution awards a bachelor's degree (or an
equivalent degree); and
(C) that
(i) provides an educational program of not less
than 2 years in duration that is acceptable for full
credit toward such a degree; or
(ii) offers a 2-year program in engineering, mathe-
matics, or the physical or biological sciences, designed
to prepare a student to work as a technician or at the
semiprofessional level in engineering, scientific, or
other technological fields requiring the understanding
and application of basic engineering, scientific, or
mathematical principles of knowledge.
(7) LOW-INCOME INDIVIDUAL.The term "low-income indi-
vidual" means an individual from a family whose taxable in-
come for the preceding year did not exceed 150 percent of an
amount equal to the poverty level determined by using criteria
of poverty established by the Bureau of the Census.
(b) ENROLLMENT OF NEEDY STUDENTS.For the purpose of this
title, the term "enrollment of needy students" means an enrollment
at an institution with respect to which
(1) at least 50 percent of the degree students so enrolled
are receiving need-based assistance under title IV in the sec-
ond fiscal year preceding the fiscal year for which the deter-
mination is made (other than loans for which an interest sub-
sidy is paid pursuant to section 428); or
(2) a substantial percentage of the students so enrolled are
receiving Federal Pell Grants in the second fiscal year preced-
ing the fiscal year for which determination is made, compared
to the percentage of students receiving Federal Pell Grants at
all such institutions in the second fiscal year preceding the fis-
cal year for which the determination is made, unless the re-
quirement of this paragraph is waived under section 512(a).
SEC. 503. [20 U.S.C. 110114 AUTHORIZED ACTIVITIES.
(a) TYPES OF ACTIVITIES AUTHORIZED.Grants awarded under
this title shall be used by Hispanic-serving institutions of higher
education to assist the institutions to plan, develop, undertake, and
carry out programs to improve and expand the institutions' capac-
ity to serve Hispanic students and other low-income students.
(b) AUTHORIZED ACTIVITIES.Grants awarded under this sec-
tion shall be used for one or more of the following activities:
(1) Purchase, rental, or lease of scientific or laboratory
equipment for educational purposes, including instructional
and research purposes.
4U1
Sec. 503
HIGHER EDUCATION ACT OF 1965
454
(2) Construction, maintenance, renovation, and improve-
ment in classrooms, libraries, laboratories, and other instruc-
tional facilities.
(3) Support of faculty exchanges, faculty development, cur-
riculum development, academic instruction, and faculty fellow-
ships to assist in attaining advanced degrees in the fellow's
field of instruction.
(4) Purchase of library books, periodicals, and other edu-
cational materials, including telecommunications program ma-
terial.
(5) Tutoring, counseling, and student service programs de-
signed to improve academic success.
(6) Funds management, administrative management, and
acquisition of equipment for use in strengthening funds man-
agement.
(7) Joint use of facilities, such as laboratories and libraries.
(8) Establishing or improving a development office to
strengthen or improve contributions from alumni and the pri-
vate sector.
(9) Establishing or improving an endowment fund.
(10) Creating or improving facilities for Internet or other
distance learning academic instruction capabilities, including
purchase or rental of telecommunications technology equip-
ment or services.
(11) Establishing or enhancing a program of teacher edu-
cation designed to qualify students to teach in public elemen-
tary schools and secondary schools.
(12) Establishing community outreach programs that will
encourage elementary school and secondary school students to
develop the academic skills and the interest to pursue post-
secondary education.
(13) Expanding the number of Hispanic and other under-
represented graduate and professional students that can be
served by the institution by expanding courses and institu-
tional resources.
(14) Other activities proposed in the application submitted
pursuant to section 504 that
(A) contribute to carrying out the purposes of this
title; and
(B) are approved by the Secretary as part of the re-
view and acceptance of such application.
(C) ENDOWMENT FUND LIMITATIONS.
(1) PORTION OF GRANT.A Hispanic-serving institution
may not use more than 20 percent of the grant funds provided
under this title for any fiscal year for establishing or improving
an endowment fund.
(2) MATCHING REQUIRED. A Hispanic-serving institution
that uses any portion of the grant funds provided under this
title for any fiscal year for establishing or improving an endow-
ment fund shall provide from non-Federal funds an amount
equal to or greater than the portion.
(3) COMPARABILITY.The provisions of part C of title III
regarding the establishment or increase of an endowment fund,
455
HIGHER EDUCATION ACT OF 1965
Sec. 511
that the Secretary determines are not inconsistent with this
subsection, shall apply to funds used under paragraph (1).
SEC. 504. [20 U.S.C. 1101c] DURATION OF GRANT.
(a) AWARD PERIOD.
(1) IN GENERAL.The Secretary may award a grant to a
Hispanic-serving institution under this title for 5 years.
(2) WAITOUT PERIOD.A Hispanic-serving institution shall
not be eligible to secure a subsequent 5-year grant award
under this title until 2 years have elapsed since the expiration
of the institution's most recent 5-year grant award under this
title, except that for the purpose of this subsection a grant
under section 514(a) shall not be considered a grant under this
title.
(b) PLANNING GRANTS.Notwithstanding subsection (a), the
Secretary may award a grant to a Hispanic-serving institution
under this title for a period of 1 year for the purpose of preparation
of plans and applications for a grant under this title.
SEC. 505. [20 U.S.C. 1101d] SPECIAL RULE.
No Hispanic-serving institution that is eligible for and receives
funds under this title may receive funds under part -A or B of title
HI during the period for which funds under this title are awarded.
PART B-GENERAL PROVISIONS
SEC. 511. [20 U.S.C. 1103] ELIGIBILITY; APPLICATIONS.
(a) INSTITUTIONAL ELIGIBILITY. Each Hispanic-serving institu-
tion desiring to receive assistance under this title shall submit to
the Secretary such enrollment data as may be necessary to dem-
onstrate that the institution is a Hispanic-serving institution as de-
fined in section 502, along with such other data and information
as the Secretary may by regulation require.
(b) APPLICATIONS.
(1) APPLICATIONS REQUIRED.Any institution which is eli-
gible for assistance under this title shall submit to the Sec-
retary an application for assistance at such time, in such form,
and containing such- information, as may be necessary to en-
able the Secretary to evaluate the institution's need for assist-
ance. Subject to the availability of appropriations to carry out
this title, the Secretary may approve an application for a grant
under this title only if the Secretary determines that
(A) the application meets the requirements of sub-
section (b); and
(B) the institution is eligible for assistance in accord-
ance with the provisions of this title under which the as-
sistance is sought.
(2) PRELIMINARY APPLICATIONS.In carrying out para-
graph (1), the Secretary may develop a preliminary application
for use by Hispanic- serving, institutions applying under this
title prior to the submission:of the principal application.
(c) CONTENTS.A Hispanic-serving institution, in the institu-
tion's application for a grant, shall
(1) set forth, or describe how the institution will develop,
a comprehensive development plan to strengthen the institu-
Sec. 511
HIGHER EDUCATION ACT OF 1965
456
tion's academic quality and institutional management, and oth-
erwise provide for institutional self-sufficiency and growth (in-
cluding measurable objectives for the institution and the Sec-
retary to use in monitoring the effectiveness of activities under
this title);
(2) include a 5-year plan for improving the assistance pro-
vided by the Hispanic-serving institution to Hispanic students
and other low-income individuals;
(3) set forth policies and procedures to ensure that Federal
funds made available under this title for any fiscal year will
be used to supplement and, to the extent practical, increase the
funds that would otherwise be made available for the purposes
of section 501(b), and in no case supplant those funds;
(4) set forth policies and procedures for evaluating the ef-
fectiveness in accomplishing the purpose of the activities for
which a grant is sought under this title;
(5) provide for such fiscal control and fund accounting pro-
cedures as may be necessary to ensure proper disbursement of
and accounting for funds made available to the institution
under this title;
(6) provide that the institution will comply with the limita-
tions set forth in section 516;
(7) describe in a comprehensive manner any proposed
project for which funds are sought under the application and
include
(A) a description of the various components of the pro-
posed project, including the estimated time required to
complete each such component;
(B) in the case of any development project that con-
sists of several components (as described by the institution
pursuant to subparagraph (A)), a statement identifying
those components which, if separately funded, would be
sound investments of Federal funds and those components
which would be sound investments of Federal funds only
if funded under this title in conjunction with other parts
of the development project (as specified by the institution);
(C) an evaluation by the institution of the priority
given any proposed project for which funds are sought in
relation to any other projects for which funds are sought
by the institution under this title, and a similar evaluation
regarding priorities among the components of any single
proposed project (as described by the institution pursuant
to subparagraph (A));
(D) a detailed budget showing the manner in which
funds for any proposed project would be spent by the insti-
tution; and
(E) a detailed description of any activity which in-
volves the expenditure of more than $25,000, as identified
in the budget referred to in subparagraph (D);
(8) provide for making reports, in such form and contain-
ing such information, as the Secretary may require to carry out
the Secretary's functions under this title, including not less
than one report annually setting
forth the
institution's
progress toward achieving the objectives for which the funds
451
HIGHER EDUCATION ACT OF 1965
Sec. 512
were awarded and for keeping such records and affording such
access to such records, as the Secretary may find necessary to
assure the correctness and verification of such reports; and
(9) include such other information as the Secretary may
prescribe.
(d) PRIORITY.With respect to applications for assistance
under this section, the Secretary shall give priority to an applica-
tion that contains satisfactory evidence that the Hispanic-serving
institution has entered into or will enter into a collaborative ar-
rangement with at least one local educational agency or commu-
nity-based organization to provide such agency or organization with
assistance (from funds other than funds provided under this title)
in reducing dropout rates for Hispanic students, improving rates of
academic achievement for Hispanic students, and increasing the
rates at which Hispanic secondary school graduates enroll in high-
er education.
(e) ELIGIBILITY DATA.The Secretary shall use the most recent
and relevant data concerning the number and percentage of stu-
dents receiving need-based assistance under title N in making eli-
gibility determinations and shall advance the base-year for the de-
terminations forward following each annual grant cycle.
SEC. 512. [20 U.S.C. 1103a] WAIVER AUTHORITY AND REPORTING RE-
QUIREMENT.
(a) WAIVER REQUIREMENTS; NEED-BASED ASSISTANCE STU-
DENTS.The Secretary may waive the requirements set forth in
section 502(a)(2)(A)(i) in the case of an institution
(1) that is extensively subsidized by the State in which the
institution is located and charges low or no tuition;
(2) that serves a substantial number of low-income stu-
dents as a percentage of the institution's total student popu-
lation;
(3) that is contributing substantially to increasing higher
education
opportunities
for
educationally
disadvantaged,
underrepresented, or minority students, who are low-income
individuals;
(4) which is substantially increasing higher educational op-
portunities for individuals in rural or other isolated areas
which are unserved by postsecondary institutions; or
(5) wherever located, if the Secretary determines that the
waiver will substantially increase higher education opportuni-
ties appropriate to the needs of Hispanic Americans.
(b) WAIVER DETERMINATIONS; EXPENDITURES.
(1) WAIVER DETERMINATIONS.The Secretary may waive
the requirements set forth in section 502(a)(2)(A)(ii) if the Sec-
retary determines, based on persuasive evidence submitted by
the institution, that the institution's failure to meet the re-
quirements is due to factors which, when used in the deter-
mination of compliance with the requirements, distort such de-
termination, and that the institution's designation as an eligi-
ble institution under part A is otherwise consistent with the
purposes of this title.
(2) EXPENDITURES.The Secretary shall submit to Con-
gress every other year a report concerning the institutions
that, although not satisfying the requirements of section
Sec. 513
HIGHER EDUCATION ACT OF 1965
458
502(a)(2)(A)(ii), have been determined to be eligible institutions
under part A. Such report shall
(A) identify the factors referred to in paragraph (1)
that were considered by the Secretary as factors that dis-
torted the determination of compliance with clauses (i) and
(ii) of section 502(a)(2)(A); and
(B) contain a list of each institution determined to be
an eligible institution under part A including a statement
of the reasons for each such determination.
SEC. 513. [20 U.S.C. 1103b1 APPLICATION REVIEW PROCESS.
(a) REVIEW PANEL.All applications submitted under this title
by Hispanic-serving institutions shall be read by a panel of readers
composed of individuals who are selected by the Secretary and who
include individuals representing Hispanic-serving institutions. The
Secretary shall ensure that no individual assigned under this sec-
tion to review any application has any conflict of interest with re-
gard to the application that might impair the impartiality with
which the individual conducts the review under this section..
(b) ImmucrioN.All readers selected by the Secretary shall
receive thorough instruction from the Secretary regarding the eval-
uation process for applications submitted under this title that are
consistent with the provisions of this title, including
(1) an enumeration of the factors to be used to determine
the quality of applications submitted under this title; and
(2) an enumeration of the factors to be used to determine
whether a grant should be awarded for a project under this
title, the amount of any such grant, and the duration of any
such grant.
(c) RECOMMENDATIONS OF PANEL.In awarding grants under
this title, the Secretary shall take into consideration the rec-
ommendations of the panel made under subsection (a).
(d) NOTIFICATION.Not later than June 30 of each year, the
Secretary shall notify each Hispanic-serving institution making an
application under this title of
(1) the scores given the institution by the panel pursuant
to this section;
(2) the recommendations of the panel with respect to such
application; and
(3) the reasons for the decision of the Secretary in award-
ing or refusing to award a grant under this title, and any
modifications, if any, in the recommendations of the panel
made by the Secretary.
SEC. 514. [20 U.S.C. 1103c] COOPERATIVE ARRANGEMENT&
(a) GENERAL AUTHORITY. The Secretary may make grants to
encourage cooperative arrangements with funds available to carry
out this title, between Hispanic-serving institutions eligible for as-
sistance under this title, and between such institutions and institu-
tions not receiving assistance under this title, for the activities de-
scribed in section 503 so that the resources of the cooperating insti=
tutions might be combined and shared in order to achieve the pur-
poses of this title; to avoid costly duplicative efforts, and to enhance
the development of Hispanic. serving institutions.
459
HIGHER EDUCATION ACT OF 1965
Sec. 511
(b) PRIORITY.The Secretary shall give priority to grants for
the purposes described under subsection (a) whenever the Sec-
retary determines that the cooperative arrangement is geographi-
cally and economically sound or will benefit the applicant Hispanic-
serving institution.
(c) DURATION.Grants to Hispanic-serving institutions having
a cooperative arrangement may be made under this section for a
period determined under section 505.
SEC. 515. [20 U.S.C. 1103411 ASSISTANCE TO INSTITUTIONS UNDER
OTHER PROGRAMS.
(a) ASSISTANCE ELIGIBILITY.Each Hispanic-serving institution
that the Secretary determines to be an institution eligible under
this title may be eligible for waivers in accordance with subsection
(b).
(b) WAIVER APPLICABILITY.
(1) IN GENERAL.Subject to, and in accordance with, regu-
lations promulgated for the purpose of this section, in the case
of any application by a Hispanic-serving institution referred to
in subsection (a) for assistance under any programs specified
in paragraph (2), the Secretary is authorized, if such applica-
tion is otherwise approvable, to waive any requirement for a
non-Federal share of the cost of the program or project, or, to
the extent not inconsistent with other law, to give, or require
to be given, priority consideration of the application in relation
to applications from other institutions.
(2) PROGRAMS.The provisions of this section shall apply
to any program authorized by title IV or section 604.
(c) LIMITATION.The Secretary shall not waive, under sub-
section (b), the non-Federal share requirement for any program for
applications which, if approved, would require the expenditure of
more than 10 percent of the appropriations for the program for any
fiscal year.
SEC. 516. [20 U.S.C. 1103e1 LIMITATIONS.
The funds appropriated under section 518 may not be used
(1) for a school or department of divinity or any religious
worship or sectarian activity;
(2) for an activity that is inconsistent with a State plan for
desegregation of higher education applicable to a Hispanic-
serving institution;
(3) for an activity that is inconsistent with a State plan of
higher education applicable to a Hispanic-serving institution;
or
(4) for purposes other than the purposes set forth in the
approved application under which the funds were made avail-
able to a Hispanic-serving institution.
SEC. 517. [20 U.S.C. 1103f] PENALTIES.
Whoever, being an officer, director, agent, or employee of, or
connected in any capacity with, any recipient of Federal financial
assistance or grant pursuant to this title embezzles, willfully
misapplies, steals, or obtains by fraud any of the funds that are the
subject of such grant or assistance, shall be fined not more than
$10,000 or imprisoned for not more than 2 years; or both.
467
Sec. 518
HIGHER EDUCATION ACT OF 1965
460
SEC. 518. [20 U.S.C. 1103g] AUTHORIZATIONS OF APPROPRIATIONS.
(a) AUTHORIZATIONS.There are authorized to be appropriated
to carry out this title $62,500,000 for fiscal year 1999 and such
sums as may be necessary for each of the 4 succeeding fiscal years.
(b) USE OF MULTIPLE YEAR AWARDS.In the event of a mul-
tiple year award to any Hispanic-serving institution under this
title, the Secretary shall make funds available for such award from
funds appropriated for this title for the fiscal year in which such
funds are to be used by the institution.
TITLE VI INTERNATIONAL EDUCATION
PROGRAMS
PART A-INTERNATIONAL AND FOREIGN
LANGUAGE STUDIES
SEC. 601. [20 U.S.C. 1121] FINDINGS AND PURPOSES.
(a) FINDINGS.Congress finds as follows:
(1) The security, stability, and economic vitality of the
United States in a complex global era depend upon American
experts in and citizens knowledgeable about world regions, for-
eign languages, and international affairs, as well as upon a
strong research base in these areas.
(2) Advances in communications technology and the
growth of regional and global problems make knowledge of
other countries and the ability to communicate in other lan-
guages more essential to the promotion of mutual understand-
ing and cooperation among nations and their peoples.
(3) Dramatic post-Cold War changes in the world's geo-
political and economic landscapes are creating needs for Amer-
ican expertise and knowledge about a greater diversity of less
commonly taught foreign languages and nations of the world.
(4) Systematic efforts are necessary to enhance the capac-
ity of institutions of higher education in the United States
for
(A) producing graduates with international and foreign
language expertise and knowledge; and
(B) research regarding such expertise and knowledge.
(5) Cooperative efforts among the Federal Government, in-
stitutions of higher education, and the private sector are nec-
essary to promote the generation and dissemination of informa-
tion about world regions, foreign languages, and international
affairs throughout education, government, business, civic, and
nonprofit sectors in the United States.
(b) PURPOSES.The purposes of this part are
(1)(A) to support centers, programs, and fellowships in in-
stitutions of higher education in the United States for produc-
ing increased numbers of trained personnel and research in
foreign languages, area studies, and other international stud-
ies;
(B) to develop a pool of international experts to meet na-
tional needs;
4 t3 8
461
HIGHER EDUCATION ACT OF 1965
Sec. 602
(C) to develop and validate specialized materials and tech-
niques for foreign language acquisition and fluency, emphasiz-
ing (but not limited to) the less commonly taught languages;
(D) to promote access to research and training overseas;
and
(E) to advance the internationalization of a variety of dis-
ciplines throughout undergraduate and graduate education;
(2) to support cooperative efforts promoting access to and
the dissemination of international and foreign language knowl-
edge, teaching materials, and research, throughout education,
government, business, civic, and nonprofit sectors in the
United States, through the use of advanced technologies; and
(3) to coordinate the programs of the Federal Government
in the areas of foreign language, area studies, and other inter-
national studies, including professional international affairs
education and research.
SEC. 602. [20 U.S.C. 11221 GRADUATE AND UNDERGRADUATE LAN-
GUAGE AND AREA CENTERS AND PROGRAMS.
(a) NATIONAL LANGUAGE AND AREA CENTERS AND PROGRAMS
AUTHORIZED.
(1) CENTERS AND PROGRAMS.
(A) IN GENERAL.The Secretary is authorized
(i) to make grants to institutions of higher edu-
cation, or combinations thereof, for the purpose of es-
tablishing, strengthening, and operating comprehen-
sive foreign language and area or international studies
centers and programs; and
(ii) to make grants to such institutions or com-
binations for the purpose of establishing, strengthen-
ing, and operating a diverse network of undergraduate
foreign language and area or international studies
centers and programs.
(B) NATIONAL RESOURCES.The centers and programs
referred to in paragraph (1) shall be national resources
for
(i) teaching of any modern foreign language;
(ii) instruction in fields needed to provide full un-
derstanding of areas, regions, or countries in which
such language is commonly used;
(iii) research and training in international studies,
and the international and foreign language aspects of
professional and other fields of study; and
(iv) instruction and research on issues in world af-
fairs that concern one or more countries.
(2) AUTHORIZED ACTIVITIES.Any such grant may be used
to pay all or part of the cost of establishing or operating a cen-
ter or program, including the cost of
(A) teaching and research materials;
(B) curriculum planning and development;
(C) establishing and maintaining linkages with over-
seas institutions of higher education and other organiza-
tions that may contribute to the teaching and research of
the center or program;
Sec. 602
HIGHER EDUCATION ACT OF 1965
462
(D) bringing visiting scholars and faculty to the center
to teach or to conduct research;
(E) professional development of the center's faculty
and staff;
(F) projects conducted in cooperation with other cen-
ters addressing themes of world regional, cross-regional,
international, or global importance;
(G) summer institutes in the United States or abroad
designed to provide language and area training in the cen-
ter's field or topic; and
(H) support for faculty, staff, and student travel in for-
eign areas, regions, or countries, and for the development
and support of educational programs abroad for students.
(3) GRANTS TO MAINTAIN LIBRARY COLLECTIONS.The Sec-
retary may make grants to centers described in paragraph (1)
having important library collections, as determined by the Sec-
retary, for the maintenance of such collections.
(4) OUTREACH GRANTS AND SUMMER INSTITUTES.The
Secretary may make additional grants to centers described in
paragraph (1) for any one or more of the following purposes:
(A) Programs of linkage or outreach between foreign
language, area studies, or other international fields, and
professional schools and colleges.
(B) Programs of linkage or outreach with 2- and 4-year
colleges and universities.
(C) Programs of linkage or outreach with departments
or agencies of Federal and State governments.
(D) Programs of linkage or outreach with the news
media, business, professional, or trade associations.
(E) Summer institutes in foreign area, foreign lan-
guage, and other international fields designed to carry out
the programs of linkage and outreach described in sub-
paragraphs (A), (B), (C), and (D).
(b) GRADUATE FELLOWSHIPS FOR FOREIGN LANGUAGE AND AREA
OR INTERNATIONAL STUDIES.
(1) IN GENERAL.The Secretary is authorized to make
grants to institutions of higher education or combinations of
such institutions for the purpose of paying stipends to individ-
uals undergoing advanced training in any center or program
approved by the Secretary.
(2) ELIGIBLE STUDENTS.Students receiving stipends de
scribed in paragraph (1) shall be individuals who are engaged
in an instructional program with stated performance goals for
functional foreign language use or in a program developing
such performance goals, in combination with area studies,
international studies, or the international aspects of a profes-
sional studies program, including predissertation level studies,
preparation for dissertation research, dissertation research
abroad, and dissertation writing.
(c) SPECIAL RULE WITH RESPECT TO TRAVEL.No funds may be
expended under this part for undergraduate travel except in ac-
cordance with rules prescribed by the Secretary setting forth poli-
cies and procedures to assure that Federal funds made available
463
HIGHER EDUCATION ACT OF 1965
Sec. 604
for such travel are expended as part of a formal program of super-
vised study.
(d) ALLOWANCES.Stipends awarded to graduate level recipi-
ents may include allowances for dependents and for travel for re-
search and study in the United States and abroad.
SEC. 603. [20 U.S.C. 1123] LANGUAGE RESOURCE CENTERS.
(a) LANGUAGE RESOURCE CENTERS AUTHORIZED.The Sec-
retary is authorized to make grants to and enter into contracts
with institutions of higher education, or combinations of such insti-
tutions, for the purpose of establishing, strengthening, and operat-
ing a small number of national language resource and training cen-
ters, which shall serve as resources to improve the capacity to
teach and learn foreign languages effectively.
(b) AUTHORIZED ACTIVITIES.The activities carried out by the
centers described in subsection (a)
(1) shall include effective dissemination efforts, whenever
appropriate; and
(2) may include
(A) the conduct and dissemination of research on new
and improved teaching methods, including the use of ad-
vanced educational technology;
(B) the development and dissemination of new teach-
ing materials reflecting the use of such research in effec-
tive teaching strategies;
(C) the development, application, and dissemination of
performance testing appropriate to an educational setting
for use as a standard and comparable measurement of
skill levels in all languages;
(D) the training of teachers in the administration and
interpretation of performance tests, the use of effective
teaching strategies, and the use of new technologies;
(E) a significant focus on the teaching and learning
needs of the less commonly taught languages, including an
assessment of the strategic needs of the United States, the
determination of ways to meet those needs nationally, and
the publication and dissemination of instructional mate-
rials in the less commonly taught languages;
(F) the development and dissemination of materials
designed to serve as a resource for foreign language teach-
ers at the elementary and secondary school levels; and
(G) the operation of intensive summer language insti-
tutes to train advanced foreign language students, to pro-
vide professional development, and to improve language
instruction through preservice and inservice language
training for teachers.
(c) CONDITIONS FOR GRANTS.Grants under this section shall
be made on such conditions as the Secretary determines to be nec-
essary to carry out the provisions of this section.
SEC. 604. [20 U.S.C. 1124] UNDERGRADUATE INTERNATIONAL STUDIES
AND FOREIGN LANGUAGE PROGRAMS.
(a) INCENTIVES FOR THE CREATION OF NEW PROGRAMS AND THE
STRENGTHENING OF EXISTING PROGRAMS IN UNDERGRADUATE
INTERNATIONAL STUDIES AND FOREIGN LANGUAGE PROGRAMS.
Sec. 604
HIGHER EDUCATION ACT OF 1965
464
(1) AUTHORITY.The Secretary is authorized to make
grants to institutions of higher education, combinations of such
institutions, or partnerships between nonprofit educational or-
ganizations and institutions of higher education, to assist such
institutions, combinations or partnerships in planning, devel-
oping, and carrying out programs to improve undergraduate in-
struction in international studies and foreign. languages. Such
grants shall be awarded to institutions, combinations or part-
nerships seeking to create new programs or to strengthen ex-
isting programs in foreign languages, area studies, and other
international fields.
(2) USE OF FUNDS.Grants made under this section may
be used for Federal share of the cost of projects and activities
which are an integral part of such a program, such as
(A) planning for the development and expansion of un-
dergraduate
programs
in
international
studies
and
foreign languages;
(B)
teaching,
research,
curriculum
development,
faculty training in the United States or abroad, and other
related activities, including
(i) the expansion of library and teaching re-
sources; and
(ii) preservice and inservice teacher training;
(C) expansion of opportunities for learning foreign lan-
guages, including less commonly taught languages;
(D) programs under which foreign teachers and schol-
ars may visit institutions as visiting faculty;
(E) programs designed to develop or enhance linkages
between 2- and 4-year institutions of higher education, or
baccalaureate and post-baccalaureate programs or institu-
tions;
(F) the development of undergraduate educational
programs
(i) in locations abroad where such opportunities
are not otherwise available or that serve students for
whom such opportunities are not otherwise available;
and
(ii) that provide courses that are closely related to
on-campus foreign language and international curric-
ula;
(G) the integration of new and continuing education
abroad opportunities for undergraduate students into cur-
ricula of specific degree programs;
(H) the development of model programs to enrich or
enhance the effectiveness of educational programs abroad,
including predeparture and postreturn programs, and the
integration of educational programs abroad into the cur-
riculum of the home institution;
(I) the development of programs designed to integrate
professional and technical education with foreign lan-
guages, area studies, and other international fields;
(J) the establishment of linkages overseas with institu-
tions of higher education and organizations that contribute
465
HIGHER EDUCATION ACT OF 1965
Sec. 604
to the educational programs assisted under this sub-
section;
(K) the conduct of summer institutes in foreign area,
foreign language, and other international fields to provide
faculty and curriculum development, including the integra-
tion of professional and technical education with foreign
area and other international studies, and to provide for-
eign area and other international knowledge or skills to
government personnel or private sector professionals in
international activities;
(L) the development of partnerships between
(i) institutions of higher education; and
(ii) the private sector, government, or elementary
and secondary education institutions,
in order to enhance international knowledge and skills;
and
(M) the use of innovative technology to increase access
to international education programs.
(3) NON-FEDERAL SHARE.The non-Federal share of the
cost of the programs assisted under this subsection
(A) may be provided in cash from the private sector
corporations or foundations in an amount equal to one-
third of the total cost of the programs assisted under this
section; or
(B) may be provided as an in-cash or in-kind contribu-
tion from institutional and noninstitutional funds, includ-
ing State and private sector corporation or foundation con-
tributions, equal to one-half of the total cost of the pro-
grams assisted under this section.
(4) SPECIAL RULE.The Secretary may waive or reduce the
required non-Federal share for institutions that
(A) are eligible to receive assistance under part A or
B of title III or under title V; and
(B) have submitted a grant application under this sec-
tion.
(5) PRIORITY.In awarding grants under this section, the
Secretary shall give priority to applications from institutions of
higher education, combinations or partnerships that require
entering students to have successfully completed at least 2
years of secondary school foreign language instruction or that
require each graduating student to earn 2 years of postsecond-
ary credit in a foreign language (or have demonstrated equiva-
lent competence in the foreign language) or, in the case of a
2-year degree granting institution, offer 2 years of postsecond-
ary credit in a foreign language.
(6) GRANT CONDITIONS.Grants under this subsection
shall be made on such conditions as the Secretary determines
to be necessary to carry out this subsection.
(7) APPLICATION.Each application for assistance under
this subsection shall include
(A) evidence that the applicant has conducted exten-
sive planning prior to submitting the application;
(B) an assurance that the faculty and administrators
of all relevant departments and programs served by the
Sec. 605
HIGHER EDUCATION ACT OF 1965
466
applicant are involved in ongoing collaboration with regard
to achieving the stated objectives of the application;
(C) an assurance that students at the applicant insti-
tutions, as appropriate, will have equal access to, and de-
rive benefits from, the program assisted under this sub-
section; and
(D) an assurance that each institution, combination or
partnership will use the Federal assistance provided under
this subsection to supplement and not supplant non-Fed-
eral funds the institution expends for programs to improve
undergraduate instruction in international studies and for-
eign languages.
(8) EVALUATION.The Secretary may establish require-
ments for program evaluations and require grant recipients to
submit annual reports that evaluate the progress and perform-
ance of students participating in programs assisted under this
subsection.
(b) PROGRAMS OF NATIONAL SIGNIFICANCE.The Secretary may
also award grants to public and private nonprofit agencies and or-
ganizations, including professional and scholarly
associations,
whenever the Secretary determines such grants will make an espe-
cially significant contribution to improving undergraduate inter-
national studies and foreign language programs.
(c) FUNDING SUPPORT.The Secretary may use not more than
10 percent of the total amount appropriated for this part for carry-
ing out the purposes of this section.
SEC. 605. [20 U.S.C. 11251 RESEARCH; STUDIES; ANNUAL REPORT.
(a) AUTHORIZED AcnwinEs.The Secretary may, directly or
through grants or contracts, conduct research and studies that con-
tribute to achieving the purposes of this part. Such research and
studies may include
(1) studies and surveys to determine needs for increased or
improved instruction in foreign language, area studies, or other
international fields, including the demand for foreign language,
area, and other international specialists in government, edu-
cation, and the private sector;
(2) studies and surveys to assess the utilization of grad-
uates of programs supported under this title by governmental,
educational, and private sector organizations and other studies
assessing the outcomes and effectiveness of programs so sup-
ported;
(3) evaluation of the extent to which programs assisted
under this title that address national needs would not other-
wise be offered;
(4) comparative studies of the effectiveness of strategies to
provide international capabilities at institutions of higher edu-
cation;
(5) research on more effective methods of providing in-
struction and achieving competency in foreign languages, area
studies, or other international fields;
s
(6) the development and publication of specialized mate-
rials for use in foreign language, area studies, and other inter-
474
467
HIGHER EDUCATION ACT OF 1965
Sec. 606
national fields, or for training foreign language, area, and
other international specialists;
(7) studies and surveys of the uses of technology in foreign
language, area studies, and international studies programs;
(8) studies and evaluations of effective practices in the dis-
semination of international information, materials, research,
teaching strategies, and testing techniques throughout the edu-
cation community, including elementary and secondary schools;
and
(9) the application of performance tests and standards
across all areas of foreign language instruction and classroom
use.
(b) ANNUAL REPORT.The Secretary shall prepare, publish,
and announce an annual report listing the books and research ma-
terials produced with assistance under this section.
SEC. 606. [20 U.S.C. 1126] TECHNOLOGICAL INNOVATION AND CO-
OPERATION FOR FOREIGN INFORMATION ACCESS.
(a) AUTHORITY.The Secretary is authorized to make grants to
institutions of higher education, public or nonprofit private librar-
ies, or consortia of such institutions or libraries, to develop innova-
tive techniques or programs using new electronic technologies to
collect, organize, preserve, and widely disseminate information on
world regions and countries other than the United States that ad-
dress our Nation's teaching and research needs in international
education and foreign languages.
(b) AUTHORIZED ACTIVITIES.Grants under this section may be
used
(1) to facilitate access to or preserve foreign information
resources in print or electronic forms;
(2) to develop new means of immediate, full-text document
delivery for information and scholarship from abroad;
(3) to develop new means of shared electronic access to
international data;
(4) to support collaborative projects of indexing, cataloging,
and other means of bibliographic access for scholars to impor-
tant research materials published or distributed outside the
United States;
(5) to develop methods for the wide dissemination of re-
sources written in non-Roman language alphabets;
(6) to assist teachers of less commonly taught languages in
acquiring, via electronic and other means, materials suitable
for classroom use; and
(7) to promote collaborative technology based projects in
foreign languages, area studies, and international studies
among grant recipients under this title.
(c) APPLICATION.Each institution or consortium desiring a
grant under this section shall submit an application to the Sec-
retary at such time, in such manner, and accompanied by such in-
formation and assurances as the Secretary may reasonably require.
(d) MATCH REQUIRED.The Federal share of the total cost of
carrying out a program supported by a grant under this section
shall not be more than 66% percent. The non-Federal share of such
cost may be provided either in-kind or in cash, and may include
contributions from private sector corporations or foundations.
4 7 5
Sec. 607
HIGHER EDUCATION ACT OF 1965
468
SEC. 607. [20 U.S.C. 1127] SELECTION OF CERTAIN GRANT RECIPIENTS.
(a) COMPETITIVE GRANTS.The Secretary shall award grants
under section 602 competitively on the basis of criteria that
separately, but not less rigorously, evaluates the applications for
comprehensive and undergraduate language and area centers and
programs.
(b) SELECTION CRITERIA.The Secretary shall set criteria for
grants awarded under section 602 by which a determination of ex-
cellence shall be made to meet the differing objectives of graduate
and undergraduate institutions.
(c) EQUITABLE DISTRIBUTION OF GRANTS.The Secretary shall,
to the extent practicable, award grants under this part (other than
section 602) in such manner as to achieve an equitable distribution
of the grant funds throughout the United States, based on the
merit of a proposal as determined pursuant to a peer review proc-
ess involving broadly representative professionals.
SEC. 608. [20 U.S.C. 1128] EQUITABLE DISTRIBUTION OF CERTAIN
FUNDS.
(a) SELECTION CRITERIA.The Secretary shall make excellence
the criterion for selection of grants awarded under section 602.
(b) EQUITABLE DISTRIBUTION. To the extent practicable and
consistent with the criterion of excellence, the Secretary shall
award grants under this part (other than section 602) in such a
manner as will achieve an equitable distribution of funds through-
out the United States.
(c) SUPPORT FOR UNDERGRADUATE EDUCATION. The Secretary
shall also award grants under this part in such manner as to en-
sure that an appropriate portion of the funds appropriated for this
part (as determined by the Secretary) are used to support under-
graduate education.
SEC. 609. [20 U.S.C. 1128a] AMERICAN OVERSEAS RESEARCH CENTERS.
(a) CENTERS AUTHORIZED.The Secretary is authorized to
make grants to and enter into contracts with any American over-
seas research center that is a consortium of institutions of higher
education (hereafter in this section referred to as a "center") to en-
able such center to promote postgraduate research, exchanges and
area studies.
(b) USE OF GRANTS.Grants made and contracts entered into
pursuant to this section may be used to pay all or a portion of the
cost
of
establishing
or
operating
a
center
or
program,
including
(1) the cost of faculty and staff stipends and salaries;
(2) the cost of faculty, staff, and student travel;
(3) the cost of the operation and maintenance of overseas
facilities;
(4) the cost of teaching and research materials;
(5) the cost of acquisition, maintenance, and preservation
of library collections;
(6) the cost of bringing visiting scholars and faculty to a
center to teach or to conduct research;
(7) the cost of organizing and managing conferences; and
(8) the cost of publication and dissemination of material
for the scholarly and general public.
4 7 6
469
HIGHER EDUCATION ACT OF 1965
Sec. 611
(C) LIMITATION.The Secretary shall only award grants to and
enter into contracts with centers under this section that
(1) receive more than 50 percent of their funding from pub-
lic or private United States sources;
(2) have a permanent presence in the country in which the
center is located; and
(3) are organizations described in section 501(c)(3) of the
Internal Revenue Code of 1986 which are exempt from taxation
under section 501(a) of such Code.
(d) DEVELOPMENT GRANTS.The Secretary is authorized to
make grants for the establishment of new centers. The grants may
be used to fund activities that, within 1 year, will result in the cre-
ation of a center described in subsection (c).
SEC. 610. [20 U.S.C. 11281,] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$80,000,000 for fiscal year 1999, and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
PART B-BUSINESS AND INTERNATIONAL
EDUCATION PROGRAMS
SEC. 611. [20 U.S.C. 1130] FINDINGS AND PURPOSES.
(a) FINDINGS.The Congress finds that
(1) the future economic welfare of the United States will
depend substantially on increasing international skills in the
business and educational community and creating an aware-
ness among the American public of the internationalization of
our economy;
(2) concerted efforts are necessary to engage business
schools, language and area study programs, professional inter-
national affairs education programs, public and private sector
organizations, and United States business in a mutually pro-
ductive relationship which benefits the Nation's future eco-
nomic interests;
(3) few linkages presently exist between the manpower
and information needs of United States business and the inter-
national education, language training and research capacities
of institutions of higher education in the United States, and
public and private organizations; and
(4) organizations such as world trade councils, world trade
clubs, chambers of commerce and State departments of com-
merce are not adequately used to link universities and busi-
ness for joint venture exploration and program development.
(b) PURPOSES.It is the purpose of this part
(1) to enhance the broad objective of this Act by increasing
and promoting the Nation's capacity for international under-
standing and economic enterprise through the provision of suit-
able international education and training for business person-
nel in various stages of professional development; and
(2) to promote institutional and noninstitutional edu-
cational and training activities that will contribute to the abil-
ity of United States business to prosper in an international
economy.
Sec. 612
HIGHER EDUCATION ACT OF 1965
470
SEC. 612. [20 U.S.C. 1130-1] CENTERS FOR INTERNATIONAL BUSINESS
EDUCATION.
(a) PROGRAM AUTHORIZED.
(1) IN GENERAL.The Secretary is authorized to make
grants to institutions of higher education, or combinations of
such institutions, to pay the Federal share of the cost of plan-
ning, establishing and operating centers for international busi-
ness education which
(A) will be national resources for the teaching of im-
proved business techniques, strategies, and methodologies
which emphasize the international context in which busi-
ness is transacted;
(B) will provide instruction in critical foreign lan-
guages and international fields needed to provide under-
standing of the cultures and customs of United States
trading partners; and
(C) will provide research and training in the inter-
national aspects of trade, commerce, and other fields of
study.
(2) SPECIAL RULE.In addition to providing training to
students enrolled in the institution of higher education in
which a center is located, such centers shall serve as regional
resources to businesses proximately located by offering pro-
grams and providing research designed to meet the inter-
national training needs of such businesses. Such centers shall
also serve other faculty, students, and institutions of higher
education located within their region.
(b) AUTHORIZED EXPENDITURES.Each grant made under this
section may be used to pay the Federal share of the cost of plan-
ning, establishing or operating a center, including the cost of
(1) faculty and staff travel in foreign areas, regions, or
countries;
(2) teaching and research materials;
(3) curriculum planning and development;
(4) bringing visiting scholars and faculty to the center to
teach or to conduct research; and
(5) training and improvement of the staff; for the purpose
of, and subject to such conditions as the Secretary finds nec-
essary for, carrying out the objectives of this section.
(C) AUTHORIZED ACTIVITIES.
(1) MANDATORY ACTIVITIES.Programs and activities to be
conducted by centers
assisted under
this
section
shall
include
(A) interdisciplinary programs which incorporate for-
eign language and international studies training into busi-
ness, finance, management, communications systems, and
other professional curricula;
(B) interdisciplinary programs which provide business,
finance, management, communications systems, and other
professional training for foreign language and inter-
national studies faculty and degree candidates;
(C) programs, such as intensive language programs,
available to members of the business community and other
471
NIGHER EDUCATION ACT OF 1965
Sec. 612
professionals which are designed to develop or enhance
their international skills, awareness, and expertise;
(D) collaborative programs, activities, or research in-
volving other institutions of higher education, local edu-
cational agencies, professional associations, businesses,
firms, or combinations thereof, to promote the development
of international skills, awareness, and expertise among
current and prospective members of the business commu-
nity and other professionals;
(E) research designed to strengthen and improve the
international aspects of business and professional edu-
cation and to promote integrated curricula; and
(F) research designed to promote the international
competitiveness of American businesses and firms, includ-
ing those not currently active in international trade.
(2) PERMISSIBLE ACTIVITIES.Programs and activities to be
conducted by centers assisted under this section may include
(A) the establishment of overseas internship programs
for students and faculty designed to provide training and
experience in international business activities, except that
no Federal funds provided under this section may be used
to pay wages or stipends to any participant who is engaged
in compensated employment as part of an internship pro-
gram;
(B) the establishment of linkages overseas with insti-
tutions of higher education and other organizations that
contribute to the educational objectives of this section;
(C) summer institutes in international business, for-
eign area studies, foreign language studies, and other
international studies designed to carry out the purposes of
subparagraph (A) of this paragraph;
(D) the development of opportunities for business stu-
dents to study abroad in locations which are important to
the existing and future economic well-being of the United
States;
(E) outreach activities or consortia with business pro-
grams located at other institutions of higher education for
the purpose of providing expertise regarding the inter-
nationalization of such programs, such as assistance in re-
search, curriculum development, faculty development, or
educational exchange programs; and
(F) other eligible activities prescribed by the Secretary.
(d) ADVISORY COUNCIL.
(1) ESTABLISHMENT. In order to be eligible for assistance
under this section, an institution of higher education, or com-
bination of such institutions, shall establish a center advisory
council which will conduct extensive planning prior to the es-
tablishment of a center concerning the scope of the center's ac-
tivities and the design of its programs.
(2) MEMBERSHIP ON ADVISORY COUNCIL. The center advi-
sory council shall include
(A) one representative of an administrative depart-
ment or office of the institution of higher education;
473,
Sec. 612
HIGHER EDUCATION ACT OF 1965
412
(B) one faculty representative of the business or man-
agement school or department of such institution;
(C) one faculty representative of the international
studies or foreign language school or department of such
institution;
(D) one faculty representative of another professional
school or department of such institution, as appropriate;
(E) one or more representatives of local or regional
businesses or firms;
(F) one representative appointed by the Governor of
the State in which the institution of higher education is lo-
cated whose normal responsibilities include official over-
sight or involvement in State-sponsored trade-related ac-
tivities or programs; and
(G) such other individuals as the institution of higher
education deems appropriate, such as a representative of
a community college in the region served by the center.
(3) MEETINGS.In addition to the initial planning activi-
ties required under subsection (d)(1), the center advisory coun-
cil shall meet not less than once each year after the establish-
ment of the center to assess and advise on the programs and
activities conducted by the center.
(e) GRANT DURATION; FEDERAL SHARE.
(1) DURATION OF GRANTS.The Secretary shall make
grants under this section for a minimum of 3 years unless the
Secretary determines that the provision of grants of shorter
duration is necessary to carry out the objectives of this section.
(2) FEDERAL SHARE.The Federal share of the cost of plan-
ning, establishing and operating centers under this section
shall be
(A) not more than 90 percent for the first year in
which Federal funds are received;
(B) not more than 70 percent for the second such year;
and
(C) not more than 50 percent for the third such year
and for each such year thereafter.
(3) NON-FEDERAL SHARE.The non-Federal share of the
cost of planning, establishing, and operating centers under this
section may be provided either in cash or in-kind.
(4) WAIVER OF NON-FEDERAL SHARE.In the case of an in-
stitution of higher education receiving a grant under this part
and conducting outreach or consortia activities with another
institution of higher education in accordance with section
612(cX2)(E), the Secretary may waive a portion of the require-
ments for the non-Federal share required in paragraph (2)
equal to the amount provided by the institution of higher edu-
cation receiving such grant to such other institution of higher
education for carrying out such outreach or consortia activities.
Any such waiver shall be subject to such terms and conditions
as the Secretary deems necessary for carrying out the purposes
of this section.
(f) GRANT CONDITIONS.Grants under this section shall be
made on such conditions as the Secretary determines to be nec-
473
HIGHER EDUCATION ACT OF 1965
Sec. 613
essary to carry out the objectives of this section. Such conditions
shall include
(1) evidence that the institution of higher education, or
combination of such institutions, will conduct extensive plan-
ning prior to the establishment of a center concerning the
scope of the center's activities and the design of its programs
in accordance with subsection (d)(1);
(2) assurance of ongoing collaboration in the establishment
and operation of the center by faculty of the business, manage-
ment, foreign language, international studies, professional
international affairs, and other professional schools or depart-
ments, as appropriate;
(3) assurance that the education and training programs of
the center will be open to students concentrating in each of
these respective areas, as appropriate; and
(4) assurance that the institution of higher education, or
combination of such institutions, will use the assistance pro-
vided under this section to supplement and not to supplant ac-
tivities conducted by institutions of higher education described
in subsection (c)(1).
SEC. 613. [20 U.S.C. 1130a] EDUCATION AND TRAINING PROGRAMS.
(a) PROGRAM AUTHORIZED.The Secretary shall make grants
to, and enter into contracts with, institutions of higher education
to pay the Federal share of the cost of programs designed to pro-
mote linkages between such institutions and the American busi-
ness community engaged in international economic activity. Each
program assisted under this section shall both enhance the inter-
national academic programs of institutions of higher education and
provide appropriate services to the business community which will
expand its capacity to engage in commerce abroad.
(b) AUTHORIZED ACTIVITIES.Eligible activities to be conducted
by institutions of higher education pursuant to grants or contracts
awarded under this section shall include
(1) innovation and improvement in international education
curricula to serve the needs of the business community, includ-
ing development of new programs for nontraditional, mid-ca-
reer, or part-time students;
(2) development of programs to inform the public of in-
creasing international economic interdependence and the role
of American business within the international economic sys-
tem;
(3) internationalization of curricula at the junior and com-
munity college level, and at undergraduate and graduate
schools of business;
(4) development of area studies programs, and inter-
disciplinary international programs;
(5) establishment of export education programs through co-
operative arrangements with regional and world trade centers
and councils, and with bilateral and multilateral trade associa-
tions;
(6) research for and development of specialized teaching
materials, including language materials, and facilities appro-
priate to business-oriented students;
54-653 99 - 16
Sec. 614
HIGHER EDUCATION ACT OF 1965
414
(7) establishment of student and faculty fellowships and
internships for training and education in international busi-
ness activities;
(8) development of opportunities for junior business and
other professional school faculty to acquire or strengthen inter-
national skills and perspectives;
(9) development of research programs on issues of common
interest to institutions of higher education and private sector
organizations and associations engaged in or promoting inter-
national economic activity;
(10) the establishment of internships overseas to enable
foreign language students to develop their foreign language
skills and knowledge of foreign cultures and societies;
(11) the establishment of linkages overseas with institu-
tions of higher education and organizations that contribute to
the educational objectives of this section; and
(12) summer institutes in international business, foreign
area and other international studies designed to carry out the
purposes of this section.
(c) APPLICATIONS.No grant may be made and no contract
may be entered into under this section unless an institution of
higher education submits an application to the Secretary at such
time and in such manner as the Secretary may reasonably require.
Each such application shall be accompanied by a copy of the agree-
ment entered into by the institution of higher education with a
business enterprise, trade organization or association engaged in
international economic activity, or a combination or consortium of
such enterprises, organizations or associations, for the purpose of
establishing, developing, improving or expanding activities eligible
for assistance under subsection (b) of this section. Each such appli-
cation shall contain assurances that the institution of higher edu-
cation will use the assistance provided under this section to supple-
ment and not to supplant activities conducted by institutions of
higher education described in subsection (b).
(d) FEDERAL SHARE.The Federal share under this part for
each fiscal year shall not exceed 50 percent of the cost of such pro-
gram.
SEC. 614. [20 U.S.C. 1130b1 AUTHORIZATION OF APPROPRIATIONS.
(a) CENTERS FOR INTERNATIONAL BUSINESS EDUCATION.There
are authorized to be appropriated $11,000,000 for the fiscal year
1999 and such sums as may be necessary for each of the 4 succeed-
ing fiscal years to carry out the provisions of section 612.
(b) EDUCATION AND TRAINING PROGRAMS.There are author-
ized to be appropriated $7,000,000 for fiscal year 1999, and such
sums as may be necessary for the 4 succeeding fiscal years, to
carry out the provisions of section 613.
475
HIGHER EDUCATION ACT OF 1965
Sec. 622
PART C- INSTITUTE FOR INTERNATIONAL
PUBLIC POLICY
SEC. 621. [20 U.S.C. 1131] MINORITY FOREIGN SERVICE PROFESSIONAL
DEVELOPMENT PROGRAM.
(a) ESTABLISHMENT.The Secretary is authorized to award a
grant, on a competitive basis, to an eligible recipient to enable such
recipient to establish an Institute for International Public Policy
(hereafter in this part referred to as the "Institute"). The Institute
shall conduct a program to significantly increase the numbers of
African Americans and other underrepresented minorities in the
international service, including private international voluntary, or-
ganizations and the foreign service of the United States. Such pro-
gram shall include a program for such students to study abroad in
their junior year, fellowships for graduate study, internships, inten-
sive academic programs such as summer institutes, or intensive
language training.
(b) DEFINITION OF ELIGIBLE RECIPIENT.
(1) IN GENERAL.For the purpose of this part, the term
"eligible recipient" means a consortium consisting of 1 or more
of the following entities:
(A) An institution eligible for assistance under part B
of title III of this Act.
(B) An institution of higher education which serves
substantial numbers of African American or other under-
represented minority students.
(C) An institution of higher education with programs
in training foreign service professionals.
(2) HOST INSTITUTION.Each eligible recipient receiving a
grant under this section shall designate an institution of high-
er education as the host institution for the Institute.
(c) APPLICATION.Each eligible recipient desiring a grant
under this section shall submit an application at such time, in such
manner, and accompanied by such information as the Secretary
may reasonably require.
(d) DURATION.Grants made pursuant to this section shall be
awarded for a period not to exceed 5 years.
(e) MATCH REQUIRED.The eligible recipient of a grant under
this section shall contribute to the conduct of the program sup-
ported by the grant an amount from non-Federal sources equal to
at least one-half the amount of the grant, which contribution may
be in cash or in kind.
SEC. 622. [20 U.S.C. 1131-1] INSTITUTIONAL DEVELOPMENT.
(a) IN GENERAL. The Institute shall award grants, from
amounts available to the Institute for each fiscal year, to histori-
cally Black colleges and universities, Hispanic-serving institutions,
Tribally Controlled Colleges or Universities, and minority institu-
tions, to enable such colleges, universities, and institutions to
strengthen international affairs programs.
(b) APPLICATION.No grant may be made by the Institute un-
less an application is made by the college, university, or institution
at such time, in such manner, and accompanied by such informa-
tion as the Institute may require.
4$'J
Sec. 623.
HIGHER EDUCATION ACT OF 1965
476
(c) DEFINITIONS. In this section
(1) the term "historically Black college and university" has
the meaning given the term in section 322;
(2) the term "Hispanic-serving institution" has the mean-
ing given the term in section 502;
(3) the term "Tribally Controlled College or University"
has the meaning given the term in section 2 of the Tribally
Controlled College or University Assistance Act of 1978 (25
U.S.C. 1801); and
(4) the term "minority institution" has the meaning given
the term in section 365.
SEC. 623. [20 U.S.C. 1131a] STUDY ABROAD PROGRAM.
(a) PROGRAM AUTHORITY.The Institute shall conduct, by
grant or contract, a junior year abroad program. The junior year
abroad program shall be open to eligible students at institutions of
higher education, including historically Black colleges and univer-
sities as defined in section 322 of this Act, tribally controlled In-
dian community colleges as defined in the Tribally Controlled Com-
munity College Assistance Act of 1978, and other institutions of
higher education with significant minority student populations. Eli-
gible student expenses shall be shared by the Institute and the in-
stitution at which the student is in attendance. Each student may
spend not more than 9 months abroad in a program of academic
study, as well as social, familial and political interactions designed
to foster an understanding of and familiarity with the language,
culture, economics and governance of the host country.
(b) DEFINITION OF ELIGIBLE STUDENT.For the purpose of this
section, the term "eligible student" means a student that is-
-
-
(1) enrolled full-time in a baccalaureate degree program at
an institution of higher education; and
(2) entering the third year of study, or completing the
third year of study in the case of a summer abroad program,
at an institution of higher education which nominates such
student for participation in the study abroad program.
(c) SPECIAL RULE.An institution of higher education desiring
to send a student on the study abroad program shall enter into a
Memorandum of Understanding with the Institute under which
such institution of higher education agrees to
(1) provide the requisite academic preparation for students
participating in the study abroad or internship programs;
(2) pay one-third the cost of each student it nominates for
participation in the study abroad program; and
(3) meet such other requirements as the Secretary may
from time to time, by regulation, reasonably require.
SEC. 624. [20 U.S.C. 1131b1 MASTERS DEGREE IN INTERNATIONAL RE-
LATIONS.
The Institute shall provide, in cooperation with the other mem-
bers participating in the eligible recipient consortium, a program of
study leading to a masters degree in international relations. The
masters degree program designed by the consortia shall be re-
viewed and approved by the Secretary. The Institute may grant fel-
lowships in an amount not to exceed the level of support com-
parable to that provided by the National Science Foundation grad-
411
HIGHER EDUCATION ACT OF 1965
Sec. 625
uate fellowships, except such amount shall be adjusted as nec-
essary so as not to exceed the fellow's demonstrated level of need
according to measurement of need approved by the Secretary. A fel-
lowship recipient shall agree to undertake full-time study and to
enter the international service (including work with private inter-
national voluntary organizations) or foreign service of the United
States
SEC. 625. [20 U.S.C. 1131c] INTERNSHIPS.
(a) IN GENERAL. The Institute shall enter into agreements
with historically Black colleges and universities as defined in sec-
tion 322 of this Act, tribally controlled Indian community colleges
as defined in the Tribally Controlled Community College Assist-
ance Act of 1978, other institutions of higher education with signifi-
cant numbers of minority students, and institutions of higher edu-
cation with programs in training foreign service professionals, to
provide academic year internships during the junior and senior
year and summer internships following the sophomore and junior
academic years, by work placements with an international vol-
untary or government organizations or agencies, including the
Agency for International Development, the United States Informa-
tion Agency, the International Monetary Fund, the National Secu-
rity Council, the Organization of American States, the Export-Im-
port Bank, the Overseas Private Investment Corporation, the De-
partment of State, Office of the United States Trade Representa-
tive, the World Bank, and the United Nations.
(b) POSTBACCALAUREATE INTERNSHIPS.The Institute shall
enter into agreements with institutions of higher education de-
scribed in the first sentence of subsection (a) to conduct internships
for students who have completed study for a baccalaureate degree.
The internship program authorized by this subsection shall
(1) assist the students to prepare for a master's degree pro-
gram;
(2) be carried out with the assistance of the Woodrow Wil-
son International Center for Scholars;
(3) contain work experience for the students designed to
contribute to the students' preparation for a master's degree
program; and
(4) be assisted by the Interagency Committee on Minority
Careers in International Affairs established under subsection
(c).
(C) INTERAGENCY COMMITTEE ON MINORITY CAREERS IN INTER-
NATIONAL AFFAIRS.
(1) ESTABLISHMENT.There is established in the executive
branch of the Federal Government an Interagency Committee
on Minority Careers in International Affairs composed of not
less than 7 members, including
(A) the Under Secretary for Farm and Foreign Agricul-
tural Services of the Department of Agriculture, or the
Under Secretary's designee;
(B) the Assistant Secretary and Director General, of
the United States and Foreign Commercial Service of the
Department of Commerce, or the Assistant Secretary and
Director General's designee;
485
Sec. 626
HIGHER EDUCATION ACT OF 1965
418\
(C) the Under Secretary of Defense for Personnel and
Readiness of the Department of Defense, or the Under Sec-
retary's designee;
(D) the Assistant Secretary for Postsecondary Edu-
cation in the Department of Education, or the Assistant
Secretary's designee;
(E) the Director General of the Foreign Service of the
Department of State, or the Director General's designee;
(F) the General Counsel of the Agency for Inter-
national Development, or the General Counsel's designee;
and
(G) the Associate Director for Educational and Cul-
tural Affairs of the United States Information Agency, or
the Associate Director's designee.
(2) FUNCTIONS.The Interagency Committee established
by this section shall
(A) on an annual basis inform the Secretary and the
Institute regarding ways to advise students participating
in the internship program assisted under this section with
respect to goals for careers in international affairs;
(B) locate for students potential internship opportuni-
ties in the Federal Government related to international af-
fairs; and
(C) promote policies in each department and agency
participating in the Committee that are designed to carry
out the objectives of this part.
SEC. 626. [20 U.S.C. 1131d] REPORT.
The Institute shall annually prepare a report on the activities
of the Institute and shall submit such report to the Secretary of
Education and the Secretary of State.
SEC. 627. [20 U.S.C. 1131e] GIFTS AND DONATIONS.
The Institute is authorized to receive money and other prop-
erty donated, bequeathed, or devised to the Institute with or with-
out a condition of restriction, for the purpose of providing financial
support for the fellowships or underwriting the cost of the Junior
Year Abroad Program. All funds or property given, devised, or be-
queathed shall be retained in a separate account, and an account-
ing of those funds and property shall be included in the annual re-
port described in section 626.
SEC. 628. [20 U.S.C. 1131f] AUTHORIZATION.
There is authorized to be appropriated $10,000,000 for fiscal
year 1999 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this part.
PART D-GENERAL PROVISIONS
SEC. 631. [20 U.S.C. 1132] DEFINITIONS.
(a) DEFINITIONS.AS used in this title
(1) the term "area studies" means a program of com-
prehensive study of the aspects of a society or societies, includ-
ing study of its history, culture, economy, politics, international
relations and languages;
48t3
479
HIGHER EDUCATION ACT OF 1965
Sec. 631
(2) the term "international business" means profit-oriented
business relationships conducted across national boundaries
and includes activities such as the buying and selling of goods,
investments in industries, the licensing of processes, patents
and trademarks, and the supply of services;
(3) the term "export education" means educating, teaching
and training to provide general knowledge and specific skills
pertinent to the selling of goods and services to other countries,
including knowledge of market conditions, financial arrange-
ments, laws and procedures;
(4) the term "internationalization of curricula" means the
incorporation of international or comparative perspectives in
existing courses of study or the addition of new components to
the curricula to provide an international context for American
business education;
(5) the term "comprehensive language and area center"
means an administrative unit of a university that contributes
significantly to the national interest in advanced research and
scholarship, employs a critical mass of scholars in diverse dis-
ciplines related to a geographic concentration, offers intensive
language training in languages of its area specialization, main-
tains important library collections related to the area, and
makes training available in language and area studies to a
graduate, postgraduate, and undergraduate clientele; and
(6) the term "undergraduate language and area center"
means an administrative unit of an institution of higher edu-
cation, including but not limited to 4-year colleges, that con-
tributes significantly to the national interest through the edu-
cation and training of students who matriculate into advanced
language and area studies programs, professional school pro-
grams, or incorporates substantial international and foreign
language content into baccalaureate degree programs, engages
in research, curriculum development and community outreach
activities designed to broaden international and foreign lan-
guage knowledge, employs faculty with strong language, area,
and international studies credentials, maintains library hold-
ings, including basic reference works, journals, and works in
translation, and makes training available predominantly to un-
dergraduate students;
(7) the term "critical languages" means each of the lan-
guages contained in the list of critical languages designated by
the Secretary pursuant to section 212(d) of the Education for
Economic Security Act (50 Fed. Reg. 149, 31413), except that,
in the implementation of this definition, the Secretary may set
priorities according to the purposes of this title;
(8) the term "institution of higher education" means, in ad-
dition to institutions which meet the definition of section 101
of this Act, institutions which meet the requirements of section
101 of this Act except that (1) they are not located in the
United States, and (2) they apply for assistance under this title
in consortia with, institutions which meet the definition of sec-
tion 101 of this Act;. and
(9) the term "educational programs abroad" means, pro-
grams of study, internships, or service learning outside the
Sec. 100
HIGHER EDUCATION ACT OF 1965
480
United States which are part of a foreign language or other
international curriculum at the undergraduate or graduate
education levels.
(b) SPECIAL CONDITIONS.All references to individuals or orga-
nizations, unless the context otherwise requires, mean individuals
who are citizens or permanent residents of the United States or or-
ganizations which are organized or incorporated in the United
States.
TITLE
WI-GRADUATE AND
POST-
SECONDARY
IMPROVEMENT
PRO-
GRAMS
SEC. 700. [20 U.S.C. 1133] PURPOSE.
It is the purpose of this title
(1) to authorize national graduate fellowship programs
(A) in order to attract students of superior ability and
achievement, exceptional promise, and demonstrated fi-
nancial need, into high-quality graduate programs and
provide the students with the financial support necessary
to complete advanced degrees; and
(B) that are designed to
(i) sustain and enhance the capacity for graduate
education in areas of national need; and
(ii) encourage talented students to pursue schol-
arly careers in the humanities, social sciences, and the
arts; and
(2) to promote postsecondary programs.
PART AGRADUATE EDUCATION PROGRAMS
Subpart 1Jacob K. Javits Fellowship Program
SEC. 701. [20 U.S.C. 1134] AWARD OF JACOB IL JAVITS FELLOWSHIPS.
(a) AUTHORITY AND TIMING OF AWARDS.The Secretary is au-
thorized to award fellowships in accordance with the provisions of
this subpart for graduate study in the arts, humanities, and social
sciences by students of superior ability selected on the basis of
demonstrated achievement, financial need, and exceptional prom-
ise. The fellowships shall be awarded to students who are eligible
to receive any grant, loan, or work assistance pursuant to section
484 and intend to pursue a doctoral degree, except that fellowships
may be granted to students pursuing a master's degree in those
fields in which the master's degree is the terminal highest degree
awarded in the area of study. All funds appropriated in a fiscal
year shall be obligated and expended to the students for fellow-
ships for use in the academic year beginning after July 1 of the fis-
cal year following the fiscal year for which the funds were appro-
priated. The fellowships shall be awarded for only 1 academic year
of study and shall be renewable for a period not to exceed 4 years
of study.
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Sec. 102
(b) DESIGNATION OF FELLOWS.Students receiving awards
under this subpart shall be known as "Jacob K. Javits Fellows".
(c) INTERRUPTIONS OF STUDY.The institution of higher edu-
cation may allow a fellowship recipient to interrupt periods of
study for a period not to exceed 12 months for the purpose of work,
travel, or independent study away from the campus, if such inde-
pendent study is supportive of the fellowship recipient's academic
program and shall continue payments for those 12-month periods
during which the student is pursuing travel or independent study
supportive of the recipient's academic program.
(d) PROCESS AND TIMING OF COMPETITION.The Secretary
shall make applications for fellowships under this part available
not later than October 1 of the academic year preceding the aca-
demic year for which fellowships will be awarded, and shall an-
nounce the recipients of fellowships under this section not later
than March 1 of the academic year preceding the academic year for
which the fellowships are awarded.
(e) AUTHORITY To CONTRACT.The Secretary is authorized to
enter into a contract with a nongovernmental agency to administer
the program assisted under this part if the Secretary determines
that entering into the contract is an efficient means of carrying out
the program.
SEC. 702. [20 U.S.C. 1134a] ALLOCATION. OF FELLOWSHIPS.
(a) FELLOWSHIP BOARD.
(1) APPOINTMENT.The Secretary shall appoint a Jacob K.
Javits Fellows Program Fellowship Board (hereinafter in this
subpart referred to as the "Board") consisting of 9 individuals
representative of both public and private institutions of higher
education who are especially qualified to serve on the Board.
In making appointments, the Secretary shall give due consider-
ation to the appointment of individuals who are highly re-
spected in the academic community. The Secretary shall assure
that individuals appointed to the Board are broadly represent-
ative of a range of disciplines in graduate education in arts,
humanities, and social sciences.
(2) Dun Es.The Board shall
(A) establish general policies for the program estab-
lished by this subpart and oversee the program's oper-
ation;
(B) establish general criteria for the award of fellow-
ships in academic fields identified by the Board, or, in the
event that the Secretary enters into a contract with a non-
governmental entity to administer the program assisted
under this subpart, by such nongovernmental entity;
(C) appoint panels of academic scholars with distin-
guished backgrounds in the arts, humanities, and social
sciences for the purpose of selecting fellows, except that, in
the event that the Secretary enters into a contract with a
nongovernmental entity to administer the program, such
panels may be appointed by such nongovernmental entity;
and
489
Sec. 702
HIGHER EDUCATION ACT OF 1965
482
(D) prepare and submit to the Congress at least once
in every 3-year period a report on any modifications in the
program that the Board determines are appropriate.
(3) CONSULTATIONS.In carrying out its responsibilities,
the Board shall consult on a regular basis with representatives
of the National Science Foundation, the National Endowment
for the Humanities, the National Endowment for the Arts, and
representatives of institutions of higher education and associa-
tions of such institutions, learned societies, and professional or-
ganizations.
(4) TERM.The term of office of each member of the Board
shall be 4 years, except that any member appointed to fill a va-
cancy shall serve for the remainder of the term for which the
predecessor of the member was appointed. No member may
serve for a period in excess of 6 years.
(5) INITIAL MEETING; VACANCY.The Secretary shall call
the first meeting of the Board, at which the first order of busi-
ness shall be the election of a Chairperson and a Vice Chair-
person, who shall serve until 1 year after the date of the ap-
pointment of the Chairperson and Vice Chairperson. There-
after each officer shall be elected for a term of 2 years. In case
a vacancy occurs in either office, the Board shall elect an indi-
vidual from among the members of the Board to fill such va-
cancy.
(6) QUORUM; ADDITIONAL MEETINGS.(A) A majority of the
members of the Board shall constitute a quorum.
(B) The Board shall meet at least once a year or more fre-
quently, as may be necessary, to carry out the Board's respon-
sibilities.
(7) COMPENSATION.Members of the Board, while serving
on the business of the Board, shall be entitled to receive corn-
pensation at rates fixed by the Secretary, but not exceeding the
rate of basic pay payable for level W of the Executive Sched-
ule, including travel time, and while so serving away from
their homes or regular places of business, the members may be
allowed travel expenses, including per diem in lieu of subsist-
ence, as authorized by section 5703 of title 5, United States
Code, for persons in Government service employed intermit-
tently.
(b) USE OF SELECTION PANELS.The recipients of fellowships
shall be selected in each designated field from among all applicants
nationwide in each field by distinguished panels appointed by the
Board to make such selections under criteria established by the
Board, except that, in the event that the Secretary enters into a
contract with a nongovernmental entity to administer the program,
such panels may be appointed by such nongovernmental entity.
The number of recipients in each field in each year shall not exceed
the number of fellows allocated to that field for that year by the
Board.
(c) FELLOWSHIP PORTABILITY.Each recipient shall be entitled
to use the fellowship in a graduate program at any accredited insti-
tution of higher education in which the recipient may decide to en-
roll.
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Sec. 104
SEC. 703. [20 U.S.C. 1134b] STIPENDS.
(a) AWARD BY SECRETARY.The Secretary shall pay to individ-
uals awarded fellowships under this subpart such stipends as the
Secretary may establish, reflecting the purpose of this program to
encourage highly talented students to undertake graduate study as
described in this subpart. In the case of an individual who receives
such individual's first stipend under this subpart in academic year
1999-2000 or any succeeding academic year, such stipend shall be
set at a level of support equal to that provided by the National
Science Foundation graduate fellowships, except such amount shall
be adjusted as necessary so as not to exceed the fellow's dem-
onstrated level of need determined in accordance with part F of
title IV.
(b) INSTITUTIONAL PAYMENTS.
(1) IN GENERAL.(A) The Secretary shall (in addition to
stipends paid to individuals under this subpart) pay to the in-
stitution of higher education, for each individual awarded a fel-
lowship under this subpart at such institution, an institutional
allowance. Except as provided in subparagraph (B), such allow-
ance shall be, for 1999-2000 and succeeding academic years,
the same amount as the institutional payment made for 1998-
1999 under section 933(b) (as such section was in effect on the
day before the date of enactment of the Higher Education
Amendments of 1998) adjusted for 1999-2000 and annually
thereafter in accordance with inflation as determined by the
Department of Labor's Consumer Price Index for the previous
calendar year.
(B) The institutional allowance paid under subparagraph
(A) shall be reduced by the amount the institution charges and
collects from a fellowship recipient for tuition and other ex-
penses as part of the recipient's instructional program.
(2) SPECIAL RULES.(A) Beginning March 1, 1992, any ap-
plicant for a fellowship under this subpart who has been noti-
fied in writing by the Secretary that such applicant has been
selected to receive such a fellowship and is subsequently noti-
fied that the fellowship award has been withdrawn, shall re-
ceive such fellowship unless the Secretary subsequently makes
a determination that such applicant submitted fraudulent in-
formation on the application.
(B) Subject to the availability of appropriations, amounts
payable to an institution by the Secretary pursuant to this sub-
section shall not be reduced for any purpose other than the
purposes specified under paragraph (1).
SEC. 704. [20 U.S.C. 1134c] FELLOWSHIP CONDITIONS.
(a) REQUIREMENTS FOR RECEIPT.An individual awarded a fel-
lowship under the provisions of this subpart shall continue to re-
ceive payments provided in section 703 only during such periods as
the Secretary finds that such individual is maintaining satisfactory
proficiency in, and devoting essentially full time to, study or re-
search in the field in which such fellowship was awarded, in an in-
stitution of higher education, and is not engaging in gainful em-
ployment other than part-time employment by such institution in
teaching, research, or similar activities, approved by the Secretary.
491
Sec. 705
HIGHER EDUCATION ACT OF 1965
484
(b) REPORTS FROM RECIPIENTS.The Secretary is authorized to
require reports containing such information in such form and filed
at such times as the Secretary determines necessary from any per-
son awarded a fellowship under the provisions of this subpart. The
reports shall be accompanied by a certificate from an appropriate
official at the institution of higher education, library, archive, or
other research center approved by the Secretary, stating that such
individual is making satisfactory progress in, and is devoting es-
sentially full time to the program for which the fellowship was
awarded.
SEC. 705. [20 U.S.C. 1134d] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $30,000,000 for fiscal
year 1999 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this subpart.
Subpart 2Graduate Assistance in Areas of
National Need
SEC. 711. [20 U.S.C. 1135] GRANTS TO ACADEMIC DEPARTMENTS AND
PROGRAMS OF INSTITUTIONS.
(a) GRANT AUTHORITY.
(1) IN GENERAL.The Secretary shall make grants to aca-
demic departments, programs and other academic units of in-
stitutions of higher education that provide courses of study
leading to a graduate degree in order to enable such institu-
tions to provide assistance to graduate students in accordance
with this subpart.
(2) ADDITIONAL GRANTS.The Secretary may also make
grants to such departments, programs and other academic
units of institutions of higher education granting graduate de-
grees which submit joint proposals involving nondegree grant-
ing institutions which have formal arrangements for the sup-
port of doctoral dissertation research with degree-granting in-
stitutions. Nondegree granting institutions eligible for awards
as part of such joint proposals include any organization
which
(A) is described in section 501(c)(3) of the Internal
Revenue Code of 1986, and is exempt from tax under sec-
tion 501(a) of such Code;
(B) is organized and operated substantially to conduct
scientific and cultural research and graduate training pro-
grams;
(C) is not a private foundation;
(D) has academic personnel for instruction and coun-
seling who meet the standards of the institution of higher
education in which the students are enrolled; and
(E) has necessary research resources not otherwise
readily available in such institutions to such students.
(b) AWARD AND DURATION OF GRANTS.
(1) AWARDS.The principal criterion for the award of
grants shall be the relative quality of the graduate programs
presented in competing applications. Consistent with an alloca-
tion of awards based on quality of competing applications, the
49
485
HIGHER EDUCATION ACT OF 1965
Sec. 113
Secretary shall, in awarding such grants, promote an equitable
geographic distribution among eligible public and private insti-
tutions of higher education.
(2)DURATION AND AMOUNT.
(A) DURATION.The Secretary shall award a grant
under this subpart for a period of 3 years.
(B) AMOUNT. The Secretary shall award a grant to an
academic department, program or unit of an institution of
higher education under this subpart for a fiscal year in an
amount that is not less than $100,000 and not greater
than $750,000.
(3) REALLOTMENT.Whenever the Secretary determines
that an academic department, program or unit of an institution
of higher education is unable to use all of the amounts avail-
able to the department, program or unit under this subpart,
the Secretary shall, on such dates during each fiscal year as
the Secretary may fix, reallot the amounts not needed to aca-
demic departments, programs and units of institutions which
can use the grants authorized by this subpart.
(c) PREFERENCE To CONTINUING GRANT RECIPIENTS.
(1) IN GENERAL.The Secretary shall make new grant
awards under this subpart only to the extent that each pre-
vious grant recipient under this subpart has received contin-
ued funding in accordance with subsection (b)(2)(A).
(2) RATABLE REDUCTION.To the extent that appropria-
tions under this subpart are insufficient to comply with para-
graph (1), available funds shall be distributed by ratably reduc-
ing the amounts required to be awarded under subsection
(b)(2)(A).
SEC. 712. [20 U.S.C. 1135a] INSTITUTIONAL ELIGIBILITY.
(a) ELIGIBILITY CRITERIA.Any academic department, program
or unit of an institution of higher education that offers a program
of postbaccalaureate study leading to a graduate degree in an area
of national need (as designated under subsection (b)) may apply for
a grant under this subpart. No department, program or unit shall
be eligible for a grant unless the program of postbaccalaureate
study has been in existence for at least 4 years at the time of appli-
cation for assistance under this subpart.
(b) DESIGNATION OF AREAS OF NATIONAL NEED. After con-
sultation with appropriate Federal and nonprofit agencies and or-
ganizations, the Secretary shall designate areas of national need.
In making such designations, the Secretary shall take into account
the extent to which the interest in the area is compelling, the ex-
tent to which other Federal programs support postbaccalaureate
study in the area concerned, and an assessment of how the pro-
gram could achieve the most significant impact with available re-
sources.
SEC. 713. [20 U.S.C. 1135b] CRITERIA FOR APPLICATIONS.
(a) SELECTION OF APPLICATIONS.The Secretary shall make
grants to academic departments, programs and units of institutions
of higher education on the basis of applications submitted in ac-
cordance with subsection (b). Applications shall be ranked on pro-
gram quality by review panels of nationally recognized scholars
Sec. 113
HIGHER EDUCATION ACT OF 1965
486
and evaluated on the quality and effectiveness of the academic pro-
gram and the achievement and promise of the students to be
served. To the extent possible (consistent with other provisions of
this section), the Secretary shall make awards that are consistent
with recommendations of the review panels.
(b) CONTENTS OF APPLICATIONS.An academic department,
program or unit of an institution ofhigher education, in the depart-
ment, program or unit's application for a grant, shall
(1) describe the current academic program of the applicant
for which the grant is sought;
(2) provide assurances that the applicant will provide,
from other non-Federal sources, for the purposes of the fellow-
ship program under this subpart an amount equal to at least
25 percent of the amount of the grant received under this sub-
part, which contribution may be in cash or in kind, fairly val-
ued;(3) set forth policies and procedures to assure that, in
making fellowship awards under this subpart, the institution
will seek talented students from traditionally underrep-
resented backgrounds, as determined by the Secretary;
-(4) describe the number, types, and amounts of the fellow-
ships that the applicant intends to offer with grant funds pro-
vided under this part;
(5) set forth policies and procedures to assure that, in
making fellowship awards under this subpart, the institution
will make awards to individuals who
(A) have financial need, as determined under part F of
title IV;
(B) have excellent academic records in their previous
programs of study; and
(C) plan to pursue the highest possible degree avail-
able in their course of study;
(6) set forth policies and procedures to ensure that Federal
funds made available under this subpart for any fiscal year
will be used to supplement and, to the extent practical, in-
crease the funds that would otherwise be made available for
the purpose of this subpart and in no case to supplant those
funds;(7) provide assurances that, in the event that funds made
available to the academic department, program or unit under
this subpart are insufficient to provide the assistance due a
student under the commitment entered into between the aca-
demic department, program or unit and the student, the aca-
demic department, program or unit will, from any funds avail-
able to the department, program or unit, fulfill the commit-
ment to the student;
(8) provide that the applicant will comply with the limita-
tions set forth in section 715;
(9) provide assurances that the academic department will
provide at least 1 year of supervised training in instruction for
students; and
(10) include such other information as the Secretary may
prescribe.
494
487
HIGHER EDUCATION ACT OF 1965
Sec. 715
SEC. 714. [20 U.S.C. 1135c] AWARDS TO GRADUATE STUDENTS.
(a) COMMITMENTS TO GRADUATE STUDENTS.
(1) IN GENERAL.An academic department, program or
unit of an institution of higher education shall make commit-
ments to graduate students who are eligible students under
section 484 (including students pursuing a doctoral degree
after having completed a master's degree program at an insti-
tution of higher education) at any point in their graduate study
to provide stipends for the length of time necessary for a stu-
dent to complete the course of graduate study, but in no case
longer than 5 years.
(2) SPECIAL RULE. No such commitments shall be made to
students under this subpart unless the academic department,
program or unit has determined adequate funds are available
to fulfill the commitment from funds received or anticipated
under this subpart, or from institutional funds.
(b) AMOUNT OF STIPENDS.The Secretary shall make pay-
ments to institutions of higher education for the purpose of paying
stipends to individuals who are awarded fellowships under this
subpart. The stipends the Secretary establishes shall reflect the
purpose of the program under this subpart to encourage highly tal-
ented students to undertake graduate study as described in this
subpart. In the case of an individual who receives such individual's
first stipend under this subpart in academic year 1999-2000 or any
succeeding academic year, such stipend shall be set at a level of
support equal to that, provided by the National Science Foundation
graduate fellowships, except such amount shall be adjusted as nec-
essary so as not to exceed the fellow's demonstrated level of need
as determined under part F of title N.
(c) TREATMENT OF INSTITUTIONAL PAYMENTS.An institution of
higher education that makes institutional payments for tuition and
fees on behalf of individuals supported by fellowships under this
subpart in amounts that exceed the institutional payments made
by the Secretary pursuant to section 716(a) may count such excess
toward the amounts the institution is required to provide pursuant
to section 714(b)(2).
(d) ACADEMIC PROGRESS REQUIRED.Notwithstanding the pro-
visions of subsection (a), no student shall receive an award
(1) except during periods in which such student is main-
taining satisfactory progress in, and devoting essentially full
time to, study or research in the field in which such fellowship
was awarded; or
(2) if the student is engaging in gainful employment other
than part-time employment involved in teaching, research, or
similar activities determined by the institution to be in support
of the student's progress towards a degree.
SEC. 715. [20 U.S.C. 1135d] ADDITIONAL ASSISTANCE FOR COST OF
EDUCATION.
(a) INSTITUTIONAL PAYMENTS.
( 1) IN GENERAL.The Secretary shall (in addition to sti-
pends paid to individuals under, this subpart) pay to the insti-
tution of higher education, for each individual awarded a fel-
lowship under this subpart at such institution, an institutional
allowance. Except as provided in paragraph (2), such allowance
Sec. 116
HIGHER EDUCATION ACT OF 1965
488
shall be, for 1999-2000 and succeeding academic years, the
same amount as the institutional payment made for 1998-1999
adjusted annually thereafter in accordance with inflation as
determined by the Department of Labor's Consumer Price
Index for the previous calendar year.
(2) REDUCTION.The institutional allowance paid under
paragraph (1) shall be reduced by the amount the institution
charges and collects from a fellowship recipient for tuition and
other expenses as part of the recipient's instructional program.
(b) USE FOR OVERHEAD PROHIBITED.Funds made available
pursuant to this subpart may not be used for the general oper-
ational overhead of the academic department or program.
SEC. 716. [20 U.S.C. 1135e] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $35,000,000 for fiscal
year 1999 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this subpart.
Subpart 3Thurgood Marshall Legal Educational
Opportunity Program
SEC. 721. [20 U.S.C. 1136] LEGAL EDUCATIONAL OPPORTUNITY PRO-
GRAM.
(a) PROGRAM AUTHORITY.The Secretary shall carry out a pro-
gram to be known as the "Thurgood Marshall Legal Educational
Opportunity Program" designed to provide low-income, minority, or
disadvantaged college students with the information, preparation,
and financial assistance to gain access to and complete law school
study.
(b) ELIGIBILITY.A college student is eligible for assistance
under this section if the student is
(1) from a low-income family;
(2) a minority; or
(3) from an economically or otherwise disadvantaged back-
ground.
(c) CONTRACT OR GRANT AUTHORIZED.The Secretary is au-
thorized to enter into a contract with, or make a grant to, the
Council on Legal Education Opportunity, for a period of not less
than 5 years
(1) to identify college students who are from low-income
families, are minorities, or are from disadvantaged back-
grounds described in subsection (b)(3);
(2) to prepare such students for study at accredited law
schools;
(3) to assist such students to select the appropriate law
school, make application for entry into law school, and receive
financial assistance for such study;
(4) to provide support services to such students who are
first-year law students to improve retention and success in law
school studies; and
(5) to motivate and prepare such students with respect to
law school studies and practice in low-income communities.
(d) SERVICES PROVIDED.In carrying out the purposes de-
scribed in subsection (c), the contract or grant shall provide for the
489
HIGHER EDUCATION ACT OF 1965
Sec. 721
delivery of services through prelaw information resource centers,
summer institutes, midyear seminars, and other educational activi-
ties, conducted under this section. Such services may include
(1) information and counseling regarding
(A) accredited law school academic programs, espe-
cially tuition, fees, and admission requirements;
(B) course work offered and required for graduation;
(C) faculty specialties and areas of legal emphasis; and
(D) undergraduate preparatory courses and curricu-
lum selection;
(2) tutoring and academic counseling, including assistance
in preparing for bar examinations;
(3) prelaw mentoring programs, involving law school
faculty, members of State and local bar associations, and re-
tired and sitting judges, justices, and magistrates;
(4) assistance in identifying preparatory courses and
material for the law school aptitude or admissions tests;
(5) summer institutes for Thurgood Marshall Fellows that
expose the Fellows to a rigorous curriculum that emphasizes
abstract thinking, legal analysis, research, writing, and exam-
ination techniques; and
(6) midyear seminars and other educational activities that
are designed to reinforce reading, writing, and studying skills
of Thurgood Marshall Fellows.
(e) DURATION OF THE PROVISION OF SERVICES.The services
described in subsection (d) may be provided
(1) prior to the period of law school study;
(2) during the period of law school study; and
(3) during the period following law school study and prior
to taking a bar examination.
(f) SUBCONTRACTS AND SUBGRANTS.For the purposes of plan-
ning, developing, or delivering one or more of the services described
in subsection (d), the Council on Legal Education Opportunity shall
enter into subcontracts with, and make subgrants to, institutions
of higher education, law schools, public and private agencies and
organizations, and combinations of such institutions, schools, agen-
cies, and organizations.
(g) STIPENDS.The Secretary shall annually establish the max-
imum stipend to be paid (including allowances for participant trav-
el and for the travel of the dependents of the participant) to
Thurgood Marshall Fellows for the period of participation in sum-
mer institutes and midyear seminars. A Fellow may be eligible for
such a stipend only if the Thurgood Marshall Fellow maintains sat-
isfactory academic progress toward the Juris Doctor or Bachelor of
Laws degree, as determined by the respective institutions.
(h) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this section $5,000,000 for fiscal
year 1999 and each of the 4 succeeding fiscal years.
Sec. 131
HIGHER EDUCATION ACT OF 1965
490
Subpart 4General Provisions
SEC. 731. [20 U.S.C. 1137] ADMINISTRATIVE PROVISIONS FOR SUB-
PARTS 1, 2, AND 3.
(a) COORDINATED ADMINISTRATION.In carrying out the pur-
pose described in section 700(1), the Secretary shall provide for co-
ordinated administration and regulation of graduate programs as-
sisted under subparts 1, 2, and 3 with other Federal programs pro-
viding assistance for graduate education in order to minimize du-
plication and improve efficiency to ensure that the programs are
carried out in a manner most compatible with academic practices
and with the standard timetables for applications for, and notifica-
tions of acceptance to, graduate programs.
(b) HIRING AUTHORITY.For purposes of carrying out subparts
1, 2, and 3, the Secretary shall appoint, without regard to the pro-
visions of title 5, United States Code, that govern appointments in
the competitive service, such administrative and technical employ-
ees, with the appropriate educational background, as shall be need-
ed to assist in the administration of such parts. The employees
shall be paid without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of such title relating to classification
and General Schedule pay rates.
(c) USE FOR RELIGIOUS PURPOSES PROHIBITED.NO institu-
tional payment or allowance under section 703(b) or 715(a) shall be
paid to a school or department of divinity as a result of the award
of a fellowship under subpart 1 or 2, respectively, to an individual
who is studying for a religious vocation.
(d) EVALUATION.The Secretary shall evaluate the success of
assistance provided to individuals under subpart 1, 2, or 3 with re-
spect to graduating from their degree programs, and placement in
faculty and professional positions.
(e) CONTINUATION AWARDS.The Secretary, using funds appro-
priated to carry out subparts 1 and 2, and before awarding any as-
sistance under such parts to a recipient that did not receive assist-
ance under part C or D of title IX (as such parts were in effect
prior to the date of enactment of the Higher Education Amend-
ments of 1998) shall continue to provide funding to recipients of as-
sistance under such part C or D (as so in effect), as the case may
be, pursuant to any multiyear award of such assistance.
PART BFUND FOR THE IMPROVEMENT OF
POSTSECONDARY EDUCATION
SEC. 741. [20 U.S.C. 1138] FUND FOR THE IMPROVEMENT OF POST-
SECONDARY
EDUCATION.
(a) AUTHORITY.The Secretary is authorized to make grants
to, .or enter into contracts with, institutions of higher education,
combinations of such. institutions; -and other public and private
nonprofit institutions and agencies, to enable such institutions,
combinations, and agencies to improve postsecondary education op-
portunities by
491
HIGHER EDUCATION ACT OF 1965
Sec. 142
(1) encouraging the reform, innovation, and improvement
of postsecondary education, and providing equal educational
opportunity for all;
(2) the creation of institutions, programs, and joint efforts
involving paths to career and professional training, and com-
binations of academic and experiential learning;
(3) the establishment of institutions and programs based
on the technology of communications;
(4) the carrying out, in postsecondary educational institu-
tions, of changes in internal structure and operations designed
to clarify institutional priorities and purposes;
(5) the design and introduction of cost-effective methods of
instruction and operation;
(6) the introduction of institutional reforms designed to ex-
pand individual opportunities for entering and reentering insti-
tutions and pursuing programs of study tailored to individual
needs;
(7) the introduction of reforms in graduate education, in
the structure of academic professions, and in the recruitment
and retention of faculties; and
(8) the creation of new institutions and programs for exam-
ining and awarding credentials to individuals, and the intro-
duction of reforms in current institutional practices related
thereto.
(b) PLANNING GRANTS.The Secretary is authorized to make
planning grants to institutions of higher education for the develop-
ment and testing of innovative techniques in postsecondary edu-
cation. Such grants shall not exceed $20,000.
SEC. 742. [20 U.S.C. 1138a] BOARD OF TAE FUND FOR THE IMPROVE-
MENT OF POSTSECONDARY EDUCATION.
(a) ESTABLISHMENT. There is established a National Board of
the Fund for the Improvement of Postsecondary Education (in this
part referred to as the "Board"). The Board shall consist of 15
members appointed by the Secretary for overlapping 3-year terms.
A majority of the Board shall constitute a quorum. Any member of
the Board who has served for 6 consec tive years shall thereafter
be ineligible for appointment to the Board during a 2-year period
following the expiration of such sixth year.
(b) MEMBERSHIP.
(1) IN GENERAL.The Secretary shall designate one of the
members of the Board as Chairperson of the Board. A majority
of the members of the Board shall be public interest represent-
atives, including students, and a minority shall be educational
representatives. All members selected shall be individuals able
to contribute an important perspective on priorities for im-
provement in postsecondary education and strategies of edu-
cational and institutional change.
(2) APPOINTMENT OF DIRECTOR.The Secretary shall ap-
point the Director of the Fund for the Improvement of Post-
secondary Education (hereafter in this part referred to as the
"Director").
(c) DUTIES.The Board shall
(1) advise the Secretary and the Director on priorities for
the improvement of postsecondary education and make such
Sec. 143
HIGHER EDUCATION ACT OF 1965
492
recommendations as the Board may deem appropriate for the
improvement of postsecondary education and for the evalua-
tion, dissemination, and adaptation of demonstrated improve-
ments in postsecondary educational practice;
(2) advise the Secretary and the Director on the operation
of the Fund for the Improvement of Postsecondary Education,
including advice on planning documents, guidelines, and proce-
dures for grant competitions prepared by the Fund; and
(3) meet at the call of the Chairperson, except that the
Board shall meet whenever one-third or more of the members
request in writing that a meeting be held.
(d) INFORMATION AND ASSISTANCE.The Director shall make
available to the Board such information and assistance as may be
necessary to enable the Board to carry out its functions.
SEC. 743. [20 U.S.C. 1138b] ADMINISTRATIVE PROVISIONS.
(a) TECHNICAL EMPLOYEES.The Secretary may appoint, for
terms not to exceed 3 years, without regard to the provisions of
title 5, United States Code, governing appointments in the competi-
tive service, not more than 7 technical employees to administer this
part who may be paid without regard to the provisions of chapter
51 and subchapter III of chapter 53 of such title relating to classi-
fication and General Schedule pay rates.
(b) PROCEDURES.The Director shall establish procedures for
reviewing and evaluating grants and contracts made or entered
into under this part. Procedures for reviewing grant applications or
contracts for financial assistance under this section may not be
subject to any review outside of officials responsible for the admin-
istration of the Fund for the Improvement of Postsecondary Edu-
cation.
SEC. 744. [20 U.S.C. 11380 SPECIAL PROJECTS.
(a) GRANT AUTHORITY.The Director is authorized to make
grants to institutions of higher education, or consortia thereof, and
such other public agencies and nonprofit organizations as the Di-
rector deems necessary for innovative projects concerning one or
more areas of particular national need identified by the Director.
(b) APPLICATION.No grant shall be made under this part un-
less an application is made at such time, in such manner, and con-
tains or is accompanied by such information as the Secretary may
require.
(c) AREAS OF NATIONAL NEED.Areas of national need shall
initially include, but shall not be limited to, the following:
(1) Institutional restructuring to improve learning and pro-
mote productivity, efficiency, quality improvement, and cost
and price control.
(2) Articulation between 2- and 4-year institutions of high-
er education, including developing innovative methods for en-
suring the successful transfer of students from 2- to 4-year in-
stitutions of higher education.
(3) Evaluation and dissemination of model programs.
(4) International cooperation and student exchange among
postsecondary educational institutions.
493
HIGHER EDUCATION ACT OF 1965
Sec. 153
SEC. 745. [20 U.S.C. 1138d] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$30,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
PART C-URBAN COMMUNITY SERVICE
SEC. 751. [20 U.S.C. 1139] FINDINGS.
The Congress finds that
(1) the Nation's urban centers are facing increasingly
pressing problems and needs in the areas of economic develop-
ment, community infrastructure and service, social policy, pub-
lic health, housing, crime, education, environmental concerns,
planning and work force preparation;
(2) there are, in the Nation's urban institutions, people
with underutilized skills, knowledge, and experience who are
capable of providing a vast range of services toward the ame-
lioration of the problems described in paragraph (1);
(3) the skills, knowledge and experience in these urban in-
stitutions, if applied in a systematic and sustained manner,
can make a significant contribution to the solution of such
problems; and
(4) the application of such skills, knowledge and experience
is hindered by the limited funds available to redirect attention
to solutions to such urban problems.
SEC. 752. [20 U.S.C. 1139a] PURPOSE; PROGRAM AUTHORIZED.
(a) PURPOSE.It is the purpose of this part to provide incen-
tives to urban academic institutions to enable such institutions to
work with private and civic organizations to devise and implement
solutions to pressing and severe problems in their communities.
(b) PROGRAM AUTHORIZED.The Secretary is authorized to
carry out a program of providing assistance to eligible institutions
to enable such institutions to carry out the activities described in
section 754 in accordance with the provisions of this part.
SEC. 753. [20 U.S.C. 1139b] APPLICATION FOR URBAN COMMUNITY
SERVICE GRANTS.
(a) APPLICATION.
(1) IN GENERAL.An eligible institution seeking assistance
under this part shall submit to the Secretary an application at
such time, in such form, and containing or accompanied by
such information and assurances as the Secretary may require
by regulation.
(2) CONTENTS.Each application submitted pursuant to
paragraph (1) shall
(A) describe the activities and services for which as-
sistance is sought; and
(B) include a plan that is agreed to by the members
of a consortium that includes, in addition to the eligible in-
stitution, one or more of the following entities:
(i) A community college.
(ii) An urban school system.
(iii) A local government.
(iv) A business or other employer.
501
Sec. 754
HIGHER EDUCATION ACT OF 1965
494
(v) A nonprofit institution.
(3) WAIVER.The Secretary may waive the consortium re-
quirements described in paragraph (2) for any applicant who
can demonstrate to the satisfaction of the Secretary that the
applicant has devised an integrated and coordinated plan
which meets the purpose of this part.
(b) PRIORITY IN SELECTION OF APPLICATIONS.The Secretary
shall give priority to applications that propose to conduct joint
projects supported by other local, State, and Federal programs. In
addition, the Secretary shall give priority to eligible institutions
submitting applications that demonstrate the eligible institution's
commitment to urban community service.
(c) SELECTION PROCEDURES.The Secretary shall, by regula-
tion, develop a formal procedure for the submission of applications
under this part and shall publish in the Federal Register an an-
nouncement of that procedure and the availability of funds under
this part.
SEC. 754. [20 U.S.C. 1139c] ALLOWABLE ACTIVITIES.
Funds made available under this part shall be used to support
planning, applied research, training, resource exchanges or tech-
nology transfers, the delivery of services, or other activities the
purpose of which is to design and implement programs to assist
urban communities to meet and address their pressing and severe
problems, such as the following:
(1) Work force preparation.
(2) Urban poverty and the alleviation of such poverty.
(3) Health care, including delivery and access.
(4) Underperforming school systems and students.
(5) Problems faced by the elderly and individuals with dis-
abilities in urban settings.
(6) Problems faced by families and children.
(7) Campus and community crime prevention, including
enhanced security and safety awareness measures as well as
coordinated programs addressing the root causes of crime.
(8) Urban housing.
(9) Urban infrastructure.
(10) Economic development.
(11) Urban environmental concerns.
(12) Other problem areas which participants in the consor-
tium described in section 753(a)(2)(B) concur are of high prior-
ity in the urban area.
(13)(A) Problems faced by individuals with disabilities re-
garding accessibility to institutions of higher education and
other public and private community facilities.
(B) Amelioration of existing attitudinal barriers that pre-
vent full inclusion by individuals with disabilities in their com-
munity.
(14) Improving access to technology in local communities.
SEC. 755. [20 U.S.C. 1139d] PEER REVIEW.
The Secretary shall designate a peer review panel to review
applications submitted under this part and make recommendations
for funding to the Secretary. In selecting the peer review panel, the
Secretary may consult with other appropriate Cabinet-level officials
495
HIGHER EDUCATION ACT OF 1965
Sec. 158
and with non-Federal organizations, to ensure that the panel will
be geographically balanced and be composed of representatives
from public and private institutions of higher education, labor,
business, and State and local government, who have expertise in
urban community service or in education.
SEC. 756. [20 U.S.C. 1139e] DISBURSEMENT OF FUNDS.
(a) MULTIYEAR AVAILABILITY. Subject to the availability of ap-
propriations, grants under this part may be made on a multiyear
basis, except that no institution, individually or as a participant in
a consortium of such institutions, may receive such a grant for
more than 5 years.
(b)
EQUITABLE GEOGRAPHIC DISTRIBUTION.The Secretary
shall award grants under this part in a manner that achieves an
equitable geographic distribution of such grants.
(c) MATCHING REQUIREMENT.An applicant under this part
and the local governments associated with the application shall
contribute to the conduct of the program supported by the grant an
amount from non-Federal funds equal to at least one-fourth of the
amount of the grant, which contribution may be in cash or in kind.
SEC. 757. [20 U.S.C. 1139f] DESIGNATION OF URBAN GRANT INSTITU-
TIONS.
The Secretary shall publish a list of eligible institutions under
this part and shall designate these institutions of higher education
as "Urban Grant Institutions". The Secretary shall establish a na-
tional network of Urban Grant Institutions so that the results of
individual projects achieved in one metropolitan area can then be
generalized, disseminated, replicated, and applied throughout the
Nation. The information developed as a result of this section shall
be made available to Urban Grant Institutions and to any other in-
terested institution of higher education by any appropriate means.
SEC. 758. [20 U.S.C. 11390 DEFINITIONS.
As used in this part:
(1) URBAN AREA.The term "urban area" means a metro-
politan statistical area having a population of not less than
350,000, or two contiguous metropolitan statistical areas hav-
ing a population of not less than 350,000, or, in any State
which does not have a metropolitan statistical area which has
such a population, the eligible entity in the State submitting
an application under section 753, or, if no such entity submits
an application, the Secretary, shall designate one urban area
for the purposes of this part.
(2) ELIGIBLE INSTITUTION.The term "eligible institution"
means
(A) a nonprofit municipal university, established by
the governing body of the city in which it is located, and
operating as of the date of enactment of the Higher Edu-
cation Amendments of 1992 under that authority; or
(B) an institution of higher education, or a consortium
of such institutions any one of which meets all of the re-
quirements of this paragraph, which
(i) is located in an urban area;
Sec. 159
HIGHER EDUCATION ACT OF 1965
496
(ii) draws a substantial portion of its undergradu-
ate students from the urban area in which such insti-
tution is located, or from contiguous areas;
(iii) carries out programs to make postsecondary
educational opportunities more accessible to residents
of such urban area; or contiguous areas;
(iv) has the present capacity to provide resources
responsive to the needs and priorities of such urban
area and contiguous areas;
(v) offers a range of professional, technical, or
graduate programs sufficient to sustain the capacity of
such institution to provide such resources; and
(vi) has demonstrated and sustained a sense of re-
sponsibility to such urban area and contiguous areas
and the people of such areas.
SEC. 759. [20 U.S.C. 1139h] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated. $20,000,000 for fiscal
year 1999 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this part.
PART D-DEMONSTRATION PROJECTS TO EN-
SURE STUDENTS WITH _DISABILITIES RE-
CEIVE A QUALITY HIGHER EDUCATION
SEC. 761. [20 U.S.C. 1140] PURPOSES.
It is the purpose of this part to support model demonstration
projects to provide technical assistance or professional development
for faculty and administrators in institutions of higher education in
order to provide students with disabilities a quality postsecondary
education.
SEC. 762. [20 U.S.C. 1140a] GRANTS AUTHORIZED.
(a) COMPETITIVE GRANTS AUTHORIZED.The Secretary may
award grants, contracts, and cooperative agreements, on a competi-
tive basis, to institutions of higher education, of which at least two
such grants shall be awarded to institutions that provide profes-
sional development and technical assistance in order for students
with learning disabilities to receive a quality postsecondary edu-
cation.
(b) DURATION; ACTIVITIES.
(1) DURATION.Grants under this part shall be awarded
for a period of 3 years.
(2) AUTHORIZED ACTIVITIES.Grants under this part shall
be used to carry out one or more of the following activities:
(A) TEACHING METHODS AND STRATEGIES.The devel-
opment of innovative, effective, and efficient teaching
methods and strategies to provide faculty and administra-
tors with the skills and supports necessary to teach stu-
dents with disabilities. Such methods and strategies may
include inservice training, professional development, cus-
tomized and general technical assistance, workshops, sum-
mer institutes, distance learning, and training in the use
of assistive and educational technology.
491
HIGHER EDUCATION ACT OF 1965
Sec. 165
(B) SYNTHESIZING RESEARCH AND INFORMATION.Syn-
thesizing research and other information related to the
provision of postsecondary educational services to students
with disabilities.
(C) PROFESSIONAL DEVELOPMENT AND TRAINING SES-
SIONS.Conducting professional development and training
sessions for faculty and administrators from other institu-
tions of higher education to enable the faculty and admin-
istrators to meet the postsecondary educational needs of
students with disabilities.
(3) MANDATORY EVALUATION AND DISSEMINATION.Grants
under this part shall be used for evaluation, and dissemination
to other institutions of higher education, of the information ob-
tained through the activities described in subparagraphs (A)
through (C).
(c) CONSIDERATIONS IN MAKING AWARDS.In awarding grants,
contracts, or cooperative agreements under this section, the Sec-
retary shall consider the following:
(1) GEOGRAPHIC DISTRIBUTION.Providing an equitable ge-
ographic distribution of such grants.
(2) RURAL AND URBAN AREAS.Distributing such grants to
urban and rural areas.
(3) RANGE AND TYPE OF INSTITUTION.Ensuring that the
activities to be assisted are developed for a range of types and
sizes of institutions of higher education.
(4) PRIOR EXPERIENCE OR EXCEPTIONAL PROGRAMS.Insti-
tutions of higher education with demonstrated prior experience
in, or exceptional programs for, meeting the postsecondary edu-
cational needs of students with disabilities.
SEC. 763. [20 U.S.C. 1140b] APPLICATIONS.
Each institution of higher education desiring to receive a
grant, contract, or cooperative agreement under this part shall sub-
mit an application to the Secretary at such time, in such manner,
and accompanied by such information as the Secretary may re-
quire. Each application shall include
(1) a description of how such institution plans to address
each of the activities required under this part;
(2) a description of how the institution consulted with a
broad range of people within the institution to develop activi-
ties for which assistance is sought; and
(3) a description of how the institution will coordinate and
collaborate with the office that provides services to students
with disabilities within the institution.
SEC. 764. [20 U.S.C. 1140c] RULE OF CONSTRUCTION.
Nothing in this part shall be construed to impose any addi-
tional duty, obligation, or responsibility on an institution of higher
education or on the institution's faculty, administrators, or staff
than are required by section 504 of the Rehabilitation Act of 1973
and the Americans with Disabilities Act of 1990.
SEC. 765. [20 U.S.C. 1140d1 AUTHORIZATION OF APPROPRIATIONS.
There are
authorized to be appropriated
for
this
part
$10,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
Higher Education Amendments of 1968
(P.L. 90-575)
AN ACT To amend the. Higher Education Act of 1965, the National Defense Edu-
cation Act of 1958, the National Vocational Student Loan Insurance Act of 1965,
the Higher Education Facilities Act of 1963, and related Acts.
FINANCIAL AID TO STUDENTS NOT TO BE TREATED AS INCOME OR
RESOURCES UNDER CERTAIN PROGRAMS
SEC. 507. For the purpose of any program assisted under title
I, IV, X, XIV, XVI, or XIX of the Social Security Act, no grant or
loan to any undergraduate student for educational purposes made
or insured under any program administered by the Commissioner
of Education shall be considered to be income or resources.
499
Education Amendments of 1972
(P.L. 92-318; 7 U.S.C. 301 note)
*
*
LAND-GRANT STATUS FOR THE COLLEGE OF THE VIRGIN ISLANDS AND
THE UNIVERSITY OF GUAM
SEC. 506. (a) The College of the Virgin Islands, the Community
College of American Samoa, the College of Micronesia, the North-
ern Marianas College, and the University of Guam shall be consid-
ered land-grant colleges established for the benefit of agriculture
and mechanic arts in accordance with the provisions of the Act of
July 2, 1862, as amended (12 Stat. 503; 7 U.S.C. 301-305, 307,
308).
(b) In lieu of extending to the Virgin Islands, Guam, American
Samoa, Micronesia, and the Northern Mariana Islands those provi-
sions of the Act of July 2, 1862, as amended, relating to donations
of public land or land scrip for the endowment and maintenance of
colleges for the benefit of agriculture and the mechanic arts, there
is authorized to be appropriated $3,000,000 to the Virgin Islands
and $3,000,000 to Guam and an equal amount to American Samoa,
Micronesia, and to the Northern Mariana Islands. Amounts appro-
priated pursuant to this section shall be held and considered to
have been granted to the Virgin Islands, Guam, American Samoa,
Micronesia, and the Northern Mariana Islands subject to the provi-
sions of that Act applicable to the proceeds from the sale of land
or land scrip.
500
*
Education Amendments of 1980
TITLE XIIIMISCELLANEOUS PROVISIONS
*
*
PART GNEW LAND GRANT COLLEGES
AMERICAN SAMOA AND MICRONESIA LAND GRANT COLLEGES
SEC. 1361. [7 U.S.C. 301 note] (a)1 * * *
(b)2 * * *
(c) Any provision of any Act of Congress relating to the oper-
ation of or provision of assistance to a land grant college in the Vir-
gin Islands or Guam shall apply to the land grant college in Amer-
ican Samoa and in Micronesia in the same manner and to the same
extent.
(d) Nothing in this section shall be construed to interfere with
or affect any of the provisions of the April 17, 1900 Treaty of Ces-
sion of Tutuila and Aunu'u Islands, or the July 16, 1904 Treaty of
Cession of the Manu'a Islands as ratified by the Act of February
20, 1929 (45 Stat. 1253) and the Act of May 22, 1929 (46 Stat. 4).
PART ITECHNICAL PROVISIONS
CONTRACT AUTHORITY
SEC. 1392. [20 U.S.C. 1146] The authorization to enter into
contracts or other obligations under the Act, as amended by this
Act, shall be effective for fiscal year 1981 and any succeeding fiscal
year only to the extent or in such amounts as are provided in ad-
vance in appropriation Acts.
EFFECTIVE DATES
SEC. 1393. [20 U.S.C. 1011 note] (a) Except as provided in
subsection (b), this Act and the amendments made by this Act shall
take effect on October 1, 1980.
(b)(1) The amendment made by section 301 of this Act to title
III of the Act shall take effect October 1, 1981.
(2) The amendment made by section 404(c)(4) of this Act to sec-
tion 415C(b)(4) of the Act shall be effective October 1, 1979.
1Subsection (a) of section 1361 of the Education Amendments of 1980 amended section 506
of the Education Amendments of 1972.
2Subsection (b) of section 1361 of the Education Amendments of 1980 amended section 5 of
the Second Morrill Act.
501
5
Sec. 1393
EDUCATION AMENDMENTS OF 1980
502
(3) The amendment made by section 405 to subpart 4 of part
A of title IV of the Act shall take effect October 1, 1981.
(4) The amendments made by part B of title IV of this Act
shall take effect, except as otherwise provided therein, on January
1, 1981, and to the extent such amendments make changes in such
part B which affect student loans, such changes shall apply to out-
standing loans as well as to loans made after the amendments take
effect, except that the amendments made by section 415(b) shall
apply with respect to any loan to cover the cost of instruction for
any period of instruction beginning on or after January 1, 1981, to
any student borrower who has no outstanding balance of principal
or interest on any loan made, insured, or guaranteed under part
B of title IV of the Higher Education Act of 1965 on the date on
which the borrower enters into the note or other written evidence
of the loan.
(5) The amendments made by part D of title N of this Act
shall apply to loans made under part E of the Act on or after Octo-
ber 1, 1980.
(6) The amendment made by section 701 of this Act adding sec-
tion 731 of the Act shall apply to loans made under section 731 on
or after October 1, 1980.
Higher Education Amendments of 1986
TITLE IVSTUDENT ASSISTANCE
SEC. 401. STUDENTS GRANTS REAUTHORIZED.
(a) AMENDMENT.Part A of title N of the Act (20 U.S.C. 1070
et seq.) is amended to read as follows:
*
*
*
*
*
*
[Text as amended printed earlier in this volume.]
(b) EFFECTIVE DATES.(1) Except as provided in paragraph (2),
sections 411A through 411F of the Act as amended by this section
shall apply with respect to the determination of need for Pell
Grants for academic years beginning with academic year 1988-
1989. With respect to any preceding academic year, such deter-
minations shall be made in accordance with regulations prescribed
by the .Secretary of Education in accordance with the Student Fi-
nancial Assistance Technical Amendments Act of 1982.
(2) The definition of independent student contained in section
411F(12) of the Act as amended by this section shall apply with re-
spect to the determination of such need for academic years begin-
ning with academic year 1987-1988.
(3) Section 411(c) of the Act as amended by this section shall
apply only to individuals who receive a Pell Grant for the first time
for a period of enrollment beginning on or after July 1, 1987.
(4) Section 411(f) of the Act as amended by this section shall
apply to the awarding of Pell Grants for periods of enrollment be-
ginning on or after July 1, 1987.
(5) Section 413C(c)(2) of the Act as amended by this section
shall apply to the awarding of grants under subpart 2 of part A of
title IV of the Act for periods of enrollment beginning on or after
July 1, 1987.
(6) The changes made in section 413D of the Act shall apply
with respect to the allocation of funds for the academic year 1988-
1989 and succeeding academic years.
(7) The changes made in section 417D of the Act shall apply
with respect to grants awarded under such section in fiscal year
1988 or any succeeding fiscal year.
SEC. 402. EXTENSION OF GUARANTEED STUDENT LOAN PROGRAM.
(a) AMENDMENT.Part B of title N of the Act (20 U.S.C. 1071
et seq.) is amended to read as follows:
*
*
*
*
*
*
[Text as amended printed earlier in this volume.]
503
5 3
Sec. 403
HIGHER EDUCATION AMENDMENTS OF 1986
504
(b) EFFECTIVE DATES.The changes made in part B of title IV
of the Act by the amendment made by subsection (a) of this section
shall take effect on the date of enactment of this Act, except
(1) as otherwise provided in such part B;
(2) the changes in sections 427(a)(2)(C) and 428(b)(1)(M) of
the Act (other than clauses (viii), (ix), and (x) of each such sec-
tion) shall apply only to loans to new borrowers that (A) are
made to cover the cost of instruction for periods of enrollment
beginning on or after July 1, 1987; or (B) are disbursed on or
after July 1, 1987;
(3) the changes made in sections 425(a), 428(b)(1)(A), and
428(b)(1)(B) of the Act shall apply with respect only to loans
disbursed on or after January 1, 1987, or made to cover the
costs of instruction for periods of enrollment beginning on or
after January 1, 1987;
(4) the changes made in subsections (a), (b), and (d) of sec-
tion 433 of the Act shall apply with respect only to loans dis-
bursed on or after January 1, 1987, or made to cover the costs
of instruction for periods of enrollment beginning on or after
January 1, 1987;
(5) the changes in section 428(b)(1)(H) shall apply with re-
spect only to loans for which the borrower files an application
on or after July 1, 1987;
(6) the changes in sections 435(d)(5) and 438(d) of the Act
shall take effect 30 days after the date of enactment of this
Act; and
(7) the changes made in section 438(b) shall take effect
with respect to loans disbursed on or after 30 days after the
date of enactment of this Act or made to cover the costs of in-
struction for periods of enrollment beginning on or after 30
days after the date of enactment of this Act.
(c) CHANGES EFFECTIVE WITHOUT REGARD TO REGULATIONS;
REPUBLICATION OF REGULATIONS.The changes made in part B of
title IV of the Act by the amendment made by subsection (a) of this
section shall be effective in accordance with subsection (b) of this
section without regard to whether such changes are reflected in the
regulations prescribed by the Secretary of Education for the pur-
pose of such part.
(d) NEW BORROWERS.For the purpose of this section, the
term "new borrower" means, with respect to any date, an individ-
ual who on that date has no outstanding balance of principal or in-
terest owing on any loan made, insured, or guaranteed under part
B of title IV of the Act.
SEC. 403. WORK STUDY REAUTHORIZED.
(a) AMENDMENT.Part C of title IV of the Act is amended to
read as follows:
*
[Text as amended printed earlier in this volume.]
(b) EFFECTIVE DATES.(1) Section 442 of the Act shall apply
with respect to the allocation of funds for academic year 1988-1989
and succeeding academic years.
505
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 406
(2) Sections 443(c), 446, and 447 of the Act as amended by this
section shall apply to periods of enrollment beginning on or after
July 1, 1987.
*
*
*
*
*
*
*
SEC. 405. AMENDMENT TO PART E OF'THE ACT.
(a) AMENDMENT.Part E of title N of the Act is amended to
read as follows:
*
*
*
*
*
*
[Text as amended printed earlier in this volume.]
*
(b) EFFECTIVE DATES.(1) Section 462 of the Act shall apply
with respect to academic year 1988,-1989 and succeeding academic_
years.
(2) The changes made in sections 464(c)(1)(A), 464(c)(2), and
465(a)(2)(E) of the Act shall apply only to loans made to cover the
costs of instruction for periods of enrollment beginning on or after
July 1, 1987, to individuals who are new borrowers on that date.
(3) Section 463(a)(9) and section 463A of the Act as amended
by this section shall apply only to loans made for periods of enroll-
ment beginning on or after July 1, 1987.
(4) For the purpose of this subsection, the term "new borrower"
means, with respect to any date, an individual who on that date
has no outstanding balance of principal or interest owing on any
loan made under part E of title IV of the Act.
SEC. 406. ADDITION OF A NEW PART F RELATING TO NEED ANALYSIS
FOR STUDENT ASSISTANCE.
(a) AMENDMENT. Title N of the Act is further amended by re-
designating part F as part G and by inserting after part. E the fol-
lowing new part:
*
*
*
*
*
[Text as amended printed earlier in this volume.]
(b) EFFECTIVE DATES FOR NEED ANALYSIS PROVISIONS.(1) Ex-
cept as provided in paragraphs (2) through (4).
(A) part F of title N of the Act shall apply with respect
to determinations of need under such title for academic years
beginning with academic year 1988-1989 and succeeding aca-
demic years; and
(B) for any preceding academic year, determinations of
need shall be made in accordance with regulations prescribed
by the Secretary of Education in accordance with the Student
Financial Assistance Technical Amendments Act of 1982.
(2) With respect to an application filed after the date of enact-
ment of this Act for a loan under part B of such title for any aca-
demic year preceding academic year 1988-1989, any determination
of expected family contribution shall be made using the system of
financial need analysis approved by the Secretary of Education for
use under subpart 2 of part A and parts C and E of such title.
(3) For purposes of sections 413D(d)(2)(B), 442(d)(2)(B) and
462(d)(2)(B) for any academic year preceding academic year 1988-
1989, the Secretary shall, in lieu of average expected family con-
511.
54-653 99 -17
Sec. 401
HIGHER EDUCATION AMENDMENTS OF 1986
506
tribution, use the procedures for sampling expected family con-
tribution within income categories that was employed for academic
year 1986-1987, adjusted to reflect changes in data.
(4) Section 479B of the Act (as so added) shall apply with re-
spect to financial assistance provided for any academic year begin-
ning after such date of enactment.
(5) The definition of independent student contained in section
480(d) of the Act as amended by subsection (a) of this section shall
apply with respect to the determination of such need for periods of
enrollment beginning on or after January 1, 1987 programs oper-
ated under part B of title IV of the Act, or for periods of enrollment
beginning on or after July 1, 1987, in the case of programs oper-
ated under subpart 2 of part A and parts C and E of such title.
SEC. 407. REVISION OF STUDENT ASSISTANCE GENERAL PROVISIONS.
(a) AMENDMENT.Part G of title IV of the Act (as redesignated
by section 406) is amended to read as follows:
[Text as amended printed earlier in this volume.]
(b) EFFECTIVE DATES.(1) Sections 483(e) and 484(d) of the
Act as amended by this section shall apply to student assistance
awarded for periods of enrollment beginning on or after July 1,
1987.
(2) The changes made in section 484(a)(1) of the Act shall
apply to student assistance awarded for periods of enrollment be-
ginning on or after July 1, 1987.
(3) Section 484(c) of the Act as amended by this section shall
apply only to student assistance awarded for periods of enrollment
beginning on or after July 1, 1987, to individuals who were not
awarded such assistance for any preceding period of enrollment.
(4) Sections 484(f), 485(b), and 487(a)(10) of the Act as amend-
ed by this section shall apply only to periods of enrollment begin-
ning on or after July 1, 1987.
*
TITLE XVAMERICAN INDIAN, ALASKA NATIVE, AND
NATIVE HAWAIIAN CULTURE AND ART DEVELOPMENT
SEC. 1501. [20 U.S.C. 4401 note] SHORT TITLE.
This title may be cited as the "American Indian, Alaska Na-
tive, and Native Hawaiian Culture and Art Development Act".
SEC. 1502. [20 U.S.C. 4401] FINDINGS.
The Congress finds that
(1) Indian art and culture and Native Hawaiian art and
culture have contributed greatly to the artistic and cultural
richness of the Nation;
(2) Indian art and culture and Native Hawaiian art and
culture occupy a unique position in American history as being
our only native art form and cultural heritage;
(3) the enhancement and preservation of this Nation's na-
tive art and culture has a fundamental positive influence on
the American people;
51 2
507
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1503
(4) although the encouragement and support of Indian and
Native Hawaiian arts and crafts are primarily a matter for pri-
vate, local, and Indian and Native Hawaiian initiative, it is
also an appropriate matter of concern to the Federal Govern-
ment;
(5) it is appropriate and necessary for the Federal Govern-
ment to support research and scholarship in Indian art and
culture and Native Hawaiian art and culture and to com-
plement programs for the advancement of such art and culture
by tribal, private, and public agencies and organizations;
(6) current Federal initiatives in the area of Indian art and
culture and Native Hawaiian art and culture are fragmented
and inadequate; and
(7) in order to coordinate the Federal Government's effort
to preserve, support, revitalize, and disseminate Indian art and
culture and Native Hawaiian art and culture, it is desirable to
establish
(A) a national Institute of American Indian and Alas-
ka Native Culture and Arts Development, and
(B) a program for Native Hawaiian culture and arts
development.
SEC. 1503. [20 U.S.C. 4402] DEFINITIONS.
For the purpose of this title
(1) The term "Indian art and culture" includes (but is not
limited to) the traditional and contemporary expressions of In-
dian language, history, visual and performing arts, and crafts.
(2) The term "Native Hawaiian art and culture" includes
the traditional and contemporary expressions of Native Hawai-
ian language, history, visual and performing arts, and crafts.
(3) The term "Institute" means the Institute of American
Indian and Alaska Native Culture and Arts Development es-
tablished by this title.
(4) The term "Indian" means any person who is a member
of an Indian tribe.
(5) The term "Indian tribe" means any tribe, band, nation,
or other organized group or community of Indians, including
any Alaska Native village (as defined in, or established pursu-
ant to, the Alaska Native Claims Settlement Act), which is rec-
ognized as eligible for special programs and services provided
by the United States to Indians because of their status as Indi-
ans.
(6) The term "Native Hawaiian" means any descendent of
a person who, prior to 1778, was a native of the Hawaiian Is-
lands.
(7) The term "Secretary" means the Secretary of the Inte-
rior.
(8) The term "Board" means the Board of Trustees of the
Institute established under this title.
PART AAMERICAN INDIANS AND ALASKA NATIVES
SEC. 1504. [20 U.S.C. 4411] ESTABLISHMENT OF INSTITUTE.
(a) IN GENERALThere is hereby established a corporation to
be known as the "Institute of American Indian and Alaska Native
513
Sec. 1504
HIGHER EDUCATION AMENDMENTS OF 1986
508
Culture and Arts Development", which shall be under the direction
and control of a Board of Trustees established under section 1505.
(b) SUCCESSION AND AMENDMENT OF CHARTER.The corpora-
tion established under subsection (a) shall have succession until
dissolved by Act of Congress. Only the Congress shall have the au-
thority to revise or amend the charter of such corporation.
SEC. 1505. [20 U.S.C. 4412] BOARD OF TRUSTEES.
(a) COMPOSITION.
(1) The Board of Trustees of the Institute shall be com-
posed of 13 voting members and 6 nonvoting members as fol-
lows:
(A) Subject to the provisions of subsection (i), the vot-
ing members shall be appointed by the President of the
United States by and with the advice and consent of the
Senate, not later than 180 days after the date of enact-
ment of this Act, from among individuals from private life
who are Indians, or other individuals, widely recognized in
the field of Indian art and culture and who represent di-
verse political views, and diverse fields of expertise, includ-
ing finance, law, fine arts, and higher education adminis-
tration.
(B) The nonvoting members shall consist of
(i) 2 Members of the House of Representatives ap-
pointed by the Speaker of the House of Representa-
tives in consultation with the Minority Leader of the
House of Representatives;
(ii) 2 Members of the Senate appointed by the
President pro tempore of the Senate, upon the rec-
ommendation of the Majority Leader and the Minority
Leader of the Senate;
(iii) the President of the Institute, ex officio; and
(iv) the president of the student body of the Insti-
tute, ex officio.
(2) In making appointments pursuant to paragraph (1)(A),
the President of the United States shall
(A) consult with the Indian tribes and the various or-
ganizations of Indians;
(B) publish in the Federal Register an announcement
of the expiration of terms no less than 4 months before
such expiration;
(C) solicit nominations from Indian tribes and various
Indian organizations to fill the vacancies;
(D) give due consideration to the appointment of indi-
viduals who will provide appropriate regional and tribal
representation on the Board; and
(E) ensure that a majority of the Board appointed
under paragraph (1)(A) are Indians.
(3) The President shall carry out the activities described in
subparagraphs (B) and (C) of paragraph (2) through the Board.
The Board may make recommendations based upon the nomi-
nations received, may make recommendations of its own, and
may review and make comments to the President or the Presi-
509
NIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1505
dent's appointed staff on individuals being considered by the
President for whom no nominations have been received.
(4) Members of Congress appointed under this section, or
their designees, shall be entitled to attend all meetings of the
Board and to provide advice to the Board on any matter relat-
ing to the Institute.
(b) TERMS OF OFFICE.
(1) Except as otherwise provided in this section, members
shall be appointed for terms of office of 6 years.
(2) The terms of office on the Board for the Members of the
House of Representatives and of the Senate shall expire at the
end of the congressional term of office during which such Mem-
ber or Senator was appointed to the Board.
(3) Of the members of the Board first appointed under sub-
section (a)(1)(A)
(A) 4 shall be appointed for terms of office of 2 years;
(B) 4 shall be appointed for terms of office of 4 years;
and
(C) 5 shall be appointed for terms of office of 6 years,
as determined by the drawing of lots during the first meeting
of the Board.
(4) No member of the Board appointed under subsection
(a)(1)(A) shall be eligible to serve in excess of 2 consecutive
terms, but may continue to serve until such member's succes-
sor is appointed.
(c) VACANCIES.Any member of the Board appointed under
subsection (a) to fill a vacancy occurring before the expiration of
the term to which such member's predecessor was appointed shall
be appointed for the remainder of such term. If the vacancy occurs
prior to the expiration of the term of a member of the Board ap-
pointed under subsection (a)(1)(B), a replacement shall be ap-
pointed in the same manner in which the original appointment was
made.
(d) REMOVAL.No member of the Board may be removed dur-
ing the term of office of such member except for just and sufficient
cause.
(e) CHAIRMAN AND VICE CHAIRMAN.The President of the
United States shall designate the initial Chairman and Vice Chair-
man of the Board from among the members of the Board appointed
pursuant to subsection (a)(1)(A). Such Chairman and Vice Chair-
man so designated shall serve for 12 calendar months. Thereafter,
the Chairman and Vice Chairman shall be elected from among the
members of the Board appointed pursuant to subsection (a)(1)(A)
and shall serve for terms of 2 years. In the case of a vacancy in
the office of Chairman or Vice Chairman, such vacancy shall be
filled by the members of the Board appointed pursuant to sub-
section (a)(1)(A), and the member filling such vacancy shall serve
for the remainder of the unexpired term.
(0 QUORUM.Unless otherwise provided by the bylaws of the
Institute, a majority of the members appointed under subsection
(a)(1)(A) shall constitute a quorum.
(g) POWERS.The Board is authorized
(1) to formulate the policy of the Institute;
(2) to direct the management of the Institute; and
r
Sec. 1506
HIGHER EDUCATION AMENDMENTS OF 1986
510
(3) to make such bylaws and rules as it deems necessary
for the administration of its functions under this title, includ-
ing the organization and procedures of the Board.
(h) COMPENSATION.Members of the Board appointed pursu-
ant to subsection (a)(1)(A) shall, for each day they are engaged in
the performance of the duties under this title, receive compensation
at the rate of $125 per day, including traveltime. All members of
the Board, while so serving away from their homes or regular
places of business, shall be allowed travel expenses (including per
diem in lieu of subsistence), as authorized by section 5703 of title
5, United States Code, for persons in Government service employed
intermittently.
(i) APPOINTMENT EXCEPTION FOR CONTINUITY.
(1) In order to maintain the stability and continuity of the
Board, the Board shall have the power to recommend the con-
tinuation of members on the Board pursuant to the provisions
of this subsection. When the Board makes such a recommenda-
tion, the Chairman of the Board shall transmit the rec-
ommendation to the President no later than 75 days prior to
the expiration of the term of the member.
(2) If the President has not transmitted to the Senate a
nomination to fill the position of a member covered by such a
recommendation within 60 days from the date that the mem-
ber's term expires, the member shall be deemed to have been
reappointed for another full term to the Board, with all the ap-
propriate rights and responsibilities.
(3) This subsection shall not be construed to permit less
than 7 members of the Board to be Indians. If an extension of
a term under paragraph (2) would result in less than 7 mem-
bers being Indians, the term of the member covered by para-
graph (2) shall be deemed to expire 60 days after the date upon
which it would have been deemed to expire without the oper-
ation of this subsection, except that the provisions of sub-
section (b)(4), relating to continuation of service pending re-
placement, shall continue to apply.
SEC. 1506. [20 U.S.C. 4413] EXECUTIVE BOARD.
(a) ComposmoN.The Board shall have an Executive Board
composed of
(1) the chairman of the Board;
(2) the vice chairman of the Board;
(3) the secretary of the Board;
(4) the treasurer of the Board; and
(5) an at-large member of the Board elected by the Board
at its initial meeting.
(b) VACANCIES.In the case of any vacancy which occurs in the
position of at-large member before the expiration of such member's
term, the Board shall elect a replacement to complete that term.
(c) MEETINGS.The Executive Board shall hold not more than
4 regular meetings per calendar year. Special meetings may be
held upon the call of the chairman or 3 members of the Executive
Board.
(d) QUORUM.A majority of the Executive Board shall con-
stitute a quorum.
511
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1501
(e) POWERS.The Executive Board may hold and use all the
powers of the Board, subject to the approval of the Board.
SEC. 1507. [20 U.S.C. 4414] GENERAL POWERS OF THE BOARD.
(a) IN GENERAL.In carrying out the provisions of this title,
the Board shall have the power, consistent with the provisions of
this title
(1) to adopt, use, and alter a corporate seal;
(2) to make agreements and contracts with persons, Indian
tribes, and private or governmental entities and to make pay-
ments or advance payments under such agreements or contract
without regard to section 3324 of title 31, United States Code;
(3) any other provision of law to the contrary notwith-
standing, to enter into joint development ventures with public
or private commercial or noncommercial entities for develop-
ment of facilities to meet the plan required under section 1519,
if the ventures are related to and further the mission of the In-
stitute;
(4) to sue and be sued in its corporate name and to com-
plain and defend in any court of competent jurisdiction;
(5) to represent itself, or to contract for representation, in
all judicial, legal, and other proceedings;
(6) with the approval of the agency concerned, to make use
of services, facilities, and property of any board, commission,
independent establishment, or executive agency or department
of the executive branch in carrying out the provisions of this
title and to pay for such use (such payments to be credited to
the applicable appropriation that incurred the expense);
(7) to use the United States mails on the same terms and
conditions as the executive departments of the United States
Government;
(8) to obtain the services of experts and consultants in ac-
cordance with the provisions of section 3109 of title 5, United
States Code, and to accept and utilize the services of voluntary
and noncompensated personnel and reimburse them for travel
expenses, including per diem, as authorized by section 5703 of
title 5, United States Code;
(9) to solicit, accept, and dispose of gifts, bequests, devises
of money, securities, and other properties of whatever char-
acter, for the benefit of the Institute;
(10) to receive grants from, and enter into contracts and
other arrangements with, Federal, State, or local governments,
public and private agencies, organizations, institutions, and in-
dividuals;
(11) to acquire, hold, maintain, use, operate, and dispose
of such real property, including improvements thereon, per-
sonal property, equipment, and other items, as may be nec-
essary to enable the Board to carry out the purpose of this
title;
(12) to the extent not already provided by law, to obtain
insurance to cover all activities of the Institute, including cov-
erage relating to property and liability, or make other provi-
sions against losses;
Sec. 1508
HIGHER EDUCATION AMENDMENTS OF 1986
512
(13) to use any funds or property received by the Institute
to carry out the purpose of this title, including the authority
to designate on an annual basis a portion, not to exceed 10 per-
cent, of the funds appropriated pursuant to section 1531 for in-
vestment, without regard to any other provision of law regard-
ing investment or disposition of federally appropriated funds,
on a short-term basis for the purpose of maximizing yield and
liquidity of such funds;
(14) to exercise all other lawful powers necessarily or rea-
sonably related to the establishment of the Institute in order
to carry out the provisions of this title and the exercise of the
powers, purposes, functions, duties, and authorized activities of
the Institute.
(b) ACCOUNTING FOR NON-FEDERAL FUNDS.Any funds re-
ceived by, or under the control of, the Institute that are not Federal
funds shall be accounted for separately from Federal funds.
(c) INTEREST AND INVESTMENTS.Interest and earnings on
amounts received by the Institute pursuant to section 1531 in-
vested under subsection (a)(12) shall be the property of the Insti-
tute and shall be expended to carry out this title. The Board shall
be held to a reasonable and prudent standard of care, given such
information and circumstances as existed when the decision is
made, in decisions involving investment of funds under subsection
(a)(12).
SEC. 1508. [20 U.S.C. 4415] PRESIDENT OF THE INSTITUTE.
(a) APPOINTMENT.The Institute shall have a President who
shall be appointed by the Board. The President of the Institute
shall serve as the chief executive officer of the Institute. Subject to
the direction of the Board and the general supervision of the Chair-
man of the Board, the President of the Institute shall have the re-
sponsibility for carrying out the policies and functions of the Insti-
tute and shall have authority over all personnel and activities of
the Institute.
(b) COMPENSATION.The President of the Institute shall be
paid at a rate not to exceed the maximum rate of basic pay payable
for grade GS-18 of the General Schedule.
SEC. 1509. [20 U.S.C. 4416] STAFF OF INSTITUTE.
(a) EXEMPTION FROM CIVIL SERVICE.Except as otherwise pro-
vided in this section, title 5, United States Code, shall not apply
to the Institute.
(b) APPOINTMENT AND COMPENSATION.
(1) The President of the Institute, with the approval of the
Board, shall have the authority to appoint, fix the compensa-
tion of (including health and retirement benefits), and pre-
scribe the duties of, such officers and employees as the Presi-
dent of the Institute deems necessary for the efficient adminis-
tration of the Institute.
(2) The President of the Institute shall fix the basic com-
pensation for officers and employees of the Institute at rates
comparable to the rates in effect under the General Schedule
for individuals with comparable qualifications and positions, to
whom chapter 51 of title 5, United States Code applies. If the
Board determines that such action is necessary for purposes of
518
513
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1509
recruitment or retention of officers or employees necessary to
the functions of the Institute, the Board is authorized, by for-
mal action, to establish a rate of, or a range for, basic com-
pensation that is comparable to the rate of compensation paid
to officers or employees having similar duties and responsibil-
ities in other institutions of higher education.
(3)(A) Not later than 180 days after the President of the
Institute is appointed, the President of the Institute shall
make policies and procedures governing
(i) the establishment of positions at the Institute,
(ii) basic compensation for such positions (including
health and retirement benefits),
(iii) entitlement to compensation,
(iv) conditions of employment,
(v) discharge from employment,
(vi) the leave system, and
(vii) such other matters as may be appropriate.
(B) Rules and regulations promulgated with respect to dis-
charge and conditions of employment shall require
(i) that procedures be established for the rapid ..and eq-
uitable resolution of grievances of such individuals; and
(ii) that no individual may be discharged without no-
tice of the reasons therefor and an opportunity for a hear-
ing under procedures that comport with the requirements
of due process.
(c) APPEAL TO BOARD.Any officer or employee of the Institute
may appeal to the Board any determination by the President of the
Institute to not re-employ or to discharge such officer or employee.
Upon appeal, the Board may, in writing, overturn the determina-
tion of the President of the Institute with respect to the employ-
ment of such officer or employee.
(d) No REDUCTION IN CLASSIFICATION OR COMPENSATION.In-
dividuals who elect to remain civil service employees shall be
transferred in accordance with applicable laws and regulations re-
lating to the transfer of functions and personnel, except that any
such transfer shall not result in a reduction in classification or
compensation with respect to any such individual for at least one
year after the date on which such transfer occurs.
(e) LEAVE.
(1) Any individual who
(A) elects under subsection (g) to be covered under the
provisions of this section, or
(B) is an employee of the Federal Government and is
transferred or reappointed, without a break in service,
from a position under a different leave system to the Insti-
tute,
shall be credited for purposes of the leave system provided
under rules and regulations promulgated pursuant to sub-
section (b), with the annual and sick leave to the credit of such
individual immediately before the effective date of such elec-
tion, transfer, or reappointment.
(2) Upon termination of employment with the Institute,
any annual leave remaining to the credit of an individual with-
in the purview of this section shall be liquidated in accordance
J
Sec. 1509
HIGHER EDUCATION AMENDMENTS OF 1986
514
with sections 5551(a) and 6306 of title 5, United States Code,
except that leave earned or accrued under rules and regula-
tions promulgated pursuant to subsection (b) shall not be so
liquidated.
(3) In the case of any individual who is transferred, pro-
moted, or reappointed, without break in service, to a position
in the Federal Government under a different leave system, any
remaining leave to the credit of such person earned or credited
under the rules and regulations promulgated pursuant to sub-
section (b) shall be transferred to the credit of such individual
in the employing agency on an adjusted basis in accordance
with the rules and regulations which shall be promulgated by
the Office of Personnel Management.
(f) APPLICABILITY.-
(1) This section shall apply to any individual appointed
after October 17, 1986, for employment in the Institute. Except
as provided in subsections (d) and (g), the enactment of this
title shall not affect
(A) the continued employment of any individual em-
ployed before October 17, 1986; or
(B) such individual's right to receive the compensation
attached to such position.
(2) This section shall not apply to an individual whose
services are procured by the Institute pursuant to a written
procurement contract.
(3) This section shall not apply to employees of an entity
performing services pursuant to a written contract with the In-
stitute.
(g) TERMINATION OF CIVIL SERVICE POSITIONS.
(1) On June 30, 1989, any position at the Institute which
is occupied by an individual in the civil service shall terminate.
During such period, such individual may make an irrevocable
election to be covered under the provisions of this section, ex-
cept that any such individual who is subject to subchapter III
of chapter 83 of title 5, United States Code, may elect to con-
tinue to be subject to such subchapter, and any such individual
who is subject to chapter 84 of such title may elect to continue
to be subject to such chapter.
(2) Any individual who makes an election under paragraph
(1) to continue to be subject to subchapter III of chapter 83 of
title 5, United States Code, or chapter 84 of such title shall,
so long as continually employed by the Institute without a
break in service subject to such subchapter or such chapter 84,
as the case may be, continue to be treated as an employee sub-
ject to such subchapter or such chapter 84, as the case may be.
Employment by the Institute without a break of continuity in
service shall be considered to be employment by the United
States Government for the purpose of such subchapter or such
chapter 84, as the case may be. The Institute shall be respon-
sible for making the contributions required to be made by an
employing agency under such subchapter or such chapter 84,
as the case
515
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1511
(h) COLLECTIVE BARGAINING.The Institute shall be consid-
ered an agency for the purpose of chapter 71 of title 5, United
States Code.
(i) WORKMEN'S COMPENSATION.Employees of the Institute
shall receive compensation for work injuries and illnesses in ac-
cordance with chapter 81 of title 5, United States Code.
SEC. 1510. [20 U.S.C. 4417] FUNCTIONS OF THE INSTITUTE.
(a) PRIMARY FUNCTIONS.The primary functions of the Insti-
tute shall be
(1) to provide scholarly study of, and instruction in, Indian
art and culture, and
(2) to establish programs which culminate in the awarding
of degrees in the various fields of Indian art and culture.
(b) ADMINISTRATIVE ENTITIES.
(1) The Board shall be responsible for establishing the poli-
cies and internal organization that relate to the control and
monitoring of all subdivisions, administrative entities, and de-
partments of the Institute.
(2) The specific responsibilities of each subdivision, entity,
and department of the Institute are solely within the discretion
of the Board, or its designee.
(3) The Board shall establish, within the Institute, depart-
ments for the study of culture and arts and for research and
exchange, and a museum. The Board shall establish the areas
of competency for the departments created under this para-
graph, which may include (but are not limited to) Departments
of Arts and Sciences, Visual Arts, Performing Arts, Language,
Literature and Museology and a learning resources center, pro-
grams of institutional support and development, research pro-
grams, fellowship programs, seminars, publications, scholar-in-
residence programs and inter-institutional programs of co-
operation at national and international levels.
(3) a Museum of American Indian and Alaska Native Arts,
which shall be under the direction of the President of the Insti-
tute.
(c) OTHER PROGRAMS.In addition to the centers and pro-
grams described in subsection (b), the Institute shall develop such
programs and centers as the Board determines are necessary to
(1) foster research and scholarship in Indian art and cul-
ture through
(A) resident programs;
(B) cooperative programs; and
(C) grant programs;
(2) complement existing tribal programs for the advance-
ment of Indian art and culture; and
(3) coordinate efforts to preserve, support, revitalize, and
develop evolving forms of Indian art and culture.
SEC. 1511. [20 U.S.C. 4418] INDIAN PREFERENCE.
(a) IN GENERAL.Notwithstanding any other provision of Fed-
eral or State law, the Institute is authorized to develop a policy or
policies for the Institute to extend preference to Indians in
(1) admissions to, and enrollment in, programs conducted
by the Institute,
521
Sec. 1512
HIGHER EDUCATION AMENDMENTS OF 1986
516
(2) employment by the Institute, and
(3) contracts, fellowships, and grants awarded by the Insti-
tute.
(b) HIRING PREFERENCE.In carrying out section 1509(b)(1),
the President of the Institute shall, to the maximum extent prac-
ticable, give preference in hiring to Indians.
SEC. 1512. [20 U.S.C. 4419] NONPROFIT AND NONPOLITICAL NATURE
OF THE INSTITUTE.
(a) STOCK.The Institute shall have no power to issue any
shares of stock or to declare or pay any dividends.
(b) NONPROFIT NATURE.No part of the income or assets of the
Institute shall inure to the benefit of any director, officer, em-
ployee, or any other individual except as salary or reasonable com-
pensation for services.
(c) NONPOLITICAL NATURE.The Institute may not contribute
to, or otherwise support, any political party or candidate for elec-
tive public office.
SEC. 1513. [20 U.S.C. 4420] TAX STATUS; TORT. LIABILITY.
(a) TAx STATUS.The Institute and the franchise, capital, re-
serves, income, and property of the Institute shall be exempt from
all taxation now or hereafter imposed by the United States, by any
Indian tribe, or by any State or political subdivision thereof.
(b) TORT LIABILITY.
(1) The Institute shall be subject to liability relating to tort
claims only to the extent a Federal agency is subject to such
liability under chapter 171 of title 28, United States Code.
(2) For purposes of chapter 171 of title 28, United States
Code, the Institute shall be treated as a Federal agency (within
the meaning of section 2671 of such title).
(3) For purposes of chapter 171 of title 28, United States
Code, the President of the Institute shall be deemed the head
of the Agency.
SEC. 1514. [20 U.S.C. 4421] TRANSFER OF FUNCTIONS.
(a) INSTITUTE OF AMERICAN INDIAN ARTS.There are hereby
transferred to the Institute of American Indian and Alaska Native
Culture and Art Development, and such Institute shall perform,
the functions of the Institute of American Indian Arts established
by the Secretary in 1962.
(b)
CERTAIN MATTERS RELATING TO TRANSFERRED FUNC-
TIONS.
(1) Subject to subsection (d), all personnel, liabilities, con-
tracts, real property (including the collections of the museum
located on the site known as the "Santa Fe Indian School" but
not the museum building), personal property, assets, and
records as are determined by the Director of the Office of Man-
agement and Budget to be employed, held, or used primarily
in connection with any function transferred under the provi-
sions of this title (regardless of the administrative entity pro-
viding the services on the date before the transfer) shall be
transferred to the Institute.
(2) Personnel engaged in functions transferred by this title
shall be transferred in accordance with applicable laws and
regulations relating to the transfer of functions, except that
517
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1515
such transfer shall be without reduction in classification or
compensation for one year after such transfer.
(c) REFERENCES IN OTHER LAWS.All laws and regulations re-
lating to the Institute of American Indian Arts established by the
Secretary in 1962 shall, insofar as such laws and regulations are
appropriate, and not inconsistent with the provisions of this title,
remain in full force and effect and apply with respect to the Insti-
tute. All references in any other Federal law to the Institute of
American Indian Arts, or any officer transferred to the Institute of
American Indian and Alaska Native Culture and Arts Development
under subsection (b), shall be deemed to refer to the Institute of
American Indian and Alaska Native Culture and Arts Development
or an officer of the Institute of American Indian and Alaska Native
Culture and Arts Development.
(d) FORGIVENESS OF AMOUNTS OWED; HOLD HARMLESS.(1)
Subject to paragraph (2)
(A) the Institute shall be responsible for all obligations of
the Institute incurred after June 2, 1988, and
(B) the Secretary shall be responsible for all obligations of
the Institute incurred on or before June 2, 1988, including
those which accrued by reason of any statutory, contractual, or
other reason prior to June 2, 1988, which became payable
within two years of June 2, 1988.
(2) With respect to all programs of the Federal Government, in
whatever form or from whatever source derived, the Institute shall
only be held responsible for actions and requirements, either ad-
ministrative, regulatory, or statutory in nature, for events which
occurred after July 1, 1988, including the submission of reports, au-
dits, and other required information. The United States may not
seek any monetary damages or repayment for the commission of
events, or omission to comply with either administrative or regu-
latory requirements, for any action which occurred prior to June 2,
1988.
SEC. 1515. [20 U.S.C. 4422] REPORTS.
(a) ANNUAL REPORT.The President of the Institute shall sub-
mit an annual report to the. Congress and to the Board concerning
the status of the Institute during the 12 calendar months preceding
the date of the report. Such report shall include, among other mat-
ters, a detailed statement of all private and public funds, gifts, and
other items of a monetary value received by the Institute during
such 12-month period and the disposition thereof as well as any
recommendations for improving the Institute.
(b) BUDGET PROPOSAL.
(1) After September 30, 1988 and for each fiscal year
thereafter, the Board shall submit a budget proposal to the
Congress.
(2) A budget proposal under this subsection shall be sub-
mitted not later than April 1 of each calendar year and shall
propose a budget for the Institute for the 2 fiscal years suc-
ceeding the fiscal year during which such proposal is submit-
. ted.
(3) In determining the amount of funds to be appropriated
to the Institute on the basis of such proposals, the Congress
Sec. 1516
HIGHER EDUCATION AMENDMENTS OF 1986
518
shall not consider the amount of private fundraising or be-
quests made on behalf of the Institute during any preceding
fiscal year.
SEC. 1516. [20 U.S.C. 4423] HEADQUARTERS.
Santa Fe, New Mexico, shall be maintained as the location for
the Institute of Indian and Alaska Native Culture and Arts Devel-
opment. To facilitate this action and the continuity of programs
being provided at the Institute of American Indian Arts, the Board
may enter into negotiations with State and local governments for
such exchanges or transfers of lands and such other assistance as
may be required.
SEC. 1517. [20 U.S.C. 4424] COMPLIANCE WITH OTHER ACTS.
(a) IN GENERAL.The Institute shall comply with the provi-
sions of
(1) Public Law 95-341 (42 U.S.C. 1996), popularly known
as the American Indian Religious Freedom Act,
(2) the Archeological Resources Protection Act of 1979 (16
U.S.C. 470aa et seq.), and
(3) the National Historic Preservation Act (16 U.S.C. 470
et seq.).
(b) CRIMINAL LAWS.All Federal criminal laws relating to lar-
ceny, embezzlement, or conversion of the funds or the property of
the United States shall apply to the funds and property of the In-
stitute.
(c) OTHER FEDERAL ASSISTANCE.
(1) Funds received by the institute pursuant to this Act
shall not be regarded as Federal money for purposes of meet-
ing any matching requirements for any Federal grant, contract
or cooperative agreement.
(2) The Institute shall not be subject to any provision of
law requiring that non-Federal funds or other moneys be used
in part to fund any grant, contract, cooperative agreement, or
project as a condition to the application for, or receipt of, Fed-
eral assistance. This subsection shall not be construed to effect
in a negative fashion the review, prioritization, or acceptance
of any application or proposal for such a program, solicited or
unsolicited.
SEC. 1518. [20 U.S.C. 4425] ENDOWMENT PROGRAM.
(a) PROGRAM ENHANCEMENT ENDOWMENT.
(1)(A) From the total amount appropriated for this sub-
section pursuant to section 1531(a), funds may be deposited
into a trust fund maintained by the institute at a federally in-
sured banking or savings institution.
(B) The President of the Institute shall provide
(i) for the deposit into the trust fund referred to in
subparagraph (A)
(I) of a capital contribution by the Institute in an
amount equal to the amount of each Federal contribu-
tion; and
(II) any earnings on the funds deposited under
this paragraph; or
(ii) for the reservation for the sole use of the Institute
of any noncash, in-kind contributions of real or personal
519
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1518
property, which property may at any time be converted to
cash, which shall be deposited as a capital contribution
into the trust fund referred to in subparagraph (A).
(C) If at any time the Institute withdraws any capital con-
tribution (as described in subparagraph (B)(i) made by the In-
stitute to the trust fund referred to in subparagraph (A) or
puts any property (as described in subparagraph (B)(ii) to a
use which is not for the sole benefit of the Institute, an amount
equal to the value of the Federal contribution shall be with-
drawn from such trust fund and returned to the Treasury as
miscellaneous receipts.
(2) Interest deposited into the trust fund pursuant to para-
graph (1)(B)(ii) may be periodically withdrawn and used, at the
direction of the Board or its designee, to defray any expense
associated with the operation of the Institute, including the ex-
pense of operations and maintenance, administration, academic
and support personnel, community and student services pro-
grams, and technical assistance.
(3) For the purpose of complying with the contribution re-
quirement of paragraph (1)(B), the Institute may use funds or
in-kind contributions of real or personal property fairly valued
which are made available from any private or tribal source, in-
cluding interest earned by the funds invested under this sub-
section. In-kind contributions shall be other than fully depre-
ciable property or property which is designated for addition to
the permanent collection of the Museum and shall be valued
according to the procedures established for such purpose by the
Secretary of the Treasury. For purposes of this paragraph, all
contributions, including in-kind and real estate, which are on-
hand as of November 29, 1990 and which have been received
after June 2, 1988, but which have not been included in com-
putations under this provision shall be eligible for matching
with Federal funds appropriated in any fiscal year. All funds
transferred to the Institute by the Secretary of the Treasury
after June 2, 1988, shall be deemed to have been properly
transferred as of the date of enactment of the Higher Edu-
cation Amendments of 1992.
(4) Amounts appropriated under section 1531(a) for use
under this subsection shall be paid by the Secretary of the
Treasury to the Institute as a Federal capital contribution
equal to the amount of funds or the value of the in-kind con-
tributions which the Institute demonstrates have been placed
within the control of, or irrevocably committed to the use of,
the Institute as a capital contribution of the Institute in ac-
cordance with this subsection.
(b) CAPITAL IMPROVEMENT ENDOWMENT.-
(1) In addition to the trust fund established under sub-
section (a), funds may be deposited into a trust fund main-
tained by the Institute at a federally insured banking or sav-
ings institution from the amount reserved for this subsection
pursuant to section 1531(a) for the purpose of establishing a
separate special endowment for capital improvement (hereafter
in this subsection referred to as the "capital endowment fund")
to pay expenses associated with site selection and preparation,
5 2
Sec. 1518
HIGHER EDUCATION AMENDMENTS OF 1986
520
site planning and architectural design and planning, new con-
struction, materials and equipment procurement, renovation,
alteration, repair, and other building and expansion costs of
the Institute.
(2) The President of the Institute shall provide for the de-
posit into the capital endowment fund of a capital contribution
by the Institute in an amount equal to the amount of each Fed-
eral contribution and any earnings on amounts in the capital
endowment fund.
(3) Funds deposited by the Institute as a match for Federal
contributions under paragraph (5) shall remain in the capital
endowment fund for a period of not less than two years. If at
any time the Institute withdraws any capital contribution to
the capital endowment fund before the funds have been depos-
ited for this two-year period, an equal amount of the Federal
contribution shall be withdrawn from the capital endowment
fund and returned to the Treasury as miscellaneous receipts.
At the end of the two-year period, the entire principal and in-
terest of the funds deposited for this period, including the Fed-
eral matching portion, shall accrue, without reservation, to the
Institute and may be withdrawn, in whole or in part, to defray
expenses associated with capital acquisition and improvement
of the Institute referred to in paragraph (1).
(4) For the purpose of complying with the contribution re-
quirement of paragraph (2), the Institute may use funds which
are available from any private, non-Federal governmental, or
tribal source.
(5) Subject to paragraph (3), amounts appropriated under
section 1531(a) for use under this subsection shall be paid by
the Secretary of the Treasury to the Institute as a Federal cap-
ital contribution equal to the amount which the Institute dem-
onstrates has been placed within the control of, or irrevocably
committed to the use of, the Institute and is available for de-
posit as a capital contribution of the Institute in accordance
with this subsection.
(6) For the purpose of complying with the contribution re-
quirement in this subsection, the Institute may use funds or
in-kind contributions of real or personal property. For the pur-
poses of this paragraph, all contributions, in-kind and real es-
tate, which are held by the Institute beginning on November
29, 1990, and which were received after June 2, 1988, but
which have not been included in their entirety in computations
under this section shall be eligible for matching Federal funds
appropriated in any year.
(C) GENERAL ADMINISTRATIVE PROVISIONS.
(1) Funds in the trust funds described in subsections (a)
and (b) shall be invested under the same conditions and limita-
tions as funds are invested under section 331(c)(2) of the High-
er Education Act of 1965 and the regulations implementing
such section (as such regulations were in effect at the time the
funds are invested).
521
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1521
(2)1 No part of the net earnings of the trust funds established
under this section shall inure to the benefit of any private person.
(3) Any amounts deposited in a trust fund authorized
under subsection (a) may be used to secure loans procured for
the purposes of constructing or improving Institute facilities.
(4)1 The President of the Institute shall provide for such other
provisions governing the trust funds established under this section
as may be necessary to protect the financial interest of the United
States and to promote the purpose of this title as agreed to by the
Secretary of the Treasury and the Board or its designee, including
recordkeeping procedures for the investment of funds received
under the trust fund established under subsection (b) and such
other recordkeeping procedures for the expenditure of accumulated
interest for the trust fund under subsection (a) as will allow the
Secretary of the Treasury to audit and monitor acitvities under this
section.
SEC. 1519. [20 U.S.C. 4426] PROVISION OF FACILITIES.
(a) PLAN.The Board shall prepare a master plan on the
short- and long-term facilities needs of the Institute. The master
plan shall include evaluation of all facets of existing Institute pro-
grams, including support activities and programs and facilities. The
master plan shall include impact projections for the Institute's
move to a new campus site. This master plan shall evaluate devel-
opment and construction requirements (based on a growth plan ap-
proved by the Board), including (but not limited to) items such as
infrastructure and site analysis, development of a phased plan with
architectural and engineering studies, cost projections, landscaping,
and related studies which cover all facets of the Institute's pro-
grams and planned functions.
(b) DEADLINE FOR TRANSMITTAL. The plan required by this
subsection shall be transmitted to Congress no later than 18
months after the date of enactment of this provision. Such plan
shall include a prioritization of needs, as determined by the Board.
PART BNATIVE HAWAIIANS AND ALASKA NATIVES
SEC. 1521. [20 U.S.C. 4441] PROGRAM FOR NATIVE HAWAIIAN AND
ALASKA NATIVE CULTURE AND ARTS DEVELOPMENT.
(a) IN GENERAL.The Secretary of the Interior is authorized to
make grants for the purpose of suppdrting programs for Native Ha-
waiian or Alaska Native culture and arts development to any pri-
vate, nonprofit organization or institution which
(1) primarily serves and represents Native Hawaiians or
Alaska Natives, and
(2) has been recognized by the Governor of the State of
Hawaii or the Governor of the State of Alaska, as appropriate,
for the purpose of making such organization or institution eli-
gible to receive such grants.
(b) PURPOSE OF GRANTS.Grants made under subsection (a)
shall, to the extent deemed possible by the Secretary and the recip-
ient of the grant, be used
'Indentation so in law.
527
Sec. 1522
HIGHER EDUCATION AMENDMENTS OF 1986
522
(1) to provide scholarly study of, and instruction in, Native
Hawaiian or Alaska Native art and culture,
(2) to establish programs which culminate in the awarding
of degrees in the various fields of Native Hawaiian or Alaska
Native art and culture, or
(3) to establish centers and programs with respect to Na-
tive Hawaiian or Alaska Native art and culture that are simi-
lar in purpose to the centers and programs described in sub-
sections (b) and (c) of section 1510.
(C) MANAGEMENT OF GRANTS.
(1) Any organization or institution which is the recipient
of a grant made under subsection (a) shall establish a govern-
ing board to manage and control the program with respect to
which such grant is made.
(2) For any grants made with respect to Native Hawaiian
art and culture, the members of the governing board which is
required to be established under paragraph (1) shall
(A) be Native Hawaiians or individuals widely recog-
nized in the field of Native Hawaiian art and culture,
(B) include a representative of the Office of Hawaiian
Affairs of the State of Hawaii,
(C) include the president of the University of Hawaii,
(D) include the president of the Bishop Museum, and
(E) serve for a fixed term of office.
(3) For any grants made with respect to Alaska Native art
and culture, the members of the governing board which is re-
quired to be established under paragraph (1) shall
(A) include Alaska Natives and individuals widely rec-
ognized in the field of Alaska Native art and culture,
(B) represent the Eskimo, Indian and Aleut cultures of
Alaska, and
(C) serve for a fixed term.
SEC. 1522. [20 U.S.C. 4442] ADMINISTRATIVE PROVISIONS.
(a) PAYMENTS.The Secretary may award grants under this
part in installments, in advance, or by way of reimbursement and
may make necessary adjustments in payments of grants on account
of overpayments or underpayments.
(b) RECOVERY OF OVERPAYMENTS.
(1) If the Secretary or a court of competent jurisdiction
finds that
(A) any person
(i) has
(I) made, or has caused to be made by an-
other, a false statement or representation of a ma-
terial fact knowing it to-be false, or
(II) knowingly failed, or caused another to
fail, to disclose a material fact; and
(ii) as a result of such action, has received any
funds under this part which such person would not
have otherwise received, or
(B) any person misappropriates any funds paid by the
Secretary under this part,
523
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1531
such person shall be liable to repay the amount of such funds
to the United States. Any such finding by the Secretary may
be made only after an opportunity for a fair hearing.
(2) Any amount repaid under this subsection shall be re-
turned to the general fund of the Treasury of the United
States.
(c) PENALTIES.Whoever
(1) makes a false statement of a material fact knowing it
to be false, or knowingly fails to disclose a material fact, for
the purpose of obtaining or increasing for such person or for
any other person any payment of funds provided under this
part, or
(2) misappropriates any funds provided under this part,
shall be fined not more than $1,000 or imprisoned for not more
than one year, or both.
PART CAUTHORIZATION OF APPROPRIATIONS
SEC. 1531. [20 U.S.C. 44511 AUTHORIZATION OF APPROPRIATIONS.
(a) PART A.
(1) There are authorized to be appropriated for each fiscal
year such sums as may be necessary to carry out the provi-
sions of part A.
(2) Funds appropriated under the authority of paragraph
(1) shall remain available without fiscal year limitation.
(3) Except as provided for amounts subject to section
1518(d), amounts appropriated under the authority of this sub-
section for fiscal year 1989, and for each succeeding fiscal year,
shall be paid to the Institute at the later of
(A) the beginning of the fiscal year, or
(B) upon enactment of such appropriation.
(4) Funds appropriated under this subsection for the fiscal
year 1992 and for each succeeding fiscal year shall be trans-
ferred by the Secretary of the Treasury through the most expe-
ditious method available with the Institute being designated as
its own certifying agency.
(5) Funds are authorized to be appropriated for programs
for more than one fiscal year. For the purpose of affording ade-
quate notice of funding available under this Act, amounts ap-
propriated in an appropriations Act for any fiscal year to carry
out this Act may, subject to the appropriation, become avail-
able for obligations on July 1 of that fiscal year.
(b) PART B.--There are authorized to be appropriated for the
purpose of carrying out the provisions of part B of this title
(1) for fiscal year 1987, $1,000,000, and
(2) for each succeeding fiscal year, such sums as may be
necessary to carry out such provisions.
Higher Education Amendments of 1992
Effective Dates and Related Implementation Provisions
TITLE IV-STUDENT ASSISTANCE
PART A-GRANTS TO STUDENTS IN ATTEND-
ANCE AT INSTITUTIONS OF HIGHER EDU-
CATION
SEC. 410. [20 U.S.C. 1070a note] EFFECTIVE DATES FOR AMENDMENTS
TO PART A.
(a) IN GENERAL.The changes made in part A of title IV of the
Act by the amendments made by this part shall take effect on the
date of enactment of this Act, except
(1) as otherwise provided in such part A;
(2) that the changes made in section 411, relating to Pell
Grants, shall apply to the awarding of Pell Grants for periods
of enrollment beginning on or after July 1, 1993; and
(3) that the changes in section 413C(a)(2), relating to the
Federal share for the supplemental educational opportunity
grant program, shall apply to funds provided for such program
for the award years beginning on or after July 1, 1993.
*
PART B-FEDERAL FAMILY EDUCATION LOANS
SEC. 432. [20 U.S.C. 1078 note] EFFECTIVE DATES FOR AMENDMENTS
TO PART B.
(a) IN GENERAL.The changes made in part B of title N of the
Act by the amendments made by this part shall take effect on the
date of enactment of this Act, except
(1) as otherwise provided in such part B;
(2) that the changes made in sections 425(a), 428(b)(1)(A),
428(b)(1)(B), 428A(b), 428B(b), relating to annual and aggre-
gate loan limits, shall apply with respect to loans for which the
first disbursement is made on or after July 1, 1993, except
that
(A) the changes made in section 425(a)(1)(A)(i) and
428(b)(1)(A)(i) shall apply with respect to loans for which
the first disbursement is made on or after October 1, 1992;
and
524
525
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 432
(B) the changes made in section 425(a)(1)(A)(iv) and
428(b)(1)(A)(iv) shall apply with respect to loans to cover
the costs of instruction for periods of enrollment beginning
on or after October 1, 1993;
(3) that the changes made in sections
427(a)(2)(C),
428(b)(1)(M), and 428B(d)(1), relating to deferments, shall
apply with respect to loans for which the first disbursement is
made on or after July 1, 1993, to an individual who is a new
borrower on the date such individual applies for a loan;
(4) that the changes made in sections 428(a)(7) and
428(0(1)(C), relating to payments for unconsummated loans,
shall apply with respect to loans made on or after October 1,
1992;
(5) that the changes made in sections 427(a)(2)(H) and
428(b)(1)(E)(i), relating to offering graduated or income sen-
sitive repayment options, shall apply with respect to loans for
which the first disbursement is made on or after July 1, 1993,
to an individual who is a new borrower on the date such indi-
vidual applies for a loan;
(6) that the changes made in section 428(b)(4), relating to
teacher deferment, shall apply with respect to loans for which
the first disbursement is made on or after July 1, 1993, to an
individual who is a new borrower on the date such individual
applies for a loan;
(7) that section 428(c)(2)(H)(i) as added by such amend-
ments shall be effective on and after October 1, 1992;
(8) that the changes in section 428(c)(3) with respect to for-
bearance after a default shall be effective on and after October
1, 1992;
(9) that the changes made in section 428B(a) with respect
to use of credit histories shall apply with respect to loans for
which the first disbursement is made on or after July 1, 1993;
(10) that section 428B(c) as added by such amendments,
relating to disbursement of Federal PLUS Loans, shall apply
with respect to loans for which the first disbursement is made
on or after October 1, 1992;
(11) that the changes made in section 428C, relating to
consolidation loans, shall apply with respect to loans under
such section for which the application is received by an eligible
lender on or after January 1, 1993;
(12) that section 428H as added by such amendments shall
be effective with respect to loans made to cover the cost of in-
struction for periods of enrollment beginning on or after Octo-
ber 1, 1992;
(13) that the changes made in section 438 shall apply with
respect to loans for which the first disbursement is made on or
after October 1, 1992;
(14) that the changes in section 439(d)(1), relating to facili-
ties loans, shall apply with respect to applications received on
or after July 1, 1992; and
(15) that the changes in the designation or names of loans
or programs under part B is effective with respect to applica-
tions or other documents (used in making such loans) that are
printed after the date of enactment of this Act.
Sec. 452
HIGHER EDUCATION AMENDMENTS OF 1992
526
(b) NEW BORROWERS.For purposes of the section, the term
"new borrower" means, with respect to any date, an individual who
on that date has no outstanding balance of principal or interest
owing on any loan made, insured, or guaranteed under part B of
title IV of the Act.
*
PART D FEDERAL DIRECT LOANS
SEC. 452. [20 U.S.C. 1087a note] INCOME CONTINGENT LOAN DISTRIBU-
TION OF FUNDS.
(a) IN GENERAL.After September 30, 1992, and not later than
March 31, 1992, the capital balance of the student loan fund estab-
lished under part D of title IV of the Higher Education Act of 1965
(as such Act was in effect on the date of enactment of this Act)
shall be distributed by allowing institutions to transfer any remain-
ing funds, including future collections and all other funds at the in-
stitution's discretion, to such institution's part E account, part C
fund, or subpart 3 of part A fund under the terms and conditions
of the appropriate program.
(b) CONVERSION OF EXISTING LOANS. Institutions may, after
July 1, 1992, convert all outstanding loans made under part D of
title N of the Higher Education Act of 1965 (as such Act was in
effect on such date)
to part E loans, provided that such
institution
(1) notify the borrower of such conversion;
(2) obtain a signed part E promissory note from the bor-
rower for the remaining amount outstanding; and
(3) provide the borrower in writing with a description of all
terms and conditions of the new loan.
PART E FEDERAL PERKINS LOANS
SEC. 468. [20 U.S.C. 1087dd note] EFFECTIVE DATES FOR AMENDMENTS
TO PART E.
The changes made in part E of title N of the Act by the
amendments made by this part shall take effect on the date of en-
actment of this Act, except that
(1) the changes in section 463(a)(2)(B), relating to the
matching of Federal capital contributions, shall apply to funds
provided for such program for the award years beginning on or
after July 1, 1993;
(2) the changes made in section 464(c)(1)(C), relating to
minimum monthly payments shall apply with respect to loans
for which the first disbursement is made on or after October
1, 1992, to an individual who, on the date the loan is made,
has no outstanding balance of principal or interest owing on
any loan made under part E of title IV of the Act;
(3) the changes made in section 464(c)(2)(A), relating to
deferments, shall apply with respect to loans for which the
first disbursement is made on or after July 1, 1993; and
5
!:)
4.0
527
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 501
(4) the changes made in section 467, relating to the cre-
ation of a Perkins Loan Revolving Fund, shall take effect on
September 15, 1997.
PART F --NEED ANALYSIS
SEC. 471. [20 U.S.C. 1087kk note] REVISION OF PART F.
(a) * * *
(b) EFFECTIVE DATE FOR AMENDMENT TO PART F.The
changes made in part F of title IV of the Act by the amendment
made by this section shall apply with respect to determinations of
need under such part F for award years beginning on or after July
1, 1993.
PART G-GENERAL PROVISIONS
SEC. 498. [20 U.S.C. 1088 note] EFFECTIVE DATES FOR AMENDMENTS
TO PART G.
The changes made in part G of title IV of the Act by the
amendments made by this part shall take effect on the date of en-
actment of this Act, except that
(1) as otherwise provided in such part G;
(2) the changes in section 481(a), relating to the definition
of institution of higher education, other than paragraph (4) of
such section, shall be effective on and after October 1, 1992;
(3) section 481(e) as added by such amendments, relating
to the definition of eligible program, shall be effective on and
after July 1, 1993;
(4) section 484(m)(1), relating to proportion of courses per-
mitted to be correspondence courses, as added by such amend-
ments shall be effective on and after October 1, 1992;
(5) the changes in section 485, relating to disclosures, shall
be effective with respect to periods of enrollment beginning on
or after July 1, 1993;
(6) the changes in section 488, relating to transfers of al-
lotments, shall apply with respect to funds provided for award
years beginning on or after July 1, 1993; and
(7) the changes in section 489, relating to payments for ad-
ministrative expenses, shall apply with respect to funds pro-
vided for award years beginning on or after July 1, 1993.
*
TITLE V-EDUCATOR RECRUITMENT,
RETENTION, AND DEVELOPMENT
SEC. 501. [20 U.S.C. 1108] REVISION OF TITLE V.
(a) * * *
Sec. 501
HIGHER EDUCATION AMENDMENTS OF 1992
528
(b) EXPIRATION DATE.Effective July 1, 1995, the Alternative
Routes to Teacher and Principal Certification and Licensure Act of
1992 (as contained in subpart 2 of part to of title V of this Act) is
repealed.
*
Higher Education Amendments of 1992
*
*
TITLE XV RELATED PROGRAMS AND
AMENDMENTS TO OTHER LAWS
PART E-OLYMPIC SCHOLARSHIPS
SEC. 1543. [20 U.S.C. 1070 note] OLYMPIC SCHOLARSHIPS.
(a) SCHOLARSHIPS AUTHORIZED.
(1) IN GENERAL.The Secretary of Education is authorized
to provide financial assistance to the United States Olympic
Education Center or the United States Olympic Training Cen-
ter to enable such centers to provide financial assistance to
athletes who are training at such centers and are pursuing
postsecondary education at institutions of higher education (as
such term is defined in section 481(a) of the Higher Education
Act of 1965).
(2) AWARD DETERMINATION.The amount of financial as-
sistance provided to athletes described in paragraph (1) shall
be determined in accordance with such athlete's financial need
as determined in accordance with part F of title IV of the
Higher Education Act of 1965.
(b) ELIGIBILITY.The Secretary of Education shall ensure that
financial assistance provided under this part is available to both
full-time and part-time students who are athletes at centers de-
scribed in subsection (a).
(c) APPLICATION.Each center desiring financial assistance
under this section shall submit an application to the Secretary of
Education at such time, in such manner and accompanied by such
information as the Secretary may reasonably require.
(d) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $5,000,000 for fiscal year 1999 and such sums
as may be necessary for each of the 4 succeeding fiscal years to
carry out this section.
Title /UV and parts A through D of title XV were repealed by paragraphs (2) and (3) of sec-
tion 6(b) of Public Law 105-332.
529
535
Sec. 1545
HIGHER EDUCATION AMENDMENTS OF 1992
530
[Part F (including section 1544) was repealed by section
568(e)(2) of P.L. 103-382, 108 Stat. 4061.11
PART G-ADVANCED PLACEMENT FEE
PAYMENT PROGRAM
SEC. 1545. [20 U.S.C. 1070a-11 note] ADVANCED PLACEMENT FEE PAY-
MENT PROGRAM.
(a) PROGRAM ESTABLISHED.The Secretary of Education is au-
thorized to make grants to States to enable the States to reimburse
individuals to cover part or all of the cost of advance placement
test fees, to low-income individuals who
(1) are enrolled in an advanced placement class; and
(2) plan to take an advanced placement test.
(b) INFORMATION DISSEMINATION.The State educational agen-
cy shall disseminate information on the availability of test fee pay-
ments under this section to eligible individuals through secondary
school teachers and guidance counselors.
(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.In ap-
proving applications for grants the Secretary of Education shall
(1) require that each such application contain a description
of the advance placement test fees the State will pay on behalf
of individual students;
(2) require an assurance that any funds received under
this section shall only be used to pay advanced placement test
fees; and
(3) contain such information as the Secretary may require
to demonstrate that the State will ensure that the student is
eligible for payments under this section, including the docu-
mentation required by chapter 1 of subpart 2 of part A of title
IV of the Higher Education Act of 1965.
(d) SUPPLEMENTATION OF FUNDING.Funds provided under
this section shall be used to supplement and not supplant other
Federal, State, and local or private funds available to assist low-
income individuals in paying for advanced placement testing.
(e) REGULATIONS.The Secretary of Education shall prescribe
such regulations as are necessary to carry out this section.
(f) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $3,600,000 for fiscal year 1993 and such sums
as may be necessary for each of the 4 succeeding fiscal years to
carry out the provisions of this section.
(g) DEFINITION.As used in this section:
(1) ADVANCED PLACEMENT TEST.The term "advanced
placement test" includes only an advanced placement test ap-
proved by the Secretary of Education for the purposes of this
section.
(2) LOW-INCOME INDIVIDUAL.The term "low-income indi-
vidual" has the meaning given the term in section 402A(g)(2)
of the Higher Education Act of 1965.
PART H AMENDMENTS TO OTHER LAWS
531
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1561
[Text as amended printed elsewhere in this and other volumes
of this compilation.]
*
PART I BUY AMERICA
SEC. 1561. SENSE OF CONGRESS.
It is the sense of the Congress that a recipient (including a na-
tion, individual, group, or organization) of any form of student as-
sistance or other Federal assistance under the Act should, in ex-
panding that assistance, purchase American-made equipment and
products.
Title VIII of the Higher Education Amendments of 1998
(P.L. 105-244)
TITLE VIII STUDIES, REPORTS, AND
RELATED PROGRAMS
PART A STUDIES
SEC. 801. [20 U.S.C. 1018 note] STUDY OF MARKET MECHANISMS IN
FEDERAL STUDENT LOAN PROGRAMS.
(a) STUDY REQUIRED.The Comptroller General and the Sec-
retary of Education shall convene a study group including the Sec-
retary of the Treasury, the Director of the Office of Management
and Budget, the Director of the Congressional Budget Office, rep-
resentatives of entities making loans under part B of title IV of the
Higher Education Act of 1965, representatives of other entities in
the financial services community, representatives of other partici-
pants in the student loan programs, and such other individuals as
the Comptroller General and the Secretary may designate. The
Comptroller General and Secretary, in consultation with the study
group, shall design and conduct a study to identify and evaluate
means of establishing a market mechanism for the delivery of loans
made pursuant to such title IV.
(b) DESIGN OF STUDY.The study required under this section
shall identify not fewer than 3 different market mechanisms for
use in determining lender return on student loans while continuing
to meet the other objectives of the programs under parts B and D
of such title N, including the provision of loans to all eligible stu-
dents. Consideration may be given to the use of auctions and to the
feasibility of incorporating income-contingent repayment options
into the student loan system and requiring borrowers to repay
through income tax withholding.
(c) EVALUATION OF MARKET MECHANISMS.The mechanisms
identified under subsection (b) shall be evaluated in terms of the
following areas:
(1) The cost or savings of loans to or for borrowers, includ-
ing parent borrowers.
(2) The cost or savings of the mechanism to the Federal
Government.
(3) The cost, effect, and distribution of Federal subsidies to
or for participants in the program.
(4) The ability of the mechanism to accommodate the po-
tential distribution of subsidies to students through an income-
contingent repayment option.
532
533
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 802
(5) The effect on the simplicity of the program, including
the effect of the plan on the regulatory burden on students, in-
stitutions, lenders, and other program participants.
(6) The effect on investment in human capital and re-
sources, loan servicing capability, and the quality of service to
the borrower.
(7) The effect on the diversity of lenders, including commu-
nity-based lenders, originating and secondary market lenders.
(8) The effect on program integrity.
(9) The degree to which the mechanism will provide mar-
ket incentives to encourage continuous improvement in the de-
livery and servicing of loans.
(10) The availability of loans to students by region, income
level, and by categories of institutions.
(11) The proposed Federal and State role in the operation
of the mechanism.
(12) A description of how the mechanism will be adminis-
tered and operated.
(13) Transition procedures, including the effect on loan
availability during a transition period.
(14) Any other areas the study group may include.
(d) PRELIMINARY FINDINGS AND PUBLICATION OF STUDY.Not
later than November 15, 2000, the study group shall make the
group's preliminary findings, including any additional or dissenting
views, available to the public with a 60-day request for public com-
ment. The study group shall review these comments and the Comp-
troller General and the Secretary shall transmit a final report, in-
cluding any additional or dissenting views, to the Committee on
Education and the Workforce of the House of Representatives, the
Committee on Labor and Human Resources of the Senate, and the
Committees on the Budget of the House of Representatives and the
Senate not later than May 15, 2001.
SEC. 802. STUDY OF THE FEASIBILITY OF ALTERNATIVE FINANCIAL
INSTRUMENTS FOR DETERMINING LENDER YIELDS.
(a) STUDY REQUIRED.The Comptroller General and the Sec-
retary of Education shall convene a study group including the Sec-
retary of the Treasury, the Director of the Office of Management
and Budget, the Director of the Congressional Budget Office, rep-
resentatives of entities making loans under part B of title IV of the
Higher Education Act of 1965, representatives of other entities in
the financial services community, representatives of other partici-
pants in the student loan programs, and such other individuals as
the Comptroller General and the Secretary of Education may des-
ignate. The Comptroller General and the Secretary of Education, in
consultation with the study group, shall evaluate the 91-day Treas-
ury bill, 30-day and 90-day commercial paper, and the 90-day Lon-
don Interbank Offered Rate (in this section referred to as "LIBOR")
in terms of the following:
(1) The historical liquidity of the market for each, and a
historical comparison of the spread between: (A) the 30-day
and 90-day commercial paper rate, respectively, and the 91-day
Treasury bill rate; and (B) the spread between the LIBOR and
the 91-day Treasury bill rate.
Sec. 803
HIGHER EDUCATION AMENDMENTS OF 1998
534
(2) The historical volatility of the rates and projections of
future volatility.
(3) Recent changes in the liquidity of the market for each
such instrument in a balanced Federal budget environment
and a low-interest rate environment, and projections of future
liquidity assuming the Federal budget remains in balance.
(4) The cost or savings to lenders with small, medium, and
large student loan portfolios of basing lender yield on either
the 30-day or 90-day commercial paper rate or the LIBOR
while continuing to base the borrower rate on the 91-day
Treasury bill, and the effect of such change on the diversity of
lenders participating in the program.
(5) The cost or savings to the Federal Government of bas-
ing lender yield on either the 30-day or 90-day commercial
paper rate or the LIBOR while continuing to base the borrower
rate on the 91-day Treasury bill.
(6) Any possible risks or benefits to the student loan pro-
grams under the Higher Education Act of 1965 and to student
borrowers.
(7) Any other areas the Comptroller General and the
Secretary of Education agree to include.
(b) REPORT REQUIRED.Not later than 6 months after the date
of enactment of this Act, the Comptroller General and the Sec-
retary shall submit a final report regarding the findings of the
study group to the Committee on Education and the Workforce of
the House of Representatives and the Committee on Labor and
Human Resources of the Senate.
SEC. 803. [20 U.S.C. 1015 note] STUDENT-RELATED DEBT STUDY RE-
QUIRED.
(a) IN GENERAL.The Secretary of Education shall conduct a
study that analyzes the distribution and increase in student-relat-
ed debt in terms of
(1) demographic characteristics, such as race or ethnicity,
and family income;
(2) type of institution and whether the institution is a pub-
lic or private institution;
(3) loan source, such as Federal, State, institutional or
other, and, if the loan source is Federal, whether the loan is
or is not subsidized;
(4) academic field of study;
(5) parent loans, and whether the parent loans are feder-
ally guaranteed, private, or property-secured such as home eq-
uity loans; and
(6) relation of student debt or anticipated debt to
(A) students' decisions about whether and where to en-
roll in college and whether or how much to borrow in order
to attend college;
(B) the length of time it takes students to earn bacca-
laureate degrees;
(C) students' decisions about whether and where to at-
tend graduate school;
(D) graduates' employment decisions;
535
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 804
(E) graduates' burden of repayment as reflected by the
graduates' ability to save for retirement or invest in a
home; and
(F) students' future earnings.
(b) REPORT.After conclusion of the study required by sub-
section (a), the Secretary of Education shall submit a final report
regarding the findings of the study to the Committee on Labor and
Human Resources of the Senate and the Committee on Education
and the Workforce of the House of Representatives not later than
18 months after the date of enactment of the Higher Education
Amendments of 1998.
(c) INFORMATION.After the study and report under this sec-
tion are concluded, the Secretary of Education shall determine
which information described in subsection (a) would be useful for
families to know and shall include such information as part of the
comparative information provided to families about the costs of
higher education under the provisions of part C of title I.
SEC. 804. [20 U.S.C. 1099b note] STUDY OF TRANSFER OF CREDITS.
(a) STUDY REQUIRED.The Secretary of Education shall con-
duct a study to evaluate policies or practices instituted by recog-
nized accrediting agencies or associations regarding the treatment
of the transfer of credits from one institution of higher education
to another, giving particular attention to
(1) adopted policies regarding the transfer of credits be-
tween institutions of higher education which are accredited by
different agencies or associations and the reasons for such poli-
cies;
(2) adopted policies regarding the transfer of credits be-
tween institutions of higher education which are accredited by
national agencies or associations and institutions of higher
education which are accredited by regional agencies and asso-
ciations and the reasons for such policies;
(3) the effect of the adoption of such policies on students
transferring between such institutions of higher education, in-
cluding time required to matriculate, increases to the student
of tuition and fees paid, and increases to the student with re-
gard to student loan burden;
(4) the extent to which Federal financial aid is awarded to
such students for the duplication of coursework already com-
pleted at another institution; and
(5) the aggregate cost to the Federal Government of the
adoption of such policies.
(b) REPORT.Not later than one year after the date of enact-
ment of this Act, the Secretary of Education shall submit a report
to the Chairman and Ranking Minority Member of the Committee
on Education and the Workforce of the House of Representatives
and the Committee on Labor and Human Resources of the Senate
detailing the Secretary's findings regarding the study conducted
under subsection (a). The Secretary's report shall include such rec-
ommendation with respect
to
the
recognition of accrediting
agencies or associations as the Secretary deems advisable.
r041
Sec. 805
HIGHER EDUCATION AMENDMENTS OF 1998
536
SEC. 805.. [20 U.S.C. 1001 note] STUDY OF OPPORTUNITIES FOR PAR-
TICIPATION IN ATHLETICS PROGRAMS.
(a) STUDY.The Comptroller General shall conduct a study of
the opportunities for participation in intercollegiate athletics. The
study shall address issues including
(1) the extent to which the number of
(A) secondary school athletic teams has increased or
decreased in the 20 years preceding 1998 (in aggregate
terms); and
(B) intercollegiate athletic teams has increased or de-
creased in the 20 years preceding 1998 (in aggregate
terms) at 2 -year. and 4-year institutions of higher edu-
cation;
(2) the extent to which participation by student-athletes in
secondary school and intercollegiate athletics has increased or
decreased in the 20 years preceding 1998 (in aggregate terms);
(3) over the 20-year period preceding 1998, a list of the
men's and women's secondary school and intercollegiate sports,
ranked in order of the sports most affected by increases or de-
creases in levels of participation and numbers of teams (in the
aggregate);
(4) all factors that have influenced campus officials to add
or discontinue sports teams at secondary schools and institu-
tions of higher education, including
(A) institutional mission and priorities;
(B) budgetary pressures;
(C) institutional reforms and restructuring;
(D) escalating liability insurance premiums;
(E) changing student and community interest in a
sport;
(F) advancement of diversity among students;
(G) lack of necessary level of competitiveness of the
sports program;
(H) club level sport achieving a level of competitive-
ness to make the sport a viable varsity level sport;
(I) injuries or deaths; and
(J) conference realignment;
(5) the actions that institutions of higher education have
taken when decreasing the level of participation in intercolle-
giate sports, or the number of teams, in terms of providing in-
formation, advice, scholarship maintenance, counseling, ad-
vance warning, and an opportunity for student-athletes to be
involved in the decisionmaking process;
(6) the administrative processes and procedures used by
institutions of higher education when determining whether to
increase or decrease intercollegiate athletic teams or participa-
tion by student-athletes;
(7) the budgetary or fiscal impact, if any, of a decision by
an institution of higher education
(A) to increase or decrease the number of intercolle-
giate athletic teams or the participation of student-ath-
letes; or
(B) to be involved in a conference realignment; and
531
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 810
(8) the alternatives, if any, institutions of higher education
have pursued in lieu of eliminating, or severely reducing the
funding for, an intercollegiate sport, and the success of such al-
ternatives.
(b) REPORT.The Comptroller General shall submit a report
regarding the results of the study to the Committee on Labor and
Human Resources of the Senate and the Committee on Education
and the Workforce of the House of Representatives.
SEC. 806. STUDY OF THE EFFECTIVENESS OF COHORT DEFAULT
RATES FOR INSTITUTIONS WITH FEW STUDENT LOAN
BORROWERS.
(a) STUDY REQUIRED.The Secretary of Education shall con-
duct a study of the: effectiveness of cohort default rates as an indi-
cator of administrative capability and program quality for institu-
tions of higher education at which less than 15 percent of students
eligible to borrow participate in the Federal student loan programs
under title IV of the Higher Education Act of 1965 and fewer than
30 borrowers enter repayment in any fiscal year. At a minimum,
the study shall include
(1) identification of the institutions included in the study
and of the student populations the institutions serve;
(2) analysis of cohort default rates as indicators of admin-
istrative shortcomings and program quality at the institutions;
(3) analysis of the effectiveness of cohort default rates as
a means to prevent fraud and abuse in the programs assisted
under such title;
(4) analysis of the extent to which the institutions with
high cohort default rates are no longer participants in the Fed-
eral student loan programs under such title; and
(5) analysis of the costs incurred by the Department of
Education for the calculation, publication, correction, and ap-
peal of cohort default rates for the institutions in relation to
any benefits to taxpayers.
(b) CONSULTATION.In conducting the study described in sub-
section (a), the Secretary of Education shall consult with institu-
tions of higher education.
(c) REPORT TO CONGRESS.The Secretary of Education shall
report to the Committee on Labor and Human Resources of the
Senate and the Committee on Education and the Workforce of the
House of Representatives not later than September 30, 1999, re-
garding the results of the study described in subsection (a).
PART B ADVANCED PLACEMENT INCENTIVE
PROGRAM
SEC. 810. [20 U.S.C. 1070a-11 note] ADVANCED PLACEMENT INCENTIVE
PROGRAM.
(a) PROGRAM ESTABLISHED.The Secretary of Education is au-
thorized to make grants to States having applications approved
under subsection (c) to enable the States to reimburse low-income
individuals to cover part or all of the cost of advanced placement
test fees, if the low-income individuals
(1) are enrolled in an advanced placement class; and
(2) plan to take an advanced placement test.
54 )
,
Sec. 810
HIGHER EDUCATION AMENDMENTS OF 1998
538
(b) INFORMATION DISSEMINATION.The State educational agen-
cy shall disseminate information regarding the availability of test
fee payments under this section to eligible individuals through sec-
ondary school teachers and guidance counselors.
(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.In ap-
proving applications for grants the Secretary of Education shall
(1) require that each such application contain a description
of the advanced placement test fees the State will pay on be-
half of individual students;
(2) require an assurance that any funds received under
this section, other than funds used in accordance with sub-
section (d), shall be used only to pay advanced placement test
fees;(3) contain such information as the Secretary may require
to demonstrate that the State will ensure that a student is eli-
gible for payments under this section, including the docu-
mentation required by chapter 1 of subpart 2 of part A of title
N of the Higher Education Act of 1965 (20 U.S.C. 1070a-11
et seq.); and
(4) consider the number of children eligible to be counted
under section 1124(c) of the Elementary and Secondary Edu-
cation Act of 1965 in the State in relation to the number of
such children in all the States in determining grant award
amounts.
(d) FUNDING RULES.
(1) USE OF FUNDS.A State educational agency in a State
in which no eligible low-income individual is required to pay
more than a nominal fee to take advanced placement tests in
core subjects may use any grant funds provided to that State
educational agency, that remain after fees have been paid on
behalf of all eligible low-income individuals, for activities di-
rectly related to increasing
(A) the enrollment of low-income individuals in ad-
vanced placement courses;
(B) the participation of low-income individuals in ad-
vanced placement tests; and
(C) the availability of advanced placement courses in
schools serving high poverty areas.
(2) SUPPLEMENT, NOT SUPPLANT, RULE.Funds provided
under this section shall supplement and not supplant other
non-Federal funds that are available to assist low-income indi-
viduals in paying advanced placement test fees.
(e) REGULATIONS. The Secretary of Education shall prescribe
such regulations as are necessary to carry out this section.
(f) REPORT.Each State annually shall report to the Secretary
of Education regarding
(1) the number of low-income individuals in the State who
receive assistance under this section; and
(2) the activities described in subsection (d)(1), if applica-
ble.
(g) DEFINITION.In this section:
(1) ADVANCED PLACEMENT TEST.The term "advanced
placement test" includes only an advanced placement test
539
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 813
approved by the Secretary of Education for the purposes of this
section.
(2) LOAT-INCOME INDIVIDUAL.The term "low-income indi-
vidual" has the meaning given the term in section 402A(g)(2)
of the Higher Education Act of 1965 (20 U.S.C. 1070a-
11(g)(2)).
(h) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $6,800,000 for fiscal year 1999 and such sums
as may be necessary for each of the 4 succeeding fiscal years to
carry out this section.
PART C COMMUMTY SCHOLARSHIP
MOBILIZATION
SEC. 811. [20 U.S.C. 1070 note] SHORT TITLE.
This part may be cited as the "Community Scholarship Mobili-
zation Act".
SEC. 812. [20 U.S.C. 1070 note] FINDINGS.
Congress finds that
(1) the local community, when properly organized and
challenged, is one of the best sources of academic support, mo-
tivation toward achievement, and financial resources for aspir-
ing postsecondary students;
(2) local communities, working to complement or augment
services currently offered by area schools and colleges, can
raise the educational expectations and increase the rate of
postsecondary attendance of their youth by forming locally-
based organizations that provide both academic support (in-
cluding guidance, counseling, mentoring, tutoring, encourage-
ment, and recognition) and tangible, locally raised, effectively
targeted, publicly recognized, financial assistance;
(3) proven methods of stimulating these community efforts
can be promoted through Federal support for the establish-
ment of regional, State, or community program centers to orga-
nize and challenge community efforts to develop educational
incentives and support for local students; and
(4) using Federal funds to leverage private contributions to
help students from low-income families attain educational and
career goals is an efficient and effective investment of scarce
taxpayer-provided resources.
SEC. 813. [20 U.S.C. 1070 note] DEFINITIONS.
In this part:
(1) REGIONAL, STATE, OR COMMUNITY PROGRAM CENTER.
The term "regional, State, or community program center"
means an organization that
(A) is a division or member of, responsible to, and
overseen by, a national organization; and
(B) is staffed by professionals trained to create, de-
velop, and sustain local entities in towns, cities, and neigh-
borhoods.
(2) LOCAL ENTITY.The term "local entity" means an orga-
nization that
Sec. 813
HIGHER EDUCATION AMENDMENTS OF 1998
540
(A) is a nonprofit organization that is described in sec-
tion 501(c)(3) of the Internal Revenue Code of 1986, and
exempt from taxation under section 501(a) of such Code (or
shall meet this criteria through affiliation with the na-
tional organization);
(B) is formed for the purpose of providing educational
scholarships and academic support for residents of the
local community served by such organization;
(C) solicits broad-based community support in its aca-
demic support and fund-raising activities;
(D) is broadly representative of the local community in
the structures of its volunteer-operated organization and
has a board of directors that includes leaders from local
neighborhood organizations and neighborhood residents,
such as school or college personnel, parents, students, com-
munity agency representatives, retirees, and representa-
tives of the business community;
(E) awards scholarships without regard to age, sex,
marital status, race, creed, color, religion, national origin,
or disability; and
(F) gives priority to awarding scholarships for post-
secondary education to deserving students from low-in-
come families in the local community.
(3) NATIONAL ORGANIZATION.The term "national organi-
zation" means an organization that
(A) has the capacity to create, develop and sustain
local entities and affiliated regional, State, or community
program centers;
(B) has the capacity to sustain newly created local en-
tities in towns, cities, and neighborhoods through ongoing
training support programs;
(C) is described in section 501(c)(3) of the Internal
Revenue Code of 1986, and exempt from taxation under
section 501(a) of such Code;
(D) is a publicly supported organization within the
meaning of section 170(b)(1)(A)(iv) of such Code;
(E) ensures that each of the organization's local enti-
ties meet the criteria described in subparagraphs (C) and
(D); and
(F) has a program for or experience in cooperating
with secondary and postsecondary institutions in carrying
out the organization's scholarship and academic support
activities.
(4) HIGH POVERTY AREA.The term "high poverty area"
means a community with a higher percentage of children from
low-income families than the national average of such percent-
age and a lower percentage of children pursuing postsecondary
education than the national average of such percentage.
(5) SECRETARY.The term "Secretary" means the Sec-
retary of Education.
(6) STUDENTS FROM LOW-INCOME FAMILIES.The term "stu-
dents from low-income families" means students determined,
pursuant to part F of title IV of the Higher Education Act of
1965 (20 U.S.C. 1087kk et seq.), to be eligible for a Federal
541
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 815
Pell Grant under subpart 1 ofpart A of title W of such Act (20
U.S.C. 1070a).
SEC. 814. [20 U.S.C. 1070 note] PURPOSE; ENDOWMENT GRANT AU-
THORITY.
(a) PURPOSE.It is the purpose of this part to establish and
support regional, State or community program centers to enable
such centers to foster the development of local entities in high pov-
erty areas that promote higher education goals for students from
low-income families by
(1) providing academic support, including guidance, coun-
seling, mentoring, tutoring, and recognition; and
(2) providing scholarship assistance for the cost of post-
secondary education.
(b) ENDOWMENT GRANT AunfoRrry.From the funds appro-
priated pursuant to the authority of section 816, the Secretary
shall award an endowment grant, on a competitive basis, to a na-
tional organization to enable such organization to support the es-
tablishment or ongoing work of regional, State or community pro-
gram centers that foster the development of local entities in high
poverty areas to improve secondary school graduation rates and
postsecondary attendance through the provision of academic sup-
port services and scholarship assistance for the cost of postsecond-
ary education.
SEC. 815. [20 U.S.C. 1070 note] GRANT AGREEMENT AND REQUIRE-
MENTS.
(a) IN GENERALThe Secretary shall award one or more en-
dowment grants described in section 814(b) pursuant to an agree-
ment between the Secretary and a national organization. Such
agreement shall
(1) require a national organization to establish an endow-
ment fund in the amount of the grant, the corpus of which
shall remain intact and the interest income from which shall
be used to support the activities described in paragraphs (2)
and (3);
(2) require a national organization to use 70 percent of the
interest income from the endowment fund in any fiscal year to
support the establishment or ongoing work of regional, State or
community program centers to enable such centers to work
with local communities to establish local entities in high pov-
erty areas and provide ongoing technical assistance, training
workshops, and other activities to help ensure the ongoing suc-
cess of the local entities;
(3) require a national organization to use 30 percent of the
interest income from the endowment fund in any fiscal year to
provide scholarships for postsecondary education to students
from low-income families, which scholarships shall be matched
on a dollar-for-dollar basis from funds raised by the local enti-
ties;
(4) require that at least 50 percent of all the interest in-
come from the endowment be allocated to establish new local
entities or support regional, State or community program
centers in high poverty areas;
547
Sec. 816
HIGHER EDUCATION AMENDMENTS OF 1998
542
(5) require a national organization to submit, for each fis-
cal year in which such organization uses the interest from the
endowment fund, a report to the Secretary that contains
(A) a description of the programs and activities sup-
ported by the interest on the endowment fund;
(B) the audited financial statement of the national or-
ganization for the preceding fiscal year;
(C) a plan for the programs and activities to be sup-
ported by the interest on the endowment fund as the Sec-
retary may require;
(D) an evaluation of the programs and activities sup-
ported by the interest on the endowment fund as the Sec-
retary may require; and
(E) data indicating the number of students from low-
income families who receive scholarships from local enti-
ties, and the amounts of such scholarships;
(6) contain such assurances as the Secretary may require
with respect to the management and operation of the endow-
ment fund; and
(7) contain an assurance that if the Secretary determines
that such organization is not in substantial compliance with
the provisions of this part, then the national organization shall
pay to the Secretary an amount equal to the corpus of the en-
dowment fund plus any accrued interest on such fund that is
available to the national organization on the date of such de-
termination.
(b) RETURNED FUNDS.All funds returned to the Secretary
pursuant to subsection (a)(7) shall be available to the Secretary to
carry out any scholarship or grant program assisted under title IV
of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.).
SEC. 816. [20 U.S.C. 1070 note] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$10,000,000 for fiscal year 2000.
PART D-GRANTS TO STATES FOR WORK-
PLACE
AND
COMMUNITY
TRANSITION
TRAINING FOR INCARCERATED YOUTH OF-
FENDERS
SEC. 821. [20 U.S.C. 1151] GRANTS TO STATES FOR WORKPLACE AND
COMMUNITY TRANSITION TRAINING FOR INCARCERATED
YOUTH OFFENDERS.
(a) FINDINGS.Congress makes the following findings:
(1) Over 150,000 youth offenders age 21 and younger are
incarcerated in the Nation's jails, juvenile facilities, and pris-
ons. (2) Most youth offenders who are incarcerated have been
sentenced as first-time adult felons.
(3) Approximately 75 percent of youth offenders are high
school dropouts who lack basic literacy and life skills, have lit-
tle or no job experience, and lack marketable skills.
(4) The average incarcerated youth has attended school
only through grade 10.
543
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 821
(5) Most of these youths can be diverted from a life of
crime into productive citizenship with available educational,
vocational, work skills, and related service programs.
(6) If not involved with educational programs while incar-
cerated, almost all of these youths will return to a life of crime
upon release.
(7) The average length of sentence for a youth offender is
about 3 years. Time spent in prison provides a unique oppor-
tunity for education and training.
(8) Even with quality education and training provided dur-
ing incarceration, a period of intense supervision, support, and
counseling is needed upon release to ensure effective reintegra-
tion of youth offenders into society.
(9) Research consistently shows that the vast majority of
incarcerated youths will not return to the public schools to
complete their education.
(10) There is a need for alternative educational opportuni-
ties during incarceration and after release.
(b) DEFINITION. For purposes of this part, the term "youth of-
fender" means a male or female offender under the age of 25, who
is incarcerated in a State prison, including a prerelease facility.
(c) GRANT PROGRAM.The Secretary of Education (in this sec-
tion referred to as the "Secretary") shall establish a program in ac-
cordance with this section to provide grants to the State correc-
tional education agencies in the States, from allocations for the
States under subsection (i), to assist and encourage incarcerated
youths to acquire functional literacy, life, and job skills, through
the pursuit of a postsecondary education certificate, or an associate
of arts or bachelor's degree while in prison, and employment coun-
seling and other related services which start during incarceration
and continue through prerelease and while on parole.
(d) APPLICATION.To be eligible for a grant under this section,
a State correctional education agency shall submit to the Secretary
a proposal for a youth offender program that
(1) identifies the scope of the problem, including the num-
ber of incarcerated youths in need of postsecondary education
and vocational training;
(2) lists the accredited public or private educational insti-
tution or institutions that will provide postsecondary edu-
cational services;
(3) lists the cooperating agencies, public and private, or
businesses that will provide related services, such as counsel-
ing in the areas of career development, substance abuse,
health, and parenting skills;
(4) describes the evaluation methods and performance
measures that the State correctional education agency will em-
ploy, which methods and measures
(A) shall be appropriate to meet the goals and objec-
tives of the proposal; and
(B) shall include measures of
(i) program completion;
(ii) student academic and vocational skill attain-
ment;
(iii) success in job placement and retention; and
543
Sec. 821
HIGHER EDUCATION AMENDMENTS OF 1998
544
(iv) recidivism;
(5) describes how the proposed programs are to be inte-
grated with existing State correctional education programs
(such as adult education, graduate education degree programs,
and vocational training) and State industry programs;
(6) addresses the educational needs of youth offenders who
are in alternative programs (such as boot camps); and
(7) describes how students will be selected so that only
youth offenders eligible under subsection (f) will be enrolled in
postsecondary programs.
(e) PROGRAM REQUIREMENTS.Each State correctional edu-
cation agency receiving a grant under this section shall
(1) integrate activities carried out under the grant with the
objectives and activities of the school-to-work programs of such
State, including
(A) work experience or apprenticeship programs;
(B) transitional worksite job training for vocational
education students that is related to the occupational goals
of such students and closely linked to classroom and lab-
oratory instruction;
(C) placement services in occupations that the stu-
dents are preparing to enter;
(D) employment-based learning programs; and
(E) programs that address State and local labor short-
ages;
(2) annually report to the Secretary and the Attorney
General on the results of the evaluations conducted using the
methods and performance measures contained in the proposal;
and (3) provide to each State for each student eligible under
subsection (f) not more than $1,500 annually for tuition, books,
and essential materials, and not more than $300 annually for
related services such as career development, substance abuse
counseling, parenting skills training, and health education, for
each eligible incarcerated youth.
(f) STUDENT ELIGIBILITY.A youth offender shall be eligible for
participation in a program receiving a grant under this section if
the youth offender
(1) is eligible to be released within 5 years (including a
youth offender who is eligible for parole within such time); and
(2) is 25 years of age or younger.
(g) LENGTH OF PARTICIPATION.A State correctional education
agency receiving a grant under this section shall provide edu-
cational and related services to each participating youth offender
for a period not to exceed 5 years, 1 year of which may be devoted
to study in a graduate education degree program or to remedial
education services for students who have obtained a secondary
school diploma or its recognized equivalent. Educational and relat-
ed services shall start during the period of incarceration in prison
or prerelease and may continue during the period of parole.
(h) EDUCATION DELIVERY SYSTEMS.State correctional edu-
cation agencies and cooperating institutions shall, to the extent
practicable, use high-tech applications in developing programs to
meet the requirements and goals of this section.
545
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 826
(i) ALLOCATION OF FUNDS.From the funds appropriated pur-
suant to subsection ( j) for each fiscal year, the Secretary shall allot
to each State an amount that bears the same relationship to such
funds as the total number of students eligible under subsection (f)
in such State bears to the total number of such students in all
States.
( j) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this section $17,000,000 for fiscal
year 1999 and such sums as may be necessary for each of the 4
succeeding fiscal years.
PART E-GRANTS TO COMBAT VIOLENT
CRIMES AGAINST WOMEN ON CAMPUSES
SEC. 826. [20 U.S.C. 1152] GRANTS TO COMBAT VIOLENT CRIMES
AGAINST WOMEN ON CAMPUSES.
(a) GRANTS AUTHORIZED.
(1) IN GENERAL.The Attorney General is authorized to
make grants to institutions of higher education, for use by such
institutions or consortia consisting of campus personnel, stu-
dent organizations, campus administrators, security personnel,
and regional crisis centers affiliated with the institution, to de-
velop and strengthen effective security and investigation strat-
egies to combat, violent crimes against women on campuses,
and to develop and strengthen victim services in cases involv-
ing violent crimes against women on campuses, which may in-
clude partnerships with local criminal justice authorities and
community-based victim services agencies.
(2) AWARD BASIS.The Attorney General shall award
grants and contracts under this section on a competitive basis.
(3)
EQUITABLE PARTICIPATION.The Attorney
General
shall make every effort to ensure
(A) the equitable participation of private and public in-
stitutions of higher education in the activities assisted
under this section; and
(B) the equitable geographic distribution of grants
under this section among the various regions of the United
States.
(b) USE OF GRANT FUNDS.Grant funds awarded under this
section may be used for the following purposes:
(1) To provide personnel, training, technical assistance,
data collection, and other equipment with respect to the in-
creased apprehension, investigation, and adjudication of per-
sons committing violent crimes against women on campus.
(2) To train campus administrators, campus security per-
sonnel, and personnel serving on campus disciplinary or judi-
cial boards to more effectively identify and respond to violent
crimes against women on campus, including the crimes of sex-
ual assault, stalking, and domestic violence.
(3) To implement and operate education programs for the
prevention of violent crimes against women.
(4) To develop, enlarge, or strengthen support services pro-
grams, including medical or psychological counseling, for vic-
tims of sexual offense crimes.
551
Sec. 826
HIGHER EDUCATION AMENDMENTS OF 1998
546
(5) To create, disseminate, or otherwise provide assistance
and information about victims' options on and off campus to
bring disciplinary or other legal action.
(6) To develop and implement more effective campus poli-
cies, protocols, orders, and services specifically devoted to pre-
vent, identify, and respond to violent crimes against women on
campus, including the crimes of sexual assault, stalking, and
domestic violence.
(7) To develop, install, or expand data collection and com-
munication systems, including computerized systems, linking
campus security to the local law enforcement for the purpose
of identifying and tracking arrests, protection orders, violations
of protection orders, prosecutions, and convictions with respect
to violent crimes against women on campus, including the
crimes of sexual assault, stalking, and domestic violence.
(8) To develop, enlarge, or strengthen victim services pro-
grams for the campus and to improve delivery of victim serv-
ices on campus.
(9) To provide capital improvements (including improved
lighting and communications facilities but not including the
construction of buildings) on campuses to address violent
crimes against women on campus, including the crimes of sex-
ual assault, stalking, and domestic violence.
(10) To support improved coordination among campus ad-
ministrators, campus security personnel, and local law enforce-
ment to reduce violent crimes against women on campus.
(C) APPLICATIONS.
(1) IN GENERAL.In order to be eligible to be awarded a
grant under this section for any fiscal year, an institution of
higher education shall submit an application to the Attorney
General at such time and in such manner as the Attorney Gen-
eral shall prescribe.
(2) CONTENTS.Each application submitted under para-
graph (1) shall
(A) describe the need for grant funds and the plan for
implementation for any of the purposes described in sub-
section (b);
(B) describe how the campus authorities shall consult
and coordinate with nonprofit and other victim services
programs, including sexual assault and domestic violence
victim services programs;
(C) describe the characteristics of the population being
served, including type of campus, demographics of the pop-
ulation, and number of students;
(D) provide measurable goals and expected results
from the use of the grant funds;
(E) provide assurances that the Federal funds made
available under this section shall be used to supplement
and, to the extent practical, increase the level of funds
that would, in the absence of Federal funds, be made avail-
able by the institution for the purposes described in sub-
section (b); and
547
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 826
(F) include such other information and assurances as
the Attorney General reasonably determines to be nec-
essary.
(3) COMPLIANCE WITH
CAMPUS CRIME REPORTING RE-
QUIRED.No institution of higher education shall be eligible
for a grant under this section unless such institution is in com-
pliance with the requirements of section 485(f) of the Higher
Education Act of 1965.
(d) GENERAL TERMS AND CONDITIONS.
(1) NONMONETARY ASSISTANCE.In addition to the assist-
ance provided under this section, the Attorney General may re-
quest any Federal agency to use the agency's authorities and
the resources granted to the agency under Federal law (includ-
ing personnel, equipment, supplies, facilities, and managerial,
technical, and advisory services) in support of campus security,
and investigation and victim service efforts.
(2) GRANTEE REPORTING.
(A) ANNUAL REPORT.Each institution of higher edu-
cation receiving a grant under this section shall submit an
annual performance report to the Attorney General. The
Attorney General shall suspend funding under this section
for an institution of higher education if the institution fails
to submit an annual performance report.
(B) FINAL REPORT.Upon completion of the grant pe-
riod under this section, the institution shall file a perform-
ance report with the Attorney General and the Secretary
of Education explaining the activities carried out under
this section together with an assessment of the effective-
ness of those activities in achieving the purposes described
in subsection (b).
(3) REPORT TO CONGRESS.Not later than 180 days after
the end of the fiscal year for which grants are awarded under
this section, the Attorney General shall submit to the commit-
tees of the House of Representatives and the Senate respon-
sible for issues relating to higher education and crime, a report
that includes
(A) the number of grants, and the amount of funds,
distributed under this section;
(B) a summary of the purposes for which the grants
were provided and an evaluation of the progress made
under the grant;
(C) a statistical summary of the persons served, detail-
ing the nature of victimization, and providing data on age,
sex, race, ethnicity, language, disability, relationship to of-
fender, geographic distribution, and type of campus; and
(D) an evaluation of the effectiveness of programs
funded under this part, including information obtained
from reports submitted pursuant to section 485(f) of the
Higher Education Act of 1965.
(4) REGULATIONS OR GUIDELINES.Not later than 120 days
after the date of enactment of this section, the Attorney Gen-
eral, in consultation with the Secretary of Education, shall
publish proposed regulations or guidelines implementing this
section. Not later than 180 days after the date of enactment of
Sec. 821
HIGHER EDUCATION AMENDMENTS OF 1998
548
this section, the Attorney General shall publish final regula-
tions or guidelines implementing this section.
(f )1 DEFINITIONS.In this section
(1) the term "domestic violence" includes acts or threats of
violence, not including acts of self defense, committed by a cur-
rent or former spouse of the victim, by a person with whom the
victim shares a child in common, by a person who is cohabitat-
ing with or has cohabitated with the victim, by a person simi-
larly situated to a spouse of the victim under the domestic or
family violence laws of the jurisdiction, or by any other person
against a victim who is protected from that person's acts under
the domestic or family violence laws of the jurisdiction;
(2) the term "sexual assault" means any conduct pro-
scribed by chapter 109A of title 18, United States Code, wheth-
er or not the conduct occurs in the special maritime and terri-
torial jurisdiction of the United States or in a Federal prison,
including both assaults committed by offenders who are
strangers to the victim and assaults committed by offenders
who are known or related by blood or marriage to the victim;
and (3) the term "victim services" means a nonprofit, non-
governmental organization that assists domestic violence or
sexual assault victims, including campus women's centers, rape
crisis centers, battered women's shelters, and other sexual as-
sault or domestic violence programs, including campus counsel-
ing support and victim advocate organizations with domestic
violence, stalking, and sexual assault programs, whether or not
organized and staffed by students.
(g) 31- AUTHORIZATION OF APPROPRIATIONS.For the purpose of
carrying out this part, there are authorized to be appropriated
$10,000,000 for fiscal year 1999 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
SEC. 827. [20 U.S.C. 1152 note] STUDY OF INSTITUTIONAL PROCEDURES
TO REPORT SEXUAL ASSAULTS.
(a) IN GENERAL.The Attorney General, in consultation with
the Secretary of Education, shall provide for a national study to ex-
amine procedures undertaken after an institution of higher edu-
cation receives a report of sexual assault.
(b) REPORT.The study required by subsection (a) shall include
an analysis of
(1) the existence and publication of the institution of high-
er education's and State's definition of sexual assault;
(2) the existence and publication of the institution's policy
for campus sexual assaults;
(3) the individuals to whom reports of sexual assault are
given most often and
(A) how the individuals are trained to respond to the
reports; and
(B) the extent to which the individuals are trained;
(4) the reporting options that are articulated to the victim
or victims of the sexual assault regarding
(A) on-campus reporting and procedure options; and
1So in law. Subsections (f) and (g) probably should be redesignated as subsections (e) and (0.
549
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 831
(B) off-campus reporting and procedure options;
(5) the resources available for victims' safety, support,
medical health, and confidentiality, including
(A) how well the resources are articulated both specifi-
cally to the victim of sexual assault and generally to the
campus at large; and
(B) the security of the resources in terms of confiden-
tiality or reputation;
(6) policies and practices that may prevent or discourage
the reporting of campus sexual assaults to local crime authori-
ties, or that may otherwise obstruct justice or interfere with
the prosecution of perpetrators of campus sexual assaults;
(7) policies and practices found successful in aiding the re-
port and any ensuing investigation or prosecution of a campus
sexual assault;
(8) the on-campus procedures for investigation and dis-
ciplining the perpetrator of a sexual assault, including
(A) the format for collecting evidence; and
(B) the format of the investigation and disciplinary
proceeding, including the faculty responsible for running
the disciplinary procedure and the persons allowed to at-
tend the disciplinary procedure; and
(9) types of punishment for offenders, including
(A) whether the case is directed outside the institution
for further punishment; and
(B) how the institution punishes perpetrators.
(c) SUBMISSION OF REPORT.The report required by subsection
(b) shall be submitted to Congress not later than September 1,
2000.
(d) DEFINITION.For purposes of this section, the term "cam-
pus sexual assaults" means. sexual assaults occurring at institu-
tions of higher education and sexual assaults committed against or
by students or employees of such institutions.
(e) AUTHORIZATION OF APPROPRIATIONS.There is authorized
to be appropriated to carry out this section $1,000,000 for fiscal
year 2000.
PART F-IMPROVING UNITED STATES UNDER-
STANDING OF SCIENCE, ENGINEERING, AND
TECHNOLOGY IN EAST ASIA
SEC. 831. [20 U.S.C. 1862 note] IMPROVING UNITED STATES UNDER-
STANDING OF SCIENCE, ENGINEERING,
AND TECH-
NOLOGY IN EAST ASIA.
(a) ESTABLISHMENT.The Director of the National Science
Foundation is authorized, beginning in fiscal year 2000, to carry
out an interdisciplinary program of education and research on East
Asian science, engineering, and technology. The Director shall
carry out the interdisciplinary program in consultation with the
Secretary of Education.
(b) PURPOSES.The purposes of the program established under
this section shall be to-
5 5
Sec. 836
HIGHER EDUCATION AMENDMENTS OF 1998
550
(1) increase understanding of East Asian research, and in-
novation for the creative application of science and technology
to the problems of society;
(2) provide scientists, engineers, technology managers, and
students with training in East Asian languages, and with an
understanding of research, technology, and management of in-
novation, in East Asian countries;
(3) provide program participants with opportunities to be
directly involved in scientific and engineering research, and ac-
tivities related to the management of scientific and techno-
logical innovation, in East Asia; and
(4) create mechanisms for cooperation and partnerships
among United States industry, universities, colleges, not-for-
profit institutions, Federal laboratories (within the meaning of
section 4(6) of the Stevenson-Wydler Technology Innovation
Act of 1980 (15 U.S.C. 3703(6))), and government, to dissemi-
nate the results of the program assisted under this section for
the benefit of United States research and innovation.
(C) PARTICIPATION BY FEDERAL SCIENTISTS, ENGINEERS, AND
MANAGERS.Scientists, engineers, and managers of science and en-
gineering programs in Federal agencies and the Federal labora-
tories shall be eligible to participate in the program assisted under
this section on a reimbursable basis.
(d) REQUIREMENT FOR MERIT REVIEW.Awards made under
the program established under this section shall only be made
using a competitive, merit-based review process.
(e) AUTHORIZATION OF APPROPRIATIONS.There is authorized
to be appropriated to carry out this section $10,000,000 for fiscal
year 2000.
PART G-- OLYMPIC SCHOLARSHIPS
SEC. 836. [20 U.S.C. 1070 note] EXTENSION OF AUTHORIZATION.
Section 1543(d) of the Higher Education Amendments of 1992
is amended by striking "1993" and inserting "1999".
PART H-UNDERGROUND RAILROAD
SEC. 841. [20 U.S.C. 1153] UNDERGROUND RAILROAD EDUCATIONAL
AND CULTURAL PROGRAM.
(a) PROGRAM ESTABLISHED.The Secretary of Education, in
consultation and cooperation with the Secretary of the Interior, is
authorized to make grants to 1 or more nonprofit educational orga-
nizations that are established to research, display, interpret, and
collect artifacts relating to the history of the Underground Rail-
road.
(b) GRANT AGREEMENT.Each nonprofit educational organiza-
tion awarded a grant under this section shall enter into an agree-
ment with the Secretary of Education. Each such agreement shall
require the organization
(1) to establish a facility to house, display, and interpret
the artifacts related to the history of the Underground Rail-
road, and to make the interpretive efforts available to institu-
551
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 846
tions of higher education that award a baccalaureate or grad-
uate degree;
(2) to demonstrate substantial private support for the facil-
ity through the implementation of a public-private partnership
between a State or local public entity and a private entity for
the support of the facility, which private entity shall provide
matching funds for the support of the facility in an amount
equal to 4 times the amount of the contribution of the State
or local public entity, except that not more than 20 percent of
the matching funds may be provided by the Federal Govern-
ment;
(3) to create an endowment to fund any and all shortfalls
in the costs of the on-going operations of the facility;
(4) to establish a network of satellite centers throughout
the United States to help disseminate information regarding
the Underground Railroad throughout the United States, if
such satellite centers raise 80 percent of the funds required to
establish the satellite centers from non-Federal public and pri-
vate sources;
(5) to establish the capability to electronically link the fa-
cility with other local and regional facilities that have collec-
tions and programs which interpret the history of the Under-
ground Railroad; and
(6) to submit, for each fiscal year for which the organiza-
tion receives funding under this section, a report to the Sec-
retary of Education that contains
(A) a description of the programs and activities sup-
ported by the funding;
(B) the audited financial statement of the organization
for the preceding fiscal year;
(C) a plan for the programs and activities to be sup-
ported by the funding as the Secretary may require; and
(D) an evaluation of the programs and activities sup-
ported by the funding as the Secretary may require.
(c) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this section $6,000,000 for fiscal
year 1999, $6,000,000 for fiscal year 2000, $6,000,000 for fiscal
year 2001, $3,000,000 for fiscal year 2002, and $3,000,000 for fiscal
year 2003.
PART I-SUMMER TRAVEL AND WORK
PROGRAMS
SEC. 846. [20 U.S.C. 1474 note] AUTHORITY TO ADMINISTER SUMMER
TRAVEL AND WORK PROGRAMS.
The Director of the United States Information Agency is au-
thorized to administer summer travel and work programs without
regard to preplacement requirements.
Sec. 851
HIGHER EDUCATION AMENDMENTS OF 1998
552
PART J WEB-BASED EDUCATION
COMMISSION
SEC. 851. DEFINITIONS.
(a) IN GENERAL.This part may be cited as the "Web-Based
Education Commission Act".
(b) DEFINITIONS.In this part:
(1) COMMISSION.The term "Commission" means the Web-
Based Education Commission established under section 852.
(2) INFORMATION TECHNOLOGY.The term "information
technology" has the meaning given that term in section 5002
of the Information Technology Management Reform Act of
1996 (110 Stat. 679).
(3) STATE.The term "State" means each of the several
States of the United States and the District of Columbia.
SEC. 852. ESTABLISHMENT OF WEB-BASED EDUCATION COMMISSION.
(a) ESTABLISHMENT.There is established a commission to be
known as the Web-Based Education Commission.
(b) MEMBERSHIP.
(1) COMPOSITION.The Commission shall be composed of
14 members, of which
(A) three members shall be appointed by the Presi-
dent, from among individuals representing the Internet
technology industry;
(B) three members shall be appointed by the Sec-
retary, from among individuals with expertise in accredita-
tion, establishing statewide curricula, and establishing in-
formation technology networks pertaining to education
curricula;
(C) two members shall be appointed by the Majority
Leader of the Senate;
(D) two members shall be appointed by the Minority
Leader of the Senate;
(E) two members shall be appointed by the Speaker of
the House of Representatives; and
(F) two members shall be appointed by the Minority
Leader of the House of Representatives.
(2) DATE.The appointments of the members of the Com-
mission shall be made not later than 45 days after the date of
enactment of this Act.
(c) PERIOD OF APPOINTMENT; VACANCIES.Members shall be
appointed for the life of the Commission. Any vacancy in the Com-
mission shall not affect its powers, but shall be filled in the same
manner as the original appointment.
(d) INITIAL MEETING.Not later than 30 days after the date on
which all members of the Commission have been appointed, the
Commission shall hold the Commission's first meeting.
(e) MEETINGS.The Commission shall meet at the call of the
Chairperson.
(f) QUORUM.A majority of the members of the Commission
shall constitute a quorum, but a lesser number of members may
hold hearings.
553
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 854
(g) CHAIRPERSON AND VICE CHAIRPERSON.The Commission
shall select a chairperson and vice chairperson from among the
members of the Commission.
SEC. 853. DUTIES OF THE COMMISSION.
(a) STUDY.
(1) IN GENERAL.The Commission shall conduct a thor-
ough study to assess the educational software available in re-
tail markets for secondary and postsecondary students who
choose to use such software.
(2) PUBLIC HEARINGS.As part of the study conducted
under this subsection, the Commission shall hold public hear-
ings in each region of the United States concerning the assess-
ment referred to in paragraph (1).
(3) EXISTING INFORMATION.To the extent practicable, in
carrying out the study under this subsection, the Commission
shall identify and use existing information related to the as-
sessment referred to in paragraph (1).
(b) REPORT.Not later than 6 months after the first meeting
of the Commission, the Commission shall submit a report to the
President and Congress that shall contain a detailed statement of
the findings and conclusions of the Commission resulting from the
study, together with the Commission's recommendations
(1) for such legislation and administrative actions as the
Commission considers to be appropriate; and
(2) regarding the appropriate Federal role in determining
quality educational software products.
(c) FACILITATION OF EXCHANGE OF INFORMATION.In carrying
out the study under subsection (a), the Commission shall, to the ex-
tent practicable, facilitate the exchange of information concerning
the issues that are the subject of the study among
(1) officials of the Federal Government, and State govern-
ments and political subdivisions of States; and
(2) educators from Federal, State, and local institutions of
higher education and secondary schools.
SEC. 854. POWERS OF THE COMMISSION.
(a) HEARINGS.The Commission may hold such hearings, sit
and act at such times and places, take such testimony, and receive
such evidence as the Commission considers advisable to carry out
the duties of the Commission.
(b) INFORMATION FROM FEDERAL AGENCIES.The Commission
may request from the head of any Federal agency or instrumental-
ity such information as the Commission considers necessary to
carry out the provisions of this part. Each such agency or instru-
mentality shall, to the extent permitted by law and subject to the
exceptions set forth in section 552 of title 5, United States Code
(commonly referred to as the Freedom of Information Act), furnish
such information to the Commission upon request.
(c) POSTAL SERVICES.The Commission may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the Federal Government.
(d) GIFTS.The Commission may accept, use, and dispose of
gifts or donations of services or property.
553
Sec. 855
HIGHER EDUCATION AMENDMENTS OF 1998
554
SEC. 855. COMMISSION PERSONNEL MATTERS.
(a) COMPENSATION OF MEMBERS.Except as provided in sub-
section (b), each member of the Commission who is not an officer
or employee of the Federal Government shall serve without com-
pensation. All members of the Commission who are officers or em-
ployees of the United States shall serve without compensation in
addition to that received for their services as officers or employees
of the United States.
(b) TRAVEL EXPENSES.The members of the Commission shall
be allowed travel expenses, including per diem in lieu of subsist-
ence, at rates authorized for employees of agencies under sub-
chapter I of chapter 57 of title 5, United States Code, while away
from their homes or regular places of business in the performance
of services for the Commission.
(C) STAFF.
(1) IN GENERAL.The Chairperson of the Commission may,
without regard to the civil service laws and regulations, ap-
point and terminate an executive director and such other addi-
tional personnel as may be necessary to enable the Commis-
sion to perform the Commission's duties. The employment of
an executive director shall be subject to confirmation by the
Commission.
(2) COMPENSATION.The Chairperson of the Commission
may fix the compensation of the executive director and other
personnel without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of title 5, United States Code, re-
lating to classification of positions and General Schedule pay
rates, except that the rate of pay for the executive director and
other personnel may not exceed the rate payable for level V of
the Executive Schedule under section 5316 of such title.
(d) DETAIL OF GOVERNMENT EMPLOYEES.Any Federal Gov-
ernment employee may be detailed to the Commission without re-
imbursement, and such detail shall be without interruption or loss
of civil service status or privilege.
(e) PROCUREMENT OF TEMPORARY AND INTERMITTENT SERV-
ICES.The Chairperson of the Commission may procure temporary
and intermittent services under section 3109(b) of title 5, United
States Code, at rates for individuals that do not exceed the daily
equivalent of the annual rate of basic pay prescribed for level V of
the Executive Schedule under section 5316 of such title.
SEC. 856. TERMINATION OF THE COMMISSION.
The Commission shall terminate on the date that is 90 days
after the date on which the Commission submits the Commission's
report under section 853(b).
SEC. 857. AUTHORIZATION OF APPROPRIATIONS.
(a) IN GENERAL.There are authorized to be appropriated
$450,000 for fiscal year 1999 to. the Commission to carry out this
part.
(b) AVAILABILITY.Any sums appropriated under the author-
ization contained in this section shall remain available, without
fiscal year limitation, until expended.
555
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 862
PART K MISCELLANEOUS
SEC. 861. EDUCATION-WELFARE STUDY.
(a) STUDY.The Comptroller General of the United States
shall conduct a study of the effectiveness of educational approaches
(including vocational and post-secondary education approaches) and
rapid employment approaches to helping welfare recipients and
other low-income adults become employed and economically self-
sufficient. Such study shall include
(1) a survey of the available scientific evidence and re-
search data on the subject, including a comparison of the ef-
fects of programs emphasizing a vocational or postsecondary
educational approach to programs emphasizing a rapid employ-
ment approach, along with research on the impacts of pro-
grams which emphasize a combination of such approaches;
(2) an examination of the research regarding the impact of
postsecondary education on the educational attainment of the
children of recipients who have completed a postsecondary edu-
cation program; and
(3) information regarding short and long-term employ-
ment, wages, duration of employment, poverty rates, sustain-
able economic self-sufficiency, prospects for career advance-
ment or wage increases, access to quality child care, placement
in employment with benefits including health care, life insur-
ance and retirement, and related program outcomes.
(b) REPORT.Not later than August 1, 1999, the Comptroller
General of the United States shall prepare and submit to the Com-
mittees on Ways and Means and on Education and the Workforce
of the House of Representatives and the Committees on Finance
and on Labor and Human Resources of the Senate, a report that
contains the finding of the study required by subsection (a).
SEC. 862. RELEASE OF CONDITIONS, COVENANTS, AND REVERSIONARY
INTERESTS, GUAM COMMUNITY COLLEGE CONVEYANCE,
BARRIGADA, GUAM.
(a) RELEASE.The Secretary of Education shall release all con-
ditions and covenants that were imposed by the United States, and
the reversionary interests that were retained by the United States,
as part of the conveyance of a parcel of Federal surplus property
located in Barrigada, Guam, consisting of approximately 314.28
acres and known as Naval Communications Area Master Station,
WESTPAC, parcel IN, which was conveyed to the Guam Commu-
nity College pursuant to
(1) the quitclaim deed dated June 8, 1990, conveying 61.45
acres, between the Secretary, acting through the Administrator
for Management Services, and the Guam Community College,
acting through its Board of Trustees; and
(2) the quitclaim deed dated June 8, 1990, conveying
252.83 acres, between the Secretary, acting through the Ad-
ministrator for Management Services, and the Guam Commu-
nity College, acting through its Board of Trustees, and the
Governor of Guam.
(b) CONSIDERATION.The Secretary shall execute the release of
the conditions, covenants, and reversionary interests under sub-
section (a) without consideration.
1
5U.
Sec. 863
HIGHER EDUCATION AMENDMENTS OF 1998
556
(c) INSTRUMENT OF RELEASE.The Secretary shall execute and
file in the appropriate office or offices a deed of release, amended
deed, or other appropriate instrument effectuating the release of
the conditions, covenants, and reversionary interests under sub-
section (a).
SEC. 863. SENSE OF CONGRESS REGARDING GOOD CHARACTER.
(a) FINDINGS.Congress finds that
(1) the future of our Nation and world will be determined
by the young people of today;
(2) record levels of youth crime, violence, teenage preg-
nancy, and substance abuse indicate a growing moral crisis in
our society;
(3) character development is the long-term process of help-
ing young people to know, care about, and act upon such basic
values as trustworthiness, respect for self and others, respon-
sibility, fairness, compassion, and citizenship;
(4) these values are universal, reaching across cultural and
religious differences;
(5) a recent poll found that 90 percent of Americans sup-
port the teaching of core moral and civic values;
(6) parents will always be children's primary character
educators;
(7) good moral character is developed best in the context
of the family;
(8) parents, community leaders, and school officials are es-
tablishing successful partnerships across the Nation to imple-
ment character education programs;
(9) character education programs also ask parents, faculty,
and staff to serve as role models of core values, to provide op-
portunities for young people to apply these values, and to es-
tablish high academic standards that challenge students to set
high goals, work to achieve the goals, and persevere in spite
of difficulty;
(10) the development of virtue and moral character, those
habits of mind, heart, and spirit that help young people to
know, desire, and do what is right, has historically been a pri-
mary mission of colleges and universities; and
(11) the Congress encourages parents, faculty, and staff
across the Nation to emphasize character development in the
home, in the community, in our schools, and in our colleges
and universities.
(b) SENSE OF CONGRESS.It is the sense of Congress that Con-
gress should support and encourage character building initiatives
in schools across America and urge colleges and universities to af-
firm that the development of character is one of the primary goals
of higher education.
SEC.
864. EDUCATIONAL MERCHANDISE LICENSING CODES OF
CONDUCT.
It is the sense of Congress that all American colleges and uni-
versities should adopt rigorous educational merchandise licensing
codes of conduct to assure that university and college licensed mer-
chandise is not made by sweatshop and exploited adult or child
557
HIGHER EDUCATION AMENDMENTS OF 1998
Sec. 864
labor either domestically or abroad, and that such codes should in-
clude at least the following:
(1) Public reporting of the code and the companies adher-
ing to the code.
(2) Independent monitoring of the companies adhering to
the code by entities not limited to major international account-
ing firms.
(3) An explicit prohibition on the use of child labor.
(4) An explicit requirement that companies pay workers at
least the governing minimum wage and applicable overtime.
(5) An explicit requirement that companies allow workers
the right to organize without retribution.
(6) An explicit requirement that companies maintain a safe
and healthy workplace.
LAND-GRANT COLLEGES
Act of July 2, 1862 (7 U.S.C. 301 et. seq.), Commonly Known
as the First Morrill Act
AN ACT Donating public lands to the several States and Territories which may
provide Colleges for the Benefit of Agriculture and the Mechanic Arts.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, [7 U.S.C. 301]
That there be granted to the several States, for the purposes here-
inafter mentioned, an amount of public land, to be apportioned to
each State a quantity equal to thirty thousand acres for each sen-
ator and representative in Congress to which the States are respec-
tively entitled by the apportionment under the census of eighteen
hundred and sixty: Provided, That no mineral lands shall be se-
lected or purchased under the provisions of this act.
SEC. 2. [7 U.S.C. 302] And be it further enacted, That the land
aforesaid, after being surveyed, shall be apportioned to the several
States in sections or subdivisions of sections, not less than one
quarter of a section; and whenever there are public lands in a
State, subject to sale at private entry at one dollar and twenty-five
cents per acre, the quantity to which said State shall be entitled
shall be selected from such lands within the limits of such State,
and the Secretary of Interior is hereby directed to issue to each of
the States in which there is not the quantity of public lands subject
to sale at private entry at one dollar and twenty-five cents per acre,
to which said State may be entitled under the provisions of this
act, land scrip to the amount in acres for the deficiency of its dis-
tributive share: said scrip to be sold by said States and the pro-
ceeds thereof applied to the uses and purposes prescribed in this
act, and for no other use or purposes whatsoever: Provided, That
in no case shall any State to which land scrip may thus be issued
be allowed to locate the same within the limits of any other State,
or of any Territory of the United States, but their assignees may
thus locate said land scrip upon any of the unappropriated lands
of the United States subject to sale at private entry at one dollar
and twenty-five cents, or less, per acre: And provided, further, That
not more than one million acres shall be located by such assignees
in any one of the States: And provided, further, That no such loca-
tion shall be made before one year from the passage of this act.
SEC. 3. [7 U.S.C. 303] And be it further enacted, That all the
expenses of management, superintendence, and taxes from date of
selection of said lands, previous to their sales, and all expenses in-
curred in the management and disbursement of moneys which may
be received therefrom, shall be paid by the States to which they
may belong, out of the treasury of said States, so that the entire
558
5 4
559
FIRST MORRILL ACT
Sec. 5
proceeds of the sale of said lands shall be applied without any dim-
inution whatever to the purposes hereinafter mentioned.
SEC. 4. [7 U.S.C. 304] That all moneys derived from the sale
of lands aforesaid by the States to which lands are apportioned and
from the sale of land scrip hereinbefore provided for shall be in-
vested in bonds of the United States or of the States or some other
safe bonds; or the same may be invested by the States having no
State bonds in any manner after the legislatures of such States
shall have assented thereto and engaged that such funds shall
yield a fair and reasonable rate of return, to be fixed by the State
legislatures, and that the principal thereof shall forever remain
unimpaired: Provided, That the moneys so invested or loaned shall
constitute a perpetual fund, the capital of which shall remain for-
ever undiminished (except so far as may be provided in section 5
of this Act), and the interest of which shall be inviolably appro-
priated, by each State which may take and claim the benefit of this
Act, to the endowment, support, and maintenance of at least one
college where the leading object shall be, without excluding other
scientific and classical studies and including military tactics, to
teach such branches of learning as are related to agriculture and
the mechanic arts, in such manner as the legislatures of the States
may respectively prescribe, in order to promote the liberal and
practical education of the industrial classes in the several pursuits
and professions in life.
SEC. 5. [7 U.S.C. 305] And be it further enacted, That the
grant of land and land scrip hereby authorized shall be made on
the following conditions, to which, as well as to the provisions here-
inbefore contained, the previous assent of the several States shall
be signified by legislative acts:
First. If any portion of the fund invested, as provided by the
foregoing section, or any portion of the interest thereon, shall, by
any action or contingency, be diminished or lost, it shall be re-
placed by the State to which it belongs, so that the capital of the
fund shall remain forever undiminished; and the annual interest
shall be regularly applied without diminution to the purposes men-
tioned in the fourth section of this act, except that a sum, not ex-
ceeding ten per centum upon the amount received by any State
under the provisions of this act, may be expended for the purchase
of lands for sites or experimental farms, whenever authorized by
the respective legislatures of said States.
Second. No portion of said fund, nor the interest thereon, shall
be applied, directly or indirectly, under any pretence whatever, to
the purchase, erection, preservation, or repair of any building or
buildings.
Third. Any State which may take and claim the benefit of the
provisions of this act shall provide, within five years, at least not
less than one college, as described in the fourth section of this act,
or the grant to such State shall cease; and said State shall be
bound to pay the United States the amount received of any lands
previously sold, and that the title to purchasers under the State
shall be valid.
Fourth. An annual report shall be made regarding the progress
of each college, recording any improvements and experiments
made, with their cost and results, and such other matters,
5U5
Sec. 7
FIRST MORRILL ACT
560
including State industrial and economical statistics, as may be sup-
posed useful; one copy of which shall be transmitted by mail free 1,
by each, to all the other colleges which may be endowed under the
provisions of this act, and also one copy to the Secretary of the In-
terior.
Fifth. When lands shall be selected from those which have
been raised to double the minimum price, in consequence of rail-
road grants, they shall be computed to the States at the maximum
price, and the number of acres proportionally diminished.
Sixth. No State while in a condition of rebellion or insurrection
against the government of the United States shall be entitled to
the benefit of this act.
Seventh. No State shall be entitled to the benefits of this act
unless it shall express its acceptance thereof by its legislature with-
in two years from the date of its approval by the President.
[Section 6; 7 U.S.C. 306 repealed by Ch. 14, § 1, December 16,
1930, 46 Stat. 10281
SEC. 7. [7 U.S.C. 307] And be it further enacted, That the land
officers shall receive the same fees for locating land scrip issued
under the provisions of this act as is now allowed for the location
of military bounty land warrants under existing. laws; Provided,
their maximum compensation shall not be thereby increased.
SEC. 8. [7 U.S.C. 308] And be it further enacted, That the Gov-
ernors of the several States to which scrip shall be issued under
this act shall be required to report annually to Congress all sales
made of such scrip until the whole shall be disposed of, the amount
received for the same, and what appropriation has been made of
the proceeds.
1There are no amendments striking the term "free" in the fourth paragraph of section 5, how-
ever a general amendment in section 3 of the Act of March 3, 1873, ch. 231, 17 Stat. 559, which
the proviso reads as follows: Provided, That all laws and parts of laws permitting the trans-
mission by mail of any free matter whatever be, and the same are hereby, repealed from and
after June thirtieth, eighteen hundred and seventy-three.
Act of August 30, 1890 (7 U.S.C. 321 et. seq.); Commonly
Known as the Second Morrill Act
AN ACT To apply a portion of the proceeds of the public lands to the more complete
endowment and support of the colleges for the benefit of agriculture and the me-
chanic arts established under the provsions of an act of Congress approved July
second, eighteen hundred and sixty-two.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, [7 U.S.C. 322,
323] That there shall be, and hereby is, annually appropriated, out
of any money in the Treasury not otherwise appropriated, arising
from the sales of public lands, to be paid as hereinafter provided,
to each State and Territory for the more complete endowment and
maintenance of colleges for the benefit of agriculture and the me-
chanic arts now established, or which may be hereafter established,
in accordance with an act of Congress approved July- second, eight-
een hundred and sixty-two, the sum of fifteen thousand,dollars. for
the year ending June thirtieth, eighteen hundted and ninety, and
an annual increase of the amount of such appropriation thereafter
for ten years by an additional sum of one thousand dollars over .the _
preceding year, and the annual amount to be paid thereafter to
each State and Territory shall be twenty-five thousand dollars to
be applied only to instruction in food and agricultural sciences, and
to the facilities for such instruction: Provided, That no money shall
be paid out under this act to any State or Territory for the support
and maintenance of a college where a distinction of race or color
is made in the admission of students, but the establishment and
maintenance of such colleges separately for white and colored stu-
dents shall be held to be a compliance with the provisions of this
act if the funds received in such State or Territory be equitably di-
vided as hereinafter set forth: Provided, That in any State in which
there has been one college established in pursuance of the act of
July second, eighteen hundred and sixty-two, and also in which an
educational institution of like character has been established, or
may be hereafter established, and is now aided by such State from
its own revenue, for the education of colored students in agri-
culture and the mechanic arts, however named or styled, or wheth-
er or not it has received money heretofore under the act to which
this act is an amendment, the legislature of such State may pro-
pose and report to the Secretary of the Interior a just and equitable
division of the fund to be received under this act between one col-
lege for white students and one institution for colored students es-
tablished as aforesaid, which shall be divided into two parts and
paid accordingly, and thereupon such institution for colored stu-
dents shall be entitled to the benefits of this act and subject to its
provisions, as much as it would have been if it had been included
under the act of eighteen hundred and sixty-two, and the fulfill-
561
5V.?
Sec. 2
SECOND MORRILL ACT
562
ment of the foregoing provisions shall be taken as a compliance
with the provision in reference to separate colleges for white and
colored students.
SEC. 2. (7 U.S.C. 324) That the sums hereby appropriated to
the States and Territories for the further endowment and support
of colleges shall be annually paid on or before the thirty -first day
of October of each year, by the Secretary of the Treasury, upon the
warrant of the Secretary of the Interior, out of the Treasury of the
United States, to the State or Territorial treasurer, or to such offi-
cer as shall be designated by the laws of such State or Territory
to receive the same, who shall, upon the order of the trustees of
the college, or the institution for colored students immediately pay
over said sums to the treasurers of the respective colleges or other
institutions entitled to receive the same, and such treasurers shall
be required to report to the Secretary of Agriculture and to the Sec-
retary of the Interior, on or before the first day of December of each
year, a detailed statement of the amount so received and of its dis-
bursement. The grants of moneys authorized by this act are made
subject to the legislative assent of the several States and Terri-
tories to the purpose of said grants: Provided, That payments of
such installments of the approtion 1 herein made as shall become
due to any State before the adjournment of the regular session of
legislature meeting next after the passage of this act shall be made
upon the assent of the governor thereof, duly certified to the Sec-
retary of the Treasury.
SEC. 3. [7 U.S.C. 325] That if any portion of the moneys re-
ceived by the designated officer of the State or Territory for the fur-
ther and more complete endowment, support, and maintenance of
colleges, or of institutions for colored students, as provided in this
act, shall, by any action or contingency, be diminished or lost, or
be misapplied, it shall be replaced by the State or Territory to
which it belongs, and until so replaced no subsequent appropriation
shall be apportioned or paid to such State or Territory; and no por-
tion of said moneys shall be applied, directly or indirectly, under
any pretense whatever, to the purchase, erection, preservation, or
repair of any building or buildings. An annual report by the presi-
dent of each of said colleges shall be made to the Secretary of Agri-
culture, as well as to the Secretary of the Interior, regarding the
condition and progress of each college, including statistical informa-
tion in relation to its receipts and expenditures, its library, the
number of its students and professors, and also as to any improve-
ments and experiments made under the direction of any experi-
ment stations attached to said colleges, with their cost and results,
and such other industrial and economical statistics as may be re-
garded as useful, one copy of which shall be transmitted by mail
free to all other colleges further endowed under this act.
SEC. 4. [7 U.S.C. 321, 326] That on or before the first day of
October in each year, after the passage of this act, the Secretary
of the Interior shall ascertain and certify to the Secretary of the
Treasury as to each State and. Territory whether it is entitled to
receive its share of the annual appropriation for colleges, or of in-
stitutions for colored students, under this act, and the amount
1So in law.
563
SECOND MORRILL ACT
Sec. 5
which thereupon each is entitled, respectively, to receive. If the
Secretary of the Interior shall withhold a certificate from any State
or Territory of its appropriation the facts and reasons therefor shall
be reported to the President, and the amount involved shall be kept
separate in the Treasury until the close of the next Congress, in
order that the State or Territory may, if it should so desire, appeal
to Congress from the determination of the Secretary of the Interior.
If the next Congress shall not direct such sum to be paid it shall
be covered into the Treasury. And the Secretary of the Interior is
hereby charged with the proper administration of this law.'
SEC. 6.
U.S.C. 328] Congress may at any time amend, sus-
pend, or repeal any or all of the provisions of this act.
SEC. 5.2 [7 U.S.C. 326a] There is appropriated annually, out
of funds in the Treasury not otherwise appropriated, for payment
to the Commonwealth of Puerto Rico, the Virgin Islands of the
United States, Guam, American Samoa, the Commonwealth of the
Northern Mariana Islands, the Federated States of Micronesia, the
Republic of the Marshall Islands, and the Republic of Palau the
amount they would be entitled to receive under this Act if they
were States. Sums appropriated under this section shall be treated
in the same manner and be subject to the same provisions of law,
as would be the case if they had been appropriated by the first
sentence of section 1.
1 Administration of the Second Morrill Act transferred to the Secretary of Agriculture by sec-
tion 1419 of the National Agricultural Research, Extension, and Teaching Policy Act Amend-
ments of 1981 (7 U.S.C. 3101 note). See page 123 of this compilation.
2This section 5 was first added at the end of the Act of August 30, 1890 (Second, Morrill Act;
(therefore after section 6)) by section 506(c) of P.L. 92-318 (86 Stat. 350). The 1988 amendment
(P.L. 100-339, sec. 2) did not change the placement of the section.
Bankhead-Jones Act
AN ACT Providing for research into basic laws and principles relating to agri-
culture, further development of cooperative agricultural extension work, and more
complete endowment and support of land-grant colleges.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SEC. 22. [7 U.S.C. 329] In order to provide for the more com-
plete endowment and support of the colleges in the several States,
Puerto Rico, the Virgin Islands, Guam, and the Northern Mariana
Islands entitled to the benefits of the Act entitled "An Act donating
public lands to the several States and Territories which may pro-
vide colleges for the benefit of agriculture and the mechanic acts,"
approved July 2, 1862, as amended and supplemented (7 U.S.C.
301-328), there are hereby authorized to be appropriated annually,
out of any money in the Treasury not otherwise appropriate, the
following amounts:
(a) For the first fiscal year beginning after the date of enact-
ment of this Act, and for each fiscal year thereafter, $8,250,000;
and
(b) For the first fiscal year beginning after the date of enact-
ment of this Act, and for each fiscal year thereafter $4,380,000.
The sums-appropriated in pursuance of paragraph (a) shall be
paid annually to the several States, Puerto Rico, the Virgin Is-
lands, Guam, and the Northern Mariana Islands in equal shares.
The sums appropriated in pursuance of paragraph (b) shall be in
addition to sums appropriated in pursuance of paragraph (a) and
shall be allotted and paid annually to each of the several States,
Puerto Rico, the Virgin Islands, Guam, and the Northern Mariana
Islands in the proportion to which the total population of each
State, Puerto Rico, the Virgin Islands, Guam, and the Northern
Mariana Islands bears to the total population of all the States,
Puerto Rico, the Virgin Islands, Guam, and the Northern Mariana
Islands as determined by the last preceding decennial census.
Sums appropriated in pursuance of this section shall be in addition
to sums appropriated or authorized under such Act of July 2, 1862,
as amended and supplemented, and shall be applied only for the
purposes of the colleges defined in such Act, as amended and sup-
plemented. The provisions of law applicable to the use and pay-
ment of sums under the Act entitled "An Act to apply a portion of
the proceeds of the public lands to the more complete endowment
and support of the colleges for the benefit of agriculture and the
mechanic arts established under the provisions of an Act of Con-
gress approved July 2, 1862," approved August 30, 1890, as amend-
ed and supplemented, shall apply to the use and payment of sums
appropriated in pursuance of this section.
564
5 7 0
Harry S Truman Memorial Scholarship Act
AN ACT To establish the Harry S Truman memorial scholarships, and for other
purposes
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, [20 U.S.C. 2001,
note]) That this Act may be cited as the "Harry S Truman Memo-
rial Scholarship Act".
STATEMENTS OF FINDINGS
SEC. 2. [20 U.S.C. 2001] The Congress finds that
because a high regard for the public trust and a lively ex-
ercise of political talents were outstanding characteristics of
the thirty-third President of the United States;
because a special interest of the man from Independence
in American history and a broad knowledge and understanding
of the American political and economic system gained by study
and experience in county and National Government culminated
in the leadership of America remembered for the quality of his
character, courage, and commonsense;
because of the desirability of encouraging young people to
recognize and provide service in the highest and best traditions
of the American political system at all levels of government, it
is especially appropriate to honor former President Harry S
Truman through the creation of perpetual education scholar-
ship program to develop increased opportunities for young
Americans to prepare and pursue careers in public service.
DEFINITIONS
SEC. 3. [20 U.S.C. 2002] As used in this Act, the term
(1) "Board" means the Board of Trustees of the Harry S
Truman Scholarship Foundation;
(2) "Foundation" means the Harry S Truman Scholarship
Foundation;
(3) "fund" means the Harry S Truman Memorial Scholar-
ship Fund;
(4) "institution of higher education" means any such insti-
tution as defined by section 101 of the Higher Education Act
of 1965;
(5) "State" means each of the several States, the District
of Columbia, the Commonwealth of Puerto Rico, and consid-
ered as a single entity, Guam, the. Virgin Islands, American
Samoa, and the Trust Territory of the Pacific Islands; and
(6) "Secretary" means the Secretary of the Treasury.
SEC. 4. [20 U.S.C. 2003)] The Harry S Truman Scholarship
Program as authorized by this Act shall be the sole Federal memo-
rial to President Harry S Truman.
565
Sec. 5
TRUMAN MEMORIAL SCHOLARSHIP ACT
566
ESTABLISHMENT OF THE HARRY'S TRUMAN SCHOLARSHIP PROGRAM
SEC. 5. [20 U.S.C. 2004] (a) There is established, as an inde-
pendent establishment of the executive branch of the United States
Government, the Harry S Truman Scholarship Foundation.
(b) (1) The Foundation shall be subject to the supervision and
direction of a Board of Trustees. The Board shall be composed of
thirteen members, as follows:
(A) two Members of the Senate, one from each political
party, to be appointed by the President of the Senate;
(B) two Members of the House of Representatives, one
from each political party, to be appointed by the Speaker;
(C) eight members not more than four of whom shall be of
the same political party, to be appointed by the President with
the advice and consent of the Senate, of whom one shall be a
chief executive officer of a State, one a chief executive officer
of a city or county, one a member of a Federal Court, one a
member of a State court, one a person active in postsecondary
education, and three representatives of the general public; and
(D) the Commissioner of Education or his designate, who
shall serve ex officio as a member of the Board, but shall not
be eligible to serve as Chairman.
(c) The term of office of each member of the Board shall be six
years; except that (1) the members first taking office shall serve as
designated by the President, four for terms of two years, five for
terms of four years, and four for terms of six years, and (2) any
member appointed to fill a vacancy shall serve for the remainder
of the term for which his predecessor was appointed, and shall be
appointed in the same manner as the original appointment for that
vacancy was made.
(d) Members of the Board shall serve without pay, but shall be
entitled to reimbursement for travel, subsistence, and other nec-
essary expenses incurred in the performance of their duties.
SCHOLARSHIPS
SEC. 6. [20 U.S.C. 2005] (a) The Foundation is authorized to
award scholarships to persons who demonstrate outstanding poten-
tial for and who plan to pursue a career in public service. Award
recipients shall be known as Truman scholars.
(b) Scholarships under this Act shall be awarded for such peri-
ods as the Foundation may prescribe but not to exceed four aca-
demic years.
(c) A student awarded a scholarship under this Act may attend
any institution of higher education offering courses of study, train-
ing, or other educational activities designed to prepare persons for
a career in public service as determined pursuant to criteria estab-
lished by the Foundation.
(d) Each student awarded a scholarship under this Act must
have indicated a serious intent to enter the public service upon the
completion of his or her educational program. Each institution of
higher education at which such a student is in attendance will
make reasonable continuing efforts to encourage such a student to
enter the public service upon completing his or her educational pro-
gram.
567
TRUMAN MEMORIAL SCHOLARSHIP ACT
Sec. 10
SELECTION OF TRUMAN SCHOLARS
SEC. 7. (a) The Foundation is authorized, either directly or by
contract, to provide for the conduct of a nationwide competition for
the purpose of selecting Truman scholars.
(b) The Foundation shall adopt selection procedures which
shall assure that at least one Truman scholar shall be selected
each year from each State in which there is at least one resident
applicant who meets the minimum criteria established by the
Foundation.[20 U.S.C. 2006)
STIPENDS
SEC. 8. [20 U.S.C. 2007] Each student awarded a scholarship
under this Act shall receive a stipend which shall not exceed the
cost to such students for tuition, fees, books, room and board, or
$10,000 (adjusted annually to reflect increases, if any, in the Con-
sumer Price Index for All Urban Consumers, published by the Bu-
reau of Labor Statistics) whichever is less for each academic year
of study.
SCHOLARSHIP CONDITIONS
SEC. 9. [20 U.S.C. 2008] (a) A student awarded a scholarship
under the provisions of this Act shall continue to receive the pay-
ments provided in this Act only during such periods as the Founda-
tion finds that he or she is maintaining satisfactory proficiency and
devoting full time to study or research designed to prepare him or
her for a career in public service and is not otherwise engaging in
gainful employment other than employment approved by the Foun-
dation pursuant to regulation.
(b) The Foundation is authorized to require reports containing
such information in such form and to be filed at such times as the
Foundation determines to be necessary from any student awarded
a scholarship under the provisions of this act. Such reports shall
be accompanied by a certificate from any appropriate official at the
institution of higher education, approved by the Foundation, stat-
ing that such student is making satisfactory progress in, and is de-
voting essentially full time to, study or research, except as other-
wise provided in subsection (a).
TRUMAN MEMORIAL SCHOLARSHIP FUND
SEC. 10. [20 U.S.C. 2009] (a) There is established in the
Treasury of the United States a trust fund to be known as the
Harry S Truman Memorial Scholarship Trust Fund. The fund shall
consist of amounts appropriated to it by section 14 of this act.
(b) It shall be the duty of the Secretary to invest in full
amounts appropriated to the fund. Such investments may be made
only in interest-bearing obligations of the United States or in obli-
gations guaranteed as to both principal and interest by the United
States. For such purpose, such obligations may be acquired (1) on
original issue at the issue price, or (2) by purchase of outstanding
obligations at the market place. The purposes for which obligations
of the United States may be issued under the Second Liberty Bond
Act, as amended, are hereby extended to authorize the issuance at
par of special obligations exclusively to the fund. Such special obli-
7 3
Sec. 11
TRUMAN MEMORIAL SCHOLARSHIP ACT
568
gation shall bear interest a a rate equal to the average rate of in-
terest, computed as to the end of the calendar month next preced-
ing the date of such issue, borne by all marketable interest-bearing
obligations of the United States then forming a part of the public
debt; except that where such average rate is not a multiple of one-
eighth of 1 per centum, the rate of interest of such special obliga-
tions shall be the multiple of one-eight of 1 per centum next lower
than such average rate. Such special obligations shall be issued
only if the Secretary determines that the purchase of other inter-
est-bearing obligations of the United States, or of obligations guar-
anteed as to both principal and interest by the United States or
original issue or at the market price, is not in the public interest.
(c) Any obligation acquired by the fund (except special obliga-
tions issued exclusively to the fund) may be sold by the Secretary
at the market price, and such special obligations may be redeemed
at par plus accrued interest.
(d) The interest on, and the proceeds from the sale or redemp-
tion of, any obligations held in the fund shall be credited to and
form a part of the fund.
EXPENDITURES FROM THE FUND
SEC. 11. [20 U.S.C. 2010] (a) The Secretary is authorized to
pay to the Foundation from the interest and earnings of the fund
such sums as the Board determines are necessary and appropriate
to enable the Foundation to carry out the purposes of the Act.
(b) The activities of the Foundation under this Act may be au-
dited by the General Accounting Office under such rules and regu-
lations as may be prescribed by the Comptroller General of the
United States. The representatives of the General Accounting Of-
fice shall have access to all books, accounts, records, reports, and
files and all other papers, things, or property belonging to or in use
by the Foundation, pertaining to such activities and necessary to
facilitate the audit.
EXECUTIVE SECRETARY
SEC. 12. [20 U.S.0 2011] (a) There shall be an Executive Sec-
retary of the Foundation who shall be appointed by the Board. The
Executive Secretary shall be the chief executive officer of the Foun-
dation and shall carry out the functions of the Foundation subject
to the supervision and direction of the Board. The Executive Sec-
retary shall carry out such other functions consistent with the pro-
visions of this Act as the Board shall delegate.
(b) The Executive Secretary of the Foundation shall be com-
pensated at the rate specified for employees placed in grade 18 of
the General Schedule set forth in section 5332 of title 5, United
States Code.
ADMINISTRATIVE PROVISIONS
SEC. 13. [20 U.S.C. 2012] (a) In order to carry out the provi-
sions of this Act, the Foundation is authorized to
(1) appoint and fix the compensation of such personnel as
may be necessary to carry out the provisions of this Act, except
that in no case shall employees other than the Executive Sec-
569
TRUMAN MEMORIAL SCHOLARSHIP ACT
Sec. 14
retary be compensated at a rate to exceed the rate provided for
employees in grade 15 of the General Schedule set forth in sec-
tion 5332 of title 5, United States Code;
(2) procure temporary and intermittent services of experts
and consultants as are necessary to the extent authorized by
section 3109 of title 5, United States Code, but at rates not to
exceed the rate specified at the time of such service for grade
GS-18 in section 5332 of such title;
(3) prescribe such regulations as it deems necessary gov-
erning the manner in which its functions shall be carried out;
(4) receive money and other property donated, bequeathed,
or devised, without condition or restriction other than it be
used for the purposes of the Foundation; and to use, sell, or
otherwise dispose of such property for the purpose of carrying
out its functions;
(5) accept and utilize the services of voluntary and non-
compensated personnel and reimburse them for travel ex-
penses, including per diem, as authorized by section 5703 of
title 5, United States Code;
(6) enter into contracts, grants, or other arrangements, or
modifications thereof, to carry out the provisions of this. Act,
and such contracts or modifications thereof may, with the con-
currence of two-thirds of the members of the Board, be entered
into without performance or other bonds, and without regard
to section 3709 of the Revised Statutes, as amended (41 U.S.C.
5);
(7) make advances, progress, and other payments which
the Board deems necessary under this Act without regard to
the provisions of section 3648 of the Revised Statutes, as
amended (31 U.S.C. 529);
(8) rent office space in the District ofColumbia; and
(9) make other necessary expenditures.
(b) The Foundation shall submit to the President and to the
Congress an annual report of its operations under this Act.
APPROPRIATIONS AUTHORIZED
SEC. 14. [20 U.S.C. 2013] There are authorized to be appro-
priated $30,000,000 to the fund.
rtir-
Ji3
54-653 99 -19
Human Rights, Refugee, and Other Foreign Relations
Provisions Act of 1996
AN ACT Making certain provisions with respect to internationally recognized
human rights, refugees, and foreign relations.
SECTION 1. SHORT TITLE.
This Act may be cited as the "Human Rights, Refugee, and
Other Foreign Relations Provisions Act of 1996".
TITLE III CLAIBORNE PELL INSTITUTE
FOR
INTERNATIONAL
RELATIONS
AND PUBLIC POLICY
SEC. 301. SHORT TITLE.
This title may be cited as the "Claiborne Pell Institute for
International Relations and Public Policy Act".
SEC. 302. GRANT AUTHORIZED.
In recognition of the public service of Senator Claiborne Pell,
the Secretary of Education is authorized to award a grant, in ac-
cordance with the provisions of this title, to assist in the establish-
ment and operation of the Claiborne Pell Institute for International
Relations and Public Policy, located at Salve Regina University,
Newport, Rhode Island, including the purchase and renovation of
facilities to house the Institute.
SEC. 303. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for fiscal year 1997
such sums, not to exceed $3,000,000, as may be necessary to carry
out this title.
SEC. 304. EFFECTIVE DATE.
This title shall take effect on the date of enactment of this Act.
TITLE W-GEORGE BUSH SCHOOL OF
GOVERNMENT AND PUBLIC SERVICE
SEC. 401. SHORT TITLE.
This title may be cited as the "George Bush School of Govern-
ment and Public Service Act".
SEC. 402. GRANT AUTHORIZED.
In recognition of the public service of President George Bush,
the Secretary of Education is authorized to make a grant in accord-
571
5 '7 6
Sec. 403
EDUCATION PROVISIONS FROM FOREIGN RELATIONS PROVISIONS
572
ance with the provisions of this Act to assist in the establishment
of the George Bush Fellowship Program, located at the George
Bush School of Government and Public Service of the Texas A &
M University.
SEC. 403. GRANT CONDITIONS.
No payment may be made under this title except upon an ap-
plication at such time, in such manner, and containing or accom-
panied by such information as the Secretary of Education may re-
quire.
SEC. 404. APPROPRIATIONS AUTHORIZED.
There are authorized to be appropriated such sums, not to ex-
ceed $3,000,000, as may be necessary to carry out the provisions
of this title.
SEC. 405. EFFECTIVE DATE.
This title shall take effect on October 1, 1996.
TITLE V MISCELLANEOUS PROVISIONS
SEC. 501. EDMUND S. MUSKIE FOUNDATION.
In recognition of the public service of Senator and Secretary of
State Edmund S. Muskie, the Secretary of Education is authorized
to award a grant in accordance
the
the provisions of this Act to
assist in the establishment of the Edmund S. Muskie Foundation,
located in Washington, D.C., by providing assistance to support the
Foundation, including assistance to be used for awarding steward-
ships, supporting the Muskie archives, and supporting the Edmund
S. Muskie Institute of Public Affairs.
SEC. 502. CALVIN COOLIDGE MEMORIAL FOUNDATION GRANT.
(a) DEFINITIONS.In this section:
(1) FOUNDATION.The term "Foundation" means the Cal-
vin Coolidge Memorial Foundation.
(2) SECRETARY.The term "Secretary" means the Sec-
retary of Education.
(b) GRANT AUTHORIZED.The Secretary is authorized to make
a grant in the amount of $1,000,000 in accordance with the provi-
sions of this section to the Foundation.
(c) GRANT CONDITIONS.
(1) APPLICATION.No payment may be made under this
section except upon an application at such time, in such
manner, and containing or accompanied by such information as
the Secretary may require.
(2) USE OF GRANT FUNDS. Funds received under this
section may be used for any of the following purposes:
(A) To increase the endowment of the Foundation.
(B) To conduct educational, archival, or preservation
activities of the Foundation.
(d) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to the Secretary $1,000,000, without fiscal year
limitation, to carry out the provisions of this section.
(e) EFFECTIVE DATE.This section shall take effect on October
1, 1996.
57 7
Morris K. Udall Scholarship and Excellence in National En-
vironmental and Native American Public Policy Act of
1992
AN ACT To establish the Morris K. Udall Scholarship and Excellence in National
Environmental Policy Foundation, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. [20 U.S.C. 5601 note] SHORT TITLE.
This Act may be cited as the "Morris K Udall Scholarship and
Excellence in National Environmental and Native American Public
Policy Act of 1992".
SEC. 2. [20 U.S.C. 5601 note] REPEAL OF PREVIOUS LEGISLATION.
The Morris K. Udall Scholarship and Excellence in National
Environmental Policy Act, S. 1176, One Hundred Second Congress,
is hereby repealed.
SEC. 3. [20 U.S.C. 5601] FINDINGS.
The Congress finds that
(1) for three decades, Congressman Morris K. Udall has
served his country with distinction and honor;
(2) Congressman Morris K. Udall has had a lasting impact
on this Nation's environment, public lands, and natural re-
sources, and has instilled in this Nation's youth a love of the
air, land, and water;
(3) Congressman Morris K Udall has been a champion of
the rights of Native Americans and Alaska Natives and has
used his leadership in the Congress to strengthen tribal self-
governance; and
(4) it is a fitting tribute to the leadership, courage, and vi-
sion Congressman Morris K Udall exemplifies to establish in
his name programs to encourage the continued use, enjoyment,
education, and exploration of our Nation's rich and bountiful
natural resources.
SEC. 4. [20 U.S.C. 5602] DEFINITIONS.
For the purposes of this Act
(1) the term "Board" means the Board of Trustees of the
Morris K. Udall Scholarship and Excellence in National Envi-
ronmental Policy Foundation established under section 5(b);
(2) the term "Center" means the Udall Center for Studies
in Public Policy established at the University of Arizona in
1987;
(3) the term "eligible individual" means a citizen or na-
tional of the United States or a permanent resident alien of the
United States;
573
578
Sec. 5
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
514
(4) the term "environmental dispute" means a dispute or
conflict relating to the environment, public lands, or natural
resources;
(5) the term "Foundation" means the Morris K. Udall
Scholarship and Excellence in National Environmental Policy
Foundation established under section 5(a);
(6) the term "Institute" means the United States Institute
for Environmental Conflict Resolution established pursuant to
section 7(a)(1)(D);
(7) the term "institution of higher education" has the same
meaning given to such term by section 1201(a) of the Higher
Education Act of 1965;
(8) the term "State" means each of the several States, the
District of Columbia, Guam, the Virgin Islands, American
Samoa, the Commonwealth of the Northern Mariana Islands,
the Republic of the Marshall Islands, the Federal States of Mi-
cronesia, and the Republic of Palau (until the Compact of Free
Association is ratified); and
(9) the term "Trust Fund" means the Morris K. Udall
Scholarship and Excellence in National Environmental Policy
Trust Fund established in section 8.
SEC. 5. [20 U.S.C. 5603] ESTABLISHMENT OF THE MORRIS K. UDALL
SCHOLARSHIP AND EXCELLENCE IN NATIONAL ENVIRON-
MENTAL POLICY FOUNDATION.
(a) ESTABLISHMENT.There is established as an independent
entity of the executive branch of the United States Government,
the Morris K. Udall Scholarship and Excellence in National Envi-
ronmental Policy Foundation.
(b) BOARD OF TRUSTEES.The Foundation shall be subject to
the supervision and direction of the Board of Trustees. The Board
shall be comprised of thirteen trustees, eleven of whom shall be
voting members of the Board, as follows:
(1) Two Trustees, shall be appointed by the President, with
the advice and consent of the Senate, after considering the rec-
ommendation of the Speaker of the House of Representatives,
in consultation with the Minority Leader of the House of Rep-
resentatives.
(2) Two Trustees, shall be appointed by the President, with
the advice and consent of the Senate, after considering the rec-
ommendation of the President pro tempore of the Senate, in
consultation with the Majority and Minority Leaders of the
Senate.
(3) Five Trustees, not more than three of whom shall be
of the same political party, shall be appointed by the President
with the advice and consent of the Senate, who have shown
leadership and interest in
(A) the continued use, enjoyment, education, and ex-
ploration of our Nation's rich and bountiful natural re-
sources, such as presidents of major foundations involved
with the environment; or
(B) in the improvement of the health status of Native
Americans and Alaska Natives and in strengthening tribal
self-governance, such as tribal leaders involved in health
57 9
575
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
Sec. 5
and public policy; development affecting Native American
and Alaska Native communities.
(4) The Secretary of the Interior, or the Secretary's des-
ignee, who shall serve as a voting ex officio member of the
Board but shall not be eligible to serve as Chairperson.
(5) The Secretary of Education, or the Secretary's designee,
who shall serve as a voting ex officio member of the Board but
shall not be eligible to serve as Chairperson.
(6) The President of the University of Arizona shall serve
as a nonvoting, ex officio member and shall not be eligible to
serve as chairperson. 1
(7) The chairperson 1 of the President's Council on Envi-
ronmental Quality, who shall serve as a nonvoting, ex officio
member and shall not be eligible to serve as chairperson. 1
(c) TERM OF OFFICE.--
(1) 2 IN GENERAL. The term of office of each member of
the Board shall be six years, except that
(A) in the case of the Trustees first taking offices
(i) as designated by the President, one Trustee ap-
pointed pursuant to section 5(b)(2) and two trustees
appointed pursuant to section 5(b)(3) shall each serve
two years; and
(ii) as designated by the President, one Trustee
appointed pursuant to section 5(b)(1) and two Trustees
appointed pursuant to section 5(b)(3) shall each serve
four years; and
(iii) as designated by the President, one Trustee
appointed pursuant to section 5(b)(1), one Trustee ap-
pointed pursuant to section 5(b)(2), and one Trustee
appointed pursuant to section 5(b)(3) shall each serve
six years;
(B) a Trustee appointed to fill a vacancy shall serve for
the remainder of the term for which the Trustee's prede-
cessor was appointed and shall be appointed in the same
manner as the original appointment for that vacancy was
made; and
(C) 3 a Trustee may serve after the expiration of the Trust-
ee's term until a successor has been chosen.
(d) TRAVEL AND SUBSISTENCE PAY.Trustees shall serve with-
out pay, but shall be entitled to reimbursement for travel, subsist-
ence, and other necessary expenses incurred in the performance of
their duties as members of the Board.
(e) LOCATION OF FouNDATION,The Foundation shall be
located in Tucson, Arizona.
(0 EXECUTIVE DIRECTOR.
(1) IN GENERAL.There shall be an Executive Director of
the Foundation who shall be appointed by the Board. The Ex-
ecutive Director shall be the chief executive officer of the Foun-
dation and shall carry out the functions of the Foundation sub-
ject to the supervision and direction of the Board. The Execu-
aSo in original. Probably should be capitalized.
2 So in original. No paragraph (2). has been enacted.
3Indention so in original; see section 655 of P.L. 104-208.
Sec. 6
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
516
tive Director shall carry out such other functions consistent
with the provisions of this Act as the Board shall prescribe.
(2) COMPENSATION.The Executive Director of the Foun-
dation shall be compensated at the rate specified for employees
in level IV of the Executive Schedule under section 5315 of
title 5, United States Code.
SEC. 6. [20 U.S.C. 5604] PURPOSE OF THE FOUNDATION.
It is the purpose of the Foundation to
(1) increase awareness of the importance of and promote
the benefit and enjoyment of the Nation's natural resources;
(2) foster among the American population greater recogni-
tion and understanding of the role of the environment, public
lands and resources in the development of the United States;
(3) identify critical environmental issues;
(4) establish a Program for Environmental Policy Research
and Environmental Conflict Resolution and Training at the
Center;
(5) develop resources to properly train professionals in the
environmental and related fields;
(6) provide educational outreach regarding environmental
policy;(7) develop resources to properly train Native American
and Alaska Native professionals in health care and public pol-
icy; (8) establish as part of the Foundation the United States
Institute for Environmental Conflict Resolution to assist the
Federal Government in implementing section 101 of the Na-
tional Environmental Policy Act of 1969 (42 U.S.C. 4331) by
providing assessment, mediation, and other related services to
resolve environmental disputes involving agencies and instru-
mentalities of the United States; and
(9) complement the direction established by the President
in Executive Order No. 12988 (61 Fed. Reg. 4729; relating to
civil justice reform).
SEC. 7. [20 U.S.C. 5605] AUTHORITY OF THE FOUNDATION.
(a) AUTHORITY OF THE FOUNDATION.
(1) IN GENERAL.(A) The Foundation, in consultation with
the Center, is authorized to identify and conduct such pro-
grams, activities, and services as the Foundation considers ap-
propriate to carry out the purposes described in section 6. The
Foundation shall have the authority to award scholarships, fel-
lowships, internships, and grants and fund the Center to carry
out and manage other programs, activities and services.
(B) The Foundation may provide, directly or by contract,
for the conduct of national competition for the purpose of se-
lecting recipients of scholarships, fellowships, internships, and
grants awarded under this Act.
(C) The Foundation may award scholarships, fellowships,
internships and grants to eligible individuals in accordance
with the provisions of this Act for study in fields related to the
environment and Native American and Alaska Native health
care and tribal public policy. Such scholarships, fellowships,
517
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
Sec. 7
internships and grants shall be awarded to eligible individuals
who meet the minimum criteria established by the Foundation.
(D) 1
INSTITUTE
FOR
ENVIRONMENTAL
CONFLICT
RESOLUTION.
(i) IN GENERAL.The Foundation shall
(I) establish the United States Institute for
Environmental Conflict Resolution as part of the
Foundation; and
(II) identify and conduct such programs, ac-
tivities, and services as the Foundation deter-
mines appropriate to permit the Foundation to
provide
assessment,
mediation,
training,
and
other related services to resolve environmental
disputes.
(ii)
GEOGRAPHIC
PROXIMITY
OF
CONFLICT
RESOLUTION PROVISION.In providing assessment, me-
diation, training, and other related services under
clause (i)(II) to resolve environmental disputes, the
Foundation shall consider, to the maximum extent
practicable, conflict resolution providers within the ge-
ographic proximity of the conflict.
(2) SCHOLARSHIPS.(A) Scholarships shall be awarded to
outstanding undergraduate students who intend to pursue ca-
reers related to the environment and to outstanding Native
American and Alaska Native undergraduate students who in-
tend to pursue careers in health care and tribal public policy.
(B) An eligible individual awarded a scholarship under this
Act may receive payments under this Act only during such
periods as the Foundation finds that the eligible individual is
maintaining satisfactory proficiency and devoting full time to
study or research and is not engaging in gainful employment
other than employment approved by the Foundation pursuant
to regulations of the Board.
(C) The Foundation may require reports containing such
information, in such form, and to be filed at such times as the
Foundation determines to be necessary from any eligible indi-
vidual awarded a scholarship under this Act. Such reports
shall be accompanied by a certificate from an appropriate offi-
cial at the institution of higher education, approved by the
Foundation, stating that such individual is making satisfactory
progress in, and is devoting essentially full time to study or
research, except as otherwise provided in this subsection.
(3) FELLOWSHIPS.Fellowships shall be awardedto
(A) outstanding graduate students who intend to pur-
sue advanced degrees in fields related to the environment
and to outstanding Native American and Alaska Native
graduate students who intend to pursue advanced degrees
in health care and tribal public policy, including law and
medicine; and
(B) faculty from a variety of disciplines to bring the
expertise of such faculty to the Foundation.
(4) INTERNSHIPS.Internships shall be awarded to
lIndentation so in original.
5.8.2
Sec. 8
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
578
(A) deserving and qualified individuals to participate
in internships in Federal, State and local agencies or in of-
fices of major environmental organizations pursuant to
section 6; and
(B) deserving and qualified Native American and Alas-
ka Native individuals to participate in internships in Fed-
eral, State and local agencies or in offices of major public
health or public policy organizations pursuant to section 6.
(5) GRANTS.The Foundation shall award grants to the
Center
(A) to provide for an annual panel of experts to discuss
contemporary environmental issues;
(B) to conduct environmental policy research;
(.C) to conduct research on Native American and Alas-
ka Native health care issues and tribal public policy
issues; and
(D) for visiting policymakers to share the practical ex-
periences of such for visiting policymakers with the Foun-
dation.
(6) REPOSITORY.The Foundation shall provide direct or
indirect assistance from the proceeds of the Trust Fund to the
Center to maintain the current site of the repository for Morris
K. Udall's papers and other such public papers as may be ap-
propriate and assure such papers' availability to the public.
(7) COORDINATION.The Foundation shall assist in the de-
velopment and implementation of a Program for Environ-
mental Policy Research and Environmental Conflict Resolution
and Training to be located at the Center.
(b) MORRIS K. UDALL SCHOLARS.Recipients of scholarships,
fellowships, internships, and grants under this Act shall be known
as "Morris K. Udall Scholars".
(c) PROGRAM PRIORITIES.The Foundation shall determine the
priority of the programs to be carried out under this Act and the
amount of funds to be allocated for such programs. However, not
less than 50 percent shall be utilized for the programs set forth in
section 6(a)(2), section 6(a)(3), and section 6(a)(4), not more than 15
percent shall be used for salaries and other administrative pur-
poses, and not less than 20 percent shall be appropriated to the
Center for section 6(a)(5), section 6(a)(6), and section 6(a)(7) condi-
tioned on a 25-percent match from other sources and further condi-
tioned on adequate space at the Center being made available for
the Executive Director and other appropriate staff of the Founda-
tion by the Center.
SEC. 8. [20 U.S.C. 5606] ESTABLISHMENT OF THE MORRIS K. UDALL
SCHOLARSHIP AND EXCELLENCE IN NATIONAL ENVIRON-
MENTAL POLICY TRUST FUND.
(a) ESTABLISHMENT OF FUND.There is established in the
Treasury of the United States a trust fund to be known as the
"Morris K. Udall Scholarship and Excellence in National Environ-
mental Policy Trust Fund" to be administered by a Foundation.
The Trust Fund shall consist of amounts appropriated to it pursu-
ant to section 13(a) and amounts credited to it under subsection
(b).
(b) INVESTMENT OF FUND ASSETS.
519
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
Sec. 10
(1)1 IN GENERAL.It shall be the duty of the Secretary of
the Treasury to invest, at the direction of the Foundation
Board, in full the amounts appropriated to the Trust Fund.
Such investments shall be in public debt securities with matu-
rities suitable to the needs of the Trust Fund. Investments in
public debt securities shall bear interest "at rates determined
by the Secretary of the Treasury taking into consideration the
current average market yield on outstanding marketable obli-
gations of the United States" of comparable maturity.
SEC. 9. [20 U.S.C. 5607] EXPENDITURES AND AUDIT OF TRUST FUND.
(a) IN GENERAL.The Foundation shall pay from the interest
and earnings of the Trust Fund such sums as the Board deter-
mines are necessary and appropriate to enable the Foundation to
carry out the provisions of this Act.
(b) AUDIT BY GENERAL ACCOUNTING OFFICE.The activities of
the Foundation and the Center under this Act may be audited by
the General Accounting Office under such rules and regulations as
may be prescribed by the Comptroller General of the United States.
Representatives of the General Accounting Office shall have access
to all books, accounts, records, reports filed and all other papers,
things, or property belonging to or in use by the Foundation and
the Center, pertaining to such federally assisted activities and
necessary to facilitate the audit.
SEC. 10. [20 U.S.C. 5608a] ENVIRONMENTAL DISPUTE RESOLUTION
FUND.
(a) ESTABLISHMENT.There is established in the Treasury of
the United States an Environmental Dispute Resolution Fund to be
administered by the Foundation. The Fund shall consist of
amounts appropriated to the Fund under section 13(b) and
amounts paid into the Fund under section 11.
(b) EXPENDITURES.The Foundation shall expend from the
Fund such sums as the Board determines are necessary to estab-
lish and operate the Institute, including such amounts as are nec-
essary for salaries, administration, the provision of mediation and
other services, and such other expenses as the Board determines
are necessary, including not to exceed $1,000 annually for official
reception and representation expenses.
(c) DISTINCTION FROM TRUST FUND.The Fund shall be main-
tained separately from the Trust Fund established under section 8.
(d) INVESTMENT OF AMOUNTS.
(1) IN GENERAL.The Secretary of the Treasury shall in-
vest such portion of the Fund as is not, in the judgment of the
Secretary, required to meet current withdrawals.
(2) INTEREST-BEARING OBLIGATIONS.Investments may be
made only in interest-bearing obligations of the United States.
(3) ACQUISITION OF OBLIGATIONS.For the purpose of in-
vestments under paragraph (1), obligations may be acquired
(A) on original issue at the issue price; or
(B) by purchase of outstanding obligations at the
market price.
1So in original. No paragraph (2) has been enacted.
584
Sec. 11
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
580
(4) SALE OF OBLIGATIONS.Any obligation acquired by the
Fund may be sold by the Secretary of the Treasury at the mar-
ket price.
(5) CREDITS TO FUND.The interest on, and the proceeds
from the sale or redemption of, any obligations held in the
Fund shall be credited to and form a part of the Fund.
SEC. 11. [20 U.S.C. 5608b] USE OF THE INSTITUTE BY A FEDERAL AGEN-
CY OR OTHER ENTITY. I
(a) AUTHORIZATION.A Federal agency may use the Founda-
tion and the Institute to provide assessment, mediation, or other
related services in connection with a dispute or conflict related to
the environment, public lands, or natural resources.
(b) PAYMENT.
(1) IN GENERAL.A Federal agency may enter into a con-
tract and expend funds to obtain the services of the Institute.
(2) PAYMENT INTO ENVIRONMENTAL DISPUTE RESOLUTION
FUND.A payment from an executive agency on a contract en-
tered into under paragraph (1) shall be paid into the Environ-
mental Dispute Resolution Fund established under section 10.
(C) NOTIFICATION AND CONCURRENCE.
(1) NOTIFICATION.An agency or instrumentality of the
Federal Government shall notify the chairperson of the Presi-
dent's Council on Environmental Quality when using the Foun-
dation or the Institute to pritivide the services described in sub-
section (a).
(2) NOTIFICATION DESCRIPTIONS.In a matter involving
two or more agencies or instrumentalities of the Federal Gov-
ernment, notification under paragraph (1) shall include a writ-
ten description of
(A) the issues and parties involved;
(B) prior efforts, if any, undertaken by the agency to
resolve or address the issue or issues;
(C) all Federal agencies or instrumentalities with a di-
rect interest or involvement in the matter and a statement
that all Federal agencies or instrumentalities agree to dis-
pute resolution; and
(D) other relevant information.
(3) CONCURRENCE.
(A) IN GENERAL.In a matter that involves two or
more agencies or instrumentalities of the Federal Govern-
ment (including branches or divisions of a single agency or
instrumentality), the agencies or instrumentalities of the
Federal Government shall obtain the concurrence of the
chairperson of the President's Council on Environmental
Quality before using the Foundation or Institute to provide
the services described in subsection (a).
(B) INDICATION OF CONCURRENCE OR NONCONCUR-
RENCE.The chairperson of the President's Council on En-
vironmental Quality shall indicate concurrence or non-
The amendment made by section 517 of Public Law 105-277 (112 Stat. 2681-512) was exe-
cuted as the probable intent of the Congress. The heading was not set out in the proper type-
face.
581
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
Sec. 12
concurrence under subparagraph (A) not later than 20
days after receiving notice under paragraph (2).
(d) EXCEPTIONS.
(1) LEGAL ISSUES AND ENFORCEMENT.
(A) IN GENERAL.A dispute
or conflict involving
agencies or instrumentalities of the Federal Government
(including branches or divisions of a single agency or in-
strumentality) that concern purely legal issues or matters,
interpretation or determination of law, or enforcement of
law by one agency against another agency shall not be
submitted to the Foundation or Institute.
(B) APPLICABILITY.Subparagraph (A) does not apply
to a dispute or conflict concerning
(i) agency implementation of a program or project;
(ii) a matter involving two or more agencies with
parallel authority requiring facilitation and coordina-
tion of the various Government agencies; or
(iii) a nonlegal policy or decisionmaking matter
that involves two or more agencies that are jointly op-
erating a project.
(2)
OTHER MANDATED MECHANISMS
OR AVENUES.A
dispute or conflict involving agencies or instrumentalities of
the Federal Government (including branches or divisions of a
single agency or instrumentality) for which Congress by law
has mandated another dispute resolution mechanism or ave-
nue to address or resolve shall not be submitted to the Founda-
tion or Institute.
(e) NON-FEDERAL ENTITIES.
(1) Non-Federal entities, including state and local govern-
ments, Native American tribal governments, nongovernmental
organizations and persons, as defined in 1 U.S.C. 1, may use
the Foundation and the Institute to provide assessment, medi-
ation, or other related services in connection with a dispute or
conflict involving the Federal government related to the envi-
ronment, public lands, or natural resources.
(2) PAYMENT INTO THE ENVIRONMENTAL DISPUTE RESOLU-
TION FUND.Entities utilizing services pursuant to this sub-
section shall reimburse the Institute for the costs of services
provided. Such amounts shall be deposited into the Environ-
mental Dispute Resolution Fund established under section 10.
SEC. 12. [20 U.S.C. 5608] ADMINISTRATIVE PROVISIONS.
(a) IN GENERALIn order to carry out the provisions of this
Act, the Foundation may
(1) appoint and fix the compensation of such personnel as
may be necessary to carry out the provisions of this Act, except
that in no case shall employees other than the Executive Direc-
tor be compensated at a rate to exceed the maximum rate for
employees in grade GS-15 of the General Schedule under sec-
tion 5332 of title 5, United States Code;
(2) procure or fund the Center to procure temporary and
intermittent services of experts and consultants as are nec-
essary to the extent authorized by section 3109 of title 5,
United States Code, but at rates not to exceed the rate speci-
586
Sec. 13
MORRIS K. UDALL SCHOLARSHIP AND EXCELLENCE
582
fled at the time of such service for level IV of the Executive
Schedule under section 5315 of title 5, United States Code;
(3) prescribe such regulations as the Foundation considers
necessary governing the manner in which its functions shall be
carried out;
(4) accept, hold, administer, and utilize gifts, both real and
personal, for the purpose of aiding or facilitating the work of
the Foundation;
(5) accept and utilize the services of voluntary and non-
compensated personnel and reimburse such personnel for trav-
el expenses, including per diem, as authorized by section 5703
of title 5, United States Code;
(6) enter into contracts, grants, or other arrangements or
modifications thereof, to carry out the provisions of this Act,
and such contracts or modifications thereof may, with the con-
currence of two-thirds of the members of the Board of Trustees,
be entered into without performance or other bonds, and with-
out regard to section 3709 of the Revised Statutes (41 U.S.C.
5); and
(7) make other necessary expenditures.
(b) THE INSTITUTE.The authorities set forth above shall, with
the exception of paragraph (4), apply to the Institute established
pursuant to section 10.
SEC. 13. [20 U.S.C. 5609] AUTHORIZATION OF APPROPRIATIONS.
(a) TRUST FUND.There is authorized to be appropriated to
the Trust Fund $40,000,000 to carry out the provisions of this Act.
(b) ENVIRONMENTAL DISPUTE RESOLUTION FUND.There are
authorized to be appropriated to the Environmental Dispute Reso-
lution Fund established under section 10
(1) $4,250,000 for fiscal year 1998, of which
(A) $3,000,000 shall be for capitalization; and
(B) $1,250,000 shall be for operation costs; and
(2) $1,250,000 for each of the fiscal years 1999 through
2002 for operation costs.
PART IINATIVE AMERICAN HIGHER EDUCATION
Navajo Community College Act'
(P.L. 92-189)
Be it enacted by the Senate and House ofRepresentatives of the
United States of America in Congress assembled, [25 U.S.C. 640a
note] That this Act may be cited as the "Navajo Community Col-
lege Act".
PURPOSE
SEC. 2. [25 U.S.C. 640a] It is the purpose of this Act to assist
the Navajo Tribe of Indians in providing education to the members
of the tribe and other qualified applicants through a community
college, established by that tribe, known as the Navajo Community
College.
GRANTS
SEC. 3. [25 U.S.C. 640b) The Secretary of Interior is author-
ized to make grants to the Navajo Tribe of Indians to assist the
tribe in the construction, maintenance, and operation of the Navajo
Community College. Such college shall be designed and operated by
the Navajo Tribe to insure that the Navajo Indians and other
qualified applicants have educational opportunities which are suit-
ed to their unique needs and interests.
STUDY OF FACILITIES NEEDS
SEC. 4.2 [25 U.S.C. 640c] (a) The Secretary shall conduct a de-
tailed survey and study of the academic facilities needs of the Nav-
ajo Community College, and shall report to the Congress not later
than August 1, 1979, the results of such survey and study. Such
Enacted Dec. 15, 1971, P.L. 92-189, 84 Stat. 646.
This statute was amended Oct. 17, 1978 by Title II of the Tribally Controlled Community Col-
lege Assistance Act of 1978 (entitled "Navajo Community College Assistance Act of 1978", P.L.
95-471, Title II, 92 Stat. 1329-1331) which includes the following congressional findings:
"CONGRESSIONAL FINDINGS
"SEC. 202. The Congress after careful study and deliberation, finds that
the Navajo Tribe constitutes the largest American Indian tribe in the United States;
"(2) the Navajo Tribe has,. through its duly constituted tribal council and representatives,
established a community college within the boundaries of the reservation;
"(3) the population of the Navajo Tribe and the best area of the Navajo reservation re-
quires that the Navajo Community College expand to better serve the needs of such popu-
lation; and
"(4) the Congress- has already recognized the need- for this institution by the passage of
the Navajo Community College Act."
Section 203(b) of this Act
95-471, Title II) states that "Nothing in this title or in the
amendment made by this title shall be deemed to authorize appropriations- for the fiscal year
beginning October 1, 1978."
2This section was expressly precluded from authorizing appropriations for the fiscal year be-
ginning Oct. 1, 1978 by sec. 203(b) of.P.L. 95-471.
583
Sec. 5
NAVAJO COMMUNITY COLLEGE ACT
584
report shall include any recommendations or views submitted by
the governing body of such College and by the governing body of
the Navajo Tribe, and shall include detailed recommendations by
the Secretary as to the number, type, and cost of academic facilities
which are required, ranking each such required facility by relative
need.(b) Funds to carry out the purposes of this section may be
drawn from general administrative appropriations to the Secretary
made after the date of enactment of the Tribally Controlled Com-
munity College Assistance Act of 1978.
(c) No later than March 1991, an inventory prepared by the
Navajo Community College identifying repairs, alterations, and
renovations to facilities required to meet health and safety stand-
ards shall be submitted to the Secretary and appropriate commit-
tees of Congress. Within 60 days following the receipt of such in-
ventory, the Secretary shall review the inventory, evaluating the
needs identified, and transmit the written comments of the Depart-
ment of the Interior to the appropriate committees of Congress, to-
gether with the Department's evaluation prepared by the health
and safety division of the Bureau of Indian Affairs.
AUTHORIZATION OF APPROPRIATIONS
SEC. 5. [25 U.S.C. 640c-1] (a)(1) For the purpose of making
construction grants under this Act, there are authorized to be ap-
propriated $2,000,000 for fiscal year 1999 and such sums as may
be necessary for each of the 4 succeeding fiscal years.
(2) Sums appropriated pursuant to this subsection for construc-
tion shall, unless otherwise provided in appropriations Acts, re-
main available until expended.
(b)(1) There are authorized to be appropriated for grants to the
Navajo Community College, for each fiscal year, an amount nec-
essary to pay expenses incurred for
(A)
the maintenance and operation of the
college,
including
(i) basic, special, developmental, vocational, technical,
and special handicapped education costs,
(ii) annual capital expenditures, including equipment
needs,
minor
capital
improvements
and
remodeling
projects, physical plant maintenance and operation costs,
and exceptions and supplemental need account, and
(iii) summer and special interest programs,
(B) major capital improvements, including internal capital
outlay funds and capital improvement projects,
(C) mandatory payments, including payments due on
bonds, loans, notes, or lease purchases, and
(D) supplemental student services, including student hous-
ing, food service, and the provision of access to books and serv-
ices.
(2) The Secretary shall make payments, pursuant to grants
under this subsection, in advance installments of not less than 40
per centum of the funds available for allotment, based on antici-
pated or actual numbers of full-time equivalent Indian students or
such other factors as determined by the Secretary. Adjustments for
overpayments and underpayments shall be applied to the remain-
585
NAVAJO COMMUNITY COLLEGE ACT
Sec. 7
der of such funds and such remainder shall be delivered no later
than July 1 of each year.
(c) The Secretary of the Interior is authorized and directed to
establish by rule procedures to insure that all funds appropriated
under this Act are properly identified for grants to the Navajo
Community College and that such funds are not commingled with
appropriations historically expended by the Bureau of Indian Af-
fairs for programs and projects normally provided on the Navajo
Reservation for Navajo beneficiaries.
EFFECT ON OTHER LAWS
SEC. 6. [25 U.S.C. 640c -2] (a) Except as specifically provided
by law, eligibility for assistance under this Act shall not, by itself,
preclude the eligibility of the Navajo Community College to receive
Federal financial assistance under any program authorized under
the Higher Education Act of 1965 or any other applicable program
for the benefit of institutions of higher education, community col-
leges, or postsecondary educational institutions.
(b) Notwithstanding any other provision of law, funds provided
under this Act to the Navajo Community College may be treated
as non-Federal, private funds of the College for purposes of any
provision of Federal law which requires that non-Federal or private
funds of the college 1 be used in a project or for a specific purpose.
PAYMENTS; INTEREST
SEC. 7. [25 U.S.C. 640c-3] (a) Notwithstanding any other pro-
vision of law, the Secretary of the Interior shall not, in disbursing
funds provided under this Act, use any method of payment which
was not used during fiscal year 1987 in the disbursement of funds
provided under this Act.
(b)(1)(A) Notwithstanding any provision of law other than sub-
paragraph (B), any interest or investment income that accrues on
any funds provided under this Act after such funds are paid to the
Navajo Community College and before such funds are expended for
the purpose for which such funds were provided under this Act
shall be the property of the Navajo Community College and shall
not be taken into account by any officer or employee of the Federal
Government in determining whether to provide assistance, or the
amount of assistance, to the Navajo Community College under any
provision of Federal law.
(B) All interest or investment income described in subpara-
graph (A) shall be expended by the Navajo Community College by
no later than the close of the fiscal year succeeding the fiscal year
in which such interest or investment income accrues.
(2) Funds provided under this Act may only be invested by the
Navajo Community College in obligations of the United States or
in obligations or securities that are guaranteed or insured by the
United States.
1So in law. Probably should be "College".
590
Tribally Controlled College or University Assistance Act of
1978
(P.L. 95-471)
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, [25 U.S.C. 1801
note] That this Act may be cited as the "Tribally Controlled Col-
lege or University Assistance Act of 1978".
DEFINITIONS
SEC. 2. [25 U.S.C. 18011 (a) For purposes of this Act, the
term
(1) "Indian" means a person who is a member of an Indian
tribe;
(2) "Indian tribe" means any Indian tribe, band, nation, or
other organized group or community, including any Alaskan
Native village or regional or village corporation as defined in
or established pursuant to the Alaskan Native Claims Settle-
ment Act, which is recognized as eligible for the special pro-
grams and services provided by the United States to Indians
because of their status as Indians;
(3) "Secretary", unless otherwise designated, means the
Secretary of the Interior;
(4) "tribally controlled college or university" means an in-
stitution of higher education which is formally controlled, or
has been formally sanctioned, or chartered, by the governing
body of an Indian tribe or tribes, except that no more than one
such institution shall be recognized with respect to any such
tribe;
(5) "institution of higher education" means an institution
of higher education as defined by section 101 of the Higher
Education Act of 1965, except that clause (2) of such section
shall not be applicable and the reference to Secretary in clause
(5)(A) of such section shall be deemed to refer to the Secretary
of the Interior;
(6) "national Indian organization" means an organization
which the Secretary finds is nationally based, represents a sub-
stantial Indian constituency, and has expertise in the field of
Indian education;
(7) "Indian student count" means a number equal to the
total number of Indian students enrolled in each tribally con-
trolled college or university, determined in a manner consist-
ent with subsection (b) of this section on the basis of the
quotient of the sum of the credit hours of all Indian students
so enrolled, divided by twelve; and
587
5 i
Sec. 101
TRIBALLY CONTROLLED ASSISTANCE
588
(8) "satisfactory progress toward a degree or certificate"
has the meaning given to such term by the institution at which
the student is enrolled.
(b) The following conditions shall apply for the purpose of de-
termining the Indian student count pursuant to paragraph (7) of
subsection (a):
(1) Such number shall be calculated on the basis of the
registrations of Indian students as in effect at the conclusion
of the third week of each academic term.
(2) Credits earned in classes offered during a summer term
shall be counted toward the computation of the Indian student
count in the succeeding fall term.
(3) Credits earned by any student who has not obtained a
high school degree or its equivalent shall be counted toward
the computation of the Indian student count if the institution
at which the student is in attendance has established criteria
for the admission of such student on the basis of the student's
ability to benefit from the education or training offered. The in-
stitution shall be presumed to have established such criteria if
the admission procedures for such studies include counseling
or testing that measures the student's aptitude to successfully
complete the course in which the student has enrolled. No
credits earned by such student for purposes of obtaining a high
school degree or its equivalent shall be counted toward the
computation of the Indian student count.
(4) Indian students earning credits in any continuing edu-
cation program of a tribally controlled college or university
shall be included in determining the sum of all credit hours.
(5) Credits earned in a continuing education program shall
be converted to a credit-hour basis in accordance with the trib-
ally controlled college or university's system for providing cred-
it for participation in such program.
(6) No credit hours earned by an Indian student who is not
making satisfactory progress toward a degree or certificate,
shall be taken into account.
TITLE ITRIBALLY CONTROLLED COLLEGES OR
UNIVERSITIES
PURPOSE
SEC. 101. [25 U.S.C. 18021 It is the purpose of this title to pro-
vide grants for the operation and improvement of tribally controlled
colleges or universities to insure continued and expanded edu-
cational opportunities for Indian students, and to allow for the im-
provement and expansion of the physical resources of such institu-
tions.
GRANTS AUTHORIZED
SEC. 102. [25 U.S.C. 18031 (a) The Secretary shall, subject to
appropriations, make grants pursuant to this title to tribally con-
trolled colleges or universities to aid in the postsecondary education
of Indian students.
(b) Grants made pursuant to this title shall go into the general
operating funds of the institution to defray, at the determination
589
TRIBALLY CONTROLLED ASSISTANCE
Sec. 106
of the tribally controlled college or university, expenditures for aca-
demic, educational, and administrative purposes and for the oper-
ation and maintenance of the the college or university. Funds pro-
vided pursuant to this title shall not be used in connection with re-
ligious worship or sectarian instruction.
ELIGIBLE GRANT RECIPIENTS
SEC. 103. [25 U.S.C. 1804) To be eligible for assistance under
this title, a tribally controlled college or university must be one
which
(1) is governed by a board of directors or board of trustees
a majority of which are Indians;
(2) demonstrates adherence to stated goals, a philosophy,
or a plan of operation which is directed to meet the needs of
Indians; and
(3) if in operation for more than one year, has students a
majority of whom are Indians.
PLANNING GRANTS
SEC. 104. [25 U.S.C. 1804a] (a) The Secretary shall establish
a program in accordance with this section to make grants to tribes
and tribal entities (1) to conduct planning activities for the purpose
of developing proposals for the establishment of tribally controlled
colleges or universities, or (2) to determine the need and potential
for the establishment of such colleges or universities.
(b) The Secretary shall establish, by regulation, procedures for
the submission and review of applications for grants under this sec-
tion.
(c) From the amount appropriated to carry out this title for any
fiscal year (exclusive of sums appropriated for section 105), the Sec-
retary shall reserve (and expend) an amount necessary to make
grants to five applicants under this section of not more than
$15,000 each, or an amount necessary to make grants in that
amount to each of the approved applicants, if less than five apply
and are approved.
TECHNICAL ASSISTANCE CONTRACTS
SEC. 105. [25 U.S.C. 1805] The Secretary shall provide, upon
request from a tribally controlled college or university which is re-
ceiving funds under section 108, technical assistance either directly
, or through contract. In the awarding of contracts for technical as-
sistance, preference shall be given to an organization designated by
the tribally controlled college or university to be assisted. No au-
thority to enter into contracts provided by this section shall be ef-
fective except to the extent authorized in advance by appropria-
tions Acts.
ELIGIBILITY STUDIES
SEC. 106. [25 U.S.C. 1806] (a) The Secretary is authorized to
enter into an agreement with the Secretary of Education to assist
the Bureau of Indian Affairs in developing plans, procedures, and
criteria for conducting the eligibility studies required by this sec-
Sec. 101
TRIBALLY CONTROLLED ASSISTANCE
590
tion. Such agreement shall provide for continuing technical assist-
ance in the conduct of such studies.
(b) The Secretary, within thirty days after a request by any In-
dian tribe, shall initiate a eligibility study to determine whether
there is justification to encourage and maintain a tribally con-
trolled college or university, and, upon a positive determination,
shall aid, in the preparation of grant applications and related budg-
ets which will insure successful operation of such an institution.
Such a positive determination shall be effective for the fiscal year
succeeding the fiscal year in which such determination is made.
(c) Funds to carry out the purposes of this section for any fiscal
year may be drawn from either
(1) general administrative appropriations to the. Secretary
made after the date of enactment of this Act for such fiscal
year; or
(2) not more than 5 per centum of the funds appropriated
to carry out section 107 for such fiscal year.
GRANTS TO TRIBALLY CONTROLLED COLLEGES OR UNIVERSITIES
SEC. 107. [25 U.S.C. 1807] (a) Grants shall be made under
this title only in response to applications by tribally controlled com-
munity colleges or universities. Such applications shall be submit-
ted at such time, in such manner, and will contain or be accom-
panied by such information as the Secretary may reasonably re-
quire pursuant to regulations. Such application shall include a de-
scription of recordkeeping procedures for the expenditure of funds
received under this Act which will allow the Secretary to audit and
monitor programs conducted with such funds. The Secretary shall
not consider any grant application unless a eligibility study has
been conducted under section 106 and it has been found that the
applying college or university will service a reasonable student pop-
ulation.
(b) The Secretary shall consult with the Secretary of Education
to determine the reasonable number of students required to sup-
port a tribally controlled college or university. Consideration shall
be given to such factors as tribal and cultural differences, isolation,
the presence of alternate education sources, and proposed curricu-
lum.
(c) Priority in grants shall be given to institutions which are
operating on the date of enactment of this Act and which have a
history of service to the Indian people. In the first year for which
funds are appropriated to carry out this section, the number of
grants shall be limited to not less than eight nor more than fifteen.
(d) In making grants pursuant to this section, the Secretary
shall, to the extent practicable, consult with national Indian orga-
nizations and with tribal governments chartering the institutions
being considered.
AMOUNT OF GRANTS
SEC. 108. [25 U.S.C. 1808] (a) Except as provided in section
111, the Secretary shall, subject to appropriations, grant for each
academic year to each tribally controlled college or university hav-
591
TRIBALLY CONTROLLED ASSISTANCE
Sec. 108
ing an application approved by him an amount equal to the product
of
(1) the Indian student count at such college or university
during the academic :rear preceding the academic year for
which such funds are being made available, as determined by
the Secretary in accordance with section 2(a)(7); and
(2) $6,000,
except that no grant shall exceed the total cost of the education
program provided by such college or university.
(b)(1) The Secretary shall make payments, pursuant to grants
under this Act, of not less than 95 percent of the funds available
for allotment by October 15 or no later than 14 days after appro-
priations become available, with a payment equal to the remainder
of any grant to which a grantee is entitled to be made no later than
January 1 of each fiscal year.
(2) Notwithstanding any other provision of law, the Secretary
shall not, in disbursing funds provided under this title, use any
method of payment which was not used during fiscal year 1987 in
the disbursement of funds provided under this title.
(3)(A) Notwithstanding any provision of law other than sub-
paragraph (B), any interest or investment income that accrues on
any funds provided under this title after such funds are paid to the
tribally controlled college or university and before such funds are
expended for the purpose for which such funds were provided
under this title shall be the property of the tribally controlled col-
lege or university and shall not be taken into account by any officer
or employee of the Federal Government in determining whether to
provide assistance, or the amount of assistance, to the tribally con-
trolled college or university under any provision of Federal law.
(B) All interest or investment income described in subpara-
graph (A) shall be expended by the tribally controlled college or
university by no later than the close of the fiscal year succeeding
the fiscal year in which such interest or investment income ac-
crues.
(4) Funds provided under this title may only be invested by the
tribally controlled college or university in obligations of the United
States or in obligations or securities that are guaranteed or insured
by the United States.
(c)(1) Each institution receiving payments under this title shall
annually provide to the Secretary an accurate and detailed ac-
counting of its operating and maintenance expenses and such other
information concerning costs as the Secretary may request.
(2) The Secretary shall, in consultation with the National Cen-
ter for Education Statistics, establish a data collection system for
the purpose of obtaining accurate information with respect to the
needs and costs of operation and maintenance of tribally controlled
colleges or universities.
(d) Nothing in this section shall be construed as interfering
with, or suspending the obligation of the Bureau for, the implemen-
tation of all legislative provisions enacted prior to April 28, 1988,
specifically including those of Public Law 98-192.
Sec. 109
TRIBALLY CONTROLLED ASSISTANCE
592
EFFECT ON OTHER PROGRAMS
SEC. 109. [25 U.S.C. 1809] (a) Except as specifically provided
in this title, eligibility for assistance under this title shall not, by
itself, preclude the eligibility of any tribally controlled college or
university to receive Federal financial assistance under any pro-
gram authorized under the Higher Education Act of 1965 or any
other applicable program for the benefit of institutions of higher
education, community colleges, or postsecondary educational insti-
tutions.
(b)(1) The amount of any grant for which tribally controlled col-
leges or universities are eligible under section 108 shall not be al-
tered because of funds allocated to any such colleges or universities:
from funds appropriated under the Act of November 2, 1921 (42
Stat. 208; 25 U.S.C. 13).
(2) No tribally controlled college or university shall be denied
funds appropriated under such Act of November 2, 1921 (42 Stat.
208; 25 U.S.C. 13).
(3) No tribally controlled college or university for which a tribe
has designated a portion of the funds appropriated for the tribe
from funds appropriated under the Act of November 2, 1921 (42
Stat. 208; 25 U.S.C. 13) may be denied a contract for such portion
under the Indian Self-Determination and Education Assistance Act
(25 U.S.C. 450 et seq.) (except as provided in that Act), or denied
appropriate contract support to administer such portion of the ap-
propriated funds.
(c) Notwithstanding any other provision of law, funds provided
under this title to the tribally controlled college or university may
be treated as non-Federal law which requires that non-Federal or
private funds of the college or university be used in a project or for
a specific purpose.
APPROPRIATION AUTHORIZATION
SEC. 110. [25 U.S.C. 1810] (a)(1) There is authorized to be ap-
propriated, for the purpose of carrying out section 105, $3,200,000
for fiscal year 1999 and such sums as may be necessary for each
of the 4 succeeding fiscal years.
(2) There is authorized to be appropriated for the purpose of
carrying out section 107, $40,000,000 for fiscal year 1999 and such
sums as may be necessary for each of the 4 succeeding fiscal years.
(3) There is authorized to be appropriated for the purpose of
carrying out sections 112(b) and 113, $10,000,000 for fiscal year
1999 and such sums as may be necessary for each of the 4 succeed-
ing fiscal years.
(4) Funds appropriated pursuant to the authorizations under
this section for the fiscal year 1999 and for each of the succeeding
4 fiscal years shall be transferred by the Secretary of the Treasury
through the most expeditious method available, with each of the
tribally controlled colleges or universities being designated as its
own certifying agency.
(b)(1) For the purpose of affording adequate notice of funding
available under this Act, amounts appropriated in an appropriation
Act for any fiscal year to carry out this Act shall become available
593
TRIBALLY CONTROLLED ASSISTANCE
Sec. 111
for obligation on July 1 of that fiscal year and shall remain avail-
able until September 30 of the succeeding fiscal year.
(2) In order to effect a transition to the forward funding meth-
od of timing appropriation action described in paragraph (1), there
are authorized to be appropriated, in an appropriation Act or Acts
for the same fiscal year, two separate appropriations to carry out
this Act, the first of which shall not be subject to paragraph (1).
GRANT ADJUSTMENTS
SEC. 111. [25 U.S.C. 1811] (a)(1) If the sums appropriated for
any fiscal year pursuant to section 110(a)(2) for grants under sec-
tion 107 are not sufficient to pay in full the total amount which ap-
proved applicants are eligible to receive under such section for such
fiscal year
(A) the Secretary shall first allocate to each such applicant
which received funds under section 107 for the preceding fiscal
year an amount equal to 95 percent of the payment received
by such.applicant under section 108;
(B) the Secretary shall next allocate to applicants who did
not receive funds under such section for the preceding fiscal
year an amount equal to 100 per centum of the product of
(i) the per capita payment for the preceding fiscal
year; and
(ii) the applicant's projected Indian student count for
the academic year for which payment is being made;
in the order in which such applicants have qualified for assist-
ance in accordance with such section so that no amount shall
be allocated to a later qualified applicant until each earlier
qualified applicant is allocated an amount equal to such prod-
uct; and
(C) if additional funds remain after making the allocations
required by subparagraphs (A) and (B), the Secretary shall al-
locate such funds by
(i) ratably increasing the amounts of the grants deter-
mined under subparagraph (A) until such grants are equal
to 100 per centum of the product described in such sub-
paragraph; and
(ii) then ratably increasing the amounts of both (I) the
grants determined under subparagraph (A), as increased
under clause (i) of this subparagraph, and (II) the grants
determined under subparagraph (B).
(2) For purposes of paragraph (1) of this subsection, the term
"per capita payment" for any fiscal year shall be determined by di-
viding the amount available for grants to tribally controlled col-
leges or universities under section 107 for such fiscal year by the
sum of the Indian student counts of such colleges or universities
for such fiscal year. The Secretary shall, on the basis of the most
satisfactory data available, compute the Indian student count for
any fiscal year for which such count was not used for the purpose
of making allocations under this title.
(b)(1) If the sums appropriated for any fiscal year for grants
under section 107 are not sufficient to pay in full the total amount
of the grants determined pursuant to subsection (a)(1)(A), the
amount which applicants described in such subsection are eligible
597
Sec. 112
TRIBALLY CONTROLLED ASSISTANCE
594
to receive under section 107 for such fiscal year shall be ratably
reduced.
(2) If any additional funds become available for making pay-
ments under section 107 for any fiscal year to which subsection (a)
or paragraph (1) of this subsection applies, such additional
amounts shall be allocated by first increasing grants reduced under
paragraph (1) of this subsection on the same basis as they were re-
duced and by then allocating the remainder in accordance with
subsection (a). Sums appropriated in excess of the amount nec-
essary to pay in full the total amounts for which applicants are eli-
gible under section 107 shall be allocated by ratably increasing
such total amounts.
(3) References in this subsection and subsection (a) to section
107 shall, with respect to fiscal year 1983, be deemed to refer to
section 106 as in effect at the beginning of such fiscal year.
(c) In any fiscal year in which the amounts for which grant re-
cipients are eligible to receive have been reduced under the first
sentence of subsection (a) of this section, and in which additional
funds have not been made available to pay in full the total of such
amounts under the second sentence of such subsection, each grant-
ee shall report to the Secretary any unused portion of received
funds ninety days prior to the grant expiration date. The amounts
so reported by any grant recipient shall be made available for allo-
cation to eligible grantees on a basis proportionate to the amount
which is unfunded as a result of the ratable reduction, but no grant
recipient shall receive, as a result of such reallocation, more than
the amount provided for under section 107(a) of this title.
REPORT ON FACILITIES
SEC. 112. [25 U.S.C. 1812]. (a) The Secretary shall provide for
the conduct of a study of facilities available for use by tribally con-
trolled colleges or universities. Such study shall consider the condi-
tion of currently existing Bureau of Indian Affairs facilities which
are vacant or underutilized and shall consider available alter-
natives for renovation, alteration, repair, and reconstruction of
such facilities (including renovation, alteration, repair, and recon-
struction necessary to bring such facilities into compliance with
local building codes). Such study shall also identify the need for
new construction. A report on the results of such study shall be
submitted to the Congress not later than eighteen months after the
date of enactment of the Tribally Controlled Community College
Assistance Amendments of 1986. Such report shall' also include an
identification of property
(1) on which structurally sound buildings suitable for use
as educational facilities are located, and
(2) which is available for use by tribally controlled commu-
nity colleges or universities under section 202(a)(2.) of the Fed-
eral Property and Administrative Services. Act of 1949 (40
U.S.C. 483(a)(2)) and under the Act of August 6, 1956 (70 Stat.
1057; 25 U.S.C. 443a).
(b) The Secretary, in consultation with the Bureau of Indian
Affairs, shall, initiate a program to conduct necessary renovations,
alterations, repairs, and reconstruction identified pursuant to sub-
section (a) of this section.
595
TRIBALLY CONTROLLED ASSISTANCE
Sec. 113
(c)(1) The Secretary shall enter into a contract with an organi-
zation described in paragraph (2) to establish and provide on an
annual basis criteria for the determination and prioritization in a
consistent and equitable manner of the facilities construction and
renovation needs of colleges or universities that receive funding
under this Act or the Navajo Community College Act.
(2) An organization described in this section is any organiza-
tion that
(A) is eligible to receive a contract under the Indian Self-
Determination and Education Assistance Act; and
(B) has demonstrated expertise in areas and issues dealing
with tribally controlled colleges or universities.
(3) The Secretary shall include the priority list established pur-
suant to this subsection in the budget submitted annually to the
Congress.
(d) For the purposes of this section, the term "reconstruction"
has the meaning provided in the first sentence of subparagraph (B)
of section 742(2) of the Higher Education Act of 1965 (20 U.S.C.
1132e-1(2)(B)).
CONSTRUCTION OF NEW FACILITIES
SEC. 113. [25 U.S.C. 1813] (a) With respect to any tribally
controlled college or university for which the report of the Adminis-
trator of General Services under section 112(a) of this Act identifies
a need for new construction, the Secretary shall, subject to appro-
priations and on the basis of an application submitted in accord-
ance with such requirements as the Secretary may prescribe by
regulation, provide grants for such construction in accordance with
this section.
(b) In order to be eligible for a grant under this section, a trib-
ally controlled college or university
(1) must be a current recipient of grants under section 105
or 107, and
(2) must be accredited by a nationally recognized accredit-
ing agency listed by the Secretary of Education pursuant to the
last sentence of section 101 of the Higher Education Act of
1965, except that such requirement may be waived if the Sec-
retary determines that there is a reasonable expectation that
such college or university will be fully accredited within eight-
een months. In any case where such a waiver is granted,
grants under this section shall be available only for planning
and development of proposals for construction.
(c)(1) Except as provided in paragraph (2), grants for construc-
tion under this section shall not exceed 80 per centum of the cost
of such construction, except that no tribally controlled college or
university shall be required to expend more than $400,000 in ful-
fillment of the remaining 20 per centum. For the purpose of provid-
ing its required portion of the cost of such construction, a tribally
controlled college or university may use funds provided under the
Act of November 2, 1921 (25 U.S.C. 13), popularly referred to as
the Snyder Act.
(2) The Secretary may waive, in whole or in part, the require-
ments of paragraph (1) in the case of any tribally controlled college
or university which demonstrates that neither such college or uni-
Sec. 114
TRIBALLY CONTROLLED ASSISTANCE
596
versity nor the tribal government with which it is affiliated have
sufficient resources to comply with such requirements. The Sec-
retary shall base a decision on whether to grant such a waiver sole-
ly on the basis of the following factors: (A) tribal population; (B) po-
tential student population; (C) the rate of unemployment among
tribal members; (D) tribal financial resources; and (E) other factors
alleged by the college or university to have a bearing on the avail-
ability of resources for compliance with the requirements of para-
graph (1) and which may include the educational attainment of
tribal members.
(d) If, within twenty years after completion of construction of
a facility which has been constructed in whole or in part with a
grant made available under this section
(1) the facility ceases to be used by the applicant in a pub-
lic or nonprofit capacity as an academic facility, unless the Sec-
retary determines that there is good cause for releasing the in-
stitution from this obligation, and
(2) the tribe with which the applicant is affiliated fails to
use the facility for a public purpose approved by the tribal gov-
ernment in futherance of the general welfare of the community
served by the tribal government,
title to the facility shall vest in the United States and the applicant
(or such tribe if such tribe is the successor in title to the facility)
shall be entitled to recover from the United States an amount
which bears the same ratio to the present value of the facility as
the amount of the applicant's contribution (excluding any funds
provided under the Act of November 2, 1921 (25 U.S.C. 13)) bore
to the original cost of the facility. Such value shall be determined
by agreement of the parties or by action brought in the United
States district court for the district in which such facility is located.
(e) No construction assisted with funds under this section shall
be used for religious worship or a sectarian activity or for a school
or department of divinity.
(f) For the purposes of this section
(1) the term "construction" includes reconstruction or ren-
ovation (as such terms are defined in the first sentence of sub-
paragraph (B) of section 742(2) of the Higher Education Act of
1965 (20 U.S.C. 1132e-1(2)(B))); and
(2) the term "academic facilities" has the meaning provided
such term under section 742(1) of the Higher Education Act of
1965 (20 U.S.C. 1132e-1(1)).
MISCELLANEOUS PROVISIONS
SEC. 114. [25 U.S.C. 1814] (a) The Navajo Tribe shall not be
eligible to participate under the provisions of this title.
(b)(1) The Secretary shall not provide any funds to any institu-
tion which denies admission to any Indian student because such in-
dividual is not a member of a specific Indian tribe, or which denies
admission to any Indian student because such individual is a mem-
ber of a specific tribe.
(2) The Secretary shall take steps to recover any unexpended
and unobligated funds provided under this title held by an institu-
tion determined to be in violation of paragraph (1).
597
TRIBALLY CONTROLLED ASSISTANCE
Sec. 302
RULES AND REGULATIONS 1
SEC. 115. [25 U.S.C. 1815] (a) Within four months from the
date of enactment of this Act, the Secretary shall, to the extent
practicable, consult with national Indian organizations to consider
and formulate appropriate rules and regulations for the conduct of
the grant program established by this title.
(b) Within six months from the date of enactment of this Act,
the Secretary shall publish proposed rules and regulations in the
Federal Register for the purpose of receiving comments from inter-
ested parties.
(c) Within ten months from the date of enactment of this Act,
the Secretary shall promulgate rules and regulations for the con-
duct of the grant program established by this title.
(d) Funds to carry out the purposes of this section may be
drawn from general administrative appropriations to the Secretary
made after the date of enactment of this Act.
TITLE IIITRIBALLY CONTROLLED COLLEGE OR
UNIVERSITY ENDOWMENT PROGRAM
PURPOSE
SEC. 301. [25 U.S.C. 1831] It is the purpose of this title to pro-
vide grants for the encouragement of endowment funds for the op-
eration and improvement of tribally controlled colleges or univer-
sities.
ESTABLISHMENT OF PROGRAM; PROGRAM AGREEMENTS
SEC. 302. [25 U.S.C. 1832] (a) From the amount appropriated
pursuant to section 306, the Secretary shall establish a program of
making endowment grants to tribally controlled colleges or univer-
sities which are current recipients of assistance under section 107
of this Act or under section 3 of the Navajo Community College
Act. No such college or university shall be ineligible for such a
grant for a fiscal year by reason of the receipt of such a grant for
a preceding fiscal year, but no such college or university shall be
eligible for such a grant for a fiscal year if such college or univer-
sity has been awarded a grant under section 331 of the Higher
Education Act of 1965 for such fiscal year.
(b) No grant for the establishment of an endowment fund by
a tribally controlled college or university shall be made unless such
college or university enters into an agreement with the Secretary
which
(1) provides for the investment and maintenance ofa trust
fund, the corpus and earnings of which shall be invested in the
same manner as funds are invested under paragraph (2) of sec-
tion 331(c) of the Higher Education Act of 1965, except that for
purposes of this paragraph, the term "trust fund" means a
fund established by an institution of higher education or by a
'Public Law 98-192 (97 Stat. 1343), which reauthorized and amended the Act, included the
following section:
"SEC. 15. In promulgating regulations to implement the amendments made by this Act, the
Secretary of the Interior shall consult with tribally controlled community colleges.".
61
0
Sec. 303
TRIBALLY CONTROLLED ASSISTANCE
598
foundation that is exempt from taxation and is maintained for
the purpose of generating income for the support of the institu-
tion, and may include real estate;
(2) provides for the deposit in such trust fund of
(A) any Federal capital contributions made from funds
appropriated under section 306;
(B) a capital contribution by such college or university
in an amount (or of a value) equal to half of the amount
of each Federal capital contribution; and
(C) any earnings of the funds so deposited;
(3) provides that such funds will be deposited in such a
manner as to insure the accumulation of interest thereon at a
rate not less than that generally available for similar funds .de-
posited at the banking or savings institution for the same pe-
riod or periods of time;
(4) provides that, if at any time such college or university
withdraws any capital contribution made by that college or
university, an amount of Federal capital contribution equal to
twice the amount of (or value of) such withdrawal shall be
withdrawn and returned to the Secretary for reallocation to
other colleges or universities;
(5) provides that no part of the net earnings of such trust
fund will inure to the benefit of any private person; and
(6) includes such other provisions as may be necessary to
protect the financial interest of the United States and promote
the purpose of this title and as are agreed to by the Secretary
and the college or university, including a description of record-
keeping procedures for the expenditure of accumulated interest
which will allow the Secretary to audit and monitor programs
and activities conducted with such interest.
USE OF FUNDS
SEC. 303. [25 U.S.C. 1833] Interest deposited, pursuant to sec-
tion 302(b)(2)(C), in the trust fund of any tribally controlled college
or university may be periodically withdrawn and used, at the dis-
cretion of such college or university, to defray any expenses associ-
ated with the operation of such college or university, including ex-
pense of operations and maintenance, administration, academic
and support personnel, community and student services programs,
and technical assistance.
COMPLIANCE WITH MATCHING REQUIREMENT
SEC. 304. [25 U.S.C. 1834] For the purpose of complying with
the contribution requirement of section 302(b)(2)(B), a tribally con-
trolled college or university may use funds which are available
from any private or tribal source. Any real or personal property re-
ceived by a tribally controlled college or university as a donation
or gift on or after the date of the enactment of this sentence may,
to the extent of its fair market value as determined by the Sec-
retary, be used by such college or university as its contribution
pursuant to section 302(b)(2)(B), or as part of such contribution, as
the case may be. In any case in which any such real or personal
property so used is thereafter sold or otherwise disposed of by such
599
TRIBALLY CONTROLLED ASSISTANCE
Sec. 402
college or university, the proceeds therefrom shall be deposited pur-
suant to section 302(b)(2)(B) but shall not again be considered for
Federal capital contribution purposes.
ALLOCATION OF FUNDS
SEC. 305. [25 U.S.C. 1835] (a) From the amount appropriated
pursuant to section 306, the Secretary shall allocate to each trib-
ally controlled college or university which is eligible for an endow-
ment grant under this title an amount for a Federal capital con-
tribution equal to twice the value of the property or the amount
which such college or university demonstrates has been placed
within the control of, or irrevocably committed to the use of, the
college or university and is available for deposit as a capital con-
tribution of that college or university in accordance with section
302(b)(2)(B), except that the maximum amount which may be so al-
located to any such college or university for any fiscal year shall
not exceed $750,000.
(b) If for any fiscal year the amount appropriated pursuant to
section 306 is not sufficient to allocate to each tribally controlled
college or university an amount equal to twice the value of the
property or the amount demonstrated by such college or university
pursuant to subsection (a), then the amount of the allocation to
each such college or university shall be ratably reduced.
AUTHORIZATION OF APPROPRIATIONS
SEC. 306. [25 U.S.C. 1836] (a) There are authorized to be ap-
propriated to carry out the provisions of this title, $10,000,000 for
fiscal year 1999 and such sums as may be necessary for each of the
4 succeeding fiscal years.
(b) Any funds appropriated pursuant to subsection (a) are au-
thorized to remain available until expended.
TITLE IV TRIBAL ECONOMIC DEVELOPMENT
SEC. 401. [25 U.S.C. 1801 note] SHORT TITLE.
This title may be cited as the "Tribal Economic Development
and Technology Related Education Assistance Act of 1990".
SEC. 402. [25 U.S.C. 1851] GRANTS AUTHORIZED.
(a) GENERAL AUTHORITY.The Secretary is authorized, subject to
the availability of appropriations, to make grants to tribally con-
trolled colleges or universities which receive grants under either
this Act or the Navajo Community College Act for the establish-
ment and support of tribal economic development and education in-
stitutes. Each program conducted with assistance under a grant
under this subsection shall include at least the following activities:
(1) Determination of the economic development needs and
potential of the Indian tribes involved in the program, includ-
ing agriculture and natural resource needs.
(2) Development of consistent courses of instruction to pre-
pare postsecondary students, tribal officials and others to meet
the needs defined under paragraph (1). The development of
such courses may be coordinated with secondary institutions to
the extent practicable.
6
Sec. 403
TRIBALLY CONTROLLED ASSISTANCE
600
(3) The conduct of vocational courses, including adminis-
trative expenses and student support services.
(4) Technical assistance and training to. Federal, tribal and
community officials and business managers and planners
deemed necessary by the institution to enable full implementa-
tion of, and benefits to be derived from, the program developed
under paragraph (1).
(5) Clearinghouse activities encouraging the coordination
of, and providing a point for the coordination of, all vocational
activities (and academically related training) serving all stu-
dents of the Indian tribe involved in the grant.
(6) The evaluation of such grants and their effect on the
needs developed under paragraph (1) and tribal economic self
sufficiency.
(b) AMOUNT AND DURATION.The grants shall be of such
amount and duration as to afford the greatest opportunity for suc-
cess and the generation of relevant data.
(c) APPLICATIONS.Institutions which receive funds under
other titles of this Act or the Navajo Community College Act may
apply for grants under this title either individually or as. consortia.
Each applicant shall act in cooperation with an Indian tribe or
tribes in developing and implementing a grant under this part.
SEC. 403. [25 U.S.C. 1852] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for grants under this
title, $2,000,000 for fiscal year 1993 and such sums as may be
necessary for each of the 4 succeeding fiscal years.
Higher Education Amendments of 1992
*
*
TITLE XIII-INDIAN HIGHER
EDUCATION PROGRAMS
PART A-TRIBALLY CONTROLLED COMMUNITY
COLLEGES
SEC. 1301. REAUTHORIZATION OF THE TRIBALLY CONTROLLED COM-
MUNITY COLLEGES ACT.
(a) GENERAL AUTHORIZATION.Section 110(a) of the Tribally
Controlled Community College Assistance Act of 1978 (hereafter in
this section referred to as the "Act") (25 U.S.C. 1810(a)) is amended
to read as follows:
*
*
*
*
*
*
[Text as amended printed earlier in this volume.]
*
(b) ENDowmErrr GRANTS.Section 306(a) of the Act (25 U.S.C.
1836(a)) is amended to read as follows:
*
*
*
*
*
*
*
[Text as amended printed earlier in this volume.]
(c) ECONOMIC DEVELOPMENT.Section 403 of the Act (25
U.S.C. 1852) is amended to read as follows:
*
*
*
*
*
*
*
[Text as amended printed earlier in this volume.]
(d) NAVAJO COMMUNITY COLLEGES. Section 5(a)(1) of the Nav-
ajo Community College Act of 1978 .(25 U.S.C. 640c-1(a)(1)) is
amended to read as follows:
*
*
*
*
*
*
[Text as amended printed earlier in this volume.]
*
PART B-HIGHER EDUCATION TRIBAL GRANT
AUTHORIZATION ACT
SEC. 1311. [25 U.S.C. 3301] SHORT TITLE.
This part may be cited as the "Higher Education Tribal Grant
Authorization Act".
601
605
54-653 99 - 20
Sec. 1312
HIGHER EDUCATION AMENDMENTS OF 1992
602
SEC. 1312. [25 U.S.C. 3302] FINDINGS.
The Congress finds that
(1) there are increasing numbers of Indian students quali-
fying for postsecondary education, and there are increasing
numbers desiring to go to postsecondary institutions;
(2) the needs of these students far outpace the resources
available currently;
(3) Indian tribes have shown an increasing interest in ad-
ministering programs serving these individuals and making
decisions on these programs reflecting their determinations of
the tribal and human needs;
(4) the contracting process under the Indian Self-Deter-
mination and Education Assistance Act has provided a mecha-
nism for the majority of the tribes to assume control over this
program from the Bureau of Indian Affairs;
(5) however, inherent limitations in the contracting philos-
ophy and mechanism, coupled with cumbersome administrative
procedures developed by the Bureau of Indian Affairs have ef-
fectively limited the efficiency and effectiveness of these pro-
grams;
(6) the provision of these services in the most effective and
efficient form possible is necessary for tribes, the country, and
the individuals to be served; and
(7) these services are part of the Federal Government's
continuing trust responsibility to provide education services to
American Indian and Alaska Natives.
SEC. 1313. [25 U.S.C. 3303] PROGRAM AUTHORITY.
(a) IN GENERAL.The Secretary shall, from the amounts ap-
propriated for the purpose of supporting higher education grants
for Indian students under the authority of the Act of November 2,
1921, popularly known as the Snyder Act (25 U.S.C. 13), make
grants to Indian tribes in accordance with the requirements of this
part to permit those tribes to provide financial assistance to indi-
vidual Indian students for the cost of attendance at institutions of
higher education.
(b) LIMITATION ON SECRETARY'S AUTHORITY.The Secretary
shall not place any restrictions on the use of funds provided to an
Indian tribe under this part that is not expressly authorized by this
part.
(c) EFFECT ON FEDERAL RESPONSIBILITIES.The provisions of
this part shall not affect any trust responsibilities of the Federal
Government.
(d) No TERMINATION FOR ADMINISTRATIVE CONVENIENCE.
Grants provided under this part may not be terminated, modified,
suspended, or reduced only for the convenience of the administer-
ing agency.
SEC. 1314. [25 U.S.C. 3304] QUALIFICATION FOR GRANTS TO TRIBES.
(a) CONTRACTING TRIBES.Any Indian tribe that obtains funds
for educational purposes similar to those authorized in this part
pursuant to contract under the Indian Self-Determination and Edu-
cation Assistance Act may qualify for a grant under this part by
submitting to the Secretary a notice of intent to administer a stu-
dent assistance program under section 1313. Such notice shall be
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HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1314
effective for the fiscal year following the fiscal year in which it is
submitted, except that if such notice is submitted during the last
90 days of a fiscal year such notice shall be effective the second fis-
cal year following the fiscal year in which it is submitted, unless
the Secretary waives this limitation.
(b) NONCONTRACTING TRIBES.Any Indian tribe that is not eli-
gible to qualify for a grant under this part by filing a notice under
subsection (a) may qualify for such a grant by filing an application
for such a grant. Such application shall be submitted under guide-
lines for programs under the Indian Self-Determination and Edu-
cation Assistance Act, as in effect on January 1, 1991, and shall be
reviewed under the standards, practices, and procedures applicable
to applications to contract under such Act as in effect on the date
the application is received, except that
(1) if the tribe is not notified that its application has been
disapproved within 180 days after it is filed with the Secretary,
the application shall be deemed to be approved;
(2) if the application is disapproved, the Secretary shall
provide technical assistance to the tribe for purposes of correct-
ing deficiencies in the application;
(3) the Secretary shall designate an office or official to re-
ceive such applications, and shall toll the 180-day period de-
scribed in paragraph (1) from the date of receipt by such office
or official; and
(4) applications shall be approved for the fiscal year follow-
ing the fiscal year in which submitted, unless the Secretary
waives the limitation of this paragraph.
(c) TERMINATION OF GRANTS.
(1) CONTINUING ELIGIBILITY PRESUMED.An Indian tribe
which has qualified under subsection (a) or (b) for a grant
under this part for any fiscal year shall continue to be eligible
for such a grant for each succeeding fiscal year unless the Sec-
retary revokes such eligibility for a cause described in para-
graph (2).
(2) CAUSES FOR LOSS OF ELIGIBILITY.The Secretary may
revoke the eligibility of an Indian tribe for a grant under this
part if such tribe
(A) fails to submit to the Bureau an annual financial
statement that reports revenues and expenditures deter-
mined by use of an accounting system, established by the
tribe, that complies with generally accepted accounting
principles;
(B) fails to submit to the Bureau an annual program
description, stating the number of students served, and
containing such information concerning such students,
their educational programs and progress, and the financial
assistance distributed to such students as the Secretary
may require by regulation;
(C) fails to submit to the Secretary a biennial financial
audit conducted in accordance with chapter 75 of title 31,
United States Code; or
(D) fails, in an evaluation of its financial assistance
program conducted by an impartial third party entity, to
comply with standards under this part relating to (i) eligi-
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HIGHER EDUCATION AMENDMENTS OF 1992
604
ble students, programs, or institutions of higher education,
(ii) satisfactory progress, or (iii) allowable administrative
costs; as determined under contracts applicable to pro-
grams to provide financial assistance to individual Indian
students for the cost of attendance at institutions of higher
education administered by Indian tribes under the Indian
Self-Determination and Education Assistance Act and in
effect on January 20, 1991.
(3) PROCEDURES FOR REVOCATION OF ELIGIBILITY.The
Secretary shall not revoke the eligibility of an Indian tribe for
a grant under this part except
(A) after notice in writing to the tribe of the cause and
opportunity to the tribe to correct;
(B) providing technical assistance to the tribe in mak-
ing such corrections; and
(C) after hearing and appeals conducted under the
same rules and regulations that apply to similar termi-
nation actions under the Indian Self-Determination and
Education Assistance Act.
SEC. 1315. [25 U.S.C. 3305] ALLOCATION OF GRANT FUNDS.
(a) ALLOCATION OF FUNDS.
(1) IN GENERALThe Secretary shall continue to deter-
mine the amount of program funds to be received by each
grantee under this part by the same method used for determin-
ing such distribution in fiscal year 1991 for tribally-adminis-
tered and Bureau-administered programs of grants to individ-
ual Indians to defray postsecondary expenses.
(2) ADMINISTRATIVE COSTS.In addition to the amount de-
termined under paragraph (1), a grantee which has exercised
the option given in section 1314(a) to administer the program
under a grant shall receive an amount for administrative costs
determined pursuant to the method used by the grantee during
the preceding contract period. All other grantees shall receive
an amount for administrative costs determined pursuant to the
regulations governing such determinations under the Indian
Self Determination and Education Assistance Act, as in effect
at the time of application to grants being made.
(3) SINGLE GRANT; SEPARATE ACCOUNTS.Each grantee
shall receive only one grant during any fiscal year, which shall
include both of the amounts under paragraphs (1) and (2).
Each grantee shall maintain this grant in a separate account.
(b) USE OF FUNDS.Funds provided by grants under this part
shall be used
(1) to make grants to individual Indian students to meet,
on the basis of need, any educational expense of attendance in
a postsecondary education program (as determined under the
contracts applying to the postsecondary education program ad-
ministered by tribes under the Indian Self Determination and
Education Assistance Act (Public Law 93-638)), to the extent
that such expense is not met from other sources or cannot be
defrayed through the action of any State, Federal, or municipal
Act, except that nothing in this subsection shall be interpreted
as requiring any priority in consideration of resources; and
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HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1316
(2) costs of administering the program under this part, ex-
cept that no more may be spent on administration of such pro-
gram than is generated by the method for administrative cost
computation specified in section 1315(a)(2).
SEC. 1316. [25 U.S.C. 3306] LIMITATIONS ON USE OF FUNDS.
(a) USE FOR RELIGIOUS PURPOSES.None of the funds made
available under this part may be used for study at any school or
department of divinity or for any religious worship or sectarian ac-
tivity.
(b) INTEREST ON FUNDS.No interest or other income on any
funds made available under this part shall be used for any purpose
other than those for which such funds may be used.
(C) PAYMENTS.
(1) IN GENERAL.Except as otherwise provided in this sub-
section, the Secretary shall make payments to grantees under
this part in two payments
(A) one payment to be made no later than October 1
of each fiscal year in an amount equal to one-half the
amount paid during the preceding fiscal year to the grant-
ee or a contractor that has elected to have the provisions
of this part apply, and
(B) the second payment consisting of the remainder to
which the grantee or contractor is entitled for the fiscal
year to be made by no later than January 1 of the fiscal
year.
(2) NEW GRANTEES.For any tribe for which no payment
was made under this part in the preceding fiscal year, full pay-
ment of the amount computed for each fiscal year shall be
made by January 1 of the fiscal year.
(d) INVESTMENT OF FUNDS.
(1) TREATMENT AS TRIBAL PROPERTY.Notwithstanding
any other provision of law, any interest or investment income
that accrues on any funds provided under this part after such
funds are paid to the Indian tribe or tribal organization and
before such funds are expended for the purpose for which such
funds were provided under this part shall be the property of
the Indian tribe or tribal organization and shall not be taken
into account by any officer or employee of the Federal Govern-
ment in determining whether to provide assistance, or the
amount of assistance, under any provision of Federal law.
(2) INVESTMENT REQUIREMENTS.Funds provided under
this part may be
(A) invested by the Indian tribe or tribal organization
only in obligations of the United States or in obligations or
securities that are guaranteed or insured by the United
States, or
(B) deposited only into accounts that are insured by an
agency or instrumentality of the United States.
(e) RECOVERIES.For the purposes of under recovery and over
recovery determinations by any Federal agency for any other funds,
from whatever source derived, funds received under this part shall
not be taken into consideration.
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HIGHER EDUCATION AMENDMENTS OF 1992
606
SEC. 1317. [25 U.S.C. 3307] ADMINISTRATIVE PROVISIONS.
(a) BIENNIAL REPORT.The Secretary shall submit a biennial
report to the Congress on the programs established under this part.
Such report shall include
(1) a description of significant administrative actions taken
by the Secretary under this part;
(2) the number of grants made under the authority of this
part;
(3) the number of applications denied for such grants and
the reasons therefor;
(4) the remedial actions taken to enable applicants to be
approved;
(5) the number of students served, by tribe;
(6) statistics on the academic pursuits of the students pro-
vided assistance under this part and the average amount of as-
sistance provided; and
(7) such additional information as the Secretary considers
significant.
(b) ROLE OF THE DIRECTOR.Applications for grants under this
part, and all application modifications, shall be reviewed and ap-
proved by personnel under the direction and control of the Director
of the Office of Indian Education Programs. Required reports shall
be submitted to education personnel under the direction and con-
trol of the Director of such Office,
(c) APPLICATION OF INDIAN SELF-DETERMINATION AND EDU-
CATION ASSISTANCE ACT. All provisions of sections 5, 6, 7, 105,
109, and 110 of the Indian Self-Determination and Education As-
sistance Act (25 U.S.C. 450c et seq.), except those provisions per-
taining to indirect costs and length of contract, shall apply to
grants provided under this part.
(d) REGULATIONS.The Secretary is authorized to issue regula-
tions relating to the discharge of duties specifically assigned to the
Secretary by this part. In all other matters relating to the details
of planning, development, implementing, and evaluating grants
under this part, the Secretary shall not issue regulations. Regula-
tions issued pursuant to this part shall not have the standing of
a Federal statute for the purposes of judicial review.
(e) RETROCESSION.Whenever an Indian tribe requests ret-
rocession of any program for which assistance is provided under
this part, such retrocession shall become effective upon a date spec-
ified by the Secretary not more than 120 days after the date on
which the tribe requests the retrocession, or such later date as may
be mutually agreed upon by the Secretary and the tribe. If such a
program is retroceded, the Secretary shall provide to any Indian
tribe served by such program at least the same quantity and qual-
ity of services that would have been provided under such program
at the level of funding provided under this part prior to the ret-
rocession. The tribal governing body requesting the retrocession
shall specify whether the retrocession shall be to a contract admin-
istered by the tribe, or a tribal entity, under the authority of the
Indian Self-Determination Act or to a Bureau administered pro-
gram.
(f) DEFINITIONS.For the purposes of this part:
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607
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1323
(1) The term "Secretary" means the Secretary of the Inte-
rior.
(2) The terms "Indian" and "Indian tribe" have the same
meaning given those terms in sections 1 4(d) and (e), respec-
tively, of the Indian Self Determination and Education Assist-
ance Act (P.L. 93-638, 20 U.S.C. 450b).
PART C-CRITICAL NEEDS FOR TRIBAL
DEVELOPMENT ACT
SEC. 1321. [25 U.S.C. 3321] SHORT TITLE.
This part may be cited as the "Critical Needs for Tribal Devel-
opment Act".
SEC. 1322. [25 U.S.C. 3322] DEFINITIONS.
As used in this part:
(1) The term "federally funded higher 'education assist-
ance" means any grant assistance provided to an Indian stu-
dent from funds made available for such purpose by contract
or grant to an Indian tribe from amounts appropriated under
the authority of the Act of November 2, 1921, popularly known
as the Snyder Act (25 U.S.C. 13).
(2) The term "eligible Indian tribe or tribal organization"
means any Indian tribe or tribal organization that qualifies to
administer federally funded higher education assistance under
a contract pursuant to the Indian Self-Determination and Edu-
cation Assistance Act or under a grant pursuant to the Higher
Education Tribal Grant Authorization Act.
(3) The term "Indian" has the meaning given such term in
section 4(d) of the Indian Self Determination and Education
Assistance Act (Public Law 93-638, 20 U.S.C. 450b).
SEC. 1323. [25 U.S.C. 3323] SERVICE CONDITIONS PERMITTED.
(a) IN GENERAL.An eligible Indian tribe or tribal organization
may, in 'accordance with the requirements of this part, require any
applicant for federally funded higher education assistance, as a
condition of receipt of such assistance, to enter into a critical area
service agreement in accordance with section 1324.
(b) CRITICAL AREA DESIGNATION.Any eligible Indian tribe or
tribal organization that intends to require critical area service
agreements shall, by a formal action of the tribal council or its del-
egate, designate particular occupational areas as critical areas for
the economic or human development needs of the tribe or its mem-
bers. The tribe or organization shall notify the Secretary of the In-
terior in writing of such designated critical areas. Such designa-
tions shall be applicable to federally funded higher education as-
sistance for any fiscal year following the fiscal year in which the
designation is made until such designation is withdrawn by the
tribe or organization by formal action. The tribe or organization
shall notify the Secretary of the Interior in writing of any designa-
tions that are withdrawn.
1So in original. Probably should be "section".
61
Sec. 1324
HIGHER EDUCATION AMENDMENTS OF 1992
608
SEC. 1324. [25 U.S.C. 3324] CRITICAL AREA SERVICE AGREEMENTS.
(a) TERMS OF AGREEMENTS.A critical area service agreement
shall be an agreement between an Indian student who receives or
who shall receive federally funded higher education assistance and
an Indian tribe or tribal organization providing such assistance in
which the student agrees
(1) to undertake a course of study at an eligible institution
(as that term is defined in section 435(a) of the Higher Edu-
cation Act of 1965) in an area of critical need, as determined
under section 1323, and to pursue that course of study to its
completion; and
(2)(A) to perform, for each academic year for which the stu-
dent receives federally funded higher education assistance
under a critical area service agreement, one calendar year of
service to the tribe or organization in an occupation that is in
a critical area designated by the tribe pursuant to section
1322(b), commencing not later than 6 months after the student
ceases to carry at an institution of higher education at least
one-half the normal full-time academic workload as determined
by the institution; or
(B) to repay such assistance to the Secretary, together
with interest thereon at a rate prescribed by the Secretary by
regulation, in monthly or quarterly installments over not more
than 5 years.
(b) SERVICE LIMITATIONS AND CONDITIONS.The tribe or tribal
organization shall agree that a student performing services under
a critical area service agreement
(1) shall be provided compensation, benefits, and working
conditions at the same level and to the same extent as any
other employee working a similar length of time and doing the
same type of work;
(2) may be treated as providing services to the tribe or or-
ganization if the student provides services for members of the
tribe or organization that are approved by the tribe or organi-
zation and agreed to by the student even though such services
are performed while the student is employed by a Federal,
State, or local agency or instrumentality or by a nonprofit or
for-profit private institution or organization; and
(3) may obtain the benefits of a waiver or suspension in ac-
cordance with the requirements of subsection (c).
(C) WAIVER AND SUSPENSION OF SERVICE AGREEMENT.
(1) WAIVER.An Indian tribe or tribal organization may,
by formal action, waive the service agreement of an Indian stu-
dent for just cause, as determined in accordance with regula-
tions prescribed by the Secretary. The tribe or organization
shall notify the Secretary in writing of any waiver granted
under this subsection.
(2) SUSPENSION.The obligation of a student to perform
services under a critical area service agreement
(A) shall be suspended for not more than 18 months
if, at the request of the student, the tribe or organization
determines that there are no employment opportunities
available in any critical service area; and
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HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1331
(B) shall be suspended if the student ceases to attend
an institution of higher education as a consequence of an
institutional determination of unsatisfactory performance.
If, at the end of a period of suspension under subparagraph
(A), there are still no employment opportunities available in
any critical service area, the student's obligations under the
agreement shall terminate. A suspension under subparagraph
(B) shall be reviewed by the tribe or organization annually, but
may be continued indefinitely.
(d) PRO RATA REDUCTION FOR PARTIAL SERVICES.The Sec-
retary shall, by regulation, provide for the pro rata reduction of re-
payment obligations under subsection (a)(2) in the case of any stu-
dent who partially completes the service obligation of that student
under subsection (a)(2)(A).
(e) CERTIFICATION OF SERVICE.An Indian tribe or tribal orga-
nization
receiving
services
under
a
critical
area
service
agreement
(1) shall establish procedures for monitoring and evaluat-
ing the provisions of this part, and provide a copy of such pro-
cedures to the Secretary and to each individual providing serv-
ices under a critical area service agreement;
(2) shall annually certify to the Secretary the identities of
the individuals performing service under such agreements; and
(3) shall annually certify to the Secretary the amount of
service performed, and the amount remaining to be performed,
by each such individual under such agreements.
SEC. 1325. [25 U.S.C. 3325] GENERAL PROVISIONS.
(a) APPLICATION OF EXISTING PROCEDURES.Except as pro-
vided in subsection (b), the requirements relating to student eligi-
bility, needs analysis, and determination of eligibility for the pro-
gram to be attended regularly incorporated by reference into con-
tracts under the Indian Self-Determination and Education Assist-
ance Act for tribal operation of higher education grant programs
prior to January 1, 1991, shall apply.
(b) ADDITIONAL, EXCESS, AND INCREMENTAL COSTS.The tribe
or tribal organization may establish in writing, subject to the re-
view of the Secretary, procedures for determining additional, ex-
cess, or inducement costs to be associated with grants for critical
area service agreements.
PART D-INSTITUTE OF AMERICAN INDIAN
NATIVE CULTURE AND ARTS DEVELOPMENT
SEC. 1331. INSTITUTE OF AMERICAN INDIAN NATIVE CULTURE AND
ARTS DEVELOPMENT.
(a) BOARD OF DIRECTORS.Section 1505 of the American In-
dian, Alaska Native, and Native Hawaiian Culture and Art Devel-
opment Act (20 U.S.C. 4412) is amended
[Text as amended printed earlier in this volume.]
Sec. 1341
HIGHER EDUCATION AMENDMENTS OF 1992
610
PART E-TRIBAL DEVELOPMENT STUDENT
ASSISTANCE REVOLVING LOAN PROGRAM
SEC. 1341. [25 U.S.C. 3331] SHORT TITLE.
This part may be cited as the "Tribal Development Student As-
sistance Act".
SEC. 1342. [25 U.S.C. 3332] FINDINGS; PURPOSES.
(a) FINDINGS.The Congress finds that
(1) a substantial number of Indian students have partially
completed their degrees in postsecondary education, but have
been unable, for a number of reasons, to complete the degrees;
(2) in at least some measure these students have been sup-
ported by tribal funds or grants of Federal monies adminis-
tered by the Bureau of Indian Affairs or tribes;
(3) the inability of the students to complete these degrees
has led to a hardship for the students and a loss of a potential
pool of talent to the tribes or tribal organizations which origi-
nally financed, at least in part, these efforts;
(4) this loss has crippled tribal efforts in the areas of eco-
nomic and social development;
(5) this failure to complete the postsecondary schooling has
led to economic loss to the tribes and the Federal Government
which could be remedied by completion of the courses of study;
and (6) a program to identify students with a level of post-
secondary completion short of the fulfillment of graduation re-
quirements and to encourage them to complete these require-
ments, including provision of resources, will benefit the stu-
dents, the tribes, and the Federal Government.
(b) PURPOSES.The purposes of this part are
(1) to establish a revolving loan program to be adminis-
tered by a tribe or tribal organization for the purposes of in-
creasing the number of college graduates available to work in
tribal businesses, tribal government, and tribal services such
as schools and hospitals;
(2) to conduct research to assess the situational and edu-
cational barriers to participation in postsecondary education;
and
(3) to encourage development, through grants, of a model
which provides, in addition to loans, transitional and follow-up
services needed to encourage persistence in postsecondary edu-
cation.
SEC. 1343. [25 U.S.C. 3333] REVOLVING FUND.
(a) RECEIPT, INVESTMENT, AND ACCOUNTING.
(1) TRIBES AND TRIBAL ORGANIZATIONS.Funds received
under a grant under this part or recovered under the provi-
sions of section 1346(a)(2)(B) shall be identified and accounted
for separately from any other tribal or Federal funds received
from the Federal Government. All funds in this account shall
be used for the purposes of this part.
(2) FINANCIAL PROCEDURES.The Secretary of the Interior
is responsible for establishing, by regulations, such require-
ments for receipt, investment and accounting of funds under
6 1 el
611
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1345
subsection (b) as shall safeguard and 1 financial interests of the
Federal Government.
(b) INVESTMENT.Funds provided under this part or recovered
by the tribe or tribal organization under the provisions of section
1346(a)(2)(B) shall be
(1) invested by the Indian tribe or tribal organization only
in obligations of the United States or in obligations or securi-
ties that are guaranteed or insured by the United States, or
(2) deposited only in accounts that are insured by an agen-
cy or instrumentality of the United States.
(c) TREATMENT OF INCOME.Notwithstanding any other provi-
sion of law, any interest or investment income that accrues on any
funds covered under this provision after such funds have been dis-
tributed to a tribe or tribal organization and before such funds are
distributed for the purposes of making loans under this part shall
be the property of the tribe or tribal organization and shall not be
taken into account by any officer or employee of the Federal Gov-
ernment in determining whether to provide assistance, or the
amount of assistance, under any provision of Federal law.
SEC. 1344. [25 U.S.C. 3334] ELIGIBLE RECIPIENTS.
(a) TRIBES AND TRIBAL ORGANIZATIONS.The Secretary of the
Interior (hereafter in this part referred to as the "Secretary") shall
make grants, in accordance with the requirements of this part, to
(1) tribes or multitribal organizations not serviced by cur-
rent federally funded postsecondary institutions authorized for
economic development grants; and
(2) tribes or multitribal organizations which lack sufficient
numbers of professionally trained tribal members to support
established or ongoing economic development initiatives.
(b) STUDENTS.Any tribe or tribal organization that receives
funds under subsection (a) shall make such funds available by loan,
under terms and conditions consistent with section 1345, to Indian
students who have successfully completed 30 hours of postsecond-
ary education and who are eligible for readmission to a postsecond-
ary institution.
SEC. 1345. [25 U.S.C. 3335] TERMS OF LOANS.
(a) IN GENERAL.A loan under this part to an Indian student
shall
(1) be subject to repayment over a period of not more than
5 years;
(2) not bear interest;
(3) be subject to forgiveness for services to the tribe in ac-
cordance with section 1346; and
(4) contain such additional terms and conditions as the ini-
tial loan agreement between the tribe or tribal organization
and student may prescribe in writing.
(b) COST OF ATTENDANCE.Calculation of the cost of attend-
ance for the student must include all costs as determined by the
tribe for the purposes of fulfilling the policy of this part.
(c) ADDITIONAL REQUIREMENTS.Any student seeking a loan
under this part shall apply for and accept the maximum financial
1So in original. Probably should be "the".
615
Sec. 1346
HIGHER EDUCATION AMENDMENTS OF 1992
612
aid available from other sources. However, for purposes of deter-
mining eligibility, loans provided under this program may not be
considered in needs analysis under any other Federal law, and may
not penalize students in determining eligibility for other funds.
SEC. 1346. [25 U.S.C. 3336] SERVICE FULFILLMENT AND CONDITIONS;
REPAYMENTS; WAIVERS.
(a) SERVICE AGREEMENT REQUIRED.
(1) IN GENERAL. Prior to receipt of a loan under this part,
the tribe or tribal organization and the eligible recipient shall
enter into a written agreement, subject to the conditions of this
section, which commits the recipient
(A) to perform, for each academic year for which the
student receives assistance under this part one calendar
year of service to the tribe or organization in an occupation
related to the course of study pursued and an economic or
social development plan developed by the tribe or tribal or-
ganization, commencing not later than 6 months after the
student ceases to carry at an institution of higher edu-
cation at least one-half the normal full-time academic
workload as determined by the institution; or
(B) to repay to the tribe or tribal organization the full
amount of the loan, in monthly or quarterly installments
over not more than 5 years.
(2) REPORT REQUIREMENT.Funds recovered pursuant to
paragraph (1)(B) shall be reported annually to the Secretary
and invested in the account established under section 1343.
(b) SERVICE LIMITATIONS AND CONDITIONS.The tribe or tribal
organization shall agree that a student performing services under
this part
(1) shall be provided compensation, benefits, and working
conditions at the same level and to the same extent as any
other employee working a similar length of time and doing the
same type of work;
(2) may be treated as providing services to the tribe or or-
ganization if the student provides services for members of the
tribe or organization that are approved by the tribe or organi-
zation and agreed to by the student even though such services
are performed while the student is employed by a Federal,
State, or local agency or instrumentality or by a nonprofit or
for-profit private institution or organization; and
(3) may obtain the benefits of a waiver or suspension in ac-
cordance with the requirements of subsection (c).
(C) WAIVER AND SUSPENSION OF SERVICE AGREEMENT.
(1) WAIVER.An Indian tribe or tribal organization may,
by formal action, waive the service agreement of an Indian stu-
dent for just cause, as determined in accordance with regula-
tions prescribed by the Secretary. The tribe or organization
shall notify the Secretary in writing of any waiver granted
under this subsection.
(2) SUSPENSION.The obligation of a student to perform
services under this part
(A) shall be suspended for not more than 18 months
if, at the request of the student, the tribe or organization
61
613
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1347
determines that there are no employment opportunities
available in any applicable area; and
(B) shall be suspended if the student ceases to attend
an institution of higher education as a consequence of an
institutional determination of unsatisfactory performance.
If, at the end of a period of suspension under subparagraph
(A), there are still no employment opportunities available
which fulfill the requirements of this part, the student's obliga-
tions under the agreement shall terminate. A suspension under
subparagraph (B) shall be reviewed by the tribe or organiza-
tion annually, but may be continued indefinitely.
(d) PRO RATA REDUCTION FOR PARTIAL SERVICES. The Sec-
retary shall, by regulation, provide for the pro rata reduction of re-
payment obligations under subsection (a)(2)(B) in the case of any
student who partially completes the service obligation of that stu-
dent under subsection (a)(2)(A).
(e) CERTIFICATION OF SERVICE.An Indian tribe or tribal orga-
nization receiving services under this part
(1) shall establish procedures for monitoring and evaluat-
ing the provisions of this part, and provide a copy of such pro-
cedures to the Secretary and to each individual providing serv-
ices under a critical area service agreement;
(2) shall annually certify to the Secretary the identities of
the individuals performing service under such agreements; and
(3) shall annually certify to the Secretary the amount of
service performed, and the amount remaining to be performed,
by each such individual under such agreements.
SEC. 1347. [25 U.S.C. 3337] ADMINISTRATION.
(a) REGULATIONS.The Secretary shall establish, by regula-
tion, an application process containing such requirements as the
Secretary deems necessary for purposes of making grants to eligi-
ble entities under this part, providing that the Secretary shall take
into account in reviewing applications under this part the number
of students with partial completion identified by the applicant, rel-
ative to the total number of the members of tribe which. would be
benefited by provision of services under section 1346, and shall at-
tempt to achieve geographic and demographic diversity in grants
made under this part.
(b) GRANT PROCEDURES.
(1) IN GENERAL.Subject to the availability of funds and
acceptable applications, the Secretary shall make 5 grants to
tribes or tribal organizations for purposes of this part, each
grant to be for a period of 4 years.
(2) ADMINISTRATIVE COSTS.The amount of administrative
costs associated with grants under this part shall be negotiated
by the Secretary with the successful applicants and made a
part of the grant agreement.
(c) DEFINITIONS.For the purposes of this part, the terms "In-
dian", "Indian tribe", "Secretary", and "tribal organizations" have
the same meanings given such terms in sections 1 4(d), (e), (i), and
'So in original. Probably should be "section".
617
Sec. 1348
HIGHER EDUCATION AMENDMENTS OF 1992
614
(1), respectively, of the Indian Self Determination and Education
Assistance Act (P.L. 93-638, 20 U.S.C. 450b).
SEC. 1348. [25 U.S.C. 3338] AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part,
$2,000,000 for fiscal year 1993 and such sums as may be necessary
for each of the 4 succeeding fiscal years.
PART F-AMERICAN INDIAN POSTSECONDARY
ECONOMIC DEVELOPMENT SCHOLARSHIP
SEC. 1361. [25 U.S.C. 3351] AMERICAN INDIAN POSTSECONDARY ECO-
NOMIC DEVELOPMENT SCHOLARSHIP.
(a) PROGRAM AUTHORIZED.The Secretary of Education is au-
thorized to make grants, in accordance with the provisions of this
part, to federally recognized Indian tribes which lack sufficient
numbers of professionally trained tribal members to support estab-
lished or ongoing economic development initiatives. Priority shall
be given to tribes which are not served by federally funded post-
secondary institutions. The purpose of such grants is to enable
such tribes to make scholarships available to tribal members to as-
sist such members to pursue courses of study leading to an under-
graduate or postbaccalaureate degree in order to provide profes-
sionally trained tribal members .to support such economic develop-
ment initiatives on Indian reservations.
(b) DESIGNATION.A scholarship awarded under this part shall
be referred to as an "American Indian Post-Secondary Economic
Development Scholarship" (hereafter referred to in this part as
"scholarship").
SEC. 1362. [25 U.S.C. 3352] INDIAN SCHOLARSHIPS.
(a) SELECTION.Each Indian tribe receiving a grant pursuant
to this part for the purpose of providing scholarships shall select
tribal members eligible to receive such scholarships. In determining
grant recipients the Secretary of Education shall consider
(1) geographic distribution of grants; and
(2) a tribal economic plan which demonstrates how individ-
ual recipients shall benefit the economic conditions of the tribe.
(b) CRITERIA.Each Indian tribe, in consultation with the Sec-
retary of Education, shall give preference to select, as those tribal
members eligible to receive such scholarships, tribal members who
have successfully completed at least 30 hours of postsecondary edu-
cation and who are eligible for readmission to a postsecondary in-
stitution.
SEC. 1363. [25 U.S.C. 3353] SCHOLARSHIP CONDITIONS.
(a) SCHOLARSHIP AGREEMENT.Each tribal member receiving a
scholarship under this part shall enter into an agreement, satisfac-
tory to the Secretary of Education and the tribal government
awarding such scholarship, under which such member agrees
(1) to utilize the proceeds of such scholarship to pursue a
course of study which meets the requirements of the edu-
cational institution in which the student is enrolled for an un-
dergraduate or postbaccalaureate degree;
615
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1363
(2) upon the acquisition of such degree, to work, one year
for each year of financial assistance under this part, on the In-
dian reservation in employment related to the course of study
pursued which will support, economic development initiatives
on such reservation; and
(3) to maintain satisfactory academic progress, as deter-
mined in accordance with section 484(c) of the Higher Edu-
cation
Act
of
1965,
while
in
an
undergraduate
or
postbaccalaureate program.
(b) REPAYMENTS.Each tribal member found by the Secretary
of Education to be in noncompliance with the agreement pursuant
to subsection (a)(2) shall be required to repay
(1) 100 percent of the total amount of scholarships award-
ed under this part if such tribal member does not work pursu-
ant to such agreement; or
(2) a pro rata portion of the total amount of scholarships
awarded under this part, as determined by the Secretary of
Education, if such tribal member worked pursuant to such
agreement but less than the time period required thereunder.
(C) WAIVER AND SUSPENSION OF SERVICE AGREEMENT.
(1) WAIVER.A federally recognized Indian tribe may, by
formal action, waive the service agreement of a tribal member
for just cause, as determined in accordance with regulations
prescribed by the Secretary. The tribe shall notify the Sec-
retary in writing of any waiver granted under this subsection.
(2) SUSPENSION.The obligation of a tribal member to per-
form services under this part
(A) shall be suspended for not more than 18 months
if, at the request of the tribal member, the tribe deter-
mines that there are no employment opportunities avail-
able in any applicable area; and
(B) shall be suspended if the tribal member ceases to
attend an institution of higher education as a consequence
of an institutional determination of unsatisfactory per-
formance.
If, at the end of a period of suspension under subparagraph
(A), there are still no employment opportunities available
which fulfill the requirements of this part, the tribal member's
obligations under the agreement shall terminate. A suspension
under subparagraph (B) shall be reviewed by the tribe annu-
ally, but may be continued indefinitely.
(d) DISCLAIMER.No scholarship awarded pursuant to this
part shall be considered in determining eligibility for student as-
sistance under title IV of the Higher Education Act of 1965.
(e) LIMITATION.Any tribal member selected by an Indian
tribe to receive a scholarship under this part shall be eligible to re-
ceive a $10,000 scholarship for each academic year of postsecond-
ary education, except that no such member shall receive scholar-
ship assistance under this part for more than 4 years of post-
secondary education (including postbaccalaureate).
(0 COST OF ATTENDANCE.
Calculation of the cost of attend-
ance for the tribal member shall include all costs as determined by
the tribe for the purposes of fulfilling the policy of this part.
613
Sec. 1364
HIGHER EDUCATION AMENDMENTS OF 1992
616
(g) ADDITIONAL REQUIREMENTS.Any tribal member seeking a
loan under this part shall apply for and accept the maximum finan-
cial aid available from other sources. However, for purposes of de-
termining eligibility, loans provided under this program may not be
considered in needs analysis under any other Federal law, and may
not penalize tribal members in determining eligibility for other
funds.
(h) APPLICATIONS FOR ASSISTANCE.Any federally recognized
Indian tribe desiring a grant under this part shall submit an appli-
cation to the Secretary of Education at such time, in such manner,
and containing such information as the Secretary may reasonably
require. Each such application shall
(1) describe the shortages on the reservation of such In-
dian tribe of professionally trained tribal members necessary to
support economic development initiatives on such reservation;
(2) provide assurances that the Indian tribe will assist in
employment placement on the reservation of tribal members
receiving scholarship assistance under this part; and
(3) provide assurances that any tribal member performing
work pursuant to this part will be provided compensation, ben-
efits, and working conditions at the same level and to the same
extent as any other employee working a similar length of time
and doing the same type of work.
SEC. 1364. [25 U.S.C. 3354] REPORT.
Each federally recognized Indian tribe receiving a grant pursu-
ant to this part shall annually report to the Secretary concerning
the administration of such grant, including the identities of any in-
dividual receiving a scholarship pursuant to this part, and of any
individual performing service pursuant to his or her commitment
under this part.
SEC. 1365. [25 U.S.C. 3355] AUTHORIZATION OF APPROPRIATIONS.
For the purpose of carrying out the provisions of this part,
there are authorized to be appropriated $2,000,000 for fiscal year
1993 and such sums as may be necessary for each of the 4 succeed-
ing fiscal years.
PART G-AMERICAN INDIAN TEACHER
TRAINING
SEC. 1371. [25 U.S.C. 3371] AMERICAN INDIAN TEACHER TRAINING.
(a) INSTITUTIONAL SUPPORT.
(1) IN GENERAL.The Secretary of Education is authorized
to award grants to tribally controlled postsecondary, vocational
and technical institutions for the purposes of
(A) developing teacher training programs;
(B) building articulation agreements between such in-
stitutions and other institutions of higher education as de-
fined in section 101 of the Higher Education Act of 1965;
and
(C) basic strengthening of tribally controlled commu-
nity colleges, as defined in section 2(a)(4) of the Tribally
Controlled Community Colleges Act (P.L. 95-471, 25
U.S.C. 1801).
617
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1311
(2) USE OF GRANTS.Grants awarded under this sub-
section shall be for the purpose of providing upper division
course work, transfer programs, articulation agreements (simi-
lar to those under part D of title I of the Higher Education Act
of 1965) with other accredited institutions, telecommunications
programs or other mechanisms which directly support the
training of American Indian teachers.
(b) STUDENT SUPPORT GRANTS.
(1) IN GENERALThe Secretary of Education is authorized
to award grants to institutions that have developed teacher
training programs under subsection (a) for the purpose of pro-
viding financial and programmatic support to American Indian
students seeking to participate in such institutions' teacher
training programs.
(2) USE OF GRANTS.Institutions receiving grants under
this section shall require recipients of grants under this sub-
section to serve as teachers in an Indian community for 1 year
for each year of scholarship support received.
(3)
ELIGIBILITY.Students
eligible
to
receive
support
grants shall include those who have completed at least 30
hours of postsecondary education and who intend to pursue a
4-year degree.
(4) WORK REQUIREMENT.Students who fail to satisfy the
requirements of paragraph (2) shall be required to repay a pro
rata portion of the total amount of scholarships awarded under
this part if the student worked for less than the required time
period described in such paragraph.
(C) SCHOLARSHIPS.
(1) AUTHORITY. The Secretary of Education is authorized
to provide scholarship assistance to American Indian students
who seek to become teachers and who
(A) agree to serve as teachers in an Indian community
for 1 year for each year of scholarship support received,
and
(B) have completed at least 30 hours of postsecondary
education.
(2) WORK REQUIREMENT.Students who fail to satisfy the
requirements of paragraph (1) shall be required to repay a pro
rata portion of the total amount of scholarships awarded under
this part if the student worked for less than the required time
period described in paragraph (1)(B).
(d) DEFINITION.For purposes of this part, the term "Indian"
has the same meaning given such term in section 4(d) of the Indian
Self Determination and Education Assistance Act (P.L. 93-638, 20
U.S.C. 450b).
(e) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $5,000,000 for fiscal year 1999 and such sums
as may be necessary for each of the 4 succeeding fiscal years to
carry out this part.
PART IIINATIONAL SCIENCE FOUNDATION
National Science Foundation Act of 1950
AN ACT To promote the progress of science; to advance the national health,
prosperity, and welfare; to secure the national defense; and other purposes
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, [42 U.S.C. 1861
note] That this Act may be cited as the "National Science Founda-
tion Act of 1950."
ESTABLISHMENT OF NATIONAL SCIENCE FOUNDATION
SEC. 2. [42 U.S.C. 1861] There is hereby established in the ex-
ecutive branch of the Government an independent agency to be
known as the National Science Foundation (hereinafter referred to
as the "Foundation"). The Foundation shall consist of a National
Science Board (hereinafter referred to as the "Board") and a Direc-
tor.
FUNCTIONS OF THE FOUNDATION
SEC. 3. [42 U.S.C. 1862] (a) The Foundation is authorized and
directed
(1) to initiate and support basic scientific research and pro-
grams to strengthen scientific research potential and science
education programs at all levels in the mathematical, physical,
medical, biological, social, and other sciences, and to initiate
and support research fundamental to the engineering process
and programs to strengthen engineering research potential and
engineering education programs at all levels in the various
fields of engineering, by making contracts or other arrange-
ments (including grants, loans, and other forms of assistance)
to support such scientific, engineering, and educational activi-
ties and to appraise the impact of research upon industrial de-
velopment and upon the general welfare;
(2) to award, as provided in section 10, scholarships and
graduate fellowships for study and research in the sciences or
in. engineering;
(3) to foster the interchange of scientific and engineering
information among scientists and engineers in the United
States and foreign countries;
(4) to foster and support the development and use of com-
puter and other scientific and engineering methods and tech-
nologies, primarily for research and education in the sciences
and engineering;
(5) to evaluate the status and needs of the -various sciences
and fields -of engineering as evidenced by programs, projects,
and "studies undertaken by agencies of the Federal Govern,-
ment; by individuals,
_.-and by public and private research
619
62
Sec. 3
NATIONAL SCIENCE FOUNDATION
620
groups, employing by grant or contract such consulting services
as it may deem necessary for the purpose of such evaluations;
and to take into consideration the results of such evaluations
in correlating the research and educational programs under-
taken or supported by the Foundation with programs, projects,
and studies undertaken by agencies of the Federal Govern-
ment, by individuals, and by public and private research
groups;
(6) to provide a central clearinghouse for the collection, in-
terpretation, and analysis of data on scientific and engineering
and to provide a source of information for policy formulation by
other agencies of the Federal Government; and
(7) to initiate and maintain a program for the determina-
tion of the total amount of money for scientific and engineering
research, including money allocated for the construction of the
facilities wherein such research is conducted, received by each
educational institution and appropriate nonprofit organization
in the United States, by grant, contract, or other arrangement
from agencies of the Federal Government, and to report annu-
ally thereon to the President and the Congress.
(b) The foundation is authorized to initiate and support specific
scientific and engineering activities in connection with matters re-
lating to international cooperation, national security, and the ef-
fects of scientific and engineering applications upon society by mak-
ing contracts or other arrangements (including grants, loans, and
other forms of assistance) for the conduct of such activities. When
initiated or supported pursuant to requests made by any other Fed-
eral department or agency, including the Office of Technology As-
sessment, such activities shall be financed whenever feasible from
funds transferred to the Foundation by the requesting official as
provided in section 14(f), and any such activities shall be unclassi-
fied and shall be identified by the Foundation as being undertaken
at the request of the appropriate official.
(c) In addition to the authority contained in subsections (a) and
(b), the Foundation is authorized to initiate and support scientific
and engineering research, including applied research, at academic
and other nonprofit institutions. When so directed by the Presi-
dent, the Foundation is further authorized to support, through
other appropriate organizations, applied scientific research and en-
gineering research relevant to national problems involving the pub-
lic interest. In exercising the authority contained in this sub-
section, the Foundation may employ by grant or contract such con-
sulting services as it deems necessary, and shall coordinate and
correlate its activities with respect to any such problem with other
agencies of the Federal Government undertaking similar programs
in that field.
(d) The Board and the Director shall recommend and encour-
age the pursuit of national policies for the promotion of research
and education in science and engineering.
(e) In exercising the authority and discharging the functions
referred to in the foregoing subsections, it shall be an objective of
the Foundation to strengthen research and education in the
sciences and engineering, including independent research by indi-
621
NATIONAL SCIENCE FOUNDATION
Sec. 4
viduals, throughout the United States, and to avoid undue con-
centration of such research and education.
(0 The Foundation shall render an annual report to the Presi-
dent for submission on or before the 15th day of April of each year
to the Congress, summarizing the activities of the Foundation and
making such recommendations as it may deem appropriate. Such
report shall include information as to the acquisition and disposi-
tion by the Foundation of any patents and patent rights.
(g) In carrying out subsection (a)(4), the Foundation is author-.
ized to foster and support access by the research and education
communities to computer networks which may be used substan-
tially for purposes in addition to research and education in the
sciences and engineering, if the additional uses will tend to in-
crease the overall capabilities of the networks to support such re-
search and education activities.
NATIONAL SCIENCE BOARD
SEC. 4. [42 U.S.C. 1863] (a) The Board shall consist of twenty-
four members to be appointed by the President, by and with the
advice and consent of the Senate, and of the Director ex officio. In
making nominations under this section, the President shall give
due regard to equitable representation of scientists who are women
or who represent minority groups. In addition to any powers and
functions otherwise granted to it by this Act, the Board shall estab-
lish the policies of the Foundation.
(b) The Board shall have an Executive Committee as provided
in section 7, and may delegate to it or to the Director or both such
of the powers and functions granted to the Board by this Act as it
deems appropriate.
(c) The persons nominated for appointment as members of the
Board (1) shall be eminent in the fields of the basic, medical, or so-
cial sciences, engineering, agriculture, education, research manage-
ment or public affairs; (2) shall be selected solely on the basis of
established records of distinguished service and (3) shall be so se-
lected as to provide representation of the views of scientific and en-
gineering leaders in all areas of the Nation. In making nominations
under this section, the President shall give due regard to equitable
representation of scientists and engineering who are women or who
represent minority groups. The President is requested, in the mak-
ing of nominations of persons for appointment as members, to give
due consideration to any recommendations for nomination which
may be submitted to him by the National Academy of Sciences, the
National Academy of Engineering, the National Association of
State Universities and Land Grant Colleges, the Association of
American Universities, the Association of American Colleges, the
Association of State Colleges and Universities, or by other sci-
entific, engineering, or educational organizations.
(d) The term of office of each member of the Board shall be six
years; except that any member appointed to fill a vacancy occurring
prior to the .expiration of the term for which his predecessor was
appointed shall be appointed for the remainder of such term. Any
person, other than the Director, who has been a member of the
Board for twelve consecutive years shall thereafter be ineligible for
Sec. 4
NATIONAL SCIENCE FOUNDATION
622
appointment during the two-year period following the expiration of
such twelfth year.
(e) The Board shall meet annually on the third Monday in May
unless, prior to May 10 in any year, the Chairman has set the an-
nual meeting for a day in May other than the third. Monday and
at such other times as the Chairman may determine, but he shall
also call a meeting whenever one-third of the members so request
in writing. A majority of the members of the Board shall constitute
a quorum. Each member shall be given notice, not less than fifteen
days prior to any meeting, of the call of such meeting.
(f) The election of the Chairman and Vice Chairman of the
Board shall take place at each annual meeting occurring in an
even-numbered year. The Vice Chairman shall perform the duties
of the Chairman in his absence. In case a vacancy occurs in the
chairmanship or vice chairmanship, the Board shall elect a mem-
ber to fill such vacancy.
(g) The Board may, with the concurrence of a majority of its
members, permit the appointment of a staff consisting of not more
than five professional staff members and such clerical staff mem-
bers as may be necessary. Such staff shall be appointed by the Di-
rector and assigned at the direction of the Board. The professional
members of such staff may be appointed without regard to the pro-
visions of title 5, United States Code, governing appointments in
the competitive service, and the provisions of chapter 51 of such
title relating to classification, and compensated at a rate not ex-
ceeding the maximum rate payable under section 5376 of such title,
as may be necessary to provide for the performance of such duties
as may be prescribed by the Board in connection with the exercise
of its powers and functions under this Act. Each appointment
under this subsection shall be subject to the same security require-
ments as those required for personnel of the Foundation appointed
under section 14(a).
(h) The Board is authorized to establish such special commis-
sions as it may from time to time deem necessary for the purposes
of this Act.
(i) The Board is also authorized to appoint from among its
members such committees as it deems necessary, and to assign to
committees so appointed such survey and advisory functions as the
Board deems appropriate to assist it in exercising its powers and
functions under this Act.
(j)(1) The Board shall render to the President, for submission
to the Congress no later than January 15 of each even numbered
year, a report on indicators of the state of science and engineering
in the United States.
(2) The Board shall render to the President for submission to
the Congress reports on specific, individual policy matters related
to science and engineering and education in science and engineer-
ing, as the Board, the President, or the Congress determines the
need for such reports.
(k) Portions of Board meetings in which the Board considers
proposed Foundation budgets for a particular fiscal year may be
closed to the public until the President's budget for that fiscal year
has been submitted to the Congress.
623
NATIONAL SCIENCE FOUNDATION
Sec. 6
(1) Members of the Board shall be required to file a financial
disclosure report under title II of the Ethics in Government Act of
1978 (5 U.S.C. App. 92 Stat. 1836), except that such reports shall
be held confidential and exempt from any law otherwise requiring
their public disclosure.
DIRECTOR OF THE FOUNDATION
SEC. 5. [42 U.S.C. 1864] (a) The Director of the Foundation
(referred to in this Act as the "Director") shall be appointed by the
President by and with the advice and consent of the Senate. Before
any person is appointed as Director, the President shall afford the
Board an opportunity to make recommendations to him with re-
spect to such appointment. The Director shall receive basic pay at
the rate provided for level II of the Executive Schedule under sec-
tion 5313 of title 5, United States Code, and shall serve for a term
of six years unless sooner removed by the President.
(b) Except as otherwise specifically provided in this Act (1) the
Director shall exercise all of the authority granted to the Founda-
tion by this Act (including any powers and functions which may be
delegated to him by the Board), and (2) all actions taken by the Di-
rector pursuant to the provisions of this Act (or pursuant to the
terms of a delegation from the Board) shall be final and binding
upon the Foundation.
(c) The Director may from time to time make such provisions
as he deems appropriate authorizing the performance by any other
officer, agency, or employee of the Foundation of any of his func-
tions under this Act, including functions delegated to him by the
Board; except that the Director may not redelegate policy-making
functions delegated to him by the Board.
(d) The formulation of programs in conformance with the poli-
cies of the Foundation shall be carried out by the Director in con-
sultation with the Board.
(e)(1) The Director may make grants, contracts, and other ar-
rangements pursuant to section 11(c) only with the prior approval
of the Board, or under authority delegated by the Board, and sub-
ject to such conditions as the Board may specify.
(2) Any delegation of authority or imposition of conditions
under paragraph (1) shall be promptly published in the Federal
Register and reported to the Committee on Labor and Human Re-
sources, and the Committee on Commerce, Science, and Transpor-
tation, of the Senate and the Committee on Science of the House
of Representatives.
(f) The Director, in his capacity as ex officio member of the
Board, shall, except with respect to compensation and tenure, be
coordinate with the other members of the Board. He shall be a vot-
ing member of the Board and shall be eligible for election by the
Board as Chairman or Vice Chairman of the Board.
DEPUTY DIRECTOR AND ASSISTANT DIRECTORS
SEC. 6. [42 U.S.C. 1864a] There shall be a Deputy Director of
the Foundation (referred to in this Act as the "Deputy Director")
who shall be appointed by the President, by and with the advice
and consent of the Senate. Before any person is appointed as Dep-
Sec. 1
NATIONAL SCIENCE FOUNDATION
624
uty Director, the President shall afford the Board and the Director
an opportunity to make recommendations to him with respect to
such appointment. The Deputy Director shall receive basic pay at
the rate provided for level III of the Executive Schedule under sec-
tion 5314 of title 5, United States Code, and shall perform such du-
ties and exercise such powers as the Director may prescribe. The
Deputy Director shall act for, and exercise the powers of, the Direc-
tor during the absence or disability of the Director or in the event
of a vacancy in the office of Director.
EXECUTIVE COMMITTEE
SEC. 7. [42 U.S.C. 1865] (a) There shall be an Executive Com-
mittee of the Board (referred to in this Act as the "Executive Com-
mittee"), which shall be composed of five members and shall exer-
cise such powers and functions as may be delegated to it by the
Board. Four of the members shall be elected as provided in sub-
section (b), and the Director ex officio shall be the fifth member
and the chairman of the Executive Committee.
(b) At each of its annual meetings the Board shall elect two of
its members as members of the Executive Committee, and the Ex-
ecutive Committee members so elected shall hold office for two
years from the date of their election. Any person, other than the
Director, who has been a member of the Executive Committee for
six consecutive years shall thereafter be ineligible for service as a
member thereof during the two-year period following the expiration
of such sixth year. For the purposes of this subsection, the period
between any two consecutive annual meetings of the Board shall
be deemed to be one year.
(c) Any person elected as a member of the Executive Commit-
tee to fill a vacancy occurring prior to the expiration of the term
for which his predecessor was elected shall be elected for the re-
mainder of such term.
(d) The Executive Committee shall render an annual report to
the Board, and such other reports as it may deem necessary, sum-
marizing its activities and making such recommendations as it may
deem appropriate. Minority views and recommendations, if any, of
members of the Executive Committee shall be included in such re-
ports.
DIVISIONS WITHIN THE FOUNDATION
SEC. 8. [42 U.S.C. 1866] There shall be within the Foundation
such Divisions as the Director, in consultation with the Board, may
from time to time determine.
SPECIAL COMMISSIONS
SEC. 9. [42 U.S.C. 1868] (a) Each special commission estab-
lished under section 4(h) shall be appointed by the Board and shall
consist of such members as the Board considers appropriate.
(b) Special commissions may be established to study and make
recommendations to the Foundation on issues relating to research
and education in science and engineering.
625
NATIONAL SCIENCE FOUNDATION
Sec. 11
SCHOLARSHIPS AND GRADUATE FELLOWSHIPS
SEC. 10. [42 U.S.C. 1869] The Foundation is authorized to
award scholarships and graduate fellowships for study and re-
search in the sciences or in engineering at appropriate nonprofit
American or nonprofit foreign institutions selected by the recipient
of such aid, for stated periods of time. Persons shall be selected for
such scholarships and fellowships from among citizens, nationals or
lawfully admitted permanent resident aliens of the United States,
and such selections shall be made solely on the basis of ability; but
in any case in which two or more applicants for scholarships or fel-
lowships, as the case may be, are deemed by the Foundation to be
possessed of substantially equal ability, and there are not sufficient
scholarships or fellowships, as the case may be, available to grant
one to each of such applicants, the available scholarship or scholar-
ships, fellowship or fellowships shall be awarded to the applicants
in such manner as will tend to 'result in a wide distribution of
scholarships and fellowships throughout the United States. Noth-
ing contained in this Act shall prohibit the Foundation from refus-
ing or revoking a scholarship or fellowship award, in whole or in
part, in the case of any applicant or recipient, if the Board is of the
opinion that such award is not in the best interests of the United
States.
GENERAL AUTHORITY OF FOUNDATION
SEC. 11. [42 U.S.C. 1870] The Foundation shall have the au-
thority, within the limits of available appropriations, to do all
things necessary to carry out the provisions of this Act, including,
but without being limited thereto, the authority
(a) to prescribe such rules and regulations as it deems nec-
essary governing the manner of its operations and its organiza-
tion and personnel;
(b) to make such expenditures as may be necessary for ad-
ministering the provisions of this Act;
(c) to enter into contracts or other arrangements, or modi-
fications thereof, for the carrying on, by organizations or indi-
viduals in the United States and foreign countries, including
other government agencies of the United States and of foreign
countries, of such scientific or engineering activities as the
Foundation deems necessary to carry out the purposes of this
Act, and, at the request of the Secretary of State or Secretary
of Defense, specific scientific or engineering activities in con-
nection with matters relating to international cooperation or
national security, and, when deemed appropriate by the Foun-
dation, such contracts or other arrangements or modifications
thereof, may be entered into without legal consideration with-
out performance or other bonds and without regard to section
3709 of the Revised Statutes (41 U.S.C. § 5);
(d) to make advance, progress, and other payments which
relate to scientific or engineering activities without regard to
the provisions of section 3648 of the Revised Statutes (31
U.S.C. 529);
(e) to acquire by purchase, lease, loan, gift, or condemna-
tion, and to hold and dispose of by grant, sale, lease, or loan,
628
Sec. 12
NATIONAL SCIENCE FOUNDATION
626
real and personal property of all kinds necessary for, or result-
ing from, the exercise of authority granted by this Act;
(f) to receive and use funds donated by others, if such
funds are donated without restriction other than that they be
used in furtherance of one or more of the general purposes of
the Foundation;
(g) to publish or arrange for the publication of scientific
and engineering information so as to further the full dissemi-
nation of information of scientific or engineering value consist-
ent with the national interest, without regard to the provisions
of section 87 by the Act of January 12, 1895 (28 Stat. 622), and
section 11 of the Act of March 1, 1919 (40 Stat. 1270; 44 U.S.C.
§ 501);
(h) to accept and utilize the services of voluntary and un-
compensated personnel and to provide transportation and sub-
sistence as authorized by section 5703 of title 5, United States
Code, for persons serving without compensation;
(i) to prescribe, with the approval of the Comptroller-Gen-
eral of the United States, the extent to which vouchers for
funds expended under contracts for scientific or engineering re-
search shall be subject to itemization or substantiation prior to
payment, without regard to the limitations of other laws relat-
ing to the expenditure of public funds and accounting therefor;
(j) to arrange with and reimburse the heads of other Fed-
eral agencies for the performance of any activity which the
Foundation is authorized to conduct; and
(k) during the 5-year period beginning on the date of the
enactment of the National Science Foundation Authorization
Act for Fiscal Year 1987, to indemnify grantees, contractors,
and subcontractors associated with the Ocean Drilling Program
under the provisions of section 2354 of title 10, United States
Code, with all approvals and certifications required by such in-
demnification made by the Director.
PATENT RIGHTS
SEC. 12. [42 U.S.C. 1871] Each contract or other arrangement
executed pursuant to this Act which relates to scientific or engi-
neering research shall contain provisions governing the disposition
of inventions produced thereunder in a manner calculated to pro-
tect the public interest and the equities of the individual or organi-
zation with which the contract or other arrangement is executed:
Provided, however, That nothing in this Act shall be construed to
authorize the Foundation to enter into any contractual or other ar-
rangement inconsistent with any provision of law affecting the
issuance or use of patents.
INTERNATIONAL COOPERATION AND COORDINATION WITH FOREIGN
POLICY
SEC. 13. [42 U.S.C. 1872] (a) The Foundation is hereby au-
thorized to cooperate in any international scientific or engineering
activities consistent with the purposes of this Act and to expend for
such international scientific or engineering activities such sums
within the limit of appropriated funds as the Foundation may deem
0
4. 0
627
NATIONAL SCIENCE FOUNDATION
Sec. 14
desirable. The Director may defray the expenses of representatives
of Government agencies and other organizations and of individual
scientists or engineers to accredited international scientific or engi-
neering congresses and meetings whenever he deems it necessary
in the promotion of the objectives of this Act. In this connection,
with the approval of the Secretary of State, the Foundation may
undertake programs, granting fellowships to, or making other simi-
lar arrangements with, foreign nationals for study and research in
the sciences or in engineering in the United States without regard
to section 10 or the affidavit of allegiance to the United States re-
quired by section 15(d)(2) of this Act.
(b)(1) The authority to enter into contracts or other arrange-
ments with organizations or individuals in foreign countries and
with agencies of foreign countries, as provided in section 11(c), and
the authority to cooperate in international scientific or engineering
activities as provided in subsection (a) of this section, shall be exer-
cised only with the approval of the Secretary of State, to the end
that such authority shall be exercised in such manner as is consist-
ent with the foreign policy objectives of the United States.
(2) If, in the exercise of the authority referred to in paragraph
(1) of this subsection, negotiation with foreign countries or agencies
thereof becomes necessary, such negotiation shall be carried on by
the Secretary of State in consultation with the Director.
MISCELLANEOUS PROVISIONS
SEC. 14. [42 U.S.C. 1873] (a)(1) The Director shall, in accord-
ance with such policies as the Board shall from time to time pre-
scribe, appoint and fix the compensation of such personnel as may
be necessary to carry out the provisions of this Act. Except as pro-
vided in section 4(h), such appointments shall be made and such
compensation shall be fixed in accordance with the provisions of
title 5, United States Code, governing appointments in the competi-
tive service, and the provisionaof chapter 51 and subchapter III of
chapter 53 of such title relating to classification and General
Schedule pay rates: Provided, That the Director may, in accordance
with such policies as the Board shall from time to time prescribe,
employ such technical and professional personnel and fix their com-
pensation, without regard to such provisions, as he may deem nec-
essary for the discharge of the responsibilities of the Foundation
under this Act. The members of the special commissions shall be
appointed without regard to the provisions of title 5, United States
Code, governing appointments in the competitive service..
(2) The Director may, under the authority provided by para-
graph (1)-of this subSection and in accordance with such policies as
the Board chooses to prescribe, appoint for a limited term, or on
a temporary basis, scientists, engineers, and other technical and
professional personnel on- leave of absence from academic, indus-
trial, or research institutions to work- for the Foundation.
(3) The Foundation may pay, to the extent authorized for cer-
tain other Federal employees by section 5723 of title 5, United
States Code, travel expenses for any individual appointed for a lim-
ited term or on a. temporary basis and transportation expenses of
his or her immediate family and- his or her. household goods and
personal effects from that individual's residence at the time: of
630
Sec. 14
NATIONAL SCIENCE FOUNDATION
628
selection or assignment to his or her duty station. The Foundation
may pay such travel expenses and transportation expenses to the
same extent for such an individual's return to the former place of
residence from his or her duty station, upon separation from the
Federal service following an agreed period of service. The Founda-
tion may also pay a per diem allowance at a rate not to exceed the
daily amounts prescribed under section 5702 of titl
5, United
States Code, to such an individual, in lieu of transportation ex-
penses of the immediate family and household goods and personal
effects, for the period of his or her employment with the Founda-
tion. Notwithstanding any other provison of law, the employer's
contribution to any retirement, life insurance, or health benefit
plan for an individual appointed for a term of one year or less,
which could be extended for no more than one additional year, may
be made or reimbursed from appropriations available to the Foun-
dation.
(b) The Foundation shall not, itself, operate any laboratories or
pilot plants.
(c) The members of the Board and the members of each special
commission shall be entitled to receive compensation for each day
engaged in the business of the Foundation at a rate fixed by the
Chairman but not exceeding the maximum rate payable under sec-
tion 5376 of title 5, United States Code, and shall be allowed travel
expenses as authorized by section 5703 of title 5, United States
Code. For the purposes of determining the payment of compensa-
tion under this subsection, the time spent in travel by any member
of the Board or any member of a special commission shall be
deemed as time engaged in the business of the Foundation. Mem-
bers of the Board and members of special commissions may waive
compensation and reimbursement for traveling expenses.
(d) Persons holding other offices in the executive branch of the
Federal Government may serve as members of the special commis-
sions, but they shall not receive remuneration for their services as
such members during any period for which they receive compensa-
tion for their services in such other offices.
(e) In making contracts or other arrangements for scientific or
engineering research, the Foundation shall utilize appropriations
available therefor in such manner as will in its discretion best real-
ize the objectives of (1) having the work performed by organiza-
tions, agencies, and institutions, or individuals in the United
States or foreign countries, including Government agencies of the
United States and of foreign countries, qualified by training and
experience to achieve the results desired, (2) strengthening the re-
search staff of organizations, particularly nonprofit organizations,
in the United States, (3) aiding institutions, agencies or organiza-
tions which, if aided, will advance scientific or engineering re-
search, and (4) encouraging independent scientific research by indi-
viduals.
(f) Funds available to any department or agency of the Govern-
ment for scientific or engineering research or education, or the pro-
vision of facilities therefor, shall be available for transfer, with the
approval of the head of the department or agency involved, in
whole or in part, to the Foundation for such use as is consistent
with the purposes for which such funds were provided, and funds
629
NATIONAL SCIENCE FOUNDATION
Sec. 15
so transferred shall be expendable by the Foundation for the pur-
poses for which the transfer was made.
(g) For purposes of this Act, the term "United States" when
used in a geographical sense means the States, the District of Co-
lumbia, the Commonwealth of Puerto Rico, and all territories and
possessions of the United States.
(h) Notwithstanding any other provision of law, the authoriza-
tion of any appropriation to the Foundation shall expire (unless an
earlier expiration is specifically provided) at the close of the second
fiscal year following the fiscal year for which the authorizaton was
enacted, to the extent that such appropriation has not theretofore
actually been made.
(i) Information supplied to the Foundation or a contractor of
the Foundation by an industrial or commercial organization in sur-
vey forms, questionnaires, or similar instruments for the purposes
of subsection (a)(5) or (a)(6) of section 3 may not be disclosed to the
public unless such information has been transformed into statis-
tical or aggregate formats that do not allow the identification of the
supplier. The names of organizations supplying such information
may not be disclosed to the public.
SECURITY PROVISIONS
SEC. 15. [42 U.S.C. 1874] (a) The Foundation shall not sup-
port any research or development activity in the field of nuclear en-
ergy, nor shall it exercise any authoriity pursuant to section 11(e)
in respect to that field, without first having obtained the concur-
rence of the Secretary of Energy that such activity will not ad-
versely affect the common defense and security. To the extent that
such activity involves restricted data as defined in the Atomic En-
ergy Act of 1954 the provisions of that Act regarding the control
of the dissemination of restricted data and the security clearance
of those individuals to be given access to restricted data shall be
applicable. Nothing in this Act shall supersede or modify any provi-
sion of the Atomic Energy Act of 1954.
(b)(1) In the case of scientific or engineering research activities
under this Act in connection with matters relating to the national
defense, with respect to which funds have been transferred to the
Foundation from the Department of Defense in accordance with the
provisions of section 14(1) of this Act, the Secretary of Defense shall
establish such security requirements and safeguards, including re-
strictions with respect to access to information and property, as he
deems necessary.
(2) In the case of scientific or engineering research activities
under this Act in connection with matters relating to the national
defense other than research activities referred to in paragraph (1)
of this subsection, the Foundation shall establish such security re-
quirements and safeguards, including restrictions with respect to
access to information and property as it deems necessary.
(3) Any agency of the Government exercising investigatory
functions is hereby authorized to make such investigations and re-
ports as may be requested by the Foundation in connection with
the enforcement of security requirements and safeguards, including
restrictions with respect to access to information and property,
established under paragraph (1) or (2) of this subsection.
Sec. 16
NATIONAL SCIENCE FOUNDATION
630
APPROPRIATIONS
SEC. 16. [42 U.S.C. 1875] To enable the Foundation to carry
out its powers and duties, only such sums may be appropriated as
the Congress may authorize by law.
PART IVASSISTANCE TO SPECIFIED INSTITUTIONS
Act of March 2, 1867
AN ACT To incorporate the Howard University in the District of Columbia
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That there be es-
tablished, and is hereby established, in the District of Columbia, a
university for the education of youth in the liberal arts and
sciences, under the name, style, and title of "The Howard Univer-
sity."
SEC. 2. And be it further enacted, That Samuel C. Pomeroy,
Charles B. Boynton, Oliver 0. Howard, Burton C. Cook, Charles H.
Howard, James B. Hutchinson, Henry A. Brewster, Benjamin F.
Morris, Danforth B. Nichols, William G. Finney, Roswell H. Ste-
vens, E. M. Cushman, Hiram Barber, E. W. Robinson, W. F.
Bascom, J. B. Johnson, and Silas L. Loomis, be, and they are here-
by, declared to be a body politic and corporate, with perpetual suc-
cession in deed or in law to all intents and purposes whatsoever,
by the name, style, and title of "The Howard University," by which
name and title they and their successors shall be competent, at law
and in equity, to take to themselves and their successors, for the
use of said university, any estate whatsoever in any messuage,
lands, tenements, hereditaments, goods, chattels, moneys, and
other effects, by gift, devise, grant, donation, bargain, sale, convey-
ance, assurance, or will; and the same to grant, bargain, sell, trans-
fer, assign, convey, assure, devise, declare, to use and farm let, and
to place out on interest, for the use of said university, in such man-
ner as to them, or a majority of them, shall be deemed most bene-
ficial to said institution; and to receive the same, their rents,
issues, and profits, income and interest, and to apply the same for
the proper use and benefit of said university; and by the same
name to sue and be sued, to implead and be imple[a]ded, in any
courts of law and equity, in all manner of suits, actions, and pro-
ceedings whatsoever, and generally by and in the same name to do
and transact all and every the business touching or concerning the
premises: Provided, That the same do not exceed the value of fifty
thousand dollars net annual income, over and above and exclusive
of the receipts for the education and support of the students of said
university.
SEC. 3. And be it further enacted, That the first meeting of said
corporators shall be holden at the time and place at which a major-
ity of the persons herein above named shall assemble for that pur-
pose; and six days' notice shall be given each of said corporators,
at which meeting said corporators may enact by-laws not inconsist-
ent with the laws of the United States regulating the government
of the corporation.
631
63.4
Sec. 4
ACT OF MARCH 2, 1861
632
SEC. 4. And be it further enacted, That the government of the
university shall be vested in a board of trustees, of not less than
thirteen members, who shall be elected by the corporators at their
first meeting. Said board of trustees shall have perpetual succes-
sion in deed or in law, and in them shall be vested the power here-
inbefore granted to the corporation. They shall adopt a common
seal, which they may alter at pleasure, under and by which all
deeds, diplomas, and acts of the university shall pass and be au-
thenticated. They shall elect a president, a secretary, and a treas-
urer. The treasurer shall give such bonds as the board of trustees
may direct. The said board shall also appoint the professors and tu-
tors, prescribing the number, and determining the amount of their
respective salaries. They shall also appoint such other officers,
agents, or employees, as the wants of the university may from time
to time demand, in all cases fixing their compensation. All meet-
ings of said board may be called in such manner as the trustees
shall prescribe, and nine of them so assembled shall constitute a
quorum to do business, and a less number may adjourn from time
to time.
SEC. 5. And be it further enacted, That the university shall con-
sist of the following departments, and such others as the board of
trustees may establish: First, normal; second, collegiate; third,
theological; fourth, law; fifth, medicine; sixth, agriculture.
SEC. 6. And be it further enacted, That the immediate govern-
ment of the several departments, subject to the control of the trust-
ees, shall be entrusted to their respective faculties, but the trustees
shall regulate the course of instruction, prescribe, with the advice
of the professors, the necessary text-books, confer such degrees,
and grant such diplomas as are usually conferred and granted in
other universities.
SEC. 7. And be it further enacted, That the board of trustees
shall have power to remove any professor or tutor or other officers
connected with the institution, when, in their judgment, the inter-
est of the university shall require it.
SEC. 8. Annual appropriations are hereby authorized to aid in
the construction,
development, improvement, endowment, and
maintenance of the university, no part of which shall be used for
religious instruction. The university shall at all times be open to
inspection by the Bureau of Education and shall be inspected by
the said bureau at least once each year. An annual report making
a full exhibit of the affairs of the university shall be presented to
Congress each year in the report of the Bureau of Education. (20
U.S.C. 123)
SEC. 9. And be it further enacted, That no misnomer of the said
corporation shall defeat or annul any donation, gift, grant, devise,
or bequest to or from the said corporation.
SEC. 10. And be it further enacted, That the said corporation
shall not employ its funds or income, or any part thereof in bank-
ing operations or for any purpose or object other than those ex-
pressed in the first section of this act; and that nothing in this act
contained shall be so construed as to prevent Congress from alter-
ing, amending, or repealing the same.
Howard University Endowment Act
TITLE IIHOWARD UNIVERSITY ENDOWMENT
SHORT TITLE
SEC. 201. [20 U.S.C. 130aa note] This title may be cited as the
"Howard University Endowment Act".
DEFINITIONS
SEC. 202. [20 U.S.C. 130aa] For purposes of this title
(1) the term "endowment fund" means a fund, or a tax ex-
empt foundation, established and maintained by Howard Uni-
versity for the purpose of generating income for its support,
but which shall not include real estate;
(2) the term "endowment fund corpus" means an amount
equal to the grants awarded under this title plus an amount
equal to such grants provided by Howard University;
(3) the term "endowment fund income" means an amount
equal to the total value of the endowment fund established
under this title minus the endowment fund corpus;
(4) the term "Secretary" means the Secretary of Education;
and
(5) the term "University" means the Howard University es-
tablished by the Act of March 2, 1867.
PROGRAM AUTHORIZED
SEC. 203. [20 U.S.C. 130aa-1] (a) The Secretary is authorized
to establish an endowment program, in accordance with the provi-
sions of this title, for the purpose of establishing or increasing en-
dowment funds, providing additional incentives to promote fund-
raising activities, and encouraging independence and self-suffi-
ciency at the University.
(b)(1) From the funds appropriated pursuant to this title for
endowments in any fiscal year for the University, the Secretary is
authorized to make grants to Howard University. The Secretary
may enter into agreements with the University and include in any
agreement made pursuant to this title such provisions deemed nec-
essary by the Secretary to assure that the purposes of this title will
be achieved.
(2) The University may receive a grant under this section only
if it has deposited in the endowment fund established under this
title an amount equal to such grant and has adequately assured
the Secretary that it will administer the endowment fund in ac-
cordance with the requirements of this title. The source of funds for
this institutional match shall not include Federal funds or funds
derived from an existing endowment fund.
633
636
Sec. 204
HOWARD UNIVERSITY ENDOWMENT
634
(3) The period of any grant under this section shall not exceed
twenty years, and during such period the University shall not with-
draw or expend any of its endowment fund corpus. Upon the expi-
ration of any grant period, the University may use the endowment
fund corpus plus any endowment fund income for any educational
purpose.
INVESTMENTS
SEC. 204. [20 U.S.C. 130aa-2] (a) The University shall invest
its endowment fund corpus and endowment fund income in those
low-risk instruments and securities in which a regulated insurance
company may invest under the law of the District of Columbia,
such as federally insured bank savings account or comparable in-
terest bearing account, certificate of deposit, money market fund,
mutual fund, or obligations of the United States.
(b) The University, in investing its endowment fund corpus and
income, shall exercise the judgment and care, under circumstances
then prevailing, which a person of prudence, discretion, and intel-
ligence would exercise in the management of his own business af-
fairs.
WITHDRAWALS AND EXPENDITURES
SEC. 205. [20 U.S.C. 130aa-3] (a) The University may with-
draw and expend its endowment fund income to defray any ex-
penses necessary to its operation, including expenses of operations
and maintenance, administration, academic and support personnel,
construction and renovation, community and student services pro-
grams, technical assistance, and research. No endowment fund in-
come or corpus may be used for any type of support of the execu-
tive officers of the University or for any commercial enterprise or
endeavor entered into after January 1, 1981. Except as provided in
subsection (b), the University shall not, in the aggregate, withdraw
or expend more than 50 per centum of the total aggregate endow-
ment fund income earned prior to the time of withdrawal or ex-
penditure.
(b) The Secretary is authorized to permit the University to
withdraw or expend more than 50 per centum of its total aggregate
endowment income whenever the University demonstrates such
withdrawal or expenditure is necessary because of
(A) a financial emergency, such as a pending insolvency or
temporary liquidity problem;
(B) a life-threatening situation occasioned by a natural dis-
aster or arson; or
(C) another unusual occurrence or exigent circumstance.
(c)(1) If the University withdraws or expends more than the
endowment fund income authorized by this section, the University
shall repay the Secretary an amount equal to 50 per centum of the
amount improperly expended (representing the Federal share
thereof).
(2) The University shall not withdraw or expend any endow-
ment fund corpus. If the University withdraws or expends any en-
dowment fund corpus, the University shall repay the Secretary an
amount equal to 50 per centum of the amount withdrawn or ex-
635
HOWARD UNIVERSITY ENDOWMENT
Sec. 209
pended (representing the Federal share thereof) plus any income
earned thereon.
ENFORCEMENT
SEC. 206. [20 U.S.C. 130aa-4] (a) After notice and an oppor-
tunity for a hearing, the Secretary is authorized to terminate and
recover any grant awarded under this title if the University
(1) withdraws or expends any endowment fund corpus, or
any endowment fund income in excess of the amount author-
ized by section 205;
(2) fails to invest its endowment fund corpus or income in
accordance with the investment standards set forth in section
204; or
(3) fails to account properly to the Secretary concerning in-
vestments and expenditures of its endowment fund corpus or
income.
(b) If the Secretary terminates a grant under subsection (a),
the University shall return to the Treasury of the United States an
amount equal to the sum of the original grant or grants under this
Act plus any income earned thereon. The Secretary may direct the
University to take such other appropriate measures to remedy any
violation of this title and to protect the financial interest of the
United States.
AUTHORIZATION OF APPROPRIATIONS
SEC. 207. [20 U.S.C. 130aa-5] There is authorized to be ap-
propriated $2,000,000 for the purposes authorized under section
203. Funds appropriated under this section shall remain available
until expended.
CONFORMING AMENDMENTS
SEC. 208. [Conforming amendments to the Act of March 2,
1867, incorporated in text shown on pages 679 -680].
EFFECTIVE DATE
SEC. 209. [20 U.S.C. 130aa note] This title shall take effect on
October 1, 1984.
Herbert Hoover Memorial
AN ACT To recognize the fifty years of extraordinary and selfless public service of
Herbert Hoover, including his many great humanitarian endeavors, his chairman-
ship of two Commissions of the Organization of the Executive Branch, and his
service as thirty-first President of the United States, and in commemoration of
the one hundredth anniversary of his birth on August 10, 1974, by providing
grants to the Hoover Institution on War, Revolution, and Peace
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That (a) in order
to establish an appropriate memorial to the late President Herbert
Hoover, the Secretary of the Treasury (hereinafter referred to as
the "Secretary") is authorized to make grants, in accordance with
the provisions of this Act, to the Hoover Institution on War, Revo-
lution, and Peace, Stanford University, Stanford, California.
(b) No grant may be made under this Act for any fiscal year
unless(1) the Secretary determines that the total of such grants
for that year will not exceed the total amount of gifts, be-
quests, and devises of money, securities, and other property,
made after the date of enactment of this Act, for that year for
the benefit of the Hoover Institution on War, Revolution, and
Peace; and
(2) the Hoover Institution on War, Revolution, and Peace
furnishes to the Secretary such information at such times and
in such manner as he may require.
(c) Grants made under this Act may be used for the constric-
tion of a new educational building to be used by the Hoover Institu-
tion on War, Revolution, and Peace, and for the equipment-of such
building.
SEC. 2. (a) The Congress finds that, if a facility constructed
with the aid of any grant under this Act is used as an educational
facility for twenty years following completion of such construction,
the public benefit accruing to the United States from such use will
equal in value the amount of such grant or grants. The period of
twenty years after completion of such construction shall, therefore,
be deemed to be the period of Federal interest in such facility for
the purposes of this Act.
(b) If, within twenty years after completion of construction of
an educational facility which has been constructed in part with a
grant or grants under this Act
(1) the Hoover Institution on War, Revolution, and Peace
(or its successor in title or possession) ceases or fails to be a
nonprofit institution, or
(2) the facility ceases to be used as an educational facility,
unless the Secretary determines that there is good cause for re-
leasing the institution from its obligation,
the United States shall be entitled to recover from such Institution
(or successor) an amount which bears to the then value of the facil-
636
639
637
HERBERT HOOVER MEMORIAL
Sec. 6
ity the same ratio as the amount of such Federal grant or grants
bore to the development cost of the facility (as determined by the
Secretary) financed with the aid of such grant or grants. Such
value shall be determined by agreement of the parties or by action
brought in the United States district court for the district in which
such facility is situated.
(c) Notwithstanding the provisions of subsections (a) and (b),
no facility constructed with assistance under this Act shall ever be
used for religious worship or a sectarian activity or for a school or
department of divinity.
SEC. 3. The Comptroller General of the United States, or any
of his duly authorized representatives, shall have access for the
purpose of audit and examination to any books, documents, papers,
and records of the Hoover Institution on War, Revolution, and
Peace that are pertinent to the grant received.
SEC. 4. The Hoover Institution on War, Revolution, and Peace
shall, annually, prepare and furnish to the President and the Con-
gress a report on the expenditure of funds received by the Institu-
tion in the previous fiscal year during the period for which grants
are made under this Act.
SEC. 5. There are authorized to be appropriated to the Sec-
retary for making grants in accordance with this Act amounts not
to exceed $7,000,000. Funds appropriated pursuant to this Act
shall be available without fiscal year limitation, for the period be-
ginning on the date of enactment of this Act and ending five years
after such date.
SEC. 6. Grants made pursuant to this Act shall be the sole
Federal memorial to the late President Herbert Hoover.
(Enacted January 2, 1975, Public Law 93-585, sec. 5, 88 Stat. 1919.)
Grants to Eisenhower College and to the Samuel Rayburn
Library
(P.L. 93-441)
AN ACT To authorize the Secretary of the Treasury to change the alloy and weight
of the one-cent piece and to amend the Bank. Holding Act Amendments of 1970
to authorize grants to Eisenhower College, Seneca Falls, New York
*
*
*
*
*
*
*
SEC. 2. (a) Except as provided by subsection (b) and after re-
ceiving the assurances described in subsection (c), the Secretary of
the Treasury is authorized to take one-tenth of all moneys derived
from the sale $1 proof coins minted and issued under section 101(d)
of the Coinage Act of 1965 (31 U.S.C. 391(d)) and section 203 of the
Bank Holding. Company Act. Amendments of 1970 (31 U.S.C. 324b)
which bears the likeness of the late President of the United States,
Dwight David Eisenhower, and transfer such amount of moneys to
Eisenhower College, Seneca Falls, New. York.
(b) For the purposes of carrying out this section, there is au-
thorized to be appropriated not to exceed $10,000,000.
(c) Before the Secretary of the Treasury may transfer any mon-
eys to Eisenhower College under this Act, Eisenhower College must
make satisfactory assurances to him that any amount equal to 10
per centum of the total amount of moneys received by Eisenhower
College under this Act shall be transferred to the Samuel Rayburn
Library at Bonham, Texas.
6 4
638.
Education Amendments of 1980
TITLE XIIIMISCELLANEOUS PROVISIONS
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PART H-MEMORIALS
Subpart 1The Robert A. Taft Institute
SHORT TITLE
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SEC. 1371. This subpart may be cited as the "Robert A. Taft
Institute Assistance Act".
GRANTS FOR DEVELOPMENT
SEC. 1372. (a) In recognition of the public service of Senator
Robert A. Taft, the Secretary of Education is authorized to make
grants to the Robert A. Taft Institute of Government, located in
New York, New York.
(b) The total amount of grants under this section in any fiscal
year may not exceed the total amount of private contributions re-
ceived by the Institute for the fiscal year for which the grants are
made.
(c) No payment may be made under this subpart except upon
an application at such time, in such manner, and containing or ac-
companied by such information as the Secretary of. Education may
require.
AUTHORIZATION OF APPROPRIATIONS
SEC. 1373. There are authorized to be appropriated to carry
out this subpart:
(1) $700,000 for fiscal year 1991;
(2) $550,000 for fiscal year 1992;
(3) $325,000 for fiscal year 1993; and
(4) $150,000 for fiscal year 1994.
No funds are authorized to be appropriated to carry out this sub-
part for fiscal year 1995 or any succeeding fiscal year.
Subpart 2General Daniel James Memorial Health Education
Center
FINANCIAL ASSISTANCE AUTHORIZED
SEC. 1376. (a) In recognition of the public service of General
Daniel James and as a memorial to General Daniel James, the Sec-
retary of Education shall, in accordance with the provisions of this
title, make a grant to establish the General Daniel James Memo-
639
6 4
Sec. 1316
EDUCATION AMENDMENTS OF 1980
640
Hal Health Education Center to be located at Tuskegee Institute,
Tuskegee, Alabama.
(b) No grant may be made under subsection (a) of this section
unless an application is made to the Secretary at such time and in
such manner as the Secretary may provide. The application shall
contain provisions designed to assure that
(1) the building known as the General Daniel James Me-
morial Health Education Center will be located on the campus
of Tuskegee Institute, Tuskegee, Alabama;
(2) the memorial will serve as a regional center for preven-
tive health education and as a repository for papers and memo-
rabilia relating to the life of General Daniel James; and
(3) such other reasonable conditions as the Secretary may
require.
AUTHORIZATION OF APPROPRIATIONS
SEC.
1377. (a) There are authorized to be appropriated
$6,000,000 for the fiscal year 1981 to carry out the provisions of
this title.
(b) Funds appropriated pursuant to this title shall remain
available until expended.
Subpart 3The William Levi Dawson Chair of Public Affairs
SHORT TITLE
SEC. 1381. This subpart may be cited as the "William Levi
Dawson Chair of Public Affairs Act".
ASSISTANCE FOR THE ESTABLISHMENT OF THE WILLIAM LEVI DAWSON
CHAIR OF PUBLIC AFFAIRS
SEC. 1382. (a) The Secretary of Education is authorized to pro-
vide financial assistance in accordance with the provision of this
section to establish the William Levi Dawson Chair of Public Af-
fairs at Fisk University, Nashville, Tennessee.
(b) No financial assistance under this title may be made except
upon an application at such time, in such manner, and containing
or accompanied by such information, as the Secretary may reason-
ably require.
AUTHORIZATION OF APPROPRIATIONS
SEC. 1383. (a) There are authorized to be appropriated such
sums, not to exceed $750,000, for the fiscal year 1981, as may be
necessary to carry out the provisions of section 1802 1 of this title.
(b) Funds appropriated pursuant to this title shall remain
available until expended.
Apparent error. Should refer to section 1382.
Public Law 98-480
*
TITLE HIHIGHER EDUCATION PROJECTS
LIBRARY PROJECT AUTHORIZED
SEC. 301. (a) The Secretary of Education (hereafter in this title
referred to as the "Secretary") is authorized to provide financial as-
sistance, in accordance with the provisions of this section, to pay
all of the cost of construction, and related expenses, for an addition
to the William H. Mortensen Library at the University of Hartford
located at Hartford, Connecticut, to enable the University of Hart-
ford to house a collection of materials relating to Presidential cam-
paigns and to American political history, known as the Presidential
Americana, together with other collections.
(b) No financial assistance may be made under this section ex-
cept upon an application at such time, in such manner, and con-
taining or accompanied by such information, as the Secretary may
reasonably require.
(c) There are authorized to be appropriated such sums, not to
exceed $6,500,000, as may be necessary to carry out the provisions
of this section. Funds appropriated pursuant to this section shall
remain available until expended.
HUMAN DEVELOPMENT CENTER FACILITY AUTHORIZED
SEC. 302. (a) The Secretary is authorized, in accordance with
the provisions of this section, to provide financial assistance to the
University of Kansas located in Lawrence, Kansas, to pay the Fed-
eral share of the cost of construction and related costs for a human
development center facility at the University of Kansas, to be used
as a national research and training resource for individuals acquir-
ing expertise in the rehabilitation, education, parent training, em-
ployment, independent living, and public policy concerns of handi-
capped individuals and their families, and as a treatment resource
for handicapped persons and their families.
(b) No financial assistance may be made under this section un-
less an application is made at such time, in such manner, and con-
taining or accompanied by such information, as the Secretary may
reasonably require.
(c) There are authorized to be appropriated such sums, not to
exceed $9,000,000, as may be necessary to carry out the provisions
of this section. Funds appropriated pursuant to this section shall
remain available until expended.
CARL VINSON INSTITUTE OF GOVERNMENT AUTHORIZED
SEC. 303. (a) In recognition of the public service of Representa-
tive Carl Vinson, in order to enhance the program of service to
641
644
Sec. 304
PUBLIC LAW 98-480
642
State and local governments in Georgia and in other States pro-
vided by the Carl Vinson Institute of Government of the University
of Georgia, and in order to preserve a historic landmark that pro-
vided special education opportunities for young women in Georgia
and in other States at a time when such opportunities were limited
or nonexistent, the Secretary is authorized, in accordance with the
provisions of this section, to provide financial assistance to the
State of Georgia to renovate the physical facilities of the former
Lucy Cobb Institute for Girls in Athens, Georgia, for the purpose
of providing a center for the Carl Vinson Institute of Government
of the University of Georgia.
(b) No financial assistance may be made under this section ex-
cept upon an application at such time, in such manner, and con-
taining or accompanied by such information, as the Secretary may
reasonably require.
(c) There are authorized to be appropriated $3,500,000 to carry
out the provisions of this section. Funds appropriated pursuant to
this section shall remain available until expended.
JOHN W. MC CORMACK INSTITUTE OF PUBLIC AFFAIRS
SEC. 304. (a) In recognition of the public service of the former
Speaker of the United States House of Representatives, John W.
McCormack, and of the pressing need for national centers for ap-
plied public policy research, the Secretary is authorized to provide
funds in accordance with the provisions of this section to assist in
the development of the John W. McCormack Institute of Public Af-
fairs, located at the University of Massachusetts, Boston, Massa-
chusetts.
(b) No payment may be made under this section except upon
an application at such time, in such manner, and containing or ac-
companied by such information. as the Secretary may require in
order to certify the amount of eligible funds. All such payments
may be used in furtherance of the mission of the McCormack Insti-
tute, which is defined as research, instruction, and civil education
related to public policy and the role of representative government
in the United States.
(c)(1) Funds appropriated pursuant to this section shall be
made available to the John W. McCormack Institute on or after Oc-
tober 1, 1984, and prior to the close of the fiscal year ending Sep-
tember 30, 1987.
(2) There are authorized to be appropriated such sums as may
be necessary to carry out this section for the fiscal year ending Sep-
tember 30, 1985, and for each of the two succeeding fiscal years,
except that the aggregate amount so appropriated shall not exceed
$3,000,000. Funds appropriated pursuant to this section shall re-
main available until expended.
Human Services Reauthorization Act
(P.L. 98-558)
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*
TITLE VHIGHER EDUCATION AND RESEARCH PROJECT
CENTER FOR EXCELLENCE IN EDUCATION AUTHORIZED
SEC. 501. (a) The Secretary of Education (hereinafter in this
section referred to as the "Secretary") is authorized in accordance
with the provisions of this title, to provide financial assistance to
Indiana University located in Bloomington, Indiana, to pay the
Federal share of the cost of the construction, and related costs, in-
cluding renovation costs, for the Center for Excellence in Education
facility at Indiana University, to be used as a national research
and training resource for individuals who intend to become exem-
plary elementary and secondary school teachers and administra-
tors.
(b)(1) No financial assistance may be made under this title un-
less an application is made at such time, in such manner, and con-
taining or accompanied by such information as the Secretary may
reasonably require.
(2) For the purpose of this section, the Federal share of the
cost of the Center for Excellence in Education facility at the Indi-
ana University should not exceed 50 percent.
(c) There are authorized -to be appropriated such sums, not to
exceed $6,000,000, as may be necessary to carry out the provisions
of this section. Funds appropriated pursuant to this title shall re-
main available until September 30, 1987.
RESEARCH CENTERS
SEC. 502. (a)(1) The Secretary of Health and Human Services
(hereinafter in this section referred to as the "Secretary") is author-
ized, in accordance with the provisions of this section, to provide
financial assistance to the University of Utah located in Salt Lake
City, Utah, to pay the Federal share of the cost of the establish-
ment and operation (including construction, and related costs, in-
cluding renovation costs) of a center for research on the health ef-
fects of nuclear energy and other new energy technologies.
(2)(A) No financial assistance may be made under this sub-
section unless an application is made at such time, in such man-
ner, and containing or accompanied by such information as the Sec-
retary may reasonably require.
(B) For the purpose of this subsection, the Federal share of the
cost of the center shall not exceed 50 percent.
(3) There are authorized to be appropriated such sums, not to
exceed $4,000,000, as may be necessary to carry out the provisions
843
646
Sec. 502
HUMAN SERVICES REAUTHORIZATION
644
of this subsection. Funds appropriated pursuant to this subsection
shall remain available until September 30, 1987.
(b)(1) The Secretary shall, through the National Cancer Insti-
tute, establish or support at least one clinic or health facility for
cancer screening and research in St. George, Utah. Such clinic
shall be affiliated with a health science center capable of providing
clinical, research, and interdisciplinary technical assistance to such
clinic or facility, and shall make its services accessible to the pre-
ponderance of the residents of the areas that have received the
greatest fallout from the Nevada nuclear tests.
(2) There are authorized to be appropriated such sums, not to
exceed $6,000,000, as may be necessary to carry out the provisions
of this subsection. Funds appropriated pursuant to this subsection
shall remain available until September 30, 1987.
(9/92)
U.S. DEPARTMENT OF EDUCATION
Office of Educational Research and Improvement (OERI)
Educational Resources Information Center (ERIC)
NOTICE
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