DOCUMENT RESUME
ED 369 325
HE 027 363
TITLE
A Compilation of Federal Education Laws. Volume
III--Higher Education, As Amended through March 1994.
Prepared for the Use of the Committee on Education
and Labor of the U.S. House of Representatives and
for the Use of the Committee on Labor and Human
Resources of the United States Senate, One Hundred
Third Congress, Second Session. [Committee Print.]
INSTITUTION
Congress of the U.S., Washington, D.C. House
Committee on Education and Labor.; Congress of the
U.S., Washington, D.C. Senate Committee on Labor and
Human Resources.
PUB DATE
Mar 94
NOTE
735p.; Serial No. 103-3.
PUB TYPE
Legal/Legislative/Regulatory Materials (090)
EDRS PRICE
MF04/PC30 Plus Postage.
DESCRIPTORS
American Indians; *Educational Facilities;
Educational Finance; *Educational Improvement;
*Educational Legislation; Engineering; Federal Aid;
*Federal Legislation; *Government School
Relationship; *Higher Education; Laws; Mathematics
Education; School Support; Science Education;
Universities
IDENTIFIERS
Education Amendments 1972; Education Amendments 1980;
Excellence in Math Sci and Engrg Educ Act 1990;
Higher Education Act 1965; Higher Education Act
Amendments 1986; Higher Education Act Amendments
1992; National Science Foundation Act 1950
ABSTRACT
This document presents the texts of selected titles,
sections, and amendments of federal laws dealing with specific
aspects of postsecondary education. It is divided into the following
major parts:
(1) "General Higher Education Programs";
(2) "Native
American Higher Education"; (3) "National Science
Foundation";
(4)
Mathematics, Science, and Engineering"; and (5)
"Assistance to
Specified Institutions." Selected titles and subsections
include
those from the Higher Education Act of 1965; the Higher Education
Amendments of 1968, 1980, 1986, and 1992; the National Science
Foundation Act of 1950; and the Excellence in Mathematics, Science,
and Engineering Education Act of 1990. Among the subjects addressed
are institutional and student financial assistance; educator
recruitment, retention, and development; international education
programs; academic facility improvement and construction;
c,00perative
education; land-grant status for colleges in the United States,
Virgin Islands, and Guam; postsecondary education
legislation
directed at American Indians; and educational
improvements in the
areas of mathematics and the sciences. (GLR)
***********************************************************************
Reproductions supplied by EDRS are the best that can be made
from the original document.
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BEST COPY AVAILABLE
[COMMITITE PRINT]
A COMPILATION OF FEDERAL
EDUCATION LAWS
VOLUME III-HIGHER EDUCATION
As Amended Through March 1994
PREPARED FOR THE USE OF THE
COMM]TTEE ON EDUCATION AND LABOR
OF THE
U.S. HOUSE OF REPRESENTATIVES
Serial No. 103J
AND FOR THE USE OF THE
COMMITTEE ON LABOR AND HUMAN
RESOURCES
OF THE
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
SECOND SESSION
MARCH 1994
U.S. GOVERNMENT PRINTING OFFICE
77-630
WASHINGTON : 1394
3
COMMITTEE ON EDUCATION AND LABOR
WILLIAM D. FORD, Michigan, Chairman
WILLIAM (BILL) CLAY, Missouri
GEORGE MILLER, California
AUSTIN J. MURPHY, Pennsylvania
DALE E. KILDEE, Michigan
PAT WILLIAMS, Montana
MATTHEW G. MARTINEZ, California
MAJOR R. OWENS, New York
THOMAS C. SAWYER, Ohio
DONALD M. PAYNE, New Jersey
JOLENE UNSOELD, Washington
PATSY T. MINK, Hawaii
ROBERT E. ANDREWS, New Jersey
JACK F. REED, Rhode Island
TIM ROEMER, Indiana
ELIOT L. ENGEL, New York
XAVIER BECERRA, California
ROBERT C. "BOBBY" SCOTT, Virginia
GENE GREEN, Texas
LYNN C. WOOLSEY, California,
CARLOS A. ROMERO-BARCELO, Puerto
Rico
RON KLINK, Pennsylvania
KARAN ENGLISH, Arizona
TED STRICKLAND, Ohio
RON DE LUGO, Virgin Islands
ENI F.H. FALEOMAVAEGA, American
Samoa
SCOTI'Y BAESLER, Kentucky
ROBERT A. UNDERWOOD, Guam
WILLIAM F. GOODLING, Pennsylvania
THOMAS E. PETRI, Wisconsin
MARGE ROUKEMA, New Jersey
STEVE GUNDERSON, Wisconsin
RICHARD K. ARMEY, Texas
HARRIS W. FAWELL, Illinois
PAUL B. HENRY, Michigan
CASS BALLENGER, North Carolina
SUSAN MOLINARI, New York
BILL BARRETT, Nebraska
JOHN A. BOEHNER, Ohio
RANDY "DUKE" CUNNINGHAM, California
PETER HOECKSTRA, Michigan
HOWARD "BUCK" McKEON, California
DAN MILLER, Florida
MICHAEL N. CASTLE, Delaware
PATRICIA RISSLER, Majority Staff Director
JAY EAGEN, Minority Staff Director
COMMITTEE ON LABOR AND HUMAN RESOURCES
EDWARD M. KENNEDY, Massachusetts, Chairman
CLAIBORNE PELL, Rhode Island
NANCY LANDON KASSEBAUM, Kansas
HOWARD M. METZENBAUM, Ohio
JAMES M. JEFFORDS, Vermont
DAN COATS, Indiana
JUDD GREGG, New Hampshire
STROM THURMOND, South Carolina
ORRIN G. HATCH, Utah
DAVE DURENBERGER, Minnesota
CHRISTOPHER J. DODD, Connecticut
PAUL SIMON, Illinois
TOM HARKIN, Iowa
BARBARA A. MIKULSKI, Maryland
JEFF BINGAMAN, New Mexico
PAUL D. WELLSTONE, Minnesota
HARRIS WOFFORD, Pennsylvania
NICK LITMEFIELD, Staff Director and Chief Counsel
SUSAN K. HATTAN, Minority Staff Director
4
a
ALPHABETICAL LISTING OF STATUTES
CONTAINED IN VOLUME III
Page
Act of March 2,1867 (Howard University)
715
Bankhead-Jones Act
626
Education Amendments of 1972, Land-Grant Status for the College of the
Virgin Islands and the University of Guam
552
Education Amendments of 1980, Title XIII, Parts G and I
553
Education Amendments
of
1980,
Title
XIII,
Part H (Miscellaneous
Provisions)
723
Excellence in Mathematics, Science and Engineering Education Act of 1990
687
First Morrill Act
620
Grants to Eisenhower College and to Samuel Rayburn Library
722
Harry S Truman Memorial Scholarship Act
628
Herbert Hoover Memorial
720
Higher Education Act of 1965
1
Higher Education Amendments of 1986
555
Higher Education Amendments of 1968
551
Higher Education Amendments of 1992Title IV, V, XIV
589
Higher Education Amendments of 1992Title XIII
654
Howard University Endowment Act
717
Human Services Reauthorization Act, Title V
728
National Science Foundation Act of 1950
673
Navajo Community College Act
635
Public Law 98-480, Title III (Higher Education Projects)
726
Public Law 98-558, Title V (Higher Education and Research Project)
704
Second Morrill Act
623
Tribally Controlled Community College Assistance Act of 1978
639
5
TABLE OF CONTENTS
VOLUME HIHIGHER EDUCATION
PART IGENERAL HIGHER EDUCATION PROGRAMS
Pace
Higher Education Act of 1965
1
Title IPartnerships for Educational Excellence
1
Part ASchool, College, and University Partnerships
1
Part BArticulation Agreements
4
Part CAcoess and Equity To Education For All Americans Through
Telecommunications
8
Title IIAcademic Library and Information Services
10
Part ACollege Library Technology and Cooperation Grants
11
Part BLibrary Education, Research, and Development
13
Part CImproving Access to Research Library Resources
14
Part DStrengthening Library and Information Science Programs
and Libraries in Historically Black Colleges and Universities and
Other Minority-Serving Institutions
15
Title IIIInstitutional Aid
16
Part AStrengthening Institutions
17
Part BStrengthening Historically Black Colleges and Universities
22
Part CEndowment Challenge Grants for Institutions Eligible for
Assistance Under Part A or Part B
29
Part DGeneral Provisions
33
Title IVStudent Assistance
39
Part AGrants to Students in Attendance at Institutions of Higher
Education
39
Subpart 1Basic Educational Opportunity Grants
40
Subpart 2Federal Early Outreach and Student Services
Programs
44
Chapter 1Federal Trio Programs
44
Chapter 2National, Early Intervention Scholarship and
Partnership Program
65
Chapter 3Presidential Access Scholarships
61
Chapter 4Model Program Community Partnership and
Counseling Grants
64
Chapter 5Public Information
65
Chapter 6--National Studnet Savings Demonstration Program
67
Chapter 7Preeligibility Form
68
Chapter 8Technical Assistance for Teachers and Counselors
69
Subpart
3Federal
Supplemental
Education
Opportunity
Grants
70
Subpart 4Grants to States for State Student Incentives
76
(V)
VI
Page
Higher Education Act of 1965Continued
Title IVStudent AssistanceContinued
Part AGrants to Students in Attendance at Institutions of Higher
EducationContinued
Subpart 5Special Programs for Students Whose Families are
Engaged in Migrant and Seasonal Farmwork
80
Subpart 6Robert C. Byrd Honors Scholarship Program
83
Subpart 7Assistance to Institutions of Higher Education
86
Subpart 8Special Child Care Services
for Disadvantaged
College Students
86
Part BFederal Family Education Loan Program
87
Part CFederal Work-Study Programs
221
Part DFederal Direct Loan Demonstration Program
232
Part EFederal Perkins Loans
246
Part FNeed Analysis
268
Part GGeneral
Provisions
Relating
to
Student
Assistance
Programs
297
Part HProgram Integrity Triad
345
Subpart 1State Postsecondary Review Program
345
Subpart 2Accrediting Agency Approval
353
Subpart 3Eligibility and Certification Procedures
358
Title VEducator Recruitment, Retention, and Development
365
Part AState and Local Programs for Teacher Excellence
367
Part BNational Teacher Academies
388
Part CTeacher Scholarships and Fellowships
392
Subpart 1Paul Douglas Teacher Scholarships
392
Subpart 2Christa McAuliffe Fellowship Program
399
Subpart 2Teacher Corps
403
Part DInnovation and Research
410
Subpart 1National Board for Professional Teaching Standards .
410
Subpart 2Alternative Routes to Teacher Certification and
Licensure
415
Subpart 3Class Size Demonstration Grant
417
Subpart 4Middle School Teaching Demonstration Progrmas
420
Part EMinority Teacher Recruitment
422
Subpart 1New Teaching Recruitment
422
Subpart 2Programs to Encourage Minority Students to Become
Teachers
426
Part FPrograms for Special Populations
429
Subpart 1National Mini Corps Program
429
Subpart 2Foreign Language Instruction
431
Subpart 3Small State Teaching Initiative
433
Subpart 4Faculty Development Grants
434
Subpart 5Early Childhood Education Training
434
Title VIInternational Education Programs
438
Part AInternational and Foreign Language Studies
438
Part BBusiness and International Education Programs
448
Part CInstitute for International Public Policy
454
Part DGeneral Provisions
457
Title VIIConstruction, Reconstruction, and Renovation of Academic
Facilities
458
Part AImprovement of Academic and Library Facilities
459
Part BHistorically Black College and University Capital Financing
463
,
VII
Page
Higher Education Act of 1965Continued
Title WIConstruction, Reconstruction, and Renovation of Academic
FacilitiesContinued
Part CLoans for Construction, Reconstruction, and Renovation of
Academic, Housing, and Other Educational Facilities
470
Part DCollege Construction Loan Insurance Association
476
Part EGeneral
482
Title I/IIICooperative Education
487
Title TXGraduate Programs
493
Part AGrants to Institutions and Consortia To Encourage Women
and Minorty Participation in Graduate Education
493
Part BPatricia Roberts Harris Fellowships Program
495
Part CJacob K. Javits Fellowship Program
499
Part DGraduate Assistance in Areas of National Need
502
Part EFaculty Development Fellowship Program
507
Part FAssistance for Training in the Legal Profession
511
Part GLaw School Clinical Experience Programs
512
Title XPostsecondary Improvement Programs
614
Part AFund for the Improvement of Postsecondary Education
514
Subpart 1Program Authority
514
Subpart 2Specialk Projects in Areas of National Need
516
Part BMinority Science and Engineering Improvement Programs
516
Subpart 1Minority Science Improvement Program
516
Subpart 2Science and Engineering Access Programs
518
Subpart 3Administrative and General Provisions
520
Part CWomen and Minorities Science and Engineering Outreach
Demonstration Program
522
Part DDwight D. Eisenhower Leadership Program
525
Title XICommunity Service Program
526
Part AUrban Community Services
526
Part BInnovative Projects
530
Subpart 1Innovative Projects for Projects Service
530
Subpart 2Student Literacy Corps and Student Mentoring
Corps
531
Subpart 3Authorization of Appropriations
534
Title XIIGeneral Provisions
534
Higher Education Amendments of 1968, Section 507
551
Education Amendments of 1972, Land-Grant Status for the College of the
Virgin Islands and the University of Guam
552
Education Amendments of 1980
553
Title XIIIMiscellaneous Provisions
553
Part GNew Land Grant Colleges
553
Part ITechnical Provisions
553
Higher Education Amendments of 1986
555
Title IVStudent Assistance
555
Title XIIIEducation Administration
558
Title XVAmerican Indian, Alaska Native, and Native Hawaiian Culture
and Art Development
570
Higher Education Amendments of 1992
589
Effective Dates and Related Implementation Provisions
589
Title IVStudent Assistance
589
Title VEducator Recruitment, Retention, and Development
593
Title XIVStudies and Commissions
594
Title XVRelated Programs and Amendments to Other Laws
610
VIII
Page
First Morrill Act
620
Second Morrill Act
623
Bankhead-Jones Act
626
Harry S Truman Memorial Scholarship Act
628
PART HNATIVE AMERICAN HIGHER EDUCATION
Navajo Community College Act
635
Tribally Controlled Community College Assistance Act of 1978
639
Title ITribally Controlled Community Colleges
640
Title IIITribally Controlled Community College Endowment Program
650
Title IVTribal Economic Development
652
Higher Education Amendments of 1992
654
Title XIIIIndian Higher Educations Programs
654
Part ATribally Controlled Community Colleges
654
Part BHigher Education Tribal Grant Authorization Act
654
Part CCritical Needs for Tribal Development Act
660
Part DInstitute of American Indian Native Culture and Arts
Development
663
Part ETribal Development Student Assistance Revolving Loan
Program
663
Part FAmerican Indian Postsecondary Economic Development
Scholarship
667
Part CIAmerican Indian Teacher Training
670
PART IIINATIONAL SCIENCE FOUNDATION
National Science Foundation Act of 1950
673
PART IVMATHEMATICS, SCIENCE, AND ENGINEERING
Excellence in Mathematics, Science, and Engineering Education Act of 1990
687
Title IFindings and Objectives
688
Title IIMathematics, Science, and Technology Improvements
689
Title IIIHigher Education
694
Title IVWomen and
Minorities
in
Mathematics,
Science
and
Engineering
696
Title VEducation Coordination and Department of Energy Programs
697
Title VIScience Scholarships
699
Title WIGeneral Provisions and Authorization of Appropriations
711
PART VASSISTANCE TO SPECIFIED INSTITUTIONS
Act of March 2, 1867
715
Howard University Endowment Act
717
Title IIHoward University Endowment
717
Herbert Hoover Memorial
720
Grants to Eisenhower College and to the Samuel Rayburn Library
722
9
IX
Page
Education Amendments of 1980
723
Title XIIIMiscellaneous Provisions
723
Part HMemorials
723
Subpart 1The Robert A. Taft Institute
723
Subpart 2General Daniel James Memorial Health Education
Center
724
Subpart 3The William Levi Dawson Chair of Public Affairs ..
724
Public Law 98-480
726
Title IIIHigher Education Projects
726
Human Services Reauthorizations Act (P.L. 98-558)
728
Title VHigher Education and Research Project
728
PART IGENERAL HIGHER EDUCATION PROGRAMS
Higher Education Act of 1965
(Pl. 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-PARTNERSHIPS FOR
EDUCATIONAL EXCELLENCE
PART A-SCHOOL, COLLEGE, AND UNIVERSITY
PARTNERSHIPS 1
SEC. 101. PURPOSE.
It is the purpose of this part to encourage partnerships be-
tween. institutions of higher education or State higher education
agencies and secondary schools serving low-income and disadvan-
taged students, to support programs that
(1) improve the retention and graduation rates at such sec-
ondary schools;
(2) improve the academic skills of public and private non-
profit secondary school students;
(3) increase such students' opportunities to continue a pro-
gram of education after secondary school; and
(4) improve such students' prospects for employment after
secondary school.
(20 U.S.C. 1001) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 459.
SEC. 102. AGREEMENT.
(a) AGREEMENT.To be eligible for a grant under this part, an
institution of higher education, a State higher education agency, or
a consortium consisting of any of the preceding entities thereof
shall enter into a written partnership agreement with a local edu-
cational agency. Such partnership may include businesses, labor or-
ganizations, professional associations, community-based organiza-
tions, public television stations or other telecommunications enti-
ties, or other public or private agencies or organizations. Each en-
tity participating in the partnership shall sign the agreement.
(b) CONTENTS OF AGREEMENT.The agreement shall include-
1This program was originally enacted as part B of title V of this Act (P.L. 99-498, sec. 501(a),
100 Stat. 1498).
1 T.
Sec. 103
HIGHER EDUCATION ACT OF 1965
2
(1) a listing of all participants in the partnership, includ-
ing a designation of the official representatives of each entity
participating in the partnership;
(2) a description of the responsibilities of each participant
in the partnership; and
(3) a listing of the resources to be contributed by each par-
ticipant in the partnership.
(20 U.S.C. 1002) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 459.
SEC. 103. GRANTS.
(a)
DIVISION BETWEEN SCHOOL-YEAR AND SUMMER
PRO-
GRAMS.Frorn the funds appropriated to carry out this part pursu-
ant to section 106, the Secretary shall reserve 65 percent of such
funds tv carry out programs operating during the regular school
year and 35 percent of such funds to carry out programs operating
during the summer.
(b) AMOUNT AND USE OF GRANTS.
(1) AMOUNT.The Secretary shall make grants under this
part in amounts which are not less than $250,000 and not
more than $1,000,000.
(2) PERMITTED USES OF FUNDS.Grants under this part
may be used by the partnership for programs that
(A) use college students to tutor secondary school stu-
dents and improve their basic academic skills or to involve
secondary sch.00l students in community service-learning
projects;
(B) are designed to improve the basic academic skills
of secondary school students;
(C) are designed to increase the understanding of spe-
cific subjects of secondary school students;
(D) are designed to improve the opportunity to con-
tinue a program of education after graduation for second-
ary school students; and
(E) are designed to increase the prospects for employ-
ment after graduation of secondary sch.00l students.
(C) PREFERENCES.In making grants under this part, the Sec-
retary shall give a preference to
(1) programs which will serve predominantly low-income
communities;
(2) partnerships which will run programs during the regu-
lar school year and summer;
(3) programs which will serve educationally disadvantaged
students; students with disabilities; potential dropouts; preg-
nant adolescents and teenage parents; children of migratory
agricultural workers or of migratory fishermen; or students
whose native language is other than English; and
(4) programs designed to encourage women and minorities
who are underrepresented in the fields of science and mathe-
matics to pursue these fields.
(d) DURATION.Each grant awarded under this part may be
awarded for a period not to exceed 5 years.
(e)
EQUITABLE GEOGRAPHIC DISTRIBUTION.The Secretary
shall award grants under this part in a manner that achieves an
equitable geographic distribution of such grants.
MEW
3
HIGHER EDUCATION ACT OF 1965
Sec. 105
(20 U.S.C. 1003) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 459;
amended December 20, 1993, P.L. 103-208, sec. 2(a)(1), 107 Stat. 2457.
SEC. 104. GRANT APPLICATION.
(a) APPLICATION REQUIRED.A partnership desiring to receive
a grant under this part shall submit an application to the Sec-
retary, in such form and providing such information as the Sec-
retary, by regulation, shall require.
(b)
CONTENTS
OF
APPLICATION.The
application
shall
include
(1) the partnership agreement described in section 102;
(2) a listing of the public and private nonprofit secondary
school or schools to be involved in the program;
(3) a description of the activities and services for which as-
sistance is sought;
(4) a description of the programs to be developed and oper-
ated by the partnership; and
(5) assurances to the Secretary that
(A) the partnership will establish a governing body in-
cluding one representative of each participant in the part-
nership;
(B) Federal funds will provide no more than 70 per-
cent of the cost of the project in the first year, 60 percent
of such costs in the second year, and 50 percent of such
costs in the third year and any subsequent year;
(C) a local educational agency or institution of higher
education receiving funds under this part shall not reduce
its combined fiscal effort per student or its aggregate ex-
penditure on education;
(D) a local educational agency or institution of higher
education participating in this partnership shall utilize
any Federal funds it shall receive from a grant under this
part to supplement, and, to the extent practicable, increase
the resources that would, in the absence of such Federal
funds, be made available from non-Federal sources for the
education of students described in this part; and
(E) in no case shall funds under such a grant be used
to supplant non-Federal funds already available.
(c) SPECIAL RULE.The non-Federal share of grants awarded
under this part may be in cash or in kind fairly evaluated, includ-
ing services, supplies or equipment.
(d) WAIVER.The Secretary may waive the matching require-
ment described in paragraph (5)(B) for any eligible partnership
that demonstrates to the satisfaction of the Secretary a unique
hardship that prevents compliance with such matching require-
ment.
(20 U.S.C. 1004) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 460;
amended December 20, 1993, P.L. 103-208, sec. 2(a)(2), 107 Stat. 2457.
SEC. 105. 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 shall consult with officials of the other Federal agencies
and with non-Federal organizations to ensure that the panel mem-
! 3
Sec. 106
NIGHER EDUCATION ACT OF 1965
4
bership shall be geographically balanced and be composed of rep-
resentatives from public and private institutions of elementary, sec-
ondary, and higher education, labor, business, and State and local
governments, who have expertise in community service or in edu-
cation.
(20 U.S.C. 1005) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 461.
SEC. 106. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $20,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this part.
(20 U.S.C. 1006) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 461.
PART B-ARTICULATION AGREEMENTS
SEC. 121. FINDINGS AND PURPOSE.
(a) FINDINGS.The Congress finds that
(1) because more than one-half of all first-time first-year
students attending postsecondary institutions attend commu-
nity or junior colleges, and because almost one-half of minority
students enrolled in higher education attend 2-year institu-
tions, community and junior colleges represent a substantial
and an important educational resource;
(2) declining participation rates for low-income students
and minorities at institutions of higher education is of growing
concern to the higher education community and Congress; and
(3) there is growing awareness of the need to assist low-
income, minority and other nontraditional students in bridging
the gap between 2-year to 4-year institutions, enabling such
students to reach their individual potential, as well as contrib-
ute to the larger society.
(b) PURPOSE.The purpose of this part is to improve the edu-
cational opportunities of this Nation's postsecondary students by
creating comprehensive articulation agreements and planning be-
tween partnerships of 2-year and 4-year institutions of higher edu-
cation.
(20 U.S.C. 1011) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 461.
SEC. 122. AUTHORIZATION OF GRANTS.
(a)
ASSISTANCE
FOR ARTICULATION PARTNERSHIPS.From
amounts appropriated for this part, the Secretary shall make
grants to States to enable States to make awards, either on a com-
petitive basis or on the basis of a formula determined by the State,
to articulation partnerships between
(1) a qualified 2-year institution; and
(2) a qualified 4-year institution.
(b) QUALIFIED INSTITUTIONS.For purposes of this part
(1) a qualified 2-year institution is an institution of higher
education (as determined under section 481(a)) that is an eligi-
ble institution under section 435(a) and that
(A) is a nonprofit institution that offers a 2-year asso-
ciate degree or a 2-year certificate program; or
(B) is a proprietary institution that offers a 2-year as-
sociate degree program; and
14
5
HIGHER EDUCATION ACT OF 1965
Sec. 124
(2) a qualified 4-year institution is an institution of higher
education (as determined under section 481(a)) that is an eligi-
ble institution under section 435(a) and that offers a bacca-
laureate degree program.
(C) ALLOCATION AND STATE GRANTS.
(3.) FORMULA ALLOCATION.In any fiscal year for which the
amount made available under section 129 to carry out the pro-
visions of this part equals or exceeds $50,000,000, the Sec-
retary shall allot an amount that bears the same ratio to the
amount appropriated under section 129 for such fiscal year as
the total amount received under title IV by students attending
institutions of higher education in that State for such fiscal
year bears to the total amount received under title IV by all
students for such fiscal year, based on the most recent year for
which such data are available.
(2) COMPETITIVE GRANTS.In any fiscal year for which the
amount made available under section 129 to carry out the pro-
visions of this part do not equal or exceed $50,000,000, the Sec-
retary is authorized, in accordance with the provisions of this
part, to make grants to States to carry out articulation agree-
ments under sections 124 and 125.
(20 U.S.C. 1011a) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 462.
SEC. 123. STATE APPLICATION.
Each State that desires to receive a grant under this part shall
submit an application to the Secretary in such form and containing
or accompanied by such information as the Secretary may require.
Such application shall
(1) after consultation with the State agencies responsible
for supervision of community colleges, technical institutes, or
other 2-year postsecondary institutions, designate a sole State
agency as the State agency responsible for the administration
and supervision of activities carried out with assistance under
this part;
(2) describe how funds will be allocated in a manner con-
sistent with section 124;
(3) contain assurances that the State will comply with the
requirements of this part;
(4) provide for an annual submission of data concerning
the use of funds and students served with assistance under
this part; and
(5) provide that the State will keep such records and pro-
vide such information to the Secretary as may be required for
purposes of financial audits and program evaluation.
(20 U.S.C. 1011b) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 462.
SEC. 124. LOCAL APPLICATIONS.
Any articulation partnership comprised of qualified institutions
that desires to receive a) grant from a State under this part shall
submit an application to the State in such form and containing or
accompanied by such information as the State may require and
shall
(1) include in the articulation agreement
(A) assurances that academic credit earned at the
qualified institution described in section 122(b)(1) will be
7.
Sec. 125
HIGHER EDUCATION ACT OF 1965
6
transferable to the qualified institution or institutions as
described in section 122(b)(2);
(B) development of articulation agreement programs
and services appropriate to the needs of the partnership
participants;
(C) activities that facilitate the development of pro-
grams and services appropriate to the needs of the stu-
dents attending courses covered by the articulation agree-
ment;(D) inservice training for faculty designed to imple-
ment effective articulation agreements;
(E) counseling services; and
(F) information concerning programs contained in the
articulation agreement;
(2) include assurances that the articulation partnership
has the qualified personnel required
(A) to develop, administer, and implement the pro-
gram required by this part; and
(B) to provide special training necessary to prepare
staff for the program; and
(3) include a plan of operation for the program which in-
cludes a description of
(A) the program goals;
(B) the uses of funds as required by paragraph (2);
(C) the activities and services which will be provided
under the program (including training and preparation of
staff); and
(D) the subject areas to be included in the articulation
agreement.
(20 U.S.C. 1011c) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 463.
SEC. 125. ARTICULATION AGREEMENT.
(a) LENGTH OF GRANT.Each recipient of a grant from a State
shall use the amounts provided under the grant to develop and op-
erate articulation agreements for 6 years.
(b) USE OF FUNDS.Funds provided to an articulation partner-
ship under this part may be used
(1) to perform any activity or program required by section
124;
(2) as part of the program's planning activities, to acquire
technical assistance from Federal, State, or local entities that
have successfully designed, established, and operated articula-
tion programs;
(3) to provide workshops with students and teachers, coun-
seling for students to continue their education to a bachelors
degree, orientation visits at institutions participating in the
partnerships;
(4) to develop agreements with local educational agencies
for vocational course equivalency approval procedures for pur-
poses of satisfying entrance requirements to qualified institu-
tions; and
(5) to provide outreach to potential students.
(20 U.S.C. 1011d) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 463.
16
7
HIGHER EDUCATrN ACT OF 1965
Sec. 129
SEC. 126. STATE ADMINISTRATION.
A State may reserve not more than 3 percent of the amounts
available under this part for any fiscal year for State administra-
tive costs including monitoring and technical assistance.
(20 U.S.C. 1011e) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 464,
SEC. 127. PRIORITY.
The State shall give priority to grant applications for programs
which
(1) encourage teacher education;
(2) have, as one of the partners participating in an articu-
lation agreement, an entity participating in an articulation
agreement described in section 344(b)(1) of the Carl D. Perkins
Vocational and Applied Technology Education Act;
(3) contribute their own institutional resources;
(4) are not subject to a default reduction agreement under
section 428F;
(5) encourage technology education; or
(6) encourage articulation in subject areas of national im-
portance as determined by the Secretary.
(20 U.S.C. 10110 Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 464.
SEC. 128. REPORTS.
(a) STATE REPORTS.Each State shall submit to the Secretary
an annual report on the operation of the program under this part
in such State during the preceding year. Such report shall include
such information as the Secretary may require by regulation.
(b) EVALUATION AND DISSEMINATION.
(1) EVALUATION.The Secretary shall, on the basis of the
reports submitted under subsection (a), evaluate all or a sam-
ple of the programs conducted under this part for the purposes
of
(A) determining the success or failure of such pro-
grams in increasing access and entry of students from 2-
year institutions to 4-year institutions; and
(B) identifying the most successful programs under
this part and the causes for such success.
(2) DISSEMINATION.The Secretary shall, not later than
January 31, 1996, submit a report to the Congress on the re-
sults of the evaluation described in paragraph (1). The Sec-
retary shall disseminate the findings made pursuant to sub-
paragraph (B) through appropriate agencies and organizations.
(3) RESERVATION.The Secretary may reserve up to 3 per-
cent of the amount appropriated under section 129 to carry out
this subsection.
(20 U.S.C. 1011g) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 464.
SEC. 129. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part,
$25,000,000 for fiscal year 1993, and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1011h) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 465.
1 7
Sec. 131
HIGHER EDUCATION ACT OF 1965
8
PART C-ACCESS AND EQUITY TO EDUCATION
FOR ALL AMERICANS THROUGH TELE-
COMMUNICATIONS
SEC. 131. PROGRAM ESTABLISHED; AUTHORIZATION OF APPROPRIA-
TIONS; ELIGIBILITY.
(a) GENERAL AUTHORITY.The Secretary is authorized to make
grants to eligible partnerships to enable such partnerships to pay
the Federal share of the cost of the activities described in the appli-
cation submitted pursuant to section 132.
(b) AUTHORIZATIONS OF APPROPRIATIONS.
(1) IN GENERALThere are authorized to be appropriated
to carry out this part $10,000,000 for fiscal year 1993 and such
sums as may be necessary for each of the 4 succeeding fiscal
years.(2) AVAILABILITY.Funcla appropriated pursuant to the au-
thority of paragraph (1) shall remain available until expended.
(c) ELIGIBLE PARTNERSHIP.For the purpose of this part the
term "eligible partnership' means a partnership which
(1) shall consist of
(A) a public broadcasting entity or a consortium there-
of; and
(B) an institution of higher education or a consortium
thereof; and
(2) may also include a State, a unit of local government,
or a public or private nonprofit organization.
(d) FEDERAL SHARE.The Federal share shall be 50 percent.
(20 U.S.C. 1015) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 465.
SEC. 132. APPLICATION.
(a) IN GENERAL.Each eligible partnership desiring to receive
a grant under this part shall submit an application to the Sec-
retary at such time, in such manner and containing or accom-
panied by such information as the Secretary may reasonably re-
quire.(b) CONTENTS.Each application submitted pursuant to para-
graph (1) shall
(1) describe the education telecommunications activities or
services to be assisted;
(2) describe the administrative and management structure
supporting such activities or services;
(3) provide assurances that the financial interests of the
United States in the telecommunications equipment, software
and other facilities shall be protected for the useful life of such
equipment, software or facilities;
(4) describe the manner in which nontraditional post-
secondary education students will benefit from the activities
and services supported;
(5) describe the manner in which special services, includ-
ing captioned films, television, descriptive video and education
media for individuals with disabilities, shall be supported; and
(6) provide assurances that the eligible partnership will
provide the non-Federal share of assistance under this part.
(C) APPROVAL OF APPLICATIONS.
18
9
HIGHER EDUCATION ACT OF 1965
Sec. 134
(1) IN GENERAL.The Secretary shall, in approving appli-
cations under this part, give priority to applications which de-
scribe programs thatc
(A) include support for services to make captioned
films, descriPtive video and educational media available to
individuals with disabilities who otherwise lack access to
such educational materials;
(B) will provide, directly or indirectly, activities or
services to a significant number of postsecondary institu-
tions;
(C) improve access to accredited telecommunications
coursework for individuals with disabilities otherwise de-
nied such access;
(D) will be available in a multistate area;
(E) include evidence of significant support for the pro-
gram from the business community; or
(F) provide matching funds, in an amount which ex-
ceeds the required non-Federal share.
(2) EQUITABLE GEOGRAPHIC DISTRIBUTION OF ASSISTANCE.
In approving applications under this part the Secretary shall
ensure the equitable geographic distribution of grants awarded
under this part.
(20 U.S.C. 1015a) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 465.
SEC. 133. AUTHORIZED ACTIVITIES.
Grants awarded under this part shall be used for one or more
of the following activities:
(1) The acquisition of site equipment to provide the tech-
nical ability to receive diverse education services at schools,
campuses, and work site locations.
(2) Satellite, fiber optic and other distribution systems,
and for local broadcast or other local distribution capability.
(3) Pre-service or in-service education and training for kin-
dergarten through 12th grade teachers through interactive tel-
evision conferencing.
(4) Preparation of telecommunications programs and soft-
ware that support national, regional or statewide efforts to pro-
vide teaching and learning materials not otherwise available
for local use.
(5) A loan service of captioned films, descriptive video and
educational media in order to make such materials available,
in accordance with regulations issued by the Secretary, in the
United States for nonprofit purposes to individuals with dis-
abilities, parents of individuals with disabilities, and other in-
dividuals directly involved in activities for the advancement of
individuals with disabilities, including addressing problems of
illiteracy among individuals with disabilities.
(20 U.S.C. 1015b) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 466.
SEC. 134. DEFINITION.
For the purpose of this part, the term "public broadcasting en-
tity" has the same meaning given to such term by section 397(11)
of the Communications Act of 1934.
(20 U.S.C. 1015c) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 466.
9
Sec. 135
HIGHER EDUCATION ACT OF 1965
10
SEC. 135. REPORT.
(a) IN GENERAL.Each recipient of a grant under this part
shall submit a report to the Secretary not later than 30 days a.fter
the conclusion of the grant period.
(b) CONTENTS.Each report described in subsection (a) shall
include(1) a description of activities and services assisted under
this part;
(2) a description of the population served by the program;
and (3) an assessment of the ability of private sector entities
participating in the eligible partnership to continue the sup-
port of the activities and services in the absence of Federal
funding.
(c) DISSEMINATION.The Secretary shall select reports received
under this subsection that are appropriate for dissemination to the
education community and shall make such reports available
through the National Diffusion Network.
(20 U.S.C. 1015d) Enacted July 23, 1992, P.L. 102-325, sec. 101, 106 Stat. 466.
TITLE II ACADEMIC LIBRARIES AND
INFORMATION SERVICES
SEC. 201. PURPOSE; AUTHORIZATION.
(a) PURPOSE.The Secretary shall carry out a program to
assist (1) college and university libraries in acquiring techno-
logical equipment and in conducting research in information
technology in accordance_with part A;
(2) in the education and training of persons in library and
information science and to encourage research and develop-
ment relating to improvement of libraries (including the pro-
motion of economical and effective information delivery, cooper-
ative efforts, and developmental projects) in accordance with
part B;
(3) the Nation's major research libraries, in maintaining
and strengthening their collections, and in making information
resources available to other libraries whose users have need for
research materials in accordance with part C; and
(4) historically black colleges and universities and other
minority-serving institutions with programs in library and in-
formation sciences to train and educate African-Americans and
other underrepresented racial, national origin, and ethnic mi-
norities in such programs in accordance with part D.
(b) AUTHORIZATION OF APPROPRIATIONS.
(1) PART A.There are authorized to be appropriated to
carry out part A $20,000,000 for fiscal year 1993 and such
sums as may be necessary for each of the 4 succeeding fisca3
years.(2) PART B.There are authorized to be appropriated to
carry out part B $10,000,000 for fiscal year 1993 and such
sums as may be necessary for each of the 4 succeeding fiscal
years.
20
11
HIGHER EDUCATION ACT OF 1965
Sec. 211
(3) PART C.-There are authorized to be appropriated to
carry out part C $20,000,000 for fiscal year 1993 and such
sums as may be necessary for each of the 4 succeeding fiscal
years.
(4) PART D.-There are authorized to be appropriated to
carry out part D $15,000,000 for fiscal year 1993 and such
sums as may be necessary for each of the 4 succeeding fiscal
years.
(20 U.S.C. 1021) Enacted Nov. 8, 1965, P.L. 89-329, sec. 201, 79 Stat. 1224;
amended Oct. 16, 1968, P.L. 90-575, sec. 211, 82 Stat.,1036; amended June 23,
1972, P.L. 92-318, sec. 111(b)(1), 86 Stat. 238; amended October 12, 1976, P.L. 94-
482, sec. 106, 90 Stat. 2089; amended October 3, 1980, P.L. 96-374, sec. 201, 94
Stat. 1384; amended October 17, 1986, P.L. 99-498, sec. 201(b), (c), 100 Stat. 1287;
amended Aug. 23, 1988, P.L. 100-418, sec. 6241, 102 Stat. 1520; amended July 23,
1992, P.L. 102-325, sec. 201, 106 Stat. 467.
SEC. 202. NOTIFICATION OF STATE AGENCY.
Each institution of higher education which receives a grant
under this title shall annually inform the State agency designated
pursuant to section 1203 of its activities under this title.
(20 U.S.C. 1022) Enacted Nov. 8, 1965, P.L. 89-329, sec. 202, 79 Stat. 1224;
amended Nov. 3, 1966, P.L. 89-752, sec. 9, 80 Stat. 1243; amended Oct. 16, 1968,
P.L. 90-575, sec. 214, 82 Stat. 1037; amended June 23, 1972, P.L. 92-318, sec.
111(b)(2)(A), 86 Stat. 238; amended and redesignated June 23, 1972, P.L. 92-318,
sec. 112, 86 Stat. 240; amended October 3, 1980, P.L. 96-374, sec. 201, 94 Stat.
1384; amended July 23, 1992, P.L. 102-325, sec. 201, 106 Stat. 468.
SEC. 203. LIBRARY EXPERTS.
The Secretary shall make every effort to ensure that programs
under this title are administered by appropriate library experts.
(20 U.S.C. 1023) Enacted July 23, 1992, P.L. 102-325, sec. 201, 106 Stat. 468.
PART A-COLLEGE LIBRARY TECHNOLOGY
AND COOPERATION GRANTS
SEC.
211. COLLEGE LIBRARY TECHNOLOGY AND COOPERATION
GRANTS.
(a) GRANTS AUTHORIZED.-The Secretary is authorized to make
grants for technological equipment, networking, and other special
purposes to-
(1) institutions of higher education which demonstrate a
need for special assistance for the planning, development, ac-
quisition, maintenance, or upgrading of technological equip-
ment necessary to organize, access or utilize material in elec-
tronic formats and to participate in networks for the accessing
and sharing of library and information resources;
(2) combinations of institutions of higher education which
demonstrate a need for special assistance in establishing and
strengthening joint-use library facilities, resources, or equip-
ment for the accessing and sharing of library and information
resources;
(3) other public and private nonprofit organizations which
provide library and information services to institutions of high-
er education on a formal, cooperative basis for the purpose of
'This part was originally enacted as part D of this title (P.L. 99-498, sec. 207, 100 Stat.
1289).
21
Sec. 211
HIGHER EDUCATION ACT OF 1965
12
ks`ablishing, developing, or expanding programs or projects
that improve the services provided by such organizations to in-
stitutions of higher education; and
(4) institutions of higher education conducting research or
demonstration projects that improve information services to
meet special national or regional needs by utilizing technology
to enhance library or information services such as through the
National Research and Education Network.
(b) ANVARDS REQUIREMENTS.From funds appropriated for this
part, the Secretary shall make competitive awards to institutions,
combinations of institutions, or organizations in each of the cat-
egories described in paragraphs (1) through (4) of subsection (a).
(C) AMOUNT.
(1) IN GENERAL.The Secretary shall award grants under
this section in an amount which is not less than $25,000.
(2) SPECIAL RULE.The Secretary shall award grants pur-
suant to paragraph (1) of subsection (a) in an amount which
is not more than $50,000 for each institution of higher edu-
cation.
(d) PRIORITY.In awarding grants pursuant to paragraph (1) of
subsection (a), the Secretary shall give priority to institutions of
higher education seeking assistance for projects which assist devel-
oping institutions of higher education in linking one or more insti-
tutions of higher education to resource sharing networks.
(e) DURATION.The Secretary shall award grants under this
section for a period not to exceed 3 years.
(f) APPLICATION.
(1) IN GENERAL.Each institution of higher education or
combination thereof 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 reasonably require.
(2) CONTENT.Each application submitted pursuant to
paragraph (1) shall
(A) describe the activities ond services for which as-
sistance is sought; and
(B) contain assurances that the applicant will expend
during the period for which the grant is sought (from
funds other than funds received under this title), for the
same purpose as such grant, an amount from such other
sources equal to not less than one-third of such grant.
(3) CRITERIA.The Secretary shall prescribe by regulation
criteria for the approval of applications submitted under this
section.
(20 U.S.C. 1029) Enacted October 3, 1980, P.L. 96-374, sec. 201, 94 Stat. 1384;
amended October 17, 1986, P.L. 99-498, sec. 207, 100 Stat. 1276; amended July 23,
1992, P.L. 102-325, sec. 201, 106 Stat. 468.
?2
13
HIGHER EDUCATION ACT OF 1965
Sec. 223
PART B-LIBRARY EDUCATION, RESEARCH,
AND DEVELOPMENT
SEC. 221. GRANTS AUTHORIZED.
(a) GRANTS.-From the amounts appropriated for this part for
any fiscal year, the Secretary shall make grants in accordance with
sections 222 and 223.
(b) RESERVATION.-Of the amount appropriated for this part
for any fiscal year, the Secretary shall make available two-thirds
of such amount for the purpose of section 222 and one-third of such
amount for the purpose of section 223.
(20 U.S.C. 1031) Enacted June 23, 1972, P.L. 92-318, sec. 111(b)(3)(A), 86 Stat.
239; amended October 3, 1980, P.L. 96-374, sec. 201, 94 Stat. 1385; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 204(b)(1), 100 Stat. 1289; amended July 23, 1992,
P.L. 102-325, sec. 201, 106 Stat. 469.
SEC. 222. LIBRARY EDUCATION AND HUMAN RESOURCE DEVELOP-
MENT.
(a) PURPOSE AND GRANT CRITERIA.-The Secretary is author-
ized to make grants to, and enter into contracts with, institutions
of higher education and library organizations or agencies to assist
such institutions, library organizations, or agencies in educating
and training persons in library and information science, particu-
larly in areas of critical needs, such as recruitment and retention
of minorities. Such grants or contracts may be used by such institu-
tions, library organizations, or agencies to-
(1) assist in covering the cost of courses of study or staff
development (including short term or regular session insti-
tutes),
(2) establish and maintain fellowships or traineeships with
stipends (including allowances for travel, subsistence, and
other expenses) for fellows who demonstrate need and who are
working toward a graduate degree (and their dependents), not
in excess of such maximum amounts as may be determined by
the Secretary, and
(3) establish, develop, or expand programs of library and
information science, including new techniques of information
transfer and communication technology.
(b) ADDITIONAL REQUIREMENTS.-Not less than 50 percent of
the grants made under this section shall be for the purpose of es-
tablishing and maintaining fellowships or traineeships under sub-
section (a)(2).
(20 U.S.C. 1032) Enacted Nov. 8, 1965, P.L. 89-329,
sec. 223, 79 Stat. 1227;
amended Oct, 16, 1968, P.L. 90-575, sec. 216, 82 Stat. 1037; amended June 23,
1972, P.L. 92-318, sec. 111(b)(3) (B) and (K); redesignated by P.L. 92-318, sec.
111(b)(3)(D), 86 Stat. 240; amended October 3, 1980, P.L. 96-374, sec. 201, 94 Stat.
1385; amended July 23, 1992, P.L. 102-325, sec. 201, 106 Stat. 469.
SEC. 223. RESEARCH AND DEMONSTRATION.
The Secretary is authorized to make grants to, and enter into
contracts with, institutions of higher education and other public
and private agencies, institutions, and organizations for research
and development projects related to the improvement of libraries,
education in library and information science, the enhancement of
library services through effective and efficient use of new tech-
? 3
Sac. 224
HIGHER EDUCATION ACT OF 1965
14
nologies, and for the dissemination of information derived from
such projects.
(20 U.S.C. 1033) Enacted Nov. 8, 1965, P.L. 89-329, sec. 224, 79 Stat. 1228; sub-
sec.. (c) repealed Apr. 13, 1970, P.L. 91-230, sec. 401(h) and superseded by pt. C of
title IV of P.L. 90-247, as amended. (20 U.S.C. 1233c.); redesignated June 23 1972,
P.L. 92-318, sec. 111(b)(3)(D), 86 Stat. 240; amended October 3, 1980, P.L. 96-374,
sec. 201, 94 Stat. 1385; amended October 17, 1986, P.L. 99-498, sec. 205, 100 Stat.
1289; amended July 23, 1992, P.L. 102-325, sec. 201, 106 Stat. 470.
SEC. 224. CONSULTATION REQUIREMENTS.
The Secretary shall consult with the appropriate library and
information science professional bodies in the determination of crit-
ical needs under section 222 and in the determination of priorities
under section 223.
(20 U.S.C. 1034) Enacted July 23, 1992, P.L. 102-325, sec. 201, 106 Stat. 470.
PART C-IMPROVING ACCESS TO RESEARCH
LIBRARY RESOURCES
SEC. 231. RESEARCH LIBRARY RESOURCES.
(a) GRANTS.-
(1) GENERAL AUTHORITY.-From the amount appropriated
for this part, the Secretary shall make grants to institutions
with major research libraries.
(2) MAJOR RESEARCH LIBRARY.-For the purposes of this
part, the term "major research library" means a public or pri-
vate nonprofit institution (including the library resources of an
institution of higher education), an, independent research li-
brary, or a State or other public library, having a library collec-
tion which is available to qualified users and which-
(A) makes a significant contribution to higher edu-
cation and research;
(B) is broadly based and is recognized as having na-
tional or international significance for scholarly research;
(C) is of a unique nature, and contains material not
widely available; and
(D) is in substantial demand by researchers and schol-
ars not connected with that institution.
(b) ELIGIBILITY.-In deterMining eligibility for assistance under
this part, the Secretary shall permit institutions that do not other-
wise qualify to provide additional information or documents to
demonstrate the national or international significance for scholarly
research of the particular collection described in the grant proposal.
(20 U.S.C. 1041) Enacted Nov. 8, 1965, P.L. 89-329, sec. 231, 79 Stat. 1228;
amended Oct. 16, 1968, P.L. 90-575, sec. 217, 218, 82 Stat. 1037-1038; amended
June 23, 1972, P.L. 92-318, sec. 114, 86 Stat. 240; amended Oct. 12, 1976, P.L. 94-
482, sec. 107, 90 Stat. 2090; amended October 3, 1980, P.L. 96-374, sec. 201, 94
Stat. 1386; amended October 17, 1986, P.L. 99-498, sec. 204(b)(2), 206, 100 Stat.
1289; amended July 23, 1992, P.L. 102-325, sec. 201, 106 Stat. 470.
SEC. 232. GEOGRAPHICAL DISTRIBUTION OF GRANTS.
In making grants under this part, the Secretary shall endeavor
to achieve broad and equitable geographical distribution through-
out the Nation.
(20 U.S.C. 1042) Enacted June 23, 1972, P.L. 92-318, sec. 115(a), 86 Stat. 241;
amended Oct. 12, 1976, P.L. 94-482, sec. 107, 90 Stat. 2090; amended October 3,
9 4
15
HIGHER EDUCATION ACT OF 1965
Sec. 241
1980, P.L. 96-374, sec. 201, 94 Stat. 1386; amended July 23, 1992, P.L. 102-325,
sec. 201, 106 Stat. 471.
PART D-STRENGTIIENING LIBRARY AND IN-
FORMATION SCIENCE PROGRAMS AND LI-
BRARIES IN HISTORICALLY BLACK
COL-
LEGES AND UNIVERSITIES AND OTHER MI-
NORITY-SERVING INSTITUTIONS
SEC. 241, STRENGTHENING LIBRARY AND
INFORMATION SCIENCE
PROGRAMS AND LIBRARIES IN HISTORICALLY BLACK
COLLEGES AN/3 UNIVERSITIES AND OTHER MINORITY.
SERVING INSTITUTIONS.
(a) ELIGIBLE INSTITUTIONS.For the purposes of this section,
the term "eligible institution" means
(1) an historically black college or university; or
(2) an institution of higher education which
(A) serves a large number or high percentage of minor-
ity students; and
(B) enrolls and graduates minority students in library
and information science programs.
(b) GENERAL AUTHORITY.
(1) AUTHORITY OF SECRETARY.The Secretary is author-
ized to make grants to, and enter into contracts with
(A) eligible institutions to assist such institutions in
strengthening their library and information science pro-
grams and library resources; and
(B) eligible institutions, and library organizations or
agencies which have nationally approved programs in li-
brary and information science, to assist such institutions
and organizations in the education and training of African
Americans and other underrepresented racial, national ori-
gin, and ethnic minorities, particularly in areas of critical
needs of library and information science.
(2) USE OF FUNDS.Such grants or contracts may be used
by such institutions, library organizations, or agencies to
(A) establish, develop, or strengthen libraries and li-
brary and information science programs, including new
techniques of information transfer and communication
technology;
(B) assist in covering the cost of courses of study or
staff development (including short-term or regular session
institutec); and
(C) establish and maintain fellowships or traineeships
with stipends (including allowances for travel, subsistence,
and other expenses) for fellows who demonstrate need and
who are working toward a graduate degree (and their de-
pendents), not in excess of such maximum amounts as may
be determined by the Secretary.
(c) TRAINEESHIPS.Not less than 50 percent of the grants
made under this section shall be for the purpose of establishing
and maintaining fellowships or traineeships under subsection
(a)(2).
Sec. 301
HIGHER EDUCATION ACT OF 1965
16
(d) FUNDING PROMBITION.-Notwithstanding any other provi-
sion of law, no funds are authorized to be appropriated to carry out
this part for any fiscal year unless the amount appropriated to
carry out each of parts A, B, and C for such fiscal year equals or
exceeds the amount appropriated for such parts, respectively, for
fiscal year 1992.
(20 U.S.C. 1047) Enacted July 23, 1992, P.L. 102-325, sec. 201, 106 Stat. 471;
amended December 20, 1993, P.L. 103-208, sec. 2(a)(3), 107 Stat. 2457.
TITLE III-INSTITUTIONAL AID
SEC. 301. 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) the title HI 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;
(4) the solution of the problems of these institutions would
enable them to become viable, fiscally stable and independent,
thriving institutions of higher education;
(5) providing assistance to eligible institutions will en-
hance the role of such institutions in providing access and
quality education to Iow-income and minority students;
(6) 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 fmancially independent; and
(7) 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.
(20 U.S.C. 1051) Enacted June 23, 1972, P.L. 92-318, sec. 121(a), 86 Stat. 241;
amended Oct. 12, 1976, P.L. 94-482, sec. 111, 90 Stat. 2091; amended October 3,
1980, P.L. 96-374, sec. 301, 94 Stat. 1390; amended October 17, 1986, P.L. 99-498,
sec. 301(a), 100 Stat. 1290; amended July 23, 1992, P.L. 102-325, sec. 301, 106 Stat.
472; amended December 20, 1993, P.L. 103-208, secs. 2(a)(4), (m), 107 Stat. 2457,
2486.
9
17
HIGHER EDUCATION ACT OF 1965
Sec. 312
PART ASTRENGTHENING INSTITUTIONS
SEC. 311. PROGRAM PURPOSE.
(a) GENERAL AUTHORIZATION.The Secretary shall carry out a
program, in accordance with this part, to improve the academic
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 CONSIDERATI0N.(1) From the
sums available for this part under section 360(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.
(20 U.S.C. 1057) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1391;
amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1291; amended June
3, 1987, P.L. 100-50, sec. 2(a)(1), 101 Stat. 335; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 312. 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
See. 312
HIGHER EDUCATION ACT OF 1965
18
(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 352(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)(i) which is legally authorized to provide, and pro-
vides within the State, an educational program for which
it awards a bachelor's degree, or (ii) which is a junior or
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; and
(E) which meets such other requirements as the Sec-
retary may prescribe; 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) 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 352(a).
(d) 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 3tudents 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.
(e) JUNIOR OR COMMUNITY COLLEGE.For the purpose of this
part, the term "junior or community college" means an institution
of higher education--
28
19
HIGHER EDUCATION ACT OF 1965
Sec. 313
(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.
(f) HISTORICALLY BLACK COLLEGE OR UNIVERSUY.-For the
purposes of this section, ne 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.
(20 U.S.C. 1058) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1391;
amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1292; amended June
3, 1987, P.L. 100-50, sec. 2(a)(2)-(6), 101 Stat. 335; amended July 18, 1988, P.L.
100-369, sec. 10, 102 Stat. 837-838; amended July 23, 1992, P.L. 102-325, sec.
302(a)-(b), 106 Stat. 472; amended December 20, 1993, P.L. 103-208, sec. 2(a)(5),
(in), 107 Stat. 2457, 2486.
SEC. 313. 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 section 354(a)(1) shall not be considered a
grant under this part.
(c) PLANNING GRANTS.-Notwithstanding subsection (a), the
Secrets. 1
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.
(20 U.S.C. 1059) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1392;
amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1294; amended July
23, 1992, P.L. 102-325, sec. 302(c), 106 Stat. 472; amended December 20, 1993, P.L.
103-208, sec. 2(a)(6), (m), 107 Stat. 2457, 2486.
SEC. 314. APPLICATION REVIEW PROCESS.
(a) REVIEW PANEL.-(1) All applications submitted under part
A by institutions of higher education shall be read by a panel of
readers composed of individuals selected by the Secretary which
shall include outside readers who are not employees of the Federal
Government. The Secretary shall ensure that no individual as-
signed 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. 314
HIGHER EDUCATION ACT OF 1965
20
(2) The Secretary shall take care to include as readers rep-
resentatives of historically and predominantly Black colleges, His-
panic institutions, Native American colleges and universities, and
institutions with substantial numbers of students who are His-
panic, Native American, Asian American, and Native American Pa-
cific Islander (including Native Hawaiians).
(3) All readers selected by the Secretary shall receive thorough
instruction from the Secretary regarding the evaluation process for
applications submitted under part A, including
(A) explanations and examples of the types of activities re-
ferred to in section 311(b) that must receive special consider-
ation for grants awarded under part A;
(B) an enumeration of the factors to be used to determine
the quality of applications submitted under part A; and
(C) an enumeration of the factors to be used to determine
whether a grant should be awarded for a project under part A,
the amount of any such grant, and the duration of any such
grant.
(b) RECOMMENDATIONS OF PANEL.In awarding grants under
part A, the Secretary shall take into consideration the rec-
ommendations of the panel established 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 part A 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 part A and any modi-
fications, if any, Li the recommendations of the panel made by
the Secretary.
(20 U.S.C. 1059a) Enacted June 3, 1987, P.L. 100-50, sec. 2(b), 101 Stat. 336;
amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 315. GOALS FOR FINANCIAL MANAGEMENT AND ACADEMIC PRO-
GR.AM.
(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 REQUIR.EMENTS.Any continuation applica-
tion shall demonstrate the progress made toward achievement of
the goals described pursuant to subsection (a).
(20 U.S.C. 1059b) Enacted July 23, 1992, P.L. 102-325, sec. 302(d)(1), 106 Stat.
473.
SEC. 316. RISPANIC-SERVING INSTITUTIONS.
(a) PROGRAM AUTHORIZED.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 and other low-income students.
(b) DEFINITIONS.For the purpose of this section
(I) the term "Hispanic-serving institution" means an insti-
tution of higher education which-
30
21
HIGHER EDUCATION ACT OF 1965
Sec. 316
(A) is an eligible institution under section 312(b);
(B) at the time of application, has an enrollment of un-
dergraduate full-time equivalent students that is at least
25 percent Hispanic students;
(C) provides assurances that
(i) not less than 50 percent of its Hispanic stu-
dents are low-income individuals who are first genera-
tion college students; and
(ii) another 25 percent of its Hispanic students are
either low-income individuals or first generation col-
lege students;
(2) 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; and
(3) the term "low-income individual" means an individual
from a family whose taxable income for the preceding year did
not exceed 150 percent of an amount equal to the poverty level
determined by using criteria of poverty established by the Bu-
reau of the Census.
(c) AUTHORIZED ACTIVITIES.
(1) TYPES OF ACTIVITIES AUTHORIZED.Grants awarded
under this section shall be used by Hispanic-serving institu-
tions of higher education to assist such institutions to plan, de-
velop, undertake, and carry out programs.
(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 their 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;
(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 Hispanic-serving in-
stitution desiring to receive assistance under this Act shall
submit to the Secretary such enrollment data as may be nec-
essary to demonstrate that it is a Hispanic-serving institution
as defined in paragraph (1) of subsection (b), along with such
0 1
Sec. 321
HIGHER EDUCATION ACT OF 1965
22
other information and data as the Secretary may by regulation
require.
(2) APPLICATIONS.Any institution which is determined by
the Secretary to be a Hispanic-serving institution (on the basis
of the information and data submitted under paragraph (1))
may submit an application for assistance under this section to
the Secretary. Such application shall include
(A) a 5-year plan for improving the assistance pro-
vided by the Hispanic-serving institution to Hispanic and
other low-income students; and
(B) such other information and assurance as the Sec-
retary may require.
(3) PRIORITY.The Secretary shall give priority to applica-
tions that contain satisfactory evidence that such institution
has entered into or will enter Lnto a collaborative arrangement
with at least one local educational agency to provide such
agency with assistance (from funds other than funds provided
under this part) in reducing Hispanic dropout rates, improving
Hispanic rates of academic achievement, and increasing the
rates at which Hispanic high school graduates enroll in higher
education.
(e) SPECIAL RULE.Por the purposes of this section, no His-
panic-serving college or university which is eligible for and receives
funds under this section may concurrently receive other funds
under this part or part B.
(20 U.S.C. 1059c) Enacted July 23, 1992, P.L. 102-325, sec. 302(d)(1), 106 Stat.
473, amended December 20, 1993, P.L. 103-208, sec. 2(a)(7), 107 Stat. 2457.
PART BSTRENGTHENING HISTORICALLY BLACK COLLEGES AND
UNIVERSITIES
SEC. 321. 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-
dowments of the historically Black colleges and universities are
32
23
HIGHER EDUCATION ACT OF 1965
Sec. 323
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.
(20 U.S.C. 1060) Enacted, October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1393;
amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1294; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 322. 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 aftey 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.
(20 U.S.C. 1061) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1393;
amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1294; amended July
18, 1988, P.L. 100-369, sec. 10(c), 102 Stat. 838; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 323. GRANTS TO INSTECUTIONS.
(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.
77-530 0-94 --2
Sec. 323
HIGHER EDUCA110N ACT OF 1965
24
(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) 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 telecommunicationg 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 eiemen-
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) 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.
(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.
(3) The Secretary shall not award a grant under this part for
telecommunications technology equipment, facilities or services, if
such equipment, facilities or services are available pursuant to sec-
tion 396(k) of the Communications Act of 1934.
(20 U.S.C. 1062) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1395;
amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1295; amended June
3, 1987, P.L. 100-50, sec. 2(a)(7), 101 Stat. 335; amended July 18, 1988, P.L. 100
369, sec. 10(b), 102 Stat. 838; amended July 23, 190, P.L. 102-325, sec. 303;a)
(b), 106 Stat. 474; amended December 20, 1993, P.L. 103-208, sec. 2(a)(8), (m), 107
Stat. 2457, 2486.
0 4
25
HIGHER EDUCATION ACT OF 1965
Sec. 324
SEC. 324. 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 (I)).
(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.
(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-
Sec. 325
HIGHER EDUCATION ACT OF 1965
26
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.
(20 U.S.C. 1063) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1395;
amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1296; amended Octo-
ber 21, 1986, P.L. 99-509, sec. 7007, 100 Stat. 1950; amended July 23, 1992, P.L.
102-325, sec. 303(c)-(d), 106 Stat. 475; amended December 20, 1993, P.L. 103-208,
sec. 2(m), 107 Stat. 2486.
SEC. 325. 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.
(20 U.S.C. 1063a) Enacted October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat.
1296; amended June 3, 1987, P.L. 100-50, sec. 2(a)(8), 101 Stat. 335; amended July
3 13
27
HIGHER EDUCATION ACT OF 1965
Sec. 326
23, 1992, P.L. 102-325, sec. 303(e), 106 Stat. 475; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 326. PROFESSIONAL OR GRADUATE INSTITUTIONS.
(a) GENERAL AUTH0RIZATI0N.(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 for Black Ameri-
cans.
(2) No grant in excess of $500,000 may be made under this sec-
tion 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 the Morehouse
School of Medicine shall receive at least $3,000,000.
(b) DURATION.Grants shall be made for a period not to exceed
5 years. No more than two 5-year grants (for a period of not more
than 10 years) may be made to any one undergraduate or post-
graduate institution.
(C) USES OF FUNDS.A grant under this section may be used
for
(1) any of the purposes enumerated under section 323;
(2) to establish or improve a development office
to
strengthen and increase contributions from alumni and the pri-
vate sector; and
(3) to assist !la the establishment or maintenance of an in-
stitutional endov, ment to facilitate fmancial independence pur-
suant to section 332 of this title.
(d) APPLICATION.Any institution eligible for a grant under
this section shall submit an application which
(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 $500,000, 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)
include
(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 Medi-
cine;
(F) Xavier University School of Pharmacy;
(G) Southern University School of Law;
(H) Texas Southern University School of Law and
School of Pharmacy;
(I) Florida A&M University School of Pharmaceutical
Sciences;
(J) North Carolina Central University School of Law;
()
See. 327
HIGHER EDUCATION ACT OF 1965
28
(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; and
(P) Jackson State qualified graduate program.
(2) QUALIFIED GRADUATE PROGRAM.For the purposes of
this section, the term "qualified graduate program" means a
graduate or professional program that
(A) provides a program of instruction in the physical
or natural sciences, engineering, mathematics, or other sci-
entific
discipline
in
which
African
Americans
are
underrepresented; and
(B) has students enrolled in such program at the time
of application for a grant under this section.
(3) SPECIAL RULE.Graduate institutions that were award-
ed grants under this section prior to October 1, 1992 shall con-
tinue to receive such grant payments, regardless of the eligi-
bility of the graduate institutions described in subparagraphs
(F) through (P), until such grant period has expired or Septem-
ber 30, 1993, whichever is later.
(4) ONE GRANT PER INSTITUT1ON.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.
(f) FUNDING RULE.Of the amount appropriated to carry out
this section for any fiscal year
(1) the first $12,000,000 (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 (E) of subsection (e)(1);
(2) any amount appropriated in excess of $12,000,000 shall
be available
(A) for the purposes of making grants, in equal
amounts not to exceed $500,000, to institutions or pro-
grams described in subparagraphs (F) through (P) of sub-
section (e)(1); and
(B) secondly for the purposes of making grants to in-
stitutions or programs described in subparagraphs (A)
through (P) of subsection (e)(1).
(20 U.S.C. 1063b) Enacted October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat.
1297; amended June 3, 1987, P.L. 100-50, sec. 2(a)(9)-(10), 101 Stat. 335; amended
July 23, 1992, P.L. 102-325. sec. 303(f)-(g), 106 Stat. 475; amended December 20,
1993, P.L. 103-208, sec 2(a-q), (m), 107 Stat. 2457, 2486.
SEC. 327. REPORTING A1,0 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;
38
29
HIGHER EDUCATION ACT OF 1965
Sec. 331
(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.
(20 U.S.C. 1063c) Enacted October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat.
1298; amended June 3, 1987, P.L. 100-50, sec. 2(a)(11), 101 Stat. 335; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
PART CENDOWMENT CHALLENGE GRANTS FOR INSTITUTIONS
ELIGIBLE FOR ASSISTANCE UNDER PART A OR PART B
SEC. 331. ENDOWMENT CHALLENGE GRANTS.
(a) PURPOSE; DEFINITI0NS.(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;
(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
subclauses (I) and (II) of clause (i) with respect to a post-
graduate degree in the case of any institution otherwise eligi-
ble under clause (i) for an endowment challenge grant upon de-
termining that the institution makes a substantial contribution
See. 331
HIGHER EDUCATION ACT OF 1965
30
to medical education opportunities for minorities and the eco-
nomically disadvantaged.
(b) GRANTS AUTHORIZED.-(1) From sums available for this sec-
tion under section 360, 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 under the following circumstances:
(i) In any fiscal year in which the amount appropriated to
carry out this part is less than $15,000,000, the institution
(I) may apply for a grant in an amount not exceeding
$500,000; and
(II) shall have deposited in its endowment fund estab-
lished under this section an amount which is equal to one-
half of the amount of such grant.
(ii) In any fiscal year in which the amount appropriated to
carry out this part is equal to or greater than $15,000,000 but
less than $25,000,000, the institution
(I) may apply for a grant in an amount not exceeding
$1,000,000; and
(II) shall have deposited in its endowment fund estab-
lished under this section an amount which is equal to one-
half of the amount of such grant.
(iii) In any fiscal year in which the amount appropriated
to carry out this part is equal to or greater than $25,000,000,
the institution may apply for a grant in an amount not to ex-
ceed $1,500,000 if such institution has deposited in its endow-
ment fund established under this section an amount which is
equal to one-half of the amount of such grant.
(C)(i) Except as provided in clause (ii), if the appropriation for
this part in a fiscal year is $20,000,000 or less, an eligible institu-
tion of higher education that is awarded a grant under subsection
(b)(2)(B) of this section shall not be eligible to reapply for a grant
under subsection (b)(2)(B) of this section during the 10 years imme-
diately following the period that such institution received such a
grant.
(ii) If the appropriation for this part in any fiscal year is great-
er than $20,000,000, an eligible institution of higher education that
is awarded a grant under subsection (b)(2)(B) of this section shall
not be eligible to reapply for a grant under subsection (b)(2)(B) of
this section during the 5 years immediately following the period
that such insti'aition received such a grant. This provision shall
apply for the fiscal year in which the appropriation is greater than
$20,000,000 and subsequent fiscal years, regardless of the appro-
priation in those fiscal years.
4 Z)
31
HIGHER EDUCATION ACT OF 1965
Sec. 331
(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.
(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 assurances
that it will (A) immediately comply with the matching require-
ments of subsection (b)(2), (B) establish an endowment fund inde-
pendent of any other such fund of the institution, (C) invest the en-
dowment 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.
41
Sec. 331
HIGHER EDUCATION ACT OF 1965
32
(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 fmancial emergency, such as a pending
insolvency or temporary liquidity problem; (II) a life-threatening
situation occasioned by a natural disaster or arson; or (III) any
other unusual occurrence or exigent circumstance.
(d) REPAYMENT PROWSIONS.(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-
4 2
33
HIGHER EDUCATION ACT OF 1965
Sec. 351
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
(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.
(20 U.S.C. 1065) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1396;
amended October 17. 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1299; amended June
3, 1987, P.L. 100-50, sec. 2(a)(12), 101 Stat. 336; amended July 23, 1992, P.L. 102
325, sec. 304(a)(3), (b), 106 Stat. 476; amended December 20, 1993, P.L. 103-208,
secs 2(a)(8), (10), (11), and (m), 107 Stat. 2457, 2458, 2486.
PART DGENERAL PROVISIONS
SEC. 361. APPLICATIONS FOR ASSISTANCE.
(a) APPLICATION REQUIRED; APPROVAL.Any institution which
is eligible 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 enable the
Secretary to evaluate its need for assistance. Subject to the avail-
ability of appropriations to carry out this title, the Secretary may
approve an application for a grant under this title if the application
meets the requirements of subsection (b) and shows that the appli-
cant is eligible for assistance in accordance with the part of this
title under which the assistance is sought.
(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) will develop, a comprehen-
sive development plan to strengthen the institution's academic
quality and institutional management, and otherwise provide
for institutional self-sufficiency and growth (including measur-
able 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
3
Sec. 351
HIGHER EDUCATION ACT OF 1965
34
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;
(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;
(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 evalcAtion 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.
4 4
35
HIGHER EDUCATION ACT OF 1965
Sec. 352
(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.
(20 U.S.C. 1066) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1396;
renumbered and amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat.
1302; amended June 3, 1987, P.L. 100-50, sec. 2(a)(13), 101 Stat. 336; amended July
23, 1992, P.L. 102-325, sec. 305(a), 106 Stat. 478; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 352. WAIVER AUTHORITY AND REPORTING REQUIREMENT.
(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 unserved 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; or
(6) 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 ma,,, 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
5
Sec. 353
HIGHER EDUCATION ACT OF 1965
36
(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 oi near an
Indian reservation or a substantial population of Indians, if the
Secretary determines that the waiver will substantially increase
higher education opportunities appropriate to the needs of Amer-
ican Indians.
(20 U.S.C. 1067) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1398;
renumbered and amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat.
1304; amended June 3, 1987, P.L. 100-50, sec. 2(a)(14)-(15), 101 Stat. 336; amended
July 23, 1992, P.L. 102-325, sec. 305(b), 106 Stat. 478; amended December 20, 1993,
P L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 353. 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, Native American colleges and universities, and institutions
with substantial numbers of Hispanics, Native Americans, Asian
Americans, and Native American Pacific Islanders (including Na-
tive Hawaiians) 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 recomm endations of the panel with respect to such
application; and
4 6
37
HIGHER EDUCATION ACT OF 1965
See. 356
(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.
(20 U.S.C. 1068) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1398;
renumbered and amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat.
1305; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 354. COOPERATIVE ARRANGEMENTS.
(a) GENERAL AumoRrrY.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
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) PRIORrry.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.
(20 U.S.C. 1069) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1399;
renumbered and amended October 17, 1986, P.L. 99-498, sec. 301(a),, 100 Stat.
1305; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat 2486.
[Section 355 was repealed by P.L. 102-325, sec. 305(c), 106
Stat. 478.]
SEC. 356. 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 (1)).
(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 title H, IV, VII, or VIII of this Act.
(c) LIMITATION.The Secretary shall not waive, under sub-
section (b), the non-Federal share requirement for any program for
4 7
Sec. 357
HIGHER EDUCATION ACT OF 1965
38
applications which, if approved, would require the expenditure of
more than 10 percent of the appropriations for the program for any
fiscal year.
(20 U.S.C. 1069b) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1400;
renumbered and amended October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat.
1306; amended July 23, 1992, P.L. 102-325, sec. 305(d), 106 Stat. 478; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 357. 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.
(20 U.S.C. 1069c) Enacted October 3, 1980, P.L. 96-374, sec. 301, 94 Stat. 1400;
amended Sept. 26, 1983, P.L. 98-95, sec. 3, 97 Stat. 711; amended June 12, 1984,
P.L. 98-312, sec. 1, 98 Stat. 233; renumbered and amended October 17, 1986, P.L.
99-498, sec. 301(a), 100 Stat. 1307; amended December 20, 1993, P.L. 103-208, sec..
2(m), 107 Stat. 2486.
SEC. 358. 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.
(20 U.S.C. 1069d) Enacted October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stet.
1307; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
[Section 359 was repealed by P.L. 102-325, sec. 305(c), 106
Stat. 478.]
SEC. 360. 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 1993, and such sums as may be necessary for each
of the 4 succeeding fiscal years.
(B)(i) There are authorized to be appropriated to carry out
section 316, $45,000,000 for fiscal year 1993 and such sums as
may be necessary for each of the 4 succeeding fiscal years.
(ii) No funds are authorized to be appropriated pursuant
to clause (i) for any fiscal year unless the amount appropriated
pursuant to paragraph (1)(A) for such fiscal year equals or ex-
ceeds $80,000,000.
(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 1993, and such sums as may be necessary for each
of the 4 succeeding fiscal years.
4 8
39
HIGHER EDUCATION ACT OF 1965
Sec. 400
(B) There are authorized to be appropriated to carry out
section 326, $20,000,000 for fiscal year 1993, 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, $50,000,000 for fiscal year 1993, 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.
(C) RESERVATIONS.If the amourit appropriated under sub-
section (a)(1) for part A for any fiscal year beginning after Septem-
ber 30, 1986, equals or exceeds the amount appropriated for such
part for fiscal year 1986, the Secretary shall, for such fiscal year
(1) allocate 25 percent of the excess (above the amount ap-
propriated for part A for fiscal year 1986) among eligible insti-
tutions at which at least 60 percent of the students are African
Americans, Hispanic Americans, Native Americans, Asian
Americans, Native Hawaiians, or Pacific Islanders, or any com-
bination thereof; and
(2) allocate 75 percent of such excess among other eligible
institutions.
(d) RATABLE REDUCTION IN FISCAL YEAR IN WHICH AMOUNTS
APPROPRIATED ARE INSUFFICIENT.In any fiscal year in which the
sums appropriated for part A are insufficient to make the reserva-
tions required by subsection (c) of this section, the Secretary shall
ratably reduce the amount of the reservation.
(e) ADDITIONAL RESERVATION.In any fiscal year beginning
after September 30, 1992, the Secretary shall award at least 25
percent of the amount appropriated pursuant to the authority of
, paragraph (3) of subsection (a) in each fiscal year to historically
black colleges and universities that meet the requirements of part
C, unless there are an insufficient number of quality applications
or an insufficient number of applications due to the provisions in
subsection (b)(2)(C) or subsection (b)(4)(B) of section 331.
(20 U S C 10690 Enacted October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat.
1307, amended July 23, 1992, P.L. 102-325, sec. 305(e)-(g), 106 Stat. 479.
TITLE IVSTUDENT ASSISTANCE
PART AGRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF
HIGHER EDUCATION
SEC. 400. STATEMENT OF PURPOSE; PROGRAM AUTHORIZATION.
(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 basic educational opportunity grants to all el-
igible students;
(2) providing supplemental educational opportunity grants
to those students who demonstrate financial need;
4
(1.
Sec. 401
HIGHER EDUCATION ACT OF 1965
40
(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) providinz 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.
(20 U.S.C. 1070) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat. 247-
248; amended June 23, 1972, Pl. 92-318, sec. 1001(c), 86 Stat. 381; amended Octo-
ber 3, 1980, P.L. 96-374, sec. 401, 1391, 94 Stat. 1401, 1503; amended October 17,
1986, P.L. 99-498, sec. 401(a), 100 Stat. 1308; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SUBPART 1BASIC EDUCATIONAL OPPORTUNITY GRANTS
SEC. 401. BASIC EDUCATIONAL OPPORTUNITY GRANTS: AMOUNT AND
DETERMJNATIONS; APPLICATIONS.
(a) PROGRAM AUTHORITY AND METHOD OF DISTRIBUTION.(1)
The Secretary shall, during the period beginning July 1, 1972, and
ending September 30, 1998, 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 attendance at an institution of higher edu-
cation, as an undergraduate, a basic 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 ugon an amount requested by the institution as needed to
pay eligible students, except that this sentence shall not be con-
strued 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,
in cases where the eligible institution elects not to participate in
the disbursement system required by paragraph (1).
(3) Basic 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 basic grant that in combination with rea-
sonable 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 defined 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 basic grant for a student eligible
under this part shall be
(i) $3,700 for academic year 1993-1994,
(ii) $3,900 for academic year 1994-1995,
5 0
41
HIGHER EDUCATION ACT OF 1965
Sec. 401
(iii) $4,100 for academic year 1995-1996,
(iv) $4,300 for academic year 1996-1997, and
(v) $4,500 for academic year 1997-1998,
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 basic grant to
which that student is entitled shall be reduced in proportion to the
degree to which that student is not so attending on a full-time
basis, in accordance with a schedule of reductions established by
the Secretary for the purposes of this division, computed in accord-
ance with this subpart. Such schedule of reductions shall be estab-
lished by regulation and published in the Federal Register in ac-
cordance 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 $2,400,
the amount of a student's basic grant shall equal $2,400 plus
(i) one-half of the amount by which such maximum basic
grant exceeds $2,400; plus
(ii) the lesser of
(I) the remaining one-half of such excess; or
(II) the sum of the student's tuition and the student's
allowance determined under subparagraph (B), if applica-
ble.
(B) For purposes of subparagraph (A)(ii)(II), a student's allow-
ance is $750 if the student has dependent care expenses (as defined
in section 472(8)) or disability related expenses (as defined in sec-
tion 472(9)).
(4) No basic grant under this subpart shall exceed the dif-
ference between the expected family contribution for a student and
the cost of attendance (as defined in section 472) at the institution
at which that student is in attendance. If, with respect to any stu-
dent, it is determined that the amount of a basic grant plus the
amount of the expected family contribution for that student exceeds
the cost of attendance for that year, the amount of the basic grant
shall be reduced until the combination of expected family contribu-
tion and the amount of the basic grant does not exceed the cost of
attendance at such institution.
(5) No basic grant shall be awarded to a student under this
subpart if the amount of that grant for that student as determined
under this subsection tor any academic year is less than $400, ex-
cept that a stuctent who is eligible for a basic grant that is equal
to or greater than $200 but less than $400 shall be awarded a basic
grant of $400.
(6) The Secretary may allow, on a case-by-case basis, a student
to receive 2 Pell grants during a single award year, if--
(A) 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
(B) the student completes course work toward completion
of an associate or baccalaureate degree that exceeds the re-
5
See. 401
HIGHER EDUCATION ACT OF 1965
42
quirements for a full academic year as defined by the institu-
tion.
(7) Notwithstanding any other provision of this subpart, the
Secretary shall allow the amount of the basic grant to be exceeded
for students participating in a program of study abroad approved
for credit by the institution at which the student is enrolled when
the reasonable costs of such program are greater than the cost of
attendance at the student's home institution, except that the
amount of such basic 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 applies, the finan-
cial aid administrator at the home institution may use the cost of
the study abroad program, rather than the home institution's cost,
to determine the cost of attendance of the student.
(8)(A) No basic grant shall be awarded to an incarcerated stu-
dent under this subpart that exceeds the sum of the amount of tui-
tion and fees normally assessed by the institution of higher edu-
cation for the course of study such student is pursuing plus an al-
lowance (determined in accordance with regulations issued by the
Secretaiy) for books and supplies associated with such course of
study, except that no basic grant shall be awarded to any incarcer-
ated student serving under sentence of death or any life sentence
without eligibility for parole or release.
(B) Basic grants under this subpart shall only be awarded to
incarcerated individuals in a State if such grants are used to sup-
plement and not supplant the level of postsecondary education as-
sistance provided by such State to incarcerated individuals in fiscal
year 1988.
(c) PERIOD OF ELIGIBILITY FOR GRANTS.-(1) The period during
which a student may receive basic grants shall be the period re-
quired for the completion of the first undergraduate baccalaureate
course of study being pursued by that student at the institution 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 pur-
pose 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.
(3) No student is entitled to receive Pell Grant payments con-
currently from more than one institution or from the Secretary and
an institution.
(d) APPLICATIONS FOR GRANTS.-(1) The Secretary shall from
time to time set dates by which students shall file applications for
basic grants under this subpart.
(2) Each student desiring a basic grant for any year shall file
an application therefor containing such information and assurances
5 2
43
HIGHER EDUCATION ACT OF 1965
Sec. 401
as the Secretary may deem necessary to enable the Secretary to
carry out the functions and responsibilities of this subpart.
(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 fmancial aid administrator (at each
institution of higher education which a student awarded a basic
grant under this subpart is attending), as a part of its regular out-
put document, the expected family contribution for each such stu-
dent. 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
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 th.e 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 Labor 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-
Sec. 401
HIGHER EDUCATION ACT OF 1966
44
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 fis-
cal 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.
(20 U.S.C. 1070a) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
247-251; amended June 30, 1976, P.L. 94-328, sec. 2(0, 90 Stat. 727; amended Oc-
tober 12, 1976, P.L. 94-482, sec. 121, 90 Stat. 2091, 2092, 2093, 2094; amended
June 15, 1977, P.L. 95-43, sec. 1(a)(5)(A), (a)(5)(B), 91 Stat. 213; amended Novem-
ber 1, 1978, P.L. 95-566, sec. 2, 92 Stat. 2402, 2403; amended October 3, 1980, P.L.
96-374, sec. 402, 1391, 94 Stat. 1401-1404, 1503; amended October 13, 1982, P.L.
97-301, sec. 8(a), 96 Stat. 1402; amended October 17, 1986, P.L. 99-498, sec. 401(a),
100 Stat. 1309; amended June 3, 1987, P.L. 100-50, sec. 3(a), 101 Stat. 337; amend-
ed July 23, 1992, P.L. 102-325, sec. 401, 106 Stat. 479; amended December 20,
1993, P.L. 103-208, sec. 2(b)(1)-(5), (k)(1), and (m), 107 Stat. 2457, 2485, 2486.
[Sections 411A through 43.1F were repealed by P.L. 102-325,
sec. 401(i), 106 Stat. 482.1
Subpart 2-Federal Early Outreach and Student
Services Programs
CHAPTER I-FEDERAL TRIO PROGRAMS
SEC. 402A. PROGRAM AUTHORITY; AUTHORIZATION OF APPROPRIA-
TIONS.
(a) GRANTS AND CONTRACTS AUTHORIZED.-The Secretary shall,
in accordance with the provisions of this chapter, carry out a pro-
gram of making grants and contracts designed to identify qualified
individuals from disadvantaged backgrounds, to prepare them for
This was previously designated no subpart 4 of part 1 of title IV and was redesignated as
chapter 1 by P.L. 102-325, sec. 402(a), 106 Stat. 482.
Ma.
45
HIGHER EDUCATION ACT Or'
"s5
Sec. 402A
a program of postsecondary education, to px
-.le support services
for such students who are pursuing programs of postsecondary edu-
cation, to motivate and prepare students for doctoral programs, and
to train individuals serving or preparing for service in programs
and proj_ects 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; and
(B) grants made under section 402G shall be awarded
for a period of 2 years.
(3) MINIMUM GRANT LEVEL.In any year in which the ap-
propriations authorized under this chapter exceed the prior
year appropriation as adjusted for inflation, the Secretary shall
use 80 percent of the amount appropriated above the current
services level to bring each award up to the minimum grant
level or the amount requested by the institution or agency,
whichever is less. The minimum grant level (A) for programs
authorized under section 402D or 402G, shall not be less than
$170,000 for fiscal year 1993; (B) for programs authorized
under section 402B or 402F shall not be less than $180,000 for
fiscal year 1994; and (C) for programs authorized under section
402C or 402E shall not be less than $190,000 for fiscal year
1995.
(C) PROCEDURES FOR AWARDING GRANTS AND CONTRACTS.
(1) PRIOR EXPERIENCE.In making grants and contracts
under this chapter, the Secretary shall consider the prior expe-
rience of service delivery under the particular program for
which funds are sought by each applicant. For fiscal years
after 1985, the level of consideration given to prior experience
shall not vary from the level of consideration given this factor
for fiscal year 1985, except that in the case of the programs au-
thorized in sections 402E and 402G, the level of consideration
given to prior experience shall be the same as the level of con-
sideration given this factor in the other programs authorized
in this chapter.
(2) ORDER OF AWARDS; PROGRAM FRAUD.(A) Except with
respect to grants made under section 402G, and as provided in
subparagraph (B), the Secretary shall award grants and con-
tracts under this chapter in the order of the scores received by
the application for such grant or contract in the peer review
Sec. 402A
HIGHER EDUCATION ACT OF 1965
46
process required under section 1210 and adjusted for prior ex-
perience in accordance with paragraph (1).
(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.
(3) PEER REVIEW PROCESS.(A) The Secretary shall assure
that,
to
the
extent
practicable,
members
of
groups
underrepresented in higher education, including African Amer-
icans, Hispanics, Native Americans, Alaska Natives, Asian
Americans, Native American Pacific Islanders (including Na-
tive Hawaiians), are represented as readers of applications
submitted under this chapter. The Secretary shall also assure
that persons from urban and rural backgrounds are rep-
resented as readers.
(B) The Secretary shall ensure that each application sub-
mitted under this chapter is read by at least 3 readers who are
not employees of the Federal Government (other than as read-
ers of applications).
(4) 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 preceding grant or con-
tract so that no interruption of funding occurs for such success-
ful reapplicants. The Secretary shall inform each entity re-
questing assistance under this subpart for a new program re-
garding the status of their application at least 8 months prior
to the proposed startup date of such program.
(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
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 not require a separate Director to administer
a program funded under this chapter if the imposition of such
requirement will hinder coordination among programs funded
under this chapter or between programs funded under this
subpart and similar programs funded through other sources.
(d) OUTREACH.
(1) IN GENERAL.The Secretary shall conduct outreach ac-
tivities to ensure that entities eligible for assistance under this
47
HIGHER EDUCATION ACT OF 1965
Sec. 402A
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 au-
thorized under this chapter. The Secretary shall give priority
to serving programs and projects that serve geographic areas
and eligible populations which have been und.erserved by the
programs assisted under this chapter. Technical training ac-
tivities shall include the provision of information on authoriz-
ing 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
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 LO1N-INCOME INDIVID-
UAL.(1) Except in the case of an independent student, as defmed
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 re-
turn.
(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.
co AUTHORIZATION OF APPROPRIATIONS.For the purpose of
making grants and contracts under this chapter, there are author-
ized to be appropriated $650,000,000 for fiscal year 1993, 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 1/2 of 1 percent of such amount to obtain addi-
tional qualified readers and additional staff to review applications,
Sec. 402B
HIGHER EDUCATION ACT OF 1965
48
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.
(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.
(20 U S.C. 1070a-11) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
258, amended October 12, 1976, P.L. 94-482, sec. 124(a), 90 Stat. 2094; amended
October 3, 1980, P.L. 96-374, sec. 405, 94 Stat. 1407; amended October
1986,
P L 99-498, sec. 401(0, 100 Stat. 1336; amended July 23, 1992, P.L. 102-325, sec.
402(a)(4), 106 Stat. 482; amended December 20, 1993, P.L. 103-208, sec. 2(b)(6)-(9),
107 Stat 2458.
SEC. 402B. 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; anoi
(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-
58
49
HIGHER EDUCATION ACT OF 1965
Sec. 402B
(1) academic advice and assistance in secondary school and
college course selection;
(2) assistance in completing college admission and fman-
cial aid applications;
(3) assistance in preparing for college entrance examina-
tions;
(4) guidance on secondary school reentry or entry to gen-
eral educational development (GED) programs or other alter-
native education programs for secondary school dropouts;
(5) personal and career counseling;
(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 parents of students
served;
(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 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.
(20 U.S.C. 1070a-12) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
258, 259; amended August 21, 1974, P.L. 93-380, sec. 833, 88 Stat. 602, 604;
amended October 12, 1976, P.L. 94-482, sec. 124, 90 Stat. 2094, 2095, 2096; amend-
ed November 1, 1978, P.L. 95-566, sec. 4, 92 Stat. 2403; amended October 3, 1980,
P.L. 96-374, sec. 405, 94 Stat. 1408; amended October 17, 1986, P.L. 99-498, sec.
401(a), 100 Stat. 1337; amended July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 486.
SEC. 402C. 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.
5J
Sec. 402C
HIGHER EDUCATION ACT OF 1965
50
(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) personal counseling;
(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 olcareer 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) mentormg programs invoMng elementary or secondary
school teachers, faculty members at mstitutions 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) 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, and
not in excess of $40 per month during the remaining period of the
year.
60
51
HIGHER EDUCATION ACT OF 1965
Sec. 402D
(20 U.S.C. 1070a-13) Enacted October 3, 1980, P.L. 96-374, sec. 405, 94 Stat.
1409; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1338; amended
July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106 Stat. 487; amended December 20,
1993, P.L. 103-208, sec. 2(b)(10), 107 Stat. 2459.
SEC. 402D. 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.
(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;
6 1
Sec. 402E
HIGHER EDUCATION ACT OF 1965
52
(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) require an assurance from the institution which is the
recipient of the grant or contract that each student enrolled in
the project will be offered sufficient financial assistance to
meet that student's full fmancial need.
(20 U.S.C. 1070a-14) Enacted October 3, 1980, P.L. 95-374, sec. 405, 94 Stat.
1410; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1339; amended
July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106 Stat. 488; amended December 20,
1993, P.L. 103-208, sec. 2(b)(11), 107 Stat. 2459.
SEC. 402E. POSTBACCALAUREATE ACHIEVEMENT PROGRAM AUTHOR-
ITY'.
(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) SERV10ES.---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
62
53
HIGHER EDUCATION ACT OF 1965
Sec. 402F
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.
(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 $2,400 per annum;
and
(2) may include, in addition, the costs of summer tuition,
summer room and board, and transportation to summer pro-
grams.
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.
(20 U.S.C. 1070a-15) Enacted October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat.
1339; amended June 3, 1987, P.L. 100-50, sec. 6, 101 Stat. 340; amended Aug. 23,
1988, P.L. 100-418, sec. 6271, 102 Stat. 1523; amended July 23, 1992, P.L. 102-
325, sec. 402(a)(4), 106 Stat. 489.
SEC. 402F. 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 fman-
cial aid applications;
63
Sec. 402G
HIGHER EDUCATION ACT OF 1965
54
(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 mstitutions 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 deAgned for students of limited
English proficiency.
(C) REQUIREMENTS FOR APPROVAL JF 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;
(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
servzces from another project funded under this section or
under section 402B.
(20 U.S.C. 1070a-16) Enacted October 3, 1980, P.L. 96-374, sec. 405, 94 Stat.
1410; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1340; amended
July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106 Stat. 490.
SEC. 402G. 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, 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.
6 4
55
HIGHER EDUCATION ACT OF 1965
Sec. 404A
(3) The design and operation of model programs for
projects funded under this chapter.
(C) CONSULTATION.Grants for the purposes of this section
tthall 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.
(20 U.S.C. 1070a-17) Enacted October 3, 1980, P.L. 96-374, sec. 405, 94 Stat.
1411; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1341; amended
July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106 Stat. 491.
SEC. 402IL EVALUATION FOR PROJECT IMPROVEMENT.
(a) IN GENERAL.For the purpose of improving the operation
of the programs and projects assisted under this chapter, the Sec-
retary is authorized to make grants to and enter into contracts
with institutions of higher education and other public and private
institutions and organizations to evaluate the effectiveness of the
various programs assisted under this subpart in meeting the pur-
poses described in this chapter.
(b) CONTENT.The evaluations described in subsection (a)
shall identify institutional, community and program practices par-
ticularly effective in increasing the access of low-income individuals
and first-generation college students to postsecondary education,
the preparation of such individuals and students for postsecondary
education, and such individuals' and students' success in post-
secondary education.
(c) REsuurs.In order to improve program effectiveness, the
results of the ongoing evaluations described in subsection (a) shall
be disseminated by the Secretary to similar programs assisted
under this chapter as well as other individuals concerned with the
postsecondary access and retention of low-income individuals and
first-generation college students.
(20 U.S.C. 1070a-18) Enactzd July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 491.
CHAPTER 2-NATIONAL EARLY INTERVENTION
SCHOLARSHIP AND PARTNERSHIP PROGRAM
SEC. 404A. EARLY INTERVENTION PROGRAM AUTHORIZED.
The Secretary is authorized, in accordance with the require-
ments of this chapter, to establish a program that
(1) encourages States to provide or maintain a guarantee
to eligible low-income students who obtain a high school di-
ploma (or its equivalent), of the financial assistance necessary
to permit them to attend an institution of higher education;
and
(2) provides incentives to States, in cooperation with local
educational agencies, institutions of higher education, commu-
nity organizations and business, to provide
(A) additional counseling, mentoring, academic sup-
port, outreach, and supportive services to elementary, mid-
dle, and secondary school students who are at risk of drop-
ping out of school; and
77-5a 0-94 -- 3
65
Sec. 404B
HIGHER EDUCATION ACT OF 1965
56
(B) information to students and their parents about
the advantages of obtaining a postsecondary education and
their college financing options.
(20 U.S.C. 1070a-21) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 492; amended December 20, 1993, P.L. 103-208, sec. 2(b)(12), 107 Stat. 2459.
SEC. 404B. STATE ELIGIBILITY AND STATE PLAN.
(a) PLAN REQUIRED FOR ELIGIBILITY.(1) In order for a State
to qualify for a grant under this chapter, the State shall submit to
the Secretary a plan for carrying out the program under this chap-
ter. Such plan shall provide for the conduct, under the State pro-
gram, of both a scholarship component in accordance with section
404D and an early intervention component in accordance with sec-
tion 404C.
(2) Each State plan submitted pursuant to paragraph (1) shall
be in such form, contain or be accompanied by such information or
assurances, and be submitted at such time as the Secretary may
require by regulation and shall
(A) describe the activities for which assistance under this
section is sought; and
(B) provide such additional assurances as the Secretary de-
termines necessary to ensure compliance with the require-
ments of this section.
(b) MATCHING REQUIREMENT.The Secretary shall not approve
a plan submitted under subsection (a) unless such plan
(1) provides that the State will provide, from State, local,
or private funds, not less than one-half the cost of the program;
(2) specifies the methods by which such share of the costs
will be paid; and
(3) includes provisions designed to assure that funds pro-
vided under this chapter shall supplement and not supplant
funds expended for existing State and local programs.
(C)
METHODS FOR COMPLYING WITH MATCHING REQUIRE-
MENT.A State may count toward the contribution required by
subsection (b)(1)
(1) the amount of the grants paid to students from State,
local, or private funds under this chapter;
(2) the amount of tuition, fees, room or board waived or re-
duced for recipients of grants under this chapter; and
(3) the amount expended on documented, targeted, long-
term mentoring and counseling provided by volunteers or paid
staff of nonschool organizations, including businesses, religious
organizations, community groups, postsecondary educational
institutions, nonprofit and philanthropic organizations, and
other organizations.
(d) PAYMENT REQUIREMENTS.Upon submission by a State of
such documents as the Secretary may, by regulation, require for
demonstrating the total amount expended by the State in accord-
ance with this chapter for a fiscal year, the Secretary shall, from
such State's allotment under section 404E for such fiscal year, pay
to such State an amount equal to not more than one-half of the
total amount so expended.
(20 U.S.C. 1070a-22) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 492; amended December 20, 1993, P.L. 103-208, sec. 2(b)(13) and (14), 107
Stat. 2459.
61;
57
HIGHER EDUCATION ACT OF 1965
Sec. 404C
SEC. 404C. EARLY INTERVENTION.
(a) IN GENERALIn order to receive payments under section
404B(d), a State shall demonstrate to the satisfaction of the Sec-
retary that the State will provide comprehensive mentoring, coun-
seling, outreach, and supportive services to students participating
in programs under this chapter who are enrolled in preschool
through grade 12. Such counseling shall include financial aid coun-
seling that provides information on the opportunities for financial
assistance under this title. The State shall demonstrate, pursuant
to regulations of the Secretary, the methods by which the State will
target services on priority students.
(b) USES OF FUNDS.
(1) IN GENERALThe Secretary shall, by regulation, estab-
lish
criteria
for
determining
whether
comprehensive
mentoring, counseling, outreach, and supportive services pro-
grams may be used to meet the revirements of subsection (a).
(2) ALLOWABLE PROVIDERS.The activities required by
subsection (a) may be provided by service providers such as
community-based organizations, schools, institutions of higher
education, public and private agencies, nonprofit and philan-
thropic organizations, businesses, institutions and agencies
sponsoring programs authorized under subpart 4 of this part,
and other organizations the Secretary deems appropriate.
(3) PERMISSIBLE ACTIVITIES.Examples of acceptable ac-
tivities to 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 academic progress as
described in section 484(c), in exchange for receiving tui-
tion assistance for a period of time to be established by
each State.
(C) Activities designed to ensure high school comple-
tion and college enrollment of at-risk children, including
identification of at-risk children, after school and summer
tutoring, assistance in obtaining summer jobs, academic
counseling, volunteer and parent involvement and former
or current scholarship recipients as mentor or peer coun-
selors, skills assessment, personal counseling, family coun-
seling and home visits, and staff development, and pro-
grams and activities as described in this subparagraph
which are specially designed for students of limited Eng-
lish proficiency.
(D) Prefreshman summer programs that-
6 7
Sec. 4040
HIGHER EDUCATION ACT OF 1965
58
(i) are at institutions of higher education that also
have programs of academic year supportive services
for disadvantaged students through projects author-
ized under section 402D or through
comparable
projects funded by the St Are or other sources;
(ii) assure the participation of students who qual-
ify as disadvantaged under the provisions of 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
suinmer services as counseling, tutoring, or orienta-
tion; and (III) provide grant aid to students to cover
prefreshman summer costs for books, supplies, living
costs and personal expenses; and
(iv) assure that participating students will receive
financial aid during each academic year they are en-
rolled
at
the
participating
institution
after the
prefreshman summer.
(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.In administering the early interven-
U011 component, the State shall treat as priority students any stu-
dent m preschool through grade 12 who is eligible
(1) to be counted under section 1005(c) of the Elementary
and Secondary Education Act of 1965;
(2) for free or reduced price meals pursuant to the Na-
tional School Lunch Act; or
(3) for assistance pursuant to part A of title IV of the So-
cial Security Act (Aid to Families with Dependent Children).
(20 U S.C. 1070a-23) Enacted July 23, 1992, P.L. 102-325, sec. 402(04), 106
Stat 493; amended December 20, 1993, P.L. 103-208, sec. 2(6)(15)-(17), 107 Stat.
2459
SEC. 404D. SCHOLARSHIP COMPONENT.
(a) IN GENERAL.In order to receive payments under section
404B(d), a State shall establish or maintain a financial assistance
program that awards grants to students in accordance with the re-
quirements of this section. The Secretary shall encourage the State
to ensure that the tuition assistance provided pursuant to this sec-
tion is available to an eligible student for use at any eligible insti-
tution.
(b) GRANT AMOUNTS.The maximum amount of the grant that
an eligible student in any participating State shall be eligible to re-
ceive under this section shall be established by the State. The mini-
mum amount of the grant 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 grant funded under section 401 for such
fiscal year.
59
HIGHER EDUCATION ACT OF 1965
Sec. 404E
(c) RELATION TO OTHER ASSISTANCE.--Thition assistance pro-
vided under this chapter shall not be considered for the purpose of
awarding Federal grant assistance under this title, except that in
no casc shall the total amount of student financial assistance
awarded to a student under this title exceed such student's total
cost of attendance.
(d) ELIGIBLE STUDENTS.A student eligible for assistance
under this chapter is a student who
(1) is less than 22 years old at time of first grant award;
(2) receives a high school diploma or a certificate of high
school equivalence 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, as a
State option, a State may offer grant j:irogram portability for
recipients who attend institutions of higher education outside
such State; and
(4) who participated in the State early intervention compo-
nent required under section 404C.
(e) PRIORITY; WAIVER.(1) The Secretary shall ensure that
each State place a priority on awarding scholarships to students
who will receive a Pell Grant for the academic year for which the
award is being made under this chapter.
(2) A State may consider students who have successfully par-
ticipated in programs funded under chapter 1 of this subpart to
have met the requirements of subsection (dX4).
(20 U.S.C. 1070a-24). Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 495; amended December 20, 1993, P.L. 103-208, sec. 2(b)(18) and (19), 107
Stat. 2459.
SEC. 404E. DISTRIBUTION OF FUNDS.
(a) COMPETITIVE AwARDs.If the amount appropriated to carry
out this chapter for a fiscal year is less than $50,000,000, then the
Secretary shall award grants under this chapter on a competitive
basis to States to carry out a program described in section 404A.
(b) ALLOTMENT BASED ON TITLE I ESEA ALLOCATIONS.If the
amount appropriated to carry out this chapter for a fiscal year is
$50,000,000 or more, then the Secretary shall allot to each State
an amount which bears the same ratio to such sums as
(1) the amount allocated under section 1005 of the Elemen-
tary and Secondary Education Act of 1965 to the local edu-
cation agencies in th.e State,
bears to
(2) the total amount allocated under such section to all
such agencies in all States.
(c) LIMIT ON USE.No State may use less than 25 percent or
more than 50 percent of its allotment for the early intervention
component of the State program, except that the Secretary may
waive the 50 percent limitation if the State demonstrates that the
State has another means of providing the student's financial assist-
ance that is described in the State plan.
(d) REALLOTMENT.The amount of any State's allotment under
subsection (b) for any fiscal year which the Secretary determines
will not be required for such fiscal year for the program of that
State shall be available for reallotment from time to time, on such
60
Sec. 404F
HIGHER EDUCATION ACT OF 1965
60
dates during such year as the Secretary may fix, to other States
in proportion to the original allotments to such States .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 such programs. The total of such reductions shall be
similarly reallotted among the States whose proportionate amounts
were not so reduced. A State shall match, in accordance with sec-
tion 404B(b) any reallocated funds it receives under this sub-
section.
(e) ALLOTMENT SUBJECT TO CONTINUING COMPLIANCE.The
Secretary shall make payments for programs only to States which
continue to meet the requirements of the State plan pursuant to
section 404B.
(20 U.S.C. 1070a-25) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 495; amended December 20, 1993, P.L. 103-208, sec. 2(b)(20), 107 Stat. 2459.
SEC. 404F. EVALUATION AND REPORT.
(a) EVALUATION.Each State receiving an allotment under this
chapter shall biennially evaluate the early intervention program
assisted under this chapter in accordance with the standards de-
scribed in subsection (b) and shali submit to the Secretary a copy
of such evaluation. The evaluation component shall permit service
providers to track eligible student progress during the period such
students are participating in the program assisted under this sec-
tion and must be consistent with the standards developed by the
Secretary pursuant to subsection (b).
(b) EVALUATION STAIs/DARDS.The Secretary shall prescribe
standards for the evaluation described in subsection (a). Such
standards shall
(1) provide for input from States and service providers;
and
(2) ensure that data protocols and procedures are consist-
ent and uniform.
(c) REPORT.The Secretary shall biennially report to the Con-
gress on the activities assisted under this chapter and the evalua-
tions conducted pursuant to subsection (a).
(20 U.S.C. 100a-26) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stt.t. 496; amended December 20, 1993, P.L. 103-208, sec. 2(b)(21) and (22), 107
Stat. 2459.
SEC. 404G. APPROPRIATIONS.
There is authorized to be appropriated to make grants under
this chapter $200,000,000 for fiscal year 1993 and such sums as
may be necessary for each of the four succeeding fiscal years. For
any fiscal year for which funds are authorized to be appropriated
to carry out subpart 4 of part A of this title, no amount may be
expended to carry out the provisionp of this chapter unless the
amount appropriated for such fiscal year to carry out such subpart
4 exceed $60,000,000.
(20 U.S.C. 1070a-27) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 496; amended December 20, 1993, P.L. 103-208, sec. 2(b)(23), 107 Stat. 2459.
70
61
HIGHER EDUCATION ACT OF 1965
Sec. 406C
CHAPTER 3-PRESIDENTIAL ACCESS
SCHOLARSHIPS
SEC. 406A. SCHOLARSHIPS AUTHORIZED.
The Secretary is authorized in accordance with this chapter to
award Presidential Access Scholarships to students who
(1) are eligible to receive a Pell Grant for the year in which
the scholarship is awarded;
(2) have participated in a preparatory program for post-
secondary education; and
(3) demonstrate academic achievement.
(20 U.S.C. 1070a-31) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 497.
SEC. 406B. SCHOLARSHIP PROGRAM REQUIREMENTS.
(a) AMOUNT OF AWARD.
(1) IN GENERAL.Except as provided in paragraph (2), the
amount of a scholarship awarded under this chapter for any
academic year shall be equal to 25 percent of the Pell Grant
that the recipient is awarded for that year or $400, whichever
is greater.
(2) ADJUSTMENT FOR INSUFFICIENT APPROPRIATIONS.If,
after the Secretary determines the total number of eligible ap-
plicants for an acadoinic year in accordance with section 406C,
funds available in a fiscal year are insufficient to fully fund all
awards for that academic year under this chapter, the amount
paid to each student shall be reduced proportionately.
(b) PERIOD OF ANVARD.Scholarships under this chapter shall
be awarded for a period of not more than four academic years, or
in the case of a student who is enrolled in an undergraduate course
of study that requires attendance for the full-time equivalent of five
academic years, five academic years.
(c) USE AT ANY INSTITUTION PERMITTED.An eligible student
awarded a scholarship under this chapter may use such scholar-
ship stipend to attend any institution of higher education.
(d) ASSISTANCE NOT TO EXCEED COST OF ATTENDANCE.A
scholarship awarded under this chapter to any student, in com-
bination with the Pell Grant and other student financial assistance
available to such student, may not exceed the student's cost of at-
tendance (as defined in section 472).
(e) PRESIDENTIAL ACCESS SCHOLARS.Students awarded schol-
arships under this chapter shall be known as "Presidential Access
Scholars".
(20 U.S.C. 1070a-32) Enacted July 23, 1992, Pl. 102-325, sec. 402(a)(4), 106
Stat. 497.
SEC. 406C. ELIGIBILITY OF SCHOLARS.
(a) REQUIREMENTS FOR STUDENTS IN FIRST YEAR OF POST-
SECONDARY EDUCATION.In order for a student who will be attend-
ing the student's first year of postsecondary education to be eligible
to receive a scholarship under this chapter for that academic year,
the student shall
(1) be enrolled or accepted for enrollment in a degree or
certificate program of at least 2 years in length;
71
Sec. 406C
HIGHER EDUCATION ACT OF 1965
62
(2) have demonstrated academic achievement and prepara-
tion for postsecondary education by taking college preparatory
level coursework in the following areas while in secondary
school or the equivalent:
(A) 4 years of English;
(B) 3 years of science;
(C) 3 years of mathematics;
(D) either
(i) 3 years of history; or
(ii) 2 years of history and 1 year of social studies;
and
(E) either
(i) 2 years of a foreign language; or
(ii) 1 year of computer science and 1 year of a for-
eign language.
(3) earn a grade point average of 2.5 or higher, on a scale
of 4.0, in the final 2 years of high school; and
(4) either
(A) have participated, for a minimum period of 36
months, in an early intervention program that meets the
requirements of section 406D; or
(B) rank, or have ranked, in the top 10 percent, by
grade point average, of the student's secondary school
graduating class.
(b) REQUIREMENTS FOR ALL STUDENTS.
(1) 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.
(2) In order for. a student who will be attending a year of
postsecondary education, other than the student's first year, to
continue to be eligible to receive a scholarship under this chap-
ter for that academic year the eligible student shall maintain
eligibility to receive a Pell Grant, including fulfilling the re-
quirements for satisfactory academic progress as described in
section 484(c).
(20 U.S.C. 1070a-33) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 497.
SEC. 406D. ELIGIBLE EARLY INTERVENTION PROGRAMS.
(a) PARTICIPATION IN TRIO PROGRAMS AND NATIONAL EARLY
INTERVENTION SCHOLARSHIP AND PARTNERSHIP PROGRAMS.Par-
ticipation in a program authorized under section 402B, 402C, or
402F, or chapter 2 of subpart 2 of this part for a 36-month period
shall meet the requirement of section 406C(a)(4)(A).
(b) OTHER ELIGIBLE EARLY INTERVENTION PROGRAM.Partici-
pation in another early intervention program, regardless of spon-
sorship, for a 36-month period, shall meet the requirements of sec-
tion 406C(a)(4)(A) if the program
(1) meets the requirements established by the Secretary;
and (2) is certified by the Governor as an honors scholars pro-
gram.
72
ep.
63
HIGHER EDUCATION ACT OF 1965
Sec. 406F
(20 U.S.C. 1070a-34) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 498.
SEC. 406E. STUDENT ELIGIBILITY.
(a) STUDENT ELIGIBILITY.For the purpose of this chapter, the
term "eligible student" means an individual who
(1) is a graduate of a public or private secondary school or
has the equivalent certificate of graduation as recognized by
the State in which the eligible student resides;
(2) not later than 3 years after such individual graduates
or obtains an equivalent certificate, has been admitted for en-
rollment or is enrolled at an institution of higher education;
and
(3) is eligible to receive a Pell Grant for the year in which
the scholarship is awarded.
(b) LIMITATION.For the purpose of thi§ chapter, the term "eli-
gible student" does not include an individual who has been award-
ed a baccalaureate degree.
(c) WAIVERS.
(1) EARLY INTERVENTION PROGRAM PARTICIPATION.The
Secretary may waive the requirement described in section
406C(a)(4) for any student who was unable to participate in an
early intervention program assisted under this part because
such program was not available in the area in which such stu-
dent resides or the student was unable to participate in an
early intervention program where the student resides.
(2)
LIMITED-ENGLISH PROFICIENT STUDENTS.The Sec-
retary may waive the requirement described in
section
406C(a)(2)(E) for any limited-English proficient student who is
fluent in a language other than English and is participating in
a program to teach such student the English language or for
any English speaking student fluent in a second language.
(20 U.S.C. 1070a-35) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 498.
SEC. 406F. EARLY INTERVENTION SCHOLARSHIP AGREEMENT.
(a) IN GENERAL.In order for a student to receive a scholar-
ship under this chapter, the State educational agency serving the
State in which such child resides shall have entered into an agree-
ment with the Secretary.
(b) CONTENTS.Each agreement described in subsection (a)
shall include provisions designed to ensure that
(1) all secondary school students in the State have equal
and easy access to the coursework described in
section
406C(a)(2);
(2) the State educational agency has procedures in place to
verify to the Secretary that students receiving scholarships
under this chapter have taken such coursework and that such
coursework has been of a college preparatory level, including
a requirement that all secondary schools in the State issue a
certificate to each eligible student certifying that such student
has completed the necessary coursework to qualify for a schol-
arship under this chapter;
(3) the State educational agency has procedures in place to
notify institutions of higher education of the availability of
Sec. 406G
HIGHER EDUCATION ACT OF 1965
64
scholarships under this chapter, so that such institutions may
award additional scholarships in concert with the scholarships
received under this chapter; and
(4) the -State educational agency has procedures in place to
inform junior high school students and their families about the
value of postsecondary education, the availability of student
aid to meet college expenses, and the availability of scholar-
ships under this chapter for students who take demanding
courses, with particular emphasis on activities designed to en-
sure that students from low- and moderate-income families
have access to such information.
(c) SPECIAL RULE.The Secretary may allow a State to receive
assistance under this chapter for students whose secondary schools
do not offer the necessary coursework if such students take the re-
quired courses at another local secondary school or community col-
lege
(20 U.S.C. 1070a-36) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat 499.
SEC. 406G. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $200,000,000 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 chapter.
No amount may be expended to carry out the provisions of this
chapter in any fiscal year unless the amount appropriated for such
fiscal year to carry out subpart 1 of part A of this title exceeds the
amount appropriated to carry out such subpart in the preceding fis-
cal year.
(20 U.S.C. 1070a-37) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat 499.
CHAPTER 4-MODEL PROGRAM COMMUNITY
PARTNERSHIP AND COUNSELING GRANTS
SEC. 408A. MODEL PROGRAM GRANTS.
(a) PROGRAM AUTHORrrY.From the amounts appropriated
under section 408C, the Secretary shall award grants to develop
model programs
(1) to counsel students, at an early age, about college op-
portunities, precollege requirements, the college admissions
procedure, financial aid opportunities, and student support
services that are specially designed or .customized for use in
specific geographic, social, and cultural environments; or
(2) which stimulate community partnerships with schools
by providing tutoring, inc ntoring, work experiences, and other
services which support making postsecondary education a real-
istic goal for all students.
(b) PRIORITIES IN SELECTION.The Secretary shall give priority
to those model programs which are directed at areas which have
a high proportion of minority, limited English proficiency, economi-
cally disadvantaged, disabled, nontraditional, or at-risk students
and those model programs which serve these students from rural
or urban environments.
(C) PROPOSAL REQUIREMENTS.
7 4
65
HIGHER EDUCATION ACT OF 1965
Sec. 408C
(1) TAILORING.To receive a grant under subsection (a)(1),
the proposal submitted to the Secretary shall demonstrate that
the counseling on college opportunities, precollege require-
ments, the college admissions procedure, and financial aid op-
portunities (including early intervention counseling), is tailored
to a specific geographic, social or cultural environment.
(2) COMMMITY PARTNERSHIPS.To receive a grant under
subsection (a)(2), the proposal submitted to the Secretary shall
demonstrate the active involvement of a local educational
agency and at least one of the following:
(A) Local businesses.
(B) Labor organizations.
(C) Community groups.
(3) GOALS AND OUTCOMES.To receive a grant under this
section, each proposal shall contain a statement of specific,
measurable goals and methods for obtaining statistics on the
number of participants who continue on to postsecondary edu-
cation.
(20 U.S.C. 1070a-41) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 500.
SEC. 408B. DIFFUSION ACTIVITIES.
(a) COLLECTION OF INFoRmATION.The Secretary shall collect
information concerning
(1) programs supported under section 408A and programs
of demonstrated effectiveness which counsel students about
college opportunities, precollege requirements, the college ad-
missions procedure, and financial aid opportunities;
(2) early intervention programs of demonstrated effective-
ness which set students on the path toward staying in school
and pursuing a postsecondary education;
(3) model programs which counsel students in specific en-
vironments, such as urban, rural, and suburban; and
(4) model programs which develop school/community part-
nerships to provide mentoring, tutoring, work experiences and
other services which support making postsecondary education
a realistic goal for all students.
(b) DISSEMINATION.The Secretary shall ensure that the infor-
mation collected under subsection (a) is disseminated.
(20 U.S.C. 1070a-42) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 500.
SEC. 408C. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $35,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this chapter.
(20 U.S.C. 1070a-43) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4). 106
Stat. 501.
CHAPTER 5-PUBLIC INFORMATION
SEC. 409A. DATABASE AND INFORMATION LINE.
From the funds available under section 409C, the Secretary
shall award a contract to establish and maintain
Sec. 409A
NIGHER EDUCATION ACT OF 1965
66
(1) a computerized database of all public and private stu-
dent financial assistance programs, to be accessible to schools
and libraries through either modems or toll-free telephone
lines; and
(2) a toll-free information line, including access by tele-
communications devices for the deaf ("TDD's"), to provide indi-
vidualized financial assistance information to parents, stu-
dents, and other individuals, including individuals with dis-
abilities, and to refer students with disabilities and their fami-
lies to the postsecondary clearinghouse that is authorized
under section 633(c) of the Individuals with Disabilities Edu-
cation Act.
(20 U.S.C. 1070a-51) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4),
106
Stat. 501; amended December 20, 1993, P.L. 103-208, sec. 2(b)(24), 107 Stat. 2459.
SEC. 409B. EARLY AWARENESS INFORMATION PROGRAM.
(a) PROGRAM AUTHORM.The Secretary is authorized to enter
into contracts with appropriate public agencies, nonprofit private
organizations, and institutions of higher education to conduct an
information program designed
(1) to broaden the early awareness of postsecondary edu-
cational opportunities by secondary school students and their
parents; and
(2) to encourage economically disadvantaged, minority, or
at-risk individuals to seek higher education, and to seek higher
education and financial assistance counseling at public schools
and libraries.
(b) CONTENTS OF MESSAGES.Announcements and messages
supported under this section
(1) may be specially designed for students of limited Eng-
lish proficiency,
(2) shall publicize
(A) the availability of Federal student assistance
under this Act;
(B) the importance of postsecondary education in long-
term career planning; and
(C) the need and necessity to complete a secondary
education program successfully in order to meet the re-
quirements for college.
(c) INFORMING CONGRESS.The Secretary shall keep the appro-
priate committees of the Congress informed with respect to the ef-
forts made pursuant to this section and shall recommend any addi-
tional legislative authority that will serve the purposes of this sec-
tion.
(20 U.S.C. 1070a-52) Enacted July 23, 1992, Pi. 102-325, sec. 402(a)(4),
106
Stat. 501.
SEC. 409C. DATABASE AND INFORMATION LINE.
There are authorized to be appropriated $20,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this chapter.
(20 U.S.C. 1070a-53) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4),
106
Stat. 502.
7
a
67
HIGHER EDUCA110N ACT OF 1965
Sec. 410A
CHAPTER 6-NATIONAL STUDENT SAVINGS
DEMONSTRATION PROGRAM
SEC. 410A. NATIONAL STUDENT SAVINGS DEMONSTRATION PROGRAM.
(a) STATEMENT OF PURPOSE.It is the purpose of this section
to
(1) create a demonstration program to test the feasibility
of establishing a national student savings program to encour-
age families to save for their children's college education and
thereby reduce the loan indebtedness of college students; and
(2) help determine the most effective means of achieving
the activities described in paragraph (1).
(b) DEMONSTRATION PROGRAM AUTHORIZED.
(1) IN GENERAL.The Secretary is authorized to award a
demonstration grant to not more than 5 States to enable each
such State to conduct a student savings program in accordance
with this section.
(2) AMOUNT OF GRANT.The amount of each grant award-
ed pursuant to paragraph (1) shall be computed on the basis
of
(A) a Federal match in an amount equal to the initial
State deposit into each account established pursuant to
subsection (cX2XB), except that such Federal match shall
not exceed $50 per child; multiplied by
(B) the number of children participating in the pro-
gram assisted under this part.
(3) PRIORITY.In awarding grants under this section the
Secretary shall give priority to States proposing programs that
establish accounts for a child prior to the age of compulsory
school attendance in the State in which such child resides.
(4) SPECIAL CONSIDERATION.Ip awarding grants under
this section the Secretary shall give special consideration to
States
(A) that permit employers to use pretax income in
making contributions to a child's account; and
(B) that provide assurances that interest earned in ac-
counts shall be exempt from State taxes.
(c) APPLICATION.
(1) IN GENERAL.Each State 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 reasonably require.
(2) CONTENTS.Each application submitted pursuant to
paragraph (1) shall
(A) describe the student savings program to be estab-
lished and the number of children to be served;
(B) contain assurances that an account shall be estab-
lished for each child participating in the program assisted
under this section and set forth the initial amount to be
deposited into each such account by the State;
(C) contain assurances that deposits into such account
shall be invested in a responsible manner that provides a
reasonable rate of return;
77
Sec. 410B
HIGHER EDUCATION ACT OF 1965
68
(D) contain assurances that funds in the account shall
only be used to pay the cost of attendance (as such term
is defined in section 472) at any eligible institution (as
such term is defined in section 481);
(E) describe the amount of the Federal contribution re-
quested for starting each child's account, which shall not
exceed $50 per child participating in the program;
(F) describe the age at which children in the State
may establish such accounts;
(G) indicate whether the program will be open to all
children, regardless of family income, or only to disadvan-
taged children;
(H) describe how additional deposits into each account
from the State or other resources will be earned by a child
for performance of community service, academic perform-
ance, or other activities or achievements;
(I) contain assurances that contributions in an account
shall be refundable to the contributor without interest if
the child is unable to attend college;
(J) contain assurances that the State shall encourage
individuals and organizations to make contributions to a
child's account;
(K) contain assurances that the State shall provide in-
centives to employers to make contributions to a child's ac-
count and participate in the program assisted under this
section; and
(L) contain assurances that if a child leaves the State
in which such child has an account, then such child shall
retain the right to make contributions to the account, ex-
cept that the State shall not be required to make any addi-
tional deposits other than interest.
(d) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $10,000,000 for fiscal year 1993 and such sums
as may be necessary for each of the 4 succeeding fiscal years to
carry out this section.
(20 U.S.C. 1070a-61) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 502.
CHAPTER 7-PREELIGIBILITY FORM'
SEC. 410B. INFORMATION ON ELIGIBILITY FOR ASSISTANCE.
To help ensure access to postsecondary education by providing
early notice to students of their potential eligibility for financial
aid, the Secretary, as part of the contracts developed pursuant to
section 483, may
(1) develop and process a common preeligibility Federal fi-
nancial aid form,
(2) distribute and process such form on a year-round basis
free of charge to students and parents, and
(3) issue, on the basis of information reported by the stu-
dent on such form, a preeligibility expected family contribution
1 This section was previously designated as section 483(d) and was redesignated as chapter
7 by P.L. 102-325.
69
HIGHER EDUCATION ACT OF 1965
Sec. 410C
figure and estimate of the amount of Federal (and, if feasible,
non-Federal) funds for which the student might qualify in later
completing and submitting the application form called for
under section 483.
The Secretary shall widely disseminate the preeligibility form
through post offices and other appropriate Federal installations,
schools, institutions of higher education, libraries, and community-
based agencies, including projects assisted under subparts 2 and 5
of this part.
(20 U.S.C. 1070a-71) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 503.
CHAPTER 8-TECHNICAL ASSISTANCE FOR
TEACHERS AND COUNSELORS
SEC. 410C. TECHNICAL ASSISTANCE GRANTS.
(a) PROGRAM AUTHORITY.From the amounts appropriated
under subsection (0, the Secretary shall award grants to local edu-
cational agencies to use for the purpose of' obtaining specialized
training for guidance counselors, teachers, and principals to coun-
sel students about college opportunities, precollege requirements,
the college admissions procedure, and financial aid opportunities.
(b) SELECTION OF GRANT RECIPIENTS.
(1) PRIORITY.In making grants under this section, the
Secretary shall give priority to those local educational agencies
serving school districts (A) from which the proportion of stu-
dents who continue on to higher education is significantly
below the national average, and (B) in which the proportion of
students who are educationally disadvantaged is significantly
above the national average.
(2) SELECTION PROCEDURES.The Secretary shall develop
a formal procedure for the submission of proposals and publish
in the Federal Register an announcement with respect to that
procedure and the availability of funds.
(c) LOCAL PLAN.To receive a grant under this section, a local
educational agency shall submit to the Secretary a plan that
(1) specifies the methods to be used for outreach, imple-
mentation, and follow-up with those students most in need and
at-risk for dropping out or failing to pursue postsecondary edu-
cation;
(2) demonstrates the methods by which the agency will
target funds to those schools within the district that have the
lowest rate of students who continue on to higher education;
(3) utilizes early intervention programs for counseling mi-
nority, economically disadvantaged, disabled, and at-risk stu-
dents about postsecondary education;
(4) includes a strategy for keeping the guidance counselors,
teachers (including elementary, secondary, vocational, and spe-
cial education teachers), and principals who have been trained
up-to-date on fmancial aid information;
(5) contains a statement of specific goals and methods for
obtaining statistics on the number of participants who continue
on to postsecondary education; and
7 3
Sec. 413A
HIGHER EDUCATION ACT OF 1965
70
(6) contains a description of the costs of the training and
other activities to be undertaken.
(d) DURATION OF GRANTS.-Grants under this section shall be
available for 2 years.
(e) EVALUATION.-
(1) CONDUCT OF EVALUATIONS.-The Secretary shall re-
serve not more than 2 percent of arty amount appropriated
under subsection (0 for the purpose of carrying out an inde-
pendent evaluation of the effectiveness of the training pro-
grams assisted under this section in-
(A) increasing the number of personnel in a school
who regularly counsel students regarding college opportu-
nities, precollege requirements, the college admission pro-
cedure, and financial aid opportunities; and
(B) increasing the number of students who continue on
to postsecondary education from a school which has had
personnel trained using monies from this section.
(2) REPORT.-The Secretary shall submit to the appro-
priate committees of the Congress a report which contains the
findings of the evaluation required by paragraph (1).
(f) TECHNICAL ASSISTANCE GRANTS.-There are authorized to
be appropriated $40,000,000 for fiscal year 1993 and such sums as
may be necessary for each of the 4 succeeding fiscal years to carry
out this section.
(20 U.S.C. 1070a-81) Enacted July 23, 1992, P.L. 102-325, sec. 402(a)(4), 106
Stat. 504.
SUBPART 3-FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY
GRANTS
SEC. 413A. 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 1993 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.
(20 U.S.C. 1070b) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat. 251,
252; amended October 12, 1976, P.L. 94-482, sec. 122(a), 90 Stat. 2094; amended
October 3, 1980, P.L. 96-374, sec. 403, 1391, 94 Stat. 1404, 1405, 1503; amended
October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1328; amended July 23, 1992,
P L. 102-325, sec. 403(b), 106 Stat. 505; amended December 20, 1993, P.L. 103-208,
sec. 2(m), 107 Stat. 2486.
a 0
71
HIGHER EDUCATION ACT OF 1965
Sec. 413C
SEC. 413B. AMOUNT AND DURATION OFGRANTS.
(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 (I) 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.
(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.
(20 U.S.C. 1070b-1) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
252, 253; amended October 3, 1980, P.L. 96-374, sec. 403, 94 Stat. 1405; amended
October 17, 1986, P.L. 99-498, sec. 301(a), 100 Stat. 1328; amended July 23, 1992,
P.L. 102-325, sec. 403(c), 106 Stat. 505; amended December 20, 1993, P.L. 103-208,
sec. 2(m), 107 Stat. 2486.
SEC. 4I3C. AGREEMENTS WITH INSTITUTIONS; SELECTION OF RECIPI-
ENTS.
(a)
INSTITUTIONAL ELIGIBILM.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
S
Sec. 413C
HIGHER EDUCATION ACT OF 1966
72
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 oi other charitable organization funds.
(b) ELIGIBILITY FOR SELECTION.Aviards 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.
(2XA) 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
(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 less
than full time, a reasonable proportion of the institution's alloca-
tion shall be made available to such students, except that
if the
total financial need of all such students attending the institution
exceeds 5 percent of the need of all students attending such insti-
tution, then at least 5 percent of such allotment 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 student§ participating in
'Effective July 1, 1994, section 2(b)(25XA) of the Higher Education Tehhnical Amendments
of 1993 amends this subsection by striking ", a reasonable proportion of the institution's alloca-
tion shall be made available to such students, except that" and inserting "and". Effective July
1, 1994, section 2(bX25)(13) of such Act also amends this subsection by striking "5 percent of
the need" and inserting "5 percent of the total financial need".
8 2
72
HIGHER EDUCATION ACT OF 1965
Sec. 4130
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.
(20
1070b-2) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
253, 254; amended October 12, 1976, P.L. 94-482, sec. 122(b), 90 Stat. 2094; amend-
ed October 3, 1980, P.L. 96-374, sec. 403(d), 94 Stat. 1405; amended October 17,
1986, P.L. 99-498, sec. 401(a), 100 Stat. 1329; amended July 23, 1992, P.L. 102
325, sec. 403(d)(0, 106 Stat. 506; amended December 20, 1993, P.L. 103-208, sec.
2(b)(25), (m), 107 Stat. 2459, 2486.
SEC. 413D. ALLOCATION OF FUNDS.
(a) ALLOCATION BASED ON PREVIOUS ALLOCATION.(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 and used under this subpart for fiscal year 1985.
(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 1985 but is not a
first or second time participant, an amount equal to the greater
of
(1) $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 1985 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-
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 1986 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-
Sec. 413D
HIGHER EDUCATION ACT OF 1965
74
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).
(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 hi-
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 PRO RATA SHARE.From
one-quarter of the remainder of the amount appropriated pursuant
to section 413A(b) for any fiscal year (after making the allocations
required by subsection (a)), the Secretary shall allocate to each eli-
gible institution an amount which bears the same ratio to such
one-quarter as the amount the eligible institution receives for such
fiscal year under subsection (a) bears to the amount all such insti-
tutions receive under such subsection (a).
(c) ALLOCATION OF EXCESS BASED ON FAIR SHARE.(1) From
three-quarters of the remainder of the amount appropriated pursu-
ant to section 413A(b) for each year (after making the allocations
required by subsection (a)), the Secretary shall allocate to each eli-
gible 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 (d)), divided by (ii) the sum of the need of all
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).
(d) 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
75
HIGHER EDUCATION ACT OF 1965
Sec. 413D
(A) establish various income categories for dependent and
independent undergraduate students;
(3) 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 CE)
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-
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.
(e) 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
r,
Sec. 415B
HIGHER EDUCATION ACT OF 1965
76
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.
(f) FILING DEADLINES.-The Secretary shall, from time to time,
set dates before which institutions must file applications for alloca-
tions under this part.
(20 U.S.C. 1070b-3) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
254, 255; amended October 3, 1980, P.L. 96-374, sec. 403, 1351, 94 Stat. 1405, 1503;
amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1330; amended June
3, 1987, P.L. 100-50, sec. 4, 101 Stat. 340; amended July 23, 1992, P.L. 102-325,
sec. 403(g), 106 Stat. 506; amended December 20, 1993, P.L. 103-208, sec. 2(b)(26),
(m), 107 Stat. 2459, 2486.
SUBPART 4-GRANTS TO STATES FOR STATE STUDENT INCENTIVES
SEC. 415A. PURPOSE; APPROPRIATIONS AUTHORITED.
(a) PURPOSE OF SUBPART.-It is the purpose of this subpart to
make incentive grants available to States to assist States in provid-
ing grants to-
(1) eligible students attending institutions of higher edu-
cation or participating in programs of study abroad that are
approved for credit by institutions of higher education at which
such students are enrolled; and
(2) eligible students for campus-based community service
work-study.
(b) AUTHORIZATION OF APPROPRIATIONS; AVAILABILITY.-
(1) IN GENERAL.-There are authorized to be appropriated
$105,000,000 for fiscal year 1993, and such sums as may be
necessary for each of the 4 succeeding fiscal years.
(2) 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.
(20 U.S.C. 1070c) Enacted June 23, 1972, PI, 92-318, sec. 131(b)(1), 86 Stat. 255,
256; amended October 12, 1976, P.L. 94-482, sec. 123(a) and 123(c)(1), 90 Stat.
2094; amended June 15, 1977, 95-43, sec. 1(b)(3), 91 Stat. 218; amended October
3, 1980, P.L. 96-374, sec. 404(a), 94 Stat. 1406; amended October 17, 1986, P.L. 99-
498, sec. 401(a), 100 Stat. 1332; amended July 23, 1992, P.L. 102-325, sec. 404(a),
106 Stat. 506; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 4I5B. ALLOTMENT AMONG STATES.
(a) ALLOTMENT BASED ON NUMBER OF ELIGIBLE STUDENTS IN
ATTENDANCE.-(1) From the sums appropriated pursuant to section
415A(b)(1) 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 par-
ticipation in the grant program authorized by this subpart bears to
the total number cri 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
HIGHER EDUCATION ACT OF 1965
Sec. 415C
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 State student grant
incentive 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 propor-
tionate amount for any of such States being reduced to the extent
it exceeds the sum the Secretary estimates 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.
CC) 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).
(20 U.S.C. 1070c-1) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
256; amended October 12, 1976, P.L. 94-482, sec. 123(c)(2), 90 Stat. 2094; amended
October 3, 1980, P.L. 96-374, sec. 404(b), 1397, 94 Stat. 1407, 1503; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1333; amended December 20, 1993,
P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 4I5C. APPLICATIONS FOR STATE STUDENT INCENTIVE GRANT
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 &terminations 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);
8 7
Sec. 415C
HIGHER EDUCATION ACT OF 1965
78
(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 determmation
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;
(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
REALLOTMENTS.Upon his approval of any application for a pay-
ment under this subpart, the Secretary shall reserve from the ap-
79
HIGHER EDUCATION ACT OF 1965
Sec. 415D
plicable 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 re-
served amount, in advance or by way of reimbursement, and in
such installments .as the Secretary may determine. The Secretary
may amend the reservation of any amount under this section, ei-
ther upon approval of an amendment of the application or upon re-
vision of the estimated cost of the student grants or work-study
jobs with respect to which such reservation was made. If the Sec-
retary approves an upward revision of such estimated cost, the Sec-
retary may reserve the Federal share of the added cost only from
the applicable allotment (or reallotment) available at the time of
such approval.
(20 U.S.C. 1070c-2) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
256, 257; amended October 12, 1976, P.L. 94-482, sec. 123(b), 90 Stat. 2094; amend-
ed June 15, 1977, P.L. 95-43, sec. 1(a)(6), 91 Stat. 213; amended November 1, 1978,
P.L. 95-566, sec. 3, 92 Stat. 2403; amended October 3, 1980, P.L. 96-374, sec.
404(c), 1391, 94 Stat. 1407, 1503; amended October 17, 1986, P.L. 99-498, sec.
401(a), 100 Stat. 1333; amended July 23, 1992, P.L. 102-325, sec. 404(b)-(d), 106
Stat. 507; amended December 20, 1993, P.L. 103-208, sec. 2(6)(27), (m), 107 Stat.
2459, 2486.
SEC. 415D. ADMLNISTRATION OF STATE PROGRAMS; JUDICIAL RE-
VIEW.
(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
(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
F.- 9
Sec. 415E
HIGHER EDUCATION ACT OF 1965
80
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.
(20 U.S.C. 1070c-3) Enacted June 23, 1972, P.L. 92-318, sec. 131(b)(1), 86 Stat.
257, 258; amended October 3, 1980, P.L. 96-374, sec. 1391, 94 Stat. 1503; amended
October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1335; amended December 20,
1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 415E. 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.
(20 U.S.C. 1070c-4) Enacted October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat.
1336; amended June 3, 1987, P.L. 100-50, sec. 5, 101 Stat. 340; amended December
20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SUBPART 5SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES
ARE ENGAGED IN MIGRANT AND SEASONAL FARMWORK
SEC. 418L MAINTENANCE AND EXPANSION OF EXISTING 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-
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 n
minimum of 75 days during the past 24 months in migrant
and seasonal farmwork; or
o
81
HiGHER EDUCATION ACT OF 1965
Sec. 418A
(ii) who are eligible to participate, or have participated
within the preceding 2 years, in programs under subpart
1 of part D of chapter 1 of title I of the Elementary and
Secondary Education Act of 1965 or section 402 of the Job
Training Partnership Act; 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 subpart 1 of part D of chapter 1 of title I of
the Elementary and Secondary Education Act of 1965 or sec-
tion 402 of the Job Training Partnership Act, and who meet
the minimum qualifications for attendance at a college or uni-
versity;
(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;
Sec. 418A
HIGHER EDUCATION ACT OF 1965
82
(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 migrantyouth; 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
staff shall have a demonstrated knowledge and be sensitive to the
unique characteristics and needs of the migrant and seasonal farm-
worker population, and provisions for:
(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 authorized by subpart 4 of this part in accord-
ance with section 417A(b)(2).
(0 MINIMUM ALLOCATIONS.The Secretary shall not allocate
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) AUTHORIZATION OF APPROPRIATIONS.(1) There are author-
ized to be appropriated for the high school equivalency program
$15,000,000 for fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
9 2
83
HIGHER EDUCATION ACT OF 1965
Sec. 419C
(2) There are authorized to be appropriated for the college as-
sistance re igrant program $5,000,000 for fiscal year 1993 and such
sums as may be necessary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1070d-2) Enacted October 3, 1980, P.L. 96-374, sec. 406, 94 Stat. 1411;
amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1341; amended June
3, 1987, P.L. 100-50, sec. 7, 101 Stat. 340; amended July 23, 1992, P.L. 102-325,
sec. 405, 106 Stat. 507; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107
Stat. 2486.
SUBPART 6-ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM
SEC. 419A. 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.
(20 U.S.C. 1070d-31) Enacted October 30, 1984, P.L. 98-558, sec. 801(a), 98 Stat.
2900; amended Nov. 8, 1985, P.L. 99-145, sec. 1627(a), 99 Stat. 779; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1343; amended December 20, 1993,
P.L. 103-208, sec. 2(m), 107 Stat. 2486.
[Section 419B was repealed by P.L. 102-325, sec. 406(a), 106
Stat. 508.1
SEC. 419C. 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 ANVARD.-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
(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 high-
er education.
(d) BYRD SCHOLARS.-Individuals awarded scholarships under
this subpart shall be known as "Byrd Scholars".
(20 U.S.C. 1070d-33) Enacted October 30, 1984, P.L. 98-558, sec, 801(a), 98 Stat.
2900; amended Nov. 8, 1985, P.L. 99-145, sec. 1627(b), 99 Stat. 779; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1344; amended July 23, 1992, P.L.
' So in law. Probably ahould end with "; and"
Sec. 419D
HIGHER EDUCATION ACT OF 1965
84
102-325, sec. 406(b), 106 Stat. 508; amended December 20, 1993, P.L. 103-208, sec.
2(b)(28), (m), 107 Stat. 2459-2460, 2486.
SEC. 419D. ALLOCATION AMONG STATES.
(a) ALLOCATION PORMULA.-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 95-1134 (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 rec:Aved by the Insular Area from any department or
agency of the United States Government.
(20 U.S.C. 1070d-34) Enacted October 30, 1984, P.L. 98-558, sec. 801(a), 98 Stat.
2901; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1344; amended
July 23, 1992, P.L. 102-325, sec. 406(c), 106 Stat. 509; amended December 20, 1993,
P.L. 103-208, sec. 2(b)(29), (m), 107 Stat. 2460, 2486.
SEC. 419E. 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.
(20 U.S.C. 1070d-35) Enacted October 30, 1984, Pl. 98-558, sec. 801(a), 98 Stat.
2901; amended Nov. 8, 1985, P.L. 99-145, sec. 1627(c), 99 Stat. 779; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1344; amended July 23, 1992, P.L.
102-325, sec. 406(g)(2), 106 Stat. 509; amended December 20, 1993, P.L. 103-208,
sec. 2(m), 107 Stat. 2486.
94
4. .
85
HIGHER EDUCKRON ACT OF 1965
Sec. 419H
SEC. 419F. 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.
(20 U.S.C. 1070(1-36) Enacted October 30, 1984, P.L. 98-558, sec. 801(a), 98 Stat.
2901; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1344; amended
December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 419G. 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 F'ederated 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-
cy shall consult with school administrators, school boards, teachers,
counselors, and parents.
kr1) TIMING OF SELECTION.-The selection process shall be com-
pleted, and the awards made, prior to the end of each secondary
school academic year.
(20 U.S.C. 1070d-37) Enacted October 30, 1984, P.L. 98-558, sec. 801(a), 98 Stat.
2901; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1345; amended
July 23, 1992, P.L. 102-325, sec. 406(d), 106 Stat. 509; amended December 20, 1993,
P.L. 103-208, sec. 2(b)(30), (in), 107 Stat. 2460, 2486.
SEC. 4190. STIPENDS AND SCHOLARSHIP CONDITIONS.
(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.
(20 U.S.C. 1070d-38) Enacted October 30, 1984, P.L. 98-558, sec. 801(a), 98 Stat.
2902; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1345; amended
July 23, 1992, P.L. 102-325, sec. 406(e), 106 Stat. 509; amended December 20, 1993,
P.L. 103-208, sec. 2(m), 107 Stat. 2486.
Q45
Sec. 419J
HIGHER EDUCATION ACT OF 1965
86
SEC. 4I9J.1 CONSTRUCTION OF NEEDS PROVISIONS.
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.
(20 U.S.C. 1070d-40) Enacted October 30, 1984, P.L. 98-558, sec. 801(a), 98 Stat.
2902; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1345; amended
July 23, 1992, 13,L. 102-325, sec. 406(f), 106 Stat. 509; amended December 20, 1993,
P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 419K AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for this subpart
$10,000,000 for fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1070d-41) Enacted October 30, 1984, P.L. 98-558, sec. 801(a), 98 Stat.
2902; amended October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat. 1346; amended
July 23, 1992, P.L. 102-325, sec. 406(h), 106 Stat. 509; amended December 20, 1993,
P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SUBPART 7 2-ASSISTANCE TO INSTITUTIONS OF HIGHER EDUCATION
SUBPART 8-SPECIAL CHILD CARE SERVICES FOR DISADVANTAGED
COLLEGE STUDENTS
SEC. 420E. SPECIAL CHILD CARE SERVICES FOR DISADVANTAGED
COLLEGE STUDENTS.
(a) PROGRAM AUTHORITY.-Funds appropriated pursuant to
subsection (c) shall be used by the Secretary to make grants to in-
stitutions of higher education to provide special child care services
to disadvantaged students.
(b) APPLICATIONS.-Any institution wishing to receive a grant
under this section shall submit an application to the Secretary.
Such application shall include-
(1) a description of the program to be established;
(2) assurances by the applicant to the Secretary that-
(A) not less than two-thirds of the participants in the
program are low-income individuals;
(B) the participants require the services to pursue suc-
cessfully a program of education beyond high school;
(C) the participants are enrolled at the institution
which is the recipient of the grant;
(D) all participants will receive sufficient assistance
(under this subpart, other provisions of this title, or other-
wise) to meet that student's full financial need for child
care services related to such enrollment; and
(E) the institution will meet such need of participants
by providing child care through vouchers, contracted serv-
ices, or direct provision of services; and
(3) such information (and meet such conditions) as may be
required by the Secretary.
Section 4191 was repealed by P.L. 102-325, sec. 406(01), 106 Stat. 509.
2Section 420 was repealed by P.L. 102-325, sec. 407, 106 Stat. 610; and section 420A was
repealed by P.L. 102-326, sec. 408, 106 Stat 510.
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87
HIGHER EDUCATION ACT OF 1965
Sec. 421
(C) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out the purpose of this section,
$20,000,000 for fiscal year 1993, and such sums as may be nec-
essary for the 4 succeeding fiscal years.
(d) DEFINITION.For purposes of this subpart, the term "low-
income individual" means an individual from a family whose tax-
able income for the preceding year did not exceed 150 percent of
an amount equal to the poverty level determined by using the cri-
teria of poverty established by the Bureau of the Census.
(20 U.S.C. 1070f) Enactod October 17, 1986, P.L. 99-498, sec. 401(a), 100 Stat.
1352; amended June 3, 1987, P.L. 100-50, sec. 9, 101 Stat. 341; amended July 23,
1992, P.L. 102-325, sec. 409, 106 Stat. 510; amended December 20, 1993, P.L. 103-
208, sec. 2(m), 107 Stat. 2486.
PART BFEDERAL FAMILY EDUCATION LOAN PROGRAM
SEC. 421. STATEMENT OF PURPOSE; NONDISCRIMINATION; AND AP-
PROPRIATIONS 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-
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 fox the fiscal year
77-520
7
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Sec. 422
HIGHER EDUCATION ACT OF 1965
88
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(0 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) DES1GNATION.-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".
(d) LIMITATION ON AUTHORIZATION To GUARANTEE NEW LOANS
UNDER THIS PART.-Notwithstanding any other provision of this
part, no new loan guarantees shall be issued after June 30, 1994,
if the Secretary does not issue final regulations implementing the
-hanges made to this part under the Higher Education Amend-
ments of 1992 prior to that date. The authority to issue new loan
guarantees shall resume upon the Secretary's issuance of such reg-
ulations. This subsection shall not provide the basis for avoiding
any requirements for notice and public hearing on such regula-
tions.
(20 U S.C. 1071) Enacted Nov. 8, 1965, P.L. 89-329, sec. 421, 79 Stat. 1236;
amended Aug. 3, 1968, .P.L. 90-460, secs. 2, 3, 82 Stat. 635-6; amended Oct. 16,
1968, P L. 90-575, secs. 113, 114, 119, 82 Stat. 1020, 1021, 1027; amended Oct. 12,
1976, P L. 94-482, sec. 127(a), 90 Stat. 2099, 2100; amended June 15, 1977, P.L.
95-43, sec. 1 (a)(8), (a)(9), (a)(10), 91 Stat. 213; amended October 3, 1980, P.L. 96-
374, sec 1391, 94 Stat. 1503; amended August 15, 1983, P.L. 98-79, sec. 6, 97 Stat.
482, amended October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1353; amended
April 28, 1988, P.L. 100-297, sec. 2601, 102 Stat. 330; amended July 18, 1988, P.L.
100-369, sec. 8, 12 Stat. 837; amended July 23, 1992, P.L. 102-325, sec. 411(a)(2),
(c), 106 Stat. 510, 511; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107
Stat 2486.
SEC. 422. 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
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89
HIGHER EDUCATION ACT OF 1965
Sec. 422
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
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(bX 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)(10)(E) or (F), such
unencumbered non-Federal portion shall not be subject to re-
call, 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.
a
Sec. 422
HIGHER EDUCATION ACT OF 1965
(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.
(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)(4Xl3), 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 subpat agraph (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
91
HIGHER EDUCATION ACT OF 1965
Sec. 422
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 af any portion of the
reserve fund) contributed since the date such State executed
an agreement pursuant to section 428(b).
(73) 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 exceed.s $50,000; and
(ii) if further reduction is required, by equally reduc-
ing the $50,000 minimum allocation of each State.
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 1De deposited in the fund established by sec-
tion 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 cal-
endar 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 ad-
vance.
(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
Sec. 422
HIGHER EDUCATION ACT OF 1965
92
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 and telephone
inquiries from students, eligible lenders, and other persons
in the State, to encourage maximum commercial lender
participation within the State, and to conduct periodic vis-
its to at least the major eligible lenders within the State;
(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 during the transition from the Federal
-Family Education Loan Program under this part to the
Federal Direct Student Loan Program under part D of this
title; 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)(10)(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
93
HIGHER EDUCATION ACT OF 1965
Sec. 422
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
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) accoriling to a Department of Education review that
was completed and forwarded to such guaranty agency prior to
I '3
Sec. 422
HIGHER EDUCATION ACT OF 1965
94
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
or the program authorized by part D of this title. However, the
Secretary may not require the return of all reserve funds of a
guaranty agency to the Secretary unless the Secretary deter-
mines that such return is in the best interest of the operation
of the program authorized by this part or the program author-
ized by part D of this title, or to ensure the proper mainte-
nance of such agency's funds or assets or the orderly termi-
nation of the guaranty agency's operations and the liquidation
of its assets. The reserves shall be maintained by each guar-
anty agency to pay program expenses and contingent liabil-
ities, 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;
(B) 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 ensure
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
11!4
4
95
HIGHER EDUCATION ACT OF 1965
Sec. 423
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.
(20 U.S.C. 1072) Enacted Nov. 8, 1965, P.L. 89-329, sec. 422, 79 Stat. 1236;
amended Nov. 3, 1966, P.L. 89-752, sec. 11, 80 Stat. 1243; amended Oct. 16, 1968,
P.L. 90-575, sec. 114, 82 Stat. 1021; amended Oct. 12, 1976, P.L. 94-482, sec.
127(a), 90 Stat. 2100, 2101, 2102, 2103; amended June 15, 1977, P.L. 95-43, sec.
1(a)(11)(A), (B), (C), (a)(12), (a)(13), 91 Stat. 213, 214; amended Nov. 1, 1978, P.L.
95-561, sec. 1322(a), 92 Stat 2363; amended Oct. 3, 1980, P.L. 96-374, sec. 1391,
94 Stat. 1503; amended April 7, 1986, P.L. 99-272, sec. 16011, 100 Stat. 339;
amended October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1354; amended Dec.
22, 1987, P.L. 100-203, sec. 3001, 101 Stat. 1330-36-1330-38; amended July 23,
1992, P.L. 102-325, sec. 412, and 416(p)(8), 106 Stat. 511, 527; amended August 10,
1993, P.L. 103-66, sec. 4041(a)(2)(A) and 4042, 107 Stat. 354, 357; amended Decem-
ber 20, 1993, P.L. 103-208, sec. 2(e)(1), (m), 107 Stat. 2460, 2486.
SEC. 423. EFFECTS OF ADEQUATE NON-FEDERAL PROGRAMS.
.(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 reason of the borrower's residence, have access to
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
Sec. 424
HIGHER EDUCATION ACT OF 1965
96
a borrower for whom such lender previously was issued such
a ,.ertificate if the loan covered by such certificate is not yet re-
paid.
(20 U.S.C. 1073) Enacted Nov. 8, 1965, P.L. 89-329, sec. 423, 79 Stat. 1237;
amended Oct. 16, 1968, P.L. 90-575, sec. 119, 82 Stat. 1026; amended Oct. 12, 1976,
P.L. 94-432, sec. 127(a), 90 Stat. 2103; amended June 15, 1977, P.L. 95-43, sec.
1(a)(14), 91 Stat. 214; amended October 3, 1980, P.L. 96-374, sec. 1391, 94 Stat.
1503; amended October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1358; amended
December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 424. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PRO-
GRAM.
(a) LIMITATIONS ON AMOUNTS OF LOANS COVERED BY FEDERAL
INSURANCE.-The tat.: 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, 1998. 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, 2002.
(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.
(20 U.S.C. 1074) Enacted Nov. 8, 1965, P.L. 89-329, sec. 424, 79 Stat. 1237;
amended Aug. 3, 1968, P.L. 90-460, sec. 1, 82 Stat. 634; amended Oct. 16, 1968,
P.L. 90-575, sec. 112, 82 Stat. 1020; amended June 23, 1972, P.L. 92-318, sec.
132(a), 86 Stat. 261; amended June 30, 1976, P.L. 94-328, sec. 2(a), 90 Stat. 727;
amended Oct. 12, 1976, P.L. 94-482, sec. 127(a), 90 Stat. 2103, 2104; amended Octo-
ber 3, 1980, P.L. 96-374, secs. 411, 1391, 94 Stat. 1415, 1503; amended April 7,
1986, P.L. 99-272, sec. 16018(a), 100 Stat. 348; amended October 17, 1986, P.L. 99-
498, sec. 402(a), 100 Stat. 1358; amended July 23, 1992, P.L. 102-325, sec. 411(b)(1),
106 Stat. 510; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 425. LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED 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);
(II) $1,750, if such student is enrolled in a pro-
gram whose length is less than one academic year, but
at least 2/3 of such an academic year; and
1
6
97
HIGHER EDUCATION ACT OF 1965
Sec. 425
(III) $875, if such student is enrolled in a program
whose length is less than 2/3, but at least 1/3, of such
an academic year;
(ii)1 in the case of a student who has successfully com-
pleted such first year but has not successfully completed
the remainder of a program of undergraduate study
(I) $3,500, if such student is enrolled in a program
whose length is at least one academic year in length
(as determined under section 481);
(II) $2,325, if such student is enrolled in a pro-
gram whose length is less than one academic year, but
at least 2/3 of such an academic year; and
(III) $1,175, if such student is enrolled in a pro-
gram whose length is less than 2/3, but at least 1/3, of
such an academic year;
(iii)1 in the case of a student at an eligible institution
who has successfully completed such first and second year
but has not successfully completed the remainder of a pro-
gram of undergraduate study
(I) $5,500, if such student is enrolled in a program
whose length is at least one academic year in length
(as determined under section 481);
(II) $3,675, if such student is enrolled in a pro-
gram whose length is less than one academic year, but
at least 2/3 of such an academic year; and
(III) $1,825, if such student is enrolled in a pro-
gram whose length is less than 2/3, but at least 1/3, of
such an 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; 2
(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
1Effective July 1, 1994, section 2(cX2)(A) of the Higher Education Technical Amendments of
1993 replaces clauses (ii) and (iii) with the following:
"(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 undergraduate
education
"(I) $3,600; or
"(II) if such student is enrolled in a program of undergraduate education, the remain-
der 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 successfully
completed the remainder of such program
"(I) $5,500; or
"(II) if such student is enrolled in a program of undergraduate education, the remain-
der of which is less than one vademic 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;
2 Effedive July 1, 1994, section 2(c)(2)(B) of the Higher Education Technical Amendments of
1993 strikes the semicolon and inserts a period.
Sec. 425
HIGHER EDUCATION ACT OF 1965
98
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
(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.
1 ) 8
HIGHER EDUCATION ACT OF 1965
Sec. 425
(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(dX1)(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-
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.
(20 U.S.C. 1075) Enacted Nov. 8, 1965, P.L. 89-329, sec. 425, 79 Stat. 1238;
amended Oct. 16, 1968, P.L. 90-575, secs. 116, 120, 82 Stat. 1023 and 1027; amend-
ed June 23, 1972, Pl. 92-318, sec. 132(a), 86 Stat. 261; further amended June 23,
1972, P.L. 92-318, sec. 132B(a), 86 Stat. 262; amended Oct. 12, 1976, sec. 127(a),
96 Stat. 2104, 2105; amended June 15, 1977, P.L. 95-43, sec. 1 (a)(15), (a)(16),
(a)(17), 91 Stat. 214; amended November 1, 1978, P.L. 95-566, sec. 5(b)(2), 92 Stat.
2403; amended October 3, 1980, P.L. 96-374, secs. 412, 1391, 94 Stat. 1416, 1503;
as amended August 13, 1981, P.L. 97-35, sec. 535 (a), (b), 95 Stat. 455; amended
April 7, 1986, P.L. 99-272, sec. 16013(e)(1), 100 Stat. 340; amended October 17,
1986, P.L. 99-498, sec. 402(a), 100 Stat. 1359; amended June 3, 1987, P.L. 100-50,
sec. 10(a), 101 Stat. 341; amended July 23, 1992, P.L. 102-325, sec. 413, 106 Stat.
512; amended December 20, 1993, P.L. 103-208, sec. 2(c)(2) and (3), (m), 107 Stat.
2460-61, 2486.
9
Sec. 426
HIGHER EDUCATION ACT OF 1965
100
SEC. 426. 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.
(20 U.S.C. 1076) Enacted Nov. 8, 1965, P.L. 89-329, sec. 426, 79 Stat. 1238;
amended Oct. 12, 1976, P.L. 94-482, sec. 127(a), 90 Stat. 2106; amended October
17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1361; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 427. ELIGIBILITY OF STUDENT BORROWERS AND TERMS OF FED-
ERALLY 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
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;
I 1, 0
101
HIGHER EDUCATION ACT OF 1965
Sec. 427
(C) provides that periodic installments of principal
need not be paid, but mterest shall accrue and be paid,
during any period
a) d.uring 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);
(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-
1 1 1
Sec. 427
HIGHER EDUCATION ACT OF 1965
102
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
(4) the funds borrowed by a student are disbursed in ac-
cordance with section 428G.
(b) SPECIAL RULES FOR MULTIPLE DISBURSEMENT.-FOT 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).
(20 U.S.C. 1077) Enacted Nov. 8, 1965, P.L. 89-320, sec. 427, 79 Stat. 1238;
amended Nov. 8, 1966, P.L. 89-794, sec. 1101(b), 80 Stat. 1476; amended Aug. 3,
1968, P.L. 90-460, sec. 2, 82 Stat. 635; amended Oct. 16, 1968, P.L. 90-575, secs.
113, 116, 120, 82 Stat. 1021, 1023, 1027; amended June 23, 1972, P.L. 92-318, sec.
132B(b), 86 Stat. 262; further amended June 23, 1972, P.L. 92-318, sec. 132C(c),
86 Stat. 263; amended Oct. 12, 1976, P.L. 94-482, sec. 127(a), 90 Stat. 2107, 2108;
amended June 15, 1977, P.L. 95-43, sec. 1(a)(9), 91 Stat. 213; sec. 1(a)(18), 91 Stat.
214; amended November 1, 1978, P.L. 95-566, sec. 5(a)(1), 92 Stat. 2403; amended
October 3, 1980, Pl. 96-374, secs. 413(a), 413(c), 415(a)(2), 415(b)(1), 416(a)(2),
423(a)(1), 1391, 94 Stat. 1417, 1418, 1419, 1420, 1421, 1432, 1503; amended August
31, 1981, P.L. 97-35, sec. 537 (b)(1), (d)(2), (e)(1), 95 Stat. 456, 457; amended August
103
HIGHER EDUCATION ACT OF 1965
Sec. 427A
15, 1983, P.L. 98-79, sec. 10, 97 Stat. 484; amended April 7, 1986, P.L. 99-272, secs.
16012(a), 16013(b), 16017(b)(1), 100 Stat. 339, 340, 343; amended October 17, 1986,
P.L. 99-498, sec. 402(a), 100 Stat. 1361; amended June 3, 1987, P.L. 100-50, sec.
10 (b), (c), 101 Stat. 341; amended July 18, 1988, P.L. 100-369, secs. 5(b), 7(c), and
11, 102 Stat. 836, 831, and 838; amended December 19, 1989, P.L. 101-239, secs.
2002(a)(1), 2004(b)(2), 103 Stat. 2111 and 2116; amended November 15, 1991, P.L.
102-164, secs. 601(a) and 602(a), 105 Stat. 1065 and 1066; amended July 23, 1992,
P.L. 102-325, sec. 414, 106 Stat. 513; amended December 20, 1993, P.L. 103-208,
sec. 2(c)(4), (m), 107 Stat. 2461, 2486.
SEC. 427A. 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 TREAS-
URY BILL RA'TES.-If for any 12-month period beginning on or after
January 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 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.
(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
7
Sec. 427A
HIGHER EDUCATION ACT OF 1965
104
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 ofpublication 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(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.
105
HIGHER EDUCATION ACT OF 1965
Sec. 427A
(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 4280) 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 shall be
(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 4280) 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
(E) 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.
(0 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-
5
Sec. 427A
HIGHER EDUCATION ACT OF 1965
106
(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction he/d 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), (0, 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 4280) 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
(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
UG
107
HIGHER EDUCATION ACT OF 1965
Sec. 427A
(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) fo ur.
(3) EXCESS INTEREST ON LOANS AFTER 1992 AMENDMENTS,
TO BORROWERS WITH OUTSTANDING BALANCES.ff, 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
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
U7
Sec. 427A
HIGHER EDUCATION ACT OF 1965
108
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 nducing 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
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
109
HIGHER EDUCATION ACT OF 1965
Sec. 427A
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 (p), 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) 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.
(k) 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
Sec. 428
HIGHER EDUCATION ACT OF 1965
110
as academic year, semester, trimester, quarter, or other aca-
demic period as defined by such institution.
(20 U.S.C. 1077a) Enacted October 3, 1980, P.L. 96-374, sec. 415(a)(1), 94 Stat.
1419; amended August 13, 1981, P.L. 97-35, sec. 534(a)(1), Stat. 454; amended Au-
gust 15, 1983, P.L. 98-79, sec. 5, 97 Stat. 481; amended October 17, 1986, P.L. 99-
498, sec. 402(a), 100 Stat. 1364; amended June 3, 1987, P.L. 100-50, sec. 10(d)(1),
101 Stat. 342; amended July 23, 1992, P.L. 102-325, sec. 415, 106 Stat. 514; amend-
ed August 10, 1993, P.L. 103-66, sec. 4101, 107 Stat. 364; amended December 20,
1993, P.L. 103-208, sec. 2(c)(5)-(10), (m), 107 Stat. 2461, 2486.
SEC. 428. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST
COSTS.
(a) FEDERAL INTEREST SUBSIDIES.-
(1) TYPES OF LOANS THAT QUALIFY.-Each student who has
received a loan for study at an eligible institution-
(A) which is insured by the Secretary under this part;
Or
(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).
(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 such student's estimated cost of at-
tendance (as determined under section 472); 1
(II) sets forth such student's estimated financial
assistance; and
(III) 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
Section 602 of Public Law 102-164 (105 Stat. 1066) amended section 428(a)(2)(A)tiX1) by
striking "and" at the end thereof. This amendment could not be executed.
120
111
HIGHER EDUCATION ACT OF 1965
Sec. 428
(B) For the purpose of clause (ii) of subparagraph (A), a
student shall qualifr for a portion of an interest payment
under paragraph (1) if the eligible institution has provided the
lender with a statement evidencing a determination of need for
a loan (as determined under part F of this title) and the
amount of such need, subject to the provisions of subparagraph
(D).
(C) For the purpose of paragraph (1) and this paragraph
(i) a student's estimated fmancial assistance means,
for the period for which the loan is sought, the amount of
assistance such student will receive under subpart 1 of
part A (as determined in accordance with section 484(b)),
subpart 3 of part A, and parts C and E of this title, and
any veterans education benefits paid because of enroll-
ment in a postsecondary education institution, including
veterans' education benefits (as defined in section 480(c)),
plus other scholarship, grant, or loan assistance; and
(ii) 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.
(F) Except as provided in subparagraph (D), *an eligible in-
stitution may refuse to certify a statement which permits a
student to receive a loan under this part or to 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 each stu-
dent so affected.
Cri). 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
(H) 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
2
Sec. 428
HIGHER EDUCATION ACT OF 1965
112
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.
(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.
122
113
HIGHER EDUCAT1^N ACT OF 1965
Sec. 428
(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, 1998,
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, 2002.
(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 fman-
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 or
its equivalent (as determined under regulations of the Sec-
retary) for any student who is carrying at an eligible insti-
tution or in a program of study abroad, approved for credit
by the eligible home institution 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 (as determined under section 481);
(II) $1,750, if such student is enrolled in a
program whose length is less than one academic
year, but at least 2/3 of such an academic year;
and
(III) $875, if such student is enrolled in a pro-
gram whose length is less than 2/3, but at least 1/3,
of such an academic year;
''3
Sec. 428
HIGHER EDUCATION ACT OF 1965
114
(ii)1 in the case of a student who has successfully
completed such first year but has not successfully com-
pleted the remainder of a program of undergraduate
study (I) $3,500, if such student is enrolled in a pro-
gram whose length is at least on academic year in
length (as determined under section 481);
(II) $2,325, if such student is enrolled in a
program whose length is less than one academic
year, but at least 2/3 of such academic year; and
(III) $1,175, if such student is enrolled in a
program whose length is less than 2/3, but at least
1/3, of such academic year;
(iii)1 in the case of a student at an eligible institu-
tion who has successfully completed such first and sec-
ond year but has not successfully completed the re-
mainder of a program of undergraduate study
(I) $5,500, if such student is enrolled in a pro-
gram whose length is at least one academic year
in length (as determined under section 481);
(II) $3,675, if such student is enrolled in a
program whose length is less than one academic
year, but at least 2/3 of such an academic year;
and (III) $1,825, if such student is enrolled in a
program whose length is less than 2/3, but at least
1/3, of such an academic year; and
(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; and
Effective July 1, 1994, section 2(c)(13)(A) of the Higher Education Technical Amendments of
1993 replaces clauses (ii) and (iii) with the following:
"(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 undergraduate
education
"(I) $3,500; or
"(II) if such student is enrolled in a program of undergraduate education, the remain-
der 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 h,is successfully completed the
first and second years of a program of undergraduate education but has not successfully
completed the remainder of such program
"(I) $5,600; or
"(II) if such student is enrolled in a program of undergraduate education, the remain-
der 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;".
124
115
HIGHER EDUCATION ACT OF 1965
Sec. 428
(v) in the case of a graduate or professional stu-
dent (as defined in regulations of the Secretary) at an
eligible institution, $8,500;
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-
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 repayment period of any in-
sured loan may not exceed 10 years, and (iii) the note, or
other written evidence of any loan, may contain such rea-
sonable provisions relating to repayment in the event of
default by the borrower as may be authorized by regula-
tions 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 repayment in accordance
with subsection (m); 1
(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 428A, the op-
The amendment made to this subparagraph (by section 4043(a) of P.L. 103-66) adding a ref-
erence to subsection (m) is not effective until July 1,1994,
1 `)
Sec. 428
HIGHER EDUCATION ACT OF 1965
116
tion of repaying the loan in accordance with a grad-
uated or income-sensitive repayment schedule estab-
lished by the lender and in accordance with regula-
tions of the Secretary; and
(ii) repayment of loans shall be in installments
over a period of not less than 5 years (unless the stu-
dent, during the 6 months immediately preceding the
start of the repayment period, specifically requests
that repayment be made over a shorter period) nor
more than 10 years commencing at the beginning of
the repayment period determined under paragraph (7)
of this subsection;
(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 not less than 98 percent of the unpaid
principal of loans insured under the program, except that
such program shall insure 100 percent of the unpaid prin-
cipal of loans made with funds advanced pursuant to sec-
tion 428(j) or 439(q); 1
(H) provides for collection of a single insurance pre-
mium equal to not more than 1.0 percent 2 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
b orrower
(i) 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 (to-
gether with interest thereon), whichever amount is
less (but in no instance less than the amount of inter-
est due and payable); and
'Section 4102(b) of P.L. 103-66, changing the percentage of principal required to be insured,
applies to loans for which the first disbursement of principal is made on or after October 1,
1993.
2Section 4102(c) of P.L. 103-66 amended this subparagraph by striking "3 percent" and in-
serting "1.0 percent". Subsection (d) of such section states the amendments made by section
4102 are effective July 1, 1994.
1 9
117
HIGHER EDUCATION ACT OF 1965
Sec. 428
(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; 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; 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 eligib3e 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)
.? 7
SOC. 428
HIGHER EDUCATION ACT OF 1965
118
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;
(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 limitation, suspension, or termi-
nation of the eligibility of an eligible institution 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 issu-
ance a final judgment obtained by a student seeking
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
1? 8
119
HIGHER EDUCATION ACT OF 1965
Sec. 428
the guaranty agency, that the guaranty agency's action did
not comply with the requirement; 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
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 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); and
(X) provides information to the Secretary in accord-
ance with section 428(c)(10) and maintains reserve funds
determined by the Secretary to be sufficient in relation to
such agency's guarantee obligations.
(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;
17-5:30 0- 94--- 5
Sec. 428
HIGHER EDUCATION ACT OF 1965
120
(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 ofthe party to whom the
borrower must send subsequent payments or direct any
communications concerning the loans, then
(1) 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
13(i
-
121
HIGHER EDUCATION ACT OF 1965
Sec. 428
(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 to students enrolled
in secondary school of student loan application forms; or
(D) conduct fraudulent or misleading advertising con-
cerning loan availability.
(4)
SPECIAL RULE.For
the
purpose
of
paragraph
(1)(m)(nan) 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-
Sec. 428
HIGHER EDUCATION ACT OF 1965
122
(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.
(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.
(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-
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 stich
losses, the Secretary shall pay promptly and without adminis-
(
123
HIGHER EDUCATION ACT OF 1965
Sec. 428
trative delay. Except as provided in subparagraph (B) of this para-
graph and in paragraph (7), the amount to be paid a guaranty
agency as reimbursement under this subsection shall be equal to
98 1 percent of the amount expended by it in discharge ofits insur-
ance obligation incurred under its loan insurance program. A guar-
anty agency shall file a claim for reimbursement with respect to
losses under this subsection within 45 days after the guaranty
agency discharges its insurance obligation 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 88 1 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 78 1 percent of the amount
of such excess.
(C) For the purpose if 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, set:ricer, or
guarPnty agency designated for exceptional performance under
section 4281 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, servicer, or guaranty agency engaged in fraud or other
purposeful misconduct in obtaining designation for exceptional
performance.
(E)1 Notwithstanding any other provisions of this section,
in the case of a loan made pursuant to a lender-of-last-resort
program, the Secretary shall apply the provisions of
(i) the fourth sentence of subparagraph (A) by sub-
stituting "100 percent" for "98 percent";
'The amendments made by section 4106(a) of P.L. 103-66, changag the reimbursement per-
centages and adding subparagraphs (E) and (F), apply to loans for which the first disbursement
is made on or after October 1, 1993.
3 3
Sec. 428
HIGHER EDUCATION ACT OF 1965
124
(ii) subparagraph (B)(i) by substituting "100 percent"
for "88 percent"; and
(iii) subparagraph (B)(ii) by substituting "100 percent"
for "78 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 "98 percent";
(ii) subparagraph (BXi) by substituting "90 percent"
for "88 percent"; and
(iii) subparagraph (B)(ii) by substituting "80 percent"
for "78 percent".
(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 reasonable attempts were
made to locate the borrower (when the location of the bor-
rower 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
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 respect 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-
'See footnote 1 on previous
125
HIGHER EDUCATION ACT OF 1965
Sec. 428
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 have been made to locate the borrower through
the use of reasonable skip-tracing techniques in accordance
with regulations prescribed 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-
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 may require the payment
by the institution of a reasonable fee (as determined
in accordance with regulations prescribed by the Sec-
retary) for such information; 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.
(1) 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 written request, a lender shall grant a
borrower forbearance, renewable at 12-month inter-
vals, on terms agreed to in writing by the parties to
the loan with the approval of the insurer, and other-
Sec. 428
HIGHER EDUCATION ACT OF 1965
126
wise consistent 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(aX2)(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(aX2XC) 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 natioual 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;
(H) 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; and
(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
I (4 6'
127
HIGHER EDUCATION ACT OF 1965
Sec. 428
extension of time for making payments, or smaller pay-
ments than were previously scheduled.
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
mit 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 whic1i 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-
spect to defaults occurring after the execution of such guaranty
agreement or, if later, after its effective date.
(6) SECRETARY'S EQUITABLE SHARE.(A) For the purpose of
paragraph (2XD), 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
(i) 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
(ii) an amount equal to 27 percent of such payments
(subject to subparagraph (D) of this paragraph) for costs
related to the student loan insurance program, including
the administrative costs of collection of loans reimbursed
under
this
subsection,
the
administrative
costs
of
preclaims assistance for default prevention, the adminis-
trative costs of supplemental preclaims assistance for de-
fault prevention, and the administrative costs of monitor-
ing the enrollment and payment status of students (as
such terms are defined in subparagraph (B) or (C) of this
paragraph).
(B) For the purpose of this paragraph and subsection (f) of
this section, the term
(i) "administrative costs of collection of' loans" means
any administrative costs incurred by a guaranty agency
which are directly related to the collection of the loan on
which a default claim has been paid to the participating
lender, including the attributable compensation of collec-
tion personnel (and in the case of personnel who perform
137
See. 428
HIGHER EDUCATION ACT OF 1965
128
several functions for such an agency only the portion of the
compensation attributable to the collection activity), attor-
ney's fees, fees paid to collection agencies, postage, equip-
ment, supplies, telephone and similar charges, but does
not include -the overhead costs of such agency whether or
not attributable;
(ii) "administrative costs of preclaim assistance for de-
fault prevention" means any administrative costs incurred
by a guaranty agency which are directly related to provid-
ing co:tlection assistance to the lender on a delinquent loan,
prior to the loan's being legally in a default status, includ-
ing the attributable compensation of appropriate personnel
(and in the case of personnel who perform several func-
tions for such an agency only the portion of compensation
attributable to the collection activity), fees paid to locate a
missing borrower, postage, equipment, supplies, telephone
and similar charges, but does not include the overhead
costs of such agency whether or not attributable; and
(iii) "administrative costs of monitoring the enrollment
and repayment status of students" means any administra-
tive costs by a guaranty agency which are directly related
to ascertaining the student's enrollment status, prompt no-
tification to the lender of such status, an audit of the note
or written agreement to determine if the provisions of that
note or agreement are consistent with the records of the
guaranty agency as to the principal amount of the loan
guaranteed, and an examination of the note or agreement
to assure that the repayment provisions are consistent
with the provisions of this part,
subject to such additional criteria as the Secretary may by reg-
ulation prescribe.
(C)(i) For the purpose of subsection (1), "administrative
costs of supplemental preclaims assistance" means (subject to
divisions (ii) through (iv)) any administrative costs
(I) incurred by a guaranty agency in connection with
a loan on which the guarantor has exercised preclaims as-
sistance generally comparable in intensiveness to the level
of preclaims assistance performed, prior to the 120th day
of delinquency, by the guaranty agency as of October 16,
1990, and which has been in delinquent status for at least
120 days; and
(II) which are directly related to providing collection
assistance to the lender on a delinquent loan, prior to a
claim being filed with the guaranty agency.
including the attributable compensation of appropriate' person-
nel (and in the case of personnel who perform several func-
tions, only the portion of compensation attributable to the col-
lection assistance), fees paid to locate a missing borrower, post-
age, equipment, supplies, telephone, and similar charges, but
does not include overhead costs.
(ii) The administrative costs for which payment under sub-
section (1) is authorized under this subparagraph must be
clearly supplemental to the preclaim assistance for default pre-
vention described in division (i)(I) of this subparagraph.
138
129
HIGHER EDUCATION ACT OF 1965
Sec. 428
(iii) The services associated with carrying out this sub-
paragraph may be provided by the guaranty agency directly or
under contract, except that such services may not be carried
out by an organization or entity (other than the guaranty agen-
cy)
(I) that is the holder or servicer of the loan or an orga-
nization or entity that owns or controls the holder or
servicer of the loan;
(II) that is owned or controlled by the same corpora-
tion, partnership, association, or individual that owns or
controls the holder or servicer of the loan; or
(III) that is an organization or entity that has a con-
tract with a guaranty agency to perform collection activi-
ties with respect to the same loans in the event of default.
(iv) In the case of accounts brought into repayment status
as a result of performing supplemental preclaims assistance,
the cost of such assistance is a permissible charge to the bor-
rower (for the cost of collection) for which the borrower shall
be liable.
(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.-
(A) If the Secretary determines that the protection of the Fed-
eral fiscal 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 para-
graph (1) of this subsection.
Sec. 428
HIGHER EDUCATION ACT OF 1965
130
(B) An orderly transition from the Federal Family Edu-
cation Loan Program under this part to the Federal Direct Stu-
dent Loan Program under part D of this title shall be deemed
to be in the Federal fiscal interest, and a guaranty agency
shall promptly assign loans to the Secretary under this para-
graph upon the Secretary's request.
(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 a current
minimum reserve level of at least .5 percent of the total attrib-
utable amount of all outstanding loans guaranteed by such
agency for the fiscal year of the agency that begins in 1993.
For purposes of this paragraph, such total attributable amount
does not include amounts of outstanding loans transferred to
the guaranty agency from another guaranty agency pursuant
to a plan of the Secretary in response to the insolvency of the
latter such guaranty agency. The minimum reserve level shall
increase to
(i) .7 percent of such total attributable amount for the
fiscal year of the agency that begins in 1994;
(ii) .9 percent of such total attributable amount for the
fiscal year of the agency that begins in 1995; and
(iii) 1.1 percent of such total attributable amount for
each fiscal year of the agency that begins on or after Janu-
ary 1, 1996.
(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
80 percent pursuant to section 428(cX1)(B)(ii), 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, as appropriate, the
guaranty agency to submit and implement a management plan
acceptable to the Secretary within 30 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
I 4
131
HIGHER EDUCATION ACT OF 1965
See: 428
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;
(v) the Secretary determines that such action is nec-
essary to ensure the continued availability of loans to stu-
dent or parent borrowers; or
(vi) the Secretary determines that such action is nec-
essary to ensure an orderly transition from the loan pro-
grams under this part to the direct student loan programs
under part D of this title.
(F) If a guaranty agency's agreement under this subsection
is terminated pursuant to subparagraph (E), then the Sec-
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
Sec. 428
HIGHER EDUCATION ACT OF 1965
132
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, to avoid disruption of the student
loan program, and to ensure an orderly transition from the
loan programs under this part to the direct student loan
programs under part D of this title.
(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
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
agsncy (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.
' T) 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 Labor and the Senate Committee on Labor and Human
1 ;2
133
HIGHER EDUCATION ACT OF 1965
Sec. 428
Resources a report specifying the Secretary's assessment of the
fiscal soundness of the guaranty agency system and the
progress of the transition from the loan programs under this
part to the direct student loan programs under part D of this
title.
(d) USURY LAWS INAPPLICABLE.No provision ofany law of the
United States (other than this Act) or of any State ii(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) PAYMENTS FOR LENDER REFERRAL SERVICES.
(1) IN GENERAL; AGREEMENTS WITH GUARANTY AGENCIES.
(A) The Secretary shall make payments in accordance with this
paragraph to a guaranty agency with which the Secretary has
an agreement under subparagraph (B) which provides a lender
referral service for students who meet the requirements of
paragraph (2).
(B)(i) The Secretary may enter into agreements with guar-
anty agencies that meet standards established by the Secretary
to provida lender referral services in geographic areas specified
by the Secretary. Such guaranty agencies shall be paid in ac-
cordance with paragraph (3) for such services.
(ii) The Secretary shall publish in the Federal Register
whatever standards, criteria, and procedures, consistent with
the provisions of this part and part D of this title, the Sec-
retary determines are reasonable and necessary to provide
lender referral services under this subsection and ensure loan
access to student and parent borrowers during the transition
from the loan programs under this part to the direct student
loan programs under part D of this title. Section 431 of the
General Education Provisions Act shall not apply to the publi-
cation of such standards, criteria, and procedures.
(2) STUDENT ELIGIBILITY.A student is eligible to apply for
lender referral services to a guaranty agency with which the
Secretary has an agreement under paragraph (1)(B) if
(A) such student is either a resident of, or is accepted
for enrollment in, or is attending, an eligible institution lo-
cated in a geographic area for which the Secretary (i) de-
termines that loans are not available to all eligible stu-
dents, and (ii) has entered into an agreement with a guar-
anty agency under paragraph (1XB) to provide lender re-
ferral services; and
(B) such student has sought and was unable to find a
lender willing to make a loan under this part.
(3) AMOUNT OF PAYMENT.From funds available for costs
of transition under section 458 of the Act, the amount which
the Secretary shall pay to any eligible guaranty agency under
this paragraph shall be equal to one-half of 1 percent of the
Sec. 428
HIGHER EDUCAllON ACT OF 1965
134
total principal amount of the loans (upon which insurance was
issued under this part) to a student described in paragraph (2)
who subsequently obtained such loans because of such agency's
referral service.
(4) INCENTIVE FEES TO LENDERS.Nothing in this or any
law shall prohibit an agency from using all or any portion of
the funds received under this part for the payment of incentive
fees to lenders who agree to participate in a lender referral
service.
(f) PAYMENTS OF CERTAIN COSTS.
(1) PAYMENTS BASED ON INSURANCE PROGRAM AGREE-
MENT.(A) For a fiscal year prior to fiscal year 1994, the Sec-
retary shall make payments in accordance with the provisions
of this paragraph to any guaranty agency for the purposes of
(i) the administrative cost of promotion of eligible
lender participation;
(ii) the administrative costs of collection of loans;
(iii) the administrative costs of preclaims assistance
for default prevention;
(iv) the administrative costs of monitoring the enroll-
ment and repayment status of students; or
(v) other such costs related to the student loan insur-
ance program subject to such agreement.
(B) The total amount of payments for any fiscal year prior
to fiscal year 1994 made under this paragraph shall be equal
to 1 percent of the total principal amount of the loans upon
which insurance was issued under this part during such fiscal
year by such guaranty agency. The guaranty agency shall, be
deemed to have a contractual right against the United States
to receive payments according to the provisions of this sub-
paragraph. Payments shall be made promptly and without ad-
ministrative delay to any guaranty agency submitting an accu-
rate and complete application therefor under this subpara-
graph.(C) No payment may be made under this paragraph for
loans for which the disbursement checks have not been cashed
or for which electronic funds transfers have not been com-
pleted.
(2) APPLICATIONS FOR PAYMENTS.No payment may be
made under paragraph (1) of this subsection unless the guar-
anty agency submits to the Secretary an application at such
time, at least annually, in such manner, and containing or ac-
companied by such information, as the Secretary may reason-
ably require. Each such application shall
(A) set forth assurances that the student loan insur-
ance program subject to the guaranty agreement complies
with subparagraphs (A), (R), (G), (R), (S), (T), and (U) of
subsection (b)(1);
(B) contain provisions designed to demonstrate the ca-
pability of carrying out a necessary and successful pro-
gram of collection of and preclaim assistance for the loan
program subject to that agreement;
(C) set forth an estimate of the costs which are eligible
for payment under the provisions of this subsection;
144
135
HIGHER EDUCATION ACT OF 1965
Sec. 428
(D) provide for such administrative and fiscal proce-
dures, including an audit, as are necessary to carry out the
provisions of this subsection; and
(E) set forth assurances that the guaranty agency will
furnish such data and information, including where nec-
essary estimates, as the Secretary may reasonably require,
to carry out the provisions of this subsection.
(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
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 Labor 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.
(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
receding the fiscal year for which the determination is made.
enever 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
115
Sec. 428
HIGHER EDUCATION ACT OF 1965
136
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;
(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 de-
termined under subsection (a)(2)(B), nor be less than $200. The
guaranty agency shall consider the request of any eligible lend-
er, 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;
116
17
137
HIGHER EDUCATION ACT OF 1965
Sec. 428
(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 DURING TRANSITION TO DIRECT LEND-
ING.(A) In order to ensure the availability of loan capital dur-
ing the transition from the Federal Family Education Loan
Program under this part to the Federal Direct Student Loan
Program under part D of this title, the Secretary is authorized
to provide a guaranty agency with additional advance funds in
accordance with section 422(c)(7), with such restrictions on the
use of such funds as are determined appropriate by the Sec-
retary, in order to ensure that the guaranty agency will make
loans as the lender-of-last-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.
(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
147
Sec. 428
HIGHER EDUCATION ACT OF 1965
138
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) PRECLAIMS ASSISTANCE AND SUPPLEMENTAL PRECLAIMS AS-
SISTANCE.
(1) ASSISTANCE REQUIRED.Upon receipt of a proper re-
quest from the lender, a guaranty agency having an agreement
with the Secretary under subsection (c) of this section shall en-
gage in preclaims assistance activities (as described in sub-
section (cX6XCXi)(I)) and supplemental preclaims assistance
activities (as described in subsection (cX6XC)) with respect to
each loan covered by such agreement.
(2) PAYMENTS FOR SUPPLEMENTAL PRECLAIMS ASSIST-
ANCE.The Secretary shall make payments in accordance with
the provisions of this paragraph to any guaranty agency that
engages in supplemental preclaims assistance (as defmed in
subsection (c)(6)(C)) on a loan guaranteed under this part. For
each loan on which such assistance is performed and for which
a default claim is not presented to the guaranty agency by the
lender on or before the 150th day after the loan becomes 120
days delinquent, such payment shall be equal to one percent
of the total of the unpaid principal and the accrued unpaid in-
terest of the loan.
(M) INCOME CONTINGENT REPAYMENT.-1
(1) AUTHORITY OF SECRETARY TO REQUIRE.The Secretary
shall require at least 10 percent of the borrowers who have de-
faulted on loans made under this part that are assigned to the
Secretary under subsection (c)(8) to repay those loans under an
income contingent repayment plan, the terms and conditions of
which shall be established 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 required
to be repaid under this subsection if the note or other evidence
of the loan has been assigned to the Secretary pursuant to sub-
section (c)(8).
(11) STATE SHARE OF DEFAULT COSTS.-2
(1) IN GENERAL.In the case of any State in which there
are located any institutions of higher education that have a co-
hort default rate that exceeds 20 percent, such State shall pay
to the Secretary an amount equal to
(A) the new loan volume attributable to all institutions
in the State for the current fiscal year; multiplied by
(B) the percentage specified in paragraph (2); multi-
plied by
(C) the quotient of
'Subsection (m) was completely revised by section 4043(a) of P.L. 103-66. Section 4043(b) of
that Public Law provided that these revisions are not effective until July 1, 1994.
2Subsection (n), added by section 4201 of P.L. 103-66, is effective October 1, 1994.
139
HIGHER EDUCATION ACT OF 1965
Sec. 428
(i) the sum of the amounts calculated under para-
graph (3) for each such institution in the State; di-
vided by
(ii) the total amount of loan volume attributable to
current and former students of institutions located in
that State entering repayment in the period used to
calculate the cohort default rate.
(2) PERCENTAGE.-For purposes of paragraph (1)(B), the
percentage used shall be--
(A) 12.5 percent for fiscal year 1995;
(B) 20 percent for fiscal year 1996; and
(C) 50 percent for fiscal year 1997 and succeeding fis-
cal years.
(3) CALCULATION.-FOr purposes of paragraph (1)(C)(i), the
amount shall be determined by calculating for each institution
the amount by which-
(A) the amount of the loans received for attendance by
such institution's current and former students who (i)
enter repayment during the fiscal year used for the cal-
culation of the cohort default rate, and (ii) default before
the end of the following fiscal year; exceeds
(B) 20 percent of the loans received for attendance by
all the current and former students who enter repayment
during the fiscal year used for the calculation of the cohort
default rate.
(4) FEE.-A State may charge a fee to an institution of
higher education that participates in the program under this
part and is located in that State according to a fee structure,
approved by the Secretary, that is based on the institution's co-
hort default rate and the State's risk of loss under this sub-
section. Such fee structure shall include a process by which an
institution with a high cohort default rate is exempt from any
fees under this paragraph if such institution demonstrates to
the satisfaction of the State that exceptional mitigating cir-
cumstances, as determined by the State and approved by the
Secretary, contributed to its cohort default rate.
(20 U.S.C. 1078) Enacted Nov. 8, 1965, P.L. 89-329, sec. 428, 79 Stat. 1240;
amended Aug. 3, 1968, P.L. 90-460, secs. 1, 2, 3, 82 Stat. 634-638; amended Oct.
16, 1968, P.L. 90-575, secs. 111, 112, 113, 115, 116, 117, 1220, 82 Stat. 1020-27;
amended June 23, 1972, P.L. 92-318, sec. 132(b), 86 Stat. 261; further amended
June 23, 1972, P.L. 92-318, sec. 132C (a) and (b), 86 Stat. 262, 263; sec. 428(e) re-
pealed June 23, 1972. P.L. 92-318, sec. 132D(c), 86 Stat. 264; amended April 18,
1974, P.L. 93-269, 88 Stat. 87, 89; amended June 30, 1976, P.L. 94-328, sec. 2(b),
90 Stat. 727; amended Oct. 12, 1976, P.L. 94-482, sec. 127(a), 90 Stat. 2108-2120;
amended June 15, 1977, P.L. 95-43, sec. 1(a) (19), (20), (21), (22), (23), (24), (25),
(26), (27), (28), (29), 91 Stat. 214, 215, 216; amended November 1, 1978, P.L. 95-
566, sec. 5 (a)(2), (b)(1), (b)(3)-(5), 92 Stat. 2403; amended October 3, 1980, P.L. 96-
374, sees. 411(b), 412 (c), (d), (f), 413(b), (d), 414, 415(a) (3), (4), (5), (b)(2), 417, 423
(b), (c), (d), 1391, 94 Stat. 1416, 1417, 1418, 1419, 1420, 1422, 1432, 1503; amended
August 13, 1981, P.L. 97-35, secs. 532(a), (b)(1), 535(c), (d), 536(b), 537(b)(2), (c),
(d)(1), (e)(2), 95 Stat. 451, 452, 455, 456, 467; amended August 15, 1983, P.L. 98-
79, sec. 10(b), 97 Stat 484; amended April 7, 1986, P.L. 99-272, secs. 16012(b),
16013(a),
(c),
(e)(2),
(3),
16014(a)(1),
(b), 16015(b), 16016,
16018(a)(2), 16021,
16032(c), 100 Stat. 339-343, 348, 349, 355; amended May 23, 1986, P.L. 99-320, sec.
2(a)(2), (b), 100 Stat. 491; amended October 17, 1986, P.L. 99-498, sec. 402, 100
Stat. 1367; amended June 3, 1987, P.L. 100-50, sec. 10(a)-(c), (e)-(m), 101 Stat. 341,
342; amended Dec. 23, 1987, P.L. 100-203, secs. 3001(b) and 3003, 101 Stat. 1330-
38-1330-39; amended July 18, 1988, P.L. 100-369, secs. 5(b)(2), 7(c), 11, 102 Stat.
Sec. 428A
HIGHER EDUCATION ACT OF 1965
140
836-838; amended Dec. 19, 1989, P.L. 101-239, secs. 2002(a)(2), (b)(1), 2004(b)(3),
and 2006(b)
(1) and (2); 103 Stat. 2111, 2112, 2116, and 2118; amended Nov. 5,
1990, P.L. 101-508, secs. 3002, 3004(b), 104 Stat. 2222; amended April 9, 1991, P.L.
102-26,
sec. 9, 105 Stat. 128; amended November 15, 1991, P.L. 102-164, secs.
601(b), 604, and 605(b), 105 Stat. 1065, 1066, and 1068; amended July 23, 1992,
P.L 102-325, secs. 411(b)(2), 416(a)-(e)(1), 416(f)-(p)(7), and 416(q)-(t)
106 Stat.
510, 516, 520, and 527; amended August
10, 1993, P.L. 103-66, secs. 4021, 4041(a),
(b), 4043(a), 4044, 4045, 4102(c), 4107, 4108(a), (b), 4110(a), and 4112(a), 107 Stat.
370, 354, 355, 358, 359, 367, 368, 369, and 370; amended September 21, 1993, P.L.
103-82, sec. 102(c)(1), 107 Stat. 823; amended December 20, 1993, P.L. 103-208,
sec 2(c)(11)-(28), (m), 107 Stat. 2462-65, 2486.
SEC. 428A.1 FEDERAL SUPPLEMENTAL LOANS FOR STUDENTS.
(a) Authority To Borrow.-
(1) STUDENT ELIGIBILITY.-Graduate and professional stu-
dents (as defined by regulations of the Secretary) and under-
graduate independent students shall be eligible to borrow
funds under this section in amounts specified in subsection (b),
and unless otherwise specified in subsections (c) and (d), loans
under this section shall have the same terms, conditions, and
benefits as all other loans made under this part. In addition,
undergraduate dependent students shall be eligible to borrow
funds under this section if the financial aid administrator de-
termines, after review of the financial information submitted
by the student and considering the debt burden of the student,
that exceptional circumstances will likely preclude the stu-
dent's parents from borrowing under section 428B for purposes
of the expected family contribution and that the student's fam-
ily is otherwise unable to provide such expected family con-
tribution. If the financial aid administrator makes such a de-
termination, appropriate documentation of such determination
shall be maintained in the institution's records to support such
determination. No student shall be eligible to borrow funds
under this section until such student has obtained a certificate
of graduation from a school providing secondary education, or
the recognized equivalent of such certificate.
(2) INSTITUTIONAL ELIGIBILITY.-Funds may not be bor-
rowed under this section by any undergraduate student who is
enrolled at any institution during any fiscal year if the cohort
default rate for such institution, for the most recent fiscal year
for which such rates are available, equals or exceeds 30 per-
cent. The Secretary shall notify institutions to which such re-
striction applies annually, and specify the fiscal year covered
by the restriction. The Secretary shall afford any institution to
which such restriction applies an opportunity to present evi-
dence contesting the accuracy of the calculation of the cohort
default rate for such institution.
(b) LIMITATIONS ON AMOUNTS OF LOANS.-
(1) ANNUAL LIMIT.-Subject to paragraphs (2) and (3), the
maximum amount a student may borrow in any academic year
or its equivalent or in any period of' 7 consecutive months,
whichever is longer, is:
I Effective July 1, 1994, section 428A is repealed in accordance with section 4047(b) and (d)
of Pl. 103-66.
15fl
141
HIGHER EDUCATION ACT OF 1965
E
428A
(A) In the case of a student at an eligible institution
who has not successfully completed the first and second
year of a program of undergrad.uate education
(1) $4,000, if such student is enrolled in a program
whose length is at least one academic year in length
(as determined under section 481);
(ii) $2,500, if such student is enrolled in a pro-
gram whose length is less than one academic year, but
at least 2/13 of such an academic year; and
(iii) $1,500, if such student is enrolled in a pro-
gram whose length is less than 2/3, but at least 1/3, of
such an academic year.
(B)1 In the case of a student at an eligible institution
who has successfully completed such first and second year
but has not successfully completed the remainder of a pro-
gram of undergraduate study
(i) $5,000, if such student is enrolled in a program
whose length is at least one academic year in length
(as determined under section 481);
(ii) $3,325, if such student is enrolled in a pro-
gram whose length is less than one academic year, but
at least 2/3 of such an academic year; and
(iii) $1,675, if such student is enrolled in a pro-
gram whose length is less than 2/3 , but at least 1/3, of
such an academic year.
(C) For the purposes of this paragraph, the number of
years that a student has completed in a program of under-
graduate education shall include any prior enrollment in
an eligible program of undergraduate education for which
the student was awarded an associate or baccalaureate de-
gree, if such degree is required by the institution for ad-
mission to the program in which the student is enrolled.
(D) In the case of a graduate or professional student
(as defined in regulations of the Secretary) at an eligible
institution, $10,000.
(2) AGGREGATE LIMIT.The aggregate insured principal
amount of insured loans made to any student under this sec-
tion, minus any interest capitalized under subsection ( ), shall
not exceed
(A) $23,000, in the case of any student who has not
successfully completed a program of undergraduate edu-
cation; and
(B) $73,000, in the case of any graduate or profes-
sional student, as such terms are defined by regulations is-
sued by the Secretary, including any loans which are in-
Effective July 1, 1994, section 2(cX29) of the Higher Education Technical Amendments of
1993 replaces subparagraph (B) with the following:
"(13) 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 program of
undergraduate education
"(i) $5,000; or
"(ii) if such student is enrolled in a program of undergraduate education, the remain-
der 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 bean to one academic year.".
1 5 1
Sec. 428A
HIGHER EDUCATION ACT OF 1965
142
sured by the Secretary under this section, or by a guaranty
agency, made to such student before the student became a
graduate or professional student.
(3) LIMITATION BASED ON NEED.Any loan under this sec-
tion 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 student under this section for any academic
year in excess of (A) the student's eatimated cost of attendance,
minus (B) the total of (i) any loan for which the student is eli-
gible under section 4281 and (ii) other fmancial aid as certified
by the eligible institution under section 428(a)(2)(A). The an-
nual insurable limit on account of the 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 ex-
cess of the annual limit.
(4) DISBURSEMENT.Any loan under this section shall be
disbursed in the manner required by subparagraphs (N) and
(0) of section 428(b)(1).
(C) PAYMENT OF PRINCIPAL AND INTEREST.
(1) COMMENCEMENT OF REPAYMENT.Repayment 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, or, if the loan is disbursed in multiple installments, not
later than 60 days after the disbursement of the last such in-
stallment, subject to deferral pursuant to sections 427(a)(2)(C)
and 428(b)(1)(M). In the case of a borrower under this section
who is also a borrower under a program of student loan insur-
ance covered by an agreement under section 427 or 428(b), the
lender shall notify the borrower of the option to defer the com-
mencement of the repayment for six months after the student
ceases to carry at an eligible institution at least one-half the
normal full-time academic workload, as determined by the in-
stitution, except that interest shall begin to accrue, and shall
be paid in accordance with paragraph (2), notwithstanding
such delay in the commencement of repayment. The lender
shall also notifyr the borrower of the borrower's option to com-
mence repayment earlier than the beginning of such repay-
ment period and the difference in total cost to the borrower.
(2) CAPITALIZATION OF INTEREST.(A) Interest On loans
made under this section
(i) which are disbursed in installments,
(ii) for which payments of principal are deferred under
sections 427(a)(2)(C)(i) and 428(b)(1)(M)(i), or
(iii) for which the commencement of the repayment pe-
riod is delayed in accordance with paragraph (1) to coin-
cide with the commencement of the repayment period of a
loan made under section 427 or 428,
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 not
more frequently than quarterly by the lender.
Effective February 20, 1994, section 2(c)(31) of the Higher Education Technical Amendments
of 1993 strikes "section 428" and inserts "sections 428 and 428H".
152
143
HIGHER EDUCATION ACT OF 1965
Sec. 428A
(B) Such capitalization of interest 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.
(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(c).
(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
10-year repayment period under section 428(b)(1)(D), such pe-
riod shall commence at the time the first payment of principal
is due from the borrower.
(d) 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
Sec. 428A
HIGHER EDUCATION ACT OF 1965
144
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 recover 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);
(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.
(20 U.S.C. 1078-1) Enacted October 12, 1976, P.L. 94-482, sec. 127(a), 90 Stat.
2120, 2121, 2122, 2123; amended June 16, 1977, P.L. 95-43, sec. 1(a)(30), (31), (32),
91 Stat. 216; amended October 3, 1980; P.L. 96-374, secs. 412(e), (0, 1391, 94 Stat.
1420, 1421, 1503; amended August 13, 1981, P.L. 97-35, sec. 535(e), 95 Stat. 455;
amended October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1384; amended June
3, 1987, P.L. 100-50, sec. 10(n), (o)(1), (p)(1), (q), (r), 101 Stat. 343, 344; amended
July 18, 1988, P.L. 100-369, secs. 4 and 5, 102 Stat. 835-836; amended December
19, 1989, P.L. 101-239, sec. 2003(a)(1), (b)(1), and (c), 103 Stat. 2112-2114; amend-
ed November 5, 1990, P.L. 101-508, sec. 3006(b), 104 Stat. 2222; amended April 9,
154
145
HIGHER EDUCATION ACT OF 1965
Sec. 428B
1991, P.L. 102-26, sec. 2(c)(1), 105 Stat. 123; amended July 23, 1992, P.L. 102-325,
sec. 417, 106 Stat. 529; amended December 20, 1993, P.L. 103-208, sec. 2(c)(29)-
(32), (m), 107 Stat. 2465, 2486.
SEC. 428B. FEDERAL PLUS LOANS.
(a) AUTHORITY To BORROVV.Parents of a dependent student,
who do not have an adverse credit history as determined pursuant
to regulations of the Secretary, shall be eligible to borrow funds
under this section in amounts specified in subsection (b), and un-
less otherwise specified in subsections (c), (d), and (e), such loans
shall have the same terms, conditions, and benefits as all other
loans made under this part. 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 sec-
tion.
(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.A11 loans made under this
section shall be disbursed in accordance with the requirements of
section 428G1 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.Repayment, 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.
'The amendment made by section 4109(a) of P.L. 103-66 to this subsection, adding the ref-
erence to multiple disbursement requirements, appliss to loans for which the first disbursement
is made on or after October 1,1993.
155
Sec. 428B
HIGHER EDUCATION ACT OF 1965
146
(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(c).
(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
(13) the period of repayment of principal will be length-
ened or shortened,
in order to reflect adjustments in ipterest 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 ad.ditional insurance fee may be
charged to the borrower with respect to the loan.
1 5 6
147
HIGHER EDUCATION ACT OF 1965
Sec. 428C
(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);
(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-
tif3r 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.
(20 U S C. 1078-2) Enacted October 3, 1980, P.L. 96-374, sec. 419, 94 Stat. 1424;
amended August 13, 1981, P.L. 97-35, secs. 532(b)(3), 534(a)(2), (c)(1), (c)(3), 95
Stat 452, 454, 455; amended August 15, 1983, P.L. 98-79, sec. 12, 97 Stat. 484;
amended October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1386; amended June
3, 1987, P L. 100-50, sec. 10(o), (p)(2), (q), (r), 101 Stat. 343, 344; amended July 23,
1992, P L 102-325, sec. 418, 106 Stat. 531; amended August 10, 1993, P.L. 103-
66, sec. 4109(a), 107 Stat. 369; amended December 20, 1993, P.L. 103-208, sec.
2(m), 107 Stat. 2486.
SEC. 428C. FEDERAL CONSOLIDATION LOANS.1
(a) AGREEMENTS WITH ELIGIBLE LENDERS.-
(I) 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
1Section 428C was extensively amended by section 4046(a) of P.L. 103-66. Section 4046(c) of
that Public Law provided that those amendments are effective July 1, 1994, except that (A) the
amendment to subsection (b)(4)(C) is effective on the date of enactment of that Public Law, and
(B) subsection (f) (as added by section 4106(a) of that Public Law) is effective on that date of
enactment
157
Sec. 428C
HIGHER EDUCATION ACT OF 1965
148
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;
(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.
(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 BORROWERS.(A) For the pur-
pose of this section, the term "eligible borrower" means a bor-
rower who, at the time of application for a consolidation loan
is in repayment status, or in a grace period preceding repay-
ment, or is a defaulted borrower who has made arrangements
to repay the obligation on the defaulted loans satisfactory to
the holders of the defaulted loans.
(B)(i) An individual's status as an eligible borrower under
this section terminates upon receipt of a consolidation loan
under this section, except
(I) with respect to eligible student loans received after
the date of receipt of the consolidation loan; and
(II) that loans received prior to the date of the consoli-
dation loan may be added to the consolidation loan during
the 180-day period following the making of the consolida-
tion loan.
(ii) Loans made under this section shall, to the extent used
to discharge loans made under this title, be counted against
applicable limitations on aggregate indebtedness contained in
sections 425(a)(2), 428(b)(1)(B), 428A(b)(2), and 464(a)(2).
(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
1 5 8
149
HIGHER EDUCATION ACT OF 1965
Sec. 428C
(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; or
(C) made under subpart II of part A of title VII 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, or (ii) the borrower certifies that the borrower has
sought and has been unable to obtain a consolidation loan
with income-sensitive repayment terms from the holders of
the outstanding loans of that borrower (which are so se-
lected 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;
(E) that the lender shall offer an income-sensitive re-
payment schedule, established by the lender in accordance
with the regulations prontulgated by the Secretary, to the
borrower of any consolidation loan made by the lender on
or after July 1, 1994; and
159
SeC. 428C
HIGHER EDUCATION ACT OF 1965
160
(F) such other terms and conditions as the Secretary
or the guaranty agency may specifically require of the
lender to caxry 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
lend.er 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 of the 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
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
1 6
151
HIGHER EDUCATION ACT OF 1965
Sec. 428C
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
(I) by the Secretary, in the case of a consolidation
loan that consolidated only Federal Stafford Loans for
which the student borrower received an interest sub-
sidy under section 428; or
(II) by the borrower, or capitalized, in the case of
a consolidation loan other than a loan described in
subclause (I);
(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.
(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.
(C) PAYMENT OF PRINCIPAL AND INTEREST.
(1) INTEREST RATES.(A) Consolidation loans made under
this section shall bear interest at rates determined under sub-
paragraph (B) or (C). For the purposes of payment of special
allowances under section 438(b)(2), the interest rate required
1 f; 1
77-5O 0-94 --6
Sec. 428C
HIGHER EDUCATION ACT OF 1965
152
by this subsection is the applicable interest rate with respect
to a consolidation loan.
(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.
(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
1 f;2
153
HINER EDUCATION ACT OF 1965
Sec. 428C
(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 1Dorrower on the loans selected for consolidation.
(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)1 SPECIAL PROGRAM AUTHORIZED.
(1) GENERAL RULE AND DEFINITION OF ELIGIBLE STUDENT
LOAN.
(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.L-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 VII 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-
'Section 306(b) of P.L. 102-408 provides that this new subsection (d) is effective December
13,1992.
Sec. 428C
HIGHER EDUCATION ACT OF 1965
154
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).
(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
ubsection that is attributable to any loan described in
iragraph (1)(C)(iD.
(C) ADDITIONAL RESERVE RULE.Notwithstanding any
91,her provision of this Act, additional reserves shall not be
7equired 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)1 TERMINATION OF AUTHORITY.The authority to make
loans under this section expires at the close of September 30, 1998.
Nothing in this section shall be construed to authorize the Sec-
retary 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 pur-
pose 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.
'Section 419(g) of the Higher Education Amendments of 1992 (Public Law 102-325) amended
section 428C(d) by striking "September 30, 1992" and inserting "September 30, 1998". Section
306(a)(1) of the Health Professions Education Extension Amendments of 1992 (Public Law 102
408) redesignated ubsection (d) as subsection (e). Section 306(b) of Public Law 102-408 at-
tempted to amend section 428(e), as redesignated, by striking "1992" and inserting "1997".
4
155
HIGHER EDUCATION ACT OF 1965
Sec. 428F
(2) DEPOSIT.-The Secretary shall deposit all fees collected
pursuant to sube:,-ction (a) into the insurance fund established
in section 431.
(20 U.S.C. 1078-3) Enacted April 7, 1986, P.L. 99-272, sec. 16017(a), 100 Stat.
343; amended October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1388; amended
June 3, 1987, P.L. 100-50, sec. 10(s), 101 Stat. 345; amended July 23, 1992, P.L.
102-325, sec. 419, 106 Stat. 532; amended October 13, 1992, P.L. 102-408, sec. 306,
106 Stat. 2084; amended August 10, 1993, P.L. 103-66, sec. 4046(a), (b)(2), and
4106(a), 107 Stat. 360, 363, and 368; amended December 20, 1993, P.L. 103-208,
sec. 2(0;33)-(37), (m), 107 Stat. 2466, 2486.
SEC. 428D. 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
(2) the authority to commingle such funds shall not relieve
such agency of any accounting or auditing obligations under
this part.
(20 U.S.C. 1078-4) Enacted October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat.
1393; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
[Section 428E was repealed by section 605(b) of Public Law
102-164; 105 Stat. 1068.)
SEC. 428F. 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
guri anty 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
Sec. 428G
HIGHER EDUCATION ACT OF 1965
156
(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.
(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) SPECIAL RULE.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 (regard-
less of whether the defaulted loan has been sold to an eligible lend-
er) upon the borrower's payment of 6 consecutive monthly pay-
ments. The guaranty agency shall not demand from a borrower as
a monthly payment amount under this subsection more than is rea-
sonable and affordable based upon the borrower's total fmancial
circumstances. A borrower may only obtain the benefit of this sub-
section with respect to renewed eligibility once.
(20 U.S.C. 1078-6) Reenacted December 19, 1989, P.L. 101-239, sec. 2005(a), 103
Stat. 2116-2118; amended July 23, 1992, P.L. 102-325, sec. 420, 106 Stat. 534;
amended December 20, 1993, P.L. 103-208, sec. 2(c)(38)-(40), (m), 107 Stat. 2466,
2486.
SEC. 428G. REQUIREMENTS FOR DISBURSEMENT OF STUDENT LOANS.
(a) MULTJPLE 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
Pq1
157
HIGHER EDUCATION ACT OF 1965
Sec. 428G
of the second semester, quarter, or similar division of such pe-
riod of enrollment.
(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 d.uration of the
period of enrollment) be presented by the institution to the stu-
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.
(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)(IH)) that com-
plies with the requirements of this 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(1); and
(3) notwithstanding subsection (a)(2), may, with the per-
mission of the borrower, be disbursed by the lender on a week-
ly or monthly basis, provided that the proceeds of the loan are
disbursed in substantially equal weekly or monthly install-
ments, 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.
(e)
EXCLUSION OF CONSOLIDATION AND FOREIGN STUDY
LOANS.The provisions of this section shall not apply in the case
VP?
Sec. 428H
HIGHER EDUCATION ACT OF 1965
158
of a loan made under section 428C or made to a student to cover
the cost of attendance at an eligible institution outside the United
States.
(f) 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.
(20 U.S.C. 1078-7) Enacted December 19, 1989, P.L. 101-239, sec. 2004(a), 101
Stat. 2115-2116; amended November 5, 1990, P.L. 101-508, sec. 3003, 104 Stat.
222; amended July 23, 1992, P.L. 102-325, sec. 421, 106 Stat. 534; amended August
10, 1993, P.L. 103-66, sec. 4109(b), 107 Stat. 369; amended December 20, 1993, P.L.
103-208, sec. 2(c)(41), (m), 107 Stat. 2466, 2486.
SEC. 428H. UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE-INCOME
BORROWERS.
(a) IN GENERAL.It is the purpose of this section to authorize
insured loans under this part 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 fDr student eligibility under section 484 (including graduate
and professional students as defined in regulations promulgated by
the Secretary) I shall be entitled to borrow an unsubsidized Staf-
ford loan. Such student shall provide to the .lender a statement
from the eligible iLiztitution at which the student has been accepted
for enrollment, or at which the student is in attendance, which
(1) sets forth such student's estimated cost of attendance
(as determined under section 472);
(2) sets forth such student's estimated financial assistance,
including a loan which qualifies for subsidy payments under
section 428; and
(3) certifies the eligibility of the student to receive a loan
under this section and the amount of the loan for which such
student is eligible, in accordance with subsection (c).
(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-
Section 4047(a) of P.L. 103-66 added the parenthetical phrase to subsection (b), completely
revised subsection (d) of this section and added paragraph (6) to subsection (e). Section 4047(d)
stated that "except as otherwise provided" in such amendments, these amendments are effective
July 1, 1994. In addition, section 4047(c) provided as follows:
(c) TERMS, CONDITIONS AND BENEFITS.Notwithstanding the amendments made by this sec-
tion, with respect to loans provided under sections 428A and 428H of the Act (as such sections
existed on the date preceding the date of enactment of this Act) the terms, conditions and bene-
fits applicable to such loans under such sections shall continue to apply to such loans after the
date of enactment of this Act.
159
HIGHER EDUCATION ACT OF 1965
Sec. 428H
ance reasonably available to such student. An eligible institution
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 or its equivalent or in any period of 7 consecutive months,
whichever is longer, shall be the amount determined under
paragraph (1), plus
(A) in tl-t?. 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
(as determined under section 481);
(ii) $2,500, if such student is enrolled in a pro-
gram whose length is less than one academic year, but
at least 2/3 of such an academic year; and
(iii) $1,500, if such student is enrolled in a pro-
gram whose length is less than 2/3, but at least 1/3, of
such an 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 subelause (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.
(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.
(e) PAYMENT OF PRINCIPAL AND INTEREST.
9
Sec. 428H
HIGHER EDUCATION ACT OF 1965
160
(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(bX7).1
(2) CAPITALIZATION OF INTEREST.Interest on loans made
under this section for which payments of principal are not re-
quired during the in-school and grace periods or for which pay-
ments
are
deferred
under
sections
427(a)(2)(C)
and
428(bX1XM) 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 quar-
terly by the lender. Such capitalization of interest 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.
(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)1 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.-1For purposes of calculating the
10-year repayment period under section 428(b)(1XD), such pe-
riod shall commence at the time the first payment of principal
is due from the borrower.
(0 ORIGINATION FEE.-2
(1) AMOUNT OF ORIGINATION FEE.The lender shall charge
the borrower an origination fee in the amount of 3.0 percent
of the principal amount of the loan, to be deducted proportion-
ately from each installment payment of the proceeds of the
loan prior to payment to the borrower.
(2) RELATION TO APPLICABLE INTEREST.Such origination
fee shall not be taken into account for purposes of determining
compliance with section 427A.
'Effective April 1, 1994, section 2(c)(43XS) of the Higher Education Technical Amendments
of 1993 adds at the end the following new sentence:
"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 repayment at an earlier date."
2Subsection (f) was extensively revised by section 4102(b) of P.L. 103-66. Section 4102(d) of
that Public Law provided that such revisions are effective on July 1, 1994.
1 7 0
161
HIGHER EDUCATION ACT OF 1965
Sec. 4281
(3) DISCLOSURE REQUIRED.The lender shall disclose to
the borrower the amount and method of calculating the origi-
nation fee.
(4) USE OF ORIGINATION FEE TO OFFSET DEFAULT COSTS.
Each lender making loans under this section shall transmit all
origination fees authorized to be collected from borrowers to
the Secretary, who shall use such fees to pay the Federal costs
of default claims paid for loans under this section and to re-
duce the cost of special allowances paid thereon, if any, under
section 438(b).
(5) REVIEW OF ORIGINATION FEE AND INSURANCE PRE-
mIum.In fiscal year 1995, the Secretary is directed to analyze
the risk rates of borrowers who have participated in this pro-
gram in the 2 previous fiscal years. If the Secretary finds, that
as a result of this review, the projected defaults and special al-
lowance costs of the unsubsidized program do not exceed the
combined origination fee under this subsection and the insur-
ance premium under subsection (h), the Secretary is directed
to lower the origination fee and insurance premium accord-
ingly.
(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 FREMIUM.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.
(20 U.S.C. 1078-8) Enacted July 23, 1992, P.L. 102-325, sec. 422, 106 Stat. 535;
amended August 10, 1993, P.L. 103-66, secs. 4047(a) and 4102(b), 107 Stat. 363 and
366; amended December 20, 1993, P.L. 103-208, sec. 2(c)(42)-(45), (m), 107 Stat.
2466-67, 2486.
SEC. 4281. SPECIAL INSURANCE AND RE1NSUR.ANCE 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.
(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
Section 4102(b)(2) of P.L. 103-66 added at the end this new subsection effective July 1, 1994.
1 7
Sec. 4281
HIGHER EDUCATION ACT OF 1965
162
(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 GUAR.ANTY 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 (-.)
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
a defmed 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
172
163
HIGHER EDUCATION ACT OF 1965
Sec. 4281
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
elf. 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
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.
p3
Sec. 4281
HIGHER EDUCATION ACT OF 1965
164
(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.
(f) 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.
(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.
1So in law. The comma probably should be deleted. Section 2(0(46) of the Higher Education
Technical Amendroenta of 1993 struck "the Federal Fake Claims Act" and inserted "section
3729 of title 31, United States Code,".
174
165
HIGHER EDUCATION ACT OF 1965
Sec. 4281
(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;
(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 shareholde,r, di-
rector, or officer of the entity who has been convicted of a
felony.
Sec. 428J
HIGHER EDUCATION ACT OF 1965
166
(20 U.S.C. 1078-9) Enacted July 23, 1992, P.L. 102-325, sec. 422, 106 Stat. 536;
amended December 20, 1993, P.L. 103-208, sec. 2(c)(46), (m), 107 Stat. 2467, 2486.
SEC. 428J. LOAN FORGIVENESS FOR TEACHERS, INDIVIDUALS PER-
FORMING NATIONAL COMMUNITY SERVICE .AND NURSES.
(a) STATEMENT OF PURPOSE.R is the purpose of this section
to encourage individuals to
(1) enter the teaching and nursing profession; and
(2) perform national and community service.
(b) DEMONSTRATION PROGRAM.
(1) IN GENERAL.The Secretary, in consultation with the
Secretary of Health and Human Services, is authorized to
carry out a demonstration program of assuming the obligation
to repay a loan made, insured or guaranteed under this part
(excluding loans made under section 428A, 428B, or 4280) for
any new borrow lr after October 1, 1989, who
(A) is employed as a full-time teacher
(i) in a school which qualifies under section
465(a)(2)(A) for loan cancellation for Perkins loan re-
cipients who teach in such schools; and
(ii) of mathematics, science, foreign languages,
special education, bilingual education, or any other
field of expertise where the State educational agency
determines there is a shortage of qualified teachers;
(B) serves as a full-time volunteer under the Peace
Corps Act or under the Domestic Volunteer Service Act of
1973, or to perform comparable service as a full-time em-
ployee of an organization which is exempt from taxation
under section 501(c)(3) of the Internal Revenue Code of
1986, if the borrower does not receive compensation which
exceeds 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 two (as defined in section 673(2) of
the Community Services Block Grant Act); or
(C) is employed full-time as a nurse in a public hos-
pital, a rural health clinic, a migrant health center, an In-
dian Health Service, an Indian health center, a Native Ha-
waiian health center or in an acute care or long-term care
facility.
(2) REGULATIONS.The Secretary is authorized to issue
such regulations as may be necessary to carry out the provi-
sions of this section.
(C) LOAN REPAYMENT.
(1) IN GENERAL.The Secretary shall assume the obliga-
tion to repay
(A) 15 percent of the total amount of Stafford loans in-
curred by the student borrower during such borrower's last
2 years of undergraduate education for the first or second
year of service in which such borrower meets the require-
ments described in subsection (a);
(B) 20 percent of such total amount for such third or
fourth year of service; and
1 7 6
167
HIGHER EDUCATION ACT OF 1965
Sec. 428J
(C) 30 percent of such total amount for such fifth year
of service.
(2) CONSTRUCTION.Nothing in this subsection shall be
construed to authorize the refunding of any repayment of a
Stafford loan.
(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 teaching certificate, the Secretary is authorized
to assume the obligation to repay the total amount of Stafford
loans incurred for a maximum of 2 academic years in returning
to an institution of higher education for the purpose of obtain-
ing a teaching certificate or additional certification. Such Staf-
ford 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 EDUCATIONAL
AWARD RECIPIENTS.No student borrower may, for the same
volunteer service, receive a benefit under both this section and
subtitle D of title I of the National and Community Service Act
of 1990 (42 U.S.C. 12571 et seq.).
(d) REPAYMENT TO ELIGIBLE LENDERS.The Secretary shall
pay to each eligible lender ar holder for each fiscal year an amount
equal to the aggregate amount of Stafford loans which are subject
to repaymmt pursuant to tb Is section for such year.
(e) APPLICATION FOR ; .2PAYMENT.
(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 reason-
ably require. Loan repayment under this section shall be on a
first-come, first-served basis and subject to the availability of
appropriations.
(2) CONDITIONS.An eligible individual may apply for re-
payment after completing each year of qualifying service. The
borrower shall receive forbearance while engaged in qualifying
service unless the borrower is in deferment while so engaged.
DEFINITIONS.For the purpose of this section the term "eli-
gible lender" has the same meaning given such term in section
435(d).
(g) EVALUATION.
(1) IN GENERAL.The Seuetary shall conduct, by grant or
contract, an independent national evaluation of the impact of
the program assisted under this part on the fields of teaching,
nursing, and community service.
(2) COMPETITIVE I3ASIS.The grant or contract described in
paragraph (1) shall be awarded on a competitive basis.
I 77
Sec. 429
HIGHER EDUCATION ACT OF 1965
168
(3) ,CONTENTS.The evaluation described in this section
shall (A) assess whether the program assisted under this
section has brought into teaching, nursing, and community
service a significant number of highly capable individuals
who otherwise would not have entered such fields;
(B) assess whether a significant number of students
perform the service described in subsection (b) or opt to
repay the loans instead of remaining in the career for
which such student received loan repayment under this
section;
(C) identify the barriers to the effectiveness of the pro-
gram assisted under this section;
(D) assess the cost-effectiveness of such program in
improving teacher, nursing, and community service worker
quality and quantity and the ways to improve the cost-ef-
fectiveness of such program;
(E) identify the reasons for which participants in the
program have chosen to take part in such program; and
(F) identify other areas of community service or em-
ployment which may serve as appropriate methods of loan
repayment.
(4) INTERIM EVALUATION REPORTS.The Secretary shall
prepare and submit to the President and the Congress such in-
terim reports on the evaluation described in this section as the
Secretary deems appropriate, and shall submit such a fmal re-
port by January 1, 1997.
(5) AUTHORIZATION OF APPROPRIATIONS.There are au-
thorized
to
be
appropriated
to
carry
out
this
section
$10,000,000 for fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1078-10) Enacted July 23, 1992, P.L. 102-325, sec. 422, 106 Stat. 541;
amended September 21, 1993, P.L. 103-82, sec. 102(c)(2), 107 Stat. 824; amended
December 20, 1993, P.L. 103-208, sec. 2(c)(47)(51), (m), 107 Stat. 2467, 2486.
SEC. 429. CERTIFICATE OF FEDERAL LOAN INSURANCEEFFECTIVE
DATE OF INSURANCE.
(a) LOAN-BY-LOAN INSURANCE.
(1) AUTHORM 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
P8
169
HIGHER EDUCATION ACT OF 1965
Sac. 429
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
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 deemzld 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
Sec. 429
HIGHER EDUCATION ACT OF 1965
170
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-
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.
(20 U.S.C. 1079) Enacted Nov. 8, 1965, P.L. 89-329, sec. 429, 79 Stat. 1243;
amended October 12, 1976, P.L. 94-482,
sec. 127(a), 90
Stat. 2123, 2124, 2125;
amended October 3, 1980, P.L. 96-374, sec. 1351, 94 Stat. 1503; amended October
17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1395; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 430. 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 Gther 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
) o
171
HIGHER EDUCATION ACT OF 1965
Sec. 430
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 reasonable attempts were made to locate the bor-
rower (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 insurance beneficiary and shall ma.ke pay-
ment in full on the amount of the beneficiary's loss pending com-
pletion of the due diligence investigation.
(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 msured 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-
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
Sec. 430
HIGHER EDUCATION ACT OF 1965
172
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.
(20 U.S.C. 1080) Enacted Nov. 8, 1965, P.L. 89-329, sec. 430, 79 Stat. 1244;
amended Oct. 16, 1968, P.L. 90-575, sec. 113, 82 Stat. 1021; amended June 23,
1972, P.L. 92-318, sec. 132B(c), 86 Stat. 262; amended October 12, 1976, P.L. 94-
482, sec. 127(a), 90 Stat. 2125, 2126; amended June 15, 1977, P.L. 95-43, sec.
1(a)(33), 91 Stat. 216; amended October 3, 1980, P.L. 96-374, secs. 416(a)(1), (b),
422, 1391, 94 Stat. 1421, 1422, 1432, 1503; amended April 7, 1986, P.L. 99-272,
secs. 16014(a)(2), 16022, 100 Stat. 341, 349; amended October 17, 1986, P.L. 99-498,
sec. 402(a), 100 Stat. 1397; amended July 23, 1992, P.L. 102-325, sec. 423, 106 Stat.
543; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 430A. REFORM TO CREDIT BUREAUS AND INSTITUTIONS 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-
152
173
HIGHER EDUCATION ACT OF 1965
Sec. 430A
(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);
(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
I
3
Sec. 430A
HIGHER EDUCATION ACT OF 1965
174
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 of delinquent 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.
(20 U.S.C. 1080a) Enacted April 7, 1986, P.L. 99-272, sec. 16023, 100 Stat. 349;
amended May 23, 1986, P.L. 99-320, sec. (c), 100 Stat. 491; amended October 17,
1986, P.L. 99-498, sec. 402(a), 100 Stat. 1398; amended June 3, 1987, P.L. 100-50,
sec. 10(v), 101 Stat. 346; amended July 23, 1992, P.L. 102-325, sec. 424, 106 Stat.
543; amended December 20, 1993, P.L. 103-208, sec. 2(c)(52), (m), 107 Stat. 2467,
2486.
SEC. 431. INSURANCE FUND.
(a) ESTABL1SHMENT.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-
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.
4
175
HIGHER EDUCATION ACT OF 1965
Sec. 432
(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 is-
sued hereunder and for that purpose is authorized to use as a pub-
lic debt transaction the proceeds from the sale of any securities is-
sued under the Second Liberty Bond Act, as amended, and the pur-
poses for which securities may be issued under that Act, as amend-
ed, are extended to include any purchase of such notes and obliga-
tions. 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.
(20 U.S.C. 1081) Enacted Nov. 8, 1965, P.L. 89-329, sec. 431, 79 Stat. 1245;
amended Aug. 3, 1968, P.L. 90-460, sec. 3, 82 Stat. 638; amended October 12, 1976,
P L. 94-482, sec. 127(a), 90 Stat. 2126, 2127; amended October 3, 1980, P.L. 96-
374, sec. 1391, 94 Stat. 1503; amended October 17, 1986, P.L. 99-498, sec. 402(a),
100 Stat. 1400; amended June 3, 1987, P.L. 100-50, sec. 10(w), 101 Stat. 346;
amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 432. 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
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
1
Sec. 432
HIGHER EDUCATION ACT OF 1965
176
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
m 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 1Dy 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
(1) prepare annually and submit a budget program as pro-
vided for wholly owned Government corporations by chapter 91
of title 31, United States Code; and
(2) maintain with respect to insurance under this part an
integral set of accounts and prepare fmancial statements in ac-
cordance with generally accepted accounting principles, which
shall be audited annually by the General Accounting Office in
conformity
with
generally accepted Government auditing
standards except that the transactions of the Secretary, includ-
ing the settlement of insurance claims and of claims for pay-
ments pursuant to section 428, and transactions related there-
to and vouchers approved by the Secretary in connection with
such transactions, shall be final and conclusive upon all ac-
counting and other officers of the 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
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
1c56
177
HIGHER EDUCATION ACT OF 1965
Sec. 432
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
ma.king 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
subcategories 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-
quiring lenders to take additional collection action as a
condition for payment of claims; and
(C) certi6ing to the central office when collection of
defaulted loans has been completed, compromising or
c
Sec. 432
HIGHER EDUCATION ACT OF 1965
178
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 BORROINERS.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)
(D), (F), or (H);
(C) a representative sample of eligible lenders under
this part, upon the request of the Committee on Education
and Labor of the House of Representatives or the Commit-
tee on Labor and Human Resources of the Senate, with re-
spect to the payment of the special allowance under sec-
tion 438 in order to evaluate the program authorized by
this part; and
(D) any Authority required to file a plan for doing
business under section 438(d).
(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 Education 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,
or regulations to the recorois of such agency, lender, or Author-
ity.
1'18
179
HIGHER EDUCATION ACT OF 1965
Sec. 432
(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 chargea,
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 loy 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
persistence of the violation, failure, or substantial misrepresen-
tation; and the amount of any losses resulting from the viola-
S.C. 432
HIGHER EDUCATION ACT OF 1965
180
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 fmal 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-
licitatiom; 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 o
Ile 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
agencies under this part, and shall notify such guaranty agen-
cies of such sanction-
9 0
181
HIGHER EDUCATION ACT OF 1965
Sec. 432
(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(bX1)(U) shall be limitedto
(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 fixture, 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
part. The Secretary shall notify each guaranty agency of the
lifting of any such sanction.
Sec. 432
HIGHER EDUCATION ACT OF 1965
182
(1) 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) AUTHC,ITY 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.
(I) 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.Within 1 year after the date of en-
actment of the Higher Education Amendments of 1992, the
Secretary shall recommend to the appropriate committees in
the Senate and House of Representatives changes to statutes
that could be made in order to further encourage such efforts.
(1) UNIFORM ADMINISTRATIVE AND CLAIMS PROCEDURES.
183
HIGHER EDUCATION ACT OF 1965
Sec. 432
(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, institut:ons 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-
dEST COPY AVAILABLE
193
77-530 0-94--7
t?
Sec. 432
HIGHER EDUCATION ACT OF 1965
184
nually, for additional methods of simplifying and standardizing
the administration of the programs authorized by this part.
(rn) 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 a common application form and promissory
note to be used for applying for loans under part B of this
title.(B) REQUIREMENTS.The form 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
(iii) permit, to the maximum extent practicable,
application for any loan under part B.
(C) APPROVAL OF FORM.The Secretary shall approve
a form for use not later than 360 days after the date of en-
actment of the Higher Education Amendments of 1992.
(D) SPECIAL RULE.Nothing in this section shall be
construed to limit the development of electronic forms and
procedures.
(2) COMMON DEFERMENT FORM.The Secretary, in coopera-
tion with representatives of guaranty agencies, institutions of
Ligher 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 precedures
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.
(n) DEFAULT REDUCTION MANAGEMENT.
(1) AUTHORIZATION.There are authorized to be appro-
priated $25,000,000 for fiscal year 1993 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
194
185
HIGHER EDUCATION ACT OF 1965
Sec. 432
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
fimds 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:
(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 Labor of the House of Represent-
atives and the Committee on Labor and Human Resources 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 sulDmit 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, State
postsecondary reviewing entities designated under subpart 1 of
part H, and entities 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 par-
ticipate under this title, shall report to the Secretary, in such man-
ner and at such time as the Secretary shall require, on any finan-
cial interest which such individual may hold in any other entity
participating in any program assisted under this title.
(20 U.S.C. 1082) Enacted Nov. 8, 1965, P.L. 89-329, sec. 432, 79 Stat. 1246;
amended Aug. 3, 1968, P.L. 90-460, sec. 3, 82 Stat. 638; amended Oct. 12, 1976,
P.L. 94-482, sec. 127(a), 90 Stat. 2127, 2128, 2129; amended October 3, 1980, P.L.
1
5
See. 433
HIGHER EDUCATION ACT OF 1965
186
96-374, secs. 416(c), 1391, 94 Stat. 1421, 1503; amended April 7, 1986, P.L. 99-272,
sec. 16024, 100 Stat. 351; amended October 17, 1986, P.L. 99-498, sec. 402(a), 100
Stat. 1401; amended June 3, 1987, P.L. 100-50, sec. 10(x), (y), 101 Stat. 346; amend-
ed December 19, 1989, P.L. 101-239, sec. 2001(a), 103 Stat. 2118; amended July 23,
1992, P.L. 102-325, sec. 425, 106 Stat. 543; amended December 20, 1993, P.L. 103-
208, sec. 2(k)(2), (3), (m), 107 Stat. 2485, 2486.
SEC. 433, STUDENT LOAN INFORMATION BY ELIGIBLE LENDERS.
(a) REQUIRED DISCLOSURE BEFORE DISBURSEMENT.-Each eligi-
ble lender shall, at or prior to the time such lender disburses a loan
which is insured or guaranteed under this' part (other than a loan
made under section 428C), provide thorough and accurate loan in-
formation on such loan to the borrower. Any disclosure required by
this subsection may be made by an eligible lender 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 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 defmition 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;
1
6
187
HIGHER EDUCATION ACT OF 1965
Sec. 433
(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 the information required under this
subsection. For any loan made, insured, or guaranteed under this
part, other than a loan made under section 428B or 428C, such dis-
closure required by this subsection shall be made not less than 60
days1 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
NONDISCLOSURE.Such information shall be available without cost
to the borrower. The failure of an eligible lender to provide infor-
mation as required by this section 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 under a contract of insur-
ance or reinsurance, or the obligation of a guaranty agency under
a contract of guaranty. Nothing in this section shall be construed
Effective February 20, 1994, section 2(c)(63) of the Higher Education Technical Amendments
of 1993 strikes "60 days" and inserts "30 days".
I
7
Sec. 434
HIGHER EDUCATION ACT OF 1965
188
as subjecting the lender to the Truth in Lending Act with regard
to loans made under this part. The Secretary may limit, suspend,
or terminate 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
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, 4288, 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 projectioni of monthly repayment amounts assuming dif-
ferent levels of borrowing and interest accruals resulting from cap-
italization of interes: while the borrower is in school. Such sample
projections shall disckse the cost to the student ofcapitalizing-
(1) principal ard interest; and
(2) interest only.
(20 U S C 1083) Enacted Nov. 8, 1965, P.L. 89-329, sec. 433, 78 Stat. 1247;
amended Oct 16, 1968, P.L. 90-575, sec. 116, 82 Stat. 102; amended June 23, 1972;
P.L 92-318, sec. 132(c), 86 Stat. 261; amended Oct. 12, 1976, P.L. 94-482, sec.
127(a), 90 Stat. 2129; amended June 15, 1977, P.L. 95-43, sec. 1(a)(34), 91 Stat.
216, amended October 3, 1980, P.L. 96-374, sec. 1391, 94 Stat. 1503; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1406; amended June 3, 1987, P.L.
100-50, sec 10(z), 101 Stat. 346; amended July 23, 1992, P.L. 102-325, sec. 426,
106 Stat. 548, amended December 20, 1993, P.L. 103-208, sec. 2(c)(53), (54), (k)(4),
(m), 107 Stat 2468, 2485, 2486.
SEC. 434. PARTICIPATION BY FEDERAL CREDIT UNIONS IN FEDERAL,
STATE, AND PRIVATE STUDENT LOAN INSURANCE PRO-
GRAMS.
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(a)(1)(B).
(20 U S C 1084) Enacted Nov. 8, 1965, P.L. 89-329, sec. 434, 79 Stat. 1247;
amended Oct. 16, 1969, P.L. 90-575, sec. 116, 82 Stat. 1024; amended June 23,
1972, P L. 92-318, sec. 132D(e), 86 Stat 264; amended Oct. 12, 1976, P.L. 94-482,
sec 127(a), 90 Stat. 2129, 2130; amended October 17, 1986, P.L. 99-448, sec. 402(a),
100 Stat. 1408; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat.
2486
SEC. 435. DEFINITIONS FOR Sl'UDENT LOAN INSURANCE PROGRAM.
As used in this part:
(a) ELIGIBLE INSTITUTION.-
189
HIGHER EDUCATION ACT OF 1965
Sec. 435
(1) IN GENERAL.Except as provided in paragraph (2), the
term "eligible institution" means an institution of higher edu-
cation, as defined in section 481, except that, for the purposes
of sections 427(a)(2)(C)(i) and 428(b)(1)(M)(1), 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
reduce its cohort default rate for any of the three fiscal
years below the threshold percentage specified in subpara-
graph (B); or
(ii) there are, in the judgment of the Secretary, excep-
tional mitigating circumstances that would make the ap-
plication of this paragraph inequitable.
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, 1994, 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)1 APPEALS BASED UPON ALLEGATIONS OF IMPROPER LOAN
SERVICING.An institution that-
1Section 5(6)(8) of the Higher Education Technical Amendments of 1993 provides as follows:
(8) COHORT DEFAULT RATE DETERMINATION9.The amendments made to subsection
(a)(3) and (mX1X13) of section 435 of this Act shall apply with respect to the determina.
Continued
1 t. 9
Sec. 435
HIGHER EDUCATION ACT OF 1965
190
(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 to a rep-
resentative sample (as determined by the Secretary) of the rel-
evant loan servicing and collection records of the affected guar-
anty agencies and loan servicers for a reasonable period of
time, not to exceed 30 days. The Secretary shall reduce the in-
stitution's cohort default rate to reflect the percentage of de-
faulted loans in the representative sample that are required to
be excluded pursuant to subsection (m)(1)(B).
(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
(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, or
(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;
(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;
tion (and appeals from determinations) of cohort default rates for fiscal year 1989 and
any succeeding fiscal year.
'Subsections (b) and (c) were repealed by P.L. 102-325, sec. 427(b)(1) and (2), 106 Stat. 549.
(1
0
191
HIGHER EDUCAIION ACT OF 1965
Sec. 435
(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 oth.er lenders uncle: this part, the Student Loan
Marketing Association or an agency of any State function-
ing as a secondary market;
(G) for purposes of making loans under sections
428A(d), 428B(d), 428C, and 439(q), the Student Loan
Marketing Association;
(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)); and
(J) for purpose of making loans under section 428C,
any nonprofit private agency functioning in any State as
a secondary market.
(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 1.5 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 Amendments 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
0
I
Sec. 435
HIGHER EDUCATION ACT OF 1965
192
under paragraph (3), improve the collection of loans de-
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 thiE 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.
(6) REBATE FEE REQUIREMENT.To be an eligible lender
under this part, an eligible lender shall pay 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.
(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).
ISection 427(f) amended section 435 by striking subsections (g), (h), and (n), but failed to re-
designate remaining oubsectiona.
2 2
193
HIGHER EDUCATION ACT OF 1965
Sec. 435
(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) 180
days in the case of a loan which is repayable in monthly install-
ments, or (2) 240 days in the case of a loan which is repayable in
less frequent installments.
(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
42811, 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)1 received for at-
tendance at that institution in that fiscal year who default be-
fore the end of the following fiscal year.2
(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, and, in considering appeals with re-
spect to cohort default rates pursuant to subsection (a)(3), ex-
clude any loans which, due to improper 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 calculation 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
that is used to repay any such loans) 2 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-
1The parenthetical phrases in subparagraphs (A) and (C), added by section 4046(b) of P.L.
103-66, are effective July 1, 1994.
2 Effective October 1, 1994, section 2(c)(60)(A) of the Higher Education Technical Amendments
of 1993 inserts at the end the following new sentence: "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
che purposes of calculating a cohort default rate for such institution, prior to the calculation of
such rate.".
0 '
Sec. 435
HIGHER EDUCATION ACT OF 1965
194
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.
(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.
(B)
The
Secretary
may
designate
such
additional
subcategories 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.
(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
(1) 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
Subsection (n) repealed br sec. 427(f) of P.L. 102-325. See footnote 1 on page 195.
2'1_/ 4
195
HIGHER EDUCATION ACT OF 1965
Sec. 436
section 673(2) of the Community Service Block Grant
Act; or
(B) 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)(B), the Secretary shall consider the borrower's
income and debt-to-income ratio as primary factors.
(20 U.S.C. 1085) Enacted Nov. 8, 1965, P.L. 89-329, sec. 435, 79 Stat. 1247; as
amended Oct. 29, 1966, P.L. 89-698, sec. 204, 80 Stat. 1072; amended Oct. 16, 1968,
P.L. 90-575, secs. 116, 118, 82 Stat. 1023-26; amended October 12, 1976, P.L. 94-
482, sec. 127(a), 90 Stat. 2130, 2131; amended June 15, 1977, P.L. 95-43, sec. 1
(a)(35), (a)(36), 91 Stat. 216; amended October 3, 1980, P.L. 96-374, secs. 412(e),
421(e)(2), 1391, 94 Stat. 1418, 1432, 1503; amended April 7, 1986, P.L. 99-272, secs.
16017(b)(2), 16020, 100 Stat. 343, 349; amended October 17, 1986, P.L. 99-498, sec.
402(a), 100 Stat. 1408; amended June 3, 1987, P.L. 100-50, sec. 10(aa), 101 Stat.
347; amended December 19, 1989, P.L. 101-239, secs. 2003(a)(2), 2007(a)(2), 103
Stat. 2113 and 2120; amended November 5, 1990, P.L. 101-508, sec. 3004(a), 104
Stat. 1388-26; amended November 8, 1990, P.L. 101-542, sec. 301, 104 Stat. 2387-
2388; amended April 9, 1991, P.L. 102-26, sec. 2(a)(1), 105 Stat. 123; amended July
23, 1992, P.L. 102-325, sec. 416(e)(2), and 427, 106 Stat. 519, 549; amended August
10, 1993, P.L. 103-66, sec. 4046(b)(1), 4106(b), 107 Stat. 362, 368; amended Decem-
ber 20, 1993, P.L. 103-208, sec. 2(c)(55)-(62), (m), 107 Stat. 2468-69, 2486.
SEC. 436. DISTRICT OF COLUMBIA STUDENT LOAN INSURANCE PRO-
GRAM.
(a) Aunio Rrry.-The government of the District of Columbia is
authorized (1) to establish a student loan insurance program which
meets the requirements of this part for a State loan insurance pro-
gram in order to enter into agreements with the Secretary for the
purposes of this title, (2) to enter into such agreements with the
Secretary, (3) to use amounts appropriated for the purposes of this
section to establish a fund for such purposes and for expenses in
connection therewith, and (4) to accept and use donations for the
purposes of this section.
(b) BINDING EFFECT ON MINORS.-Notwithstanding the provi-
sions of any applicable law, if the borrower, on any loan insured
under the program established pursuant to this section, is a minor,
any otherwise valid vote or other written agreement executed by
him for the purposes of such loan shall create a binding obligation.
(c) APPROPRIATIONS AUTHORIZED.-There are authorized to be
appropriated such amounts as may be necessary for the purposes
of this section.
(20 U.S.C. 1086) Enacted Nov. 3, 1966, P.L. 89-752, sec. 12, 80 Stat. 1244;
amended Oct. 16, 1968, PL. 90-575, sec. 116, 82 Stat. 1024; amended Oct. 12, 1976,
P.L. 94-482, sec. 127(a), 90 Stat. 2132, 2133; amended October 3, 1980, P.L. 96-
374, sec. 1391, 94 Stat. 1503; amended October 17, 1986, P.L. 99-498, sec. 402(a),
100 Stat. 1413; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat.
2486.
SEC. 497. REPAYMENT BY THE SECRETARY OF LOANS OF BANKRUPT,
DECEASED, OR DISABLED BORROWERS; TREATMENT OF
BORROWERS ATTENDING CLOSED SCHOOLS OR FALSELY
CERTIFIED AS ELIGIBLE TO BORROW.
(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
Sec. 437
HIGHER EDUCATION ACT OF 1965
196
Secretary), then the Secretary shall discharge the borrower's liabil-
ity on th.e 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, 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 affili-
ates and principals or settle the loan obligation pursuant to the
financial responsibility authority under subpart 3 of part H.
(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 pirincipals.
(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.
"
n,
197
HIGHER EDUCATION ACT OF 1965
Sec. 437A
(20 U.S.C. 1087) Enacted Oct. 16, 1968, P.L. 90-575, sec. 113, 82 Stat. 1020;
amended June 23, 1972, P.L. 92-318, sec. 132D, 86 Stat. 263; amended Oct. 12,
1976, P.L. 94-482, sec. 127(a), 90 Stat. 2133; amended October 3, 1980, P.L. 96-
374, sec. 1391, 94 Stat. 1503; amended October 17, 1986, P.L. 99-498, sec. 402(a),
100 Stat. 1414; amended July 23, 1992, P.L. 102-325, sec. 428, 106 Stat. 551;
amended December 20, 1993, P.L. 103-208, sec. 2(c)(63)-(65), (m), 107 Stat. 2469,
2486.
SEC. 437A. DEBT MANAGEMENT OPTIONS.
(a) PROGRAM AUTHORITY.-For the purpose of offering addi-
tional debt management options, the Secretary is authorized, to the
extent of funds appropriated-
(1) to acquire from eligible holders the notes of borrowers
under this part (other than section 428B) who are considered
to be at high risk of default and who submit a request to the
Secretary for an alternative repayment option;
(2) to offer such borrowers one or more alternative repay-
ment options, which may include graduated or extended repay-
ment and which shall, subject to subsection (b)(2), include an
income contingent repayment option established in accordance
with subsection (b); and
(3) to enter into contracts or other agreements with private
firms or other agencies of the Government as necessary to
carry out the purposes of this section.
(b) INCOME CONTINGENT REPAYMENT OPTION.-
(1) REGULATIONS.-For the purposes of subsection (a)(2),
the Secretary shall, by regulation, establish the terms and con-
ditions for an income contingent repayment option. Such regu-
lations shall specify the schedules under which income will be
assessed for repayment of loans, shall permit the discharge of
the remaining obligation on the loan not later than 25 years
after the commencement of income contingent repayment, and
may provide for the potential collection of amounts in excess
of the principal and interest owed on the original loan or loans.
(2) COLLECTION MECHANISM DETERMINATION REQUIRED.-
Such regulations shall not be effective unless the Secretary
publishes a finding that-
(A) the Secretary has, pursuant to subsection (a)(3),
established a collection mechanism that will provide a high
degree of certainty that collections will be made in accord-
ance with the repayment option established under para-
graph (1); and
(B) the use of such repayment option and collection
mechanism will result in an increase in the net amount
the Government will collect.
(C) DETERMINATIONS OF HIGH RISK OF DEFAULT.-In making
determinations under subsection (a)(1), the Secretary shall-
(1) consider the ratio of part B debt repayment to income;
(2) establish, by regulation, such other indicators of high
risk as the Secretary considers appropriate.
(d) LOAN LIMITATION.-Not more than $200,000,000 may be
used to acquire loans under this section in any fiscal year.
(20 U.S.C. 1087-0) Enacted July 23, 1992, P.L. 102-325, sec. 429, 106 Stat. 552;
amended December 20, 1993, P.L. 103-208, sec. 2(c)(66)-(68), (m), 107 Stat. 2469,
2486.
or
Sec. 438
HIGHER EDUCATION ACT OF 1965
198
SEC. 438. 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 halders 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), and (F) 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 pe-
riod, (ii) by subtracting the applicable interest rate on such
loans from such average, (iii) by adding 3.10 percent to the re-
sultant percent, and (iv) by dividing the resultant percent by
4. If such computation produces a number less than zero, such
loans shall be subject to section 427A(0.1
(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-
1So in 'aw. Should refer to section 427A(i).
2'18
199
HIGHER EDUCATION ACT OF 1965
Sec. 438
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), or (F), 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 inter-
est or other income pertaining to, eligible loans made or pur-
chased 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) In the case of loans disbursed on or after October 1,
1992, pursuant to section 428A or 428B for which the interest
rate is determined under section 427A(c)(4), a special allow-
ance shall not be paid unless the rate determined for any 12-
month period under section 427A(c)(4)(B) exceeds
(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
or
4?,
Sec. 438
HIGHER EDUCATION ACT OF 1965
200
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
(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.
(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 4281.2
1So in law. Should refer to section 427A(D.
2 Indentation so in law.
201
HIGHER EDUCATION ACT OF 1965
Sec. 438
(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 imrsuant 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.Notwithstanding subsection (b), the total amount
of interest and special allowance payable under section
428(a)(3XA) and subsection (b) of this section, respectively, to
any holder shall be reduced by the Secretary by the amount
which the lender is authorized to charge as an origination fee
in accordance with paragraph (2) of this subsection. If 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 bor-
rowers for origination fees in that quarter, the Secretary shall
deduct the excess amount from the subsequent quarters' pay-
ments until the total amount has been deducted.
(2) AMOUNT OF ORIGINATION FEES.Subject to paragraph
(6) of this subsection, with respect to any loan (other than
loans made under sections 428C 1 and 439(o)) for which a com-
pleted note or other written evidence of the loan was sent or
delivered to the borrower for signing on or after 10 days after
the date of enactment 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 exceed 3.01 percent of the principal amount of
the loan, to be deducted proportionately from each installment
payment of the proceeds of the loan prior to payment to the
borrower.
(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-
I The amendments made 4 section 4102(a) of P.L. 103-66 to this subsection (changing the
origination fee maximum from 6 tn 3 percent and applying them to SLS and PLUS loans) are
effective July 1, 1994.
Sec. 438
HIGHER EDUCATION ACT OF 1965
202
sectien (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 3.01 percent of the principal amount of the
loan, t6 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.
(d) LOAN FEES FROM LENDERS.
(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE
SUBSIDIES.Notwithstanding subsection
(b), the Secretary
shall reduce the total amount of interest and special allowance
payable under section 428(a)(3)(A) and subsection (b) of this
section, respectively, to any holder of a loan by a loan fee in
an amount determined in accordance with paragraph (2) of this
subsection. If the total amount of interest and special allow-
ance payable under section 428(a)(3XA) and subsection (b) of
this section, respectively, is less than the amount of such loan
fee, then the Secretary shall deduct such excess amount from
subsequent quarters' payments until the total amount has
been deducted.
(2) AMOUNT OF LOAN FEES.With respect to any loan
under this part for which the first dicbursement 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) LENDING FROM PROCEEDS OF TAX EXEMPT OBLIGATIONS.
(1) PLAN FOR DOING BUSINESS REQUIRED.In order for the
holders of loans any portion of which were made or purchased
with funds obtained by the holder from an Authority issuing
obligations, the income from which is exempt from taxation
under the Internal Revenue Code of 1986, to be eligible to re-
ceive a special allowance under subsection (b)(2) of this section,
the Authority shall submit to the Governor of the State, and
to the guaranty agency determined by the Secretary to be the
principal guaranty agency for the State, a plan for doing busi-
ness. The Governor shall, after consultation with the guaranty
agency, approve or disapprove the plan within 30 days of the
receipt of the proposed plan from the Authority. Such plan
shall also be transmitted to the Secretary within 60 days after
approval.
2 I 2
203
HIGHER EDUCATION ACT OF 1965
Sec. 438
(2) CONTENTS OF PLAN.Each such plan shall contain pro-
visions designed to assure that
(A) no eligible lender in the area served by the Author-
ity will be excluded from participation in the program of
the Authority and all eligible lenders may participate in
the program on the same terms and conditions if eligible
lenders are going to participate in the program;
(B) no director or staff member of the Authority who
receives compensation from the Authority may own stock
in, or receive compensation from, any agency that would
contract to service and collect the loans of the Authority;
(C) student loans will not be purchased from partici-
pating lenders at a premium amounting to more than 1
percent of the unpaid principal amount borrowed plus ac-
crued interest to the date of acquisition, but a reasonable
loan transfer fee may be paid by the purchaser;
(D) the Authority will, within the limit of funds avail-
able and subject to the applicable State and Federal law,
make loans to, or purchase loans incurred by, all eligible
students who are residents of, or who attend an eligible in-
stitution within, the area served by the Authority;
(E) the Authority has a plan under which the Author-
ity will pursue the development of new lender participa-
tion in a continuing program of benefits to students to-
gether with essurances of existing lender commitments to
the program; and
(F) there will be an annual audit of the Authority by
a certified public accounting firm which will include review
of compliance by the Authority with the provisions of the
plan.
(3) NONDISCRIMINATION.In order for the holders of loans
which were made or purchased with funds obtained by the
holder from an Authority issuing obligations, the income from
which is exempt from taxation under the Internal Revenue
Code of 1986, to be eligible to receive a special allowance under
subsection (bX2) of this section on any such loans, the Author-
ity shall not engage in any pattern or practice which results
in a denial of a 'borrower's access to loans under this part be-
cause of the borrower's race, sex, color, religion, national ori-
gin, age, handicapped status, income, attendance at a particu-
lar eligible institution within the area served by the Authority,
length of the borrower's educational program, or the borrower's
academic year in school.
(4) REPORT BY THE SECRETARY.The Secretary shall, no
later than September 30, 1988, and each succeeding September
30th, submit a report to the Committee on Education and
Labor of the House of Representatives and the Committee on
Labor and Human Resources of the Senate specifying
(A) the amount of student loan credit provided
through the use of tax-exempt obligations for the most re-
cent fiscal year;
(B) an assessment of the impact of the availability of
such financing on the availability of student credit in the
areas served by the authorities issuing such obligations;
12I3
Sec. 439
HIGHER EDUCATION ACT OF 1965
204
(C) an assessment of the need for additional tax-ex-
empt financing for student credit for the next fiscal year;
and
(D) any other information determined by the Secretary
to be relevant to the purposes of the report.
(f) REGULATTONS 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-
vent, where practicable, any practices which the Secretary finds
have denied loans to a substantial number of eligible students.
(20 U S C. 1087-1) Enacted June 23, 1972, P.L. 92-318, sec. 132E(a), 86 Stat. 264;
amended Oct. 12, 1976, P.L. 94-482, sec. 127(a), 90 Stat. 2133, 2134, 2135, 2136;
amended June 15, 1977, P.L. 95-43, sec. 1(a)(37) (A), (B), (C), (D), (E), (F), 91 Stat.
216, 217, amended October 3, 1980, P.L. 96-374, sec. 420, 94 Stat. 1425; amended
August 13, 1981, P.L. 97-35, sees. 532(b)(4), 534(b), 536(a), 95 Stat. 452, 453, 454,
455, 456, amended August 15, 1983, P.L. 98-79, sec. 7, 97 Stat. 482; amended April
7, 1986, P L. 99-272, secs. 16013(d), 16017(b)(3), (c), 100 Stat. 340, 347; amended
October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1414; amended June 3, 1987,
P L 100-50, sec. 10(d)(2), (bb), (cc), 101 Stat. 342, 347; amended July 18, 1988, P.L.
100-369, sec. 7(c), 102 Stat. 837; amended July 23, 1992, P.L. 102-325, sec. 430,
106 Stat 553; amended August 10, 1993, P.L. 103-66, secs. 4102, 4103, 4105, and
4111, 107 Stat. 366, 367, 368, and 370; amended December 20, 1993, P.L. 103-208,
sec 2(m), 107 Stat. 2486.
SEC. 939. STUDENT LOAN MARKETING ASSOCIATION.
(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 AS90-
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 depaidency 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,
214
205
HIGHER EDUCATION ACT OF 1965
Sec. 439
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-
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 tine 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 (0. 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
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
unexpired 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
0
SOC. 439
HIGHER EDUCATION ACT OF 1965
206
(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,
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 GENERALThe 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 at an eligible institution
of higher education:
(i) educational and training facilities;
(ii) housing for students and faculties;
(iii) library facilities, including the acquisition of
library materials at institutions of higher education;
and (iv) related equipment, instrumentation, and fur-
nishings for facilities and materials described in
clause (i) or (iii);
except that not more than 15 percent of the value of trans-
actions entered into under this subparagraph shall involve
transactions of the type 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 (a) 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
207
HIGHER EDUCATION ACT OF 1965
Sec. 439
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
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 7.aragraph (1)(A) of this subsection shall be made
on the sect. :Ay of (A) insured loans, (B) marketable obligations
and secunties 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
2 ! 7
Sec. 439
HIGHER EDUCATION ACT OF 1965
208
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.
(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
2 ! 8
209
HIGHER EDUCAT7:1 ACT OF 1965
Sec. 439
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
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-
Sec. 439
HIGHER EDUCATION ACT OF 1965
210
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
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-
)
()4
d.
ma-
211
HIGHER EDUCATION ACT OF 1965
Sec. 439
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 hereaft.ar 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 is-
sued 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
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 Unit-
ed 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
(I) to sue and be sued, complain and defend, in its cor-
porate name and through its own counsel;
2
Sec. 439
HIGHER EDUCATION ACT OF 1965
212
(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;
(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
213
HIGHER EDUCATION ACT OF 1965
Sec. 439
intercorporate relations) of assets and liabilities, capital and sur-
plus or deficit; a statement of surplus or deficit analysis; a state-
ment of income and expense; a statement of sources and applica-
tion 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, to-
gether with such recommendations with respect thereto as the Sec-
retary may deem advisable, including a report of an3r 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 Associa-
tion.
(1) LAWFUL INVESTMENT INSTRUMENTS; EFFECT OF AND EXEMP-
TIONS FROM OTHER LAWS.All obligations issued by the Associa-
tion including those made under subsection (dX4) 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 Presid.ent and the Congress a report of its operations
and activities during each year.
(a) LOAN CONSOLIDATIONS.
2 ? 3
Sec. 439
HIGHER EDUCATION ACT OF 1965
214
(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(dX1) (D) or (F) may designate as its
agent such agency or lender to perform such functions as the
Association d.etermines 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.
(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(b)(1) 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-
2 ? 4
215
HIGHER EDUCATION ACT OF 1965
Sec. 439
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
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) periooiic financial reports publicly distributed by
the Association; and
(B) reports concerning the Association that are re-
ceived by the Association and prepared by nationally rec-
ognized statistical rating organizations.
(2) AUDIT BY SECRETARY OF THE TREASURY.(A) The Sec-
retary of the Treasury may
(i) appoint auditors to conduct audits of the Associa-
tion from time to time to determine the condition of the
Association for the purpose of assessing its financial safety
and soundness; and
(ii) enter into contracts to obtain the services of such
technical experts as the Secretary of the Treasury deter-
mines necessary and appropriate to provide technical as-
sistance to any auditor appointed under this paragraph.
(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.
(3) MONITORING OF SAFETY AND SOUNDNESS.The Sec-
retary of the Treasury shall conduct such studies as may be
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
77-M0 0-94
(1 ) r
es.
k)
Sec. 439
HIGHER EDUCATION ACT OF 1965
216
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 Association, the As-
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 ranldng minority
2,VG
217
HIGHER EDUCATION ACT OF 1965
Sec. 439
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
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
,27
Set. 439
HIGHER EDUCATION ACT OF 1965
218
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 fimd 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
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-
219
HIGHER EDUCATION ACT OF 1965
Sec. 439
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 COMMITrEES.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 E. nd General Accounting Office
upon their submission to the Secretary of the Treasury or re-
ceipt from the Secretary of the Treasury. Notwithstanding any
othe: 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
memb ers
(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
(5)(B), 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
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-
2 ? 9
Sec. 439
HIGHER EDUCATION ACT OF 1965
220
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 and
obtained pursuant to this subsection. Nothing in this para-
graph shall authorize the Secretary of the Treasury, the Sec-
retary of Education, the Congressional Budget Office, and the
General Accounting Office to withhold information from Con-
gress, or prevent the Secretary of Education, the Congressional
Budget Office, and the General Accounting Office from comply-
ing with a request for information from any other Federal de-
partment or agency requesting the information for purposes
within the scope of its jurisdiction, or complying with an order
of a court of the United States in an action brought by the
United States. For purposes of section 552 of title 5, United
States Code, this paragraph shall be considered a statute de-
scribed in subsection (b)(3) of such section 552.
(13) DEFINITIONS.As used in this subsection:
221
HIGHER EDUCATION ACT OF 1965
Sec. 439
(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 fmancial 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.
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.
(20 U S C. 1087-2) Enacted June 23, 1972, P.L. 92-318, sec. 133(a), 86 Stat. 265,
269, amended April 21, 1976, P.L. 94-273, sec. 3(9), 90 Stat. 376; amended October
12, 1976, P L. 94-482, sec. 127(a), 90 Stat. 2136-2141; amended June 15, 1977, P.L.
95-43, sec 1(a)(38), 91 Stat. 217; amended October 3, 1980, P.L. 96-374, secs. 421,
1391, 94 Stat. 1427, 1503; amended August 13, 1981, P.L. 97-35, sec. 538, 95 Stat.
457, amended December 29, 1981, P.L. 97-115, sec. 18, 95 Stat. 1610; amended Oc-
tober 13, 1982, P.L. 97-301, sec. 14, 96 Stat. 1405; amended August 15, 1983, P.L.
98-79, secs. 2, 8, 97 Stat. 476, 483; amended April 7, 1986, P.L. 99-272, secs.
16017(b)(4), 16018(a)(3), 100 Stat. 347, 348; amended October 17, 1986, P.L. 99-498,
sec 402(a), 100 Stat. 1418; amended June 3, 1987, P.L. 100-50, sec. 10(dd), 101
Stat 347, amended July 18, 1988, P.L. 100-369, sec. 7(c), 102 Stat. 837; amended
July 23, 1992, P.L. 102-325, sec. 431, 106 Stat. 554; amended August 10, 1993, P.L.
103-66, secs. 4041(c) and 4104, 107 Stat. 356 and 367; amended December 20, 1993,
P L 103-208, sec. 2(c)(69), (m), 107 Stat. 2470, 2486.
PART C-FEDERAL WORK-STUDY PROGRAMS
SEC. 441. 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-
Sec. 441
HIGHER EDUCA110N ACT OF 1965
222
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, $800,000,000 for fiscal
year 1993 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, literacy training,
education (including tutorial services), welfare, social services,
transportation, housing and neighborhood improvement, public
safety, crime prevention and control, recreation, rural develop-
ment, 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; 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.
(42 U.S.C. 2751) Enacted Aug. 20, 1964, P.L. 88-452, sec. 121, 78 Stat. 515;
amended Nov. 8, 1965, P.L. 89-329, sec. 441(2), 79 Stat. 1249; amended Oct. 16,
1968, P.L. 90-575, secs. 131, 132, 133, 82 Stat. 1028-1029; amended Oct. 22, 1969,
P.L. 91-95, sec. 5, 83 Stat. 143; amended June 23, 1972; P.L. 92-318, sec. 135 and
sec. 135A, 86 Stat. 270; amended October 12, 1976, P.L. 94-482, sec. 128(a), 90 Stat.
2143; amended October 3, 1980, P.L. 96-374, sec. 431, 94 Stat. 1433; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 403(a), 100 Stat. 1429; amended July 23, 1992, P.L.
102-325, sec. 441(b), (c), and (d), 106 Stat. 563; amended September 21, 1993, P.L.
103-82, sec. 111(b)(3), 107 Stat. 860; amended December 20, 1993, P.L. 103-208,
sec. 2(m), 107 Stat. 2486.
SEC. 442. ALLOCATION OF FUNDS.
(a) ALLOCATION BASED ON PREVIOUS ALLOCATION.-(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 and used under this part for
fiscal year 1985.
(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 1985 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
232
223
HIGHER EDUCATION ACT OF 1965
Sec. 442
program under this part after fiscal year 1985 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 (H) 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
w hich
(i) was a first-time participant in the program in fiscal
year 1986 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 aoiditional 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 PRO RATA SHARE.From
one-quarter of the remainder of the amount appropriated pursuant
to section 441(b) for any fiscal year (after making the allocations
required by subsection (a)), the Secretary shall allocate to each eli-
gible institution an amount which bears the same ratio to such
one-quarter as the amount the eligible institution receives for such
233
Sec. 442
HIGHER EDUCATION ACT OF 1965
224
fiscal year under subsection (a) bears to the amount all such insti-
tutions receive under such subsection (a).
(c) ALLOCATION OF EXCESS BASED ON SHARE OF EXCESS ELIGI-
BLE AMOUNTS.-(1) From three-quarters of the remainder of the
amount appropriated pursuant to section 441(b) after making the
allocations required by subsection (a), 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) the amount of that institution's need (as determined
under subsection (d)), 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).
(d) 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 fbr 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; 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
234
225
HIGHER EDUCATION ACT OF 1965
Sec. 442
(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, for academic
year 1988-1989 shall use the procedures employed for academic
year 1986-1987, and, for any subsequent academic years, the Sec-
retary 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).
(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.
2 '3 5
Sec. 443
HIGHER EDUCATION ACT OF 1965
226
(D) The allowance for books and supplies described in subpara-
graph (A)(iii) is equal to $450.
(e) 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
10 percent of the total amount of funds granted to such institution
under this section to compensate students employed in community
service in the preceding fiscal year. Such excess funds shall be real-
lotted to institutions which qualify under this subsection on the
same basis as excess eligible amounts are allocated to institutions
pursuant to subsection (c). Funds received 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.
(f) FILING DEADLINES.-The Secretary shall, from time to time,
set dates before which institutions must file applications for alloca-
tions under this part.
(42 U.S.C. 2752) Enacted Aug. 20, 1964, P.L. 88-452, sec. 122, 78 Stat. 514;
amended Nov. 8, 1965, P.L. 89-329, sec. 441(1), 79 Stat. 1249; amended Oct. 16,
1968, P.L. 90-575, secs. 131, 135, 82 Stat. 1028-1029; amended June 23, 1972, P.L.
92-318, sec. 135B, 86 Stat. 270, 271; amended October 3, 1980, P.L. 96-374, secs.
431, 432, 1391, 94 Stat. 1433, 1503; amended October 17, 1986, P.L. 99-498, sec.
403(a), 100 Stat. 1429; amended June 3, 1987, P.L. 100-50, sec. 11(a), 101 Stat. 348;
amended July 23, 1992, P.L. 102-325, sec. 442, 106 Stat. 564; amended December
20, 1993, P.L. 103-208, sec. 2(d)(1) and (2), (m), 107 Stat. 2470, 2486.
SEC. 443. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.
(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 of its students in work for
the institution itself, work in community service or work in the
public interest for a Federal, State, or local public agency or
private nonprofit organization under an arrangement between
the institution and such agency or organization, and such
work-- (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
227
HIGHER EDUCATION ACT OF 1965
Sec. 443
(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) in fiscal year 1994 and succeeding fiscal years, 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 com-
munity service, except that the Secretary may waive this
subparagraph if the Secretary determines that enforcing it
would cause hardship for students at an institution; and
(B) 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 of this title,
and who meet the requirements of section 484 will be assisted,
except that
(A) if the institution's grant under this part is directly
or indirectly based in part on the fmancial need dem-
onstrated by students who are (i) attending the institution
less than full time, or (ii) independent students; and
(B) if the total financial need of all such less than full-
time and independent students at the institution exceeds
5 percent of the total financial need of all students at such
institution,
then at least 5 percent of the grant shall be made available to
such less than full-time and independent students;
(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 for academic
year 1993-1994 and succeeding academic years, except that
the Federal share may exceed such amounts of compensation
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
Sec. 443
HIGHER EDUCATION ACT OF 1965
228
available funds) to all eligible students in the institution in
need thereof, and to make equivalent employment offered or
arranged by the institution reasonably available (to the extent
of available funds) to all students in the institution who desire
such employment;
(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-
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
(b)(1) 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
229
HIGHER EDUCATION ACT OF 1965
Sec. 445
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; 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.
(42 U.S.C. 2753) Enacted Aug. 20, 1964, P.L. 88-452, sec. 123, 78 Stat. 514;
amended Nov. 8, 1965, P.L. 89-329, sec. 441(3), 79 Stat. 1249; amended Oct. 16,
1968, P.L. 90-575, secs. 131, 133, 139, 82 Stat. 1028-1030; amended Oct. 12, 1976,
P.L. 94-482, sec. 128(b), 90 Stat. 2143; amended Oct. 3, 1980, P.L. 96-374, sec. 434,
94 Stat. 1434; amended October 17, 1986, P.L. 99-498, sec. 402(a), 100 Stat. 1432;
amended June 3, 1987, P.L. 100-50, sec. 11(b), (c), 101 Stat. 348; amended July 23,
1992, P.L. 102-325, sec. 442(a)(2), 106 Stat. 563; amended July 23, 1992, P.L. 102-
325, secs. 441(a)(2) and 443, 106 Stat. 563 and 564; amended December 20, 1993,
P.L. 103-208, sec. 2(d)(3)-(5), (m), 107 Stat. 2470, 2486.
SEC. 444. 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.
(20 U.S.C. 2754) Enacted October 17, 1986, P.L. 99-498, sec. 403(a), 100 Stat.
1435; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 445. 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.
239
Sec. 446
HIGHER EDUCA110N ACT OF 1965
230
(42 U.S.C. 2755) Enacted Aug. 20, 1964, P.L. 88-452, sec. 125, 78 Stat. 516;
amended Nov. 8, 1966, P.L. 89-329, sec. 441(6), 79 Stat. 1250; amended Oct. 16,
1968, P.L. 90-575, sec. 131, 82 Stat. 1028; amended October 17, 1986, P.L. 99-498,
sec. 403(a), 100 Stat. 1435; amended July 23, 1992, P.L. 102-325, sec. 444, 106 Stat.
566; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat.2486.
SEC. 446. JOB LOCATION AND DEVELOPMENT PROGRAMS.
(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.
(42 U.S.C. 2756) Enacted Aug. 20, 1964, P.L. 88-452, sec. 126, 78 Stat. 516;
amended Nov. 8, 1965, P.L. 89-329, sec. 441(1), 79 Stat. 1249; amended Oct. 16,
1968, P.L. 90-575, sec. 131, 82 Stat. 1028; amended June 28, 1975, P.L. 94-43, sec.
2, 89 Stat. 233; amended Oct. 3, 1980, P.L. 96-374, secs. 435(b), 1391, 94 Stat. 1435,
1503; amended October 17, 1986, P.L. 99-498, sec. 403(a), 100 Stat. 1435; amended
June 3, 1987, P.L. 100-50, sec. 11(d), 101 Stat. 348; amended July 23, 1992, P.L.
102-325, sec. 445, 106 Stat. 566; amended December 20, 1993, P.L. 103-208, sec.
2(m), 107 Stat. 2486.
231
HIGHER EDUCATION ACT OF 1965
Sec. 447
SEC. 441. ADDITIONAL FUNDS TO CONDUCT COMMUNITY 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,
(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.
(42 U.S.C. 2756a) Enacted June 23, 1972, P.L. 92-318, sec. 135F, 86 Stat. 271,
272, amended Oct. 12, 1976, see. 128(d), 90 Stat. 2143, 2144; amended Oct. 3, 1980,
P L 96-374, secs. 436, 1391, 94 Stat. 1436, 1503; amended October 17, 1986, P.L.
99-498, sec. 403(a), 100 Stat. 1436; amended July 23, 1992, P.L. 102-325, sec.
446(a), and (b), 106 Stat. 567; amended December 20, 1993, P.L. 103-208, sec. 2(m),
107 Stat. 2486.
SEC. 448. 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 fmancial aid packaging.
(2) ACTIVITIES AUTHORIZED.From the sums appropriated
pursuant to subsection (1), 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;
and
(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
41 4 1
K.,
h.
Sec. 451
HIGHER EDUCATION ACT OF 1965
232
(ii) alternatives that develop sound citizenship, en-
courage student persistence, and make optimum use of
assistance under this part in education and student
development.
(c) APPLICATION.Each eligible institution may submit an ap-
plication for funds authorized by subsection (f) to use funds under
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;
(IS) 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 APPROPR1ATIONS.There are authorized
to be appropriated to carry out this section $5,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years.
(42 U.S.C. 2756h) Enacted July 23, 1992, P.L. 102-325, sec. 447, 106 Stat. 567;
amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
PART D-FEDERAL DIRECT STUDENT LOAN
PROGRAM
SEC. 451. PROGRAM AUTHORITY.
There are hereby made available, in accordance with the provi-
sions of this part, such sums as may be necessary to make loans
to all eligible students (and the eligible parents of such students)
233
HIGHER EDUCATION ACT OF 1965
Sec. 452
in attendance at participating institutions of higher education se-
lected by the Secretary, to enable such students to pursue their
courses of study at such institutions during the period beginning
July 1, 1994. Such loans shall be made by participating institu-
tions, or consortia thereof, that have agreements with the Sec-
retary to originate loans, or by alternative originators designated
by the Secretary to make loans for students in attendance at par-
ticipating institutions (and their parents).
(20 U.S.C. 1087a) Enacted August 10, 1993, P.L. 103-66, sec. 4021, 107 Stat. 341.
SEC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT 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) FEES FOR ORIGINATION SERVICES.
(1) FEES FOR INSTITUT1ONS.The Secretary shall pay fees
to institutions of higher education (or a consortium of such in-
stitutions) with agreements under section 454(b), in an amount
established by the Secretary, to assist in meeting the costs of
loan origination. Such fees
(A) shall be paid by the Secretary based on all the
loans made under this part to a particular borrower in the
same academic year;
(B) shall be subject to a sliding scale that decreases
the per borrower amount of such fees as the number of
borrowers increases; and
(C)(i) for academic year 1994-1995, shall not exceed a
program-wide average of $10 per borrower for all the loans
made under this part to such borrower in the same aca-
demic year; and
(ii) for succeeding academic years, shall not exceed
such average fee as the Secretary shall establish pursuant
to regulations.
(2) FEES FOR ALTERNATIVE ORIGINATORS.The Secretary
shall pay fees for loan origination services to alternative origi-
nators of loans made under this part in an amount established
by the Secretary in accordance with the terms of the contract
described in section 456(b) between the Secretary and each
such alternative originator.
(c) 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
2 4 3
Sec. 453
HIGHER EDUCATION ACT OF 1965
234
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.
(d) 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 basic grants under
subpart 1 of part A of this title.
(20 U.S.C. 1087b) Enacted August 10, 1993, P.L. 103-66, sec. 4021, 107 Stat. 341.
SEC. 453. SELECTION OF INSTITUTIONS FOR PARTICIPATION AND
ORIGINATION.
(a) PHASE-IN OF PROGRAM.
(1) 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 pro-
gram under this part, and agreements pursuant to section
454(b) with institutions of higher education, or consortia there-
of, to originate loans in such program, for academic years be-
ginning on or after July 1, 1994. Alternative origination serv-
ices, through which an entity other than the participating in-
stitution 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 Sec-
retary may provide, for students attending participating insti-
tutions that do not originate direct student loans under this
part. Such agreements for the academic year 1994-1995 shall,
to the extent feasible, be entered into not later than January
1, 1994.
(2) TRANSITION PROVISIONS.In order to ensure an expedi-
tious but orderly transition from the loan programs under part
B of this title to the direct student loan program under this
part, the Secretary shall, in the exercise of the Secretary's dis-
cretion, determine the number of institutions with which the
Secretary shall enter into agreements under subsections (a)
and (b) of section 454 for any academic year, except that the
Secretary shall exercise such discretion so as to achieve the fol-
lowing goals:
(A) for academic year 1994-1995, loans made under
this part shall represent 5 percent of the new student loan
volume for such year;
(B) for academic year 1995-1996, loans made under
this part shall represent 40 percent of the new student
loan volume for such year;
(C) for academic years 1996-.1997 and 1997-1998,
loans made under this part shall represent 50 percent of
the new student loan volume for such years; and
(D) for the academic year that begins in fiscal year
1998, loans made under this part shall represent 60 per-
cent of the new student loan volume for such year.
(3) EXCEPTION.The Secretary may exceed the percentage
goals described in subparagraphs (C) or (D) of paragraph (2) if
the Secretary determines that a higher percentage is war-
ranted by the number of institutions of higher education that
214
235
HIGHER EDUCATION ACT OF 1965
Sec. 453
desire to participate in the program under this part and that
meet the eligibility requirements for such participation.
(4) NEW STUDENT LOAN VOLUME.For the purpose of this
subsection, the term "new student loan volume" means the es-
timated sum of all loans (other than consolidation loans) that
will be made, insured or guaranteed under this part and part
B in the year for which the determination is made. The Sec-
retary shall base the estimate described in the preceding sen-
tence on the most recent program data available.
(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, by, to the extent possible
(A)(i) categorizing such institutions according to antici-
pated loan volume, length of academic program, control of
the institution, highest degree offered, size of student en-
rollment, geographic location, annual loan volume, and de-
fault experience; and
(ii) beginning in academic year 1995-1996 selecting in-
stitutions that are reasonably representative of each of the
categories described pursuant to clause (i); and
(B) if the Secretary determines it necessary in order to
carry out the purposes of subparagraph (A) and attain
such reasonable representation (as required by subpara-
graph (A)), selecting additional institutions.
(C) SELECTION CRITERIA FOR ORIGINATION.
(1) IN GENERALThe 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) TRANSITION SELECTION CRITERIA.For academic year
1994-1995, the Secretary may approve an institution to origi-
nate loans only if such institution
(A) made loans under part E of this title in academic
year 1993-1994 and did not exceed the applicable maxi-
mum default rate under section 462(g) for the most recent
fiscal year for which data are available;
(B) 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;
(C) is not overdue on program or financial reports or
audits required under this title;
o 4
Sec. 454
HIGHER EDUCATION ACT OF 1965
236
(D) 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);
(E) in the opinion of the Secretary, has not had signifi-
cant deficiencies identified by a State postsecondary review
entity under subpart 1 of part H of this title;
(F) 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;(G) 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
(H) 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 AFTER TRANSI-
TION.For academic year 1995-4996 and subsequent academic
years, the Secretary shall promulgate and publish in the Fed-
eral Register regulations governing the approval of institutions
to originate loans under this part in accordance with section
457(a)(2).
(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.
(20 U S.C. 1087c) Enacted August 10, 1993, P.L. 103-66, sec. 4021, 107 Stat. 342;
amended December 20, 1993, P.L. 103-208, sec. 2(e), 107 Stat. 2470.
SEC. 454. AGREEMENTS WITH INSTITUTIONS.
(a) PARTICIPATION AGREEMENTS.A11 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;
37
HIGHER EDUCATION ACT OF 1965
Sec. 454
(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
contriloution 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
(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 eieveloped in con-
247
Sec. 455
HIGHER EDUCATION ACT OF 1965
238
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.
(20 U.S.C. 1087d) Enacted August 10, 1993, P.L. 103-66, sec. 4021, 107 Stat. 345.
SEC. 455. TERMS AND CONDITIONS OF LOANS.
(a) IN GENERAL.
(1)
PARALLEL
TERMS,
CONDITIONS,
BENEFITS,
AND
AMOUNTS.Unless otherwise specified in this part, loans made
to borrowers under this part shall have the same terms, 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-
24 8
239
HIGHER EDUCATION ACT OF 1965
Sec. 455
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
Unsubsidized Stafford 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
(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,
2 4 9
Sec. 455
HIGHER EDUCATION ACT OF 1965
240
except that such rate shall not exceed 9 percent.
(5) 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.
(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
princi al amount of loan.
(
REPAYMENT PLANS.
(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, incl Siding 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
241
HIGHER EDUCATION ACT OF 1965
Sec. 455
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
(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
.251
Sec. 455
HIGHER EDUCATION ACT OF 1965
242
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
(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.
(fl 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 of a
(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
252
243
HIGHER EDUCATION ACT OF 1965
Sec. 455
(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
under section 435(o), that the borrower has experienced or
will experience an economic hardship.
(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) only under such terms and
conditions as the Secretary shall establish pursuant to section
457(a)(1) or regulations promulgated under this part. Loans made
under this subsection shall be known as "Federal Direct Consolida-
tion 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 borro wer 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 Seuetary shall establish peri-
ods for the payments described in paragraph (1) in a manner
consistent with payment of basic 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.
(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
23
Sec. 456
HIGHER EDUCATION ACT OF 1965
244
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 basic grants
under subpart 1 of part A of this title.
(20 U.S.C. 1087e) Enacted August 10, 1993, P.L. 103-66, sec. 4021, 107 Stat. 346.
SEC. 456. 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 experierice 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 CONSTRUCT ION.Nothing in this section shall
be construed as a limitation of the authority of any 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;
(4) services to assist in the orderly transition from the loan
programs under part B to the direct student loan program
under this part; and
254
245
HIGHER EDUCATION ACT OF 1965
Sec. 457
(5) such other aspects of the direct student loan program
as the Secretary determines are necessary to ensure the suc-
cessful operation of the program.
(20 U.S.C. 10871) Enacted August 10, 1993, P.L. 103-66, sec. 4021, 107 Stat. 352.
SEC. 457. REGULATORY ACTWITIES.
(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 a ithorized 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.
(20 U.S.C. 1087g) Enacted August 10, 1993, P.L. 103-66, sec. 4021, 107 Stat. 352.
SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES.
(a) IN GENERAL.Each fiscal year, there shall be available to
the Secretary of Education from funds available pursuant to section
422(g) and from funds not otherwise appropriated, funds to be obli-
gated for administrative costs under this part, including the costs
of the transition from the loan programs under part B to the direct
student loan programs under this part (including the costs of annu-
ally assessing the program under this part and the progress of the
transition) and transition support (including administrative costs)
for the expenses of guaranty agencies in servicing outstanding
loans in their portfolios and in guaranteeing new loans, not to ex-
ceed (from such funds not otherwise appropriated) $260,000,000 in
fiscal year 1994, $345,000,000 in fiscal year 1995, $550,000,000 in
fiscal year 1996, $595,000,000 in fiscal year 1997, and $750,000,000
in fiscal year 1998. If in any fiscal year the Secretary determines
that additional funds for administrative expenses are needed as a
result of such transition or the expansion of the direct student loan
programs under this part, the Secretary is authorized to use funds
Sec. 458
HIGHER EDUCATION ACT OF 1965
246
available under this section for a subsequent fiscal year for such
expenses, except that the total expenditures by the Secretary (from
such
funds
not
otherwise
appropriated)
shall
not
exceed
82,500,000,000 in fiscal years 1994 through 1998. The Secretary is
also authorized to carry over funds available under this section to
a subsequent fiscal year.
(b) AvAILABILITY.Funds made available under subsection (a)
shall remain available until expended.
(C) BUDGET JUSTIFICATION.No funds may be expended wider
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.
(d) NOTIFICATION.In the event the Secretary finds it nec-
essary to use the authority provided to the Secretary under sub-
section (a) to draw funds for administrative expenses from a future
year's funds, no funds may be expended under this section unless
the Secretary immediately notifies the Committees on Appropria-
tions of the Senate and of the House of Representatives, and the
Labor and Human Resources Committee of the Senate and the
Education and Labor Committee of the House of Representatives,
of such action and explain the reasons for such action.
(20 U.S.C. 1087h) Enacted August 10, 1993, P.L. 103-66, sec. 4021, 107 Stat. 353.
PART EFEDERAL PERKINS LOANS
SEC. 461. 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 1993 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 1997 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, 1997, to continue or complete
courses of st udy.
(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-
2 5
247
HIGHER EDUCATION ACT OF 1965
Sec. 462
eral capital contributions and all contributions from such institu-
tions shall be used for the establishment, expansion, and mainte-
nance of student loan funds.
(20 U.S.C. 1087aa) Enacted June 23, 1972, P.L. 92-318, sec. 137(b), 86 Stat. 273;
amended October 12, 1976, P.L. 94-482, secs. 130(a) and 130(b), 90 Stat. 2146;
amended October 3, 1980, P.L. 96-374, secs. 441, 1391, 94 Stat. 1436, 1503; amend-
ed October 17, 1986, P.L. 99-498, sec. 405(a), 100 Stat. 1439; amended July 23,
1992, P.L. 102-325, sec. 461(a)(2)-(c), 106 Stat. 576; amended December 20, 1993,
P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 462. ALLOCATION OF FUNDS.
(a) ALLOCATION BASED ON PREVIOUS ALLOCATION.(1) From
the amount appropriated pursuant to section 461(b) for each fiscal
year, the Secretary shall first allocate to each eligible institution an
amount equal to
(A) 100 percent of the amount of Federal capital contribu-
tion allocated to such institution under this part for fiscal year
1985, multiplied by
(B) the institution's default penalty, as determined under
subsection (f),
except that if the institution has a default rate in excess of the ap-
plicable maximum default rate under subsection (g), 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 1985 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 1985 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 1986 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.
2 7
77-530 0-94-9
Sec. 462
HIGHER EDUCATION ACT OF 1965
248
(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
(ii) the institution's default penalty, as determined under
subsection (f),
except that if the institution has a default rate in excess of the ap-
plicable maximum default rate under subsection (g), the institution
may not receive an allocation under this paragraph.
(3XA) 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 mount 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 PRO RATA SHARE.From
one-quarter of the remainder of the amount appropriated pursuant
to section 461(b) for any fiscal year (after ma.king the allocations
required by subsection (a) of this section), the Secretary shall allo-
cate to each eligible institution an amount which bears the same
ratio to such one-quarter as
(1) the amount the eligible institution receives for such fis-
cal year under subsection (a), bears to
(2) the amount all such institutions receive under such
subsection (a).
(C) ALLOCATION OF EXCESS BASED ON SHARE OF EXCESS ELIGI-
BLE AMOUNTS.(1) From three-quarters of the remainder of the
amount appropriated pursuant to section 461(b) after making the
allocations required by subsection (a) of this section, the Secretary
shall allocate to each eligible institution which has an excess eligi-
ble amount an amount which bears the same ratio to such remain-
der 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) 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
258
249
HIGHER EDUCATION ACT OF 1965
Sec. 462
(B) the amount required to be allocated to that institution
under subsection (a),
except that an eligible institution which has a default rate in ex-
cess of the applicable maximum default rate under subsection (g)
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 (d); minus
(B) the institution's anticipated collections; multiplied by
(C) the institution's default penalty, as determined under
subsection (f);
except that, if the institution has a default rate in excess of the ap-
plicable maximum default rate under subsk..:ttion (g), the eligible
amount of that institution is zero.
(d) 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;
9
P
Sec. 462
HIGHER EDUCATION ACT OF 1965
250
(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, for academic
year 1988-1989, shall use the procedures employed for academic
year 1986-1987, and, for any subsequent academic years, the Sec-
retary 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 f5ical year;
(C) de' c- mine the average cost of attendance for all grad-
uate and i.r. nsional students;
(D) E tht 'Act from the average cost of attendance for all
graduate ari, professional students (determined under sub-
paragraph 0)), 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.
(e) ANTICIPATED C0LLECTI0NS.(1) An institution's anticipated
collections are equal to the amount which was collected during the
2 60
251
HIGHER EDUCATION ACT OF 1965
Sec. 462
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 default rates in the program assisted
under this part.
(f) DEFAULT REDUCTION AND DEFAULT PENALTIES.-(1) For any
fiscal year prior to fiscal year 1994, any institution which has a de-
fault rate which equals or exceeds 7.5 percent but does not exceed
the maximum default rate applicable to the award year under sub-
section (g), the institution's default penalty is a percentage equal
to the complement of such default rate. For any institution which
has a default rate that does not exceed 7.5 percent, the institution's
default penalty is equal to one.
(2) F'or fiscal year 1994 and any succeeding fiscal year, any in-
stitution with a cohort default rate (as defined under subsection
(h)) which
(A) equals or exceeds 15 percent, shall establish a default
reduction plan pursuant to regulations issued by the Secretary;
(B) equals or exceeds 20 percent, but is less than 25 per-
cent, shall have a default penalty of 0.9;
(C) equals or exceeds 25 percent, but is less than 30 per-
cent, shall have a default penalty of 0.7; and
(D) equals or exceeds 30 percent shall have a default pen-
alty of zero.
(g) APPLICABLE MAXIMUM DEFAULT RATE.-(1) For award years
1992 and 1993, the applicable maximum default rate is 15 percent.
(2) For award year 1994 and subsequent years, the maximum
cohort default rate is 30 percent.
(h) DEFINITIONS OF DEFAULT RATE AND COHORT DEFAULT
RATE.-(1) For any award year prior to award year 1994, for the
purpose of this section, the default rate is computed by dividing
(A) the total principal amount of defaulted loans; by
(B) the total principal amount of loans made under this
part, less the principal amount of all loans made to borrowers
who are eligible for deferment under section 464(c)(2)(A)(i) or
are in a grace period preceding repayment.
(2) For the purpose of paragraph (1)(A), the total principal
amount of defaulted loans is equal to the total amount borrowed
under loans that have reached repayment status and that are in
default, minu
(A) amounts that have been repaid or cancelled on such
loans;
(B) loans discharged in bankruptcy;
(C) loans referred or assigned to the Secretary for collec-
tion under paragraph (5)(A), (5)(B)(i), or (6) of section 463(a);
and
(D) loans that are in default but on which the borrowers
have made satisfactory arrangements to resume payment.
(3)(A) For award year 1994 and any succeeding year, 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 current and former
Sec. 462
HIGHER EDUCATION ACT OF 1965
252
students who enter repayment on such loans (received for at-
tendance at that institution) in that award year who default
before the end of the following award year.
(B) In determining the number of students who default be-
fore the end of such award year, the Secretary shall, in cal-
culating the cohort default rate, exclude any loans which, due
to improper servicing or collection, would result in an inac-
curate or incomplete calculation of the cohort default rate.
(C) 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.
(D) 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.
(E) Any loan that is in default but on which the borrower
has made satisfactory arrangements to resume payment or any
loan which has been rehabilitated before the end of such fol-
lowing award year is not considered as in default for purposes
of this subsection.
(F) 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.
(G) The Secretary shall prescribe regulations designed to
prevent an institution from evading the application to that in-
stitution of a default rate determination under this subsection
through the use of such measures as branching, consolidation,
change of ownership or control or other means as determined
by the Secretary.
(4) A loan shall be considered to be in default--
(A) 240 days (in the case of a loan repayable monthly), or
(B) 270 days (in the case of a loan repayable quarterly),
after the borrower fails to make an installment payment when
due or to comply with other terms of the promissory note,
(i) FILING DEADLINES.The Secretary shall, from time to time,
set dates before which institutions must file applications for alloca-
tions under this part.
(j) 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).
262
253
HIGHER EDUCATION ACT OF 1965
Sec. 463
(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 1985; 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 paragraph (3) ef subsection (c)), divided by (ii) the
sum of the eligible amounts of all participating institutions
(as determined under paragraph (3)), multiplied by (iii) the
amount of funds available for reallocation under this sub-
section; exceeds
(B) the amount required to be allocated to that institu-
tion under subsection (c) of section 462.
(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
waive this paragraph for a specific institution if the Secretary
finds that enforcing it is contrary to the interest of the pro-
gram.
(20 U.S.C. 1087bb) Enacted June 23, 1972, P.L. 92-318, sec. 137(b), 86 Stat. 273,
274; amended October 3, 1980, P.L. 96-374, secs. 448(a), 1391, 94 Stat. 1443, 1503;
amended October 17, 1986, P.L. 99-498, sec. 405(a), 100 Stat. 1440; amended June
3, 1987, P.L. 100-50, sec. 13(a)(d), 101 Stat. 348; amended July 23, 1992, P.L. 102
325, sec. 462, 106 Stat. 576; amended December 20, 1993, P.L. 103-208, sec. 2(0(1)
(4), (in), 107 Stat. 2470-71, 2486.
SEC. 483. 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
(i) by an institution that
(I) is granted permission by the Secretary to
participate in an Expanded Lending Option under
the program, and
(II) has a default rate which does not exceed
7.5 percent for award year 1993-1994 and has a
cohort default rate which does not exceed 15 per-
cent for award year 1994-1995 or for any succeed-
ing award year,
Sec. 463
HIGHER EDUCATION ACT OF 1965
254
in an amount not less than the amount of the Federal
capital contributions described in subparagraph (A); or
(ii) by any other institution, in an amount not less
than three-seventeenths of such Federal capital con-
tribution in fiscal year 1993, and one-third of such
Federal capital contribution in each of the succeeding
fiscal years, of the amount of the Federal capital con-
tributions 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 note has been in default for (A) 120 days, in the case
of a loan which is repayable in monthly installments, or (B)
180 days, in the case of a loan which is repayable in less fre-
quent installments, notice of such default shall be given to the
Secretary in an annual report describing the total number of
loans from such fund which are in such default;
(5) 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-
lected to cover the Secretary's collection costs) to make
255
HIGHER EDUCATION ACT OF 1965
Sec. 463
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;
(6) 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;
(7) 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;
(8) provide assurances that the institution will comply
with the provisions of section 463A;
(9) provide that the institution of higher education will
make loans first to students with exceptional need; and
(10) include such other reasonable provisions as may be
necessary to protect the United States from unreasonable risk
of loss and as are agreed to by the Secretary and the institu-
tion.
(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 shall enter into
cooperative agreements with credit bureau organizations to provide
for the exchange of information concerning student borrowers con-
cerning whom the Secretary has received a referral pursuant to
section 467.
(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 to such organizations, with respect to any loan for
which the Secretary is responsible, of
(A) the date of disbursement and the amount of any such
loan;
6") r
Sec. 463A
HIGHER EDUCAIION ACT OF 1965
256
(B) information concerning collection of any such loan, in-
cluding information concerning the status of any defaulted
loan; and
(C) the date of cancellation of the note upon completion of
repayment by the borrower of any such loan.
(3) Notwithstanding paragraPhs (4) and (6) of subsection (a) of
section 605 of the Fair Crit 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 regarding the status of a
borrower's account on a loan made under this part until-
(A) 7 years from the date on which the Secretary accepted
an assignment or referral of a loan, or
(B) 7 years from the date the Secretary first reports the ac-
count to a consumer reporting agency.
(4) Each institution of higher ed.ucation, after consultation with
the Secretary and pursuant to the agreements entered into under
paragraph (1), shall disclose at least annually to any credit bureau
organization with which the Secretary has such an agreement--
(A) the amount of loans made to any borrower under this
part at the time of the disbursement of the loan; and
(B) the information set forth in section 430A(a).
(d) LIMITATION ON USE OF INTEREST BEARING ACCOUNTS.-In
carrying out the provisions of subsection (a)(10), 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 (aX5) 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.
(20 U S.C. 1087cc) Enacted June 23, 1972, P.L. 92-318, sec. 137(b), 86 Stat. 274,
275, amended October 12, 1976, P.L. 94-482, sec. 130(c), 90 Stat. 2146, 2147;
amended October 3, 1980, P.L. 96-374, secs. 442(b) (1), (2), (3), 445(a), (b)(1), 447(a),
448(b), 1391, 94 Stat. 1439, 1440, 1442, 1443, 1503; amended April 7, 1986, P.L. 99-
272, secs. 16025, 16026, 100 Stat. 352, 353; amended October 17, 1986, P.L. 99-498,
sec 405(a), 100 Stat. 1444; amended June 3, 1987, P.L. 100-50, sec. 13(e)-(f), 101
Stat. 349, amended July 23, 1992, P.L. 102-325, sec. 463(a), (b), 106 Stat. 579;
amended December 20, 1993, P.L. 103-208, sec. 2(f)(5)-(7), (m), 107 Stat. 2471,
2486.
SEC. 463A. 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
of section 463(aX8), 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;
257
HIGHER EDUCATION ACT OF 1965
Sec. 463A
(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. 2172);
(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
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;
Sec. 464
HIGHER EDUCATION ACT OF 1965
258
(3) the estimated balance owed by the borrower on the
loan or loans covered by the disclosure as of 9ie scheduled date
on which the repayment period is to begin (mcluding, 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.
(20 U.S.C. 1087cc-1) Enacted October 3, 1980, P.L. 96-374, sec. 447(b), 94 Stat.
1443; amended October 13, 1982, P.L. 97-301, sec. 13(b), 96 Stat. 1404; amended
August 15, 1983, P.L. 98-79, sec. 3(b), 97 Stat. 478; amended April 7, 1986, P.L.
99-272, sec. 16027, 100 Stat. 353; amended October 17, 1986, P.L. 99-498, sec.
405(a), 100 Stat. 1446; amended June 3, 1987, P.L. 100-50, sec. 13(g)-(h), 101 Stat.
349; amended July 23, 1992, P.L. 102-325, sec. 463(c), 106 Stat. 579; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(0(8), is amended, 107 Stat. 2471, 2486.
SEC. 464. 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) for institutions that have an agreement with the Sec-
retary to participate in the Expanded Lending Option under
section 463(aX2X13Xi)-
(I) $4,000, in the case of a student who has not suc-
cessfully completed a program of undergraduate education;
Or
(II) $6,000, in the case of a graduate or professional
student (as defined in regulations issued by the Secretary).
259
HIGHER EDUCATION ACT OF 1965
Sec. 464
(ii) for all other institutions
(I) $3,000, in the case of a student who has not suc-
cessfully completed a program of undergraduate education;
Or
(II) $5,000, in the case of a graduate or professional
student (as defined in regulations issued by the Secretary).
(B) Except as provided in paragraph (4), the aggregate of the
loans for all years made to a student by institutions of higher edu-
cation from loan funds established pursuant to agreements under
this part may not exceed
(i) for institutions that have an agreement with the Sec-
retary to participate in the Expanded Lending Option under
section 463(a)(2)(B)(i)
(I) $40,000 in the case of any graduate or professional
student (as defined by regulations of the Secretary, and in-
cluding any loans from such funds made to such person be-
fore he became a graduate or professional student);
(II) $20,000 in the case of a student who has success-
fully completed 2 years of a program of education leading
to a bachelor's degree but who has not completed the work
necessary for such a degree (determined under regulations
of the Secretary, and including any loans from such funds
made to such person before he became such a student);
and
(III) $8,000 in the case of any other student; or
(ii) for all other institutions
(I) $15,000, in the case of any student who has not
successfully completed a program of undergraduate edu-
cation; or
(H) $30,000, in the case of any graduate or profes-
sional student (as defined by regulations issued by the Sec-
retary) and including any loans from such funds made to
such student before the student became a graduate or pro-
fessional 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 (2XA) and (2XB) 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.
(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
Sec. 464
HIGHER EDUCATION ACT OF 1965
260
than full time, or (B) independent students, and if the total finan-
cial need of all such less than full-time and independent students
at the institution exceeds 5 percent of the total financial need of
all students at such institution, then at least 5 percent of such
loans shall be made available to such less than full-time and inde-
pendent 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
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 begiu 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 (i) 3 percent per year,
(ii) 4 percent per year in the case of any loan made on or after
July 1, 1981, or (iii) 5 percent per year in the case of any loan
made on or after October 1, 1981, except that no interest shall
accrue (I) prior to the beginning date of repayment determined
under subparagraph (A)(i), or (II) during any period in which
repayment is suspended by reason of paragraph (2);
ors,
261
HIGHER EDUCATION ACT OF 1965
Sec. 464
(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
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).
(2XA) 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
(H) 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 (B).
(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.
(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.
" 1
/
Sec. 464
HIGHER EDUCATION ACT OF 1965
262
(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
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.
(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 graqt a bor-
rower forbearance of principal and interest or principal only, re-
newable at 12-month intervals for a period not to excecd 3 years,
on such terms as are otherwise consistent with the regulations is-
sued 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 instituthn determines that the borrower should
qualify for forbearance for other reasons.
(f) SPECIAL REPAYMENT RULE AUTHORITY.(1) Subject to such
restrictions as the Secretary may prescribe to protect the interest
of the United States, in order to encourage repayment of loans
made under this part which are in default, the Secretary may, in
the agreement entered into under this part, authorize an 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.
(2) No compromise repayment of a defaulted loan as authorized
by paragraph (1) may be made unless the student borrower pays-
263
HIGHER EDUCATION ACT OF 1965
Sec. 465
(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.
(20 U.S.C. 1087dd) Enacted June 23, 1972, P.L. 92-318, sec. 137(b), 86 Stat. 275,
277; amended October 12, 1976, P.L. 94-482, sec. 130(d), 130(e), 130(0, 130 (g)(1)
and (g)(2), 90 Stat. 2147; amended June 15, 1977, P.L. 95-43, secs. 1(a)(39), 91 Stat.
217; amended October 3, 1980, P.L. 96-374, secs. 442(b) (4), (5), 443, 444, 445(b)(2),
446, 448(c), 1391, 94 Stat. 1440, 1441, 1442, 1443, 1503; amended August 13, 1981,
P.L. 97-35, sec. 539, 95 Stat. 458; amended April 7, 1986, P.L. 99-272, sec. 16028,
100 Stat. 353; amended October 17, 1986, P.L. 99-498, sec. 405(a), 100 Stat. 1448;
.
amended June 3, 1987, P.L. 100-50, sec. 13(i), 101 Stat. 349; amended July 18,
1988, P.L. 100-369, sec. 7(c), 102 Stat. 837; amended December 19, 1989, P.L. 101-
239, sec. 2001(3), 103 Stat. 2111; amended July 23, 1992, P.L. 102-325, sec. 464,
106 Stat. 580; amended December 20, 1993, P.L. 103-208, sec. 2(f)(9)-(11), (m), 107
Stat. 2471, 2486.
SEC. 465. CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE.
(a) CANCELLATION OF PERCENTAGE OF DEBT BASED ON YEARS
OF QUALIFYING SERVICE.-(1) The percent specified in paragraph
(3) of this subsection of the total amount of any loan made after
June 30, 1972, 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
school which is in the school district of a local educational
agency which is eligible in such year for assistance pursuant
to chapter 1 of the Education Consolidation and Improvement
Act of 1981, and which for the purpose of this paragraph and
for that year has been determined by the Secretary (pursuant
to regulations and after consultation with the State edu-
cational agency 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 676(b)(9) of the Individuals With Disabilities
Education Act;
(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;
2
Sec. 465
HIGHER EDUCATION ACT OF 1965
264
(F) as a fall-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(a)(1) of the Individ-
uals 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;
(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 121/2 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.).
(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
265
HIGHER EDUCATION ACT OF 1965
Sec. 466
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.
(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.
(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.
(20 U.S.C. 1087ee) Enacted June 23, 1972, P.L. 92-318, sec. 137(b), 86 Stat. 277,
278, amended Nov. 1, 1978, P.L. 95-561, sec. 1323, 92 Stat. 2363; amended October
3, 1980, P.L. 96-374, secs. 442(b)(6), 448 (d), (e), 1391, 94 Stat. 1440, 1443, 1503;
amended October 17, 1986, P.L. 99-498, sec. 405(a), 100 Stat. 1451; amended June
3, 1987, P.L. 100-50, sec. 13(j), 101 Stat. 349; amended July 18, 1988, P.L. 100-
369, sec. 7(c), 102 Stat. 837; amended November 29, 1990, P.L. 101-647, sec. 2101(a)
and (b), 104 Stat. 4856; amended October 7, 1991, P.L. 102-119, sec. 26(h), 105 Stat.
607, amended July 23, 1992, P.L. 102-325, sec. 465(a)-(c), 106 Stat. 582; amended
September 21, 1993, P.L. 103-82, sec. 102(c)(3), 107 Stat. 824; amended December
20, L93, P.L. 103-208, sec. 2(0(12)-(14), (k)(7), (m), 107 Stat. 2471, 2486.
SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.
(a) IN GENERAL.-After September 30, 1996, and not later than
March 31, 1997, 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, 1996, 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,
2005, 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, 1996, 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, 1997, that the
t)
Sec. 467
HIGHER EDUCATION ACT OF 1965
266
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-
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.
(20 U.S.C. 1087ff) Enacted June 23, 1972,
P.L. 92-318, sec. 137(b), 86 Stat. 278,
279; amended October 12, 1976, P.L. 94-482, sec. 130(h), 90 Stat. 2147; amended
October 3, 1980, P.L. 96-374, secs. 442(c), 1391, 94 Stat. 1440, 1503; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 405(a),
100 Stat. 1453; amended July 23, 1992, P.L.
102-325, sec. 466, 106 Stat. 584; amended December 20, 1993,
P.L. 103-208, sec.
2(0(15), (m), 107 Stat. 2471, 2486.
SEC. 467. COLLECTION
OF DEFAULTED LOANS: PERKINS LOAN RE-
VOLVING 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 reimburser-ent 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.
(c) PERKINS LOAN REVOLVING FUND.-(1) Mere is established
a Perkins Loan Revolving Fund which shall be available without
fiscal year limitation to the Secretary to make payments under this
part, in accordance with paragraph (2) of this subsection. There
shall be deposited in the Perkins Revolving Loan Fund-
(A) all funds collected by the Secretary on any loan re-
ferred,
transferred,
or assigned under paragraph
(5)(A),
(5)(B)(i), or (6) of section 463(a);
2?6
267
HIGHER EDUCATION ACT OF 1965
Sec. 468
(B) all funds collected by the Secretary on any loan re-
ferred under paragraph (5)(B)(ii) of section 463(a);
(C)
all funds
paid
to
the Secretary under section
466(c)(1)(A);
(D) all funds from a student loan fund under this part re-
ceived by the Secretary as the result of the closure of an insti-
tution of higher education;
(E) all funds received by the Secretary as a result of an
audit of a student loan fund established under this part; and
(F) all funds which have been appropriated and which the
Secretary determines are not necessary for carrying out section
465, relating to the cancellation of certain loans under this
part for qualifying service.
(2) Notwithstanding any other provision of law, the Secretary
shall, from the Perkins Loan Revolving Fund established under
paragraph (1), pay allocations of additional capital contributions to
eligible institutions of higher education in accordance with section
462, except that funds described in subparagraph (B) of paragraph
(1) shall be repaid to the institution of higher education which re-
ferred the loan, as specified in section 463(a)(5)(B)(ii). The Sec-
retary shall make the payments required by this paragraph in a
manner designed to maximize the availability of capital loan funds
under this part.
(20 U.S.C. 1087gg) Enacted August 13, 1979, P.L. 96-49, sec. 5(d)(3), 93 Stat. 352;
amended October 3, 1980, P.L. 96-374, secs. 445(c), 1391, 94 Stat. 1442, 1503;
amended April 7, 1986, P.L. 99-272, sec. 16029, 100 Stat. 354; amended October
17, 1986, P.L. 99-498, sec. 405(a), 100 Stat. 1453; amended July 23, 1992, P.L. 102-
325, sec. 467, 106 Stat. 584; amended December 20, 1993, P.L. 103-208, sec. 2(m),
107 Stat. 2486.
SEC. 468. 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.
(20 U.S.C. 1087hh) Enacted October 3, 1980, P.L. 96-374, sec. 442(a), 94 Stat.
1437; amended October 17, 1986, P.L. 99-498, sec. 405(a), 100 Stat. 1454; amended
December 20, 1993, PL. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 469. DEFINITIONS.
(a) Low-INcora 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 chapter 1 of title I of the Elementary and Secondary Edu-
cation Act of 1965.
2'17
Sec. 471
HIGHER EDUCATION ACT OF 1965
268
(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 You'll' WITH DISABIL-
ITIES.For purposes of this part, the term "infants, toddlers, chil-
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.
(20 U.S.C. 1087ii) Enacted July 23, 1992, P.L. 102-325, sec. 465(d), 106 Stat. 583;
amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
PART F-NEED ANALYSIS
SEC. 471. 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 4 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)).
(20 U.S.C. 1087kk) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1454; amended July 23, 1992, P.L. 102-325, sec. 471(a), 106 Stat. 585.
SEC. 472. 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 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 of not less than $1,500 for
a student without dependents residing at home with par-
ents;
(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
269
HIGHER EDUCATION ACT OF 1965
Sec. 472
(C) for all other students shall be an allowance based
on the expenses reasonably incurred by such students for
room and board, except that the amount may not be less
than $2,500;
(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;
(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, but this paragraph shall not be construed
to permit including the cost of rental or purchase of equipment;
(11) for a student placed in a work experience under a co-
operative education program, an allowance for reasonable costs
associated with such employment (as determined by the insti-
tution); 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
HIGHER EDUCATION ACT OF 1965
270
(20 U.S.C. 108711) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1454; amended July 23, 1992, P.L. 102-325, sec. 471, 106 Stat. 585; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(g)(1), 107 Stat. 2471.
SEC. 473. FAMILY CONTRIBUTION.
For the purpose of this title, except subpart 4 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.
(20 U.S.C. 1087mm) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1455, amended July 23, 1992, P.L. 102-325, sec. 471, 106 Stat. 586; amended July
23, 1992, P.L. 102-325, sec. 471(a), 106 Stat. 586.
SEC. 474. 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;
(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
who are enrolled or accepted for enrollment, on at least a half-
time basis, in a degree, certificate, or other program leading to
a recognized educational credential at an institution of higher
education that is an eligible institution in accordance with the
provisions of section 487 and for whom the family may reason-
ably be expected to contribute to their postsecondary edu-
cation;(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.
0
271
HIGHER EDUCATION ACT OF 1965
Sec. 475
(20 U.S.C. 1087nn) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1456; amended July 18, 1988, P.L. 100-369, sec. 7(c), 102 Stat. 837; amended July
23, 1992, P.L. 102-325, sec. 471(a), 106 Stat. 587.
SEC. 475. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.
(a) COMPUTATION OF EXPECTED FAMILY CONTRIBUTION.For
each dependent student, the expected family contribution is equal
to the sum of
(1) the parents' contribution from adjusted available 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
(3) dividing the assessment resulting under paragraph (2)
by the number of the family members who are enrolled or ac-
cepted for enrollment, on at least a half-time basis, in a degree,
certificate, or other program leading to a recognized edu-
cational credential at an institution of higher education that is
an eligible institution in accordance with the provisions of sec-
tion 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); and
(E) an employment expense allowance, determined 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-
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):
s 1
Sec. 475
HIGHER EDUCATION ACT OF 1965
272
Percentages for Computation of State and Other Tax Allowance
And parents' total
income is
If parents' State or territory of residence is-
less than
$15,000
or
5,000
$1
or more
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):
22
273
HIGHER EDUCATION ACT OF 1965
Sec. 475
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.
2 3
Sec. 475
HIGHER EDUCATION ACT OF 1965
274
(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
is
Then the adjusted net worth is:
Less than $1
$0
$1$75,000
40 percent of NW
$75,001$225,000
$30,000 plus 50 percent of NW over
$75,000
$225,001$375,000
$105,000 plus 60 percent of NW over
$225,000
$375,001 or more
$195,000 plus 100 percent of NW over
$375,000
(3) EDUCATION SAVINGS AND ASSET PROTECTION 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):
275
HIGHER EDUCATION ACT OF 1965
Sec. 475
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
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
16,800
36
23,800
17,400
37
25,900
19,000
38
28,100
20,500
39
30,200
22,100
40
32,400
23,700
41
33,300
24,100
42
34,100
24,700
43
35,000
25,200
44
35,700
25,800
45
36,600
26,300
46
37,600
26,900
47
38,800
27,600
48
39,800
28,200
49
40,800
28,800
50
41,800
29,500
51
43,200
30,200
52
44,300
31,100
53
45,700
31,800
54
47,100
32,600
55
48,300
33,400
56
49,800
34,400
57
51,300
35,200
58
52,900
36,200
59
54,800
37,200
60
56,500
38,100
61
58,500
39,200
62
60,300
40,300
63
62,400
41,500
64
64,600
42,800
65 or more
66,800
44,000
(4) ASSET CONVERSION RATE.-The asset conversion rate is
12 percent.
(e) ASSESSMENT SCHEDULE.-The adjusted available income (as
determined under subsection (b)(1) and hereafter in this subsection
referred to as "AAI") is assessed according to the following table (or
a successor table prescribed by the Secretary under section 478):
0r
.
Sec. 475
HIGHER EDUCATION ACT OF 1965
276
Parents' 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 AM over $14,200
$16,601 to $19,000
$4,180 + 40% of AAI over $16,600
$19,001 or more
$5,140 + 47% of AM 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 ar7ets 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 ir riependent student.
(g) STUDENT CONTRIBUTION FROM ,VAILABLE 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
277
HIGHER EDUCATION ACT OF 1965
Sec. 475
(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); and
(D) an income protection allowance of $1,750.
(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
sectim 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.
(5) The student's available income (determined in accord-
ance with paragraph (1) of this subsection) is assessed at 50
percent.
(h) STUDENT CONTIUBUTION 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
21!i"7
Sec. 476
HIGHER EDUCATION ACT OF 1965
278
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.
(20 U.S.C. 1087oo) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1456, amended June 3, 1987, P.L. 100-50, sec. 14(1)-(12), 101 Stat. 349; amended
July 23, 1992, P.L. 102-325 sec. 471(a), 106 Stat. 587; amended December 20, 1993,
P L 103-208, sec. 2(g)(2)-(e), 107 Stat. 2472.
SEC. 476. FAMILY CONTRIBUTION FOR LNDEPENDENT STUDENTS
WITHOUT DEPENDENTS OTHER THAN A SPOUSE.
(a) COMPUTATION OF EXPECTED FAMILY CONTRIBUTION.For
each independent student without dependents other than a spouse,
the expected family contribution is determined by
(1) adding
(A) the family's contribution from available income
(determined in accordance with subsection (b)); and
(B) the family's contribution from assets (determined
in accordance with subsection (c)); and
(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;
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;
'
S
279
HIGHER EDUCATION ACT OF 1965
Soc. 476
(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
(I) $3,000 for single students;
(II) $3,000 for married students where both
are enrolled pursuant to subsection (a)(2); and
(III) $6,000 for married students where one is
enrolled pursuant to subsection (a)(2); and
(v) in the case where a spouse is present, an em-
ployment expense allowance, as determined in accord-
ance with paragraph (4); 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-
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
o
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.
tiEST COPY AVAILABLE
77-3O 0-94--I0
Sec. 476
HIGHER EDUCATION ACT OF 1965
280
(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 GENERAL.The family's contribution from assets is
equal to(A) the family's net worth (determined in accordance
with paragraph (2)); minus
(B) the asset protection allowance (determined in 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.
(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
$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):
)
281
HIGHER EDUCATION ACT OF 1965
Sec. 476
Asset Protection Allowances for Families and Students
If the age of the student is-
And the student is
married
single
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
2 ;)
Sec. 477
HIGHER EDUCATION ACT OF 1965
282
considered in determining the family's contribution from income or
assets.
(20 U.S.C. 1087pp) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1463; amended June 3, 1987, P.L. 100-50, sec. 14(1), (3), (4), (13)(17), 101 Stat.
349, 351; amended July 23, 1992, P.L. 102-325, sec. 471(a), 106 Stat. 594; amended
December 20, 1993, P.L. 103-208, sec. 2(g)(6), 107 Stat. 2472.
SEC. 477. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS
WITH DEPENDENTS OTHER THAN A SPOUSE.
(a) COMPUTATION OF EXPECTED FAMILY CONTRMUTION.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); and
(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;
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); and
(E) an employment expense allowance, determined 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-
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):
)
I)
4,
=*.
283
HIGHER EDUCATION ACT OF 1965
Sec. 477
Percentages for Computation of State and Other Tax Allowance
And family's total
income is
If student's State or territory of residence is
less than
$15,000
$15,000
or more
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, Massachuseas, 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):
Sec. 477
HIGHER EDUCA110N ACT OF 1965
284
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.
2 ')4
285
HIGHER EDUCATION ACT OF 1965
Sec. 477
(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):
Sec. 477
HIGHER EDUCA110N ACT OF 1965
286
Asset Protection Allowances for Families and Students
If the age of the student is-
And the student is
married
single
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):
tir
287
HIGHER EDUCATION ACT OF 1965
Sec. 478
Assessment From Adjusted Available Income (AAI)
If AM is
Then the assessment is
Less than
$3,409
$750
$3,409 to $9,400
22% of AAI
to $11,800
2,068 + 25% of AAI over 9,400
11,801 to
14,201 to
16,600
2,668 + 29% of AM over 11,800
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.
(20 U.S.C. 1087qq) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1465; amended June 3, 1987, P.L. 100-50, sec. 14(1)(6), (8), (18), (19), 101 Stat.
349, 350, 351; amended July 23, 1992, P.L. 102-325, sec. 471(a), 106 Stat. 597;
amended December 20, 1993, P.L. 103-208, sec. 2(g)(2), (7), 107 Stat. 2472.
SEC. 478. REGULATIONS; UPDATED TABLES.
(a) AUTHORITY TO PRESCRIBE REGULATIONS RESTRICTED.(1)
Notwithstanding any other provision of law, the Secretary shall not
have the authority to prescribe regulations to carry out this part
except
(A) to prescribe updated tables 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.For each academic year
after academic year 1993-1994, the Secretary shall publish in the
Federal 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 con-
tained in the table in each such section by a percentage equal to
the estimated percentage increase in the Consumer Price Index (as
determined by the Secretary) between December 1992 and the De-
cember 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-
2
1-4 7
C
Sec. 478
HIGHER EDUCATION ACT OF 1965
288
(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-
grap_h (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(dX3), 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).
a) 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
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
2'48
289
HIGHER EDUCATION ACT OF 1965
See. 479
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.
(20 U.S.C. 1087rr) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat
1470; amended June 3, 1987, P.L. 100-50, sec. 14(20)-(22), 101 Stat. 351; amended
July 23, 1992, P.L. 102-325, sec. 471(a), 106 Stat. 602; amended December 20, 1993,
P.L. 103-208, sec. 2(g)(8) and (9), 107 Stat. 2472.
SEC. 479. 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-
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
Sec. 479
HIGHER EDUCATION ACT OF 1965
290
(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(cX2) 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 paragraph if the student or family, respec-
tively, files
(A) a form 1640A or 1040EZ (including any prepared
or electronic version of such form) required pursuant to the
Internal Revenue Code of 1986; or
(B) 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 Fed.erated 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 were not required to file an
income tax return under section 6012(a)(1) of the Internal
Revenue Code of 1986; and
(B) the sum of the adjusted gross income of the par-
ents is less than or eaual 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) was
not required to file an income tax return under section
6012(a)(1) of the Internal Revenue Code of 1986; 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
291
HIGHER EDUCATION ACT OF 1965
Sec. 479A
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.
(20 U.S.C. 1087ss) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1472; amended June 3, 1987, P.L. 100-50, sec. 14(23)-(25), 101 Stat. 352; amended
April 9, 1991, P.L. 102-26, sec. 11, 105 Stat. 129; amended July 23, 1992, P.L. 102-
325, sec. 471(a), 106 Stat. 604; amended December 20, 1993, P.L. 103-208, sec.
2(g)(10)-(15), 107 Stat. 2472-73.
SEC. 479A. DISCRETION OF STUDEN"J FINANCIAL AID ADMINISTRA-
TORS.
(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 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 adjust-
ments shall substantiate such special circumstances of individual
students. In addition, nothing in this title shall be interpreted as
limiting the authority of the student financial aid administrator in
such cases to request and use supplementary information about the
financial status or personal circumstances of eligible applicants in
selecting recipients 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.
(b) ADJUSTMENTS TO ASSETS TAKEN INTO ACCOUNT.A student
fmancial 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) ADJUSTMENTS FOR SPECIAL CIRCUMSTANCES.
(1) IN GENERAL.A student financial aid administrator
shall be considered to be making an adjustment for special cir-
cumstances in accordance with subsection (a) if
(A) in the case of a dependent student--
(i) such student received a Federal Pell Grant as
a dependent student in academic year 1992-1993 and
the amount of such student's Federal Pell Grant for
academic year 1993-1994 is at least $500 less than
3 1.1.
Sec. 479B
HIGHER EDUCAIION ACT OF 1965
292
the amount of such student's Federal Pell Grant foT:
academic year 1992-1993; and
(ii) the decrease described in clause (i) is the di-
rect result of a change in the determination of such
student's need for assistance in accordance with this
part that is attributable to the enactment of the High-
er Education Amendments of 1992; and
(B) in the case of a single independent student
(1) such student received a Federal Pell Grant as
a single independent student in academic year 1992-
1993 and qualified as an independent student in ac-
cordance with section 480(d) for academic year 1993-
1994, and the amount of such student's Federal Pell
Grant for academic year 1993-1994 is at least $500
less than the amount of such student's Federal Pell
Grant for academic year 1992-1993; and
(ii) the decrease described in clause (i) is the di-
rect result of a change in the determination of such
student's need for assistance in accordance with this
part that is attributable to the enactment of the High-
er Education Amendments of 1992.
(2) AMOUNT.A financial aid administrator shall not make
an adjustment for special circumstances pursuant to this sub-
section in an amount that exceeds one-half of the difference be-
tween the amount of a student's Federal Pell Grant for aca-
demic year 1992-1993 and the amount of such student's Fed-
eral Pell Grant for academic year 1993-1994.
(3) ACADEMIC YEAR LIMITATION.A financial aid adminis-
trator shall make adjustments under this subsection only for
Federal Pell Grants awarded for academic years 1993-1994,
1994-1995, and 1995-1996.
(4) SPECIAL RuLE.Adjustments under this subsection
shall be made in any fiscal year only if an Act that contains
an appropriation for such fiscal year to carry out this sub-
section is enacted on ar after the date of enactment of the
Higher Education Technical Amendments of 1993.
(5) LIMITATION.Adjustments under this subsection shall
not be available for any academic year to any student who, on
the basis of the financial circumstances of the student for the
current academic year, would not have been eligible for a grant
under this section in academic year 1992-1993.
(20 U.S.C. 1087tt) Enacted October 17, 1986, P.L.. 99-498, sec. 406(a), 100 Stat.
1472; amended June 3, 1987, P.L. 100-50, sec. 14(26), 101 Stat. 352; amended De-
cember 19, 1989, P.L. 101-239, sec. 2009, 103 Stat. 2122-2123; amended July 23,
1992, P.L. 102-325, sec. 471(a), 106 Stat. 605; amended December 20, 1993, P.L.
103-208, sec. 2(g)(16), 107 Stat. 2473.
SEC. 479B. DISREGARD OF STUDENT AID IN OTHER FEDERAL PRO-
GRAMS.
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
293
HIGHER EDUCATION ACT OF 1965
Sec. 480
Federal, State, or local program financed in whole or in part with
Federal funds.
(20 U.S.C. 1087uu) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1472; amended June 3, 1987, P.L. 100-50, sec. 14(27), 101 Stat. 353; amended July
23, 1992, P.L. 102-325, sec. 471(a), 106 Stat. 606.
SEC. 479C. 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.
(20 U.S.C. 1087uu-1) Enacted June 3, 1987, P.L. 100-50, sec. 14(27), 101 Stat.
353; amended July 23, 1992, P.L. 102-325, sec. 471(a), 106 Stat. 606.
SEC. 480. DEFINITIONS.
As used in this part:
(a) TOTAL INCOME.(1) Except as provided in paragraph (2),
the term "total income" is equ.:11 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, and no portion of a national service
educational 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.), 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 aid to families with depend-
ent children under a State plan approved 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;
3 :
Sec. 480
HIGHER EDUCATION ACT OF 1965
294
(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
pt.rposes; and
(14) any other untaxed income and benefits, such as Black
Lung Benefits, Refugee Assistance, railroad retirement bene-
fits, or Job TraininA Partnership Act noneducational benefits.
(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) linited States Code, title 10, chapter 106: Selective Re-
serve.(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-
3'14
295
HIGHER EDUCATION ACT OF 1965
Sec. 480
(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 IV 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.
(g) NET ASSETS.The term "net assets" means the current
market value at the time of application of the assets (as defined in
subsection (f)), 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 Island.s, the
Republic of the Marshall Islands, the Federated States of Microne-
sia, or Palau under the laws ar plicable 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 defmed in subsection (c).
(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-
3 i5
Sec. 480
HIGHER EDUCATION ACT OF 1965
296
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 national service edu-
cational award or post-service benefit under title I of the National
and Community Service Act of 1990 (42 U.S.C. 12571 et seq.) shall
not be treated as 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.
(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
.3tudent and the student's dependents.
(m) Busmss 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.
(20 U.S.C. 1087vv) Enacted October 17, 1986, P.L. 99-498, sec. 406(a), 100 Stat.
1472; amended June 3, 1987, P.L. 100-50, sec. 14(28), 101 Stat. 353-355; amended
July 18, 1988, P.L. 100-369, sec. 7(b), 102 Stat. 837; amended November 16, 1990,
P.L. 101-610, sec. 185(4), 104 Stat. 3168; amended July 23, 1992, P.L. 102-325, sec.
43'i6
297
HIGHER EDUCATION ACT OF 1965
Sec. 481
471(a), 106 Stat. 606; amended September 21, 1993, P.L. 103-82, sec. 102(c)(4), (5),
107 Stat. 824; airended December 20, 1993, P.L. 103-208, sec. 2(g)(17)(20), 107
Stat. 2474-75.
PART G.GENERAL PROVISIONS RELATING TO STUDENT ASSISTANCE
PROGRAMS
SEC. 481. DEFINITIONS.
(a) INSTITUTION OF HIGHER EDUCATION.(1) Subject to para-
graphs (2) through (4) of this subsection, the term "institution of
higher education" for purposes of this title includes, in addition to
the institutions covered by the definition in section 1201(a)
(A) a proprietary institution of higher education;
(B) a postsecondary vocational institution; and
(C) only for the purposes of part B of this title, an institu-
tion outside the United States which is comparable to an insti-
tution of higher education as defined in section 1201(a) and
which has been approved by the Secretary for the purpose of
part B.
(2)(A) For the purpose of qualifying as an institution under
paragraph (1)(C) of this subsection, the Secretary shall establish
criteria by regulation for the approval of institutions outside the
United States and for the determination that such institutions are
comparable to an institution of higher education as defined in sec-
tion 1201(a). In the case of a graduate medical school outside the
United States, such criteria shall include a requirement that a stu-
dent attending a graduate medical school outside the United States
is ineligible for loans made, insured, or guaranteed under part B
of this title unless
(i)(I) at least 60 percent of those enrolled and at least 60
percent of the graduates of the graduate medical school outside
the United States were not persons described in section
484(a)(5) in the year preceding the year for which a student is
seeking a loan under part B of this title; and
(II) at least 60 percent of the individuals who were stu-
dents or graduates of the graduate medical school outside the
United States (both nationals of the United States and others)
taking the examinations administered by the Educational
Commission for Foreign Medical Graduates received a passing
score in the year preceding the year for which a student is
seeking a loan under part B of this title; or
(ii) the institution's clinical training program was approved
by a State as of January 1, 1992.
(B) For the purpose of qualifying as an institution under para-
graph (1)(C), the Secretary shall establish an advisory panel of
medical experts which shall
(i) evaluate the standards of accreditation applied to appli-
cant foreign medical schools; and
(ii) determine the comparability of those standards to
standards for accreditation applied to United States medical
schools.
If such accreditation standards are determined not to be com-
parable, the foreign medical school shall be required to meet the
requirements of section 1201(a).
3H7
Sec. 481
HIGHER EDUCATION ACT OF 1965
298
(C) The failure of an institution outside the United States to
provide, release, or authorize release to the Secretary of such infor-
mation as may be required by subparagraph (A) of this paragraph
shall render such institution ineligible for the purpose of part B of
this title.
(D) The Secretary shall, not later than one year after the date
of enactment of the Higher Education Amendments of 1992, pre-
pare and submit to the Committee on Education and Labor of the
House of Representatives and the Committee on Labor and Human
Resources of the Senate a report on the implementation of the reg-
ulations required by subparagraph (A) of this paragraph.
(E) If, pursuant to this paragraph, an institution loses eligi-
bility to participate in the programs under this title, then a student
enrolled at such institution may, notwithstanding such loss of eligi-
bility, continue to be eligible to receive a loan under part B while
attending such institution for the academic year succeeding the
academic year in which such loss of eligibility, occurred.
(3) An institution shall not be considered to meet the definition
of an institution of higher eduzation in paragraph (1), if such
institution
(A) offers more than 50 percent of such institution's
courses by correspondence, unless the institution is an institu-
tion that meets the defmition in section 521(4)(C) of the Carl
D. Perkins Vocational and Applied Technology Education Act;
(B) enrolls 50 percent or more of its students in cor-
respondence courses, unless the institution is an institution
that meets the definition in such section, except that the Sec-
retary, at the request of such institution, may waive the appli-
cability of this subparagraph to such institution for good cause,
as determined by the Secretary in the case of an institution of
higher education that provides a 2-year or 4-year program of
instruction for which the institution awards an associate or
baccalaureate degree;
(C) has a student enrollment in which more than 25 per-
cent of the students are incarcerated, except that the Secretary
may waive the prohibition of this subparagraph for a nonprofit
institution that provides a 4-year or a 2-year program of in-
struction (or both) for which it awards a bachelor's or associ-
ate's degree, respectively; or
(D) has a student enrollment in which more than 50 per-
cent of the students do not have a high school diploma or its
recognized equivalent and does not provide a 4-year or a 2-year
program of instruction (or both) for which it awards a bach-
elor's or associate's degree, respectively, except that the Sec-
retary may waive the limitation contained in this subpara-
graph if a nonprofit institution demonstrates to the satisfaction
of the Secretary that it exceeds such limitation because it
serves, through contracts with Federal, State, or local govern-
ment agencies, significant numbers of students who do not
have a high school diploma or its recognized equivalent.
(4) 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
3 0 8
A
299
HIGHER EDUCATION ACT OF 1965
Sec. 481
cause the direction of the management or policies of the insti-
tution, has filed for bankruptcy; or
(B) the institution, its owner, or its chief executive officer
has been convicted of, or has pled nolo contendere or guilty to,
a crime involving the acquisition, use, or expenditure of funds
under this title, or has been judicially determined to have com -
mitted fraud involving funds under this title.
(5) The Secretary shall certify an institution's qualification as
an institution of higher education in accordance with the require-
ments of subpart 3 of part H.
(6) An institution of higher education shall not be considered
to meet the definition of an institution of higher education in para-
graph (1) if such institution is removed from eligibility for funds
under this title as a result of an action pursuant to part H of this
title.
(b) PROPRIETARY INSTITUTION OF HIGHER EDUCATION.For the
purpose of this section, the term "proprietary institution of higher
education" means a school (1) which provides an eligible program
of training to prepare students for gainful employment in a recog-
nized occupation, (2) which meets the requirements of clauses (1)
and (2) of section 1201(a), (3) which does not meet the requirement
of clause (4) of section 1201(a), (4) which is accredited by a nation-
ally recognized accrediting agency or association approved by the
Secretary pursuant to part H of this title, (5) which has been in
existence for at least 2 years, and (6) which has at least 15 percent
of its revenues from sources that are not derived from funds pro-
vided under this title, as determined in accordance with regula-
tions prescribed by the Secretary. Such term also includes a propri-
etary educational institution in any State which, in lieu of the re-
quirement in clause (1) of section 1201(a), admits as regular stu-
dents persons who are beyond the age of compulsory school attend-
ance in the State in which the institution is located.
(C) POSTSECONDARY VOCATIONAL INSTITUTION.For the pur-
pose of this section, the term "postsecondary vocational institution"
means a school (1) which provides an eligible program of training
to prepare students for gainful employment in a recognized occupa-
tion, (2) which meets the requirements of clauses (1), (2), (4), and
(5) of section 1201(a), and (3) which has been in existence for at
least 2 years. Such term also includes an educational institution in
any State which, in lieu of the requirement in clause (1) of section
1201(a), admits as regular students persons who are beyond the
age of compulsory school attendance in the State in which the insti-
tution is located.
(d) 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
Sec. 481
HIGHER EDUCATION ACT OF 1965
300
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-
cation that provides a 2-year or 4-year program of instruction for
which the institution awards an associate or baccalaureate degree.
(e) 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 parasraph.
(D THIRD PARTY SERVICER.For purposes of this title, the term
"third party servicer" means any individual, or any State, or pri-
vate, profit or nonprofit organization which enters into a contract
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-
poct 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.
(20 U.S.C. 1088) Enacted October 3, 1980, P.L. 96-374, sec. 461(a), 94 Stat. 1444;
amended October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1476; amended June
3, 1987, P.L. 100-50, sec. 15(1), 101 Stat. 355; amended December 19, 1989, P.L.
101-239, secs. 2007 (b) and (c), 103 Stat. 2120, 2121; amended November 5, 1990,
P.L. 101-508, sec. 3005(b), 104 Stat.1388-28; amended April 9, 1991, P.L. 102-26,
sec. 2(a)(2) and (3), 105 Stat. 123; amended July 23, 1992, P.L. 102-325, sec. 481,
310
11
301
HIGHER EDUCATION ACT OF 1965
Sec. 482
106 Stat. 609; amended December 20, 1993, P.L. 103-208, sec. 2(1)(1)46), 107 Stat.
2475-76.
SEC. 482. 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: fmal 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.
(b) TIMING FOR REALLOCATIONS.With respect to any fimds 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
reallocation shall occur at least once each year, not later than Sep-
tember 30 of that year.
(C) DELAY OF EFFECTIVE DATE OF LATE PUBLICATIONS.Any
regulatory changes initiated by the Secretary affecting the pro-
grams pursuant to this title that have not been published in fmal
311
Sec. 483
HIGHER EDUCATION ACT OF 1965
302
form by Deceinber 1 prior to the start Of the award year shall not
become effective until the beginning of the second awar4 year after
such December 1 date. For award year 1994-95, this subsection
shall not require a delay in the effectiveness of regulatory changes
affecting parts B, G, and H of this title that are published in final
form by May 1, 1994.
(d) NOTICE TO CONGRESS.The Secretary shall notify the Coin-
mittee on Labor and Human Resources of the Senate and the Com-
mittee on Education and Labor of the House of Representatives
when the items specified in the calendar have been completed and
provide all relevant forms, rules, and instructions with such notice.
When a deadline included in the calendar is not met, the Secretary,
within 7 days, shall submit to the Committee on Labor and Human
Resources of the Senate and the Committee -.n Education and
Labor of the House of Representatives a written report, including
proper documentation, as to why the deadline was not adhered to
and 'a detailed plan for ensuring that subsequent dates are met.
Nothing in this section shall be interpreted to penalize 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.
(20 U.S.C. 1089) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1445;
amended April 7, 1986, P.L. 99-272, sec. 1089, 1C0 Stat. 354; amended October 17,
1986, P.L. 99-498, sec. 407(a), 100 Stat. 1477; amended June 3, 1987, P.L. 100-50,
sec. 15(2), 101 Stat. 355; amended July 23, 1992, P.L. 102-325, sec. 482, 106 Stat.
612; amended December 20, 1993, P.L. 103-208, sec. 2(h)(7), (m), 107 Stat. 2476,
2486.
SEC. 483. FORMS AND REGULATIONS.
(a) COMMON FINANCIAL AID FORM AND PROCESSING.
(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, C, D, and E of this title
(other than under subpart 4 of part A) and to determine the
need of a student for the purpose of part B of this title. The
Secretary may include on the form developed pursuant to this
paragraph not more than eight nonfinancial data items se-
lected in consultation with the States to assist the States in
awarding State student financial assistance. Such form shall
satisf3r the requirements of section 401(d) of this title. For the
purpose of collecting eligibility and other data for the purpose
of part B, the Secretary shall develop a separate, identifiable
loan application document (pursuant to section 432(m)) that
applicants or institutions in which the students are enrolled or
accepted for enrollment shall submit directly to eligible lenders
and on which the applicant sLail clearly indicate a choice of a
lender.
(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-
312
303
HIGHER EDUCATION ACT OF 1965
Sec. 483
livery of financial aid through the use of such form. The need
and eligibility of a student for financial assistance under parts
A, C, D, and E of this title (other than under subpart 4 of part
A) and the need of a student for the purpose of part B of this
title, may only be determined by using the form developed by
the Secretary pursuant to paragraph (1) of this subsection. No
student may receive assistance under parts A, C, D, and E of
this title (other than under subpart 4 of part A) or have the
student's need established for the purpose of part B of this
title, except by use of the form developed by the Secretary pur-
suant 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 and States shall receive, without charge, the data col-
lected by the Secretary using the form dpveleped pursuant to
this section for the purposes of determining need and eligibility
for institutional and State financial aid awards. Entities des-
ignated by institutions of higher education or States to receive
such data shall be subject to all requirements of this section,
unless such requirements are waived by the Secretary.
(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 fmancial 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.
(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
313
Sec. 483
HIGHER EDUCATION ACT OF 1965
304
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.
(b) STREAMLINED REAPPLICATION PROCESS.(1) The Secretary
shall, within 240 days after the date of enactment of the Higher
Education
Amendments
of
1992,
develop
a
streamlined
reapplication form and process, including electronic reapplication
process, consistent with the requirements 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-
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 Labor of the House of Rep-
resentatives 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
3/4.
305
HIGHER EDUCA110N
..1' OF 1965
Sec. 484
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 633(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.
(f) SPECIAL RULE.Nothing in section 1544 of the Higher Edu-
cation Amendments of 1992 shall relieve processors or institutions
of higher education of any or all obligations under this section.
(20 U.S.C. 1090) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1478;
amended October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1478; amended June
3, 1987, P.L. 100-50, sec. 15(3)(6), 101 Stat. 356; amended July 23, 1992, P.L. 102
325, sec. 483, 106 Stat. 612; amended December 20, 1993, P.L. 103-208, sec.
2(h)(8)(12), (m), 107 Stat. 2476, 2486.
SEC. 484. 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 institution of higher education which the
student intends to attend, or is attending (or in the case of a
loan or loan guarantee with the lender), a document, which
need not be notarized, 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
student from the Republic of the Marshall Islands, the
Federated States of Micronesia, or the Republic of Palau;
31'5
Sec. 484
HIGHER EDUCATION ACT OF 1965
306
(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 resid.ent,
or a permanent resident of the Trust Territory of the Pacific
Islands, Guam, or the Northern Mariana Islands.
(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), ansi 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.
(5) Notwithstanding any other provision of this subsection, no
incarcerated student is eligible to receive a loan under this title.
31.6
OP
307
HIGHER EDUCATION ACT OF 1965
Sec. 484
(C) SATISFACTORY PR0GRESS.(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 (aX2) 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 either one of the following stand-
ards:
(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.
(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-
Sec. 484
HIGHER EDUCATION ACT OF 1965
308
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, or part E of this title in the same aca-
demic year, or if the student fraudulently borrowed in excess of the
aggregate maximum loan limits under such part B, part D, 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 stud.ent 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) REVIE1N.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
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-
318
309
HIGHER EDUCATION ACT OF 1965
Sec. 484
sistance on the basis of the individual's immigration
status until such a reasonable opportunity has been
provided; and
(l3) if there are submitted documents which the insti-
tution determines constitute reasonable evidence indicat-
ing such status
(1) the institution shall transmit to the Immigra-
tion and Naturalization Service photostatic or other
similar copies of such documents for official verifica-
tion,
(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
(4) there is a subsecluent 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 instl uct 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.
31_9
Sec. 484
HIGHER EDUCATION ACT OF 1965
310
(j ) 1 STUDENTS ATTENDING INSTITUTIONS IN THE FREELY ASSO-
CIATED STATES AND ELIGIBILITY FOR TRIO PROGRAMS.Notwith-
standing any other provision of law, a student who meets the re-
quirements of paragraph (a)(5) of this section or who is a resident
of the freely associated states, and who attends a public or non-
profit institution of higher education located in any of the freely as-
sociated states rather than a State, shall be eligible, if otherwise
qualified, for assistance under subpart 1, 2, or 4 of part A or part
C of this title.
(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 student
enrolled in a course of instruction at an eligible institution of
higher education (other than an institution that meets the defi-
nition in section 521(4)(C) of the Carl D. Perkins Vocational
and Applied Technology Education Act) that is offered in whole
or in part through telecommunications and leads to a recog-
nized associate, bachelor, or graduate degree conferred by such
institution shall not be considered to be enrolled in correspond-
ence courses unless the total amount of telecommunications
and correspondence courses at such institution equals or ex-
ceeds 50 percent of such courses.
(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.
(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 cii-
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.
(in)2 STUDENTS WITH A FIRST BACCALAUREATE OR PROFES-
SIONAL DEGREE.A student shall not be ineligible for assistance
'Section 801(a) of P.L. 102--73 added subsection (k) to section "484 of the Act (20 U.S C
1091)".
2Section 484(g) of the Higher Education Amendments of 1992 inserts a new subsection (n)
Section 2(k)(8) of the Higher Education Technical Amendments of 1993 amended section 484 of
311
HIGHER EDUCATION ACT OF 1965
Sec. 484
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 comphance. 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
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-
the Higher Education Amendments of 1992 by inserting after subsection (h) a new subsection
(1) as follows:
"(i) EFFECTIvE DATE.The amendments made by subsection (g) with respect to the addition
of subsection (n) shall be effective on and after December 1, 1987.";
Section 484(n) was redesignated as subsection (m) by section 2(h)i25) of the Higher Education
Amendments of 1993.
77-530 0-94-- I I
Sec. 484A
HIGHER EDUCA110N ACT OF 1965
312
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.
(20 U.S.C. 1091) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1448;
amended April 7, 1986, P.L. 99-272, sec. 16032, 100 Stat. 354; amended October
17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1479; amended Nov. 6, 1986, P.L. 99-
603, sec. 121(a)(3), 100 Stat. 3388; amended June 3, 1987, P.L. 100-50, sec. 15(7)-
(9), 101 Stat. 356; amended July 18, 1988, P.L. 100-369, secs. 1, 2, and 6, 102 Stat.
835-836; amended October 24, 1988, P.L. 100-525, sec. 2(g), 102 Stat. 2611; amend-
ed November 5, 1990, P.L. 101-508, sec. 3005(a), 104 Stat.1388-27; amended April
9, 1991, P.L. 102-26, sec. 2(b) and (c)(2), 105 Stat. 123; amended July 25, 1991, P.L.
102-73, 801(a), 105 Stat.359; amended July 23, 1992, P.L. 102-325, sec. 484, 106
Stat. 615; amended December 20, 1993, P.L. 103-208, sec. 2(h)(13)-(25), (m), 107
Stat. 2476-77, 2486.
SEC. 484A. STATUTE OF LIMITATIONS.
(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
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-
; a
s
372
313
HIGHER EDUCATION ACT OF 1965
Sec. 4MB
(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.
(20 U.S.C. 1091a) &Acted April 7, 1986, P.L. 99-272, sec. 16033, 100 Stat. 355;
amended October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1482; amended April
9, 1991, P.L. 102-26, sec. 3(a), 105 Stat. 124; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 484B. INSTITUTIONAL REFUNDS.
(a) REFUND POLICY REQUIRED.Each institution of higher edu-
cation participating in a program under this title shall have in ef-
fect a fair and equitable refund policy under which the institution
refunds unearned tuition, fees, room and board, and other charges
to a student who received grant or loan assistance under this title,
or whose parent received a loan made under section 428B on behalf
of the student, if the student
(1) does not register for the period of attendance for which
the assistance was intended; or
(2) withdraws or otherwise fails to complete the period of
enrollment for which the assistance was provided.
(b) DETERMINATIONS.The institution's refund policy shall be
considered to be fair and e uitable for purposes of this section if
that policy provides for a refund in an amount of at least the larg-
est of the amounts provided under
(1) the requirements of applicable State law;
(2) the specific refund requirements established by the in-
stitution's nationally recognized accrediting agency and ap-
proved by the Secretary; or
(3) the pro rata refund calculation described in subsection
(c), except that this paragraph will not apply to the institu-
tion's refund policy for any student whose date of withdrawal
from the institution is after the 60 percent point (in time) in
the period of enrollment for which the student has been
charged.
(c) DEFINITIONS.(1) As used in this section, the term "pro
rata refund" means a refund by the institution to a student attend-
ing such institution for the first time of not less than that portion
of the tuition, fees, room and board, and other charges assessed the
student by the institution equal to the portion of the period of en-
rollment for which the student has been charged that remains on
the last day of attendance by the student, rounded downward to
the nearest 10 percent of that period, less any unpaid charges owed
by the student for the period of enrollment for which the student
has been charged, and less a reasonable administrative fee not to
exceed the lesser of 5 percent of the tuition, fees, room and board,
and other charges assessed the student, or $100.
(2) For purposes of paragraph (1), "the portion of the period of
enrollment for which the student has been charged that remains",
shall be determined
(A) in the case of a program that is measured in credit
hours, by dividing the total number of weeks comprising the
3?3
Sec. 485
HIGHER EDUCATION ACT OF 1965
314
period of enrollment for which the student has been charged
into the number of weeks remaining in that period as of the
last recorded day of attendance by the student;
(B) in the case of a program that is measured in clock
hours, by dividing the total number of clock hours comprising
the period of enrollment for which the student has been
charged into the number of clock hours remaining to be com-
pleted by the student in that period as of the last recorded day
of attendance by the student; and
(C) in the case of a correspondence program, by dividing
the total number of lessons comprising the period of enrollment
for which the student has been charged into the total number
of such lessons not submitted by the student.
(20 U.S.C. 1091b) Enacted July 23, 1992, P.L. 102-325, sec. 485(a), 106 Stat. 619;
amended December 20, 1993, P.L. 103-208, sec. 2(hX26) and (27), 107 Stat. 2477.
SEC. 485. 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, through appro-
priate publications and mailings, to all current students, and to
any prospective student upon request. The information 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;
(F) a statement of the refund policy of the institution, as
determined under section 484B, for the return e unearned tui-
tion and fees or other refundable portion of cost, as described
in subparagraph (E) of this paragraph, which refunds shall be
credited in the following order:
(i) to outstanding balances on loans under part B
of this title for the period of enrollment for which a re-
fund is required,
(ii) to outstanding balances on loans under part D
of this title for the period of enrollment for which a re-
fund is required,
3 4
316
HIGHER EDUCATION ACT OF 1965
Sec. 485
(iii) to outstanding balances on loans under part E
of this title for the period of enrollment for which a re-
fund is required,
(iv) to awards under subpart 1 of part A of this
title,(v) to awards under subpart 3 of part A of this
title,
(vi) to other student assistance, and
(vii) to the student;
(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, o- 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 standards 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 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
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; and
Amendment made by sec. 10(a) of P.L. 102-26, 105 Stat. 128, inserted "undergraduate" after
"fulltime" without futher specification.
3 ? 5
Sec. 485
HIGHER EDUCATION ACT OF 1965
316
(N) that enrollment in a program of study abroad approved
for credit by the home institution may be considered enroll-
ment in the home institution for purposes of applying for Fed-
eral student financial assistance.
(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 cmmted 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, for any academic year beginning more than 270
days after the Secretary first prescribes final regulations pur-
suant to such subparagraph (L), be made available to current
and prospective students prior to enrolling or entering into any
financial obligation; and
(B) shall cover the one-year period ending on June 30 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
(b) EXIT COUNSELING FOR B0RR0WERS.-(1)(A) Each eligible in-
stitution shall, through fmancial aid officers or otherwise, make
available counseling to borrowers (individually or in groups) 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 borrower enrolled at the institution or at the
time of cif. parture 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
(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.
31?,6
N
317
HIGHER EDUCATION ACT OF 1965
Sec. 485
(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
(1) 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) 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.The Secretary shall make available to eligible
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
(1) assist students in gaining information through institutional
sources, and (2) 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-
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
3?7
Sec. 485
HIGHER EDUCATION ACT OF 1965
318
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.
(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;
(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 his par-
ents, his guidance counselor, and coach the information contained
in the report submitted by such institution pursuant to paragraph
(1). (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.
319
HIGHER EDUCATION ACT OF 1965
Sec. 485
(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
(E) 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-
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) This subsection shall not be effective until the first July 1
that follows, by more than 270 days, the date on which the Sec-
retary first prescribes fmal regulations pursuant to this subsection.
The reports required by this subsection shall be due on that July
1 and each succeeding July 1 and shall cover the 1-year period end-
ing June 30 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
-;.3e9
, Sec. 485
HIGHER EDUCATION ACT OF 1965
320
(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, during
the most recent calendar year, and during the 2 preceding cal-
endar years for which data are available, of the following
criminal offenses reported to campus security authorities or
local police agencies
(i) murder;
(ii) sex offenses, forcible or nonforcible;
(Li) robbery;
(iv) aggravated assault;
(v) burglary; and
(vi) motor vehicle theft.
(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) Statistics concerning the number of arrests for the fol-
lowing crimes occurring on campus:
(i) liquor law violations;
(ii) drug abuse violations; and
(iii) weapons possessions.
(I) A statement of policy regarding the possession, use, and
sale of alcoholic beverages and enforcement of State underage
drinking laws and a statement of policy regarding the posses-
sion, use, and sale of illegal drugs and enforcement of Federal
and State drug laws and a description of any drug or alcohol
abuse education programs as required under section 1213 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.
330
321
HIGHER EDUCATION ACT OF 1965
Sec. 485
(4) Upon the request of the Secretary, each institution partici-
pating in any program under this title shall submit to the Sec-
retary a copy of the statistics required to be made available under
paragraphs (1)(F) and (1)(H). The Secretary shall
(A) review such statistics and report to the Committee on
Education and Labor of the House of Representatives and the
Committee on Labor and Human Resources of the Senate on
campus crime statistics by September 1, 1995; and
(B) in coordination with representatives of institutions of
higher education, identify exemiilary 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.
(5)(A) For purposes of this subsection, the term "campus"
includes
(i) any building or property owned or controlled by the in-
stitution of higher education within the same reasonably con-
tiguous geographic area and used by the institution in direct
support of, or related to its educational purposes; or
(ii) any building or property owned or controlled by stu-
dent organizations recognized by the institution.
(B) In cases where branch campuses of an institution of higher
education, schools within an institution of higher education, or ad-
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.
(6) The statistics described in paragraphs (1)(F) and (1)(H)
shall be compiled in accordance with the definitions used in the
uniform crime reporting system of the Department of Justice, Fed-
eral Bureau of Investigation, and the modifications in such defini-
tions as implemented pursuant to the Hate Crime Statistics Act.
(7)(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
nonforcible.
(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.
,331
Sec. 485A
HIGHER EDUCATION ACT OF 1965
322
(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.
(20 U.S.C. 1092) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1449;
amended October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1482; amended June
3, 1987, P.L. 100-50, sec. 15(10)-(11), 101 Stat. 357; amended November 8, 1990,
P L 101-542, sec. 103 (a) and (b), sec. 104(a), sec. 204(a), 104 Stat. 2381-2382,
238&-2384, 2385-2387; amended November 16, 1990, P.L. 101-610, secs. 201, 202,
and 203, 104 Stat. 3171-3172; amended April 9, 1991, P.L. 102-26, sec. 10, 105
Stat
128; amended November 15, 1991, P.L. 102-164, sec. 603, 105 Stat. 1066;
amended July 23, 1992, P.L. 102-325, sec. 486, 106 Stat. 620; amended December
20, 1993, P.L. 103-208, sec. 2(h)(28)-(37), (k)(9), (m), 107 Stat. 2477, 2486.
SEC. 485A. COMBINED PAYMENT PLAN.
(a) ELIGIBILITY FOR PLAN.-Upon the request of the borrower,
a lender described in subparagraph (A), (B), or (C) of section
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(0)
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 consolidatiun 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.
323
HIGHER EDUCATION ACT OF 1965
Sec. 485A
(c) LENDER ELIGMILITY.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
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 VII 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.
Sec. 485B
HIGHER EDUCATION ACT OF 1965
324
(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).
(20 U.S.C. 1092a) Enacted October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat.
1484; amended June 3, 1987, P.L. 100-50, sec. 15(12), 101 Stat. 357; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 485B. 1 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-
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. 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 borrow-
ers; (3) the guaranty agency responsible for the guarantee of
the loan;
'Section 204 of Public Law 101-610 (104 Stat. 3172) amended section 4858(a) of the Higher
Education Act of 1965. These amendments could not be carried out.
34
325
HIGHER EDUCATION ACT OF 1965
Sec. 485B
(4) the institution of higher education or organization re-
sponsible for loans made under parts D and E;
(5) 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 bor-
rower;
(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;
(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
33 5
Sec. 485C
HIGHER EDUCATION ACT OF 1965
326
submitted by individual lenders, servicers or guaranty agen-
cies.(2) ACTWITIES.Por 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.
U) 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.
(20 U.S.C. 1092b) Reenacted December 19, 1989, Pl. 101-239, sec. 2008, 103
Stat. 2121-2122; amended July 23, 1992, Pi. 102-325, sec. 487, 106 Stat. 623;
amended December 20, 1993, P.L. 103-208, sec. 2(h)(38)(41), (m), 107 Stat. 2478,
2486.
SEC. 485C. SIMPLIFICATION OF THE LENDING PROCESS FOR BORROW-
ERS.
(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.
(20 U.S.C. 1092c) Enacted July 23, 1992, P.L. 102-326, sec. 488, 106 Stat. 624.
SEC. 486. TRAINING IN FINANCIAL AID SERVICES.
(a) PROGRAM AUTHORITY.The Secretary is authorized to pro-
vide grants to appropriate nonprofit private organizations or com-
binations of such organizations to provide training for student fi-
327
HIGHER EDUCATION ACT OF 1965
Sec. 487
nancial aid administrators and TRIO personnel, at all levels of ex-
perience, who provide or are involved in student financial aid serv-
ices.
(b) USE OF FUNDS.Financial assistance under this section
may be used for
(1) the operation of short-term training institutes and spe-
cial training programs for student financial aid administrators
or TRIO personnel designed to
(A) improve the professional management skills of par-
ticipants in such institutes and programs;
(B) improve the delivery of student services;
(C) improve students' or prospective students' informa-
tion on the availability and operation of student financial
assistance programs; and
(D) improve the understanding and knowledge of the
participants concerning the legislative and regulatory re-
quirements of the student financial assistance programs
and changes in such requirements; and
(2) the development of appropriate training materials.
(c) LIMITATIONS Grants authorized under this section
(1) shall be limited to not less than $1,000,000 in the case
of single-year grants;
(2) shall be limited to not less than $1,000,000 per year in
the case of multiple-year grants;
(3) shall be limited to a maximum of 3 years in the case
of multiple-year grants; and
(4) may be renewed at the discretion of the Secretary.
(d) AUTHORIZATION OF APPROPRIATIONS AND USE OF FUNDS.
There are authorized to be appropriated $5,000,000 for fiscal year
1993 and such sums as may be necessary for each of the 4 succeed-
ing fiscal years to carry out the provisions of this section.
(20 U.S.C. 1093) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1450;
amended October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1487; amended July
23, 1992, P.L. 102-325, sec. 489, 106 Stat. 624.
SEC. 487. 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 insti',..ition (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.
, 337
Sec. 487
HIGHER EDUCATION ACT OF 1965
328
(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 State review entity designated
under subpart 1 of part H;
(C) the appropriate guaranty agency; and
(D) the appropriate accrediting agency or association.
(4) The institution will comply with the provisions of sub-
section (b) 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-
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, the institution will inform all eligible borrowers
enrolled in the institution about the availability and eligibility
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 information con-
cerning 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-
338'
329
HIGHER EDUCATION ACT OF 1965
Sec. 487
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, will develop a Default Manage-
ment Plan for approval by the Secretary as part of its initial
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, develop a Default
Management Plan for approval by the Secretary and imple-
ment such Plan for two years after its change of ownership or
status.
(15) The institution acknowledges the authority of the Sec-
retary, guaranty agencies, lenders, accrediting agencies, the
Secretary of Veterans Affairs, and State review entities 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-
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
339
Sec. 487
HIGHER EDUCATION ACT OF 1965
330
collection effort, as designated by the Secretary, in a timely
manner and to the satisfaction of the Secretary.
(18)(A) With respect to any institution that offers athlet-
ically related student aid, the institution will
(i) cause an annual compilation, independently audited
not less often than every 3 years, to be prepared within 6
months after the end of its fiscal year, of
(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 its inter-
collegiate athletics activities;
(II) the total expenses, and the expenses attrib-
utable to football, men's basketball, women's basket-
ball, all other men's sports combined and all other
women's sports combined, made by the institution for
its intercollegiate athletics activities; and
(III) the total revenues and operating expenses of
the institution; and
(ii) make the reports on such compilations and, where
allowable by State law, the audits, available for inspection
by the Secretary and the public.
(B) For the purpose of subparagraph (A)
(i) revenues from intercollegiate athletics activities al-
locable to a sport shall include without limitation gate re-
ceipts, broadcast revenues, appearance guarantees and op-
tions, concessions and advertising, but revenues such as
student activities fees or alumni contributions not so allo-
cable shall be included in the calculation of total revenues
only; and
(ii) expenses for intercollegiate athletics activities allo-
cable to a sport shall include without limitation grants-in-
aid, salaries, travel, equipment, and supplies, but expenses
such as general and administrative overhead not so alloca-
ble shall be included in the calculation of total expenses
only.
(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 fmancial 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.
3 4 0
331
HIGHER EDUCATION ACT OF 1965
Sec. 487
(21) The institution will meet the requirements established
by the Secretary, State postsecondary review entities, and ac-
crediting agencies pursuant to part H of this title.
(22) The institution will comply with the refund policy es-
tablished pursuant to section 484B.
(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 determmation 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 clause (ii), a financial audit of
an eligible institution with regard to the fmancial condition 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 in-
sured 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 organiza-
tion or person in accordance with standards established by the
Comptroller General for the audit of governmental organiza-
tions, 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 State review
entities referred to in subpart 1 of part H; or
(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;
(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 m eet the requirements
of this clause), with regard to any contract with an eligible in-
3 4 1
Sec. 487
HIGHER EDUCATION ACT OF 1965
332
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
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
312
333
HIGHER EDUCATION ACT OF 1965
Sec. 487
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
(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,
3 4
,
Sec. 487
HIGHER EDUCATION ACT OF 1965
334
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
(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 fmancial 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, after consultation with each
State review entity designated under subpart 1 of part H, a list of
State agencies which the Secretary determines to be reliable au-
thority as to the quality of public postsecondary vocational edu-
314
335
HIGHER EDUCATION ACT OF 1965
Sec. 487
cation in their respective States for the purpose of determining eli-
gibility for all Federal student assistance programs.
(5) The Secretary shall make readily available to appropriate
guaranty agencies, eligible lenders, State review entities des-
ignated under subpart 1 of part H, and accrediting agencies or as-
sociations the results of the audits of eligible institutions conducted
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 481 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-
retary shall allow the institution to use any reasonable means, in-
cluding stenographers, of recording the hearing.
(20 U.S.C. 1094) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1451;
amended April 7, 1986, P.L. 99-272, sec. 16034, 100 Stat 356; amended October 17,
1986, P.L. 99-498, sec. 407(a), 100 Stat. 1486; amended December 19, 1989, P.L.
101-239, secs. 2003(c)(2) and 2006(c), 103 Stat. 2114, 2118-2120; amended Novem-
ber 8, 1990, P.L. 101-542, sec. 205, 104 Stat. 2387; amended April 9, 1991, P.L.
102-26, sec. 2(c)(3), 105 Stat. 124; amended July 23, 1992, P.L. 102-325, sec. 490,
106 Stat. 625; amended December 20, 1993, P.L. 103-208, sec. 2(h)(42) and (43),
(m), 107 Stat. 2478, 2486.
SEC. 487A. QUALITY ASSURANCE PROGRAM.
(a) IN GENERAL.-The Secretary is authorized to select institu-
tions for voluntary participation in a Quality Assurance Program
that provides participating institutions with an alternative man-
agement approach through which individual schools develop and
implement their own comprehensive systems to verify student fi-
nancial aid application data, thereby enhancing program integrity
within the student aid delivery system. The Quality Assurance Pro-
gram authorized by this section shall be based on criteria that in-
clude demonstrated institutional performance, as determined by
Sec. 487A
HIGHER EDUCATION ACT OF 1965
336
the Secretary, arid shall take into consideration current quality as-
surance goals, as determined by the Secretary.
(b) EXEMPTION FROM REQUIREMENTS.The Secretary is au-
thorized to exempt any institution participating in the Quality As-
surance Program from any reporting or verification requirements
in this title, and may substitute such quality assurance reporting
as the Secretary deems necessary to ensure accountability and
compliance with the purposes of the programs under this title.
(c) REMOVAL FROM THE PROGRAM.The Secretary is author-
ized to determine
(1) when an institution that is unable to administer the
Quality Assurance Program must be removed from such pro-
gram, and
(2) when institutiorts desiring to cease participation in
such program will be required to complete the current award
year under the requirements of the Quality Assurance Pro-
gram.
(d) EXPERIMENTAL SITES.(1) The Secretary is authorized to
select institutions for voluntary participation as experimental sites
to provide recommendations to the Secretary on the impact and ef-
fectiveness of proposed regulations or new management initiatives.
(2) The Secretary is authorized to exempt any institution par-
ticipating as an experimental site from any requirements in this
title, or in regulations prescribed under this title, that would bias
experimental results.
(e) DEFINITIONS.For purposes of this section, "current award
year" is defined as the award year during which the participating
institution indicates its intention to cease participation.
(20 U.S.C. 1094a) Enacted July 23, 1992, P.L. 102-325, sec. 491, 106 Stat. 629.
SEC. 487B. ASSIGNMENT OF IDENTIFICATION NUMBERS.
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.
(20 U.S.C. 1094b) Enacted July 23, 1992, P.L. 102-325, sec. 491, 106 Stat. 629.
SEC. 488. 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.
(20 U.S.C. 1095) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1452;
amended October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1490; amended June
3, 1987, P.L. 100-50, sec. 15(14), 101 Stat. 357; amended July 23, 1992, P.L. 102
325, sec. 492, 106 Stat. 630; amended December 20, 1993, P.L. 103-208, sec. 2(m),
107 Stat. 2486.
337
HIGHER EDUCATION ACT OF 1965
Sec. 488A
SEC. 488A. WAGE GARNISHMENT REQUIREMENT.
(a) GARNISHMENT REQUMEMENTS.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-
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 ac-
tion, and shall be liable for, and the Secretary or the guaranty
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 em-
ployee following receipt of such employer of notice of the with-
holding 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 cycles 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
347
Sec. 489
HIGHER EDUCATION ACT OF 1965
338
(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
remed.y 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 (aX5) 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 fmal 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) 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.
(20 U.S.C. 1095a) Enacted November 15, 1991, P.L. 102-164. sec. 605(a), 105
Stat. 1066-1068; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat.
2486.
SEC. 489. ADMINISTRATWE 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-
318
mm0
339
HIGHER EDUCATION ACT OF 1965
Sec. 490
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 ofany 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.
(20 U.S.C. 1096) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1453;
amended October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1491; amended Nov.
6, 1986, P.L. 99-603, sec. 121(b)(7), 100 Stat. 3391; amended June 3, 1987, P.L.
100-50, sec. 15(15), 101 Stat. 357; amended July 23, 1992, P.L. 102-325, sec. 446(c),
and 493, 106 Stat. 567, and 630; amended December 20, 1993, P.L. 103-208, sec.
2(h)(44), (k)(6), (m), 107 Stat. 2478, 2486.
[Section 489A is repealed by section 494 of Public Law 102
325, 106 Stat. 631.]
SEC. 490. 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
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
349
Sec. 491
HIGHER EDUCATION ACT OF 1965
340
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 recoroi 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.
(20 U.S.C. 1097) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1453;
amended October 17, 1986, P.L. 99-498, sec. 407(a), 100 Stat. 1491; amended July
23, 1992, P.L. 102-325, sec. 495, 106 Stat. 631; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 491. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSIST-
ANCE.
(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
(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 ComurrEE.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 and expenditures, personnel de-
cisions and processes, procurements, and other administrative and
management functions. The Advisory Committee's administration
and management shall be subject to the usual and customary Fed-
eral audit procedures. Notwithstanding Department of Education
policies and regulations, the Advisory Committee shall exert inde-
pendent control of its budget allocations and expenditures, person-
nel decisions and processes, procurements, and other administra-
tive and management functions. The Advisory Committee's admin-
istration and management shall be subject to the usual and cus-
tomary 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 Secretary for
comment prior to submission to the Congress in accordance with
subsection (0. The Secretary's authority to terminate advisory com-
mittees of the Department pursuant to section 448(b) of the Gen-
eral Education Provisions Act ceased to be effective on June 23,
1983.(C) MEMBERSHIP.(1) The Advisory Committee shall have 11
members of which-
350
341
HIGHER EDUCATION ACT OF 1965
Sic. 491
(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;
(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 pol-
icy 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 an
such Members' staff of the findings and recommendaticn;
made pursuant to this paragraph.
(e) OPERATIONS OF THE C0MMITTEE.(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
351
I.
/.
Sec. 491
HIGHER EDUCATION ACT OF 1965
342
(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) The Advisory Committee shall elect a Chairman and a Vice
Chairman from among its members.
(4) Six members of the Advisory Committee shall constitute a
quorum.
(5) The Advisory Committee shall meet at the call of the Chair-
man or a majority of its members.
(f) 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.(1) Members of the Advi-
sory Committee who are officers or full-time employees of the Unit-
ed States shall serve without compensation in addition to that re-
ceived for their services as officers or employees of the United
States; but they may be allowed travel expenses, including per
diem in lieu of subsistence, as authorized by section 5703 of title
5, United States Code, for persons in the Government service em-
ployed intermittently.
(2) Members of the Advisory Committee who are not officers or
full-time employees of the United States may each receive reim-
bursement for travel expenses incident to attending Advisory Com-
mittee meetings, including per diem in lieu of subsistence, as au-
thorized by section 5703 of title 5, United States Code, for persons
in the Government service employed intermittently.
(h) PERSONNEL AND RES0URCES.(1) The Advisory Committee
may appoint such personnel as may be necessary by the Chairman
without regard to the provisions of title 5, United States Code, gov-
erning 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 General Schedule.
(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.
352
343
HIGHER EDUCATION ACT OF 1965
Sec. 491
(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
$750,000, 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 committee shall
(1) monitor and evaluate the program modifications result-
ing from the enactment of the Higher Education Amendments
of 1992, especially as such amendments relate to the need
analysis;
(2) monitor and evaluate the implementation, pursuant to
section 483, of a Free Application for Federal Student Aid and
the process for determining eligibility and awards for programs
under this title, including a simplified reapplication process;
(3) 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 high school students;
and
(4) assess the adequacy of methods of monitoring student
debt burden.
(k) TERM OF THE COMMIWEE.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, 1998.
(1) STUDENT LOAN PROGRAM SIMPLIFICATION STUDY.(1) The
Advisory Committee shall conduct a thorough study of means of
simplifying all aspects of the loan programs under part B of this
title. In carrying out the study, the Advisory Committee shall ex-
amine, at a minimum
(A) reduction of paperwork burdens experienced by finan-
cial aid administrators resulting from the current structure of
such loan programs;
(B) promotion of simplification and standardization of
forms, procedures, and all other aspects of guaranty agency op-
erations for the purpose of facilitating data exchanges with
such agencies (including the National Student Loan Database)
and facilitating Department of Education oversight;
(C) simplification of the repayment process to minimize
borrower confusion, including encouragement of single holder
ownership of all of an individual's loans;
77-530
0-94-----12
I 353
Sec. 492
HIGHER EDUCATION ACT OF 1965
344
(D) encouragement of efficient utilization of loan programs
to minimize multiple program borrowing in postsecondary edu-
cation; and
(E) other proposals which are designed to reduce the ad-
ministrative burdens on, and paperwork required of, students,
educational institutions, guaranty agencies, lenders, secondary
markets, and the Secretary submitted in response to a general
solicitation by the Advisory Committee.
(2) The Advisory Committee shall consult with the Committee
on Education and Labor of the House of Representatives and the
Committee on Labor and Human Resources of the Senate in carry-
ing out the study required by this subsection.
(3) The Advisory Committee shall, not later than 1 year after
the date of enactment of this Act, prepare and submit to the Com-
mittee on Education and Labor of the House of Representatives
and the Committee on Labor and Human Resources of the Senate
a report on the study required by this subsection.
(20 U.S.C. 1098) Enacted October 3, 1980, P.L. 96-374, sec. 451(a), 94 Stat. 1454;
amended August 16, 1983, P.L. 98-79, sec. 11, 97 Stat. 484; amended October 17,
1986, P.L. 99-498, sec. 407(a), 100 Stat. 1492; amended June 3, 1987, P.L. 100-50,
sec. 15(16)(18), 101 Stat. 367; amended July 23, 1992, P.L. 102-325, sec. 496, 106
Stat. 631; amended December 20, 1993, P.L. 103-208, set.. 2(h)(45) and (46), (m),
107 Stat. 2478, 2486.
SEC. 492. REGIONAL MEETINGS AND NEGOTIATED RULEMARING.
(a) MEETINGS.
(1) IN GENERALThe Secretary shall convene regional
meetings to obtain public involvement in the development of
proposed regulations for parts B, G, and H of this title. Such
meetings shall include 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.During such meetings, the Secretary shall
provide for a comprehensive discussion and exchange of infor-
mation concerning the implementation of parts B, G, and H, as
amended by the Higher Education Amendments of 1992. The
Secretary shall take into account the information received at
such meetings in the development of proposed regulations and
shall publish a summary of such information in the Federal
Register together with such proposed regulations.
(b) DRAFI' REGULATIONS.After holding regional meetings and
before publishing proposed regulations in the Federal Register, the
Secretary shall prepare draft regulations implementing parts B, G,
and H of this title as amended by the Higher Education Amend-
ments of 1992 and shall submit such regulations to a negotiated
rulemaking process. The Secretary shall follow the guidance pro-
vided in sections 305.82-4 and 305.85-5 of chapter 1, Code of Fed-
eral Regulations, and any successor recommendation, regulation, or
law. Participants in the negotiations process shall be chosen by the
Secretary from individuals nominated by groups participating in
the regional meetings described in subsection (a)(1), and shall in-
clude both representatives of such groups from Washington, D.C.,
354
345
HIGHER EDUCATION ACT OF 1965
Sec. 494
and industry participants. To the extent possible, the Secretary
shall select individuals reflecting the diversity in the industry, rep-
resenting 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 regu-
lations may be issued by the Secretary within the 240-day period
described in section 431(g) of the General Education Provisions Act.
(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.
(20 U.S.C. 1098a) Enacted July 23, 1992, P.L. 102-325, sec. 497, 106 Stat. 633.
SEC. 493. AUTHORIZATION OF APPROPRIATIONS FOR ADMINISTRA-
TIVE 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.
(20 U.S.C. 1098b) Enacted July 23, 1992, P.L. 102-325, sec. 497, 106 Stat. 634.
PART HPROGRAM INTEGRITY TRIAD
Subpart 1State Postsecondary Review Program
SEC. 494. STATE POSTSECONDARY REVIEW PROGRAM.
(a) PURPOSE.It is the purpose of this section to authorize the
Secretary to enter into agreements that
(1) designate one State postsecondary review entity in each
State to be responsible for the conduct or coordination of the
review under section 494C(d) of institutions of higher edu-
cation, reported to the State by the Secretary pursuant to sec-
tion 494C(a), for the purposes of determining eligibility under
this title; and
(2) provide Federal funds to each State postsecondary re-
view entity for performing the functions required by such
agreements with the Secretary.
(b) PROGRAM AUTHORITY.The Secretary shall, in accordance
with the provisions of this subpart, enter into agreements with
each of the States to carry out the purposes of this subpart. If any
State declines to enter into an agreement with the Secretary for
the purposes of this subpart, the provisions of this subpart which
refer to the State, with respect to such State, shall refer to the Sec-
retary, who may make appropriate arrangements with agencies or
organizations of demonstrated competence in reviewing institutions
of higher education.
,355
Sec. 494A
HIGHER EDUCATION ACT OF 1965
346
(C) FAILURE TO COMPLY WITH AGREEMENT.If a State fails to
enter into an agreement under this section or fails to meet the re-
quirements of its agreement with the Secretary under this
subpart(1) the Secretary
(A) may not designate as eligible for participation in
any program under this title any new institution (includ-
ing new branch campuses) or any institution that has
changed ownership, pursuant to section 481 and subpart 3
of this part; and
(B) may grant only provisional certification for all in-
stitutions in the State pursuant to subpart 3 of this part;
and
(2) the State shall be ineligible to receive funds under sec-
tion 494B of this subpart, subpart 4 of part A of this title, and
chapter 2 of subpart 2 of part A of this title
(20 U.S.C. 1099a) '.nacted July 23, 1992, P.L. 102-325, sec. 499, 106 Stat. 634.
SEC. 494A. STATE 1 )STSECONDARY REVIEW ENTITY AGREEMENTS.
(a) STATE OR3ANIZATION STRUCTURES.(1) Each agreement
under this sul.pax1 shall describe a State organizational structure
responsible fox ,,arrying out the review under section 494C(d) of in-
stitutions repo:, d to the State by the Secretary pursuant to sec-
tion 494C(a). Each such entity's action in reviewing such institu-
tions shall, for purposes of this subpart, be considered to be the ac-
tion of the State.
(2) For the purposes of this subpart, the designation of a State
postsecondary review entity for the purpose of entering into an
agreement with the Secretary shall be in accordance with the State
law of each individual State with respect to the authority to make
legal agreements between the State and the Federal Government.
(3) Except as provided in paragraph (6), nothing in this sub-
part shall be construed to authorize the Secretary to require any
State to adopt, as a condition for entering into an agreement, a
specific State organizational structure.
(4) Except as provided in paragraph (6), nothing in this sub-
part shall be construed
(A) as a limitation on the authority of any State to adopt
a State organization structure for postsecondary education
agencies, or programs, or institutions of higher education as
appropriate to the needs, traditions, and circumstances of that
State;(B) as a limitation on the authority of a State entering into
an agreement pursuant to this subpart to modify the State or-
ganizational structure at any time subsequent to entering into
such agreement;
(C) as a limitation on the authority of any State to enter
into an agreement for purposes of this subpart as a member
of a consortium of States;
(D) as an authorization for the Secretary to withhold funds
from any State or postsecondary institution on the basis of
compliance with a State's constitution or laws;
(E) as an authorization for any State postsecondary review
entity to exercise planning, policy, coordinating, supervisory,
3 5 6
347
HIGHER EDUCATION ACT OF 1965
Sec. 494A
budgeting, or administrative powers over any postsecondary in-
stitution; or
(F) as a limitation on the use of State audits for the pur-
pose of compliance with applicable standards under section
494C(d).
(5) Nothing in this subpart shall be construed to limit the au-
thority or activities of any State loan insurance program estab-
lished under section 428(b) of this title or of any relevant State li-
censing authority which grants approval for institutions of higher
education to operate within a State or their authority to contact the
Secretary directly.
(6) Notwithstanding the provisions of paragraphs (2), (3), and
(4) of this subsection, the Secretary may require each State to des-
ignate an entity responsible for the conduct or coordination of the
review of institutions under this title.
(b) CONTENTS OF AGREEMENTS.Agreements between each
State and the Secretary shall contain the following elements:
(1) A designation of a single State postsecondary review
entity, which represents all entities of that State which are re-
sponsible for
(A) granting State authorization to each institution of
higher education in that State for the purposes of this
title, and
(B) ensuring that each institution of higher education
in that State remains in compliance with the standards de-
veloped pursuant to section 494C.
(2) Assurances that the State will review institutions of
higher education for the purpose of determining eligibility
under this title on a schedule to coincide with the dates set by
the Secretary to certify or recertify such institutions of higher
education as provided in section 481 and subpart 3 of this part.
(3) Assurances that the appropriate State postsecondary
review entity will perform the functions authorized by this sub-
part and will keep such records and provide such information
to the Secretary as may be requested for financial and compli-
ance audits and program evaluation, consistent with the re-
sponsibilities of the Secretary.
(4) A description of the relationship between the State
postsecondary review entity designated for the purposes of this
subpart and (A) the agency or agencies designated for the pur-
poses of chapter 36 of title 38 of the United States Code, (B)
the loan insurance program established under section 428(b) of
this title for that State, and (C) the grant agency established
under section 415C of this title.
(5) A plan for performing the functions described in section
494C of this subpart.
(0) FEDERAL RESPONSIBILITY.Notwithstanding any other pro-
vision of law, no State shall be required to enter into an agreement
with the Secretary under this subpart for performing the review
functions required by such agreement unless the Congress appro-
priates funds for this subpart
(20 U.S.C. 1099a-1) Enacted July 23, 1992, P.L. 102-325, sec. 499, 106 Stat. 635.
357
Sec. 494B
HIGHER EDUCATION ACT OF 1965
348
SEC. 494B. FEDERAL REIMBURSEMENT OF STATE POSTSECONDARY
REVIEW COSTS.
(a) PAYMENTS.Subject to subsection (b), the Secretary shall
reimburse the States for the costs of performing the functions re-
quired by agreements with the Secretary authorized under this
subpart. Such costs shall include expenses for providing initial and
continuing training to State personnel and other personnel in the
State, including personnel at institutions of higher education sub-
ject to review, to serve the purposes of this subpart. Reimburse-
ment shall be provided for necessary activities which supplement,
but do not supplant, existing licensing or review functions con-
ducted by the State. The Secretary shall also reimburse such enti-
ties for work performed by their subcontractors and consultants
where such work has a direct relationship to the requirements of
agreements with the Secretary under this subpart.
.
(b) AUTHORIZATION OF APPROPRIATIONS.For the purpose of
enabling the Secretary to make payments to States which have
made agreements with the Secretary under this subpart, there is
authorized to be appropriated $75,000,000 for fiscal year 1993, and
such sums as may be necessary for each of the 4 succeeding fiscal
years.
(20 U.S.C. 1099a-2) Enacted July 23, 1992, P.L. 102-325, sec. 499, 106 Stat. 637.
SEC. 494C. FUNCTIONS OF STATE REVIEW ENTITIES.
(a) INITIAL REVIEW.The Secretary shall review all eligible in-
stitutions of higher education in a State to determine if any such
institution meets any of the criteria in subsection (b). If any such
institution meets one or more of such criteria, the Secretary shall
inform the State in which such institution is located that the insti-
tution has met such criteria, and the State shall review the institu-
tion pursuant to the standards in subsection (d). The Secretary
may determine that a State need not review an institution if such
institution meets the criterion in subsection (b)(10) only, such insti-
tution was previously reviewed by the State under subsection (d),
and the State determined in such previous review that the institu-
tion did not violate any of the standards in subsection (d). The Sec-
retary shall supply the State with a copy of the institutional audits,
required pursuant to section 487(c), for the institutions which shall
be reviewed by the State. In addition to those institutions identi-
fied by the Secretary, the State may, subject to approval by the
Secretary, review additional institutions which meet one or more of
the criteria provided in subsection (b), based on more recent data
available to the State, or which the State has reason to believe are
engaged in fraudulent practices. If the Secretary fails to approve or
disapprove a State request to review additional institutions within
21 days, the State may proceed to review such additional institu-
tions as if approved by the Secretary.
(b) REVIEW CRITERIA.The criteria for the initial review of in-
stitutions of higher education are as follows:
(1) A cohort default rate (as defined in section 435(m))
equal to or greater than 25 percent.
(2) A cohort default rate (as defined in such section) equal
to or greater than 20 percent and either-
338"'
349
HIGHER EDUCATION ACT OF 1965
Sec. 494C
(A) more than two-thirds of the institution's total un-
dergraduates who are enrolled on at least a half-time basis
receive assistance under this title (except subparts 4 and
6 of part A); or
(B) two-thirds or more of the institution's education
and general expenditures are derived from funds provided
to students enrolled at the institution from the programs
established under this title (except subparts 4 and. 6 of
part A and section 428B).
(3) Two-thirds or more of the institution's education and
general expenditures are derived from funds provided to stu-
dents enrolled at the institution pursuant to subpart 1 of part
A of this title.
(4) A limitation, suspension, or termination action by the
Secretary against the institution pursuant to section 487 dur-
ing the preceding 5 years.
(5) An audit finding during the 2 most recent audits of an
institution of higher education's conduct of the programs estab-
lished by this title that resulted in the repayment by the insti-
tution of amounts greater than 5 percent of the funds such in-
stitution received from the programs assisted under this title
for any one year.
(6) A citation of an institution by the Secretary for failure
to submit audits required by this title in a timely fashion.
(7) A year-to-year fluctuation of more than 25 percent in
the amounts received by students enrolled at the institution
from either Federal Pell Grant, Federal Stafford Loan, or Fed-
eral Supplemental Loans to Students programs, which are not
accounted for by changes in these programs.
(8) Failure to meet fmancial responsibility standards pur-
suant to subpart 3 of this part.
(9) A change of ownership of the institution that results in
a change of control which includes (but is not limited to)
(A) the sale of the institution or the majority of its as-
sets;
(B) the division of 1 or more institutions into 2 or
more institutions;
(C) the transfer of the controlling interest in stock of
the institution or its parent corporation;
(D) the transfer of the controlling interest of stock of
the institution to its parent corporation; or
(E) the transfer of the liabilities of the institution to
its parent corporation.
(10) Except with regard to any public institution that is af-
filiated with a State system of higher education, participation
in any of the programs established pursuant to subparts 1 and
3 of part A, part B, part C, and part E of this title for less than
5 years.
(11) A pattern of student complaints pursuant to sub-
section (j) related to the management or conduct of the pro-
grams established by this title or relating to misleading or in-
appropriate advertising and promotion of the institution's pro-
gram, which in the judgment of the Secretary are sufficient to
justify review of the institution.
359
.
Sec. 494C
HIGHER EDUCATION ACT OF 1965
350'
(C) USE OF RECENT DATA.The criteria provided for in sub-
section (b) shall be measured on the basis of the most recent data
available to the Secretary. Institutions may request verification of
the data used by the Secretary.
(d) REVIEW STANDARDS.Institutions which meet I_ or more of
the criteria in subsection (b) shall be reviewed by the appropriate
State entity in accordance with published State standards that are
consistent with the constitution and laws of the State, developed in
consultation with the institutions in the State, and subject to dis-
approval by the Secretary. Such review shall determine the follow-
ing:
(I) The availability to students and prospective students of
catalogs, admissions requirements, course outlines, schedules
of tuition and fees, policies regarding course cancellations, and
the rules and regulations of the institution relating to students
and the accuracy of such catalogs and course outlines in re-
flecting the courses and programs offered by the institution.
(2) Assurance that the institution has a method to assess
a student's ability to successfully complete the course of study
for which he or she has applied.
(3) Assurance that the institution maintains and enforces
standards relating to academic progress and maintains ade-
quate student and other records.
(4) Compliance by the institution with relevant safety and
health standards, such as fire, building, and sanitation codes.
(5) The financial and administrative capacity of tIr. insti-
tution as appropriate to a specified scale of operations and the
maintenance of adequate financial and other information nec-
essary to determine the financial and administrative capacity
of the institution.
(6) For institutions financially at risk, the adequacy of pro-
visions to provide for the instruction of students and to provide
for the retention and accessibility of academic and financial aid
records of students in the event the institution closes.
(7) If the stated objectives of the courses or programs of
the institution are to prepare students for employment, the re-
lationship of the tuition and fees to the remuneration that can
be reasonably expected by students who complete the course or
program and the relationship of the courses or programs (in-
cluding the appropriateness of the length of such courses) to
providing the student with quality training and useful employ-
ment in recognized occupations in the State.
(8) Availability to students of relevant information by in-
stitutions of higher education, including
(A) information relating to market and job availability
for students in occupational, professional, and vocational
programs; and
(B) information regarding the relationship of courses
to specific standards necessary for State licensure in spe-
cific occupations.
(9) The appropriateness of the number of credit or clock
hours required for the completion of programs or of the length
of 600-hour courses.
3(30
351
HIGHER EDUCATION ACT OF 1965
Sec. 494C
(10) Assessing the actions of any owner, shareholder, or
person exercising control over the educational institution which
may adversely affect eligibility for programs under this title.
(11.) The adequacy of procedures for investigation and reso-
lution of student complaints.
(12) The appropriateness of advertising and promotion and
student recruitment practices.
(13) That the institution has a fair and equitable refund
policy to protect students.
(14) The success of the program at the institution,
including
(A) the rates of the institution's students' program
completion and graduation, taking into account the length
of the program at the institution and the selectivity of the
institution's admissions policies;
(B) the withdrawal rates of the institution's students;
(C) with respect to vocational and professional pro-
grams, the rates of placement of the institution's grad-
uates in occupations related to their course of study;
(D) where appropriate, the rate at which the institu-
tion's graduates pass licensure examinations; and
(E) the variety of student completion goals, including
transfer to another institution of higher education, full-
time employment in the field of study, and military serv-
ice.
(15) With respect to an institution which meets 1 or more
of the criteria in subsection (b), the State shall contract with
the appropriate approved accrediting agency or association (de-
scribed in subpart 2 of this part) or another peer review system
with demonstrated competence in assessing programs (pursu-
ant to the authority contained in subsection (f)) to carry out a
review or provide information regarding such agency's or asso-
ciation's assessment of the following: The quality and content
of the institution's courses or programs of instruction, training,
or study in relation to achieving the stated objectives for which
the courses or programs are offered, including the adequacy of
the space, equipment, instructional materials, staff, and stu-
dent support services (including student orientation, counsel-
ing, and advisement) for providing education and training that
meets such stated objectives.
(e) SUBSTITUTIONS PROHIBITED.The appropriate State post-
secondary review entity may not substitute either (1) accreditation
by a private accrediting agency or body, or (2) compliance audits
performed by a State guaranty agency established under section
428(b) of this title, for State review of compliance with the stand-
ards in subsection (d).
(f) STATE CONTRACTS.If the appropriate State postsecondary
review entity contracts with a private agency or body or an accredi-
tation body or peer review system for assistance in performing
State postsecondary review entity functions, such contract shall be
provided for in the agreement with the Secretary required by sec-
tion 494A.
(g)
PROHIBITION ON UNRELATED REQUIREMENTS.Notwith-
standing any of the provisions of this subpart, the Secretary shall
Sec. 494C
HIGHER EDUCATION ACT OF 1965
352
not require a State to establish standards that are unrelated to en-
suring institutional or program integrity or that violate the provi-
sions of a State's constitution or laws.
(h) INSTITUTIONAL ELIGIBILITY.A State postsecondary review
entity may determine that an institution of higher education shall
not be eligible to participate in programs under this title based on
its own findings or the findings of a Federal entity in accordance
with the following procedures:
(1) STATE FINDINGS.If the appropriate State postsecond-
ary review entity fmds that an institution of higher education
does not meet one or more of the standards in subsection (d)
of this section, such State postsecondary review entity shall no-
tify the Secretary of its findings and the actions that such en-
tity is taking, or has taken, in response to such findings within
a time period prescribed by the Secretary by regulation. If a
Ste.te postsecondary review entity determines an institution of
higher education shall not be eligible for participation in pro-
grams under this title, such State postsecondary review entity
shall so notify the Secretary. Upon receipt of such notification
of ineligibility, the Secretary shall immediately terminate the
participation of such institutions in the programs authorized
by this title.
(2) SECRETARY'S FINDINGS.If the Secretary or any other
Federal entity takes, or plans to take, any action against any
institution of higher education (including any actions taken
under section 487), the Secretary shall notify the appropriate
State postsecondary review entity (or entities, in the case of
multi-State institutions) of such action within a time period
prescribed in the Secretary's regulations.
(3) PROCEDURAL PROTECTIONS FOR DISAPPROVALThe Sec-
retary shall, by regulation, prescribe minimum procedural
standards for the disapproval of institutions of higher edu-
cation by the appropriate State postsecondary review entity or
entities for purposes of this title.
(i) LIMIT ON STATE POSTSECONDARY REVIEW AGENCY FUNC-
TIONS.The functions of State postsecondary review entity shall
not include performing financial and compliance audits as may be
required under section 428 or 487 of this Act.
(j) CONSUMER COMPLAINTS.A State, in consultation with the
institutions of higher education in the State, shall establish and
publicize the availability of procedures for receiving and responding
to complaints from students, faculty, and others about institutions
of higher education and shall keep records of such complaints in
order to determine their frequency and nature for specific institu-
tions of higher education.
(k) ENFORCEMENT MECHANISMS.Nothing in this subpart shall
restrict the authority of the States to establish mechanisms to en-
force the standards established under subsection (d) or require the
States to establish specific mechanisms recommended by the Sec-
retary.
(20 U.S.C. 1099a-3) Enacted July 23, 1992, P.L. 102-326, sec. 499, 106 Stat. 637;
amended December 20, 1993, P.L. 103-208, sec. 2(i)(1) and (2), 107 Stat. 2478.
3f2
353
HIGHER EDUCATION ACT OF 1965
Sec. 496
Subpart 2Accrediting Agency Approval
SEC. 496. APPROVAL or ACCREDITING AGENCY OR ASSOCIATION.
(a) STANDARDS REQUIRED.No accrediting agency or associa-
tion 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 standards established by the Secretary pursuant to
this section. The Secretary shall, after notice and opportunity for
a hearing, establish standards for such determinations. Such
standards shall include an appropriate measure or measures of stu-
dent achievement. Such standards shall require that
(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
?363
Sec. 496
HIGHER EDUCA110N ACT OF 1965
354
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 at the institution of higher edu-
cation 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 of accreditation of the agency or associa-
tion assess the institution's
(A) curricula;
(B) faculty;
(C) facilities, equipment, and supplies;
(D) fiscal and administrative capacity as appropriate
to the specified scale of operations;
(E) student support services;
(F) recruiting and admissions practices, academic cal-
endars, catalogs, publications, grading and advertising;
(G) program length and tuition and fees in relation to
the subject matters taught and the objectives of the de-
grees or credentials offered;
(H) measures of program length in clock hours or cred-
it hours;
(I) success with respect to student achievement in re-
lation to its mission, including, as appropriate, consider-
ation of course completion, State licensing examination,
and job placement rates;
(J) default rates in the student loan programs under
title IV of this Act, based on the most recent data provided
by the Secretary;
(K) record of student complaints received by, or avail-
able to, the agency or association; and
(L) compliance with its program responsibilities under
title IV of this Act, including any results of financial or
compliance audits, program reviews, and such other infor-
mation as the Secretary may provide to the agency or asso-
ciation;
except that subparagraphs (G), (H), (I), (J), and (L) 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;
355
HIGHER EDUCATION ACT OF 1965
Sec. 496
(7) such agency or association shall notify the Secretary
and the appropriate State postsecondary review entity within
30 days of the accreditation of an institution or any final de-
nial, withdrawal, suspension, or termination of accreditation or
placement on probation of an institution, together with any
other adverse action taken with respect to an institution; and
(8) such agency or association shall make available to the
public, upon request, and to the Secretary, and the State post-
secondary review entity of the State in which the institution of
higher education is located a summary of any review resulting
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
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.
CC) OPERATING PROCEDURES REQUIRED.No accrediting agency
or association may be approved 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 (at
least .one of which inspections at each institution that provides
vocational education and training shall be unannounced), with
particular focus on educational quality and program effective-
ness, and ensures that accreditation team members are well-
trained and knowledgeable with respect to their responsibil-
ities;
(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
365
Sec. 496
HIGHER EDUCATION ACT OF 1965
356
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 APPROVAL.No accrediting agency or associa-
tion may be approved 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-
volving the final denial, withdrawal, or termination of accreditation
to initial arbitration prior to any other legal 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 approved 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 STANDARDS.Nothing in this Act
shall be construed to permit the Secretary to establish standards
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 addi-
tional 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.
3q3
357
HIGHER EDUCATION ACT OF 1965
Sec. 496
(j) IMPACT OF Loss OF ACCREDITATION.An institution may
not be certified or recertified as an institution of higher education
under section 481 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 481 and subpart
3 of this part for a period sufficient to allow such institution to ob-
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 standards provided
for in this section.
(1) LIMITATION, SUSPENSION OR TERMINATION OF APPROVAL.
(1) The Secretary shall limit, suspend, or terminate the approval
of an accrediting agency or association if the Secretary determines,
after notice and opportunity for a hearing, that the accrediting
agency or association has failed to apply effectively the standards
or operate according to the procedures provided in this section.
(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 ot 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.
3 5 7
MM.
Sec. 496
HIGHER EDUCATION ACT OF 1965
358
(n) INDEPENDENT ENTALUATION.(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 standards 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
(A) the solicitation of third-party information concerning
the performance of the accrediting agency or association; and
(B) site visits, including unannounced site visits 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 standards 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 approval process. The Secretary shall not, under any
circumstances, base decisions on the approval or disapproval of ac-
creditation agencies or associations on standards other than those
contained in this section.
(4) The Secretary shall maintain sufficient documentation to
support the conclusions reached in the approval process, and, upon
disapproval of any accreditation agency or association, shall make
publicly available the reason for such disapproval, including ref-
erence to the specific standards under this section which have not
been fulfilled.
(0) REGULAT1ONS.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.
(20 U.S.C. 1099b) Enacted July 23, 1992, P.L. 102-325, sec. 499, 106 Stat. 641;
amended December 20, 1993, P.L. 103-208, sec. 2(i)(3)(8), 107 Stat. 2478-79.
Subpart 3Eligibility and Certification
Procedures
SEC. 498. ELIGIBILITY AND CERTIFICATION PROCEDURES.
(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.
359
HIGHER EDUCATION ACT OF 1965
Sec. 498
(b) SINGLE APPLICATION FORM.The Secretary shall prepare
and prescribe a single application form which
(1) requires sufficient information and documentation to
determine that the requirements of eligibility, accreditation,
and capability of the institution 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 description of third party servicers of an in-
stitution of higher education, together with a copy of any con-
tract with the institution of higher education and a financial
aid service provider or loan servicer; and
(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.
(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 with respect to operating
losses, net worth, asset-to-liabilities ratios, or operating fund defi-
cits then the institution shall provide the Secretary with satisfac-
tory evidence of its financial responsibility in accordance with para-
graph (3). Such criteria shall take into account any differences in
generally accepted accounting principles, and the financial state-
ments required thereunder, that are applicable to for profit and
nonprofit institutions. The Secretary shall take into account an in-
stitution's total financial circumstances 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, such as performance bonds or letters of
credit payable to the Secretary, which third-party financial
guarantees shall equal not less than one-half of the annual po-
tential 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;
369
Sec. 498
HIGHER EDUCATION ACT OF 1965
360
(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 fmancial 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 ratio of cur-
rent assets to current liabilities imposed by the Secretary pursuant
to paragraph (2), the Secretary shall waive that particular require-
ment for that institution if the institution demonstrates to the sat-
isfaction 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 current operating ratio requirement.
(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
recertification under this section. If the institution is permitted to
be certified (provisionally or otherwise) and such audit does not es-
tablish compliance with paragraph (2), the Secretary may require
that additional 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
(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.
370
361
NIGHER EDUCATION ACT OF 1965
Sec. 49
(d) ADMINISTRATIVE CAPACITY STANDARD.The Secretary
i:
authorized
(1) to establish procedures and requirements relating t(
the administrative capacities of institutions of higher edu
cation, including
(A) consideration of past performance of institutions oi
persons in control of such institutions with respect to stu-
dent aid programs; and
(B) maintenance of records;
(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 auth- rized under this title.
(2)(A) 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-
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.
3,7 1
Sec. 498
HIGHER EDUCATION ACT OF 1965
362
(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.
a) ACTIONS ON APPLICATIONS; SITE VISITS AND FEES.The Sec-
retary shall ensure that prompt action is taken by the Department
on any application required under subsection (b). The personnel of
the Department of Education shall conduct a site visit at each in-
stitution before certifying or recertifying its eligibility for purposes
of any program under this title. The Secretary may establish prior-
ities by which institutions are to receive site visits, and may coordi-
nate such visits with site visits by States, guaranty agencies, and
accrediting bodies in order to eliminate duplication, and reduce ad-
ministrative burden. The Secret iry may charge reasonable fees to
cover the expenses of certification and site visits and, to the extent
permitted by appropriations Acts, may retain such fees to cover
s uch expenses.
(g) TIME LIMITATIOriS ON, AND RENEWAL OF, ELIGIBILITY.(11
The eligibility for the purposes of any program authorized under
this title of any institution that is participating in any such pro-
gram on the date of enactment of the Higher Education Amend-
ments of 1992 shall expire in accordance with the schedule pre-
scribed by the Secretary in accordance with paragraph (2), but not
later than 5 years after such date of enactment.
(2) The Secretary shall establish a schedule for the expiration
of the eligibility for purposes of any such program of all institutions
of' higher education within the 5-year period specified in paragraph
(1). Such schedule shall place a priority for the expiration of the
372
363
HIGHER EDUCATION ACT OF 1965
Sec. 498
certification of institutions on those that meet the following cri-
teria:
(A) institutions subject to review by a State postsecondary
review entity pursuant to subpart 1 of part H; or
(B) other categories of institutions which the Secretary
deems necessary.
(3) After the expiration of the certification of any institution
under the schedule prescribed under this subsection, or upon re-
quest for initial certification from an institution not previously cer-
tified, the Secretary may certify the eligibility for the purposes of
any program authorized under this title of each such institution for
a period not to exceed 4 years.
(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 tit e
(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 fmancial condition that
may jeopardize its ability to perform its financial respon-
sibilities under a program participation agreement.
(2) Whenever the Secretary withdraws the approval of any ac-
crediting 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 approval.
(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 481 (other than the requirements in sub-
sections (b)(5) and (cX3)) 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;
373
Sec. 498A
HIGHER EDUCATION ACT OF 1965
364
(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.
(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 481(b)(5) and 481(c)(3) prior to seeking such cer-
tification. Such branch is required to be in existence at least 2
years prior to seeking certification as a main campus or free-stand-
ing institution.
(2) The Secretary may waive the requirement of section
1201(a)(2) for a branch that (A) is not located in a State, (B) is af-
filiated with an eligible institution, and (C) was participating in
one or more programs under this title on or before January 1, 1992.
(20 U.S.C. 1099c) Enacted July 23, 1992, P.L. 102-325, sec. 499, 106 Stat. 647,
amended December 20, 1993, P.L. 103-208, sec. 2(i)(9)(14), 107 Stat. 2479-80.
SEC. 498A. 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) may 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 wh',ch places the institu-
tions in the highest 25 percent of such institutions;
(C) institutions with a significant fluctuation in Fed-
eral Stafford Loan volume or Federal Pell Grant awards,
or both, in the year for which the determination is made
compared to the year prior to such year;
374
365
HIGHER EDUCA11ON ACT OF 1965
sec. 498A
(D) institutions reported to have deficiencies or finan-
cial aid problems by the appropriate State postsecondary
review entity designated under subpart 1 of this part or by
the appropriate accrediting agency or association;
(E) institutions with high annual dropout rates;
(F) any institution which is required to be reviewed by
a State postsecondary review entity pursuant to subpart 1
of part H under section 494C(b); and
(G) such other institutions as the Secretary deems
necessary; and
(3) shall establish and operate a central data base of infor-
mation on institutional accreditation, eligibility, and certifi-
cation that includes.
(A) all information available to the Department;
(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.(1) In carrying out para-
graphs (1) and (2) of subsection (a), the Secretary shall establish
guidelines designed to ensure uniformity of practice in the conduct
of program reviews of institutions of higher education.
(2) The Secretary shall review the regulations of the Depart-
ment and the application of such regulations to ensure the uni-
formity of interpretation and application of the regulations.
(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.
(20 U.S.C. 1099c-1) Enacted July 23, 1992, P.L. 102-325, sec. 499, 106 Stat. 652;
amended December 20, 1993, P.L. 103-208, sec. 2(i)(15), 107 Stat. 2480.
TITLE V EDUCATOR RECRUITMENT,
RETENTION, AND DEVELOPMENT
SEC. 500. FINDINGS AND PURPOSES.
(a) FINDINGS.The Congress finds that-
375
Sec. 500
HIGHER EDUCATION ACT OF 1965
366
(1) teachers in the classroom are the men and women who
must play an integral role in leading our Nation's schools into
the 21st century;
(2) we should encourage individuals to enter the education
profession so that our teaching force is representative both of
the diversity of our Nation and of the tremendous talents and
skills of our citizens;
(3) the methods used to prepare prospective teachers and
the continuing education and support provided to practicing
teachers have a significant influence on the effectiveness of
classroom teachers;
(4) the postsecondary education of education professionals
has not been linked to local, State and national goals and
standards;
(5) the inservice and continuing professional development
of educators has not promoted systematic and sustained im-
provement of the education system;
(6) State educational agencies have not been funded and
staffed adequately to carry out a mission of supporting a proc-
ess to achieve local, State, or national goals and standards;
(7)
in
order
to
encourage
more
women
and
underrepresented minorities to enter the fields of science and
mathematics and succeed in these fields, we must provide
proper training for existing mathematics and science teachers
and recruit women and underrepresented minorities as teach-
ers in these fields;
(8) educators must have the expertise and the support that
allow them to adapt to the changing environment in our
schools and to the evolving skills required of our schools' grad-
uates; and
(9) the Federal Government plays an essential role in pro-
viding support to educator training and professional develop-
ment that will enable teachers to be classroom leaders and ad-
ministrators to be school leaders at the forefront of reforming
our Nation's schools.
(b) PURPOSE.-It is the purpose of this title
(1) to provide assistance to our Nation's teaching force for
the continued improvement of their professional skills;
(2) to provide assistance for professional development ac-
tivities enabling teachers, school administrators, and institu-
tions of higher education to work collaboratively to improve
educational performance through school reform and restructur-
ing;
(3) to address the Nation's teacher shortage, particularly
in areas where there are heavy concentrations of low-income
students, by encouraging talented persons, including the indi-
viduals already employed as school paraprofessionals and indi-
viduals who have been employed in other areas of endeavor, to
enter the teaching profession;
(4) to encourage academically qualified students to become
teachers through scholarship assistance;
(5) to support the recruitment of underrepresented popu-
lations into teaching careers;
376
367
NIGHER EDUCATION ACT OF 1965
Sec. 501
(6) to provide scholarship assistance to encourage women
and minorities who are underrepresented in the fields of
science and mathematics to enter the teaching profession in
these fields;
(7) to encourage the establishment and maintenance of
programs that provide professional teacher preparation to indi-
viduals who are moving to careers in education from other oc-
cupations;
(8) to promote partnerships between institutions of higher
education and local educational agencies for the purpose of pro-
moting the simultaneous restructuring and renewal of elemen-
tary and secondary schools and college-based teacher education
programs;
(9) to improve the leadership and administrative skills of
elementary and secondary school administrators;
(10) to provide assistance to schools of education in institu-
tions of higher education in order to reform teacher education
programs by encouraging new developments in teacher prepa-
ration which provide for greater integration of subject matter
and pedagogical training and which prepare classroom teach-
ers to effectively meet changing noneducational challenges in
the schools; and
(11) to promote high quality child development and early
childhood education specialist training programs, including
preschool and early intervention services for infants and tod-
dlers with disabilities.
(20 U.S.C. 1101) Enacted July 23, 1992, P.L. 102-325, sec 501(a), 106 Stat. 653.
PART ASTATE AND LOCAL PROGRAMS FOR
TEACHER EXCELLENCE
SEC. 601. AUTHORITY AND ALLOCATION OF FUNDS; DEFINITIONS.
(a) PURPOSE AND AUTHORITY.
(1) PURPOSE.It is the purpose of this part to provide
funds to State educational agencies, local educational agencies
and institutions of higher education in order to update and im-
prove the skills of classroom teachers, including preschool and
early childhood education specialists and school administra-
tors, to establish State academies for teachers and school lead-
ers, and to provide for a comprehensive examination of State
requirements for teacher preservice and certification.
(2) PROGRAM AUTHORIZED.The Secretary is authorized to
make allotments to State educational agencies for the purposes
of enhancing and improving the quality of teaching, including
early childhood education, in each of the several States.
(b) ALLOTMENT OF FUNDS.
(1) IN GENERAL.FrOM the funds appropriated in each fis-
cal year pursuant to section 510A, the Secretary shall allot to
each State
(A) 50 percent of such funds on the basis of the num-
ber of individuals in the State aged 5 through 17 compared
to the number of all such individuals in all States; and
377
Sec. 501
HIGHER EDUCATION ACT OF 1965
368
(B) 50 percent of such funds on the basis of the
amount the State receives under sections 1005 and 1006 of
chapter 1 of title I of the Elementary and Secondary Edu-
cation Act of 1965 compared to the total amount that all
States receive under such sections.
(2) ALLOCATIONS FROM STATE ALLOTMENT'S.
(A)(i) Except as provided in subsection (c), from the
amount allotted to each State in each fiscal year pursuant
to paragraph (1) and not reserved pursuant to subpara-
graph (B)(i), the State education agency shall allocate 50
percent of such amount in accordance with clause (ii) to
local eduational agencies to carry out the activities de-
scribed in section 503.
(ii) The State educational agency shall allocate 50 per-
cent of the amount allotted to the State in each fiscal year
under paragraph (1) so that
(I) one-half of such amount is allocated to local
educational agencies within such State based on the
local educational agency's relative share of the enroll-
ments in public schools within the State; and
(II) one-half of such amount is allocated to local
educational agencies within such State based on the
local educational agency's relative share of the State's
allocation of funds under sections 1005 and 1006 of
the Elementary and Secondary Education Act of 1965,
except that any local educational agency that would re-
ceive an allocation of less than $10,000 shall be required
to form a consortium with at least one other local edu-
cational agency in order to receive an allocation under this
part. In making allocations under this part, the State edu-
cational agency shall use the most recent data available.
(B)(i) From the amount allotted to each State in each
fiscal year pursuant to paragraph (1) the State educational
agency shall reserve not more than 3 percent of such funds
for the purposes of administering the program under this
title, including evaluation and dissemination activities.
(ii) From the amount allotted to each State in each fis-
cal year under paragraph (1) and not reserved pursuant to
clause (i), the State educational agency
(I) shall reserve not more than 25 percent of such
funds to carry out sections 504, 505, and 506; and
(II) shall reserve not more than 25 percent of such
funds to award grants to institutions of higher edu-
cation in accordance with sections 507 and 508.
(C) SPECIAL RULE.Notwithstanding the provisions of sub-
section (b)(2)(A), if the amount appropriated to carry out this part
for any fiscal year is less than $250,000,000, then each State edu-
cational agency shall use 50 percent of the amount allotted to such
State under paragraph (1) and not reserved pursuant to subsection
(b)(2)(B)(i) to award grants to local educational agencies on a com-
petitive basis.
(d) REALLOTMENT.If a State or local educational agency elects
not to receive assistance under this part in any fiscal year or the
Secretary determines in any fiscal year that a State or local edu-
3
369
HIGHER EDUCATION ACT OF 1965
See. 501
cational agency will not be able to use all or any portion of the
funds available to such State or local educational agency under this
part, then the Secretary shall reallot such funds. The Secretary
shall reallot such funds in such fiscal year in accordance with the
provisions of this part among the States or local educational agen-
cies who are eligible for assistance under this part and are not de-
scribed in the preceding sentence.
(e) DEFINITIONS.For purposes of this part
(1) the term "State" means each of the 50 States, the Dis-
trict of Columbia, the Commonwealth of Puerto Rico, the Vir-
gin Islands, Guam, the Commonwealth of the Northern Mari-
ana Islands, American Samoa, and the Republic of Palau (until
the Compact of Free Association takes effect pursuant to sec-
tion 101(a) of Public Law 99-658); and
(2) the term "key academic subjects" means English, math-
ematics, science, history, geography, foreign languages, civics
and government, and economics.
(20 U.S.C. 1102) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 653.
SEC. 502. STATE APPLICATION.
(a) IN GENERAL.Any State which desires to receive an allot-
ment under this part shall submit to the Secretary an application
which
(1) designates the State educational agency as the State
agency responsible for the administration and supervision of
programs assisted under this part;
(2) provides for a process of active discussion and consulta-
tion with a committee, convened by the chief State school offi-
cer, which is broadly representative of the following edu-
cational interests within the State, including
(A) a representative nominated by each of the follow-
ing:
(i) the State teacher organizations;
(ii) the organizations representing preschool and
early childhood education specialists;
(iii) the State school administrators organization;
(iv) the State parents organizations;
(v) the State business organizations; and
(vi) the State student organizations;
(B) a representative from the State board of education;
(C) a representative of faculty from departments,
schools or colleges of educations;
(D) other representatives of institutions of higher edu-
cation, including community colleges;
(E) the State director of vocational education; and
(F) the State director of special education;
(3) describes the competitive process that the State will
use to distribute funds among local educational agencies pur-
suant to section 501(c);
(4) describes the process the State will use to conduct the
assessment required by section 504(c);
(5) describes how the State will allocate funds among ac-
tivities required under section 504;
379.
Sec. 501
HIGHER EDUCATION ACT OF 1965
370
(6) with respect to the State academies to be established
under sections 505 and 506
(A) describes the academies to be established under
this part and the goals and objectives for each such acad-
emy;
(B) describes how the academies assisted under this
part shall relate to the overall plan for the attainment of
the national education goals by the State;
(C) describes the competitive process that shall be
used to select applicants to operate the academies assisted
under this part;
(D) assures that the Academies for Teachers shall pro-
vide instruction in the key academic subjects;
(E) assures that the State shall continue to operate
the academies assisted under this part when Federal funds
provided pursuant to this title are no longer available;
(F) assures that Federal funds provided under this
part shall not be used for construction of new facilities or
substantial remodeling;
(G) assures that the Academies for Teachers shall pro-
vide activities designed to enhance the ability of teachers
to work with special educational populations, including
(i) limited-English proficient children;
(ii) children with disabilities;
(iii) economically and educationally disadvantaged
children; and
(iv) gifted and talented children; and
(H) contains such other assurances and information as
the Secretary may reasonably require;
(7) describes the competitive process that the State will
use to distribute funds among institutions of higher education
pursuant to section 507;
(8) describes a plan to promote learning among the State
educational agency staff in order to support and facilitate sys-
temic improvement of the State educational agency, schools or
colleges of education at institutions of higher education, and
local educational agencies; and
(9) includes such other information and assurances as the
Secretary may require.
(b) FUNCTIONS OF COMMITTEE.The application required by
subsection (a) shall identify the procedures by which the committee
required by paragraph (2) of such subsection will be engaged in
(1) ensuring that activities assisted under this part are ef-
fective, coordinated with other State, local, and Federal activi-
ties and programs, and meet the needs of the State for improv-
ing the quality of teaching and teacher education programs, in-
cluding those programs concerned with preschool education
and the training of early childhood education specialists, and
school leadership programs;
(2) advising the State on criteria for awarding funds under
sections 501(c), 505, 506, and 507; and
(3) advising the State on criteria for approving local edu-
cational agency applications under section 503(a).
(C) EVALUATION AND REPORT.
345 0
PINF
371
HIGHER EDUCATION ACT OF 1965
Sec. 503
(1) REPORT TO SECRETARY.Each State educational agency
receiving an allotment under this part shall evaluate the work
of each academy that is located in the State and assisted under
this part every 2 years, including the impact of each academy's
programs on participants, and report the findings of such eval-
uation to the Secretary. The initial report shall be submitted
3 years after funds are first allotted to such State educational
agency under section 501 and subsequent reports shall be sub-
mitted every 2 years thereafter. Such report shall also describe
the characteristics of the participants and activities provided
at each academy assisted under this part.
(2) REPORT TO CONGRESS.The Secretary shall submit to
the Congress a summary of the reports required under sub-
- section (a). The initial summary shall be submitted 60 days
after the due date of the first report described in subsection (a)
and subsequent summaries shall be submitted every 2 years
thereafter.
(20 U.S.C. 1102a) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 656.
SEC. 503. LOCAL APPLICATION AND USE OF FUNDS.
(a) LOCAL APPLICATION.Any local educational agency which
desires to receive assistance under section 501(b)(2)(A) or 501(c)
shall submit to the State educational agency an application
which
(1) describes the needs of such local educational agency
with respect to inservice training programs for teachers and
preschool and early childhood education specialists pursuant to
the assessment conducted under subsection (b)(2)(A), and, if
appropriate, describes the need of such local educational agen-
cy for teacher recruitment, business partnerships, outreach to
military veterans, and the provision of other opportunities for
teachers to improve their skills;
(2) describes the process used to determine such needs, in-
cluding consultation with teachers, preschool and early child-
hood specialists, principals, parents, representatives from de-
partments, schools or colleges .of education, and others in the
community;
(3) describes the activities such agency intends to conduct
with the funds provided under section 501(b)(2)(A) or 501(c)
consistent with the provisions of this section in order to im-
prove the quality of teaching within such agency;
(4) describes the processes and methods used to promote
systematic improvement through continual learning in order to
achieve agreed upon local, State and National standards; and
(5) any other information that the State educational agen-
cy may reasonably require.
(b) LOCAL USES OF FUNDS.
(1) IN GENERAL.Local educational agencies receiving as-
sistance under section 501(b)(2)(A) or 501(c) shall use such
funds for the inservice training of teachers and, if appropriate,
for preschool and early childhood education specialists, and
may use funds for-
3 5
Sec. 503
HIGHER EDUCATION ACT OF 1965
372
(A) development of programs to recruit individuals
into the teaching profession and the field of early child-
hood education;
(B) business partnerships;
(C) outreach to military veterans; and
(D) other purposes consistent with improving the qual-
ity of teaching in the local educational agency, as approved
by the State educational agency.
(2) INSERVICE TRAINING.-
(A) In order to
receive assistance under section
501(b)(2)(A) or 501(c), a local educational agency or a con-
sortium of local educational agencies shall first assess the
needs of such agency or agencies for inservice training.
(B) Funds expended for inservice training shall be
used, in accordance with the assessment conducted under
subparagraph (A), for the cost of
(i) the expansion and improvement of inservice
training and retraining of teachers and other appro-
priate school personnel, including vocational teachers,
special education teachers, and preschool teachers,
consistent with the assessment conducted under sub-
paragraph (A);
(ii) providing funds for grants for individual teach-
ers within the local educational agency to undertake
projects to improve their teaching ability or to improve
the instructional materials used in their classrooms;
(iii) activities designed to address the effects of
chronic community violence on children, such as vio-
lence counseling training for teachers and early child-
hood specialists, and activities and training aimed at
resolving conflicts;
(iv) activities designed to enhance the ability of
teachers to work with culturally diverse students;
(v) activities designed to integrate academic and
vocational education;
(vi) as appropriate, activities designed to assist
teacher participation in a Tech-Prep program under
section 344 of the Carl D. Perkins Vocational and Ap-
plied Technology Act, in order to develop the skills of
such teachers in activities such as organizational de-
velopment leadership and interdisciplinary curricula
development; and
(vii) other activities consistent with the goals of
this part as approved by the State educational agency.
(C) Such activities may be carrirA out through agree-
ments with institutions of higher e
ication, nonprofit or-
ganizations, public agencies, and museums.
(D) Activities related to inservice training shall be co-
ordinated with such activities carried out under part A of
title II of the Elementary and Secondary Education Act of
1965.
(3) RECRUITMENT OF TEACHERS.-
3'52
373
HIGHER EDUCAIION ACT OF 1965
Sec. 503
(A) Local educational agencies receiving assistance
under section
501(b)(2)(A)
or 501(c) may use such
assistance
(i) to establish, operate, or expand programs to en-
courage and recruit interested individuals to pursue a
course of study that will lead to a career in education;
and
(ii) to establish, operate, or expand a program
where such agency recruits students currently enrolled
in a school in the local educational agency to be teach-
ers or early childhood education specialists.
(B) Activities under this paragraphmay include
a) academic and career counseling of and support
services for students;
(ii) programs in which students act as tutors while
they are enrolled in schools in the local educational
agency;
(iii) programs in which students enrolled in insti-
tutions of higher education and other individuals tutor
students within schools in the local educational agen-
cy;
(iv) information and recruitment efforts to attract
individuals into the teaching profession; and
(v) programs to support early childhood education
efforts at the preschool and school level.
(C) In conducting programs under this paragraph,
local educational agencies shall place a priority on recruit-
ing students and individuals from minority groups.
(D) Local educational agencies may conduct programs
under this paragraph in consortia with institutions of
higher education.
(4) BUSINESS PARTNERSHIPS.Local educational agencies
receiving assistance under section 501(b)(2)(A) or 501(c) may
use such assistance to establish partnerships with representa-
tives of the business community to sponsor
(A) programs which allow representatives of local busi-
ness or firms to go into the classroom and work with the
classroom teacher to provide instruction in subject areas
where the expertise of the teacher could be supplemented,
especially in the subject areas of mathematics, science, and
vocational and technology education training;
(B) internship programs which provide an opportunity
for classroom teachers to work in local businesses or firms
to gain practical experience or to develop new skills or ex-
pertise;
(C) programs which bring students and teachers into
business settings to see applications of course work and in
specialized areas, and to learn to use advanced technical
equipment;
(D) programs which allow representatives of local
businesses and firms to work with school administrators to
develop instructional material; and
Sec. 504
HIGHER EDUCATION ACT OF 1965
374
(E) other activities appropriate to forming a working
relationship between business leaders and classroom lead-
ers.
(5) OUTREACH TO MILITARY VETERANS.Local educational
agencies receiving assistance under section 501(b)(2)(A) or
501(c) may use such assistance to establish programs to inform
United States military veterans of teaching opportunities and
to provide assistance in the establishment of teaching opportu-
nities for such veterans by
(A) planning and implementing informational and out-
reach programs leading to the development of programs
specifically designed to inform United States military vet-
erans about teaching opportunities and the qualifications
necessary for such opportunities;
(B) planning and implementing programs leading to
the creation of teaching opportunities for such veterans;
(C) supporting programs to assist such veterans to
meet the qualifications to become teachers;
(D) disseminating information on the program de-
scribed in this paragraph and on sources of student finan-
cial assistance available under title IV of this Act and
under programs administered by the Department of Veter-
ans Affairs and other Federal agencies; and
(E) making scholarships available to such military vet-
erans under the same terms and conditions specified in
subpart 1 of part C of this title.
(20
1102b) Enacted July 23, 1992, P L. 102-325, sec. 501(a). 106 Stat. 658.
SEC. 504. STATE USES OF FUNDS.
(a) IN GENERAL.Each State educational agency receiving
funds reserved pursuant to section 501(b)(2)(B)(ii)(I) shall use such
funds (1) first, to conduct a study of teacher education programs
within such State, as required under subsection (c); and
(2) secondly, for
(A) the establishment of State Academies for Teachers
under section 505;
(B) the establishment of State Academies for School
Leaders under section 506; and
(C) activities directly related to the implementation of
the teacher education study required under subsection (c).
(b) SPECIAL RULE.If a State educational agency can dem-
onstrate that the amount of funds reserved pursuant to section
501(b)(2)(B)(ii)(I) is insufficient to establish one State academy,
then the State educationai agency shall distribute such funds to
local educational agencies in accordance with section 501(b)(2)(A)
or 501(c) to carry out the activities described in section 503(b).
(C) TEACHER EDUCATION STUDY.
(1) STUDY REQUIRED.Each State educational agency re-
ceiving funds under this part shall, in consultation with insti-
tutions of higher education, local educational agencies, teach-
ers, parents, the State legislature, the State board of edu-
cation, and business, undertake a study of
`541
375
HIGHER EDUCATION ACT OF 1965
Sec. 504
(A) teacher education programs and State teacher pro-
fessional development requirements, including programs
and requirements intended to train preschool and early
childhood education specialists; and
(B) the State laws and regulations relating to such
programs and requirements, including any standards or
requirements for certification and licensure,
in order to determine if such programs and requirements are
adequately preparing teachers to effectively educate students.
(2) CONSIDERATIONS.Such study shall consider whether
such programs or requirements
(A) would be improved if teacher education programs
were required to coordinate courses with other depart-
ments on campus in order to provide prospective teachers
with a strong background in their subject matter;
(B) integrate academic and vocational education in-
struction;
(C) give enough flexibility in order to allow experimen-
tation and innovation;
(D) would be improved if such programs provided
preparation for students desiring to become teachers, but
who are pursuing a bachelor's degree in an area of study
other than education;
(E) would be improved if teacher certification required
a bachelor's degree in a subject area and a master's degree
in education; and
(F) would be improved if institutions of higher edu-
cation that have developed innovative materials and cur-
ricula for inservice training were required to incorporate
these improvements into their preservice programs.
(3) DEADLINES.
(A) Such study shall be completed by two years from
the end of the first fiscal year in which funding was made
available for this part. The results of such study shall be
reported to the Secretary. In submitting the report to the
Secretary, the State educational agency shall include in
the report the most successful practices used to enhance
the profession of teaching. The Secretary may disseminate
such successful practices in order to assist other States in
their efforts to enhance the profession of teaching.
(B) Except as provided in paragraph (4), beginning in
the thii d fiscal year for which funding under this part is
available, State educational agencies shall use all funds
provided under section 501(b)(2)(B)(ii)(I) which are not al-
lotted for State Academies for Teachers and State Acad-
emies for School Leaders
(i) to implement the program and policy changes
resulting from the findings of such study; and
(ii) to assist schools and programs of education
throughout the State in meeting any new require-
ments that result from such study.
(C) The State educational agency shall award grants
pursuant to section 507(b)(9) to institu;ions of higher edu-
tiEST COPY FOLABLE
77-5O 0-94--13
3S5
Sec. 505
HIGHER EDUCATION ACT OF 1965
376
cation to implement the programs and policy changes re-
sulting from the findings of such study.
(4) WAIVER.If a State demonstrates to the Secretary that
it has completed a study comparable to the study required by
this subsection within the previous 5 years prior to the fiscal
year for which funds are first made available under this part,
then the Secretary may waive the requirements of this sub-
section. States receiving a waiver shall use funds provided
under section 501(bX2XB)(ii)(I) to implement the program and
policy changes resulting from the findings of such study. If the
State can demonstrate to the Secretary that such program and
policy changes have been implemented, then the State shall
use funds provided under section 501(bX2)(BXii)(I) to carry out
the activities authorized under sections 505 ruid 506.
(20 U.S.C. 1102c) Enacted July 23, 1992, P.L. 102-325, sec. 601(a), 106 Stat, 661.
SEC. 505. STATE ACADMIES FOR TEACHERS.
(a) PURPOSE; DEFINITIONS.
(1) PURPOSE.It is the purpose of this section to improve
elementary and secondary school teacher subject matter knowl-
edge and teaching skills in each of the key academic subjects
by establishing one or more Academies in the key academic
subjects in every State.
(2) DEFINmoNs.For purposes of this section
(A) the term "Academy" means a course of instruction
and related activities to increase a teacher's knowledge of
a specific subject area, a teacher's ability to impart such
knowledge to students, and a teacher's ability to address
any other issue described in this section, except that such
term
(i) does not mean a physical facility; and
(ii) does not require a separate location from an-
other Academy or other training program; and
(B) the term "eligible entity" means a local educational
agency, an institution of higher education, a museum, a
private nonprofit educational organization of demonstrated
effectiveness, or a consortium of any 2 or more of such en-
tities.
(b) APPLICATION REQUIRED.
(1) IN GENERAL.Each eligible entity desiring to operate
an Academy under this section shall submit an application to
the State educational agency at such time, in such manner,
and accompanied by such information as the State may reason-
ably require.
(2) CONTENTS.Each application submitted pursuant to
paragraph (1) shall describe
(A) the goals of the Academy and the steps that shall
be taken to evaluate the extent to which the Academy
reaches its goals;
(B) the curriculum to be used or developed by the
Academy;
(C) steps to be taken to recruit teachers for the Acad-
emy's program, including outreach efforts to identify and
attract
dc.qi
377
HIGHER EDUCATION ACT OF 1965
Sec. 505
(i) minority group members;
(ii) individuals with disabilities;
(iii) individuals from areas with large numbers or
concentrations of disadvantaged students; and
(iv) other teachers with the potential to serve as
mentor teachers;
(D) steps to be taken to ensure that faculty members
teaching at the Academy shall be of exceptional ability and
experience, including outreach efforts to identify and at-
tract as faculty members
(i) minority group members;
(ii) individuals with disabilities; and
(iii) individuals from areas with large numbers or
concentrations of disadvantaged students;
(E) efforts to be undertaken to disseminate informa-
tion about the Academy;
(F) selection criteria to be used in identifying teachers
to participate in the Academy;
(G) steps to be taken to assure that the programs of-
fered by the Academy shall be of sufficient length and com-
prehensiveness
to
significantly
improve
participants'
knowledge; and
(H) efforts to be undertaken to evaluate the impact of
the Academy on participants.
(C) USE OF ALLOTTED FUNDS.
(1) GRANTS.Each State educational agency receiving an
allotment under this part shall use the funds reserved pursu-
ant to section 501(b)(2)(B)(ii)(I) to award one or more competi-
tive grants to eligible entities to enable such eligible entities to
operate an Academy in accordance with the provisions of this
section.
(2) COORDINATION OF ACTIVITIES.To the extent prac-
ticable, such academies shall coordinate efforts with teacher in-
service activities of local educational agencies.
(3) COMBINATION OF RESOURCES.Each State educational
agency receiving an allotment under this part may combine the
funds reserved pursuant to section 501(b)(2)(B)(ii)(I) with such
funr.is reserved by another State educational agency to operate
academies assisted under this part on a multistate or regional
basis.
(4) COSTS.Each eligible entity receiving a grant under
this section shall use such funds to meet the operating costs
of carrying out the activities described in subsection (d), which
may include reasonable startup and initial operating costs, and
costs associated with release time, stipends, travel, and living
expenses for teachers who participate in the Academy's pro-
gram if no other funds are available to pay such costs.
(d) AUTHORIZED AcTIvrnEs.Each eligible entity receiving a
grant to operate an Academy under this section may use such
grant funds for
(1) renewal and enhancement of participants' knowledge in
key academic subjects;
(2) skills and strategies to improve academic achievement
of students, especially students who are educationally dis-
3S7
Sec. 505
HIGHER EDUCATION ACT OF 1965
378
advantaged, are limited-English proficient, are drug- or alco-
hol-exposed, or have disabilities;
(3) improved teaching and classroom management skills;
(4) techniques for the integration of academic and voca-
tional subject matter, including the application of such tech-
niques in tech/prep education programs;
(5) the use of educational technologies in teaching the key
academic subjects;
(6) training needed to participate in curriculum develop-
ment in a key academic subject;
(7) training in the development and use of assessment
tools;
(8) review of existing teacher enhancement programs to
identify the most promising approaches;
(9) development of a curriculum for use by the Academy;
(10) follow-up activities for previous participants;
(11) dissemination of information about the Academy, in-
cluding the training curricula developed; and
(12) any other activities proposed by the applicant and ap-
proved by the State educational agency.
(e) COST SHARING.Funds received for this section may be
used to pay not more than 75 percent of the cost of operating an
Academy in the first year an eligible entity receives a grant under
this section, 65 percent of such cost in such second year, 55 percent
of such cost in such third year, 45 percent of such cost in such
fourth year, and 35 percent of such cost in such fifth year. The re-
maining share shall be provided from non-Federal sources, and
may be in cash or in-kind contributions, fairly valued.
(I) SPECIAL RULES.
(1) USES OF FUNDS.
(A) KEY ACADEMIC SUBJECTS.At least 70 percent of
funds received for this section shall be used for enhance-
ment of participant knowledge in key academic subjects.
(B) OTHER SUBJECTS.At least 20 percent of the funds
received for this section shall be used for enhancement of
participant knowledge in areas not related to academic
subjects.
(2) SPECIAL RULE.In awarding grants under this section
the State educational agency may provide for training in 2 or
more key academic subjects at a single site.
(3) ADDITIONAL ACADEMIES OR AWARDS.If a State can
demonstrate that the State's need for academies in key aca-
demic subjects has been met, and if the State can demonstrate
that it is implementing the findings of the teacher education
study described in section 504(c), then the State may use a
portion
of
the
amount
reserved
pursuant
to
section
501(b)(2)(B)(ii)(I) to establish one or more of the following acad-
emies or awards:
(A) EARLY CHILDHOOD ACADEMIES.A State
edu-
cational agency may establish an academy aimed at early
childhood education training. Such an academy shall give
a priority to recruiting candidates from underrepresented
groups in the early childhood education profession and
3S8
379
HIGHER EDUCATION ACT OF 1965
Sec. 505
shall provide intensive childhood training in violence coun-
seling.
(B) TECH-PREP ACADEMIES.-A State educational agen-
cy may establish an academy for
(i) assisting educators in secondary schools and
community colleges to more effectively understand or-
ganizational
structures and organizational change
strategies;
(ii) assisting educators to learn effective peer lead-
ership strategies;
(iii) assisting secondary school teachers and com-
munity college faculty to identify the knowledge and
skills required in highly technical industries and
workplaces;
(iv) assisting secondary school teachers and com-
munity college faculty to apply creative strategies to
the development of interdisciplinary curricula; and
(v) assisting educators in integrating academic
and vocational education.
(C) TEACHER AWARDS.-(i) A State educational agency
may make awards to State Academies for Teachers to pro-
vide for a program of cash awards and recognition to out-
standing teachers in the key academic subject or subjects
covered by the program of the Academy.
(ii) Any full-time public or private elementary or sec-
ondary school teacher of a key academic subject or voca-
tional and technology education subject, including an ele-
mentary school teacher of the general curriculum, shall be
eligible to receive an award under this subparagraph.
(iii) The amount of a teacher's award under this sub-
paragraph shall not exceed $5,000 and shall be available
for any purpose the recipient chooses.
(iv) Each Academy receiving an award under clause (i)
of this subparagrapn shall select teachers to receive
awards from nominations received from local educational
agencies, public and private elementary and secondary
schools, teachers, associations of teachers, parents, associa-
tions of parents and teachers, businesses, business groups,
and student groups.
(v) The Academy shall select award recipients under
this subparagraph in accordance with criteria developed by
the Academy and approved by the State educational agen-
cy. The selection criteria may take into account teacher's
success in
(I) educating disadvantaged children and children
with disabilities;
(II) educating gifted and talented children;
(III) encouiaging students to enroll, and succeed,
in advanced classes in a key academic subject or voca-
tional and technology education subject;
(IV) teaching a key academic subject or vocational
and technology
education
subject
successfully
in
schools educating large numbers of educationally dis-
3S9
Sec. 506
HIGHER EDUCATION ACT OF 1965
380
advantaged students, including schools in low-income
inner-city or rural areas;
(V) introducing a new curriculum in a key aca-
demic subject into a school or strengthening an estab-
lished curiculum;
(VI) acting as a master teacher; and
(VII) other criteria as developed by the Academies
and approved by the State educational agency.
(20 U.S.C. 1102d) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 663;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(1), 107 Stat. 2480.
SEC. 506. STATE ACADEMIES FOR SCHOOL LEADERS.
(a) PURPOSE; DEFINITIONS.
(1) PURPOSE.It is the purpose of this section to improve
the training and performance of school principals and other
school leaders and to increase the number of persons who are
highly trained to be principals and school leaders by establish-
ing an Academy for current and prospective school leaders in
every State.
(2) DEFINITIONS.For the purpose of this section
(A) the term "Academy" means a course of instruction
and related activities to increase a school leader's knowl-
edge of the tools and techniques of school management and
leadership, and such leader's ability to exercise such tools
and techniques in the school setting, and may include a
course of instruction for school district level system leaders
separately or in combination with school leaders and
teachers, except that such term
(i) does not mean a physical facility; and
(ii) does not require a separate location from an-
other Academy or other training program; and
(B) the term "eligible entity" means a technical assist-
ance center assisted under subpart 2 of part C of title V
of this Act as such Act was in effect on the day before the
date of enactment of the Higher Education Amendments of
1992, a local educational agency, an institution of higher
education, a museum, a private nonprofit educational orga-
nization of demonstrated effectiveness, or a consortium of
any 2 or more such entities.
(b) APPLICATION REQUIRED.
(1) IN GENERAL.(A) Each eligible entity desiring to oper-
ate an Academy under this section shall submit an application
to the State educational agency at such time, in such manner
and accompanied by such information as the State may reason-
ably require. Such Academy may be operated in cooperation or
consortium with an Academy of another State.
(B) A priority for award.s shall be given to entities who re-
ceived funds under subpart 2 of part C of title V of the Higher
Education Act as in effect on September 30, 1991.
(2) CONTENTS.Each application submitted pursuant to
paragraph (1) shall describe
(A) the goals of the Academy and the steps that shall
be taken to evaluate the extent to which the Academy
reaches its goals;
381
HIGHER EDUCATION ACT OF 1965
Sec. 506
(B) the curriculum to be used or developed by the
Academy;
(C) the steps to be taken to recruit school leaders for
the Academy's program, including outreach efforts to iden-
tify and attract
(i) minority group members;
(ii) individuals with disabilities;
(iii) individuals from areas with large numbers or
concentrations of disadvantaged students; and
(iv) other individuals with potential to become
school leaders;
(D) efforts to be taken to disseminate information
about the Academy;
(E) selection criteria to be used in identifying school
leaders to participate in the Academy;
(F) steps to be taken to assure that the programs of-
fered by the Academy shall be of sufficient length and corn-
_
prehensiveness
to
significantly
improve
participants'
k.nowledge;
(G) steps to be taken to assure the involvement of pri-
vate sector managers and executives from businesses in
the conduct of the Academy's programs; and
(H) efforts to be undertaken to evaluate the impact of
the Academy on participants.
(c) USE OF ALLOWED FUNDS.
(1) GRANTS.Each State educational agency receiving an
allotment under this part shall use the funds reserved pursu-
ant to section 501(b)(2)(B)(ii)(I) to award a competitive grant to
an eligible entity to enable such eligible entity to operate an
Academy in accordance with the provisions of this subpart.
(2) COSTS.Each eligible entity receiving a grant under
this section shall use such funds to meet the costs of carrying
out the activities described in subsection (d), which may in-
clude reasonable startup and initial operating costs, and sti-
pends, travel, and living expenses for participants in the Acad-
emy if no other funds are available to pay such costs.
(3) LIMITATIONS.
(A) PARTICIPANTS.At least 70 percent of the partici-
pants in an Academy shall be from the school building
level.
(B) SPECIAL RULE.In awarding grants under this sec-
tion, the State educational agency may provide for the lo-
cation at the same site of Academies assisted under this
section and Academies assisted under section 505.
(d) AUTHORIZED ACTWITIES.Each eligible entity receiving a
grant to operate an Academy under this section may use such
grant funds for
(1) developing and enhancing of participants' knowledge in
instructional leadership, school-based management, shared de-
cisionmaking, school improvement strategies and school-level
accountability mechanisms;
(2) identifying candidates, including members of minority
groups, individuals with disabilities, and individuals from
schools with high numbers or concentrations of educationally
391
Sec. 507
HIGHER EDUCATION ACT OF 1965
382
disadvantaged students and individuals who are bilingual, to
be trained as new school leaders;
(3) conducting programs which provide for the involvement
of private sector managers and executives from businesses;
(4) identifying models and methods of leadership training
and development that are promising or have proven to be suc-
cessful;
(5) providing intensive training and development programs
for current school leaders seeking enhanced and up-to-date
knowledge needed to perform their jobs effectively;
(6) identifying local educational agencies and schools with
principal and other school leader vacancies and working with
such agencies and schools to match Academy participants with
such vacancies;
(7) facilitating internships for graduates of the program for
new school leaders, under the guidance and supervision of ex-
perienced administrators;
(8) providing periodic follow-up development activities for
school leaders trained through the Academy's programs;
(9) disseminating information about the Academy, includ-
ing the training curricula developed;
(10) coordinating activities with those of any State Acad-
emies for Teachers established in the State; and
(11) any other activity proposed by the applicant in the ap-
plication submitted pursuant to subsection (b) and approved by
the State educational agency.
(e) COST-SHARING.Funds received under this section may be
used to pay not more than 75 percent of the cost of operating an
Academy in the first year an eligible entity receives a grant under
this subpart, 65 percent of such cost in such second year, 55 per-
cent of such cost in such third year, 45 percent of such cost in such
fourth year, and 35 percent of such cost in such fifth year. The re-
maining share shall be provided from non-Federal sources, and be
in cash or in kind, fairly valued.
(20 U.S.C. 1102e) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 666
SEC. 507. INSTITUTIONS OF HIGHER EDUCATION USES OF FUNDS.
(a) APPLICATIONS.Institutions of higher education desiring to
receive a grant under section 501(b)(2)(13)(ii)(11) shall submit to the
State educational agency an application which
(1) describes the types of activities that the institution
plans to undertake with funds provided;
(2) describes the process used by the institution to deter-
mine the State's needs for improving teacher education and
training for preschool and early childhood education special-
ists, including consulting with current students, teachers, rep-
resentatives from local educational agencies, parents, and rep-
resentatives from preschool and early childhood specialists;
(3) if such institution is applying for a grant to assist local
educational agencies in providing inservice training for teach-
ers, describes the training and services that such institution
plans to provide for teachers within the local educational agen-
cy and demonstrates that such training and services are con-
.3.92
383
HIGHER EDUCATION ACT OF 1965
Sec. 507
sistent with the needs of the local educational agencies to be
served;
(4) if such institution is applying for a grant to establish
a professional development academy, contains the information
required pursuant to section 508;
(5) describes how the institution plans to integrate aca-
demic and vocational teacher education programs; and
(6) contains any other information that may be required by
the State educational agency.
(b) AWARDS.The State educational agency shall award grants
on a competitive basis to institutions of higher education that have
departments, schools, or colleges of education. In awarding grants,
the State educational agency shall award funds for the following
purposes:(1) For the establishment of professional development
academies pursuant to section 508.
(2) For the establishment and maintenance of programs
that provide teacher training to individuals who are moving to
a career in education from another occupation.
(3) For institutions of higher education in consultation and
cooperation with a local educational agency or a consortium of
local educational agencies, to develop and provide technical as-
sistance to local education agencies in providing inservice
training for teachers.
(4) For improving teacher education programs in order to
further innovation in teacher education programs within an in-
stitution of higher education and to better meet the needs of
the local educational agencies for well-prepared teachers.
(5) For improving training for preschool and early child-
hood education specialists, including preschool and early inter-
vention services for infants and toddlers with disabilities, in
order to further innovation in such programs with institutions
of higher education and to better meet the needs of preschool
and early childhood education programs for well-prepared per-
sonnel.
(6) To integrate the instruction of academic and vocational
teacher education programs.
(7) For activitieS to encourage individuals, especially indi-
viduals from minority groups, to pursue a career in education.
(8) For expanding cooperative educational programs be-
tween State educational agencies and offices, schools, and
school systems, institutions of higher education, appropriate
educational entities, and private sector establishments in-
volved in education between the United States and the Repub-
lic of Mexico for the purpose of providing bilateral teaching ini-
tiatives and programs that provide teacher training experi-
ences between the educational communities of the United
States and those of the Republic of Mexico and to enhance mu-
tually beneficial educational activities involving researchers,
scholars, faculty members, teachers, educational administra-
tors, and other specialists to lecture, teach, conduct research,
and develop cooperative programs.
(9) When the study of teacher education programs is com-
pleted in accordance with section 504(c), to implement the pro-
393
Sec. 508
HIGHER EDUCAIION ACT OF 1965
384
gram and policy changes for teacher education programs re-
sulting from the findings of such study.
(20 U.S.C. 1102f) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 669.
SEC. 508. PROFESSIONAL DEVELOPMENT ACADEMIES.
(a) AUTHORITY; DEFINMONS.
(1) Aumourv.From amounts reserved pursuant to sec-
tion 501(bX2XBXi1)(II), the State educational agency is author-
ized to make grants to, and enter into contracts and coopera-
tive agreements with, eligible entities to plan, establish, and
operate professional development academies.
(2) DEFINITIONS.For purposes of this section
(A) the term "Academy" means school-based teacher
training operated as a partnership between one or more el-
ementary or secondary schools and one or more institu-
tions of higher education that provides prospective and
novice teachers an opportunity to work under the guidance
of master teachers and college faculty members. Such
Academy shall be established for the purpose of
(i) the training of prospective and novice teachers
(including preschool and early childhood education
specialists, where appropriate) under the guidance of
master teachers and teacher educators;
(ii) the continuing development of experienced
teachers;
(iii) research and development to improve teaching
and learning and the organization of schools;
(iv) public demonstration of exemplary learning
programs for diverse students; and
(v) dissemination of knowledge produced in the re-
search and development process;
except that such term
(i) does not mean a physical facility; and
(ii) does not require a separate location from an-
other Academy or other training program; and
(B) the term "eligible entity" means a partnership that
includes one or more local educational agencies and one or
more institutions of higher education and may include
teachers and the business community.
(b) AWARDS AND RENEWALS.An award made under this sec-
tion may be in the form of a one-year planning grant. Such award
may be renewed for implementation purposes without further com-
petition annually for 4 additional years, upon submission of an
evaluation of the project to the State educational agency and assur-
ances that the recipient
(1) has achieved the goals set out in its application for the
original term;
(2) shows promise of continuing its progress;
(3) will meet its share of the project costs; and
(4) has developed a plan for continuing the Academy after
Federal funding is no longer available.
(C) APPLICATION REQUIRED.
(1) IN GENERAL.Each eligible entity desiring to operate
an Academy under this section shall submit an application to
4
385
HIGHER EDUCATION ACT OF 1965
Sec. 508
the State educational agency at such time, in such manner,
and accompanied by such information as the State educational
agency may reasonably require.
(2) CONTENTS.Each application submitted pursuant to
subsection (a) shall describe
(A) what schools within the local educational agency
and what institutions of higher education shall participate
in the partnership or otherwise participate in the program;
(B) the goals of the Academy and the steps that shall
be taken to evaluate the extent to which the Academy
reaches such goals;
(C) a plan for monitoring progress and evaluating the
effectiveness of the Academy in meeting the goals it has
developed for teacher and student performance;
(D) a description of the partnership's plan for systemic
change in education, and a description of the activities and
services for which assistance is sought;
(E) ways in which the professional development pro-
grams shall cover course content in key academic subjects,
methods of instruction, and classroom and school-based
management skills;
(F) plans to involve prospective and novice teachers in
the programs offered by the Academy, including outreach
efforts to identify and attract
(i) minority group members;
(ii) individuals with disabilities; and
(iii) individuals from areas with large numbers or
concentrations of disadvantaged students; and
(G) estimates of the number of prospective and begin-
ning teachers to be trained in the Academy in each year
of the project and assurances that a significant number of
prospective and beginning teachers will be trained in the
Academy in each year of the project.
(3) ASSURANCES.Each application submitted pursuant to
this subsection shall contain assurances that
(A) professional development programs at the Acad-
emy shall be designed and conducted by faculty members
from institutions of higher education and teachers from
local schools of demonstrated excellence;
(B) in establishing the Academy, the applicant has
consulted with teachers, administrators, and parents who
will be affected at the teaching school site;
(C) participating faculty from institutions of higher
education shall include faculty members who are experts
in the key academic subjects; and
(D) the activities, services and programs offered by the
Academy shall be of sufficient length and comprehensive-
ness to significantly improve participants' knowledge.
(4) PRIORITIES.In making awards under this part, the
State educational agency shall give priority to applicants
that
(A) select Academy sites based on need, as evidenced
by such measures as a high rate of teacher attrition or a
395
Sec. 508
HIGHER EDUCATION ACT OF 1965
386
high proportion of the student body at risk of educational
failure;
(B) propose projects that demonstrate the strong com-
mitment to or previous active support for educational inno-
vation;
(C) propose projects that demonstrate collaboration
with other educational organizations, social or human
service agencies, other community organizations, and the
business community in the teaching school's operation;
(D) demonstrate potential for a significant impact on
the quality of the future education work force; and
(E) demonstrate the long-term feasibility of the part-
nership.
(5) SPECIAL RULES.Each such application shall describe
(A) how the local educational agency will address the
need to change or waive a local rule or regulation that is
found by an Academy to impede the school's progress in
achieving its goals; and
(B) how partners that are institutions of higher edu-
cation will involve the School of Education, the School of
Arts and Sciences, and the School of Technology or Engi-
neering and any other department of the institution.
(d) USE OF ALLOWED FUNDS.
(1) PERMITTED USES.Each eligible entity receiving a
grant under this section shall use such funds to meet the oper-
ating costs of carrying out the activities described in subsection
(e), which may include reasonable startup and initial operating
costs, staff development, purchase of books, materials, and
equipment, including new technology, costs associated with re-
lease time, payment of personnel directly related to the oper-
ation of the Academy, and participation in the activities of a
network of Academies.
(2) LIMITATIONS.The Secretary may limit the amounts of
funds that may be used for minor remodeling and the purchase
of equipment udder this part.
(e) AUTHORIZED ACTIVITIES.Each eligible entity receiving a
grant to operate an Academy under this section may use such
grant funds for
(1) training and internship activities for prospective or
novice teachers in a school setting under the guidance of mas-
ter or mentor teachers and faculty from institutions of higher
education, especially faculty who are experts in key academic
subjects;
(2) mentoring and induction activities for prospective and
novice teachers, including such teachers seeking to enter teach-
ing through alternative routes;
(3) participation of experienced teachers in the internship
training and assessment of prospective and beginning teachers;
(4) teaching skills and strategies to increase the ability of
prospective, novice and experienced teachers to teach disadvan-
taged students, students with disabilities (including students
with severe and multiple disabilities and students with lesser
known or newly emerging disabilities), students who are lim-
,.396
387
HIGHER EDUCATION ACT OF 1965
Sec. 510
ited-English proficient, and students from diverse cultural
backgrounds;
(5) programs to enhance teaching and classroom manage-
ment skills, including school-based management skills, of nov-
ice, prospective and experienced teachers;
(6) experimentation and research to improve teaching and
learning conducted in the Academy by teachers and university
faculty;
(7) activities to integrate academic and vocational edu-
cation;
(8) training and other activities to promote the continued
learning of experienced teachers, especially in their subject
matter knowledge and how to teach it;
(9) participation of expert practicing teachers and adminis-
trators in the university-based education studies of prospective
teachers;
(10) activities designed to disseminate information about
the teaching strategies acquired through the Academy with
other teachers in the district's schools;
(11) organizational restructuring, including the introduc-
tion of new roles and staffing patterns in the school and uni-
versity;
(12) activities intended to address the effects of chronic
community violence, such as violence counseling and conflict
resolution training; and
(13) other activities proposed by the applicant and ap-
proved by the Secretary.
(0 COST-SHARING.Funds received under this section may be
used to pay 100 percent of the cost of a planning grant and not
more than 75 percent of the cost of operating an Academy in the
first 2 years an eligible entity receives a grant under this subpart
and not more than 50 percent of such cost in such third and fourth
years. The remaining share shall be provided from non-Federal
sources, and may be in-kind, fairly valued.
(20 U.S.C. 1102g) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stet 670
SEC. 509. FEDERAL FUNDS TO SUPPLEMENT, NOT SUPPLANT REGU-
LAR NONFEDERAL FUNDS.
A State educational agency, local educational agency, or insti-
tution of higher education may use funds received under this part
only so as to supplement and, to the extent practicable, increase
the level of funds that would be available from non-Federal sources
for the uses of funds under this part and in no case may such funds
be so used as to supplant such funds from such non-Federal
sources.
(20 U.S.C. 1102h) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 673
SEC. 610. COORDINATION WITH OTHER PROGRAMS.
The State educational agency shall ensure that activities con-
ducted under this part shall be consistent with the goals and objec-
tives of any Federal or State systemic educational reform activities.
(20 U.S.C. 1102i) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 673.
3 9 7
Sec. 510A
HIGHER EDUCATION ACT OF 1965
388
SEC. 510A. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$350,000,000 for fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1102j) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 674.
PART B-NATIONAL TEACHER ACADEMIES
SEC. 511. PROGRAM ESTABLISHED.
(a) IN GENERAL.The Secretary is authorized, in accordance
with the provisions of this part, to make grants to eligible recipi-
ents to establish and operate National Teacher Academies.
(b) SUBJECT AREAS AND STAFF.
(1) SUBJECT AREAS.At least 1 but not more than 3 Na-
tional Teacher Academies shall be established in each of the
following subject areas commonly taught in elementary and
secondary schools:
(A) English.
(B) Mathematics.
(C) Science.
(D) History.
(E) Geography.
(F) Civics and government.
(G) Foreign languages.
(2) STAFF.Academy staff shall be selected from the most
accomplished and prominent scholars in the relevant fields of
study and in the methodologies which improve the skills of per-
sons who teach in such fields of study.
(C) DURATION OF GRANT.Each grant to establish and operate
a National Teacher Academy shall be for a period of 3 years, and
is renewable.
(d) COMPETITIVE GRANT AWARDS.The Secretary shall award
grants under this part on a competitive basis.
(e)
CONSISTENCY WITH SYSTEMIC REFORMS.In awarding
grants under this part, the Secretary shall ensure that activities
conducted under this part are consistent with the goals and objec-
tives of other Federal or State systemic educational reform activi-
ties.
(20 U.S.C. 1103) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 674.
SEC. 512. ELIGIBLE RECIPIENTS.
(a) IN GENERALFor the purposes of this part, the term "eligi-
ble recipient" means
(1) an institution of higher education;
(2) a private nonprofit educational organization of dem-
onstrated effectiveness; or
(3) a combination of the institutions or organizations set
forth in paragraphs (1) and (2) of this paragraph.
(b)
EXPERTISE REQUIREMENTS.The Secretary
shail
only
award grants to eligible recipients that have demonstrated exper-
tise in the
(1) subject area of the National Teacher Academy to be es-
tablished and operated; and
3 Q 8
389
HIGHER EDUCATION ACT OF 1965
Sec. 514
(2) in-service training of teachers at the national, State,
and local levels.
(20 U.S.C. 1103a) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 674.
SEC. 513. USE OF FUNDS.
(a) IN GENERALFunds provided pursuant to this part shall
be used to
(1) provide in-service training programs for teachers and
administrators, including
(A) programs which emphasize improving the teachers'
knowledge in the particular subject area of the National
Teacher Academy;
(B) programs which integrate knowledge of subject
matter with techniques for communicating that knowledge
to students, including students who are disadvantaged,
limited-English proficient, drug- or alcohol-exposed, or who
have disabilities;
(C) the use of the most recent applied research find-
ings concerning education and the classroom; and
(D) integration of materials from different disciplines
into classroom instruction, especially for elementary school
teachers;
(2) conduct each year at least one summer institute of at
least 3 weeks duration for the State delegations described in
section 515; and
(3) provide support services to the State Academies for
Teachers, including
(A) the establishment of a national network of individ-
uals to assist in teacher education programs in State Acad-
emies for Teachers;
(B) consultation assistance in the design and imple-
mentation of in-service teacher training programs; and
(C) monthly newsletters or other methods of commu-
nicating useful information.
(b) ADMINISTRATIVE COSTS.Not more than 10 percent of the
amount of funds received under this part may be used by an eligi-
ble recipient for administrative costs.
(20 U.S.C. 1103b) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 674.
SEC. 514. APPLICATION.
(a) APPLICATION.Each eligible recipient desiring a grant
under this part shall submit an application to the Secretary at
such time and in such manner as the Secretary may reasonably re-
quire.
(b) CONTENTS.Each application submitted pursuant to sub-
section (a) shall
(1) describe the activities, services, and programs for which
assistance is sought;
(2) describe how at least 70 percent of the National Teach-
er Academy's time shall be devoted to basic course content rel-
evant to the particular subject field and necessary for improv-
ing the quality of teaching in public and private elementary
and secondary schools;
3q9
Sec. 515
HIGHER EDUCATION ACT OF 1965
390
(3) describe how not more than 30 percent of the National
Teacher Academy's time shall be devoted to methods of in-
struction relevant to the particular subject field;
(4) describe how the National Teacher Academy's activities
will be coordinated with or administered cooperatively with in-
stitutes established by other Federal entities, such as the Na-
tional Science Foundation and the National Endowment for the
Humanities; and
(5) provide such additional assurances or information as
the Secretary may reasonably require.
(20 U.S.C. 1103c) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 675.
SEC. 515. STATE DELEGATIONS.
(a) IN GENERAL.Each selection panel established pursuant to
section 516(b) shall select a State delegation to participate in each
National Teacher Academy assisted under this part.
(b) COMPOSITION.
(1) IN GENERAL.Except as provided in paragraphs (2) and
(3), each State delegation described in subsection (a) shall, at
a minimum, be composed of
(A) 1 school administrator with authority to design
and conduct in-service teacher training and academic pro-
grams; and
(B) at least 5 teachers, of whom at least 2 shall be ele-
mentary school teachers.
(2) SPECIAL RULE.The State delegations for the Common-
wealth of the Northern Mariana Islands, Guam, the Virgin Is-
lands, American Samoa and the Republic of Palau (until the
Compact of Free Association is ratified) shall, at a minimum,
be composed of
(A) 1 school administrator with authority to design
and conduct in-service teacher training and academic pro-
grams; and
(B) at ieast 3 teachers, of whom at least 1 shall be an
elementary school teacher.
(3) ADDITIONAL TEACHERS.
(A) Each State that has obtained the approval of the
appropriate National Teacher Academy may send to such
National Teacher Academy the number of additional teach-
ers determined in accordance with subparagraph (B).
(B) The appropriate National Teacher Academy shall
determine the number of additional teachers to attend
such National Teacher Academy on the basis of the num-
ber of full-time equivalent teachers in the State compared
to such number in all States.
(c) DUTIES.Each State delegation shall
(1) attend the appropriate subject area summer institute
at the appropriate National Teacher Academy; and
(2) after participation in the National Teacher Academy
assist in the development and operation of the appropriate Na-
tional Teacher Academy.
(20 U.S.C. 1103d) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 676.
4
391
HIGHER EDUCATION ACT OF 1965
Sec. 521
SEC. 516. SELECTION.
(a) IN GENERAL.Individuals participating in a National
Teacher Academy shall be selected by the selection panel described
in subsection (b) in. accordance with the provisions of section 515.
(b) SELECTION PANEL.
(1) ESTABLISHMENT.Each State educational agency re-
ceiving assistance under part .A of this title shall establish a
10-member selection panel to select teachers to attend the Na-
tional Teacher Academies established pursuant to this part.
(2) COMPOSITION AND REPRESENTATION.
(A) COMPOSITION.At least 50 percent of the member-
ship of each selection panel shall be classroom teachers,
selected in consultation with teacher organizations, if any,
in the State.
(B) REPRESENTATION.The composition of each selec-
tion panel shall be broadly representative of the elemen-
tary and secondary schools and the State.
(3) FUNCTION.Each selection panel shall
(A) annually select the State delegations in accordance
with section 515; and
(B) involve the individuals selected pursuant to sub-
paragraph (A) in the operation of the State academies, if
any, or other in-service training activities in the local edu-
cational agency in which such individuals teach.
(20 U.S.C. 1103e) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 676.
SEC. 517. NATIONAL TEACHER ACADEMY EVALUATION.
The Secretary shall evaluate the system of National Teacher
Academies and the effects of such academies on teachers every 2
years. The Secretary shall make available to the Congress and the
public the results of such evaluation.
(20 U.S.C. 11030 En.lzted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat, 677.
SEC. 518. AUTHORIZATION OF APPROPRIATIONS.
(a) IN GENERAL.There are authorized to be appropriated
$35,000,000 for fiscal year 1993 and such sums as may be nec-
essary for the 4 succeeding fiscal years to carry out the provisions
of this part, of which not more than $5,000,000 shall be available
for each of the National Teacher Academy subject areas listed in
section 511(b)(1).
(b) SPECIAL RULES.
(1) APPROPRIATIONS LESS THAN $14,000,000.If the amount
appropriated pursuant to the authority of subsection (a) is less
than $14,000,000, then not more than $2,000,000 shall be
available for each National Teacher Academy subject area in
the order in which such subject areas are listed in section
511(b)(1), until such funds are expended.
(2)
APPROPRIATIONS
EQUAL
TO
OR
IN
EXCESS
OF
814,000,000.U the amount appropriated pursuant to the au-
thority of subsection (a) is equal to or exceeds $14,000,000,
then such funds as equals or exceeds $14,000,000 shall be allo-
cated equitably among each of the National Teacher Academy
subject areas listed in section 511(b)(1).
(20 U.S.C. 1103g) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 677.
Sec. 522
HIGHER EDUCATION ACT OF 1965
392
PART CTEACHER SCHOLARSHIPS AND
FELLOWSHIPS
Subpart IPaul Douglas Teacher Scholarships 1
SEC. 521. PURPOSE; DESIGNATION.
(a) PURPOSE.It is the purpose of this subpart to make avail-
able, through grants to the States, scholarships to individuals who
are outstanding secondary school graduates and who demonstrate
an interest in teaching, in order to enable and encourage those in-
dividuals to pursue teaching careers in education at the preschool,
elementary or secondary level.
(b) DESIGNATION.Scholarships awarded under this subpart
shall be referred to as the "Paul Douglas Teacher Scholarships".
(20 U.S.C. 1104) Reenacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1498; amended July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 677.
SEC. 522. ALLOCATION AMONG STATES.
(a) ALLOCATION.From the sums appropriated for this subpart
for any fiscal year, the Secretary shall allocate to any State an
amount based on the school-age population in the State compared
to the school-age population in all States.
(b) USE OF CENSUS DATA.For the purpose of this section, the
number of persons in a State and in all States shall be determined
by the most recently available data from the Bureau of the Census.
(20 U.S.C. 1104a) Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1498; amended July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 677.
SEC. 523. GRANT APPLICATIONS.
(a) SUBMISSION OF APPLICATIONs.--The Secretary is authorized
to make grants to States in accordance with the provisions of this
subpart. In order to receive a grant under this subpart, a State
shall submit an application at such time or times, in such manner,
and containing such information as the Secretary may prescribe by
regulation. Such application shall set forth a program of activities
for carrying out the purposes set forth in section 521 in such detail
as will enable the Secretary to determine the degree to which such
program will accomplish such purposes and such other policies,
procedures, and assurances as the Secretary may require by regu-
lation.
(b) CONTENT OF APPLICATIONS.The Secretary shall approve
an application under this subpart only if the application
(1) describes the selection criteria and procedures to be
used by the State in the selection of scholarship recipients
under this subpart;
(2) designates as the State agency responsible for admin-
istering the grants received under this subpart the State agen-
cy which administers the program under subpart 4 of part A
of title IV (relating to State student incentive grants), the
State agency with which the Secretary has an agreement
under section 428(b), or another appropriate State agency ap-
proved by the Secretary;
This program was originally enacted on Oct. 17, 1986, as subpart I of Part D of Title V of
the Act (P.L. 99-498, sec. 501(a), 100 Stat. 1506).
do 2
393
HIGHER EDUCATION ACT OF 1965
Sec. 523
(3) describes the outreach effort the State agency intends
to use to publicize the availability of Paul Douglas Scholar-
ships to secondary school students in the State;
(4) describes how the State will inform recipients, upon re-
ceipt of the award, of current and projected teacher shortages
and surpluses within the State;
(5) provides assurances that each recipient eligible under
section 525(b) of this subpart who receives a Paul Douglas
Scholarship shall enter into an agreement with the State agen-
cy under which the recipient shall
(A) within the 10-year period after completing the
postsecondary education for which the Paul Douglas
Teacher Corps Scholarship was awarded, teach for a pe-
riod of not less than 2 years for each year for which assist-
ance was received, in a public or private nonprofit pre-
school, elementary, or secondary school in any State, or, on
a full-time basis, children with disabilities or children with
limited English proficiency in a private nonprofit school,
except that, in the case of individuals who teach in a
shortage area established by the Secretary pursuant to
section 530A, the requirements of this subparagraph shall
be reduced by one-hgf-
(B) provide the Siate agency evidence of compliance
with section 526 as required by the State agency; and
(C) repay all or part of a Paul Douglas Scholarship re-
ceived under section 524 plus interest and, if applicable,
reasonable collection. fees, in compliance with regulations
issued by the Secretary under section 527, in the event
that the conditions of subparagraph (A) are not complied
with, except as provided for in section 528;
(6) provides that the agreement entered into with recipi-
ents shall fully disclose the terms and conditions under which
assistance under this subpart is provided and under which re-
payment may be required, including
(A) a description of the procedures required to be es-
tablished under paragraph (7); and
(B) a description of the appeals procedures required to
be established under paragraph (8) under which a recipi-
ent may appeal a determination of noncompliance with
any provision under this subpart;
(7) provides for procedures under which a recipient of as-
sistance received under this subpart who teaches for less than
the period required under paragraph (5)(A) will have the re-
payment requirements reduced or eliminated consistent with
the provisions of sections 527 and 528;
(8) provides for appeals procedures under which a recipient
may appeal any determination of noncompliance with any pro-
vision under this subpart; and
(9) provides assurances that the State agency shall make
particular efforts to attract students from low-income back-
grounds; ethnic and racial minority students; individuals with
disabilities;
other
individuals
from
groups
historically
underrepresented in teaching; individuals who express a will-
ingness or desire to teach in rural schools, urban schools, or
Sec. 523
HIGHER EDUCATION ACT OF 1965
394
schools having less than average academic results or serving
large numbers of economically disadvantaged students; or
women or minorities who show interest in pursuing teaching
careers
in
mathematics
and
science
and
who
are
underrepresented in such fields.
(c) SELECTION CRITERIA AND PROCEDURES.The State edu-
cational agency, in cooperation with the State higher education
agency, and pursuant to scholarship selection criteria included in
section 525, shall establish criteria to select Paul Douglas Teacher
Scholarship recipients. These criteria shall be intended to attract
highly qualified individuals into teaching, to ensure that these stu-
dents are enrolled or are accepted for enrollment in approved
teacher education programs, and to meet the present and projected
needs of States in addressing teacher shortages, including the de-
mand for and supply of early childhood and elementary teachers in
the State, the demand for and supply of secondary teachers in the
State, and the demand for teachers with training in specific aca-
demic disciplines in the State.
(d) SPECIAL CoNsIDERtmoN.The State educational agency, in
cooperation with the State higher education agency, shall give spe-
cial consideration in the selection of scholarship recipients to indi-
viduals who
(1) intend to teach or provide related services to students
with disabilities;
(2) intend to teach limited English proficient students;
(3) intend to teach preschool age children;
(4) intend to teach in schools servicing inner city or rural
or geographically isolated areas (as defined by the Secretary by
regulations consistent with the purposes of this section);
(5) intend to teach in curricular areas or geographic areas
where there are demonstrated shortages of qualified teachers;
or
(6) are from disadvantaged backgrounds, including racial
and ethnic minorities and individuals with disabilities, and are
underrepresented in the teaching profession or in the curricu-
lar areas in which they are preparing to teach.
(e) SOLICITATION OF VIEWS ON SELECTION CRITERIA AND PRO-
CEDURES.ln developing the selection criteria and procedures to be
used by the State, the State shall solicit the views of local edu-
cational agencies, private educational institutions, and other inter-
ested parties. Such views
(1) shall be solicited by means of
(A) written comments; and
(B) publication of proposed selection criteria and pro-
cedures in final form for implementation; and
(2) may be solicited by means of
(A) public hearings on the teaching needs of elemen-
tary and s _condary schools in the State (including the
number of new teachers needed, the expected supply of
new teachers, and the shortages in the State of teachers
with specific preparation); or
(B) such other methods as the State may determine to
be appropriate to gather information on such needs.
4'14
395
HIGHER EDUCATION ACT OF 1965
Sec. 525
(20 U.S.C. 1104b) Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1498; amended July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 678.
SEC. 524. AMOUNT AND DURATION OF AND RELATION TO OTHER AS-
SISTANCE.
(a) LIMITATIONS ON AMOUNT AND DURATION.Subject to sub-
section (c) each Paul Douglas Teacher Scholarship recipient shall
receive a $5,000 scholarship for each academic year of postsecond-
ary education for study in preparation to become a preschool, spe-
cial education, elementary, or secondary teacher. No individual
shall receive scholarship assistance for more than 4 years of post-
secondary education, as determined by the State agency.
(b) CONSIDERATION OF AWARD IN OTHER PROGRAMS.Notwith-
standing the provisions of title IV of this Act, scholarship funds
awarded pursuant to this part shall be considered in determining
eligibility for student assistance under title IV of this Act.
(c) ASSISTANCE NOT To EXCEED COST OF ATFENDANCE.No in-
dividual shall receive an award under the Paul Douglas Teacher
Scholarship established under this subpart, in any academic year,
which exceeds the cost of attendance, as defined in section 472 of
this Act, at the institution the individual is attending. A scholar-
ship awarded under this part shall not be reduced on the basis of
the student's receipt of other forms of Federal student financial as-
sistance, but shall be taken into account in determining the eligi-
bility of the student for those other forms of Federal student finan-
cial assistance.
(20 U.S.C. 1104c) Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1499; amended July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 680.
SEC. 525. SELECTION OF PAUL DOUGLAS TEACHER SCHOLARS.
(a) SELECTION BY STATEWIDE PANELS.Paul Douglas Teacher
Scholars shall be selected by a 7-member statewide panel ap-
pointed by the chief State elected official, acting in consultation
with the State educational agency, or by an existing grant agency
or panel designated by the chief State elected official and approved
by the Secretary. The statewide panel shall be representative of
school administrators, teachers, including preschool and special
education teachers, and parents.
(b) ELIGIBILITY FOR SELECTION; SELECTION CRITERIA AND PRO-
CEDURES.Selections of Paul Douglas Scholars shall be made from
students who have graduated or who are graduating from second-
ary school and who rank in the top 10 percent of their graduating
class. The State educational agency shall make applications avail-
able to public and private nonprofit secondary schools in the State
and in other locations convement to applicants, parents, and oth-
ers. The statewide panel shall develop criteria and procedures for
the selection of Paul Douglas Scholars. Such criteria may include
the applicant's secondary school grade point average, involvement
in extracurricular activities, financial need, and expression of inter-
est in teaching as expressed in an essay written by the applicant.
The panel may also require the applicant to furnish letters of rec-
ommendation from teachers and others.
(c) WAIVERS.For purposes of giving special consideration
under section 523(d), a State may waive the criteria contained in
the first sentence of subsection (b) for not more than 25 percent of
4 5
Sec. 526
HIGHER EDUCATION ACT OF 1965
396
individuals receiving Paul Douglas Teacher Scholarships on or
after July 1, 1993.
(20 U.S.C. 1104d) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 680;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(2), 107 Stat. 2480.
SEC. 526. SCHOLARSHIP CONDITIONS.
Recipients of scholarship assistance under this subpart shall
continue to receive such scholarship payments only during such pe-
riods that the State agency finds that the recipient is
(1) enrolled as a full-time student in an accredited post-
secondary institution;
(2) pursuing a course of study leading to teacher certifi-
cation; and
(3) maintaining satisfactory progress as determined by the
postsecondary institution the recipient is attending.
(20 U.S.C. 1104e) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 681.
SEC. 527. SCHOLARSHIP REPAYMENT PROVISIONS.
Recipients found by the State agency to be in noncompliance
with the agreement entered into under section 523(b)(5) of this sub-
part shall be required to repay a pro rata amount of the scholar-
ship awards received, plus interest (but in no event at an interest
rate higher than the rate applicable to loans in the applicable pe-
riod under part B of title IV of this Act) and, where applicable, rea-
sonable collection fees, on a schedule and at a rate of interest to
be prescribed by the Secretary by regulations issued pursuant to
this subpart.
(20 U.S.C. 11040 Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 681.
SEC. 528, EXCEPTIONS TO REPAYMENT PROVISIONS.
(a) DEFERRAL DURING CERTAIN PERIODS.A recipient shall not
be considered in violation of the agreement entered into pursuant
to section 523(b)(5)(C) during any period in which the recipient
(1) is pursuing a full-time course of study related to the
field of teaching at an eligible institution;
(2) is serving, not in excess of 3 years, as a member of the
armed services of the United States;
(3) is temporarily totally disabled for a period of time not
to exceed 3 years as established by sworn affidavit of a quali-
fied physician;
(4) is unable to secure employment for a period not to ex-
ceed 12 months by reason of the care required by a spouse who
is disabled;
(5) is seeking and unable to find full-time employment for
a single period not to exceed 12 months;
(6) is seeking and unable to find full-time employment as
a teacher in a public or private nonprofit preschool, elementary
or secondary school, or education program for a single period
not to exceed 27 months; or
(7) satisfies the provisions of additional repayment excep-
tions that may be prescribed by the Secretary in regulations is-
sued pursuant to this subpart.
(b) FORGIVENESS IF PERMANENTLY TOTALLY DISABLED.A re-
cipient shall be excused from repayment of any scholarship assist-
ance received under this subpart if the recipient becomes perma-
4.1 6*
397
HIGHER EDUCATION ACT OF 1965
Sec. 529
nently totally disabled as established by sworn affidavit of a quali-
fied physician.
(20 U.S.C. 1104g) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 681.
SEC. 529. FEDERAL ADMINISTRATION OF STATE PROGRAMS; JUDICIAL
REVIEW.
(a) DISAPPROVAL HEARING REQUIRED.The Secretary shall not
finally disapprove any application for a State program submitted
under section 523, or any modification thereof, without first afford-
ing the State agency submitting the program reasonable notice and
opportunity for a hearing..
(b) SUSPENSION OF ELIGIBILrry.Whenever the Secretary, after
reasonable notice and opportunity for a hearing to the State agency
administering a State program approved under this subpart,
finds
(1) that the State program has been so changed that it no
longer complies with the provisions of this subpart, or
(2) that in the administxation 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
he regarded as eligible to participate in the program under this
subpart until the Secreta ry is satisfied that there is no longer any
such failure to comply.
(C) COURT REVIEW.
(1) IN GENERAL.If any State is dissatisfied with the Sec-
retary's final action under subsection (b) (1) or (2), 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 ap-
peal may be served at any place in the United States. The Sec-
retary shall forthwith certify and file in the court the tran-
script of the proceedings and the record on which the action
was based.
(2) FINDINGS.The findings of fact by the Secretary, if
supported by substantial evidence, shall be conclusive; but the
court, for good cause shown, may remand the case to the Sec-
retary to take further evidence, and the Secretary may there-
upon make new or modified findings of fact and may modify
any previous action, and shall certify to the court the tran-
script and record of further proceedings. Such new or modified
findings of fact shall likewise be conclusive if supported ny sub-
stantial evidence.
(3) JURISDICTION.The court shall have jurisdiction to af-
firm 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 section 1254 of title 28, United
States Code.
(20 U.S.C. 1104h) Enacted July 23, 1992, P.L. 102-326, sec. 501(a), 106 Stat. 682.
SEC. 530. EVALUATION.
(a) IN GENERAL.The Secretary shall conduct, by grant or con-
tract, an independent evaluation of recipients of scholarship assist-
ance under this subpart, which shall summarize and evaluate the
State activities assisted under this subpart and the performance of
such recipients. The evaluation shall assess the impact of the schol-
t-t
Sec. 530
NIGHER EDUCATION ACT OF 1965
398
arship program assisted under this subpart to determine whether
such program has brought into teaching a significant number of
highly able individuals who otherwise would not have entered
teaching.
(b) CONTENTS.The evaluation described in subsection (a)
shall include
(1) a description of the characteristics, including the edu-
cational preparation and achievement, of recipients of scholar-
ship assistance under this subpart compared to similar stu-
dents participating in teacher training who do not receive such
scholarships;
(2) the rate at which such recipients successfully complete
academic training and go on to teaching careers in preschool,
elementary, or secondary education, compared to such rate for
similar individuals who do not receive scholarship assistance
under this subpart;
(3) the extent to which it is possible to determine objec-
tively that the receipt of scholarship assistance under this sub-
part was the primary reason for an individual's choice of a
teaching education and career;
(4) the extent to which such recipients comply with the
provisions of this subpart;
(5) the length of time such recipients remain in teaching
careers, compared to similar teachers who do not receive schol-
arships;
(6) the barriers to the effectiveness of the program assisted
under this subpart; and
(7) the cost-effectiveness of such program in improving
teacher quality and quantity.
(c) EVALUATION REPORTS.The Secretary shall submit such in-
terim evaluation reports to the President and the Congress as may
be appropriate, and shall submit a final report on or before Janu-
ary 1, 1997.
(d) FUNDING.The Secretary shall reserve a total of not more
than $1,000,000 from the amounts appropriated pursuant to the
authority of section 530B in fiscal years 1993 through 1997 to carry
out this section.
(20 U.S.C. 1104i) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 682.
SEC. 530A. DESIGNATION OF SHORTAGE AREAS.
For the purposes of this part, the term "shortage areas" means
(1) geographic areas of the State in which there is a shortage of
preschool, elementary, and secondary school teachers, and (2) an
area of shortage of preschool, elementary, and secondary school
teachers in specific grade levels and in specific academic, instruc-
tional, subject matter, and discipline classifications. Such shortage
areas shall be prescribed by the Secretary, in consultation with the
chief State school officer or, in the case of nonprofit private elemen-
tary or secondary schools, with appropriate officials of nonprofit
private schools in each State in accordance with this section. In
carrying out the provisions of this section, the Secretary shall give
special consideration to areas in which emergency certification of
individuals in a State is being used to correct teacher shortages
399
HIGHER EDUCATION ACT OF 1965
Sec. 532
and to States which have retirement laws permitting early retire-
ment.
(20 U.S.C. 1104j) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 683;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(3), 107 Stat. 2481.
SEC. 530B. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $26,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this subpart.
(20 U.S.C. 1104k) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 683.
Subpart 2Christa McAuliffe Fellowship Program
SEC. 531. DECLARATION OF PURPOSE; DESIGNATION.
(a) PURPOSE.It is the purpose of this subpart to establish a
national fellowship program for experienced and outstanding teach-
ers.
(b) DESIGNATION.A recipient of a fellowship under this sub-
part shall be known as a "Christa McAuliffe fellow".
(20 U.S.C. 1105) Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1500; amended July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 684.
SEC. 532. PROGRAM AUTHORIZED.
(a) IN GENERALThe Secretary is authorized to make grants,
in accordance with the provisions of this subpart, to State edu-
cational agencies to enable such State educational agencies to
(1) conduct Christa McAuliffe fellowship activities; and
(2) award fellowships to Christa McAuliffe fellows in ac-
cordance with the provisions of this subpart.
(b) AMOUNT OF GRANTS.The amount awarded to each State
educational agency pursuant to paragraph (1) of subsection (a)
shall be an amount awarded on the basis of the school-age popu-
lation in the State compared to the school-age population in all
States, except that the Secretary may adjust the awards to ensure
that such awards are of sufficient size to carry out the purposes of
this subpart.
(c) STATE ACTIvrnEs.Each State educational agency receiving
a grant pursuant to subsection (a) shall use not more than 3- per-
cent of such grant for administrative purposes.
(d) USE OF FUNDS FOR FELLOWSHIPS AND ADMINISTRATION.
Funds appropriated for any fiscal year for fellowships to teachers
under this subpart shall be used to award fellowships in accord-
ance with the requirements of this subpart, except that not more
than 1 percent of such funds shall be used by the Secretary for pur-
poses of administering this subpart, including activities authorized
under section 537(b).
(20 U.S.C. 1105a) Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1501; amended July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 684.
SEC. 533. CHRISTA MCAULIFFE FELLOWSHIPS.
(a) AWARD DISTRIBUTION AND AMOUNT.
(1) AWARD DISTRIBUTION.--Each State educational agency
receiving a grant under this subpart shall use such funds to
award Christa McAuliffe fellowships to public and private
school teachers who have been employed as teachers for 8 or
4 " 9
Sec. 533
HIGHER EDUCATION ACT OF 1965
400
more years to enable such teachers to engage in the activities
described in subsection (b).
(2) AmouNT.Fellowships shall be in an amount equal to
the annual salary the individual would earn in such individ-
ual's current place of employment for the award period.
(3) RATABLE REDUCTION.If an individual receives a fel-
lowship award for less than a school year, such fellowship shall
be ratably reduced to equal the salary forgone.
(4) DURATION.No Christa McAuliffe fellow may receive
an award for 2 consecutive years.
(5) REQUIREMENT.Subject to the repayment provisions of
section 536, each Christa McAuliffe fellow shall be required to
return to a teaching position, in their place of employment
prior to receiving the fellowship award, for at least 2 years fol-
lowing such award. The Secretary is authorized, in extraor-
dinary circumstances, to waive or defer all or a portion of the
service requirement, or allow fellows to fulfill their service re-
quirement by going into a teaching position in another school
or school district within the State or in another State upon ap-
proval of the sending and receiving State.
(b) USE OF FELLOWSHIPS.Each Christa McAuliffe fellowship
may be used for
(1) sabbaticals for study, research or academic improve-
ment to(A)(i) improve such teacher's knowledge base in an
area of expertise; or
(ii) learn a new area of expertise;
(B) increase skills and professional ability; and
(C) enhance the ability of teachers to work with spe-
cial education populations, including
(i) gifted and talented children;
(ii) limited-English proficient children;
(iii) children with disabilities; and
(iv) economically and educationally disadvantaged
children;
(2)(A) consultation with or assistance to other school dis-
tricts or private school systems; or
(B) development of special innovative programs;
(3) projects or partnerships that involve the business com-
munity and the schools;
(4) programs that incorporate the use and the sharing of
technologies to help students learn; or
(5) expanding or replicating model programs of staff devel-
opment.
(20 U.S.C. 1105b) Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1501; amended July 23, 1992, P.L. 102-326, sec. 501(a), 106 Stat. 684.
SEC. 634. SELECTION OF CHRISTA MCAULIFFE FELLOWS.
(a) IN GENERAL.Christa McAuliffe fellows in each State shall
be selected (in accordance with section 535) by a 7-member state-
wide panel appointed by the chief State school officer, or by an ex-
isting panel designated by the chief State school officer. The state-
wide panel shall be representative of school administrators, teach-
ers, parents, and institutions of higher education.
410
401
HIGHF^ WUCATION ACT OF 1965
Sec. 537
(b) SPECIAL RULE.Each State educational agency may choose
to administer the program assisted under this subpart through a
pre-existing panel which is experienced in administering similar
programs.
(20 U.S.C. 1105c) Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1502; amended July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 685.
SEC. 535. EVALUATION OF APPLICATIONS.
(a) SUBMISSION TO AND REVIEW BY STATEWIDE PANEL.An ap-
plicant for a Christa McAuliffe fellowship shall submit a proposal
for a project in accordance with section 533(b), and shall indicate
the extent to which the applicant wishes to continue current teach-
ing duties. The applicant shall submit such a proposal to the local
educational agency for comment prior to submission to the state-
wide panel (appointed under section 534) for the State in which the
project will be conducted. Each such application shall contain such
information as such State educational agency may reasonably re-
quire.
(b) CONSULTATION AND CONSIDERATION.
(1) IN GENERAL.In evaluating proposals, the statewide
panel shall consult with the local educational agency, and shall
consider
(A) evaluations during employment as a teacher;
(B) demonstrated commitment to teaching in the fu-
ture; and
(C) intended activities during the award period.
(2) RECOMMENDATIONS.The statewide panel may request
recommendations from teaching peers and the applicant's prin-
cipal and superintendent on the quality of the proposal, the
benefit of such proposal to education, and any other criteria for
awarding fellowships as are considered appropriate by such
statewide panel.
(3) SELECTION.Selection of members of the statewide
panel shall be made in accordance with regulations prescribed
by the Secretary.
(c)
PUBLIC ANNOUNCEMENT.Announcement of fellowship
awards shall be made in a public ceremony.
(20 U.S.C. 1105d) Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1502; amended July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 685; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(j)(4), 107 Stat. 2481.
SEC. 536. FELLOWSHIP REPAYMENT PROVISIONS.
Repayment of the award shall be made to the Federal Govern-
ment in the case of fraud or gross noncompliance.
(20 U.S.C. 1105e) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 686.
SEC. 537. SECRETARY'S RESPONSIBILITIES.
(a) IN GENERAL.The Secretary shall
(1) make awards to State educational agencies having ap-
plications approved under section 538; and
(2) in cooperation with the State educational agency, con-
duct activities which foster communication among and bring
together Christa McAuliffe fellows including activities such as
written communications, meetings, or training sessions.
(b) INFORMATION DISSEMINATION.The Secretary shall estab-
lish a clearinghouse or otherwise provide for the collection and dis-
411
Sec. 538
HIGHER EDUCATION ACT OF 1965
402
semination of information on exemplary projects for improving edu-
cation that were developed in accordance with section 533(b) of this
part. The Secretary may utilize the National Diffusion Network in
carrying out the requirements of this section.
(20 U.S.C. 11050 Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 686;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(5), 107 Stat. 2481.
SEC. 538. STATE APPLICATION.
(a) APPLICATION REQUIRED.Each State educational agency
desiring a grant under this subpart shall submit an application to
the Secretary at such time, in such manner, and containing such
information as the Secretary may reasonably require.
(b) CONTENTS.Each application submitted pursuant to sub-
section (a) shall
(1) provide assurances that Christa McAuliffe fellows will
be released from teaching responsibilities for up to one school
year (if the fellow's proposal requires such release time) with-
out jeopardizing the rights such members would have had
without participating in the program assisted under this sub-
part;(2) provide assurances that the State educational agency,
or its designee, in cooperation with local educational agencies,
shall maintain accurate records regarding the activities of
Christa McAuliffe fellows within the State to ensure that such
members are meeting all conditions of the fellowships provided
pursuant to this subpart, and shall notify the Secretary imme-
diately upon a change in a Christa McAuliffe fellow's status
rendering such fellow in violation of the conditions of the fel-
lowship; and
(3) provide assurances that the State educational agency
has consulted with local educational agencies in designing and
developing the Christa McAuliffe Fellowship program.
(20 U.S.C. 1105g) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 686.
SEC. 639. EVALUATION.
(a) IN GENERAL.
(1) IN GENERAL.The Secretary shall conduct, by grant or
contract, an independent evaluation of
(A) Christa McAuliffe fellows; and
(B) the impact of the activities undertaken by the
Christa McAuliffe fellows on teachers, teacher research,
curricula, staff development, improvement of programs
and improvement of student achievement.
(2) COMPETITIVE BASIS.The grant or contract described in
paragraph (1) shall be awarded on a competitive basis.
(b) CONTENTS.The evaluation shall
(1) include information on the nature of projects developed
and implemented by Christa McAuliffe fellows;
(2) assess the measurable effects of' such projects on the
academic performance of the students served by such projects;
(3) assess the effect of the fellowship program assisted
under this subpart on the postfellowship experiences of Christa
McAuliffe fellows;
(4) identify the barriers to such program's effectiveness;
.02
an.
HIGHER EDUCA110N ACT OF 1965
Sec. 541
(5) assess the extent to which successful projects were dis-
seminated and adopted by other teachers and schools without
further Federal assistance; and
(6) determine and explore ways to improve the cost-effec-
tiveness of such program.
(C) EVALUATION REPORTS.The Secretary shall submit such in-
terim evaluation reports to the President and the Congress as may
be appropriate, and shall submit a final report on or before Janu-
ary 1, 1997.
(d) FUNDING.The Secretary shall reserve a total of not more
than $1,000,000 from the amounts appropriated pursuant to the
authority of section 540 in fiscal years 1993 through 1997 to carry
out this section.
(20 U.S.C. 110511) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 687.
SEC. 540. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $20,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this subpart.
(20 U.S.C. 1105i) Enacted July 23, 1992, P.L. 102-325, sec. 601(a), 106 Stat. 687.
Subpart 3Teacher Corps
SEC. 541. TEACHER CORPS PROGRAM AUTHORIZED.
(a) GRANTS BY THE SECRETARY.In any fiscal year in which
the appropriations for this subpart do not equal or exceed
$50,000,000, the Secretary is authorized, in accordance with the
provisions of this subpart, to make grants, on a competitive basis,
to State educational agencies to carry out Teacher Corps activities.
(b) STATE GRANT PROGRAm.In any fiscal year in which the
appropriations for this subpart equal or exceed. $50,000,000, the
Secretary is authorized, in accordance with the provisions of this
subpart, to make grants to State educational agencies from alloca-
tions under subsection (c) to carry out Teacher Corps activities.
(c) ALLOCATION.Except as provided in subsection (a), each
State educational agency shall be eligible to receive a grant under
this subpart in each fiscal year that bears the same ratio to the
amount appropriated under section 548 in that fiscal year as the
school-age population of the State bears to the school-age popu-
lation of all States.
(d) TEACHER CORPS SCHOOL.For the purpose of this subpart
the term "Teacher Corps school" means a public elementary or sec-
ondary school identified by the State educational agency as having
the highest levels of poverty and the lowest levels of student
achievement based on a ranking of such elementary schools and
secondary schools in the State according to the number of children
living in poverty and the levels of student achievement. In carrying
out the preceding sentence, the State educational agency shall
identify and inform not more than 10 percent of such elementary
schools and not more than 10 percent of such secondary schools in
the State which have the highest levels of poverty and the lowest
levels of student achievement.
(e) DESIGNATION.
4 1.3
Sec. 542
HIGHER EDUCATION ACT OF 1965
404
(1) SCHOLARSHIP.A scholarship awarded under this sub-
part shall be referred to as a "Teacher Corps scholarship".
(2) RECIPIENT.A recipient of a scholarship under this
subpart shall be referred to as a "Teacher Corps member".
(20 U.S.C. 1106) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 687.
SEC. 642. USE OF FUNDS.
(a) SECRETARY.The Secretary shall use funds provided pursu-
ant to this subpart to
(1) disseminate information nationally about the availabil-
ity of scholarships under this subpart;
(2) conduct activities, with the cooperation of the State and
local educational agencies, which foster communication among,
and bring together, members of the Teacher Corps, including
activities such as written communications, meetings, or train-
ing sessions;
(3) establish and conduct summer preservice orientation
programs for Teacher Corps members about to begin teaching;
(4) ensure that Teacher Corps members recognize the chal-
lenges of teaching in a Teacher Corps school;
(5) inform Teacher Corps members of Teacher Corps
schools and facilitate the hiring and placement of Teacher
Corps members at Teacher Corps schools;
(6) evaluate applications from and award grants to State
educational agencies to enable such agencies to award Teacher
Corps scholarships in accordance with the provisions of this
subpart; and
(7) collect scholarship repayments from individual Teacher
Corps members, in accordance with the provisions of section
546.
(b) STATE EDUCATIONAL AGENCY.Each State educational
agency receiving a grant under this subpart shall use such grant
funds to(1) evaluate applications for Teacher Corps membership
and award scholarships to Teacher Corps members;
(2) provide technical assistance to local educational agen-
cies establishing and operating induction programs;
(3) ensure that Teacher Corps members understand the
obligation to repay the scholarships received under this sub-
part upon failure to comply with the conditions of the scholar-
ship; and
(4) ensure that Teacher Corps members are fulfilling the
obligation to repay scholarships received under this subpart,
and provide the Secretary with the names and addresses of
Teacher Corps members who have not fulfilled such obligation.
(c) SPECIAL RULE.The Secretary may enter into contracts
with or make grants to nonprofit educational organizations for
(1) recruiting members of the Teacher Corps;
(2) establishing and conducting summer preservice train-
ing programs; and
(3) conducting activities that foster communications among
and bring together members of the Teacher Corps.
(d) RESERVATIONS.Each State receiving a grant under this
subpart may reserve-
4t4
405
HIGHER EDUCATION ACT OF 1965
Sec. 543
(1) 5 percent of such grant funds to provide technical as-
sistance to local educational agencies and to pay administra-
tive costs; and
(2) 5 percent of such grant funds to provide for induction
and mentoring programs.
(e) SPECIAL RULE.Each State educational agency receiving a
grant under this subpart may enter into contracts with or award
grants to nonprofit educational agencies to conduct the activities
described in subsection (b).
(20 U.S:C: 1106a) Enacted July 23, 1992, P.L. 102-326, sec. 501(a), 106 Stat. 688.
SEC. 543. TEACHER CORPS.
(a) SELECTION.The State educational agency shall select
Teacher Corps members.
(b) CRITERIA.
(1) IN GENERAL.The State educational agency shall es-
tablish criteria to select Teacher Corps members that are in-
tended to
(A) attract highly qualified individuals to teaching;
and
(B) meet the needs of Teacher Corps schools in ad-
dressing teacher shortages.
(2) CRITERIA.The criteria described in paragraph (1) may
include
(A) in the case of students or recent graduates, out-
standing academic records, or in other cases, contributions
which may be made by individuals working in other ca-
reers; and
(B) a demonstrated commitment to teaching or profes-
sional experience in substantive fields of expertise in
which the State is experiencing or expects to experience
teacher shortages.
(c) SPECIAL CONSIDERATION.The State educational agency, in
selecting Teacher Corps members, shall give special consideration
to individuals who
(1) intend to teach or provide related services to students
with disabilities;
(2) intend to teach limited-English proficient students;
(3) intend to teach preschool age children;
(4) are from disadvantaged backgrounds, including racial
and ethnic minorities and individuals with disabilities;
(5) are members of populations that are underrepresented
in the teaching profession or in the curricular areas in which
such individuals are preparing to teach;
(6) intend to teach in the areas of science or mathematics,
especially women and minorities who are underrepresented in
such fields; or
(7) intend to teach on Indian reservations or in Alaska Na-
tive villages named or certified pursuant to section 3(c) of the
Alaska Native Claims Settlement Act, Public Law 92-203, or
in areas with high concentrations of Native Hawaiians.
(d) APPLICATION.Each individual desiring to participate in
the program assisted under this subpart shall submit an applica-
415
Sec. 544
HIGHER EDUCATION ACT OF 1965
406
tion at such time, in such manner, and containing such information
as the State educational agency may reasonably require.
(20 U.S.C. 1106b) Enacted July 23, 1992, P.L. 102-325, sea. 501(a), 106 Stat. 689.
SEC. 544. STATE APPLICATION.
In order to receive funds under this subpart, a State edu-
cational agency, in consultation with the Governor, shall submit an
application to the Secretary at such time, in such manner, and con-
taining such information as the Secretary may reasonably require.
Each such application shall
(1) describe how the State educational agency shall select
Teacher Corps members;
(2) identify Teacher Corps schools within the State, where
Teacher Corps members shall be assigned, provided that not
more than 10 percent of all public schools in the State may be
designated Teacher Corps schools;
(3) provide assurances that the State educational agency,
in cooperation with local educational agencies, shall assist in
employment placement within such State for Teacher Corps
members in Teacher Corps schools;
(4) provide assurances that the State educational agency,
in cooperation with local educational agencies, shall ensure
that Teacher Corps members are paid at rates comparable to
other entry level teachers in the school district where the
Teacher Corps member is assigned;
(5) provide assurances that the local educational agencies
in which the Teacher Corps members shall be placed shall es-
tablish or expand induction programs that assist Teacher
Corps members in adjusting to the new school and community
where such members shall teach, including working with a
mentor teacher in the school building where the Teacher Corps
members are placed; and
(6) describe how the State educational agency shall mon-
itor and report to the Secretary not less than annually on the
operation of programs assisted under this subpart and on the
compliance of individuals who receive Teacher Corps scholar-
ships with the provisions of this subpart.
(20 U.S.C. 1106c) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 690.
SEC. 545. SCHOLARSHIPS.
(a) ELIGIBILITY.
(1) IN GENERAL.An individual is eligible to receive Teach-
er Corps scholarships for a maximum of 3 years during enroll-
ment in any of the following programs of study, or a combina-
tion thereof:
(A) a program of study leading to a baccalaureate de-
gree;(B) a 1- or 2-year postbaccalaureate program of study
leading to a master's or specialist degree or a teaching cer-
tificate; or
(C) a 2-year program of study leading to an associate's
degree in early childhood education or early childhood de-
velopment, or a 1-year program of study leading to a child
development associate credential.
4 ta
407
HIGHER EDUCATION ACT OF 1965
Sec. 546
(2) SPECIAL RULES.(A) An individual pursuing a program
of study described in subparagraph (B) of paragraph (1) is eli-
gible to receive a Teacher Corps scholarship during any of the
first 3 years that such individual is employed as a teacher to
defray the costs of pursuing such postbaccalaureate instruc-
tion.
(B) An individual in possession of a bachelor's degree, who
wishes to enter teaching from another profession, is eligible to
receive a Teacher Corps scholarship to enable such individual
to receive the instruction necessary to enter the teaching pro-
fession, as determined by the State in which the individual
wishes to teach. Such instruction may be provided while the
individual is employed as a provisional teacher.
(b) LIMITATIONS ON AMOUNT AND DURATION.Subject to sub-
section (d), each Teacher Corps member shall receive a $5,000
scholarship for each academic year of postsecondary education, ex-
cept that no individual shall receive scholarship assistance for
more
than
3
years
of
postsecondary
education
(including
postbaccalaureate), as determined by the Secretary.
(c) CONSIDERATION OF AWARD IN OTHER PROGRAMS.--Each
Teacher Corps scholarship awarded pursuant to this subpart shall
be considered as student financial assistance in determining eligi-
bility for student assistance under title IV.
(d) ASSISTANCE NOT TO EXCEED NEED.Each Teacher Corps
scholarship, when added to assistance received under title IV, if
any, shall not exceed the cost of attendance, as defined in section
472, at the institution the individual is attending. If the amount of
the Teacher Corps scholarship and assistance received under title
IV exceeds the cost of attendance, loans received under part B, D,
or E of such title shall be reduced by an amount equal to the
amount by which the combined awards exceed the cost of attend-
ance.
(e) CONTINUED ELIGIBILITY.Each individual who receives a
Teacher Corps scholarship shall continue to receive such scholar-
ship payments only during such periods that the State educational
agency fmds that such individual is
(1) enrolled as a full-time student in an accredited post-
secondary institution; and
(2) maintaining satisfactory progress defined under section
484.
(20 U.S.C. 1106d) Enacted July 23, 1992, Pl. 102-325, sec. 501(a), 106 Stat. 690;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(6), 107 Stat. 2481.
SEC. 546. SCHOLARSHIP CONDITIONS.
(a) SCHOLARSHIP AGREEMENT.Each individual receiving a
scholarship under this subpart shall enter into a written agree-
ment with the State educational agency which shall provide assur-
ances that each such individual
(1) shall pursue a course of study which meets State re-
quirements for teacher preparation;
(2) has completed at least 2 years of undergraduate edu-
cation at an institution of higher education;
77-530 0-91-11
4 vi
Sec. 546
HIGHER EDUCATION ACT OF 1965
408
(3) shall maintain satisfactory academic progress and par-
ticipate in teaching-related activities while in undergraduate
or post-baccalaureate programs;
(4) shall work as a teacher upon completion of such indi-
vidual's education for 3 years in a Teacher Corps school, as
identified by the State educational agency pursuant to section
541(d), except that Teacher Corps members may transfer to
another such school within the State or in another State upon
approval of the State educational agency;
(5) in carrying out the obligation described in paragraph
(4), shall meet the performance requirements of.
(A) the school in which such individual teaches; and
(B) the local educational agency exercising administra-
tive control or direction of, or performing a service function
for such school;
(6) shall repay all or part of a Teacher Corps scholarship
received under section 545(b) plus interest and, if applicable,
reasonable collection fees, in compliance with regulations is-
sued by the Secretary under subsection (b), in the event that
the conditions of this subsection are not complied with, except
as provided for in subsection (c);
(7) at least during the first year of employment, shall par-
ticipate in an induction program which includes working with
a mentor teacher selected by the local educational agency in
which the Teacher Corps member is employed and who, to the
extent practicable, is teaching in the same subject as the
Teacher Corps member; and
(8) who is not enrolled in a program of study as set forth
in section 545(aX1XC) shall obtain State teacher certification
during the period of employment or as soon as possible as
State law requires.
(b) SCHOLARSHIP REPAYMENT.
(1) IN GENERAL.Individuals found by the State edu-
cational agency to be in noncompliance with the agreement en-
tered into under subsection (a) shall be required to repay to
the Secretary a pro rata amount of the scholarship awards re-
ceived, plus interest at the highest rate applicable to loans
under part B of title W and, where applicable, reasonable col-
lection fees, in accordance with the provisions of paragraph (3).
(2) EXCEPTIONS TO REPAYMENT.An individual shall not be
considered to be in violation of the agreement entered into pur-
suant to subsection (a) during any period in which such indi-
vidual meets the exceptions to repayment provisions set forth
in section 528(a)(2), 528(aX3) or 528(b), or if the individual
dies.
(3) REPAYMENT PERCENTAGES.Each individual found by
the Secretary to be in noncompliance with the agreement en-
tered into under subsection (a) shall be required to repay
(A) 100 percent of the total amount of scholarships
awarded under this subpart if such individual does not
teach pursuant to the agreement described in subsection
(a) or teaches pursuant to such agreement for less than 1
year;
409
HIGHER EDUCATION ACT OF 1965
Sec. 547
(B) 67 percent of such amount if such individual teach-
es pursuant to such agreement for at least 1 year but less
than 2 years; and
(C) 34 percent of such amount if such individual teach-
es pursuant to such agreement for at least 2 years but less
than 3 years.
(4) INTEREST.If a portion of scholarship is repaid under
this subsection in any year, the entire amount of interest on
such portion of such scholarship which accrues for such year
shall be repaid.
(5) USE OF REPAYMENTS.Any repayments of scholarships
made to the Secretary pursuant to the provisions of this sec-
tion shall be used by the Secretary to make additional grants
in accordance with the provisions of this subpart.
(C) WAIVER.The Secretary may provide for the partial or total
waiver or suspension of any service obligation or repayment by an
individual who received a Teacher Corps scholarship whenever
compliance by such individual is impossible or would involve ex-
treme hardship to such individual.
(20 U.S.C. 1106e) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 691.
SEC. 547. PUBLICATION AND RECRUITMENT.
(a) IN GENERAL.The Secretary shall
(1) publicize the availability of, and procedure to apply for,
Teacher Corps scholarships, particularly among students par-
ticipating in teaching-related activities through summer teach-
ing institutes, future teacher clubs, and other teaching-related
activities, at institutions of higher education nationwide, par-
ticularly in institutions of higher education with large minority
enrollments, historically black colleges and universities, sec-
ondary schools nationwide (especially such schools with minor-
ity enrollment in excess of the statewide average minority en-
rollment), and with
(A) individuals participating in programs assisted
under subpart 4 of part A of title IV;
(B) individuals leaving the armed services, the Peace
Corps, VISTA, and programs funded under the National
and Community Service Act of 1990;
(C) community-based organizations working in minor-
ity education; and
(D) other agencies and entities likely to attract indi-
viduals interested in entering teaching from another ca-
reer;
(2) recruit minority students to participate in the program
assisted under this subpart; and
(3) recruit students with outstanding academic records to
participate in such program.
(b) SPECIAL RULE.The publications required under subsection
(a) shall describe substantive fields of expertise and geographic
areas experiencing teacher shortages within the Nation.
(20 U.S.C. 11060 Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 693.
4 1, 9
Sec. 548
HIGHER EDUCA110N ACT OF 1965
410
SEC. 548. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $25,000,000 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 subpart.
(20 U.S.C. 1106g) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 693.
PART DINNOVATION AND RESEARCH
Subpart 1National Board for Professional
Teaching Standards
SEC. 551. NATIONAL BOARD FOR PROFESSIONAL TEACHING STAND-
ARDS.
(a) DEFINMONS.For the purpose of this subpart
(1) The term "Board" means the National Board for Profes-
sional Teaching Standards.
(2) The term "Committee" means the Fund for Improve-
ment and Reform of Schools and Teaching Board established in
section 3231 of the Fund for the Improvement and Reform of
Schools and Teaching Act.
(3) The term "Director" means the Director of the National
Science Foundation.
(b) PROGRAM AUTHORIZATION.
(1) PROGRAM AUTHORIZED.From sums appropriated pur-
suant to the authority of subsection (k) in any fiscal year, the
Secretary shall, in accordance with this subpart, provide finan-
cial assistance to the National Board for Professional Teaching
Standards, in order to pay the Federal share of the costs of the
activities described in subsection (d).
(2) TERMS AND CONDIT1ONS.(A) No financial assistance
may be made available under this subpart except upon an ap-
plication as required by subsection (e).
(B) No financial assistance may be made available under
this subpart unless the Secretary determines that
(i) the Board will comply with the provisions of this'
subpart;
(ii) the Board will use the Federal funds only for re-
search and development activities in accordance with sub-
section (d) and such teacher assessment and certification
procedures will be free from racial, cultural, gender or re-
gional bias;
(iii) the Board
(I) will widely disseminate for review and com-
ment announcements of specific research projects to be
conducted with Federal funds, including a description
of the goals and focus of the specific project involved
and the specific merit review procedures and evalua-
tion ciiteria to be used in the competitive award proc-
ess; and
(II) will send such announcements to the Sec-
retary, the Director, the National Research Council,
and the educational research community;
(iv) the Secretary, pursuant to an arrangement with
the Board, will publish the announcements described in
420
411
HIGHER EDUCATION ACT OF 1965
Sec. 551
clause (iii) in the Federal Register (or such other publica-
tion deemed appropriate by the Secretary) and in publica-
tions of general circulation designed to disseminate such
announcements widely to the educational research commu-
nity;
(v) the Board will, after offering any interested party
an opportunity to make comment upon, and take exception
to, the projects contained in the announcements described
in clause (iii) for a 30-day period following publication, and
after reconsidering any project upon which comment is
made or to which exception is taken, issue through the
Secretary a request for proposals in the Federal Register
(or such other publication deemed appropriate by the Sec-
retary) containing any revised project information;
(vi) the Board will make awards of Federal funds com-
petitively on the basis of merit, and, in the award process,
the Board will select, to the extent practicable consistent
with standards of excellence
(I) a broad range of institutions associated with
educational research and development; and
(II) individuals who are broadly representative of
the educational research and teaching communities
with expertise in the specific area of research and de-
velopment in qv -istion;
(vii) the Board will adopt audit practices customarily
applied to nonprofit private organizations and will comply
with subsection (g)(4);
(viii) the Board will not use Federal funds to meet the
administrative and operating expenses of the Board;
(ix) the Board will submit an annual report to the
Congress in accordance with the provisions of subsection
(g)(1); and
(x) the Board will, upon request, disseminate to
States, local educational agencies, or other public edu-
cational entities the results of any research or research
project produced with funds authorized by this subpart,
upon the payment of the cost of reproducing the appro-
priate material.
(3) AVAILABILITY OF FUNDS.(A) Notwithstanding any
other provision of law, funds appropriated to carry out this
subpart shall remain available for obligation and expenditure
until the end of the second fiscal year succeeding the fiscal
year for which the funds were appropriated.
(B) No funds shall be made available to the Board after
September 30, 1997, except as authorized by subparagraph (A)
of this subsection.
(c) CONSULTATION.The Board shall consult at least twice an-
nually with the Committee on the design and execution of its over-
all research and development strategy, including procedures to as-
sure compliance with the requirements of this subpart. The proce-
dures shall include
(1) an outline of specific research and development agenda
and activities to be conducted with the Federal funds; and
4?!
Sec. 551
HIGHER EDUCATION ACT OF 1965
412
(2) provisions to ensure compliance with the open competi-
tion and merit review requirements of this subpart for propos-
als and projects assisted under this subpart.
(d) AUTHORIZED Acr
(1) IN GENERAL.Federal funds received under this sub-
part may only be used for research and development activities
directly related to the development of teacher assessment and
certification procedures for elementary and secondary school
teachers.
(2) PRIORITIES.(A) The Board shall give priority to re-
search and development activities in
(i) mathematics;
(ii) the sciences;
(iii) foreign languages; and
(iv) literacy, including the ability to read, write and
analyze.
(B) The Board shall give priority to research and develop-
ment activities for the certification of elementary and second-
ary school teachers and the need and ability of such teachers
to teach special educational populations, including
(i) limited English proficient children;
(ii) gifted and talented children;
(iii) children with disabilities; and
(iv) economically and educationally disadvantaged
children.
(e) APPLICATION.
(1) IN GENERAL.The Board shall submit applications to
the Secretary at such time and in such manner as the Sec-
retary may reasonably require. Each such application shall
(A) describe the activities for which assistance is
sought; and
(B) provide assurances that the non-Federal share of
the cost of activities of the Board is paid from non-Federal
sources, together with a description of the manner in
which the Board will comply with the requirements of this
subparagraph.
(2) APPROVAL.The Secretary shall approve an application
unless such application fails to comply with the provisions of
this subpart.
(f) FEDERAL SHARE.
(1) IN GENERAL.The Secretary shall pay to the Board the
Federal share of the costs of the activities of the Board for the
fee)ri. od for which the application is approved under subsection
(2) AMOUNT OF FEDERAL SHARE.The Federal share shall
be 50 percent of the costs of the activities described in sub-
section (d).
(g) REPORTS AND AUDITING PROVISION.
(1) NATIONAL BOARD FOR PROFESSIONAL TEACHING STAND-
ARDS REPORT.The Board shall submit an annual report to the
appropriate committees of the Congress not later than June 30
of any fiscal year in which Federal funds are expended pursu-
ant to this subpart. The Board shall disseminate the report for
review and comient to the Department of Education, the Na-
413
HIGHER EDUCAIION ACT OF 1965
Sec. 551
tional Science Foundation, the National Research Council, and
the education research community. The report shall
(A) include a detailed financial statement and a report
of the audit practices described in subsection (b)(2)(B)(vii);
(B) include a description of the general procedures to
assure compliance with the requirements of this subpart
as required in subsection (d); and
(C) provide a comprehensive and detailed description
of the Board's agenda, activities, and planned activities for
the preceding and succeeding fiscal years, including
(1) the Board's overall research and development
program and activities;
(ii) the specific research and development projects
and activities conducted with Federal funds during the
preceding fiscal year, including
(I) a description of the goals and methodology
of the project;
(II) a description and assessment of the find-
ings (or status and preliminary findings if the
project is not yet completed);
(III) a description of the competitive bidding
process, the merit review procedures, and the
evaluation criteria used to award project funds;
and
(IV) a description of the Board's plans for dis-
semination of the findings described in clause (ii);
(iii) the specific research and development projects
and activities planned to be conducted with Federal
funds during the succeeding fiscal year, including the
goals and methodologies to be used; and
(iv) a listing of available publications of the Board,
including publications related to policies, standards
and general information, research reports, and com-
missioned papers of the Board.
(2) FIRST ANNUAL REPORT.The first annual report re-
quired by this subsection shall include a description of the
Board's research and development agenda for the succeeding 5-
year period. Such first report shall include to the maximum ex-
tent practicable, a description of specific research and develop-
ment projects and activities, and the goals and methodologies
of such projects and activities.
(3) ADDITIONAL REPORTS.The Secretary, the Director, and
the National Research Council shall report to the appropriate
committees of the Congress on the compliance of the Board
with the requirements of this part not later than 30 days after
the Board submits its annual report pursuant to paragraph (1).
(4) AUDITING PROVISION.The Comptroller General of the
United States, and any of the Comptroller's authorized rep-
resentatives, shall have access, for the purpose of audit and ex-
amination, to any books, documents, papers, and records of the
Board, and to any recipient of the Board, that is pertinent to
the sums received and disbursed under this subpart.
(h) EVALUATION.
491
Sec. 551
HIGHER EDUCATION ACT OF 1965
414
(1) IN GENERAL.After September 30, 1995, the Secretary
shall reserve not more than 2 percent of the amount appro-
priated pursuant to the authority of subsection (k) to provide
for an independent, ongoing evaluation of the research pro-
gram of teacher assessments carried out by the Board and the
fairness and the accuracy of the data such evaluations produce.
The evaluation shall include an analysis of the impact of teach-
er assessments on minority teachers. The findings of the eval-
uation shall be submitted to the Labor and Human Resources
Committee of the Senate and the Education and Labor Com-
mittee of the House of Re_presentatives.
(2) SPECIAL RULE.The Secretary shall enter into a con-
tract for the performance of the evaluation described in para-
graph (1) with a nationally recognized organization (such as
the National Academy of Sciences or the National Academy of
Education).
(i) CONSTRUCTION.Nothing in this subpart shall be construed
to
(1) establish a preferred national curriculum or preferred
teaching methodology for elementary and secondary school in-
struction;
(2) infringe upon the rights and responsibilities of the
States to license elementary and secondary school teachers;
(3) infringe upon the practice or accreditation of home
school or private school teaching;
(4) provide an individual certified by the Board with a
right of action against a State, local educational agency, or
other public educational entity for any decisions related to hir-
-
ing, promotion, retention or dismissal;
(5) authorize the Board to
(A) study, create, or promulgate separate standards
applicable to home school or private school teachers;
(B) take any action to require home school, private
school, or public school teachers to participate in any pro-
gram offered by the Board; or
(C) take any action that infringes in any manner on
the right of parents to direct the education of their chil-
dren; or
(6) authorize the Secretary to exercise supervision or con-
trol over the research program, standards, assessment prac-
tices, administration, or staffing policies of the Board.
(j) VOLUNTARY PARTICIPATION.Notwithstanding any other
provision of this subpart, voluntary participation in certification as-
sessments by the l3oard shall be open to home school, private
school, and public school teachers.
(k) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $20,000,000 for the period beginning October 1,
1992, and ending September 30, 1997, to carry out the provisions
of this subpart.
(20 U.S.C. 1107) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 693.
4'2, 4
415
HIGHER EDUCATION ACT OF 1965
Sec. 555
Subpart 2 1Alternative Routes to Teacher
Certificati7 and Licensure
SEC. 552. SHORT TITLE.
This subpart may be cited as the "Alternative Routes to Teach-
er Certification and Licensure Act of 1992".
(20 U.S.C. 1108) Enacted July 23, 1992, P.L. 102-325, sec. 601(a), 106 Stat. 698.
SEC. 553. FINDINGS.
The Congress finds that
(1) effective elementary and secondary schools require
competent teachers and strong leadership;
(2) school systems would benefit greatly by increasing the
pool of qualified individuals from which to recruit teachers;
(3) many talented professionals who have demonstrated a
high level of subject area competence outside the education
profession may wish to pursue careers in education, but have
not fulfilled the requirements to be certified or licensed as
teachers;
(4) alternative routes can enable qualified individuals to
fulfill State certification or licensure requirements and would
allow school systems to utilize the expertise of such profes-
sionals and improve the pool of qualified individuals available
to local educational agencies as teachers; and
(5) alternative routes to certification or licensure require-
ments that do not exclude qualified individuals from teaching
solely because such individuals do not meet traditional certifi-
cation or licensure requirements would allow school systems to
take advantage of these professionals and improve the supply
of well-qualified teachers.
(20 U.S.C. 1108a) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 698.
SEC. 554. PURPOSE.
It is the purpose of this subpart to improve the supply of well-
qualified elementary and secondary school teachers by encouraging
and assisting States to develop and implement programs for alter-
native routes to teacher certification or licensure requirements.
Such programs shall place special emphasis on the participation of
individuals who are members of minority groups.
(20 U.S.C. 1108b) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 698.
SEC. 555. ALLOTMENTS.
(a) ALLOTMENTS TO STATES.
(1) IN GENERAL.From the amount appropriated to carry
out this subpart, the Secretary shall allot to each State the
lesser of either the amount the State applies for under section
556 or an amount that is proportional to the State's share of
the total population of children ages five through seventeen in
all the States (based on the most recent data available that is
satisfactory to the Secretary).
(2) REALLOCATION.If a State does not apply for its allot-
ment, or the full amount of its allotment, under the preceding
'Effective July 1, 1996, this subpart ia repealed. See section 601(b) of P.L. 102-325, 106 Stat.
719.
Sec. 556
HIGHER EDUCATION ACT OF 1965
416
paragraph, the Secretary may reallocate the excess funds to
one or more other States that demonstrate, to the satisfaction
of the Secretary, a current need for the funds.
(b) SPECIAL RULE.Notwithstanding section 412(b) of the Gen-
eral Education Provisions Act, funds awarded under this subpart
shall remain available for obligation by a recipient for a period of
two calendar years from the date of the grant.
(20 U.S.C. 1108c) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 699.
SEC. 556. STATE APPLICATIONS.
(a) IN GENERAL.Any State desiring to receive a grant under
this subpart shall, through the State educational agency, submit an
application at such time, in such manner, and containing such in-
formation, as the Secretary may reasonably require.
(b) REQuiREmENTs.Each application shall
(1) describe the programs, projects, and activities to be un-
dertaken; and
(2) contain such assurances as the Secretary considers nec-
essary, including assurances that
(A) assistance provided to the State educational agen-
cy under this subpart will be used to supplement, and not
to supplant, any State or local funds available for the de-
velopment and implementation of programs to provide al-
ternative routes to fulfilling teacher certification or licen-
sure requirements;
(B) the State educational agency has, in developing
and designing the application, consulted with
(i) representatives of local educational agencies,
including superintendents and school board members
(including representatives of their professional organi-
zations where applicable);
(ii) elementary and secondary school teachers, in-
cluding representatives of their professional organiza-
tions;(iii) institutions of higher education with schools
or departments of education;
(iv) parents; and
(v) other interested organizations and individuals;
and
(C) the State educational agency will submit to the
Secretary, at such time as the Secretary may specify, a
final report describing the activities carried out with as-
sistance provided under this subpart and the results
achieved.
(c) GEPA PROVISIONS INAFFLICABLE.Sections 435 and 436 of
the General Education Provisions Act, except to the extent that
such sections relate to fiscal control and fund accounting proce-
dures, shall not apply to this subpart.
(20 U.S.C. 1108d) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 699.
SEC. 557. USE OF FUNDS.
(a) USE OF FUNDS.
(1) IN GENERAL.A State educational agency shall use as-
sistance provided under this subpart to support programs,
projects, or activities that develop and implement new, or ex-
4?6
417
HIGHER EDUCATION ACT OF 1965
Sec. 561
pand and improve existing, programs that enable individuals
to move to a career in education from another occupation
through an alternative route to teacher certification or licen-
sure.
(2) TYPES OF ASSISTANCE.A State educational agency
may carry out such programs, projects, or activities directly,
through contracts, or through grants to local educational agen-
cies, intermediate educational agencies, institutions of higher
education, or consortia of such agencies.
(b) USES.Funds received under this subpart may be used
for
(1) the design, development, implementation, and evalua-
tion of programs that enable qualified professionals who have
demonstrated a high level of subject area competence outside
the education profession and are interested in entering the
education profession to fulfill State certification or licensure re-
quirements;
(2) the establishment of administrative structures nec-
essary for the development and implementation of programs to
provide alternative routes to fulfilling State requirements for
certification or licensure;
(3) training of staff, including the development of appro-
priate support programs, such as mentor programs, for teach-
ers entering the school system through alternative routes to
teacher certification or licensure;
(4) the development of recruitment strategies;
(5) the development of reciprocity agreements between or
among States for the certification or licensure of teachers; and
(6) other appropriate programs, projects, and activities de-
signed to meet the objectives of this subpart.
(20 U.S.C. 11110 Enacted October 17, 1986, P.L. 99-498, sec. 501(a), 100 Stat.
1509; amended June 3, 1987, P.L. 100-50, sec. 17(c), 101 Stat. 359; amended July
23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 700.
(20 U.S.C. 1108e) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 700.
SEC. 558. DEFINITION.
For purposes of this subpart, the term "State" means each of
the 50 States, the District of Columbia, the Commonwealth of
Puerto Rico, the Virgin Islands, Guam, American Samoa, the
Northern Mariana Islands, and Palau (until the Compact of Free
Association with Palau takes effect pursuant to section 101(a) of
Public Law 99-658).
(20 U.S.C. 11080 Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 700.
SEC. 559. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this sub-
part $15,000,000 for fiscal year 1993.
(20 U.S.C. 1108g) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 700.
Subpart 3Class Size Demonstration Grant
SEC. 561. PURPOSE.
It is the purpose of this subpart to provide grants to local edu-
cational agencies to enable such agencies to determine the benefits
41`?7
Sec. 662
HIGHER EDUCATION ACT OF 1965
418
in various school settings of reducing class size on the educational
performance of students and on classroom management and organi-
zation.
(20 U.S.C. 1109) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 700.
SEC. 662. PROGRAM AUTHORIZED.
(a) PROGRAM AUTHORIZED.
(I) IN GENERAL.The Secretary shall carry out a program
of awarding grants, in accordance with the provisions of this
subpart, to local educational agencies to pay the Federal share
of the costs of conducting d.emonstration projects that dem-
onstrate methods of reducing class size which may provide in-
formation meaningful to other State and local educational
agencies.
(2) FEDERAL SHARE.The Federal share shall be 50 per-
cent.
(b) RESERVATION.The Secretary may reserve not more than 5
percent of the amount appropriateoi pursuant to the authority of
section 565A in each fiscal year to carry out the evaluation activi-
ties described in section 565.
(c) SELECTION CRITERIA.The Secretary shall make grants to
local educational agencies on the basis of
(1) the need and the ability of a local educational agency
to reduce the class size of an elementary or secondary school
served by such agency;
(2) the ability of a local educational agency to furnish the
non-Federal share of the costs of the demonstration project for
which assistance is sought;
(3) the abffity of a local educational agency to continue the
project for which assistance is sought after the termination of
F'ederal financial assistance under this subpart; and
(4) the degree to which a local educational agency dem-
onstrates in the application submitted pursuant to section 564
consultation in program implementation and design with par-
ents, teachers, school administrators, and local teacher organi-
zations, where applicable.
(d) PRIORITY.In awarding grants under this subpart, the Sec-
retary shall give priority to demonstration projects that involve at-
risk students, including educationally or economically disadvan-
taged students, students with disabilities, limited-English pro-
ficient students, and young students.
(e) GRANTS MUST SUPPLEMENT OTHER FUNDS.A local edu-
cational agency shall use the Federal funds received under this
subpart to supplement and not supplant other Federal, State and
local funds available to the local educational agency.
(20 U.S.C. 1109a) Enacted July 23, 1992, P.L. 102-325, sec. 601(a), 106 Stat. 700.
SEC. 663. PROGRAM REQUIREMENTS.
(a) ANNUAL COMPETITION.In each fiscal year, the Secretary
shall announce the factors to be examined in a demonstration
project assisted under this subpart. Such factors may include
(1) the magnitude of the reduction in class size to be
achieved;
(2) the level of education and the subject areas in which
the demonstration projects shall occur;
4
419
HIGHER EDUCATION ACT OF 1965
Sec. 565
(3) the form of the instructional strategy to be dem-
onstrated; and
(4) the duration of the project.
(b)
RANDOM TECHNIQUES AND APPROPRIATE COMPARISON
GROUPS.Demonstration projects assisted under this subpart shall
be designed to utilize randomized techniques or appropriate com-
parison groups, where feasible.
(20 U.S.C. 1109b) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 701.
SEC. 564. APPLICATION.
(a) IN GENERAL.In order to receive a grant under this sub-
part a local educational agency shall submit an application to the
Secretary that is responsive to the announcement described in sec-
tion 563(a), at such time, in such manner, and containing or accom-
panied by such information as the Secretary may reasonably re-
quire.
(b) DURATION.The Secretary shall encourage local
edu-
cational agencies to submit applications under this subpart for a
period of 3 years.
(c) CONTENTS.Each application submitted pursuant to sub-
section (a) shall include--
(1) a description of the objectives to be attained with the
financial assistance made available under this subpart and the
mariner in which such financial assistance shall be used to re-
duce class size;
(2) a description of the steps to be taken to achieve target
class sizes, including, where applicable, the acquisition of ad.di-
tional teaching personnel and classroom space;
(3) a statement of the methods for the collection of data
necessary for the evaluation of the impact of class size reduc-
tion programs on student achievement;
(4) an assurance that the local educational agency shall
pay from non-Federal sources the non-Federal share of the
costs of the demonstration project for which assistance is
sought; and
(5) such additional assurances as the Secretary may rea-
sonably require.
(d) SUFFICIENT SIZE AND SCOPE REQUIRED.The Secretary
shall only award grants under this subpart to applicants having
applications which describe projects of sufficient size and scope to
contribute to carrying out the purposes of this subpart.
(20 U.S.C. 1109c) Enacted July 23, 1992, Pl. 102,-325, sec. 501(a), 106 Stat. 701.
SEC. 565. EVALUATION AND DISSEMINATION.
(a) NATIONAL EVALUATION.The Secretary shall conduct a na-
tional evaluation of the demonstration projects assisted under this
subpart to determine the costs incurred in achieving the reduction
in class size and the effects of the reductions on outcomes, such as
student performance in the affected subjects or grades, attendance,
discipline, classroom organization, management, and teacher satis-
faction and retention.
(b) COOPERATION.Each local educational agency receiving a
grant under this subpart shall cooperate in the national evaluation
described in subsection (a) and shall provide such information to
the Secretary as the Secretary may reasonably require.
Sec. 565A
HIGHER EDUCATION ACT OF 1965
420
(c) REPORTS.The Secretary shall report to the Congress on
the results of the evaluation conducted pursuant to subsection (a).
(d) DISSEMINATION.The Secretary shall widely disseminate
information about the results of the class size demonstration
projects assisted under this subpart.
(20 U.S.C. 1109d) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 702.
SEC. 565A. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $3,000,000 for fiscal
year 1993, and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this subpart.
(20 U.S.C. 1109e) Enacted July 23, 1992, P.L. 102,-325, sec. 501(a), 106 Stat. 702.
Subpart 4Middle School Teaching
Demonstration Programs
SEC. 588. STATEMENT OF PURPOSE.
It is the purpose of this subpart to provide financial assistance
to institutions of higher education which offer teacher training or
retraining programs to develop model programs with a specialized
focus on teaching grades 6 through 9.
(20 U.S.C. 1110) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 703.
SEC. 567. DEFINITIONS.
As used in this subpart:
(1) The term "developmentally appropriate" means a pro-
gram that is appropriate for a child's age and all areas of an
individual child's development, including educational, physical,
emotional, social, cognitive, and communication.
(2) The term "middle school" means a school which enrolls
students in at least two of the grades 6, 7, 8, and 9.
(20 U.S.C. 1110a) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 703.
SEC. 568. PROGRAM AUTHORIZED.
(a) IN GENERAL.The Secretary is authorized to make grants,
on a competitive basis, to institutions of higher education to de-
velop model programs with a specialized focus on teaching grades
6 through 9.
(b) SPECIAL RULE.
(1) EQUITABLE DISTRIBUTION.The Secretary shall ensure
an equitable geographic distribution of grants awarded under
this subpart.
(2) CONSIDERATION.The Secretary shall take into consid-
eration equitable levels of funding for urban and rural areas in
awarding grants under this subpart.
(c) GRANT PERIOD.Grants under this subpart may be award-
ed for a peribd not to exceed 3 years.
(d) FUNDING LIMITATION.Grants awarded under this subpart
may not exceed $250,000 in the first year of funding.
(20 U.S.C. 1110b) Enacted July 23, 1992, P.L. 102-325, sec. 601(a), 106 Stat. 703.
SEC. 569. APPLICATION.
(a) IN GENERAL.Each institution of higher education desiring
a grant under this subpart shall submit an application to the Sec-
430
421
HIGHER EDUCATION ACT OF 1965
Sec. 570A
retary at such time, in such manner, and accompanied by such in-
formation as the Secretary may reasonably require.
(b) CONTENTS.Each application submitted pursuant to sub-
section (a) shall demonstrate that
(1) the applicant will establish and maintain a program of
teacher training or retraining designed to offer specialized
preparation for individuals teaching grades 6 through 9;
(2) the applicant has designed a program of teacher train-
ing or retraining which includes
(A) a study of adolescent development (including cog-
nitive, social, and emotional) with particular emphasis on
early adolescent development;
(B) a study of the influence of institutions such as
schools, families, and peer groups in the socialization of
adolescents;
(C) information concerning the organization of schools
for students in grades 6 through 9, with particular empha-
sis on developmentally appropriate school and classroom
organization and practices;
(D) training in at least 2 subject areas and related in-
structional strategies;
(E) direct experience through internships in middle
grade schools under the guidance of teachers who dem-
onstrate exemplary classroom practices;
(F) strategies for the prevention and detection of high
risk behavior, particularly drug and alcohol abuse, and for
the enhancement of self esteem among adolescents;
(G) a study of effective methods and models of present-
ing substance abuse information and education to adoles-
cent students; and
(H) methods of encouraging parental and community
involvement with middle schools; and
(3) the program will be designed and operated with the ac-
tive participation of classroom teachers and will include an in-
service training component.
(20 U.S.C. 1110c) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 703.
SEC. 570. REPORTS AND INFORMATION DISSEMINATION.
Each institution of higher education receiving a grant under
this subpart shall submit to the Secretary such reports and other
information regarding programs conducted under tliis subpart as
the Secretary deems necessary. The Secretary shall disseminate
such information to other institutions of higher education, State
educational agencies, and local educational agencies.
(20 U.S.C. 1110d) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 704.
SEC. 570A. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $5,000,000 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 subpart.
(20 U.S.C. ll10e) Enacted July 23, 1992, P.L. 102-326, sec. 501(a), 106 Stat. 704.
431
Sec. 571
HIGHER EDUCATION ACT OF 1965
422
PART EMINORITY TEACHER RECRUITMENT
Subpart 1New Teaching Careers
SEC. 671. STATEMENT OF PURPOSE.
It is the purpose of this subpart to establish and operate new
career programs to attract minority candidates, who are in school
support or paraprofessional positions in shortage area schools serv-
ing disadvantaged students, to careers as certified or licensed
teachers.
(20 U.S.C. 1111) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 704
SEC. 572. STATE GRANT AUTHORITY; APPLICATIONS.
(a) AUTHORITY.
(1) GRANTS BY SECRETARY.In any fiscal year in which ap-
propriations
for
this
subpart
do
not
equal
or
exceed
$50,000,000, the Secretary is authorized, in accordance with
this subpart, to award grants, on a competitive basis, to States
to enable States to pay the Federal share of supporting pro-
grams that carry out the purpose of this subpart.
(2) STATE GRANT PROGRAM.In any fiscal year in which
appropriations for this subpart equal or exceed $50,000,000,
the Secretary is authorized, in accordance with the provisions
of this subpart, to make grants to States in accordance with al-
locations under subsection (b) to enable States to pay the Fed-
eral share of supporting programs that carry out the purposes
of this subpart.
(b) ALLOCATION AMONG STATES.Except as provided in sub-
section (a)(1), each State shall be eligible to receive a grant under
this subpart in each fiscal year that bears as nearly as possible the
same ratio to the amount appropriated under section 576C as the
allocation of funds under part A of chapter 1 of title I of the Ele-
mentary and Secondary Education Act of 1965 in that State bears
to the total allocation of such funds in all States, except that no
State grant shall be less than $500,000 in any fiscal year.
(c) DURATION OF GRANT.Each grant awarded under this sub-
part shall be awarded for a term of 5 years, subject to the availabil-
ity of appropriations.
(d) FEDERAL SHARE.The Federal share of each grant awarded
under this subpart shall be 75 percent in the first year in which
the State receives a grant, 65 percent in the second such year, 55
percent in the third such year, 45 percent in the fourth such year,
and 35 percent in the fifth such year.
(e) NON-FEDERAL SHARE.The non-Federal share of each grant
awarded under this subpart may be in cash or in kind fairly evalu-
ated, including planned equipment or services.
(f) SUBMISSION OF STATE APPLICATIONS.In order to receive a
grant under this subpart, a State shall submit an application at
such time or times, in such manner, and containing such informa-
tion as the Secretary may prescribe by regulation. Such application
shall
(1) contain assurances that the State will award grants on
a competitive basis to eligible recipients submitting applica-
tions described in section 574;
43f!'
423
HIGHER EDUCATION ACT OF 1965
Sec. 574
(2) set forth a program of activities for carrying out the
purposes set forth in this subpart in such detail as will enable
the Secretary to determine the degree to which such program
will accomplish such purposes and such other policies, proce-
dures, and assurances as the Secretary may require by regula-
tion.
(20 U.S.C. 1111a) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 704
SEC. 573. AGREEMENTS.
Each State receiving a grant under this subpart shall enter
into an agreement with the Secretary. Each such agreement shall
include provisions designed to ensure that
(1) the State educational agency, the State higher edu-
cation agency, or the State agency which administers subpart
4 of part A of title W, relating to State student incentive
grants, will administer the program authorized by this subpart
in the State;
(2) the State educational agency or higher education agen-
cy will use not more than 5 percent of the grant it receives for
administrative expenses;
(3) the State educational agency or higher education agen-
cy will keep such records and provide such information to the
Secretary as may be required for fiscal audit and program
evaluation, consistent with the responsibilities of the Sec-
retary; and
(4) the State will establish a system for the evaluation of
the programs assisted under this subpart.
(20 U.S.C. unb) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 705
SEC. 574. APPLICATION.
(a) IN GENERAL.A grant under this subpart may be made
only to an eligible recipient which submits an application to the
State containing or accompanied by such information as the State
may reasonably require.
(b) CONTENTS OF APPLICATION.Each such application shall
(1) describe the activities and services for which assistance
is sought;
(2) set forth the number of expected participants in each
program assisted under this subpart;
(3) demonstrate steps on a career ladder leading to the po-
sition of fully credentialed teacher, ranging from nonskilled
entry
positions,
extending
through
intermediate
subprofessional functions, and terminating in full professional
status as a certified teacher duly recognized by the appropriate
State agency;
(4) contain assurances that advancement within such ca-
reer ladders would be based on merit, but that the opportunity
for professional growth is available to all;
(5) demonstrate a plan for employing permanently individ-
uals who have participated in the program at their new level
of training, including individuals who terminate the program
at a level below that of fully credentialed teacher;
(6) demonstrate a plan for bringing a sizable portion of the
educational program and coursework to the place of the partici-
pant's employment;
433
Sec. 575
HIGHER EDUCATION ACT OF 1965
424
(7) demonstrate a plan for providing academic credit for in-
service training and other relevant experience as well as for-
mal academic coursework;
(8) provide for participation of individuals who have at-
tained various levels of education, including individuals who
have not completed high school, with special consideration for
such participation given to individuals already serving within
the school system;
(9) provide assurances that the program assisted under
this subpart will be available to individuals with disabilities;
and (10) contain such other assurances as the State may rea-
sonably require.
(20 U.S.C. 1111c) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 705.
SEC. 575. REQUIREMENTS.
(a) GENERAL REQUIREMENTS.An eligible racipient of a grant
under this subpart shall require that any paraprofessional who re-
ceives student financial assistance under this subpart and who be-
comes a fully certified or licensed teacher enter into an agreement
under which the paraprofessional shall.
(1) within the 10-year period after completing the post-
secondary education for which the assistance was provided., act
as an educational professional or a paraprofessional in the
local educational agency that is a consortium member of the el-
igible recipient providing such assistance, or, if no teaching po-
sition is offered by such local educational agency, in a shortage
area school approved by the State for a period of not less than
one year for each full-time academic year or equivalent for
which the assistance was received;
(2) provide to the State evidence of compliance with para-
graph (1); and
(3) repay that portion of the student fmancial assistance
received under this subpart which was provided for tuition,
plus interest and reasonable collection costs (if applicable), in
the event that the teacher fails to comply with the conditions
of paragraph (1), in accordance with the regulations prescribed
by the Secretary under section 527, except that the provisions
of this paragraph shall not apply to anyone for whom no teach-
ing position was made available by the local educational agen-
cy or State, or in the circumstances provided in section 528.
(b) AMOUNT OF FINANCIAL ASSISTANCE.The amount of finan-
cial assistance awarded under this subpart shall be reduced by the
amount that the financial assistance exceeds the student's cost of
attendance, as defined in section 472. Financial assistance awarded
under this subpart shall not be reduced on the basis of the stu-
dent's receipt of other forms of Federal student financial assistance
but shall be taken into account in determining the eligibility of the
student for those other forms of Federal student financial assist-
ance.
(20 U.S.C. 1111d) Enacted July 23, 1992, P.L. 102-325, sec. 601(a), 106 Stat. 706.
SEC. 576. SPECIAL CONSIDERATION.
In awarding grants under this subpart, the State shall give
special consideration to-
434
425
HIGHER EDUCATION ACT OF 1965
Sec. 576C
(1) programs designed to identify, recruit, and certify
(A) speakers of non-English languages who have been
trained as teachers in their home country; or
(B) individuals already employed in a local educational
agency; and
(2) eligible recipients located in shortage areas as defined
in section 576B.
(20 U.S.C. 1111e) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 707.
SEC. 576A. USE OF FUNDS.
Funds provided to eligible recipients pursuant to this subpart
may be used for
(1) tuition or part or all of the costs of attendance (as de-
termined under section 472) for participants in programs as-
sisted under this subpart;
(2) the release lime of such participants;
(3) instructional and supportive services for such partici-
pants in such programs; and
(4) stipends for child care to such participants whose aca-
demic coursework takes place outside the normal workday.
(20 U.S.C. 111H) Enacted July 23, 1992, P.L. 102-625, sec. 501(a), 106 Stat. 707.
SEC. 576B. DEF/NITIONS.
For the purpose of this subpart
(1) the term "certified or licensed teacher" means an indi-
vidual who possesses a document certifying that the individual
has met the requirements of a State for employment as a
teacher in the public schools of that State (including individ-
uals who have been certified as specialists in preschool and
early childhood education);
(2) the term "eligible recipient" means a consortium of
(A) an institution of higher education, and
(B) one or more local educational agencies.
(3) the term "paraprofessional" means an individual with
at least a high school diploma or recognized equivalent who is
employed in a preschool or element-ry or secondary school
under the supervision of a certified or licensed teacher, includ-
ing individuals employed in bilingual education, special edu-
cation, and migrant education;
(4) the term "school support" means an individual who is
employed by a local educational agency; and
(5) the term 'shortage area" means (A) an area the Sec-
retary has designated as an area with a shortage of elementary
and secondary school teachers, or (B) a shortage in a des-
ignated subject area as described in section 530A of this Act.
(20 U.S.C. 1111g) Enacted July 23, 1992, P.L. 102-326, sec. 601(a), 106 Stat. 707.
SEC. 576C. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $30,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this subpart.
(20 U.S.C. 1111h) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 708.
435
Sec. 577
HIGHER EDUCATION ACT OF 1965
426
Subpart 2Programs to Encourage Minority
Students to Become Teachers
SEC. 577. STATEMENT OF PURPOSE.
It is the purpose of the program conducted pursuant to section
578 to carry out activities designed to
(1) improve recruitment and training opportunities in edu-
cation for minority individuals, including language minority in-
dividuals;
(2) increase the number of minority teachers, including
language minority teachers, in elementary and secondary
schools; and
(3) to identif3r and encourage minority students in the 7th
through the 12th grades to aspire to, and to prepare for, ca-
reers in elementary and secondary school teaching.
(20 U.S.C. 1112) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 708.
SEC. 578. PARTNERSHIP GRANTS AUTHORIZED.
(a) Aumortrry.The Secretary is authorized to make grants to
pay the Federal share of carrying out the purposes of this subpart
to a partnership between
(1) one or more institutions of higher education which have
a demonstrated record and special expertise in carrying out the
purposes of this subpart; and
(2)(A) one or more local educational agencies;
(B) a State educational agency or a State higher education
agency; or
(C) community-based organizations.
(b) FEDERAL SHARE.The Federal share of each grant awarded
under this section shall be 50 percent.
(c) NON-FEDERAL SHARE.The non-Federal share of each grant
awarded under this section may be in cash or kind fairly evaluated,
including planned equipment or services.
(d) ADMINISTRATIVE COSTS.Not more than 5 percent of any
grant awarded under this section may be used for administrative
expenses.
(20 U.S.C. 1112a) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 708.
SEC. 579. PARTNERSHIP AGREEMENT.
(a) IN GENERAL.In order to be eligible for a grant under sec-
tion 578, a partnership shall enter into a written partnership
agreement. All partners shall sign the agreement.
(b) CONTENTS OF AGREEMENT.The agreement shall include
(1) a listing of all participants in the partnership;
(2) a description of the responsibilities of each participant
in the partnership; and
(3) a listing of the resources, if any, to be contributed to
the partnership.
(c) SELECTION CRITERIA.In making grants under section 578,
the Secretary shall approve applications which contain provision
for projects designed to carry out the purposes described in section
577 and which-
4'if
427
HIGHER EDUCATION ACT OF 1965
Sec. 580
(1) identify students who indicate an interest in entering
the teaching profession, and provide such individuals with sup-
port programs suchas
(A) scholarship fund..s to meet expenses;
(B) remedial and tutoring programs;
(C) counseling and support services;
(D) academic advice and guidance in course selection
to prepare for teacher certification;
(E) information and advice regarding eligibility for
membership in the Teacher Corps established under sub-
part 3 of part C of this title, and other financial assistance
programs;
(F) teaching mentors;
(G) ir.otivational activities;
(H) taaching skill development;
(I) future teacher clubs; and
(J) instruction in test-taking skills.
(2) establish or strengthen teacher training programs;
(3) establish or enhance early identification/articulation
partnership programs with secondary schools and community
colleges;
(4) establish partnerships with graduate schools of edu-
cation to foster and facilitate the movement of minority stu-
dents into post-graduate studies;
(5) establish programs and activities which foster and fa-
cilitate the movement of students interested in pursuing teach-
ing careers from 2-year institutions to 4-year institutions, fo-
cusing particular attention on facilitating the transfer of aca-
demic credit; and
(6) improve existing assessment practices that determine
an individual's qualifications to become a teacher.
(20 U.S.C. 1112b) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 708.
SEC. 580. APPLICATION FOR TEACHER PARTNERSIDEPS PROGRAM.
(a) APPLICATION REQUIRED.A partnership desiring to receive
a grant under section 578 shall submit an application to the Sec-
retary.
(b)
CONTENTS
OF
APPLICATION.The
application
shall
include(1) the written and signed partnership agreement required
by section 579;
(2) set forth the individuals to be served;
(3) a listing of the elementary, if applicable, and secondary
schools of the local educational agency to be involved in the
program assisted under this subpart;
(4) a description of the services and activitie3 to be offered
under the program assisted under this subpart; and
(5) such additional information and assurances as the Sec-
retary may reasonably require.
(c) STATE EDUCATIONAL AGENCY REvIEw.Each application
from a partnership for a grant under section 578 shall be for-
warded to the appropriate State educational agency (unless the
State educational agency is a member of the partnership) for re-
view and comment if the State educational agency requests the op-
437
Sec. 580A
HIGHER EDUCATION ACT OF 1965
428
portimity for such a review. The State educational agency must
complete a review of such application and comment to the Sec-
retary within 30 calendar days of receipt. Failure of the State edu-
cational agency to submit comments to the Secretary shall not prej-
udice such application.
(20 U.S.C. 1112c) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 709.
SEC. 580A. TEACHER PLACEMENT PROGRAM.
(a) GRANTS AUTHORIZED.
(1) IN GENERAL.The Secretary is authorized to make
grants to institutions of higher education that have schools or
departments of education to pay the Federal share of develop-
ing and carrying out programs and activities designed to
(A) prepare and train students to become elementary
and secondary school teachers; and
(B) to the extent practicable, place the students as
teachers in urban and rural public or private nonprofit ele-
mentary or secondary schools where at least 50 percent of
students enrolled are from minority groups.
(2) FEDERAL SHARE.The Federal share of each grant
awarded under this section shall be 50 percent.
(3) NON-FEDERAL SHARE.The non-Federal share of each
grant awarded under this section may be in cash or in kind
fairly evaluated, including planned ecluipment or services.
(b) USE OF FUNDS.Grants under tlus section may be used for
the costs of developing and carrying out the program of teacher
preparation, training, and placement described in subsection (a).
(c) APPLICATIONS.No grant may be made under this section
unless an application to the Secretary is made by the institution
of higher education at such time, in such manner, and containing
or accompanied by such information as the Secretary may reason-
ably require.
(d) SPECIAL CONSIDERATION.The Secretary is authorized, in
making grants under this section, to give special consideration to
historically Black colleges and universities and to institutions
which
(1) are eligible to receive funds under part C of title X; and
(2) have enrollments of at least 50 percent minority stu-
dents in their teacher education programs.
(e) PERFORMANCE INCENTIVE.In any fiscal year beginning
after September 30, 1993, the Secretary may, based upon evalua-
tion and monitoring of programs assisted under this section, in-
crease the Federal share for a recipient of funds under this section
for the succeeding fiscal year to 75 percent, if the Secretary deter-
mines that there is demonstrated success in the operation of the
program assisted by such recipient.
(f) ADMINISTRATIVE COSTS.Not more than 5 percent of any
grant awarded under this section may be used for administrative
expenses.
(20 U.S.C. 1112d) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 710.
SEC. 580B. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $15,000,000 for fiscal
year 1993, and such sums as may be necessary for each of the 4
succeeding fiscal years, of which not more than 2/3 shall be avail-
4:38
429
HIGHER EDUCATION ACT OF 1965
Sec. 581
able to carry out programs under section 578 and not less than Vs
shall be available to carry out programs under section 580A.
(20 U.S.C. 1112e) Enacted July 23, 1992, P.L. 102-326, sec. 501(a), 106 Stat. 710;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(7), 107 Stat. 2481.
PART FPROGRAMS FOR SPECIAL
POPULATIONS
Subpart INational Mini Corps Program
SEC. 581. NATIONAL MINI CORPS.
(a) PROGRAM AUTHORMED.The Secretary is authorized to
make grants to institutions of higher education to enable such in-
stitutions to establish partnerships with local educational agencies
to carry out the purposes of the National Mini Corps Program.
(b) DEFINITIONS.AS used in this subpart
(1) the term "children" means children who are eligible to
receive services under part A or subpart 1 of part D of chapter
1 of title I of the Elementary and Secondary Education Act of
1965; and
(2) the term "individual" (A) has the same meaning as the
terms "first generation college student" and "low income indi-
vidual" as defined under section 402A(g) of this Act, or (B)
means a student enrolled in an institution of higher education
who is the child of current or former migratory workers (in-
cluding migratory agricultural dairy workers) or of migratory
fishermen.
(c) PURPOSE OF THE PROGRAM.It is the purpose of the Na-
tional Mini Corps Program to
(1) provide individuals who are enrolled or plan to enroll
in an institution of higher education with advisement, training,
and instructional services, and to encourage individuals to be
role models for children;
(2) provide outreach and recruitment services to encourage
individuals to enroll in teacher education programs;
(3) provide support and instructional services to individ-
uals who are enrolled in an institution of higher education to
enable such individuals to provide direct instructional services,
which are coordinated with the overall educational goals of the
State or local educational agency, to children eligible to receive
services under chapter 1 of title I of the Elementary and Sec-
ondary Education Act of 1965 during the regular school year
or summer term. Such support and services may include
(A) lessons and provision of materials that meet the
academic needs of children in the classroom;
(B) supplemental instruction to reinforce the basic
skills and concepts provided through instruction by the
teacher;
(C) instruction in other subject areas;
(D) academic assistance, home visits, parental involve-
ment, parent-student advisement services, and family ad-
vocacy; and
4 "39
Sec. 581
HIGHER EDUCATION ACT OF 1965
430
(E) stipends for individuals who participate in the pro-
gram assisted under this subpart for at least 10 but not
more than 15 hours per week;
(4) designate college coordinators at participating institu-
tions of higher education to train, supervise, and assign indi-
viduals to carry out the activities of this subpart in cooperation
with State and local educational agencies in which children
with special needs have been identified; and
(5) support other appropriate activities related to encour-
aging individuals to enter the teaching profession and to pro-
vide a link to the community.
(d) APPLICATION REQUIRED.Institutions of higher education
desiring to receive a grant under this subpart shall submit an ap-
plication to the Secretary which shall include
(1) a written partnership agreement with the State and
local educational agency in which the children have been iden-
tified for participation in the activities under this subpart;
(2) a description of the strategies that will be employed to
engage the community generally in the activities and programs
supported by the programs under this subpart;
(3) a description of the process by which individuals will
be recruited and selected to participate in the programs as-
sisted under this subpart;
(4) a description of the programs and activities whicli will
be supported by the programs under this subpart; and
(5) such other information as the Secretary considers nec-
essary to determine the nature of the local needs, the quality
of the proposed Mini Corps Program, and the capability of the
applicant to implement the proposed Mini Corps Program.
(e) AWARDING OF GRANTs.In awarding grants under this sub-
part, the Secretary shall ensure, to the extent practicable, that
(1) grants are equitably distributed on a geographic basis
throughout the Nation and among a variety of communities;
(2) the amount of the grant awarded is proportionate to
the number of individuals and children who, on the basis of the
grant application, are expected to be involved in the programs
and activities supported by the National Mini Corps; and
(3) not less than 30 percent of the grants awarded under
this subpart are awarded for programs serving migrant stu-
dents and children.
(f) USES OF FUNDS.Funds provided under this part may be
used for planning, implementing and operating a National Mini
Corps Program, except that not more than 5 percent of any grant
received under this subpart may be used for administrative costs.
(g) EVALUATION.--The Secretary shall, by January 1, 1996,
evaluate the demonstration program assisted under this part and
report the results of such evaluation to the appropriate committees
of the Congress.
(h) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this subpart $10,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years.
(20 U.S.C. 1113) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 711;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(8), 107 Stat. 2481.
4 4 0
431
HIGHER EDUCATION ACT OF 1965
Sec. 586
Subpart 2Foreign Language Instruction
SEC. 586. DEMONSTRATION GRANTS FOR CRITICAL LANGUAGE AND
AREA STUDIES.
(a) PROGRAM AUTHORITY.The Secretary is authorized to
make demonstration grants to eligible consortia to enable such eli-
gible consortia to
(1) operate critical language and area studies programs;
(2) develop and acquire educational equipment and mate-
rials; and
(3) develop teacher training programs, texts, curriculum,
and other activities designed to improve and expand the in-
struction of foreign languages at elementary and secondary
schools across the Nation.
(b) GRANT LIMITATION.The Secretary shall not award a grant
which exceeds $2,000,000 to an eligible consortium under this sec-
tion in any fiscal year, but shall award grants of sufficient size,
scope and quality for a program of comprehensive instruction of
foreign languages.
(c) SPECIAL RULES.
(1) PRIORITY.In awarding grants under this section, the
Secretary shall give priority to eligible consortia with dem-
onstrated, proven effectiveness in the field of critical language
and area studies and which have been in existence for at least
1 year prior to applying for a grant under this section.
(2) EQUITABLE DISTRIBUTION.In awarding grants under
this section, the Secretary shall take into consideration provid-
ing an equitable geographic distribution of such grants among
the regions of the United States.
(3) PROGRAM REQUIREMENT.Each eligible consortium re-
ceiving a grant under this section shall include in the activities
assisted pursuant to such grant, a study abroad or cultural ex-
change program.
(d) ELIGIBLE CONSORTIUM.
(1) IN GENERAL.For the purposes of this section, the term
"eligible consortium" means a cooperative effort between enti-
ties in one or more States that must include at least 4 schools,
of which
(A) one shall be an institution of higher education;
(B) one shall be a secondary school with experience in
teaching critical languages;
(C) one shall be a secondary school with experience in
teaching critical languages and in which at least 25 per-
cent of the students are eligible to be counted under chap-
ter 1 of title I of the Elementary and Secondary Education
Act of 1965; and
(D) one shall be a secondary school in which at least
25 percent of the students are eligible to be counted under
chapter 1 of title I of the Elementary and Secondary Edu-
cation Act of 1965.
(2) NONPROFIT ORGANIZATIONS.Each eligible consortium
described in paragraph (1) may include a nonprofit organiza-
tion to provide services not otherwise available from the enti-
ties described in paragraph (1).
441
See. 587
HIGHER EDUCATION ACT OF 1965
432
(e) ADMINISTRATION.Each eligible consortium receiving a
grant under this section may use not more than 10 percent of such
grant for administrative expenses.
o APPLICATION.
(1) IN GENERAL.Except as provided in paragraph (2),
each eligible consortium desiring a grant under this section
shall submit an application to the Secretary at such time, in
such manner and accompanied by such information as the Sec-
retary may reasonably require.
(2) SPECIAL RULE.The State educational agency or State
higher education agency responsible for the supervision of any
one school participating in an eligible consortium may submit
the application described in paragraph (1) on behalf of such eli-
gible consortium.
(g) DEFINITIONS.For purposes of this section, the term "criti-
cal language" means each of the languages contained in the list of
critical foreign languages designated by the Secretary pursuant to
section 212(d) of the Education for Economic Security Act (50 Fed.
Reg. 149, 31413).
(h) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $15,000,000 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.
(20 U.S.C. 1114) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 712
SEC. 687. DEVELOPMENT OF FOREIGN LANGUAGE AND CULTURE IN-
STRUCTIONAL MATERIALS.
(a) Gp.ANTS AUTHORIZED.The Secretary is authorized to pro-
vide one or more grants on a competitive basis to a State or local
educational agency, an institution of higher education, a private
nonprofit foreign language organization, a nonprofit education asso-
ciation, or a consortium thereof, to enable such entity to act as a
resource center for
(1) coordinating the development of and disseminating for-
eign language and culture instructional material, including
children's literature in foreign languages, videotapes and com-
puter software, and teacher's instructional kits relating to
international study; and
(2) encouraging the expanded use of technology in teaching
foreign languages and culture at the elementary school level
and, when the needs of elementary schools have been met, at
the secondary school level, with a particular emphasis on ex-
panding the use of technology in teaching foreign languages
and culture at elementary and secondary schools that have
proportionally fewer resources available for teaching foreign
languages and cultures, including schools in urban and rural
areas.
(b) COORDINATION.In developing materials and technologies
under this section, the Secretary shall, where appropriate, make
use of materials and technologies developed under the Star Schools
Program Assistance Act.
(c) AUTHORIZATION OF APPROPRIATION.There are authorized
to be appropriated $4,000,000 for fiscal year 1993 and such sums
442
433
HIGHER EDUCATION ACT OF 1965
Sec. 591
as may be necessary for each of the 4 succeeding fiscal years to
carry out the provisions of this section.
(20 U.S.C. 1114a) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 714.
Subpart 3Small State Teaching Initiative
SEC. 591. MODEL PROGRAMS AND EDUCATIONAL FICELLENCE.
(a) PURPOSE.It is the purpose of this section to provide suffi-
cient funds to small States to enable such States to develop model
programs for educational excellence, teacher training and edu-
cational reform.
(b) PROGRAM AUTHORIZED.
(1) Aumoury.The Secretary is authorized to make
grants to small States in order to enable such States to make
grants to eligible institutions for the purpose of enhancing and
improving the quality of teacher education, training, and re-
cruitment in the Nation's smallest States.
(2) EQUITABLE DISTRIBUTION.The Secretary shall award
grants described in paragraph (1) in equal amounts among
small States having applications approved under subsection
(e).
(C) INSTITINIONAL USE OF FUNDS.Eligible institutions receiv-
ing funds under this section may use such funds for the develop-
ment of innovative teaching techniques and materials, preservice
and inservice training programs, renovation of training facilities
and construction of model classrooms.
(d) DEFINITIONS.
(1) SMALL STATE.For the purposes of this section the
term "small State" means a State the total population of which
is less than 1,108,500 as reported in the 1990 Census of Popu-
lation and Housing.
(2) ELIGIBLE INSTITUTION.For the purposes of this sec-
tion, the term "eligible institution" means any institution of
higher education (as such term is defined in section 1201(a))
that is located in a small State and that provides a course of
study which prepares an individual to become a classroom
teacher.
(e) APPLICATION.Any eligible institution which desires to re-
ceive a grant under this section shall submit to the State an appli-
cation which
(1) if the State educational agency is not administering the
program assisted under this subpart, certifies that the State
educational agency has participated in the development of the
application;
(2) provides for a process of active discussion and consulta-
tion with an advisory committee convened by the State edu-
cational agency and the eligible institution; and
(3) describes how the institution will use the funding.
(f) AUTHORIZATION OF APPROPRIATIONS.For the purposes of
this part there are authorized to be appropriated $5,000,000 for fis-
cal year 1993 and such sums as may be necessary in each of the
4 succeeding fiscal years.
(20 U.S.C. 1115) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 714.
.
'4 41
Sec. 593
HIGHER EDUCATION ACT OF 1965
Subpart 4Faculty Development Grants
SEC. 593. TRAINING GRANTS.
(a) GRANTS AUTHORIZED.The Secretary
is authorized to
award grants to institutions of higher education to enable such in-
stitutions to
(1) develop model programs that provide training to sec-
ondary school faculty to prepare students with disabilities for
postsecondary educational opportunities; and
(2) establish programs of faculty development for faculty
who teach in an institution of higher education to prepare such
faculty for the enrollment of students with disabilities at such
institution.
(b) USE OF GRANTs.The grants described in subsection (a)
may be used to
(1) provide scholarships, including stipends and allow-
ances, to faculty described in paragraph (1) or (2) of subsection
(a); (2) develop materials and inservice programs to assist such
faculty in making the curriculum at an institution of higher
education accessible to students with disabilities; and
(3) provide funds to support the release of such faculty
from teaching assignments for the purpose of educating such
faculty regarding the needs of students with disabilities.
(C) SPECIAL RULES.The Secretary shall ensure that grants
awarded under subsection (aX1) are used for programs that are in
compliance with State and professionally recognized standards for
the training of special education personnel.
(d) AF'PLICATION.Each 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 reasonably require.
(e) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this subpart $5,000,000 tor fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years.
(20 U.S.C. 1116) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 715.
Subpart 5Early Childhood Education Training
SEC. 596. TRAINING IN EARLY CHILDHOOD EDUCATION AND VIO-
LENCE COUNSELING.
(a) PROGRAM AUTHORIZED.The Secretary shall award grants
to institutions of higher education to enable such institutions to es-
tablish innovative programs to recruit and train students for ca-
reers in(1) early childhood development and care, or preschool pro-
grams; or
(2) providing counseling to young children from birth to 6
years of age who have been affected by violence and to adults
who work with such young children.
(b) APPLICATION.An institution of higher education desiring a
grant pursuant to subsection (a) shall submit an application to the
444
11.
435
HIGHER EDUCA110N ACT OF 1965
Sec. 596
Secretary at such time, in such form and containing or accom-
panied by such information or assurances as the Secretary may re-
quire. Each such application shall
(1) describe the activities and services for which assistance
is sought;
(2) contain a plan in accordance with subsection (c);
(3) demonstrate that such institution has the capacity to
implement such plan; and
(4) provide assurances that such plan was developed in
consultation with agencies and organizations that will assist
the institution in carrying out such plan.
(c) PLAN.Each application described in subsection (a) shall
contain a comprehensive plan for the recruitment, retention and
training of students seeking careers in early childhood development
or violence counseling. Such plan shall include a description of
(1) specific strategies for reaching students at secondary
schools, community colleges, undergraduate institutions, or
other agencies and institutions from which such students are
to be drawn for participation in the program, including any
partnerships with such institutions;
(2) specific strategies for retaining such students in the
program, such as summer sessions, internships, mentoring,
and other activities;
(3) methods that will be used to ensure that students
trained pursuant to the plan will find employment in early
childhood education, development and care, or violence coun-
seling;
(4) the goals, objectives, and timelines to be used in assess-
ing the success of the plan and of the activities assisted under
this section;
(5) the curriculum and training leading to the degree or
credential that prepares students for the careers described in
the plan;
(6) the special plans, if any to assure that students
trained pursuant to the plan will be prepared for serving in
economically disadvantaged areas; and
(7) sources of financial aid, to ensure that the training pro-
gram offered pursuant to this section is available to all quali-
fied students.
(d) SELECTION AND PRIORITIES.In evaluating the applications
submitted under this section, the Secretary shall prescribe criteria
regarding such evaluation and shall give priority in granting funds
to institutions that
(1) prepare students for work in economically disadvan-
taged areas;
(2) plan to focus their recruitment, retention, and training
efforts on disadvantaged students; and
(3) have demonstrated effectiveness in providing the type
of training for which the institution seeks assistance under
this section.
(e) DURATION AND AMOUNT.
(1) DURATION.A grant under this section shall be award-
ed for a period of not less than 3 years nor more than 5 years.
445
Sec. 597
HIGHER EDUCATION ACT OF 1965
436
(2) AMOUNT.The total amount of the grant awarded
under this section to any institution of higher education for
any 1 year shall not be less than $500,000 nor more than
$1,000,000.
(20 U.S.C. 1117) Enacted July 23, 1992, P,L. 102-325, sec. 501(a), 106 Stat. 716.
SEC. 597. EARLY CHILDHOOD STAFF TRAINING AND PROFESSIONAL
ENHANCEMENT.
(a) PROGRAM AUTHORIZED.
(1) IN GENERAL.The Secretary shall award grants, on a
competitive basis, to States in accordance with the provisions
of this section.
(2) DURATION.Grants under this section shall be award-
ed for a period of 5 years.
(b) APPLICATION.A State desiring a grant pursuant to this
section shall submit an application to the Secretary at such time,
in such form and containing or accompanied by such information
or assurances as the Secretary may require.
(c) LEAD AGENCY.
(1) DESIGNATION OF LEAD AGENCY.The chief executive of-
ficer of a State, in consultation with the State educational
agency, desiring to receive a grant shall designate an appro-
priate State agency to act as the lead agency to
(A) administer funds received under this section;
(B) develop a State plan pursuant to subsection (e);
and (C) coordinate the provision of services with other ap-
propriate Federal, State, and local programs.
(2) ADVISORY COMMITTEE.The lead agency shall establish
an advisory committee, described in subsection (d), to assist in
developing the plan required under subsection (e).
(d) ADVISORY COMMITTEE.Each advisory committee estab-
lished pursuant to subsection (c)(2) shall consist of a representative
of the following agencies, institutions, organizations, divisions, pro-
grams or departments in the State to the extent such entities exist
within such State:
(1) The lead State agency responsible for administering
funds received under the Child Care and Development Block
Grant Act.
(2) Other State agencies administering or regulating
childcare, early childhood development or education programs.
(3) Institutions of higher education.
(4) Organizations representing early childhood develop-
ment staff and parents.
(5) A local child care resource and referral agency or an or-
ganization representing local child care resource and referral.
(6) A State Head Start association.
(7) An organization with significant experience in training
in the fields of early childhood development, early care and
early education.
(8) State agencies or departments administering or regu-
lating employment, job training, and community development
programs.
(e) STATE PLAN.
4,1G
437
HIGHER EDUCATION ACT OF 1965
Sec. 597
(1) IN GENERAL.Each State desiring a grant under this
section shall submit, through the lead agency, a plan to the
Secretary at such time, in such manner and accompanied by
such information as the Secretary may reasonably require. The
Secretary shall consult with the Secretary of Health and
Human Services regarding the contents of such plan.
(2) CONTENTS.Each plan submitted pursuant to sub-
section (a) shall
(A) identify the lead agency as described in subsection
(c); (B) assess the training offerinp and content of such
offerings, amount of training required for an early child-
hood development staff license or certificate, compensation,
recruitment and turnover of staff, and any coordination of
training offerings and professional growth of early child-
hood development staff in the State;
(C) describe the goals of the activities assisted under
this part; and
(D) describe how the State shall
(i) identify and maintain a career development
path, based on a progression of roles for early child-
hood development staff, with each role articulated
with training and different levels of responsibility and
suggested compensation, in such manner as will per-
mit an individual to qualify for a more responsible
role;
(ii) ensure that trainers of early childhood devel-
opment staff in the State are qualified, licensed or cer-
tified in accordance with State law;
(iii) describe the ways in which the State will en-
courage the coordination of training programs among
institutions of higher education, including, if prac-
ticable, transfer of credits among mstitutions;
(iv) set forth the ways in which the State will pay
the costs of any assessment, credentialing, certifi-
cation, licensing, training offering, training inventory,
increase in staff participation in training, or other
services assisted by a grant under this section;
(v) describe the ways in which the State plans to
coordinate the various State and local agencies and or-
ganizations to maximize coordination of standards and
requirements for certifications, licenses, and accredita-
dons;
(vi) describe the ways in which the State will com-
pile and disseminate information on
(I) training offerings;
(II) requirements for admission into courses
and programs;
(III) requirements for a license, certificate,
credential, or degree to which such offerings may
be afplied;
IV) fimding sources available for such activi-
ties; and
(V) the cost of training offerings; and
447
Sec. 599
HIGHER EDUCATION ACT OF 1965
438
(vii) describe the ways in which the State will use
the funds received under this section and any other
funds available to the State to carry out the activities
described in the State plan.
(20 U.S.C. 1117a) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 717;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(9), 107 Stat. 2481,
SEC. 598. REPORT.
Each institution of higher education or State receiving a grant
under this subpart shall submit to the Secretary program reports
and evaluations at such times and containing such information as
the Secretary may require.
(20 U.S.C. 1117b) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 719.
SEC. 599. AUTHORIZATION OF APPROPRIATIONS.
(a) TRAINING IN EARLY CHILDHOOD EDUCATION AND VIOLENCE
COUNSELING.To carry out activities described in section 596,
there are authorized to be appropriated $20,000,000 for fiscal year
1993 and such sums as may be necessary for each of the 4 succeed-
ing fiscal years.
(b) EARLY CHILDHOOD STAFF TRAINING AND PROFESSIONAL EN-
HANCEMENT.To carry out activities described in section 597, there
are authorized to be appropriated $10,000,000 for fiscal year 1993
and such sums as may be necessary for each of the 4 succeeding
fiscal years.
(20 U.S.C. 1117c) Enacted July 23, 1992, P.L. 102-325, sec. 501(a), 106 Stat. 719.
TITLE VI INTERNATIONAL EDUCATION
PROGRAMS
PART A-INTERNATIONAL AND FOREIGN
LANGUAGE STUDIES
SEC. 601. FINDINGS AND PURPOSES.
(a) FINDINGS.The Congress finds that
(1) the well-being of the United States, its economy and
long-range security, is dependent on the education and train-
ing of Americans in international and foreign language studies
and on a strong research base in these areas;
(2) knowledge of other countries and the ability to commu-
nicate in other languages is essential to the promotion of mu-
tual understanding and cooperation among nations; and
(3) present and future generations of Americans must be
afforded the opportunity to develop to the fullest extent pos-
sible their intellectual capacities in all areas of knowledge.
(b) PURPOSES.--It is the purpose of this part to assist in the
development of knowledge, international study, resources and
trained personnel, to stimulate the attainment of foreign language
acquisition and fluency, to develop a pool of international experts
to meet national needs, and to coordinate the programs of the Fed-
eral Government in the areas of foreign language, area and other
international studies, including professional international affairs
education, and research.
448
439
HIGHER EDUCATION ACT OF 1965
Sec. 602
(20 U.S.C. 1121) Enacted Nov. 8, 1965, P.L. 89-329, sec. 601, 79 Stat. 1261;
amended Nov. 3, 1966, P.L. 89-752, sec. 3(b), 80 Stat. 1241; amended Oct. 16, 1968,
P.L. 90-575, secs. 241, 242, 82 Stat. 1041; amended June 23, 1972, P.L. 92-318, sec.
151(a), 86 Stat. 288; amended October 12, 1976, P.L. 94-482, sec. 156, 90 Stat.
2155, 2156; amended October 3, 1980, P.L. 96-374, sec. 601, 94 Stat. 1465; amended
October 17, 1986, P.L. 99-498, sec. 601, 100 Stat. 1514; amended July 23, 1992, P.L.
102-325, sec. 601, 106 Stat. 719.
SEC. 602. GRADUATE AND UNDERGRADUATE LANGUAGE AND AREA
CENTERS.
(a) NATIONAL LANGUAGE AND AREA CENTERS AUTHORIZED.-
(1) GENERAL AUTHORITY.-The Secretary is authorized-
(A) to make grants to institutions of higher education,
or combinations thereof, for the purpose of establishing,
strengthening, and operating comprehensive language and
area centers and programs; and
(B) to make grants to such institutions or combina-
tions for the purpose of establishing, strengthening, and
operating a diverse network of undergraduate language
and area centers and programs,
which will be national resources for teaching of any modern
foreign language, for instruction in fields needed to provide full
understanding of areas, regions, or countries in which such
language is commonly used, for research and training in inter-
national studies, and the international and foreign language
aspects of professional and other fields of study, and for in-
struction and research on issues in world affairs which 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) faculty, staff, and student travel in foreign areas,
regions, or countries;
(B) teaching and research materials;
(C) curriculum planning and development;
(D) bringing visiting scholars and faculty to the center
to teach or to conduct research;
(E) establishing and maintaining linkages with over-
seas institutions of higher education and other organiza-
tions that may contribute to the educational objectives of
this section for the purpose of contributing to the teaching
and research of the center or program; and
(F) training and improvement of the staff, for the pur-
pose of, and subject to such conditions as the Secretary
finds necessary, for carrying out the objectives of this sec-
tion.
(3) GRANTS To MAINTAIN LIBRARY COLLECTIONS.-The Sec-
retary may make grants to centers described in paragraph (1)
having important library collections for the maintenance of
such collections.
(4) OUTREACH GRANTS AND SUMMER INSTITUTES.-The Sec-
retary may make additional grants to centers described in
paragraph (1) for any one or combination of the following pur-
poses:
77-530 0 -94 -- 15
449
Sec. 602
HIGHER EDUCATION ACT OF 1965
440
(A) Programs of linkage or outreach between foreign
language, area studies, and 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 and other inter-
national fields designed to carry out the programs of link-
age and outreach in subparagraphs (A), (B), (C), and (D)
of this paragraph.
(b) STIPENDS FOR FOREIGN LANGUAGE AND AREA STUDIES.
(1) GRADUATE STIPENDS.(A) The Secretary is authorized
to make grants to institutions of higher education or combina-
tions of such institutons for the purpose of paying stipends to
individuals undergoing advanced training in any center or pro-
gram approved by the Secretary under this part.
(B) Students receiving stipends described in subparagraph
(A) shall be individuals who are engaged in an instructional
program with stated performance goals for functional foreign
language use or in a program developing such performance
goals, in combination with area studies, international studies,
or the international aspects of a professional studies program.
(C) Stipends awarded to grad.uate level recipients may in-
clude allowances for dependents and for travel for research and
study in the United States and abroad.
(2) DOCTORAL STIPENDS.(A) The Secretary is authorized
to make grants to institutions of higher education or combina-
tions of such institutions for the purpose of paying stipends to
students beginning with their third year of graduate training
in any center or program approved by the Secretary under this
part.
(B) Students receiving stipends described in subparagraph
(A) shall be individuals engaged in completing advanced degree
requirements in foreign language, foreign area studies, or
other international fields.
(C) Stipends shall be for the purpose of completing degree
requirements, such as the predissertation level studies, prepa-
ration for dissertation research including the study of less com-
monly taught languages, dissertation research abroad, and dis-
sertation writing.
(D) Students may receive stipends described in subpara-
graph (A) for a maximum of 4 years if such students make sat-
isfactory_progress toward completion of a degree program.
(3) FUNDING LIMITATIONS.The Secretary is not author-
ized to make awards under paragraph (2) for any fiscal year
unless the amount made available under paragraph (1) for
such fiscal year equals or exceeds the current services equiva-
lent of the level of funding during fiscal year 1992 under para-
graph (1).
(C) SPECIAL RULE WITH RESPECT TO TRAVEL.No funds may be
expended under this part for undergraduate travel except in ac-
-,450
441
HIGHER EDUCATION ACT OF 1965
Sec. 604
cordance with rules prescribed by the Secretary setting forth poli-
cies and procedures to assure that Federal funds made available
for such travel are expended as part of a formal program of super-
vised study.
(20 U.S.C. 1122) Enacted Nov. 8, 1965, P.L. 89-329, sec. 602, 79 Stat. 1261;
amended Nov. 15, 1977, P.L. 95-180, 91 Stat. 1372; amended October 3, 1980, P.L.
96-374, sec. 601, 94 Stat. 1465; amended October 17, 1986, P.L. 99-498, sec. 602,
100 Stat. 1514; amended June 3, 1987, P.L. 100-50, sec. 18, 101 Stat. 360; amended
July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 720; amended December 20, 1993,
P.L. 103-208, sec. 2(j)(10) and (11), 107 Stat. 2481.
SEC. 603. 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 estabP.shing, 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. Activities carried out
by such centers may include-
(1) the conduct of research on new and improved teaching
methods, including the use of advanced educational technology;
(2) the development of new teaching materials reflecting
the use of such research in effective teaching strategies;
(3) the development and application of performance testing
appropriate to an educational setting for use as a standard and
comparable measurement of skill levels in all languages;
(4) the training of teachers in the administration and in-
terpretation of performance tests, the use of effective teaching
strategies, and the use of new technologies;
(5) the publication of instructional materials in the less
commonly taught languages; and
(6) the widespread dissemination of research results,
teaching materials, and improved pedagogical strategies to oth-
ers within the postsecondary education community.
(b) 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.
(20 U.S.C. 1123) Enacted November 8, 1965, P.L. 89-329, sec. 603, 79 Stat. 1262;
amended October 3, 1980, P.L. 96-374, sec. 601, 94 Stat. 1466; amended October
17, 1986, P.L. 99-498, sec. 603, 100 Stat. 1515; amended July 23, 1992, P.L. 102-
325, sec. 601, 106 Stat. 722; amended December 20, 1993, P.L. 103-208, sec. 2(j)(12),
107 Stat. 2481.
SEC. 604. UNDERGRADUATE INTERNATIONAL STUDIES AND FOREIGN
LANGUAGE PROGRAMS.
(a) INCENTIVES FOR THE CREATION OF UNDERGRADUATE INTER-
NATIONAL STUDIES AND FOREIGN LANGUAGE PROGRAMS.-
(1) AUTHORITY.-The Secretary is authorized to make
grants to institutions of higher education or combinations of
such institutions to assist such institutions or combinations in
planning, developing, and carrying out a program to improve
undergraduate instruction in international studies and foreign
languages. Such grants shall be awarded to institutions of
higher education or combinations of such institutions seeking
45t
SW. 604
HIGHER EDUCATION ACT OF 1965
442
to create new programs or curricula in area studies, foreign
languages, and other international fields.
(2) FEDERAL SHARE AND USE OF FUNDS.Grants made
under this section may be used to pay not more than 50 per-
cent 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;
(B) teaching, research, curriculum development, and
other related activities;
(C) training of faculty members in foreign countries;
(D) expansion of foreign language courses;
(E) programs under which foreign teachers and schol-
ars may visit institutions as visiting faculty;
(F) international education programs designed to de-
velop or enhance linkages between two- and four-year in-
stitutions of higher education, or baccalaureate and post-
baccalaureate programs or institutions;
(G) the development of an international dimension in
preservice and inservice teacher training;
(H) the development of undergraduate study abroad
programs in locations abroad in which such study opportu-
nities are not otherwise available or which serve students
for whom such opportunities are not otherwise available
and which provide courses that are closely related to on-
campus foreign language and international studies curric-
ula; and
(I) the integration of new study abroad opportunities
for undergraduate students into cunicula of specific degree
progranis.
(3) NON-FEDERAL SHARE.The non-Federal share of the
cost of the programs assisted under this subsection may be
provided eith.er in cash or in kind. Such assistance may be
composed of institutional and noninstitutional funds, including
State and private contributions.
(4) PRioRrry.In awarding grants under this section, the
Secretary shall give priority to applications from institutions of
higher education or combinations of such institutions that re-
quire 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
two-year degree granting institution, offer 2 years of post-
secondary credit in a foreign language.
(b) GRANTS TO STRENGTHEN PROGRAMS OF DEMONSTRATED Ex-
CELLENCE IN UNDERGRADUATE INTERNATIONAL STUDIES AND FOR-
EIGN LANGUAGE PROGRAMS.
(1) IN GENERAL.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 enable such
institutions of higher education, combinatiOns of such institu-
tions or partnerships to
, 452
443
HIGHER EDUCATION ACT OF 1965
Sec. 604
(A) strengthen programs of demonstrated excellence in
area studies, foreign languages, and other international
fields in order to ensure the self-sustaining maintenance
and growth of such programs; and
(B) enhance the capacity-building and dissemination
functions of such programs.
(2) FEDERAL SHARE AND USE OF GRANT FUNDS.Grants
awarded under this subsection may be used to pay not more
than 50 percent of the cost of projects and activities which are
an integral part of the programs described in paragraph (1),
such as
(A) teaching, research, curriculum development, and
other related activities;
(B) strengthening undergraduate majors and minors
directly related to the generation of international exper-
tise;
(C) developing new foreign language courses, espe-
cially in languages previously not taught at such institu-
tion or combination of such institutions, and improving the
quality of existing foreign language programs;
(D) expanding library and teaching resources;
(E) establishing linkages overseas with institutions of
higher education and organizations that contribute to the
educational objectives of this subsection;
(F) developing programs designed to integrate profes-
sional and technical education with area studies, foreign
languages, and other international fields;
(G) disseminating curricular materials and program
designs to other educational institutions;
(H) integrating on-campus undergraduate curriculum
with study abroad and exchange programs;
(I) training faculty and staff in area studies, foreign
languages, and other international fields;
(J) conducting summer institutes in foreign area and
other international fields to provide faculty and curriculum
development, including the integration of professional and
technical education with foreign area and other inter-
national studies, and to provide foreign area and other
international knowledge or skills to government personnel
or private sector professionals in international activities;
(K)
developing
study
and
internship
abroad
programs
(i) in locations in which such opportunities are not
otherwise available; or
(ii) which serve students for whom such opportu-
nities are not otherwise available; and
(L) developing model programs to enrich or enhance
the effectiveness of study abroad programs, including
predeparture and post return orientation programs, inte-
gration of study abroad into the curriculum of the home in-
stitution, credit transfer, improved faculty involvement,
cross-disciplinary programs, student selection and advising
services, and academic advising.
.453
Sec. 605
HIGHER EDUCATION ACT OF 1965
444
(3) NON-FEDERAL SHARE.-The non-Federal share of the
cost of the programs assisted under this subsection may be
provided either in cash or in kind. Such assistance may be
composed of institutional and noninstitutional funds, including
State and private contributions.
(4) EVALUATION CRITERIA AND REPORT.-As a condition for
the award of any grant under this subsection, the Secretary
may establish criteria for evaluating programs and require an
annual report which evaluates the progress and performance of
students in such programs.
(C) 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 attaining the objective of this sec-
tion.
(20 U.S.C. 1124) Enacted November 8, 1965, P.L. 89-329, sec. 604, 79 Stat. 1263;
amended November 3, 1966, P.L. 89-752, sec. 14, 80 Stat. 1244; amended October
16, 1968, P.L. 90-575, sec. 242, 82 Stat. 1041; amended October 12, 1976, P.L. 94-
482, sec. 157, 90 Stat. 2156; amended October 3, 1980, P.L. 96-374, sec. 601, 94
Stat. 1466; amended October 17, 1986, P.L. 99-498, sec. 604, 100 Stat. 1516; amend-
ed July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 722.
SEC. 605. INTENSIVE SUMMER LANGUAGE INSTITUTES.
(a) INTENSIVE SUMMER LANGUAGE INSTITUTES AUTHORIZED.-
(1) GRANTS AUTHORIZED.-The Secretary is authorized to
make grants to institutions of higher education, or combina-
tions of such institutions, for the purpose of establishing and
conducting intensive summer language institutes.
(2) ELIGIBLE GRANT RECIPIENTS.-Training authorized by
this section shall be provided through-
(A) institutes designed to meet the needs for intensive
language training by advanced foreign language students;
(B) institutes designed to provide professional develop-
ment and improve language instruction through preservice
and inservice training for language teachers; or
(C) institutes that combine the purposes of subpara-
graphs (A) and (B).
(3) AUTHORIZED ACTIVITIES.--Grants made under this sec-
tion may be used for-
(A) intensive training in critical languages;
(B) training in neglected languages; and
(C) stipends for students and faculty attending the in-
stitutes authorized by this section.
(4) INSTRUCTIONAL PROGRAM.-Institutes supported under
this section may provide instruction on a full-time or part-time
basis to supplement instruction not fully available in centers
supported under section 602.
(b) PEER REVIEVI.-Grants made under this section shall be
awarded on the basis of recommendations made by peer review
panels composed of broadly representative professionals.
(20 U.S.C. 1124a) Enacted October 17, 1986, P.L. 99-498, sec. 605(2), 100 Stat.
1517; amended July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 725.
4 5
445
HIGHER EDUCATION ACT OF 1965
Sec. 607
SEC. 606. RESEARCH; STUDIES; ANNUAL REPORT.
(a) AUTHORIZED ACTIVITIES.-The Secretary may, directly or
through grants or contracts, conduct research and studies which
contribute to the purposes of this part. Such research and studies
may include but are not limited to-
(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) comparative studies of the effectiveness of strategies to
provide international capabilities at institutions of higher edu-
cation;
(4) research on more effective methods of providing in-
struction and achieving competency in foreign languages;
(5) the development and publication of specialized mate-
rials for use in foreign language, area studies, and other inter-
national fields, or for training foreign language, area, and
other international specialists; and
(6) 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.
(20 U.S.C. 1125) Enacted November 8, 1965, P.L. 89-329, sec. 605, 79 Stat 1264,
amended October 16, 1968; P.L. 90-575, sec. 242, 82 Stat. 1041; amended October
3, 1980, P.L. 96-374, sec. 601, 94 Stat. 1467; amended December 21, 1982, P L. 97-
375, sec. 204, 96 Stat. 1823; amended August 22, 1986, P.L. 99-386, sec. 103(c), 100
Stat. 821; amended October 17, 1986, P.L. 99-498, secs. 605(1), 606, 100 Stat 1517,
amended July 23, 1992, Pl. 102-325, sec. 601, 106 Stat. 725.
SEC. 607. PERIODICALS AND OTHER RESEARCH MATERIALS PUB-
LISHED OUTSIDE TIM UNITED STATES.
(a) PROGRAM AUTHORIZED; AUTHORIZATION OF APPROPRIA-
TIONS.-
(1) PROGRAM AUTHORIZED.-From the amount appropriated
under paragraph (2), the Secretary is authorized to award
grants to institutions of higher education, public or nonprofit
private library institutions, or consortia of such institutions for
the acquisition of, and provision of access to, periodicals and
other research materials published outside the United States.
(2) AUTHORIZATION OF APPROPRIATIONS.-In addition to the
amount authorized to be appropriated by section 610A, there
are authorized to be approjAiated $5,000,000 for fiscal year
1993, and such sums as may be necessary for each of the 4 suc-
ceeding fiscal years to carry out this section.
(b) AUTHORIZED ACTIVITIES.-Grants under this section shall
be used for the following purposes:
45'5
Sec. 607
HIGHER EDUCATION ACT OF 1965
446
(1) To acquire periodicals and other research materials
published outside the United States which are not commonly
held by American academic libraries and which are of scholarly
or research importance.
(2) To maintain in machine-readable form current biblio-
graphic information on periodicals and other research mate-
rials thus acquired, and to enter such information into one or
more of the widely available bibliographic data bases.
(3) To preserve such periodicals and other research mate-
rials.
(4) To make such periodicals and other research materials
widely available to researchers and scholars.
(c) APPLICATION AND PREFERENCE.
(1) APPLICATION.Each institution or consortium desiring
a grant under this section shall submit an application to the
Secretary at such time, in such manner, and accompanied by
such information and assurances as the Secretary may reason-
ably require.
(2) PREFERENCE.The Secretary shall give preference to
grant applications according to the following criteria:
(A) The total number of library research materials in
an institution's or consortium's collection.
(B) The comprehensiveness, both current and retro-
spective, of the institution's or consortium's collection of
periodicals and other research materials published outside
the United States.
(C) Public accessibility to '.ne institution's or consor-
tium's collection of periodicals and other research mate-
rials published outside the United States.
(D) The institution's or consortium's technological ca-
pability to share its collection of periodicals and other re-
search materials published outside the United States with
other institutions of higher education, with public or non-
profit institutions, and with individual scholars.
(E) The institution's or consortium's budget and staff
capability to build, maintain, and service periodicals and
other research materials published outside the United
States.
(3) SUFFICIENT SIZE.The Secretary shall award grants
under this section of sufficient size to enable an institution or
consortium to
(A) substantially improve its collection of foreign peri-
odicals and other research materials published outside the
United States; and
(B) contribute to a comprehensive national base of for-
eign language materials for students and scholars.
(d) WRITISN AGREEMENT.
(1) AGREEMENT REQUIRED.Prior to the awarding of
grants authorized under subsection (c), each recipient institu-
tion or consortium shall file a formal written agreement with
the Secretary which outlines their collecting responsibilities re-
garding periodicals and other research materials published
outside the United States and ensures public access.
447
HIGHER EDUCATION ACT OF 1965
Sec. 609
(2) FUNDING LIMITATION.-No funds from grants author-
ized under subsection (c) may be used by a recipient institution
or consortium to acquire and process periodicals and other re-
search materials published outside the United States other
than that specified in the agreement filed with the Secretary
under paragraph (1).
(e) COPYRIGHT.-Nothing in this section shall be considered to
amend, affect, or define the provisions of title 17, United States
Code, relating to copyright.
(20 U.S.C. 1125a) Enacted October 17, 1986, P.L. 99-498, sec. 607, 100 Stat. 1518;
amended July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 726; amended December
20, 1993, P.L. 103-208, sec. 2(j)(13), 107 Stat. 2481.
(20 U.S.C. 1125a) Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 726.
SEC. 608, SELECTION OF CERTAIN GRANT RECIPIENTS.
(a) COMPETITIVE GRANTS.-The Secretary shall award grants
under section 602 competitively on the basis of criteria that sepa-
rately, but not less rigorously, evaluates the applications for com-
prehensive and undergraduate language and area centers and pro-
grams.
(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 funds throughout the United States, based on the merit of a pro-
posal with peer review by broadly representative professionals.
(20 U.S.C. 1125b) Enacted October 17, 1986, P.L. 99-498, sec. 608, 100 Stat. 1518;
amended July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 727.
SEC. 609. 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 Nation.
(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.
(20 U.S.C. 1126) Enacted November 8, 1965, P.L. 89-329, sec. 606, 79 Stat. 1265;
amended October 3, 1980, P.L. 96-374, sec. 601, 94 Stat. 1467; amended October
17, 1986, P.L. 99-498, sec. 605(1), 100 Stat. 1517; amended July 23, 1992, P.L. 102-
325, sec. 601, 106 Stat. 727.
SEC. 610. 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-
5 '7
Sec. 810
HIGHER EDUCATION ACT OF 1965
448
able such center to promote postgraduate research, exchanges and
area studies.
(b) USE OF GRArns.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 the
cost of faculty and staff stipends and salaries, faculty, stair and
student travel, the operation and maintenance of overseas facili-
ties, the cost of teaching and research materials, the cost of acquisi-
tion, maintenance and preservation of library collections, the cost
of bringing visiting scholars and faculty to a center to teach or to
conduct research, the cost of organizing and managing conferences
and the cost of publication and dissemination of material for the
scholarly and general public.
(c) LIMITATION.The Secretary shall only award grants to and
enter into contracts with centers under this section that
(1) receive more than 50 percent of their funding from 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.
(20 U.S.C. 1127) Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 728
SEC. 610A. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$80,000,000 for fiscal year 1993, and such sums as may be nec-
essary for the 4 succeeding fiscal years.
(20 U.S.C. 1127) Enacted November 8, 1965, P.L. 89-329, sec. 607, 79 Stat. 1265,
amended October 3, 1980, P.L. 96-374, sec. 601, 94 Stat. 1467; amended October
17, 1986, P.L. 99-498, sec. 605(1), 100 Stat. 1517, 1519; renumbered and amended
'
July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 728.
PART BBUSINESS AND INTERNATIONAL
EDUCATION PROGRAMS
SEC. 611. AUTHORIZATION OF APPROPRIATIONS.
(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 busmess 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
458
449
HIGHER EDUCA110N ACT OF 1965
Sec. 612
(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.
(20 U.S.C. 1130) Enacted October 3, 1980, P.L. 96-374, sec. 601, 94 Stat. 1467,
amended October 17, 1986, P.L. 99-498, sec. 610, 100 Stat. 1519; amended July 23,
1992, P.L. 102-325, sec. 601, 106 Stat. 728.
SEC. 612. 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
459
Sec. 612
HIGHER EDUCATION ACT OF 1965
450
(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 advanced degree candidates;
(C) evening or summer programs, such as intensive
language programs, available to members of the business
community and other 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, and other international studies designed
to carry out the purposes of subparagraph (A) of this para-
graph;
(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;
ilfj"
451
HIGHER EDUCATION ACT OF 1965
Sec. 612
(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;
(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.
(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.
Sec. 613
HIGHER EDUCATION ACT OF 1965
452
(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(c)(2)(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 CONDmoNs.Grants under this section shall be
made on such conditions as the Secretary determines to be nec-
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).
(20 U.S.C. 1130-1) Enacted Aug. 23, 1988, P.L. 100-418, sec. 6261, 102 Stat.
1520-1523; amended July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 729.
SEC. 613. EDUCATION AND TRAM/ENG 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-
462
453
HIGHER EDUCATION ACT OF 1965
Sec. 613
(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;
(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 a Id
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 sulosection (L, 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).
433
Sec. 614
HIGHER EDUCATION ACT OF 1965
454
(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.
(20 U.S.C. 1130a) Enacted October 3, 1980, P.L. 96-374, sec. 601, 94 Stat. 1468;
amended October 17, 1986, P.L. 99-498, sec. 611, 100 Stat. 1519; amended Aug. 23,
1988, P.L. 100-418, secs. 6261 and 6263, 102 Stat. 1520 and 1523; amended July
23, 1992, P.L. 102-325, sec. 601, 106 Stat. 732.
SEC. 614. AUTHORIZATION OF APPROPRIATIONS.
(a) CENTERS FOR INTERNATIONAL BUSINESS EDUCATION.-There
are authorized to be appropriated $11,000,000 for the fiscal year
1993 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 1993, and such
sums as may be necessary for the 4 succeeding fiscal years, to
carry out the provisions of section 613.
(20 U.S.C. 1130b) Enacted October 3, 1980, P.L. 96-374, sec. 601, 94 Stat. 1469;
amended October 17, 1986, P.L. 99-498, sec. 612, 100 Stat. 1519; amended Aug. 23,
1988, P.L. 100-418, secs. 6261 and 6263, 102 Stat. 1520 and 1523; amended Novem-
ber 16, 1990, P.L. 101-600, sec. 7, 104 Stat. 3046; amended July 23, 1992, P.L. 102-
325, sec. 601, 106 Stat. 733.
PART C-INSTITUTE FOR INTERNATIONAL
PUBLIC POLICY
SEC. 621. MINORITY FOREIGN SERVICE PROFESSIONAL DEVELOP-
MENT 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
underrepresented 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.
1
0
455
HIGHER EDUCATION ACT OF 1965
Sec. 623
(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-fourth the amount of the grant, which contribution
may be in cash or in kind.
(20 U.S.C. 1131) Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 734.
SEC. 622. JUNIOR YEAR 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 at an institution of
higher education which nominates such student for participa-
tion in the junior year abroad program.
(c) SPECIAL RULE.An institution of higher education desiring
to send a student on the junior year 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 junior year abroad or internship programs;
(2) pay one-half the cost of each student it nominates for
participation in the junior year abroad program; and
(3) meet such other requirements as the Secretary may
from time to time, by regulation, reasonably require.
(20 U.S.C. 1131a) Enacted July 23, 1992, P.L. 102-325,
sec. 601, 106 Stat. 734.
SEC. 623. MASTERS DEGREE IN INTERNATIONAL RELATIONS.
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-
465
Sec. 624
HIGHER EDUCATION ACT OF 1965
456
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
(20 U.S.C. 1131b) Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 735.
SEC. 624. INTERNSHIPS.
The Institute shall enter into agreements with historically
Black colleges and universities as defined in section 322 of this Act,
tribally controlled Indian community colleges as defined in the
Tribally Controlled Community College Assistance Act of 1978,
other institutions of higher education with significant numbers of
minority students, and institutions of higher education with pro-
grams in training foreign service professionals, to provide academic
year internships during the junior and senior year and summer in-
ternships following the sophomore and junior academic years, by
work placements with an international voluntary or government
organizations or agencies, including the Agency for International
Development, the United States Information Agency, the Inter-
national Monetary Fund, the National Security Council, the Orga-
nization of American States, the Export-Import Bank, the Overseas
Private Investment Corporation, the Department of State, Office of
the United States Trade Representative, the World Bank, and the
United Nations.
(20 U.S.C. 1131c) Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 735.
SEC. 625. 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.
(20 U.S.C. 1131d) Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 735.
SEC. 626. 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 625.
(20 U.S.C. 1131e) Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 736.
SEC. 627. AUTHORIZATION.
There is authorized to be appropriated $10,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this part.
(20 U.S.C. 11310 Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 736.
IPA
457
HIGHER EDUCATION ACT OF 1965
Sec. 631
PART 0-GENERAL PROVISIONS
SEC. 631. 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;
(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 titl4;
Sac. 632
HIGHER EDUCATION ACT OF 1965
458
(8) the term "institution of higher education" means, in ad-
dition to institutions which meet the definition of section
1201(a) of this Act, institutions which meet the requirements
of section 1201(a) of this Act except that (1) they are not lo-
cated in the United States, and (2) they apply for assistance
under this title in consortia with institutions which meet the
definition of 1201(a) of this Act.
(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.
(20 U.S.C. 1132) Enacted Nov. 8, 1965, P.L. 8;1-329, sec. 622, 79 Stat. 1266;
amended October 3, 1980, P.L. 96-374, sec. 614, 94 Stat. 1470; amended October
17, 1986, P.L. 99-498, sec. 614, 160 Stat. 1520; renumbered and amended July 23,
1992, P.L. 102-325, sec. 601, 106 Stat. 736.
SEC. 632. PRESERVATION OF PRE-1992 PROGRAMS.
Notwithstanding any other provision of law, amendments to
this title establishing new programs or expanding existing pro-
grams enacted pursuant to the Higher Education Amendments of
1992 shall not be funded in fiscal year 1993, or the 4 succeeding
fiscal years, unless and until Congress enacts appropriations for
programs under this title enacted prior to such Amendments at a
level no less than the level of funding in effect for such preexisting
programs for fiscal year 1992.
(20 U.S.C. 1132-1) Enacted July 23, 1992, P.L. 102-325, sec. 601, 106 Stat. 737.
TITLE WICONSTRUCTION, RECONSTRUCTION, AND
RENOVATION OF ACADEMIC FACILITIES
SEC. 701. PURPOSES.
(a) IN GENERAL.The Secretary shall carry out programs of fi-
nancial assistance to institutions of higher education and to higher
education building agencies for the construction, reconstruction, or
renovation of academic facilities and the acquisition and mainte-
nance of special research and instructional instrumentation and
equipment. In making such grants, the Secretary shall include as-
sistance to enable institutions
(1) to bring their facilities into conformity with the re-
quirements of
(A) Federal, State, and local laws requiring removal of
barriers to full participation by individuals with disabil-
ities;
(B) environmental protection or health and safety pro-
grams mandated by Federal, State, or local law, if such re-
quirements were not in effect at the time such facilities
were constructed; or
(C) hazardous waste disposal, treatment, and storage
requirements mandated by the Resource Conservation and
Recovery Act of 1976, or similar State statutes;
(2) to more efficiently use available energy resources, espe-
cially coal, solar power, and other renewable energy resources;
459
HIGHER EDUCATION ACT OF 1965
See. 712
(3) to detect, remove, or otherwise contain asbestos haz-
ards in academic and other facilities used by students, in ac-
cordance with regulations prescribed by the Secretary;
(4) to construct, reconstruct, or renovate the Nation's aca-
demic research and instructional instrumentation and facili-
ties, including libraries (including renovation of libraries to
promote the use of new technologies and preservation of li-
brary materials), and to acquire and maintain special research
and instructional instrumentation and equipment;
(5) to provide facilities for advanced skill training pro-
grams that relate to emerging technologies and skill needs;
(6) with unusual increases in enrollment or with signifi-
cant internal programmatic enrollment shifts (according to
data and criteria established by the Secretary) to construct, re-
construct, or renovate their facilities; or
(7) to preserve significant architecture.
(b) PRIORITY ON RENOVATION.-In the awarding of grants
under part A or B of this title, priority shall be given to projects
involving the renovation of facilities.
(20 U.S.C. 1132a) Enacted June 23, 1972, P.L. 92-318, sec. 161, 86 Stat. 288;
amended October 12, 1976, P.L. 94-482, secs. 161(a), 162(a)(3), 162(b), 90 Stat.
2157; amended October 3, 1980, P.L. 96-374, sec. 701, 94 Stat. 1472; amended Octo-
ber 17, 1986, P.L. 99-498, sec. 701, 100 Stat. 1520; amended June 3, 1987, P.L.
100-50, sec. 19(1), 101 Stat. 360; amended July 23, 1992, P.L. 102-325, sec. 701,
106 Stat. 737; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486,
SEC. 702. PRIOR RIGHTS AND OBLIGATIONS.
(a) AUTHORIZATION OF APPROPRIATIONS.-There are authorized
to be appropriated such sums as may be necessary for fiscal year
1993 and for each of the 4 succeeding fiscal years to pay obligations
incurred prior to 1987 under parts C and D of this title, as such
parts were in effect before the effective date of the Higher Edu-
cation Act Amendments of 1992.
(b) LEGAL RESPONSIBILITIES.-Except as provided in section
783, all entities with continuing obligations incurred under parts A,
B, C, and D of this title, as such parts were in effect before the ef-
fective date of the Higher Education Act Amendments of 1992,
shall be subject to the requirements of such part as in effect before
the effective date of the Higher Education Act Amendments of
1992.
(20 U.S.C. 1132a-1) Enacted July 23, 1992, P.L. 102-325, sec. 702, 106 Stat. 738.
PART A-IMPROVEMENT OF ACADEMIC AND
LIBRARY FACILITIES
SEC. 711. SHORT Trnm.
This part may be cited as the "Higher Education Facilities Act
of 1992".
(20 U.S.C. 1132b) Enacted July 23, 1992, P.L. 102-325, sec. 703, 106 Stat. 738.
SEC. 712. FINDINGS.
The Congress finds that-
(1) over the past 50 years institutions of higher education
have expanded dramatically, while at the same time tradi-
41
Sec. 713
HIGHER EDUCATION ACT OF 1965
460
tional sources of funding facilities maintenance and repair
have declined and even disappeared in some instances;
(2) in order to meet the rising cost of educating students,
resulting mainly from inflation and the higher costs of re-
search, many colleges and universities made the choice to defer
renovations and improvements;
(3) overall, the need for capital investment by institutions
of
higher
education
has
been
estimated
to
exceed
$60,000,000,000;
(4) the deterioration of facilities has caused valuable re-
search experiments and programs to be postponed, delayed or
canceled; and
(5) the United States' competitive position within the
world economy is vulnerable if the necessary research facilities
are not available to provide advanced training in the fields of
science and technology.
(20 U.S.C. 1132b-1) Enacted July 23, 1992, P.L. 102-325, sec. 703, 106 Stat. 738.
SEC. 713. DISTRIBUTION OF ASSISTANCE.
(a) COMPETITIVE OR FORMULA DISTRIBUTION.
(1) COMPETITIVE GRANTS.If the amount appropriated pur-
suant to section 716 for a fiscal year is less than $50,000,000,
then the Secretary shall award grants under this part on a
competitive basis in accordance with subsection (h) to institu-
tions of higher education to carry out the activities described
in section 714.
(2) ALLOTMENT FORMULA.
(A) FORMULA.If the amount appropriated pursuant
to section 716 for a fiscal year is equal to or greater than
$50,000,000, then the Secretary shall allot to each State
higher education agency with an approved application
(i) 50 percent of such funds on the basis of the
population of the State compared to the population of
all States; and
(ii) 50 percent of such funds on the basis of the
number of students attending institutions of higher
education within the State compared to the number of
students attending institutions of higher education in
all States.
(B) USE OF FORMULA GRANTS.Each State higher edu-
cation agency receiving an allotment pursuant to subpara-
graph (A), shall use such allotment to award grants, on a
competitive basis, to institutions of higher education with-
in the State to enable such institutions to carry out the ac-
tivities described in section 714.
(C) REALLOTMENT.Except as provided in subsection
(0, any amount that the Secretary determines will not be
available to a State higher education agency because such
agency elects not to participate in the program assisted
under this part shall be reallotted to other States in the
same manner as the original allotments were made.
(b) MATCHING REQUIREMENTS.
(1) STATE MATCHING REQUIREMENT.
461
HIGHER EDUCATION ACT OF 1965
Sec. 713
(A) IN GENERAL.In order to receive an allotment
under subsection (a)(2)(A), each State higher education
agency shall provide matching funds equal to 25 percent of
the amount of any allotment received pursuant to such
subsection. The Secretary may waive the requirements of
the preceding sentence if the State can demonstrate to the
satisfaction of the Secretary that such matching require-
ment would present a severe financial hardship to the
State.
(B) CASH REQUIREMENT.Each State higher education
agency receiving funds under this part shall only provide
matching funds pursuant to paragraph (1) in cash.
(2) INSTITUTIONAL MATCHING REQUIREMENT.In order to
receive a grant under subsection (a)(1) or (a)(2XB), each eligi-
ble institution shall provide matching funds equal to 50 per-
cent of the amount of any grant received pursuant to such sub-
section. Such matching funds may be provided by the State
higher education agency or the institution of higher education.
(c) PRIORITY.In awarding grants pursuant to subsection (a),
the Secretary or each State higher education agency shall give pri-
ority to institutions of higher education that serve large numbers
or percentages of minority or disadvantaged students.
(d) EQUITABLE PARTICIPATION.In awarding grants pursuant
to subsection (a), the Secretary or each State higher education
agency shall ensure the equitable participation of both public and
private eligible institutions within the State.
(e) SPECIAL RULE.If the Secretary determines that any eligi-
ble institution within a State has received, within the 2 preceding
fiscal years, a direct, noncompetitive award of Federal funds for fa-
cilities construction, renovation, improvement or repair, then the
eligible institution shall be ineligible to receive assistance under
this part.
(f) USE FOR MAINTENANCE.An amount less than or equal to
10 percent of that portion of funds awarded under this part which
is allotted by the recipient to meet costs of
(1) research and instructional instrumentation and equip-
ment; and
(2) equipment and structural changes necessary to ensure
the proper ftinctioning of such research or instructional instru-
mentation and equipment;
may be allocated by the recipient for maintenance of equipment
and changes described in paragraphs (1) and (2). Part or all of this
percentage may also be applied to costs of upgrading such equip-
ment and structural changes within 3 years of the date of initial
use, if the recipient deems such upgrading essential to the contin-
ued usefulness of such research or instructional instrumentation
and equipment.
(g) SUPPLEMENTATION.Granta awarded pursuant to
sub-
section (a) shall be used to supplement and not supplant other Fed-
eral, State, and local funds available for improvement of academic
and library facilities.
(h) PEER REVIEW REQUIRED.In making grants under sub-
section (a)(1), the Secretary shall utilize a national peer review
4 71,
Sec. 714
HIGHER EDUCATION ACT OF 1965
462
panel. The panel shall be broadly representative of all types and
classes of institutions of higher education in the United States.
(20 U.S.C. 1132b-2) Enacted July 23, 1992, P.L. 102-325, sec. 703, 106 Stat. 738.
SEC. 714, USE OF FUNDS.
Institutions of higher education shall use funds awarded under
this part for any one or more of the following activities:
(1) The improvement, renovation, and repair of academic
facilities.
(2) The improvement and renovation of library facilities.
(3) The improvement and renovation of broadcast, cable,
and satellite interconnection equipment for use in postsecond-
ary educational television and radio programming, including
interactive technology and communications.
(4) The construction of academic and library facilities if the
State determines such construction necessary.
(20 U.S.C. 1132b-3) Enacted July 23, 1992, P.L. 102-325, sec. 703, 106 Stat. 740;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(14), 107 Stat. 2481.
SEC. 715. APPLICATION.
(a) STATE HIGHER EDUCATION AGENCY.
(1) APPLICATION.Each State higher education agency de-
siring an allotment pursuant to section 713(a)(2)(A) shall sub-
mit an application to the Secretary at such time, in such man-
ner and accompanied by such information as the Secretary
may reasonably require.
(2) CONTENTS.Each application described in paragraph
(1) shall(A) describe the activities and services for which as-
sistance is sought;
(B) contain assurances that the State higher education
agency will comply with the matching requirement de-
scribed in section 713(b)(1);
(C) contain a description and the amount of any direct,
noncompetitive appropriation of funds for facilities con-
struction, renovation, improvement or repair which the
State provides to any institution of higher education with-
in the State; and
(D) contain such other assurances as the Secretary de-
termines necessary to ensure compliance with the provi-
sions of this part.
(b) INSTITUTIONS OF HIGHER EDUCATION.
(1) APPLICATION.Each institution of higher education de-
siring a grant pursuant to section 713(a)(1) or 713(a)(2)(B)
shall submit an application to the Secretary or the State high-
er education agency, as appropriate, at such time, in such
manner and accompanied by such information as the Secretary
or such agency may reasonably require.
(2) CONTENTS.Each application described in paragraph
(1) shall(A) describe the activities and services for which as-
sistance is sought;
(B) contain assurances that the eligible institution will
comply with the matching requirement described in section
713(b)(2); and 4 72
463
HIGHER EDUCATION ACT OF 1965
Sec. 721
(C) contain such other assurances as the Secretary or
State higher education agency determines necessary to en-
sure compliance with the provisions of this part.
(20 U.S.C. 1132b-4) Enacted July 23, 1992, P.L. 102-325, sec. 703, 106 Stat. 740;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(15), 107 Stat. 2481.
SEC. 716. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $350,000,000 for fiscal
year 1993 and each of the 4 succeeding fiscal years to carry out the
provisions of this part.
(20 U.S.C. 1132b-5) Enacted July 23, 1992, P.L. 102-325, sec. 703, 106 Stat. 741.
PART B-HISTORICALLY BLACK COLLEGE AND
UNIVERSITY CAPITAL FINANCING
SEC. 721. 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
American 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.
(20 U.S.C. 1132c) Enacted July 23, 1992, P.L. 102-325, sec. 704, 106 Stat. 741.
SEC. 722. DEFMITIONS.
For the purposes of this part:
473
Sec. 722
HIGHER EDUCATION ACT OF 1965
464
(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 (2G 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 723(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 723.
(5) The term "capital project" means, subject to section
724(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) instructional equipment, research instrumentation,
and any capital equipment or fixture related to facilities
described in subparagraph (A);
(C) 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
(D) any real property or interest therein underlying fa-
cilities described in subparagraph (A) or (C).
(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
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 725(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 727 of this part.
(20 U.S.C. 1132c-1) Enacted July 23, 1992, P.L. 102-325, sec. 704, 106 Stat, 742.
SEC. 723. FEDERAL INSURANCE FOR BONDS.
(a) GENERAL RULE.Subject to the limitations in section 724,
the Secretary is authorized to enter into insurance agreements to
provide fmancial 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).
474
465
HIGHER EDUCATION ACT OF 1965
Sec. 723
(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 725(1) and 726 and
the designated bonding authority agrees in such agreement to
(1) use the proceeds of the qualified bonds, less costs of is-
suance not to exceed 2 percent of the principal amount thereof,
to make loans to eligible institutions or for deposit into an es-
crow 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
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 10
percent of the proceeds of any loan made 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
475
Sec. 723
HIGHER EDUCATION ACT OF 1965
466
(ii) when all bonds under this part are retired or
canceled, shall be divided among the eligible institu-
tions making deposits into such account on the basis
of the amount of each such institution's deposit;
(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 724 of
this part; and
(11) make loans only to eligible institutions under this part
in accordance with regulations 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
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 ctIrtification 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
723(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.
47,f1
467
HIGHER EDUCATION ACT OF 1965
Sec. 725
(20 U.S.C. 1132c-2) Enacted July 23, 1992, P.L. 102-325, sec. 704, 106 Stat. 743.
SEC. 724. LIMITATIONS ON FEDERAL INSURANCE FOR BONDS ISSUED
BY THE DESIGNATED BONDING AUTHORITY.
(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 CREDrr 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.
(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 a 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.
(20 U.S.C. 1132c-3) Enacted July 23, 1992, P.L. 102-325, sec. 704, 106 Stat. 745.
SEC. 725. 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;
4 '17
Sec. 726
HIGHER EDUCATION ACT OF 1965
468
(2) shall require that the first loans for capital projects au-
thorized under section 723 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 Unit-
ed 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;
(5) may sell, exchange, or lease real or personal property
and securities or obligations; and
(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.
(20 U.S.C. 1132c-4) Enacted July 23, 1992, P.L. 102-325, sec. 704, 106 Stat. 745;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(16), 107 Stat. 2481.
SEC. 726. PROHIBITION.
No institution that receives a loan under this part shall also
receive a grant under part A of this title.
(20 U.S.C. 1132c-5) Enacted July 23, 1992, P.L. 102-325, sec. 704, 106 Stat. 746;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(17), 107 Stat. 2481.
SEC. 727. IIECU 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 Secrrtary and the designated bonding au-
thority as to the most effeci
c 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
4 7 8
469
HIGHER EDUCATION ACT OF 1965
Sec. 727
those needs can be met through the program authorized by this
past, 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.
(E) The president of the National Association for
Equal Opportunity in Higher Education.
(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 (1XC) 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
I 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.
(c) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $50,000 for fiscal year 1993 and each of the 4
succeeding fiscal years to carry out this section.
(20 U.S.C. 1132c-6) Enacted July 23, 1992, P.L. 102-326, sec. 704, 106 Stat. 746.
SEC. 728. MINORITY BUSINESS ENTERPRISE UTILIZATION.
In tin performance of and with respect to the Secretary's effec-
tuation of his responsibilities under section 725(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.
(20 U.S.C. 1132c-7) Enacted July 23, 1992, P.L. 102-325, sec. 704, 106 Stat, 747.
4 9
See. 731
HIGHER EDUCATION ACT OF 1965
470
PART C-LOANS FOR CONSTRUCTION, RECON-
STRUCTION AND RENOVATION OF ACA-
DEMIC,
HOUSING,
AND
OTHER
EDU-
CATIONAL FACILITIES
SEC. 731. FEDERAL ASSISTANCE IN THE FORM OF LOANS.
(a) AUTHORITY AND CONDITIONS FOR LOANS.To assist institu-
tions of higher education and higher education building agencies in
the construction, reconstruction, or renovation of housing, under7
graduate and graduate academic facilities, and other educational
facilities for students and faculty, the Secretary may make loans of
funds to such institutions for the construction, reconstruction, or
renovation of such facilities. No such assistance shall be provided
unless
(1) the educational institution involved is unable to secure
the necessary funds for the construction or purchase from
other sources upon terms and conditions equally as favorable
as the terms and conditions applicable to loans under this title;
and
(2) the Secretary finds that any such construction will be
undertaken in an economical manner, and that any such facili-
ties are not or will not be of elaborate or extravagant design
or materials.
(b) AMOUNT AND CONDITIONS OF LOANS.A loan to institutions
of higher education or higher education building agency
(1) may be in an amount not exceeding the total develop-
ment cost of the facility, as determined by the Secretary;
(2) shall be secured in such manner and be repaid within
such period, not exceeding 50 years, as may be determined by
the Secretary; and
(3) shall bear interest at a rate determined by the Sec-
retary which shall be not more than the lower of (A) 5.5 per-
cent per annum, or (B) the total of one-quarter of 1 percent per
annum added to the rate of interest paid by the Secretary on
funds obtained from the Secretary of the Treasury.
(C) USE OF LOANS FOR PREVIOUSLY MADE CONTRACTS.Any in-
stitution of higher education or higher education building agency
which, prior to October 17, 1986, had contracted for housing or
other educational facilities may, in connection therewith, receive
loans authorized under this part, as the Secretary may determine.
No such loan shall be made for any housing or other educational
facilities, the construction of which was begun prior to such date,
or completed prior to the filing of an application under this part.
(d) MATCHING REQUIREMENT.The Secretary shall not make a
loan under this part unless the institution of higher education or
higher education building agency receiving such loan provides from
non-Federal sources at least 20 percent of the development cost of
the project for which the loan is made.
(20 U.S.C. 1132d) Enacted October 3, 1980, P.L. 96-374, sec. 701, 94 Stat. 1475;
amended October 17, 1986, P.L. 99-498, sec. 701, 100 Stat. 1525; amended June 3,
1987, P.L. 100-50, sec. 19(3), 101 Stat. 360; amended July 23, 1992, P.L. 102-325,
l This program was orginally enacted October 17. 1986 as part F of title VII of the Act (P.L.
99-498. sec. 701. 100 Stat. 1533).
4 b
471
HIGHER EDUCATION ACT OF 1965
Sec. 732
sec. 705, 106 Stat. 747; amended December 20, 1993, P.L. 103-208, sec. 2(j)(18) and
(19), 107 Stat. 2481.
SEC. 732. GENERAL PROVISIONS.
(a) BUDGET AND ACCOUNTING.In the performance of, and
with respect to, the functions, powers, and duties under this part,
the Secretary, notwithstanding the provisions of any other law,
shall
(1) prepare annually and submit a budget program as pro-
vided for wholly owned Government corporations by chapter 91
of title 31, United States Code; and
(2) maintain a set of accounts which shall be audited by
the Comptroller General in accordance with the provisions of
chapter 35 of title 31, United States Code, but such financial
transactions of the Secretary, as the making of loans and
vouchers approved by the Secretary, in connection with such fi-
nancial transactions shall be final and conclusive upon all offi-
cers of the Government.
(b) USE OF FUNDS.Funds made available to the Secretary
pursuant to the provisions of this part shall be deposited in a
checking account or accounts with the Treasurer of the United
States. Receipts and assets obtained or held by the Secretary in
connection with the pertbrmance of functions under this part, and
all funds available for carrying out the functions of the Secretary
under this part (including appropriations therefor, which are here-
by authorized), shall be available, in such amounts as may from
year to year be authorized by the Congress, for the administrative
expenses of the Secretary in connection with the performance of
such functions.
(c) LEGAL POWERS.In the performance of, and with respect to,
the functions, powers, and duties under this part, the Secretary,
notwithstanding the provisions of any other law, may
(1) prescribe such rules and regulations as may be nec-
essary to carry out the purposes of this part;
(2) sue and be sued;
(3) foreclose on any property or commence any action to
protect or enforce any right conferred upon the Secretary by
any law, contract, or other agreement, and bid for and pur-
chase at any foreclosure or any other sale any property in con-
nection with which the Secretary has made a loan pursuant to
this part;
(4) in the event of any such acquisition, notwithstanding
any other provision of law relating to the acquisition, handling,
or disposal of real property by the United States, complete, ad-
minister, remodel and convert, dispose of, lease, and otherwise
deal with, such property, but any such acquisition of real prop-
erty shall not deprive any State or political subdivision thereof
of its civil or criminal jurisdiction in and over such property or
impair the civil rights under the State or local laws of the in-
habitants on such property;
(5) sell or exchange at public or private sale, or lease, real
or personal property, and sell or exchange any securities or ob-
ligations, upon such terms as the Secretary may fix;
(6) obtain insurance against loss in connection with prop-
erty and other assets held;
tIEST COPY AVAkABLE
77-530 0-94 -- IS
4n1
Sec. 732
HIGHER EDUCATION ACT OF 1965
472
(7) subject to the specific limitations in this part, consent
to the modification, with respect to the rate of interest, time
of payment of any installment of principal or interest, security,
or any other term of any contract or agreement to which the
Secretary is a party or which has been transferred to the Sec-
retary pursuant to this part, granting to a borrower of a loan
made before October 1, 1992, the option of repaying the loan
at a discount computed in accordance with subsection (d) if the
repayment is (A) made from non-Federal sources, (B) not de-
rived from proceeds of obligations the income of which is ex-
empt from taxation under the Internal Revenue Code of 1986,
and (C) made on a loan that has been outstanding for at least
5 years; and
(8) include in any contract or instrument made pursuant
to this part such other covenants, conditions, or provisions as
may be necessary to assure that the purposes of this part will
be achieved.
(d) COMPUTATION OF ALLOWABLE DISCOUN'TS.The Secretary
shall compute the discount which may be offered to a borrower as
an inducement to early repayment under subsection (c)(7) in an
amount determined by the Secretary to be in the best financial in-
terests of the Government, taking into account the yield on out-
standing marketable obligations of the United States having matu-
rities comparable to the remaining term of such loan.
(e) NONDISCRIMINATION BETWEEN BORROWERS IN OFFERING
DISCOUNTED PREPAYMENT.
(1) GENERAL RULE.If the Secretary offers a discount as
an inducement to early repayment under subsection (c)(7),
such offer shall be available without regard to whether the bor-
rower is delinquent or in default on the loan on or before Octo-
ber 1, 1992, but the Secretary shall refuse to make such offer
to a borrower that becomes delinquent or goes into default
after that date.
(2) APPLICABILITY.The discount offered shall apply, in
the case of a borrower that complies with paragraph (1), to the
entire amount outstanding on the loan (including any amount
owed with respect to payments that are overdue).
(f) CONTRACTS FOR SUPPLIES OR SERVICES.Section 3709 of the
Revised Statutes shall not apply to any contract for services or sup-
plies on account of any property acquired pursuant to this part if
the amount of such contract does not exceed $1,000.
(g) APPLICABILITY OF GOVERNMENT CORPORATION CONTROL
ACT.The provisions of section 9107(a) of title 31, United States
Code, which are applicable to corporations or agencies subject to
chapter 91 of such title, shall also be applicable to the activities of
the Secretary under this part.
(h) WAGE RATES.The Secretary shall take such action as may
be necessary to ensure that all laborers and mechanics employed
by contractors or subcontractors on any project assisted under this
p art
(1) shall be paid wages at rates not less than those prevail-
ing on the same type of work on similar construction in the im-
mediate locality as determined by the Secretary of Labor in ac-
473
HIGHER EDUCATION ACT OF 1965
Sec. 734
cordance with the Act of March 3, 1931 (Davis-Bacon Act), as
amended; and
(2) shall be employed not more than 40 hours in any one
week unless the employee receives wages for the employee's
employment in excess of the hours specified above at a rate not
less than one and one-half times the regular rate at which the
employee is employed,
but the Secretary may waive the application of this subsection in
cases or classes of cases where laborers or mechanics, not otherwise
employed at any time in the construction of such project, volun-
tarily donate their services without full compensation for the pur-
pose of lowering the costs of construction and the Secretary deter-
mines that any amounts saved thereby are fully credited to the
educational institution undertaking the construction.
(i) LIMITATION.-No loan may be made under this part for any
facility on the campus of any postsecondary educational institution
until 5 years after the date on which a previous loan for another
facility on such campus was made under this part, unless the loan
is intended to be used to construct or reconstruct a facility dam-
aged as a result of a national disaster, as declared by the Presi-
dent.
(20 U.S.C. 1132d-1) Enacted October 3, 1980, P.L. 96-374, sec. 701, 94 Stat. 1475;
amended October 17, 1986, P.L. 99-498, sec. 701, 100 Stat. 1526; amended July 18,
1988, P.L. 106-369, sec. 7(c), 102 Stat. 837; amended July 23, 1992, P.L. 102-325,
sec. 705, 106 Stat. 748.
SEC. 733. APPORTIONMENT.
(a) LIMITATION.-Not more than 12.5 percent of the amount of
the funds provided for in this part in the form of loans shall be
made available to educational institutions within any one State.
(b) PRIORITIES.-In awarding loans under this part, the Sec-
retary shall give priority-
(1) to loans for renovation or reconstruction of undergradu-
ate and graduate academic facilities; and
(2) to loans for renovation or reconstruction of older under-
graduate and graduate academic facilities that have gone with-
out major renovation or reconstruction for an extended period.
(20 U.S.C. 1132d-2) Enacted October 3, 1980, P.L. 96-374, sec. 701, 94 Stat. 1476;
amended Oct ker 17, 1986, P.L. 99-498, sec. 701, 100 Stat. 1527; amended June 3,
1987, P.L. 100-50, sec. 19(4), 101 Stat. 360; amended July 23, 1992, P.L. 102-325,
sec. 705,106 Stat. 750.
SEC. 734, DEFINITIONS.
For the purpose of this part:
(a) HOUSING.-The term "housing" means-
(1) new or existing structures suitable for dwelling use, in-
cluding single-room dormitories and apartments; and
(2) dwelling facilities provided for rehabilitation, alter-
ation, conversion, or improvement of existing structures which
are otherwise inadequate for the proposed dwelling use.
(b) EDUCATIONAL INSTITUTION.-The term "institution of higher
education or higher education building agency" means-
(1)(A) any educational institution which offers, or provides
satisfactory assurance to the Secretary that it will offer within
a reasonable time after completion of a facility for which as-
sistance is requested under this part, at least a 2-year program
V43
Sec. 734
HIGHER EDUCATION ACT OF 1965
474
acceptable for full credit toward a baccalaureate degree (in-
cluding any public educational institution, or any private edu-
cational institution no part of the net earnings of which inures
to the benefit of any private shareholder or individual); or
(B) any public educational institution which
(i) is administered by a college or university which is
accredited by a nationally recognized accrediting agency or
association;
(ii) offers technical or vocational instruction; and
(iii) provides residential facilities for some or all of the
students receiving such instruction;
(2) any hospital operating a school of nursing beyond the
level of high school approved by the appropriate State author-
ity, or any hospital approved for internships, by recognized au-
thority, if such hospital is either a public hospital or a private
hospital, no part of the net earnings of which inures to the
benefit of any private shareholder or individuai;
(3) any corporation (no part of the net earnings of which
inures to the benefit of any private shareholder or individ-
ual)
(A) established for the sole purpose of providing hous-
ing or other educational facilities for students or students
and faculty of one or more institutions included in para-
graph (1) without regard to their membership in or affili-
ation with any social, fraternal, or honorary society or or-
ganization; and
(B) upon dissolution of which all title to any property
purchased or built from the proceeds of any loan which is
made under section 731 (as such section was in effect prior
to the date of enactment of the Higher Education Amend-
ments of 1992), will pass to such institution (or to any one
or more of such institutions) unless it is shown to the sat-
isfaction of the Secretary that such property or the pro-
ceeds from its sale will be used for some other nonprofit
educational purpose;
(4) any agency, public authority, or other instrumentality
of any State, established for the purpose of providing or financ-
ing housing or other educational facilities for students or fac-
ulty of any educational institution included in paragraph (1),
but nothing in this paragraph shall require an institution in-
cluded in paragraph (1) to obtain loans or grants through any
instrumentality included in this paragraph; and
(5) any nonprofit student housing cooperative corporation
established for the purpose of providing housing for students or
students and faculty of any institution included in Paragraph
(1).
In the case of any loan made under section 731 (as such section
was in effect prior to the date of enactment of the Higher Edu-
cation Amendments of 1992) to a corporation described in para-
graph (3) which was not established by the institution or institu-
tions for whose students or students and faculty it would provide
housing, or to a student housing cooperative corporation described
in paragraph (5), and in the case of any loan which is obtained
from other sources by such a corporation, the Secretary shall re-
.,484
475
HIGHER EDUCATION ACT OF 1965
Sec. 734
quire that the note securing such loan be cosigned by such institu-
tion (or by any one or more of such institutions). Inere the law
of any State in effect on the date of enactment of the Housing Act
of 1964 prevents the institution or institutions, for whose students
or students and faculty housing is to be provided, from cosigning
the note, the Secretary shall require the corporation and the pro-
posed project to be approved by such institution (or by any one or
more of such institutions) in lieu of such cosigning.
(C) UNDERGRADUATE AND GRADUATE ACADEMIC FACILITIES.
(1) IN GENERAL.Except as provided in paragraph (2), the
term "undergraduate and graduate academic facilities" means
structures suitable for use as classrooms, laboratories, librar-
ies, and related facilities, the primary purpose of which is the
instruction of students pursuing at least a 2-year program ac-
ceptable for full credit toward a baccalaureate degree, or for
administration of the educational programs serving such stu-
dents, of an institution of higher education, and maintenance,
storage, or utility facilities essential to operation of the fore-
going facilities, as well as infirmaries or other facilities de-
signed to provide primarily for outpatient care of student and
instructional personnel. Plans for such facilities shall be in
compliance with such standards as the Secretary may pre-
scribe or approve in order to ensure that projects assisted with
the use of Federal funds under this part shall be, to the extent
appropriate in view of the uses to be made of the facilities, ac-
cessible to and usable by individuals with disabilities.
(2) EXCEPTIONS.The term "undergraduate and graduate
academic facilities" shall not include (A) any facility intended
primarily for events for which admission is to be charged to the
general public, (B) any gymnasium or other facility specially
designed for athletic or recreational activities, other than for
an academic course in physical education or where the Sec-
retary finds that the physical integration of such facilities with
other undergraduate academic facilities included under this
part is required to carry out the objectives of this part, (C) any
facility used or to be used for sectarian instruction or as a
place for religious worship, or (D) any facility which (although
not a facility described in the preceding clause) is used or to
be used primarily in connection with any part of the program
of a school or department of divinity.
(d) DEVELOPMENT COST.The term "development cost" means
costs of the construction of the housing or other educational facili-
ties and the land on which it is located, including necessary site
improvements to permit its use for housing, academic facilities, or
other educational facilities, except that in the case of the purchase
of facilities such term means the cost as approved by the Secretary.
(e) FACULTY.The term "faculty" means members of the fac-
ulty and their families.
(f) OTHER EDUCATIONAL FACILITIES.The term "other edu-
cational facilities" means (1) new or existing structures suitable for
use as cafeterias or dining halls, student centers or student unions,
infirmaries or other inpatient or outpatient health facilities, or for
other essential service facilities, and (2) structures suitable for the
above uses provided by rehabilitation, alteration, conversion, or im-
5
Sec. 735
HIGHER EDUCATION ACT OF 1965
476
provement of existing structures which are otherwise inadequate
for such uses.
(20 U.S.C. 1132d-3) Enacted July 23, 1992, P.L. 102-325, sec. 705, 106 Stat. 751;
amended December 20, 1993, P.L. 103-208, sec. 2(jX20), 107 Stat. 2481.
SEC. 735. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part,
$50,000,000 for fiscal year 1993 anol such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1132d-4) Enacted July 23, 1992, P.L. 102-325, sec. 705, 106 Stat. 753.
PART DCOLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION
SEC. 751. CONGRESSIONAL DECLARATION OF PURPOSE; DEFINITION;
INCORPORATION.
(a) PURPOSE.The Congress hereby declares that it is the pur-
pose of this part to authorize participation of the United States
Government and the Student Loan Marketing Association in a pri-
vate, for profit corporation to be known as the College Construction
Loan Insurance Association (hereinafter referred to as the "Cor-
poration") which will, directly or indirectly, alone or in collabora-
tion with others
(1) guarantee, insure, and reinsure bonds, debentures,
notes, evidences of debt, loans, and interests therein, the pro-
ceeds of which are to be used for an education facilities pur-
pose;
(2) guarantee and insure leases of personal, real, or mixed
property to be used for an education facilities purpose; and
(3) issue letters of credit and undertake obligations and
commitments as the Corporation deems necessary to carry out
the purposes described in paragraphs (1) and (2).
(b) STATUS AS NON-GOVERNMENTAL ENTITY.The Corporation
shall not be an agency, instrumentality, or establishment of the
United States Government and shall not be a "Government cor-
poration" nor a "Government controlled corporation" as defmed in
section 103 of title 5, United States Code. No action under section
1491 of title 28, United States Code (commonly known as the Tuck-
er Act) shall be allowable against the United. States based on the
actions of the Corporation.
(c) CORPORATE POWERS AND LIMITATIONS.The Corporation
shall be subject to the provisions of this part and, to the extent not
inconsistent with this part, to the District of Columbia Business
Corporation Act. The business activities of the Corporation shall al-
ways be limited to the purposes set forth in subsection (a) of this
section. It shall have the powers conferred upon a corporation by
the District of Columbia Business Corporation Act as from time to
time in effect in order to conduct its corporate affairs and to carry
out its purposes and activities incidental thereto.
(d) DEFINITION OF EDUCATION FACILITIES PURPOSE.AS used
in this section, an "education facilities purpose" includes any activ-
ity (including activities related to the payment of financing or
transaction costs) relating to the construction, reconstruction, ren-
'This program was originally enacted on Oct. 17, 1986, as part E of title VII of the Act (P.L.
99-498, sec. 701, 100 Stat. 1528).
4Sli
477
HIGHER EDUCATION ACT OF 1965
Sec. 752
ovation, acquisition, or purchase of (1) education, training, or re-
search facilities or housing for students, faculty, or staff, (2) any
underlying real property or any interest therein, (3) furniture, fix-
tures, and equipment to be used in connection with any education
or training facility or housing for students, faculty, or staff, and (4)
instructional equipment and research instrumentation including
site preparation for such equipment and instrumentation.
(20 U.S.C. 11320 Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat. 1528;
amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 752. CRITERIA FOR GUARANTEES AND INSURANCE.
(a) GENERAL RULE.The Corporation shall provide direct in-
surance, guarantees, and reinsurance on obligations issued for edu-
cation facilities purposes only in accordance with the requirements
of this section.
(b) ALLOCATION OF REINSURANCE CAPACITY.
(1) At least the percentages specified in paragraph (2) of
the aggregate dollar amount of bond and debenture issues rein-
sured by the Corporation shall be issues which, without insur-
ance, are listed by a nationally recognized statistical rating or-
ganization at a rating below the third highest rating of such
organization.
(2) For the purpose of paragraph (1) of this subsection, the
percentages specified in this paragraph shall be-
-(A) 10 percent for the first full year of operation of the
Corporation;
(B) 30 percent for the second full year of such oper-
ation; and
(C) 50 percent for the third full year of such operation
and thereafter.
(3) No bond or debenture issue which is both reinsured
and directly insured by the Corporation may be counted toward
the fulfillment of the requirements of paragraph (1).
(e) DIRECT INSURANCE AND GUARANTEE ACTIVITIES; LIMITA-
TIONS.
(1) All of the assets and obligations directly covered by pri-
mary insurance or guarantees issued by the Corporation shall
be assets or obligations of institutions which are, without in-
surance or guarantee, listed by a nationally recognized statis-
tical rating organization at a rating below the third highest
rating of such organization.
(2) At least the percentages specified in paragraph (3) of
the aggregate dollar amount of the assets and obligations rein-
sured, insured, and guaranteed by the Corporation under this
section shall be in the direct insurance and guarantee activi-
ties specified in this subsection.
(3) For the purpose of paragraph (2) of this paragraph, the
percentages specified in this paragraph shall be
(.A) 10 percent for the first full year of operation of the
Corporation;
(B) 30 percent for the second full year of such oper-
ation; and
(C) 50 percent for the third full year of such operation
and thereafter.
47
See. 752
HIGHER EDUCATION ACT OF 1965
478
(4) For the purpose of paragraph (1), the assets and obliga-
tions which may be directly covered by primary insurance or
guarantees issued by the Corporation are
(A) bonds, debentures, notes, evidences of debt, loans,
and interests therein, the proceeds of which are to be used
for an education facilities purpose; and
(B) leases of personal real, or mixed property to be
used for an education facilAies purpose.
(5) Notwithstanding paragraph (1), the Corporation may
issue primary insurance or guarantees covering the assets or
obligations of institutions which are, without insurance or
guarantee, listed by a nationally recognized statistical rating
organization at or above the third highest rating of such orga-
nization, subject to all of the following conditions and limita-
tions:
(A) The proposed transaction shall have been declined
for coverage by all unaffiliated monoline insurers that are
authorized to write financial guarantee insurance and
that, in the previous year, provided primary insurance or
guarantees on educational facility obligations. The Sec-
retary shall publish by January 31 of each year a list of
all such insurers.
(B) Within 2 business days of receiving complete docu-
mentation concerning a proposed transaction by an institu-
tion seeking insurance from the Corporation pursuant to
this paragraph (5), an insurer shall offer to provide cov-
erage or execute an affidavit of declination, or its failure
to respond shall be deemed a declination. The institution
seeking insurance from the Corporation shall file with the
Corporation the affidavits from all declining insurers, as
well as an affidavit of the institution's fmancial advisor
specifically identifying the pertinent terms of the proposed
transaction, the requested insurance coverage, and the
date on which complete documentation concerning the pro-
posed transaction was submitted to each insurer and cer-
tifying that such information was provided to each insurer
that declined coverage.
(C) The proceeds of the assets or obligations insured
or guaranteed by the Corporation pursuant to this para-
graph shall be used exclusively for the renovation, repair,
replacement, or construction of academic and educational
facilities and shall not be used for the renovation, repair,
replacement, or construction of athletic facilities.
(D) The aggregate par value of assets and obligations
insured or guaranteed by the Corporation under this para-
graph (5) shall not exceed.
(i) $100,000,000 per year during calendar years
1993, 1994, and 1995; or
(ii) $150,000,000 per year during calendar years
1996 and 1997.
(E) The aggregate dollar amount of transactions under
this paragraph (5) shall not exceed
(i) in calendar year 1993, 1994, or 1995, 10 per-
cent of the aggregate dollar amount of assets and obli-
0154
=11.
479
HIGHER EDUCATION ACT OF 1965
St Le. 754
gations directly covered by primary insurance or guar-
antees issued by the Corporation under this section in
such year; or
(ii) in calendar year 1996 or 1997, 15 percent of
the aggregate dollar amount of assets and obligations
directly covered by primary insurance or guarantees
issued by the Corporation under this section in such
year.
(d) NOTICE OF SERVICES.The Corporation shall take such
steps as may be necessary to publicize the availability of its insur-
ance and reinsurance programs under this section in a manner
that assures that information concerning such programs will be
available to each eligible institution.
(e) NONDISCRIMINATION REQUIRED.
(1) The Corporation may not carry out any activities with
respect to any educational facilities purpose of a participating
institution if the institution discriminates on account of race,
color, religion (subject to paragraph (2)), national origin, sex (to
the extent provided in title IX of the Education Amendments
of 1972), or handicapping condition.
(2) The prohibition with respect to religion shall not apply
to an educational institution which is controlled by or which is
closely identified with the tenets of a particular religious orga-
nization if the application of this section would not be consist-
ent with the religious tenets of such organization.
(3) Each participating institution shall certify to the Cor-
poration that the institution does not discriminate as required
by the provisions of paragraph (1).
(20 U.S.C. 1132f-1) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1529; amended July 23, 1992, P.L. 102-325, sec. 707(b), 106 Stat. 754; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. '753. PROCESS OF ORGANIZATION.
The Secretary of the Treasury, the Secretary, and the Student
Loan Marketing Association shall each appoint 2 persons to be
incorporators of the Corporation. If either the Secretary of the
Treasury or the Secretary fail to appoint incorporators within 90
days after the date of enactment of the Higher Education Amend-
ments of 1986, the Student Loan Marketing Association, after con-
sultation with the Committee on Labor and Human Resources of
the Senate and the Committee on Education and Labor of the
House of Representatives, shall have the authority to name the
incorporators which have not been so appointed. The incorporators
so appointed shall each sign the articles of incorporation and shall
serve as the initial Board of Directors until the members of the
first regular Board of Directors shall have been appointed and
elected. Such incorporators shall take whatever actions are nec-
essary or appropriate to establish the Corporation, including the
filing of articles of incorporation.
(20 U.S.C. 1132f-2) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1530; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 754. OPERATION AND ELECTION OF BOARD OF DIRECTORS.
(a) IN GENERAL.The Corporation shall have a Board of Direc-
tors which shall consist of 11 members, of whom one shall be elect-
4c.i9
Sec. 755
HIGHER EDUCATION ACT OF 1965
480
ed annually by the Board to serve as chairman. Directors shall
serve for terms of one year or until their successors have been ap-
pointed and qualified, and any member so appointed to fill a va-
cancy shall be appointed only for the unexpired term of the Direc-
tor whom he succeeds. Two Directors shall be appointed by the Sec-
retary of the Treasury; 2 Directors shall be appointed by the Sec-
retary; 3 Directors shall be appointed by the Student Loan Market-
ing Association; and the remaining 4 Directors shall be elected by
the holders of the Corporation's voting common stock at least one
of whom shall be a college or university administrator. The failure
of the Secretary or the Secretary of the Treasury to make any one
or more appointments to the Board of Directors of the Corporation
shall not affect or diminish the right and power of (1) the other di-
rectors who have been appointed or elected to assume and carry
out their duties as directors and (2) the Board so constituted to act
for all purposes as the full Board of the Corporation.
(b) CUMULATIVE VOTING.The articles of incorporation of the
Corporation shall provide for cumulative voting under section 27(d)
of the District of Columbia Business Corporation Act (D.C. Code,
sec. 29-327(d)).
(20 U.S.C. 1132f-3) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1531; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 755. INITIAL CAPITAL.
(a) AunioRrrY To ISSUE COMMON STOCK.The Corporation
shall issue shares of voting common stock of no par Value at such
time within 6 months of its incorporation as shall be designated by
the initial Board of Directors, and from time to time thereafter.
(b) SUBSCRIPTION BY SECRETARY.The Secretary is authorized
and directed to subscribe to and purchase, in each of the 5 years
following the incorporation of the Corporation, voting common
stock of the Corporation having an aggregate purchase price of not
more than $20,000,000, subject to availability of appropriations.
(C) SUBSCRIPTION BY ASSOCIATION.The Student Loan Market-
ing Association is authorized to subscribe to and purchase during
the 5 years following the incorporation of the Corporation voting
common stock of the Corporation having an aggregate purchase
price of $25,000,000 or more.
(d) ANNUAL ISSUANCE.The Corporation is authorized to offer
for subscription and purchase to the general public during the 5
years following the incorporation of the Corporation, voting com-
mon stock having an aggregate purchase price of S125,000;000. Not
less than 40 percent of such stock shall be set aside for purchase
by institutions of higher education prior to being offered to the gen-
eral public.
(20 U.S.C. 1132f-4) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1531; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 756. ISSUE OF NONVOTING STOCK AND DEBT TO THE PUBLIC.
The Corporation may issue, without limitation as to amount or
restriction as to ownership, such nonvoting common, preferred, and
preference stock, debt, and such other securities and obligations, in
such amounts, at such times, and having such terms and condi-
tions as may be deemed necessary or appropriate by its Board of
Directors.
4 0
481
HIGHER EDUCATION ACT OF 1965
Sec. 758
(20 U.S.C. 1132f-5) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1532; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 757. OBLIGATIONS NOT FEDERALLY GUARANTEED; NO FEDERAL
PRIORITY.
No obligation which is insured, guaranteed, or otherwise
backed by the Corporation, shall be deemed to be an obligation
which is guaranteed by the full faith and credit of the United
States. No obligation which is insured, guaranteed, or otherwise
backed by the Corporation shall be deemed to be an obligation
which is guaranteed by the Student Loan Marketing Association.
This section shall not affect the determination of whether such obli-
gation is guaranteed for purposes of Federal income taxes.
(20 U.S.C. 1132f-6) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1532; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 758, AUTHORITY OF SECRETARY TO SELL COMMON STOCK;
RIGHT OF FIRST REFUSAL.
(a) AUTHORITY To SELL.The Secretary may, at any time after
a date which is 5 years after the date of incorporation of the Cor-
poration, sell (in one or more transactions) the voting common
stock of the Corporation owned by the Secretary. Prior to offering
such common stock for sale to any other person, the Secretary shall
offer such stock to the Student Loan Marketing Association at the
price determined pursuant to subsection (b). Not later than 30 days
prior to the sale of such stock, the Secretary shall advise, in writ-
ing, the Committee on Labor and Human Resources of the Senate
and the Committee on Education and Labor of the House of Rep-
resentatives of plans of the Secretary.
(b) PURCHASE PRICE.The price at which the Secretary may
sell the voting common stock of the Corporation under subsection
(a) shall be the market value of such shares as determined by the
Secretary, on the basis of an independent appraisal, but shall not
be less than the value of such shares as shown on the books of ac-
count of the Corporation as of the date of closing of such purchase.
In no event shall the purchase price be less than the original issu-
ance price.
(C) BOARD OF DIRECTORS ELECTED AFTER MAJORITY BUY-
Otrr.If the Student Loan Marketing Association acquires from
the Secretary sufficient voting common stock so as to own more
than 50 percent of the issued and outstanding voting common stock
of the Corporation, section 754 (except subsection (b)) shall be of
no further force or effect and the Board of Directors of the Corpora-
tion shall thereafter be elected entirely by the voting common
shareholders.
(d) RIGHT OF FIRST REFUSAL TO ASSOCIATION.Until such time
as the Student Loan Marketing Association acquires all of the vot-
ing common stock owned by the Secretary, the Student Loan Mar-
keting Association shall have the right to purchase all, or any less-
er portion it shall select, of each of the issues of equity securities
or other securities convertible into equity of the Corporation as the
Corporation may issue from time to time, on the same terms and
conditions as such securities are to be offered to other persons.
(e) AUTHORITY OF ASSOCIATION WITH RESPECT TO CORPORA-
TION.The Student Loan Marketing Association is authorized and
491
Sec. 759
HIGHER EDUCATION ACT OF 1965
482
empowered to purchase stock and to carry out such other activities
as are necessary and appropriate for carrying out the Association's
obligations and responsibilities with respect to the Corporation.
The Student Loan Marketing Association is also authorized to
enter into such other transactions with the Corporation, including
the acquisition of securities and obligations of the Corporation re-
ferred to in this section and sections 755 and 756, and arrange-
ments for the provision of management and other services to the
Corporation, as shall be approved by the Student Loan Marketing
Association and the Corporation.
(20 U.S.C. 11'32f-7) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1532; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 759. USE OF STOCK SALE PROCEEDS.
The proceeds received by the Secretary upon the sale of any
shares of the Corporation to the Student Loan Marketing Associa-
tion or any other person shall be deposited in the general fund of
the Treasury.
(20 U.S.C. 1132fS). Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1533; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 760. AUDITS; REPORTS TO THE PRESIDENT AND THE CONGRESS.
(a) ACCOUNTING.The books of account of the Corporaticn
shall be maintained in accordance with generally accepted account-
ing principles and shall be subject to an annual audit by an inde-
pendent public accountant.
(b) REPORTS.The Corporation shall transmit to the President
and the Congress, annually and at such other times as it deems de-
sirable, a report of its operations and activities under this part,
which annual report shall include a copy of the Corporation's finan-
cial statements and the opinion with respect thereto prepared by
the independent public accountant reviewing such statements and
a copy of any report made on an audit conducted under subsection
(a). The annual reports shall include such information and other
evidence as is necessary to demonstrate that the Corporation has
complied with the requirements of section 752.
(20 U.S.C. 1132f-9) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1533; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
PART EGENERAL 1
SEC. 781. RECOVERY OF PAYMENTS.
(a) PUBLIC BENEFIT.The Congress declares that, if a facility
constructed with the aid of a grant under part A of this title, or
part B of this title as such part was in effect prior to the enactment
of the Higher Education Amendments of 1992, is used as an aca-
demic facility for 20 years following completion of such construc-
tion, the public benefit accruing to the United States will equal in
value the amount of the grant. The period of 20 years after comple-
tion of such construction shall therefore be deemed to be the period
of Federal interest in such facility for the purposes of this title.
(b) RECOVERY UPON CESSATION OF PUBLIC BENEFIT.If, within
20 years after completion of construction of an academic facility
'This part was originally enacted Oct. 17, 1986 as part H of title VII of the Act (P.L. 99
498, sec. 701, 100 Stat. 1642).
4 2
483
HIGHER EDUCATION ACT OF 1965
Sec. 782
which has been constructed, in part with a grant under part A of
this title, or part B of this title as such part was in effect prior to
the enactment of the Higher Education Amendments of 1992
(1) the applicant (or its 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", 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 th.e 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 this title shall ever be used for religious worship or a sectar-
ian activity or for a school or department of divinity.
(20 U.S.C. 1132i) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat. 1542;
amended July 23, 1992, P.L. 102-325, sec. 708(b), 106 Stat. 754; amended December
20, 1993, P.L. 103-208, sec. 2(j)(21), (m), 107 Stat. 2481, 2486.
SEC. 782. DEFINITIONS.
The following definitions apply to terms used in this title:
(1)(A) Except as provided in subparagraph (B), the term
"academic facilities" means structures suitable for use as class-
rooms, laboratories, libraries, and related facilities necessary
or appropriate for instruction of students, or for research, or
for administration of the educational or research programs, of
an institution of higher education, and maintenance, storage,
or utility facilities essential to operation of the foregoing facili-
ties. For the purpose of part A or C, such term includes infir-
maries or other facilities designed to provide primarily for out-
patient care of students and instructional personnel. Plans for
such facilities shall be in compliance with such standards as
the Secretary may prescribe or approve in order to ensure that
projects assisted with the use of Federal funds under this title
shall be, to the extent appropriate in view of the uses to be
made of the facilities, accessible to and usable by handicapped
persons.
(B) The term "academic facilities" shall not include (i) any
facility intended primarily for events for which admission is to
be charged to the general public, or (ii) any gymnasium or
other facility specially designed for athletic or recreational ac-
tivities, other than for an academic course in physical edu-
cation or where the Secretary finds that the physical integra-
tion of such facilities with other academic facilities included
under this title is required to carry out the objectives of this
title, or (iii) any facility used or to be used for sectarian in-
struction or as a place for religious worship, or (iv) any facility
which (although not a facility described in the preceding
clause) is used or to be used primarily in connection with any
4 Q 3
Sec. 782
HIGHER EDUCATION ACT OF 1965
484
part of the program of a school or department of divinity, or
(v) any facility used or to be used by a school of medicine,
school of dentistry, school of osteopathy, school of pharmacy,
school of optometry, school of podiatry, or school of public
health as these terms are defined in section 701 of the Public
Health Service Act, or a school of nursing as defined in section
853 of that Act, except that the term "academic facilities" may
include any facility described in clause (v) to the degree that
such facility is owned, operated, and maintained by the institu-
tion of higher education requesting the approval of a project;
and that funds available for such facility under such project
shall be used solely for the purpose of conversion or moderniza-
tion of energy utilization techniques to economize on the use
of energy resources; and that such project is not limited to fa-
cilities described in clause (v).
(2)(A) The term "construction" means (i) erection of new or
expansion of existing structures, and the acquisition and in-
stallation of initial equipment therefor. or (ii) acquisition of ex-
isting structures not owned by the inaltution involved; or (iii)
a combination of either of the foregoing. For the purpose of the
preceding sentence, the term "equipment" includes, in addition
to machinery, utilities, and built-in equipment and any nec-
essary enclosures or structures to house them, all other items
necessary for the functioning of a particular facility as an aca-
demic facility, including necessary furniture, but not including
books, curricular, and program materials, and items of current
and operating expense such as fuel, supplies, and the like; the
term "initial equipment" means equipment acquired and in-
stalled in connection with construction; and the terms "equip-
ment", "initial equipment", and "built-in equipment", shall be
more particularly defined by the Secretary by regulation.
(B) The term "reconstruction or renovation" means reha-
bilitation, alteration, conversion, or improvement (including
the acquisition and installation of initial equipment, or mod-
ernization or replacement of such equipment) of existing struc-
tures. For the purpose of the preceding sentence, the term
"equipment" includes, in addition to machinery, utilities, and
built-in equipment and any necessary enclosures or structures
to house them, all other items necessary for the functioning of
a particular facility as an academic facility, including nec-
essary furniture, but not including books, curricular, and pro-
gram materials, and items of current and operating expense
such as fuel, supplies, and the like; the term "initial equip-
ment" means equipment acquired and installed either in con-
nection with construction as defined in paragraph (2)(A), or as
part of the rehabilitation, alteration, conversion, or improve-
ment of an existing structure, which structure would otherwise
not be adequate for use as an academic facility; the terms
"equipment", "initial equipment", and "built-in equipment"
shall be more particularly defined by the Secretary by regula-
tion; and the term "rehabilitation, alteration, conversion, or im-
provement" includes such action as may be necessary to pro-
vide for the architectural needs of, or to remove architectural
barriers to, handicapp44,p4rsons with a view toward increasing
485
HIGHER EDUCATION ACT OF 1965
Sec. 782
the accessibility to, and use of, academic facilities by such per-
sons.
(3)(A) The term "development cost", with respect to an aca-
demic facility, means the amount found by the Secretary to be
the cost, to the applicant for a grant or loan under this title,
of the construction, reconstruction, cr renovation involved and
the cost of necessary acquisition of the land on which the facil-
ity is located and of necessary site improvements to permit its
use for such facility. There shall be excluded from the develop-
ment cost
(i) in determining the amount of any grant under part
A or B, an amount equal to the sum of (I) any Federal
grant which the institution has obtained or is assured of
obtaining, under any law other than this title, with respect
to the construction, reconstruction, or renovation that is to
be financed with the aid of a grant under part A or B, and
(II) the amount of any non-Federal funds required to be
expended as a condition of such other Federal grant; and
(ii) in determining the amount of any loan under part
C, an amount equal to the amount of any Federal financial
assistance which the institution has obtained, or is as-
sured of obtaining, under any law other than this title,
with respect to the construction, reconstruction, or renova-
tion that is to be financed with the aid of a loan under
part C.
(B) In determining the development cost with respect to an
academic facility, the Secretary may include expenditures for
works of art for the facility not to exceed 1 percent of the total
cost (including such expenditures) to the applicant of construc-
tion, reconstruction, or renovation of, and land acquisition and
site improvements for, such facility.
(4) The term "maintenance", with respect to instructional
and research equipment obtained with funding under this title,
shall mean the care necessary to the optimal functioning of
such equipment. With respect to the equipment and structural
changes related to obtaining and sustaining the necessary en-
vironment (ventilation, etc.) for proper functioning of instruc-
tional and research equipment, "maintenaoce" shall mean that
portion of care above and beyond normal overhead costs.
(5) The term "higher education building agency" means (A)
an agency, public authority, or other instrumentality of u State
authorized to provide, or finance the construction, reconstruc-
tion, or renovation of, academic facilities for institutions of
higher education (whether or not also authorized to provide or
finance other facilities for such or other educational institu-
tions, or for their students or faculty), or (B) any corporation
(no part of the net earnings of which inures or may lawfully
inure to the benefit of any private shareholder or individual (i)
established by an institution of higher education for the sole
purpose of providing academic facilities for the use of such in-
stitution, and (ii) upon dissolution of which, all title to any
property purchased or built from the proceeds of any loan
made u- ler part C will pass to such institution), or (C) an in-
stitution -4' postsecondary education.
495
Sec. 783
HIGHER EDUCATION ACT OF 1965
486
(6) The term "public educational institution" does not in-
clude a school or institution of any agency of the United States.
(7) The term "State" includes in addition to the several
States of the Union, the Commonwealth of Puerto Rico, the
District of Columbia, Guam, American Samoa, the Virgin Is-
lands, and the Trust Territory of the Pacific Islands.
(20 U.S.C. 1132i-1) Enacted October 17, 1986, P.L. 99-498, sec. 701, 100 Stat.
1542; amended June 3, 1987, P.L. 100-50, sec. 19(6), 101 Stat. 360; amended July
23, 1992, P.L. 102-325, sec. 708(c), 106 Stat. 754; amended December 20, 1993, P.L.
103-208, sec. 2(j)(22), (m), 107 Stat. 2481, 2486.
SEC. 783. FORGIVENESS OF CERTAIN LOANS.
(a) FORGIVENESS AUTHORIZED.-The Secretary may forgive the
entire balance due, or any portion thereof, on any loan made under
part C or part F of this title (as in effect on the day before the date
of enactment of the Higher Education Amendments of 1992), or
under the College Housing and Academic Facilities Loan program,
or any other federally subsidized, insured, or authorized loan pro-
gram designed to assist institutions of higher education to con-
struct academic or dormitory facilities, whenever the Secretary de-
termines that-
(1) the institution of higher education is current in its pay-
ments to the Department or has entered into a moratorium
agreement with the Secretary with respect to such payments;
and
(2) the outstanding indebtedness on all such loans owed by
such institution equals at least one-quarter of the annual
budget for the most recent fiscal year of the institution of high-
er education seeking forgiveness of its housing loan indebted-
ness, exclusive of funds provided under titles III and IV of this
Act, and in the judgment of the Secretary the survival of the
institution of higher education is threatened.
(b) DEFINITION.-For the purpose of this section the term "in-
stitution of higher education" includes a postsecondary educational
institution.
(c) APPLICATION.-Each institution of higher education request-
ing forgiveness of any loan under this section shall submit an ap-
plication to the Secretary at such time, in such manner and con-
taining or accompanied by such information, as the Secretary may
reasonably require.
(d) REDUCTION OF AMOUNTS OWED TO TREASURER.-If the Sec-
retary forgives all or part of a loan described in subsection (a), the
outstanding balance remaining on the notes of the Secretary that
were issued to the Secretary of the Treasury under section 761(d)
as in effect prior to the enactment of the Higher Education Amend-
ments of 1992, or under any provision of this title as in effect at
the time such note was issued, shall be reduced by such amount
forgiven.
(20 U.S.C. 1132i-2) Enacted October 17, 1986. P.L. 99-498, sec. 701, 100 Stat.
1545; amended December 22, 1987, Pl. 100-203, sec. 3101, 101 Stat. 1330-39;
amended July 23, 1992, P.L. 102-325, sec. 708(d), 106 Stat. 764; amended December
20, 1993, P.L. 103-208, sec. 2(j)(23), (m), 107 Stat, 2480-81, 2486.
496
487
HIGHER EDUCATION ACT OF 1965
Sec. 802
TITLE VIII-COOPERATIVE EDUCATION
SEC. 801. STATEMENT OF PURPOSE; DEFINITION.
(a) PURPOSE.-It is the purpose of this title to award grants to
institutions of higher education or combinations of such institutions
to encourage such institutions to develop and make available to as
many of their students as possible work experience that will aid
such students in future careers and will enable such students to
support themselves financially while in school.
(b) DEFINITION.-For the purpose of this title the term "cooper-
ative education" means the provision of alternating or parallel peri-
ods of academic study and public or private employment in order
to give students work experiences related to their academic or occu-
pational objectives and an opportunity to earn the funds necessary
for continuing and completing their education.
(20 U.S.C. 1133) Enacted October 16, 1968, P.L. 90-575, sec. 251, 82 Stat. 1042;
amended June 23, 1972, P.L. 92-318, sec. 172, 86 Stat. 304; amended October 12,
1976, P.L. 94-482, sec. 129(b), 90 Stat. 2144, 2145; amended October 3, 1980, P.L.
96-374., secs. 801 (a), (b), 1391, 94 Stat. 1481, 1482, 1503; amended October 17,
1986, P.L. 99-498, sec. 801, 100 Stat. 1546; amended July 23, 1992, P.L. 102-325,
sec. 801, 106 Stat. 755.
SEC. 802. AUTHORIZATION OF APPROPRIATIONS; RESERVATIONS.
(a) APPROPRIATIONS AUTHORIZED.-There are authorized to be
appropriated to carry out this title $30,000,000 for fiscal year 1993
and such sums as may be necessary for each of the 4 succeeding
fiscal years.
(b) RESERVATiONS.-Of the amounts appropriated in each fiscal
year the Secretary shall reserve such amount as is necessary to
make continuing awards to institutions of higher education that
were, on the date of enactment of the Higher Education Amend-
ments of 1992, operatinf: an existing cooperative education program
under a multiyear project award and to continue to pay to such in-
stitutions the Federal share in effect on the day before such date
of enactment. Of the remainder of the amount appropriated in such
fiscal year-
(1) not less than 50 percent shall be available for carrying
out grants to institutions of higher education and combinations
of such institutions described in section 803(a)(1)(A) for cooper-
ative education under section 803;
(2) not less than 25 percent shall be available for carrying
out grants to institutions of higher education described in sec-
tion 803(a)(1)(B) for cooperative education under section 803;
(3) not to exceed 11 percent shall be available for dem-
onstration projects under paragraph (1) of section 804(a);
(4) not to exceed 11 percent shall be available for training
and resource centers under paragraph (2) of section 804(a); and
(5) not to exceed 3 percent shall be available for research
under paragraph (3) of section 804(a).
(c) AVAILABILITY OF APPROPRIATIONS.-Appropriations under
this title shall not be available for the payment of compensation of
students for employment by employers under arrangements pursu-
ant to this title.
(20 U.S.C. 1133a) Enacted Oct. 16, 1968, P.L. 90-575, sec. 251, 82 Stat. 1043;
amended June 23, 1972, P.L. 92-318, sec. 171, 86 Stat. 304; amended October 12,
497
Sec. 803
HIGHER EDUCATION ACT OF 1965
488
1976, P.L. 94-482, sec. 129(b), 90 Stat. 2145, 2146; amended October 3, 1980, P.L.
96-374, secs. 801(c), (d), 1391, 94 Stat. 1482, 1503; amended October 17, 1986, P.L.
99-498, sec. 801, 100 Stat. 1646; amended July 23, 1992, P.L. 102-325, sec. 801,
106 Stat. 755; amended December 20, 1993, P.L. 103-208, sec. 2(j)(24), 107 Stat.
2482.
SEC. 803. GRANTS FOR COOPERATIVE EDUCATION.
(a) GRANTS AUTHORIZED.
(1) IN GENERAL.The Secretary is authorized
(A) from the amount available under section 802(b)(1)
in each fiscal year and in accordance with the provisions
of this title, to make grants to institutions of higher edu-
cation or combinations of such institutions that have not
received a grant under this paragraph in the 10-year pe-
riod preceding the date for which a grant under this sec-
tion is requested to pay the Federal share of the cost of
planning, establishing, expanding, or carrying out pro-
grams of cooperative education by such institutions or
combinations of institutions; and
(B) from the amount available under section 802(b)(2)
in each fiscal year and in accordance with the provisions
of this title, to make grants to institutions of higher edu-
cation that are operating an existing cooperative education
program as determined by the Secretary to pay the cost of
planning, establishing, expanding, or carrying out pro-
grams of cooperative education by such institutions.
(2) PROGRAM REQUIREMENT.Cooperative education pro-
grams assisted under this section shall provide alternating or
parallel periods of academic study and of public or private em-
ployment, giving students work experience related to their aca-
demic or occupational objectives and the opportunity to earn
the funds necessary for continuing and completing their edu-
cation.
(3) AMOUNT OF GRANTS.(A) The amount of each grant
awarded pursuant to paragraph (1)(A) to any institution of
higher education or combination of such institutions in any fis-
cal year shall not exceed $500,000.
(B)(i) Except as provided in clauses (ii) and (iii), the Sec-
retary shall award grants in each fiscal year to each institution
of higher education described in paragraph (1)(B) that has an
application approved under subsection (b) in an amount which
bears the same ratio to the amount reserved pursuant to sec-
tion
802(b)(2)
for
such
fiscal year as the number of
unduplicated students placed in cooperative education jobs
during the preceding fiscal year (other than cooperative edu-
cation jobs under section 804 and as determined by the Sec-
retary) by such institution of higher education bears to the
total number of all such students placed in such jobs during
the preceding fiscal year by all such institutions.
(ii) No institution of higher education shall receive a grant
pursuant to paragraph (1)(B) in any fiscal year in an amount
which exceeds 25 percent of such institution's cooperative edu-
cation program's personnel and operating budget for the pre-
ceding fiscal year.
4 8
489
HIGHER EDUCATION ACT OF 1965
Sec. 803
(iii) The minimum annual grant amount which an institu-
tion of higher education is eligible to receive under paragraph
(1XB) is $1,000 and the maximum annual grant amount is
$75,000.
(4) LIMITATION.The Secretary shall not award grants
pursuant to paragraphs (1)(A) and (1)(B) to the same institu-
tion of higher education or combination of such institution in
any one fiscal year.
(5) USES.Grants under paragraph (1)(B) shall be used
exclusively
(A) to expand the quality and participation of a cooper-
ative education program;
(B) for outreach in new curricular areas; and
(C) for outreach to potential participants including
underrepresented and nontraditional populations.
(b) APPLICATIONS.Each institution of higher education or
combination of such institutions desiring to receive a grant under
this section shall submit an application to the Secretary at such
time and in such manner as the Secretary shall prescribe. Each
such application shall
(1) set forth the program or activities for which a grant is
authorized under this section;
(2) specify each portion of such program or activities which
will be performed by a nonprofit organization or institution
other than the applicant and the compensation to be paid for
such performance;
(3) provide that the applicant will expend during such fis-
cal year for the purpose of such program or activities not less
than the amount expended for such purpose during the pre-
vious fiscal year;
(4) describe the plans which the applicant will carry out to
assure, and contain a formal statement of the institution's com-
mitment which assures, that the applicant will continue the co-
operative education program beyond the 5-year period of Fed-
eral assistance described in subsection (c)(1) at a level which
is not less than the total amount expended for such program
during the first year such program was assisted under this sec-
tion;
(5) provide that, in the case of an institution of higher edu-
cation that provides a 2-year program which is acceptable for
full credit toward a bachelor's degree, the cooperative edu-
cation program will be available to students who are certificate
or associate degree candidates and who carry at least one-half
the normal full-time academic workload;
(6) provide that the applicant will
(A) make such reports as may be essential to ensure
that the applicant is complying with the provisions of this
section, including the reports for the second and each suc-
ceeding fiscal year for which the applicant receives a grant
with respect to the impact of the cooperative education
program in the previous fiscal year, including
(i) the number of unduplicated student applicants
in the cooperative education program;
4 9
Sec. 803
HIGHER EDUCATION ACT OF 1985
490
(ii) the number. of unduplicated students placed in
cooperative education jobs;
(iii) the number of employers who have hired coop-
erative education students;
(iv) the income for students derived from working
in cooperative education jobs; and
(v) the increase or decrease in the number of
unduplicated students placed in cooperative education
jobs in each fiscal year compared to the previous fiscal
year; and
(B) keep such records as are essential to ensure that
the applicant is complying with the provisions of this title,
including the notation of cooperative educatinn employ-
ment on the student's transcript;
(7) describe the extent to which programs in the academic
discipline for which the application is made have had a favor-
able reception by public and private sector employers;
(8) describe the extent to which the institution is commit-
ted to extending cooperative education on an institution-wide
basis for all students who can benefit;
(9) describe the plans that the applicant will carry out to
evaluate the applicant's cooperative education program at the
end of the grant period;
(10) provide for .2uch fiscal control and fund accounting
procedures as may be necessary to assure proper disbursement
of, and accounting for, Federal funds paid to the applicant
under this title;
(11) demonstrate a commitment to serving special popu-
lations such as women, individuals with disabilities, and Afri-
can American, Mexican-American, Puerto Rican, Cuban, other
Hispanic, American Indian, Alaska Native, Aleut, Native Ha-
waiian,
American
Samoan.
Micronesian,
Guamanian
(Chamorro), and Northern Marianian students; and
(12) include such other information as is essential to carry
out the provisions of this title.
(c) DURATION OF GRANTS; FEDERAL SHARE.
(1) DURATION OF GRANTS.No individual institution of
higher education may receive, individually or as a participant
in a combination of such institutions
(A) a grant pursuant to subsection (a)(1)(A) for more
than 5 fiscal years; or
(B) a grant pursuant to subsection (a)(1)(B) for more
than 5 fiscal years.
(2) FEDERAL SHARE.The Federal share of a grant under
section 803(a)(1)(A) may not exceed
(A) 85 percent of the cost of carrying out the program
or activities described in the application in the first year
the applicant re ?.eives a grant under this section;
(B) 70 percent of such cost in the second such year;
(C) 55 percent of such cost in the third such year;
(D) 40 percent of such cost in the fourth such year;
and
(E) 25 percent of such cost in the fifth such year.
5u0
491
HIGHER EDUCATION ACT OF 1965
Sec. 804
(3) SPECIAL RuLE.Any provision of law to the contrary
notwithstanding, the Secretary shall not waive the provisions
of this subsection.
(d) MAINTENANCE OF EFFORT.If the Secretary determines
that a recipient of fimds under this section has failed to maintain
the fiscal effort described in subsection (b)(3), then the Secretary
may elect not to make grant payments under this section to such
recipient.
(e) FACTORS FOR SPECIAL CONSIDERATION OF APPLICATIONS.
(1) IN GENERAL.In approving applications under this sec-
tion, the Secretary shall give special consideration to applica-
tions from institutions of higher education or combinations of
such institutions for programs which show the greatest prom-
ise of success because of
(A) the extent to which programs in the academic dis-
cipline with respect to which the application is made have
had a favorable reception by public and private sector em-
ployers;
(B) the strength of the commitment of the institution
of higher education or combination of such institutions to
cooperative education as demonstrated by the plans and
formalized institutional commitment statement which such
institution or combination has made to continue the pro-
gram after the termination of Federal financial assistance,
(C) the extent to which the institution or combination
is committed to extending cooperative education for all stu-
dents who can benefit, and
(D) such other factors as are consistent with the pur-
poses of this section.
(2) ADDITIONAL SPECIAL CONSIDERATION.The Secretary
shall also give special consideration to applications from insti-
tutions of higher education or combinations of such institutions
which demonstrate a commitment to serving special popu-
lations such as women, individuals with disabilities, and Afri-
can American, Mexican-American, Puerto Rican, Cuban, other
Hispanic, American Indian, Alaska Native, Aleut, Native Ha-
waiian,
American
Samoan,
Micronesian,
Guamanian
(Chamorro), and Northern Marianian students.
(20 U.S.C. 1133b) Enacted Oct. 16, 1968, P.L. 90-575, sec. 251, 82 Stat. 1043,
amended October 12, 1976, P.L. 94-482, sec. 129(b), 90 Stat. 2146; amended October
3, 1980, P.L. 96-374, sec. 1391, 94 Stat. 1503; amended October 17, 1986, P.L 99
498, sec. 801, 100 Stat. 1548; amended July 23, 1992, P.L. 102-325, sec. 801, 106
Stat. 756; amended December 20, 1993, P.L. 103-208, sec. 2(j)(25) and (26), 107
Stat. 2482.
SEC. 804. DEMONSTRATION AND INNOVATION PROJECTS; TRAINING
AND RESOURCE CENTERS; AND RESEARCH.
(a) AUTHORIZATION.The Secretary is authorized, in accord-
ance with the provisions of this section, to make grants and enter
into contracts for
(1) the conduct of demonstration projects designed to dem-
onstrate or determine the feasibility or value of innovative
methods of cooperative education from the amounts available
in each fiscal year under section 802(b)(3);
5 )1
Sec. 804
HIGHER EDUCATION ACT OF 1965
492
(2) thd conduct of training and resource centers designed
to
(A) train personnel in the field of cooperative edu-
cation;(B) improve materials used in cooperative education
programs if such improvement is conducted in conjunction
with other activities described in this paragraph;
(C) furnish technical assistance to institutions of high-
er education to increase the potential of the institution to
continue to conduct a cooperative education program with-
out Federal assistance;
(D) encourage model cooperative education programs
which furnish education and training in occupations in
which there is a national need;
(E) support. partnerships under which an institution
carrying out a comprehensive cooperative education pro-
gram joins with one or more institutions of higher edu-
cation in order to (i) assist the institution other than the
comprehensive cooperative education institution to develop
and expand an existing program of cooperative education,
or (ii) establish and improve or expand comprehensive co-
operative education programs; and
(F) encourage model cooperative education programs
in the fields of science and mathematics for women and
minorities who are underrepresented in such fields
from the amounts available in each fiscal year under section
802(b)(4); and
(3) the conduct of research relating to cooperative edu-
cation, from the amounts available in each fiscal year under
section 802(b)(5).
(b) ADMINISTRATIVE PROVISION.
(1) IN GENERAL.To carry out this section, the Secretary
may
(A) make grants to or contracts with institutions of
higher education, or combinations of such institutions; and
(B) make grants to or contracts with other public or
private nonprofit agencies or organizations, whenever such
grants or contracts will make an especially significant con-
tribution to attaining the objectives of this section.
(2) LIMITATION.(A) The Secretary may not use more than
3 percent of the amount appropriated to carry out this section
in each fiscal year to enter into contracts described in para-
graph (1)(A).
(B) The Secretary may use not more than 3 percent of the
amount appropriated to carry out this section in each fiscal
year to enter into contracts described in paragraph (1)(B).
(C) SUPPLEMENT NOT SUPPLANT.A recipient of a grant or con-
tract under this section may use the funds provided only so as to
supplement and, to the extent possible, increase the level of funds
that would, in the absence of such funds, be made available from
non-Federal sources to carry out the activities supported by such
grant or contract, and in no case to supplant such funds from non-
Federal sources.
(20 U.S.C. 1133c) Enacted July 23, 1992, P.L. 102-325, sec. 801, 106 Stat. 759.
493
HIGHER EDUCATION ACT OF 1965
Sec. 911
TITLE DC-GRADUATE PROGRAMS
SEC. 901. PURPOSE AND ADMINISTRATWE PROVISIONS.
(a) PuRPosE.It is the purpose of this title to
(1) foster and support graduate and professional education;
(2) provide incentives and support for United States citi-
zens to complete doctoral degree programs leading to academic
careers, especially women and students from underrepresented
groups; and
(3) provide support for students from underrepresented
groups to complete masters and professional degree programs.
(b) ADMINISTRATIVE PROVISIONS.
(1) COORDINATED ADMINISTRATION.-111 carrying out the
purposes of this title, the Secretary shall provide for coordi-
nated adminigtration and regulation of graduate programs
under this title to ensure that the programs are carried out in
a manner most compatible with academic practices.
(2) HIRING AUTHORITY.For purposes of carrying out this
title, the Secretary shall appoint, without regard to the provi-
sions of title 5 of the United States Code governing appoint-
ments in the competitive service, such administrative and tech-
nical employees, with the appropriate educational background,
as shall be needed to assist in th.e adminictration of such title.
Such employees shall be paid without regard to the provisions
of chapter 51 and subchapter III of chapter 53 of such title re-
lating to classification and. General Schedule pay rates.
(3) UsE FOR RELIGIOUS PURPOSES PROHIBITED.NO fellow-
ship shall be awarded under this title for study at a school or
department of divinity.
(20 U.S.C. 1134) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 760;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(27), 107 Stat. 2482.
PART A-GRANTS TO INSTITUTIONS AND CON-
SORTIA TO ENCOURAGE WOMEN AND MI-
NORITY PARTICIPATION IN GRADUATE EDU-
CATION
SEC. 911. GRANTS AUTHORIZED
The Secretary shall make grants to institutions of higher edu-
cation and consortia of such institutions to enable such institutions
and consortia
(1) to identify talented undergraduate students who
(A) demonstrate financial need; and
(B)
are
individuals
from
minority
groups
underrepresented in graduate education or are women
underrepresented in fields of study in graduate education
such as the fields of science and mathematics; and
(2) to provide such students with an opportunity to partici-
pate in a program of research and scholarly activities at such
institutions or consortia designed to provide such students
with effective preparation for graduate study in such fields or
related fields.
5 I3
Sec. 912
HIGHER EDUCATION ACT OF 1965
494
(20 U.S.C. 1134a) Enacted June 23, 1972, P.L. 92-318, sec. 181(a), 86 Stat. 304;
amended October 12, 1976, P.L. 94-482, sec. 171(01), (aX2), 90 Stat. 2159; amend-
ed October 3, 1980, P.L. 96-374, secs. 901(a), 1391, 94 Stat. 1482, 1503; amended
October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1549; renumbered and amend-
ed July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 760.
SEC. 912. SUBMISSION AND CONTENTS OF APPLICATION.
(a) REQUIRED INFORMATION.-Each institution of higher edu-
cation or consortium desiring assistance under this part shall sub-
mit an application to the Secretary in such form and containing
such information as the Secretary may by regulation prescribe.
Each such application shall provide information regarding-
(1) the program of study, to take the form of summer re-
search internships, seminars, and other educational experi-
ences;(2) the institution's or consortium's plan for identifying
and recruiting talented women and minority undergraduates,
especially those interested in entering fields in which such
women and minority undergraduates are underrepresented;
(3) the .participation of faculty in the program and a de-
tailed description of the research in which students will be in-
volved;
(4) a plan for the evaluation of the effectiveness of the pro-
gram; and
(5) such other assurances and information as the Secretary
may require by regulation.
(b) SELECTION REQUIREMENTS.-In making awards to institu-
tions and consortia-
(1) the Secretary shall consider the quality of the research
in which students will be involved as well as the recruitment
program and program of study; and
(2) the Secretary shall ensure an equitable geographic dis-
tribution among public and private institutions of higher edu-
cation and consortia.
(20 U.S.C. 1134b) Enacted June 23, 1972, P.L. 92-318, sec. 181(a), 86 Stat. 304;
amended October 12, 1976, P.L. 94-482,,sec. 171(a)(1), (a)(2), 90 Stat. 2159; amend-
ed October 3, 1980, P.L. 96-374, secs. 901(a), 1391, 94 Stat. 1482, 1503; amended
October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1549; renumbered and amend-
ed July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 760.
SEC. 913. USE OF FUNDS.
Awards made to institutions or consortia under this part shall
be used exclusively to provide direct fellowship aid which may in-
clude need-based stipends, room and board costs, transportation
costs, and tuition for courses for which credit is given by the insti-
tution or consortium as approved by the Secretary.
(20 U.S.C. 1134c) Enacted June 23, 1972, P.L. 92-318, sec. 181(a), 86 Stat. 304;
amended October 12, 1976, P.L. 94-482, sec. 171(a)(1), (a)(2), 90 Stat. 2159; amend-
ed October 3, 1980, P.L. 96-374, secs. 901(a), 1391, 94 Stat. 1482, 1503; amended
October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1549; renumbered and amend-
ed July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 760.
SEC. 914. INFORMATION COLLECTION.
In order to assist institutions of higher education or consortia
to identify talented women and minority undergraduates for grad-
uate study, institutions or consortia receiving awards under this
part shall provide to the Secretary such information as the Sec-
retary determines is necessary to carry out this section. With re-
5i II
495
HIGHER EDUCATION ACT OF 1965
Sec. 922
spect to students participating in a summer internship under this
part, the Secretary shall collect information submitted by such in-
stitutions or consortia, such as the students' names, addresses, and
institutions attended for undergraduate study. The Secretary shall,
subject to the authorization of each student, make the information
available to institutions of higher education or consortia offering
graduate programs seeking to identify talented women and minor-
ity undergraduates for graduate study.
(20 U.S.C. 1134c-1) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 762.
SEC. 915. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$25,000,000 for fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1134c-2) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 762.
PART B-PATRICIA ROBERTS HARRIS
FELLOWSHIP PROGRAM
SEC. 921. STATEMENT OF PURPOSE; DESIGNATION.
(a) PURPOSE.It is the purpose of this part to provide, through
institutions of higher education, a program of grants to assist in
making available the benefits of master's level, professional, and
doctoral education programs to individuals from minority groups
and women who are underrepresented in such programs.
(b) DESIGNATION.Each recipient of such an award under this
part shall be known as a "Patricia Roberts Harris Graduate Fel-
low"
(20 U.S.C. 1134d) Enacted June 30, 1972, P.L. 92-318, sec. 181(a), 86 Stat. 306;
amended October 12, 1976, P.L. 94-482, sec. 171(b). 90 Stat. 2160; amended October
3, 1980, P.L. 96-374, sec. 902(a), 94 Stat. 1482; amended October 17, 1986, P.L. 99
498, sec. 901(a), 100 Stat. 1550; amended July 23, 1992, P.L. 102-325, sec. 901, 106
Stat. '762.
SEC. 922. PROGRAM AUTHORIZED.
(a) GRANTS BY SECRETARY.
(1) IN GENERAL.The Secretary shall make grants to insti-
tutions of higher education to enable such institutions to make
grants in accordance with the provisions of this part.
(2) RESERVATIONS.The Secretary shall reserve
(A) 50 percent of the amount appropriated pursuant to
the authonty of section 924 to award grants to institutions
of higher education to ena..4e such institutions to make
awards for master's level and professional study; and
(B) 50 percent of such amount to award grants to such
institutions to enable such institutions to make awards for
doctoral study.
(b) DISTRIBUTION AND AMOUNTS OF GRANTS.
(I) EQUITABLE DISTRIBUTION.In making such grants the
Secretary shall, to the maximum extent feasible, ensure an eq-
uitable geographic distribution of awards and an equitable dis-
tribution among eligible public and independent institutions of
higher education.
(2) REALLOTMENT.Whenever the Secretary determines
that an institution of higher education is unable to use all of
5
Sec. 922
HIGHER EDUCATION ACT OF 1965
496
the amounts available to it under this part, the Secretary
shall, on such dates during each fiscal year as the Secretary
may fix, reallot such amounts not needed to institutions which
can use the grants authorized by this part.
(c) APPLICATIONS.Any eligible institution of higher education
offering a program of postbaccalaureate study leading to a master's
level, professional, or doctoral degree may apply for grants under
this part. Each such institution may make an application o the
Secretary at such time, in such manner, and containing or accom-
panied by such information as the Secretary may reasonably re-
quire. Such application may be made on behalf of professional
schools, academic departments, or similar organizational units
within such institution meeting the requirements of this sub-
section, including interdisciplinary or interdepartmental programs.
(d) SELECTION OF APPLICATIONS.In making grants to institu-
tions of higher education, the Secretary shall--
(1) take into account present and projected needs for high-
ly trained individuals in academic career fields of high national
priority;
(2) consider the need to prepare a larger number of women
and individuals from minority groups, especially from among
such groups which have been traditionally underrepresented in
professional and academic careers requiring master's level, pro-
fessional, or doctoral degrees, but nothing contained in this
paragraph shall be interpreted to require any institution to
grant preference or disparate treatment to the members of one
minority group on account of an imbalance which may exist
with respect to the total number or percentage of individuals
of such group participating in or receiving the benefits of the
program authorized in this section, in comparison with the
total number or percentage of individuals of such group in any
community, State, section, or other area;
(3) take into account the need to expand access by women
and minority groups to careers heretofore lacking adequate
representation of women and minority groups; and
(4) take into account the success of the applicant in provid-
ing students with access to careers in which women and minor-
ity groups are underrepresented.
(e) PRIORITIES FOR PELLOWSHIPS.The Secretary shall assure
that, in making grants under this part, a priority for awards is ac-
corded to
(1) individuals from minority groups and women who are
pursuing master's level or professional study in fields in which
they are underrepresented;
(2) individuals from minority groups and women who are
pursuing master's level study leading to careers that serve the
public interest; and
(3)
women
and
individuals
from
traditionally
underrepresented groups undertaking doctoral study, including
those interested in entering the fields of science and mathe-
matics.
(f) INSTITUTIONAL PAYMENTS.(1) The Secretary shall pay to
the institution of higher education, for each individual awarded a
fellowship under this part at such institution, an institutional al-
497
HIGHER EDUCPTI114 ACT OF 1965
Sec. 923
lowance. Except as provided in paragraph (2), such allowance shall
be
(A) $6,000 annually with respect to individuals who first
received fellowships under this part prior to academic year
1993-1994; and
(B) with respect to individuals who first receive fellowships
during or after academic year 1993-1994
(i) $9,000 for the academic year 1993-1994; and
(ii) for succeeding academic years, $9,000 adjusted an-
nually thereafter in accordance with inflation as deter-
mined by the Department of Labor's Consumer Price Index
for the previous calendar year.
(2) 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.
(20 U.S.C. 1134e) Enacted June 23, 1972, P.L. 92-318, sec. 181(a), 86 Stat. 306,
amended October 12, 1976, P.L. 94-482, sec. 171(b), 90 Stat. 2160; amended October
3, 1980, P.L. 96-374, sec. 902(a), 94 Stat. 1482; amended October 17, 1986, P.L. 99
498, sec. 901(a), 100 Stat. 1550; amended July 23, 1992, P.L. 102-325, sec. 901, 106
Stat. 763; amended December 20, 1993, P.L. 103-208, sec. 2(j)(28), 107 Stat. 2482
SEC. 923. AWARD OF FELLOWSHIPS.
(a) AWARDS.The Secretary shall make payments to institu-
tions of higher education for the purpose of paymg stipends to indi-
viduals who are awarded fellowships under this part. The stipends
the Secretary may establish shall reflect the purpose of this pro-
gram to encourage students to undertake master's level, profes-
sional, and doctoral study as described in this part. In the case of
an individuid who receives such individual's first stipend under
this part in academic year 1993-1994 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 ex-
ceed the fellow's demonstrated level of need F.ccording to measure-
ments of need approved by the Secretary.
(b) REQUIREMENTS FOR AWARDS.
(1) MASTER'S OR PROFESSIONAL DEGREE.No student en-
rolled in graduate study leading to a master's or professional
degree shall receive an award except during periods in which
such student is maintaining satisfactory progress in, and de-
voting essentially full time to study or research (including act-
ing as a teaching assistant or research assistant as may be re-
quired as a condition to award a degree), in the field in which
such fellowship was awarded and is not engaging in gainful
employment, other than part-time employment by the institu-
tion of higher education involved in teaching, research, or simi-
lar activities, approved by the Secretary. Such period shall not
exceed the normal period for completing the program in which
the student is enrolled or a total of 3 years, whichever is less,
except that the Secretary may provide by regulation for the
granting of such fellowships for an additional period of study
not to exceed one 12-month period, under special circumstances
which the Secretary determines would most effectively serve
the purposes of this part. The Secretary shall make a deter-
5 ' 7
=NO
Sec. 924
HIGHER EDUCATION ACT OF 1965
498
mination to provide such 12-month extension of an award to an
individual fellowship recipient for study or research upon re-
view of an application for such extension by the recipient.
(2) DOCTORAL DEGREE.No student enrolled in graduate
study leading to a doctoral degree shall receive an award
under this part except during periods in which such student is
maintaining satisfactory progress in, and devoting essentially
full time to study, research (including acting as a teaching as-
sistant or research assistant as may be required as a condition
to award a degree), or dissertation work in the field in which
such fellowship was awarded and is not engaging in gainful
employment, other than part-time employment by the institu-
tion of higher education involved in teaching, research, or simi-
lar activities, approved by the Secretary. Such period shall not
exceed a total of 3 years, consisting of not more than 2 years
of support for study or research, and not more than 1 year of
support for dissertation work, provided that the student has
attained satisfactory progress prior to the dissertation stage,
except that the Secretary may provide by regulation for the
granting of such fellowships for an additional period of study
not to exceed one 12-month period, under special circumstances
which the Secretary determines would most effectively serve
the purposes of this part. The Secretary shall make a deter-
mination to provide such 12-month extension of an award to an
individual fellowship recipient for study or research upon re-
view of an application for such extension by the recipient. The
institution shall provide 2 years of support for each student fol-
lowing the years of Federal predissertation support under this
part. Any student receiving an award for graduate study lead-
ing to a doctoral degree shall receive at least 1 year of super-
vised training in instruction during such student's doctoral
program.
(3) CONTINUATION OF AWARDS UNDER PRIOR LAW.Not-
withstanding any other provision of law, in the case of an indi-
vidual who was awarded a multiyear fellowship under this
part before the date of enactment of the Higher Education
Amendments of 1992, awards to such individual for the re-
mainder of such fellowship may, at the discretion of the insti-
tution of higher education attended by such individual, be sub-
ject to the requirements of this subsection as in effect prior to
such date of enactment. The institution shall be required to ex-
ercise such discretion at the time that its application to the
Secretary for a grant under this part, and the amount of any
such grant, are being considered by the Secretary.
(20 U.S.C. I1341) Enacted June 23, 1972, P.L. 92-318, sec. 181(a), 86 Stat. 306,
307; amended October 12, 1976, P.L. 94-482, sec. 171(b), 90 Stat. 2160, 2161;
amended October 3, 1980, P.L. 96-374, sec. 902(a), 94 Stat. 1484.; amended October
17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1552; amended July 23, 1992, P.L. 102
325, sec. 901, 106 Stat. 764; amended December 20, 1993, P.L. 103-208, sec.
2(j)(29)(31), 107 Stat. 2482-83.
SEC. 924. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $60,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this part. Notwithstanding any
5 8
499
HIGHER EDUCATION ACT OF 1965
Sec. 931
other provision of law, the Secretary may use funds appropriated
pursuant to this section for fiscal year 1994 to make continuation
awards under section 923(b)(3) to individuals who would have been
eligible for such awards in fiscal year 1993 if such section had been
in effect.
(20 U.S.C. 1134g) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 765;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(32), 107 Stat. 2483.
PART C-JACOB K. JAVITS FELLOWSHIP
PROGRAM
SEC. 931. AWARD OF JACOB R. JAVITS FELLOWSHIPS.
(a) AunicarrY AND TIMING OF AWARDS.-The Secretary is au-
thorized to award fellowships in accordance with the provisions of
this part for graduate study in the arts, humanities, and social
sciences by students of superior ability selected on the basis of
demonstrated achievement and exceptional promise. These fellow-
ships shall be awarded to students mtending to pursue a doctoral
degree, except that fellowships may be granted to students pursu-
ing a master's degree in those fields in which the master's degree
is commonly accepted as the appropriate degree for a tenured-track
faculty position in a baccalaureate degree-granting institution. All
funds appropriated in a fiscal year shall be obligated and expended
to the students for fellowships for use in the academic year begin-
ning after July 1 of 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.
(b) DESIGNATION OF FELLOWS.-Students receiving awards
under this part 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.
(20 U.S.C. 1134h) Enacted October 3, 1980, P.L. 96-374, sec. 903, 94 Stat. 1484;
amended Nov. 22, 1986, P.L. 99-159, 99 Stat. 908; amended October 17, 1986, P.L.
99-498, sec. 901(a), 100 Stat. 1552; amended June 3, 1987, P.L. 100-50, sec. 20(1),
101 Stat. 360; amended July 23, 1992, Pi. 102-325, sec. 901, 106 Stat. 765; amend-
ed December 20, 1993, P.L. 103-208, sec. 2(j)(33), 107 Stat. 2483.
SEC. 932. ALLOCATION OF FELLOWSHIPS.
(a) FELLOWSHIP BOARD.-
(1) APPOINTMENT.-The Secretary shall appoint a Jacob K.
Javits Fellows Program Fellowship I3oard (hereinafter in this
part referred to as the "Board") consisting of 9 individuals rep-
resentative of both public and private institutions of higher
education who are especially fivalified 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 knowledge-
5 19
Sec. 932
HIGHER EDUCATION ACT OF 1965
500
able about and have experience in graduate education in arts,
humanities, and social sciences.
(2) DUTIES.The Board shall
(A) establish general policies for the program estab-
lished by this part and oversee its operation;
(B) establish general criteria for the distribution of fel-
lowships among eligible academic fields identified by the
Board;(C) appoint panels of academic scholars with distin-
guished backgrounds in the arts, humanities, and social
sciences for the purpose of selecting fellows; and
(D) prepare and submit to the Congress at least once
in every 3-year period a report on any modifications in the
program that the Board determines are appropriate.
(3) CONSULTATIONS.In carrying out its responsibilities,
the Board shall consult on a regular basis with representatives
of the National Science Foundation, the National Endowment
for the Humanities, the National Endowment for the Arts, and
representatives of institutions of higher education and associa-
tions of such institution, 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 their ap-
pointment. Thereafter each officer shall be elected for a term
of 2 years. In case a vacancy occurs in either office, the Board
shall elect an individual from among the members of the Board
to fill such vacancy.
(6) QUORUM; ADDITIONAL MEETINGS.(A) A majority of the
members of the Board shall constitute a quorum.
(B) The Board shall meet at least once a year or more fre-
quently, as may be necessary, to cariy out its responsibilities.
(7) COMPENSATION.Members of the Board, while serving
on the business of the Board, shall be entitled to receive com-
pensation at rates fixed by the Secretary, but not exceeding the
rate of basic pay payable for level IV of the Executive Sched-
ule, including traveltime, and while so serving away from their
homes or regular places of business, they may be allowed trav-
el expenses, including per diem in lieu of subsistence, as au-
thorized by section 5703 of title 5, United States Code, for per-
sons in Government service employed intermittently.
(b) USE OF SELECTION PANELS.The recipients of fellowships
shall be selected in each designated field from among all applicants
nationwide in each field by distinguished panels appointed by the
Board to make such selections under criteria established by the
Board. 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.
5 1
501
HIGHER EDUCATION ACT OF 1965
SOC. 933
(c) FELLOWSHIP PoirrABILIrr.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.
(20 U.S.C. 1134i) Enacted October 3, 1980, P.L. 96-374, sec. 903, 94 Stat. 1485;
amended October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1553; amended June
3, 1987, P.L. 100-50, sec. 19(2)-(3), 101 Stat. 360; amended July 23, 1992, P.L. 102-
325, sec. 901, 106 Stat. 766; amended December 20, 1993, P.L. 103-208, sec. 2(j)(34)
and (35), 107 Stat. 2483.
SEC. 93$. STIPENDS.
(a) AWARD BY SECRETARY.The Secretary shall pay to individ-
uals awarded fellowships under this part such stipends as the Sec-
retary may establish, reflecting the purpose of this program to en-
courage highly talented students to undertake gracivate study as
described in this part. In the case of an individual who receives
such individual's first stipend under this part in academic year
1993-1994 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 according to measurements of need ap-
proved by the Secretary.
(b) INSTITUTIONAL PAYMENTS.
(1) IN GENERAL.(A) The Secretary shall (in addition to
stipends paid to individuals under this part) pay to the institu-
tion of higher education, for each individual awarded a fellow-
ship under this part at such institution, an institutional allow-
ance. Except as provided in subparagraph (B), such allowance
shall be
(0 $6,000 annually with respect to individuals who
first received fellowships under this part prior to academic
year 1993-1994; and
(ii) with respect to individuals who first receive fellow-
ships during or after academic year 1993-1994
(1) $9,000 for the academic year 1993-1994; and
(II) for succeeding academic years, $9,000 ad-
justed 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 part who has been notified
in writing by the Secretary that such applicant has been se-
lected to receive such a fellowship and is subsequently notified
that the fellowship award has been withdrawn, shall receive
such fellowship unless the Secretary subsequently makes a de-
termination that such applicant submitted fraudulent informa-
tion on the application.
(B) Subject to the availability of appropriations, amounts
payable to an institution by the Secretary pursuant to this sub-
5 t
Sec. 934
HIGHER EDUCATION ACT OF 1965
502
section shall not be reduced for any purpose other than the
purposes specified under paragraph (1).
(20 U.S.C. 1134j) Enacted October 3, 1980, P.L. 96-374, sec. 903, 94 Stat. 1486;
amended October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1554; amended June
3, 1987, P.L. 100-50, sec. 19(4), 101 Stat. 360; amended July 23, 1992, P.L. 102-
325, sec. 901, 106 Stat. 767; amended December 20, 1993, P.L. 103-208, sec. 2(j)(36),
107 Stat. 2483-84.
SEC. 934. FELLOWSHIP CONDITIONS.
(a) REQUIREMENTS FOR RECEIPT.-An individual awarded a fel-
lowship under the provisions of this part shall continue to receive
payments provided in section 933 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.
(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 part. The re-
ports shall be accompanied by a certificate from an appropriate offi-
cial at the institution of higher education, library, archive, or other
research center approved by the Secretary, stating that such indi-
vidual is making satisfactory progress in, and is devoting essen-
tially full time to the program for which the fellowship was award-
ed.
(20 U.S.C. 1134k) Enacted October 3, 1980, P.L. 96-374, sec. 903, 94 Stat. 1486;
amended October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1554; amended July
23, 1992, P.L. 102-325, sec. 901, 106 Stat. 767.
SEC. 935. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $30,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this part.
(20 U.S.C. 1134k-1) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 768.
PART D-GRADUATE ASSISTANCE IN AREAS OF
NATIONAL NEED
SEC. 941. PURPOSE.
In order to sustain and enhance the capacity for teaching and
research in areas of national need, it is the purpose of this part to
provide, through academic departments and programs of institu-
tions of higher education, a fellowship program to assist graduate
students of superior ability who demonstrate financial need.
(20 U.S.C. 11341) Enacted October 3, 1980, P.L. 96-374, sec. 904, 94 Stat. 1486;
amended October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1555; amended July
23, 1992, P.L. 102-325, sec. 901, 106 Stat. 768; amended December 20, 1993, P.L.
103-208, sec. 2(j)(37), 107 Stat. 2484.
SEC. 942. GRANTS TO ACADEMIC DEPARTMENTS AND PROGRAMS OF
INSTITUTIONS.
(a) GRANT AUTHORITY.-
512
503
HIGHER EDUCATION ACT OF 1965
Sec. 942
(1) IN GENERAL.The Secretary shall make grants to aca-
demic departments and programs and other academic units of
institutions of higher education that provide courses of study
leading to a graduate degree in order to enable such institu-
tions to provide assistance to graduate students in accordance
with this part.
(2) ADDITIONAL GRANTS.The Secretary may also make
grants to such departments and programs and to other units
of institutions of higher education granting graduate degrees
which submit joint proposals involving nondegree granting in-
stitutions which have formal arrangements for the support of
doctoral dissertation research with degree-granting institu-
tions. 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) AV/ARMThe principal criterion for the allocation of
awards 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
Secretary shall, in making such grants, promote an equitable
geographic distribution among eligible public and private insti-
tutions of higher education.
(2) DURATION.The Secretary shall approve a grant recipi-
ent under this part for a 3-year period. From the sums appro-
priated under this part for any fiscal year, the Secretary shall
not make a grant to any academic department or program of
an institution of higher education of less than $100,000 or
greater than $750,000 per fiscal year.
(3) REALLOTMENT.Whenever the Secretary determines
that an academic department or program of an institution of
higher education is unable to use all of the amounts available
to it under this part, the Secretary shall, on such dates during
each fiscal year as the Secretary may fix, reallot the amounts
not needed to academic departments and programs of institu-
tions which can use the grants authorized by this part.
(C) PREFERENCE TO CONTINUING GRANT RECIPIENTS.
(1) IN GENERAL.The Secretary shall make new grant
awards under this part only to the extent that each previous
grant recipient has received continued funding in accordance
with subsection (b)(2).
(2) RATABLE REDUCTION.To the extent that appropria-
tions under this part are insufficient to comply with paragraph
77-mo o-94--17
Sec. 943
HIGHER EDUCATION ACT OF 1965
504
(1), available funds shall be distributed by ratably reducing the
amounts required to be awarded by subsection (b)(2).
(20 U.S.C. 1134m) Enacted October 3, 1980, P.L. 96-374, sec. 904, 94 Stat. 1487;
amended October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat. 1555; amended July
18, 1988, P.L. 100-369, sec. 7(c), 102 Stat. 837; amended July 23, 1992, P.L. 102-
325, sec. 901, 106 Stat. 768.
SEC. 943. INSTITUTIONAL ELIGIBILITY.
(a) ELIGIBILITY CRITERIA.-Any academic department or pro-
gram of an institution of higher education that offers a program of
peatbaccalaureate study leading to a graduate degree in an area of
national need (as designated under subsection (b)) may apply for
a grant under this part. No department or program shall be eligible
for a grant unless the program of postbaccalaureate study has been
in existence for at least 4 years at the time of application for assist-
ance under this part.
(b) DESIGNATION OF AREAS OF NATIONAL NEED.-After con-
sultation with the National Science Foundation, the National Acad-
emy of Sciences, the National Endowments for the Arts and the
Humanities, and other appropriate Federal and nonprofit agencies
and organizations, the Secretary shall designate areas of national
need, such as mathematics, biology, physics, chemistry, engineer-
ing, geosciences, computer science, or foreign languages and area
studies. In making such designations, the Secretary shall take into
account the extent to which the interest is compelling and the ex-
tent to which other Federal programs support postbaccalaureate
study in the area concerned.
(20 U.S.C. 1134n) Enacted October 3, 1980, P.L. 96-374, sec. 905, 94 Stat. 1487;
renumbered and amended October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat.
1556; amended July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 769; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(jX38), 107 Stat. 2484.
SEC. 944. CRITERIA FOR APPLICATIONS.
(a) SELECTION OF APPLICATIONS.-The Secretary shall make
grants to academic departments and programs of institutions of
higher education on the basis of applications submitted in accord-
ance with subsection (b). Applications shall be ranked on program
quality by geographically balanced review panels of nationally rec-
ognized scholars. To the extent possible (consistent with other pro-
visions of this section), the Secretary shall make awards that are
consistent with recommendations of the review panels.
(b) CONTENTS OF APPLICATIONS.-An academic department or
program of an institution of higher education, in its 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 funds, for the purposes of the fellow-
ship program under this part an amount equal to at least 25
percent of the amount of the grant received under this part;
(3) set forth policies and procedures to assure that, in
making fellowship awards under this part the institution will
seek talented students from traditionally underrepresented
backgrounds, as determined by the Secretary;
51_4
N.
505
HIGHER EDUCATION ACT OF 1965
Sec. 945
(4) set forth policies and procedures to assure that, in
making fellowship awards under this part, the institution will
make awards to individuals who
(A) have financial need, as. determined under .criteria
developed by the institution;
(B) have excellent academic records in their previous
programs of study;
(C) plan teaching or research careers; and
(D) plan to pursue the highest possible degree avail-
able in their course of study;
(5) set forth policies and procedures to ensure that Federal
funds made available under this part for any fiscal year will
be used to supplement and, to the extent practical, increase the
funds that would otherwise be made available for the purpose
of this part and in no case to supplant those funds;
(6) provide assurances that, in the event that funds made
available to the academic department or program under this
part are insufficient to provide the assistance due a student
under the commitment entered into between the academic de-
partment or program and the student, the academic depart-
ment or program will endeavor, from any funds available to it,
to fulfill the commitment to the student;
(7) provide that the applicant will comply with the limita-
tions set forth in section 945;
(8) provide assurances that the academic department will
provide at least 1 year of supervised training in instruction for
students; and
(9) include such other information as the Secretary may
prescribe.
(20 U.S.C. 1134o) Enacted October 3, 1980, P.L. 96-374, sec. 905, 94 Stat. 1488;
renumbered and amended October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat.
1556; amended July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 770.
SEC. 946. AWARDS TO GRADUATE STUDENTS.
(a) COMMITMENTS TO GRADUATE STUDENTS.
(1) IN GENERAL.An academic department or program of
an institution of higher education shall make commitments to
graduate students (including students pursuing a doctoral de-
gree after having completed a master's degree provam at an
institution of higher education) at any point in their graduate
study to provide stipends for the length of time necessary for
a student to complete the course of graduate study, but in no
case longer than 5 years.
(2) SPECIAL RULE.No such commitments shall be made to
students under this part unless the academic department or
program has determined adequate funds are available to fulfill
the commitment either from funds received or anticipated
under this part, 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
part. The stipends the Secretary establishes shall reflect the pur-
pose of this program to encourage highly talented students to un-
dertake graduate study as described in this part. In the case of an
individual who receives such individual's first stipend under this
10
See. 946
HIGHER EDUCATION ACT OF 1965
506
part in academic year 1993-1994 or any succeeding academic year,
such stipend shall be set at a level of support equal to that pro-
vided by the National Science Foundation graduate fellowships, ex-
cept such amount shall be adjusted as necessary so as not to exceed
the fellow's demonstrated level of need according to measurements
of need approved by the Secretary.
(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
part in amounts that exceed the institutional payments made by
the Secretaiy pursuant to section 946(a) may count such payments
toward the amounts the institution is required to provide pursuant
to section 944(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.
(20 U.S.C. 1134p) Enacted October 3, 1980, P.L. 96-374, sec. 905, 94 Stat. 1488;
renumbered and amended October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat.
1557; amended July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 770; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(jX39), 107 Stat. 2484.
SEC. 946. ADDITIONAL ASSISTANCE FOR COST OF ROUCATION.
(a) INSTITUTIONAL PAYMENTS.(1) The Secretary shall (in addi-
tion to stipends paid to individuals under this part) pay to the in-
stitution of higher education, for each individual awarded a fellow-
ship under this part at such institution, an institutional allowance.
Except as provided in paragraph (2), such allowance shall be
(A) $6,000 annually with respect to individuals who first
received fellowships under this part prior to academic year
1993-1994; and
(B) with respect to individuals who first receive fellowships
during or after academic year 1993-1994
(i) $9,000 for the academic year 1993-1994; and
(ii) for succeeding academic years, $9,000 adjusted an-
nually thereafter in accordance with inflation as deter-
mined by the Department of Labor's Consumer Price Index
for the previous calendar year.
(2) The institutional allowance paid under paragraph (1) shall
be reduced by the amount the institution charges and collect; 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 part may not be used for the general operational
overhead of the academic department or program.
(20 U.S.C. 1134q) Enacted October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat.
1558; amended July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 771; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(jX40), 107 Stat. 2484.
516
507
HIGHER EDUCATION ACT OF 1965
Sec. 951
SEC. 947. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $40,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years to carry out this part.
(20 U.S.C. 1134q-1) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 771.
PART E-FACULTY DEVELOPMENT
FELLOWSHIP PROGRAM
SEC. 951. FELLOWSHIPS AUTHORIZED.
(a) FELLOWSHIP PROGRAM AUTHORIZATION.The Secretary
shall make grants to institutions of higher education or consortia
of such institutions and nonprofit organizations associated with in-
stitutions of higher education, with a demonstrated record of en-
hancing the access of individuals from underrepresented groups in-
cluding African Americans, Asian Americans, Hispanic Americans,
Native Americans, Pacific Islanders, and Native Hawaiians, to en-
able such institutions or consortia to
(1) identify talented faculty from underrepresented groups
who wish to
(A) continue in the higher education professorate and
obtain a doctoral degree; or
(B) participate
n faculty professional development
programs specifically designed to advance the careers of
underrepresented minorities;
(2) identify talented baccalaureate degree recipients from
underrepresented groups who have financial need and who
wish to obtain a doctoral degree and enter the higher edu-
cation professorate; and
(3) provide the individuals described in paragraphs (1) and
(2) with a fellowship to assist such students in obtaining a doc-
toral degree or to participate in a faculty development pro-
gram.
(b) GEOGRAPHIC DISTRIBUTION.In awarding grants pursuant
to subsection (a), the Secretary shall ensure
(1) an equitable geographic distribution of such grants;
and
(2) that both public and private institutions of higher edu-
cation are fairly represented among the grant recipients.
(C) SPECIAL RULE.
(1) EQUITABLE DISTRIBUTION.Each institution of higher
education or consortium receiving a grant under this part shall
ensure that during the period of the grant there is an equitable
distribution
of
fellowships
under
this
part
among
underrepresented groups.
(2) CONSTRUCTION.Nothing in this section shall be inter-
preted to require any institution of higher education or consor-
tium to grant preference or disparate treatment to the mem-
bers of one group on account of an imbalance which may exist
with respect to the total number or percentage of individuals
of such group participating in or receiving the benefits of the
program authorized in this part, in comparison with the total
517
Sec. 952
HIGHER EDUCATION ACT OF 1965
508
number or percentage of individuals of such group in any com-
munity, State, section, or other area.
(d) WAIVER BY THE SECRETARY.The Secretary may waive all
or any portion of the requirement under subsection (b) upon appli-
cation of any institution which is eligible for funds under title III
of this Act, pursuant to criteria established by the Secretary by
regulation.
(e) SELECTION REQUIREMENTS.In awarding grants under sub-
section (a), the Secretary shall give priority to applications describ-
ing programs that
(1) provide to each fellowship recipient
(A) a tuition waiver; and
(B)(i) a minimum $2,000 stipend; or
(ii) additional financial support in conjunction with
teaching or research activities that are part of such recipi-
ent's doctoral program;
(2) provide adclitional financial support to each fellowship
recipient from non-Federal resources, either in cash or in kind.,
such as contributions from the business community and civic
organizations;
(3) emphasize courses of study leading to the doctoral de-
grees in disciplines where minorities are underrepresented;
and
(4) describe steps to ensure that a fellowship recipient will
teach at an institution of higher education where minority un-
dergraduate students are likely to benefit from the educational
experience and academic achievement of such recipient.
DESIGNATION.Students receiving fellowship awards under
this part shall be known as "Faculty Development Fellows".
(20 U.S.C. 1134r) Enacted October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat
1558; amended July 23, 1992, P.L. 102-326, sec. 901, 106 Stat. 772; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(j)(41), 107 Stat. 2484.
SEC. 952. FELLOWSHIPS.
Each institution of higher education or consortium receiving a
grant under this part shall award fellowships in an amount equal
to the amount awarded to National Science Foundation graduate
fellowship recipients for that year, or an amount based on the fi-
nancial need of the recipient (as determined by the institution in
accordance with measurements of need approved by the Secretary)
whichever is less.
(20 U.S.C. 1134r-1) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 773.
SEC. 953. APPLICATION.
(a) APPLICATION REQUIRED.Each institution of higher edu-
cation or consortium desiring a grant under this part shall submit
an application to the Secretary at such time, in such manner and
containing such information as the Secretary may by regulation
reasonably require.
(b) CONTENTS.Each application submitted pursuant to sub-
section (a) shall contain
(1) the institution of higher education's or consortium's
plan for identifying and recruiting faculty and baccalaureate
degree recipients who may participate in the program assisted
under this part;
tr)
509
HIGHER EDUCATION ACT OF 1965
Sec. 954
(2) a description of the program or programs of doctoral
study that the institution of higher education or consortium
plans to offer in the institution's doctoral program;
(3) the institution of higher education's or consortium's
plan for using minority faculty and other faculty as advisors
and academic resources in support of the program assisted
under this part;
(4) a description of other resources of the institution of
higher education or consortium, including tuition waivers,
assistantships or financial aid other than loans, that such in-
stitution or consortium shall make available to fellowship re-
cipients;
(5) a description of the method such institution or consor-
tium shall use to determine a student's financial need;
(6) the names of those undergraduate institutions which
are historically or predominantly black colleges and univer-
sities or other institutions with significant enrollments of Afri-
can Americans, Asian Americans, Hispanic Americans, Native
Hawaiians, Pacific Islanders, and Native Americans which
have agreed to cooperate with the applicant institution to carry
out the purposes of this part; and
(7) such other assurances and information as the Secretary
may reasonably require by regulation.
(20 U.S.C. 1134r-2) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 773.
SEC. 954. FELLOWSHIP AGREEMENT.
Each recipient of a fellowship under this part shall enter into
an agreement with the institution of higher education or consor-
tium awarding such fellowship under which the fellowship recipi-
ent shall
(1) in the case of a fellowship recipient described in section
951(a)(1), within a 5-year period after completing the doctoral
degree for which the fellowship under this part was awarded,
teach, for a period of not less than 1 year for each year for
which financial assistance under this part was received, in a
public or private nonprofit institution of higher education that
has a significant minority enrollment;
(2) in the case of a fellowship recipient described in section
951(a)(2), within a 5-year period after completing the doctoral
degree for which the fellowship under this part was awarded,
teach, for a period of not less than 1 year for each year for
which financial assistance under this part was received, in a
public or private nonprofit institution of higher education;
(3) agree to provide the Secretary with evidence of compli-
ance, determined pursuant to regulations issued by the Sec-
retary, with the provisions of paragraph (1) or (2); and
(4) repay all or part of the fellowship received, plus inter-
est, and if applicable reasonable collection fees, under regula-
tions issued by the Secretary, in the event the conditions of
paragraph (1) or (2) are not complied with, except as provided
in section 956.
(20 U.S.C. 1134r-3) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 774,
5 9
Sec. 944
HIGHER EDUCATION ACT OF 1965
510
SEC. 955. FELLOWSHIP REPAYMENT PROVISIONS.
A recipient of a fellowship under this part found by the Sec-
retary to be in noncompliance with the agreement entered into
under section 954(1) or 954(2) shall be required to repay a pro rata
amount of such fellowship assistance received, plus interest (but in
no event at an interest rate higher than the rate applicable to
loans in the applicable period under part B of title IV) and, where
applicable, reasonable collection fees, on a schedule and at a rate
of interest to be prescribed by the Secretary by regulations issued
pursuant to this part.
(20 U.S.C. 1134r-4) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 774.
SEC. 956. EXCEPTIONS TO REPAYMENT PROVISIONS.
(a) DEFERRAL DURING CERTAIN PERIODS.A recipient shall not
be considered in violation of the agreement entered into pursuant
to section 954 (1) or (2) during any period in which the recipient
(1) is pursuing a full-time course of study related to the
field of teaching at an eligible institution;
(2) is serving, not in excess of 3 years, as a member of the
armed services of the United States;
(3) is temporarily totally disabled for a period of time not
to exceed 3 years as established by sworn affidavit of a quali-
fied physician;
(4) is unable to secure employment for a period not to ex-
ceed 12 months by reason of the care required by a spouse who
is disabled;
(5) is seeking and unable to fmd full-time employment for
a single period not to exceed 12 months;
(6) is engaged in full-time employment as a teacher in a
public or private nonprofit preschool, elementary or secondary
school, or a public or private nonprofit preschool, education
program; or
(7) satisfies the provisions of additional repayment excep-
tions that may be prescribed by the Secretary in regulations is-
sued pursuant to tliis part.
(b) FORGIVENESS IF PERMANENTLY TOTALLY DISABLED.A re-
cipient shall be excused from repayment of any fellowship assist-
ance received under this part if the recipient becomes permanently
totally disabled as established by sworn affidavit of a qualified phy-
sician.
(20 U.S.C. 1134r-5) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 774.
SEC. 957. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$25,000,000 for fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1134r-6) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 775.
511
HIGHER EDUCATION ACT OF 1965
Sec. 961
PART F-ASSISTANCE FOR TRAINING IN THE
LEGAL PROFESSION
SEC. 961. PROGRAM REQUIREMENTS.
(a) PROGRAM AUTHORITY.The Secretary shall carry out a pro-
gram to assist minority, low-income, or educationally disadvan-
taged college graduates to successfully pursue a law degree and
service in the legal profession through an annual grant or contract
with the Council on Legal Education Opportunity (hereinafter
CLEO). A grant or contract under this part shall permit CLEO to
use up to 6 percent of the funds provided for administrative costs
of the grant or contract.
(b) SERVICES AUTHORIZED.A legal training project under this
part may provide the following services:
(1) Assistance and counseling in gaining admission to ac-
credited law schools.
(2) A 6-week intensive summer program designed to pre-
pare minority, low-income or educationally disadvantaged indi-
viduals for the successful completion of legal studies.
(3) An academic-year program of tutorial services, aca-
demic advice and counseling designed to assist eligible partici-
pants successfully complete their legal training, which may
include
(A) instruction in reading, legal research, legal writing
skills and problem analysis;
(B) academic advice and assistance in course selection;
(C) advisement about financing their legal education
and available student financial aid;
(D) personal and professional counseling relative to ca-
reer alternatives in the legal profession and bar examina-
tion preparation; and
(E) any other activity consistent with subparagraphs
(A) through (D) which furthers the objectives of this part
which the Secretary may, by regulation, reasonably re-
quire.
(C) USE OF FUNDS.The Secretary shall by grant or contract
on a biennial basis, with the Council on Legal Education Oppor-
tunity, cover all or part of the cost of
(1) publicizing the existence and availability of program
funds to assist minority, low-income, and educationally dis-
advantaged individuals to pursue a legal education;
(2) selecting minority, low-income and educationally dis-
advantaged individuals for training for the legal profession;
(3) facilitating the entry of such individuals into law
schools at institutions of high.er education for the purpose of
pursuing a legal education;
(4) selecting from among all qualified applicants, which
shall provide the services authorized by section 961(b) (2) or
(3);
(5) evaluating the quality, impact and continuing feasibil-
ity of the programs implemented under section 961(b);
' This program waa originally enacted Oct. 17, 1986 as part E of title IX of the Act (P.L. 99
.198, sec. 901(a), 100 Stat. 1558).
Sec. 962
HIGHER EDUCATION ACT OF 1965
512
(6) providing, through the institutions, agencies, and orga-
nizations selected under paragraph (4), for not more than 6
months prior to entry of such mdividuals upon their course of
training for the legal profession, or following entry, training
designed to assist them to complete successfully such training
for the legal profession;
(7) paying such stipends (including allowances for partici-
pant travel and for their dependents) as the Secretary may de-
termine for such individuals for any such period of preliminary
training for the legal profession during which such individuals
maintain satisfactory academic progress toward the J.D. or
LL.B. degree, as determined by the respective institution; and
(8) paying for administrative activities of the institutions
of higher education, agencies, or organizations which receive
subgrants or contracts under paragraph (6), or with which such
contracts are entered into, to the extent that such activities are
for the purpose of furthering the activities described in para-
graphs (1) through (7).
(20 U.S.C. 1134s) Enacted October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat.
1558; amended July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 775.
SEC. 982. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$7,000,000 for fiscal year 1993 and such sums as may be necessary
for each of the 4 succeeding fiscal years.
(20 U.S.C. 1134t) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 776.
PART G-LAW SCHOOL CLINICAL EXPERIENCE
PROGRAMS
SEC. 971. PROGRAM AUTHORIZED.
(a) GRANT AND CONTRACT PURPOSES.The Secretary is author-
ized to enter into grants or contracts with accredited law schools
in the States for the purpose of paying not to exceed 90 percent of
the costs of continuing, expanding, or establishing programs in
such schools to provide clinical experience to students in the prac-
tice of law, which includes any form of law student work involving
performance in the role of a lawyer exercising legal skills and roles
such as those of an advocate, counselor, negotiator, investigator,
and ethical practitioner, whether by way of the provision of rep-
resentation of or services to an identifiable client in actual cases or
situations (subject to existing State er local limitations upon such
provision) or by way of simulation of such provision through appro-
priate exercises. Preference shall be given to those programs pro-
viding legal experience in the preparation and trial of actual cases,
including administrative cases and the settlement of controversies
outside the courtroom. The cases and situations handled in actual-
ity or by simulation may encompass any one or more of the follow-
ing:
(1) Judicial, administrative, executive, or legislative pro-
ceedings, including the full range of preparation therefor.
This program was originally enacted Oct. 17, 1986 as part F of title 1:1{ of the Act (P.L. 99
498, sec. 901(a), 100 Stat. 1660).
513
HIGHER EDUCATION ACT OF 1965
Sec. 971
(2) Office or house counsel problems.
(3) Factual investigation, empirical research, or policy or
legal analysis.
(b) USE OF FUNDS.Such costs may include necessary expendi-
tures incurred for
(1) planning;
(2) training of faculty members and salary for additional
faculty members;
(3) travel and per diem for faculty and students;
(4) reasonable stipends for students for work in the public
service performed as part of any such program at a time other
than during the regular academic year;
(5) equipment and library resources;
(6) involving practicing lawyers in the process of training
law students to perform as lawyers; and
(7) such other items as are allowed pursuant to regulations
issued by the Secretary.
(c) LIMITATIONS ON AMOUNTS.No law school may receive
more than $250,000 in any fiscal year pursuant to this part, no
part of which may be used to pay for indirect costs or charges.
(d) DEFINITION.For the purpose of this part, the term "ac-
credited law school" means any law school which is accredited by
a nationally recognized accrediting agency or association approved
by the Secretary for this purpose, including any combination or
consortium of such schools.
(20 U.S.C. 1134u) Enacted October 17, 1986, P.L. 99-498, sec. 901(a), 100 Stat.
1560; amended July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 776.
SEC. 972. APPLICATIONS.
(a) REQUIREMENTS.A grant or contract authorized by this
part may be made by the Secretary upon application which
(1) is made at such time or times and contains such infor-
mation as the Secretary may prescribe;
(2) provides 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 applicant under
this part; and
(3) provides for making such reports, in such form and con-
taining such information as the Secretary may require to carry
out functions under this part, and for keeping such records and
for affording such access thereto as the Secretary may find nec-
essary to assure the correctness and verification of such re-
ports.
(b) DISTRIBUTION OF GRANTS AND CONTRACTS.The Secretary
shall allocate grants or contracts under this part in such manner
as will provide an equitable distribution of such grants or contracts
throughout the United States among law schools which show prom-
ise of being able to use funds effectively for the purposes of this
part.
(20 U.S.C. 1134v) Enacted October 17, 1986, P.L. 99-498, sec. 91Cka), 100 Stat.
1558; renumbered and amended July 23, 1992, P.L. 102-325, sec. 901, 106 Stat.
777.
Sec. 973
HIGHER EDUCATION ACT OF 1965
514
SEC. 973. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part
$10,000,000 for fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1134w) Enacted July 23, 1992, P.L. 102-325, sec. 901, 106 Stat. 777..
TITLE XPOSTSECONDARY IMPROVEMENT PROGRAMS
PART AFUND FOR THE IMPROVEMENT OF
POSTSECONDARY EDUCATION
Subpart IProgram Authority
SEC. 1001. FUND FOR THE IMPROVEMENT OF POSTSECONDARY EDU-
CATION.
(a) AUTHORITY.The Secretary is authorized to make grants
to, or enter into contracts with, institutions of higher education or
combinations of such institutions and other public and private non-
profit institutions and agencies, to enable such institutions and
combinations of such institutions to improve postsecondary edu-
cation opportunities by
(1) encouraging the reform, innovation, and improvement
of postsecondary education, and providing equal educational
opportunity for all;
(2) the creation of institutions and programs involving new
paths to career and professional training, and new combina-
tions of academic and experiential lemming;
(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
Lhe 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.
(20 U.S.C. 1135) Enacted June 23, 1972, P.L. 92-318, sec. 186(a)(1), 86 Stat. 312,
313; amended October 12, 1976, P.L. 94-482, sec. 176(a)(3), (a)(4), (a)(6), 90 Stat.
2165; amended November 15, 1977, P.L. 95-180, 91 Stat. 1372; amended October
3, 1980, P.L. 96-374, sec. 1001(a), 94 Stat. 1489; amended July 23, 1992, P.L. 102-
325, sec. 1001, 106 Stat. 778.
515
HIGHER EDUCATION ACT OF 1965
Sec. 1003
SEC. 1002. NATIONAL BOARD OF THE FUND FOR THE IMPROVEMENT
OF POSTSECONDARY EDUCATION.
(a) ESTABLISHMENT.There is established a National Board of
the Fund for the Improvement of Postsecondary Education (here-
after in this part referred to as the "Board"). The. Board shall con-
sist of 15 members appointed by the Secretary for overlapping 3-
year terms. A majority of the Board shall constitute a quorum. Any
member of the Board who has served for 6 consecutive years shall
thereafterbe ineligible for appointment to the Board during a 2-
year joeriod 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
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.
(20 U.S.C. 1135a-1) Enacted October 3, 1980, P.L. 96-374, sec. 1001(a), 94 Stat.
1489; amended October 17, 1986, P.L. 99-498, sec. 1001(a), 100 Stat. 1560; renum-
bered and amended July 23, 1992, P.L. 102-325, sec. 1001, 106 Stat. 778.
SEC. 1003. ADMINISTRATIVE PROVISIONS.
(a) TECHNICAL EMPLOYEES.The Secretary may appoint, for
terms not VI exceed 3 years, without regard to the provisions of
title 5 of the United States Code governing appointments in the
competitive service, not more than 5 technical employees to admin-
ister this subpart who may be paid without regard to the provi-
sions of chapter 51 and subchapter III of chapter 53 of such title
relating to classification and General Schedule pay rates.
(b) PROCEDURES.The Director shall establish procedures for
reviewing and evaluating grants and contracts made or entered
into under this subpart. Procedures for reviewing grant applica-
Sec. 1004
HIGHER EDUCATION ACT OF 1965
516
dons or contracts for financial assistance under this section may
not be subject to any review outside of officials responsible for the
administration of the Fund for the Improvement of Postsecondary
Education.
(20 U.S.C. 1136a-2) Enaated October 3, 1980, P.L. 96-374, sec. 1001(a), 94 Stat.
1490; amended July 23, 1992, P.L. 102-325, sec. 1001, 106 Stat. 779; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(j)(42), 107 Stat. 2484.
SEC. 1004. AUTHORIZATION OF APPROPRIATIONS.
(a) IN GENERAL.-There are authorized to be appropriated to
carry out this subpart (except for section 1001(b)) $20,000,000 for
fiscal year 1993 and such sums as may be necessary for each of the
4 succeeding fiscal years.
(b) PLANNING GRANTS.-There are authorized to be appro-
priated to carry out section 1001(b) $1,000,000 for fiscal year 1993
and such sums as may be necessary for each of the 4 succeeding
fiscal years.
(20 U.S.C. 1136a-3) Enacted October 3, 1980, P.L. 96-374,
sec. 1001(a), 94 Stat.
1490; amended October 17, 1986,
P.I.4 99-498,
sec. 1001(a), 100 Stat. 1560; renum-
bered and amended July 23, 1992, P.L. 102-326, sec. 1001, 106 Stat. 779; amended
December 20, 1993, P.L. 103-208, sec. 2(j)(42), 107 Stat. 2484.
Subpart 2-Special Projects in Areas of National
Need
SEC. 1011. SPECIAL PROJECTS.
(a) GRANT AurHoRrry.-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) International exchanges.
(2) Campus climate and culture.
(3) Evaluation and dissemination.
(d) AUTHORIZATION OF APPROPRIATIONS.-There are authorized
to be appropriated to carry out this subpart $5,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years.
(20 U.S.C. 1135a-11) Enacted July 23, 1992, P.L. 102-326, sec. 1001, 106 Stat.
780; amended December 20, 1993, P.L. 103-208, sec. 2(j)(43), 107 Stat. 2484.
PART B-MINORITY SCIENCE AND ENGINEERING IMPROVEMENT
PROGRAMS
SUBPART 1-MINORITY SCIENCE IMPROVEMENT PROGRAM
SEC. 1021, PURPOSE; AUTHORITY.
(a) It is the purpose of this subpart to continue the authority
of the Department to operate the Minority Institutions Science Im-
5' 6
517
HIGHER EDUCATION ACT OF 1965
Sec. 1023
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
underrepresented ethnic minorities, particularly minority women,
in scientific and technological careers.
(20 U.S.C. 1135b) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1561; amended July 23, 1992, P.L. 102-325, sec. 1002(a), 106 Stat. 780; amended
December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1022. 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 GWEN 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.
(20 U.S.C. 1135b-1) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1561; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1023. USE OF FUNDS.
(a) TYPES OF GRANTS.Funds appropriated to carry out this
subpart may be made available as
(1) institutional grants (as defmed in section 1046(6));
(2) cooperative grants (as defined in section 1046(7));
(3) design projects (as defined in section 1046(8)); or
(4) special projects (as defined in section 1046(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.
527
Sec. 1024
HIGHER EDUCATION ACT OF 1965
518
(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.
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 limited to)
(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.
(20 U.S.C. 1135b-2) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1562; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1024. MULTIAGENCY STUDY OF MINORITY SCIENCE PROGRAMS.
SEC. 1024. The Secretary, in cooperation with the heads of
other departments and agencies that operate programs similar in
purposes to the Minority Science Improvement 1°rogram which seek
to increase minority participation and representation in scientific
fields, shall submit a report to the President and Congress summa-
rizing and evaluating such programs by January 1, 1996.
(20 U.S.C. 1135b-3) Enacted July 23, 1992, P.L. 102-325, sec. 1002(b), 106 Stat.
780; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SUBPART 2SCIENCE AND ENGINEERING ACCESS PROGRAMS
SEC. 1031. MINORITY SUPPORT IN SCIENCE AND ENGINEERING PRO-
GRAMS.
SEC. 1031. The Secretary shall, in accordance with the provi-
sions of' this subpart, carry out a program of making grants to in-
stitutions of higher education that are designed to provide or im-
5
519
HIGHER EDUCATION ACT OF 1965
Sec. 1033
prove support programs for minority students enrolled in science
and engineering programs at institutions with a significant minor-
ity enrollment (at least 10 percent).
(20 U.S.C. 1135c) Enacted June 23, 1972, P.L. 92-218, sec. 186(a)(1), 86 Stat 322,
323; amended October 3, 1980, P.L. 96-374, secs. 1001(b), 1391, 94 Stat. 1491, 1503,
renumbered and amended October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat 1563,
amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1032. SPECIAL SERVICE PROJECTS PROGRAM.
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 provide or improve support
to accredited colleges and universities and professional scientific so-
cieties for a broad range of activities designed to eliminate or re-
duce specific barriers to the entry of minorities into science and
technology.
(20 U.S.C. 1135c-1) Enacted June 23, 1972, P.L. 92-318, sec. 186(a)(1), 86 Stat
323; amended October 3, 1980, P.L. 96-374, secs. 1001(b), 1391, 94 Stat. 1491, 1503,
amended October 19, 1984, P.L. 98-524, sec. 4(c)(3), 98 Stat. 2488; renumbered and
amended October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat. 1563; amended Decem-
ber 20, 1993, Pi. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1033. SUPPORTABLE ACTIVITIES.
Funds appropriated for the purpose of this subpart may be
made available for-
(I) providing needed services to groups of minority institu-
tions or providing training for scientists and engineers from el-
igible minority institutions;
(2) providing needed services to groups of institutions serv-
ing significant numbers of minority students or providing
training for scientists and engineers from such institutions to
improve their ability to train minority students in science or
engineering;
(3) assisting minority institutions to improve the quality of
preparation of their students for graduate work or careers in
science, mathematics, and technology;
(4) improving access of undergraduate students at minor-
ity institutions to careers in the sciences, mathematics, and en-
gineering;
(5) improving access of minority students, particularly mi-
nority women, to careers in the sciences, mathematics, and en-
gineering;
(6) improving access for pre-college minority students to
careers in science, mathematics, and engineering through com-
munity outreach programs conducted through colleges and uni-
versities eligible for support through the Minority Science and
Engineering Improvement Programs;
(7) disseminating activities, information, and educational
materials designed to address specific barriers to the entry of
minorities into science and technology, and conducting activi-
ties and studies concerning the flow of underrepresented ethnic
minorities into scientific careers;
(8) supporting curriculum models to encourage minority
student participation in research careers in science, mathe-
matics, and technology; and
5 ? 9
Sec. 1041
HIGHER EDUCATION ACT OF 1965
520
(9) improving the capability of minority institutions for
self-assessment, management, and evaluation of their science,
mathematics, and engineering programs and dissemination of
their results.
(20 U.S.C. 1135c-2) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1563; amended July 23, 1992, P.L. 102-325, sec. 1002(c), 106 Stat. 780; amended
December 20, 1993, Pl. 103-208, sec. 2(m), 107 Stat. 2486.
SUBPART 3-ADMINISTRATIVE AND GENERAL PROVISIONS
SEC. 1041. ELIGIBILITY FOR GRANTS.
Eligibility to receive grants under this part is limited to-
(1) public and private nonprofit institutions that are mi-
nority institutions (as defined in section 1046(3));
(2) nonprofit science-oriented organizations, professional
scientific societies, and all nonprofit, accredited colleges and
universities which provide a needed service to a group of eligi-
ble minority institutions or which provide in-service training
for project directors, scientists, and engineers from eligible mi-
nority institutions; and
(3) for the purposes of section 1032, public and private
nonprofit institutions that have at least 10 percent minority
enrollment.
(20 U.S.C. 1135d) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1564; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1042. GRANT APPLICATION.
(a) SUBMISSION AND CONTENTS OF APPLICATIONS.-An eligible
applicant (as determined under section 1041) 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 1021(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.
(20 U.S.C. 1135d-1) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1564; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1043. CROSS PROGRAM AND CROSS AGENCY COOPERATION.
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.
(20 U.S.C. 1135d-2) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1564; amended July 23, 1992, P.L. 102-325, sec. 1002(d), 106 Stat. 780; amended
December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
521
HIGHER EDUCATION ACT OF 1965
Sec. 1046
SEC. 1044. 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-
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.
(20 U.S.C. 1135d-3) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat
1564; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
[Section 1045 is repealed by section 1002(e) of Public Law 102
325, 106 Stat. 780.1
SEC. 1046. 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
underrepresented 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, and
social sciences, and history and philosophy of science; also in-
cluded are interdisciplinary fields which are comprised of over-
lapping 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
5 3 I
Sec. 1047
HIGHER EDUCATION ACT OF 1965
522
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
(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.
(20 U.S.C. 1135d-5) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1566; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1047. AUTHORIZATION OF APPROPRIATIONS.
(a) AUTHORIZATIONS.There are authorized to be appropriated
to carry out the purposes of this part, $10,000,000 for fiscal year
1993 and such sums as may be necessary for each of the 4 succeed-
ing fiscal years.
(b) APPROPRIATION LIMUATION.For any fiscal year, 50 per-
cent of the funds appropriated for this part shall be allocated for
the purpose of section 1021, 33.33 percent for the purpose of sec-
tion 1031, and 16.67 percent for the purpose of section 1032.
(20 U.S.C. 1135d-6) Enacted October 17, 1986, P.L. 99-498, sec. 1002, 100 Stat.
1567; amended Aug. 23, 1988, P.L. 100-418, sec. 6221, 102 Stat. 1518; amended
July 23, 1992, P.L. 102-325, sec. 1002(0, 106 Stat. 780; amended December 20,
1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
PART C-WOMEN AND MINORITIES SCIENCE
AND ENGINEERING OUTREACH DEMONSTRA-
TION PROGRAM
SEC. 1061. PURPOSE.
It is the purpose of this part to provide grants to institutions
working in partnership with elementary and secondary schools to
establish outreach programs for female and minority elementary
and secondary school students to increase the participation of those
students in science and engineering undergraduate and graduate
degree programs.
(20 U.S.C. 1135e) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 781.
523
HIGHER EDUCATION ACT OF 1965
Sec. 1064
SEC. 1062. PROGRAM AUTHORITh:D.
The Secretary shall, in accordance with the provision of this
part, award grants to eligible institutions to enable such eligible in-
stitutions to pay the Federal share of the costs of carrying out a
program that is designed to enhance, coordinate, develop, and ex-
pand programs and initiatives which identify and encourage female
and minority elementary and secondary school students to pursue
higher education in preparation for careers in science and engineer-
ing.
(20 U.S.C. 1135e-1) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 781.
SEC. 1063. ELIGIBLE INSTITUTIONS.
(a) DEFINITION.Foi the purpose of this part the term "eligible
institution" means an institution of higher education which
(1) has science and engineering programs;
(2) has female and minority enrollment and retention rates
significantly higher than the national averages of such rates,
but does not meet the definition of "minority institution" set
forth in section 1046(3);
(3) demonstrates its ability to conduct outreach activities
in science and engineering to female and minority students at
the elementary and secondary school levels;
(4) incorporates the use of advanced telecommunications
equipment, including fiber optics and interactive video sys-
tems, to improve the development of intermodal programs tar-
geted toward female and minority students;
(5) enters into a partnership agreement with a local edu-
cational agency and at least 1 local business or industry; and
(6) describes in the application submitted pursuant to sec-
tion 1065 the duties of each partner entering into the partner-
ship agreement described in paragraph (5).
(b) LIMITATION.The Secretary shall award at least 40 percent
of the total funds made available under this section in any fiscal
year to eligible institutions located in any of the Nation's ten larg-
est metropolitan statistical areas.
(20 U.S.C. 1135e-2) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 781.
SEC. 1064. AMOUNT, DURATION, AND USE OF FUNDS.
(a) AMOUNT AND DURATION OF GRANTS.Grants under this
part shall be provided in an amount which is not less than
$500,000 in a single fiscal year, and shall be continued for a period
not to exceed 5 fiscal years.
(b) USE OF GRANTS.Grants provided under this section may
be used for
(1) the operation and administration of outreach programs
to elementary and secondary school students;
(2) faculty development programs in support of outreach
programs;
(3) curriculum development in support of the outreach pro-
grams;
(4) disseminating information about the outreach programs
to elementary and secondary schools and institutions of higher
education;
(5) supporting cooperative efforts with elementary and sec-
ondary schools, community groups, business and industry, and
533
Sec. 1065
HIGHER EDUCATION ACT OF 1965
524
other education-related groups, to expand the scope of the out-
reach programs; and
(6) establishing infrastructure necessary to operate pro-
grams, specifically including telecommunications equipment
providing distance learning capabilities.
(20 U.S.C. 1135e-3) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 782.
SEC. 1065. APPLICATION.
To receive a grant under this part, an eligible institution shall
submit an application at such time, in such manner, and contain-
ing or accompanied by such information, as the Secretary may rea-
sonably require. Each such application shall contain a description
of the goals of the activities to be assisted.
(20 U.S.C. 1135e-4) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 782.
SEC. 1066. EVALUATION.
(a) INDEPENDENT ANNUAL EVALUATION.The Secretary shall
provide for the annual independent evaluation of activities assisted
under this part to determine their effectiveness in providing
(1) the operation and administration of outreach programs
to elementary and secondary school students;
(2) faculty development programs in support of outreach
programs;
(3) curriculum development in support of the outreach pro-
grams;
(4) disseminating information about the outreach programs
to elementary and secondary schools and institutions of higher
education;
(5) supporting cooperative efforts with elementary and sec-
ondary schools, community groups, business and industry, and
other education-related groups, to expand the scope of outreach
programs; and
(6) establishing infrastructure necessary to operate pro-
grams, specifically including telecommunications equipment
providing distance learning capabilities.
(13) EVALUATIONS.
(1) CONDUCT AND CRITERIA.Each evaluation described in
subsection (a) shall be conducted by individuals not directly in-
volved in the administration of the activities assisted under
this part. Such independent evaluators and the program ad-
ministrators shall jointly develop evaluation criteria which pro-
vide for appropriate analysis of the factors described in sub-
section (a). When possible, each evaluation 'shall include com-
parisons with appropriate control groups.
(2) PROGRAM EFFECTIVENESS.In order to determine the
effectiveness of assistance provided under this part in achiev-
ing the goals stated in the application described in section
1065, each evaluation described in subsection (a) shall contain
objective measures of such goals and, where feasible, shall ob-
tain the specific views of participants about the activities as-
sisted under this part.
(c) REPORT TO CONGRESS AND DISSEMINATION.The Secretary
shall prepare and submit to the Congress a review and summary
of the results of the evaluations described in subsection (a) not
later than September 30, 1997.
5 3 4
525
HIGHER EDUCATION ACT OF 1965
:ide. 1081
(20 U.S.C. 1135e-5) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 782.
SEC. 1067. FEDERAL SHARE.
The Federal share of the costs of activities assisted under this
part shall be 90 percent of the costs of such activities in the first
year an eligible institution receives a grant under this part, 80 per-
cent of such cost in the second such year, 70 percent of such cost
in the third such year, 60 percent of such cost in the fourth such
year, and 50 percent of such costs in the fifth such year. The re-
maining funds shall be provided from non-Federal sources.
(20 U.S.C. 1135e-6) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 783
SEC. 1068. SUPPLEMENT NOT SUPPLANT.
An eligible institution may use funds received under this part
only so as to supplement and, to the extent practicable, increase
the level of funds that would be available from non-Federal sources
for the activities described in section 1064(b) and in no case may
such funds be so used as to supplant such funds from such non-
Federal sources.
(20 U.S.C. 1135e-7) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 783
SEC. 1069. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part,
$10,000,000 for fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years. Not more than 3
percent of the amount appropriated for this part in any fiscal year
may be used for purposes of section 1066.
(20 U.S.C. 1135e-8) Enacted July 23, 1992, P.L. 102-325, sec. 1003, 106 Stat. 783
PART D-DWIGHT D. EISENHOWER
LEADERSHIP PROGRAM
SEC. 1081. SHORT TITLE; ESTABLISHMENT OF THE PROGRAM.
(a) SHORT TITLE.This part may be cited as the "Dwight D.
Eisenhower Leadership Development Act of 1992".
(b) ESTABLISHMENT OF PROGRAM.
(1) IN GENERAL.The Secretary shall establish a program
to be known as the "Dwight D. Eisenhower Leadership Devel-
opment Program".
(2) SPECIAL RULE.The program assisted under this part
shall be established in conjunction with institutions of higher
education which are specially prepared to undertake the devel-
opment of new generations of leaders in the areas of national
and international affairs.
(c) FUNCTIONS OF THE PROGRAM.The functions of the pro-
gram assisted under this part shall include
(1) stimulating and supporting the development of leader-
ship skills among new generations of American college stu-
dents;
(2) directing a national program that identifies, recruits,
inspires, and educates outstanding young men and women re-
garding leadership roles in a wide variety of fields in both the
public and private sectors;
(3) offering opportunities for young American leaders who
meet the requirements of section 484(a) of this Act and who
5.35
Sec. 1101
HIGHER EDUCATION ACT OF 1965
526
are broadly representative of the population of the United
States to benefit from internships in national and international
organizations, with special attention being given to establish-
ing such opportunities in developing countries;
(4) developing curriculum for secondary and postsecondary
education;
(5) developing a prototype for understanding and teaching
critical leadership skills to young Americans and encouraging
institutions of higher education to establish similar leadership
programs throughout the United States and abroad; and
(6) stimulating the theoretical and practical study of lead-
ership and leadership development to develop both a better un-
derstanding of leadership and improved methods to teach criti-
cal skills to young adults.
(d) OPERATION OF THE PROGRAM.The Secretary is authorized
to make grants to or enter into cooperative agreements, contracts,
or leases with institutions of higher education (as defined in section
1201 of this title), or with nonprofit private organizations in consor-
tia with such institutions, to operate the program assisted under
this part.
(e) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $10,000,000 for fiscal year 1993 and such sums
as may be necessary for each of the 4 succeeding fiscal years to
carry out this part.
(20 U.S.C. 11350 Enacted July 23, 1992, P.L. 102-325, sec. 1004, 106 Stat. 783;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(44), (45), 107 Stat. 2485.
TITLE XI-COMMUNITY SERVICE
PROGRAMS
PART A-URBAN COMMUNITY SERVICE
SEC. 1101. 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.
' This program was originally enacted on October 17, 1986 as Part B of title XI of the Act
(P.L. 99-498, sec. 1101, 100 Stat. 1670).
536
527
HIGHER EDUCATION ACT OF 1965
Sec. 1104
(20 U.S.C. 1136) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 784.
SEC. 1102. 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 1104 in accordance with the provisions of this part.
(20 U.S.C. 1136a) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 785.
SEC. 1193. 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.
(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.
(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.
(20 U.S.C. 1136b) Enacted October 17, 1986, P.L. 99-498, sec. 1101, 100 Stat.
1569; amended July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 785.
SEC. 1104. 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.
537
Sec. 1105
HIGHER EDUCATION ACT OF 1965
528
(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 1103(a)(2)(B) concur are of high pri-
ority 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 with their
community.
(20 U.S.C. 1136c) Enacted October 17, 1986, P.L. 99-498, sec. 1101, 100 Stat.
1569; amended July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 785.
SEC. 1105. PEER REVIEW.
The Secretary shall designate a peer review panel to review
applications submitted under this part and make recommendations
for funding to the Secretary. In selecting the peer review panel, the
Secretary may consult with other appropriate Cabinet-level officials
and with non-Federal organizations, to ensure that the panel will
be geographically balanced and be composed of representatives
from public and private institutions of higher education, labor,
business, Stateand local government, who have expertise in urban
community service or in education.
(20 U.S.C. 1136d) Enacted October 17, 1986, P.L. 99-498, sec. 1101, 100 Stat.
1569; amended July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 785.
SEC. 1106. DISBURSEMENT OF FUNDS.
(a) MULTIYEAR ANTAILABILM.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 equi-
table geographic distribution of such grants.
(c) MATCHING REQUIREMENT.An applicant under this part
and the local governments associated with its application shall con-
tribute 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.
(20 U.S.C. 1136e) Enacted October 17, 1986, P.L. 99-498, sec. 1101, 100 Stat.
1569; amended July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 785; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(j)(46), 107 Stat. 2485.
5:38
529
HIGHER EDUCA110N ACT OF 1965
Sec. 1109
SEC. 1107. DESIGNATION OF URBAN GRANT INSTITUTIONS.
The Secretary shall publish a list of eligible institutions under
this part and shall designate these institutions of higher education
as "Urban Grant Institutions". The Secretary shall establish a 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.
(20 U.S.C. 11360 Enacted October 17, 1986, P.L. 99-498, sec. 1101, 100 Stat.
1569; amended July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 785.
SEC. 1108. 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 entity of the State having an agreement
or submitting an application under section 1103, or, if no such
entity has an agreement, 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
(1) is located in an urban area;
(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.
(20 U.S.C. 1136g) Enacted October 17, 1986, P.L. 99-498, sec. 1101, 100 Stat.
1569; amended July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 785.
SEC. 1109. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $20,000,000 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 part.
(20 U.S.C. 1136h) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 787.
539
Sec. 1121
HIGHER EDUCATION ACT OF 1965
530
PART B-1NN0VATIVE PROJECTS
Subpart 1Innovative Projects for Community
Service
SEC. 1121. STATEMENT OF PURPOSE.
It is the purpose of this subpart to support innovative projects
in order to encourage student participation in community service
projects, including literacy projects.
(20 U.S.C. 1137) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 788.
SEC. 1122. INNOVATIVE PROJECTS FOR COMMUNITY SERVICE.
(a) PROGRAM AUTHORIZED.
(1) IN GENERAL.The Secretary is authorized, in accord-
ance with the provisions of this subpart, to make grants to and
enter into contracts with institutions of higher education (in-
cluding combinations of such institutions) and with such other
public agencies and nonprofit private organizations as the Sec-
retary deems necessary for innovative projects designed to
carry out the purpose of this subpart.
(2) PROJECTS.The projects described in paragraph (1)
may
(A) support research regarding the effects of student
community service organizations;
(B) provide assistance to student organizations that
work with community service organizations;
(C) support linkages between youth corps programs, as
described in section 122(a)(2) of' the National and Commu-
nity Service Act of 1990 and institutions of higher edu-
cation; and
(D) support innovative student service programs.
(b) APPLICATIONS.No grant may be made and no contract
may be entered into under this section unless an application is
made at such time, in such manner, and containing or accompanied
by such information as the Secretary may require.
(C) APPLICABLE PROCEDURES:
(1) PROCEDURES.No application may be approved under
subsection (b) unless the National Board of the Fund for Im-
provement of Postsecondary Education, under procedures es-
tablished by the Director of such Fund, approves the applica-
tion.(2) SPECIAL RULE.The provisions of section 1003(b) shall
apply to grants made under this subpart.
(d) DEFINITION.For the purpose of this subpart, the term
"community service" means planned, supervised services designed
to improve the quality of life for community residents, particularly
community residents with low income, or to assist in the solution
of particular problems related to the needs of such residents.
(20 U.S.C. 1137a) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 788;
amended September 21, 1993, P.L. 103-82, sec. 111(b)(4), 107 Stat. 860.
A This program was originally enacted on October 17, 1986 as part C of title X of the Act (P.L.
99--498, sec. 1003, 100 Stat. 1567).
5 4
531
HIGHER EDUCATION ACT OF 1965
Sec. 1143
Subpart 2Student Literacy Corps and Student
Mentoring Corps I
SEC. 1141. PURPOSE.
It is the purpose of this subpart to provide financial assistance
to institutions of higher education to promote the development of
literacy corps programs and mentoring corps programs to be oper-
ated by institutions of higher education in public community agen-
cies in the communities in which such institutions are located.
(20 U.S.C. 1138) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 788.
SEC. 1142. LITERACY CORPS PROGRAM AND MENTORING CORPS PRO-
GRAM
(a) GENERAL AUTHORITY.From the amount appropriated for
this subpart pursuant to section 1151 for any fiscal year, the Sec-
retary is authorized, in accordance with the provisions of this sub-
part, to make grants to institutions of higher education for not
more than 4 years to pay the Federal share of the cost of carrying
out a student literacy corps program or a student mentoring corps
program.
(b) LIMITATION.Arl institution of higher education shall only
receive 1 grant under this subpart in each fiscal year.
(C) CONTINUATION OF LITERACY OR MENTORING PROGRAM.
Grants under this section are renewable upon application by the
institution of higher education in accordance with section 1144.
(d) FEDERAL SHARE.
(1) IN GENERAL.The Federal share of carrying out a stu-
dent literacy corps program or a student mentoring corps pro-
gram under this subpart shall be
(A) not more than 100 percent for an initial grant to
an institution of higher education; and
(B) not more than 75 percent for a grant renewed
under subsection (c).
(2) NON-FEDERAL SHARE.The non-Federal share of carry-
ing out a student literacy corps program or a student
mentoring corps program under this subpart may be paid from
any non-Federal sources.
(20 U.S.C. 1138a) Enacted July 23, 1992, P.L. 102-326, sec. 1101, 106 Stat. 789;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(47), 107 Stat. 2485.
SEC. 1143. USES OF FUNDS.
(a) IN GENERAL.Funds made available under this subpart
may be used for
(1) grants to institutions of higher education for
(A) the costs of participation of institutions of higher
education in the student literacy corps program or student
mentoring corps program for which assistance is sought;
and
(B) stipends for student coordinators engaged in the
student literacy corps program or student mentoring corps
program for which assistance is sought; and
'This program was originally enacted August 23, 1988 as part D of title I of the Act (P.L.
100-418, sec. 6201, 102 Stat. 1514).
541
Sec. 1144
HIGHER EDUCATION ACT OF 1965
532
(2) technical assistance, collection and dissemination of in-
formation, and evaluation in accordance with section 1145.
(b) LIMITATIONS.No grant under this subpart to an institu-
tion of higher education may exceed $100,000. No institution of
higher education may expend more than $35,000 of a grant made
under this subpart in the first year in which the institution re-
ceives such a grant.
(20 U.S.C. 1138b) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 789.
SEC. 1144. APPLICATIONS.
(a) APPLICATION REQUIRED.Each institution of higher edu-
cation desiring to receive a grant under this subpart 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.
(b) CONTENTS OF APPLICATION.
(1) LITERACY CORPS.Each application to conduct a stu-
dent literacy corps program under this subpart shall
(A) contain assurances that the institution will use the
grant in accordance with section 1143;
(B) contain adequate assurances that
(i) the institution has established
1 or more
courses of instruction for academic credit which are
designed to combine the training of undergraduate
students in various academic departments such as so-
cial sciences, economics, and education with experi-
ence as tutors;
(ii) such individuals will be required, as a condi-
tion of receiving credit in such course, to perform, for
each credit, not less than 2 hours a week, of voluntary,
uncompensated service during the academic term in a
public community agency as a tutor in such agency's
educational or literacy program;
(iii) such tutoring service will be supplementary to
the existing instructional services, offered in a struc-
tured classroom setting, and furnished under the su-
pervision of qualified personnel; and
(iv) the institution will locate such tutoring serv-
ices in one or more public community agencies which
serve educationally or economically d.isadvantaged in-
dividuals, and will give priority in providing tutoring
services to
(I) educationally disadvantaged students re-
ceiving services under chapter 1 of title I of the
Elementary and Secondary Education Act of 1965;
(II) students with disabilities; and
(III) illiterate parents of educationally or eco-
nomically disadvantaged elementary school stu-
dents, with special emphasis on single-parent
households; and
(C) demonstrate that the institution of higher edu-
cation has participated, prior to applying for a grant under
this subpart, in community service activities, including the
conduct of a cooperative education program; and
512
633
HIGHER EDUCATION ACT OF 1965
Sec. 1144
(D) contain such other assurances as the Secretary
may reasonably require.
(2) MENTORING CORPS.Each application to conduct a stu-
dent mentoring corps program under this subpart shall
(A) contain assurances that the institution will use the
grant in accordance with section 1144;
(B) contain adequate assurances that
(i) the institution has established
1 or more
courses of instruction for academic credit which are
designed to combine the training of undergraduate
students of various academic departments with experi-
ence as mentors;
(ii) such individuals will be required, as a condi-
tion of receiving credit in such course, to perform not
less than 60 hours of voluntary, uncompensated serv-
ice during the academic term as a mentor to economi-
cally disadvantaged children and youth;
(iii) such mentaring will be complimentary to the
existing instructional services offered in a structured
classroom setting, and will include structured and in-
formal activities geared towards improving the aca-
demic, social and emotional development of children in
the programs;
(iv) the institution will locate public community
agencies or elementary or secondary schools which
serve educationally or economically disadvantaged
youth and will give priority in providing mentoring
services to economically disadvantaged children and
youth through community-based organizations or ele-
mentary or secondary schools;
(C) demonstrate that the institution of higher edu-
cation has participated, prior to applying for a grant under
this subpart, in community service activities, including the
conduct of a cooperative education program; and
(D) contain such other assurances as the Secretary
may reasonably require.
(c) WAIVER.
(1) IN GENERAL.The Secretary may, upon request of an
institution of higher education which does not meet the re-
quirements of subsection (b)(1XC) or (b)(2)(C), grant a waiver
of the requirement under such paragraph if the institution of
higher education provides assurances that
(A) the institution of higher education has conducted
another significant program which involves community
outreach and service; or
(B) its failure to engage in community service-related
programs or activities prior to making application under
this subpart will not impede the ability of the institution
to engage in the outreach efforts necessary to carry out the
requirements of this subpart.
(2) SPECIAL RULE.An institution of higher education may
apply for a waiver as part of the application described in sub-
section (b).
543.
Sec. 1145
HIGHER EDUCATION ACT OF 1965
534
(d) CARRYOVER OF FUNDS.Notwithstanding any other provi-
sion of law, in any fiscal year in which funds are appropriated
under this subpart but not expended by the end of such fiscal year,
at least 75 percent of such funds shall remain available in the suc-
ceeding fiscal year to carry out this subpart.
(20 U.S.C. 1138c) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 789.
SEC. 1145. TECHNICAL ASSISTANCE AND COORDINATION CONTRACT.
To the extent that funds are available therefor pursuant to sec-
tion 1151, the Secretary may, directly or by way of grant, contract,
or other arrangement
(1) provide technical assistance to grant recipients under
this subpart;
(2) collect and disseminate information with respect to pro-
grams assisted under this subpart; and
(3) evaluate such programs and issue reports on the re-
sults of such evaluations.
(20 U.S.C. 1138d) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 791.
SEC. 1146. DEFINITIONS.
For the purpose of this subpart
(1) INSTITUTION OF HIGHER EDUCATION.The term "institu-
tion of higher education", in the case of an institution of higher
education with a branch campus, means, at the election of the
institution
(A) a branch campus of the institution; or
(B) the institution.
(2) PUBLIC COMMUNITY AGENCY.The term "public commu-
nity agency" means an established community agency with an
established program of instruction such as elementary and sec-
ondary schools, Head Start centers, prisons, agencies serving
youth, and agencies serving individuals with disabilities, in-
cluding disabled veterans.
(20 U.S.C. 1138e) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 791.
Subpart 3Authorization of Appropriations
SEC. 1151. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $15,000,000 for fiscal
year 1993 and such sums as may be necessary for each of the 4
succeeding fiscal years of which, for any such fiscal year
(1) not more than one-third shall be available to carry out
subpart 1; and
(2) not less than two-thirds shall be available to carry out
subpart 2.
(20 U.S.C. 1139) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 792.
TITLE XIIGENERAL PROVISIONS
SEC. 1201. DEFINITIONS.
As used in this Act--
5i
535
HIGHER EDUCATION ACT OF 1965
Sec. 1201
(a) The term "institution of higher education" 1 means an edu-
cational institution in any State which (1) admits as regular stu-
dents only persons having a certificate of graduation from a school
providing secondary education, or the recognized equivalent of such
a certificate, (2) is legally authorized within such State to provide
a program of education beyond secondary education, (3) provides an
educational program for which it awards a bachelor's degree or pro-
vides not less than a two-year program which is acceptable for full
credit toward such a degree, (4) is a public or other nonprofit insti-
tution, and (5) is accredited by a nationally recognized accrediting
agency or association, or if not so accredited, is an institution that
has been granted preaccreditation status by such an agency or as-
sociation that has been recognized by the Secretary for the grant-
ing of preaccreditation status, and the Secretary has determined
that there is satisfactory assurance that the institution will meet
the accreditation standards of such an agency or association within
a reasonable time. Such term also includes any school which pro-
vides not less than a one-year program of training to prepare stu-
dents for gainful employment in a recognized occupation and which
meets the provision of clauses (1), (2), (4), and (5). Such term also
includes a public or nonprofit private educational institution in any
State which, in lieu of the requirement in clause (1), admits as reg-
ular students persons who are beyond the age of compulsory school
attendance in the State in which the institution is located.2 For
purposes of this subsection, the Secretary shall publish a list of na-
tionally recognized accrediting agencies or assobiations which he
determines, pursuant to subpart 2 of part H of title IV of this Act,
to be reliable authority as to the quality of the education or train-
ing offered.
(b) The term "State" includes, in addition to the several States
of the Union, the Commonwealth of Puerto Rico, the District of Co-
lumbia, Guam, American Samoa, the Virgin Islands, the govern-
ment of the Northern Mariana Islands, and the Trust Territory of
the Pacific Islands.3
(c) The term "nonprofit" as applied to a school, agency, organi-
zation, or institution means a school, agency, organization, or insti-
'Section 410 of title IV of P.L. 94-482 (Enacted October 12, 1976), 90 Stat. 2233, 2234 adds
the following amendment to the Act of November 2, 1921 (25 U.S.C. 13): 'Notwithstanding any
other provision of this Act or any other law, postsecondary schools administered by the Sec-
retary of the Interior for Indians, and which meet the definition of an "institution of higher edu-
cation" under section 1201 of the Higher Education Act of 1965, shall be eligible to participate
in and receive appropriated funds under any program authorized by the Higher Education Act
of 1965 or any other applicable program for the benefit of institutions of higher education, com-
munity colleges, or postsecondary educational institutions.".
2This sentence was added by section 181(a) of P.L. 94-482, as amended by section 1(b)(7) of
P L 95-43. Section 181(b) of Pl. 94-482, as added by section 1(bX7) of Pl. 95-43, read as
follows:
"(b) Neither the amendment made by subsection (a) of this section nor the amendment made
to section 435(b)(1) of the Act (by section 127(a) of this Act) shall be construed to authorize ter-
minating the eligibility of an institution which was deemed to be an institution of higher edu-
cation for purposes of sections 435(bX1) and 1201(a) on the date of enactment of this Act. The
preceding sentence of this section shall not be construed to impair the authority of the Commis-
sioner to limit, suspend, or terminate such eligibility for the reasons and as provided by section
497 of the Act.".
3State status for Higher Education Act purposes extended to Northern Mariana Islands and
Trust Territory of the Pacific Islands by P.L. 95-180, November 15, 1977, 91 Stat. 1372. Section
d of P.L. 95-180 prevents the invalidation of "any payments or other benefits provided under
the Higher Education Act of 1965" to the Trust Territory of the Pacific Islands or the govern-
ment of the Northern Mariana Islands prior to November 15, 1977 by any other provision of
law
77-530 0-94--18
Sec. 1201
HIGHER EDUCATION ACT OF 1965
536
tution 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 individ-
ual.
(d) The term "secondary school" has the same meaning given
that term under section 1471(21) of the Elementary and Secondary
Education Act of 1965.
(e) The term "Secretary" means the Secretary of Education.
(0 The term "local educational agency" has the same meaning
given that term under section 1471(12) of the Elementary and Sec-
ondary Education Act of 1965.
(g) The term "State educational agency" has the same meaning
given that term under section 1471(23) of the Elementary and Sec-
ondary Education Act of 1965.
(h) The term "State higher education agency" means the officer
or agency primarily responsible for the State supervision of higher
education.
(i) The term "elementary school' has the same meaning given
that term under section 1471(8) of the Elementary and Secondary
Education Act of 1965.
(j) The term "combination of institutions of higher education"
means a group of institutions of higher education that have entered
into a cooperative arrangement for the purpose of carrying out a
common objective, or a public or private nonprofit agency, organiza-
tion, or institution designated or created by a group of institutions
of higher education for the purpose of carrying out a common objec-
tive on their behalf.
(k) The term "gifted and talented children" has the same
meaning given that term under section 4103(1) of the Elementary
and Secondary Education Act of 1965.
(1) The term "school or department of divinity" means an insti-
tution or a department or a branch of an institution the program
of instruction of which is designed for the education of stud.ents (A)
to prepare them to become ministers of religion or to enter upon
some other religious vocation (or to provide continuing training for
any such vocation), or (B) to prepare them to teach theological sub-
jects.(m) The term "Department" means the Department of Edu-
cation.(n) The term "disability" has the same meaning given that
term I. nder section 3(2) of the Americans With Disabilities Act of
1990 (12 U.S.C. 12102(2)).
(o) The term "special education teacher" means teachers who
teach children with disabilities as defined in the Individuals With
Disabilities Education Act.
(p) The term "service-learning" has the same meaning given
that term under sectioa 101(23) of the National and Community
Service Act of 1990 (42 U.S.C. 12511(21)).
(20 U.S.C. 1141) Enacted Nov. 8, 1965, P.L. 89-329, sec. 801, 78 Stat. 1269;
amended Oct. 16, 1968, P.L. 90-575, secs. 251, 293, and 294, 82 Stat. 1042 and
1050-51; amended April 13, 1970, P.L. 91-230, sec. 806(b), 84 Stat. 192; subsection
(1) added June 23, 1972, P.L. 92-318, sec. 131(d)(1), 86 Stat. 260; amended October
12, 1976, P.L. 94-482, sec. 181, 90 Stat. 2167; amended October 3, 1980, P.L. 96-
374, sec. 1391, 94 Stat. 1603; amended June 3, 1987, P.L. 100-50, sec. 21(a), 101
Stat. 360; amended April 9, 1991, P.L. 102-26, sec. 2(a)(4), 105 Stat. 123; amended
5 16
537
HIGHER EDUCATION ACT OF 1965
Sec: 1203
July 23, 1992, P.L. 102-325, sec. 1201, 106 Stat. 792; amended September 21, 1993,
P.L. 103-82, sec. 111(b)(5), 107 Stat. 861; amended December 20, 1993, P.L. 103-
208, sec. 2(j)(48), (m), 107 Stat. 2485, 2486.
SEC. 1202. ANTIDISCRIMINATION.
(a) IN GENERAL.-Institutions of higher education receiving
Federal financial assistance may not use such financial assistance
whether directly or indirectly to undertake any study or project or
fulfill the terms of any contract containing an express or implied
provision that any person or persons of a particular race, religion,
sex, or national origin be barred from performing such study,
project, or contract, except no institution shall be barred from per-
forming such study, project, or contract, except no institution shall
be barred from conducting objective studies or projects concerning
the nature, effects, or prevention of discrimination, or have its cur-
riculum restricted on the subject of discrimination, against any
such person.
(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.
(20 U.S.C. 1145b) Enacted October 12, 1976, P.L. 94-482, sec. 182, 90 Stat. 2167;
redesignated October 3, 1980, P.L. 96-374, sec. 2101, 94 Stat. 1493; amended July
23, 1992, P.L. 102-325, sec. 1202, 106 Stat. 793; amended December 20, 1993, P.L.
103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1203. FEDERAL-STATE RELATIONSHIPS; STATE AGREEMENTS.
(a) Any State which desires to receive assistance under an ap-
plicable program, as described in subsection (f), shall enter into an
agreement with the Secretary pursuant to subsection (b) setting
forth the terms and conditions for the relationship between the
Federal Government and that State for the purposes set forth in
the applicable programs.
(b) Such agreement shall consist of assurances by the State, in-
cluding a description of the means to be used by the State to fulfill
the assurances, that-
(1) the State will provide for such methods of administra-
tion as are necessary for the proper and efficient administra-
tion of any program in keeping with the purposes of the appli-
cable programs described in subsection (f);
(2) the State will provide such fiscal control and fund ac-
counting procedures as may be necessary to ensure proper dis-
bursement of, and accounting for, Federal funds paid to the
State under any title of this Act;
(3)
the
State
will
follow
policies
and
practices
of
administration that will ensure that non-Federal funds will not
be supplanted by Federal funds, and that equitable and appro-
priate criteria will be used in evaluation of applications or pro-
posals for grants or contracts under any such applicable pro-
gram; and
(4) the State has a comprehensive planning or policy for-
mulation process which-
(A) considers the relation between State administra-
tion of any such applicable program, and administration of
similar State programs or processes;
5 ,1
Sec. 1203
HIGHER EDUCATION ACT OF 1965
538
(B) encourages State policies designed
consider ef-
fects on declining enrollments on all sectors of postsecond-
ary education in the State;
(C) considers the postsecondary education needs of
unserved and underserved individuals within the State, in-
cluding individuals beyond the traditional college age;
(D) considers the resources of institutions, organiza-
tions, or agencies (both public and private) within the
State capable of providing postsecondary educational op-
portunities in the State; and
(E) provides for direct, equitable and active participa-
tion in the comprehensive planning or policy formulation
process or processes of representatives of institutions of
higher education (including community colleges, propri-
etary institutions, and independent colleges and univer-
sities), students, other providers of postsecondary edu-
cation services, and the general public in the State.
Particination under subclause (E) shall, consistent with State law,
be ach ved through membership on State planning commissions,
State ae visory councils, or other State entities established by the
State to c.onduct federally assisted comprehensive planning or pol-
icy f )rmt lation.
f 1 The information and assurances provided by a State in ac-
cordan,..e with paragraphs (1), (2), and (3) of subsection (b), and
regulations issued by the Secretary related directly to such assur-
ances, shall be satisfactory for the purposes of, and shall be consid-
ered in lieu of, any comparable requirements for information and
assurances in any applicable program described in subsection (f).
(d)(1) An agreement of a State shall remain in effect subject to
modification as changes in information or circumstances require.
(2) Whenever the Secretary, after reasonable notice and oppor-
tunity for a hearing has been given to the State, finds that there
is a failure to comply substantially with the assurances required in
paragraph (1), (2), or (3) of subsection (b), the Secretary shall notify
the State that it is no longer eligible to participate in any applica-
ble program described in subsection (f) until the Secretary is satis-
fied that there is no longer any such failure to comply.
(e)(1) For the purpose of this section, the selection of the State
entity or entities authorized to act on behalf of the State for the
purpose of entering into an agreement with the Secretary shall be
in accordance with the State law of each individual State with re-
spect to the authority to make legal agreements between the State
and the Federal Government.
(2)(A) Nothing in this section shall be construed to authorize
the Secretary to require any State to adopt, as a condition for en-
tering into an agreement, or for participation in an applicable pro-
gram as defmed in subsection (f), a specific State organizational
structure for achieving participation in the planning, or adminis-
tration of programs, or for statewide planning, coordination, gov-
erning, regulating, or administering of postsecondary education
agencies, institutions, or programs in the State.
(B) Nothing in this section shall be construed as a limitation
on the authority of any State to adopt a State organizational struc-
ture for postsecondary education agencies, institutions, or programs
5IS'
539
HIGHER EDUCATION ACT OF 1965
Sec. 1205
which is appropriate to the needs, traditions, and circumstances of
that State, or as a limitation on the authority of a State entering
into an agreement pursuant to this section to modify the State or-
ganizational structure at any time subsequent to entering into such
an agreement.
(f) For the purposes of this section an "applicable program" is
defined as
(1) title I;
(2) subpart 3 of part A of title IV; and
(3) part A of title VII.
(20 U.S.C. 1143) Enacted October 3, 1980, P.L. 96-374, sec. 1201, 94 Stat 1493,
amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1204. TREATMENT OF TERRITORIES AND TERRTTORIAL STUDENT
ASSISTANCE.
(a) The Secretary is required to waive the eligibility criteria of
any postsecondary education program administered by the Depart-
ment where such criteria do not take into account the unique cir-
cumstances in Guam, the Virgin Islands, American Samoa, Palau,
the Commonwealth of the Northern Mariana Islands, and the free-
ly associated states.
(b) Notwithstanding any other provision of law, an institution
of higher education that is located in any of the freely associated
states, rather than a State, shall be eligible, if otherwise qualified,
for assistance under chapter 1 of subpart 2 of part A of title IV of
this Act.
(20 U.S.0 1144a) Enacted October 3, 1980, P.L. 96-374, sec. 1201, 94 Stat 1495,
amended October 17, 1986, P.L. 99-498, sec. 1201, 100 Stat. 1573; amended July
25, 1991, P.L. 102-73, sec. 801(c), 105 Stat. 360; amended December 20, 1993, P L
103-208, sec. 2(j)(49), (m), 107 Stat. 2485, 2486.
SEC. 1205. NATIONAL ADVISORY COMMITTEE ON INSTITUTIONAL
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 481(a)), to assess
the process of eligibility and certification of such institutions under
title IV of this Act and the provision of financial aid under title IV
of this Act. The Secretary may also appoint to the Committee rep-
resentatives of the general public serving on the National Advisory
Committee on Accreditation and Institutional Eligibility (as such
Committee was in existence on the date of enactment of the Higher
Education Amendments of 1992).
(b) TERMS OF MEMBERS.Terms of office of each member of
the Committee shall be 3 years, except that
(1) of the members first appointed to the Committee the
Secretary shall designate
(A) 5 such members to serve for a term of 1 year;
(B) 5 such members to serve for a term of 2 years; and
(C) 5 such members to serve for a term of 3 years; and
5 4 9
Sec. 1205
HIGHER EDUCATION ACT OF 1965
540
(2) any member appointed to fill in a vacancy occurring
prior to the expiration of the term for which the member's
predecessor was appointed shall be appointed for the remain-
der of such term.
(C) 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 IV of this Act;
(2) advise the Secretary with respect to the recognition of
a specific accrediting agency or association;
(3) advise the Secretary with respect to the preparation
and publication of the list of nationally recognized accrediting
agencies and associations;
(4) develop and recommend to the Secretary standards and
criteria for specific categories of vocational training institutions
and institutions of higher education for which there are no 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 of this Act, together with recommendations for im-
provements in such process;
(6) advise the Secretary with respect to the functions of
the Secretary under subpart 1 of part H of title IV of this Act,
relating to State institutional integrity standards;
(7) 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
(8) carry out such other advisory functions relating to ac-
creditation and institutional eligibility as the Secretary may
prescribe.
(d) 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.
(e) REPORT.The Committee shall, not later than November 30
of each year, make an annual report through the Secretary to the
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.
(f) TERMINATION..Subject to section 448(b) of the General
Education Provision Act, the National Advisory Committee on In-
550
541
HIGHER EDUCATION ACT OF 1965
Sec. 1206
stitutional Quality and Integrity shall continue to exist until Sep-
tember 30, 1998.
(20 U.S.C. 1145) Enacted October 3, 1980, P.L. 96-374, sec. 1201, 94 Stat 1495,
amended October 17, 1986, P.L. 99-4)8, sec. 1202, 100 Stat. 1573; amended July
23, 1992, P.L. 102-325, sec. 1203, 106 Stat. 793; amended December 20, 1993, P L
103-208, sec. 2(j)(50)(53), 107 Stat. 2485.
SEC. 1206. COMMISSION TO STUDY POSTSECONDARY INSTITUTIONAL
-IND PROGRAMMATIC RECOGNITION PROCESS.
(a) There is established in the legislative branch a Joint Study
Commission on Postsecondary Institutional Recognition (hereafter
in this section referred to as the "Cammission").
(b) The Commission shall be composed of 5 members appointed
jointly by the President pro tempore of the Senate, upon the rec-
ommendation of the Majority Leader and the Minority Leader, and
by the Speaker of the House of Representatives, upon the rec-
ommendation of the Majority Leader and the Minority Leader.
(c)(1) Members of the Commission shall be appointed, on the
basis of their integrity, impartiality, and good judgment, from
among individuals who, as a result of their training, experience,
and attainment, are widely recognized by professionals in the fields
of education and governmental administration as experts in those
fields.
(2) A majority of the members of the Commission may not, at
the time of their appointment, be serving as either employees or of-
ficers of any accrediting agency or an organization of accrediting
agencies, currently serving as administrators of accredited institu-
tions, or be current or past members of the Advisory Committee on
Accreditation and Institutional Eligibility of the Department.
(3) Vacancies in the membership of the Commission shall not
affect the power of the remaining members to perform the duties
of the Commission and shall be filled in the same manner in which
the original appointment was made.
(4) Each member of the Commission not otherwise employed by
the United States Government shall receive the daily equivalent of
the annual basic pay for level V of the Executive Schedule under
section 5316 of title 5, United States Code, for each day during
which such member is actually engaged in the performance of the
duties of the Commission. Each member of the Commission shall
be allowed travel expenses in the same manner as any individual
employed intermittently by the Federal Government is allowed
travel expenses under section 5703 of title 5, United States Code.
(d)(1) The Commission shall conduct a thorough study of the
institutional and programmatic recognition process used by the De-
partment in determining institutional or programmatic eligibility
for student participation in Federal student assistance programs
under this Act with attention being given to the accreditation of
various types of public and private postsecondary institutions and
programs.
(2) The study shall address, analyze, and report specifically
on
(A) the comprehensiveness of the standards and criteria
used by existing accreditation agencies;
5
1,
Sec. 1206
HIGHER EDUCATION ACT OF 1965
542
(B) the reliability and validity of the institutional and pro-
grammatic review processes used by the existing accreditation
agencies;
(C) the adequacy of the current accreditation methodology
and system;
(D) alternative structures, standards, criteria, and proc-
esses that might be used in accrediting institutions and pro-
grams;
(E) the indicators of educational quality that might be in-
corporated into the accreditation process;
(F) the educational outcome measurements that might be
used in the accreditation process;
(G) the indicators of institutional and programmatic qual-
ity that should be provided to applicants and students; and
(H) alternative approaches that might be used by the Sec-
retary for institutional and programmatic recognition to permit
student participation in Federal student assistance programs,
as each factor bears on eligibility for participation in Federal stu-
dent assistance programs.
(3) The study sh.all also include an analysis of
(A) the processes and procedures currently utilized by the
Secretary and the Department in determining institutional and
program eligibility for receiving Federal student assistance
funds;
(B) the operations and effectiveness in carrying out eligi-
bility determination of the division of the Department referred
to as the "Division of Eligibility and Agency Evaluation";
(C) review of alternatives to accreditation in determining
eligibility and their acceptability;
(D) the role and effectiveness of, participation agreements,
between institutions and programs and the Department in de-
termining specific institutional program eligibility for Federal
funds;
(E) the ability of the Department to enforce conditions
specified in participation agreements, including institutional
and program audits;
(F) the current status, functioning, and effectiveness of the
National Advisory Committee on Accreditation and Institu-
tional Eligibility, including its role in developing criteria for
recognition of accrediting agencies and evaluating their success
in assessing the quality of the education or training offered.
(e) The Commission shall adopt procedures allowing any inter-
ested party to submit information with respect to the recognition
process, including critiques of current accrediting agency recogni-
tion procedures, accreditation procedures, possible alternative pro-
cedures, and proposed changes in criteria for recognition of individ-
ual accrediting agencies.
(0 The Commission shall prepare a narrative and statistical re-
port consisting of
(1) an overview description of the voluntary accrediting
process used for postsecondary education in the United States;
and
(2) a brief description of each accrediting agency recog-
nized by the Department.
552
543
HIGHER EDUCATION ACT OF 1965
SOC. 1206
The report shall include at least a statement of the agency's pur-
pose and a description of the organizational and governance struc-
ture of the agency, the agency's accreditation and visitation proce-
dures, employers of members of the accrediting agency's governing
body, the agency's sources of financial support, and such back-
ground information as the Commission may request from the agen-
cy regarding the number of members, number of candidates for ac-
creditation, number of members voluntarily withdrawn after mem-
bership, number of applications withdrawn before membership,
number of members dropped, and number of applicants denied ac-
creditation. The report shall include the types of information
shared among the various accrediting agencies, the degree of dupli-
cation among accrediting agencies in the current system, and an
analysis of reported complaints by the agency and its member in-
stitutions and programs.
(g) The Commission shall also prepare a report on
(1) the history, operation, procedures, and the role and
adequacy of staff of the division described in subsection
(e)(3)(B);
(2) the history and current operations of the National Ad-
visory Committee on Accreditation and Institutional Eligibility,
including current criteria for Federal recognition of accrediting
bodies, how the criteria were developed, possible modifications,
and procedures for accomplishing this; and
(3) with respect to the Department in general, an overview
of its role in the institutional and programmatic recognition
process as it relates to eligibility for Federal student assist-
ance, including recommendations, if appropriate, on how this
role might be changed and improved.
(h)(1)(A) By agreement between the President pro tempore of
the Senate and the Speaker of the House of Representatives, the
Commission is authorized to secure on a reimbursable basis, office
space, clerical personnel, travel expenses, and such supplies and
equipment as may be necessary for the Commission to carry out
the study.
(B) Subject to such limitations as the President pro tempore of
the Senate and the Speaker of the House of Representatives may
jointly prescribe, the Commission may appoint such personnel as
the Commission deems necessary and fix the compensation at an
annual rate that does not exceed the rate of basic pay then payable
for GS-18 of the General Schedule under section 5332 of title 5,
United States Code, and may procure by contract the temporary
and intermittent services of clerical personnel and experts or con-
sultants, or organizations thereof.
(2) In conducting the study authorized by this section; the
Commission is authorized to
(A) seek such assistance and support as may be required
to conduct the study from appropriate Federal agencies;
(B) arrange for the detail of staff personnel from other
Federal agencies;
(C) enter into contracts and make other arrangements, as
may be necessary for the conduct of the study;
(D) convene such technical groups as deemed necessary to
secure information about the existing recognition process; and
553
Sec. 1207
HIGHER EDUCATION ACT OF 1965
544
(E) provide transportation and subsistence for persons
serving without compensation.
(3) Upon request by the Commission, the head of any Federal
agency is authorized to detail, on a reimbursable basis, any of the
personnel of such agency to the Commission to assist in the con-
duct of the study.
(i) The Commission shall submit a report of the findings and
recommendations of the study required by this section to the Post-
secondary Education Subcommittee of the Education and Labor
Committee of the House of Representatives and the Subcommittee
on Education, Arts, and Humanities of the Labor and Human Re-
sources Committee of the Senate not later than one year after
funds are appropriated and made available for this study.
(j) There are authorized to be appropriated $1,000,000 to carry
out the study authorized by this section.
(20 U.S.C. 1145a) Enacted October 17, 1986, P.L. 99-498, sec. 1203, 100 Stat.
1574; amended Decomber 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1207. 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.
(20 U.S.C. 1145b) Enacted October 17, 1986, P.L. 99-498, sec. 1204, 100 Stat.
1676; amended Decembar 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1208. 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, (2) making deposits in an escrow
account administered by such institution for such payments, or (3)
obtaining a bond or other insurance that such payments will be
made.
(20 U.S.C. 1145c) Enacted October 17, 1986, P.L. 99-498, sec. 1205, 100 Stat.
1577; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1209. 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 Act shall contain:
(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
554
545
HIGHER EDUCATION ACT OF 1965
Sec. 1209
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 GIFTS.Notwithstanding the provisions of subsection (b),
whenever any institution receives a restricted or conditional gift or
contract from a foreign sonrce, the institution shall disclose:
(I) 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
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 t e
Executive Branch requires a report containing requirements
substantially similar to those required under this Act, a copy
of this 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
Act shall be public records open to inspection and copying during
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 thereunder, a
civil action may be brought in an appropriate district court of
the United States, or the appropriate United States court of
555
Sec. 1209
HIGHER EDUCATION ACT OF 1965
546
any territory or other place iubject to the jurisdiction of the
United States, to request such court to compel compliance with
the requirements of this Act.
(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 the ministerial duties imposed on the Secretary by 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 which
(A) is legally authorized within such State to provide
a program of education beyond secondary school;
(B) provides a program for which it awards a bach-
elor'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 its 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 provisio! '3 regarding (A)
the employment, assignment, or termination ot faculty; (B) the
establishment of departments, centers, research or lecture pro-
grams, or new faculty positions; (C) the selection or admission
of students; or (D) the award of grants, loans, scholarships, fel-
lowships, or other forms of financial aid restricted to students
of a specified country, religion, sex, ethnic origin, or political
opinion.
5 5 i;
547
HIGHER EDUCATION ACT OF 1965
Sec. 1212
(20 U.S.C. 1145d) Enacted July 23, 1992, P.L. 102-325, sec. 1101, 106 Stat. 794;
amended December 20, 1993, P.L. 103-208, sec. 2(j)(54), 107 Stat. 2485.
SEC. 1210. 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.
(20 U.S.C. 1145d-1) Enacted June 3, 1987, P.L. 100-50, sec. 21(b), 101 Stat. 360;
amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1211. AGGREGATE LIMIT OF AUTHORIZATION OF APPROPRIA-
TIONS.
Notwithstanding any other provision of this Act, the total
amount which may be appropriated to carry out the programs and
activities authorized by this Act, other than the programs and ac-
tivities authorized by subpart 1 of part A and part B of title IV,
shall not exceed-
(1) $3,166,000,000 for fiscal year 1987,
(2) $3,351,000,000 for fiscal year 1988,
(3) $3,552,000,000 for fiscal year 1989,
(4) $3,771,000,000 for fiscal year 1990, and
(5) $4,007,000,000 for final year 1991.
(20 U.S.C. 1145e) Enacted October 17, 1986, P.L. 99-498, sec. 1207, 100 Stat.
1579; amended June 3, 1987, P.L. 100-50, sec. 21(b), 101 Stat. 360; amended De-
cember 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
SEC. 1212, TECHNOLOGY TRANSFER CENTERS.
(a)(1XA) Except as prorided in subparagraph (B), there are au-
thorized to be appropriateti $15,000,000 for fiscal year 1988 and
such sums as may be necessary for each of the 3 succeeding fiscal
years to develop, construct, and operate regional technology trans-
fer centers. The Secretary shall establish such regional centers-
(i) to promote the study and development of programs and
depositories necessary to further the transfer of technology rel-
evant to a respective region's economy;
(ii) to assist in developing incubator facilities to encourage
new economic initiatives;
(iii) to provide technical assistance linking university ex-
pertise and private sector resources to solve technical, market-
mg, and manufacturing problems associated with technology-
transfer and start-up businesses; and
(iv) to ensure consideration of the economic development
needs of rural as well as urban areas within the region.
(B) The Secretary shall reserve not less than $3,000,000 of
amounts appropriated pursuant to subparagraph (A) for the pur-
pose of carrying out the Training Technology Transfer Act of 1988.
(2) In carrying out the requirements of this section, regional
technology-transfer centers are authorized-
(A) to build on or, where needed, develop telecommuni-
cations systems to link the centers and their affiliates with in-
dustrial users;
557
Sec. 1212
HIGHER EDUCATION ACT OF 1965
548
(B) to build on or develop necessary computer networks
and data bases; and
(C) to utilize or help develop regional and national librar-
ies.
(b) Financial assistance to each center shall be awarded com-
petitively. Such financial assistance shall be awarded for the estab-
lishment or operation of such centers.
(c) Each regional center established shall be operated by an ap-
propriately qualified college or university within the region, a con-
sortium of such schools within the region, or a university-related
research park or center, and such regional center shall, where
deemed necessary, establish one or more affiliate centers at col-
leges and universities based in other States within the region.
(d) In establishing such centers, the institutions applying shall
show in their application
(1) how the center will facilitate the economy of the region;
(2) that the center's mission is compatible with the eco-
nomic development plans of States in the region; and
(3) that appropriate consultation with the relevant State
agencies concerned with economic development has taken
place.
(e)(1) Such center also may be operated by a consortium com-
posed of an entity or entities described in subsection (c), and an ex-
isting campus-based research entity, or other State and local agen-
cies, nonprofit agencies, interstate higher education organizations,
or, where appropriate, for-profit agencies. The Secretary, through
regulation, shall determine a mechanism for assessing the percent-
age of operating costs paid by other members of a technology trans-
fer consortium arrangements.
(2) For purpose of paragraph (1), the term "existing campus-
based research facilities", includes agricultural research facilities,
mining and minerals research facilities; forestry and wood-products
research facilities, solar renewable energy research facilities, high
technology facilities, and manufacturing technology research facili-
ties.
(f) Each such center shall establish a Board to advise the cen-
ter on policy. Such board shall be
(1) representative of the States involved in the region; and
(2) consist of representatives for urban areas, rural areas,
ethnic conerns, business, labor, and education.
(g)(1) Grants for each center shall be awarded for a 5-year pe-
riod. Before the end of such period, the Secretary shall conduct a
competition for the award of grants for the succeeding 5-year pe-
riod.(2) For the fourth and fifth year of each such 5-year period,
and during any renewal of the grant for succeeding 5-year periods,
50 percent of the cost of the activities for which assistance is
awarded shall be provided from non-Federal sources.
(h) Funding fbr affiliate. centers authorized in subsection (c)
shall be provided by the regional center and the college or univer-
sity operating the affiliate center, with funding levels to be reached
by the 2 entities in a scope-of-work agreement negotiated between
the 2 entities. Should the affiliate center wish, its operations and
funding support can be a consortia, as specified in subsection (e).
5 5 S
549
HIGHER EDUCATION ACT OF 1965
Sec. 1213
(iX1) The Secretary, after consultation with the Departments of
Agriculture, Energy, Commerce, and Interior shall publish, for pub-
lic comment, a proposed list of priorities for the establishment of
regional technology transfer centers and shall propose the regional
composition of such centers, keeping in mind that satellite and tele-
communications technology enables regions to contain noncontig-
uous States.
(2) The Secretary shall publish the final list of regions and pri-
orities along with the public's comments. In establishing such re-
gions, the Secretary may designate a State or a portion of a State
as a region.
(20 U.S.C. 11450 Enacted Aug. 23, 1988, P.L. 100-418, sec. 6231, 102 Stat. 1518
1520; amended December 20, 1993, P.L. 103-208, sec. 2(j)(55) and (56), (m), 107
Stat. 2485, 2486.
SEC 1213. DRUG AND ALCOHOL ABUSE PREVENTION
1.
(a) Notwithstanding any other provision of law, no institution
of higher education shall be eligible to receive funds or any other
form of fmancial assistance under any Federal program, including
participation in any federally funded or guaranteed student loan
program, unless it certifies to the Secretary that it has adopted and
has implemented a program to prevent the use of illicit drugs and
the abuse of alcohol by students and employees that, at a mini-
mum, 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 its
property or as part of any of its 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 paragraph (1)(A); and
(2) a biennial review by the institution of its program to
(A) determine its effectiveness and implement changes
to the program if they are needed; and
(B) ensure that the sanctions required by paragraph
(1)(E) are consistently enforced.
(b) Each institution of higher education that provides the cer-
tification required by subsection (a) shall, upon request, make
available to the Secretary and to the public a copy of each item re-
'Section 1213 shall take effect on Oct. 1, 1900. See P.L. 101-226, sec. 22(aX2), 103 Stat. 1939.
559
Sec. 1213
HIGHER EDUCATION ACT OF 1965
550
quired by subsection (aX1) as well as the results of the biennial re-
view required by subsection (aX2).
(c)(1) The Secretary shall publish regulations to implement and
enforce the provisions of this section, including regulations that
provide for
(A) the periodic review of a representative sample of pro-
grams required by subsection (a); and
(B) a range of responses and sanctions for institutions of
higher education that fail to implement their programs or to
consistently enforce their sanctions including information and
technical assistance, the development of a compliance agree-
ment, and the termination of any form of Federal financial as-
sistance.
(2) The sanctions required by subsection (a)(1)(E) may include
the completion of an appropriate rehabilitation program.
(d) Upon determination by the Secretary to terminate financial
assistance to any institution of higher education under this section,
the institution may file an appeal with an administrative law judge
before the expiration of the 30-day period beginning on the date
such institution is notified of the decision to terminate financial as-
sistance 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.
(20 U.S.C. 1145g) Enacted Dec. 12, 1989, P.L. 101-226, sec. 22(a)(1), 103 Stat.
1938; amended December 20, 1993, P.L. 103-208, sec. 2(m), 107 Stat. 2486.
5 C
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 )(a 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.
(20 U.S.C. 1091, note) Enacted Oct. 16, 1968, P.L. 90-575, Title V, sec. 507, 82
Stat. 1063.
551
561
Education Amendments of 1972
(P.L. 92-318)
LAND-GP-ANT 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.
(7 U.S.C. 301, note) Enacted June 23, 1972, P.L. 92-318, sec. 506, 86 Stat. 350;
amended Oct. 3, 1980, P.L. 96-374, sec. 1361(a), 94 Stat. 1501; amended Aug. 27,
1986, P.L. 99-396, sec. 9(a), 100 Stat. 840; amended Feb. 24, 1992, P.L. 102-247,
sec. 305, 106 Stat. 39.
5f.;2
552
Education Amendments of 1980
TITLE XIIIMISCELLANEOUS PROVISIONS
PART GNEW LAND GRANT COLLEGES
AMERICAN SAMOA AND MICRONESIA LAND GRANT COLLEGES
SEC. 1361. (a)1 * * *
(b)2 * * *
(p) 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).
U.S.C. 301, note) Enacted October 3, 1980, P.L. 96-374, sec. 1361, 94 Stat.
1502; amended August 27, 1986, P.L. 99-396, sec. 9(c), 100 Stat. 840.
PART ITECHNICAL PROVISIONS
CONTRACT AUTHORITY
SEC. 1392. The authorization to enter into contracts or other
obligations under the Act, as amended by this Act, shall be effec-
tive for fiscal year 1981 and any succeeding fiscal year only to the
extent or in such amounts as are provided in advance in appropria-
tion Acts.
(20 U.S.C. 1146) Enacted October 3, 1980, P.L. 96-374, sec. 1392, 94 Stat. 1504.
EFFECTIVE DATES
SEC. 1393. (a) Except as provided in subsection (b), this Act
and the amendments made by this Act shall take effect on October
1, 1980.
'Subsection (a) of section 1361 of the Education Amendments of 1980 amended section 506
of the Education Amendments of 1972.
2 StibeeCtion (b) of section 1361 of the Education Amendmenth of 1980 amended section 5 of
the Second Morrill Act.
553
Sec. 1393
EDUCATION AMENDMENTS OF 1980
554
(bX1) 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.
(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 IV 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.
(20 U.S.C. 1001, note) Enacted October 3, 1980, P.L. 96-374, sec. 1393, 94 Stat.
1504.
564.
Higher Education Amendments of 1986
TITLE IVSTUDENT ASSISTANCE
SEC. 401. STUDENTS GRANTS REAUTHORIZED
(a) AMENDMENT.Part A of title IV 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 determivation 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.
2SEC. 402. EXTENSION OF GUARANTEED STUDENT LOAN PROGRAM.
(a) AMENDMENT.Part B of title IV of the Act (20 U.S.C. 1071
et seq.) is amended to read as follows:
[Text as amended printed earlier in this volume.]
555
565
Sec. 403
HIGHER EDUCATION AMENDMENTS OF 1986
556
(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;
REPUBLYCATION 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.
557
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 'ro PART E OF THE ACT.
(a) AMENDMENT.Part E 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 462 of the Act shall apply
with respect to academic year 1988-1989 and succeeding academic
years.
(2) The changes made in sections 464(cX1XA), 464(cX2), 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 individ.uals who are new borrowers on that date.
(3) Section 463(aX9) 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. ADDrrION OF A NEW PART F RELATING TO NEED ANALYSIS
FOR STUDENT ASSISTANCE.
(a) AMENDMENT.Title IV 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 PROWSIONS.(1) Ex-
cept as provided in paragraphs (2) through (4)
(A) part F of title IV 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
fmancial 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(dX2XB), 442(dX2)(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-
-, 567
SOC. 407
HIGHER EDUCATION AMENDMENTS OF 1986
558
tribution, use the procedures for sampling expected family con-
tribution within income categories that was employed for academic
year 1986-1987, adjuGted 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 XIIIEDUCATION ADMINISTRATION
PART ASECRETARIAL STUDIES AND EVALUATIONS
SEC. 1301. SATISFACTORY PROGRESS.
The Secretary, through the Office of Educational Research and
Improvement, shall conduct a survey on the impact, if any, on
grades of students of the amendments made by this Act to section
484(c) of the Act. The study required by this subsection shall be
conducted over the 5-year period ending September 30, 1991. The
Secretary, after the end of each year of the study, shall submit to
the Congress a report of the survey required by this subsection, to-
gether with such recommendations as the Secretary deems appro-
priate.
(20 U.S.C. 1091 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1301, 100 Stat.
1579; amended June 3, 1987, P.L. 100-50, sec. 23(1), 101 Stat. 362.
558
559
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1303
1,
SEC. 1302. NATIONAL ENDOWMENT FOR INTERNATIONAL STUDIES.
(a) STUDY REQUIRED.The Secretary shall, in consultation
with the Director of the United States Information Agency, the Di-
rector of the Agency for International Development, the Secretary
of State, and the Secretary of Defense, conduct a study on the es-
tablishment of a National Endowment for International Studies.
The study shall develop a program, a funding plan, and priorities
for such an Endowment.
(b) CONDUCT OF STUDY.In carrying out the study required by
this section, the Secretary shall consider
(1) the extent of the need for international studies pro-
grams at all educational levels, not served by title VI of the
Act;
(2) the programs at the Agency for International Develop-
ment, the United States Information Agency, and the Depart-
ments of State, Defense, and Education which can be coordi-
nated to increase the scope and number and kinds of partici-
pants in international educational programs;
(3) the feasibility of an Endowment for International Stud-
ies, by whom it shall be administered, and procedures for re-
ceiving corporate and other private contributions for supple-
mental funding, similar to Treasury fund accounts at other
Federal agencies; and
(4) a comprehensive evaluation of the weaknesses and
strengths in mternational education and foreign language
training at all levels of education in our Nation and the role
of the Endowment to remedy these weaknesses, and encourage
expansion of these strengths.
(c) REPORT.The Secretary shall prepare and submit to the
Congress, not later than one year after the date of enactment of
this section, a report on the study required by this section, together
with such recommendations, including recommendations for legisla-
tion, as the Secretary deems appropriate.
(20 U.S.C. 1121 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1302, 100 Stat.
1580; amended June 3, 1987, P.L. 100-50, sec. 23(2), 101 Stat. 362.
SEC. 1303. DATA STUDY REQUIRED.
(a) CONDUCT OF STUDIES.The Secretary, through the Office of
Education Research and Improvement, shall conduct the studies re-
quired by this section and submit reports thereon to the Congress
not later than September 30, 1990. The reports shall contain such
recommendations, including recommendations for legislation, as
the Secretary deems appropriate.
(b) COST STUDY REQUIRED.(1) The Secretary shall conduct a
study on the escalating cost of higher education. The study re-
quired by this section shall
(A) identify the current cost of obtaining a higher edu-
cation and determine how that cost has changed in recent
years,
(B) determine the specific causes of such changes in cost
and the extent to which those causes have contributed to such
changes,
(C) forecast the future cost of obtaining a higher education
with consideration given to prospective demographic changes
in student enrollments,
569
Sec. 1303
HIGHER EDUCATION AMENDMENTS OF 1986
560
(D) evaluate the impact of such changes in cost on institu-
tions of higher education, their students, and lower- and mid-
dle-income families,
(E) make recommendations on how such changes in cost
can be minimized in the future, and
(F) outline State and Federal policy options which may
help to minimize such changes in cost in the future.
(2) In conducting such study, the Secretary shall give special
consideration to the impact of escalating costs on lower- and mid-
dle-income students and families, the impact of escalating costs on
female and minority students, the impact of escalating costs on the
career choices made by students, and the relationship between es-
calating costs and the Federal student financial assistance pro-
grams.
(3) During the conduct of such study, the Secretary shall con-
sult frequently with the Chairman of the Senate Committee on
Labor and Human Resources and the Chairman of the House Com-
mittee on Education and Labor.
(c) STUDENT AID RECIPIENT SURVEY.(1) The Secretary shall
survey student aid recipients on a regular cycle, but not less than
once every 3 years
(A) to identify the population of students receiving Federal
student aid;
(B) to determine the income distribution and other 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.
(d) TEACHER SUPPLY AND DEMAND.(1) The Secretary shall
utilize the legislative authority under section 406(b) of the General
Education Provisions Act to annually assess current and future
supply and demand for teachers with particular attention to
(A) long-term and short-term shortages of personnel in
various subject areas or teaching specialties;
(B) shortages in particular States or regions;
(C) the number of minorities entering teaching;
(D) the number of women and minorities entering edu-
cational administration;
(E) the effect of State curriculum and graduation require-
ments on the need for teachers in each State;
(F) the extent to which demographic characteristics of per-
sons currently employed as teachers and persons studying to
be teachers match the characteristics of the students in each
State (race, age, sex);
570
a
561
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1304
(G) the academic qualifications of prospective teachers and
the academic preparation of persons currently preparing to be
teachers;
(H) the effect of the introduction of State mandated teach-
er competency tests on the demographic and educational char-
acteristics of teachers and the supply of teachers; and
(I) an assessment of new and emerging specialties and the
technologies, academic subjects, and occupational areas requir-
ing vocational education, with emphasis on the unique needs
for preparing an adequate supply of vocational teachers of
handicapped students, with added emphasis on the preparation
required to teach combined classrooms of handicapped, or other
highly targeted groups of students and other students within
a vocational education setting.
(2) The analysis conducted under this subsection may include
assessment of other educational needs identified by the Congress,
including an assessment of the need for instructional equipment
and materials in elementary and secondary schools and in institu-
tions of higher education.
(e) EQUITABLE STUDENT AID FOR FARM FAMILIES.The Sec-
retary shall conduct a study of financial aid formulas under title
IV of the Act for students in postsecondary educational institutions
with special attention to devising a more equitable formula for
farm families.
(f) There are authorized to be appropriated $2,700,000 for the
fiscal year 1987 and for each of the 2 succeeding fiscal years to
carry out the provisions of this section.
(20 U.S.C. 1221e-1 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1303, 100 Stat.
1580-1582; amended June 3, 1987, P.L. 100-50, sec. 23(3)(A)-(D), 101 Stat. 362.
SEC. 1304. EVALUATION OF CONTINUING EDUCATION.
(a) EVALUATION.The Secretary shall enter into a contract
with a qualified entity to study and evaluate the programs estab-
lished under part A of title I of this Act.
(b) SECRETARY'S RESPONSIBILITIES.The Secretary shall assist
in evaluating the status and progress of adult education and post-
secondary continuing education in achieving the purposes of this
title. Such assistance shall include
(1) an analysis of the fmdings of the report under sub-
section (a) togetb.er with suggestions for improvements in plan-
ning or program operation; and
(2) the provision of an information network on research in
adult and continuing education, the operation of model or inno-
vative programs, successful experiences in the planning, ad-
ministration, and conduct of adult and continuing education
programs, and advances in curriculum and instructional prac-
tices and technologies.
(c) REPORT.Not later than January 1, 1990, the Secretary
shall submit a report to the Congress on the program evaluations
required under this section and on any progress in fulfilling the
goals and purposes of title I of the Act. The Secretary may include
in the report appropriate recommendations Gr legislative proposals.
(20 U.S.C. 1011 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1304, 100 Stat.
1582; amended June 3, 1987, P.L. 100-50, sec. 23(4)(A)-(D), 101 Stat. 362.
571
Sec. 1305
HIGHER EDUCATION AMENDMENTS OF 1986
562
SEC. 1305. STUDY OF BANKRUPTCY TREATMENT OF STUDENTS.
The Secretary shall conduct a study of the treatment of stu-
dents under chapter 13 of title 11, United States Code, relating to
the discharge of student loan indebtedness in bankruptcy proceed-
ings, and of the effect of including such students under that provi-
sion of that law. The Secretary shall prepare and submit a report
to the Congress on the study required by this section not later than
3 months after the date of enactment of this Act.
Enacted Oct. 17, 1986, P.L. 99-498, sec. 1305, 100 Stat. 1582.
SEC. 1306. STUDY OF PELL GRANT LESS THAN HALF-TIME STUDENTS.
The Secretary shall conduct a study to determine the number
of less than half-time students who would be eligible for Pell grants
by reason of having an expected family contribution of $0 and by
reason of having an expected family contribution of $0$200 for the
appropriate academic years. The Secretary shall prepare and sub-
mit a report to the Congress not later than September 30, 1988,
on the results of the study required by this section.
(20 U.S.C. 1070a note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1306, 100 Stat.
1582.
SEC. 1307. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $1,000,000 for the fis-
cal year 1987 and for each of the 2 succeeding fiscal years to carry
out the provisions of sections 1301 and 1302.
Enacted Oct. 17, 1986, P.L. 99-498, sec. 1307, 100 Stat. 1583; amended June 3,
1987, P.L. 100-50, sec. 23(5) (A) and (B), 101 Stat. 362.
PART BGENERAL ACCOUNTING OFFICE REPORTS
SEC. 1311. STUDY OF PRACTICES OF STATE GUARANTY AGENCIES AND
MULTISTATE GUARANTORS UNDER THE GUARANTEED
STUDENT LOAN PROGRAM.
(a) STUDY REQUIRED.The Comptroller General shall conduct
a complete study of the practices of State guaranty agencies and
multistate guarantors under the guaranteed student loan program
authorized by part B of title IV of the Act. The study shall inves-
tigate, on a comparative basis
(1) due diligence practice of lenders;
(2) default rates and recovery rates on student loans;
(3) changes in loan volume;
(4) methods of soliciting student borrowers;
(5) potential for fraudulent double borrowing by students;
(6) participation agreements between the types of guaran-
tor and lenders;
(7) eligible institution participation agreements;
(8) adequacy of reserve4:1 funds in relation to guaranty com-
mitments made by the agency and the default risk which such
commitments represent, as reflected by the socio-economic
background of the borrowers, the category of institution at-
tended, and the historical experience of' the agency;
(9) types of services provided to lenders, eligible institu-
tions, and borrowers;
(10) use of funds generated through participation in the
guaranteed student loan program by amount and nature of ex-
572
563
HIGHER EDUCATION AMENDMENTS OF 1986
Sec 1313
penses for administrative support for programs other than the
guaranteed student loan program;
(11) to what extent the guarantors meet the requirements
of truth-in-lending provisions;
(12) profile of borrowers and defaulters of loans guaran-
teed by the agency and an assessment of the default risks in-
herent in such loans;
(13) coordination of the loan guaranty program with grant
programs;
(14) general student access to loan assistance; and
(15) need for administrative cost allowances by particular
guaranty agencies in relation to the default risk faced by the
agency, the administrative costs incurred, or needed to be in-
curred by the agency, and other factors relevant to the cost of
guaranteeing loans under the program.
(b) REPORT.The Comptroller General of the United States
shall prepare and submit a report, not later than 2 years after the
date of enactment of this Act, to the Committee on Labor and
Human Resources of the Senate and the Committee on Education
and Labor of the House of Representatives on the findings of the
study required by subsection (a) of this section, together with such
recommendations as the Comptroller General deems appropriate.
(20 U.S.C. 1071 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1311, 100 Stat.
1583.
SEC. 1312. STUDY OF USE OF MULTIPLE-YEAR LINES OF CREDIT.
The Comptroller General shall evaluate the feasibility and effi-
ciency of permitting students to establish lines of credit with eligi-
ble lenders under part B of title IV of the Act that cover more than
2 years of attendance at an institution of higher education. Such
evaluation shall determine the extent to which such an arrange-
ment would reduce the administrative costs associated with mak-
ing separate loans annually under such part. In conducting such
evaluation, the Comptroller General shall consult institutions of
higher education and eligible lenders under such part. Within 2
years after the date of enactment of this Act, the Comptroller Gen-
eral shall submit to the Congress a report on the results of such
evaluation together with such recommendations as the Secretary
considers appropriate.
(20 U.S.C. 1071 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1312, 100 Stat.
1584.
SEC. 1313. STUDY OF MULTIPLE DISBURSEMENT.
The Comptroller General shall evaluate the impact of the mul-
tiple disbursement system required for student loans under part B
of title IV of the Act on the ability of both students and institutions
of higher education to meet their expenses as they arise. Such eval-
uation shall include an assessment of any other impacts of such
system on such students or institutions that the Comptroller Gen-
eral determines to be significant. A report on the results of such
evaluation shall be submitted to the Congress not later than 2
years after the date of enactment of this Act.
(20 U.S.C. 1071 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1313, 100 Stat.
1684.
573
Sec. 1314
HIGHER EDUCATION AMENDMENTS OF 1986
564
SEC. 1314. STUDENT LOAN CONSOLIDATION.
The Comptroller General shall evaluate the cost, efficiency,
and impact of the consolidation loan program established by the
amendments made by this Act to part B of title IV of the Act and
shall report to the Congress not later than 2 years after the date
of enactment of this Act on the findings and recommendations
required by this subsection. Nothing in this section shall be inter-
preted to authorize the Secretary to require lenders, holders, or
guarantors to maintain or report records relating to the loans dis-
charged by borrowers in receiving a consolidation loan pursuant to
section 428C of the Act.
(20 U.S.C. 1071 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1314, 100 Stat.
1684; amended June 3, 1987, P.L. 100-50, sec. 23(6), 101 Stat. 362.
PART CCOSTS OF POSTSECONDARY EDUCATION
SEC. 1321. NATIONAL COMMISSION ON RESPONSIBILITIES FOR FI-
NANCING POSTSECONDARY EDUCATION.
(a) FINDINGS.The Congress finds
(1) that institutions of higher education in our Nation and
their human and intellectual resources are critical to the fu-
ture of the American society, and the Nation's economic poten-
tial, its strength, security, and freedom, and the quality of life
for all citizens are tied to the quality and extent of higher edu-
cation available;
(2) that it is the responsibility of the Federal Government
to establish a clearly defined national policy regarding.
(A) the role and expectations of respective institutions
in society (the family unit, institutions of higher education,
government, and the individual in financing the costs of
postsecondary education); and
(B) the most efficient and effective use of limited Fed-
eral, State, and private resources for supplementing the
family effort in financing postsecondary education and for
creating incentives for individuals and families to plan for
financing postsecondary education; and
(3) the appropriate response to economic, budgetary, demo-
graphic, and social changes which will require individuals,
families, institutions of higher education, and government to
plan and adapt to the future needs for student financial assist-
ance for postsecondary education.
(b) ESTABLISHMENT OF THE COMMISSION.(1) There is estab-
lished as an independent agency in the executive branch a commis-
sion to be known as the National Commission on Responsibilities
for Financing Postsecondary Education (hereafter in this section re-
ferred to as the "Commission").
(2) The Commission shall be composed of 9 members, 3 of
whom shall be appointed by t1
President, 3 of whom shall be ap-
pointed by the Speaker of th. House of Representatives, and 3 of
whom shall be appointed by the majority leader of the Senate. The
membership of the Commission shall provide expertise and experi-
ence in the provision and fmancing of postsecondary education, in-
cluding student fmancial aid administrators, secondary school ad-
ministrators, individuals skilled in education economics research,
.574
565
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1321
individuals having expertise in the development of standards and
systems of need analysis for student assistance programs, and indi-
viduals with particular expertise in credit financing for postsecond-
ary education.
(c) DUTIES OF THE COMMISSION.
(1) IN GENERAL.The Commission shall study and inves-
tigate the extent to which
(A) there is a consistent and coherent Federal policy
regarding the appropriate family role in financing the
costs of postsecondary education for family members;
(B) the current Federal laws and regulations promote
the stated Federal policy; and
(C) the extent to which State laws which remove pa-
rental responsibilities for children over 18 years of age
conflict with Federal policy in this area.
(2) REPORT AND RECOMMENDATIONS.The Commission
shall
(A) summarize the appropriate findings of the Na-
tional Commission on Student Financial Assistance;
(B) recommend to the Congress a comprehensive anal-
ysis on the extent to which a consensus exists regarding
the appropriate role of the family in financing postsecond-
ary education; and
(C) to the extent that a consensus exists, recommend
changes in current law that would be required to achieve
the desired Federal policy, including recommendations on
Federal incentives to encourage families to plan and save
for their financial responsibilities in financing postsecond-
ary education for family members taking into account the
needs of future generations.
(d) SPECIFIC REQUIREMENTS.In carrying out its responsibil-
ities under subsection (c), the Commission shall make a study of
the following areas:
(1) NEED ANALYSIS.
(A) The most appropriate mechanisms for measuring
student and family ability to pay for postsecondary edu-
cation.
(B) The incentives and disincentives for family saving
in existing need analysis systems.
(C) The feasibility and impact of different need analy-
sis systems and eligibility formulas for determining stu-
dent and family contributions for Federal and non-Federal
grant, loan, and work-study programs.
(D) The extent to which existing systems of need anal-
ysis take into account the circumstances of older and non-
traditional students, students with minor dependents, and
divorced and separated parents.
(E) The extent to which existing systems of need anal-
ysis recoglize differing regional economic conditions.
(F) The feasibility of a simplified need analysis system
for determining ability to pay for low-income families, eco-
nomically disadvantaged families, and families receiving
public assistance benefits.
575
Sec. 1321
HIGHER EDUCATION AMENDMENTS OF 1986
566
(G) The postsecondary education financing partner-
ship, and the impact of external influences, such as eco-
nomic conditions or State-level initiatives, that affect the
balance of financial support among students and their
families, the Federal Government, States, postsecondary
institutions, credit institutions, and the private sector.
(2) STUDENT INDEPENDENCE.The most appropriaL:e mech-
anisms and factors to be considered in determining student
independence and self-support and in determining when fami-
lies should be expected to provide parental financial informa-
tion in determining expected family contributions for Federal
student assistance programs.
(3) PARENTAL RESPONSIBILITY.In consultation and co-
operation with associations of higher education institutions
and administrators, secondary schools, student and parent as-
sociations, and other organizations, the most effective means of
reinforcing and promoting the principle of parental responsibil-
ity for contributing, to the extent that they are able, to the
costs of their children's postsecondarx education.
(4) STUDENT RESPONSIBILITY.The most effective mecha-
nisms for measuring student ability to contribute to edu-
cational cost through earnings and savings, the extent to which
such mechanisms reflect the circumstances of students from
disadvantaged families, and the existing levels of student con-
tributions from past, current, and future earnings.
(5) INSTITUTIONAL RESPONSIBILITY.The most effective
mechanisms of reinforcing and promoting the principle of insti-
tutional responsibility for providing need-based aid to students
attending postsecondary institutions.
(6) GOVERNMENTAL RESPONSIBILITY.The most efficient
and appropriate mechanisms for providing student assistance
from the various levels of government.
(7) EARLY INFORMATION, PLANNING, AND INFORMATION
TECHNOLOGY.The extent to which programs providing early
information on postsecondary education, costs, and financial
aid programs to students and their families influence edu-
cational opportunity and family saving.
(e) ADMINISTRATION OF THE COMMISSION.
(1) RATE OF PAY.Members of the Commission who are
not full-time officers or employees of the United States and
who are not Members of Congress may, while serving on busi-
ness of the Commission, be compensated at a rate not to ex-
ceed the rate specified at the time of such service for Grade
GS-18 of the General Schedule as authorized by section 5332
of title 5, United States Code, for each day, or any part of a
day, they are engaged in the actual performance of Commis-
sion duties, including travel time; and while so serving away
from their homes or regular places of business, all members of
the Commission may be allowed travel expenses, including per
diem in lieu of susbsistence, as authorized by section 5703 of
title 5, United States Code, for persons in Government service
employed intermittently.
(2) TEMPORARY EXEMPTION.Subject to such rules as may
be adopted by the Commission, the Chairperson, without re-
5 76
567
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1321
gard to the provisions of title 5, United States Code, governing
appointments in the competitive service and 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, shall have the power to
(A) appoint a Director or Executive Director who shall
be paid at a rate not to exceed the rate of basic pay for
GS-18 of the General Schedule; and
(B) appoint and fix the compensation at a rate not to
exceed the rate payable at the GS-18 rate of such other
personnel as the Chairperson considers necessary.
(3) AUTHORITY TO CONTRACT.Subject to the Federal Prop-
erty and Administrative Services Act of 1949, as amended, the
Commission is authorized to enter into contracts with Federal
and State agencies, private firms, institutions, and individuals
for the conduct of activities necessary to the discharge of its
duties and responsibilities.
(4) SOURCE OF ADMINISTRATIVE SUPPORT.Financial and
administrative support services (including those related to
budget and accounting, financial reporting, payroll, and per-
sonnel) shall be provided to the Commission by the General
Services Administration (or other appropriate organization) for
which payment shall be made in advance or by reimbursement,
from funds of the Commission, in such amounts as may be
agreed by the Chairperson of the Commission and the Admin-
istrator of General Services.
(5) Aumoarry TO HIRE EXPERTS AND CONSULTANTS.The
Commission is authorized to procure temporary and intermit-
tent 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. Experts and consultants may
be employed without compensation if they agree to do so in ad-
vance.
(6) AUTHORITY FOR DETAIL OF EMPLOYEES.Upon request
of the Commission, the head of any Federal agency is author-
ized to detail on a reimbursable basis, any of the personnel of
such agency to the Commission to assist the Commission in
carrying out its duties under this section. I
(f) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated to carry out this part $1,000,000.
(g) TERMINATION.The Commission shall terminate 2 years
after the first meeting of the members.
(20 U.S.C. 1221-1 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1321, 100 Stat.
1584-1586; amended July 6, 1990, P.L. 101-324, secs. 1 and 2, 104 Stat. 300-301.
Section 306 of P.L. 102-170, :05 Stat. 1136, stated the following: subsection (e) of section
1321 of the Higher Education Act of 1965 (20 U.S.C. 1221-1(e)) is amended by inserting at the
end thereof the following new paragraph:
"(7) GIvra AND noNATIoNs.The Commission may accept, use, and dispose of money, gifts
or donations of services or property.".
This amendment probably should have been made to the Higher Educatim Amendments of
1986.
tIEST COPY AVAILABLE
77-530 0-94-19
577
Sec. 1331
HIGHER EDUCATION AMENDMENTS OF 1986
568
PART DLIBRARY RESOURCES
SEC. 1831. STUDY OF THE EFFECTIVENESS OF THE NEEDS CRITERIA
FOR THE COLLEGle LIBRARY RESOURCE PROGRAM AU-
THORIZED.
(a) STUDY REQuiRED.-L-The National Commission on Libraries
and Information Sciences shall conduct a study on the effectiveness
in directing assistance to libraries with the greatest need of the
needs criteria specified in section 211 of the Act.
(b) REPORT TO CONGRESS.The National Commission on Li-
braries and Information Sciences shall prepare and submit a report
to the Congress not later than 3 years after the conclusion of the
first fiscal year in which appropriations are made for the College
Library Resource Program authorized by section 211 of the Act, to-
gether with such recommendations as the Commission on Libraries
and Information Sciences deems appropriate.
(20 U.S.C. 1029 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1331, 100 Stat.
1587.
PART ENATIONAL ACADEMY OF SCIENCES STUDY
SEC. 1341. VOLUNTEERS.
(a) STUDY REQUIRED.The National Academy of Sciences shall
conduct a thorough study of how volunteers can best be used in the
classroom. The study required by this section shall include
(1) the feasibility of using recipients of student loans
made, assured, or guaranteed under part B of title IV of the
Act or part E of such title as part of repayment of such loans;
(2) the use of older Americans as such volunteers;
(3) the use of business persons and other professionals as
volunteers; and
(4) the place of incentives to encourage volunteerism.
The study required by this section shall examine the methods of
using volunteers designed to provide the greatest flexibility for
local educational agencies.
(b) REPORT REQuiRED.Not later than one year after the date
of entering into a contract with the Department of Education for
the study described in this section, the National Academy of
Sciences shall prepare and submit to the Congress a report, to-
gether with a description of programs on the use of volunteers and
with such recommendations as deemed appropriate.
CC) AVAILABILITY OF FUNDS.----The Secretary shall, from funds
available for the administration of the Department of Education,
make available not to exceed $500,000 for the study required by
this section.
(20 U.S.C. 1221-1 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1341, 100 Stat.
1587; amended June 3, 1987, P.L. 100-50, sec. 23(7), 101 Stat. 362.
PART FFAULKNER UNIVERSITY
SEC. 1351. RELIEF OF LIABILITY.
(a) RELIEF OF LIABHATY.Faulkner University (formerly Ala-
bama Christian College) of Montgomery, Alabama, is relieved of all
liability--
578
569
HIGHER EDUCATION AMENDMENTS OF 1986
.
Sec. 1361
(1) to repay to the United States the sum of $147,681.39,
plus accrued interest, and
(2) to pay $7,822.50 to the National Direct Student Loan
Fund of the Faulkner Univ,ersity,
representing payments inadvertently made pursuant to subpart 1
and subpart 2 of part A and part C of title IV of the Higher Edu-
cation Act of 1965 and direct student loans inadvertently made
under part E of such title IV prior to the receipt of eligibility status
for the junior and senior years of the baccalaureate degree pro-
grams offered by Faulkner University. In the audit and settlement
of the accounts of any certifying or disbursing officer of the United
States, full credit shall be given for the amount for which liability
is relieved by this section.
(b) SPECIAL RULE.For the purpose of part B of title IV of the
Higher Education Act of 1965, each student in attendance at the
Faulkner University of Montgomery, Alabama, receiving a federally
insured loan for the academic year 1981-1982 and for the academic
year 1982-1983 pursuant to such part B shall be deemed to be in
attendance at an eligible institution for that academic year.
Enacted C. 17, 1986, P.L. 99-498, sec. 1351, 100 Stat. 1587-1588.
PART GALIEN YOUTH EDUCATION OPPORTUNITY PANEL
SEC.
1361.
DENIAL OF STUDENT ASSISTANCE TO CERTAIN
NONCITIZENS
(a) ESTABLISHMENT OF PANEL.(1) There is established in the
Department of Education a panel to be known as the "Alien Youth
Education Opportunity Panel" (hereafter in this section referred to
as the "Panel").
(2) The Panel shall be composed of 7 members, 3 of whom shall
be appointed by the Secretary, 2 of whom shall be appointed by the
Speaker of the House of Representatives, and 2 of whom shall be
appointed by the MAjority Leader of the Senate.
(b) DUTIES OF PANEL.The Panel shall study and investigate
the extent to which the requirements of section 484(a)(5) of the Act
result in the denial of student assistance to long-term residents of
the United States who have graduated from United States high
schools and the extent to which that denial deprives those individ-
uals of an equal educational opportunity.
(C) REPORT AND RECOMMENDATIONS.The Panel shall submit a
report of its findings and recommendations to the Secretary, the
President, and the Congress not later than 2 years after the date
of enactment of this section.
(d) ADMINISTRATIVE AND CLERICAL SUPPORT.The Secretary
shall provide the Panel with such administrative and clerical sup-
port as it may require to carry out its activities under this section.
(e) COMPENSATION AND EXPEN5ES.(1) Members of the Panel
who are officers or full-time employees of the United States shall
serve without compensation in addition to that received for their
services as officers or employees of the United States; but they 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 the Government service employed intermittently.
579
Sec. 1371
HIGHER EDUCM1ON AMENDMENTS OF 1986
570
(2) Members of the Panel who are not officers or full-time em-
ployees of the United States may each receive reimbursement for
travel expenses incident to attending Panel 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.
(0 ACCESS TO INFORMATION.The Panel is authorized to se-
cure directly from any executive department, bureau, agency,
board, commission, office, independent establishment, or instru-
mentality information, suggestions, estimates, and statistics for the
purpose of this section and each such department, bureau, agency,
board, commission, office, independent establishment, or instru-
mentality is authorized and directed, to the extent permitted by
law, to furnifth such inforniatinn, suggestions, estimates, and statis-
tics directly to the Panel.
(20 U.S.C. 1091 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1361, 100 Stat.
1588-1589.
PART HBOSTON COLLEGE
SEC. 1371. DEBT PROVISION.
The Secretary is directed to cancel all annual debt service obli-
gations of the receiving institution for fiscal years 1987, 1988,
1989, and 1990 of which the total amount to be cancelled shall not
exceed $2,700,000 adjusted as required in fiscal year 1990, for the
Department of Education Project Loan #5-1-00665-0 dated August
5, 1981, and shall adjust the loan agreement to reflect the change
required by this section without any other provision of law being
applicable.
Enacted Oct. 17, 1986, P.L. 99-498, sec. 1371, 100 Stat. 1589.
PART ICARL ALBERT CONGRESSIONAL RESEARCH AND STUDIES
CENTER
SEC. 1381. APPROPRIATION PROVISION.
Funds appropriated in Public Law 97-377 under the heading
"HIGHER AND CONTINUING EDUCATION", for the Carl Albert Congres-
sional Research and Studies Center, under the terms of H.R. 3598
(97th Congress) shall be available as a direct appropriation without
regard to section 4(a) of H.R. 3598 (97th Congress).
Enacted Oct. 17, 1986, P.L. 99-498, sec. 1381, 100 Stat. 1589.
TITLE XVAMERICAN INDIAN, ALASKA NATIVE, AND
NATIVE HAWAIIAN CULTURE AND ART DEVELOPMENT
SEC. 1501. SHORT TITLE.
This title may be cited as the "American Indian, Alaska Na-
tive, and Native Hawaiian Culture and Art Development Act".
(20 U.S.C. 4401 note) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1501, 100 Stat.
1600.
SEC. 1502. FINDINGS.
The Congress finds that-
5 S 0
571
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1503
(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;
(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 fur Native Hawaiian culture and arts
development.
(20 U.S.C. 4401) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1502, 100 Stat. 1600.
SEC. 1503. 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.
51
Sec. 1504
HIGHER EDUCATION AMENDMENTS OF 1986
572
(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.
(20 U.S.C. 4402) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1503, 100 Stat. 1600-
1601.
PART AAMERICAN INDIANS AND ALASKA NATIVES
SEC. 1504. ESTABLISHMENT OF INSTITUTE.
(a) IN GENERAL.There is hereby established a corporation to
be known as the "Institute of American Indian and Alaska Native
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.
(20 U.S.C. 4411) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1604, 100 Stat. 1601.
SEC. 1505. 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 shsll 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;
573
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1505
(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-
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 ir embers of the Board first appointed under sub-
section (aX1XA)
(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
5c.43
Sec. 1505
HIGHER EDUCATION AMENDMENTS OF 1986
574
pursuant to subsection (aX1XA). 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.
(f) QUORUM.Unless otherwise provided by the bylaws of the
Institute, a majority of the members appointed under subkction
(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
(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
mtermittently.
(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.
(20 U.S.C. 4412) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1505, 100 Stat. 1601-
1603; amended July 23, 1992, P.L. 102-325, sec. 1331, 106 Stat. 805, amended July
23, 1992, P.L. 102-325, sec. 1331(a), 106 Stat. 805.
5 5 4
575
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1507
SEC. 1506. EXECUTIVE BOARD.
(a) COMPOSITION.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.
(e) POWERS.The Executive Board may hold and use all the
powers of the Board, subject to the approval of the Board.
(20 U.S.C. 4413) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1506, 100 Stat. 1603.
SEC. 1507. 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) tolnake 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
Goverment;
(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
Sec. 1508
HIGHER EDUCA110N AMENDMENTS OF 1986
576
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;
(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.Intereet and earnings on
amounts received by the Institute pursuant to section 1531 in-
vested under subsection (aX12) 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).
(20 U.S.C. 4414) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1507, 100 Stat. 1603-
1604; amended November 29, 1990, P.L. 101-644, sec. 601, 104 Stat. 4668; amended
July 23, 1992, P.L. 102-325, sec. 1331(b), 106 Stat. 806; amended December 20,
1993, P.L. 103-208, sec. 2(1), 107 Stat. 2486.
SEC. 1508. 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-
5';s6
577
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1509
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.
(20 U.S.C. 4415) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1508, 100 Stat. 1604;
amended Apr. 28, 1988, P.L. 100-297, sec. 5406, 102 Stat. 417.
SEC. 1509. 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
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-
5
Sec. 1509
HIGHER EDUCATION AMENDMENTS OF 1986
578
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
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.This section shall apply to any individual
appointed after the date of enactment of this title for employment
in the Institute. Except as provided in subsections (d) and (g), the
enactment of this title shall not affect
(1) the continued employment of any individual employed
immediately before the date of enactment of this title, or
(2) such individual's right to receive the compensation at-
tached to such position.
(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
5S8
579
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1510
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 contmue 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 may be.
(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.--Ernployees of the Institute
shall receive compensation for work injuries and illnesses in ac-
cordance with chapter 81 of title 5, United States Code.
(20 U.S.C. 4416) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1509, 100 Stat. 1604
1606; amended April 28, 1988, sec. 5406(a), 102 Stat. 417; amended July 23, 1992,
P.L. 102-325, sec. 1331(c), 106 Stat. 806.
SEC. 1510. FUNCTIONS OF Tat 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.
599
Sec. 1-511
HIGHER EDUCATION AMENDMENTS OF 1986
580
(0) OTHER PROGRAMS.In addition to the centers and programs
described in subsection (b), the Institute shall develop such pro-
grams 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.
(20 U.S.C. 4417) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1510, 100 Stat. 1606
1607; amended November 29, 1990, P.L. 101-644, sec. 502, 104 Stat. 4668-69;
amended July 23, 1992, P.L. 102-325, sec. 1331(d), 106 Stat. 807.
SEC. 1511. 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,
(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.
(20 U.S.C. 4418) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1511, 100 Stat. 1607;
amended July 23, 1992, P.L. 102-325, sec. 1331(e), 106 Stat. 807.
SEC. 1512. NONPROFIT AND NONPOLITICAL NATURE OF THE INSTI-
TUTE.
(a) STOCK.The Institute shall have no power to issue any
shares of stock or to declare or_ pay any dividenols.
(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.
(20 U.S.C. 4419) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1512, 100 Stat. 1607.
SEC. 1513. 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).
5 9 0
0
581
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1514
(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.
(20 U.S.C. 4420) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1513, 100 Stat. 1608;
amended Sept. 27, 1988, P.L. 100-446, 102 Stat. 1818.
SEC. 1514. 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
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 Alabka 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 r. oonsible for actions and requirements, either ad-
ministrative, reg latory, or statutory in nature, for events which
591
Sec. 1515
HIGHER EDUCATION AMENDMENTS OF 1986
582
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.
(20 U.S.C. 4421) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1514, 100 Stat. 1607-
1608; amended November 5, 1987, P.L. 100-153, sec. 8(1), 101 Stat. 888; amended
Apr. 28, 1988, P.L. 100-297, sec. 5406, 102 Stat. 418; amended November 29, 1990,
P.L. 101-644, sec. 503, 104 Stat. 4669; amended July 23, 1992, P.L. 102-325, sec.
1331(f), 106 Stat. 807.
SEC. 1515. 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
shall not consider the amount of private fundraising or be-
quests made on behalf of the Institute during any preceding
fiscal year.
(20 U.S.C. 4422) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1515, 100 Stat. 1609;
amended Apr. 28, 1988, P.L. 100-297, sec. 5406, 102 Stat. 418; amended July 23,
1992, P.L. 102-325, sec. 1331(g), 106 Stat. 807.
SEC. 1516. 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.
(20 U.S.C. 4423) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1516, 100 Stat. 1609;
amended July 23, 1992, P.L. 102-325, sec. 1331(h), 106 Stat. 807.
SEC. 1517, 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,
583
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1518
(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 subsectic,n 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.
(20 U.S.C. 4424) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1516, 100 Stat. 1609;
amended November 29, 1990, P.L. 101-644, sec. 504, 104 Stat. 4669; amended July
23, 1992, P.L. 102-325, sec. 1331(i), 106 Stat. 808.
SEC-. 1518. 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
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
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)(BXii) may be periodically withdrawn and used, at the
direction of the Board or its designee, to defray any expense
593
Sec. 1518
HIGHER EDUCATION AMENDMENTS OF 1986
584
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 (1XE), 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 contributicn
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,
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-
594
585
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1519
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 fimds 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.
(c) GENERAL ADMINISMATIVE PROVISIONS.(1) Funds in the
trust funds described in subsections (a) and (b) shall be invested
at a rate not less than that generally available for similar funds
deposited at the same banking institution for the same period or
periods of time.
(2) No part of the net earnings of the trust funds established
under this section shall inure to the benefit of any private person.
(3)1 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) The President of the Institute shall provide for such other
provisions governing the trust funds establish.ed 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 fimds 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.
(20 U.S.C. 4425) Reenacted Nov. 29, 1990, P.L. 101-644, 30C. 505, 104 Stat. 4669-
71; amended July 23, 1992, P.L. 102-325, sec. 1331(j), 106 Stui.. 809.
SEC. 1519. 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. Tlus master plan shall evaluate devel-
opment and construction requirements (based on a growth plan ap-
So in original. Indentation is wrong.
595
10,
Sec. 1521
HIGHER EDUCATION AMENDMENTS OF 1986
586
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.
(20 U.S.C. 4426) Enacted July 23, 1992, P.L. 102-325, sec. 1331(k), 106 Stat. 809.
PART BNATIVE HAWAIIANS
SEC. 1521. PROGRAM FOR NATWE HAWAIIAN CULTURE AND ARTS DE-
VELOPMENT.
(a) IN GENERAL.The Secretary of the Interior is authorized to
make grants for the purpose of supporting a program for Native
Hawaiian culture and arts development to any private, nonprofit
organization or institution which
(1) primarily serves and represents Native Hawaiians, and
(2) has been recognized by the Governor of the State of
Hawaii for the purpose of making such organization or institu-
tion eligible 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
(1) to provide scholarly study of, and instruction in, Native
Hawaiian art and culture,
(2) to establish programs which culminate in the awarding
of degrees in the various fields of Native Hawaiian art and cul-
ture, or
(3) to establish centers and programs with respect to Na-
tive Hawaiian art and culture that are similar in purpose to
the centers and programs described in subsections (b) arid (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) 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) shall serve f n. a fixed term of office.
(20 U.S.C. 4441) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1521, 100 Stat. 1610
1611.
SEC. 1522. ADMINISTRATIVE PROVISIONS.
(a) PAYMENTS.The Secretary may award grants under this
part in installments, in advance, or by way of reimbursement and
587
HIGHER EDUCATION AMENDMENTS OF 1986
Sec. 1531
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
(1) 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,
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.
(20 U.S.C. 4442) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1522, 100 Stat. 1611-
1612
PART CAUTHORIZATION OF APPROPRIATIONS
SEC. 1531. 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
1513(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-
5 9 7
Sec. 1531
HIGHER EDUCATION AMENDMENTS OF 1986
588
clitious 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.
(20 U.S.C. 4451) Enacted Oct. 17, 1986, P.L. 99-498, sec. 1531, 100 Stat. 1612;
amended Apr. 28, 1988, P.L. 100-297, sec. 5406(c), 102 Stat. 418; amended Nov. 29,
1990, P.L. 101-644, sec. 506, 104 Stat. 4672.
5Q8
Higher Education Amendments of 1992
Effective Dates and Related Implementation Provisions
*
TITLE W-STUDENT ASSISTANCE
PART A-GRANTS TO STUDENTS IN ATrEND-
ANCE AT INSTITUTIONS OF HIGHER EDU-
CATION
SEC. 410. 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 m 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 carollment 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.
(20 U.S.C. 1070a note) Enacted July 23, 1992, P.L. 102-325, sec. 410, 106 Stat.
510.
PART B-FEDERAL FAMILY EDUCATION LOANS
SEC. 432. EFFECTIVE DATES FOR AMENDMENTS TO PART B.
(a) IN GENERAL.The changes made in part B 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 m such part B;
(2) that the changes made in sections 425(a), 428(b)(1)(A),
428(b)(1XB), 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 42btaX1)(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
589
5Q9
Sec. 432
HIGHER EDUCATION AMENDMENTS OF 1992
590
(B) the changes made in section 425(aX1)(AXiv) 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 alter October 1, 1993;
(3) that the changes made in
sections
427(a)(2)(C),
428(b)(1XM), 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(f)(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(bX1)(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) th.at 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.
591
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 452
(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.
(20 U.S.C. 1078 note) Enacted July 23, 1992, P.L. 102-325, sec. 432, 106 Stat.
562.
PART D-FEDERAL DIRECT LOANS
SEC. 452. INCOME CONTINGENT LOAN DISTRIBUTION 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 IV 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.
(20 U.S.C. 1087a note) Enacted July 23, 1992, P.L. 102-325, sec. 452, 106 Stat.
575.
PART E-FEDERAL PERKINS LOANS
*
SEC. 468. EVII'ECTIVE DATES FOR AMENDW TS TO PART E.
The changes made in part E 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) 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, 1.993;
(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;
Sec. 498
HIGHER EDUCATION AMENDMENTS OF 1992
592
(3) the changes made in section 464(cX2)(A), relating to
deferments, shall apply with respect to loans for which the
first disbursement is made on or after July 1, 1993; and
(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.
(20 U.S.C. 1087dd note) Enacted July 23, 1992, P.L. 102-325, sec. 468, 106 L3* at.
585.
PART F-NEED ANALYSIS
SEC. 471. 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.
(20 U.S.C. 1087kk note) Enacted July 23, 1992, P.L. 102-325, sec. 471, 106 Stat.
609.
PART G-GENERAL PROVISIONS
SEC. 498. 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.
(20 U.S.C. 1088 note) Enacted July 23, 1992, P.L. 102-325, sec. 498, 106 Stat.
634.
593
HIGHER EDUCATION ':.:MMENTS OF 1992
Sec. 501
TITLE V-EDUCATOR RECRUITMENT,
RETENTION, AND DEVELOPMENT
SEC. 501. REVISION OF TITLE V.
(a) * * *
(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 D of title V of this Act) is
repealed.
(20 U.S.C. 1108) Enacted July 23, 1992, P.L. 102-325, sec. 501, 106 Stat. 719.
6' )3
Higher Education Amendments of 1992
TITLE XIV-STUDIES AND
COMMISSIONS
PART A-STUDIES BY THE DEPARTMENT OF
EDUCATION
SEC. 1401. STUDY OF ROLE OF GUARANTY AGENCIES.
(a) STUDY.The Secretary of Education shall review the role
of guaranty agencies within the Federal Family Education Loan
Program by examining the administrative and financial operations
of such agencies and the relationships between guaranty agencies
and State governments.
(b) REPORT.The Secretary of Education shall report to the
Congress within 1 year of the date of enactment of this Act on the
study described in subsection (a). Such report shall consider and
make recommendations concerning
(1) increasing the role of guaranty agencies in oversight
and licensing of proprietary trade schools under the Federal
Family Education Loan Program;
(2) strengthening Federal disincentives for high default
rate portfolios;
(3) consolidating guaranty agencies regionally or other-
wise;
(4) eliminating the role of guaranty agencies within the
Federal Family Education Loan Program; and
(5) the compensation of chief executive officers and mana-
gerial staffs of guaranty agencies.
(20 U.S.C. 1071 note) Enacted July 23, 1992, P.L. 102-325, sec. 1401, 106 Stat.
816.
SEC. 1402. STUDY OF STATUTORY PROTECTIONS.
The Secretary of Education shall report to the Congress within
180 days of the date of enactment of the Higher Education Amend-
ments of 1992 on the advisability of statutorily protecting officials
of accrediting agencies involved in the performance of legitimate
Federal Family Education Loan Program activities.
(20 U.S.C. 1071 note) Enacted July 23, 1992, P.L. 102-325, sec. 1402, 106 Stat.
817.
SEC. 1403. STUDY OF FRAUD-BASED DEFENSES.
(a) STUDY.The Secretary shall conduct a study of the impact
of fraud-based defenses on the Federal Family Education Loan Pro-
gram. Such study shall include-
594
595
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1404
(1) an analysis of statutory, regulatory, and case law re-
garding the use of fraud-based defenses against repayment of
such loans;
(2) an estimate of the total number of borrowers filing for
relief from repayment of such loans using a fraud-based de-
fense and amount of such loan principal involved;
(3) an estimate of such loan principal relieved annually
through fraud-based defenses;
(4) an evaluation of the importance of a fraud-based de-
fense to the protection of borrowers of such loans; and
(5) an evaluation of the effects of the availability of a
fraud-based defense on the accessibility of Stafford loans by
geographical area and by type of postsecondary institution.
(b) DATE.The study described in subsection (a) shall be com-
pleted not later than 18 months after the date of enactment of this
Act.
(C) REPORT.
(1) IN GENERAL.The Secretary shall submit a report to
the Congress on the study described in subsection (a) that
makes specific recommendations for legislative options that
may be needed to address the rights of borrowers with respect
to the availability of fraud-based defenses under the Federal
Family Education Loan Program without jeopardizing the par-
ticipation of lenders or the solvency of guaranty agencies re-
quired to maintain the integrity of such program.
(2) DATE.The report described in paragraph (1) shall be
completed not later than 19 months after the date of enact-
ment of this Act.
(20 U.S.C. 1080 note) Enacted July 23, 1992, P.L. ;02-325, sec. 1403, 106 Stat.
817.
SEC. 1404. DATA ON NONTRADITIONAL STUDENTS.
(a) STUDY REQU1RED.The Secretary of Education shall con-
duct a 2-year study regarding the types of programs available for,
and determine the success or failure of such programs in, increas-
ing the accessibility for nontraditional students to postsecondary
education. The study shall be conducted through the Office of Edu-
cational Research and Improvement.
(b) PURPOSE.The purpose of the study shall be
(1) to appraise the adequacies and deficiencies of current
student financial aid information resources and services and
evaluate the effectiveness of these programs as they pertain to
the nontraditional student;
(2) to investigate the availability of grants and loans and
other fmancial assistance to nontraditional students (including
independent students and part-time students);
(3) to assess the availability of supportive services for the
nontraditional students including (but not limited to) counsel-
ing, child care services, campus health center services, and li-
brary services;
(4) to make recommendations on how the Department of
Education can maintain an effective data base regarding non-
traditional students that will include-
6
Sec. 1405
HIGHER EDUCATION AMENDMENTS OF 1992
596
(A) a yearly count of the number of students who are
nontraditional and breakdown of the institutions they are
attending;
(B) the number of nontraditional students who work
and go to school;
(C) the extent of participation in Federal student aid
programs;
(D) the amount of unmet costs of postsecondary edu-
cation for nontraditional students; and
(E) trends over the last decade regarding participation
of nontraditional students in title W programs.
(c) REPORT.The Secretary of Education shall submit an in-
terim report to the Committee on Education and Labor of the
House of Representatives and the Committee on Labor and Human
Resources of the Senate within 1 year after the date of enactment
of this section and submit a final report 2 years after such date of
enactment.
(20 U.S.C. 1221e note) Enacted July 23, 1992, P.L. 102-325, sec. 1404, 106 Stat.
817.
SEC. 1405. STUDY OF FEDERAL BENEFIT COORDINATION.
(a) IN GENERAL.The Secretary of Education shall conduct a
study to evaluate the coordination of Federal student financial as-
sistance programs under title IV of the Higher Education Act of
1965 with other programs funded in whole or in part with Federal
funds, giving particular attention to
(1) the effect of receipt of program assistance under title
IV of the Higher Education Act of 1965 on students eligible for
other programs funded in whole or in part with Federal funds,
including reduction or denial of such other program funds; and
(2) the attendance cost elements funded in whole or in part
by programs under title IV of the Higher Education Act of
1965 for students eligible for other Federal programs and the
inclusion of room or board costs in such attendance costs.
(b) REPORT.The Secretary of Education shall prepare and
submit to the appropriate committees of the Congress a report on
the study conducted pursuant to subsection (a) not later than 3
years after the date of enactment of this Act, together with such
recommendations as the Secretary of Education deems appropriate.
(20 U.S.C. 1070 note) Enacted July 23, 1992, P.L. 102-325, sec. 1405, 106 Stat.
818.
SEC. 1406. NATIONAL SURVEY OF FACTORS ASSOCIATED WITH PAR-
TICIPATION.
(a) AUTHORITY OF THE SECRETARY OF EDUCATION.In order to
assure improved and accurate data on the participation of at-risk
students in postsecondary education, the Secretary of Education,
acting through the National Center for Educational Statistics, shall
conduct a special purpose survey on a biennial basis of factors asso-
ciated with participation of low-income, disadvantaged, non-English
language background, disabled, and minority students, including
(but not limited to) African American, Native Americans, Native
Hawaiians, major Hispanic subgroups, and Asian students from
disadvantaged backgrounds in various types of postsecondary edu-
cation. The survey data shall permit comparisons with other groups
6
597
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1407
that have characteristically participated at higher rates than at-
risk students.
(b) DEVELOPMENT OF THE SURVEY.The Secretary of Edu-
cation shall consult with the Congress and the elementary and sec-
ondary and higher education community in developing such an an-
nual survey. The survey shall include, but not be limited to
(1) academic preparation of groups at key points in the ele-
mentary and secondary education process;
(2) rates of academic progress and graduation from high
school;(3) participation in postsecondary education by type and
control of institution and by program of study;
(4) persistence rates in postsecondary programs, or, in the
case of short-term programs, completion rates; and
(5) average student financial assistance awarded to groups,
including Federal, State, and other assistance.
(C) REPORT TO CONGRESS.The Secretary of Education shall
report relevant data and conclusions from the survey to Congress
on an annual basis, including comparisons of important factors for
at-risk and other relevant populations.
(d) DEVELOPMENT OF PLAN.In the event of significant find-
ings related to underparticipation rates of at-risk and other stu-
dents, the Secretary of Education shall submit a plan containing
policies and program modifications for ensuring the participation of
at-risk students. The plan shall indicate the modifications the Sec-
retary will make to increase participation, including, but not lim-
ited to, increasing information and training, and recommending
other relevant changes to the programs under this title.
(e) PANEL SURVEY ON INCOME DYNAMICS.
(1) IN GENERAL.The Secretary of Education, acting
through the National Center for Education Statistics, shall
make an interagency agreement with the National Science
Foundation to provide for additional questions and an appro-
priate sample size as part of an existing panel study of income
dynamics to provide information on the educational processes
and other developmental behavior of Hispanic, black, and non-
Hispanic white children and their short-term and long-term
consequences.
(2) AUTHORIZATION OF APPROPRIATIONS.There are author-
ized to be appropriated $900,000 for fiscal year 1993 and such
sums for each of the 4 succeeding fiscal years to carry out this
subsection.
(20 U.S.C. 1221e-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1406, 106
Stat. 818.
SEC. 1407. EVALUATION OF TUITION GUARANTY PROGRAMS.
(a) PURPOSE.The purposes of this section are
(1) to require the Secretary of Education to determine the
effectiveness of programs for disadvantaged elementary and
secondary school students that offer guarantees for postsecond-
ary education; and
(2) to identify ways to encourage the business community
to participate in such programs.
(b) CONDUCT OF STUDY.
Sec. 1408
HIGHER EDUCATION AMENDMENTS OF 1992
598
(1) IN GENERALThe Secretary of Education shall evalu-
ate the effectiveness of programs for disadvantaged children
that, in exchange for the child's commitment to achieving a
satisfactory elementarY and secondary education, promise the
child the financial resources needed to pursue a postsecondary
education.
(2) CONTENT.The Secretary of Education shall study a
sample of the types of programs available, and (A) determine
the success or failure of such programs in increasing the access
and entry of disadvantaged students into postsecondary edu-
cation, (B) identify the most successful programs and the
causes for success, and (C) determine the responsibilities of
sponsors of the programs.
(3) PROGRAMS STUDIED.The programs studied shall in-
clude a guarantee of postsecondary education for students cur-
rently in elementary or secondary grade levels. The programs
may include supportive services, meatoring, study skills, and
counseling to students participating in the program.
(c) DISSEMINATION.The Secretary of Education shall dissemi-
nate the findings through appropriate agencies and organizations
including associations of businesses.
(d) SUBMISSION OF REPORT.The Secretary of Education shall
submit an interim report regarding the study by June 30, 1996,
and a final report regarding the study by January 1, 1997, to the
Committee on Education and Labor of the House of Representa-
tives and the Committee on Labor and Human Resources of the
Senate.
(20 U.S.C. 1070a-21 note) Enacted July 23, 1992, P.L. 102-325, sec. 1407, 106
Stat. 819.
SEC. 1408. INFORMATION ON GRADUATE EDUCATION.
(a) ASSESSMENT REQUIRED.The Secretary of Education shall
conduct a study which will provide an assessment of the informa-
tion currently collected on graduate education and will identify
what additional information should be generated to guide the De-
partment of Education in defining and executing its role in the sup-
port of graduate education.
(b) SUBJECT OF ASSESSMENT.The assessment required by
subsection (a) shall include the assessment of the total amount of
Federal, State, private, foundation, and institutional fellowships,
assistantships, loans, or any other forms of financial assistance to
all graduate students, including both American and foreign stu-
dents; and how these amounts are distributed by race, by sex, to
nontraditional students, and to students with disabilities. In addi-
tion, the assessment shall determine the number of graduate stu-
dents, cross-referenced by race, sex, and national origin, part-time,
full-time, independent versus dependent status, and individuals
with disabilities who enrolled and completed all requirements for
the degrees master of arts, master of science, master in business
administtation, doctor of philosophy, doctor of education, juris doc-
tor, medical doctor, doctor in veterinary medicine, and doctor of
dental science.
(c) CONSULTATION.In conducting such study, the Secretary of
Education shall consult with other agencies and organizations in-
6 1) 8
599
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1410
volved in graduate education policy, including the Congressional
Office of Technology Assessment, the President's Office of Science
and Technology Policy, the National Science Foundation and the
other Federal agencies supporting academic research and graduate
education, the National A.cademy of Sciences and other public and
private organizations which participate in the formulation and im-
plementation of national graduate education policies and programs.
(d) DATE FOR COMPLETION.The study shall be completed
within 2 years of the date of enactment of this Act.
(20 U.S.C. 1134 note) Enacted July 23, 1992, P.L. 102-325, sec. 1408, 106 Stat.
820
SEC. 1409. STUDY OF ENVIRONMENTAL HAZARDS IN INSTITUTIONS OF
HIGHER EDUCATION.
(a) STUDY AUTHORIZED.The Secretary of Education, in co-
operation with the Administrator of the Environmental Protection
Agency, is authorized to conduct a study of the extent to which as-
bestos, lead in drinking water, or radon gas pose a threat to the
health and safety of students and employees of institutions of high-
er education.
(b) SURVEY REQUIRED.Such study shall include a survey of a
representative sample of institutions of higher education in order
to assess how widespread such hazards are. A sufficient number of
institutions shall be sampled and tested in order to provide reason-
able estimates on
(1) the number of institutions which contain friable asbes-
tos (as defined in the Asbestos Hazard Emergency Response
Act) and how many students and employees may be exposed to
unsafe levels of asbestos fibers,
(2) the number of institutions that have rooms which con-
tain more than 4 picocuries/liter of radon, and
(3) the number of institutions which contain water foun-
tains or faucets or water coolers which discharge water with
more than 10 parts per billion of lead.
(c) CONSULTATION.In designing and carrying out such study,
the Secretary shall consult with associations representing institu-
tions of higher education, faculty, and other employees.
(d) REPORT ON STUDY,The Secretary of Education shall sub-
mit a report with the results of the assessment, incl iding the infor-
mation required by subsection (b), along with recommendations by
the Secretary regarding what actions, if any, Congress and the Ad-
ministration should take to ensure that environmental health haz-
ards, if any, are eliminated. The report shall be presented to Con-
gress not later than July 1, 1995.
(e) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $3,000,000 in fiscal year 1994 for the purposes
of carrying out this section.
(20 U.S.C. 1132a note) Enacted July 23, 1992, P.L. 102-325, sec. 1409, 106 Stat.
821.
SEC. 1410. STUDY OF CIVILIAN AVIATION TRAINING PROGRAMS.
(a) FINDINGS.The Congress fmds that--
(1) the role of the military as a source of supply of trained
pilots and mechanics and other personnel for commercial avia-
tion is severely reduced;
77-530 0-94-20
9
Sec. 1411
HIGHER EDUCATION AMENDMENTS OF 1992
600
(2) approximately 50 percent of the 52,000 commercial pi-
lots currently flying will retire by the year 2000 and an addi-
tional 8,000 to 10;30giRilots will be needed by then;
(3) there is
cant underrepresentation of minorities
.
.
and women currently working in the aviation industry and Af-
rican Americans constitute less than 1 percent of pilots with
the Nation's scheduled air carriers;
(4) there is a substantial projected increase of minorities
and women as a proportion of the workforce by the year 2000;
and (5) there is need for a comprehensive study of future
human resources needs for the air transportation industry, in-
cluding a thorough investigation of recruitment, aviation train-
ing outside the military context, financial and other incentives
and disincentives which affect the flow of people, and espe-
cially minorities and women, into the industry.
(b) STUDY REQUIRED.The Secretary of Education shall enter
into appropriate arrangements with the National Academy of
Sciences Commission on Behavioral and Social Sciences and Edu-
cation to study civilian aviation training programs needed to sat-
isfy the workforce requirements of the commercial aviation indus-
try in the year 2000 and beyond. The specific concerns to be ad-
dressed by the study shall include
(1) the avenues for civilians to enter the aviation industry,
(2) the characteristics of current training and the match
with skill requirements in the workplace, and
(3) the impediments and incentives for minorities and
women to enter the aviation industry (such as a lack of role
models, cost of schooling and ffight time, the underutilization
of historically black colleges and universities in the educational
training process, and institutional barriers).
(c) INTERIM REPORT.The Secretary of Education shall request
that the National Academy of Sciences Commission on Behavioral
and Social Sciences and Education submit an interim report to the
Secretary and the Congress within 1 year after the date of enact-
ment of this Act, and the study shall be completed within 2 years
of the date of enactment of this Act.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1410, 106 Stat.
821.
SEC. 1411. REPORT ON THE USE OF PELL GRANTS BY PRISONERS.
(a) REPORT REQUIRED.The Secretary of Education shall sub-
mit to the Congress a report on the use of Pell Grants by prisoners.
Such report shall contain a statement of
(1) the number of prisoners receiving Pell Grants;
(2) the average amount of the Pell Grants awarded to pris-
oners;(3) the average length of Pell Grant subsidized study for
prisoners;
(4) the graduation or success rate of prisoners receiving
Pell Grants;
(5) an analysis of whether prisoners' lack of income has
made them more successful in obtaining Pell Grants over other
low-income citizens who are not incarcerated;
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HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1412
(6) an analysis of whether prisoners lack of income pro-
vides them with an advantage in receiving Pen Grants; and
(7) the Secretary's recommendations for making the pro-
gram more equitable with regard to awards to prisoners in re-
lation to other applicants.
(b) DEADLINE FOR SUBMISSION.The report required by sub-
section (a) shall be submitted not later than 6 months after the
date of enactment of this Act.
Enacted July 23, 1992, P.L. 102-325, sec. 1411, 406 Stat. 821.
SEC. 1412. NATIONAL JOB BANK FOR TEACHER RECRUITMENT.
(a) FEASIBILITY STUDY.The Secretary of Education is author-
ized to conduct a study on the feasibility of
(1) establishing a clearinghouse to operate a national
teacher job bank; or
(2) establishing regional clearinghouses to operate regional
teacher job banks.
(b) NATIONAL TEACHER JOB BANK DEMONSTRATION.
(1) PROGRAM AUTHORIZED.The Secretary of Education is
authorized to contract with one or more State entities, non-
profit organizations, or institutions of higher education to es-
tablish a national or regional teacher job bank clearinghouse
which shall
(A)
assist local educational agencies and private
schools in locating qualified applicants for teaching-related
positions; and
(B) help individuals in locating teaching-related jobs
or the training necessary to enter the teaching profession
or the field of early childhood or preschool education.
(2) APPLICATION REQUIRED.Each entity desiring to enter
into a. contract with the Secretary of Education for the estab-
lishment of a teacher job bank clearinghouse shall submit an
application to the Secretary at such time, in such manner and
accompanied by such information as the Secretary may reason-
ably require. Each such application shall include
(A) a demonstration of the applicant's capacity to effi-
ciently and effectively handle a large volume of inquiries
from employers and potential employees;
(B) a demonstration of support from local educational
agencies and private schools and institutions of higher
education that are likely to use the services provided by
the teacher job bank clearinghouse; and
(C) a demonstration of ability to provide prospective
teachers with information, either directly or by contract
with another entity, regarding the certification and licen-
sure requirements of each State which is served by a clear-
inghouse and information regarding procedures for assist-
ing out-of-State teachers to meet State certification re-
quirements.
(3) PRIORITY.The Secretary shail give priority to applica-
tions submitted pursuant to paragraph (2) which
(A) demonstrate the ability to serve a region of the
United States and involve the cooperation of several State
6 1
Sec. 1421
HIGHER EDUCATION AMENDMENTS OF 1992
602
educational agencies and institutions of higher education;
Or
(B) demonstrate an ability to address shortages of
teachers, such as teachers from minority groups, special
education teachers, bilingual teachers, or individuals plan-
ning to teach in subject areas, geographical areas, or types
of schools with shortages.
(c) USE OF FuNns.Each entity, organization, or institution re-
ceiving funds under this section may use such funds to
(1) develop, in consultation with local education agencies
and other appropriate entities, standardized initial application
forms for teaching jobs and related positions, and standardized
forms and procedures for announcing available teaching posi-
tions;(2) coordinate and assist State and local teacher recruit-
ment efforts;
(3) publish and disseminate information about opportuni-
ties for teacher employment and teacher training;
(4) maintain a system for matching available teachers with
job openings for which they are qualified and for tracking the
supply of teachers and the demand for teachers among the
States;
(5) encourage the development of programs to recruit and
train minorities and individuals with disabilities to become
teachers;
(6) assist employers in checking the background of appli-
cants;(7) publieie the availability of scholarships, loans, and
other programs that assist individuals wishing to pursue a
teaching career;
(8) assist employers in the development of effective teacher
recruitment programs;
(9) assist in developing reciprocal agreements on teacher
certification among States; and
(10) conduct such other activities and services necessary to
carrying out the purposes of this section in accordance with the
provisions of this section.
(d) DEFINITION.For the purposes of this section, the term
"teacher" includes elementary and secondary school classroom
teachers, and preschool and early childhood education specialists.
(e) AUTHORIZATION.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 succeeding fiscal years to carry out this section.
(20 U.S.C. 1101 note) Enacted July 23, 1992, P.L. 102-325, sec. 1412, 106 Stat.
822.
PART B-NATIONAL COMMISSION ON
INDEPENDENT HIGHER EDUCATION
SEC. 1421. SHORT TITLE.
This part may be cited as the "National Independent Colleges
and Universities Discovery Act".
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603
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1422
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1421, 106 Stat.
824.
SEC. 1422. FINDINGS.
The Congress finds that
(1) the quality and scope of higher education in our Nation
is without argument the finest in the world, and a distinguish-
ing feature of our Nation's system of higher education is its
strong and diverse nonprofit independent sector;
(2) independent colleges and universities are as diverse as
the Nation itself and include traditional liberal arts institu-
tions, major research universities, church- and faith-related
colleges, colleges and universities primarily attended by mi-
norities, women's colleges, junior colleges, and schools of law,
medicine, engineering, business and other professions;
(3) the diversity of independent colleges and universities
offers students a choice in the type of educational experience
that will best serve such students interests, needs and aspira-
tions;
(4) independent colleges and universities enroll 21 percent
of all students in the United States, award 33 percent of all
bachelor's degrees in the United States, 42 percent of all such
master's degrees, 36 percent of all such doctoral degrees, and
59 percent of all such professional degrees;
(5) a majority of all undergraduate students attending
independent collwes and unive :sities receive some form of fi-
nancial assistance, and such independent colleges and univer-
sities provide such financial assistance from their own re-
sources;
(6) independent colleges and universities are deeply in-
volved in hundreds of partnerships with elementary and sec-
ondary schools, and such partnerships are largely funded by
such colleges and universities;
(7) independent colleges and universities have been an ex-
traordinary example of private-public partnerships, with such
colleges and universities operating in the public interest to pro-
vide a public good;
(8) less than 20 percent of the revenue of independent col-
leges and universities comes from governmental funds, most of
which is in the form of Federal and State financial aid;
(9) decreases in Federal and State support for student fi-
nancial aid programs has placed at risk the option of choosing
an independent college or university for an increasing number
of students;
(10) whereas at the turn of the twentieth century 80 per-
cent of the students enrolled in higher education in the United
States were enrolled in independent colleges and universities,
such percentage has now declined to 21 percent, and further
erosions place at risk the option of choosing an independent
college or university for students and parents; and
(11) the entire sector of independent colleges and univer-
sities and the important contributions such sector makes toour
Nation is at risk and deserves national policy attention.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1422, 106 Stat.
824.
6 ! 3
Sec. 1423
HIGHER EDUCATION AMENDMENTS OF 1992
604
SEC. 1423. PURPOSE.
It is the purpose of this part to establish a National Commis-
sion on Independent Higher Education.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1423, 106 Stat.
825.
SEC. 1424. NATIONAL COMMISSION ON INDEPENDENT HIGHER EDU-
CATION.
(a) ESTABLISHMENT.There is established as an independent
agency in the executive branch a commission to be known as the
National Commission on Independent Higher Education (hereafter
in this part referred to as the "Commission").
(b) MEMBERSHIP.
(1) COMPOSITION.The Commission shall be composed of 9
members, 3 of whom shall be appointed by the President, 2 of
whom shall be appointed by the Speaker of the House of Rep-
resentatives, 1 of whom shall be appointed by the Minority
Leader of the House of Representatives, 2 of whom shall be ap-
pointed by the Majority Leader of the Senate, and 1 of whom
shall be appointed by the Minority Leader of the Senate.
(2) EXPgRTISE REQUIREMENT.The members of the Com-
mission shall consist of individuals with expertise and experi-
ence in independent higher education, including expertise in
national tax policy, individuals with expertise in State higher
education finance, Individuals with expertise in Federal finan-
cial aid programs, individuals with expertise in issues of stu-
dent and faculty diversity, and individuals with expertise in
graduate education and research.
(3) DATE.The members of the Commission shall be ap-
pointed not later than 6 months after the date of enactment of
this Act.
(C) PERIOD OF APPOINTMENT; VACANCIES.Members of the
Commission shall be appointed for the life of the Commission. Any
vacancy in the Commission shall not affect its powers, but shall be
filled in the same manner as the original appointment.
(d) MEETINGS.The Commission shall meet at the call of the
Chairman.
(e) QUORUM.SiX of the members of the Commission shall con-
stitute a quorum, but a lesser number of members may hold hear-
ings.
(f) CHAIRPERSON.The Commission shall select a Chairperson
from among its members.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1424, 106 Stat.
825.
SEC. 1425. DUTIES OF THE COMMISSION.
The Commission shall
(1) develop a factual base for understanding the status of
independent colleges and universities, their contributions to
public priorities, and the effects of national higher education
policies on the independent nonprofit sector;
(2) review the issuance of Federal regulations regarding
independent colleges and universities, and suggest means by
which independent colleges and universities can be held ac-
6 4
605
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1427
countable for use of public resources without inappropriate in-
trusion into institutional autonomy; and
(3) address the relation between Federal and State policies
on independent colleges and universities, particularly with re-
spect to student access and choice, finance, institutional sub-
sidies, and institutional accountability.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1425, 106 Stat.
826.
SEC. 1426. REPORT AND RECOMMENDATIONS.
(a) INTERIM REPORT.The Commission shall submit an interim
report to the President and the Congress on the Commission's ac-
tivities and findings within 18 months of the date of enactment of
this Act.
(b) FINAL REPORT.
(1) IN GENERAL.The Commission shall submit a final re-
port to the President and the Congress on the Commission's
activities and fmdings within 3 years of the date of enactment
of this Act.
(2) RECOMMENDATION.The report described in paragraph
(1) shall contain a recommendation regarding the establish-
ment of a national policy on independent colleges and univer-
sities appropriate to meeting the Nation's higher educational
goals in the twenty-first century.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1426, 106 Stat.
826.
SEC. 1427. 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 purposes of this part.
(b) INFORMATION FROM FEDERAL AGENCIES.The Commission
may secure directly from any Federal department or agency such
information as the Commission considers necessary to carry out the
provisions of this part. Upon request of the Chairperson of the
Commission, the head of such department or agency shall furnish
such information to the Commission.
(c) GIFTs.The Commission may accept in the name of the
United States grants, gifts, and bequests of money for immediate
disbursement in furtherance of the functions of the Commission.
Such grants, gifts, and bequests, after acceptance by the Commis-
sion, shall be paid by the donor or representative of the donor to
the Treasurer of the United States, whose receipts shall be their
acquittance. The Treasurer of the United States shall enter such
grants, gifts, and bequest in a special account to the credit of the
Commission for the purposes specified.
(d) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $1,000,000 to carry out this part for fiscal year
1993 and each succeeding fiscal year. Amounts appropriated under
this subsection are authorized to remain available until expended,
or until the Commission is terminated, whichever occurs first.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1427, 106 Stat.
826.
6 1 5
Sec. 1428
HIGHER EDUCATION AMENDMENTS OF 1992
606
SEC. 1428. COMMISSION PERSONNEL MATTERS.
(a) TRAVEL EXPENSES.From amounts appropriated under sec-
tion 1427(d), the members of the Commission shall be allowed trav-
el expenses, including per diem in lieu of subsistence, at rates au-
thorized for employees of agencies under subchapter I of chapter 57
of title 5, United States Code, while away from their homes or reg-
ular places of business in the performance of services for the Com-
mission.
(b) DETAIL OF GOVERNMENT EMPLOYEES.Any Federal Govern-
ment employee may be detailed to the Commission without reim-
bursement, and such detail shall be without interruption or loss of
civil service status or privilege.
(e) 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 not more than
2 staff members to enable the Commission to perform its du-
ties. 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 not
more than 2 staff members without regard to the provisions of
chapter 51 and subchapter HI of chapter 53 of title 5, United
States Code, relating to classification of positions and General
Schedule pay rates, except that the rate of pay for the execu-
tive director and such staff may not exceed the rate payable for
level 15 of the General Schedule classified under section 5107
of such title.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1428, 106 Stat.
827.
SEC. 1429. TERMINATION OF THE COMMISSION.
The Commission shall terminate 3 years after the date of en-
actment of this Act.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1429, 106 Stat.
827.
PART C-NATIONAL COMMISSION ON THE
COST OF HIGHER EDUCATION
SEC. 1441. ESTABLISHMENT OF COMMISSION.
There is established a Commission to be known as the "Na-
tional Commission on the Cost of Higher Education" (hereafter in
this part referred to as the "Commission").
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1441, 106 Stat.
827.
SEC. 1442. MEMBERSHIP OF COMMISSION.
(a) APPOINTMENT.The Commission shall be composed of 12
members as follows:
(1) Four citizens of the United States appointed by the
President.
(2) Two Senators appointed by the Majority Leader of the
Senate, of which--
6 16
607
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1442
(A) one shall be a member of the Committee on Labor
and Human Resources Qf the Senate; and
(B) one shall be a member of the Committee on Appro-
priations of the Senate.
(3) Two Senators appointed by the Minority Leader of the
Senate, of which
(A) one shall be a member of the Committee on Labor
and Human Resources of the Senate; and
(B) one shall be a member of the Committee on Appro-
priations of the Senate.
(4) Two Members of the House of Representatives ap-
pointed by the Speaker of the House of Representatives, of
which
(A) one shall be a member of the Committee on Edu-
cation and Labor of the House of Representatives; and
(B) one shall be a member of the Committee on Appro-
priations of the House of Representatives.
(5) Two Members of the House of Representatives ap-
pointed by the Minority Leader of the House of Representa-
tives, of which
(A) one shall be a member of the Committee on Edu-
cation and Labor of the House of Representatives; and
(B) one shall be a member of the Committee on Appro-
priations of the House of Representatives.
(b) ADDITIONAL QUALIFICATIONS.
(1) PRESIDENTIAL APPOINTEES.An individual appointed
under subsection (a)(1) may not be an officer or an employee
of the Executive Branch.
(2) CITIZENS.Individuals who are not Members of the
Congress and are appointed under subsection (a)(1) shall be in-
divid.uals who
(A) have extensive knowledge of higher education and
its financing and who are leaders of the education commu-
nity, distinguished academics, State or local government
officials, students, parents of college students, members of
the business community, or other individuals with distinc-
tive qualifications or experience; and
(B) are not officers or employees of the United States.
(C) CHAIRPERSON AND VICE CHAIRPERSON.The members of the
Commission shall elect a Chairman and a Vice Chairperson. In the
absence of the Chairperson, the Vice Chairperson will assume the
duties of the Chairperson.
(d) QUORUM.A majority of the members of the Commission
shall constitute a quorum for the transaction of business.
(e) APPOINTMENTS.All appointments under subsection (a)
shall be made within 3 months after the date of enactment of this
Act.
(f) VOTING.Each member of the Commission shall be entitled
to one vote, which shall be equal to the vote of every other member
of the Commission.
(g) VACANCIES.Any vacancy on the Commission shall not af-
fect its powers, but shall be filled in the manner in which the origi-
nal appointment was made.
6 17
Sec. 1443
HIGHER EDUCATION AMENDMENTS OF 1992
608
(h) PROHIBITION OF ADDITIONAL PAY.Members of the Com-
mission shall receive no additional pay, allowances, or benefits by
reason of their service on the Commission. Members appointed
from among private citizens of the United States may be allowed
travel expenses, including per diem, in lieu of subsistence, as au-
thorized by law for persons serving intermittently in the govern-
ment service to the extent funds are available for such expenses.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1442, 106 Stat.
827.
SEC. 1443. FUNCTIONS OF COMMISSION.
(a) SPECIFIC FINDINGS AND RECOMMENDATIONS.The Commis-
sion shall study and make findings and specific recommendations
regarding the following:
(1) The increase in tuition costs compared with other com-
modities and services as well as methods of reducing increased
tuition costs.
(2) Trends in college and university administrative costs as
well as other costs and means of reducing such increased costs.
(3) The development of a standardized annual report that
colleges and universities shall distribute which details the ad-
ministrative costs, instructional costs and capital costs of such
colleges and universities.
(4) The extent to which Federal, State and local regula-
tions contribute to increased tuition costs and the increase in
the cost of higher education.
(5) The establishment of a mechanism for a more timely
and widespread distribution of data on tuition trends and other
costs of operating colleges and universities.
(6) The extent to which the lack of student financial assist-
ance programs has contributed to increased tuition costs.
(7) Other related topics determined to be appropriate by
the Commission.
(b) FINAL REPORT.
(1) IN GENERALSubject to paragraph (2), the Commis-
sion shall submit to the President and to the Congress not
later than September 1, 1994, a report which shall contain a
detailed statement of the findings and conclusions of the Com-
mission, including the Commission's recommendations for ad-
ministrative and legislative action that the Commission consid-
ers advisable.
(2) MAJORITY VOTE REQUIRED FOR RECOMMENDATIONS.
Any recommendation described in paragraph (1) shall be made
by the Commission to the President and to the Congress only
if such recommendation is adopted by a majority vote of the
members of the Commission who are present and voting.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1443, 106 Stat.
829.
SEC. 1444. POWERS OF COMMISSION.
(a) HEARINGS.The Commission may, for the purpose of carry-
ing out this part, hold such hearings and sit and act at such times
and places, as the Commission may fmd advisable.
(b) RULES AND REGULATIONS.The Commission may adopt
such rules and regulations as may be necessary to establish the
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609
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1444
Commission's procedures and to govern the manner of the Commis-
sion's operations, or anization, and personnel.
(C) ASSISTANCE FROM FEDERAL AGENCIES.
(1) INFORMATION.The Commission may request from the
head of any Federal agency or instrumentality such informa-
tion as the Commission may require for the purpose of this
part. Each such agency or instrumentality shall, to the extent
permitted by law and subject to the exceptions set forth in sec-
tion 552 of title 5, United States Code (commonly referred to
as the Freedom of Information Act), furnish such information
to the Commission, upon request made by the Chairperson of
the Commission.
(2) FACILITIES AND SERVICES, PERSONNEL DETAIL AUTHOR-
IZED.Upon request of the Chairperson of the Commission, the
head of any Federal agency or instrumentality shall, to the ex-
tent possible and subject to the discretion of such head
(A) make any of the facilities and services of such
agency or instrumentality available to the Commission;
and
(B) detail any of the personnel of such agency or in-
strumentality to the Commission, on a nonreimbursable
basis, to assist the Commission in carrying out the Com-
mission's duties under this part, except that any expenses
of the Commission incurred under this subparagraph shall
be subject to the limitation on total expenses set forth in
section 1445(b).
(d) MAILS.The Commission may use the United States mails
in the same manner and under the same conditions as other Fed-
eral agencies.
(e) CONTRACTING.The Commission, to such extent and in
such amounts as are provided in appropriation Acts, may enter into
contracts with State agencies, private firms, institutions, and indi-
viduals for the purpose of conducting research or surveys necessary
to enable the Commission to discharge the Commission's duties
under this part, subject to the limitation on total expenses set forth
in section 1445(b).
(f) STAFF.Subject to such rules and regulations as may be
adopted by the Commission, the Chairperson of the Commission
(subject to the limitation on total expenses set forth in section
1445(b)) shall have the power to appoint, terminate, and fix the
compensation (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service,
and without regard to the provisions of chapter 51 and subchapter
III of chapter 53 of such title, or of any other provision, or of any
other provision of law, relating to the number, classification, and
General Schedule rates) of an Executive Director, and of such addi-
tional staff as the Chairperson deems advisable to assist the Com-
mission, at rates not to exceed a rate equal to the maximum rate
for level IV of the Executive Schedule under section 5332 of such
title.
(g) ADVISORY CommyrrEE.The Commission shall be consid-
ered an advisory committee within the meaning of the Federal Ad-
visory Committee Act (5 U.S.C. App.) and shall be independent
from the Executive Branch.
Sec. 1445
HIGHER EDUCATION AMENDMENTS OF 1992
610
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102,325, sec. 1444, 106 Stat.
829.
SEC. 1445. EXPENSES OF COMMISSION.
(a) IN GENERAL.Any expenses of the Commission shall be
paid from such funds as may be available to the Secretary of the
Treasury.
(b) LIMITATION.The total expenses of the Commission shall
not exceed $2,000,000.
(c) GAO AuDrr.Prior to the termination of the Commission
pursuant to section 1446, the Comptroller General of the United
States shall conduct an audit of the financial books and records of
the Commission to determine that the limitation on expenses has
been met, and shall include the Comptroller General's determina-
tion in an opinion to be included in the report of the Commission.
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1445, 106 Stat.
830.
SEC. 1446. TERMINATION OF COMMISSION.
The Commission shall cease to exist on the date that is 90
days after the date on which the Commission submits its final re-
port in accordance with section 1443(b).
(20 U.S.C. 1221-1 note) Enacted July 23, 1992, P.L. 102-325, sec. 1446, 106 Stat.
831.
TITLE XV-RELATED PROGRAMS AND
AMENDMENTS TO OTHER LAWS
PART A-NATIONAL CENTER FOR THE
WORKPLACE
SEC. 1511. PURPOSE; DESIGNATION.
It is the purpose of this part to address the problems created
by the simultaneous convergence of broad economic, social, cul-
tural, political, and technological changes in the workplace through
a national center administered by the Department of Labor that
will join together workplace experts from America's best institu-
tions of higher education with experts from the public and private
sectors to conduct research, share information, and propose rem-
edies.
(29 U.S.J. 2401) Enacted July 23, 1992, P.L. 102-325, sec. 1511, 106 Stat. 831.
SEC. 1512. ESTABLISHMENT.
(a) ESTABLISHMENT.
(1) IN GENERALThere is authorized to be established the
National Center for the Workplace (hereafter in this part re-
ferred to as the "Center") through competitive grant or contract
between the Secretary of Labor and an eligible recipient.
(2) MATCHING FUNDS.In order to receive the grant de-
scribed in paragraph (1) an eligible entity shall provid.e match-
ing funds from non-Federal sources equal to 25 percent of the
funds received pursuant to such grant.
(b) ELIGIBLE RECIPIENT.An eligible recipient shall be a con-
sortium of institutions of higher education in the United States.
6 .(2,
611
HIGHER EDUCATION AMENDMENTS OF 1992
See. 1513
The consortium shall represent a diversity of views on and an ex-
pertise in the field of employment policy, and shall be represented
and coordinated by a host institution of higher education that
meets all of the following criteria:
(1) Broad collective knowledge of and demonstrable experi-
ence in the wide range of employment and workplace issues.
(2) A faculty that, collectively, demonstrates a nonpartisan
research and policy perspective joining the several relevant
workplace disciplines (labor economics, industrial relations, col-
lective bargaining, human resource management, sociology,
psychology, and law) in a multidisciplinary approach to work-
place issues.
(3) Established credibility and working relationships with
employers, unions, and government agencies on a national
scale, and established means of providing education and tech-
nical assistance to each of the above groups that include publi-
cations, state-of-the-art electronic and video technology, and
distinguished extension/outreach programs operating on a na-
tional and international level.
(c) REPORT.The Center shall annually report to the Congress,
the Secretary of Education, and the Secretary of Labor on the ac-
tivities of the Center.
(29 U.S.C. 2402) Enacted July 23, 1992, P.L. 102-325, sec. 1512, 106 Stat. 831.
SEC. 1513. USE OF FUNDS.
(a) CENTER ACTIVMES.Payments made under this part may
be used to establish and operate the Center, to bring together
major independent researchers from the Center's member-institu-
tions focused on the most significant workplace problems with the
aim of analysis and synthesis of policy implications and dissemina-
tion of findings, and to support the following activities:
(1) The coordination and funding of research activities of
the Center's member-institutions for collaborative collection
and evaluation of data on changes and trends in the workplace
and in the labor force, on establishe,.1 and emerging public pol-
icy issues, on the economic and occupational structures, and on
work organizations and employment conditions.
(2) The analysis of the public policy implications of social
and demographic changes in the United States as they relate
to the workplace.
(3) The conduct of seminars for Federal and State policy-
makers on policy implications of the Center's findings. Such
seminars shall be held not more frequently than once each
year. In addition, the Center shall utilize electronic technology,
such as computer networks and video conferencing, to convey
the cumulative value of the Center's activities from year to
year and to foster continuous exchange of ideas and informa-
tion.
(4) The conduct of a National Conference on employment
policy not more frequently than once each year for the leaders
of business and organiziA labor in the United States designed
to convey the cumulative value of the Center's activities and to
foster an exchange of ideas and information.
6?1
Sec. 1514
HIGHER EDUCATION AMENDMENTS OF 1992
612
(5) The nonpartisan evaluation of the economic and social
implications of national and international workplace and em-
ployment issues.
(6) The provision of ready access to the Center's collective
expertise for policy officials in the Federal and State govern-
ments and representatives of private and public sector organi-
zations through meetings, publications, special reports, video
conferences, electronic mail and computer networks, and other
means to share up-to-date information on workplace and em-
ployment issues, practices, and innovations, the most promis-
ing options, and guidance in management of the change proc-
ess. (7) The development of programs, curricula, and instruc-
tional materials for colleges, universities, and other edu-
cational institutions designed to impart the knowledge and
skills required to promote innovations in the design of work
and employment conditions that enhance organizational per-
formance and meet worker needs.
(8) The development and administration of a national re-
pository of information on key workplace issues that can be
readily accessed by the public and private sector.
(b) FELLOWSHIPS.Grant funds awarded under this title may
also be used to provide graduate assistantships and fellowships at
the Center to encourage graduate study of the field of employment
policy and to encourage graduate research in areas that are seen
as critical to national competitiveness.
(29 U.S.C. 2401) Enacted July 23, 1992, P.L. 102-325, sec. 1511, 106 Stat. 831.
(29 U.S.C. 2403) Enacted July 23, 1992, P.L. 102-325, sec. 1513, 106 Stat. 832.
SEC. 1514. GIFTS AND DONATIONS.
The Center is authorized to receive money and other property
donated, bequeathed, or devised to the Center with or without a
condition of restriction, for the purpose of furthering the activities
of the Center. All funds or property given, devised, or bequeathed
shall be retained in a separate account, and an accounting of those
funds and property shall be included in the annual report submit-
ted pursuant to section 1512(c).
(29 U.S.C. 2404) Enacted July 23, 1992, P.L. 102-325, sec. 1511, 106 Stat. 833.
SEC. 1515. AUTHORIZATION.
(a) IN GENERAL.There are authorized to be appropriated
$2,500,000 for fiscal year 1993 and such sums as may be necessary
for each of the 4 succeeding fiscal years to carry out this part.
(b) AvAmABILrry.Funds appropriated pursuant to the author-
ity of subsection (a) shall remain available until expended.
(29 U.S.C. 2405) Enacted July 23, 1992, P.L. 102-325, sec. 1515, 106 Stat. 833.
PART B-NATIONAL CLEARINGHOUSE FOR
POSTSECONDARY EDUCATION MATERIALS
SEC. 1521. NATIONAL CLEARINGHOUSE FOR POSTSECONDARY EDU-
CATION MATERIALS.
(a) PURPOSE.The purpose of this section is to coordinate the
production and distribution of educational materials in an acces-
6 )2
613
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1621
Bible form, especially audio and digital text production, to college
and university based print-disabled populations.
(b) PROGRAM AUTHORITY.
(1) IN GENERAL.The Secretary of Education is authorized
to award a grant or contract to pay the Federal share of the
cost of establishing a National Clearinghouse for Postsecondary
Education Materials (hereafter in this part referred to as the
"Clearinghouse") to coordinate the production and distribution
of educational materials, in an accessible form, including audio
and digital, for students with disabilities.
(2) AwARD BASIS.The grant or contract awarded pursu-
ant to paragraph (1) shall be made on a competitive basis.
(3) DURATION.The grant or contract awarded under this
section shall be awarded for a period of 3 years.
(c) USE OF FUNDS.The grant or contract awarded under this
section shall be used to
(1) catalog in computer-readable form postsecondary edu-
cation materials;
(2) identif3r college campus-based services producing taped
texts whose technical and reader quality make them eligible
for inclusion in the Clearinghouse and share its quality control
standards with campus-based student support services offices
serving students with disabilities;
(3) promote data conversion and programming to allow the
electronic exchange of bibliographic information between exist-
ing on line systems;
(4) encourage outreach efforts that will educate print-dis-
abled individuals, as defined by section 652(d)(2) of the Individ-
uals With Disabilities Education Act, educators, schools, and
agencies about the Clearinghouse's activities;
(5) upgrade existing computer systems at the Clearing-
house;
(6) coordinate with identifiable and existing data bases
containing postsecondary education materials, including the
programs authorized under section 652(d) of the Individuals
With Disabilities Act; and
(7) develop and share national guidelines and standards
for the production of audio and digital text materials.
(d) FEDERAL SHARE LIMITATION.The Federal share under this
section may not be more than
(1) 80 percent of the total cost of the program in the first
year;
(2) 60 percent of the total cost of the program in the sec-
ond year; and
(3) 50 percent of the total cost of the program in the third
year.
(e) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated for the purpose of this section, $1,000,000 for
fiscal year 1993 and such sums as may be necessary for each of the
fiscal years 1994 and 1995.
(20 U.S.C. 1452, note) Enacted July 23, 1992, P.L. 102-325, sec. 1521, 106 Stat.
833.
693
See. 1531
HIGHER EDUCATION AMENDMENTS OF 1992
614
PART C-SCHOOL-BASED DECISIONMAKERS
SEC. 1531. TRAINING AND TECHNICAL ASSISTANCE FOR SCHOOL-
BASED DECISIONMAKERS DEMONSTRATION PROGRAM.
(a) IN GENERAL.The Secretary of Education is authorized to
make grants to local education agencies, in consortia with one or
more institutions of higher education, to establish programs to pro-
vide
training
and
technical
assistance
to
school-based
decisionmakers in local education agencies implementing system-
wide reform.
(b) APPLICATION.To be eligible to receive a training and tech-
nical assistance demonstration grant under this section, consortia
shall submit an application to the Secretary of Education in such
form and contaimng or accompanied by such information as the
Secretary may require. A copy of the application shall also be sent
to the State educational agency for notification purposes.
(c) AUTHORIZATION OF APPROPRIATIONS.There are authorized
to be appropriated $1,000,000 for fiscal year 1993 and such sums
as may be necessary for fiscal years 1994 and 1995.
(20 U.S.C. 1101, note) Enacted July 23, 1992, P.L. 102-325, sec. 1531, 106 Stat.
834.
PART D-GRANTS FOR SEXUAL OFFENSES
EDUCATION
SEC. 1541. GRANTS FOR CAMPUS SEXUAL Oki, ENSES EDUCATION.
(a) GRANTS AUTHORIZED.
(1) IN GENERAL.The Secretary of Education (hereafter in
this part referred to as the "Secretary") is authorized to make
grants to or enter into contracts with institutions of higher
education or consortia of such institutions to enable such insti-
tution to carry out sexual offenses education and prevention
programs under this section.
(2) AWARD BASIS.The Secretary shall award grants and
contracts under this section on a competitive basis.
(3) EQUITABLE PARTICIPATION.The Secretary shall make
every effort to ensure the equitable participation of private and
public institutions of higher education and to ensure the equi-
table geographic participation of such institutions in the activi-
ties assisted under this part.
(4) PRIORITY.In the award of grants and contracts under
this section, the Secretary shall give priority to institutions of
higher education or consortia of such institutions that show the
greatest need for the sums requested.
(b) GENERAL SEXUAL OFFENSES PREVENTION AND EDUCATION
GRANTS.Funds provided under this part may be used for the fol-
lowing purposes:
(1) To provide training for campus security and college per-
sonnel, including campus disciplinary or judicial boards, that
address the issues of sexual offenses.
(2) To develop, disseminate, or implement campus security
and student disciplinary policies to prevent and discipline sex-
ual offense crimes.
615
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1541
(3) To develop, enlarge, or strengthen support services pro-
grams including medical or psychological counseling to assist
victims' recovery from sexual offense crimes.
(4) To create, disseminate, or otherwise provide assistance
and information about victims' options on and off campus to
bring disciplinary or other legal action.
(5) To implement, operate, or improve sexual offense edu-
cation and prevention programs, including programs making
use of peer-to-peer education.
(C) MODEL GRANTS.Not less than 25 percent of the funds ap-
propriated for this section in any fiscal year shall be available for
grants or contracts for model demonstration programs which will
be coordinated with local rape crisis centers for the development
and implementation of quality rape prevention and education cur-
ricula and for local programs to provide services to student sexual
offense victims.
(d) ELIGIBILITY.No institution of higher education or consor-
tium of such institutions shell be eligible to be awarded a grant or
contract under this section unless
(1) its student code of conduct, or other written policy gov-
erning student behavior explicitly prohibits all forms of sexual
offenses;
(2) it has in effect and implements a written policy requir-
ing the disclosure to the victim of any sexual offense of the out-
come of any investigation by campus police or campus discipli-
nary proceedings brought pursuant to the victim's complaint
against the alleged perpetrator of the sexual offense, except
that nothing in this section shall be interpreted to authorize
disclosure to any person other than the victim; and
(3) the Secretary shall give priority to those applicants
who do not have an established campus education program re-
garding sexual offenses.
(e) APPLICATIONS.
(1) IN GENERAL.In order to be eligible to be awarded a
grant or contract under this section for any fiscal year, an in-
stitution of higher education or consortium of such institutions
shall submit an application to the Secretary at such time and
in such manner as the Secretary shall prescribe.
(2) CONTENTS.Each application submitted under para-
graph (1) shall
(A) set forth the activities and programs to be carried
out with funds granted under this part;
(B) contain an estimate of the cost for the establish-
ment and operation of such programs;
(C) explain how the program intends to address the
issue of sexual offenses;
(D) provide assurances that the Federal funds made
available under this section shall be used to supplement
and, to the extent practical, to increase the level of funds
that would, in the absence of such Federal funds, be made
available by the applicant for the purpose described in this
part, and in no case to supplant such funds; and
(E) include such other information and assurances as
the Secretary reasonably determines to be necessary.
6?5
Sec. 1643
HIGHER EDUCATION AMENDMENTS OF 1992
616
(f) GRANTEE REPORTING.Upon completion of the grant or con-
tract period under this section, the grantee institution or consor-
tium of such institutions shall file a performance report with the
Secretary explaining the activities carried out together with an as-
sessment of the effectiveness of those activities in achieving the
purposes of this section. The Secretary shall suspend funding for
an approved application if an applicant fails to submit an annual
performance report.
(g) DEFINITIONS.For purposes of this part, the term "sexual
offenses educational and prevention" includes programs that pro-
vide education seminars, peer-to-peer counseling, operation of h.ot-
lines, self-defense courses, the preparation of informational mate-
rials, and any other effort to increase campus awareness of the
facts about, or to help prevent, sexual offenses.
(h) GENERAL TERMS AND CONDITIONS.
(1) REGULATIONS.Not later than 90 days after the date
of enactment of this section, the Secretary shall publish pro-
posed regulations implementing this section. Not later than
150 days after such date, the Secretary shall publish final reg-
ulations implementing this section.
(2) REPORTS TO CONGRESS.Not later than 180 days after
the end of each fiscal year for which grants or contracts are
awarded under this section, the Secretary shall submit to the
committees of the House of Representatives and the Senate re-
sponsible for issues relating to higher education and to crime,
a report that includes
(A) the amount of grants or contracts awarded under
this section;
(B) a summary of the purposes for which those grants
or contracts were awarded and an evaluation of their
progress; and
(C) a copy of each grantee report filed pursuant to sub-
section (f) of this section.
(i) AUTHORIZATION OF APPROPRIATIONS.For the purpose of
carrying out this part, there are authorized to be appropriated
$10,000,000 for the fiscal year 1993 and such sums as may be nec-
essary for each of the 4 succeeding fiscal years.
(20 U.S.C. 1145h) Enacted July 23, 1992, P.L. 102-325, sec. 1541, 106 Stat. 834.
PART EOLYMPIC SCHOLARSHIPS
SEC. 1543. 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
6 ?.6
617
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1545
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 1993 and such sums
as may be necessary for each of the 4 succeeding fiscal years to
carry out this section.
(20 U.S.C. 1070, note) Enacted July 23, 1992, P.L. 102-325, sec. 1543, 106 Stat.
836.
PART F-NEED-BASED MD
SEC. 1544. AUTHORITY TO AWARD NEED-BASED AID.
(a) EFFECT ON PENDING CASES PROHIBITED.Nothing in this
section shall in any way be construed to affect any antitrust litiga-
tion pending on the date of enactment of this Act.
(b) IN GENERAL.Except as provided in subsections (a), (c),
and (e), institutions of higher education may
(1) voluntarily agree with any other institution of higher
education to award financial aid not awarded under the Higher
Education Act of 1965 to students attending those institutions
only on the basis of demonstrated financial need for such aid;
and (2) discuss and voluntarily adopt defined principles of pro-
fessional judgment for determining student financial need for
aid not awarded under the Higher Education Act of 1965.
(C) EXCEPTION.Institutions of higher education shall not dis-
cuss or agree with each other on the prospective financial aid
award to a specific common applicant for financial aid.
(d) RELATED MATrER.No inference ofunlawful contract, com-
bination, or conspiracy shall be drawn from the fact that institu-
tions of higher education engage in conduct authorized by this sec-
tion.
(e) SUNSET PROVISION.This section shall expire on September
30, 1994.
(20 U.S.C. 1088, note) Enacted July 23, 1992, Pl. 102-325, sec. 1544, 106 Stat.
837.
PART G-ADVANCED PLACEMENT FEE
PAYMENT PROGRAM
SEC. 1545. ADVANCED PLACEMENT FEE PAYMENT PROGRAM.
(a) PROGRAM ESTABLISHED.The Secretary of Education is au-
thorized to make grants to States to enable the States to reimburse
6 )7
Sec. 1545
HIGHER EDUCATION AMENDMENTS OF 1992
618
individuals to cover part or all of the cost of adyance 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 reccived 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.A8 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 INDIVIDUALThe 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, note) Enacted July 23, 1992, P.L. 102-325, sec. 1545, 106
Stat. 837.
PART H-AMENDMENTS TO OTHER LAWS
[Text as amended printed elsewhere in this and other vol-
umes of this compilation.]
? S
619
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1561
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.
Enacted July 23, 1992, P.L. 102-325, sec. 1561, 106 Stat. 841.
6?.9
LAND-GRANT COLLEGES
Act of July 2, 1862 (7 U.S.C. 301 et. seq.), Commonly Known
as the First Morrill Act
(As amended through December 31, 1991, P.L. 102-243)
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, That there be
granted to the several States, for the purposes hereinafter men-
tioned, an amount of public land, to be apportioned to each State
a quantity equal to thirty thousand acres for each senator and rep-
resentative in Congress to which the States are respectively enti-
tled by the apportionment under the census of eighteen hundred
and sixty: Provided, That no mineral lands shall be selected or pur-
chased under the provisions of this act.
(7 U.S.C. 301) Enacted July 2, 1862, ch. 130, sec. 1, 12 Stat. 503.
SEC. 2. And be it further enacted, That the land aforesaid, after
being surveyed, shall be apportioned to the several States in sec-
tions or subdivisions of sections, not less than one quarter of a sec-
tion; 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 In-
terior 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 distributive share:
said scrip to be sold by said States and the proceeds 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 location shall be made
before one year from the passage of this act.
(7 U.S.C. 303) Enacted July 2, 1862, ch. 130, sec. 2, 12 Stat. 503.
SEC. 3. And be it further enacted, That all the expenses of man-
agement, superintendence, and taxes from date of selection of said
lands, previous to their sales, and all expenses incurred in the
.630
620
021
FIRST MORRILL ACT
ac. 5
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 proceeds of the
sale of said lands shall be applied without any diminution what-
ever to the purposes hereinafter mentioned.
(7 U.S.C. 302) Enacted July 2, 1862, ch. 130, sec. 3, 12 Stat. 504.
SEC. 4. That all moneys derived from the sale of lands afore-
said by the States to which lands are apportioned and from the
sale of land scrip hereinbefore provided f'or shall be invested in
bonds of the Unit.ed 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 legisla-
tures, 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.
(7 U.S.C. 304) Enacted July 2, 1862, ch. 130, sec. 4, 12 Stat. 504; amended Mar.
3, 1883, ch. 102, 22 Stat. 484; amended Apr. 13, 1926, P.L. 113, 69th Cong., 44 Stat.
247.
SEC. 5. And be it further enacted, That the grant of land and
land scrip hereby authorized shall be made on the following condi-
tions, to which, as well as to the provisions hereinbefore contained,
the previous assent of the several States shall be signified by legis-
lative 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,
631
Sec. 7
FIRST MORRILL ACT
622
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, recordLng any improvements and experiments
made, with their cost and results, and such other matters, includ-
ing State industrial and economical statistics, as may be supposed
useful; one copy of which shall be transmitted by mail freel, 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.
(7 U.S.C. 305) Enacted July 2, 1862, ch. 130, sec. 5, 12 Stat. 504.
[Section 6; 7 U.S.C. 306 repealed by Ch. 14, § 1, December 16,
1930, 46 Stat. 1028]
SEC. 7. And be it further enacted, That the land officers shall
receive the same fees for locating land scrip issued under the provi-
sions of this act as is now allowed for the location of military boun-
ty land warrants under existing laws; Provided, their maximum
compensation shall not be thereby increased.
(7 U.S.C. 307) Enacted July 2, 1862, ch. 130, sec. 7, 12 Stat. 505.
SEC. 8. And be it further enacted, That the Governors 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.
(7 U.S.C. 308) Enacted July 2, 1862, ch. 130, sec. 8, 12 Stat. 505.
I There 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 mall of any free matter whatever be, and the same are hereby, repealed from and
after June thirtieth, eighteen hundred and seventy-three.
632
Act of August 30, 1890 (7 U.S.C. 321 et. seq.); Commonly
Known as the Second Morrill Act
(As amended through December 31, 1991, P.L. 102-243)
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, That there shall
be, and hereby is, annually appropriated, out of any money in the
Treasury not otherwise appropriated, arising from the sales of pub-
lic lands, to be paid as hereinafter provided, to each State and Ter-
ritory for the more complete endowment and maintenance of col-
leges for the benefit of agriculture and the mechanic arts now es-
tablished, or which may be hereafter established, in accordance
with an act of Congress approved July second, eighteen hundred
and sixty-two, the sum of fifteen thousand dollars for theyear end-
ing June thirtieth, eighteen hundred and ninety, and an annual in-
crease 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 fa-
cilities 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
623
6 33
Sec. 2
SECOND MORRILL ACT
624
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-
ment of the foregoing provisions shall be taken as a compliance
with the provision in reference to separate colleges for white and
colored students.
(7 U.S.C. 322, 323) Enacted August 30, 1890, ch. 841, sec. 1, 26 Stat. 417; amend-
ed March 4, 1907, P.L. 242, 69th Cong , 34 Stat. 1282; authority transferred with
the Office of Education to the Federal Security Agency July 1, 1939, 1939 Reorg.
Plan No. 1, secs. 201, 204, 4 F.R. 2728, 53 Stat. 1424; transferred to the Dept. of
H.E.W. April 11, 1953, 1953 Reorg. Plan No. 1, secs. 5, 8, 18 F.R. 2053, 67 Stat.
631; amended P.L. 97-98.
SEC. 2. 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 officer 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 en-
titled to receive the same, and such treasurers shall be required to
report to the Secretary of Agriculture and to the Secretary of the
Interior, on or before the first day of December of each year, a de-
tailed statement of the amount so received and of its disbursement.
The grants of moneys authorized by this act are made subject to
the legislative assent of the several States and Territories to the
purpose of said grants: Provided, That payments of such install-
ments 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 Secretary of the
Treasury.
(7 U.S.C. 324) Enacted August 30, 1890, ch. 841, sec. 2, 26 Stat. 418: amended
April 21, 1976, P.L. 94-273, sec. 9(1), 90 Stat. 378.
SEC. 3. That if any portion of the moneys received by the des-
ignated officer of the State or Territory for the further 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 appor-
tioned or paid to such State or Territory; and no portion 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 president of each of
said colleges shall be made to the Secretary of Agriculture, as well
as to the Secretary of the Interior, regarding the condition and
progress of each college, including statistical information in rela-
tion to its receipts and expenditures, its library, the number 'of its
students and professors, and also as to any improvements and ex-
periments made under the direction of any experiment stations at-
tached to said colleges, with their cost and results, and such other
1So in law.
6 :! 4
625
SECOND MORRILL ACT
Sec. 5
industrial and economical statistics as may be regarded as useful,
one copy of which shall be transmitted by mail free to all other col-
leges thrther endowed under this act.
(7 U.S.C. 325) Enacted August 30, 1890, ch. 841, sec. 3, 26 Stat. 418.
SEC. 4. That on or before the first day of October in each year,
after the passage of this act, the Secretary of the Interior shall as-
certain and certify to the Secretary of the Treasury as to each State
and Territory whether it is entitled to receive its share of the an-
nual appropriation for colleges, or of institutions for colored stu-
dents, under this act, and the amount which thereupon each is en-
titled, respectively, to receive. If the Secretary of the Interior shall
withhold a certificate from any State or Territory of its appropria-
tion the facts and reasons therefor shall be reported to the Presi-
dent, and the amount involved shall be kept separate in the Trees-
u.ry 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.'
(7 U.S.C. 321, 326) Enacted August 30, 1890, ch. 841, sec. 4, 26 Stat. 419, amend-
ed April 21, 1976, P.L. 94-273, sec. 3(1), 90 Stat. 376.
SEC. 6. Congress may at any time amend, suspend, or repeal
any or all of the provisions of this act.
(7 U.S.C. 328) Enacted August 30, 1890, ch. 841, sec. 6, 26 Stat. 419.
SEC. 52 There is appropriated annually, out of funds in the
Treasury not otherwise appropriated, for payment to the Common-
wealth of Puerto Rico, the Virgin Islands of the United States,
Guam, American Samoa, the Commonwealth of the Northern Mari-
ana Islands, and the Trust Territory of the Pacific Islands or its
successor governments the amount they would be entitled to re-
ceive 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.
(7 U.S.C. 326a) Enacted June 23, 1972, P.L. 92-318, sec. 506(c), 86 Stat. 350;
amended October 3, 1980, P.L. 96-374, sec. 1361(b), 94 Stat. 1502; amended Aug.
27, 1986, P.L. 99-396, sec. 9(b), 100 Stat. 840; amended June 17, 1988, P.L. 100-
339, sec. 2, 102 Stat. 621.
' Administration of the Second Morrill Act transferred to the Secretary of Agriculture by sec-
tion 1419 of the National Agricultural Research, ExtenBion, and Teaching Policy Act Amend.
ments of 1981 (7 U.S.C. 3101 note). See page 123 of thiB compilation.
2 This section 6 was first added at the end of the Act of August 30,1890 (Second, Morrill Act;
(therefore after section 6)) by section 606(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.
635
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 Amerka in Congress assembled,
SEC. 22. In order to provide for the more complete 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 provide 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.
(7 U.S.C. 329) Enacted June 29, 1935. P.L. 182, 74th Cong., sec. 22, 49 Stat. 439;
amended June 29, 1952, P.L. 390, 82nd Cong., secs. 1-4, 66 Stat. 135, amended July
6 3
626
627
Sec. 22
14, 1960, P.L. 86-668, sec. 1, 74 Stat. 525; amended June 23, 1972, P.L. 92-318,
sec. 506(d), 86 Stat. 350, 351; amended August 27, 1986, Pl. 99-396, sec. 9(d), 100
Stat. 840.
637
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, That this Act may
be cited as the "Harry S Truman Memorial Scholarship Act".
(20 U.S.C. 2001, note) Enacted January 4, 1975, P.L. 93-642, sec. 1, 88 Stat.
2276.
STATEMENTS OF FINDINGS
SEC. 2. 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.
(20 U.S.C. 2001) Enacted January 4, 1975, Public Law 93-642, sec. 2, 88 Stat.
2276.
DEFINITIONS
SEC. 3. 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 1201(a) of the Higher Education
Act of 1965;
(5) "State" means each of the several States, the District
of Columbia, the CommonwPalth 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.
6 8
4
628
629
TRUMAN MEMORIAL SCHOLARSHIP ACT
Sec. 6
(20 U.S.C. 2002) Enacted January 4, 1975, Public Law 93-642, sec. 3, 88 Stat
2276.
SEC. 4. The Harry S Truman Scholarship Program as author-
ized by this Act shall be the sole Federal memorial to President
Harry S Truman.
(20 U.S.C. 2003) Enacted January 4, 1975, Public Law 93-642, sec. 4, 88 Stat.
2277.
ESTABLISHMENT OF THE HARRY S TRUMAN SCHOLARSHIP PROGRAM
SEC. 5. (a) There is established, as an independent establish-
ment 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.
(20 U.S.C. 2004) Enacted January 4, 1975, Public Law 93-642, 88 Stat. 2277.
SCHOLARSHIPS
SEC. 6. (a) The Foundation is authorized to award scholarships
to persons who demonstrate outstanding potential 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
Gaa
SSC 7
TRUMAN MEMORIAL SCHOLARSHIP ACT
630
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.
(20 U.S.C. 2005) Enacted January 4. 1975, Public Law 93-642, 88 Stat. 2278.
SELECTION OF '.7:RUMAN 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) Enacted January 4, 1975, Public Law 93-642, sec. 7, 88 Stat.
2278.
STIPENDS
SEC. 8. Each student awarded a scholarship under this Act
shall receive a stipend which shall not exceed the cost to such stu-
dents for tuition, fees, books, room and board, or $10,000 (adjusted
annually to reflect increases, if any, in the Consumer Price Index
for All Urban Consumers, published by the Bureau of Labor Statis-
tics) whichever is less for each academic year of study.
(20 U.S.C. 2007) Enacted January 4, 1975, Public Law 93-642, sec. 8, 88 Stat.
2278; amended Nov. 22, 1985, P.L. 99-159, 99 Stat. 904.
SCHOLARSHIP CONDITIONS
SEC. 9. (a) A student awarded a scholarship under the provi-
sions of this Act shall continue to receive the payments provided
in this Act only during such periods as the Foundation 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 ca-
reer in public service and is not otherwise engaging in gainful em-
ployment other than employment approved by the Foundation pur-
suant 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).
(20 U.S.C. 2008) Enacted January 4, 1975, Public Law 93-642, sec. 9, 88 Stat.
2278.
<to
631
TRUMAN MEMORIAL SCHOLARSHIP ACT
Sec. 11
TRUMAN MEMORIAL SCHOLARSHIP FUND
SEC. 10. (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 appro-
priated 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-
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.
(20 U.S.C. 2009) Enacted January 4, 1975, Public Law 93-642, sec. 10, 88 Stat.
2279.
EXPENDITURES FROM THE FUND
SEC. 11. (a) The Secretary is authorized to pay to the Founda-
tion 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 Acpounting 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.
(20 U.S.C. 2010) Enacted January 4, 1975, Public Law 93-642, sec. 11, 88 Stat.
2279.
77-530 0-94-21
641.
Sec. 12
TRUMAN MEMORIAL SCHOLARSHIP ACT
632
EXECUTIVE SECRETARY
SEC. 12. (a) There shall be an Executive Secretary of the Foun-
dation who shall be appointed by the Board. The Executive Sec-
retary shall be the chief executive officer of the Foundation and
shall carry out the functions of the Foundation subject to the su-
pervision and direction of the Board. The Executive Secretary shall
carry out such other functions consistent with the provisions 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.
(20 U.S.0 2011) Enacted January 4, 1975, Public Law 93-642, sec. 12, 88 Stat.
2280.
ADMINISTRATIVE PROVISIONS
SEC. 13. (a) In order to carry out the provisions 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-
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 volurtary and
noncompensated 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 thereofmay, 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 of Columbia; and
(9) make other necessary expenditures.
612
633
TRUMAN MEMORIAL SCHOLARSHIP ACT
Sec. 14
(b) The Foundation shall submit to the President and to the
Congress an amival report of its operations under this Act.
(20 U.S.C. 2012) Enacted Jamuary 4, 1975, Public Law 93-642, sec. 14, 88 Stat.
2280.
APPROPRIATIONS AUTHORIZED
SEC. 14. There are authorized to be appropriated $30,000,000
to the fund.
(20 U.S.C. 2013) Enacted January 4, 1975, Public Law 93-642, sec. 14, 88 Stat.
2280.
643
'6
0
PART IINATIVE AMERICAN HIGHER EDUCATION
Navajo Community College Act'
(P.L. 92-189)
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That this Aact
may be cited as the "Navajo Community College Act".
(25 U.S.C. 640a, note) Enacted December 15, 1971, P.L. 92-189, sec. 1, 85 Stat.
646.
PURPOSE
SEC.
. ; ie the purpose of this Act to assist the Navajo Tribe
of IndianE in providing education to the members of the tribe and
other quslifief I applicants through a community college, established
by that tl
known as the Navajo Community College.
(25 U.S.C. 640a) Enacted December 16, 1971, P.L. 92-189, sec. 2, 85 Stat. 646.
GRANTS
SEC. 3. The Secretary of Interior is authorized to make grants
to the Navajo Tribe of Indians to assist the tribe in the construc-
tion, maintenance, and operation of the Navajo Community Col-
lege. Such college shall be designed and operated by the Navajo
Tribe to insure that the Navajo Indians and other qualified appli-
cants have educational opportunities which are suited to their
unique needs and interests.
(25 U.S.C. 640b) Enacted December 15, 1971, P.L. 92-189, sec. 3, 85 Stat. 646.
1Enacted Dec. 15, 1971, Pl. 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.
96-471, 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
"(1) 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 beet 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 (P.L. 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."
635
644
Sec. 4
NAVAJO COMMUNITY COLLEGE ACT
636
STUDY Cr. FACILITIES NEEDS
SEC. 4.1 (a) The Secretary shall conduct a detailed suriey and
study of the academic facilities needs of the Navajo Community
College, and shall report to the Congress not later than August 1,
1979, the results of such survey and study. Such report shall in-
clude 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 heelth
and safety division of the Bureau of Indian Affairs.
(25 U.S.C. 640c) Enacted December 16, 1971, P.L. 92-189, sec. 4, 85 Stat. 646;
amended October 17, 1978, P.L. 95-471, sec. 203(a), 92 Stat. 1330; amended October
30, 1990, P.L. 101-477, sec. 2(b), 104 Stat. 1153.
AUTHORIZATION OF APPROPRIATIONS
SEC. 5. (a)(1) For the purpose of making construction grants
under this Act, 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 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,
i n cluding--
(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,
Tine section was expressly precluded from authorizing appropriations for the fiscal year be-
gmning Oct 1, 1978 by sec. 203(b) of P.L. 96-471.
645
637
NAVAJO COMMUNITY COLLEGE ACT
Sec. 7
(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) No grant under this subsection shall exceed-
(A) $4,000 for each such full-time equivalent Indian stu-
dent in actual attendance at such college; or
(B) the total annual cost of the education program pro-
vided by such college,
whichever is less.
(3) 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-
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.
(25 U.S.C. 640c-1) Enacted October 17, 1978, P.L. 95-471, sec. 203(a), 92 Stat.
1330; amended October 3, 1980, P.L. 96-374, sec. 1351, 94 Stat 1501; amended Sep-
tember 30, 1986, P.L. 99-428, sec. 7, 100 Stat. 983; amended Apr. 28, 1988, P.L.
100-297, sec. 6401, 102 Stat. 414-415; amended October 30, 1990, P.L. 101-477,
sec. 2(a), 104 Stat. 1153; amended July 23, 1992, P.L. 102-325, sec. 1301(d), 106
Stat. 797.
EFFECT ON OTHER LAWS
SEC. 6. (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 fmancial as-
sistance under any program authorized under the Higher Edu-
cation Act of 1965 or any other applicable program for the benefit
of institutions of higher
education,
community
colleges,
or
postsecondary educational institutions.
(b) Notwithstanding any other provision of law, funds provided
under this Act to the NavEkjo 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.
(25 U.S.C. 640-2) Enacted Oct. 3, 1980, P.L. 96-374, sec. 1351(c), 94 Stat. 1501;
amended Apr. 28, 1988, P.L. 100-297, sec. 5403(b), 102 Stat. 416.
PAYMENTS; INTEREST
SEC. 7. (a) Notwithstanding any other provision of law, the
Secretary of the Interior shall not, in disbursing funds provided
1So in law. Probably ahould be "College".
6'4 6
Sec. 7
NAVAJO COMMUNITY COLLEGE ACT
638
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.
(bX1)(A) Notwithstanding any provision of law other than sub-
paragraph (B), any interest or investment income that accrues on
any fimds 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.
(25 U.S.C. 640c-3) Enacted Apr. 28, 1988, P.L. 100-297, sec. 5402(b), 102 Stat.
415-416.
Tribally Controlled Community College 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, That this Act may
be cited as the "Tribally Controlled Community College Assistance
Act of 1978".
(25 U.S.C. 1801 note) Enacted October 17, 1978, P.L. 95-471, sec. 1, 92 Stat.
1325.
DEFINITIONS
SEC. 2. (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 fer 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 community college" leans an insti-
tution of higher education which is formally coutrolled, 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 1201(a) 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 community college, determined in a manner consistent
with subsection (b) of this section on the basis of the quotient
of the sum of the credit hours of all Indian students so en-
rolled, divided by twelve; and
639
6 8
Sec. 101
TRIBALLY CONTROLLED ASSISTANCE
640
(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 successfiffly
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 community college 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 community college's system for providing credit
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.
(25 U.S.C. 1801) Enacted October 17, 1978, P.L. 95-471, sec. 1, 92 Stat. 1325;
amended December 1, 1983, P.L. 98-192, sec. 1, 97 Stat. 1335; amended September
30, 1986, P.L. 99-428, sec. 3, 100 Stat. 982.
TITLE ITRIBALLY CONTROLLED COMMUNITY COLLEGES
PURPOSE
SEC. 101. It is the purpose of this title to provide grants for
the operation and improvement of tribally controlled community
colleges to insure continued and expanded educational opportuni-
ties for Indian students, and to allow for the improvement and ex-
pansion of the physical resou-ces of such institutions.
(25 U.S.C. 1802) Enacted October 17, 1978, P.L. 95-471, title I, sec. 101, 92 Stat.
1325; amended December 1, 1983, P.L. 98-192, sec. 2, 97 Stat. 1336.
GRANTS AUTHORIZED
SEC. 102. (a) The Secretary shall, subject to appropriations,
make grants pursuant to this title to tribally controlled community
colleges to aid in the postsecondary education of Indian students.
6,19
641
TRIBALLY CONTROLLED ASSISTANCE
Sec. 105
(b) Grants made pursuant to this title shall go into the general
operating funds of the institution to defray, at the determination
of the tribally controlled community college, expenditures for aca-
demic, educational, and administrative purposes and for the oper-
ation and maintenance of the college. Funds provided pursuant to
this title shall not be used in connection with religious worship or
sectarian instruction.
(25 U.S.C. 1803) Enacted October 17, 1978, P.L. 95-471, title I, sec. 102, 92 Stat.
1326; amended December 1, 1983, P.L. 98-192, sec. 3, 97 Stat. 1336.
ELIGIBLE GRANT RECIPIENTS
SEC. 103. To be eligible for assistance under this title, a trib-
ally controlled community college 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) ff in operation for more than one year, has students a
majority of whom are Indians.
(25 U.S.C. 1804) Enacted October 17, 1978, P.L. 95-471, title I, sec. 103, 92 Stat.
1326.
PLANNING GRANTS
SEC. 104. (a) The Secretary shall establish a program in ac-
cordance with this section to make grants to tribes and tribal enti-
ties (1) to conduct planning activities for the purpose of developing
proposals for the establishment of tribally controlled community
colleges, or (2) to- determine the need and potential for the estab-
lishment of such colleges.
(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.
(25 U.S.C. 1804a) Enacted December 1, 1983, P.L. 98-192, sec. 4(a)(2), 97 Stat.
1336.
TECHNICAL ASSISTANCE CONTRACTS
SEC. 105. The Secretary shall provide, upon request from a
tribally controlled community college which is receiving funds
under section 108, technical assistance either directly or through
contract. In the awarding of contracts for technical assistance, pref-
erence shall be given to an organization designated by the tribally
controlled community college to be assisted. No authority to enter
into contracts provided by this section shall be effective except to
the extent authorized in advance by appropriations Acts.
5 0
Sec. 106
TRIBALLY CONTROLLED ASSISTANCE
642
(25 U.S.C. 1805) Enacted October 17, 1978, P.L. 95-471, title I, sec. 104, 92 Stat.
1326; amended December 1, 1983, P.L. 98-192, secs. 4, 5, 97 Stat. 1336.
ELIGIBILITY STUDIES
SEC. 106. (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 con-
ducting the eligibility studies required by this section. Such agree-
ment shall provide foi continuing technical assistance in the con-
duct 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 community college, 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.
(25 U.S.C. 1806) Enacted October 17, 1978, P.L. 95-471, title I, sec. 105, 92 Stat.
1326; amended October 17, 1979, P.L. 96-88, title III, sec. 301(a)(1), title V, sec.
507, 93 Stat. 677, 692; amended December 1, 1983, P.L. 98-192, sec. 3(b), 4(a)(I),
(b)(1), 6(a), 97 Stat. 1336, 1337.
GRANTS TO TRIBALLY CONTROLLED COMMUNITY COLLEGES
SEC. 107. (a) Grants shall be made under this title only in re-
sponse to applications by tribally controlled community colleges.
Such applications shall be submitted at such time, in such manner,
and will contain or be accompanied by such information as the Sec-
retary may reasonably require pursuant to regulations. Such appli-
cation shall include a description 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 un-
less a eligibility study has been conducted under section 106 and
it has been found that the applying community college will service
a reasonable student population.
(b) The Secretary shall consult with the Secretary of Education
to determine the reasonable number of students required to sup-
port a tribally controlled community college. 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.
.
:
651
643
TRIBALLY CONTROLLED ASSISTANCE
Sec. 108
(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.
(25 U.S.C. 1807) Enacted October 17, 1978, P.L. 95-471, title 1, sec. 106, 92 Stat.
1327; amended October 17, 1979, P.L. 96-88, title III, sec. 301(a)(1), title V, sec.
507, 93 Stat. 677, 692; amended December 21, 1982, P.L. 97-375, title I, sec. 108(c),
96 Stat. 1820; amended December 1, 1983, P.L. 98-192, secs. 3(b), 4(a)(1), (b)(2),
6(b), 97 Stat. 1336, 1337.
AMOUNT OF GRANTS
SEC. 108. (a) Except as provided in section 111, the Secretary
shall, subject to appropriations, grant for each academic year to
each tribally controlled community college having an application
approved by him an amount equal to the product of
(1) the Indian student count at such college during the
academic year preceding the academic year for which such
funds are being made available, as determined by the Sec-
retary in accordance with section 2(a)(7); and
(2) $5,820,
except that no grant shall exceed the total cost of the education
program provided by such college.
(bX1) 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
dnall 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.
(3XA) Notwithstanding any provision of law other than sub-
paragraph (B), any interest or investment income that accrues on
any fiirids provided under this title after such funds are paid to the
tribally controlled community college and before such funds are ex-
pended for the purpose for which such funds were provided under
this title shall be the property of the tribally controlled community
college and shall not be taken into account by any officer or em-
ployee of the Federal Government in determining whether to pro-
vide assistance, or the amount of assistance, to the tribally con-
trolled community college under any provision of Federal law.
(B) All interest or investment mcome described in subpara-
graph (A) shall be expended by the tribally controlled community
college by no later than the close of the fiscal year succeeding the
fiscal year in which such interest or investment income accrues.
(4) Funds provided under this title may only be invested by the
tribally controlled community college 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.
652
Sec. 109
TRIBALLY CONTROLLED ASSISTANCE
644
(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
community colleges.
(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.
(25 U.S.C. 1808) Enacted October 17, 1978, P.L. 95-471, title I, sec. 107, 92 Stat.
1327; amended December 21, 1982, P.L. 97-375, title I, sec. 108(c), 96 Stat. 1820,
amended December 1, 1983, P.L. 98-192, sec. 4(a)(1), 7, 97 Stat. 1336, 1337; amend-
ed September 30, 1986, P.L. 99-428, sec. 4, 100 Stat. 983; amended April 28, 1988,
P.L. 100-297, sec. 5402, 102 Stat. 415; amended Sep+ember 9, 1988, P.L. 100-427,
sec. 24, 102 Stat. 1613; amended October 30, 1990, P.L. 101-477, sec. 1(a), 104 Stat.
1152.
EFFECT ON OTHER PROGRAMS
SEC. 109. (a) Except as specifically provided in this title, eligi-
bility for assistance under this title shall not, by itself, preclude the
eligibility of any tribally controlled college to receive Federal finan-
cial assistance under any program authorized under the Higher
Education Act of 1965 or any other applicable program for the ben-
efit of institutions of higher education, community colleges, or post-
secondary educational institutions.
(b)(1) The amount of any grant for which tribally controlled
community colleges are eligible under section 108 shall not be al-
tered becausP of funds allocated to any such colleges from funds ap-
propriated Luder the Act of November 2, 1921 (42 Stat. 208; 25
U.S.C. 13).
(2) No tribally controlled community college shall be denied
funds appropriated under such Act of November 2, 1921 (42 Stat.
208; 25 U.S.C. 13).
(3) No tribally controlled community college 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.
(d)1 Notwithstanding any other provision of law, funds pro-
vided under this title to the tribally controlled community college
may be treated as non-Federal law which requires that non-Federal
or private funds of the college be used in a project or for a specific
purpose.
(25 U.S.C. 1809) Enacted October 17, 1978, P.L. 95-471, title I, sec. 108, 92 Stat.
1328; amended December 1, 1983, P.L. 98-192, sec. 4(a)(1), 8, 97 Stat, 1336, 1337;
amended September 30, 1986, P.L. 99-428, sec. 5, 100 Stat. 983; amended Apr. 28,
1988, P.L. 100-297, sec. 5403, 102 Stat. 416.
Sec. 109(d) should probably be a "(e)".
G 5 3
645
TRIBALLY CONTROLLED ASSISTANCE
Sec. 111
ARPROPRIATION AUTHORIZATION
SEC. 110. (a)(1) There is authorized to be appropriated, for the
purpose of carrying out section 105, $3,200,000 for fiscal year 1993
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, $30,000,000 for fiscal year 1993 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
1993 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 1993 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 Community Colleges being designated as its
own certifying agency.
(bX1) 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
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).
(25 U.S.C. 1810) Enacted October 17, 1978, P.L. 95-471, title I, sec. 109, 92 Stat.
1328; amended December 1, 1983, P.L. 98-192, sec. 4(a)(1), 9, 97 Stat. 1336, 1337;
amended September 30, 1986, P.L. 99-428, sec. 2(a), 100 Stat. 982; amended Octo-
ber 30, 1990, Pl. 101-477, sec. 1(b), 104 Stat. 1152; amended July 23, 1992, P.L.
102-325, sec. 1301(a), 106 Stat. 797.
GRANT ADJUSTMENTS
SEC. 111. (a)(1) If the sums appropriated for any fiscal year
pursuant to section 110(a)(2) for grants under section 107 are not
sufficient to pay in full the total amount which approved 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
654
Sec. 111
TRIBALLY CONTROLLED ASSISTANCE
646
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 (/) 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 com-
munity colleges under section 107 for such fiscal year by the sum
of the Indian student counts of such colleges 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 alloca-
tions 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
to receive under section 107 for such fiscal year shall be ratably re-
duced.(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.
655
647
TRIBALLY CONTROLLED ASSISTANCE
Sec. 112
(25 U.S.C. 1811) Enacted October 17, 1978, P.L. 95-471, title I, sec. 110, 92 Stat.
1328; amended December 1, 1983, P.L. 98-192, sec. 4(a)(1), 4(b)(3), 10, 97 Stat.
1336, 1338; amended October 30, 1990, P.L. 101-477, sec. 1(c), 104 Stat. 1152.
REPORT ON FACILITIES
SEC. 112. (a) The Secretary shall provide for the conduct of a
study of facilities available for use by tribally controlled community
colleges. Such study shall consider the condition of currently exist-
ing Bureau of Indian Affairs facilities which are vacant or
underutilized ahd shall consider available alternatives for renova-
tion, alteration, repair, and reconstruction of such facilities (includ-
ing renovation, alteration, repair, and reconstruction necessary to
bring such facilities into compliance with local building codes).
Such study shall also identify the need for new construction. A re-
port on the results of such study shall be submitted to the Con-
gress not later than eighteen months after the date of enactment
of the Tribally Controlled Community College Assistance Amend-
ments 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 under section 202(a)(2) of the Federal 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 pu..-mant to sub-
section (a) of this section.
(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 that receive fiinding 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 community colleges.
(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)).
(25 U.S.C. 1812) Enacted October 17, 1978, P.L. 95-471, title I, sec. 111, 92 Stat.
1328; amended December 1, 1983, P.L. 98-192, sec. 4(a)(1), 11, 97 Stat, 1336, 1339;
amended September 30, 1986, P.L. 99-428, sec. 6(b), 100 Stat. 983; amended Sep-
tember 25, 1990, P.L. 101-392, sec. 313, 104 Stat. 805.
65G
Sec. 113
TRIBALLY CONTROLLED ASSISTANCE
648
CONSTRUCTION OF NEW FACILITIES
SEC. 113. (a) With respect to any tribally controlled community
college for which the report of the Administrator of General Serv-
ices under section 112(a) of this Act identifies a need for new con-
struction, the Secretary shall, subject to appropriations and on the
basis of an application submitted in accordance with such require-
ments 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 community college
(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 1201(a) of the Higher Education Act of
1965 (20 U.S.C. I141(a)), except that such requirement may be
waived if the Secretary determines that there is a reasonable
expectation that such college will be fully accredited within
eighteen 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 community
college shall be required to expend more than $400,000 in fulfill-
ment of the remaining 20 per centum. For the purpose of providing
its required portion of the cost of such construction, a tribally con-
trolled community college may use funds provided under the Act of
November 2, 1921 (25 U.S.C. 13), popularly referred to as the Sny-
der Act.
(2) The Secretary may waive, in whole or in part, the require-
ments of paragraph (1) in the case of any tribally controlled com-
munity college which demonstrates that neither such college nor
the tribal government with which it is affiliated have sufficient re-
sources to comply with such requirements. The Secretary shall
base a decision on whether to grant such a waiver solely on the
basis of the following factors: (A) tribal population; (B) potential
student population; (C) the rate of unemployment among tribal
me mbers; (D) tribal financial resources; and (E) other factors al-
leged by the college to have a bearing on the availability of re-
sources for compliance with the requirements of paragraph (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,
657
649
TRIBALLY CONTROLLED ASSISTANCE
.
Sec. 114
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)).
(25 U.S.C. 1813) Enacted October 17, 1978, P.L. 95-471, title I, sec. 112, 92 Stat.
1329; amended December 1, 1983, P.L. 98-192, sec. 4(a)(1), 12, 97 Stat. 1336, 1340.
MISCELLANEOUS PROVISIONS
SEC. 114. (a) The Navajo Tribe shall not be eligible to partici-
pate 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).
(25 U.S.C. 1814) Enacted October 17, 1978, P.L. 95-471, title I, sec. 113, 92 Stat.
1329; amended December 1, 1983, sec. 4(a)(1), 97 Stat. 1336.
RULES AND REGULATIONS 1
SEC. 115. (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 ap-
propriate rules and regulations for the conduct of the grant pro-
gram 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.
tPublic Law 98-192 (97 Stat. 1343), which reauthorized and amended the Act, included the
following section:
"SEc. 16. In promulgating regulations to implement the amendments made by this Act, the
Secretary of the Interior shall consult with tribally controlled community colleges.".
698
Sec. 301
TRIBALLY CONTROLLED ASSISTANCE
650
(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.
(26 U.S.C. 1816) Enacted October 17, 1978, P.L. 96-471, title I, sec. 114, 92 Stat.
1329; amended December 1, 1983, P.L. 98-192, sec. 4(a)(1), 97 Stat. 1336.
TITLE IIITRIBALLY CONTROLLED COMMUNITY COLLEGE
ENDOWMENT PROGRAM
PURPOSE
SEC. 301. It is the purpose of this title to provide grants for
the encouragement of endowment funds for the operation and im-
provement of tribally controlled community colleges.
(25 U.S.C. 1831) Enacted December 1, 1983, P.L. 98-192, sec. 13, 97 Stat. 1341.
ESTABLISHMENT OF PROGRAM; PROGRAM AGREEMENTS
SEC. 302. (a) From the amount appropriated pursuant to sec-
tion 306, the Secretary shall establish a program of making endow-
ment grants to tribally controlled community colleges which are
current recipients of assistance under section 107 of this Act or
under section 3 of the Navajo Community College Act. No such col-
lege 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 shall be eligible for such a grant for a fiscal year if
such college has been awarded a grant under section 333 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 community ccllege shall be made unless such
college enters into an agreement with the Secretary which
(1) provides for the establishment and maintenance of a
trust fund at a federally insured banking or savings institu-
tion;(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 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 same banking or savings institution for the same
period or periods of time;
(4) provides that, if at any time such college withdraws
any capital contribution made by that college, 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;
6 5 9
651
TRIBALLY CONTROLLED ASSISTANCE
SOC. 305
(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, including a description of recordkeeping proce-
dures for the expenditure of accumulated interest which will
allow the Secretary to audit and monitor programs and activi-
ties conducted with such interest.
(25 U.S.C. 1832) Enacted December 1, 1983, P.L. 98-192, sec. 13, 97 Stat. 1341;
amended October 30, 1990, P.L. 101-477, sec. 1(d)(1)(A) and (B), 104 Stat. 1152.
USE OF FUNDS
SEC. 303. Interest deposited, pursuant to section 302(bX2XC),
in the trust fund of any tribally controlled community college may
be periodically withdrawn and used, at the discretion of such col-
lege, to defray any expenses associated with the operation of such
college, including expense of operations and maintenance, adminis-
tration, academic and support personnel, community and student
services programs, and technical assistance.
(25 U.S.C. 1833) Enacted December 1, 1983, P.L. 98-192, sec. 13, 97 Stat. 1342.
COMPLIANCE WITH MATCHING REQUIREMENT
SEC. 304. For the purpose of complying with the contribution
requirement of section 302(b)(2)(B), a tribally controlled community
college may use funds which are available from any private or trib-
al source. Any real or personal property received by a tribally con-
trolled community college as a d.onation or gift on or after the date
of the enactment of this sentence may, to the extent of its fair mar-
ket value as determined by the Secretary, be used by such college
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 other-
wise disposed of by such college, the proceeds therefrom shall be
deposited pursuant to section 302(b)(2)(B) but shall not again be
considered for Federal capital contribution purposes.
(25 U.S.C. 1834) Enacted December 1, 1983, P.L. 98-192, sec. 13, 97 Stat. 1342;
amended October 30, 1990, P.L. 101-477, sec. 1(d)(1)(C), 104 Stat. 1153.
ALLOCATION OF FUNDS
SEC. 305. (a) From the amount appropriated pursuant to sec-
tion 306, the Secretary shall allocate to each tribally controlled
community college which is eligible for an endowment grant under
this title an amount for a Federal capital contribution equal to
twice the value of the property or the amount which such college
demonstrates has been placed within the control of, or irrevocably
committed to the use of, the college and is available for deposit as
a capital contribution of that college in accordance with section
302(b)(2)(B), except that the maximum amount which may be so al-
located to any such college 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
669
Sec. 306
TRIBALLY CONTROLLED ASSISTANCE
652
community college an amount equal to twice the value of the prop-
erty or the amount demonstrated by such college pursuant to sub-
section (a), then the amount of the allocation to each such college
shall be ratably reduced.
(25 U.S.C. 1835) Enacted December 1, 1983, P.L. 98-192, sec. 13, 97 Stat. 1342;
amended October 30, 1990, P.L. 101-477, sec. 1(d)(1) (D) and (E), 104 Stat. 1153.
AUTHORIZATION OF APPROPRIATIONS
SEC. 306. (a) There are authorized to be appropriated to carry
out the provisions of this title, $10,000,000 for fiscal year 1993 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.
(25 U.S.C. 1836) Enacted December 1, 1983, P.L. 98-192, sec. 13, 97 Stat. 1343;
amended September 30, 1986, P.L. 99-428, sec. 2(b), 100 Stat. 982; amended Octo-
ber 30, 1990, P.L. 101-477, sec. 1(d)(1)(F), 104 Stat. 1153; amended July 23, 1992,
P.L. 102-325, sec. 1301(b), 106 Stat. 797.
TITLE IVTRIBAL ECONOMIC DEVELOPMENT
SEC. 401. SHORT TITLE.
This title may be cited as the "Tribal Economic Development
and Technology Related Education Assistance Act of 1990".
(25 U.S.C. 1801 note) Enacted September 25, 1990, P.L. 101-392 sec. 312, 104
Stat. 804.
SEC. 402. GRANTS AUTHORIZED.
(a) GENERAL AUTHORITY.The Secretary is authorized, subject to
the availability of appropriations, to make grants to tribally con-
trolled community colleges which receive grants under either this
Act or the Navajo Community College Act for the establishment
and support of tribal economic development and education insti-
tutes. 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.
(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 I
653
TRIBALLY CONTROLLED ASSISTANCE
Sec. 403
(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.
(25 U.S.C. 1851) Enacted September 25, 1990, sec. 312, P.L. 101-392, 104 Stat.
804.
SEC. 403. 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 nec-
essary for each of the 4 succeeding fiscal years.
(25 U.S.C. 1852) Enacted September 25, 1990, P.L. 101-392, sec. 316, 104 Stat.
804-805; amended July 23, 1992, P.L. 102-325, sec. 1301(c), 106 Stat. 797.
Higher Education Amendments of 1992
TITLE XIII-INDIAN HIGHER
EDUCATION PROGRAMS
PART A-TRIBALLY CONTROLLED COMMUNITY
COLLEGES
SEC. 1301. REAUTHORIZATION Oh' 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) ENDOWMENT 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. SHORT TITLE.
This part may be cited as the "Higher Education Tribal Grant
Authorization Act".
(25 U.S.C. 3301) Enacted July 23, 1992, P.L. 102-325, sec. 1311, 106 Stat. 798.
654
6 3
655
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1314
SEC. 1312. 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.
(25 U.S.C. 3302) Enacted July 23, 1992, P.L. 102-325, sec. 1312, 106 Stat. 798.
SEC. 1313. 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.
(25 U.S.C. 3303) Enacted July 23, 1992, P.L. 102-325, sec. 1313, 106 Stat. 798.
SEC. 1314. 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
6 6 4
Sec. 1314
HIGHER EDUCATION AMENDMENTS OF 1992
656
submitting to the Secretary a notice of intent to administer a stu-
dent assistance program under section 1313. Such notice shall be
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
V;5
657
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1315
(D) fails, in an evaluation cf its financial assistance
program conducted by an impartial third party entity, to
comply with standards under this part relating to (i) eligi-
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.
(25 U.S.C. 3304) Enacted July 23, 1992, P.L. 102-325, sec. 1314, 106 Stat. 799.
SEC. 1915. ALLOCATION OF GRANT FUNDS.
(a) ALLOCATION OF FUNDS.
(1) IN GENERAL.The 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) ADMINISTRATWE 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
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Sec. 1316
HIGHER EDUCATION AMENDMENTS OF 1992
658
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
(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).
(25 U.S.C. 3305) Enacted July 23, 1992, P.L. 102-325, sec. 1315, 106 Stat. 800.
SEC. 1316. 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 FuNns.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
sectirities 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.
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659
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1317
(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.
(25 U.S.C. 3306) Enacted July 23, 1992, P.L. 102-325, sec. 1316, 106 Stat. 801.
SEC. 1317. 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.Applieations 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
668
Sec. 1321
HIGHER EDUCATION AMENDMENTS OF 1992
660
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:
(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 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).
(25 U.S.C. 3307) Enacted July 23, 1992, P.L. 102-325, sec. 1317, 106 Stat. 802.
PART C-CRITICAL NEEDS FOR TRIBAL
DEVELOPMENT ACT
SEC. 1321. SHORT TITLE.
This part may be cited as the "Critical Needs for Tribal Devel-
opment Act".
(25 U.S.C. 3321) Enacted July 23, 1992, P.L. 102-325, sec. 1321, 106 Stat. 803.
SEC. 1922. DrEINITIONS.
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).
(25 U.S.C. 3322) Enacted July 23, 1992, P.L. 102-325, sec. 1322, 106 Stat. 803.
SEC. 1323. 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-
4
661
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1324
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.
(25 U.S.C. 3323) Enacted July 23, 1992, P.L. 102-325, sec. 1323, 106 Stat. 803.
SEC. 1324. 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 latef 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 SEW ..E 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.
670
Sec. 1325
HIGHER EDUCATION AMENDMENTS OF 1992
662
(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
(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)(2XA).
(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.
(25 U.S.C. 3324) Enacted July 23, 1992, P.L. 102-325, sec. 1324, 106 Stat. 803.
SEC. 1325. 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.
(25 U.S.C. 3325) Enacted July 23, 1992, P.L. 102-325, sec 1325, 106 Stat. 805.
6 7
663
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1342
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
4412) is amended
[Text as amended printed earlier in this volume.]
PART E-TRIBAL DEVELOPMENT STUDENT
ASSISTANCE REVOLVING LOAN PROGRAM
SEC. 1341. SHORT TITLE.
This part may be cited as the "Tribal Development Student As-
sistance Act".
(25 U.S.C. 3331) Enacted July 23, 1992, P.L. 102-325, sec. 1341, 106 Stat. 809.
SEC. 1342. 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;
77-00 0-94-22
672
Sec. 1343
HIGHER EDUCAIION AMENDMENTS OF 1992
664
(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.
(25 U.S.C. 3332) Enacted July 23, 1992, P.L. 102-325, sec. 1342, 106 Stat. 809.
SEC. 1343. 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)(2XB) 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 .lesponsible for establishing, by regulations, such require-
ments for receipt, investment and accounting of funds under
subsection (b) as shall safeguard and 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 secun-
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.
(25 U S.C. 3333) Enacted July 23, 1992, P.L. 102-325, sec. 1343, 106 Stat. 809.
SEC. 1344. 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-
673"
tiEST COPY AVAILABLE
665
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1346
ary education and who are eligible for readmission to a postsecond-
ary institution.
(25 U.S.C. 3334) Enacted July 23, 1992, P.L. 102-425, sec. 1344, 106 Stat. 810.
SEC. 1345. 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
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.
(25 U.S.C. 3335) Enacted July 23, 1992, P.L. 102-325, sec. 1345, 106 Stat. 810.
SEC. 1346. SERVICE FULFILLMENT AND CONDITIONS; REPAYMENTS;
WAIVERS.
(a) SERVICE AGREEMENT REQUIRED.
(1) IN GENERAL.Prior to receipt of a loan under this part,
tie 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 (1XB) 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;
6 4
Sec. 1347
HIGHER EDUCATION AMENDMENTS OF 1992
666
(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
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 (aX2XB) in the case of any
student who partially completes the service obligation of that stu-
dent under subserdon (a)(2)(A).
(e) CERTIFMATION 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.
(25 U.S.C. 3336) Enacted July 23, 1992, P.L. 102,325, sec. 1346, 106 Stat. 811.
SEC. 1347. 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
675
667
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1362
into account in reviewing applications under this part the number
of students with partial completion identified by the applicant, re--
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 Secystary witn 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 4 (d), (e), (i), and
(1), respectively, of the Indian Self Determination and Education
Assistance Act (P.L. 93-638, 20 U.S.C. 450b).
(25 U.S.C. 3337) Enacted July 23, 1992, P.L. 102-326, sec. 1347, 106 Stat. 812.
SEC. 1348. 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.
(25 U.S.C. 3338) Enacted July 23, 1992, P.L. 102-326, sec. 1348, 106 Stat. 812.
PART F-AMERICAN INDIAN POSTSECONDARY
ECONOMIC DEVELOPMENT SCHOLARSHIP
SEC. 1361. AMERICAN INDIAN POSTSECONDARY ECONOMIC DEVELOP.
MENT 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").
(25 U.S.C. 3361) Enacted July 23, 1992, P.L. 102-326, sec. 1361, 106 Stat. 813.
SEC. 1362. INDIAN SCHOLARSHIPS.
(a) SELECTION.Each Indian tribe receiving a grant pursuant
to this part for the purpose of providing scholarships shall select
676
Sec. 1363
HIGHER EDUCATION AMENDMENTS OF 1992
668
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.
(25 U.S.C. 3352) Enacted July 23, 1992, P.L. 102-325, sec. 1362, 106 Stat. 813.
SEC. 1363. 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;
(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 notif3r 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
677
669
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1364
(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 t3 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).
(f) COST OF ATrEND.ANCE.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.
(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.
(25 U.S.C. 3353) Enacted July 23, 1992, P.L. 102-325, sec. 1363, 106 Stat. 813.
SEC. 1364. 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.
6 8
Sec. 1365
HIGHER EDUCATION AMENDMENTS OF 1992
670
(25 U.S.C. 3354) Enacted July 23, 1992, P.L. 102-325, sec. 1364, 106 Stat. 815.
SEC. 1385. 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.
(25 U S.C. 3355) Enacted July 23, 1992, P.L. 102-325, sec. 1365, 106 Stat. 815.
PART G-AMERICAN INDIAN TEACHER
TRAINING
SEC. 1371. AMERICAN INDIAN TEACHER TRA1N/NG.
(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 1201(a) 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).
(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 thode 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 GENERAL.The 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 fmancial 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.
671
HIGHER EDUCATION AMENDMENTS OF 1992
Sec. 1371
(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).
(03) DEFINITION.FOT 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 1993 and such sums
as may be necessary for each of the 4 succeeding fiscal years to
carry out this part.
(25 U.S.C. 3371) Enacted July 23, 1992, P.L. 102-325, sec. 1371, 106 Stat. 815.
6 0
.1
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, That this Act may
be cited as the "National Science Foundation Act of 1950."
(42 U.S.C. 1861, note) Enacted May 10, 1950, ch. 171, sec. 1, 64 Stat. 149.
ESTABLISHMENT OF NATIONAL SCIENCE FOUNDATION
SEC. 2. There is hereby established in the executive branch of
the Governnient an independent agency to be known as the Na-
tional Science Foundation (hereinafter referred to as the "Founda-
tion"). The Foundation shall consist of a National Science Board
(hereinafter referred to as the "Board") and a Director.
(42 U.S.C. 1861) Enacted May 10, 1950, ch. 171, sec. 2, 64 Stat. 149.
FUNCTIONS OF THE FOUNDATION
SEC. 3. (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
673
W...1
Sec. 3
NATIONAL SCIENCE FOUNDATION
674
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
ed ucational 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(0, 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 sex-vices 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-
f";*2
675
NATIONAL SCIENCE FOUNDATION
Sec. 4
viduals, throughout the United States, and to avoid undue con-
centration of such research and education.
(f) 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 activ:Aies.
(g)1 In carrying out subsection (a)(4), the Foundation is au-
thorized 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.
(42 U.S.C. 1862) Enacted May 10, 1950, ch. 171, sec. 3, 64 Stat. 149; amended
July 11, 1958, P.L. 85-510, sec. 1, 72 Stat. 353; amended September 8, 1959, P.L.
86-232, sec. 1, 73 Stat. 467; amended July 8, 1968, P.L. 90-407, sec. 1, 82 Stat.
360, amended August 10, 1972, P.L. 92-372, sec. 8, 86 Stat. 528; amended October
13, 1972, P.L. 92-484, sec. 10(b), 86 Stat. 802; amended April 21, 1976, P.L. 94-
273, sec. 11(3), 90 Stat. 378; August 15, 1977, P.L. 95-99, sec. 14(a), 91 Stat. 835;
amended Nov. 22, 1985, P.L. 99-159, sec. 110 (a)(1)-(111, 99 Stat. 890-891; amend-
ed Aug. 21, 1986, P.L. 99-383, sec. 3(a), 100 Stat. 814, amended October 23, 1992,
P L 102-476, sec. 4, 106 Stat. 2299; amended November 4, 1992, P.L. 102-588, sec.
217, 106 Stat. 5117.
NATIONAL SCIENCE BOARD
SEC. 4. (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 mi-
nority groups. In addition to any powers and functions otherwise
granted to it by this Act, the Board shall establish 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
'Duplicate subsection (g) added by section 217 of Public Law 102-.588.
693
77-530 0-94 --23
Sec. 4
NATIONAL SCIENCE FOUNDATION
676
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
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 aet 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 appropriate rate provided for individuals in grade GS-
18 of the General Schedule under section 5332 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 requirements 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.
677
NATIONAL SCIENCE FOUNDATION
Sec. 5
(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.
(k)1 Members of the Board shall be required to file a fmancial
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.
(42 U.S.C. 1863) Enacted May 10, 1950, ch. 171, sec. 4, 64 Stat. 150; amended
September 8, 1959, P.L. 86-232, sec. 2, 73 Stat. 467; amended June 11, 1960, P.L.
86-507, sec. 1(36), 74 Stat. 202; amended July 18, 1968, P.L. 90-407, sec. 2, 82 Stat.
361; amended April 21, 1976, P.L. 94-273, sec. 11(3), 90 Stat. 378; amended May
11, 1976, P.L. 94-282, sec. 503, 90 Stat. 473; amended May 11, 1976, P.L. 94-471,
sec. 9, 90 Stat. 2057; August 15, 1977, P.L. 95-99, sec. 14(b), 91 Stat. 835; December
12, 1980, P.L. 96-516, sec. 21(a), 94 Stat. 3010; December 21, 1982, P.L. 97-375,
sec. 214, 96 Stat. 1826; amended Nov. 22, 1985, P.L. 99-159, sec. 109(a) and sec.
110(a)(12), 99 Stat. 899 and 890-891, amended Oct. 31, 1988, P.L. 100-570, sec. 105
and 108, 102 Stat. 2868 and 2869.
DIRECTOR OF THE FOUNDATION
SEC. 5. (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 ap-
pointed as Director, the President shall afford the Board an oppor-
tunity to make recommendations to him with respect to such ap-
pointment. The Director shall receive basic pay at the rate provided
for level II of the Executive Schedule under section 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
1So in law. Probably should have been designated as subsection "or.
6 5.
4
See. 6
NATIONAL SCIENCE FOUNDATION
678
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 the preceding sentence shall be effective only for such period
of time, not exceeding two years, as the Board may specify, and
shall be promptly published in the Federal Register and reported
to the Committees on Labor and Human Resources and Commerce,
Science, and Transportation of the Senate and the Committee on
Science and Technology of the House of Representatives. On Octo-
ber 1 of each odd-numbered year the Board shall submit to the
Congress a concise report which explains and justifies any actions
taken by the Board under this subsection to delegate its authority
or impose conditions within the preceding two years. The provi-
sions of this subsection shall cease to be effective at the end of fis-
cal year 1989.
(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.
(42 U.S.C. 1864) Enacted May 10, 1950, ch. 171, sec. 5, 64 Stat. 151; amended
September 8, 1959, P.L. 86-232, sec. 3, 73 Stat. 467; amended July 8, 1968, P.L.
90-407, sec. 3, 82 Stat. 362; amended Nov. 22, 1985, P.L. 99-159, sec. 109(b),
Stat. 889.
DEPUTY DIRECTOR AND ASSISTANT DIRECTORS
SEC. 6. There shall be a Deputy Director of the Foundation (re-
ferred to in this Act as the "Deputy Director") who shall be ap-
pointed by the President, by and with the advice and consent of the
Senate. Before any person is appointed as Deputy Director, the
President shall afford the Board and the Director an opportunity
to make recommendations to him with respect to such appoint-
ment. The Deputy Director shall receive basic pay at the rate pro-
vided for level III of the Executive Schedule under section 5314 of
title 5, United States Code, and shall perform such duties and exer-
cise such powers as the Director may prescribe. The Deputy Direc-
tor shall act for, and exercise the powers of, the Director during the
absence or disability of the Director or in the event of a vacancy
in the office of Director.
(42 U.S.C. 1864a) Enacted July 18, 1968, P.L. 90-407, sec. 4, 82 Stat. 363; amend-
ed Aug. 21, 1986, P.L. 99-383, sec. 7(bX1), 100 Stat. 814.
EXECUTIVE COMMITTEE
SEC. 7. (a) There shall be an Executive Committee of the Board
(referred to in this Act as the "Executive Committee"), which shall
6i1;
Si
679
NATIONAL SCIENCE FOUNDATION
Sec. 10
be composed of five members and shall exercise such powers and
functions as may be delegated to it by the Board. Four of the mem-
bers shall be elected as provided in subsection (b), and the Director
ex officio shall be the fifth member and the chairman of the Execu-
tive Committee.
(b) At each of its annual meetings the Board si,all 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 siuring 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.
(42 U.S.C. 1865) Enacted May 10, 1950, ch. 171, sec. 6, 64 Stat. 151; amended
September 8, 1959, P.L. 86-232, sec. 4, 73 Stat. 467; renumbered and amended July
18, 1968, P.L. 90-407, sec. 4, 5, 82 Stat. 363, 364.
DIVISIONS WITHIN THE FOUNDATION
SEC. 8. There shall be within the Foundation such Divisions as
the Director, in consultation with the Board, may from time to time
determine.
(42 U.S.C. 1866) Enacted May 10, 1950, ch. 171, sec. 7, 64 Stat. 152; renumbered
and amended July 18, 1968, P.L. 90-407, sec. 4, 6, 82 Stat. 363, 364.
SPECIAL COMMISSIONS
SEC. 9. (a) Each special commission established 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.
(42 U.S.C. 1868) Enacted May 10, 1950, ch. 171, sec. 9, 64 Stat. 152; amended
July 18, 1968, P.L. 90-407, sec. 7, 82 Stat. 364; amended Nov. 22, 1985, P.L. 99-
159, sec. 109(d), 99 Stat. 889.
SCHOLARSHIPS AND GRADUATE FELLOWSHIPS
SEC. 10. The Foundation is authorized to award scholarships
and graduate fellowships for study and research in the sciences or
in engineering at appropriate nonprofit American or nonprofit for-
eign institutions selected by the recipient of such aid, for stated pe-
riods of time. Persons shall be selected for such scholarships and
fellowships from among citizens, nationals or lawfully admitted
67
Sec. 11
NATIONAL SCIENCE FOUNDATION
680
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 fellowships, as the
case may be, are deemed by the Foundation to be possessed of sub-
stantially equal ability, and there are noi; sufficient scholarships or
fellowships, as the case may be, available to grant one to each of
such applicants, the available scholarship or scholarships, fellow-
ship or fellowships shall be awarded to the applicants in such man-
ner as will tend to result in a wide distribution of scholarships and
fellowships throughout the United States. Nothing contained in
this Act shall prohibit the Foundation from refusing 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.
(42 U.S.C. 1869) Enacted May 10, 1950, ch. 171, sec. 10, 64 Stat. 162; amended
September 8, 1959, P.L. 86-233, sec. 5, 73 Stat. 468; amended June 29, 1960, P.L.
86-550, 74 Stat. 256; amended October 16, 1962, P.L. 87-835, sec. 2, 76 Stat. 1070;
amended July 18, 1968, P.L. 90-407, sec. 8, 82 Stat. 364; amended Nov. 22, 1985,
P.L. 99-159, sec. 110(a) 13, 99 Stat. 891; amended Aug. 21, 1986, P.L. 99-385, sec.
7(c), 100 Stat. 814; amended November 16, 1990, PL. 101-589, sec. 302(c), 104 Stat.
2895.
GENERAL AUTHORITY OF FOUNDATION
SEC. 11. The Foundation shall have the authority, 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-
ministerffig 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,
real and personal property of all kinds necessary for, or result-
ing from, the exercise of authority granted by this Act;
GS8
411110
681
NATIONAL SCIENCE FOUNDATION
Sec. 13
(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.
(42 U.S.C. 1870) Enacted May 10, 1950, ch. 171, sec. 11, 64 Stat. 153; amended
September 8, 1959, P.L. 86-232, sec. 6, 73 Stat. 468; amended July 18, 1968, P L.
90-407, sec. 9, 82 Stat. 365; amended Nov. 22, 1985, P.L. 99-159, sec. 110(a)(14),
99 Stat. 891; amended Aug. 21, 1986, P.L. 99-383, sec. 7(d), 100 Stat. 814.
PATENT RIGHTS
SEC. 12. Each contract or other arrangement executed pursu-
ant to this Act which relates to scientific or engineering research
shall contain provisions governing the disposition of inventions pro-
duced thereunder in a manner calculated to protect the public in-
terest and the equities of the individual or organization with which
the contract or other arrangement is executed: Provided, however,
That nothing in this Act shall be construed to authorize the Foun-
dation to enter into any contractual or other arrangement incon-
sistent with any provision of law affecting the issuance or use of
patents.
(42 U.S.C. 1871) Enacted May 10, 1950, ch. 171, sec. 12, 64 Stat. 153; amended
Nov. 22, 1985, P.L. 99-159, secs. 109(c) and 110(a)(15), 99 Stat. 889 and 891.
INTERNATIONAL COOPERATION AND COORDINATION WITH FOREIGN
POLICY
SEC. 13. (a) The Foundation is hereby authorized to cooperate
in any international scientific or engineering activities consistent
Sec. 14
NATIONAL SCIENCE FOUNDATION
682
with the purposes of this Act and to expend for such international
scientific or engineering activities such sums within the limit of ap-
propriated funds as the Foundation may deem desirable. The Di-
rector may defray the expenses of representatives of Government
agencies and other organizations and of individual scientists or en-
gineers to accredited international scientific or engineering con-
gresses and meetings whenever he deems it necessary in the pro-
motion of the objectives of this Act. In this connection, with the ap-
proval of the Secretary of State, the Foundation may undertake
programs, granting fellowships to, or making other similar ar-
rangements 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(dX2) 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.
(42 U.S.C. 1872) Enacted May 10, 1950, ch. 171, sec. 13, 64 Stat. 154; amended
September 8, 1959, P.L. 86-232, sec. 7, 73 Stat. 468; amended July 18, 1968, P.L.
90-407, sec. 10, 82 Stat. 365; amended Nov. 22, 1985, P.L. 99-159, sec. 110(a)(16),
99 Stat 891.
MISCELLANEOUS PROVISIONS
SEC. 14. (a)(1) The Director shall, in accordance with such poli-
cies as the Board shall from time to time prescribe, appoint and fix
the compensation of such personnel as may be necessary to carry
out the provisions of this Act. Except as provided in section 4(h),
such appointments shall be made and stich compensation shall be
fixed in accordance with the provisions of title 5, United States
Code, governing appointments in the competitive service, and the
provisions of chapter 51 and subchapter III of chapter 53 of such
title relating to classification and General Schedule pay rates: Pro-
vided, 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 compensation, without re-
gard to such provisions, as he may deem necessary for the dis-
charge of the responsibilities of the Foundation under this Act. The
members of the special commissions shall be appointed without re-
gard to the provisions of title 5, United States Code, governing ap-
pointments 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
683
NATIONAL SCIENCE FOUNDATION
Sec. 14
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 se-
lection 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 title 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 F'ounda-
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 receive compensation for each day engaged in the
business of the Foundation at a rate fixed by the Chairman but not
exceeding the rate specified for the daily rate for GS-18 of the Gen-
eral Schedule under section 5332 of title 5, United States Code,
and shall be allowed travel expenses as authorized by section 5703
of title 5, United States Code.
(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 engineermg 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
691
Sec. 15
NATIONAL SCIENCE FOUNDATION
684
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
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 (aX6) 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.
(j) Starting with fiscal year 1990, the Foundation shall submit
to the Congress in each fiscal year, at the time of the release of
the President's budget, a three-year budget estimate for the Foun-
dation. The three-year budget shall include funding estimates for
each major activity, including each scientific directorate, the United
States Antarctic Program, the Science and Engineering Education
Directorate, and the Program Development and Management activ-
ity.
(42 U.S.C. 1873) Enacted May 10, 1950, ch. 171, sec. 14, 64 Stat. 154; renumbered
July 11, 1958, P.L. 85-510, sec. 2, 72 Stat. 353; amended September 8, 1959, P.L.
86-232, sec. 8, 73 Stat. 469; renumbered and amended July 18, 1968, P.L. 90-407,
sec 11(2). 12, 82 Stat. 365, 366; amended November 18, 1969, P.L. 91-120, sec. 3,
83 Stat.
()3; amended August 15, 1977, P.L. 95-99, sec. 14(c), 92 Stat. 835; amend-
ed Nov. 22, 1985, P.L. 99-159, secs. 109(e)(1) and 110(a)(18), 99 Stat. 889 and 891;
amended Oct. 31, 1988, P.L. 100-570, sec. 107, 102 Stat. 2869; amended November
16, 1990, P.L. 101-589, sec. 251, 104 Stat. 2894.
SECURITY PROVISIONS
SEC. 15. (a) The Foundation shall not support any research or
development activity in the field of nuclear energy, nor shall it ex-
ercise any authoriity pursuant to section 11(e) in respect to that
field, without first having obtained the concurrence of the Atomic
Energy Commission that such activity will not adversely affect the
common defense and security. To the extent that such activity in-
volves restricted data as defined in the Atomic Energy Act of 1954
the provisions of that Act regarding the control of the dissemina-
tion of restricted data and the security clearance of those individ-
uals to be given access to restricted data shall be applicable. Noth-
ing in this Act shall supersede or modify any provision of the Atom-
ic Energy Act of 1954.
(b)(1) In the (.4.1se of scientific or engineering research activities
under this Act in connectipp, with matters relating to the national
4
685
NATIONAL SCIENCE FOUNDATION
Sec. 16
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(f) 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, es-
tablished under paragraph (1) or (2) of this subsection.
(42 U.S.C. 1874) Enacted May 10, 1950, ch. 171, sec. 15, 64 Stat. 156; amended
April 5, 1952, ch. 159, sec. 1, 66 Stat. 43; renumbered July 11, 1958, P.L. 85-510,
sec. 2, 72 Stat. 353; amended October 16, 1962, P.L. 87-835, sec. 1, 76 Stat. 1069;
renumbered and amended July 18, 1968, P.L. 90-407, sec. 11(2), 13, 82 Stat. 365,
366; amended December 12, 1980, P.L. 96-516, sec. 21(b), 94 Stat. 3010; amended
Nov. 22, 1985, P.L. 99-159, secs. 109(e)(2) and 110(a)(19), 99 Stat. 890 and 891;
amended Oct. 31, 1988, P.L. 100-570, sec. 105(c), 102 Stat. 2868.
APPROPRIATIONS
SEC. 16. To enable the Foundation to carry out its powers and
duties, only such sums may be appropriated as the Congress may
authorize by law.
(42 U.S.C. 1875) Enacted May 10, 1950, ch. 171, sec. 16, 64 Stat. 156.
9 3
PART IVMAIREMATICS, SCIENCE AND ENGINEERING
(Public Law 101-589, November 16, 1990)
AN ACT To promote excellence in American mathematics, science and engineering
education; enhance the scientific and technical literacy of the American public;
stimulate the professional development of scientists and engineers; increase the
participation of women and minorities in careers in mathematics, science, and en-
gineermg; and for other purposes.
Be it enacted by the Senate and Haiise of Representatives of the
United States of America in Congress assembled,
SECTION' I. SHORT TITLE.
This Act may be cited as the "Excellence in Mathematics,
Science and Engineering Education Act of 1990".
(20 U.S.C. 5304 note) Enacted November 16, 1990, P.L. 101-589, 104 Stat. 2881.
SEC. 2. TABLE OF CONTKNTS.
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE IFINDINGS AND OBJECTIVES
Sec. 101. Findings and objectives.
TITLE IIMATHEMATICS, SCIENCE AND TECHNOLOGY IMPROVEMENTS
PART A-DWIGHT D. EISENHOWER MATHEMATICS AND SCIENCE EDUCATION
AMENDMENTS
Sec. 201. In-State apportionment.
Sec. 202. Elementary and secondary education programs.
Sec. 203. Higher education programs.
Sec. 204. National programs.
Sec. 205. Regional science and mathematics education consortiums.
Sec. 206. Federal administration.
PART B-INNOVATIVE TECHNOLOGIES
Sec. 221. Expanding the uses of innovative technologies for mathematics and
science instruction.
PART C-SCIENCE-TECHNOLOGY CENTERS
Sec. 231. Science-technology centers.
PART D-GRANTS TO EDUCATIONAL AGENCIES FOR SYSTEMIC REFORM OF
MATHEMATICS AND SCIENCE EDUCATION
Sec. 241. Systemic reform of mathematics and science.
PMCT E-TECHNICAL AMENDMENT
Sec. 251. Technical amendment.
Sec. 252. National Center for Education Statistics.
Sec. 253. Amendment ofJames Madison Memorial Fellowship Act.
TITLE HIHIGHER EDUCATION
PART A-GRADUATE FELLOWSHIPS AND TRAINEESHIPS
Sec. 301. Statement of purpose.
Sec. 302. Graduate fellowships.
687
q 4
Sec. 101
MATHEMATIC% SCIENCE AND ENGINEERING
688
Sec. 303. Graduate traineeships.
PART BCENTERS OF EXCELLENCE
Sec. 311. Centers of Excellence of Undergraduate Teaching.
TITLE IVWOMEN AND MINORITIES IN MATHEMATICS, SCIENCE AND
ENGINEERING
Sec. 401. Statement ofpurpose.
Sec.
Distinguished visiting professors.
Sec. 403. Faculty awards for women and minorities.
Sec. 404. Alliances for minority participation.
TITLE VEDUCATION COORDINATION AND DEPARTMENT OF ENERGY
PROGRAMS
Sec. 501. Science education report.
Sec. 502. General education report.
Sec. 503. Department .of Energy programs.
TITLE VISCIENCE SCHOLARSHIPS
PAR'T A--NATIONAL SCIENCE SCHOLARS PROGRAM
Sec. 601. Purpose; appropriations authorized.
Sec. 602. Scholarships authorized.
Sec. 603. Selection of scholars.
Sec. 604. Eligibility of scholars.
Sec. 605. Scholarship amount.
Sec. 606. Summer employment opportunities for scholars.
PART BROBERT NOYCE SCHOLARSHIPS
Sec. 611. Robert Noyce scholarships.
PART -,NATIONAL ACADEMY OF SCIENCE, SPACE, AND TECHNOLOGY
Sec. 621. National Academy of Science, Space, and Technology.
PART DADDITIONAL PROVISIONS
Sec. 631. Effect of certain controlled substance and felony convictions.
Sec. 632. Report.
TITLE VHGENERAL PROVISIONS AND AUTHORIZATION OF
APPROPRIATIONS
PART AAUTHORIZATION OF APPROPRLATIONS
Sec. 701. Authorization of appropriations.
PART BDEFINITIONS
Sec. 711. Definitions.
PART CMISCELLANEOUS PROVISIONS
Sec. 721. Student assistance general provisions.
Sec. 722. Public Law 81-874.
Sec. 723. Technical amendment.
PART DEFFECTWE DATE
Sec. 731. Effective date.
TITLE I FINDINGS AND OBJECTIVES
SEC. 101, FINDINGS AND OBJECTIVES.
(a) FINDINGS.The Congress finds that--
(1) science and mathematics are cornerstones of America's
efforts to compete in the global marketplace and improve our
standard of living and quality of life;
689
MATHEMATICS, SCIENCE AND ENGINEERING
Sec. 101
(2) international comparisons show American students are
consistently behind their foreign counterparts in mathematics
and science achievement;
(3) projections by the National Science Foundation esti-
mate a shortage of 675,000 scientists and engineers by the
year 2000;
(4)
women
and
minorities
are
significantly
underrepresented in the fields of mathematics, science and en-
gineering;
(5) the achievement of universal scientific and mathemati-
cal literacy by all Americans is an essential goal of all efforts
to strengthen American competitiveness;
(6) the achievement of scientific and mathematical literacy
requires a strong, coordinated effort to strengthen the teaching
of science and mathematics; and
(7) the Federal Government has a significant role in pro-
moting the study of mathematics and science, by providing fi-
nancial assistance to improve the general quality of programs
for the study of mathematics and science, by acting as a source
for information concerning successful projects and activities, by
encouraging talented men and women to pursue scientific ca-
reers and by strengthening the mathematics and science edu-
cational opportunities available to women and minorities.
(b) NATIONAL OBJECTIVES.The Congress declares that it shall
be a national objective to
(1) encourage American students to pursue careers in
mathematics, science and engineering;
(2) improve the quality of teaching in mathematics and
science made available to all Americans;
(3) have American students rank first in the world in
mathematics and science;
(4) substantially increase the number of graduates with
degrees in mathematics, science and engineering; and
(5) substantially increase the number of women and mi-
norities pursuing careers in mathematics, science and engi-
neering.
(20 U.S.C. 5301). Enacted November 16, 1990, P.L. 101-589, sec. 101, 104 Stat.
2882,
TITLE II-MATHEMATICS, SCIENCE AND
TECHNOLOGY IMPROVEMENTS
PART A-DWIGHT D. EISENHOWER MATHE-
MATICS AND SCIENCE EDUCATION AMEND-
MENTS
See Volume H for the Dwight D. Eisenhower Mathematics and
Science Education Act.
Sec. 221
MAMEMATICS, SCIENCE AND ENGINEERING
690
PART B-INNOVATWE TECHNOLOGIES
SEC. 221. EXPANDING THE USES OF INNOVATIVE TECHNOLOGIES
FOR MATHEMATICS AND SCIENCE INSTRUCTION.
(a) COMPUTER TECHNOLOGIES.
(1) PROGRAM AUTHORIZED.The Director shall establish
research programs on the use of computers and related tech-
nologies in basic mathematics, science, and technology instruc-
tion.(2) ELIGIBLE APPLICANTS.In carrying out the program
under this subsection, the Director shall establish a merit re-
view process to make awards on the basis of
(A) the potential of the proposal to improve the effec-
tiveness and productivity of, basic mathematics and science
education;
(B) the potential of the proposal to involve the class-
room teacher in the design of the program and to provide
teacher training for optimum effectiveness in the class-
room; and
(C) the capability of the entity developing the innova-
tive computer technology to provide broad and efficient dis-
semination of the technology to schools.
(3) USE OF AWARDS.Funds awarded under this subsection
may be used for
(A) research and development of curriculum;
(B) development of computer software; and
(C) research and development of other promising tech-
nologies for educational applications as specified by the Di-
rector.
(b) DISTANCE LEARNING.
(1) PROGRAM AUTHORIZED.The Director shall establish
programs to promote the use of interactive telecommunications
linkages to provide mathematics and science education in the
elementary and secondary classroom.
(2) ELIGIBLE APPLICANTS.In carrying out the program
under this subsection, the Director shall establish a merit re-
view process to make awards to partnefships which may in-
volve State educational agencies, local educational agencies,
public television agencies, institutions of higher education, and
other relevant entities, on the basis of
(A) the potential of the proposal to improve the deliv-
ery of quality mathematics and science instruction to un-
derserved rural and urban areas; and
(B) the potential of the proposal to provide teacher
training programs for optimum effectiveness in the class-
room.
(3) USE OF AWARDS.Funds awarded under this subsection
may be used for
(A) the research and development of software and
hardware technologies necessary to implement interstate
and intrastate interactive linkages with several school dis-
tricts;
6' 7
691
MATHEMATICS, SCIENCE AND ENGINEERING
Sec. 221
(B) research on two-wsy audio and video interactive
telecommunications and computer linkages designed to be
used in conjunction with each other;
(C) research and development of curriculum;
(D) teacher training in the use of technologies devel-
oped under this section; and
(E) other appropriate telecommunications research
projects that will improve mathematics and science edu-
cation in underserved areas.
(C) SPECIAL RULE.In carrying out the provisions of this sec-
tion, the Director shall
(1) pay particular attention to the needs of rural and
urban areas which are underserved in fields of mathematics
and science instruction or which have a high percentage of stu-
dents receiving services under chapter 1 of title I of the Ele-
mentary and Secondary Education Act of 1965;
(2) give special consideration to proposals to extend or
adapt for wider applications technologies, and associated edu-
cational materials, that the eligible applicant making the pro-
posal has demonstrated to be effective in limited applications;
(3) ensure coordination between the National Science
Foundation's programs for support of teacher training and pro-
grams developed under this section, with the objective of train-
ing teachers in the use of promising educational technologies;
and
(4) consult, cooperate and coordinate with analogous pro-
grams and policies of other Federal agencies.
(d) MATCHING REQUIREMENT.Aw ards shall be made under
this section only to eligible applicants that will contribute re-
sources, in cash or in kind, from non-Federal sources in an amount
equal to 25 percent of the Federal award.
(e) COORDINATION.The Director shall work with the Sec-
retary to encourage use of technologies and educational materials
developed under this section in Department of Education model
programs established under section 2012 of the Dwight D. Eisen-
hower Mathematics and Science Education Act for instruction and
training in the use of computers. In addition, the Director shall en-
sure that programs and activities developed under this section are
reported to the Clearinghouse established under section 2012 of
such Act for subsequent dissemination through the regional consor-
tia established under subpart 2 of such Act.
(f) PLANNING ACTIVITIES.The Office of Science and Tech-
nology Policy shall ensure that planning activities for education
and human resource development and for high performance com-
puting within the Federal Coordinating Council for Science, Engi-
neering, and Technology include consideration of the use of na-
tional computer networks for educational purposes, including dis-
tance learning and dissemination of curricular materials.
(20 U.S.C. 5311) Enacted November 16, 1990, P.L. 101-589, sec. 221, 104 Stat.
2891.
6 (4
1=0,
Sec. 231
MATHEMATICS, SCIENCE AND ouGINEERING
692
PART C-SCIENCE-TECHNOLOGY CENTERS
SEC. 231. SCIENCE-TECHNOLOGY CENTERS.
(a) IN GENERAL.
(1) AWARDS AUTHORIZED.The Director is authorized to
make awards to science-technology centers for
(A) development of more effective, hands-on, inter-
active mathematics, science and technology programs and
activities;
(B) replication or dissemination of effective programs
and activities, giving special attention to the needs of fe-
male and minority children and economically disadvan-
taged areas; and
(C) development of new science-technology centers, in-
cluding support for such centers to work with established
science-technology centers to acquire proven educational
programs.
(2) AWARD BASIS.Funds awarded pursuant to this section
shall be awarded on a competitive, merit review basis.
(3) CRITERIA.Criteria for making awards under para-
graph (1) may include
(A) the potential for the educational program to have
a significant impact on both formal and informal science
education;
(B) the capability of the recipient institution to dis-
seminate the material broadly;
(C) the extent of matching funds provided from non-
Federal sources;
(D) the experience and qualifications of the staff of the
recipient institution; and
(E) the overall excellence of the proposed program.
(b) SPECIAL CONSIDERATION.In making awards pursuant to
this section the Director shall give special consideration to pro-
grams designed primarily for elementary school-aged children.
(c) GEOGRAPHIC DISTRIBUTION.In making awards pursuant to
this section, the Director shall, to the extent practicable, ensure an
equitable geographic distribution of such awards.
(d) USE OF CLEARINGHOUSE.The Director shall report on such
programs and activities developed under this section to the Clear-
inghouse established under section 2012 of the Dwight D. Eisen-
hower Mathematics and Science Education Act for subsequent dis-
semination through the regional consortia established under sub-
part 2 of such Act.
(e) AUTHORIZED ACTIVITIES.Awards made under this section
may be used for
(1) scientific or technological exhibits developed for public
display, either in a science-technology center or sponsored by
a science-technology center but displayed in another facility;
(2) educational activities, such as curriculum development,
teacher training programs, and student educational kits, devel-
oped for use by teachers for students; and
(3) other formal or informal science educational programs
developed by science-technology centers.
(f) DEFINITIONS.As used in this section
693
MATHEiAAT1CS, SCIENCE AND ENGINEERING
Sec. 231
(1) the term "informal science education" means those as-
pects of science education that occur outside the school class-
room, usually voluntary, recreational, and interdisciplinary in
nature, that are not directed by a specific curriculum;
(2) the term "science" means all physical, biological, and
social sciences, mathematics, and engineering; and
(3) the term "science-technology center", which may in-
clude museums, planetariums, libraries and zoos, means a non-
profit institution open to the general public providing inter-
active exhibits, demonstrations, and informal science education
designed to
(A) further public understanding of science and tech-
nology; and
(B) illustrate how such science and technology inter-
acts with society.
Such institutions may also be involved in formal educational
activities.
(20 U.S.C. 5321) Enacted November 16, 1990, P.L. 101-589, sec. 231, 104 Stat.
2892.
PART D-GRANTS TO EDUCATIONAL AGENCIES
FOR SYSTEMIC REFORM OF MATHEMATICS
AND SCIENCE EDUCATION
SEC. 241. SYSTEMIC REFORM OF MATHEMATICS AND SCIENCE.
(a) IN GENERAL.The Director, in consultation with the Sec-
retary, is authorized to make awards to States or State educational
agencies for projects that implement system-wide improvement in
elementary or secondary school mathematics and science education.
(b) IMPROVEMENT COMPONENTS.Each project for which an
award is made pursuant to subsection (a) shall include the follow-
ing components:
(1) increased student achievement in mathematics and
science;
(2) improvements in organizational structure and decision-
m aking;
(3) modifications in the provision and allocation of re-
sources regarding mathematics and science instruction;
(4) improvement in the recruitment, retention and continu-
ing professional development of teachers and other educators
who instruct mathematics and science;
(5) improved mathematics and science curriculum content
and learning goals; and
(6) use of other Federal funds including funds provided for
the Dwight D. Eisenhower Mathematics and Science Education
Act.
(c) SPECIAL RULE.In making awards pursuant to subsection
(a), the Director shall
(1) to the extent practicable, ensure an equitable geo-
graphic distribution of such awards; and
(2) give priority to States or State educational agencies
whose improvement plans place a strong emphasis on increas-
7 0
Sec. 251
MATHEMATICS, SCIENCE AND ENGINEERING
694
ing the academic achievement of females and minority stu-
dents in mathematics and science.
(20 U.S.C. 5331) Enacted November 16, 1990, P.L. 101-589, sec. 241, 104 Stat.
2894.
PART E-TECHNICAL AMENDMENT
SEC. 251. TECHNICAL AMENDMENT.
[Amends section 14(f) of the National Science Foundation Act
of 1959.]
SEC. 252. NATIONAL CENTER FOR EDUCATION STATISTICS.
[Amends the General Education Provisions Act by adding a
new paragraph (4) to section 406(d).]
SEC. 253. AMENDMENT OF JAMES MADISON MEMORIAL FELLOWSHIP
ACT.
[Amends Section 813(a)(4) of the James Madison Memorial Fel-
lowship Act.]
TITLE III-HIGHER EDUCATION
PART A-GRADUATE FELLOWSHIPS AND
TRAINEESHIPS
SEC. 301. STATEMENT OF PURPOSE.
It is the purpose of this part to avert the substantial shortage
of American scientists and engineers projected to occur over the
next 15 years by significantly increasing the number of graduate
fellowships awarded by the National Science Foundation and to in-
stitute a program of graduate traineeships.
(20 U.S.C. 5341) Enacted November 16, 1990, P.L. 101-589, sec. 301, 104 Stat.
2895.
SEC. 302. GRADUATE FELLOWSHIPS.
(a) IN GENERAL.The Director is authorized to increase the
number of graduate fellowships awarded by the Foundation, so
that, in fiscal year 1993 and each fiscal year thereafter, at least
1200
,
fellowships are awarded annually.
(b) SPECIAL RULE.In awarding fellowships pursuant to sub-
section (a), the Director shall ensure that a substantially increasing
number of fellowships shall be awarded to women and minorities
in fiscal year 1991 and in each succeeding fiscal year through fiscal
year 2000.
(c) GRADUATE FELLOWSHIPS.--[Aniends section 10 of the Na-
tional Science Foundation Act of 1950.]
(20 U.S.C. 5342) Enacted November 16, 1990, P.L. 101-689, sec. 302, 104 Stat.
2895.
SEC. 303. GRADUATE TRAINEESHIPS.
(a) IN GENERAL.The Director is authorized to carry out a
competitive, merit-based program of making awards to institutions
of higher
education
to enable such
institutions
to
conduct
traineeship programs which encourage promising students, espe-
7
I.
695
MATHEMATICS, SCIENCE AND ENGINEERING
Sec. 311
cially women and minorities, to continue their education and re-
search in mathematics, science and engineering.
(b) SPECIAL RULE.In making awards pursuant to subsection
(a), the Director shall, to the extent practicable, ensure
(1) an equitable geographic distribution of such grants;
(2) that institutions of higher education receiving such
awards demonstrate experience in, and a commitment to, edu-
cating and graduating a significant number of women and mi-
nority students in mathematics, science and engineering; and
(3) that special consideration is given to institutions of
higher education that have demonstrated progress and an on-
going commitment to upgrading their capabilities to perform
high quality research, and are not among the institutions cur-
rently receiving a large number of students with National
Science Foundation graduate fellowships.
(20 U.S.C. 5343) E meted November 16, 1990, P.L. 101-589, sec. 303, 104 Stat.
2896.
PART B-CENTERS OF EXCELLENCE
SEC. 311. CENTERS OF EXCELLENCE OF UNDERGRADUATE TEACHING.
(a) ESTABLISHMENT.The Director shall establish a program of
making awards to encourage institutions of higher education to im-
prove, and to give greater attention to, undergraduate instruction
in science, mathematics and engineering. Awards under this sec-
tion shall be made on a competitive, merit review basis to faculty
with a record of excellence in teaching using the criteria described
in subsection (c). Awards under this section shall be for a 3-year
period, and the amount of each award shall be comparable to those
under the Presidential Young Investigator program.
(b) USE OF FuNDs.Awards made under this section shall be
used to improve the quality of undergraduate instruction at the re-
cipient institution. Awards made under this section may be used
for such purposes as
(1) development of innovative curriculum or teaching
methods, including interdisciplinary courses and courses for
nonscience majors;
(2) purchase of educational equipment for use by students
and faculty;
(3) support for research and professional activities related
to undergraduate education; and
(4) support of teaching fellows.
(c) CRITERIA.Awards under this section shall be made on the
basis of
(1) the commitment of the institution to improve under-
graduate education in science, mathematics and engineering
and to assign appropriate importance to undergrad.uate in-
struction in determining faculty compensation and as a cri-
terion for faculty promotion;
(2) the teaching ability and accomplishments of the faculty
member applying for the award, including evidence that the
applicant has remained current with research developments;
and
71 2
Sec. 401
MATHEMATICS, SCIENCE AND ENGINEERING
696
(3) the impact that the award will have on improving the
quality of undergraduate instruction.
(d) DESIGNATION.Institutions receiving grants under this sec-
tion shall be designated "Centers of Excellence for Undergraduate
Teaching".
(20 U.S.C. 5351) Enacted November 16, 1990, P.L. 101-589, sec. 311, 104 Stat.
2896.
TITLE IV WOMEN AND MINORITIES IN
MATHEMATICS, SCIENCE AND ENGI-
NEERING
SEC. 401. STATEMENT OF PURPOSE.
It is the purpose of this title to expand and enhance National
Science Foundation program activities that are specifically focused
on increasing the educational and professional participation of
women and minorities in the fields of mathematics, science and en-
gineering.
(20 U.S.C. 5361) Enacted November 16, 1990, P.L. 101-589, sec. 401, 104 Stat.
2897.
SEC. 402. DISTINGUISHED VISITING PROFESSORS.
The Director is authorized to make awards to institutions of
higher education to enable such institutions to support distin-
guished women and minority faculty members in mathematics,
science and engineering to enable such faculty members to serve as
"Distinguished Visiting Professors" at academic institutions that do
not have sufficient resources to attract and retain faculty members
of such professional stature on a permanent basis.
(20 U.S.C. 5362) Enacted November 16, 1990, P.L. 101-589, sec. 402, 104 Stat.
2897.
SEC. 403. FACULTY AWARDS FOR WOMEN AND MINORII MS.
The Director is authorized to make awards to institutions of
higher education, other than research universities, to enable such
institutions to recruit and retain women and minority faculty mem-
bers in the fields of mathematics, science and engineering, and to
obtain equipment and facilities necessary for the research activities
of such faculty members.
(20 U.S.C. 5363) Enacted November 16, 1990, P.L. 101-589, sec. 403, 104 Stat.
2897.
SEC. 404. ALLIANCES FOR MINORITY PARTICIPATION.
(a) IN GENERAL.The Director is authorized to make awards
to institutions of higher education to enable such institutions of
higher education to establish or maintain alliances, partnerships,
or other cooperative arrangements between institutions of higher
education with predominately minority enrollments and institu-
tions of higher education with high quality research programs in
mathematics, science or engineering.
(b) SPECIAL RULE.In making awards pursuant to this title,
the Director shall, to the extent practicable, ensure
(1) an equitable geographic distribution of such awards;
and
703
697
MATHEMATICS, SCIENCE AND ENGINEERING
Sec. 501
(2) that institutions of higher education receiving such
awards demonstrate experience in, and a commitment to, edu-
cating and graduating a significant number of women and mi-
nority students from programs in mathematics, science and en-
gineering.
(20 U.S.C. 5364) Enacted November 16, 1990, P.L. 101-589, sec. '404, 104 Stat.
2897.
TITLE V-EDUCATION COORDINATION
AND DEPARTMENT OF ENERGY PRO-
GRAMS
SEC. 501. SCIENCE EDUCATION REPORT.
(a) REPORT REQUIRED.The Director of the Office of Science
and Technology Policy, through the Federal Coordinating Council
on Science, Engineering, and Technology, shall prepare a report on
science, mathematics, and engineering education to be submitted to
Congress within 1 year after the date of enactment of this Act. The
report shall include
(1) a description of current Federal science, mathematics,
and engineering education programs at all education levels;
(2) any specific statutory changes necessary to further as-
sist the agencies' mathematics and science education goals;
and
(3) a strategic plan for an interagency program to enhance
science, mathematics, and engineering education, including
(A) a statement of program goals;
(B) a description of implementation steps required to
achieve such goals;
(C) a strategy for taking advantage of the strengths of
Federal research and development facilities related to
science, mathematics, and engineering education;
(D) provisions for outreach to teachers and others with
direct access to students;
(E) a system for evaluating program effectiveness, in-
cluding criteria for evaluation;
(F) criteria and procedures to facilitate and expedite
either the loan or transfer of title to surplus equipment to
schools, school districts, and colleges and universities;
(G) recommendations on how to enhance exchange of
employees among agencies to share expertise in mathe-
matics and science education; and
(H) mechanisms to coordinate the activities of the
agencies which will implement the plan.
(b) PREPARATION AND UPDATING.Preparation of the plan re-
quired by subsection (a)(3) shall, at a minimum, include represent-
atives of the Departments of Energy and Education, and the Na-
tional Science Foundation. In subsequent years, the plan required
by subsection (a)(3) shall be updated and submitted to Congress
annually at the time of the President's budget request and shall in-
clude the funding levels in that budget for each agency to carry out
each agency's portion of the plan.
7 4
SOC. 502
MATHEMATICS, SCIENCE AND ENGINEERING
698
(20 U.S.C. 5371) Enacted November 16, 1990, P.L. 101-589, sec. 501, 104 Stat.
2898.
SEC. 502. GENERAL EDUCATION REPORT.
The Department of Defense, the Department of Energy, the
Department of Agriculture, the Department of Labor, the Depart-
ment of Health and Human Services, the Department of Transpor-
tation, the Department of Justice, the National Aeronautics and
Space Administration, the Environmental Protection Agency, and
the Department of Commerce shall each prepare and submit to the
Secretary of Education, within 9 months of the enactment of this
Act, a report on all educational activities supported, excluding ac-
tivities described in section 501. The Secretary shall compile this
information and report to Congress within 1 year after the date of
enactment of this Act. The report shall include
(1) a summary of current education programs at all levels;
and
(2) any specific statutory changes necessary to further as-
sist the agencies' education goals.
(20 U.S.C. 5372) Enacted November 16, 1990, P.L. 101-589, sec. 502, 104 Stat.
2898.
SEC. 503. DEPARTMENT OF ENERGY PROGRAMS.
(a) AUTHORIZATION.
(1) IN GENERAL.The Secretary of Energy is authorized
(A) provide paid administrative leave for employees of
the Department of Energy or its research and development
facilities who volunteer to interact with schools,. colleges,
universities, teachers, or students for the purpose of
science, mathematics, and engineering education;
(B) establish a volunteer talent pool of scientists,
mathematicians, and engineers who have retired from the
Department of Energy or its research and development fa-
cilities to
(i) serve as "Scientists in Residence" at schools
and school districts for the purpose of assisting teach-
ers with activities such as experiments, lectures, or
materials;
(ii) serve as requested, as a science counselor to
students; and
(iii) otherwise assist science, mathematics, and en-
gineering classes;
(C) establish a Young Americans' Summer Science
Camp Program to provide secondary school students with
a hands-on science experience as well as exposure to work-
ing scientists and career counseling; and
(D) establish a program for mathematics and science
teachers, to provide such teachers serving large numbers
of disadvantaged students with new strategies for mathe-
matics and science instruction.
(2) SPECIAL RULE.In carrying out the provisions of para-
graph (1)(B) the Secretary of Energy, wherever possible acting
through the Department's research and development facilities,
to-
7o5
699
MATHEMATICS, SCIENCE AND ENGINEERING
Sec. 601
shall identify and match schools and school districts with re-
tired scientists, mathematicians, and engineers.
(b) FACILITIES; NON-FEDERAL FUNDS.Education activities as-
sisted under this section may be conducted through Department of
Energy research and development facilities. The Secretary is au-
thorized to accept non-Federal funds to finance education activities.
(C) LIMITATIONS.
(1) NATIONAL DEFENSE PRODUCTION ACTIVITIES.Nothing
in this section shall apply to activities of the Department of
Energy or its contractors that are funded as national defense
production activities.
(2) SPECIAL RULE.Nothing in this section shall be con-
strued to affect mathematics, science, and engineering edu-
cation programs administered through the Department of En-
ergy other than the Office of Energy Research.
(d) TERMINATION PROVISION.The provisions of this section
shall not take effect if a substantially identical program is included
in the National Defense Authorization Act for Fiscal Year 1991.
(e) DEFINITION.For the purpose of this section, the term "re-
search and development facilities" means, except as provided in
subsection (c)(1), all Department of Energy single purpose and mul-
tipurpose National Laboratories and research and development fa-
cilities and programs, and any other facility or program operated
by a contractor funded from the Office of Energy Research.
(20 U.S.C. 5373) Enacted November 16, 1990, P.L. 101-589, sec. 503, 104 Stat.
2899
TITLE VI-SCIENCE SCHOLARSHIPS
PART A-NATIONAL SCIENCE SCHOLARS
PROGRAM
SEC. 601. PURPOSE; APPROPRIATIONS AUTHORIZED.
(a) PURPOSE.It is the purpose of this part
(1) to establish a National Science Scholars Program to
recognize student excellence and achievement in the physical,
life, and computer sciences, mathematics, and engineering;
(2) to provide financial assistance to students under para-
graph (1) to continue their postsecondary education in such
fields of study at sustained high levels of performance;
(3) to contribute to strengthening the leadership of the