[DOCID: f:h6enr.txt]
        H.R.6

                       One Hundred Fifth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
                                  eight


                                 An Act


 
 To extend the authorization of programs under the Higher Education Act 
                    of 1965, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Higher Education 
Amendments of 1998''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. References.
Sec. 3. General effective date.

                       TITLE I--GENERAL PROVISIONS

Sec. 101. Revision of title I.
Sec. 102. Conforming amendments.

                        TITLE II--TEACHER QUALITY

Sec. 201. Teacher quality enhancement grants.

                      TITLE III--INSTITUTIONAL AID

Sec. 301. Transfers and redesignations.
Sec. 302. Findings.
Sec. 303. Strengthening institutions.
Sec. 304. Strengthening HBCU's.
Sec. 305. Endowment challenge grants.
Sec. 306. HBCU capital financing.
Sec. 307. Minority science and engineering improvement program.
Sec. 308. General provisions.

                      TITLE IV--STUDENT ASSISTANCE

                       Part A--Grants to Students

Sec. 401. Federal Pell Grants.
Sec. 402. Federal TRIO programs.
Sec. 403. Gear up program.
Sec. 404. Academic achievement incentive scholarships.
Sec. 405. Repeals.
Sec. 406. Federal supplemental educational opportunity grants.
Sec. 407. Leveraging educational assistance partnership program.
Sec. 408. Special programs for students whose families are engaged in 
          migrant and seasonal farmwork.
Sec. 409. Robert C. Byrd Honors Scholarship Program.
Sec. 410. Child care access means parents in school.
Sec. 410A. Learning anytime anywhere partnerships.

              Part B--Federal Family Education Loan Program

Sec. 411. Limitation repealed.
Sec. 412. Advances to reserve funds.
Sec. 413. Guaranty agency reforms.
Sec. 414. Scope and duration of Federal loan insurance program.
Sec. 415. Limitations on individual federally insured loans and Federal 
          loan insurance.
Sec. 416. Applicable interest rates.
Sec. 417. Federal payments to reduce student interest costs.
Sec. 418. Voluntary flexible agreements with guaranty agencies.
Sec. 419. Federal PLUS loans.
Sec. 420. Federal consolidation loans.
Sec. 421. Default reduction program.
Sec. 422. Requirements for disbursements of student loans.
Sec. 423. Unsubsidized loans.
Sec. 424. Loan forgiveness for teachers.
Sec. 425. Loan forgiveness for child care providers.
Sec. 426. Notice to Secretary and payment of loss.
Sec. 427. Legal powers and responsibilities.
Sec. 428. Student loan information by eligible lenders.
Sec. 429. Definitions.
Sec. 430. Delegation of functions.
Sec. 431. Discharge.
Sec. 432. Debt management options.
Sec. 433. Special allowances.
Sec. 434. Federal family education loan insurance fund.

                   Part C--Federal Work-study Programs

Sec. 441. Authorization of appropriations; community services.
Sec. 442. Allocation of funds.
Sec. 443. Grants for Federal work-study programs.
Sec. 444. Flexible use of funds.
Sec. 445. Work colleges.

           Part D--William D. Ford Federal Direct Loan Program

Sec. 451. Selection of institutions.
Sec. 452. Terms and conditions.
Sec. 453. Contracts.
Sec. 454. Funds for administrative expenses.
Sec. 455. Authority to sell loans.
Sec. 456. Loan cancellation for teachers.

                      Part E--Federal Perkins Loans

Sec. 461. Authorization of appropriations.
Sec. 462. Allocation of funds.
Sec. 463. Agreements with institutions of higher education.
Sec. 464. Terms of loans.
Sec. 465. Cancellation for public service.
Sec. 466. Distribution of assets from student loan funds.
Sec. 467. Perkins Loan Revolving Fund.

                          Part F--Need Analysis

Sec. 471. Cost of attendance.
Sec. 472. Data elements.
Sec. 473. Family contribution for dependent students.
Sec. 474. Family contribution for independent students without 
          dependents other than a spouse.
Sec. 475. Family contribution for independent students with dependents 
          other than a spouse.
Sec. 476. Regulations; updated tables and amounts.
Sec. 477. Simplified needs test; zero expected family contribution.
Sec. 478. Discretion of student financial aid administrators.
Sec. 479. Treatment of other financial assistance.
Sec. 480. Clerical amendments.
Sec. 480A. Effective dates.

                       Part G--General Provisions

Sec. 481. Master calendar.
Sec. 482. Forms and regulations.
Sec. 483. Student eligibility.
Sec. 484. State court judgments.
Sec. 485. Institutional refunds.
Sec. 486. Institutional and financial assistance information for 
          students.
Sec. 487. National student loan data system.
Sec. 488. Distance education demonstration programs.
Sec. 489. Program participation agreements.
Sec. 490. Regulatory relief and improvement.
Sec. 490A. Garnishment requirements.
Sec. 490B. Administrative subpoena authority.
Sec. 490C. Advisory Committee on Student Financial Assistance.
Sec. 490D. Meetings and negotiated rulemaking.
Sec. 490E. Year 2000 requirements at the Department of Education.
Sec. 490F. Procedures for cancellations and deferments for eligible 
          disabled veterans.

                        Part H--Program Integrity

Sec. 491. State role and responsibilities.
Sec. 492. Accrediting agency recognition.
Sec. 493. Eligibility and certification procedures.
Sec. 494. Program review and data.
Sec. 495. Review of regulations.

                    TITLE V--DEVELOPING INSTITUTIONS

Sec. 501. Establishment of new title V.

               TITLE VI--INTERNATIONAL EDUCATION PROGRAMS

Sec. 601. International and foreign language studies.
Sec. 602. Business and international education programs.
Sec. 603. Institute for International Public Policy.
Sec. 604. General provisions.

       TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

Sec. 701. Revision of title VII.
Sec. 702. Repeals.

           TITLE VIII--STUDIES, REPORTS, AND RELATED PROGRAMS

                             Part A--Studies

Sec. 801. Study of market mechanisms in Federal student loan programs.
Sec. 802. Study of the feasibility of alternative financial instruments 
          for determining lender yields.
Sec. 803. Student-related debt study required.
Sec. 804. Study of transfer of credits.
Sec. 805. Study of opportunities for participation in athletics 
          programs.
Sec. 806. Study of the effectiveness of cohort default rates for 
          institutions with few student loan borrowers.

              Part B--Advanced Placement Incentive Program

Sec. 810. Advanced placement incentive program.

               Part C--Community Scholarship Mobilization

Sec. 811. Short title.
Sec. 812. Findings.
Sec. 813. Definitions.
Sec. 814. Purpose; endowment grant authority.
Sec. 815. Grant agreement and requirements.
Sec. 816. Authorization of appropriations.

Part D--Grants to States for Workplace and Community Transition Training 
                    for Incarcerated Youth Offenders

Sec. 821. Grants to States for workplace and community transition 
          training for incarcerated youth offenders.

    Part E--Grants to Combat Violent Crimes Against Women on Campuses

Sec. 826. Grants to combat violent crimes against women on campuses.
Sec. 827. Study of institutional procedures to report sexual assaults.

 Part F--Improving United States Understanding of Science, Engineering, 
                       and Technology in East Asia

Sec. 831. Improving United States understanding of science, engineering, 
          and technology in East Asia.

                      Part G--Olympic Scholarships

Sec. 836. Extension of authorization.

                      Part H--Underground Railroad

Sec. 841. Underground Railroad educational and cultural program.

                 Part I--Summer Travel and Work Programs

Sec. 846. Authority to administer summer travel and work programs.

                 Part J--Web-based Education Commission

Sec. 851. Short title; definitions.
Sec. 852. Establishment of Web-Based Education Commission.
Sec. 853. Duties of the Commission.
Sec. 854. Powers of the Commission.
Sec. 855. Commission personnel matters.
Sec. 856. Termination of the Commission.
Sec. 857. Authorization of appropriations.

                          Part K--Miscellaneous

Sec. 861. Education-welfare study.
Sec. 862. Release of conditions, covenants, and reversionary interests, 
          Guam Community College conveyance, Barrigada, Guam.
Sec. 863. Sense of Congress regarding good character.
Sec. 864. Educational merchandise licensing codes of conduct.

                   TITLE IX--AMENDMENTS TO OTHER LAWS

   Part A--Extension and Revision of Indian Higher Education Programs

Sec. 901. Tribally controlled colleges and universities.
Sec. 902. Reauthorization of Navajo Community College Act.

                      Part B--Education of the Deaf

Sec. 911. Short title.
Sec. 912. Elementary and secondary education programs.
Sec. 913. Agreement with Gallaudet University.
Sec. 914. Agreement for the National Technical Institute for the Deaf.
Sec. 915. Definitions.
Sec. 916. Gifts.
Sec. 917. Reports.
Sec. 918. Monitoring, evaluation, and reporting.
Sec. 919. Federal endowment programs.
Sec. 920. Scholarship program.
Sec. 921. Oversight and effect of agreements.
Sec. 922. International students.
Sec. 923. Research priorities.
Sec. 924. National Study on the Education of the Deaf.
Sec. 925. Authorization of appropriations.

                Part C--United States Institute of Peace

Sec. 931. Authorities of the United States Institute of Peace.

              Part D--Voluntary Retirement Incentive Plans

Sec. 941. Voluntary retirement incentive plans.

           Part E--General Education Provisions Act Amendment

Sec. 951. Amendment to Family Educational Rights and Privacy Act of 
          1974.
Sec. 952. Alcohol or drug possession disclosure.

    Part F--Liaison for Proprietary Institutions of Higher Education

Sec. 961. Liaison for proprietary institutions of higher education.

                  Part G--Amendments to Other Statutes

Sec. 971. Nondischareability of certain claims for educational benefits 
          provided to obtain higher education.
Sec. 972. GNMA guarantee fee.

                             Part H--Repeals

Sec. 981. Repeals.
Sec. 982. Repeals of previous higher education amendments provisions.

SEC. 2. REFERENCES.

    Except as otherwise expressly provided, whenever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Higher Education Act of 
1965 (20 U.S.C. 1001 et seq.).

SEC. 3. GENERAL EFFECTIVE DATE.

    Except as otherwise provided in this Act or the amendments made by 
this Act, the amendments made by this Act shall take effect on October 
1, 1998.

                      TITLE I--GENERAL PROVISIONS

SEC. 101. REVISION OF TITLE I.

    (a) General Provisions.--Title I (20 U.S.C. 1001 et seq.) is 
amended to read as follows:

                     ``TITLE I--GENERAL PROVISIONS

                         ``PART A--DEFINITIONS

``SEC. 101. GENERAL DEFINITION OF INSTITUTION OF HIGHER EDUCATION.

    ``(a) Institution of Higher Education.--For purposes of this Act, 
other than title IV, the term `institution of higher education' means 
an educational institution in any State that--
        ``(1) admits as regular students only persons having a 
    certificate of graduation from a school providing secondary 
    education, or the recognized equivalent of such a certificate;
        ``(2) is legally authorized within such State to provide a 
    program of education beyond secondary education;
        ``(3) provides an educational program for which the institution 
    awards a bachelor's degree or provides not less than a 2-year 
    program that is acceptable for full credit toward such a degree;
        ``(4) is a public or other nonprofit institution; and
        ``(5) is accredited by a nationally recognized accrediting 
    agency or association, or if not so accredited, is an institution 
    that has been granted preaccreditation status by such an agency or 
    association that has been recognized by the Secretary for the 
    granting of preaccreditation status, and the Secretary has 
    determined that there is satisfactory assurance that the 
    institution will meet the accreditation standards of such an agency 
    or association within a reasonable time.
    ``(b) Additional Institutions Included.--For purposes of this Act, 
other than title IV, the term `institution of higher education' also 
includes--
        ``(1) any school that provides not less than a 1-year program 
    of training to prepare students for gainful employment in a 
    recognized occupation and that meets the provision of paragraphs 
    (1), (2), (4), and (5) of subsection (a); and
        ``(2) a public or nonprofit private educational institution in 
    any State that, in lieu of the requirement in subsection (a)(1), 
    admits as regular students persons who are beyond the age of 
    compulsory school attendance in the State in which the institution 
    is located.
    ``(c) List of Accrediting Agencies.--For purposes of this section 
and section 102, the Secretary shall publish a list of nationally 
recognized accrediting agencies or associations that the Secretary 
determines, pursuant to subpart 2 of part H of title IV, to be reliable 
authority as to the quality of the education or training offered.

``SEC. 102. DEFINITION OF INSTITUTION OF HIGHER EDUCATION FOR PURPOSES 
              OF TITLE IV PROGRAMS.

    ``(a) Definition of Institution of Higher Education for Purposes of 
Title IV Programs.--
        ``(1) Inclusion of additional institutions.--Subject to 
    paragraphs (2) through (4) of this subsection, the term 
    `institution of higher education' for purposes of title IV 
    includes, in addition to the institutions covered by the definition 
    in section 101--
            ``(A) a proprietary institution of higher education (as 
        defined in subsection (b) of this section);
            ``(B) a postsecondary vocational institution (as defined in 
        subsection (c) of this section); and
            ``(C) only for the purposes of part B of title IV, an 
        institution outside the United States that is comparable to an 
        institution of higher education as defined in section 101 and 
        that has been approved by the Secretary for the purpose of part 
        B of title IV.
        ``(2) Institutions outside the united states.--
            ``(A) In general.--For the purpose of qualifying as an 
        institution under paragraph (1)(C), the Secretary shall 
        establish criteria by regulation for the approval of 
        institutions outside the United States and for the 
        determination that such institutions are comparable to an 
        institution of higher education as defined in section 101. In 
        the case of a graduate medical or veterinary school outside the 
        United States, such criteria shall include a requirement that a 
        student attending such school outside the United States is 
        ineligible for loans made, insured, or guaranteed under part B 
        unless--
                ``(i)(I) at least 60 percent of those enrolled in, and 
            at least 60 percent of the graduates of, the graduate 
            medical school outside the United States were not persons 
            described in section 484(a)(5) in the year preceding the 
            year for which a student is seeking a loan under part B of 
            title IV; and
                ``(II) at least 60 percent of the individuals who were 
            students or graduates of the graduate medical school 
            outside the United States (both nationals of the United 
            States and others) taking the examinations administered by 
            the Educational Commission for Foreign Medical Graduates 
            received a passing score in the year preceding the year for 
            which a student is seeking a loan under part B of title IV; 
            or
                ``(ii) the institution has a clinical training program 
            that was approved by a State as of January 1, 1992, or the 
            institution's students complete their clinical training at 
            an approved veterinary school located in the United States.
            ``(B) Advisory panel.--
                ``(i) In general.--For the purpose of qualifying as an 
            institution under paragraph (1)(C) of this subsection, the 
            Secretary shall establish an advisory panel of medical 
            experts that shall--

                    ``(I) evaluate the standards of accreditation 
                applied to applicant foreign medical schools; and
                    ``(II) determine the comparability of those 
                standards to standards for accreditation applied to 
                United States medical schools.

                ``(ii) Special rule.--If the accreditation standards 
            described in clause (i) are determined not to be 
            comparable, the foreign medical school shall be required to 
            meet the requirements of section 101.
            ``(C) Failure to release information.--The failure of an 
        institution outside the United States to provide, release, or 
        authorize release to the Secretary of such information as may 
        be required by subparagraph (A) shall render such institution 
        ineligible for the purpose of part B of title IV.
            ``(D) Special rule.--If, pursuant to this paragraph, an 
        institution loses eligibility to participate in the programs 
        under title IV, then a student enrolled at such institution 
        may, notwithstanding such loss of eligibility, continue to be 
        eligible to receive a loan under part B while attending such 
        institution for the academic year succeeding the academic year 
        in which such loss of eligibility occurred.
        ``(3) Limitations based on course of study or enrollment.--An 
    institution shall not be considered to meet the definition of an 
    institution of higher education in paragraph (1) if such 
    institution--
            ``(A) offers more than 50 percent of such institution's 
        courses by correspondence, unless the institution is an 
        institution that meets the definition in section 521(4)(C) of 
        the Carl D. Perkins Vocational and Applied Technology Education 
        Act;
            ``(B) enrolls 50 percent or more of the institution's 
        students in correspondence courses, unless the institution is 
        an institution that meets the definition in such section, 
        except that the Secretary, at the request of such institution, 
        may waive the applicability of this subparagraph to such 
        institution for good cause, as determined by the Secretary in 
        the case of an institution of higher education that provides a 
        2- or 4-year program of instruction (or both) for which the 
        institution awards an associate or baccalaureate degree, 
        respectively;
            ``(C) has a student enrollment in which more than 25 
        percent of the students are incarcerated, except that the 
        Secretary may waive the limitation contained in this 
        subparagraph for a nonprofit institution that provides a 2- or 
        4-year program of instruction (or both) for which the 
        institution awards a bachelor's degree, or an associate's 
        degree or a postsecondary diploma, respectively; or
            ``(D) has a student enrollment in which more than 50 
        percent of the students do not have a secondary school diploma 
        or its recognized equivalent, and does not provide a 2- or 4-
        year program of instruction (or both) for which the institution 
        awards a bachelor's degree or an associate's degree, 
        respectively, except that the Secretary may waive the 
        limitation contained in this subparagraph if a nonprofit 
        institution demonstrates to the satisfaction of the Secretary 
        that the institution exceeds such limitation because the 
        institution serves, through contracts with Federal, State, or 
        local government agencies, significant numbers of students who 
        do not have a secondary school diploma or its recognized 
        equivalent.
        ``(4) Limitations based on management.--An institution shall 
    not be considered to meet the definition of an institution of 
    higher education in paragraph (1) if--
            ``(A) the institution, or an affiliate of the institution 
        that has the power, by contract or ownership interest, to 
        direct or cause the direction of the management or policies of 
        the institution, has filed for bankruptcy, except that this 
        paragraph shall not apply to a nonprofit institution, the 
        primary function of which is to provide health care educational 
        services (or an affiliate of such an institution that has the 
        power, by contract or ownership interest, to direct or cause 
        the direction of the institution's management or policies) that 
        files for bankruptcy under chapter 11 of title 11, United 
        States Code, between July 1, 1998, and December 1, 1998; or
            ``(B) the institution, the institution's owner, or the 
        institution's chief executive officer has been convicted of, or 
        has pled nolo contendere or guilty to, a crime involving the 
        acquisition, use, or expenditure of funds under title IV, or 
        has been judicially determined to have committed fraud 
        involving funds under title IV.
        ``(5) Certification.--The Secretary shall certify an 
    institution's qualification as an institution of higher education 
    in accordance with the requirements of subpart 3 of part H of title 
    IV.
        ``(6) Loss of eligibility.--An institution of higher education 
    shall not be considered to meet the definition of an institution of 
    higher education in paragraph (1) if such institution is removed 
    from eligibility for funds under title IV as a result of an action 
    pursuant to part H of title IV.
    ``(b) Proprietary Institution of Higher Education.--
        ``(1) Principal criteria.--For the purpose of this section, the 
    term `proprietary institution of higher education' means a school 
    that--
            ``(A) provides an eligible program of training to prepare 
        students for gainful employment in a recognized occupation;
            ``(B) meets the requirements of paragraphs (1) and (2) of 
        section 101(a);
            ``(C) does not meet the requirement of paragraph (4) of 
        section 101(a);
            ``(D) is accredited by a nationally recognized accrediting 
        agency or association recognized by the Secretary pursuant to 
        part H of title IV;
            ``(E) has been in existence for at least 2 years; and
            ``(F) has at least 10 percent of the school's revenues from 
        sources that are not derived from funds provided under title 
        IV, as determined in accordance with regulations prescribed by 
        the Secretary.
        ``(2) Additional institutions.--The term `proprietary 
    institution of higher education' also includes a proprietary 
    educational institution in any State that, in lieu of the 
    requirement in paragraph (1) of section 101(a), admits as regular 
    students persons who are beyond the age of compulsory school 
    attendance in the State in which the institution is located.
    ``(c) Postsecondary Vocational Institution.--
        ``(1) Principal criteria.--For the purpose of this section, the 
    term `postsecondary vocational institution' means a school that--
            ``(A) provides an eligible program of training to prepare 
        students for gainful employment in a recognized occupation;
            ``(B) meets the requirements of paragraphs (1), (2), (4), 
        and (5) of section 101(a); and
            ``(C) has been in existence for at least 2 years.
        ``(2) Additional institutions.--The term `postsecondary 
    vocational institution' also includes an educational institution in 
    any State that, in lieu of the requirement in paragraph (1) of 
    section 101(a), admits as regular students persons who are beyond 
    the age of compulsory school attendance in the State in which the 
    institution is located.

``SEC. 103. ADDITIONAL DEFINITIONS.

    ``In this Act:
        ``(1) Combination of institutions of higher education.--The 
    term `combination of institutions of higher education' means a 
    group of institutions of higher education that have entered into a 
    cooperative arrangement for the purpose of carrying out a common 
    objective, or a public or private nonprofit agency, organization, 
    or institution designated or created by a group of institutions of 
    higher education for the purpose of carrying out a common objective 
    on the group's behalf.
        ``(2) Department.--The term `Department' means the Department 
    of Education.
        ``(3) Disability.--The term `disability' has the same meaning 
    given that term under section 3(2) of the Americans With 
    Disabilities Act of 1990.
        ``(4) Elementary school.--The term `elementary school' has the 
    same meaning given that term under section 14101 of the Elementary 
    and Secondary Education Act of 1965.
        ``(5) Gifted and talented.--The term `gifted and talented' has 
    the same meaning given that term under section 14101 of the 
    Elementary and Secondary Education Act of 1965.
        ``(6) Local educational agency.--The term `local educational 
    agency' has the same meaning given that term under section 14101 of 
    the Elementary and Secondary Education Act of 1965.
        ``(7) New borrower.--The term `new borrower' when used with 
    respect to any date means an individual who on that date has no 
    outstanding balance of principal or interest owing on any loan 
    made, insured, or guaranteed under title IV.
        ``(8) Nonprofit.--The term `nonprofit' as applied to a school, 
    agency, organization, or institution means a school, agency, 
    organization, or institution owned and operated by one or more 
    nonprofit corporations or associations, no part of the net earnings 
    of which inures, or may lawfully inure, to the benefit of any 
    private shareholder or individual.
        ``(9) School or department of divinity.--The term `school or 
    department of divinity' means an institution, or a department or a 
    branch of an institution, the program of instruction of which is 
    designed for the education of students--
            ``(A) to prepare the students to become ministers of 
        religion or to enter upon some other religious vocation (or to 
        provide continuing training for any such vocation); or
            ``(B) to prepare the students to teach theological 
        subjects.
        ``(10) Secondary school.--The term `secondary school' has the 
    same meaning given that term under section 14101 of the Elementary 
    and Secondary Education Act of 1965.
        ``(11) Secretary.--The term `Secretary' means the Secretary of 
    Education.
        ``(12) Service-learning.--The term `service-learning' has the 
    same meaning given that term under section 101(23) of the National 
    and Community Service Act of 1990.
        ``(13) Special education teacher.--The term `special education 
    teacher' means teachers who teach children with disabilities as 
    defined in section 602 of the Individuals with Disabilities 
    Education Act.
        ``(14) State educational agency.--The term `State educational 
    agency' has the same meaning given that term under section 14101 of 
    the Elementary and Secondary Education Act of 1965.
        ``(15) State higher education agency.--The term `State higher 
    education agency' means the officer or agency primarily responsible 
    for the State supervision of higher education.
        ``(16) State; freely associated states.--
            ``(A) State.--The term `State' includes, in addition to the 
        several States of the United States, the Commonwealth of Puerto 
        Rico, the District of Columbia, Guam, American Samoa, the 
        United States Virgin Islands, the Commonwealth of the Northern 
        Mariana Islands, and the Freely Associated States.
            ``(B) Freely associated states.--The term `Freely 
        Associated States' means the Republic of the Marshall Islands, 
        the Federated States of Micronesia, and the Republic of Palau.

                ``PART B--ADDITIONAL GENERAL PROVISIONS

``SEC. 111. ANTIDISCRIMINATION.

    ``(a) In General.--Institutions of higher education receiving 
Federal financial assistance may not use such financial assistance, 
directly or indirectly, to undertake any study or project or fulfill 
the terms of any contract containing an express or implied provision 
that any person or persons of a particular race, religion, sex, or 
national origin be barred from performing such study, project, or 
contract, except that nothing in this subsection shall be construed to 
prohibit an institution from conducting objective studies or projects 
concerning the nature, effects, or prevention of discrimination, or to 
have the institution's curriculum restricted on the subject of 
discrimination.
    ``(b) Limitations on Statutory Construction.--Nothing in this Act 
shall be construed to limit the rights or responsibilities of any 
individual under the Americans With Disabilities Act of 1990, the 
Rehabilitation Act of 1973, or any other law.

``SEC. 112. PROTECTION OF STUDENT SPEECH AND ASSOCIATION RIGHTS.

    ``(a) Protection of Rights.--It is the sense of Congress that no 
student attending an institution of higher education on a full- or 
part-time basis should, on the basis of participation in protected 
speech or protected association, be excluded from participation in, be 
denied the benefits of, or be subjected to discrimination or official 
sanction under any education program, activity, or division of the 
institution directly or indirectly receiving financial assistance under 
this Act, whether or not such program, activity, or division is 
sponsored or officially sanctioned by the institution.
    ``(b) Construction.--Nothing in this section shall be construed--
        ``(1) to discourage the imposition of an official sanction on a 
    student that has willfully participated in the disruption or 
    attempted disruption of a lecture, class, speech, presentation, or 
    performance made or scheduled to be made under the auspices of the 
    institution of higher education; or
        ``(2) to prevent an institution of higher education from taking 
    appropriate and effective action to prevent violations of State 
    liquor laws, to discourage binge drinking and other alcohol abuse, 
    to protect students from sexual harassment including assault and 
    date rape, to prevent hazing, or to regulate unsanitary or unsafe 
    conditions in any student residence.
    ``(c) Definitions.--For the purposes of this section:
        ``(1) Official sanction.--The term `official sanction'--
            ``(A) means expulsion, suspension, probation, censure, 
        condemnation, reprimand, or any other disciplinary, coercive, 
        or adverse action taken by an institution of higher education 
        or administrative unit of the institution; and
            ``(B) includes an oral or written warning made by an 
        official of an institution of higher education acting in the 
        official capacity of the official.
        ``(2) Protected association.--The term `protected association' 
    means the joining, assembling, and residing with others that is 
    protected under the first and 14th amendments to the Constitution, 
    or would be protected if the institution of higher education 
    involved were subject to those amendments.
        ``(3) Protected speech.--The term `protected speech' means 
    speech that is protected under the first and 14th amendments to the 
    Constitution, or would be protected if the institution of higher 
    education involved were subject to those amendments.

``SEC. 113. TREATMENT OF TERRITORIES AND TERRITORIAL STUDENT 
              ASSISTANCE.

    ``(a) Waiver Authority.--The Secretary is required to waive the 
eligibility criteria of any postsecondary education program 
administered by the Department where such criteria do not take into 
account the unique circumstances in Guam, the United States Virgin 
Islands, American Samoa, the Commonwealth of the Northern Mariana 
Islands, and the Freely Associated States.
    ``(b) Eligibility.--Notwithstanding any other provision of law, an 
institution of higher education that is located in any of the Freely 
Associated States, rather than in another State, shall be eligible, if 
otherwise qualified, for assistance under chapter 1 of subpart 2 of 
part A of title IV. This subsection shall cease to be effective on 
September 30, 2004.

``SEC. 114. NATIONAL ADVISORY COMMITTEE ON INSTITUTIONAL QUALITY AND 
              INTEGRITY.

    ``(a) Establishment.--There is established in the Department a 
National Advisory Committee on Institutional Quality and Integrity 
(hereafter in this section referred to as the `Committee'), which shall 
be composed of 15 members appointed by the Secretary from among 
individuals who are representatives of, or knowledgeable concerning, 
education and training beyond secondary education, including 
representatives of all sectors and types of institutions of higher 
education (as defined in section 102), to assess the process of 
eligibility and certification of such institutions under title IV and 
the provision of financial aid under title IV.
    ``(b) Terms of Members.--Terms of office of each member of the 
Committee shall be 3 years, except that any member appointed to fill a 
vacancy occurring prior to the expiration of the term for which the 
member's predecessor was appointed shall be appointed for the remainder 
of such term.
    ``(c) Public Notice.--The Secretary shall--
        ``(1) annually publish in the Federal Register a list 
    containing the name of each member of the Committee and the date of 
    the expiration of the term of office of the member; and
        ``(2) publicly solicit nominations for each vacant position or 
    expiring term of office on the Committee.
    ``(d) Functions.--The Committee shall--
        ``(1) advise the Secretary with respect to establishment and 
    enforcement of the standards of accrediting agencies or 
    associations under subpart 2 of part H of title IV;
        ``(2) advise the Secretary with respect to the recognition of a 
    specific accrediting agency or association;
        ``(3) advise the Secretary with respect to the preparation and 
    publication of the list of nationally recognized accrediting 
    agencies and associations;
        ``(4) develop and recommend to the Secretary standards and 
    criteria for specific categories of vocational training 
    institutions and institutions of higher education for which there 
    are no recognized accrediting agencies, associations, or State 
    agencies, in order to establish the eligibility of such 
    institutions on an interim basis for participation in federally 
    funded programs;
        ``(5) advise the Secretary with respect to the eligibility and 
    certification process for institutions of higher education under 
    title IV, together with recommendations for improvements in such 
    process;
        ``(6) advise the Secretary with respect to the relationship 
    between--
            ``(A) accreditation of institutions of higher education and 
        the certification and eligibility of such institutions; and
            ``(B) State licensing responsibilities with respect to such 
        institutions; and
        ``(7) carry out such other advisory functions relating to 
    accreditation and institutional eligibility as the Secretary may 
    prescribe.
    ``(e) Meeting Procedures.--The Committee shall meet not less than 
twice each year at the call of the Chairperson. The date of, and agenda 
for, each meeting of the Committee shall be submitted in advance to the 
Secretary for approval. A representative of the Secretary shall be 
present at all meetings of the Committee.
    ``(f) Report.--Not later than November 30 of each year, the 
Committee shall make an annual report through the Secretary to 
Congress. The annual report shall contain--
        ``(1) a list of the members of the Committee and their 
    addresses;
        ``(2) a list of the functions of the Committee;
        ``(3) a list of dates and places of each meeting during the 
    preceding fiscal year; and
        ``(4) a summary of the activities, findings and recommendations 
    made by the Committee during the preceding fiscal year.
    ``(g) Termination.--The Committee shall cease to exist on September 
30, 2004.

``SEC. 115. STUDENT REPRESENTATION.

    ``The Secretary shall, in appointing individuals to any commission, 
committee, board, panel, or other body in connection with the 
administration of this Act, include individuals who are, at the time of 
appointment, attending an institution of higher education.

``SEC. 116. FINANCIAL RESPONSIBILITY OF FOREIGN STUDENTS.

    ``Nothing in this Act or any other Federal law shall be construed 
to prohibit any institution of higher education from requiring a 
student who is a foreign national (and not admitted to permanent 
residence in the United States) to guarantee the future payment of 
tuition and fees to such institution by--
        ``(1) making advance payment of such tuition and fees;
        ``(2) making deposits in an escrow account administered by such 
    institution for such payments; or
        ``(3) obtaining a bond or other insurance that such payments 
    will be made.

``SEC. 117. DISCLOSURES OF FOREIGN GIFTS.

    ``(a) Disclosure Report.--Whenever any institution is owned or 
controlled by a foreign source or receives a gift from or enters into a 
contract with a foreign source, the value of which is $250,000 or more, 
considered alone or in combination with all other gifts from or 
contracts with that foreign source within a calendar year, the 
institution shall file a disclosure report with the Secretary on 
January 31 or July 31, whichever is sooner.
    ``(b) Contents of Report.--Each report to the Secretary required by 
this section shall contain the following:
        ``(1) For gifts received from or contracts entered into with a 
    foreign source other than a foreign government, the aggregate 
    dollar amount of such gifts and contracts attributable to a 
    particular country. The country to which a gift is attributable is 
    the country of citizenship, or if unknown, the principal residence 
    for a foreign source who is a natural person, and the country of 
    incorporation, or if unknown, the principal place of business, for 
    a foreign source which is a legal entity.
        ``(2) For gifts received from or contracts entered into with a 
    foreign government, the aggregate amount of such gifts and 
    contracts received from each foreign government.
        ``(3) In the case of an institution which is owned or 
    controlled by a foreign source, the identity of the foreign source, 
    the date on which the foreign source assumed ownership or control, 
    and any changes in program or structure resulting from the change 
    in ownership or control.
    ``(c) Additional Disclosures for Restricted and Conditional 
Gifts.--Notwithstanding the provisions of subsection (b), whenever any 
institution receives a restricted or conditional gift or contract from 
a foreign source, the institution shall disclose the following:
        ``(1) For such gifts received from or contracts entered into 
    with a foreign source other than a foreign government, the amount, 
    the date, and a description of such conditions or restrictions. The 
    report shall also disclose the country of citizenship, or if 
    unknown, the principal residence for a foreign source which is a 
    natural person, and the country of incorporation, or if unknown, 
    the principal place of business for a foreign source which is a 
    legal entity.
        ``(2) For gifts received from or contracts entered into with a 
    foreign government, the amount, the date, a description of such 
    conditions or restrictions, and the name of the foreign government.
    ``(d) Relation to Other Reporting Requirements.--
        ``(1) State requirements.--If an institution described under 
    subsection (a) is within a State which has enacted requirements for 
    public disclosure of gifts from or contracts with a foreign source 
    that are substantially similar to the requirements of this section, 
    a copy of the disclosure report filed with the State may be filed 
    with the Secretary in lieu of a report required under subsection 
    (a). The State in which the institution is located shall provide to 
    the Secretary such assurances as the Secretary may require to 
    establish that the institution has met the requirements for public 
    disclosure under State law if the State report is filed.
        ``(2) Use of other federal reports.--If an institution receives 
    a gift from, or enters into a contract with, a foreign source, 
    where any other department, agency, or bureau of the executive 
    branch requires a report containing requirements substantially 
    similar to those required under this section, a copy of the report 
    may be filed with the Secretary in lieu of a report required under 
    subsection (a).
    ``(e) Public Inspection.--All disclosure reports required by this 
section shall be public records open to inspection and copying during 
business hours.
    ``(f) Enforcement.--
        ``(1) Court orders.--Whenever it appears that an institution 
    has failed to comply with the requirements of this section, 
    including any rule or regulation promulgated under this section, a 
    civil action may be brought by the Attorney General, at the request 
    of the Secretary, in an appropriate district court of the United 
    States, or the appropriate United States court of any territory or 
    other place subject to the jurisdiction of the United States, to 
    request such court to compel compliance with the requirements of 
    this section.
        ``(2) Costs.--For knowing or willful failure to comply with the 
    requirements of this section, including any rule or regulation 
    promulgated thereunder, an institution shall pay to the Treasury of 
    the United States the full costs to the United States of obtaining 
    compliance, including all associated costs of investigation and 
    enforcement.
    ``(g) Regulations.--The Secretary may promulgate regulations to 
carry out this section.
    ``(h) Definitions.--For the purpose of this section--
        ``(1) the term `contract' means any agreement for the 
    acquisition by purchase, lease, or barter of property or services 
    by the foreign source, for the direct benefit or use of either of 
    the parties;
        ``(2) the term `foreign source' means--
            ``(A) a foreign government, including an agency of a 
        foreign government;
            ``(B) a legal entity, governmental or otherwise, created 
        solely under the laws of a foreign state or states;
            ``(C) an individual who is not a citizen or a national of 
        the United States or a trust territory or protectorate thereof; 
        and
            ``(D) an agent, including a subsidiary or affiliate of a 
        foreign legal entity, acting on behalf of a foreign source;
        ``(3) the term `gift' means any gift of money or property;
        ``(4) the term `institution' means any institution, public or 
    private, or, if a multicampus institution, any single campus of 
    such institution, in any State, that--
            ``(A) is legally authorized within such State to provide a 
        program of education beyond secondary school;
            ``(B) provides a program for which the institution awards a 
        bachelor's degree (or provides not less than a 2-year program 
        which is acceptable for full credit toward such a degree) or 
        more advanced degrees; and
            ``(C) is accredited by a nationally recognized accrediting 
        agency or association and to which institution Federal 
        financial assistance is extended (directly or indirectly 
        through another entity or person), or which institution 
        receives support from the extension of Federal financial 
        assistance to any of the institution's subunits; and
        ``(5) the term `restricted or conditional gift or contract' 
    means any endowment, gift, grant, contract, award, present, or 
    property of any kind which includes provisions regarding--
            ``(A) the employment, assignment, or termination of 
        faculty;
            ``(B) the establishment of departments, centers, research 
        or lecture programs, or new faculty positions;
            ``(C) the selection or admission of students; or
            ``(D) the award of grants, loans, scholarships, 
        fellowships, or other forms of financial aid restricted to 
        students of a specified country, religion, sex, ethnic origin, 
        or political opinion.

``SEC. 118. APPLICATION OF PEER REVIEW PROCESS.

    ``All applications submitted under the provisions of this Act which 
require peer review shall be read by a panel of readers composed of 
individuals selected by the Secretary, which shall include outside 
readers who are not employees of the Federal Government. The Secretary 
shall ensure that no individual assigned under this section to review 
any application has any conflict of interest with regard to that 
application which might impair the impartiality with which that 
individual conducts the review under this section.

``SEC. 119. BINGE DRINKING ON COLLEGE CAMPUSES.

    ``(a) Short Title.--This section may be cited as the `Collegiate 
Initiative To Reduce Binge Drinking and Illegal Alcohol Consumption'.
    ``(b) Sense of Congress.--It is the sense of Congress that, in an 
effort to change the culture of alcohol consumption on college 
campuses, all institutions of higher education should carry out the 
following:
        ``(1) The president of the institution should appoint a task 
    force consisting of school administrators, faculty, students, Greek 
    system representatives, and others to conduct a full examination of 
    student and academic life at the institution. The task force should 
    make recommendations for a broad range of policy and program 
    changes that would serve to reduce alcohol and other drug-related 
    problems. The institution should provide resources to assist the 
    task force in promoting the campus policies and proposed 
    environmental changes that have been identified.
        ``(2) The institution should provide maximum opportunities for 
    students to live in an alcohol-free environment and to engage in 
    stimulating, alcohol-free recreational and leisure activities.
        ``(3) The institution should enforce a `zero tolerance' policy 
    on the illegal consumption of alcohol by students at the 
    institution.
        ``(4) The institution should vigorously enforce the 
    institution's code of disciplinary sanctions for those who violate 
    campus alcohol policies. Students with alcohol or other drug-
    related problems should be referred for assistance, including on-
    campus counseling programs if appropriate.
        ``(5) The institution should adopt a policy to discourage 
    alcoholic beverage-related sponsorship of on-campus activities. It 
    should adopt policies limiting the advertisement and promotion of 
    alcoholic beverages on campus.
        ``(6) The institution should work with the local community, 
    including local businesses, in a `Town/Gown' alliance to encourage 
    responsible policies toward alcohol consumption and to address 
    illegal alcohol use by students.

``SEC. 120. DRUG AND ALCOHOL ABUSE PREVENTION.

    ``(a) Restriction on Eligibility.--Notwithstanding any other 
provision of law, no institution of higher education shall be eligible 
to receive funds or any other form of financial assistance under any 
Federal program, including participation in any federally funded or 
guaranteed student loan program, unless the institution certifies to 
the Secretary that the institution has adopted and has implemented a 
program to prevent the use of illicit drugs and the abuse of alcohol by 
students and employees that, at a minimum, includes--
        ``(1) the annual distribution to each student and employee of--
            ``(A) standards of conduct that clearly prohibit, at a 
        minimum, the unlawful possession, use, or distribution of 
        illicit drugs and alcohol by students and employees on the 
        institution's property or as part of any of the institution's 
        activities;
            ``(B) a description of the applicable legal sanctions under 
        local, State, or Federal law for the unlawful possession or 
        distribution of illicit drugs and alcohol;
            ``(C) a description of the health-risks associated with the 
        use of illicit drugs and the abuse of alcohol;
            ``(D) a description of any drug or alcohol counseling, 
        treatment, or rehabilitation or re-entry programs that are 
        available to employees or students; and
            ``(E) a clear statement that the institution will impose 
        sanctions on students and employees (consistent with local, 
        State, and Federal law), and a description of those sanctions, 
        up to and including expulsion or termination of employment and 
        referral for prosecution, for violations of the standards of 
        conduct required by subparagraph (A); and
        ``(2) a biennial review by the institution of the institution's 
    program to--
            ``(A) determine the program's effectiveness and implement 
        changes to the program if the changes are needed; and
            ``(B) ensure that the sanctions required by paragraph 
        (1)(E) are consistently enforced.
    ``(b) Information Availability.--Each institution of higher 
education that provides the certification required by subsection (a) 
shall, upon request, make available to the Secretary and to the public 
a copy of each item required by subsection (a)(1) as well as the 
results of the biennial review required by subsection (a)(2).
    ``(c) Regulations.--
        ``(1) In general.--The Secretary shall publish regulations to 
    implement and enforce the provisions of this section, including 
    regulations that provide for--
            ``(A) the periodic review of a representative sample of 
        programs required by subsection (a); and
            ``(B) a range of responses and sanctions for institutions 
        of higher education that fail to implement their programs or to 
        consistently enforce their sanctions, including information and 
        technical assistance, the development of a compliance 
        agreement, and the termination of any form of Federal financial 
        assistance.
        ``(2) Rehabilitation program.--The sanctions required by 
    subsection (a)(1)(E) may include the completion of an appropriate 
    rehabilitation program.
    ``(d) Appeals.--Upon determination by the Secretary to terminate 
financial assistance to any institution of higher education under this 
section, the institution may file an appeal with an administrative law 
judge before the expiration of the 30-day period beginning on the date 
such institution is notified of the decision to terminate financial 
assistance under this section. Such judge shall hold a hearing with 
respect to such termination of assistance before the expiration of the 
45-day period beginning on the date that such appeal is filed. Such 
judge may extend such 45-day period upon a motion by the institution 
concerned. The decision of the judge with respect to such termination 
shall be considered to be a final agency action.
    ``(e) Alcohol and Drug Abuse Prevention Grants.--
        ``(1) Program authority.--The Secretary may make grants to 
    institutions of higher education or consortia of such institutions, 
    and enter into contracts with such institutions, consortia, and 
    other organizations, to develop, implement, operate, improve, and 
    disseminate programs of prevention, and education (including 
    treatment-referral) to reduce and eliminate the illegal use of 
    drugs and alcohol and the violence associated with such use. Such 
    grants or contracts may also be used for the support of a higher 
    education center for alcohol and drug abuse prevention that will 
    provide training, technical assistance, evaluation, dissemination, 
    and associated services and assistance to the higher education 
    community as determined by the Secretary and institutions of higher 
    education.
        ``(2) Awards.--Grants and contracts shall be awarded under 
    paragraph (1) on a competitive basis.
        ``(3) Applications.--An institution of higher education, a 
    consortium of such institutions, or another organization that 
    desires to receive a grant or contract under paragraph (1) shall 
    submit an application to the Secretary at such time, in such 
    manner, and containing or accompanied by such information as the 
    Secretary may reasonably require by regulation.
        ``(4) Additional requirements.--
            ``(A) Participation.--In awarding grants and contracts 
        under this subsection the Secretary shall make every effort to 
        ensure--
                ``(i) the equitable participation of private and public 
            institutions of higher education (including community and 
            junior colleges); and
                ``(ii) the equitable geographic participation of such 
            institutions.
            ``(B) Consideration.--In awarding grants and contracts 
        under this subsection the Secretary shall give appropriate 
        consideration to institutions of higher education with limited 
        enrollment.
        ``(5) Authorization of appropriations.--There are authorized to 
    be appropriated to carry out this subsection $5,000,000 for fiscal 
    year 1999 and such sums as may be necessary for each of the 4 
    succeeding fiscal years.
    ``(f) National Recognition Awards.--
        ``(1) Purpose.--It is the purpose of this subsection to provide 
    models of innovative and effective alcohol and drug abuse 
    prevention programs in higher education and to focus national 
    attention on exemplary alcohol and drug abuse prevention efforts.
        ``(2) Awards.--
            ``(A) In general.--The Secretary shall make 5 National 
        Recognition Awards for outstanding alcohol prevention programs 
        and 5 National Recognition Awards for outstanding drug abuse 
        prevention programs, on an annual basis, to institutions of 
        higher education that--
                ``(i) have developed and implemented innovative and 
            effective alcohol prevention programs or drug abuse 
            prevention programs; and
                ``(ii) with respect to an application for an alcohol 
            prevention program award, demonstrate in the application 
            submitted under paragraph (3) that the institution has 
            undertaken efforts designed to change the culture of 
            college drinking consistent with the review criteria 
            described in paragraph (3)(C)(iii).
            ``(B) Ceremony.--The awards shall be made at a ceremony in 
        Washington, D.C.
            ``(C) Document.--The Secretary shall publish a document 
        describing the alcohol and drug abuse prevention programs of 
        institutions of higher education that receive the awards under 
        this subsection and disseminate the document nationally to all 
        public and private secondary school guidance counselors for use 
        by secondary school juniors and seniors preparing to enter an 
        institution of higher education. The document shall be 
        disseminated not later than January 1 of each academic year.
            ``(D) Amount and use.--Each institution of higher education 
        selected to receive an award under this subsection shall 
        receive an award in the amount of $50,000. Such award shall be 
        used for the maintenance and improvement of the institution's 
        outstanding prevention program for the academic year following 
        the academic year for which the award is made.
        ``(3) Application.--
            ``(A) In general.--Each institution of higher education 
        desiring an award under this subsection shall submit an 
        application to the Secretary at such time, in such manner, and 
        accompanied by such information as the Secretary may require. 
        Each such application shall contain--
                ``(i) a clear description of the goals and objectives 
            of the prevention program of the institution;
                ``(ii) a description of program activities that focus 
            on alcohol or drug policy issues, policy development, 
            modification, or refinement, policy dissemination and 
            implementation, and policy enforcement;
                ``(iii) a description of activities that encourage 
            student and employee participation and involvement in 
            activity development and implementation;
                ``(iv) the objective criteria used to determine the 
            effectiveness of the methods used in such programs and the 
            means used to evaluate and improve the programs' efforts;
                ``(v) a description of special initiatives used to 
            reduce high-risk behavior or increase low-risk behavior; 
            and
                ``(vi) a description of coordination and networking 
            efforts that exist in the community in which the 
            institution is located for purposes of such programs.
            ``(B) Application review.--The Secretary shall appoint a 
        committee to review applications submitted under this 
        paragraph. The committee may include representatives of Federal 
        departments or agencies the programs of which include alcohol 
        abuse prevention and education efforts and drug abuse 
        prevention and education efforts, directors or heads (or their 
        representatives) of professional associations that focus on 
        alcohol and drug abuse prevention efforts, and non-Federal 
        scientists who have backgrounds in social science evaluation 
        and research methodology and in education. Decisions of the 
        committee shall be made directly to the Secretary without 
        review by any other entity in the Department.
            ``(C) Review criteria.--The committee described in 
        subparagraph (B) shall develop specific review criteria for 
        reviewing and evaluating applications submitted under this 
        paragraph. The review criteria shall include--
                ``(i) measures of the effectiveness of the program of 
            the institution, that includes changes in the campus 
            alcohol or other drug environment or the climate and 
            changes in alcohol or other drug use before and after the 
            initiation of the program;
                ``(ii) measures of program institutionalization, 
            including--

                    ``(I) an assessment of needs of the institution;
                    ``(II) the institution's alcohol and drug policies, 
                staff and faculty development activities, drug 
                prevention criteria, student, faculty, and campus 
                community involvement; and
                    ``(III) whether the program will be continued after 
                the cessation of Federal funding; and

                ``(iii) with respect to an application for an alcohol 
            prevention program award, criteria for determining whether 
            the institution has policies in effect that--

                    ``(I) prohibit alcoholic beverage sponsorship of 
                athletic events, and prohibit alcoholic beverage 
                advertising inside athletic facilities;
                    ``(II) prohibit alcoholic beverage marketing on 
                campus, which may include efforts to ban alcohol 
                advertising in institutional publications or efforts to 
                prohibit alcohol-related advertisements at campus 
                events;
                    ``(III) establish or expand upon alcohol-free 
                living arrangements for all college students;
                    ``(IV) establish partnerships with community 
                members and organizations to further alcohol prevention 
                efforts on campus and the areas surrounding campus; and
                    ``(V) establish innovative communications programs 
                involving students and faculty in an effort to educate 
                students about alcohol-related risks.

        ``(4) Eligibility.--In order to be eligible to receive a 
    National Recognition Award an institution of higher education 
    shall--
            ``(A) offer an associate or baccalaureate degree;
            ``(B) have established an alcohol abuse prevention and 
        education program or a drug abuse prevention and education 
        program;
            ``(C) nominate itself or be nominated by others, such as 
        professional associations or student organizations, to receive 
        the award; and
            ``(D) not have received an award under this subsection 
        during the 5 academic years preceding the academic year for 
        which the determination is made.
        ``(5) Authorization of appropriations.--
            ``(A) In general.--There is authorized to be appropriated 
        to carry out this subsection $750,000 for fiscal year 1999.
            ``(B) Availability.--Funds appropriated under subparagraph 
        (A) shall remain available until expended.

``SEC. 121. PRIOR RIGHTS AND OBLIGATIONS.

    ``(a) Authorization of Appropriations.--
        ``(1) Pre-1987 parts c and d of title vii.--There are 
    authorized to be appropriated such sums as may be necessary for 
    fiscal year 1999 and for each of the 4 succeeding fiscal years to 
    pay obligations incurred prior to 1987 under parts C and D of title 
    VII, as such parts were in effect before the effective date of the 
    Higher Education Amendments of 1992.
        ``(2) Post-1992 and pre-1998 part c of title vii.--There are 
    authorized to be appropriated such sums as may be necessary for 
    fiscal year 1999 and for each of the 4 succeeding fiscal years to 
    pay obligations incurred prior to the date of enactment of the 
    Higher Education Amendments of 1998 under part C of title VII, as 
    such part was in effect during the period--
            ``(A) after the effective date of the Higher Education 
        Amendments of 1992; and
            ``(B) prior to the date of enactment of the Higher 
        Education Amendments of 1998.
    ``(b) Legal Responsibilities.--
        ``(1) Pre-1987 title vii.--All entities with continuing 
    obligations incurred under parts A, B, C, and D of title VII, as 
    such parts were in effect before the effective date of the Higher 
    Education Amendments of 1992, shall be subject to the requirements 
    of such part as in effect before the effective date of the Higher 
    Education Amendments of 1992.
        ``(2) Post-1992 and pre-1998 part c of title vii.--All entities 
    with continuing obligations incurred under part C of title VII, as 
    such part was in effect during the period--
            ``(A) after the effective date of the Higher Education 
        Amendments of 1992; and
            ``(B) prior to the date of enactment of the Higher 
        Education Amendments of 1998,
    shall be subject to the requirements of such part as such part was 
    in effect during such period.

``SEC. 122. RECOVERY OF PAYMENTS.

    ``(a) Public Benefit.--Congress declares that, if a facility 
constructed with the aid of a grant under part A of title VII as such 
part A was in effect prior to the date of enactment of the Higher 
Education Amendments of 1998, or part B of such title as part B was in 
effect prior to the date of enactment of the Higher Education 
Amendments of 1992, is used as an academic facility for 20 years 
following completion of such construction, the public benefit accruing 
to the United States will equal in value the amount of the grant. The 
period of 20 years after completion of such construction shall 
therefore be deemed to be the period of Federal interest in such 
facility for the purposes of such title as so in effect.
    ``(b) Recovery Upon Cessation of Public Benefit.--If, within 20 
years after completion of construction of an academic facility which 
has been constructed, in part with a grant under part A of title VII as 
such part A was in effect prior to the date of enactment of the Higher 
Education Amendments of 1998, or part B of title VII as such part B was 
in effect prior to the date of enactment of the Higher Education 
Amendments of 1992--
        ``(1) the applicant under such parts as so in effect (or the 
    applicant's successor in title or possession) ceases or fails to be 
    a public or nonprofit institution; or
        ``(2) the facility ceases to be used as an academic facility, 
    or the facility is used as a facility excluded from the term 
    `academic facility' (as such term was defined under title VII, as 
    so in effect), unless the Secretary determines that there is good 
    cause for releasing the institution from its obligation,
the United States shall be entitled to recover from such applicant (or 
successor) an amount which bears to the value of the facility at that 
time (or so much thereof as constituted an approved project or 
projects) the same ratio as the amount of Federal grant bore to the 
cost of the facility financed with the aid of such grant. The value 
shall be determined by agreement of the parties or by action brought in 
the United States district court for the district in which such 
facility is situated.
    ``(c) Prohibition on Use for Religion.--Notwithstanding the 
provisions of subsections (a) and (b), no project assisted with funds 
under title VII (as in effect prior to the date of enactment of the 
Higher Education Amendments of 1998) shall ever be used for religious 
worship or a sectarian activity or for a school or department of 
divinity.

                   ``PART C--COST OF HIGHER EDUCATION

``SEC. 131. IMPROVEMENTS IN MARKET INFORMATION AND PUBLIC 
              ACCOUNTABILITY IN HIGHER EDUCATION.

    ``(a) Improved Data Collection.--
        ``(1) Development of uniform methodology.--The Secretary shall 
    direct the Commissioner of Education Statistics to convene a series 
    of forums to develop nationally consistent methodologies for 
    reporting costs incurred by postsecondary institutions in providing 
    postsecondary education.
        ``(2) Redesign of data systems.--On the basis of the 
    methodologies developed pursuant to paragraph (1), the Secretary 
    shall redesign relevant parts of the postsecondary education data 
    systems to improve the usefulness and timeliness of the data 
    collected by such systems.
        ``(3) Information to institutions.--The Commissioner of 
    Education Statistics shall--
            ``(A) develop a standard definition for the following data 
        elements:
                ``(i) tuition and fees for a full-time undergraduate 
            student;
                ``(ii) cost of attendance for a full-time undergraduate 
            student, consistent with the provisions of section 472;
                ``(iii) average amount of financial assistance received 
            by an undergraduate student who attends an institution of 
            higher education, including--

                    ``(I) each type of assistance or benefit described 
                in section 428(a)(2)(C)(i);
                    ``(II) fellowships; and
                    ``(III) institutional and other assistance; and

                ``(iv) number of students receiving financial 
            assistance described in each of subclauses (I), (II), and 
            (III) of clause (iii);
            ``(B) not later than 90 days after the date of enactment of 
        the Higher Education Amendments of 1998, report the definitions 
        to each institution of higher education and within a reasonable 
        period of time thereafter inform the Committee on Labor and 
        Human Resources of the Senate and the Committee on Education 
        and the Workforce of the House of Representatives of those 
        definitions; and
            ``(C) collect information regarding the data elements 
        described in subparagraph (A) with respect to at least all 
        institutions of higher education participating in programs 
        under title IV, beginning with the information from academic 
        year 2000-2001 and annually thereafter.
    ``(b) Data Dissemination.--The Secretary shall make available the 
data collected pursuant to subsection (a). Such data shall be available 
in a form that permits the review and comparison of the data 
submissions of individual institutions of higher education. Such data 
shall be presented in a form that is easily understandable and allows 
parents and students to make informed decisions based on the costs for 
typical full-time undergraduate students.
    ``(c) Study.--
        ``(1) In general.--The Commissioner of Education Statistics 
    shall conduct a national study of expenditures at institutions of 
    higher education. Such study shall include information with respect 
    to--
            ``(A) the change in tuition and fees compared with the 
        consumer price index and other appropriate measures of 
        inflation;
            ``(B) faculty salaries and benefits;
            ``(C) administrative salaries, benefits and expenses;
            ``(D) academic support services;
            ``(E) research;
            ``(F) operations and maintenance; and
            ``(G) institutional expenditures for construction and 
        technology and the potential cost of replacing instructional 
        buildings and equipment.
        ``(2) Evaluation.--The study shall include an evaluation of--
            ``(A) changes over time in the expenditures identified in 
        paragraph (1);
            ``(B) the relationship of the expenditures identified in 
        paragraph (1) to college costs; and
            ``(C) the extent to which increases in institutional 
        financial aid and tuition discounting practices affect tuition 
        increases, including the demographics of students receiving 
        such discounts, the extent to which financial aid is provided 
        to students with limited need in order to attract a student to 
        a particular institution, and the extent to which Federal 
        financial aid, including loan aid, has been used to offset the 
        costs of such practices.
        ``(3) Final report.--The Commissioner of Education Statistics 
    shall submit a report regarding the findings of the study required 
    by paragraph (1) to the appropriate committees of Congress not 
    later than September 30, 2002.
        ``(4) Higher education market basket.--The Bureau of Labor 
    Statistics, in consultation with the Commissioner of Education 
    Statistics, shall develop a higher education market basket that 
    identifies the items that comprise the costs of higher education. 
    The Bureau of Labor Statistics shall provide a report on the market 
    basket to the Committee on Labor and Human Resources of the Senate 
    and the Committee on Education and the Workforce of the House of 
    Representatives not later than September 30, 2002.
        ``(5) Fines.--In addition to actions authorized in section 
    487(c), the Secretary may impose a fine in an amount not to exceed 
    $25,000 on an institution of higher education for failing to 
    provide the information described in paragraph (1) in a timely and 
    accurate manner, or for failing to otherwise cooperate with the 
    National Center for Education Statistics regarding efforts to 
    obtain data on the cost of higher education under this section and 
    pursuant to the program participation agreement entered into under 
    section 487.
    ``(d) Student Aid Recipient Survey.--(1) The Secretary shall survey 
student aid recipients on a regular cycle, but not less than once every 
3 years--
        ``(A) to identify the population of students receiving Federal 
    student aid;
        ``(B) to determine the income distribution and other 
    socioeconomic characteristics of federally aided students;
        ``(C) to describe the combinations of aid from State, Federal, 
    and private sources received by students from all income groups;
        ``(D) to describe the debt burden of loan recipients and their 
    capacity to repay their education debts; and
        ``(E) to disseminate such information in both published and 
    machine readable form.
    ``(2) The survey shall be representative of full-time and part-
time, undergraduate, graduate, and professional and current and former 
students in all types of institutions, and should be designed and 
administered in consultation with the Congress and the postsecondary 
education community.

 ``PART D--ADMINISTRATIVE PROVISIONS FOR DELIVERY OF STUDENT FINANCIAL 
                               ASSISTANCE

``SEC. 141. PERFORMANCE-BASED ORGANIZATION FOR THE DELIVERY OF FEDERAL 
              STUDENT FINANCIAL ASSISTANCE.

    ``(a) Establishment and Purpose.--
        ``(1) Establishment.--There is established in the Department a 
    Performance-Based Organization (hereafter referred to as the `PBO') 
    which shall be a discrete management unit responsible for managing 
    the operational functions supporting the programs authorized under 
    title IV of this Act, as specified in subsection (b).
        ``(2) Purposes.--The purposes of the PBO are--
            ``(A) to improve service to students and other participants 
        in the student financial assistance programs authorized under 
        title IV, including making those programs more understandable 
        to students and their parents;
            ``(B) to reduce the costs of administering those programs;
            ``(C) to increase the accountability of the officials 
        responsible for administering the operational aspects of these 
        programs;
            ``(D) to provide greater flexibility in the management of 
        the operational functions of the Federal student financial 
        assistance programs;
            ``(E) to integrate the information systems supporting the 
        Federal student financial assistance programs;
            ``(F) to implement an open, common, integrated system for 
        the delivery of student financial assistance under title IV; 
        and
            ``(G) to develop and maintain a student financial 
        assistance system that contains complete, accurate, and timely 
        data to ensure program integrity.
    ``(b) General Authority.--
        ``(1) Authority of secretary.--Notwithstanding any other 
    provision of this part, the Secretary shall maintain responsibility 
    for the development and promulgation of policy and regulations 
    relating to the programs of student financial assistance under 
    title IV. In the exercise of its functions, the PBO shall be 
    subject to the direction of the Secretary. The Secretary shall--
            ``(A) request the advice of, and work in cooperation with, 
        the Chief Operating Officer in developing regulations, 
        policies, administrative guidance, or procedures affecting the 
        information systems administered by the PBO, and other 
        functions performed by the PBO;
            ``(B) request cost estimates from the Chief Operating 
        Officer for system changes required by specific policies 
        proposed by the Secretary; and
            ``(C) assist the Chief Operating Officer in identifying 
        goals for the administration and modernization of the delivery 
        system for student financial assistance under title IV.
        ``(2) PBO functions.--Subject to paragraph (1), the PBO shall 
    be responsible for administration of the information and financial 
    systems that support student financial assistance programs 
    authorized under this title, excluding the development of policy 
    relating to such programs but including the following:
            ``(A) The administrative, accounting, and financial 
        management functions of the delivery system for Federal student 
        assistance, including--
                ``(i) the collection, processing and transmission of 
            applicant data to students, institutions and authorized 
            third parties, as provided for in section 483;
                ``(ii) design and technical specifications for software 
            development and systems supporting the delivery of student 
            financial assistance under title IV;
                ``(iii) all software and hardware acquisitions and all 
            information technology contracts related to the delivery 
            and management of student financial assistance under title 
            IV;
                ``(iv) all aspects of contracting for the information 
            and financial systems supporting student financial 
            assistance programs under this title; and
                ``(v) providing all customer service, training, and 
            user support related to systems that support those 
            programs.
            ``(B) Annual development of a budget for the operations and 
        services of the PBO, in consultation with the Secretary, and 
        for consideration and inclusion in the Department's annual 
        budget submission.
        ``(3) Additional functions.--The Secretary may allocate to the 
    PBO such additional functions as the Secretary and the Chief 
    Operating Officer determine are necessary or appropriate to achieve 
    the purposes of the PBO.
        ``(4) Independence.--Subject to paragraph (1), in carrying out 
    its functions, the PBO shall exercise independent control of its 
    budget allocations and expenditures, personnel decisions and 
    processes, procurements, and other administrative and management 
    functions.
        ``(5) Audits and review.--The PBO shall be subject to the usual 
    and customary Federal audit procedures and to review by the 
    Inspector General of the Department.
        ``(6) Changes.--
            ``(A) In general.--The Secretary and the Chief Operating 
        Officer shall consult concerning the effects of policy, market, 
        or other changes on the ability of the PBO to achieve the goals 
        and objectives established in the performance plan described in 
        subsection (c).
            ``(B) Revisions to agreement.--The Secretary and the Chief 
        Operating Officer may revise the annual performance agreement 
        described in subsection (d)(4) in light of policy, market, or 
        other changes that occur after the Secretary and the Chief 
        Operating Officer enter into the agreement.
    ``(c) Performance Plan and Report.--
        ``(1) Performance plan.--
            ``(A) In general.--Each year, the Secretary and Chief 
        Operating Officer shall agree on, and make available to the 
        public, a performance plan for the PBO for the succeeding 5 
        years that establishes measurable goals and objectives for the 
        organization.
            ``(B) Consultation.--In developing the 5-year performance 
        plan and any revision to the plan, the Secretary and the Chief 
        Operating Officer shall consult with students, institutions of 
        higher education, Congress, lenders, the Advisory Committee on 
        Student Financial Assistance, and other interested parties not 
        less than 30 days prior to the implementation of the 
        performance plan or revision.
            ``(C) Areas.--The plan shall include a concise statement of 
        the goals for a modernized system for the delivery of student 
        financial assistance under title IV and identify action steps 
        necessary to achieve such goals. The plan shall address the 
        PBO's responsibilities in the following areas:
                ``(i) Improving service.--Improving service to students 
            and other participants in student financial aid programs 
            authorized under this title, including making those 
            programs more understandable to students and their parents.
                ``(ii) Reducing costs.--Reducing the costs of 
            administering those programs.
                ``(iii) Improvement and integration of support 
            systems.--Improving and integrating the information and 
            delivery systems that support those programs.
                ``(iv) Delivery and information system.-- Developing an 
            open, common, and integrated delivery and information 
            system for programs authorized under this title.
                ``(v) Other areas.--Any other areas identified by the 
            Secretary.
        ``(2) Annual report.--Each year, the Chief Operating Officer 
    shall prepare and submit to Congress, through the Secretary, an 
    annual report on the performance of the PBO, including an 
    evaluation of the extent to which the PBO met the goals and 
    objectives contained in the 5-year performance plan described in 
    paragraph (1) for the preceding year. The annual report shall 
    include the following:
            ``(A) An independent financial audit of the expenditures of 
        both the PBO and programs administered by the PBO.
            ``(B) Financial and performance requirements applicable to 
        the PBO under the Chief Financial Officer Act of 1990 and the 
        Government Performance and Results Act of 1993.
            ``(C) The results achieved by the PBO during the year 
        relative to the goals established in the organization's 
        performance plan.
            ``(D) The evaluation rating of the performance of the Chief 
        Operating Officer and senior managers under subsections (d)(4) 
        and (e)(2), including the amounts of bonus compensation awarded 
        to these individuals.
            ``(E) Recommendations for legislative and regulatory 
        changes to improve service to students and their families, and 
        to improve program efficiency and integrity.
            ``(F) Other such information as the Director of the Office 
        of Management and Budget shall prescribe for performance based 
        organizations.
        ``(3) Consultation with stakeholders.--The Chief Operating 
    Officer, in preparing the report described in paragraph (2), shall 
    establish appropriate means to consult with borrowers, 
    institutions, lenders, guaranty agencies, secondary markets, and 
    others involved in the delivery system of student aid under this 
    title--
            ``(A) regarding the degree of satisfaction with the 
        delivery system; and
            ``(B) to seek suggestions on means to improve the delivery 
        system.
    ``(d) Chief Operating Officer.--
        ``(1) Appointment.--The management of the PBO shall be vested 
    in a Chief Operating Officer who shall be appointed by the 
    Secretary to a term of not less than 3 and not more than 5 years, 
    and compensated without regard to chapters 33, 51, and 53 of title 
    5, United States Code. The Secretary shall appoint the Chief 
    Operating Officer within 6 months after the date of enactment of 
    the Higher Education Amendments of 1998. The appointment shall be 
    made on the basis of demonstrated management ability and expertise 
    in information technology, including experience with financial 
    systems, and without regard to political affiliation or activity.
        ``(2) Reappointment.--The Secretary may reappoint the Chief 
    Operating Officer to subsequent terms of not less than 3 and not 
    more than 5 years, so long as the performance of the Chief 
    Operating Officer, as set forth in the performance agreement 
    described in paragraph (4), is satisfactory.
        ``(3) Removal.--The Chief Operating Officer may be removed by--
            ``(A) the President; or
            ``(B) the Secretary, for misconduct or failure to meet 
        performance goals set forth in the performance agreement in 
        paragraph (4).
    The President or Secretary shall communicate the reasons for any 
    such removal to the appropriate committees of Congress.
        ``(4) Performance agreement.--
            ``(A) In general.--Each year, the Secretary and the Chief 
        Operating Officer shall enter into an annual performance 
        agreement, that shall set forth measurable organization and 
        individual goals for the Chief Operating Officer.
            ``(B) Transmittal.--The final agreement, and any revision 
        to the final agreement, shall be transmitted to the Committee 
        on Education and the Workforce of the House of Representatives 
        and the Committee on Labor and Human Resources of the Senate, 
        and made publicly available.
        ``(5) Compensation.--
            ``(A) In general.--The Chief Operating Officer is 
        authorized to be paid at an annual rate of basic pay not to 
        exceed the maximum rate of basic pay for the Senior Executive 
        Service under section 5382 of title 5, United States Code, 
        including any applicable locality-based comparability payment 
        that may be authorized under section 5304(h)(2)(B) of such 
        title. The compensation of the Chief Operating Officer shall be 
        considered for purposes of section 207(c)(2)(A) of title 18, 
        United States Code, to be the equivalent of that described 
        under clause (ii) of section 207(c)(2)(A) of such title.
            ``(B) Bonus.--In addition, the Chief Operating Officer may 
        receive a bonus in an amount that does not exceed 50 percent of 
        such annual rate of basic pay, based upon the Secretary's 
        evaluation of the Chief Operating Officer's performance in 
        relation to the goals set forth in the performance agreement 
        described in paragraph (2).
            ``(C) Payment.--Payment of a bonus under this subparagraph 
        (B) may be made to the Chief Operating Officer only to the 
        extent that such payment does not cause the Chief Operating 
        Officer's total aggregate compensation in a calendar year to 
        equal or exceed the amount of the President's salary under 
        section 102 of title 3, United States Code.
    ``(e) Senior Management.--
        ``(1) Appointment.--
            ``(A) In general.--The Chief Operating Officer may appoint 
        such senior managers as that officer determines necessary 
        without regard to the provisions of title 5, United States 
        Code, governing appointments in the competitive service.
            ``(B) Compensation.--The senior managers described in 
        subparagraph (A) may be paid without regard to the provisions 
        of chapter 51 and subchapter III of chapter 53 of such title 
        relating to classification and General Schedule pay rates.
        ``(2) Performance agreement.--Each year, the Chief Operating 
    Officer and each senior manager appointed under this subsection 
    shall enter into an annual performance agreement that sets forth 
    measurable organization and individual goals. The agreement shall 
    be subject to review and renegotiation at the end of each term.
        ``(3) Compensation.--
            ``(A) In general.--A senior manager appointed under this 
        subsection may be paid at an annual rate of basic pay of not 
        more than the maximum rate of basic pay for the Senior 
        Executive Service under section 5382 of title 5, United States 
        Code, including any applicable locality-based comparability 
        payment that may be authorized under section 5304(h)(2)(C) of 
        such title. The compensation of a senior manager shall be 
        considered for purposes of section 207(c)(2)(A) of title 18, 
        United States Code, to be the equivalent of that described 
        under clause (ii) of section 207(c)(2)(A) of such title.
            ``(B) Bonus.--In addition, a senior manager may receive a 
        bonus in an amount such that the manager's total annual 
        compensation does not exceed 125 percent of the maximum rate of 
        basic pay for the Senior Executive Service, including any 
        applicable locality-based comparability payment, based upon the 
        Chief Operating Officer's evaluation of the manager's 
        performance in relation to the goals set forth in the 
        performance agreement described in paragraph (2).
        ``(4) Removal.--A senior manager shall be removable by the 
    Chief Operating Officer, or by the Secretary if the position of 
    Chief Operating Officer is vacant.
    ``(f) Student Loan Ombudsman.--
        ``(1) Appointment.--The Chief Operating Officer, in 
    consultation with the Secretary, shall appoint a Student Loan 
    Ombudsman to provide timely assistance to borrowers of loans made, 
    insured, or guaranteed under title IV by performing the functions 
    described in paragraph (3).
        ``(2) Public information.--The Chief Operating Officer shall 
    disseminate information about the availability and functions of the 
    Ombudsman to borrowers and potential borrowers, as well as 
    institutions of higher education, lenders, guaranty agencies, loan 
    servicers, and other participants in those student loan programs.
        ``(3) Functions of ombudsman.--The Ombudsman shall--
            ``(A) in accordance with regulations of the Secretary, 
        receive, review, and attempt to resolve informally complaints 
        from borrowers of loans described in paragraph (1), including, 
        as appropriate, attempts to resolve such complaints within the 
        Department of Education and with institutions of higher 
        education, lenders, guaranty agencies, loan servicers, and 
        other participants in the loan programs described in paragraph 
        (1)(A); and
            ``(B) compile and analyze data on borrower complaints and 
        make appropriate recommendations.
        ``(4) Report.--Each year, the Ombudsman shall submit a report 
    to the Chief Operating Officer, for inclusion in the annual report 
    under subsection (c)(2), that describes the activities, and 
    evaluates the effectiveness of the Ombudsman during the preceding 
    year.
    ``(g) Personnel Flexibility.--
        ``(1) Personnel ceilings.--The PBO shall not be subject to any 
    ceiling relating to the number or grade of employees.
        ``(2) Administrative flexibility.--The Chief Operating Officer 
    shall work with the Office of Personnel Management to develop and 
    implement personnel flexibilities in staffing, classification, and 
    pay that meet the needs of the PBO, subject to compliance with 
    title 5, United States Code.
        ``(3) Excepted service.--The Chief Operating Officer may 
    appoint, without regard to the provisions of title 5, United States 
    Code, governing appointments in the competitive service, not more 
    than 25 technical and professional employees to administer the 
    functions of the PBO. These employees may be paid without regard to 
    the provisions of chapter 51 and subchapter III of chapter 53 of 
    such title relating to classification and General Schedule pay 
    rates.
    ``(h) Establishment of a Fair and Equitable System for Measuring 
Staff Performance.--The PBO shall establish an annual performance 
management system, subject to compliance with title 5, United States 
Code and consistent with applicable provisions of law and regulations, 
which strengthens the organizational effectiveness of the PBO by 
providing for establishing goals or objectives for individual, group, 
or organizational performance (or any combination thereof), consistent 
with the performance plan of the PBO and its performance planning 
procedures, including those established under the Government 
Performance and Results Act of 1993, and communicating such goals or 
objectives to employees.
    ``(i) Report.--The Secretary and the Chief Operating Officer, not 
later than 180 days after the date of enactment of the Higher Education 
Amendments of 1998, shall report to Congress on the proposed budget and 
sources of funding for the operation of the PBO.
    ``(j) Authorization of Appropriations.--The Secretary shall 
allocate from funds made available under section 458 such funds as are 
appropriate to the functions assumed by the PBO. In addition, there are 
authorized to be appropriated such sums as may be necessary to carry 
out the purposes of this part, including transition costs.

``SEC. 142. PROCUREMENT FLEXIBILITY.

    ``(a) Procurement Authority.--Subject to the authority of the 
Secretary, the Chief Operating Officer of a PBO may exercise the 
authority of the Secretary to procure property and services in the 
performance of functions managed by the PBO. For the purposes of this 
section, the term `PBO' includes the Chief Operating Officer of the PBO 
and any employee of the PBO exercising procurement authority under the 
preceding sentence.
    ``(b) In General.--Except as provided in this section, the PBO 
shall abide by all applicable Federal procurement laws and regulations 
when procuring property and services. The PBO shall--
        ``(1) enter into contracts for information systems supporting 
    the programs authorized under title IV to carry out the functions 
    set forth in section 141(b)(2); and
        ``(2) obtain the services of experts and consultants without 
    regard to section 3109 of title 5, United States Code and set pay 
    in accordance with such section.
    ``(c) Service Contracts.--
        ``(1) Performance-based servicing contracts.--The Chief 
    Operating Officer shall, to the extent practicable, maximize the 
    use of performance-based servicing contracts, consistent with 
    guidelines for such contracts published by the Office of Federal 
    Procurement Policy, to achieve cost savings and improve service.
        ``(2) Fee for service arrangements.--The Chief Operating 
    Officer shall, when appropriate and consistent with the purposes of 
    the PBO, acquire services related to the title IV delivery system 
    from any entity that has the capability and capacity to meet the 
    requirements for the system. The Chief Operating Officer is 
    authorized to pay fees that are equivalent to those paid by other 
    entities to an organization that provides an information system or 
    service that meets the requirements of the PBO, as determined by 
    the Chief Operating Officer.
    ``(d) Two-Phase Source-Selection Procedures.--
        ``(1) In general.--The PBO may use a two-phase process for 
    selecting a source for a procurement of property or services.
        ``(2) First phase.--The procedures for the first phase of the 
    process for a procurement are as follows:
            ``(A) Publication of notice.--The contracting officer for 
        the procurement shall publish a notice of the procurement in 
        accordance with section 18 of the Office of Federal Procurement 
        Policy Act (41 U.S.C. 416) and subsections (e), (f), and (g) of 
        section 8 of the Small Business Act (15 U.S.C. 637), except 
        that the notice shall include only the following:
                ``(i) A general description of the scope or purpose of 
            the procurement that provides sufficient information on the 
            scope or purpose for sources to make informed business 
            decisions regarding whether to participate in the 
            procurement.
                ``(ii) A description of the basis on which potential 
            sources are to be selected to submit offers in the second 
            phase.
                ``(iii) A description of the information that is to be 
            required under subparagraph (B).
                ``(iv) Any additional information that the contracting 
            officer determines appropriate.
            ``(B) Information submitted by offerors.--Each offeror for 
        the procurement shall submit basic information, such as 
        information on the offeror's qualifications, the proposed 
        conceptual approach, costs likely to be associated with the 
        proposed conceptual approach, and past performance of the 
        offeror on Federal Government contracts, together with any 
        additional information that is requested by the contracting 
        officer.
            ``(C) Selection for second phase.--The contracting officer 
        shall select the offerors that are to be eligible to 
        participate in the second phase of the process. The contracting 
        officer shall limit the number of the selected offerors to the 
        number of sources that the contracting officer determines is 
        appropriate and in the best interests of the Federal 
        Government.
        ``(3) Second phase.--
            ``(A) In general.--The contracting officer shall conduct 
        the second phase of the source selection process in accordance 
        with sections 303A and 303B of the Federal Property and 
        Administrative Services Act of 1949 (41 U.S.C. 253a and 253b).
            ``(B) Eligible participants.--Only the sources selected in 
        the first phase of the process shall be eligible to participate 
        in the second phase.
            ``(C) Single or multiple procurements.--The second phase 
        may include a single procurement or multiple procurements 
        within the scope, or for the purpose, described in the notice 
        pursuant to paragraph (2)(A).
        ``(4) Procedures considered competitive.--The procedures used 
    for selecting a source for a procurement under this subsection 
    shall be considered competitive procedures for all purposes.
    ``(e) Use of Simplified Procedures for Commercial Items.--Whenever 
the PBO anticipates that commercial items will be offered for a 
procurement, the PBO may use (consistent with the special rules for 
commercial items) the special simplified procedures for the procurement 
without regard to--
        ``(1) any dollar limitation otherwise applicable to the use of 
    those procedures; and
        ``(2) the expiration of the authority to use special simplified 
    procedures under section 4202(e) of the Clinger-Cohen Act of 1996 
    (110 Stat. 654; 10 U.S.C. 2304 note).
    ``(f) Flexible Wait Periods and Deadlines for Submission of Offers 
of Noncommercial Items.--
        ``(1) Authority.--In carrying out a procurement, the PBO may--
            ``(A) apply a shorter waiting period for the issuance of a 
        solicitation after the publication of a notice under section 18 
        of the Office of Federal Procurement Policy Act (41 U.S.C. 416) 
        than is required under subsection (a)(3)(A) of such section; 
        and
            ``(B) notwithstanding subsection (a)(3) of such section, 
        establish any deadline for the submission of bids or proposals 
        that affords potential offerors a reasonable opportunity to 
        respond to the solicitation.
        ``(2) Inapplicability to commercial items.--Paragraph (1) does 
    not apply to a procurement of a commercial item.
        ``(3) Consistency with applicable international agreements.--If 
    an international agreement is applicable to the procurement, any 
    exercise of authority under paragraph (1) shall be consistent with 
    the international agreement.
    ``(g) Modular Contracting.--
        ``(1) In general.--The PBO may satisfy the requirements of the 
    PBO for a system incrementally by carrying out successive 
    procurements of modules of the system. In doing so, the PBO may use 
    procedures authorized under this subsection to procure any such 
    module after the first module.
        ``(2) Utility requirement.--A module may not be procured for a 
    system under this subsection unless the module is useful 
    independently of the other modules or useful in combination with 
    another module previously procured for the system.
        ``(3) Conditions for use of authority.--The PBO may use 
    procedures authorized under paragraph (4) for the procurement of an 
    additional module for a system if--
            ``(A) competitive procedures were used for awarding the 
        contract for the procurement of the first module for the 
        system; and
            ``(B) the solicitation for the first module included--
                ``(i) a general description of the entire system that 
            was sufficient to provide potential offerors with 
            reasonable notice of the general scope of future modules;
                ``(ii) other information sufficient for potential 
            offerors to make informed business judgments regarding 
            whether to submit offers for the contract for the first 
            module; and
                ``(iii) a statement that procedures authorized under 
            this subsection could be used for awarding subsequent 
            contracts for the procurement of additional modules for the 
            system.
        ``(4) Procedures.--If the procurement of the first module for a 
    system meets the requirements set forth in paragraph (3), the PBO 
    may award a contract for the procurement of an additional module 
    for the system using any of the following procedures:
            ``(A) Sole source.--Award of the contract on a sole-source 
        basis to a contractor who was awarded a contract for a module 
        previously procured for the system under competitive procedures 
        or procedures authorized under subparagraph (B).
            ``(B) Adequate competition.--Award of the contract on the 
        basis of offers made by--
                ``(i) a contractor who was awarded a contract for a 
            module previously procured for the system after having been 
            selected for award of the contract under this subparagraph 
            or other competitive procedures; and
                ``(ii) at least one other offeror that submitted an 
            offer for a module previously procured for the system and 
            is expected, on the basis of the offer for the previously 
            procured module, to submit a competitive offer for the 
            additional module.
            ``(C) Other.--Award of the contract under any other 
        procedure authorized by law.
        ``(5) Notice requirement.--
            ``(A) Publication.--Not less than 30 days before issuing a 
        solicitation for offers for a contract for a module for a 
        system under procedures authorized under subparagraph (A) or 
        (B) of paragraph (4), the PBO shall publish in the Commerce 
        Business Daily a notice of the intent to use such procedures to 
        enter into the contract.
            ``(B) Exception.--Publication of a notice is not required 
        under this paragraph with respect to a use of procedures 
        authorized under paragraph (4) if the contractor referred to in 
        that subparagraph (who is to be solicited to submit an offer) 
        has previously provided a module for the system under a 
        contract that contained cost, schedule, and performance goals 
        and the contractor met those goals.
            ``(C) Content of notice.--A notice published under 
        subparagraph (A) with respect to a use of procedures described 
        in paragraph (4) shall contain the information required under 
        section 18(b) of the Office of Federal Procurement Policy Act 
        (41 U.S.C. 416(b)), other than paragraph (4) of such section, 
        and shall invite the submission of any assertion that the use 
        of the procedures for the procurement involved is not in the 
        best interest of the Federal Government together with 
        information supporting the assertion.
        ``(6) Documentation.--The basis for an award of a contract 
    under this subsection shall be documented. However, a justification 
    pursuant to section 303(f) of the Federal Property and 
    Administrative Services Act of 1949 (41 U.S.C. 253(f)) or section 
    8(h) of the Small Business Act (15 U.S.C. 637(h)) is not required.
        ``(7) Simplified source-selection procedures.--The PBO may 
    award a contract under any other simplified procedures prescribed 
    by the PBO for the selection of sources for the procurement of 
    modules for a system, after the first module, that are not to be 
    procured under a contract awarded on a sole-source basis.
    ``(h) Use of Simplified Procedures for Small Business Set-Asides 
for Services Other Than Commercial Items.--
        ``(1) Authority.--The PBO may use special simplified procedures 
    for a procurement of services that are not commercial items if--
            ``(A) the procurement is in an amount not greater than 
        $1,000,000;
            ``(B) the procurement is conducted as a small business set-
        aside pursuant to section 15(a) of the Small Business Act (15 
        U.S.C. 644(a)); and
            ``(C) the price charged for supplies associated with the 
        services procured are items of supply expected to be less than 
        20 percent of the total contract price.
        ``(2) Inapplicability to certain procurements.--The authority 
    set forth in paragraph (1) may not be used for--
            ``(A) an award of a contract on a sole-source basis; or
            ``(B) a contract for construction.
    ``(i) Guidance for Use of Authority.--
        ``(1) Issuance by pbo.--The Chief Operating Officer of the PBO, 
    in consultation with the Administrator for Federal Procurement 
    Policy, shall issue guidance for the use by PBO personnel of the 
    authority provided in this section.
        ``(2) Guidance from ofpp.--As part of the consultation required 
    under paragraph (1), the Administrator for Federal Procurement 
    Policy shall provide the PBO with guidance that is designed to 
    ensure, to the maximum extent practicable, that the authority under 
    this section is exercised by the PBO in a manner that is consistent 
    with the exercise of the authority by the heads of the other 
    performance-based organizations.
        ``(3) Compliance with ofpp guidance.--The head of the PBO shall 
    ensure that the procurements of the PBO under this section are 
    carried out in a manner that is consistent with the guidance 
    provided for the PBO under paragraph (2).
    ``(j) Limitation on Multiagency Contracting.--No department or 
agency of the Federal Government may purchase property or services 
under contracts entered into or administered by a PBO under this 
section unless the purchase is approved in advance by the senior 
procurement official of that department or agency who is responsible 
for purchasing by the department or agency.
    ``(k) Laws Not Affected.--Nothing in this section shall be 
construed to waive laws for the enforcement of civil rights or for the 
establishment and enforcement of labor standards that are applicable to 
contracts of the Federal Government.
    ``(l) Definitions.--In this section:
        ``(1) Commercial item.--The term `commercial item' has the 
    meaning given the term in section 4(12) of the Office of Federal 
    Procurement Policy Act (41 U.S.C. 403(12)).
        ``(2) Competitive procedures.--The term `competitive 
    procedures' has the meaning given the term in section 309(b) of the 
    Federal Property and Administrative Services Act of 1949 (41 U.S.C. 
    259(b)).
        ``(3) Sole-source basis.--The term `sole-source basis', with 
    respect to an award of a contract, means that the contract is 
    awarded to a source after soliciting an offer or offers from, and 
    negotiating with, only that source.
        ``(4) Special rules for commercial items.--The term `special 
    rules for commercial items' means the regulations set forth in the 
    Federal Acquisition Regulation pursuant to section 303(g)(1) of the 
    Federal Property and Administrative Services Act of 1949 (41 U.S.C. 
    253(g)(1)) and section 31 of the Office of Federal Procurement 
    Policy Act (41 U.S.C. 427).
        ``(5) Special simplified procedures.--The term `special 
    simplified procedures' means the procedures applicable to purchases 
    of property and services for amounts not greater than the 
    simplified acquisition threshold that are set forth in the Federal 
    Acquisition Regulation pursuant to section 303(g)(1)(B) of the 
    Federal Property and Administrative Services Act of 1949 (41 U.S.C. 
    253(g)(1)(A)) and section 31(a)(1) of the Office of Federal 
    Procurement Policy Act (41 U.S.C. 427(a)(1)).

``SEC. 143. ADMINISTRATIVE SIMPLIFICATION OF STUDENT AID DELIVERY.

    ``(a) In General.--In order to improve the efficiency and 
effectiveness of the student aid delivery system, the Secretary and the 
Chief Operating Officer shall encourage and participate in the 
establishment of voluntary consensus standards and requirements for the 
electronic transmission of information necessary for the administration 
of programs under title IV.
    ``(b) Participation in Standard Setting Organizations.--
        ``(1) The Chief Operating Officer shall participate in the 
    activities of standard setting organizations in carrying out the 
    provisions of this section.
        ``(2) The Chief Operating Officer shall encourage higher 
    education groups seeking to develop common forms, standards, and 
    procedures in support of the delivery of Federal student financial 
    assistance to conduct these activities within a standard setting 
    organization.
        ``(3) The Chief Operating Officer may pay necessary dues and 
    fees associated with participating in standard setting 
    organizations pursuant to this subsection.
    ``(c) Adoption of Voluntary Consensus Standards.--Except with 
respect to the common financial reporting form under section 483(a), 
the Secretary shall consider adopting voluntary consensus standards 
agreed to by the organization described in subsection (b) for 
transactions required under title IV, and common data elements for such 
transactions, to enable information to be exchanged electronically 
between systems administered by the Department and among participants 
in the Federal student aid delivery system.
    ``(d) Use of Clearinghouses.--Nothing in this section shall 
restrict the ability of participating institutions and lenders from 
using a clearinghouse or servicer to comply with the standards for the 
exchange of information established under this section.
    ``(e) Data Security.--Any entity that maintains or transmits 
information under a transaction covered by this section shall maintain 
reasonable and appropriate administrative, technical, and physical 
safeguards--
        ``(1) to ensure the integrity and confidentiality of the 
    information; and
        ``(2) to protect against any reasonably anticipated security 
    threats, or unauthorized uses or disclosures of the information.
    ``(f) Definitions.--
        ``(1) Clearinghouse.--The term `clearinghouse' means a public 
    or private entity that processes or facilitates the processing of 
    nonstandard data elements into data elements conforming to 
    standards adopted under this section.
        ``(2) Standard setting organization.--The term `standard 
    setting organization' means an organization that--
            ``(A) is accredited by the American National Standards 
        Institute;
            ``(B) develops standards for information transactions, data 
        elements, or any other standard that is necessary to, or will 
        facilitate, the implementation of this section; and
            ``(C) is open to the participation of the various entities 
        engaged in the delivery of Federal student financial 
        assistance.
        ``(3) Voluntary consensus standard.--The term `voluntary 
    consensus standard' means a standard developed or used by a 
    standard setting organization described in paragraph (2).''.
    (b) Repeal of Old General Provisions.--Title XII (20 U.S.C. 1141 et 
seq.) is repealed.
    (c) Repeal of Title IV Definition.--Section 481 (20 U.S.C. 1088) is 
amended--
        (1) by striking subsections (a), (b), and (c); and
        (2) by redesignating subsections (d) through (f) as subsections 
    (a) through (c), respectively.

SEC. 102. CONFORMING AMENDMENTS.

    (a) Conforming Amendments Correcting References to Section 1201.--
        (1) Agriculture.--
            (A) Student internship programs.--Section 922 of the 
        Federal Agriculture Improvement and Reform Act of 1996 (7 
        U.S.C. 2279c) is amended--
                (i) in subsection (a)(1)(B)--

                    (I) by striking ``1201'' and inserting ``101''; and
                    (II) by striking ``(20 U.S.C. 1141)''; and

                (ii) in subsection (b)(1)--

                    (I) by striking ``1201'' and inserting ``101''; and
                    (II) by striking ``(20 U.S.C. 1141)''.

            (B) Agricultural sciences education.--Section 1417(j)(1)(A) 
        of the National Agricultural Research, Extension, and Teaching 
        Policy Act of 1977 (7 U.S.C. 3152(j)(1)(A)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
        (2) Armed forces.--
            (A) Science and mathematics education improvement 
        program.--Section 2193(c)(1) of title 10, United States Code, 
        is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (B) Support of science, mathematics, and engineering 
        education.--Section 2199(2) of title 10, United States Code, is 
        amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (C) Allowable costs under defense contracts.--Section 
        841(c)(2) of the National Defense Authorization Act for fiscal 
        year 1994 (10 U.S.C. 2324 note) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (D) Environmental restoration institutional grants for 
        training dislocated defense workers and young adults.--Section 
        1333(i)(3) of the National Defense Authorization Act for fiscal 
        year 1994 (10 U.S.C. 2701 note) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (E) Environmental education opportunities program.--Section 
        1334(k)(3) of the National Defense Authorization Act for fiscal 
        year 1994 (10 U.S.C. 2701 note) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (F) Environmental scholarship and fellowship programs.--
        Section 4451(b)(1) of the National Defense Authorization Act 
        for 1993 (10 U.S.C. 2701 note) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
        (3) Application of antitrust laws to award of need-based 
    educational aid.--Section 568(c)(3) of the Improving America's 
    Schools Act of 1994 (15 U.S.C. 1 note) is amended--
            (A) by striking ``1201(a)'' and inserting ``101''; and
            (B) by striking ``(20 U.S.C. 1141(a))''.
        (4) Omnibus parks and public lands management act of 1996.--
    Section 1007(c)(5) of the Omnibus Parks and Public Lands Management 
    Act of 1996 (16 U.S.C. 698u-5) is amended by striking ``1201(a) of 
    the Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
    inserting ``101 of the Higher Education Act of 1965''.
        (5) Restrictions on former officers, employees, and elected 
    officials of the executive and legislative branches.--Section 
    207(j)(2)(B) of title 18, United States Code, is amended by 
    striking ``1201(a)'' and inserting ``101''.
        (6) Education.--
            (A) Higher education amendments of 1992.--Section 1(c) of 
        the Higher Education Amendments of 1992 (20 U.S.C. 1001 note) 
        is amended by striking ``1201'' and inserting ``101''.
            (B) Treatment of branches.--Section 498(j)(2) of the Higher 
        Education Act of 1965 (20 U.S.C. 1099c(j)(2)) is amended by 
        striking ``1201(a)(2)'' and inserting ``101(a)(2)''.
            (C) Disclosure requirements.--Section 429(d)(2)(B)(ii) of 
        the General Education Provisions Act (20 U.S.C. 
        1228c(d)(2)(B)(ii)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (D) Harry s. truman scholarships.--Section 3(4) of the 
        Harry S. Truman Memorial Scholarship Act (20 U.S.C. 2002(4)) is 
        amended by striking ``1201(a)'' and inserting ``101''.
            (E) Tech-prep education.--Section 347(2)(A) of the Carl D. 
        Perkins Vocational and Applied Technology Education Act (20 
        U.S.C. 2394e(2)(A)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (F) Education for economic security.--Section 3(6) of the 
        Education for Economic Security Act (20 U.S.C. 3902(6)) is 
        amended by striking ``1201(a)'' and inserting ``101''.
            (G) James madison memorial fellowships.--Section 815 of the 
        James Madison Memorial Fellowship Act (20 U.S.C. 4514) is 
        amended--
                (i) in paragraph (3), by striking ``1201(a)'' and 
            inserting ``101''; and
                (ii) in paragraph (4), by striking ``1201(d) of the 
            Higher Education Act of 1965'' and inserting ``14101 of the 
            Elementary and Secondary Education Act of 1965''.
            (H) Barry goldwater scholarships.--Section 1403(4) of the 
        Barry Goldwater Scholarship and Excellence in Education Act (20 
        U.S.C. 4702(4)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (I) Morris k. udall scholarships.--Section 4(6) of the 
        Morris K. Udall Scholarship and Excellence in National 
        Environmental and Native American Public Policy Act of 1992 (20 
        U.S.C. 5602(6)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (J) Bilingual education, and language enhancement and 
        acquisition.--Section 7501(4) of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 7601(4)) is amended by 
        striking ``1201(a)'' and inserting ``101''.
            (K) General definitions.--Section 14101(17) of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        8801(17)) is amended by striking ``1201(a)'' and inserting 
        ``101''.
            (L) National education statistics.--Section 402(c)(3) of 
        the National Education Statistics Act of 1994 (20 U.S.C. 
        9001(c)(3)) is amended by striking ``1201(a)'' and inserting 
        ``101''.
        (7) Foreign relations.--
            (A) Environment and sustainable development exchange 
        program.--Section 240(d) of the Foreign Relations Authorization 
        Act, Fiscal Years 1994 and 1995 (22 U.S.C. 2452 note) is 
        amended by striking ``1201(a)'' and inserting ``101''.
            (B) Samantha smith memorial exchange program.--Section 
        112(a)(8) of the Mutual Educational and Cultural Exchange Act 
        of 1961 (22 U.S.C. 2460(a)(8)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (C) Soviet-eastern european training.--Section 803(1) of 
        the Soviet-Eastern European Research and Training Act of 1983 
        (22 U.S.C. 4502(1)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (D) Developing country scholarships.--Section 603(d) of the 
        Foreign Relations Authorization Act, Fiscal Years 1986 and 1987 
        (22 U.S.C. 4703(d)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
        (8) Indians.--
            (A) Snyder act.--The last paragraph of section 410 of the 
        Act entitled ``An Act authorizing appropriations and 
        expenditures for the administration of Indian Affairs, and for 
        other purposes'', approved November 2, 1921 (25 U.S.C. 13) 
        (commonly known as the Snyder Act) is amended by striking 
        ``1201'' and inserting ``101''.
            (B) Tribally controlled community college assistance.--
        Section 2(a)(5) of the Tribally Controlled Community College 
        Assistance Act (25 U.S.C. 1801(a)(5)) is amended by striking 
        ``1201(a)'' and inserting ``101''.
            (C) Construction of new facilities.--Section 113(b)(2) of 
        the Tribally Controlled Community College Assistance Act (25 
        U.S.C. 1813(b)(2)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (D) American indian teacher training.--Section 
        1371(a)(1)(B) of the Higher Education Amendments of 1992 (25 
        U.S.C. 3371(a)(1)(B)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
        (9) Labor.--
            (A) Rehabilitation definitions.--Section 6(23) of the 
        Rehabilitation Act of 1973 (29 U.S.C. 705(23)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (B) Technology related assistance for individuals with 
        disabilities act of 1988.--Section 3(8) of the Technology 
        Related Assistance for Individuals with Disabilities Act of 
        1988 (29 U.S.C. 2202(8)) is amended by striking ``1201(a) of 
        the Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
        inserting ``101 of the Higher Education Act of 1965''.
        (10) Surface mining control.--Section 701(32) of the Surface 
    Mining Control and Reclamation Act of 1977 (30 U.S.C. 1291(32)) is 
    amended by striking ``1201(a)'' and inserting ``101''.
        (11) Pollution prevention.--Section 112(a)(1) of the Federal 
    Water Pollution Control Act (33 U.S.C. 1262(a)(1)) is amended by 
    striking ``1201'' and inserting ``101''.
        (12) Postal service.--Section 3626(b)(3) of title 39, United 
    States Code, is amended--
            (A) by striking ``1201(a)'' and inserting ``101''; and
            (B) by striking ``(20 U.S.C. 1141(a))''.
        (13) Public health and welfare.--
            (A) Public health service act.--Section 705(a)(2)(C) of the 
        Public Health Service Act (42 U.S.C. 292d(a)(2)(C)) is amended 
        by striking ``section 481(a)'' and inserting ``section 
        102(a)''.
            (B) Scientific and technical education.--Section 3(g) of 
        the Scientific and Advanced-Technology Act of 1992 (42 U.S.C. 
        1862i(g)) is amended--
                (i) in paragraph (2)--

                    (I) by striking ``1201(a)'' and inserting ``101''; 
                and
                    (II) by striking ``(20 U.S.C. 1141(a))''; and

                (ii) in paragraph (3)--

                    (I) by striking ``1201(a)'' and inserting ``101''; 
                and
                    (II) by striking ``(20 U.S.C. 1141(a))''.

            (C) Older americans.--Section 102(32) of the Older 
        Americans Act of 1965 (42 U.S.C. 3002(32)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (D) Justice system improvement.--Section 901(17) of the 
        Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
        3791(17)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (E) Energy technology commercialization services program.--
        Section 362(f)(5)(A) of the Energy Policy and Conservation Act 
        (42 U.S.C. 6322(f)(5)(A)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (F) Environmental restoration and waste management.--
        Section 3132(b)(1) of the National Defense Authorization Act 
        for Fiscal Years 1992 and 1993 (42 U.S.C. 7274e(b)(1)) is 
        amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (G) Head start.--Section 649(c)(3) of the Head Start Act 
        (42 U.S.C. 9844(c)(3)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (H) State dependent care development grants.--Section 
        670G(5) of the Child Care and Development Block Grant Act of 
        1990 (42 U.S.C. 9877(5)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (I) Instructional activities for low-income youth.--The 
        matter preceding subparagraph (A) of section 682(b)(1) of the 
        Community Services Block Grant Act (42 U.S.C. 9910c(b)(1)) is 
        amended by striking ``1201(a)'' and inserting ``101''.
            (J) Drug abuse education.--Section 3601(7) of the Anti-Drug 
        Abuse Act of 1988 (42 U.S.C. 11851(7)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (K) National and community service.--Section 101(13) of the 
        National and Community Service Act of 1990 (42 U.S.C. 
        12511(13)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (L) Civilian community corps.--Section 166(6) of the 
        National and Community Service Act of 1990 (42 U.S.C. 12626(6)) 
        is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (M) Cranston-gonzalez national affordable housing act.--
        Section 457(9) of the Cranston-Gonzalez National Affordable 
        Housing Act (42 U.S.C. 12899f(9)) is amended by striking 
        ``1201(a)'' and inserting ``101''.
            (N) Community schools youth services and supervision grant 
        program.--The definition of public school in section 30401(b) 
        of the Community Schools Youth Services and Supervision Grant 
        Program Act of 1994 (42 U.S.C. 13791(b)) is amended--
                (i) by striking ``1201'' each place the term appears 
            and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(i))''.
            (O) Police corps.--The definition of institution of higher 
        education in section 200103 of the Police Corps Act (42 U.S.C. 
        14092) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (P) Law enforcement scholarship program.--The definition of 
        institution of higher education in section 200202 of the Law 
        Enforcement Scholarship and Recruitment Act (42 U.S.C. 14111) 
        is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
        (14) Telecommunications.--Section 223(h)(4) of the 
    Telecommunications Act of 1934 (47 U.S.C. 223(h)(4)) is amended--
            (A) by striking ``1201'' and inserting ``101''; and
            (B) by striking ``(20 U.S.C. 1141)''.
        (15) War and national defense.--Section 808(3) of the David L. 
    Boren National Security Education Act of 1991 (50 U.S.C. 1908(3)) 
    is amended--
            (A) by striking ``1201(a)'' and inserting ``101''; and
            (B) by striking ``(20 U.S.C. 1141(a))''.
    (b) Internal Cross References.--The Act (20 U.S.C. 1001 et seq.) is 
amended--
        (1) in section 402A(c)(2) (20 U.S.C. 1070a-11(c)(2)), by 
    striking ``1210'' and inserting ``118'';
        (2) in section 435(a) (20 U.S.C. 1085(a)), by striking 
    ``section 481'' and inserting ``section 102'';
        (3) in section 485(f)(1)(I) (20 U.S.C. 1092(f)(1)(I)), by 
    striking ``1213'' and inserting ``120'';
        (4) in section 487(d) (20 U.S.C. 1094(d)), by striking 
    ``section 481'' and inserting ``section 102'';
        (5) in subsections (j) and (k) of section 496 (20 U.S.C. 
    1099b), by striking ``section 481'' each place the term appears and 
    inserting ``section 102'';
        (6) in section 498(i) (20 U.S.C. 1099c) is amended by striking 
    ``section 481'' and inserting ``section 102'';
        (7) in section 498(j) (20 U.S.C. 1099c(j))--
            (A) in paragraph (1), by striking ``sections 481(b)(5) and 
        481(c)(3)'' and inserting ``sections 102(b)(1)(E) and 
        102(c)(1)(C)''; and
            (B) in paragraph (2), by striking ``1201(a)(2)'' and 
        inserting ``101(a)(2)''; and
        (8) in section 631(a)(8) (20 U.S.C. 1132(a)(8))--
            (A) by striking ``section 1201(a)'' each place the term 
        appears and inserting ``section 101''; and
            (B) by striking ``of 1201(a)'' and inserting ``of section 
        101''.
    (c) Additional Conforming Amendments Correcting References to 
Section 481.--
        (1) School-to-work opportunities act of  1994.--Section 4 of 
    the School-to-Work Opportunities Act of 1994 (20 U.S.C. 6103) is 
    amended--
            (A) in paragraph (11)(B)(viii), by striking ``section 
        481(b)'' and inserting ``section 102(b)''; and
            (B) in paragraph (12), by striking ``section 481'' and 
        inserting ``section 102''.
        (2) National and community service act of 1990.-- Section 
    148(g) of the National and Community Service Act of 1990 (42 U.S.C. 
    12604(g)) is amended by striking ``section 481(a) of the Higher 
    Education Act of 1965 (20 U.S.C. 1088(a))'' and inserting ``section 
    102 of the Higher Education Act of 1965''.
    (d) Workforce Investment Act of 1998.--The Workforce Investment Act 
of 1998 is amended--
        (1) in section 101(35) (29 U.S.C. 2801(35)), by striking 
    ``section 481 of the Higher Education Act of 1965 (20 U.S.C. 
    1088)'' and inserting ``section 102 of the Higher Education Act of 
    1965''; and
        (2) in section 203(11) (20 U.S.C. 9202(11)), by striking 
    ``section 1201 of the Higher Education Act of 1965 (20 U.S.C. 
    1141)'' and inserting ``section 101 of the Higher Education Act of 
    1965''.

                       TITLE II--TEACHER QUALITY

SEC. 201. TEACHER QUALITY ENHANCEMENT GRANTS.

    The Act is amended by inserting after title I (20 U.S.C. 1001 et 
seq.) the following:

     ``TITLE II--TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND 
                              PARTNERSHIPS

``SEC. 201. PURPOSES; DEFINITIONS.

    ``(a) Purposes.--The purposes of this title are to--
        ``(1) improve student achievement;
        ``(2) improve the quality of the current and future teaching 
    force by improving the preparation of prospective teachers and 
    enhancing professional development activities;
        ``(3) hold institutions of higher education accountable for 
    preparing teachers who have the necessary teaching skills and are 
    highly competent in the academic content areas in which the 
    teachers plan to teach, such as mathematics, science, English, 
    foreign languages, history, economics, art, civics, Government, and 
    geography, including training in the effective uses of technology 
    in the classroom; and
        ``(4) recruit highly qualified individuals, including 
    individuals from other occupations, into the teaching force.
    ``(b) Definitions.--In this title:
        ``(1) Arts and sciences.--The term `arts and sciences' means--
            ``(A) when referring to an organizational unit of an 
        institution of higher education, any academic unit that offers 
        1 or more academic majors in disciplines or content areas 
        corresponding to the academic subject matter areas in which 
        teachers provide instruction; and
            ``(B) when referring to a specific academic subject matter 
        area, the disciplines or content areas in which academic majors 
        are offered by the arts and science organizational unit.
        ``(2) High need local educational agency.--The term `high need 
    local educational agency' means a local educational agency that 
    serves an elementary school or secondary school located in an area 
    in which there is--
            ``(A) a high percentage of individuals from families with 
        incomes below the poverty line;
            ``(B) a high percentage of secondary school teachers not 
        teaching in the content area in which the teachers were trained 
        to teach; or
            ``(C) a high teacher turnover rate.
        ``(3) Poverty line.--The term `poverty line' means the poverty 
    line (as defined by the Office of Management and Budget, and 
    revised annually in accordance with section 673(2) of the Community 
    Services Block Grant Act (42 U.S.C. 9902(2))) applicable to a 
    family of the size involved.

``SEC. 202. STATE GRANTS.

    ``(a) In General.--From amounts made available under section 210(1) 
for a fiscal year, the Secretary is authorized to award grants under 
this section, on a competitive basis, to eligible States to enable the 
eligible States to carry out the activities described in subsection 
(d).
    ``(b) Eligible State.--
        ``(1) Definition.--In this title, the term `eligible State' 
    means--
            ``(A) the Governor of a State; or
            ``(B) in the case of a State for which the constitution or 
        law of such State designates another individual, entity, or 
        agency in the State to be responsible for teacher certification 
        and preparation activity, such individual, entity, or agency.
        ``(2) Consultation.--The Governor and the individual, entity, 
    or agency designated under paragraph (1) shall consult with the 
    Governor, State board of education, State educational agency, or 
    State agency for higher education, as appropriate, with respect to 
    the activities assisted under this section.
        ``(3) Construction.--Nothing in this subsection shall be 
    construed to negate or supersede the legal authority under State 
    law of any State agency, State entity, or State public official 
    over programs that are under the jurisdiction of the agency, 
    entity, or official.
    ``(c) Application.--To be eligible to receive a grant under this 
section, an eligible State shall, at the time of the initial grant 
application, submit an application to the Secretary that--
        ``(1) meets the requirement of this section;
        ``(2) includes a description of how the eligible State intends 
    to use funds provided under this section; and
        ``(3) contains such other information and assurances as the 
    Secretary may require.
    ``(d) Uses of Funds.--An eligible State that receives a grant under 
this section shall use the grant funds to reform teacher preparation 
requirements, and to ensure that current and future teachers possess 
the necessary teaching skills and academic content knowledge in the 
subject areas in which the teachers are assigned to teach, by carrying 
out 1 or more of the following activities:
        ``(1) Reforms.--Implementing reforms that hold institutions of 
    higher education with teacher preparation programs accountable for 
    preparing teachers who are highly competent in the academic content 
    areas in which the teachers plan to teach, and possess strong 
    teaching skills, which may include the use of rigorous subject 
    matter competency tests and the requirement that a teacher have an 
    academic major in the subject area, or related discipline, in which 
    the teacher plans to teach.
        ``(2) Certification or licensure requirements.--Reforming 
    teacher certification or licensure requirements to ensure that 
    teachers have the necessary teaching skills and academic content 
    knowledge in the subject areas in which teachers are assigned to 
    teach.
        ``(3) Alternatives to traditional preparation for teaching.--
    Providing prospective teachers with alternatives to traditional 
    preparation for teaching through programs at colleges of arts and 
    sciences or at nonprofit educational organizations.
        ``(4) Alternative routes to state certification.-- Carrying out 
    programs that--
            ``(A) include support during the initial teaching 
        experience; and
            ``(B) establish, expand, or improve alternative routes to 
        State certification of teachers for highly qualified 
        individuals, including mid-career professionals from other 
        occupations, paraprofessionals, former military personnel and 
        recent college graduates with records of academic distinction.
        ``(5) Recruitment; pay; removal.--Developing and implementing 
    effective mechanisms to ensure that local educational agencies and 
    schools are able to effectively recruit highly qualified teachers, 
    to financially reward those teachers and principals whose students 
    have made significant progress toward high academic performance, 
    such as through performance-based compensation systems and access 
    to ongoing professional development opportunities for teachers and 
    administrators, and to expeditiously remove incompetent or 
    unqualified teachers consistent with procedures to ensure due 
    process for the teachers.
        ``(6) Social promotion.--Development and implementation of 
    efforts to address the problem of social promotion and to prepare 
    teachers to effectively address the issues raised by ending the 
    practice of social promotion.
        ``(7) Recruitment.--Activities described in section 204(d).

``SEC. 203. PARTNERSHIP GRANTS.

    ``(a) Grants.--From amounts made available under section 210(2) for 
a fiscal year, the Secretary is authorized to award grants under this 
section, on a competitive basis, to eligible partnerships to enable the 
eligible partnerships to carry out the activities described in 
subsections (d) and (e).
    ``(b) Definitions.--
        ``(1) Eligible partnerships.--In this title, the term `eligible 
    partnerships' means an entity that--
            ``(A) shall include--
                ``(i) a partner institution;
                ``(ii) a school of arts and sciences; and
                ``(iii) a high need local educational agency; and
            ``(B) may include a Governor, State educational agency, the 
        State board of education, the State agency for higher 
        education, an institution of higher education not described in 
        subparagraph (A), a public charter school, a public or private 
        elementary school or secondary school, a public or private 
        nonprofit educational organization, a business, a teacher 
        organization, or a prekindergarten program.
        ``(2) Partner institution.--In this section, the term `partner 
    institution' means a private independent or State-supported public 
    institution of higher education, the teacher training program of 
    which demonstrates that--
            ``(A) graduates from the teacher training program exhibit 
        strong performance on State-determined qualifying assessments 
        for new teachers through--
                ``(i) demonstrating that 80 percent or more of the 
            graduates of the program who intend to enter the field of 
            teaching have passed all of the applicable State 
            qualification assessments for new teachers, which shall 
            include an assessment of each prospective teacher's subject 
            matter knowledge in the content area or areas in which the 
            teacher intends to teach; or
                ``(ii) being ranked among the highest-performing 
            teacher preparation programs in the State as determined by 
            the State--

                    ``(I) using criteria consistent with the 
                requirements for the State report card under section 
                207(b); and
                    ``(II) using the State report card on teacher 
                preparation required under section 207(b), after the 
                first publication of such report card and for every 
                year thereafter; or

            ``(B) the teacher training program requires all the 
        students of the program to participate in intensive clinical 
        experience, to meet high academic standards, and--
                ``(i) in the case of secondary school candidates, to 
            successfully complete an academic major in the subject area 
            in which the candidate intends to teach or to demonstrate 
            competence through a high level of performance in relevant 
            content areas; and
                ``(ii) in the case of elementary school candidates, to 
            successfully complete an academic major in the arts and 
            sciences or to demonstrate competence through a high level 
            of performance in core academic subject areas.
    ``(c) Application.--Each eligible partnership desiring a grant 
under this section shall submit an application to the Secretary at such 
time, in such manner, and accompanied by such information as the 
Secretary may require. Each such application shall--
        ``(1) contain a needs assessment of all the partners with 
    respect to teaching and learning and a description of how the 
    partnership will coordinate with other teacher training or 
    professional development programs, and how the activities of the 
    partnership will be consistent with State, local, and other 
    education reform activities that promote student achievement;
        ``(2) contain a resource assessment that describes the 
    resources available to the partnership, the intended use of the 
    grant funds, including a description of how the grant funds will be 
    fairly distributed in accordance with subsection (f), and the 
    commitment of the resources of the partnership to the activities 
    assisted under this title, including financial support, faculty 
    participation, time commitments, and continuation of the activities 
    when the grant ends; and
        ``(3) contain a description of--
            ``(A) how the partnership will meet the purposes of this 
        title;
            ``(B) how the partnership will carry out the activities 
        required under subsection (d) and any permissible activities 
        under subsection (e); and
            ``(C) the partnership's evaluation plan pursuant to section 
        206(b).
    ``(d) Required Uses of Funds.--An eligible partnership that 
receives a grant under this section shall use the grant funds to carry 
out the following activities:
        ``(1) Reforms.--Implementing reforms within teacher preparation 
    programs to hold the programs accountable for preparing teachers 
    who are highly competent in the academic content areas in which the 
    teachers plan to teach, and for promoting strong teaching skills, 
    including working with a school of arts and sciences and 
    integrating reliable research-based teaching methods into the 
    curriculum, which curriculum shall include programs designed to 
    successfully integrate technology into teaching and learning.
        ``(2) Clinical experience and interaction.--Providing sustained 
    and high quality preservice clinical experience including the 
    mentoring of prospective teachers by veteran teachers, and 
    substantially increasing interaction between faculty at 
    institutions of higher education and new and experienced teachers, 
    principals, and other administrators at elementary schools or 
    secondary schools, and providing support, including preparation 
    time, for such interaction.
        ``(3) Professional development.--Creating opportunities for 
    enhanced and ongoing professional development that improves the 
    academic content knowledge of teachers in the subject areas in 
    which the teachers are certified to teach or in which the teachers 
    are working toward certification to teach, and that promotes strong 
    teaching skills.
    ``(e) Allowable Uses of Funds.--An eligible partnership that 
receives a grant under this section may use such funds to carry out the 
following activities:
        ``(1) Teacher preparation and parent involvement.--Preparing 
    teachers to work with diverse student populations, including 
    individuals with disabilities and limited English proficient 
    individuals, and involving parents in the teacher preparation 
    program reform process.
        ``(2) Dissemination and coordination.--Broadly disseminating 
    information on effective practices used by the partnership, and 
    coordinating with the activities of the Governor, State board of 
    education, State higher education agency, and State educational 
    agency, as appropriate.
        ``(3) Managerial and leadership skills.--Developing and 
    implementing proven mechanisms to provide principals and 
    superintendents with effective managerial and leadership skills 
    that result in increased student achievement.
        ``(4) Teacher recruitment.--Activities described in section 
    204(d).
    ``(f) Special Rule.--No individual member of an eligible 
partnership shall retain more than 50 percent of the funds made 
available to the partnership under this section.
    ``(g) Construction.--Nothing in this section shall be construed to 
prohibit an eligible partnership from using grant funds to coordinate 
with the activities of more than one Governor, State board of 
education, State educational agency, local educational agency, or State 
agency for higher education.

``SEC. 204. TEACHER RECRUITMENT GRANTS.

    ``(a) Program Authorized.--From amounts made available under 
section 210(3) for a fiscal year, the Secretary is authorized to award 
grants, on a competitive basis, to eligible applicants to enable the 
eligible applicants to carry out activities described in subsection 
(d).
    ``(b) Eligible Applicant Defined.--In this title, the term 
`eligible applicant' means--
        ``(1) an eligible State described in section 202(b); or
        ``(2) an eligible partnership described in section 203(b).
    ``(c) Application.--Any eligible applicant desiring to receive a 
grant under this section shall submit an application to the Secretary 
at such time, in such form, and containing such information as the 
Secretary may require, including--
        ``(1) a description of the assessment that the eligible 
    applicant, and the other entities with whom the eligible applicant 
    will carry out the grant activities, have undertaken to determine 
    the most critical needs of the participating high-need local 
    educational agencies;
        ``(2) a description of the activities the eligible applicant 
    will carry out with the grant; and
        ``(3) a description of the eligible applicant's plan for 
    continuing the activities carried out with the grant, once Federal 
    funding ceases.
    ``(d) Uses of Funds.--Each eligible applicant receiving a grant 
under this section shall use the grant funds--
        ``(1)(A) to award scholarships to help students pay the costs 
    of tuition, room, board, and other expenses of completing a teacher 
    preparation program;
        ``(B) to provide support services, if needed to enable 
    scholarship recipients to complete postsecondary education 
    programs; and
        ``(C) for followup services provided to former scholarship 
    recipients during the recipients first 3 years of teaching; or
        ``(2) to develop and implement effective mechanisms to ensure 
    that high need local educational agencies and schools are able to 
    effectively recruit highly qualified teachers.
    ``(e) Service Requirements.--The Secretary shall establish such 
requirements as the Secretary finds necessary to ensure that recipients 
of scholarships under this section who complete teacher education 
programs subsequently teach in a high-need local educational agency, 
for a period of time equivalent to the period for which the recipients 
receive scholarship assistance, or repay the amount of the scholarship. 
The Secretary shall use any such repayments to carry out additional 
activities under this section.

``SEC. 205. ADMINISTRATIVE PROVISIONS.

    ``(a) Duration; One-Time Awards; Payments.--
        ``(1) Duration.--
            ``(A) Eligible states and eligible applicants.--Grants 
        awarded to eligible States and eligible applicants under this 
        title shall be awarded for a period not to exceed 3 years.
            ``(B) Eligible partnerships.--Grants awarded to eligible 
        partnerships under this title shall be awarded for a period of 
        5 years.
        ``(2) One-time award.--An eligible State and an eligible 
    partnership may receive a grant under each of sections 202, 203, 
    and 204 only once.
        ``(3) Payments.--The Secretary shall make annual payments of 
    grant funds awarded under this part.
    ``(b) Peer Review.--
        ``(1) Panel.--The Secretary shall provide the applications 
    submitted under this title to a peer review panel for evaluation. 
    With respect to each application, the peer review panel shall 
    initially recommend the application for funding or for disapproval.
        ``(2) Priority.--In recommending applications to the Secretary 
    for funding under this title, the panel shall--
            ``(A) with respect to grants under section 202, give 
        priority to eligible States serving States that--
                ``(i) have initiatives to reform State teacher 
            certification requirements that are designed to ensure that 
            current and future teachers possess the necessary teaching 
            skills and academic content knowledge in the subject areas 
            in which the teachers are certified or licensed to teach;
                ``(ii) include innovative reforms to hold institutions 
            of higher education with teacher preparation programs 
            accountable for preparing teachers who are highly competent 
            in the academic content area in which the teachers plan to 
            teach and have strong teaching skills; or
                ``(iii) involve the development of innovative efforts 
            aimed at reducing the shortage of highly qualified teachers 
            in high poverty urban and rural areas;
            ``(B) with respect to grants under section 203--
                ``(i) give priority to applications from eligible 
            partnerships that involve businesses; and
                ``(ii) take into consideration--

                    ``(I) providing an equitable geographic 
                distribution of the grants throughout the United 
                States; and
                    ``(II) the potential of the proposed activities for 
                creating improvement and positive change.

        ``(3) Secretarial selection.--The Secretary shall determine, 
    based on the peer review process, which application shall receive 
    funding and the amounts of the grants. In determining grant 
    amounts, the Secretary shall take into account the total amount of 
    funds available for all grants under this title and the types of 
    activities proposed to be carried out.
    ``(c) Matching Requirements.--
        ``(1) State grants.--Each eligible State receiving a grant 
    under section 202 or 204 shall provide, from non-Federal sources, 
    an amount equal to 50 percent of the amount of the grant (in cash 
    or in kind) to carry out the activities supported by the grant.
        ``(2) Partnership grants.--Each eligible partnership receiving 
    a grant under section 203 or 204 shall provide, from non-Federal 
    sources (in cash or in kind), an amount equal to 25 percent of the 
    grant for the first year of the grant, 35 percent of the grant for 
    the second year of the grant, and 50 percent of the grant for each 
    succeeding year of the grant.
    ``(d) Limitation on Administrative Expenses.--An eligible State or 
eligible partnership that receives a grant under this title may not use 
more than 2 percent of the grant funds for purposes of administering 
the grant.
    ``(e) Teacher Qualifications Provided to Parents Upon Request.--Any 
local educational agency or school that benefits from the activities 
assisted under this title shall make available, upon request and in an 
understandable and uniform format, to any parent of a student attending 
any school served by the local educational agency, information 
regarding the qualification of the student's classroom teacher with 
regard to the subject matter in which the teacher provides instruction. 
The local educational agency shall inform parents that the parents are 
entitled to receive the information upon request.

``SEC. 206. ACCOUNTABILITY AND EVALUATION.

    ``(a) State Grant Accountability Report.--An eligible State that 
receives a grant under section 202 shall submit an annual 
accountability report to the Secretary, the Committee on Labor and 
Human Resources of the Senate, and the Committee on Education and the 
Workforce of the House of Representatives. Such report shall include a 
description of the degree to which the eligible State, in using funds 
provided under such section, has made substantial progress in meeting 
the following goals:
        ``(1) Student achievement.--Increasing student achievement for 
    all students as defined by the eligible State.
        ``(2) Raising standards.--Raising the State academic standards 
    required to enter the teaching profession, including, where 
    appropriate, through the use of incentives to incorporate the 
    requirement of an academic major in the subject, or related 
    discipline, in which the teacher plans to teach.
        ``(3) Initial certification or licensure.--Increasing success 
    in the pass rate for initial State teacher certification or 
    licensure, or increasing the numbers of highly qualified 
    individuals being certified or licensed as teachers through 
    alternative programs.
        ``(4) Core academic subjects.--
            ``(A) Secondary school classes.--Increasing the percentage 
        of secondary school classes taught in core academic subject 
        areas by teachers--
                ``(i) with academic majors in those areas or in a 
            related field;
                ``(ii) who can demonstrate a high level of competence 
            through rigorous academic subject area tests; or
                ``(iii) who can demonstrate competence through a high 
            level of performance in relevant content areas.
            ``(B) Elementary school classes.--Increasing the percentage 
        of elementary school classes taught by teachers--
                ``(i) with academic majors in the arts and sciences; or
                ``(ii) who can demonstrate competence through a high 
            level of performance in core academic subjects.
        ``(5) Decreasing teacher shortages.--Decreasing shortages of 
    qualified teachers in poor urban and rural areas.
        ``(6) Increasing opportunities for professional development.--
    Increasing opportunities for enhanced and ongoing professional 
    development that improves the academic content knowledge of 
    teachers in the subject areas in which the teachers are certified 
    or licensed to teach or in which the teachers are working toward 
    certification or licensure to teach, and that promotes strong 
    teaching skills.
        ``(7) Technology integration.--Increasing the number of 
    teachers prepared to integrate technology in the classroom.
    ``(b) Eligible Partnership Evaluation.--Each eligible partnership 
receiving a grant under section 203 shall establish and include in the 
application submitted under section 203(c), an evaluation plan that 
includes strong performance objectives. The plan shall include 
objectives and measures for--
        ``(1) increased student achievement for all students as 
    measured by the partnership;
        ``(2) increased teacher retention in the first 3 years of a 
    teacher's career;
        ``(3) increased success in the pass rate for initial State 
    certification or licensure of teachers; and
        ``(4) increased percentage of secondary school classes taught 
    in core academic subject areas by teachers--
            ``(A) with academic majors in the areas or in a related 
        field; and
            ``(B) who can demonstrate a high level of competence 
        through rigorous academic subject area tests or who can 
        demonstrate competence through a high level of performance in 
        relevant content areas;
        ``(5) increasing the percentage of elementary school classes 
    taught by teachers with academic majors in the arts and sciences or 
    who demonstrate competence through a high level of performance in 
    core academic subject areas; and
        ``(6) increasing the number of teachers trained in technology.
    ``(c) Revocation of Grant.--
        ``(1) Report.--Each eligible State or eligible partnership 
    receiving a grant under this title shall report annually on the 
    progress of the eligible State or eligible partnership toward 
    meeting the purposes of this title and the goals, objectives, and 
    measures described in subsections (a) and (b).
        ``(2) Revocation.--
            ``(A) Eligible states and eligible applicants.--If the 
        Secretary determines that an eligible State or eligible 
        applicant is not making substantial progress in meeting the 
        purposes, goals, objectives, and measures, as appropriate, by 
        the end of the second year of a grant under this title, then 
        the grant payment shall not be made for the third year of the 
        grant.
            ``(B) Eligible partnerships.--If the Secretary determines 
        that an eligible partnership is not making substantial progress 
        in meeting the purposes, goals, objectives, and measures, as 
        appropriate, by the end of the third year of a grant under this 
        title, then the grant payments shall not be made for any 
        succeeding year of the grant.
    ``(d) Evaluation and Dissemination.--The Secretary shall evaluate 
the activities funded under this title and report the Secretary's 
findings regarding the activities to the Committee on Labor and Human 
Resources of the Senate and the Committee on Education and the 
Workforce of the House of Representatives. The Secretary shall broadly 
disseminate successful practices developed by eligible States and 
eligible partnerships under this title, and shall broadly disseminate 
information regarding such practices that were found to be ineffective.

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

    ``(a) Development of Definitions and Reporting Methods.--Within 9 
months of the date of enactment of the Higher Education Amendments of 
1998, the Commissioner of the National Center for Education Statistics, 
in consultation with States and institutions of higher education, shall 
develop key definitions for terms, and uniform reporting methods 
(including the key definitions for the consistent reporting of pass 
rates), related to the performance of elementary school and secondary 
school teacher preparation programs.
    ``(b) State Report Card on the Quality of Teacher Preparation.--
Each State that receives funds under this Act shall provide to the 
Secretary, within 2 years of the date of enactment of the Higher 
Education Amendments of 1998, and annually thereafter, in a uniform and 
comprehensible manner that conforms with the definitions and methods 
established in subsection (a), a State report card on the quality of 
teacher preparation in the State, which shall include at least the 
following:
        ``(1) A description of the teacher certification and licensure 
    assessments, and any other certification and licensure 
    requirements, used by the State.
        ``(2) The standards and criteria that prospective teachers must 
    meet in order to attain initial teacher certification or licensure 
    and to be certified or licensed to teach particular subjects or in 
    particular grades within the State.
        ``(3) A description of the extent to which the assessments and 
    requirements described in paragraph (1) are aligned with the 
    State's standards and assessments for students.
        ``(4) The percentage of teaching candidates who passed each of 
    the assessments used by the State for teacher certification and 
    licensure, and the passing score on each assessment that determines 
    whether a candidate has passed that assessment.
        ``(5) The percentage of teaching candidates who passed each of 
    the assessments used by the State for teacher certification and 
    licensure, disaggregated and ranked, by the teacher preparation 
    program in that State from which the teacher candidate received the 
    candidate's most recent degree, which shall be made available 
    widely and publicly.
        ``(6) Information on the extent to which teachers in the State 
    are given waivers of State certification or licensure requirements, 
    including the proportion of such teachers distributed across high- 
    and low-poverty school districts and across subject areas.
        ``(7) A description of each State's alternative routes to 
    teacher certification, if any, and the percentage of teachers 
    certified through alternative certification routes who pass State 
    teacher certification or licensure assessments.
        ``(8) For each State, a description of proposed criteria for 
    assessing the performance of teacher preparation programs within 
    institutions of higher education in the State, including indicators 
    of teacher candidate knowledge and skills.
        ``(9) Information on the extent to which teachers or 
    prospective teachers in each State are required to take 
    examinations or other assessments of their subject matter knowledge 
    in the area or areas in which the teachers provide instruction, the 
    standards established for passing any such assessments, and the 
    extent to which teachers or prospective teachers are required to 
    receive a passing score on such assessments in order to teach in 
    specific subject areas or grade levels.
    ``(c) Initial Report.--
        ``(1) In general.--Each State that receives funds under this 
    Act, not later than 6 months of the date of enactment of the Higher 
    Education Amendments of 1998 and in a uniform and comprehensible 
    manner, shall submit to the Secretary the information described in 
    paragraphs (1), (5), and (6) of subsection (b). Such information 
    shall be compiled by the Secretary and submitted to the Committee 
    on Labor and Human Resources of the Senate and the Committee on 
    Education and the Workforce of the House of Representatives not 
    later than 9 months after the date of enactment of the Higher 
    Education Amendments of 1998.
        ``(2) Construction.--Nothing in this subsection shall be 
    construed to require a State to gather information that is not in 
    the possession of the State or the teacher preparation programs in 
    the State, or readily available to the State or teacher preparation 
    programs.
    ``(d) Report of the Secretary on the Quality of Teacher 
Preparation.--
        ``(1) Report card.--The Secretary shall provide to Congress, 
    and publish and make widely available, a report card on teacher 
    qualifications and preparation in the United States, including all 
    the information reported in paragraphs (1) through (9) of 
    subsection (b). Such report shall identify States for which 
    eligible States and eligible partnerships received a grant under 
    this title. Such report shall be so provided, published and made 
    available not later than 2 years 6 months after the date of 
    enactment of the Higher Education Amendments of 1998 and annually 
    thereafter.
        ``(2) Report to congress.--The Secretary shall report to 
    Congress--
            ``(A) a comparison of States' efforts to improve teaching 
        quality; and
            ``(B) regarding the national mean and median scores on any 
        standardized test that is used in more than 1 State for teacher 
        certification or licensure.
        ``(3) Special rule.--In the case of teacher preparation 
    programs with fewer than 10 graduates taking any single initial 
    teacher certification or licensure assessment during an academic 
    year, the Secretary shall collect and publish information with 
    respect to an average pass rate on State certification or licensure 
    assessments taken over a 3-year period.
    ``(e) Coordination.--The Secretary, to the extent practicable, 
shall coordinate the information collected and published under this 
title among States for individuals who took State teacher certification 
or licensure assessments in a State other than the State in which the 
individual received the individual's most recent degree.
    ``(f) Institutional Report Cards on the Quality of Teacher 
Preparation.--
        ``(1) Report card.--Each institution of higher education that 
    conducts a teacher preparation program that enrolls students 
    receiving Federal assistance under this Act, not later than 18 
    months after the date of enactment of the Higher Education 
    Amendments of 1998 and annually thereafter, shall report to the 
    State and the general public, in a uniform and comprehensible 
    manner that conforms with the definitions and methods established 
    under subsection (a), the following information:
            ``(A) Pass rate.--(i) For the most recent year for which 
        the information is available, the pass rate of the 
        institution's graduates on the teacher certification or 
        licensure assessments of the State in which the institution is 
        located, but only for those students who took those assessments 
        within 3 years of completing the program.
            ``(ii) A comparison of the program's pass rate with the 
        average pass rate for programs in the State.
            ``(iii) In the case of teacher preparation programs with 
        fewer than 10 graduates taking any single initial teacher 
        certification or licensure assessment during an academic year, 
        the institution shall collect and publish information with 
        respect to an average pass rate on State certification or 
        licensure assessments taken over a 3-year period.
            ``(B) Program information.--The number of students in the 
        program, the average number of hours of supervised practice 
        teaching required for those in the program, and the faculty-
        student ratio in supervised practice teaching.
            ``(C) Statement.--In States that approve or accredit 
        teacher education programs, a statement of whether the 
        institution's program is so approved or accredited.
            ``(D) Designation as low-performing.--Whether the program 
        has been designated as low-performing by the State under 
        section 208(a).
        ``(2) Requirement.--The information described in paragraph (1) 
    shall be reported through publications such as school catalogs and 
    promotional materials sent to potential applicants, secondary 
    school guidance counselors, and prospective employers of the 
    institution's program graduates.
        ``(3) Fines.--In addition to the actions authorized in section 
    487(c), the Secretary may impose a fine not to exceed $25,000 on an 
    institution of higher education for failure to provide the 
    information described in this subsection in a timely or accurate 
    manner.

``SEC. 208. STATE FUNCTIONS.

    ``(a) State Assessment.--In order to receive funds under this Act, 
a State, not later than 2 years after the date of enactment of the 
Higher Education Amendments of 1998, shall have in place a procedure to 
identify, and assist, through the provision of technical assistance, 
low-performing programs of teacher preparation within institutions of 
higher education. Such State shall provide the Secretary an annual list 
of such low-performing institutions that includes an identification of 
those institutions at-risk of being placed on such list. Such levels of 
performance shall be determined solely by the State and may include 
criteria based upon information collected pursuant to this title. Such 
assessment shall be described in the report under section 207(b).
    ``(b) Termination of Eligibility.--Any institution of higher 
education that offers a program of teacher preparation in which the 
State has withdrawn the State's approval or terminated the State's 
financial support due to the low performance of the institution's 
teacher preparation program based upon the State assessment described 
in subsection (a)--
        ``(1) shall be ineligible for any funding for professional 
    development activities awarded by the Department of Education; and
        ``(2) shall not be permitted to accept or enroll any student 
    that receives aid under title IV of this Act in the institution's 
    teacher preparation program.
    ``(c) Negotiated Rulemaking.--If the Secretary develops any 
regulations implementing subsection (b)(2), the Secretary shall submit 
such proposed regulations to a negotiated rulemaking process, which 
shall include representatives of States, institutions of higher 
education, and educational and student organizations.

``SEC. 209. GENERAL PROVISIONS.

    ``(a) Methods.--In complying with sections 207 and 208, the 
Secretary shall ensure that States and institutions of higher education 
use fair and equitable methods in reporting and that the reporting 
methods protect the privacy of individuals.
    ``(b) Special Rule.--For each State in which there are no State 
certification or licensure assessments, or for States that do not set 
minimum performance levels on those assessments--
        ``(1) the Secretary shall, to the extent practicable, collect 
    data comparable to the data required under this title from States, 
    local educational agencies, institutions of higher education, or 
    other entities that administer such assessments to teachers or 
    prospective teachers; and
        ``(2) notwithstanding any other provision of this title, the 
    Secretary shall use such data to carry out requirements of this 
    title related to assessments or pass rates.
    ``(c) Limitations.--
        ``(1) Federal control prohibited.--Nothing in this title shall 
    be construed to permit, allow, encourage, or authorize any Federal 
    control over any aspect of any private, religious, or home school, 
    whether or not a home school is treated as a private school or home 
    school under State law. This section shall not be construed to 
    prohibit private, religious, or home schools from participation in 
    programs or services under this title.
        ``(2) No change in state control encouraged or required.--
    Nothing in this title shall be construed to encourage or require 
    any change in a State's treatment of any private, religious, or 
    home school, whether or not a home school is treated as a private 
    school or home school under State law.
        ``(3) National system of teacher certification prohibited.--
    Nothing in this title shall be construed to permit, allow, 
    encourage, or authorize the Secretary to establish or support any 
    national system of teacher certification.

``SEC. 210. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this title 
$300,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years, of which--
        ``(1) 45 percent shall be available for each fiscal year to 
    award grants under section 202;
        ``(2) 45 percent shall be available for each fiscal year to 
    award grants under section 203; and
        ``(3) 10 percent shall be available for each fiscal year to 
    award grants under section 204.''.

                      TITLE III--INSTITUTIONAL AID

SEC. 301. TRANSFERS AND REDESIGNATIONS.

    (a) In General.--The Higher Education Act of 1965 is amended--
        (1) by redesignating part D of title III (20 U.S.C. 1066 et 
    seq.) as part F of title III;
        (2) by redesignating sections 351, 352, 353, 354, 356, 357, 
    358, and 360 (20 U.S.C. 1066, 1067, 1068, 1069, 1069b, 1069c, 
    1069d, and 1069f) as sections 391, 392, 393, 394, 395, 396, 397, 
    and 399, respectively;
        (3) by transferring part B of title VII (20 U.S.C. 1132c et 
    seq.) to title III to follow part C of title III (20 U.S.C. 1065 et 
    seq.), and redesignating such part B as part D;
        (4) by redesignating sections 721 through 728 (20 U.S.C. 1132c 
    and 1132c-7) as sections 341 through 348, respectively;
        (5) by transferring subparts 1 and 3 of part B of title X (20 
    U.S.C. 1135b et seq. and 1135d et seq.) to title III to follow part 
    D of title III (as redesignated by paragraph (3)), and 
    redesignating such subpart 3 as subpart 2;
        (6) by inserting after part D of title III (as redesignated by 
    paragraph (3)) the following:

   ``PART E--MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM'';

        (7) by redesignating sections 1021 through 1023 (20 U.S.C. 
    1135b and 1135b-2), and sections 1041, 1042, 1043, 1044, 1046, and 
    1047 (20 U.S.C. 1135d, 1135d-1, 1135d-2, 1135d-3, 1135d-5, and 
    1135d-6) as sections 351 through 353, and sections 361, 362, 363, 
    364, 365, and 366, respectively; and
        (8) by repealing section 366 (as redesignated by paragraph (7)) 
    (20 U.S.C. 1135d-6).
    (b) Conforming Amendments.--Section 361 (as redesignated by 
subsection (a)(7)) (20 U.S.C. 1135d) is amended--
        (1) in paragraph (1), by inserting ``and'' after the semicolon;
        (2) in paragraph (2), by striking ``; and'' and inserting a 
    period; and
        (3) by striking paragraph (3).
    (c) Cross References.--Title III (20 U.S.C. 1051 et seq.) is 
amended--
        (1) in section 311(b) (20 U.S.C. 1057(b)), by striking 
    ``360(a)(1)'' and inserting ``399(a)(1)'';
        (2) in section 312 (20 U.S.C. 1058)--
            (A) in subsection (b)(1)(B), by striking ``352(b)'' and 
        inserting ``392(b)''; and
            (B) in subsection (c)(2), by striking ``352(a)'' and 
        inserting ``392(a)'';
        (3) in section 313(b) (20 U.S.C. 1059(b)), by striking 
    ``354(a)(1)'' and inserting ``394(a)(1)'';
        (4) in section 342 (as redesignated by subsection (a)(4)) (20 
    U.S.C. 1132c-1)--
            (A) in paragraph (3), by striking ``723(b)'' and inserting 
        ``343(b)'';
            (B) in paragraph (4), by striking ``723'' and inserting 
        ``343'';
            (C) in the matter preceding subparagraph (A) of paragraph 
        (5), by striking ``724(b)'' and inserting ``344(b)'';
            (D) in paragraph (8), by striking ``725(1)'' and inserting 
        ``345(1)''; and
            (E) in paragraph (9), by striking ``727'' and inserting 
        ``347'';
        (5) in section 343 (as redesignated by subsection (a)(4)) (20 
    U.S.C. 1132c-2)--
            (A) in subsection (a), by striking ``724'' and inserting 
        ``344''; and
            (B) in subsection (b)--
                (i) in the matter preceding paragraph (1), by striking 
            ``725(1) and 726'' and inserting ``345(1) and 346'';
                (ii) in paragraph (10), by striking ``724'' and 
            inserting ``344''; and
                (iii) in subsection (d), by striking ``723(c)(1)'' and 
            inserting ``343(c)(1)'';
        (6) in section 345(2) (as redesignated by subsection (a)(4)) 
    (20 U.S.C. 1132c-4(2)), by striking ``723'' and inserting ``343'';
        (7) in section 348 (as redesignated by subsection (a)(4)) (20 
    U.S.C. 1132c-7), by striking ``725(1)'' and inserting ``345(1)'';
        (8) in section 353(a) (as redesignated by subsection (a)(7)) 
    (20 U.S.C. 1135b-2(a))--
            (A) in paragraph (1), by striking ``1046(6)'' and inserting 
        ``365(6)'';
            (B) in paragraph (2), by striking ``1046(7)'' and inserting 
        ``365(7)'';
            (C) in paragraph (3), by striking ``1046(8)'' and inserting 
        ``365(8)''; and
            (D) in paragraph (4), by striking ``1046(9)'' and inserting 
        ``365(9)'';
        (9) in section 361(1) (as redesignated by subsection (a)(7)) 
    (20 U.S.C. 1135d(1)), by striking ``1046(3)'' and inserting 
    ``365(3)'';
        (10) in section 362(a) (as redesignated by subsection (a)(7)) 
    (20 U.S.C. 1135d-1(a))--
            (A) in the matter preceding paragraph (1), by striking 
        ``1041'' and inserting ``361''; and
            (B) in paragraph (1), by striking ``1021(b)'' and inserting 
        ``351(b)''; and
        (11) in section 391(b)(6) (as redesignated by subsection 
    (a)(2)), by striking ``357'' and inserting ``396''.

SEC. 302. FINDINGS.

    Section 301(a) (20 U.S.C. 1051(a)) is amended--
        (1) by redesignating paragraphs (3) through (7) as paragraphs 
    (4) through (8), respectively; and
        (2) by inserting after paragraph (2) the following:
        ``(3) in order to be competitive and provide a high-quality 
    education for all, institutions of higher education should improve 
    their technological capacity and make effective use of 
    technology;''.

SEC. 303. STRENGTHENING INSTITUTIONS.

    (a) Grants.--Section 311 (20 U.S.C. 1057) is amended by adding at 
the end the following:
    ``(c) Authorized Activities.--Grants awarded under this section 
shall be used for 1 or more of the following activities:
        ``(1) Purchase, rental, or lease of scientific or laboratory 
    equipment for educational purposes, including instructional and 
    research purposes.
        ``(2) Construction, maintenance, renovation, and improvement in 
    classrooms, libraries, laboratories, and other instructional 
    facilities, including the integration of computer technology into 
    institutional facilities to create smart buildings.
        ``(3) Support of faculty exchanges, faculty development, and 
    faculty fellowships to assist in attaining advanced degrees in the 
    field of instruction of the faculty.
        ``(4) Development and improvement of academic programs.
        ``(5) Purchase of library books, periodicals, and other 
    educational materials, including telecommunications program 
    material.
        ``(6) Tutoring, counseling, and student service programs 
    designed to improve academic success.
        ``(7) Funds management, administrative management, and 
    acquisition of equipment for use in strengthening funds management.
        ``(8) Joint use of facilities, such as laboratories and 
    libraries.
        ``(9) Establishing or improving a development office to 
    strengthen or improve contributions from alumni and the private 
    sector.
        ``(10) Establishing or improving an endowment fund.
        ``(11) Creating or improving facilities for Internet or other 
    distance learning academic instruction capabilities, including 
    purchase or rental of telecommunications technology equipment or 
    services.
        ``(12) Other activities proposed in the application submitted 
    pursuant to subsection (c) that--
            ``(A) contribute to carrying out the purposes of the 
        program assisted under this part; and
            ``(B) are approved by the Secretary as part of the review 
        and acceptance of such application.
    ``(d) Endowment Fund.--
        ``(1) In general.--An eligible institution may use not more 
    than 20 percent of the grant funds provided under this part to 
    establish or increase an endowment fund at such institution.
        ``(2) Matching requirement.--In order to be eligible to use 
    grant funds in accordance with paragraph (1), the eligible 
    institution shall provide matching funds from non-Federal sources, 
    in an amount equal to or greater than the Federal funds used in 
    accordance with paragraph (1), for the establishment or increase of 
    the endowment fund.
        ``(3) Comparability.--The provisions of part C, regarding the 
    establishment or increase of an endowment fund, that the Secretary 
    determines are not inconsistent with this subsection, shall apply 
    to funds used under paragraph (1).''.
    (b) Endowment Fund Definition.--Section 312 (as amended by section 
301(c)(2)) (20 U.S.C. 1058) is amended--
        (1) by redesignating subsections (c) through (f) as subsections 
    (d) through (g), respectively; and
        (2) by inserting after subsection (b) the following:
    ``(c) Endowment Fund.--For the purpose of this part, the term 
`endowment fund' means a fund that--
        ``(1) is established by State law, by an institution of higher 
    education, or by a foundation that is exempt from Federal income 
    taxation;
        ``(2) is maintained for the purpose of generating income for 
    the support of the institution; and
        ``(3) does not include real estate.''.
    (c) Duration of Grant.--Section 313 (20 U.S.C. 1059) is amended--
        (1) in subsection (b), by inserting ``subsection (c) and a 
    grant under'' before ``section 394(a)(1)''; and
        (2) by adding at the end the following:
    ``(d) Wait-Out-Period.--Each eligible institution that received a 
grant under this part for a 5-year period shall not be eligible to 
receive an additional grant under this part until 2 years after the 
date on which the 5-year grant period terminates.''.
    (d) Applications.--Title III is amended by striking section 314 (20 
U.S.C. 1059a) and inserting the following:

``SEC. 314. APPLICATIONS.

    ``Each eligible institution desiring to receive assistance under 
this part shall submit an application in accordance with the 
requirements of section 391.''.
    (e) American Indian Tribally Controlled Colleges and 
Universities.--Section 316 (20 U.S.C. 1059c) is amended to read as 
follows:

``SEC. 316. AMERICAN INDIAN TRIBALLY CONTROLLED COLLEGES AND 
              UNIVERSITIES.

    ``(a) Program Authorized.--The Secretary shall provide grants and 
related assistance to Indian Tribal Colleges and Universities to enable 
such institutions to improve and expand their capacity to serve Indian 
students.
    ``(b) Definitions.--In this section:
        ``(1) Indian.--The term `Indian' has the meaning given the term 
    in section 2 of the Tribally Controlled College or University 
    Assistance Act of 1978.
        ``(2) Indian tribe.--The term `Indian tribe' has the meaning 
    given the term in section 2 of the Tribally Controlled College or 
    University Assistance Act of 1978.
        ``(3) Tribal college or university.--The term `Tribal College 
    or University' has the meaning give the term `tribally controlled 
    college or university' in section 2 of the Tribally Controlled 
    College or University Assistance Act of 1978, and includes an 
    institution listed in the Equity in Educational Land Grant Status 
    Act of 1994.
        ``(4) Institution of higher education.--The term `institution 
    of higher education' means an institution of higher education as 
    defined in section 101(a), except that paragraph (2) of such 
    section shall not apply.
    ``(c) Authorized Activities.--
        ``(1) In general.--Grants awarded under this section shall be 
    used by Tribal Colleges or Universities to assist such institutions 
    to plan, develop, undertake, and carry out activities to improve 
    and expand such institutions' capacity to serve Indian students.
        ``(2) Examples of authorized activities.--The activities 
    described in paragraph (1) may include--
            ``(A) purchase, rental, or lease of scientific or 
        laboratory equipment for educational purposes, including 
        instructional and research purposes;
            ``(B) construction, maintenance, renovation, and 
        improvement in classrooms, libraries, laboratories, and other 
        instructional facilities, including purchase or rental of 
        telecommunications technology equipment or services;
            ``(C) support of faculty exchanges, faculty development, 
        and faculty fellowships to assist in attaining advanced degrees 
        in the faculty's field of instruction;
            ``(D) academic instruction in disciplines in which Indians 
        are underrepresented;
            ``(E) purchase of library books, periodicals, and other 
        educational materials, including telecommunications program 
        material;
            ``(F) tutoring, counseling, and student service programs 
        designed to improve academic success;
            ``(G) funds management, administrative management, and 
        acquisition of equipment for use in strengthening funds 
        management;
            ``(H) joint use of facilities, such as laboratories and 
        libraries;
            ``(I) establishing or improving a development office to 
        strengthen or improve contributions from alumni and the private 
        sector;
            ``(J) establishing or enhancing a program of teacher 
        education designed to qualify students to teach in elementary 
        schools or secondary schools, with a particular emphasis on 
        teaching Indian children and youth, that shall include, as part 
        of such program, preparation for teacher certification;
            ``(K) establishing community outreach programs that 
        encourage Indian elementary school and secondary school 
        students to develop the academic skills and the interest to 
        pursue postsecondary education; and
            ``(L) other activities proposed in the application 
        submitted pursuant to subsection (d) that--
                ``(i) contribute to carrying out the activities 
            described in subparagraphs (A) through (K); and
                ``(ii) are approved by the Secretary as part of the 
            review and acceptance of such application.
        ``(3) Endowment fund.--
            ``(A) In general.--A Tribal College or University may use 
        not more than 20 percent of the grant funds provided under this 
        section to establish or increase an endowment fund at the 
        institution.
            ``(B) Matching requirement.--In order to be eligible to use 
        grant funds in accordance with subparagraph (A), the Tribal 
        College or University shall provide matching funds, in an 
        amount equal to the Federal funds used in accordance with 
        subparagraph (A), for the establishment or increase of the 
        endowment fund.
            ``(C) Comparability.--The provisions of part C regarding 
        the establishment or increase of an endowment fund, that the 
        Secretary determines are not inconsistent with this paragraph, 
        shall apply to funds used under subparagraph (A).
    ``(d) Application Process.--
        ``(1) Institutional eligibility.--To be eligible to receive 
    assistance under this section, a Tribal College or University shall 
    be an eligible institution under section 312(b).
        ``(2) Application.--Any Tribal College or University desiring 
    to receive assistance under this section shall submit an 
    application to the Secretary at such time, and in such manner, as 
    the Secretary may by regulation reasonably require. Each such 
    application shall include--
            ``(A) a 5-year plan for improving the assistance provided 
        by the Tribal College or University to Indian students, 
        increasing the rates at which Indian secondary school students 
        enroll in higher education, and increasing overall 
        postsecondary retention rates for Indian students; and
            ``(B) such enrollment data and other information and 
        assurances as the Secretary may require to demonstrate 
        compliance with paragraph (1).
        ``(3) Special rule.--For the purposes of this part, no Tribal 
    College or University that is eligible for and receives funds under 
    this section may concurrently receive other funds under this part 
    or part B.''.
    (f) Alaska Native and Native Hawaiian-Serving Institutions.--Part A 
of title III (20 U.S.C. 1057 et seq.) is amended by adding at the end 
the following:

``SEC. 317. ALASKA NATIVE AND NATIVE HAWAIIAN-SERVING INSTITUTIONS.

    ``(a) Program Authorized.--The Secretary shall provide grants and 
related assistance to Alaska Native-serving institutions and Native 
Hawaiian-serving institutions to enable such institutions to improve 
and expand their capacity to serve Alaska Natives and Native Hawaiians.
    ``(b) Definitions.--For the purpose of this section--
        ``(1) the term `Alaska Native' has the meaning given the term 
    in section 9308 of the Elementary and Secondary Education Act of 
    1965;
        ``(2) the term `Alaska Native-serving institution' means an 
    institution of higher education that--
            ``(A) is an eligible institution under section 312(b); and
            ``(B) at the time of application, has an enrollment of 
        undergraduate students that is at least 20 percent Alaska 
        Native students;
        ``(3) the term `Native Hawaiian' has the meaning given the term 
    in section 9212 of the Elementary and Secondary Education Act of 
    1965; and
        ``(4) the term `Native Hawaiian-serving institution' means an 
    institution of higher education which--
            ``(A) is an eligible institution under section 312(b); and
            ``(B) at the time of application, has an enrollment of 
        undergraduate students that is at least 10 percent Native 
        Hawaiian students.
    ``(c) Authorized Activities.--
        ``(1) Types of activities authorized.--Grants awarded under 
    this section shall be used by Alaska Native-serving institutions 
    and Native Hawaiian-serving institutions to assist such 
    institutions to plan, develop, undertake, and carry out activities 
    to improve and expand such institutions' capacity to serve Alaska 
    Natives or Native Hawaiians.
        ``(2) Examples of authorized activities.--Such programs may 
    include--
            ``(A) purchase, rental, or lease of scientific or 
        laboratory equipment for educational purposes, including 
        instructional and research purposes;
            ``(B) renovation and improvement in classroom, library, 
        laboratory, and other instructional facilities;
            ``(C) support of faculty exchanges, and faculty development 
        and faculty fellowships to assist in attaining advanced degrees 
        in the faculty's field of instruction;
            ``(D) curriculum development and academic instruction;
            ``(E) purchase of library books, periodicals, microfilm, 
        and other educational materials;
            ``(F) funds and administrative management, and acquisition 
        of equipment for use in strengthening funds management;
            ``(G) joint use of facilities such as laboratories and 
        libraries; and
            ``(H) academic tutoring and counseling programs and student 
        support services.
    ``(d) Application Process.--
        ``(1) Institutional eligibility.--Each Alaska Native-serving 
    institution and Native Hawaiian-serving institution desiring to 
    receive assistance under this section shall submit to the Secretary 
    such enrollment data as may be necessary to demonstrate that the 
    institution is an Alaska Native-serving institution or a Native 
    Hawaiian-serving institution as defined in subsection (b), along 
    with such other information and data as the Secretary may by 
    regulation require.
        ``(2) Applications.--Any institution which is determined by the 
    Secretary to be an Alaska Native-serving institution or a Native 
    Hawaiian-serving institution may submit an application for 
    assistance under this section to the Secretary. Such application 
    shall include--
            ``(A) a 5-year plan for improving the assistance provided 
        by the Alaska Native-serving institution or the Native 
        Hawaiian-serving institution to Alaska Native or Native 
        Hawaiian students; and
            ``(B) such other information and assurance as the Secretary 
        may require.
    ``(e) Special Rule.--For the purposes of this section, no Alaska 
Native-serving institution or Native Hawaiian-serving institution which 
is eligible for and receives funds under this section may concurrently 
receive other funds under this part or part B.''.

SEC. 304. STRENGTHENING HBCU'S.

    (a) Grants.--Section 323 (20 U.S.C. 1062) is amended--
        (1) by redesignating subsection (b) as subsection (c);
        (2) by inserting after subsection (a) the following:
    ``(b) Endowment Fund.--
        ``(1) In general.--An institution may use not more than 20 
    percent of the grant funds provided under this part to establish or 
    increase an endowment fund at the institution.
        ``(2) Matching requirement.--In order to be eligible to use 
    grant funds in accordance with paragraph (1), the eligible 
    institution shall provide matching funds from non-Federal sources, 
    in an amount equal to or greater than the Federal funds used in 
    accordance with paragraph (1), for the establishment or increase of 
    the endowment fund.
        ``(3) Comparability.--The provisions of part C regarding the 
    establishment or increase of an endowment fund, that the Secretary 
    determines are not inconsistent with this subsection, shall apply 
    to funds used under paragraph (1).''; and
        (3) in subsection (c) (as redesignated by paragraph (1)), by 
    striking paragraph (3).
    (b) Professional or Graduate Institutions.--
        (1) General authorization.--Section 326(a) (20 U.S.C. 1063b(a)) 
    is amended--
            (A) in subsection (a)--
                (i) in paragraph (1), by inserting ``in mathematics, 
            engineering, or the physical or natural sciences'' after 
            ``graduate education opportunities''; and
                (ii) in paragraph (2)--

                    (I) by striking ``$500,000'' and inserting 
                ``$1,000,000''; and
                    (II) by striking ``except that'' and all that 
                follows and inserting the following: ``, except that no 
                institution shall be required to match any portion of 
                the first $1,000,000 of the institution's award from 
                the Secretary. After funds are made available to each 
                eligible institution under the funding rules described 
                in subsection (f), the Secretary shall distribute, on a 
                pro rata basis, any amounts which were not so made 
                available (by reason of the failure of an institution 
                to comply with the matching requirements of this 
                paragraph) among the institutions that have complied 
                with such matching requirement.''; and

            (B) in subsection (d)(2), by striking ``$500,000'' and 
        inserting ``$1,000,000''.
        (2) Use of funds.--Section 326(c) (20 U.S.C. 1063b(c)) is 
    amended by striking paragraphs (1) through (3) and inserting the 
    following:
        ``(1) purchase, rental or lease of scientific or laboratory 
    equipment for educational purposes, including instructional and 
    research purposes;
        ``(2) construction, maintenance, renovation, and improvement in 
    classroom, library, laboratory, and other instructional facilities, 
    including purchase or rental of telecommunications technology 
    equipment or services;
        ``(3) purchase of library books, periodicals, technical and 
    other scientific journals, microfilm, microfiche, and other 
    educational materials, including telecommunications program 
    materials;
        ``(4) scholarships, fellowships, and other financial assistance 
    for needy graduate and professional students to permit the 
    enrollment of the students in and completion of the doctoral degree 
    in medicine, dentistry, pharmacy, veterinary medicine, law, and the 
    doctorate degree in the physical or natural sciences, engineering, 
    mathematics, or other scientific disciplines in which African 
    Americans are underrepresented;
        ``(5) establish or improve a development office to strengthen 
    and increase contributions from alumni and the private sector;
        ``(6) assist in the establishment or maintenance of an 
    institutional endowment to facilitate financial independence 
    pursuant to section 331; and
        ``(7) funds and administrative management, and the acquisition 
    of equipment, including software, for use in strengthening funds 
    management and management information systems.''.
        (3) Eligibility.--Section 326(e) (20 U.S.C. 1063b(e)) is 
    amended--
            (A) in paragraph (1)--
                (i) by striking ``include--'' and inserting ``are the 
            following'';
                (ii) by inserting ``and other qualified graduate 
            programs'' before the semicolon at the end of subparagraphs 
            (E) through (J);
                (iii) by striking ``and'' at the end of subparagraph 
            (O); and
                (iv) in subparagraph (P)--

                    (I) by inserting ``University'' after ``State''; 
                and
                    (II) by striking the period and inserting a 
                semicolon; and
                    (III) by adding at the end the following:

            ``(Q) Norfolk State University qualified graduate programs; 
        and
            ``(R) Tennessee State University qualified graduate 
        programs.'';
            (B) by striking paragraphs (2) and (3) and inserting the 
        following:
        ``(2) Qualified graduate program.--(A) For the purposes of this 
    section, the term `qualified graduate program' means a graduate or 
    professional program that provides a program of instruction in the 
    physical or natural sciences, engineering, mathematics, or other 
    scientific discipline in which African Americans are 
    underrepresented and has students enrolled in such program at the 
    time of application for a grant under this section.
        ``(B) Notwithstanding the enrollment requirement contained in 
    subparagraph (A), an institution may use an amount equal to not 
    more than 10 percent of the institution's grant under this section 
    for the development of a new qualified graduate program.
        ``(3) Special rule.--Institutions that were awarded grants 
    under this section prior to October 1, 1998, shall continue to 
    receive such grants, subject to the availability of appropriated 
    funds, regardless of the eligibility of the institutions described 
    in subparagraphs (Q) and (R) of paragraph (1).''; and
            (C) by adding at the end the following:
        ``(5) Institutional choice.--The president or chancellor of the 
    institution may decide which graduate or professional school or 
    qualified graduate program will receive funds under the grant in 
    any 1 fiscal year, if the allocation of funds among the schools or 
    programs is delineated in the application for funds submitted to 
    the Secretary under this section.''.
        (4) Funding rule.--Section 326(f) (20 U.S.C. 1063b(f)) is 
    amended--
            (A) by striking ``Of the amount appropriated'' and 
        inserting ``Subject to subsection (g), of the amount 
        appropriated'';
            (B) in paragraph (1)--
                (i) by striking ``$12,000,000'' and inserting 
            ``$26,600,000''; and
                (ii) by striking ``(A) through (E)'' and inserting 
            ``(A) through (P)'';
            (C) by striking paragraph (2) and inserting the following:
        ``(2) any amount in excess of $26,600,000, but not in excess of 
    $28,600,000, shall be available for the purpose of making grants to 
    institutions or programs described in subparagraphs (Q) and (R) of 
    subsection (e)(1); and
        ``(3) any amount in excess of $28,600,000, shall be made 
    available to each of the institutions or programs identified in 
    subparagraphs (A) through (R) pursuant to a formula developed by 
    the Secretary that uses the following elements:
            ``(A) The ability of the institution to match Federal funds 
        with non-Federal funds.
            ``(B) The number of students enrolled in the programs for 
        which the eligible institution received funding under this 
        section in the previous year.
            ``(C) The average cost of education per student, for all 
        full-time graduate or professional students (or the equivalent) 
        enrolled in the eligible professional or graduate school, or 
        for doctoral students enrolled in the qualified graduate 
        programs.
            ``(D) The number of students in the previous year who 
        received their first professional or doctoral degree from the 
        programs for which the eligible institution received funding 
        under this section in the previous year.
            ``(E) The contribution, on a percent basis, of the programs 
        for which the institution is eligible to receive funds under 
        this section to the total number of African Americans receiving 
        graduate or professional degrees in the professions or 
        disciplines related to the programs for the previous year.''.
        (5) Hold harmless rule.--Section 326 is further amended by 
    adding at the end the following new subsection:
    ``(g) Hold Harmless Rule.--Notwithstanding paragraphs (2) and (3) 
of subsection (f), no institution or qualified program identified in 
subsection (e)(1) that received a grant for fiscal year 1998 and that 
is eligible to receive a grant in a subsequent fiscal year shall 
receive a grant amount in any such subsequent fiscal year that is less 
than the grant amount received for fiscal year 1998, unless the amount 
appropriated is not sufficient to provide such grant amounts to all 
such institutions and programs, or the institution cannot provide 
sufficient matching funds to meet the requirements of this section.''.

SEC. 305. ENDOWMENT CHALLENGE GRANTS.

    Section 331(b) (20 U.S.C. 1065(b)) is amended--
        (1) in paragraph (1), by striking ``360'' and inserting 
    ``399''; and
        (2) in paragraph (2), by striking subparagraphs (B) and (C) and 
    inserting the following:
    ``(B) The Secretary may make a grant under this part to an eligible 
institution in any fiscal year if the institution--
        ``(i) applies for a grant in an amount not exceeding $500,000; 
    and
        ``(ii) has deposited in the eligible institution's endowment 
    fund established under this section an amount which is equal to \1/
    2\ of the amount of such grant.
    ``(C) An eligible institution of higher education that is awarded a 
grant under subparagraph (B) shall not be eligible to receive an 
additional grant under subparagraph (B) until 10 years after the date 
on which the grant period terminates.''.

SEC. 306. HBCU CAPITAL FINANCING.

    (a) Definition.--Section 342(5) (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-1(5)) is amended--
        (1) by redesignating subparagraphs (B), (C), and (D) as 
    subparagraphs (C), (G), and (H), respectively;
        (2) by inserting after subparagraph (A) the following:
            ``(B) a facility for the administration of an educational 
        program, or a student center or student union, except that not 
        more than 5 percent of the loan proceeds provided under this 
        part may be used for the facility, center or union if the 
        facility, center or union is owned, leased, managed, or 
        operated by a private business, that, in return for such use, 
        makes a payment to the eligible institution;'';
        (3) in subparagraph (C) (as redesignated by paragraph (1)), 
    insert ``technology,'' after ``instructional equipment'';
        (4) by inserting after subparagraph (C) (as redesignated by 
    paragraph (1)) the following:
            ``(D) a maintenance, storage, or utility facility that is 
        essential to the operation of a facility, a library, a 
        dormitory, equipment, instrumentation, a fixture, real property 
        or an interest therein, described in this paragraph;
            ``(E) a facility designed to provide primarily outpatient 
        health care for students or faculty;
            ``(F) physical infrastructure essential to support the 
        projects authorized under this paragraph, including roads, 
        sewer and drainage systems, and water, power, lighting, 
        telecommunications, and other utilities;''; and
        (5) in subparagraph (H) (as redesignated by paragraph (2)), by 
    striking ``(C)'' and inserting ``(G)''.
    (b) Responsibilities.--Section 343 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-2) is amended--
        (1) in subsection (b)(8) (as redesignated by section 301(a)(4)) 
    (20 U.S.C. 1132c-2(b)(8)), by striking ``10 percent'' each place 
    the term appears and inserting ``5 percent''; and
        (2) by adding at the end the following:
    ``(e) Notwithstanding any other provision of law, a qualified bond 
guaranteed under this part may be sold to any party that offers terms 
that the Secretary determines are in the best interest of the eligible 
institution.''.
    (c) Technical Assistance.--Section 345 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-4) is amended--
        (1) in paragraph (5), by striking ``and'' after the semicolon;
        (2) in paragraph (6), by striking the period and inserting ``; 
    and''; and
        (3) by adding at the end the following:
        ``(7) may, directly or by grant or contract, provide technical 
    assistance to eligible institutions to prepare the institutions to 
    qualify, apply for, and maintain a capital improvement loan, 
    including a loan under this part.''.
    (d) Prohibition.--Section 346 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-5) is repealed.
    (e) Advisory Board.--Section 347 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-6) is amended--
        (1) in subsection (b)--
            (A) in subparagraph (D), by inserting ``, or the 
        president's designee.'' after the period; and
            (B) in subparagraph (E), by inserting ``, or the designee 
        of the Association'' before the period; and
        (2) by striking subsection (c).

SEC. 307. MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM.

    (a) Minority Science and Engineering Improvement Program 
Findings.--Subpart 1 of part E of title III (as redesignated by 
paragraphs (6) and (7) of section 301) (20 U.S.C. 1135b et seq.) is 
amended by inserting after the subpart heading the following:

``SEC. 350. FINDINGS.

    ``Congress makes the following findings:
        ``(1) It is incumbent on the Federal Government to support the 
    technological and economic competitiveness of the United States by 
    improving and expanding the scientific and technological capacity 
    of the United States. More and better prepared scientists, 
    engineers, and technical experts are needed to improve and expand 
    such capacity.
        ``(2) As the Nation's population becomes more diverse, it is 
    important that the educational and training needs of all Americans 
    are met. Underrepresentation of minorities in science and 
    technological fields diminishes our Nation's competitiveness by 
    impairing the quantity of well prepared scientists, engineers, and 
    technical experts in these fields.
        ``(3) Despite significant limitations in resources, minority 
    institutions provide an important educational opportunity for 
    minority students, particularly in science and engineering fields. 
    Aid to minority institutions is a good way to address the 
    underrepresentation of minorities in science and technological 
    fields.
        ``(4) There is a strong Federal interest in improving science 
    and engineering programs at minority institutions as such programs 
    lag behind in program offerings and in student enrollment compared 
    to such programs at other institutions of higher education.''.
    (b) Eligibility for Grants.--Section 361 (as redesignated by 
section 301(a)(7)) (20 U.S.C. 1135d) is amended to read as follows:

``SEC. 361. ELIGIBILITY FOR GRANTS.

    ``Eligibility to receive grants under this part is limited to--
        ``(1) public and private nonprofit institutions of higher 
    education that--
            ``(A) award baccalaureate degrees; and
            ``(B) are minority institutions;
        ``(2) public or private nonprofit institutions of higher 
    education that--
            ``(A) award associate degrees; and
            ``(B) are minority institutions that--
                ``(i) have a curriculum that includes science or 
            engineering subjects; and
                ``(ii) enter into a partnership with public or private 
            nonprofit institutions of higher education that award 
            baccalaureate degrees in science and engineering;
        ``(3) nonprofit science-oriented organizations, professional 
    scientific societies, and institutions of higher education that 
    award baccalaureate degrees, that--
            ``(A) provide a needed service to a group of minority 
        institutions; or
            ``(B) provide in-service training for project directors, 
        scientists, and engineers from minority institutions; or
        ``(4) consortia of organizations, that provide needed services 
    to one or more minority institutions, the membership of which may 
    include--
            ``(A) institutions of higher education which have a 
        curriculum in science or engineering;
            ``(B) institutions of higher education that have a graduate 
        or professional program in science or engineering;
            ``(C) research laboratories of, or under contract with, the 
        Department of Energy;
            ``(D) private organizations that have science or 
        engineering facilities; or
            ``(E) quasi-governmental entities that have a significant 
        scientific or engineering mission.''.
    (c) Definitions.--Section 365(4) (as redesignated by section 
301(a)(7)) (20 U.S.C. 1135d-5(4)) is amended by inserting 
``behavioral,'' after ``physical,''.
    (d) Conforming amendments.--The heading for subpart 1 of part E of 
title III (as redesignated by paragraphs (6) and (7) of section 301(a)) 
is amended by inserting ``and Engineering'' before ``Improvement 
Program''.

SEC. 308. GENERAL PROVISIONS.

    (a) Applications for Assistance.--Subsection (a) of section 391(a) 
(as redesignated by section 301(a)(2)) (20 U.S.C. 1066(a)) is amended 
to read as follows:
    ``(a) Applications.--
        ``(1) Applications required.--Any institution which is eligible 
    for assistance under this title shall submit to the Secretary an 
    application for assistance at such time, in such form, and 
    containing such information, as may be necessary to enable the 
    Secretary to evaluate the institution's need for the assistance. 
    Subject to the availability of appropriations to carry out this 
    title, the Secretary may approve an application for assistance 
    under this title only if the Secretary determines that--
            ``(A) the application meets the requirements of subsection 
        (b);
            ``(B) the applicant is eligible for assistance in 
        accordance with the part of this title under which the 
        assistance is sought; and
            ``(C) the applicant's performance goals are sufficiently 
        rigorous as to meet the purposes of this title and the 
        performance objectives and indicators for this title 
        established by the Secretary pursuant to the Government 
        Performance and Results Act of 1993 and the amendments made by 
        such Act.
        ``(2) Preliminary applications.--In carrying out paragraph (1), 
    the Secretary may develop a preliminary application for use by 
    eligible institutions applying under part A prior to the submission 
    of the principal application.''.
    (b) Applications.--Paragraph (1) of section 391(b) (as redesignated 
by section 301(a)(2)) (20 U.S.C. 1066(b)) is amended by inserting ``, D 
or E'' after ``part C''.
    (c) Contents of Applications.--Section 391(b)(6) (as redesignated 
by section 301(a)(2)) is amended by inserting before the semicolon the 
following: ``, except that for purposes of section 316, paragraphs (2) 
and (3) of section 396 shall not apply''.
    (d) Waivers.--Section 392(a) (as redesignated by section 301(a)(2)) 
(20 U.S.C. 1067(a)) is amended--
        (1) by striking ``or'' at the end of paragraph (5);
        (2) by redesignating paragraph (6) as paragraph (7); and
        (3) by inserting after paragraph (5) the following new 
    paragraph:
        ``(6) that is a tribally controlled college or university as 
    defined in section 2 of the Tribally Controlled College or 
    University Assistance Act of 1978; or''.
    (e) Application Review Process.--Section 393(a) (as redesignated by 
section 301(a)(2)) (20 U.S.C. 1068(a)) is amended--
        (1) in paragraph (2), by striking ``Native American colleges 
    and universities'' and inserting ``Tribal Colleges and 
    Universities''; and
        (2) by adding at the end the following:
    ``(d) Exclusion.--The provisions of this section shall not apply to 
applications submitted under part D.''.
    (f) Waivers.--Paragraph (2) of section 395(b) (as redesignated by 
section 301(a)(2)) (20 U.S.C. 1069b(b)) is amended by striking ``title 
IV, VII, or VIII'' and inserting ``part D or title IV''.
    (g) Continuation Awards.--Part F of title III is amended by 
inserting after section 397 (as redesignated by section 301(a)(2)) (20 
U.S.C. 1069d) the following:

``SEC. 398. CONTINUATION AWARDS.

    ``The Secretary shall make continuation awards under this title for 
the second and succeeding years of a grant only after determining that 
the recipient is making satisfactory progress in carrying out the 
grant.''.
    (h) Authorization of Appropriations.--Section 399(a) (as 
redesignated by section 301(a)(2)) (20 U.S.C. 1069f) is amended--
        (1) in paragraph (1)--
            (A) in subparagraph (A), by striking ``1993'' and inserting 
        ``1999'';
            (B) in subparagraph (B)--
                (i) in clause (i), by striking ``$45,000,000 for fiscal 
            year 1993'' and inserting ``$10,000,000 for fiscal year 
            1999'';
                (ii) by striking clause (ii); and
                (iii) by striking ``(B)(i) There'' and inserting ``(B) 
            There''; and
            (C) by adding at the end the following:
        ``(C) There are authorized to be appropriated to carry out 
    section 317, $5,000,000 for fiscal year 1999 and such sums as may 
    be necessary for each of the 4 succeeding fiscal years.'';
        (2) in paragraph (2)--
            (A) in subparagraph (A), by striking ``1993'' and inserting 
        ``1999''; and
            (B) in subparagraph (B), by striking ``$20,000,000 for 
        fiscal year 1993'' and inserting ``$35,000,000 for fiscal year 
        1999'';
        (3) in paragraph (3), by striking ``$50,000,000 for fiscal year 
    1993'' and inserting ``$10,000,000 for fiscal year 1999'';
        (4) by adding at the end the following:
        ``(4) Part d.--(A) There are authorized to be appropriated to 
    carry out part D (other than section 345(7), but including section 
    347), $110,000 for fiscal year 1999, and such sums as may be 
    necessary for each of the 4 succeeding fiscal years.
        ``(B) There are authorized to be appropriated to carry out 
    section 345(7), such sums as may be necessary for fiscal year 1999 
    and each of the 4 succeeding fiscal years.
        ``(5) Part e.--There are authorized to be appropriated to carry 
    out part E, $10,000,000 for fiscal year 1999, and such sums as may 
    be necessary for each of the 4 succeeding fiscal years.''; and
        (5) by striking subsections (c), (d), and (e).

                      TITLE IV--STUDENT ASSISTANCE

                       PART A--GRANTS TO STUDENTS

SEC. 401. FEDERAL PELL GRANTS.

    (a) Extension of Authority.--Section 401(a)(1) (20 U.S.C. 
1070a(a)(1)) is amended--
        (1) in the first sentence, by striking ``The Secretary shall, 
    during the period beginning July 1, 1972, and ending September 30, 
    1998,'' and inserting ``For each fiscal year through fiscal year 
    2004, the Secretary shall''; and
        (2) in the second sentence, by inserting ``until such time as 
    the Secretary determines and publishes in the Federal Register with 
    an opportunity for comment, an alternative payment system that 
    provides payments to institutions in an accurate and timely 
    manner,'' after ``pay eligible students''.
    (b) Amount of Grant.--Paragraph (2)(A) of section 401(b) is amended 
to read as follows:
    ``(2)(A) The amount of the Federal Pell Grant for a student 
eligible under this part shall be--
        ``(i) $4,500 for academic year 1999-2000;
        ``(ii) $4,800 for academic year 2000-2001;
        ``(iii) $5,100 for academic year 2001-2002;
        ``(iv) $5,400 for academic year 2002-2003; and
        ``(v) $5,800 for academic year 2003-2004,
less an amount equal to the amount determined to be the expected family 
contribution with respect to that student for that year.''.
    (c) Relation of Maximum Grant to Tuition and Expenses.--Paragraph 
(3) of section 401(b) is amended to read as follows:
    ``(3)(A) For any academic year for which an appropriation Act 
provides a maximum basic grant in an amount in excess of $2,700, the 
amount of a student's basic grant shall equal $2,700 plus--
        ``(i) one-half of the amount by which such maximum basic grant 
    exceeds $2,700; plus
        ``(ii) the lesser of--
            ``(I) the remaining one-half of such excess; or
            ``(II) the sum of the student's tuition and, if the student 
        has dependent care expenses (as described in section 472(8)) or 
        disability-related expenses (as described in section 472(9)), 
        an allowance determined by the institution for such expenses.
    ``(B) An institution that charged only fees in lieu of tuition as 
of October 1, 1998, may include in the institution's determination of 
tuition charged, fees that would normally constitute tuition.''.
    (d) Regulations for Multiple Awards.--Section 401(b)(6) is 
amended--
        (1) by redesignating subparagraphs (A) and (B) as clauses (i) 
    and (ii), respectively;
        (2) by inserting ``(A)'' after the paragraph designation; and
        (3) by adding at the end the following:
    ``(B) The Secretary shall promulgate regulations implementing this 
paragraph.''.
    (e) Time Limit To Receive Grants.--Section 401(c) is amended by 
adding at the end the following:
    ``(4) Notwithstanding paragraph (1), the Secretary may allow, on a 
case-by-case basis, a student to receive a basic grant if the student--
        ``(A) is carrying at least one-half the normal full-time work 
    load for the course of study the student is pursuing, as determined 
    by the institution of higher education; and
        ``(B) is enrolled or accepted for enrollment in a 
    postbaccalaureate program that does not lead to a graduate degree, 
    and in courses required by a State in order for the student to 
    receive a professional certification or licensing credential that 
    is required for employment as a teacher in an elementary school or 
    secondary school in that State,
except that this paragraph shall not apply to a student who is enrolled 
in an institution of higher education that offers a baccalaureate 
degree in education.''.
    (f) Institutional Ineligibility Based on Default Rates.--Section 
401 is amended by adding at the end the following:
    ``(j) Institutional Ineligibility Based on Default Rates.--
        ``(1) In general.--No institution of higher education shall be 
    an eligible institution for purposes of this subpart if such 
    institution of higher education is ineligible to participate in a 
    loan program under part B or D as a result of a final default rate 
    determination made by the Secretary under part B or D after the 
    final publication of cohort default rates for fiscal year 1996 or a 
    succeeding fiscal year.
        ``(2) Sanctions subject to appeal opportunity.--No institution 
    may be subject to the terms of this subsection unless the 
    institution has had the opportunity to appeal the institution's 
    default rate determination under regulations issued by the 
    Secretary for the loan program authorized under part B or D, as 
    applicable. This subsection shall not apply to an institution that 
    was not participating in the loan program authorized under part B 
    or D on the date of enactment of the Higher Education Amendments of 
    1998, unless the institution subsequently participates in the loan 
    programs.''.
    (g) Conforming Amendments.--
        (1) Section 400(a)(1) (20 U.S.C. 1070(a)(1)) is amended by 
    striking ``basic educational opportunity grants'' and inserting 
    ``Federal Pell Grants''.
        (2) The heading of subpart 1 of part A of title IV (20 U.S.C. 
    1070a et seq.) is amended to read as follows:

                  ``Subpart 1--Federal Pell Grants''.

        (3) Section 401 is amended--
            (A) in the heading of the section, by striking ``basic 
        educational opportunity'' and inserting ``federal pell'';
            (B) in subsection (a)(3), by striking ``Basic grants'' and 
        inserting ``Grants'';
            (C) by striking ``basic grant'' each place the term appears 
        and inserting ``Federal Pell Grant''; and
            (D) by striking ``basic grants'' each place the term 
        appears and inserting ``Federal Pell Grants''.
        (4) Section 401(f)(3) is amended by striking ``Education and 
    Labor'' and inserting ``Education and the Workforce''.
        (5) Section 452(c) (20 U.S.C. 1087b(c)) is amended by striking 
    ``basic grants'' and inserting ``Federal Pell Grants''.
        (6) Subsections (j)(2) and (k)(3) of section 455 (20 U.S.C. 
    1087e) are each amended by striking ``basic grants'' and inserting 
    ``Federal Pell Grants''.

SEC. 402. FEDERAL TRIO PROGRAMS.

    (a) Program Authority; Authorization of Appropriations.--
        (1) Duration of grants.--Section 402A(b)(2) (20 U.S.C. 1070a-
    11(b)(2)) is amended--
            (A) by striking ``and'' at the end of subparagraph (A);
            (B) by striking the period at the end of subparagraph (B) 
        and inserting ``; and''; and
            (C) by inserting after subparagraph (B) the following new 
        subparagraph:
            ``(C) grants under section 402H shall be awarded for a 
        period determined by the Secretary.''.
        (2) Minimum grants.--Section 402A(b)(3) is amended to read as 
    follows:
        ``(3) Minimum grants.--Unless the institution or agency 
    requests a smaller amount, individual grants under this chapter 
    shall be no less than--
            ``(A) $170,000 for programs authorized by sections 402D and 
        402G;
            ``(B) $180,000 for programs authorized by sections 402B and 
        402F; and
            ``(C) $190,000 for programs authorized by sections 402C and 
        402E.''.
        (3) Procedures for awarding grants and contracts.--Subsection 
    (c) of section 402A is amended to read as follows:
    ``(c) Procedures for Awarding Grants and Contracts.--
        ``(1) Application requirements.--An eligible entity that 
    desires to receive a grant or contract under this chapter shall 
    submit an application to the Secretary in such manner and form, and 
    containing such information and assurances, as the Secretary may 
    reasonably require.
        ``(2) Prior experience.--In making grants under this chapter, 
    the Secretary shall consider each applicant's prior experience of 
    service delivery under the particular program for which funds are 
    sought. The level of consideration given the factor of prior 
    experience shall not vary from the level of consideration given 
    such factor during fiscal years 1994 through 1997, except that 
    grants made under section 402H shall not be given prior experience 
    consideration.
        ``(3)  Order of awards; program fraud.--(A) Except with respect 
    to grants made under sections 402G and 402H and as provided in 
    subparagraph (B), the Secretary shall award grants and contracts 
    under this chapter in the order of the scores received by the 
    application for such grant or contract in the peer review process 
    required under paragraph (4) and adjusted for prior experience in 
    accordance with paragraph (2) of this subsection.
        ``(B) The Secretary is not required to provide assistance to a 
    program otherwise eligible for assistance under this chapter, if 
    the Secretary has determined that such program has involved the 
    fraudulent use of funds under this chapter.
        ``(4) Peer review process.--(A) The Secretary shall ensure 
    that, to the extent practicable, members of groups underrepresented 
    in higher education, including African Americans, Hispanics, Native 
    Americans, Alaska Natives, Asian Americans, and Native American 
    Pacific Islanders (including Native Hawaiians), are represented as 
    readers of applications submitted under this chapter. The Secretary 
    shall also ensure that persons from urban and rural backgrounds are 
    represented as readers.
        ``(B) The Secretary shall ensure that each application 
    submitted under this chapter is read by at least three readers who 
    are not employees of the Federal Government (other than as readers 
    of applications).
        ``(5) Number of applications for grants and contracts.--The 
    Secretary shall not limit the number of applications submitted by 
    an entity under any program authorized under this chapter if the 
    additional applications describe programs serving different 
    populations or campuses.
        ``(6) Coordination with other programs for disadvantaged 
    students.--The Secretary shall encourage coordination of programs 
    assisted under this chapter with other programs for disadvantaged 
    students operated by the sponsoring institution or agency, 
    regardless of the funding source of such programs. The Secretary 
    shall not limit an entity's eligibility to receive funds under this 
    chapter because such entity sponsors a program similar to the 
    program to be assisted under this chapter, regardless of the 
    funding source of such program. The Secretary shall permit the 
    Director of a program receiving funds under this chapter to 
    administer one or more additional programs for disadvantaged 
    students operated by the sponsoring institution or agency, 
    regardless of the funding sources of such programs.
        ``(7)  Application status.--The Secretary shall inform each 
    entity operating programs under this chapter regarding the status 
    of their application for continued funding at least 8 months prior 
    to the expiration of the grant or contract. The Secretary, in the 
    case of an entity that is continuing to operate a successful 
    program under this chapter, shall ensure that the start-up date for 
    a new grant or contract for such program immediately follows the 
    termination of the preceding grant or contract so that no 
    interruption of funding occurs for such successful reapplicants. 
    The Secretary shall inform each entity requesting assistance under 
    this chapter for a new program regarding the status of their 
    application at least 8 months prior to the proposed startup date of 
    such program.''.
        (4) Authorization of appropriations.--Section 402A(f) is 
    amended by striking ``$650,000,000 for fiscal year 1993'' and 
    inserting ``$700,000,000 for fiscal year 1999''.
        (5) Waiver.--Section 402A(g) is amended by adding at the end 
    the following:
        ``(4) Waiver.--The Secretary may waive the service requirements 
    in subparagraph (A) or (B) of paragraph (3) if the Secretary 
    determines the application of the service requirements to a veteran 
    will defeat the purpose of a program under this chapter.''.
    (b) Talent Search.--Section 402B(b) (20 U.S.C. 1070a-12(b)) is 
amended--
        (1) by striking paragraph (4) and inserting the following:
        ``(4) guidance on and assistance in secondary school reentry, 
    entry to general educational development (GED) programs, other 
    alternative education programs for secondary school dropouts, or 
    postsecondary education;'';
        (2) in paragraph (5), by inserting ``, or activities designed 
    to acquaint individuals from disadvantaged backgrounds with careers 
    in which the individuals are particularly underrepresented'' before 
    the semicolon;
        (3) in paragraph (8), by striking ``parents'' and inserting 
    ``families''; and
        (4) in paragraph (9), by inserting ``or counselors'' after 
    ``teachers''.
    (c) Upward Bound.--Section 402C (20 U.S.C. 1070a-13) is amended--
        (1) in subsection (b)--
            (A) in paragraph (2), by striking ``personal counseling'' 
        and inserting ``counseling and workshops'';
            (B) in paragraph (9)--
                (i) by inserting ``or counselors'' after ``teachers''; 
            and
                (ii) by striking ``and'' after the semicolon;
            (C) by redesignating paragraph (10) as paragraph (12);
            (D) by inserting after paragraph (9) the following:
        ``(10) work-study positions where youth participating in the 
    project are exposed to careers requiring a postsecondary degree;
        ``(11) special services to enable veterans to make the 
    transition to postsecondary education; and''; and
            (E) in paragraph (12) (as redesignated by subparagraph 
        (C)), by striking ``(9)'' and inserting ``(11)''; and
        (2) in subsection (e), by striking ``and not in excess of $40 
    per month during the remaining period of the year.'' and inserting 
    ``except that youth participating in a work-study position under 
    subsection (b)(10) may be paid a stipend of $300 per month during 
    June, July, and August. Youths participating in a project proposed 
    to be carried out under any application may be paid stipends not in 
    excess of $40 per month during the remaining period of the year.''.
    (d) Student Support Services.--Paragraph (6) of section 402D(c) (20 
U.S.C. 1070a-14(c)(6)) is amended to read as follows:
        ``(6) consider, in addition to such other criteria as the 
    Secretary may prescribe, the institution's effort, and where 
    applicable past history, in--
            ``(A) providing sufficient financial assistance to meet the 
        full financial need of each student in the project; and
            ``(B) maintaining the loan burden of each such student at a 
        manageable level.''.
    (e) Postbaccalaureate Achievement Program.--Section 402E(e)(1) (20 
U.S.C. 1070a-15(e)(1)) is amended by striking ``$2,400'' and inserting 
``$2,800''.
    (f) Staff Development Activities.--Section 402G (20 U.S.C. 1070a-
17) is amended--
        (1) in subsection (a), by inserting ``participating in,'' after 
    ``leadership personnel employed in,''; and
        (2) in subsection (b), by inserting after paragraph (3) the 
    following new paragraph:
        ``(4) The use of appropriate educational technology in the 
    operation of projects assisted under this chapter.''.
    (g) Evaluation and Dissemination.--Section 402H (20 U.S.C. 1070a-
18) is amended to read as follows:

``SEC. 402H. EVALUATIONS AND GRANTS FOR PROJECT IMPROVEMENT AND 
              DISSEMINATION PARTNERSHIP PROJECTS.

    ``(a) Evaluations.--
        ``(1) In general.--For the purpose of improving the 
    effectiveness of the programs and projects assisted under this 
    chapter, the Secretary may make grants to or enter into contracts 
    with institutions of higher education and other public and private 
    institutions and organizations to evaluate the effectiveness of the 
    programs and projects assisted under this chapter.
        ``(2) Practices.--The evaluations described in paragraph (1) 
    shall identify institutional, community, and program or project 
    practices that are particularly effective in enhancing the access 
    of low-income individuals and first-generation college students to 
    postsecondary education, the preparation of the individuals and 
    students for postsecondary education, and the success of the 
    individuals and students in postsecondary education. Such 
    evaluations shall also investigate the effectiveness of alternative 
    and innovative methods within Federal TRIO programs of increasing 
    access to, and retention of, students in postsecondary education.
    ``(b) Grants.--The Secretary may award grants to institutions of 
higher education or other private and public institutions and 
organizations, that are carrying out a program or project assisted 
under this chapter prior to the date of enactment of the Higher 
Education Amendments of 1998, to enable the institutions and 
organizations to expand and leverage the success of such programs or 
projects by working in partnership with other institutions, community-
based organizations, or combinations of such institutions and 
organizations, that are not receiving assistance under this chapter and 
are serving low-income students and first generation college students, 
in order to--
        ``(1) disseminate and replicate best practices of programs or 
    projects assisted under this chapter; and
        ``(2) provide technical assistance regarding programs and 
    projects assisted under this chapter.
    ``(c) Results.--In order to improve overall program or project 
effectiveness, the results of evaluations and grants described in this 
section shall be disseminated by the Secretary to similar programs or 
projects assisted under this subpart, as well as other individuals 
concerned with postsecondary access for and retention of low-income 
individuals and first-generation college students.''.

SEC. 403. GEAR UP PROGRAM.

    Chapter 2 of subpart 2 of part A of title IV (20 U.S.C. 1070a-21 et 
seq.) is amended to read as follows:

 ``CHAPTER 2--GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE 
                                PROGRAMS

``SEC. 404A. EARLY INTERVENTION AND COLLEGE AWARENESS PROGRAM 
              AUTHORIZED.

    ``(a) Program Authorized.--The Secretary is authorized, in 
accordance with the requirements of this chapter, to establish a 
program that--
        ``(1) encourages eligible entities to provide or maintain a 
    guarantee to eligible low-income students who obtain a secondary 
    school diploma (or its recognized equivalent), of the financial 
    assistance necessary to permit the students to attend an 
    institution of higher education; and
        ``(2) supports eligible entities in providing--
            ``(A) additional counseling, mentoring, academic support, 
        outreach, and supportive services to elementary school, middle 
        school, and secondary school students who are at risk of 
        dropping out of school; and
            ``(B) information to students and their parents about the 
        advantages of obtaining a postsecondary education and the 
        college financing options for the students and their parents.

    ``(b) Awards.--
        ``(1) In general.--From funds appropriated under section 404H 
    for each fiscal year, the Secretary shall make awards to eligible 
    entities described in paragraphs (1) and (2) of subsection (c) to 
    enable the entities to carry out the program authorized under 
    subsection (a).
        ``(2) Priority.--In making awards to eligible entities 
    described in paragraph (c)(1), the Secretary shall--
            ``(A) give priority to eligible entities that--
                ``(i) on the day before the date of enactment of the 
            Higher Education Amendments of 1998, carried out successful 
            educational opportunity programs under this chapter (as 
            this chapter was in effect on such day); and
                ``(ii) have a prior, demonstrated commitment to early 
            intervention leading to college access through 
            collaboration and replication of successful strategies;
            ``(B) ensure that students served under this chapter on the 
        day before the date of enactment of the Higher Education 
        Amendments of 1998 continue to receive assistance through the 
        completion of secondary school.
    ``(c) Definition of Eligible Entity.--For the purposes of this 
chapter, the term `eligible entity' means--
        ``(1) a State; or
        ``(2) a partnership consisting of--
            ``(A) one or more local educational agencies acting on 
        behalf of--
                ``(i) one or more elementary schools or secondary 
            schools; and
                ``(ii) the secondary schools that students from the 
            schools described in clause (i) would normally attend;
            ``(B) one or more degree granting institutions of higher 
        education; and
            ``(C) at least two community organizations or entities, 
        such as businesses, professional associations, community-based 
        organizations, philanthropic organizations, State agencies, 
        institutions or agencies sponsoring programs authorized under 
        subpart 4, or other public or private agencies or 
        organizations.

``SEC. 404B. REQUIREMENTS.

    ``(a) Funding Rules.--
        ``(1) Continuation awards.--From the amount appropriated under 
    section 404H for a fiscal year, the Secretary shall continue to 
    award grants to States under this chapter (as this chapter was in 
    effect on the day before the date of enactment of the Higher 
    Education Amendments of 1998) in accordance with the terms and 
    conditions of such grants.
        ``(2) Distribution.--From the amount appropriated under section 
    404H that remains after making continuation awards under paragraph 
    (1) for a fiscal year, the Secretary shall--
            ``(A) make available--
                ``(i) not less than 33 percent of the amount to 
            eligible entities described in section 404A(c)(1); and
                ``(ii) not less than 33 percent of the amount to 
            eligible entities described in section 404A(c)(2); and
            ``(B) award the remainder of the amount to eligible 
        entities described in paragraph (1) or (2) of section 404A(c).
        ``(3) Special rule.--The Secretary shall annually reevaluate 
    the distribution of funds described in paragraph (2)(B) based on 
    number, quality, and promise of the applications and adjust the 
    distribution accordingly.''.
    ``(b) Limitation.--Each eligible entity described in section 
404A(c)(1), and each eligible entity described in section 404A(c)(2) 
that conducts a scholarship component under section 404E, shall use not 
less than 25 percent and not more than 50 percent of grant funds 
received under this chapter for the early intervention component of an 
eligible entity's program under this chapter, except that the Secretary 
may waive the 50 percent limitation if the eligible entity demonstrates 
that the eligible entity has another means of providing the students 
with financial assistance that is described in the plan submitted under 
section 404C.
    ``(c) Coordination.--Each eligible entity shall ensure that the 
activities assisted under this chapter are, to the extent practicable, 
coordinated with, and complement and enhance--
        ``(1) services under this chapter provided by other eligible 
    entities serving the same school district or State; and
        ``(2) related services under other Federal or non-Federal 
    programs.
    ``(d) Designation of Fiscal Agent.--An eligible entity described in 
section 404A(c)(2) shall designate an institution of higher education 
or a local educational agency as the fiscal agent for the eligible 
entity.
    ``(e) Coordinators.--An eligible entity described in section 
404A(c)(2) shall have a full-time program coordinator or a part-time 
program coordinator, whose primary responsibility is a project under 
section 404C.
    ``(f) Displacement.--An eligible entity described in 404A(c)(2) 
shall ensure that the activities assisted under this chapter will not 
displace an employee or eliminate a position at a school assisted under 
this chapter, including a partial displacement such as a reduction in 
hours, wages or employment benefits.
    ``(g) Cohort Approach.--
        ``(1) In general.--The Secretary shall require that eligible 
    entities described in section 404A(c)(2)--
            ``(A) provide services under this chapter to at least one 
        grade level of students, beginning not later than 7th grade, in 
        a participating school that has a 7th grade and in which at 
        least 50 percent of the students enrolled are eligible for free 
        or reduced-price lunch under the National School Lunch Act (or, 
        if an eligible entity determines that it would promote the 
        effectiveness of a program, an entire grade level of students, 
        beginning not later than the 7th grade, who reside in public 
        housing as defined in section 3(b)(1) of the United States 
        Housing Act of 1937); and
            ``(B) ensure that the services are provided through the 
        12th grade to students in the participating grade level.
        ``(2) Coordination requirement.--In order for the Secretary to 
    require the cohort approach described in paragraph (1), the 
    Secretary shall, where applicable, ensure that the cohort approach 
    is done in coordination and collaboration with existing early 
    intervention programs and does not duplicate the services already 
    provided to a school or community.

``SEC. 404C. ELIGIBLE ENTITY PLANS.

    ``(a) Plan Required for Eligibility.--
        ``(1) In general.--In order for an eligible entity to qualify 
    for a grant under this chapter, the eligible entity shall submit to 
    the Secretary a plan for carrying out the program under this 
    chapter. Such plan shall provide for the conduct of a scholarship 
    component if required or undertaken pursuant to section 404E and an 
    early intervention component required pursuant to section 404D.
        ``(2) Contents.--Each plan submitted pursuant to paragraph (1) 
    shall be in such form, contain or be accompanied by such 
    information or assurances, and be submitted at such time as the 
    Secretary may require by regulation. Each such plan shall--
            ``(A) describe the activities for which assistance under 
        this chapter is sought; and
            ``(B) provide such additional assurances as the Secretary 
        determines necessary to ensure compliance with the requirements 
        of this chapter.
    ``(b) Matching Requirement.--
        ``(1) In general.--The Secretary shall not approve a plan 
    submitted under subsection (a) unless such plan--
            ``(A) provides that the eligible entity will provide, from 
        State, local, institutional, or private funds, not less than 50 
        percent of the cost of the program, which matching funds may be 
        provided in cash or in kind;
            ``(B) specifies the methods by which matching funds will be 
        paid; and
            ``(C) includes provisions designed to ensure that funds 
        provided under this chapter shall supplement and not supplant 
        funds expended for existing programs.
        ``(2) Special rule.--Notwithstanding the matching requirement 
    described in paragraph (1)(A), the Secretary may by regulation 
    modify the percentage requirement described in paragraph (1)(A) for 
    eligible entities described in section 404A(c)(2).
    ``(c) Methods for Complying With Matching Requirement.--An eligible 
entity may count toward the matching requirement described in 
subsection (b)(1)(A)--
        ``(1) the amount of the financial assistance paid to students 
    from State, local, institutional, or private funds under this 
    chapter;
        ``(2) the amount of tuition, fees, room or board waived or 
    reduced for recipients of financial assistance under this chapter; 
    and
        ``(3) the amount expended on documented, targeted, long-term 
    mentoring and counseling provided by volunteers or paid staff of 
    nonschool organizations, including businesses, religious 
    organizations, community groups, postsecondary educational 
    institutions, nonprofit and philanthropic organizations, and other 
    organizations.
    ``(d) Peer Review Panels.--The Secretary shall convene peer review 
panels to assist in making determinations regarding the awarding of 
grants under this chapter.

``SEC. 404D. EARLY INTERVENTION.

    ``(a) Services.--
        ``(1) In general.--In order to receive a grant under this 
    chapter, an eligible entity shall demonstrate to the satisfaction 
    of the Secretary, in the plan submitted under section 404C, that 
    the eligible entity will provide comprehensive mentoring, 
    counseling, outreach, and supportive services to students 
    participating in programs under this chapter. Such counseling shall 
    include--
            ``(A) financial aid counseling and information regarding 
        the opportunities for financial assistance under this title; 
        and
            ``(B) activities or information regarding--
                ``(i) fostering and improving parent involvement in 
            promoting the advantages of a college education, academic 
            admission requirements, and the need to take college 
            preparation courses;
                ``(ii) college admissions and achievement tests; and
                ``(iii) college application procedures.
            ``(2) Methods.--The eligible entity shall demonstrate in 
        such plan, pursuant to regulations of the Secretary, the 
        methods by which the eligible entity will target services on 
        priority students described in subsection (c), if applicable.
    ``(b) Uses of Funds.--
        ``(1) In general.--The Secretary shall, by regulation, 
    establish criteria for determining whether comprehensive mentoring, 
    counseling, outreach, and supportive services programs may be used 
    to meet the requirements of subsection (a).
        ``(2) Permissible activities.--Examples of activities that meet 
    the requirements of subsection (a) include the following:
            ``(A) Providing eligible students in preschool through 
        grade 12 with a continuing system of mentoring and advising 
        that--
                ``(i) is coordinated with the Federal and State 
            community service initiatives; and
                ``(ii) may include such support services as after 
            school and summer tutoring, assistance in obtaining summer 
            jobs, career mentoring, and academic counseling.
            ``(B) Requiring each student to enter into an agreement 
        under which the student agrees to achieve certain academic 
        milestones, such as completing a prescribed set of courses and 
        maintaining satisfactory progress described in section 484(c), 
        in exchange for receiving tuition assistance for a period of 
        time to be established by each eligible entity.
            ``(C) Activities designed to ensure secondary school 
        completion and college enrollment of at-risk children, such as 
        identification of at-risk children, after school and summer 
        tutoring, assistance in obtaining summer jobs, academic 
        counseling, volunteer and parent involvement, providing former 
        or current scholarship recipients as mentor or peer counselors, 
        skills assessment, providing access to rigorous core courses 
        that reflect challenging academic standards, personal 
        counseling, family counseling and home visits, staff 
        development, and programs and activities described in this 
        subparagraph that are specially designed for students of 
        limited English proficiency.
            ``(D) Summer programs for individuals who are in their 
        sophomore or junior years of secondary school or are planning 
        to attend an institution of higher education in the succeeding 
        academic year that--
                ``(i) are carried out at an institution of higher 
            education that has programs of academic year supportive 
            services for disadvantaged students through projects 
            authorized under section 402D or through comparable 
            projects funded by the State or other sources;
                ``(ii) provide for the participation of the individuals 
            who are eligible for assistance under section 402D or who 
            are eligible for comparable programs funded by the State;
                ``(iii)(I) provide summer instruction in remedial, 
            developmental or supportive courses;
                ``(II) provide such summer services as counseling, 
            tutoring, or orientation; and
                ``(III) provide financial assistance to the individuals 
            to cover the individuals' summer costs for books, supplies, 
            living costs, and personal expenses; and
                ``(iv) provide the individuals with financial 
            assistance during each academic year the individuals are 
            enrolled at the participating institution after the summer 
            program.
            ``(E) Requiring eligible students to meet other standards 
        or requirements as the State determines necessary to meet the 
        purposes of this section.
    ``(c) Priority Students.--For eligible entities not using a cohort 
approach, the eligible entity shall treat as priority students any 
student in preschool through grade 12 who is eligible--
        ``(1) to be counted under section 1124(c) of the Elementary and 
    Secondary Education Act of 1965;
        ``(2) for free or reduced price meals under the National School 
    Lunch Act; or
        ``(3) for assistance pursuant to part A of title IV of the 
    Social Security Act.
    ``(d) Allowable Providers.--In the case of eligible entities 
described in section 404A(c)(1), the activities required by this 
section may be provided by service providers such as community-based 
organizations, schools, institutions of higher education, public and 
private agencies, nonprofit and philanthropic organizations, 
businesses, institutions and agencies sponsoring programs authorized 
under subpart 4, and other organizations the State deems appropriate.

``SEC. 404E. SCHOLARSHIP COMPONENT.

    ``(a) In General.--
        ``(1) States.--In order to receive a grant under this chapter, 
    an eligible entity described in section 404A(c)(1) shall establish 
    or maintain a financial assistance program that awards scholarships 
    to students in accordance with the requirements of this section. 
    The Secretary shall encourage the eligible entity to ensure that a 
    scholarship provided pursuant to this section is available to an 
    eligible student for use at any institution of higher education.
        ``(2) Partnerships.--An eligible entity described in section 
    404A(c)(2) may award scholarships to eligible students in 
    accordance with the requirements of this section.
    ``(b) Grant Amounts.--The maximum amount of a scholarship that an 
eligible student shall be eligible to receive under this section shall 
be established by the eligible entity. The minimum amount of the 
scholarship for each fiscal year shall not be less than the lesser of--
        ``(1) 75 percent of the average cost of attendance for an in-
    State student, in a 4-year program of instruction, at public 
    institutions of higher education in such State, as determined in 
    accordance with regulations prescribed by the Secretary; or
        ``(2) the maximum Federal Pell Grant funded under section 401 
    for such fiscal year.
    ``(c) Relation to Other Assistance.--Scholarships provided under 
this section shall not be considered for the purpose of awarding 
Federal grant assistance under this title, except that in no case shall 
the total amount of student financial assistance awarded to a student 
under this title exceed such student's total cost of attendance.
    ``(d) Eligible Students.--A student eligible for assistance under 
this section is a student who--
        ``(1) is less than 22 years old at time of first scholarship 
    award under this section;
        ``(2) receives a secondary school diploma or its recognized 
    equivalent on or after January 1, 1993;
        ``(3) is enrolled or accepted for enrollment in a program of 
    undergraduate instruction at an institution of higher education 
    that is located within the State's boundaries, except that, at the 
    State's option, an eligible entity may offer scholarship program 
    portability for recipients who attend institutions of higher 
    education outside such State; and
        ``(4) who participated in the early intervention component 
    required under section 404D.
    ``(e) Priority.--The Secretary shall ensure that each eligible 
entity places a priority on awarding scholarships to students who will 
receive a Federal Pell Grant for the academic year for which the 
scholarship is awarded under this section.
    ``(f) Special Rule.--An eligible entity may consider students who 
have successfully participated in programs funded under chapter 1 to 
have met the requirements of subsection (d)(4).

``SEC. 404F. 21ST CENTURY SCHOLAR CERTIFICATES.

    ``(a) Authority.--The Secretary, using funds appropriated under 
section 404H that do not exceed $200,000 for a fiscal year--
        ``(1) shall ensure that certificates, to be known as 21st 
    Century Scholar Certificates, are provided to all students 
    participating in programs under this chapter; and
        ``(2) may, as practicable, ensure that such certificates are 
    provided to all students in grades 6 through 12 who attend schools 
    at which at least 50 percent of the students enrolled are eligible 
    for a free or reduced price lunch under the National School Lunch 
    Act.
    ``(b) Information Required.--A 21st Century Scholar Certificate 
shall be personalized for each student and indicate the amount of 
Federal financial aid for college which a student may be eligible to 
receive.

``SEC. 404G. EVALUATION AND REPORT.

    ``(a) Evaluation.--Each eligible entity receiving a grant under 
this chapter shall biennially evaluate the activities assisted under 
this chapter in accordance with the standards described in subsection 
(b) and shall submit to the Secretary a copy of such evaluation. The 
evaluation shall permit service providers to track eligible student 
progress during the period such students are participating in the 
activities and shall be consistent with the standards developed by the 
Secretary pursuant to subsection (b).
    ``(b) Evaluation Standards.--The Secretary shall prescribe 
standards for the evaluation described in subsection (a). Such 
standards shall--
        ``(1) provide for input from eligible entities and service 
    providers; and
        ``(2) ensure that data protocols and procedures are consistent 
    and uniform.
    ``(c) Federal Evaluation.--In order to evaluate and improve the 
impact of the activities assisted under this chapter, the Secretary 
shall, from not more than 0.75 percent of the funds appropriated under 
section 404H for a fiscal year, award one or more grants, contracts, or 
cooperative agreements to or with public and private institutions and 
organizations, to enable the institutions and organizations to evaluate 
the effectiveness of the program and, as appropriate, disseminate the 
results of the evaluation.
    ``(d) Report.--The Secretary shall biennially report to Congress 
regarding the activities assisted under this chapter and the 
evaluations conducted pursuant to this section.

``SEC. 404H. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this chapter 
$200,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

SEC. 404. ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS.

    Chapter 3 of subpart 2 of part A of title IV (20 U.S.C. 1070a-31 et 
seq.) is amended to read as follows:

        ``CHAPTER 3--ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS

``SEC. 406A. SCHOLARSHIPS AUTHORIZED.

    ``The Secretary is authorized to award scholarships to students who 
graduate from secondary school after May 1, 2000, to enable the 
students to pay the cost of attendance at an institution of higher 
education during the students first 2 academic years of undergraduate 
education, if the students--
        ``(1) are eligible to receive Federal Pell Grants for the year 
    in which the scholarships are awarded; and
        ``(2) demonstrate academic achievement by graduating in the top 
    10 percent of their secondary school graduating class.

``SEC. 406B. SCHOLARSHIP PROGRAM REQUIREMENTS.

    ``(a) Amount of Award.--
        ``(1) In general.--Except as provided in paragraph (2), the 
    amount of a scholarship awarded under this chapter for any academic 
    year shall be equal to 100 percent of the amount of the Federal 
    Pell Grant for which the recipient is eligible for the academic 
    year.
        ``(2) Adjustment for insufficient appropriations.--If, after 
    the Secretary determines the total number of eligible applicants 
    for an academic year in accordance with section 406C, funds 
    available to carry out this chapter for the academic year are 
    insufficient to fully fund all awards under this chapter for the 
    academic year, the amount of the scholarship paid to each student 
    under this chapter shall be reduced proportionately.
    ``(b) Assistance Not To Exceed Cost of Attendance.--A scholarship 
awarded under this chapter to any student, in combination with the 
Federal Pell Grant assistance and other student financial assistance 
available to such student, may not exceed the student's cost of 
attendance.

``SEC. 406C. ELIGIBILITY OF SCHOLARS.

    ``(a) Procedures Established by Regulation.--The Secretary shall 
establish by regulation procedures for the determination of eligibility 
of students for the scholarships awarded under this chapter. Such 
procedures shall include measures to prevent any secondary school from 
certifying more than 10 percent of the school's students for 
eligibility under this section.
    ``(b) Coordination.--In prescribing procedures under subsection 
(a), the Secretary shall ensure that the determination of eligibility 
and the amount of the scholarship is determined in a timely and 
accurate manner consistent with the requirements of section 482 and the 
submission of the financial aid form required by section 483. For such 
purposes, the Secretary may provide that, for the first academic year 
of a student's 2 academic years of eligibility under this chapter, 
class rank may be determined prior to graduation from secondary school, 
at such time and in such manner as the Secretary may specify in 
regulations prescribed under this chapter.

``SEC. 406D. STUDENT REQUIREMENTS.

    ``(a) In General.--Each eligible student desiring a scholarship 
under this chapter shall submit an application to the Secretary at such 
time, in such manner, and containing such information as the Secretary 
may reasonably require.
    ``(b) Continuing Eligibility.--In order for a student to continue 
to be eligible to receive a scholarship under this chapter for the 
second year of undergraduate education, the eligible student shall 
maintain eligibility to receive a Federal Pell Grant for that year, 
including fulfilling the requirements for satisfactory progress 
described in section 484(c).

``SEC. 407E. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this chapter 
$200,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

SEC. 405. REPEALS.

    Chapters 4 through 8 of subpart 2 of part A of title IV (20 U.S.C. 
1070a-41 et seq. and 1070a-81 et seq.) are repealed.

SEC. 406. FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS.

    (a) Authorization of Appropriations.--Section 413A(b)(1) (20 U.S.C. 
1070b(b)(1)) is amended by striking ``1993'' and inserting ``1999''.
    (b) Use of Funds for Less-Than-Full-Time Students.--Subsection (d) 
of section 413C (20 U.S.C. 1070b-2) is amended to read as follows:
    ``(d) Use of Funds for Less-Than-Full-Time Students.--If the 
institution's allocation under this subpart is directly or indirectly 
based in part on the financial need demonstrated by students who are 
independent students or attending the institution on less than a full-
time basis, then a reasonable proportion of the allocation shall be 
made available to such students.''.
    (c) Allocation of Funds.--
        (1) Updating the base period.--Section 413D(a) (20 U.S.C. 
    1070b-3(a)) is amended--
            (A) in paragraph (1), by striking ``received and used under 
        this part for fiscal year 1985'' and inserting ``received under 
        subsections (a) and (b) of this section for fiscal year 1999 
        (as such subsections were in effect with respect to allocations 
        for such fiscal year)'';
            (B) in paragraph (2)--
                (i) in subparagraphs (A) and (B), by striking ``1985'' 
            each place the term appears and inserting ``1999''; and
                (ii) in subparagraph (C)(i), by striking ``1986'' and 
            inserting ``2000''.
        (2) Elimination of pro rata share.--Section 413D is further 
    amended--
            (A) by striking subsection (b);
            (B) in subsection (c)(1), by striking ``three-quarters of 
        the remainder'' and inserting ``the remainder'';
            (C) in subsection (c)(2)(A)(i), by striking ``subsection 
        (d)'' and inserting ``subsection (c)''; and
            (D) by redesignating subsections (c), (d), (e), and (f) as 
        subsections (b), (c), (d), and (e), respectively.
        (3) Effective Date.--The amendments made by this subsection 
    shall apply with respect to allocations of amounts appropriated 
    pursuant to section 413A(b) of the Higher Education Act of 1965 for 
    fiscal year 2000 or any succeeding fiscal year.
    (d) Carryover and Carryback Authority.--Subpart 3 of part A of 
title IV (20 U.S.C. 1070b et seq.) is amended by adding at the end the 
following:

``SEC. 413E. CARRYOVER AND CARRYBACK AUTHORITY.

    ``(a) Carryover Authority.--Of the sums made available to an 
eligible institution under this subpart for a fiscal year, not more 
than 10 percent may, at the discretion of the institution, remain 
available for expenditure during the succeeding fiscal year to carry 
out the program under this subpart.
    ``(b) Carryback Authority.--
        ``(1) In general.--Of the sums made available to an eligible 
    institution under this subpart for a fiscal year, not more than 10 
    percent may, at the discretion of the institution, be used by the 
    institution for expenditure for the fiscal year preceding the 
    fiscal year for which the sums were appropriated.
        ``(2) Use of carried-back funds.--An eligible institution may 
    make grants to students after the end of the academic year, but 
    prior to the beginning of the succeeding fiscal year, from such 
    succeeding fiscal year's appropriations.''.

SEC. 407. LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP PROGRAM.

    (a) Amendment to Subpart Heading.--
        (1) In general.--The heading for subpart 4 of part A of title 
    IV (20 U.S.C. 1070c et seq.) is amended to read as follows:

 ``Subpart 4--Leveraging Educational Assistance Partnership Program''.

        (2) Conforming amendments.--Subpart 4 of part A of title IV (20 
    U.S.C. 1070c et seq.) is amended--
            (A) in section 415B(b) (20 U.S.C. 1070c-1(b)), by striking 
        ``State student grant incentive'' and inserting ``leveraging 
        educational assistance partnership''; and
            (B) in the heading for section 415C (20 U.S.C. 1070c-2), by 
        striking ``state student incentive grant'' and inserting 
        ``leveraging educational assistance partnership''.
    (b) Authorization of Appropriations.--Section 415A(b) (20 U.S.C. 
1070c(b)) is amended--
        (1) in paragraph (1), by striking ``1993'' and inserting 
    ``1999'';
        (2) by redesignating paragraph (2) as paragraph (3); and
        (3) by inserting after paragraph (1) the following:
        ``(2) Reservation.--For any fiscal year for which the amount 
    appropriated under paragraph (1) exceeds $30,000,000, the excess 
    shall be available to carry out section 415E.''.
    (c) Special Leveraging Educational Assistance Partnership 
Program.--Subpart 4 of part A of title IV (20 U.S.C. 1070c et seq.) is 
amended--
        (1) by redesignating section 415E as 415F; and
        (2) by inserting after section 415D the following:

``SEC. 415E. SPECIAL LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP 
              PROGRAM.

    ``(a) In General.--From amounts reserved under section 415A(b)(2) 
for each fiscal year, the Secretary shall--
        ``(1) make allotments among States in the same manner as the 
    Secretary makes allotments among States under section 415B; and
        ``(2) award grants to States, from allotments under paragraph 
    (1), to enable the States to pay the Federal share of the cost of 
    the authorized activities described in subsection (c).
    ``(b) Applicability Rule.--The provisions of this subpart which are 
not inconsistent with this section shall apply to the program 
authorized by this section.
    ``(c) Authorized Activities.--Each State receiving a grant under 
this section may use the grant funds for--
        ``(1) increasing the dollar amount of grants awarded under 
    section 415B to eligible students who demonstrate financial need;
        ``(2) carrying out transition programs from secondary school to 
    postsecondary education for eligible students who demonstrate 
    financial need;
        ``(3) carrying out a financial aid program for eligible 
    students who demonstrate financial need and wish to enter careers 
    in information technology, or other fields of study determined by 
    the State to be critical to the State's workforce needs;
        ``(4) making funds available for community service work-study 
    activities for eligible students who demonstrate financial need;
        ``(5) creating a postsecondary scholarship program for eligible 
    students who demonstrate financial need and wish to enter teaching;
        ``(6) creating a scholarship program for eligible students who 
    demonstrate financial need and wish to enter a program of study 
    leading to a degree in mathematics, computer science, or 
    engineering;
        ``(7) carrying out early intervention programs, mentoring 
    programs, and career education programs for eligible students who 
    demonstrate financial need; and
        ``(8) awarding merit or academic scholarships to eligible 
    students who demonstrate financial need.
    ``(d) Maintenance of Effort Requirement.--Each State receiving a 
grant under this section for a fiscal year shall provide the Secretary 
an assurance that the aggregate amount expended per student or the 
aggregate expenditures by the State, from funds derived from non-
Federal sources, for the authorized activities described in subsection 
(c) for the preceding fiscal year were not less than the amount 
expended per student or the aggregate expenditures by the State for the 
activities for the second preceding fiscal year.
    ``(e) Federal Share.--The Federal share of the cost of the 
authorized activities described in subsection (c) for any fiscal year 
shall be not more than 33\1/3\ percent.''.
    (c) Technical and Conforming Amendments.--
        (1) Purpose.--Subsection (a) of section 415A (20 U.S.C. 
    1070c(a)) is amended to read as follows:
    ``(a) Purpose of Subpart.--It is the purpose of this subpart to 
make incentive grants available to States to assist States in--
        ``(1) providing grants to--
            ``(A) eligible students attending institutions of higher 
        education or participating in programs of study abroad that are 
        approved for credit by institutions of higher education at 
        which such students are enrolled; and
            ``(B) eligible students for campus-based community service 
        work-study; and
        ``(2) carrying out the activities described in section 415F.''.
        (2) Allotment.--Section 415B(a)(1) (20 U.S.C. 1070c-1(a)(1)) is 
    amended by inserting ``and not reserved under section 415A(b)(2)'' 
    after ``415A(b)(1)''.

SEC. 408. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE ENGAGED IN 
              MIGRANT AND SEASONAL FARMWORK.

    (a) Coordination.--Section 418A(d) (20 U.S.C. 1070d-2(d)) is 
amended by inserting after ``contains assurances'' the following: 
``that the grant recipient will coordinate the project, to the extent 
feasible, with other local, State, and Federal programs to maximize the 
resources available for migrant students, and''.
    (b) Authorization of Appropriations.--Section 418A(g) is amended by 
striking ``1993'' each place the term appears and inserting ``1999''.
    (c) Data Collection.--Section 418A is amended--
        (1) by redesignating subsection (g) (as amended by subsection 
    (b)) as subsection (h); and
        (2) by inserting after subsection (f) the following:
    ``(g) Data Collection.--The National Center for Education 
Statistics shall collect postsecondary education data on migrant 
students.''.
    (d) Technical Amendment.--Section 418A(e) is amended by striking 
``authorized by subpart 4 of this part in accordance with section 
417A(b)(2)'' and inserting ``in accordance with section 402A(c)(1)''.

SEC. 409. ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM.

    (a) FAS Eligibility.--Section 419D (20 U.S.C. 1070d-34) is amended 
by adding at the end thereof the following:
    ``(e) FAS Eligibility.--
        ``(1) Fiscal years 2000 through 2004.--Notwithstanding any 
    other provision of this subpart, in the case of students from the 
    Freely Associated States who may be selected to receive a 
    scholarship under this subpart for the first time for any of the 
    fiscal years 2000 through 2004--
            ``(A) there shall be 10 scholarships in the aggregate 
        awarded to such students for each of the fiscal years 2000 
        through 2004; and
            ``(B) the Pacific Regional Educational Laboratory shall 
        administer the program under this subpart in the case of 
        scholarships for students in the Freely Associated States.
        ``(2) Termination of eligibility.--A student from the Freely 
    Associated States shall not be eligible to receive a scholarship 
    under this subpart after September 30, 2004.''.
    (b) Authorization of Appropriations.--Section 419K (20 U.S.C. 
1070d-41) is amended by striking ``$10,000,000 for fiscal year 1993'' 
and inserting ``$45,000,000 for fiscal year 1999''.

SEC. 410. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL.

    Part A of title IV (20 U.S.C. 1070 et seq.) is amended by inserting 
after subpart 6 (20 U.S.C. 1070d-31 et seq.) the following:

         ``Subpart 7--Child Care Access Means Parents in School

``SEC. 419N. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL.

    ``(a) Purpose.--The purpose of this section is to support the 
participation of low-income parents in postsecondary education through 
the provision of campus-based child care services.
    ``(b) Program Authorized.--
        ``(1) Authority.--The Secretary may award grants to 
    institutions of higher education to assist the institutions in 
    providing campus-based child care services to low-income students.
        ``(2) Amount of grants.--
            ``(A) In general.--The amount of a grant awarded to an 
        institution of higher education under this section for a fiscal 
        year shall not exceed 1 percent of the total amount of all 
        Federal Pell Grant funds awarded to students enrolled at the 
        institution of higher education for the preceding fiscal year.
            ``(B) Minimum.--A grant under this section shall be awarded 
        in an amount that is not less than $10,000.
        ``(3) Duration; renewal; and payments.--
            ``(A) Duration.--The Secretary shall award a grant under 
        this section for a period of 4 years.
            ``(B) Payments.--Subject to subsection (e)(2), the 
        Secretary shall make annual grant payments under this section.
        ``(4) Eligible institutions.--An institution of higher 
    education shall be eligible to receive a grant under this section 
    for a fiscal year if the total amount of all Federal Pell Grant 
    funds awarded to students enrolled at the institution of higher 
    education for the preceding fiscal year equals or exceeds $350,000.
        ``(5) Use of funds.--Grant funds under this section shall be 
    used by an institution of higher education to support or establish 
    a campus-based child care program primarily serving the needs of 
    low-income students enrolled at the institution of higher 
    education. Grant funds under this section may be used to provide 
    before and after school services to the extent necessary to enable 
    low-income students enrolled at the institution of higher education 
    to pursue postsecondary education.
        ``(6) Construction.--Nothing in this section shall be construed 
    to prohibit an institution of higher education that receives grant 
    funds under this section from serving the child care needs of the 
    community served by the institution.
        ``(7) Definition of low-income student.--For the purpose of 
    this section, the term ``low-income student'' means a student who 
    is eligible to receive a Federal Pell Grant for the fiscal year for 
    which the determination is made.
    ``(c) Applications.--An institution of higher education desiring a 
grant under this section shall submit an application to the Secretary 
at such time, in such manner, and accompanied by such information as 
the Secretary may require. Each application shall--
        ``(1) demonstrate that the institution is an eligible 
    institution described in subsection (b)(4);
        ``(2) specify the amount of funds requested;
        ``(3) demonstrate the need of low-income students at the 
    institution for campus-based child care services by including in 
    the application--
            ``(A) information regarding student demographics;
            ``(B) an assessment of child care capacity on or near 
        campus;
            ``(C) information regarding the existence of waiting lists 
        for existing child care;
            ``(D) information regarding additional needs created by 
        concentrations of poverty or by geographic isolation; and
            ``(E) other relevant data;
        ``(4) contain a description of the activities to be assisted, 
    including whether the grant funds will support an existing child 
    care program or a new child care program;
        ``(5) identify the resources, including technical expertise and 
    financial support, the institution will draw upon to support the 
    child care program and the participation of low-income students in 
    the program, such as accessing social services funding, using 
    student activity fees to help pay the costs of child care, using 
    resources obtained by meeting the needs of parents who are not low-
    income students, and accessing foundation, corporate or other 
    institutional support, and demonstrate that the use of the 
    resources will not result in increases in student tuition;
        ``(6) contain an assurance that the institution will meet the 
    child care needs of low-income students through the provision of 
    services, or through a contract for the provision of services;
        ``(7) describe the extent to which the child care program will 
    coordinate with the institution's early childhood education 
    curriculum, to the extent the curriculum is available, to meet the 
    needs of the students in the early childhood education program at 
    the institution, and the needs of the parents and children 
    participating in the child care program assisted under this 
    section;
        ``(8) in the case of an institution seeking assistance for a 
    new child care program--
            ``(A) provide a timeline, covering the period from receipt 
        of the grant through the provision of the child care services, 
        delineating the specific steps the institution will take to 
        achieve the goal of providing low-income students with child 
        care services;
            ``(B) specify any measures the institution will take to 
        assist low-income students with child care during the period 
        before the institution provides child care services; and
            ``(C) include a plan for identifying resources needed for 
        the child care services, including space in which to provide 
        child care services, and technical assistance if necessary;
        ``(9) contain an assurance that any child care facility 
    assisted under this section will meet the applicable State or local 
    government licensing, certification, approval, or registration 
    requirements; and
        ``(10) contain a plan for any child care facility assisted 
    under this section to become accredited within 3 years of the date 
    the institution first receives assistance under this section.
    ``(d) Priority.--The Secretary shall give priority in awarding 
grants under this section to institutions of higher education that 
submit applications describing programs that--
        ``(1) leverage significant local or institutional resources, 
    including in-kind contributions, to support the activities assisted 
    under this section; and
        ``(2) utilize a sliding fee scale for child care services 
    provided under this section in order to support a high number of 
    low-income parents pursuing postsecondary education at the 
    institution.
    ``(e) Reporting Requirements; Continuing Eligibility.--
        ``(1) Reporting requirements.--
            ``(A) Reports.--Each institution of higher education 
        receiving a grant under this section shall report to the 
        Secretary 18 months, and 36 months, after receiving the first 
        grant payment under this section.
            ``(B) Contents.--The report shall include--
                ``(i) data on the population served under this section;
                ``(ii) information on campus and community resources 
            and funding used to help low-income students access child 
            care services;
                ``(iii) information on progress made toward 
            accreditation of any child care facility; and
                ``(iv) information on the impact of the grant on the 
            quality, availability, and affordability of campus-based 
            child care services.
        ``(2) Continuing eligibility.--The Secretary shall make the 
    third annual grant payment under this section to an institution of 
    higher education only if the Secretary determines, on the basis of 
    the 18-month report submitted under paragraph (1), that the 
    institution is making a good faith effort to ensure that low-income 
    students at the institution have access to affordable, quality 
    child care services.
    ``(f) Construction.--No funds provided under this section shall be 
used for construction, except for minor renovation or repair to meet 
applicable State or local health or safety requirements.
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $45,000,000 for fiscal year 1999 
and such sums as may be necessary for each of the 4 succeeding fiscal 
years.''.

SEC. 411. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

    Subpart 8 of part A of title IV (20 U.S.C. 1070 et seq.) is amended 
to read as follows:

          ``Subpart 8--Learning Anytime Anywhere Partnerships

``SEC. 420D. FINDINGS.

    ``Congress makes the following findings:
        ``(1) The nature of postsecondary education delivery is 
    changing, and new technology and other related innovations can 
    provide promising education opportunities for individuals who are 
    currently not being served, particularly for individuals without 
    easy access to traditional campus-based postsecondary education or 
    for whom traditional courses are a poor match with education or 
    training needs.
        ``(2) Individuals, including individuals seeking basic or 
    technical skills or their first postsecondary experience, 
    individuals with disabilities, dislocated workers, individuals 
    making the transition from welfare-to-work, and individuals who are 
    limited by time and place constraints can benefit from 
    nontraditional, noncampus-based postsecondary education 
    opportunities and appropriate support services.
        ``(3) The need for high-quality, nontraditional, technology-
    based education opportunities is great, as is the need for skill 
    competency credentials and other measures of educational progress 
    and attainment that are valid and widely accepted, but neither need 
    is likely to be adequately addressed by the uncoordinated efforts 
    of agencies and institutions acting independently and without 
    assistance.
        ``(4) Partnerships, consisting of institutions of higher 
    education, community organizations, or other public or private 
    agencies or organizations, can coordinate and combine institutional 
    resources--
            ``(A) to provide the needed variety of education options to 
        students; and
            ``(B) to develop new means of ensuring accountability and 
        quality for innovative education methods.

``SEC. 420E. PURPOSE; PROGRAM AUTHORIZED.

    ``(a) Purpose.--It is the purpose of this subpart to enhance the 
delivery, quality, and accountability of postsecondary education and 
career-oriented lifelong learning through technology and related 
innovations.
    ``(b) Program Authorized.--
        ``(1) Grants.--
            ``(A) In general.--The Secretary may, from funds 
        appropriated under section 420J make grants to, or enter into 
        contracts or cooperative agreements with, eligible partnerships 
        to carry out the authorized activities described in section 
        420G.
            ``(B) Duration.--Grants under this subpart shall be awarded 
        for periods that do not exceed 5 years.
        ``(2) Definition of eligible partnership.--For purposes of this 
    subpart, the term `eligible partnership' means a partnership 
    consisting of 2 or more independent agencies, organizations, or 
    institutions. The agencies, organizations, or institutions may 
    include institutions of higher education, community organizations, 
    and other public and private institutions, agencies, and 
    organizations.

``SEC. 420F. APPLICATION.

    ``(a) Requirement.--An eligible partnership desiring to receive a 
grant under this subpart shall submit an application to the Secretary, 
in such form and containing such information, as the Secretary may 
require.
    ``(b) Contents.--Each application shall include--
        ``(1) the name of each partner and a description of the 
    responsibilities of the partner, including the designation of a 
    nonprofit organization as the fiscal agent for the partnership;
        ``(2) a description of the need for the project, including a 
    description of how the project will build on any existing services 
    and activities;
        ``(3) a listing of human, financial (other than funds provided 
    under this subpart), and other resources that each member of the 
    partnership will contribute to the partnership, and a description 
    of the efforts each member of the partnership will make in seeking 
    additional resources; and
        ``(4) a description of how the project will operate, including 
    how funds awarded under this subpart will be used to meet the 
    purpose of this subpart.

``SEC. 420G. AUTHORIZED ACTIVITIES.

    ``Funds awarded to an eligible partnership under this subpart shall 
be used to--
        ``(1) develop and assess model distance learning programs or 
    innovative educational software;
        ``(2) develop methodologies for the identification and 
    measurement of skill competencies;
        ``(3) develop and assess innovative student support services; 
    or
        ``(4) support other activities that are consistent with the 
    purpose of this subpart.

``SEC. 420H. MATCHING REQUIREMENT.

    ``Federal funds shall provide not more than 50 percent of the cost 
of a project under this subpart. The non-Federal share of project costs 
may be in cash or in kind, fairly evaluated, including services, 
supplies, or equipment.

``SEC. 420I. PEER REVIEW.

    ``The Secretary shall use a peer review process to review 
applications under this subpart and to make recommendations for funding 
under this subpart to the Secretary.

``SEC. 420J. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this subpart 
$10,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

             PART B--FEDERAL FAMILY EDUCATION LOAN PROGRAM

SEC. 411. LIMITATION REPEALED.

    Section 421 (20 U.S.C. 1071) is amended by striking subsection (d).

SEC. 412. ADVANCES TO RESERVE FUNDS.

    Section 422 (20 U.S.C. 1072) is amended--
        (1) in subsection (a)(2), by striking ``428(c)(10)(E)'' and 
    inserting ``428(c)(9)(E)'';
        (2) in subsection (c)--
            (A) in paragraph (6)(B)(i), by striking ``written'' and 
        inserting ``written, electronic,'';
            (B) in paragraph (7)(A), by striking ``during the 
        transition from the Federal Family Education Loan Program under 
        this part to the Federal Direct Student Loan Program under part 
        D of this title''; and
            (C) in paragraph (7)(B), by striking ``428(c)(10)(F)(v)'' 
        and inserting ``428(c)(9)(F)(v)'';
        (3) in the first and second sentences of subsection (g)(1), by 
    striking ``or the program authorized by part D of this title'' each 
    place it appears; and
        (4) by adding at the end the following:
    ``(i) Additional Recall of Reserves.--
        ``(1) In general.--Notwithstanding any other provision of law 
    and subject to paragraph (4), the Secretary shall recall, from 
    reserve funds held in the Federal Student Loan Reserve Funds 
    established under section 422A by guaranty agencies--
            ``(A) $85,000,000 in fiscal year 2002;
            ``(B) $82,500,000 in fiscal year 2006; and
            ``(C) $82,500,000 in fiscal year 2007.
        ``(2) Deposit.--Funds recalled by the Secretary under this 
    subsection shall be deposited in the Treasury.
        ``(3) Required share.--The Secretary shall require each 
    guaranty agency to return reserve funds under paragraph (1) on the 
    basis of the agency's required share. For purposes of this 
    paragraph, a guaranty agency's required share shall be determined 
    as follows:
            ``(A) Equal percentage.--The Secretary shall require each 
        guaranty agency to return an amount representing an equal 
        percentage reduction in the amount of reserve funds held by the 
        agency on September 30, 1996.
            ``(B) Calculation.--The equal percentage reduction shall be 
        the percentage obtained by dividing--
                ``(i) $250,000,000, by
                ``(ii) the total amount of all guaranty agencies' 
            reserve funds held on September 30, 1996, less any amounts 
            subject to recall under subsection (h).
            ``(C) Special rule.--Notwithstanding subparagraphs (A) and 
        (B), the percentage reduction under subparagraph (B) shall not 
        result in the depletion of the reserve funds of any agency 
        which charges the 1.0 percent insurance premium pursuant to 
        section 428(b)(1)(H) below an amount equal to the amount of 
        lender claim payments paid during the 90 days prior to the date 
        of the return under this subsection. If any additional amount 
        is required to be returned after deducting the total of the 
        required shares under subparagraph (B) and as a result of the 
        preceding sentence, such additional amount shall be obtained by 
        imposing on each guaranty agency to which the preceding 
        sentence does not apply, an equal percentage reduction in the 
        amount of the agency's remaining reserve funds.
        ``(4) Offset of required shares.--If any guaranty agency 
    returns to the Secretary any reserve funds in excess of the amount 
    required under this subsection or subsection (h), the total amount 
    required to be returned under paragraph (1) shall be reduced by the 
    amount of such excess reserve funds returned.
        ``(5) Definition of reserve funds.--The term `reserve funds' 
    when used with respect to a guaranty agency--
            ``(A) includes any reserve funds in cash or liquid assets 
        held by the guaranty agency, or held by, or under the control 
        of, any other entity; and
            ``(B) does not include buildings, equipment, or other 
        nonliquid assets.''.

SEC. 413. GUARANTY AGENCY REFORMS.

    (a) Federal Student Loan Reserve Fund.--Part B of title IV is 
amended by inserting after section 422 (20 U.S.C. 1072) the following 
new section:

``SEC. 422A. FEDERAL STUDENT LOAN RESERVE FUND.

    ``(a) Establishment.--Each guaranty agency shall, not later than 60 
days after the date of enactment of this section, deposit all funds, 
securities, and other liquid assets contained in the reserve fund 
established pursuant to section 422 into a Federal Student Loan Reserve 
Fund (in this section and section 422B referred to as the `Federal 
Fund'), which shall be an account of a type selected by the agency, 
with the approval of the Secretary.
    ``(b) Investment of Funds.--Funds transferred to the Federal Fund 
shall be invested in obligations issued or guaranteed by the United 
States or a State, or in other similarly low-risk securities selected 
by the guaranty agency, with the approval of the Secretary. Earnings 
from the Federal Fund shall be the sole property of the Federal 
Government.
    ``(c) Additional Deposits.--After the establishment of the Federal 
Fund, a guaranty agency shall deposit into the Federal Fund--
        ``(1) all amounts received from the Secretary as payment of 
    reinsurance on loans pursuant to section 428(c)(1);
        ``(2) from amounts collected on behalf of the obligation of a 
    defaulted borrower, a percentage amount equal to the complement of 
    the reinsurance percentage in effect when payment under the 
    guaranty agreement was made--
            ``(A) with respect to the defaulted loan pursuant to 
        sections 428(c)(6)(A) and 428F(a)(1)(B); and
            ``(B) with respect to a loan that the Secretary has repaid 
        or discharged under section 437;
        ``(3) insurance premiums collected from borrowers pursuant to 
    sections 428(b)(1)(H) and 428H(h);
        ``(4) all amounts received from the Secretary as payment for 
    supplemental preclaims activity performed prior to the date of 
    enactment of this section;
        ``(5) 70 percent of amounts received after such date of 
    enactment from the Secretary as payment for administrative cost 
    allowances for loans upon which insurance was issued prior to such 
    date of enactment; and
        ``(6) other receipts as specified in regulations of the 
    Secretary.
    ``(d) Uses of Funds.--Subject to subsection (f), the Federal Fund 
may only be used by a guaranty agency--
        ``(1) to pay lender claims pursuant to sections 428(b)(1)(G), 
    428(j), 437, and 439(q); and
        ``(2) to pay into the Agency Operating Fund established 
    pursuant to section 422B (in this section and section 422B referred 
    to as the ``Operating Fund'') a default aversion fee in accordance 
    with section 428(l).
    ``(e) Ownership of Federal Fund.--The Federal Fund, and any 
nonliquid asset (such as a building or equipment) developed or 
purchased by the guaranty agency in whole or in part with Federal 
reserve funds, regardless of who holds or controls the Federal reserve 
funds or such asset, shall be considered to be the property of the 
United States, prorated based on the percentage of such asset developed 
or purchased with Federal reserve funds, which property shall be used 
in the operation of the program authorized by this part, as provided in 
subsection (d). The Secretary may restrict or regulate the use of such 
asset only to the extent necessary to reasonably protect the 
Secretary's prorated share of the value of such asset. The Secretary 
may direct a guaranty agency, or such agency's officers or directors, 
to cease any activity involving expenditures, use, or transfer of the 
Federal Fund administered by the guaranty agency that the Secretary 
determines is a misapplication, misuse, or improper expenditure of the 
Federal Fund or the Secretary's share of such asset.
    ``(f) Transition.--
        ``(1) In general.--In order to establish the Operating Fund, 
    each guaranty agency may transfer not more than 180 days' cash 
    expenses for normal operating expenses (not including claim 
    payments) as a working capital reserve as defined in Office of 
    Management and Budget Circular A-87 (Cost Accounting Standards) 
    from the Federal Fund for deposit into the Operating Fund for use 
    in the performance of the guaranty agency's duties under this part. 
    Such transfers may occur during the first 3 years following the 
    establishment of the Operating Fund. However, no agency may 
    transfer in excess of 45 percent of the balance, as of September 
    30, 1998, of the agency's Federal Fund to the agency's Operating 
    Fund during such 3-year period. In determining the amount that may 
    be transferred, the agency shall ensure that sufficient funds 
    remain in the Federal Fund to pay lender claims within the required 
    time periods and to meet the reserve recall requirements of this 
    section and subsections (h) and (i) of section 422.
        ``(2) Special rule.--A limited number of guaranty agencies may 
    transfer interest earned on the Federal Fund to the Operating Fund 
    during the first 3 years after the date of enactment of this 
    section if the guaranty agency demonstrates to the Secretary that--
            ``(A) the cash flow in the Operating Fund will be negative 
        without the transfer of such interest; and
            ``(B) the transfer of such interest will substantially 
        improve the financial circumstances of the guaranty agency.
        ``(3) Repayment provisions.--Each guaranty agency shall begin 
    repayment of sums transferred pursuant to this subsection not later 
    than the start of the fourth year after the establishment of the 
    Operating Fund, and shall repay all amounts transferred not later 
    than 5 years from the date of the establishment of the Operating 
    Fund. With respect to amounts transferred from the Federal Fund, 
    the guaranty agency shall not be required to repay any interest on 
    the funds transferred and subsequently repaid. The guaranty agency 
    shall provide to the Secretary a reasonable schedule for repayment 
    of the sums transferred and an annual financial analysis 
    demonstrating the agency's ability to comply with the schedule and 
    repay all outstanding sums transferred.
        ``(4) Prohibition.--If a guaranty agency transfers funds from 
    the Federal Fund in accordance with this section, and fails to make 
    scheduled repayments to the Federal Fund, the agency may not 
    receive any other funds under this part until the Secretary 
    determines that the agency has made such repayments. The Secretary 
    shall pay to the guaranty agency any funds withheld in accordance 
    with this paragraph immediately upon making the determination that 
    the guaranty agency has made all such repayments.
        ``(5) Waiver.--The Secretary may--
            ``(A) waive the requirements of paragraph (3), but only 
        with respect to repayment of interest that was transferred in 
        accordance with paragraph (2); and
            ``(B) waive paragraph (4);
    for a guaranty agency, if the Secretary determines that there are 
    extenuating circumstances (such as State constitutional 
    prohibitions) beyond the control of the agency that justify such a 
    waiver.
        ``(6) Extension of repayment period for interest.--
            ``(A) Extension permitted.--The Secretary shall extend the 
        period for repayment of interest that was transferred in 
        accordance with paragraph (2) from 2 years to 5 years if the 
        Secretary determines that--
                ``(i) the cash flow of the Operating Fund will be 
            negative as a result of repayment as required by paragraph 
            (3);
                ``(ii) the repayment of the interest transferred will 
            substantially diminish the financial circumstances of the 
            guaranty agency; and
                ``(iii) the guaranty agency has demonstrated--

                    ``(I) that the agency is able to repay all 
                transferred funds by the end of the 8th year following 
                the date of establishment of the Operating Fund; and
                    ``(II) that the agency will be financially sound on 
                the completion of repayment.

            ``(B) Repayment of income on transferred funds.--All 
        repayments made to the Federal Fund during the 6th, 7th, and 
        8th years following the establishment of the Operating Fund of 
        interest that was transferred shall include the sums 
        transferred plus any income earned from the investment of the 
        sums transferred after the 5th year.
        ``(7) Investment of federal funds.--Funds transferred from the 
    Federal Fund to the Operating Fund for operating expenses shall be 
    invested in obligations issued or guaranteed by the United States 
    or a State, or in other similarly low-risk securities selected by 
    the guaranty agency, with the approval of the Secretary.
        ``(8) Special rule.--In calculating the minimum reserve level 
    required by section 428(c)(9)(A), the Secretary shall include all 
    amounts owed to the Federal Fund by the guaranty agency in the 
    calculation.''.
    (b) Agency Operating Fund Established.--Part B of title IV is 
further amended by inserting after section 422A (as added by subsection 
(a)) the following new section:

``SEC. 422B. AGENCY OPERATING FUND.

    ``(a) Establishment.--Each guaranty agency shall, not later than 60 
days after the date of enactment of this section, establish a fund 
designated as the Operating Fund.
    ``(b) Investment of Funds.--Funds deposited into the Operating Fund 
shall be invested at the discretion of the guaranty agency in 
accordance with prudent investor standards.
    ``(c) Additional Deposits.--After the establishment of the 
Operating Fund, the guaranty agency shall deposit into the Operating 
Fund--
        ``(1) the loan processing and issuance fee paid by the 
    Secretary pursuant to section 428(f);
        ``(2) 30 percent of amounts received after the date of 
    enactment of this section from the Secretary as payment for 
    administrative cost allowances for loans upon which insurance was 
    issued prior to such date of enactment;
        ``(3) the account maintenance fee paid by the Secretary in 
    accordance with section 458;
        ``(4) the default aversion fee paid in accordance with section 
    428(l);
        ``(5) amounts remaining pursuant to section 428(c)(6)(B) from 
    collection on defaulted loans held by the agency, after payment of 
    the Secretary's equitable share, excluding amounts deposited in the 
    Federal Fund pursuant to section 422A(c)(2); and
        ``(6) other receipts as specified in regulations of the 
    Secretary.
    ``(d) Uses of Funds.--
        ``(1) In general.--Funds in the Operating Fund shall be used 
    for application processing, loan disbursement, enrollment and 
    repayment status management, default aversion activities (including 
    those described in section 422(h)(8)), default collection 
    activities, school and lender training, financial aid awareness and 
    related outreach activities, compliance monitoring, and other 
    student financial aid related activities, as selected by the 
    guaranty agency.
        ``(2) Special rule.--The guaranty agency may, in the agency's 
    discretion, transfer funds from the Operating Fund to the Federal 
    Fund for use pursuant to section 422A. Such transfer shall be 
    irrevocable, and any funds so transferred shall become the sole 
    property of the United States.
        ``(3) Definitions.--For purposes of this subsection:
            ``(A) Default collection activities.--The term `default 
        collection activities' means activities of a guaranty agency 
        that are directly related to the collection of the loan on 
        which a default claim has been paid to the participating 
        lender, including the due diligence activities required 
        pursuant to regulations of the Secretary.
            ``(B) Default aversion activities.--The term `default 
        aversion activities' means activities of a guaranty agency that 
        are directly related to providing collection assistance to the 
        lender on a delinquent loan, prior to the loan's being legally 
        in a default status, including due diligence activities 
        required pursuant to regulations of the Secretary.
            ``(C) Enrollment and repayment status management.--The term 
        `enrollment and repayment status management' means activities 
        of a guaranty agency that are directly related to ascertaining 
        the student's enrollment status, including prompt notification 
        to the lender of such status, an audit of the note or written 
        agreement to determine if the provisions of that note or 
        agreement are consistent with the records of the guaranty 
        agency as to the principal amount of the loan guaranteed, and 
        an examination of the note or agreement to assure that the 
        repayment provisions are consistent with the provisions of this 
        part.
    ``(e) Ownership and Regulation of Operating Fund.--
        ``(1) Ownership.--The Operating Fund, with the exception of 
    funds transferred from the Federal Fund in accordance with section 
    422A(f), shall be considered to be the property of the guaranty 
    agency.
        ``(2) Regulation.--Except as provided in paragraph (3), the 
    Secretary may not regulate the uses or expenditure of moneys in the 
    Operating Fund, but the Secretary may require such necessary 
    reports and audits as provided in section 428(b)(2).
        ``(3) Exception.--Notwithstanding paragraphs (1) and (2), 
    during any period in which funds are owed to the Federal Fund as a 
    result of transfer under section 422A(f)--
            ``(A) moneys in the Operating Fund may only be used for 
        expenses related to the student loan programs authorized under 
        this part; and
            ``(B) the Secretary may regulate the uses or expenditure of 
        moneys in the Operating Fund.''.

SEC. 414. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM.

    Section 424(a) (20 U.S.C. 1074(a)) is amended--
        (1) by striking ``October 1, 2002'' and inserting ``October 1, 
    2004''; and
        (2) by striking ``September 30, 2006'' and inserting 
    ``September 30, 2008''.

SEC. 415. LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS AND FEDERAL 
              LOAN INSURANCE.

    Section 425(a)(1)(A) (20 U.S.C. 1075(a)(1)(A)) is amended--
        (1) in clause (i)--
            (A) by inserting ``and'' after the semicolon at the end of 
        subclause (I); and
            (B) by striking subclauses (II) and (III) and inserting the 
        following:
                ``(II) if such student is enrolled in a program of 
            undergraduate education which is less than one academic 
            year, the maximum annual loan amount that such student may 
            receive may not exceed the amount that bears the same ratio 
            to the amount specified in subclause (I) as the length of 
            such program measured in semester, trimester, quarter, or 
            clock hours bears to one academic year;''; and
        (2) by inserting ``and'' after the semicolon at the end of 
    clause (iii).

SEC. 416. APPLICABLE INTEREST RATES.

    (a) Applicable Interest Rates.--
        (1) Amendment.--Section 427A (20 U.S.C. 1077a) is amended--
            (A) by redesignating subsections (k) and (l) as subsections 
        (l) and (m), respectively; and
            (B) by inserting after subsection (j) the following:
    ``(k) Interest Rates for New Loans on or After October 1, 1998, and 
Before July 1, 2003.--
        ``(1) In general.--Notwithstanding subsection (h) and subject 
    to paragraph (2) of this subsection, with respect to any loan made, 
    insured, or guaranteed under this part (other than a loan made 
    pursuant to section 428B or 428C) for which the first disbursement 
    is made on or after October 1, 1998, and before July 1, 2003, the 
    applicable rate of interest shall, during any 12-month period 
    beginning on July 1 and ending on June 30, be determined on the 
    preceding June 1 and be equal to--
            ``(A) the bond equivalent rate of 91-day Treasury bills 
        auctioned at the final auction held prior to such June 1; plus
            ``(B) 2.3 percent,
    except that such rate shall not exceed 8.25 percent.
        ``(2) In school and grace period rules.--Notwithstanding 
    subsection (h), with respect to any loan under this part (other 
    than a loan made pursuant to section 428B or 428C) for which the 
    first disbursement is made on or after October 1, 1998, and before 
    July 1, 2003, the applicable rate of interest for interest which 
    accrues--
            ``(A) prior to the beginning of the repayment period of the 
        loan; or
            ``(B) during the period in which principal need not be paid 
        (whether or not such principal is in fact paid) by reason of a 
        provision described in section 427(a)(2)(C) or 428(b)(1)(M),
    shall be determined under paragraph (1) by substituting `1.7 
    percent' for `2.3 percent'.
        ``(3) PLUS loans.--Notwithstanding subsection (h), with respect 
    to any loan under section 428B for which the first disbursement is 
    made on or after October 1, 1998, and before July 1, 2003, the 
    applicable rate of interest shall be determined under paragraph 
    (1)--
            ``(A) by substituting `3.1 percent' for `2.3 percent'; and
            ``(B) by substituting `9.0 percent' for `8.25 percent'.
        ``(4) Consolidation loans.--With respect to any consolidation 
    loan under section 428C for which the application is received by an 
    eligible lender on or after October 1, 1998, and before July 1, 
    2003, the applicable rate of interest shall be at an annual rate on 
    the unpaid principal balance of the loan that is equal to the 
    lesser of--
            ``(A) the weighted average of the interest rates on the 
        loans consolidated, rounded to the nearest higher one-eighth of 
        1 percent; or
            ``(B) 8.25 percent.
        ``(5) Consultation.--The Secretary shall determine the 
    applicable rate of interest under this subsection after 
    consultation with the Secretary of the Treasury and shall publish 
    such rate in the Federal Register as soon as practicable after the 
    date of determination.''.
        (2) Conforming amendment.--Section 428B(d)(4) (20 U.S.C. 1078-
    2(d)(4)) is amended by striking ``section 427A(c)'' and inserting 
    ``section 427A''.
    (b) Special Allowances.--
        (1) Amendment.--Section 438(b)(2) (20 U.S.C. 1087-1(b)(2)) is 
    amended by adding at the end the following:
            ``(H) Loans disbursed on or after october 1, 1998, and 
        before july 1, 2003.--
                ``(i) In general.--Subject to paragraph (4) and clauses 
            (ii), (iii), and (iv) of this subparagraph, and except as 
            provided in subparagraph (B), the special allowance paid 
            pursuant to this subsection on loans for which the first 
            disbursement is made on or after October 1, 1998, and 
            before July 1, 2003, shall be computed--

                    ``(I) by determining the average of the bond 
                equivalent rates of 91-day Treasury bills auctioned for 
                such 3-month period;
                    ``(II) by subtracting the applicable interest rates 
                on such loans from such average bond equivalent rate;
                    ``(III) by adding 2.8 percent to the resultant 
                percent; and
                    ``(IV) by dividing the resultant percent by 4.

                ``(ii) In school and grace period.--In the case of any 
            loan for which the first disbursement is made on or after 
            October 1, 1998, and before July 1, 2003, and for which the 
            applicable rate of interest is described in section 
            427A(k)(2), clause (i)(III) of this subparagraph shall be 
            applied by substituting `2.2 percent' for `2.8 percent'.
                ``(iii) PLUS loans.--In the case of any loan for which 
            the first disbursement is made on or after October 1, 1998, 
            and before July 1, 2003, and for which the applicable rate 
            of interest is described in section 427A(k)(3), clause 
            (i)(III) of this subparagraph shall be applied by 
            substituting `3.1 percent' for `2.8 percent', subject to 
            clause (v) of this subparagraph.
                ``(iv) Consolidation loans.--In the case of any 
            consolidation loan for which the application is received by 
            an eligible lender on or after October 1, 1998, and before 
            July 1, 2003, and for which the applicable interest rate is 
            determined under section 427A(k)(4), clause (i)(III) of 
            this subparagraph shall be applied by substituting `3.1 
            percent' for `2.8 percent', subject to clause (vi) of this 
            subparagraph.
                ``(v) Limitation on special allowances for plus 
            loans.--In the case of PLUS loans made under section 428B 
            and first disbursed on or after October 1, 1998, and before 
            July 1, 2003, for which the interest rate is determined 
            under section 427A(k)(3), a special allowance shall not be 
            paid for such loan during any 12-month period beginning on 
            July 1 and ending on June 30 unless, on the June 1 
            preceding such July 1--

                    ``(I) the bond equivalent rate of 91-day Treasury 
                bills auctioned at the final auction held prior to such 
                June 1 (as determined by the Secretary for purposes of 
                such section); plus
                    ``(II) 3.1 percent,

            exceeds 9.0 percent.
                ``(vi) Limitation on special allowances for 
            consolidation loans.--In the case of consolidation loans 
            made under section 428C and for which the application is 
            received on or after October 1, 1998, and before July 1, 
            2003, for which the interest rate is determined under 
            section 427A(k)(4), a special allowance shall not be paid 
            for such loan during any 3-month period ending March 31, 
            June 30, September 30, or December 31 unless--

                    ``(I) the average of the bond equivalent rate of 
                91-day Treasury bills auctioned for such 3-month 
                period; plus
                    ``(II) 3.1 percent,

            exceeds the rate determined under section 427A(k)(4).''.
        (2) Consolidation loans.--Section 428C(c)(1) (20 U.S.C. 1078-
    3(c)(1)) is amended by striking everything preceding subparagraph 
    (B) and inserting the following:
        ``(1) Interest rate.--(A) Notwithstanding subparagraphs (B) and 
    (C), with respect to any loan made under this section for which the 
    application is received by an eligible lender on or after October 
    1, 1998, and before July 1, 2003, the applicable interest rate 
    shall be determined under section 427A(k)(4).''.
        (3) Conforming amendment.--Section 438(b)(2) (20 U.S.C. 1087-
    1(b)(2)(C)(ii)) is amended--
            (A) in subparagraph (A), by striking ``(F), and (G)'' and 
        inserting ``(F), (G), and (H)'';
            (B) in subparagraph (B)(iv), by striking ``(F), or (G)'' 
        and inserting ``(F), (G), or (H)''; and
            (C) in subparagraph (C)(ii), by striking ``subparagraph 
        (G)'' and inserting ``subparagraphs (G) and (H)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to any loan made, insured, or guaranteed under part 
B of title IV of the Higher Education Act of 1965 for which the first 
disbursement is made on or after October 1, 1998, and before July 1, 
2003, except that such amendments shall apply with respect to any loan 
made under section 428C of such Act for which the application is 
received by an eligible lender on or after October 1, 1998, and before 
July 1, 2003.

SEC. 417. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

    (a) Federal Interest Subsidies.--
        (1) Requirements to receive subsidy.--Section 428(a)(2) (20 
    U.S.C. 1078(a)(2)) is amended--
            (A) in subparagraph (A)(i), by striking subclauses (I), 
        (II), and (III) and inserting the following:
                ``(I) sets forth the loan amount for which the student 
            shows financial need; and
                ``(II) sets forth a schedule for disbursement of the 
            proceeds of the loan in installments, consistent with the 
            requirements of section 428G; and''; and
            (B) by amending subparagraph (B) to read as follows:
        ``(B) For the purpose of clause (ii) of subparagraph (A), a 
    student shall qualify for a portion of an interest payment under 
    paragraph (1) if the eligible institution has determined and 
    documented the student's amount of need for a loan based on the 
    student's estimated cost of attendance, estimated financial 
    assistance, and, for the purpose of an interest payment pursuant to 
    this section, expected family contribution (as determined under 
    part F), subject to the provisions of subparagraph (D).'';
            (C) by amending subparagraph (C) to read as follows:
        ``(C) For the purpose of subparagraph (B) and this paragraph--
            ``(i) a student's cost of attendance shall be determined 
        under section 472;
            ``(ii) a student's estimated financial assistance means, 
        for the period for which the loan is sought--
                ``(I) the amount of assistance such student will 
            receive under subpart 1 of part A (as determined in 
            accordance with section 484(b)), subpart 3 of part A, and 
            parts C and E;
                ``(II) any veterans' education benefits paid because of 
            enrollment in a postsecondary education institution, 
            including veterans' education benefits (as defined in 
            section 480(c), but excluding benefits described in 
            paragraph (2)(E) of such section); plus
                ``(III) other scholarship, grant, or loan assistance, 
            but excluding any national service education award or post-
            service benefit under title I of the National and Community 
            Service Act of 1990; and
            ``(iii) the determination of need and of the amount of a 
        loan by an eligible institution under subparagraph (B) with 
        respect to a student shall be calculated in accordance with 
        part F.''; and
            (D) by striking subparagraph (F).
        (2) Duration of authority.--Section 428(a)(5) is amended--
            (A) by striking ``September 30, 2002'' and inserting 
        ``September 30, 2004''; and
            (B) by striking ``September 30, 2006'' and inserting 
        ``September 30, 2008''.
    (b) Insurance Program Agreements.--
        (1) Annual loan limits.--Section 428(b)(1)(A) is amended--
            (A) in the matter preceding clause (i), by inserting ``, as 
        defined in section 481(a)(2),'' after ``academic year'';
            (B) in clause (i)--
                (i) in subclause (I), by striking ``length (as 
            determined under section 481);'' and inserting ``length; 
            and''; and
                (ii) by striking subclauses (II) and (III) and 
            inserting the following:

                    ``(II) if such student is enrolled in a program of 
                undergraduate education which is less than 1 academic 
                year, the maximum annual loan amount that such student 
                may receive may not exceed the amount that bears the 
                same ratio to the amount specified in subclause (I) as 
                the length of such program measured in semester, 
                trimester, quarter, or clock hours bears to 1 academic 
                year;'';

            (C) in clause (iv), by striking ``and'' after the 
        semicolon;
            (D) in clause (v), by inserting ``and'' after the 
        semicolon; and
            (E) by inserting before the matter following clause (v) the 
        following:
                ``(vi) in the case of a student enrolled in coursework 
            specified in sections 484(b)(3)(B) and 484(b)(4)(B)--

                    ``(I) $2,625 for coursework necessary for 
                enrollment in an undergraduate degree or certificate 
                program, and, in the case of a student who has obtained 
                a baccalaureate degree, $5,500 for coursework necessary 
                for enrollment in a graduate or professional degree or 
                certification program; and
                    ``(II) in the case of a student who has obtained a 
                baccalaureate degree, $5,500 for coursework necessary 
                for a professional credential or certification from a 
                State required for employment as a teacher in an 
                elementary school or secondary school;''.

        (2) Selection of repayment plans.--Clause (ii) of section 
    428(b)(1)(D) is amended to read as follows: ``(ii) the student 
    borrower may annually change the selection of a repayment plan 
    under this part, and''.
        (3) Repayment plans.--Subparagraph (E) of section 428(b)(1) is 
    amended to read as follows:
            ``(E) subject to subparagraphs (D) and (L), and except as 
        provided by subparagraph (M), provides that--
                ``(i) not more than 6 months prior to the date on which 
            the borrower's first payment is due, the lender shall offer 
            the borrower of a loan made, insured, or guaranteed under 
            this section or section 428H, the option of repaying the 
            loan in accordance with a standard, graduated, income-
            sensitive, or extended repayment schedule (as described in 
            paragraph (9)) established by the lender in accordance with 
            regulations of the Secretary; and
                ``(ii) repayment of loans shall be in installments in 
            accordance with the repayment plan selected under paragraph 
            (9) and commencing at the beginning of the repayment period 
            determined under paragraph (7);'';
        (4) Coinsurance.--Section 428(b)(1)(G) is amended by striking 
    ``not less than''.
        (5) Payment amounts.--Section 428(b)(1)(L)(i) is amended--
            (A) by inserting ``except as otherwise provided by a 
        repayment plan selected by the borrower under clause (ii) or 
        (iii) of paragraph (9)(A),'' before ``during any''; and
            (B) by inserting ``, notwithstanding any payment plan under 
        paragraph (9)(A)'' after ``due and payable''.
        (6) Deferments.--Section 428(b)(1)(M) is amended--
            (A) in clause (i)(I), by inserting before the semicolon the 
        following: ``, except that no borrower, notwithstanding the 
        provisions of the promissory note, shall be required to borrow 
        an additional loan under this title in order to be eligible to 
        receive a deferment under this clause''; and
            (B) in clause (ii), by inserting before the semicolon the 
        following: ``, except that no borrower who provides evidence of 
        eligibility for unemployment benefits shall be required to 
        provide additional paperwork for a deferment under this 
        clause''.
        (7) Limitation, suspension, and termination.--Section 
    428(b)(1)(U) is amended--
            (A) by striking ``emergency action,,'' each place the term 
        appears and inserting ``emergency action,''; and
            (B) in clause (iii)(I), by inserting ``that originates or 
        holds more than $5,000,000 in loans made under this title for 
        any lender fiscal year (except that each lender described in 
        section 435(d)(1)(A)(ii)(III) shall annually submit the results 
        of an audit required by this clause),'' before ``at least once 
        a year''.
        (8) Additional insurance program requirements.-- Section 
    428(b)(1) is further amended--
            (A) by striking ``and'' at the end of subparagraph (W);
            (B) in subparagraph (X)--
                (i) by striking ``428(c)(10)'' and inserting 
            ``428(c)(9)''; and
                (ii) by striking the period at the end and inserting 
            ``; and'';
            (C) by adding at the end the following new sub- paragraph:
            ``(Y) provides that--
                ``(i) the lender shall determine the eligibility of a 
            borrower for a deferment described in subparagraph (M)(i) 
            based on receipt of--

                    ``(I) a request for deferment from the borrower and 
                documentation of the borrower's eligibility for the 
                deferment;
                    ``(II) a newly completed loan application that 
                documents the borrower's eligibility for a deferment; 
                or
                    ``(III) student status information received by the 
                lender that the borrower is enrolled on at least a 
                half-time basis; and

                ``(ii) the lender will notify the borrower of the 
            granting of any deferment under clause (i)(II) or (III) of 
            this subparagraph and of the option to continue paying on 
            the loan.''.
        (9) Restrictions on inducements.--Section 428(b)(3) is 
    amended--
            (A) by striking subparagraph (C) and inserting the 
        following:
            ``(C) conduct unsolicited mailings of student loan 
        application forms to students enrolled in secondary school or a 
        postsecondary institution, or to parents of such students, 
        except that applications may be mailed to borrowers who have 
        previously received loans guaranteed under this part by the 
        guaranty agency; or''; and
            (B) by adding at the end the following new sentence:
    ``It shall not be a violation of this paragraph for a guaranty 
    agency to provide assistance to institutions of higher education 
    comparable to the kinds of assistance provided to institutions of 
    higher education by the Department of Education.''.
        (10) Delay in commencement of repayment period.--Section 
    428(b)(7) is amended by adding at the end the following:
        ``(D) There shall be excluded from the 6-month period that 
    begins on the date on which a student ceases to carry at least one-
    half the normal full-time academic workload as described in 
    subparagraph (A)(i) any period not to exceed 3 years during which a 
    borrower who is a member of a reserve component of the Armed Forces 
    named in section 10101 of title 10, United States Code, is called 
    or ordered to active duty for a period of more than 30 days (as 
    defined in section 101(d)(2) of such title). Such period of 
    exclusion shall include the period necessary to resume enrollment 
    at the borrower's next available regular enrollment period.''.
        (11) Repayment plans.--Section 428(b) is amended by adding at 
    the end the following:
        ``(9) Repayment plans.--
            ``(A) Design and selection.--In accordance with regulations 
        promulgated by the Secretary, the lender shall offer a borrower 
        of a loan made under this part the plans described in this 
        subparagraph for repayment of such loan, including principal 
        and interest thereon. No plan may require a borrower to repay a 
        loan in less than 5 years unless the borrower, during the 6 
        months immediately preceding the start of the repayment period, 
        specifically requests that repayment be made over of a shorter 
        period. The borrower may choose from--
                ``(i) a standard repayment plan, with a fixed annual 
            repayment amount paid over a fixed period of time, not to 
            exceed 10 years;
                ``(ii) a graduated repayment plan paid over a fixed 
            period of time, not to exceed 10 years;
                ``(iii) an income-sensitive repayment plan, with 
            income-sensitive repayment amounts paid over a fixed period 
            of time, not to exceed 10 years, except that the borrower's 
            scheduled payments shall not be less than the amount of 
            interest due; and
                ``(iv) for new borrowers on or after the date of 
            enactment of the Higher Education Amendments of 1998 who 
            accumulate (after such date) outstanding loans under this 
            part totaling more than $30,000, an extended repayment 
            plan, with a fixed annual or graduated repayment amount 
            paid over an extended period of time, not to exceed 25 
            years, except that the borrower shall repay annually a 
            minimum amount determined in accordance with paragraph 
            (1)(L)(i).
            ``(B) Lender selection of option if borrower does not 
        select.--If a borrower of a loan made under this part does not 
        select a repayment plan described in subparagraph (A), the 
        lender shall provide the borrower with a repayment plan 
        described in subparagraph (A)(i).''.
    (c) Guarantee Agreements.--
        (1) Reinsurance payments.--
            (A) Amendments.--Section 428(c)(1) (20 U.S.C. 1078(c)(1)) 
        is amended--
                (i) in subparagraph (A), by striking ``98 percent'' and 
            inserting ``95 percent'';
                (ii) in subparagraph (B)(i), by striking ``88 percent'' 
            and inserting ``85 percent'';
                (iii) in subparagraph (B)(ii), by striking ``78 
            percent'' and inserting ``75 percent'';
                (iv) in subparagraph (E)--

                    (I) in clause (i), by striking ``98 percent'' and 
                inserting ``95 percent'';
                    (II) in clause (ii), by striking ``88 percent'' and 
                inserting ``85 percent''; and
                    (III) in clause (iii), by striking ``78 percent'' 
                and inserting ``75 percent''; and

                (v) in subparagraph (F)--

                    (I) in clause (i), by striking ``98 percent'' and 
                inserting ``95 percent'';
                    (II) in clause (ii), by striking ``88 percent'' and 
                inserting ``85 percent''; and
                    (III) in clause (iii), by striking ``78 percent'' 
                and inserting ``75 percent''.

            (B) Effective date.--The amendments made by subparagraph 
        (A) of this paragraph apply to loans for which the first 
        disbursement is made on or after October 1, 1998.
        (2) Notice to institutions of defaults.--Section 428(c)(2) is 
    amended--
            (A) in subparagraph (A), by striking ``proof that 
        reasonable attempts were made'' and inserting ``proof that the 
        institution was contacted and other reasonable attempts were 
        made''; and
            (B) in subparagraph (G), by striking ``certifies to the 
        Secretary that diligent attempts have been made'' and inserting 
        ``certifies to the Secretary that diligent attempts, including 
        contact with the institution, have been made''.
        (3) Guaranty agency information to eligible institutions.--
    Section 428(c)(2)(H)(ii) is amended to read as follows:
                ``(ii) the guaranty agency shall not require the 
            payment from the institution of any fee for such 
            information; and''.
        (4) Forbearance.--Section 428(c)(3) is amended--
            (A) in subparagraph (A)(i), by striking ``written'';
            (B) in subparagraph (B), by striking ``and'' after the 
        semicolon;
            (C) in subparagraph (C), by striking the period and 
        inserting ``; and''; and
            (D) by inserting before the matter following subparagraph 
        (C) the following:
            ``(D) shall contain provisions that specify that--
                ``(i) forbearance for a period not to exceed 60 days 
            may be granted if the lender reasonably determines that 
            such a suspension of collection activity is warranted 
            following a borrower's request for deferment, forbearance, 
            a change in repayment plan, or a request to consolidate 
            loans, in order to collect or process appropriate 
            supporting documentation related to the request, and
                ``(ii) during such period interest shall accrue but not 
            be capitalized.''.
        (5) Equitable share.--Paragraph (6) of section 428(c) is 
    amended to read as follows:
        ``(6) Secretary's equitable share.--For the purpose of 
    paragraph (2)(D), the Secretary's equitable share of payments made 
    by the borrower shall be that portion of the payments remaining 
    after the guaranty agency with which the Secretary has an agreement 
    under this subsection has deducted from such payments--
            ``(A) a percentage amount equal to the complement of the 
        reinsurance percentage in effect when payment under the 
        guaranty agreement was made with respect to the loan; and
            ``(B) an amount equal to 24 percent of such payments for 
        use in accordance with section 422B, except that, beginning on 
        October 1, 2003, this subparagraph shall be applied by 
        substituting `23 percent' for `24 percent'.''.
        (6) Assignment.--Section 428(c)(8) is amended--
            (A) by striking ``(A) If'' and inserting ``If''; and
            (B) by striking subparagraph (B).
        (7) Guaranty agency reserve level; agency termination.--Section 
    428(c)(9) is amended--
            (A) in subparagraph (A), by striking ``maintain a current 
        minimum reserve level of at least .5 percent'' and inserting 
        ``maintain in the agency's Federal Student Loan Reserve Fund 
        established under section 422A a current minimum reserve level 
        of at least 0.25 percent'';
            (B) in subparagraph (C)--
                (i) by striking ``80 percent pursuant to section 
            428(c)(1)(B)(ii)'' and inserting ``85 percent pursuant to 
            paragraph (1)(B)(i)'';
                (ii) by striking ``, as appropriate,''; and
                (iii) by striking ``30 working days'' and inserting 
            ``45 working days'';
            (C) in subparagraph (E)--
                (i) by inserting ``or'' at the end of clause (iv);
                (ii) by striking ``; or'' at the end of clause (v) and 
            inserting a period; and
                (iii) by striking clause (vi);
            (D) in subparagraph (F)(vii), by striking ``to avoid 
        disruption'' and everything that follows and inserting ``and to 
        avoid disruption of the student loan program.'';
            (E) in subparagraph (I), by inserting ``that, if commenced 
        after September 24, 1998, shall be on the record'' after ``for 
        a hearing''; and
            (F) in subparagraph (K)--
                (i) by striking ``and Labor'' and inserting ``and the 
            Workforce''; and
                (ii) by striking everything after ``guaranty agency 
            system'' and inserting a period.
    (d) Payment for Lender Referral Services; Income-Sensitive 
Repayment.--Subsection (e) of section 428 is amended to read as 
follows:
    ``(e) Notice of Availability of Income-Sensitive Repayment 
Option.--At the time of offering a borrower a loan under this part, and 
at the time of offering the borrower the option of repaying a loan in 
accordance with this section, the lender shall provide the borrower 
with a notice that informs the borrower, in a form prescribed by the 
Secretary by regulation--
        ``(1) that all borrowers are eligible for income-sensitive 
    repayment, including through loan consolidation under section 428C;
        ``(2) the procedures by which the borrower may elect income-
    sensitive repayment; and
        ``(3) where and how the borrower may obtain additional 
    information concerning income-sensitive repayment.''.
    (e) Payment of Certain Costs.--Subsection (f) of section 428 is 
amended to read as follows:
    ``(f) Payments of Certain Costs.--
        ``(1) Payment for certain activities.--
            ``(A) In general.--The Secretary--
                ``(i) for loans originated during fiscal years 
            beginning on or after October 1, 1998, and before October 
            1, 2003, and in accordance with the provisions of this 
            paragraph, shall, except as provided in subparagraph (C), 
            pay to each guaranty agency, a loan processing and issuance 
            fee equal to 0.65 percent of the total principal amount of 
            the loans on which insurance was issued under this part 
            during such fiscal year by such agency; and
                ``(ii) for loans originated during fiscal years 
            beginning on or after October 1, 2003, and in accordance 
            with the provisions of this paragraph, shall, except as 
            provided in subparagraph (C), pay to each guaranty agency, 
            a loan processing and issuance fee equal to 0.40 percent of 
            the total principal amount of the loans on which insurance 
            was issued under this part during such fiscal year by such 
            agency.
            ``(B) Payment.--The payment required by subparagraph (A) 
        shall be paid on a quarterly basis. The guaranty agency shall 
        be deemed to have a contractual right against the United States 
        to receive payments according to the provisions of this 
        paragraph. Payments shall be made promptly and without 
        administrative delay to any guaranty agency submitting an 
        accurate and complete application under this subparagraph.
            ``(C) Requirement for payment.--No payment may be made 
        under this paragraph for loans for which the disbursement 
        checks have not been cashed or for which electronic funds 
        transfers have not been completed.''.
    (f) Action on Agreements.--Section 428(g) is amended by striking 
``and Labor'' and inserting ``and the Workforce''.
    (g) Lenders-of-Last-Resort.--Paragraph (3) of section 428(j) is 
amended--
        (1) in the paragraph heading, by striking ``during transition 
    to direct lending'';
        (2) in subparagraph (A)--
            (A) by striking ``during the transition from the Federal 
        Family Education Loan Program under this part to the Federal 
        Direct Student Loan Program under part D of this title,'' and 
        inserting a comma;
            (B) by inserting ``designated for a State'' after ``a 
        guaranty agency''; and
            (C) by inserting ``subparagraph (C) and'' before ``section 
        422(c)(7),''; and
        (3) by adding at the end thereof the following:
        ``(C) The Secretary shall exercise the authority described in 
    subparagraph (A) only if the Secretary determines that eligible 
    borrowers are seeking and are unable to obtain loans under this 
    part, and that the guaranty agency designated for that State has 
    the capability to provide lender-of-last-resort loans in a timely 
    manner, in accordance with the guaranty agency's obligations under 
    paragraph (1), but cannot do so without advances provided by the 
    Secretary under this paragraph. If the Secretary makes the 
    determinations described in the preceding sentence and determines 
    that it would be cost-effective to do so, the Secretary may provide 
    advances under this paragraph to such guaranty agency. If the 
    Secretary determines that such guaranty agency does not have such 
    capability, or will not provide such loans in a timely fashion, the 
    Secretary may provide such advances to enable another guaranty 
    agency, that the Secretary determines to have such capability, to 
    make lender-of-last-resort loans to eligible borrowers in that 
    State who are experiencing loan access problems.''.
    (h) Default Aversion Assistance.--Subsection (l) of section 428 is 
amended to read as follows:
    ``(l) Default Aversion Assistance.--
        ``(1) Assistance required.--Upon receipt of a complete request 
    from a lender received not earlier than the 60th day of 
    delinquency, a guaranty agency having an agreement with the 
    Secretary under subsection (c) shall engage in default aversion 
    activities designed to prevent the default by a borrower on a loan 
    covered by such agreement.
        ``(2) Reimbursement.--
            ``(A) In general.--A guaranty agency, in accordance with 
        the provisions of this paragraph, may transfer from the Federal 
        Student Loan Reserve Fund under section 422A to the Agency 
        Operating Fund under section 422B a default aversion fee. Such 
        fee shall be paid for any loan on which a claim for default has 
        not been paid as a result of the loan being brought into 
        current repayment status by the guaranty agency on or before 
        the 300th day after the loan becomes 60 days delinquent.
            ``(B) Amount.--The default aversion fee shall be equal to 1 
        percent of the total unpaid principal and accrued interest on 
        the loan at the time the request is submitted by the lender. A 
        guaranty agency may transfer such fees earned under this 
        subsection not more frequently than monthly. Such a fee shall 
        not be paid more than once on any loan for which the guaranty 
        agency averts the default unless--
                ``(i) at least 18 months has elapsed between the date 
            the borrower entered current repayment status and the date 
            the lender filed a subsequent default aversion assistance 
            request; and
                ``(ii) during the period between such dates, the 
            borrower was not more than 30 days past due on any payment 
            of principal and interest on the loan.
            ``(C) Definition.--For the purpose of earning the default 
        aversion fee, the term `current repayment status' means that 
        the borrower is not delinquent in the payment of any principal 
        or interest on the loan.''.
    (i) Income Contingent Repayment.--Section 428(m) is amended by 
striking ``shall require at least 10 percent of the borrowers'' and 
inserting ``may require borrowers''.
    (j) State Share of Default Costs.--Subsection (n) of section 428 is 
repealed.
    (k) Blanket Certificate of Guaranty.--Section 428 is amended by 
adding at the end the following:
    ``(n) Blanket Certificate of Loan Guaranty.--
        ``(1) In general.--Subject to paragraph (3), any guaranty 
    agency that has entered into or enters into any insurance program 
    agreement with the Secretary under this part may--
            ``(A) offer eligible lenders participating in the agency's 
        guaranty program a blanket certificate of loan guaranty that 
        permits the lender to make loans without receiving prior 
        approval from the guaranty agency of individual loans for 
        eligible borrowers enrolled in eligible programs at eligible 
        institutions; and
            ``(B) provide eligible lenders with the ability to transmit 
        electronically data to the agency concerning loans the lender 
        has elected to make under the agency's insurance program via 
        standard reporting formats, with such reporting to occur at 
        reasonable and standard intervals.
        ``(2) Limitations on blanket certificate of guaranty.--(A) An 
    eligible lender may not make a loan to a borrower under this 
    section after such lender receives a notification from the guaranty 
    agency that the borrower is not an eligible borrower.
        ``(B) A guaranty agency may establish limitations or 
    restrictions on the number or volume of loans issued by a lender 
    under the blanket certificate of guaranty.
        ``(3) Participation level.--During fiscal years 1999 and 2000, 
    the Secretary may permit, on a pilot basis, a limited number of 
    guaranty agencies to offer blanket certificates of guaranty under 
    this subsection. Beginning in fiscal year 2001, any guaranty agency 
    that has an insurance program agreement with the Secretary may 
    offer blanket certificates of guaranty under this subsection.
        ``(4) Report required.--The Secretary shall, at the conclusion 
    of the pilot program under paragraph (3), provide a report to the 
    Committee on Education and the Workforce of the House of 
    Representatives and the Committee on Labor and Human Resources of 
    the Senate on the impact of the blanket certificates of guaranty on 
    program efficiency and integrity.''.

SEC. 418. VOLUNTARY FLEXIBLE AGREEMENTS WITH GUARANTY AGENCIES.

    Part B of title IV (20 U.S.C. 1071 et seq.) is amended by inserting 
after section 428 (20 U.S.C. 1078) the following:

``SEC. 428A. VOLUNTARY FLEXIBLE AGREEMENTS WITH GUARANTY AGENCIES.

    ``(a) Voluntary Agreements.--
        ``(1) Authority.--Subject to paragraph (2), the Secretary may 
    enter into a voluntary, flexible agreement with a guaranty agency 
    under this section, in lieu of agreements with a guaranty agency 
    under subsections (b) and (c) of section 428. The Secretary may 
    waive or modify any requirement under such subsections, except that 
    the Secretary may not waive--
            ``(A) any statutory requirement pertaining to the terms and 
        conditions attached to student loans or default claim payments 
        made to lenders; or
            ``(B) the prohibitions on inducements contained in section 
        428(b)(3) unless the Secretary determines that such a waiver is 
        consistent with the purposes of this section and is limited to 
        activities of the guaranty agency within the State or States 
        for which the guaranty agency serves as the designated 
        guarantor.
        ``(2) Special rule.--If the Secretary grants a waiver pursuant 
    to paragraph (1)(B), any guaranty agency doing business within the 
    affected State or States may request, and the Secretary shall 
    grant, an identical waiver to such guaranty agency under the same 
    terms and conditions (including service area limitations) as govern 
    the original waiver.
        ``(3) Eligibility.--During fiscal years 1999, 2000, and 2001, 
    the Secretary may enter into a voluntary, flexible agreement with 
    not more than 6 guaranty agencies that had 1 or more agreements 
    with the Secretary under subsections (b) and (c) of section 428 as 
    of the day before the date of enactment of the Higher Education 
    Amendments of 1998. Beginning in fiscal year 2002, any guaranty 
    agency or consortium thereof may enter into a voluntary flexible 
    agreement with the Secretary.
        ``(4) Report required.--Not later than September 30, 2001, the 
    Secretary shall report to the Committee on Labor and Human 
    Resources of the Senate and the Committee on Education and the 
    Workforce of the House of Representatives regarding the impact that 
    the voluntary flexible agreements have had upon program integrity, 
    program and cost efficiencies, and the availability and delivery of 
    student financial aid. Such report shall include--
            ``(A) a description of each voluntary flexible agreement 
        and the performance goals established by the Secretary for each 
        agreement;
            ``(B) a list of participating guaranty agencies and the 
        specific statutory or regulatory waivers provided to each 
        guaranty agency and any waivers provided to other guaranty 
        agencies under paragraph (2);
            ``(C) a description of the standards by which each agency's 
        performance under the agency's voluntary flexible agreement was 
        assessed and the degree to which each agency achieved the 
        performance standards; and
            ``(D) an analysis of the fees paid by the Secretary, and 
        the costs and efficiencies achieved under each voluntary 
        agreement.
    ``(b) Terms of Agreement.--An agreement between the Secretary and a 
guaranty agency under this section--
        ``(1) shall be developed by the Secretary, in consultation with 
    the guaranty agency, on a case-by-case basis;
        ``(2) may only include provisions--
            ``(A) specifying the responsibilities of the guaranty 
        agency under the agreement, with respect to--
                ``(i) administering the issuance of insurance on loans 
            made under this part on behalf of the Secretary;
                ``(ii) monitoring insurance commitments made under this 
            part;
                ``(iii) default aversion activities;
                ``(iv) review of default claims made by lenders;
                ``(v) payment of default claims;
                ``(vi) collection of defaulted loans;
                ``(vii) adoption of internal systems of accounting and 
            auditing that are acceptable to the Secretary, and 
            reporting the result thereof to the Secretary in a timely 
            manner, and on an accurate, and auditable basis;
                ``(viii) timely and accurate collection and reporting 
            of such other data as the Secretary may require to carry 
            out the purposes of the programs under this title;
                ``(ix) monitoring of institutions and lenders 
            participating in the program under this part; and
                ``(x) informational outreach to schools and students in 
            support of access to higher education;
            ``(B) regarding the fees the Secretary shall pay, in lieu 
        of revenues that the guaranty agency may otherwise receive 
        under this part, to the guaranty agency under the agreement, 
        and other funds that the guaranty agency may receive or retain 
        under the agreement, except that in no case may the cost to the 
        Secretary of the agreement, as reasonably projected by the 
        Secretary, exceed the cost to the Secretary, as similarly 
        projected, in the absence of the agreement;
            ``(C) regarding the use of net revenues, as described in 
        the agreement under this section, for such other activities in 
        support of postsecondary education as may be agreed to by the 
        Secretary and the guaranty agency;
            ``(D) regarding the standards by which the guaranty 
        agency's performance of the agency's responsibilities under the 
        agreement will be assessed, and the consequences for a guaranty 
        agency's failure to achieve a specified level of performance on 
        1 or more performance standards;
            ``(E) regarding the circumstances in which a guaranty 
        agency's agreement under this section may be ended in advance 
        of the agreement's expiration date;
            ``(F) regarding such other businesses, previously purchased 
        or developed with reserve funds, that relate to the program 
        under this part and in which the Secretary permits the guaranty 
        agency to engage; and
            ``(G) such other provisions as the Secretary may determine 
        to be necessary to protect the United States from the risk of 
        unreasonable loss and to promote the purposes of this part;
        ``(3) shall provide for uniform lender participation with the 
    guaranty agency under the terms of the agreement; and
        ``(4) shall not prohibit or restrict borrowers from selecting a 
    lender of the borrower's choosing, subject to the prohibitions and 
    restrictions applicable to the selection under this Act.
    ``(c) Public Notice.--
        ``(1) In general.--The Secretary shall publish in the Federal 
    Register a notice to all guaranty agencies that sets forth--
            ``(A) an invitation for the guaranty agencies to enter into 
        agreements under this section; and
            ``(B) the criteria that the Secretary will use for 
        selecting the guaranty agencies with which the Secretary will 
        enter into agreements under this section.
        ``(2) Agreement notice.--The Secretary shall notify the 
    Chairperson and the Ranking Minority Member of the Committee on 
    Labor and Human Resources of the Senate and the Committee on 
    Education and the Workforce of the House of Representatives not 
    later than 30 days prior to concluding an agreement under this 
    section. The notice shall contain--
            ``(A) a description of the voluntary flexible agreement and 
        the performance goals established by the Secretary for the 
        agreement;
            ``(B) a list of participating guaranty agencies and the 
        specific statutory or regulatory waivers provided to each 
        guaranty agency;
            ``(C) a description of the standards by which each guaranty 
        agency's performance under the agreement will be assessed; and
            ``(D) a description of the fees that will be paid to each 
        participating guaranty agency.
        ``(3) Waiver notice.--The Secretary shall notify the 
    Chairperson and the Ranking Minority Member of the Committee on 
    Labor and Human Resources of the Senate and the Committee on 
    Education and the Workforce of the House of Representatives not 
    later than 30 days prior to the granting of a waiver pursuant to 
    subsection (a)(2) to a guaranty agency that is not a party to a 
    voluntary flexible agreement.
        ``(4) Public availability.--The text of any voluntary flexible 
    agreement, and any subsequent revisions, and any waivers related to 
    section 428(b)(3) that are not part of such an agreement, shall be 
    readily available to the public.
        ``(5) Modification notice.--The Secretary shall notify the 
    Chairperson and the Ranking Minority Members of the Committee on 
    Labor and Human Resources of the Senate and the Committee on 
    Education and the Workforce of the House of Representatives 30 days 
    prior to any modifications to an agreement under this section.
    ``(d) Termination.--At the expiration or early termination of an 
agreement under this section, the Secretary shall reinstate the 
guaranty agency's prior agreements under subsections (b) and (c) of 
section 428, subject only to such additional requirements as the 
Secretary determines to be necessary in order to ensure the efficient 
transfer of responsibilities between the agreement under this section 
and the agreements under subsections (b) and (c) of section 428, and 
including the guaranty agency's compliance with reserve requirements 
under sections 422 and 428.''.

SEC. 419. FEDERAL PLUS LOANS.

    Section 428B (20 U.S.C. 1078-2) is amended--
        (1) by amending subsection (a) to read as follows:
    ``(a) Authority To Borrow.--
        ``(1) Authority and eligibility.--Parents of a dependent 
    student shall be eligible to borrow funds under this section in 
    amounts specified in subsection (b), if--
            ``(A) the parents do not have an adverse credit history as 
        determined pursuant to regulations promulgated by the 
        Secretary; and
            ``(B) the parents meet such other eligibility criteria as 
        the Secretary may establish by regulation, after consultation 
        with guaranty agencies, eligible lenders, and other 
        organizations involved in student financial assistance.
        ``(2) Terms, conditions, and benefits.--Except as provided in 
    subsections (c), (d), and (e), loans made under this section shall 
    have the same terms, conditions, and benefits as all other loans 
    made under this part.
        ``(3) Special rule.--Whenever necessary to carry out the 
    provisions of this section, the terms `student' and `borrower' as 
    used in this part shall include a parent borrower under this 
    section.''; and
        (2) by adding at the end the following:
    ``(f) Verification of Immigration Status and Social Security 
Number.--A parent who wishes to borrow funds under this section shall 
be subject to verification of the parent's--
        ``(1) immigration status in the same manner as immigration 
    status is verified for students under section 484(g); and
        ``(2) social security number in the same manner as social 
    security numbers are verified for students under section 484(p).''.

SEC. 420. FEDERAL CONSOLIDATION LOANS.

    (a) Definition of Eligible Borrower.--Section 428C(a)(3) (20 U.S.C. 
1078-3(a)(3)) is amended by striking everything preceding subparagraph 
(C) and inserting the following:
        ``(3) Definition of eligible borrower.--(A) For the purpose of 
    this section, the term `eligible borrower' means a borrower who--
            ``(i) is not subject to a judgment secured through 
        litigation with respect to a loan under this title or to an 
        order for wage garnishment under section 488A; and
            ``(ii) at the time of application for a consolidation 
        loan--
                ``(I) is in repayment status;
                ``(II) is in a grace period preceding repay- ment; or
                ``(III) is a defaulted borrower who has made 
            arrangements to repay the obligation on the defaulted loans 
            satisfactory to the holders of the defaulted loans.
        ``(B)(i) An individual's status as an eligible borrower under 
    this section terminates upon receipt of a consolidation loan under 
    this section, except that--
            ``(I) an individual who receives eligible student loans 
        after the date of receipt of the consolidation loan may receive 
        a subsequent consolidation loan;
            ``(II) loans received prior to the date of the 
        consolidation loan may be added during the 180-day period 
        following the making of the consolidation loan;
            ``(III) loans received following the making of the 
        consolidation loan may be added during the 180-day period 
        following the making of the consolidation loan; and
            ``(IV) loans received prior to the date of the first 
        consolidation loan may be added to a subsequent consolidation 
        loan.''.
    (b) Definition of Eligible Student Loan.--Section 428C(a)(4) is 
amended by striking subparagraph (C) and inserting the following:
            ``(C) made under part D of this title;''.
    (c) Contents of Agreements.--Section 428C(b) is amended--
        (1) in paragraph (1)(A)(i), by inserting ``except that this 
    clause shall not apply in the case of a borrower with multiple 
    holders of loans under this part,'' after ``under this section,'';
        (2) in paragraph (4)(C)(ii)--
            (A) in the matter preceding subclause (I), by inserting 
        ``during any such period'' after ``and be paid'';
            (B) in subclause (I), by striking ``, or on or after 
        October 1, 1998,''; and
            (C) in subclause (II), by striking ``and before October 1, 
        1998,'';
        (3) in paragraph (6)(A), by inserting before the semicolon at 
    the end the following: ``, except that a lender is not required to 
    consolidate loans described in subparagraph (D) or (E) of 
    subsection (a)(4) or subsection (d)(1)(C)(ii)''.
    (d) Extension of Authority.--Section 428C(e) is amended by striking 
``September 30, 2002'' and inserting ``September 30, 2004''.
    (e) Special Rule.--Section 428C(f) is amended--
        (1) by redesignating paragraph (2) as paragraph (3); and
        (2) by inserting after paragraph (1) the following:
        ``(2) Special rule.--For consolidation loans based on 
    applications received during the period from October 1, 1998 
    through January 31, 1999, inclusive, the rebate described in 
    paragraph (1) shall be equal to 0.62 percent of the principal plus 
    accrued unpaid interest on such loan.''.

SEC. 421. DEFAULT REDUCTION PROGRAM.

    The heading for subsection (b) of section 428F (20 U.S.C. 1078-6) 
is amended by striking ``Special Rule'' and inserting ``Satisfactory 
Repayment Arrangements To Renew Eligibility''.

SEC. 422. REQUIREMENTS FOR DISBURSEMENTS OF STUDENT LOANS.

    (a) Special Rule.--Section 428G(a) (20 U.S.C. 1078-7(a)) is amended 
by adding at the end the following:
        ``(3) Special rule.--An institution whose cohort default rate 
    (as determined under section 435(m)) for each of the 3 most recent 
    fiscal years for which data are available is less than 10 percent 
    may disburse any loan made, insured, or guaranteed under this part 
    in a single installment for any period of enrollment that is not 
    more than 1 semester, 1 trimester, 1 quarter, or 4 months.''.
    (b) Disbursement.--Section 428G(b)(1) is amended by adding at the 
end the following new sentence: ``An institution whose cohort default 
rate (as determined under section 435(m)) for each of the three most 
recent fiscal years for which data are available is less than 10 
percent shall be exempt from the requirements of this paragraph.''.
    (c) Exclusions.--Section 428G(e) is amended--
        (1) by striking ``or made'' and inserting ``, made''; and
        (2) by inserting ``, or made to a student to cover the cost of 
    attendance in a program of study abroad approved by the home 
    eligible institution if the home eligible institution has a cohort 
    default rate (as calculated under section 435(m)) of less than 5 
    percent'' before the period.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall be effective during the period beginning on October 1, 1998, and 
ending on September 30, 2002.

SEC. 423. UNSUBSIDIZED LOANS.

    (a) Eligible Borrowers.--Subsection (b) of section 428H (20 U.S.C. 
1078-8(b)) is amended to read as follows:
    ``(b) Eligible Borrowers.--Any student meeting the requirements for 
student eligibility under section 484 (including graduate and 
professional students as defined in regulations promulgated by the 
Secretary) shall be entitled to borrow an unsubsidized Federal Stafford 
Loan if the eligible institution at which the student has been accepted 
for enrollment, or at which the student is in attendance, has--
        ``(1) determined and documented the student's need for the loan 
    based on the student's estimated cost of attendance (as determined 
    under section 472) and the student's estimated financial 
    assistance, including a loan which qualifies for interest subsidy 
    payments under section 428; and
        ``(2) provided the lender a statement--
            ``(A) certifying the eligibility of the student to receive 
        a loan under this section and the amount of the loan for which 
        such student is eligible, in accordance with subsection (c); 
        and
            ``(B) setting forth a schedule for disbursement of the 
        proceeds of the loan in installments, consistent with the 
        requirements of section 428G.''.
    (b) Loan Limits.--Section 428H(d) is amended--
        (1) in paragraph (2)--
            (A) in the matter preceding subparagraph (A)--
                (i) by inserting ``(as defined in section 481(a)(2))'' 
            after ``academic year''; and
                (ii) by striking ``or in any period of 7 consecutive 
            months, whichever is longer,'';
            (B) in subparagraph (A)--
                (i) in clause (i), by striking ``length (as determined 
            under section 481);'' and inserting ``length; and''; and
                (ii) by striking clauses (ii) and (iii) and inserting 
            the following:
                ``(ii) if such student is enrolled in a program of 
            undergraduate education which is less than one academic 
            year, the maximum annual loan amount that such student may 
            receive may not exceed the amount that bears the same ratio 
            to the amount specified in clause (i) as the length of such 
            program measured in semester, trimester, quarter, or clock 
            hours bears to one academic year;''.
            (C) in subparagraph (C), by inserting ``and'' after the 
        semicolon; and
            (D) by inserting before the matter following subparagraph 
        (C) the following:
            ``(D) in the case of a student enrolled in coursework 
        specified in sections 484(b)(3)(B) and 484(b)(4)(B)--
                ``(i) $4,000 for coursework necessary for enrollment in 
            an undergraduate degree or certificate program, and, in the 
            case of a student who has obtained a baccalaureate degree, 
            $5,000 for coursework necessary for enrollment in a 
            graduate or professional program; and
                ``(ii) in the case of a student who has obtained a 
            baccalaureate degree, $5,000 for coursework necessary for a 
            professional credential or certification from a State 
            required for employment as a teacher in an elementary or 
            secondary school;''; and
        (2) in paragraph (3), by adding at the end the following: 
    ``Interest capitalized shall not be deemed to exceed such maximum 
    aggregate amount.''.
    (c) Capitalization of Interest.--Paragraph (2) of section 428H(e) 
is amended to read as follows:
        ``(2) Capitalization of interest.--(A) Interest on loans made 
    under this section for which payments of principal are not required 
    during the in-school and grace periods or for which payments are 
    deferred under sections 427(a)(2)(C) and 428(b)(1)(M) shall, if 
    agreed upon by the borrower and the lender--
            ``(i) be paid monthly or quarterly; or
            ``(ii) be added to the principal amount of the loan by the 
        lender only--
                ``(I) when the loan enters repayment;
                ``(II) at the expiration of a grace period, in the case 
            of a loan that qualifies for a grace period;
                ``(III) at the expiration of a period of deferment or 
            forbearance; or
                ``(IV) when the borrower defaults.
        ``(B) The capitalization of interest described in subparagraph 
    (A) shall not be deemed to exceed the annual insurable limit on 
    account of the student.''.
    (d) Extended Repayment Plan.--Section 428H(e)(6) is amended by 
striking ``10 year repayment period under section 428(b)(1)(D)'' and 
inserting ``repayment period under section 428(b)(9)''.
    (e) Qualification.--Section 428H(e) is amended by adding at the end 
the following:
        ``(7) Qualification for forbearance.--A lender may grant the 
    borrower of a loan under this section a forbearance for a period 
    not to exceed 60 days if the lender reasonably determines that such 
    a forbearance from collection activity is warranted following a 
    borrower's request for forbearance, deferment, or a change in 
    repayment plan, or a request to consolidate loans in order to 
    collect or process appropriate supporting documentation related to 
    the request. During any such period, interest on the loan shall 
    accrue but not be capitalized.''.
    (f) Repeal.--Subsection (f) of section 428H is repealed.

SEC. 424. LOAN FORGIVENESS FOR TEACHERS.

    Section 428J (20 U.S.C. 1078-10) is amended to read as follows:

``SEC. 428J. LOAN FORGIVENESS FOR TEACHERS.

    ``(a) Statement of Purpose.--It is the purpose of this section to 
encourage individuals to enter and continue in the teaching profession.
    ``(b) Program Authorized.--The Secretary shall carry out a program, 
through the holder of the loan, of assuming the obligation to repay a 
qualified loan amount for a loan made under section 428 or 428H, in 
accordance with subsection (c), for any new borrower on or after 
October 1, 1998, who--
        ``(1) has been employed as a full-time teacher for 5 
    consecutive complete school years--
            ``(A) in a school that qualifies under section 465(a)(2)(A) 
        for loan cancellation for Perkins loan recipients who teach in 
        such schools;
            ``(B) if employed as a secondary school teacher, is 
        teaching a subject area that is relevant to the borrower's 
        academic major as certified by the chief administrative officer 
        of the public or nonprofit private secondary school in which 
        the borrower is employed; and
            ``(C) if employed as an elementary school teacher, has 
        demonstrated, as certified by the chief administrative officer 
        of the public or nonprofit private elementary school in which 
        the borrower is employed, knowledge and teaching skills in 
        reading, writing, mathematics, and other areas of the 
        elementary school curriculum; and
        ``(2) is not in default on a loan for which the borrower seeks 
    forgiveness.
    ``(c) Qualified Loans Amount.--
        ``(1) In general.--The Secretary shall repay not more than 
    $5,000 in the aggregate of the loan obligation on a loan made under 
    section 428 or 428H that is outstanding after the completion of the 
    fifth complete school year of teaching described in subsection 
    (b)(1). No borrower may receive a reduction of loan obligations 
    under both this section and section 460.
        ``(2) Treatment of consolidation loans.--A loan amount for a 
    loan made under section 428C may be a qualified loan amount for the 
    purposes of this subsection only to the extent that such loan 
    amount was used to repay a Federal Direct Stafford Loan, a Federal 
    Direct Unsubsidized Stafford Loan, or a loan made under section 428 
    or 428H for a borrower who meets the requirements of subsection 
    (b), as determined in accordance with regulations prescribed by the 
    Secretary.
    ``(d) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(e) Construction.--Nothing in this section shall be construed to 
authorize any refunding of any repayment of a loan.
    ``(f) List.--If the list of schools in which a teacher may perform 
service pursuant to subsection (b) is not available before May 1 of any 
year, the Secretary may use the list for the year preceding the year 
for which the determination is made to make such service determination.
    ``(g) Additional Eligibility Provisions.--
        ``(1) Continued eligibility.--Any teacher who performs service 
    in a school that--
            ``(A) meets the requirements of subsection (b)(1)(A) in any 
        year during such service; and
            ``(B) in a subsequent year fails to meet the requirements 
        of such subsection,
    may continue to teach in such school and shall be eligible for loan 
    forgiveness pursuant to subsection (b).
        ``(2) Prevention of double benefits.--No borrower may, for the 
    same service, receive a benefit under both this subsection and 
    subtitle D of title I of the National and Community Service Act of 
    1990 (42 U.S.C. 12571 et seq.).
    ``(h) Definition.--For purposes of this section, the term `year', 
where applied to service as a teacher, means an academic year as 
defined by the Secretary.''.

SEC. 425. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.

    Part B (20 U.S.C. 1071 et seq.) is amended by inserting after 
section 428J (20 U.S.C. 1078-10) the following:

``SEC. 428K. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.

    ``(a) Purpose.--It is the purpose of this section--
        ``(1) to bring more highly trained individuals into the early 
    child care profession; and
        ``(2) to keep more highly trained child care providers in the 
    early child care field for longer periods of time.
    ``(b) Definitions.--In this section:
        ``(1) Child care facility.--The term `child care facility' 
    means a facility, including a home, that--
            ``(A) provides child care services; and
            ``(B) meets applicable State or local government licensing, 
        certification, approval, or registration requirements, if any.
        ``(2) Child care services.--The term `child care services' 
    means activities and services provided for the education and care 
    of children from birth through age 5 by an individual who has a 
    degree in early childhood education.
        ``(3) Degree.--The term `degree' means an associate's or 
    bachelor's degree awarded by an institution of higher education.
        ``(4) Early childhood education.--The term `early childhood 
    education' means education in the areas of early child education, 
    child care, or any other educational area related to child care 
    that the Secretary determines appropriate.
        ``(5) Institution of higher education.--Notwithstanding section 
    102, the term `institution of higher education' has the meaning 
    given the term in section 101.
    ``(c) Demonstration Program.--
        ``(1) In general.--The Secretary may carry out a demonstration 
    program of assuming the obligation to repay, pursuant to subsection 
    (d), a loan made, insured, or guaranteed under this part or part D 
    (excluding loans made under sections 428B and 428C or comparable 
    loans made under part D) for any new borrower after the date of 
    enactment of the Higher Education Amendments of 1998, who--
            ``(A) completes a degree in early childhood education;
            ``(B) obtains employment in a child care facility; and
            ``(C) has worked full time for the 2 consecutive years 
        preceding the year for which the determination is made as a 
        child care provider in a low-income community.
        ``(2) Low-income community.--For the purposes of this 
    subsection, the term `low-income community' means a community in 
    which 70 percent of households within the community earn less than 
    85 percent of the State median household income.
        ``(3) Award basis; priority.--
            ``(A) Award basis.--Subject to subparagraph (B), loan 
        repayment under this section shall be on a first-come, first-
        served basis and subject to the availability of appropriations.
            ``(B) Priority.--The Secretary shall give priority in 
        providing loan repayment under this section for a fiscal year 
        to student borrowers who received loan repayment under this 
        section for the preceding fiscal year.
        ``(4) Regulations.--The Secretary is authorized to prescribe 
    such regulations as may be necessary to carry out the provisions of 
    this section.
    ``(d) Loan Repayment.--
        ``(1) In general.--The Secretary shall assume the obligation to 
    repay--
            ``(A) after the second consecutive year of employment 
        described in subparagraphs (B) and (C) of subsection (c)(1), 20 
        percent of the total amount of all loans made after date of 
        enactment of the Higher Education Amendments of 1998, to a 
        student under this part or part D;
            ``(B) after the third consecutive year of such employment, 
        20 percent of the total amount of all such loans; and
            ``(C) after each of the fourth and fifth consecutive years 
        of such employment, 30 percent of the total amount of all such 
        loans.
        ``(2) Construction.--Nothing in this section shall be construed 
    to authorize the refunding of any repayment of a loan made under 
    this part or part D.
        ``(3) Interest.--If a portion of a loan is repaid by the 
    Secretary under this section for any year, the proportionate amount 
    of interest on such loan which accrues for such year shall be 
    repaid by the Secretary.
        ``(4) Special rule.--In the case where a student borrower who 
    is not participating in loan repayment pursuant to this section 
    returns to an institution of higher education after graduation from 
    an institution of higher education for the purpose of obtaining a 
    degree in early childhood education, the Secretary is authorized to 
    assume the obligation to repay the total amount of loans made under 
    this part or part D incurred for a maximum of two academic years in 
    returning to an institution of higher education for the purpose of 
    obtaining a degree in early childhood education. Such loans shall 
    only be repaid for borrowers who qualify for loan repayment 
    pursuant to the provisions of this section, and shall be repaid in 
    accordance with the provisions of paragraph (1).
        ``(5) Ineligibility of national service award recipients.--No 
    student borrower may, for the same volunteer service, receive a 
    benefit under both this section and subtitle D of title I of the 
    National and Community Service Act of 1990 (42 U.S.C. 12601 et 
    seq.).
    ``(e) Repayment to Eligible Lenders.--The Secretary shall pay to 
each eligible lender or holder for each fiscal year an amount equal to 
the aggregate amount of loans which are subject to repayment pursuant 
to this section for such year.
    ``(f) Application for Repayment.--
        ``(1) In general.--Each eligible individual desiring loan 
    repayment under this section shall submit a complete and accurate 
    application to the Secretary at such time, in such manner, and 
    containing such information as the Secretary may require.
        ``(2) Conditions.--An eligible individual may apply for loan 
    repayment under this section after completing each year of 
    qualifying employment. The borrower shall receive forbearance while 
    engaged in qualifying employment unless the borrower is in 
    deferment while so engaged.
    ``(g) Evaluation.--
        ``(1) In general.--The Secretary shall conduct, by grant or 
    contract, an independent national evaluation of the impact of the 
    demonstration program assisted under this section on the field of 
    early childhood education.
        ``(2) Competitive basis.--The grant or contract described in 
    subsection (b) shall be awarded on a competitive basis.
        ``(3) Contents.--The evaluation described in this subsection 
    shall--
            ``(A) determine the number of individuals who were 
        encouraged by the demonstration program assisted under this 
        section to pursue early childhood education;
            ``(B) determine the number of individuals who remain 
        employed in a child care facility as a result of participation 
        in the program;
            ``(C) identify the barriers to the effectiveness of the 
        program;
            ``(D) assess the cost-effectiveness of the program in 
        improving the quality of--
                ``(i) early childhood education; and
                ``(ii) child care services;
            ``(E) identify the reasons why participants in the program 
        have chosen to take part in the program;
            ``(F) identify the number of individuals participating in 
        the program who received an associate's degree and the number 
        of such individuals who received a bachelor's degree; and
            ``(G) identify the number of years each individual 
        participates in the program.
        ``(4) Interim and final evaluation reports.--The Secretary 
    shall prepare and submit to the President and the Congress such 
    interim reports regarding the evaluation described in this 
    subsection as the Secretary deems appropriate, and shall prepare 
    and so submit a final report regarding the evaluation by January 1, 
    2002.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $10,000,000 for fiscal year 
1999, and such sums as may be necessary for each of the 4 succeeding 
fiscal years.''.

SEC. 426. NOTICE TO SECRETARY AND PAYMENT OF LOSS.

    The third sentence of section 430(a) (20 U.S.C. 1080(a)) is amended 
by inserting ``the institution was contacted and other'' after ``submit 
proof that''.

SEC. 427. LEGAL POWERS AND RESPONSIBILITIES.

    (a) Audit of Financial Transactions.--Section 432(f)(1) is 
amended--
        (1) in subparagraph (B), by striking ``section 435(d)(1) (D), 
    (F), or (H);'' and inserting ``section 435(d)(1); and'';
        (2) in subparagraph (C)--
            (A) by striking ``and Labor'' and inserting ``and the 
        Workforce''; and
            (B) by striking ``; and'' inserting a period; and
        (3) by striking subparagraph (D).
    (b) Program of Assistance.--Section 432(k)(3) is amended by 
striking ``Within 1 year'' and everything that follows through ``1992, 
the'' and inserting ``The''.
    (c) Common Forms and Formats.--Section 432(m) is amended--
        (1) in paragraph (1)--
            (A) in subparagraph (A), by striking ``a common application 
        form and promissory note'' and inserting ``common application 
        forms and promissory notes, or master promissory notes,'';
            (B) in subparagraph (B)--
                (i) by striking ``The form'' and inserting ``The 
            forms'';
                (ii) by striking clause (iii); and
            (C) by amending subparagraph (C) to read as follows:
            ``(C) Free application form.--For academic year 1999-2000 
        and succeeding academic years, the Secretary shall prescribe 
        the form developed under section 483 as the application form 
        under this part, other than for loans under sections 428B and 
        428C.'';
            (D) by amending subparagraph (D) to read as follows:
            ``(D) Master promissory note.--
                ``(i) In general.--The Secretary shall develop and 
            require the use of master promissory note forms for loans 
            made under this part and part D. Such forms shall be 
            available for periods of enrollment beginning not later 
            than July 1, 2000. Each form shall allow eligible borrowers 
            to receive, in addition to initial loans, additional loans 
            for the same or subsequent periods of enrollment through a 
            student confirmation process approved by the Secretary. 
            Such forms shall be used for loans made under this part or 
            part D as directed by the Secretary.
                ``(ii) Consultation.--In developing the master 
            promissory note under this subsection, the Secretary shall 
            consult with representatives of guaranty agencies, eligible 
            lenders, institutions of higher education, students, and 
            organizations involved in student financial assistance.
                ``(iii) Sale; assignment; enforceability.--
            Notwithstanding any other provision of law, each loan made 
            under a master promissory note under this subsection may be 
            sold or assigned independently of any other loan made under 
            the same promissory note and each such loan shall be 
            separately enforceable in all Federal and State courts on 
            the basis of an original or copy of the master promissory 
            note in accordance with the terms of the master promissory 
            note.
                ``(iv) Perfection of security interests in student 
            loans.--Notwithstanding the provisions of any State law to 
            the contrary, including the Uniform Commercial Code as in 
            effect in any State, a security interest in loans made 
            under this part created on behalf of any eligible lender as 
            defined in section 435(d) may be perfected either through 
            the taking of possession of such loans (which can be 
            through taking possession of an original or copy of the 
            master promissory note) or by the filing of notice of such 
            security interest in such loans in the manner provided by 
            such State law for perfection of security interests in 
            accounts.''; and
        (2) by adding at the end the following:
        ``(4) Electronic forms.--Nothing in this section shall be 
    construed to limit the development and use of electronic forms and 
    procedures.''.
    (d) Default Reduction Management.--Section 432(n) is amended--
        (1) in paragraph (1), by striking ``1993'' and inserting 
    ``1999''; and
        (2) in paragraph (3), by striking ``and Labor'' and inserting 
    ``and the Workforce''.
    (e) Reporting Requirement.--Section 432(p) is amended by striking 
``State postsecondary reviewing entities designated under subpart 1 of 
part H,''.

SEC. 428. STUDENT LOAN INFORMATION BY ELIGIBLE LENDERS.

    (a) Required Disclosure Before Disbursement.--Section 433(a) (20 
U.S.C. 1083(a)) is amended by amending the matter preceding paragraph 
(1) to read as follows:
    ``(a) Required Disclosure Before Disbursement.--Each eligible 
lender, at or prior to the time such lender disburses a loan that is 
insured or guaranteed under this part (other than a loan made under 
section 428C), shall provide thorough and accurate loan information on 
such loan to the borrower in simple and understandable terms. Any 
disclosure required by this subsection may be made by an eligible 
lender by written or electronic means, including as part of the 
application material provided to the borrower, as part of the 
promissory note evidencing the loan, or on a separate written form 
provided to the borrower. Each lender shall provide to each borrower a 
telephone number, and may provide an electronic address, through which 
additional loan information can be obtained. The disclosure shall 
include--''.
    (b) Required Disclosure Before Repayment.--Section 433(b) is 
amended by amending the matter preceding paragraph (1) to read as 
follows:
    ``(b) Required Disclosure Before Repayment.--Each eligible lender 
shall, at or prior to the start of the repayment period of the student 
borrower on loans made, insured, or guaranteed under this part, 
disclose to the borrower by written or electronic means the information 
required under this subsection in simple and understandable terms. Each 
eligible lender shall provide to each borrower a telephone number, and 
may provide an electronic address, through which additional loan 
information can be obtained. For any loan made, insured, or guaranteed 
under this part, other than a loan made under section 428B or 428C, 
such disclosure required by this subsection shall be made not less than 
30 days nor more than 240 days before the first payment on the loan is 
due from the borrower. The disclosure shall include--''.

SEC. 429. DEFINITIONS.

    (a) Cohort Default Rate.--Section 435(a) (20 U.S.C. 1085(a)) is 
amended--
        (1) in paragraph (2)--
            (A) in subparagraph (A)--
                (i) by striking ``or'' at the end of clause (i);
                (ii) by striking clause (ii) and inserting the 
            following:
            ``(ii) there are exceptional mitigating circumstances 
        within the meaning of paragraph (4); or
            ``(iii) there are, in the judgment of the Secretary, other 
        exceptional mitigating circumstances that would make the 
        application of this paragraph inequitable.''; and
                (iii) by adding after the matter following clause (iii) 
            (as added by clause (ii)) the following:
    ``If an institution continues to participate in a program under 
    this part, and the institution's appeal of the loss of eligibility 
    is unsuccessful, the institution shall be required to pay to the 
    Secretary an amount equal to the amount of interest, special 
    allowance, reinsurance, and any related payments made by the 
    Secretary (or which the Secretary is obligated to make) with 
    respect to loans made under this part to students attending, or 
    planning to attend, that institution during the pendency of such 
    appeal.''; and
            (B) in subparagraph (C), by striking ``July 1, 1998,'' and 
        inserting ``July 1, 1999,'';
        (2) in the matter following subparagraph (C) of para- graph 
    (3)--
            (A) by inserting ``for a reasonable period of time, not to 
        exceed 30 days,'' after ``access''; and
            (B) by striking ``of the affected guaranty agencies and 
        loan servicers for a reasonable period of time, not to exceed 
        30 days'' and inserting ``used by a guaranty agency in 
        determining whether to pay a claim on a defaulted loan or by 
        the Department in determining an institution's default rate in 
        the loan program under part D of this title''; and
        (3) by adding at the end the following new paragraphs:
        ``(4) Definition of mitigating circumstances.--(A) For purposes 
    of paragraph (2)(A)(ii), an institution of higher education shall 
    be treated as having exceptional mitigating circumstances that make 
    application of that paragraph inequitable if such institution, in 
    the opinion of an independent auditor, meets the following 
    criteria:
            ``(i) For a 12-month period that ended during the 6 months 
        immediately preceding the fiscal year for which the cohort of 
        borrowers used to calculate the institution's cohort default 
        rate is determined, at least two-thirds of the students 
        enrolled on at least a half-time basis at the institution--
                ``(I) are eligible to receive a Federal Pell Grant 
            award that is at least equal to one-half the maximum 
            Federal Pell Grant award for which a student would be 
            eligible based on the student's enrollment status; or
                ``(II) have an adjusted gross income that when added 
            with the adjusted gross income of the student's parents 
            (unless the student is an independent student), of less 
            than the poverty level, as determined by the Department of 
            Health and Human Services.
            ``(ii) In the case of an institution of higher education 
        that offers an associate, baccalaureate, graduate or 
        professional degree, 70 percent or more of the institution's 
        regular students who were initially enrolled on a full-time 
        basis and were scheduled to complete their programs during the 
        same 12-month period described in clause (i)--
                ``(I) completed the educational programs in which the 
            students were enrolled;
                ``(II) transferred from the institution to a higher 
            level educational program;
                ``(III) at the end of the 12-month period, remained 
            enrolled and making satisfactory progress toward completion 
            of the student's educational programs; or
                ``(IV) entered active duty in the Armed Forces of the 
            United States.
            ``(iii)(I) In the case of an institution of higher 
        education that does not award a degree described in clause 
        (ii), had a placement rate of 44 percent or more with respect 
        to the institution's former regular students who--
                ``(aa) remained in the program beyond the point the 
            students would have received a 100 percent tuition refund 
            from the institution;
                ``(bb) were initially enrolled on at least a half-time 
            basis; and
                ``(cc) were originally scheduled, at the time of 
            enrollment, to complete their educational programs during 
            the same 12-month period described in clause (i).
            ``(II) The placement rate shall not include students who 
        are still enrolled and making satisfactory progress in the 
        educational programs in which the students were originally 
        enrolled on the date following 12 months after the date of the 
        student's last date of attendance at the institution.
            ``(III) The placement rate is calculated by determining the 
        percentage of all those former regular students who--
                ``(aa) are employed, in an occupation for which the 
            institution provided training, on the date following 12 
            months after the date of their last day of attendance at 
            the institution;
                ``(bb) were employed, in an occupation for which the 
            institution provided training, for at least 13 weeks before 
            the date following 12 months after the date of their last 
            day of attendance at the institution; or
                ``(cc) entered active duty in the Armed Forces of the 
            United States.
            ``(IV) The placement rate shall not include as placements a 
        student or former student for whom the institution is the 
        employer.
        ``(B) For purposes of determining a rate of completion and a 
    placement rate under this paragraph, a student is originally 
    scheduled, at the time of enrollment, to complete the educational 
    program on the date when the student will have been enrolled in the 
    program for the amount of time normally required to complete the 
    program. The amount of time normally required to complete the 
    program for a student who is initially enrolled full-time is the 
    period of time specified in the institution's enrollment contract, 
    catalog, or other materials, for completion of the program by a 
    full-time student. For a student who is initially enrolled less 
    than full-time, the period is the amount of time it would take the 
    student to complete the program if the student remained enrolled at 
    that level of enrollment throughout the program.
        ``(5) Reduction of default rates at certain minority 
    institutions.--
            ``(A) Beneficiaries of exception required to establish 
        management plan.--After July 1, 1999, any institution that has 
        a cohort default rate that equals or exceeds 25 percent for 
        each of the three most recent fiscal years for which data are 
        available and that relies on the exception in subparagraph (B) 
        to continue to be an eligible institution shall--
                ``(i) submit to the Secretary a default management plan 
            which the Secretary, in the Secretary's discretion, after 
            consideration of the institution's history, resources, 
            dollars in default, and targets for default reduction, 
            determines is acceptable and provides reasonable assurance 
            that the institution will, by July 1, 2002, have a cohort 
            default rate that is less than 25 percent;
                ``(ii) engage an independent third party (which may be 
            paid with funds received under section 317 or part B of 
            title III) to provide technical assistance in implementing 
            such default management plan; and
                ``(iii) provide to the Secretary, on an annual basis or 
            at such other intervals as the Secretary may require, 
            evidence of cohort default rate improvement and successful 
            implementation of such default management plan.
            ``(B) Discretionary eligibility conditioned on 
        improvement.--Notwithstanding the expiration of the exception 
        in paragraph (2)(C), the Secretary may, in the Secretary's 
        discretion, continue to treat an institution described in 
        subparagraph (A) of this paragraph as an eligible institution 
        for each of the 1-year periods beginning on July 1 of 1999, 
        2000, and 2001, only if the institution submits by the 
        beginning of such period evidence satisfactory to the Secretary 
        that--
                ``(i) such institution has complied and is continuing 
            to comply with the requirements of subparagraph (A); and
                ``(ii) such institution has made substantial 
            improvement, during each of the preceding 1-year periods, 
            in the institution's cohort default rate.
        ``(6) Participation rate index.--
            ``(A) In general.--An institution that demonstrates to the 
        Secretary that the institution's participation rate index is 
        equal to or less than 0.0375 for any of the 3 most recent 
        fiscal years for which data is available shall not be subject 
        to paragraph (2). The participation rate index shall be 
        determined by multiplying the institution's cohort default rate 
        for loans under part B or D, or weighted average cohort default 
        rate for loans under parts B and D, by the percentage of the 
        institution's regular students, enrolled on at least a half-
        time basis, who received a loan made under part B or D for a 
        12-month period ending during the 6 months immediately 
        preceding the fiscal year for which the cohort of borrowers 
        used to calculate the institution's cohort default rate is 
        determined.
            ``(B) Data.--An institution shall provide the Secretary 
        with sufficient data to determine the institution's 
        participation rate index within 30 days after receiving an 
        initial notification of the institution's draft cohort default 
        rate.
            ``(C) Notification.--Prior to publication of a final cohort 
        default rate for an institution that provides the data 
        described in subparagraph (B), the Secretary shall notify the 
        institution of the institution's compliance or noncompliance 
        with subparagraph (A).''.
    (b) Eligible Lender.--Section 435(d) (20 U.S.C. 1085(d)) is 
amended--
        (1) in paragraph (1)--
            (A) in subparagraph (A)(ii)--
                (i) by striking ``or'' after ``1992,''; and
                (ii) by inserting before the semicolon the following: 
            ``, or (III) it is a bank (as defined in section 3(a)(1) of 
            the Federal Deposit Insurance Act (12 U.S.C. 1813(a)(1)) 
            that is a wholly owned subsidiary of a nonprofit 
            foundation, the foundation is described in section 
            501(c)(3) of the Internal Revenue Code of 1986 and exempt 
            from taxation under section 501(1) of such Code, and the 
            bank makes loans under this part only to undergraduate 
            students who are age 22 or younger and has a portfolio of 
            such loans that is not more than $5,000,000'';
            (B) by striking ``and'' at the end of subparagraph (I);
            (C) by striking the period at the end of subparagraph (J) 
        and inserting ``; and''; and
            (D) by adding at the end the following new subparagraph:
            ``(K) a consumer finance company subsidiary of a national 
        bank which, as of the date of enactment of this subparagraph, 
        through one or more subsidiaries: (i) acts as a small business 
        lending company, as determined under regulations of the Small 
        Business Administration under section 120.470 of title 13, Code 
        of Federal Regulations (as such section is in effect on the 
        date of enactment of this subparagraph); and (ii) participates 
        in the program authorized by this part pursuant to subparagraph 
        (C), provided the national bank and all of the bank's direct 
        and indirect subsidiaries taken together as a whole, do not 
        have, as their primary consumer credit function, the making or 
        holding of loans made to students under this part.''; and
        (2) in paragraph (5), by adding at the end the following new 
    sentence:
    ``It shall not be a violation of this paragraph for a lender to 
    provide assistance to institutions of higher education comparable 
    to the kinds of assistance provided to institutions of higher 
    education by the Department of Education.''.
    (c) Definition of Default.--
        (1) Amendment.--Section 435(l) is amended--
            (A) by striking ``180 days'' and inserting ``270 days''; 
        and
            (B) by striking ``240 days'' and inserting ``330 days''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply with respect to loans for which the first day of delinquency 
    occurs on or after the date of enactment of this Act.
    (d) Cohort Default Rate.--Section 435(m) is amended--
        (1) in paragraph (1)(B), by striking ``insurance, and, in 
    considering appeals with respect to cohort default rates pursuant 
    to subsection (a)(3), exclude'' and inserting ``insurance. In 
    considering appeals with respect to cohort default rates pursuant 
    to subsection (a)(3), the Secretary shall exclude, from the 
    calculation of the number of students who entered repayment and 
    from the calculation of the number of students who default,''; and
        (2) in paragraph (2)(C), by adding at the end the following: 
    ``The Secretary may require guaranty agencies to collect data with 
    respect to defaulted loans in a manner that will permit the 
    identification of any defaulted loan for which (i) the borrower is 
    currently making payments and has made not less than 6 consecutive 
    on-time payments by the end of such following fiscal year, and (ii) 
    a guaranty agency has renewed the borrower's title IV eligibility 
    as provided in section 428F(b).''; and
        (3) in paragraph (4), by adding at the end the following:
        ``(D) The Secretary shall publish the report described in 
    subparagraph (C) by September 30 of each year.''.

SEC. 430. DELEGATION OF FUNCTIONS.

    Section 436 (20 U.S.C. 1086) is amended to read as follows:

``SEC. 436. DELEGATION OF FUNCTIONS.

    ``(a) In General.--An eligible lender or guaranty agency that 
contracts with another entity to perform any of the lender's or 
agency's functions under this title, or otherwise delegates the 
performance of such functions to such other entity--
        ``(1) shall not be relieved of the lender's or agency's duty to 
    comply with the requirements of this title; and
        ``(2) shall monitor the activities of such other entity for 
    compliance with such requirements.
    ``(b) Special Rule.--A lender that holds a loan made under part B 
in the lender's capacity as a trustee is responsible for complying with 
all statutory and regulatory requirements imposed on any other holder 
of a loan made under this part.''.

SEC. 431. DISCHARGE.

    Section 437(c)(1) (20 U.S.C. 1087(c)(1)) is amended--
        (1) by inserting after ``falsely certified by the eligible 
    institution,'' the following: ``or if the institution failed to 
    make a refund of loan proceeds which the institution owed to such 
    student's lender,''; and
        (2) by adding at the end the following new sentences: ``In the 
    case of a discharge based upon a failure to refund, the amount of 
    the discharge shall not exceed that portion of the loan which 
    should have been refunded. The Secretary shall report to the 
    Committee on Education and the Workforce of the House of 
    Representatives and the Committee on Labor and Human Resources of 
    the Senate annually as to the dollar amount of loan discharges 
    attributable to failures to make refunds.''.

SEC. 432. DEBT MANAGEMENT OPTIONS.

    Section 437A (20 U.S.C. 1087-0) is repealed.

SEC. 433. SPECIAL ALLOWANCES.

    (a) Deduction From Interest and Special Allowance Subsidies.--
Paragraph (1) of section 438(c) (20 U.S.C. 1087-1) is amended to read 
as follows:
        ``(1) Deduction from interest and special allowance 
    subsidies.--(A) Notwithstanding subsection (b), the Secretary shall 
    collect the amount the lender is authorized to charge as an 
    origination fee in accordance with paragraph (2) of this 
    subsection--
            ``(i) by reducing the total amount of interest and special 
        allowance payable under section 428(a)(3)(A) and subsection (b) 
        of this section, respectively, to any holder; or
            ``(ii) directly from the holder of the loan, if the lender 
        fails or is not required to bill the Secretary for interest and 
        special allowance or withdraws from the program with unpaid 
        loan origination fees.
        ``(B) If the Secretary collects the origination fee under this 
    subsection through the reduction of interest and special allowance, 
    and the total amount of interest and special allowance payable 
    under section 428(a)(3)(A) and subsection (b) of this section, 
    respectively, is less than the amount the lender was authorized to 
    charge borrowers for origination fees in that quarter, the 
    Secretary shall deduct the excess amount from the subsequent 
    quarters' payments until the total amount has been deducted.''.
    (b) Origination Fees.--Section 438(c) is amended--
        (1) in paragraph (2)--
            (A) by striking ``(other than'' and inserting ``(including 
        loans made under section 428H, but excluding''; and
            (B) by adding at the end the following new sentence: 
        ``Except as provided in paragraph (8), a lender that charges an 
        origination fee under this paragraph shall assess the same fee 
        to all student borrowers.''; and
        (2) by adding at the end the following new paragraph:
        ``(8) Exception.--Notwithstanding paragraph (2), a lender may 
    assess a lesser origination fee for a borrower demonstrating 
    greater financial need as determined by such borrower's adjusted 
    gross family income.''.
    (c) Collection of Fees.--Paragraph (1) of section 438(d) is amended 
to read as follows:
        ``(1) Deduction from interest and special allowance 
    subsidies.--
            ``(A) In general.--Notwithstanding subsection (b), the 
        Secretary shall collect a loan fee in an amount determined in 
        accordance with paragraph (2)--
                ``(i) by reducing the total amount of interest and 
            special allowance payable under section 428(a)(3)(A) and 
            subsection (b), respectively, to any holder of a loan; or
                ``(ii) directly from the holder of the loan, if the 
            lender--

                    ``(I) fails or is not required to bill the 
                Secretary for interest and special allowance payments; 
                or
                    ``(II) withdraws from the program with unpaid loan 
                fees.

            ``(B) Special rule.--If the Secretary collects loan fees 
        under this subsection through the reduction of interest and 
        special allowance payments, and the total amount of interest 
        and special allowance payable under section 428(a)(3)(A) and 
        subsection (b), respectively, is less than the amount of such 
        loan fees, then the Secretary shall deduct the amount of the 
        loan fee balance from the amount of interest and special 
        allowance payments that would otherwise be payable, in 
        subsequent quarterly increments until the balance has been 
        deducted.''.
    (d) Lending From Proceeds of Tax-Exempt Obligations.--
        (1) Amendment.--Subsection (e) of section 438 is amended to 
    read as follows:
    ``(e) Nondiscrimination.--In order for the holders of loans which 
were made or purchased with funds obtained by the holder from an 
Authority issuing obligations, the income from which is exempt from 
taxation under the Internal Revenue Code of 1986, to be eligible to 
receive a special allowance under subsection (b)(2) on any such loans, 
the Authority shall not engage in any pattern or practice which results 
in a denial of a borrower's access to loans under this part because of 
the borrower's race, sex, color, religion, national origin, age, 
disability status, income, attendance at a particular eligible 
institution within the area served by the Authority, length of the 
borrower's educational program, or the borrower's academic year in 
school.''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    be effective as of the date the plan required by section 438(e)(1) 
    (as such section was in effect prior to such amendment) was 
    approved by the Secretary or the Governor (whichever was the case). 
    No Authority shall have a right or cause of action against the 
    Secretary for any amounts paid to or offset by the Secretary 
    pursuant to a final settlement agreement entered into prior to July 
    1, 1998, resolving any audit or program review findings alleging 
    violations of any provision of section 438(e) (as in effect prior 
    to such amendment).

SEC. 434. FEDERAL FAMILY EDUCATION LOAN INSURANCE FUND.

    Any funds in the insurance fund, as established under section 431 
of the Higher Education Act of 1965 (20 U.S.C. 1081), on the date of 
enactment of this Act shall be transferred to and deposited in the 
Treasury. All funds received by the Secretary of Education under 
subsection (a) of such section after the date of enactment of this Act 
shall be deposited into the fund in accordance with such subsection.

                  PART C--FEDERAL WORK-STUDY PROGRAMS

SEC. 441. AUTHORIZATION OF APPROPRIATIONS; COMMUNITY SERVICES.

    (a) Authorization of Appropriations.--Section 441(b) (42 U.S.C. 
2751(b)) is amended by striking ``$800,000,000 for fiscal year 1993'' 
and inserting ``$1,000,000,000 for fiscal year 1999''.
    (b) Definition of Community Services.--Section 441(c) is amended--
        (1) in paragraph (1), by inserting ``(including child care 
    services provided on campus that are open and accessible to the 
    community)'' after ``child care''; and
        (2) in paragraph (3), by inserting ``, including students with 
    disabilities who are enrolled at the institution'' before the 
    semicolon.

SEC. 442. ALLOCATION OF FUNDS.

    (a) Updating the Base Period.--Section 442(a) (20 U.S.C. 2752(a)) 
is amended--
        (1) in paragraph (1), by striking ``received and used under 
    this part for fiscal year 1985'' and inserting ``received under 
    subsections (a) and (b) for fiscal year 1999 (as such subsections 
    were in effect with respect to allocations for such fiscal year)'';
        (2) in paragraph (2)--
            (A) in subparagraphs (A) and (B), by striking ``1985'' each 
        place the term appears and inserting ``1999''; and
            (B) in subparagraph (C)(i), by striking ``1986'' and 
        inserting ``2000''.
    (b) Elimination of Pro Rata Share.--Section 442 is amended--
        (1) by striking subsection (b);
        (2) by redesignating subsections (c) through (f) as subsections 
    (b) through (e), respectively;
        (3) in subsection (b)(1) (as redesignated by paragraph (2)), by 
    striking ``three-quarters of'';
        (4) in subsection (b)(2)(A)(i) (as so redesignated), by 
    striking ``subsection (d)'' and inserting ``subsection (c)'';
        (5) in subsection (c)(3) (as so redesignated), by striking 
    ``the Secretary, for academic year 1988-1989 shall use the 
    procedures employed for academic year 1986-1987, and, for any 
    subsequent academic years,''; and
        (6) in subsection (d)(1) (as so redesignated)--
            (A) by striking ``10 percent'' and inserting ``5 percent'';
            (B) by striking ``in community service'' and inserting ``in 
        tutoring in reading and family literacy activities''; and
            (C) by striking ``subsection (c)'' and inserting 
        ``subsection (b)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to allocations of amounts appropriated pursuant to 
section 441(b) for fiscal year 2000 or any succeeding fiscal year.

SEC. 443. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.

    (a) Eligible Employment.--Section 443(b)(1) (42 U.S.C. 2753(b)(1)) 
is amended by inserting ``, including internships, practica, or 
research assistantships as determined by the Secretary,'' after ``part-
time employment''.
    (b) Community Service.--Section 443(b)(2)(A) is amended--
        (1) by striking ``in fiscal year 1994 and succeeding fiscal 
    years,'' and inserting ``for fiscal year 1999,''; and
        (2) by inserting ``(including a reasonable amount of time spent 
    in travel or training directly related to such community service)'' 
    after ``community service''.
    (c) Tutoring and Literacy Activities.--Section 443 is amended--
        (1) in subsection (b)(2)--
            (A) by striking ``and'' at the end of subparagraph (A);
            (B) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (C) by inserting after subparagraph (A) the following:
            ``(B) for fiscal year 2000 and succeeding fiscal years, an 
        institution shall use at least 7 percent of the total amount of 
        funds granted to such institution under this section for such 
        fiscal year to compensate students employed in community 
        service, and shall ensure that not less than 1 tutoring or 
        family literacy project (as described in subsection (d)) is 
        included in meeting the requirement of this subparagraph, 
        except that the Secretary may waive this subparagraph if the 
        Secretary determines that enforcing this subparagraph would 
        cause hardship for students at the institution; and''; and
        (2) by adding at the end the following new subsection:
    ``(d) Tutoring and Literacy Activities.--
        ``(1) Use of funds.--In any academic year to which subsection 
    (b)(2)(B) applies, an institution shall ensure that funds granted 
    to such institution under this section are used in accordance with 
    such subsection to compensate (including compensation for time 
    spent in training and travel directly related to tutoring in 
    reading and family literacy activities) students--
            ``(A) employed as reading tutors for children who are 
        preschool age or are in elementary school; or
            ``(B) employed in family literacy projects.
        ``(2) Priority for schools.--To the extent practicable, an 
    institution shall--
            ``(A) give priority to the employment of students in the 
        provision of tutoring in reading in schools that are 
        participating in a reading reform project that--
                ``(i) is designed to train teachers how to teach 
            reading on the basis of scientifically-based research on 
            reading; and
                ``(ii) is funded under the Elementary and Secondary 
            Education Act of 1965; and
            ``(B) ensure that any student compensated with the funds 
        described in paragraph (1) who is employed in a school 
        participating in a reading reform project described in 
        subparagraph (A) receives training from the employing school in 
        the instructional practices used by the school.
        ``(3) Federal share.--The Federal share of the compensation of 
    work-study students compensated under this subsection may exceed 75 
    percent.''.
    (d) Use of Funds for Independent and Less Than Full-Time 
Students.--Paragraph (3) of section 443(b) is amended to read as 
follows:
        ``(3) provide that in the selection of students for employment 
    under such work-study program, only students who demonstrate 
    financial need in accordance with part F and meet the requirements 
    of section 484 will be assisted, except that if the institution's 
    grant under this part is directly or indirectly based in part on 
    the financial need demonstrated by students who are (A) attending 
    the institution on less than a full-time basis, or (B) independent 
    students, a reasonable portion of the grant shall be made available 
    to such students;''.
    (e) Federal Share.--Paragraph (5) of section 443(b) is amended to 
read as follows:
        ``(5) provide that the Federal share of the compensation of 
    students employed in the work-study program in accordance with the 
    agreement shall not exceed 75 percent, except that--
            ``(A) the Federal share may exceed 75 percent, but not 
        exceed 90 percent, if, consistent with regulations of the 
        Secretary--
                ``(i) the student is employed at a nonprofit private 
            organization or a government agency that--

                    ``(I) is not a part of, and is not owned, operated, 
                or controlled by, or under common ownership, operation, 
                or control with, the institution;
                    ``(II) is selected by the institution on an 
                individual case-by-case basis for such student; and
                    ``(III) would otherwise be unable to afford the 
                costs of such employment; and

                ``(ii) not more than 10 percent of the students 
            compensated through the institution's grant under this part 
            during the academic year are employed in positions for 
            which the Federal share exceeds 75 percent; and
            ``(B) the Federal share may exceed 75 percent if the 
        Secretary determines, pursuant to regulations promulgated by 
        the Secretary establishing objective criteria for such 
        determinations, that a Federal share in excess of such amounts 
        is required in furtherance of the purpose of this part;''.
    (f) Availability of Employment.--Section 443(b)(6) is amended by 
striking ``, and to make'' and all that follows through ``such 
employment''.
    (g) Academic Relevance.--Section 443(c)(4) is amended by inserting 
before the semicolon at the end the following: ``, to the maximum 
extent practicable''.

SEC. 444. FLEXIBLE USE OF FUNDS.

    Section 445 (42 U.S.C. 2755) is amended by adding at the end the 
following:
    ``(c) Flexible Use of Funds.--An eligible institution may, upon the 
request of a student, make payments to the student under this part by 
crediting the student's account at the institution or by making a 
direct deposit to the student's account at a depository institution. An 
eligible institution may only credit the student's account at the 
institution for (1) tuition and fees, (2) in the case of 
institutionally owned housing, room and board, and (3) other 
institutionally provided goods and services.''.

SEC. 445. WORK COLLEGES.

    Section 448 (42 U.S.C. 2756b) is amended--
        (1) in subsection (b)(2)--
            (A) in subparagraph (C), by striking ``and'' after the 
        semicolon;
            (B) in subparagraph (D)(ii), by striking the period and 
        inserting a semicolon; and
            (C) by adding at the end the following:
            ``(E) coordinate and carry out joint projects and 
        activities to promote work service learning; and
            ``(F) carry out a comprehensive, longitudinal study of 
        student academic progress and academic and career outcomes, 
        relative to student self-sufficiency in financing their higher 
        education, repayment of student loans, continued community 
        service, kind and quality of service performed, and career 
        choice and community service selected after graduation.''; and
        (2) in subsection (f), by striking ``1993'' and inserting 
    ``1999''.

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

SEC. 451. SELECTION OF INSTITUTIONS.

    (a) General Authority.--Section 453(a) (20 U.S.C. 1087c(a)) is 
amended--
        (1) by striking ``Phase-In'' and everything that follows 
    through ``General authority.--'' and inserting ``General 
    Authority.--''; and
        (2) by striking paragraphs (2), (3), and (4).
    (b) Selection Criteria.--Section 453(b)(2) is amended by striking 
``prescribe,'' and everything that follows through the end of 
subparagraph (B) and inserting ``prescribe.''.
    (c) Origination.--Section 453(c) is amended--
        (1) in paragraph (2)--
            (A) in the heading, by striking ``Transition selection 
        criteria'' and inserting ``Selection criteria'';
            (B) by striking ``For academic year 1994-1995, the 
        Secretary'' and inserting ``The Secretary'';
            (C) by striking subparagraph (A);
            (D) by striking subparagraph (E); and
            (E) by redesignating subparagraphs (B), (C), (D), (F), (G), 
        and (H) as subparagraphs (A) through (F), respectively; and
        (2) in paragraph (3)--
            (A) in the paragraph heading, by striking ``After 
        transition''; and
            (B) by striking ``For academic year 1995-1996 and 
        subsequent academic years, the'' and inserting ``The''.

SEC. 452. TERMS AND CONDITIONS.

    (a) Direct Loan Interest Rates.--
        (1) Amendment.--Section 455(b) (20 U.S.C. 1087e(b)) is amended 
    by adding at the end the following:
        ``(6) Interest rate provision for new loans on or after october 
    1, 1998, and before july 1, 2003.--
            ``(A) Rates for fdsl and fdusl.--Notwithstanding the 
        preceding paragraphs of this subsection, for Federal Direct 
        Stafford Loans and Federal Direct Unsubsidized Stafford Loans 
        for which the first disbursement is made on or after October 1, 
        1998, and before July 1, 2003, the applicable rate of interest 
        shall, during any 12-month period beginning on July 1 and 
        ending on June 30, be determined on the preceding June 1 and be 
        equal to--
                ``(i) the bond equivalent rate of 91-day Treasury bills 
            auctioned at the final auction held prior to such June 1; 
            plus
                ``(ii) 2.3 percent,
        except that such rate shall not exceed 8.25 percent.
            ``(B) In school and grace period rules.--Notwithstanding 
        the preceding paragraphs of this subsection, with respect to 
        any Federal Direct Stafford Loan or Federal Direct Unsubsidized 
        Stafford Loan for which the first disbursement is made on or 
        after October 1, 1998, and before July 1, 2003, the applicable 
        rate of interest for interest which accrues--
                ``(i) prior to the beginning of the repayment period of 
            the loan; or
                ``(ii) during the period in which principal need not be 
            paid (whether or not such principal is in fact paid) by 
            reason of a provision described in section 428(b)(1)(M) or 
            427(a)(2)(C),
        shall be determined under subparagraph (A) by substituting `1.7 
        percent' for `2.3 percent'.
            ``(C) PLUS loans.--Notwithstanding the preceding paragraphs 
        of this subsection, with respect to Federal Direct PLUS Loan 
        for which the first disbursement is made on or after October 1, 
        1998, and before July 1, 2003, the applicable rate of interest 
        shall be determined under subparagraph (A)--
                ``(i) by substituting `3.1 percent' for `2.3 percent'; 
            and
                ``(ii) by substituting `9.0 percent' for `8.25 
            percent'.
            ``(D) Consolidation loans.--Notwithstanding the preceding 
        paragraphs of this subsection, any Federal Direct Consolidation 
        loan for which the application is received on or after February 
        1, 1999, and before July 1, 2003, shall bear interest at an 
        annual rate on the unpaid principal balance of the loan that is 
        equal to the lesser of--
                ``(i) the weighted average of the interest rates on the 
            loans consolidated, rounded to the nearest higher one-
            eighth of one percent; or
                ``(ii) 8.25 percent.
            ``(E) Temporary rules for consolidation loans.--
        Notwithstanding the preceding paragraphs of this subsection, 
        any Federal Direct Consolidation loan for which the application 
        is received on or after October 1, 1998, and before February 1, 
        1999, shall bear interest at an annual rate on the unpaid 
        principal balance of the loan that is equal to--
                ``(i) the bond equivalent rate of 91-day Treasury bills 
            auctioned at the final auction held prior to such June 1; 
            plus
                ``(ii) 2.3 percent,
        except that such rate shall not exceed 8.25 percent.''.
        (2) Limitation on consolidation loans during temporary interest 
    rate.--Notwithstanding section 455(g) of the Higher Education Act 
    of 1965, a borrower who is enrolled or accepted for enrollment in 
    an institution of higher education may not consolidate loans under 
    such section during the period beginning October 1, 1998, and 
    ending February 1, 1999, unless the borrower certifies that the 
    borrower has no outstanding loans made, insured, or guaranteed 
    under title IV of such Act other than loans made under part D of 
    such title.
    (b) Repayment Incentives.--Section 455(b) (20 U.S.C. 1087e(b)) is 
further amended by adding at the end the following:
        ``(7) Repayment incentives.--
            ``(A) In general.--Notwithstanding any other provision of 
        this part, the Secretary is authorized to prescribe by 
        regulation such reductions in the interest rate paid by a 
        borrower of a loan made under this part as the Secretary 
        determines appropriate to encourage on-time repayment of the 
        loan. Such reductions may be offered only if the Secretary 
        determines the reductions are cost neutral and in the best 
        financial interest of the Federal Government. Any increase in 
        subsidy costs resulting from such reductions shall be 
        completely offset by corresponding savings in funds available 
        for the William D. Ford Federal Direct Loan Program in that 
        fiscal year from section 458 and other administrative accounts.
            ``(B) Accountability.--Prior to publishing regulations 
        proposing repayment incentives, the Secretary shall ensure the 
        cost neutrality of such reductions. The Secretary shall not 
        prescribe such regulations in final form unless an official 
        report from the Director of the Office of Management and Budget 
        to the Secretary and a comparable report from the Director of 
        the Congressional Budget Office to the Congress each certify 
        that any such reductions will be completely cost neutral. Such 
        reports shall be transmitted to the Committee on Labor and 
        Human Resources of the Senate and the Committee on Education 
        and the Workforce of the House of Representatives not less than 
        60 days prior to the publication of regulations proposing such 
        reductions.''.
    (c) Consolidation Loans.--The first sentence of section 455(g) is 
amended by striking everything after ``section 428C(a)(4)'' and 
inserting a period.
    (d) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to any loan made under part D of title IV of the 
Higher Education Act of 1965 for which the first disbursement is made 
on or after October 1, 1998, and before July 1, 2003, except that such 
amendments shall apply with respect to a Federal Direct Consolidation 
Loan for which the application is received on or after October 1, 1998, 
and before July 1, 2003.

SEC. 453. CONTRACTS.

    Section 456(b) (20 U.S.C. 1087f(b)) is amended--
        (1) in paragraph (3), by inserting ``and'' after the semicolon;
        (2) by striking paragraph (4); and
        (3) by redesignating paragraph (5) as paragraph (4).

SEC. 454. FUNDS FOR ADMINISTRATIVE EXPENSES.

    Section 458 (20 U.S.C. 1087h) is amended--
        (1) by amending subsection (a) to read as follows:
    ``(a) Administrative Expenses.--
        ``(1) In general.--Each fiscal year there shall be available to 
    the Secretary, from funds not otherwise appropriated, funds to be 
    obligated for--
            ``(A) administrative costs under this part and part B, 
        including the costs of the direct student loan programs under 
        this part; and
            ``(B) account maintenance fees payable to guaranty agencies 
        under part B and calculated in accordance with subsections (b) 
        and (c),
    not to exceed (from such funds not otherwise appropriated) 
    $617,000,000 in fiscal year 1999, $735,000,000 in fiscal year 2000, 
    $770,000,000 in fiscal year 2001, $780,000,000 in fiscal year 2002, 
    and $795,000,000 in fiscal year 2003.
        ``(2) Account maintenance fees.--Account maintenance fees under 
    paragraph (1)(B) shall be paid quarterly and deposited in the 
    Agency Operating Fund established under section 422B.
        ``(3) Carryover.--The Secretary may carry over funds made 
    available under this section to a subsequent fiscal year.'';
        (2) by amending subsection (b) to read as follows:
    ``(b) Calculation Basis.--Except as provided in subsection (c), 
account maintenance fees payable to guaranty agencies under paragraph 
(1)(B) shall be calculated--
        ``(1) for fiscal years 1999 and 2000, on the basis of 0.12 
    percent of the original principal amount of outstanding loans on 
    which insurance was issued under part B; and
        ``(2) for fiscal years 2001, 2002, and 2003, on the basis of 
    0.10 percent of the original principal amount of outstanding loans 
    on which insurance was issued under part B.'';
        (3) by striking subsection (d);
        (4) by redesignating subsection (c) as subsection (d); and
        (5) by inserting after subsection (b) the following:
    ``(c) Special Rules.--
        ``(1) Fee cap.--The total amount of account maintenance fees 
    payable under this section--
            ``(A) for fiscal year 1999, shall not exceed $177,000,000;
            ``(B) for fiscal year 2000, shall not exceed $180,000,000;
            ``(C) for fiscal year 2001, shall not exceed $170,000,000;
            ``(D) for fiscal year 2002, shall not exceed $180,000,000; 
        and
            ``(E) for fiscal year 2003, shall not exceed $195,000,000.
        ``(2) Insufficient funding.--
            ``(A) In general.--If the amounts set forth in paragraph 
        (1) are insufficient to pay the account maintenance fees 
        payable to guaranty agencies pursuant to subsection (b) for a 
        fiscal year, the Secretary shall pay the insufficiency by 
        requiring guaranty agencies to transfer funds from the Federal 
        Student Loan Reserve Funds under section 422A to the Agency 
        Operating Funds under section 422B.
            ``(B) Entitlement.--A guaranty agency shall be deemed to 
        have a contractual right against the United States to receive 
        payments according to the provisions of subparagraph (A).''.

SEC. 455. AUTHORITY TO SELL LOANS.

    Part D of title IV (20 U.S.C. 1087a et seq.) is amended by adding 
at the end the following:

``SEC. 459. AUTHORITY TO SELL LOANS.

    ``The Secretary, in consultation with the Secretary of the 
Treasury, is authorized to sell loans made under this part on such 
terms as the Secretary determines are in the best interest of the 
United States, except that any such sale shall not result in any cost 
to the Federal Government. Notwithstanding any other provision of law, 
the proceeds of any such sale may be used by the Secretary to offer 
reductions in the interest rate paid by a borrower of a loan made under 
this part as the Secretary determines appropriate to encourage on-time 
repayment in accordance with section 455(b)(7). Such reductions may be 
offered only if the Secretary determines the reductions are in the best 
financial interests of the Federal Government.''.

SEC. 456. LOAN CANCELLATION FOR TEACHERS.

    Part D of title IV (20 U.S.C. 1087a et seq.) is further amended by 
adding after section 459 (as added by section 455) the following:

``SEC. 460. LOAN CANCELLATION FOR TEACHERS.

    ``(a) Statement of Purpose.--It is the purpose of this section to 
encourage individuals to enter and continue in the teaching profession.
    ``(b) Program Authorized.--
        ``(1) In general.--The Secretary shall carry out a program of 
    canceling the obligation to repay a qualified loan amount in 
    accordance with subsection (c) for Federal Direct Stafford Loans 
    and Federal Direct Unsubsidized Stafford Loans made under this part 
    for any new borrower on or after October 1, 1998, who--
            ``(A) has been employed as a full-time teacher for 5 
        consecutive complete school years--
                ``(i) in a school that qualifies under section 
            465(a)(2)(A) for loan cancellation for Perkins loan 
            recipients who teach in such schools;
                ``(ii) if employed as a secondary school teacher, is 
            teaching a subject area that is relevant to the borrower's 
            academic major as certified by the chief administrative 
            officer of the public or non-profit private secondary 
            school in which the borrower is employed; and
                ``(iii) if employed as an elementary school teacher, 
            has demonstrated, as certified by the chief administrative 
            officer of the public or nonprofit private elementary 
            school in which the borrower is employed, knowledge and 
            teaching skills in reading, writing, mathematics and other 
            areas of the elementary school curriculum; and
            ``(B) is not in default on a loan for which the borrower 
        seeks forgiveness.
        ``(2) Special rule.--No borrower may obtain a reduction of loan 
    obligations under both this section and section 428J.
    ``(c) Qualified Loan Amounts.--
        ``(1) In general.--The Secretary shall cancel not more than 
    $5,000 in the aggregate of the loan obligation on a Federal Direct 
    Stafford Loan or a Federal Direct Unsubsidized Stafford Loan that 
    is outstanding after the completion of the fifth complete school 
    year of teaching described in subsection (b)(1)(A).
        ``(2) Treatment of consolidation loans.--A loan amount for a 
    Federal Direct Consolidation Loan may be a qualified loan amount 
    for the purposes of this subsection only to the extent that such 
    loan amount was used to repay a Federal Direct Stafford Loan, a 
    Federal Direct Unsubsidized Stafford Loan, or a loan made under 
    section 428 or 428H, for a borrower who meets the requirements of 
    subsection (b), as determined in accordance with regulations 
    prescribed by the Secretary.
    ``(d) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(e) Construction.--Nothing in this section shall be construed to 
authorize any refunding of any canceled loan.
    ``(f) List.--If the list of schools in which a teacher may perform 
service pursuant to subsection (b) is not available before May 1 of any 
year, the Secretary may use the list for the year preceding the year 
for which the determination is made to make such service determination.
    ``(g) Additional Eligibility Provisions.--
        ``(1) Continued eligibility.--Any teacher who performs service 
    in a school that--
            ``(A) meets the requirements of subsection (b)(1)(A) in any 
        year during such service; and
            ``(B) in a subsequent year fails to meet the requirements 
        of such subsection, may continue to teach in such school and 
        shall be eligible for loan cancellation pursuant to subsection 
        (b).
        ``(2) Prevention of double benefits.--No borrower may, for the 
    same volunteer service, receive a benefit under both this section 
    and subtitle D of title I of the National and Community Service Act 
    of 1990 (42 U.S.C. 12571 et seq.).
    ``(h) Definition.--For the purpose of this section, the term `year' 
where applied to service as a teacher means an academic year as defined 
by the Secretary.''.

                     PART E--FEDERAL PERKINS LOANS

SEC. 461. AUTHORIZATION OF APPROPRIATIONS.

    Subsection (b) of section 461 (20 U.S.C. 1087aa) is amended--
        (1) in paragraph (1), by striking ``1993'' and inserting 
    ``1999''; and
        (2) in paragraph (2), by striking ``1997'' each place the term 
    appears and inserting ``2003''.

SEC. 462. ALLOCATION OF FUNDS.

    (a) Changes in Allocation Formula.--
        (1) Updating the base period.--Section 462(a) (20 U.S.C. 
    1087bb(a)) is amended--
            (A) in paragraph (1)(A), by striking ``the amount of the 
        Federal capital contribution allocated to such institution 
        under this part for fiscal year 1985'' and inserting ``the 
        amount received under subsections (a) and (b) of this section 
        for fiscal year 1999 (as such subsections were in effect with 
        respect to allocations for such fiscal year)'';
            (B) in paragraph (2)--
                (i) in subparagraphs (A) and (B), by striking ``1985'' 
            each place the term appears and inserting ``1999''; and
                (ii) in subparagraph (C)(i), by striking ``1986'' and 
            inserting ``2000''.
        (2) Elimination of pro rata share.--Section 462 is further 
    amended--
            (A) in subsection (a)--
                (i) in paragraph (1)(B), by striking ``subsection (f)'' 
            and inserting ``subsection (e)'';
                (ii) in the matter following paragraph (1)(B), by 
            striking ``subsection (g)'' and inserting ``subsection 
            (f)'';
                (iii) in paragraph (2)(D)(ii), by striking ``subsection 
            (f)'' and inserting ``subsection (e)''; and
                (iv) in the matter following paragraph (2)(D)(ii), by 
            striking ``subsection (g)'' and inserting ``subsection 
            (f)'';
            (B) by striking subsection (b);
            (C) in subsection (c)(1), by striking ``three-quarters of 
        the remainder'' and inserting ``the remainder'';
            (D) in the matter following subsection (c)(2)(B), by 
        striking ``subsection (g)'' and inserting ``subsection (f)'';
            (E) in subsection (c)(3)--
                (i) in subparagraph (A), by striking ``subsection (d)'' 
            and inserting ``subsection (c)'';
                (ii) in subparagraph (C), by striking ``subsection 
            (f)'' and inserting ``subsection (e)''; and
                (iii) in the matter following subparagraph (C), by 
            striking ``subsection (g)'' and inserting ``subsection 
            (f)'';
            (F) in subsection (j)(1)(B)(i), by striking ``1985'' and 
        inserting ``1999'';
            (G) in subsection (j)(2)--
                (i) in subparagraph (A), by striking ``paragraph (3) of 
            subsection (c)'' and inserting ``subsection (b)(3)''; and
                (ii) in subparagraph (B), by striking ``subsection (c) 
            of section 462'' and inserting ``subsection (b)''; and
            (H) by redesignating subsections (c) through (j) as 
        subsections (b) through (i), respectively.
        (3) Effective Date.--The amendments made by this subsection 
    shall apply with respect to allocations of amounts appropriated 
    pursuant to section 461(b) for fiscal year 2000 or any succeeding 
    fiscal year.
    (b) Self-Help Need.--The matter preceding subparagraph (A) of 
section 462(c)(3) (as redesignated by subsection (a)(2)(G)) is amended 
by striking ``the Secretary, for'' and all that follows through 
``years,''.
    (c) Default Penalties.--Subsections (e) and (f) of section 462 (as 
redesignated by subsection (a)(2)(G)) are amended to read as follows:
    ``(e) Default Penalties.--
        ``(1) Years preceding fiscal year 2000.--For any fiscal year 
    preceding fiscal year 2000, any institution with a cohort default 
    rate that--
            ``(A) equals or exceeds 15 percent, shall establish a 
        default reduction plan pursuant to regulations prescribed by 
        the Secretary, except that such plan shall not be required with 
        respect to an institution that has a default rate of less than 
        20 percent and that has less than 100 students who have loans 
        under this part in such academic year;
            ``(B) equals or exceeds 20 percent, but is less than 25 
        percent, shall have a default penalty of 0.9;
            ``(C) equals or exceeds 25 percent, but is less than 30 
        percent, shall have a default penalty of 0.7; and
            ``(D) equals or exceeds 30 percent shall have a default 
        penalty of zero.
        ``(2) Years following fiscal year 2000.--For fiscal year 2000 
    and any succeeding fiscal year, any institution with a cohort 
    default rate (as defined under subsection (g)) that equals or 
    exceeds 25 percent shall have a default penalty of zero.
        ``(3) Ineligibility.--
            ``(A) In general.--For fiscal year 2000 and any succeeding 
        fiscal year, any institution with a cohort default rate (as 
        defined in subsection (g)) that equals or exceeds 50 percent 
        for each of the 3 most recent years for which data are 
        available shall not be eligible to participate in a program 
        under this part for the fiscal year for which the determination 
        is made and the 2 succeeding fiscal years, unless, within 30 
        days of receiving notification from the Secretary of the loss 
        of eligibility under this paragraph, the institution appeals 
        the loss of eligibility to the Secretary. The Secretary shall 
        issue a decision on any such appeal within 45 days after the 
        submission of the appeal. Such decision may permit the 
        institution to continue to participate in a program under this 
        part if--
                ``(i) the institution demonstrates to the satisfaction 
            of the Secretary that the calculation of the institution's 
            cohort default rate is not accurate, and that recalculation 
            would reduce the institution's cohort default rate for any 
            of the 3 fiscal years below 50 percent; or
                ``(ii) there are, in the judgment of the Secretary, 
            such a small number of borrowers entering repayment that 
            the application of this subparagraph would be inequitable.
            ``(B) Continued participation.--During an appeal under 
        subparagraph (A), the Secretary may permit the institution to 
        continue to participate in a program under this part.
            ``(C) Return of funds.--Within 90 days after the date of 
        any termination pursuant to subparagraph (A), or the conclusion 
        of any appeal pursuant to subparagraph (B), whichever is later, 
        the balance of the student loan fund established under this 
        part by the institution that is the subject of the termination 
        shall be distributed as follows:
                ``(i) The Secretary shall first be paid an amount which 
            bears the same ratio to such balance (as of the date of 
            such distribution) as the total amount of Federal capital 
            contributions to such fund by the Secretary under this part 
            bears to the sum of such Federal capital contributions and 
            the capital contributions to such fund made by the 
            institution.
                ``(ii) The remainder of such student loan fund shall be 
            paid to the institution.
            ``(D) Use of returned funds.--Any funds returned to the 
        Secretary under this paragraph shall be reallocated to 
        institutions of higher education pursuant to subsection (i).
            ``(E) Definition.--For the purposes of subparagraph (A), 
        the term `loss of eligibility' shall be defined as the 
        mandatory liquidation of an institution's student loan fund, 
        and assignment of the institution's outstanding loan portfolio 
        to the Secretary.
    ``(f) Applicable Maximum Cohort Default Rate.--
        ``(1) Award years prior to 2000.--For award years prior to 
    award year 2000, the applicable maximum cohort default rate is 30 
    percent.
        ``(2) Award year 2000 and succeeding award years.--For award 
    year 2000 and subsequent years, the applicable maximum cohort 
    default rate is 25 percent.''.
    (d) Cohort Default Rate Definition.--Section 462(g) (as 
redesignated by subsection (a)(2)(G)) is amended--
        (1) by striking the subsection heading and paragraphs (1) and 
    (2) and inserting the following:
    ``(g) Definition of Cohort Default Rate.--'';
        (2) by striking ``(3)(A) For award year 1994 and any succeeding 
    award year, the term'' and inserting the following:
        ``(1)(A) The term'';
        (3) in paragraph (1) (as redesignated by paragraph (2))--
            (A) by striking subparagraphs (B) and (E); and
            (B) by redesignating subparagraphs (C), (D), (F), and (G) 
        as subparagraphs (B), (C), (D), and (F), respectively;
            (C) by inserting after subparagraph (D) (as redesignated by 
        subparagraph (B)) the following:
        ``(E) In determining the number of students who default before 
    the end of such award year, the institution, in calculating the 
    cohort default rate, shall exclude--
            ``(i) any loan on which the borrower has, after the time 
        periods specified in paragraph (2)--
                ``(I) voluntarily made 6 consecutive payments;
                ``(II) voluntarily made all payments currently due;
                ``(III) repaid in full the amount due on the loan; or
                ``(IV) received a deferment or forbearance, based on a 
            condition that began prior to such time periods;
            ``(ii) any loan which has, after the time periods specified 
        in paragraph (2), been rehabilitated or canceled; and
            ``(iii) any other loan that the Secretary determines should 
        be excluded from such determination.''; and
        (4) by striking paragraph (4) and inserting the following:
        ``(2) For purposes of calculating the cohort default rate under 
    this subsection, a loan shall be considered to be in default--
            ``(A) 240 days (in the case of a loan repayable monthly), 
        or
            ``(B) 270 days (in the case of a loan repayable quarterly),
    after the borrower fails to make an installment payment when due or 
    to comply with other terms of the promissory note.''.
    (e) Conforming Amendments.--Section 462 (20 U.S.C. 1087bb) is 
amended--
        (1) in the matter following paragraphs (1)(B) and (2)(D)(ii) of 
    subsection (a), by inserting ``cohort'' before ``default'' each 
    place the term appears;
        (2) in the matter following paragraphs (2)(B) and (3)(C) of 
    subsection (b) (as redesignated by subsection (a)(2)(G)), by 
    inserting ``cohort'' before ``default'' each place the term 
    appears;
        (3) in subsection (d)(2) (as redesignated by subsection 
    (a)(2)(G)), by inserting ``cohort'' before ``default''; and
        (4) in subsection (g)(1)(F) (as redesignated by subsections 
    (a)(2)(G) and (d)(3)(B)), by inserting ``cohort'' before 
    ``default''.

SEC. 463. AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION.

    (a) Contents of Agreements.--Section 463(a) (20 U.S.C. 1087cc(a)) 
is amended--
        (1) by amending subparagraph (B) of paragraph (2) to read as 
    follows:
            ``(B) a capital contribution by an institution in an amount 
        equal to one-third of the Federal capital contributions 
        described in subparagraph (A);'';
        (2) by striking paragraph (4); and
        (3) by redesignating paragraphs (5) through (10) as paragraphs 
    (4) through (9);
    (b) Agreements With Credit Bureaus.--Section 463(c) is amended--
        (1) in paragraph (1)--
            (A) by striking ``the Secretary shall'' and inserting ``the 
        Secretary and each institution of higher education 
        participating in the program under this part shall''; and
            (B) by inserting ``and regarding loans held by the 
        Secretary or an institution'' after ``section 467'';
        (2) in paragraph (2)--
            (A) in the matter preceding subparagraph (A), by striking 
        ``by the Secretary'' and all that follows through ``of--'' and 
        inserting ``by the Secretary or an institution, as the case may 
        be, to such organizations, with respect to any loan held by the 
        Secretary or the institution, respectively, of--'';
            (B) by amending subparagraph (A) to read as follows:
            ``(A) the date of disbursement and the amount of such loans 
        made to any borrower under this part at the time of 
        disbursement of the loan;'';
            (C) in subparagraph (B)--
                (i) by inserting ``the repayment and'' after 
            ``concerning''; and
                (ii) by striking ``any defaulted'' and inserting 
            ``such''; and
            (D) in subparagraph (C), by inserting ``, or upon 
        cancellation or discharge of the borrower's obligation on the 
        loan for any reason'' before the period;
        (3) in paragraph (3)--
            (A) in the matter preceding subparagraph (A)--
                (i) by inserting ``or an institution'' after ``from the 
            Secretary''; and
                (ii) by striking ``until--'' and inserting ``until the 
            loan is paid in full.''; and
            (B) by striking subparagraphs (A) and (B);
        (4) by amending paragraph (4) to read as follows:
    ``(4)(A) Except as provided in subparagraph (B), an institution of 
higher education, after consultation with the Secretary and pursuant to 
the agreements entered into under paragraph (1), shall disclose at 
least annually to any credit bureau organization with which the 
Secretary has such an agreement the information set forth in paragraph 
(2), and shall disclose promptly to such credit bureau organization any 
changes to the information previously disclosed.
    ``(B) The Secretary may promulgate regulations establishing 
criteria under which an institution of higher education may cease 
reporting the information described in paragraph (2) before a loan is 
paid in full.''; and
        (4) by inserting after paragraph (4) the following:
    ``(5) Each institution of higher education shall notify the 
appropriate credit bureau organizations whenever a borrower of a loan 
that is made and held by the institution and that is in default makes 6 
consecutive monthly payments on such loan, for the purpose of 
encouraging such organizations to update the status of information 
maintained with respect to that borrower.''.
    (c) Conforming Amendment.--Section 463(d) is amended by striking 
``subsection (a)(10)'' and inserting ``subsection (a)(9)''.

SEC. 464. TERMS OF LOANS.

    (a) Terms and Conditions; Annual Limits.--Paragraph (2) of section 
464(a) (20 U.S.C. 1087dd(a)) is amended to read as follows:
    ``(2)(A) Except as provided in paragraph (4), the total of loans 
made to a student in any academic year or its equivalent by an 
institution of higher education from a loan fund established pursuant 
to an agreement under this part shall not exceed--
        ``(i) $4,000, in the case of a student who has not successfully 
    completed a program of undergraduate education; or
        ``(ii) $6,000, in the case of a graduate or professional 
    student (as defined in regulations issued by the Secretary).
    ``(B) Except as provided in paragraph (4), the aggregate unpaid 
principal amount for all loans made to a student by institutions of 
higher education from loan funds established pursuant to agreements 
under this part may not exceed--
        ``(i) $40,000, in the case of any graduate or professional 
    student (as defined by regulations issued by the Secretary, and 
    including any loans from such funds made to such person before such 
    person became a graduate or professional student);
        ``(ii) $20,000, in the case of a student who has successfully 
    completed 2 years of a program of education leading to a bachelor's 
    degree but who has not completed the work necessary for such a 
    degree (determined under regulations issued by the Secretary), and 
    including any loans from such funds made to such person before such 
    person became such a student; and
        ``(iii) $8,000, in the case of any other student.''.
    (b) Need and Eligibility.--Section 464(b) is amended--
        (1) in paragraph (1), by adding at the end the following: ``A 
    student who is in default on a loan under this part shall not be 
    eligible for an additional loan under this part unless such loan 
    meets one of the conditions for exclusion under section 
    462(g)(1)(E).''; and
        (2) by amending paragraph (2) to read as follows:
    ``(2) If the institution's capital contribution under section 462 
is directly or indirectly based in part on the financial need 
demonstrated by students who are (A) attending the institution less 
than full time, or (B) independent students, then a reasonable portion 
of the loans made from the institution's student loan fund containing 
the contribution shall be made available to such students.''.
    (c) Contents of Loan Agreement.--Section 464(c) is amended--
        (1) in paragraph (1)(D)--
            (A) by striking ``(i) 3 percent'' and all that follows 
        through ``or (iii)''; and
            (B) by striking ``subparagraph (A)(i)'' and inserting 
        ``paragraph (2)(A)(i)'';
        (2) in the matter following clause (iv) of paragraph (2)(A), by 
    striking ``subparagraph (B)'' and inserting ``subparagraph (A) of 
    paragraph (1)'';
        (3) by adding at the end of paragraph (2) the following:
    ``(C) An individual with an outstanding loan balance who meets the 
eligibility criteria for a deferment described in subparagraph (A) as 
in effect on the date of enactment of this subparagraph shall be 
eligible for deferment under this paragraph notwithstanding any 
contrary provision of the promissory note under which the loan or loans 
were made, and notwithstanding any amendment (or effective date 
provision relating to any amendment) to this section made prior to the 
date of such deferment.''; and
        (4) by adding at the end the following:
    ``(7) There shall be excluded from the 9-month period that begins 
on the date on which a student ceases to carry at least one-half the 
normal full-time academic workload (as described in paragraph (1)(A)) 
any period not to exceed 3 years during which a borrower who is a 
member of a reserve component of the Armed Forces named in section 
10101 of title 10, United States Code, is called or ordered to active 
duty for a period of more than 30 days (as defined in section 101(d)(2) 
of such title). Such period of exclusion shall include the period 
necessary to resume enrollment at the borrower's next available regular 
enrollment period.''.
    (d) Discharge; Rehabilitation; Incentive Repayment.-- Section 464 
is amended by adding at the end the following:
    ``(g) Discharge.--
        ``(1) In general.--If a student borrower who received a loan 
    made under this part on or after January 1, 1986, is unable to 
    complete the program in which such student is enrolled due to the 
    closure of the institution, then the Secretary shall discharge the 
    borrower's liability on the loan (including the interest and 
    collection fees) and shall subsequently pursue any claim available 
    to such borrower against the institution and the institution's 
    affiliates and principals, or settle the loan obligation pursuant 
    to the financial responsibility standards described in section 
    498(c).
        ``(2) Assignment.--A borrower whose loan has been discharged 
    pursuant to this subsection shall be deemed to have assigned to the 
    United States the right to a loan refund in an amount that does not 
    exceed the amount discharged against the institution and the 
    institution's affiliates and principals.
        ``(3) Eligibility for additional assistance.--The period during 
    which a student was unable to complete a course of study due to the 
    closing of the institution shall not be considered for purposes of 
    calculating the student's period of eligibility for additional 
    assistance under this title.
        ``(4) Special rule.--A borrower whose loan has been discharged 
    pursuant to this subsection shall not be precluded, because of that 
    discharge, from receiving additional grant, loan, or work 
    assistance under this title for which the borrower would be 
    otherwise eligible (but for the default on the discharged loan). 
    The amount discharged under this subsection shall be treated as an 
    amount canceled under section 465(a).
        ``(5) Reporting.--The Secretary or institution, as the case may 
    be, shall report to credit bureaus with respect to loans that have 
    been discharged pursuant to this subsection.
    ``(h) Rehabilitation of Loans.--
        ``(1) Rehabilitation.--
            ``(A) In general.--If the borrower of a loan made under 
        this part who has defaulted on the loan makes 12 ontime, 
        consecutive, monthly payments of amounts owed on the loan, as 
        determined by the institution, or by the Secretary in the case 
        of a loan held by the Secretary, the loan shall be considered 
        rehabilitated, and the institution that made that loan (or the 
        Secretary, in the case of a loan held by the Secretary) shall 
        request that any credit bureau organization or credit reporting 
        agency to which the default was reported remove the default 
        from the borrower's credit history.
            ``(B) Comparable conditions.--As long as the borrower 
        continues to make scheduled repayments on a loan rehabilitated 
        under this paragraph, the rehabilitated loan shall be subject 
        to the same terms and conditions, and qualify for the same 
        benefits and privileges, as other loans made under this part.
            ``(C) Additional assistance.--The borrower of a 
        rehabilitated loan shall not be precluded by section 484 from 
        receiving additional grant, loan, or work assistance under this 
        title (for which the borrower is otherwise eligible) on the 
        basis of defaulting on the loan prior to such rehabilitation.
            ``(D) Limitations.--A borrower only once may obtain the 
        benefit of this paragraph with respect to rehabilitating a loan 
        under this part.
        ``(2) Restoration of eligibility.--If the borrower of a loan 
    made under this part who has defaulted on that loan makes 6 ontime, 
    consecutive, monthly payments of amounts owed on such loan, the 
    borrower's eligibility for grant, loan, or work assistance under 
    this title shall be restored to the extent that the borrower is 
    otherwise eligible. A borrower only once may obtain the benefit of 
    this paragraph with respect to restored eligibility.
    ``(i) Incentive Repayment Program.--
        ``(1) In general.--Each institution of higher education may 
    establish, with the approval of the Secretary, an incentive 
    repayment program designed to reduce default and to replenish 
    student loan funds established under this part. Each such incentive 
    repayment program may--
            ``(A) offer a reduction of the interest rate on a loan on 
        which the borrower has made 48 consecutive, monthly repayments, 
        but in no event may the rate be reduced by more than 1 percent;
            ``(B) provide for a discount on the balance owed on a loan 
        on which the borrower pays the principal and interest in full 
        prior to the end of the applicable repayment period, but in no 
        event may the discount exceed 5 percent of the unpaid principal 
        balance due on the loan at the time the early repayment is 
        made; and
            ``(C) include such other incentive repayment options as the 
        institution determines will carry out the objectives of this 
        subsection.
        ``(2) Limitation.--No incentive repayment option under an 
    incentive repayment program authorized by this subsection may be 
    paid for with Federal funds, including any Federal funds from the 
    student loan fund, or with institutional funds from the student 
    loan fund.''.

SEC. 465. CANCELLATION FOR PUBLIC SERVICE.

    Section 465 (20 U.S.C. 1087ee) is amended--
        (1) in subsection (a)--
            (A) in paragraph (2)(C), by striking ``section 676(b)(9)'' 
        and inserting ``section 635(a)(10)'';
            (B) in the last sentence of paragraph (2), by striking 
        ``section 602(a)(1)'' and inserting ``section 602''; and
            (C) by adding at the end the following new paragraph:
    ``(7) An individual with an outstanding loan obligation under this 
part who performs service of any type that is described in paragraph 
(2) as in effect on the date of enactment of this paragraph shall be 
eligible for cancellation under this section for such service 
notwithstanding any contrary provision of the promissory note under 
which the loan or loans were made, and notwithstanding any amendment 
(or effective date provision relating to any amendment) to this section 
made prior to the date of such service.''; and
        (2) in subsection (b), by adding at the end the following new 
    sentence: ``To the extent feasible, the Secretary shall pay the 
    amounts for which any institution qualifies under this subsection 
    not later than 3 months after the institution files an 
    institutional application for campus-based funds.''.

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

    Section 466 (20 U.S.C. 1087ff) is amended--
        (1) in subsection (a)--
            (A) in the matter preceding paragraph (1)--
                (i) by striking ``1996'' and inserting ``2003''; and
                (ii) by striking ``1997'' and inserting ``2004''; and
            (B) in paragraph (1), by striking ``1996'' and inserting 
        ``2003'';
        (2) in subsection (b)--
            (A) by striking ``2005'' and inserting ``2012''; and
            (B) by striking ``1996'' and inserting ``2003''; and
        (3) in subsection (c), by striking ``1997'' and inserting 
    ``2004''.

SEC. 467. PERKINS LOAN REVOLVING FUND.

    (a) Repeal.--Subsection (c) of section 467 (20 U.S.C. 1087gg(c)) is 
repealed.
    (b) Transfer of Balance.--Any funds in the Perkins Loan Revolving 
Fund on the date of enactment of this Act shall be transferred to and 
deposited in the Treasury.

                         PART F--NEED ANALYSIS

SEC. 471. COST OF ATTENDANCE.

    Section 472 (20 U.S.C. 1087ll) is amended--
        (1) in paragraph (2), by inserting after ``personal expenses'' 
    the following: ``, including a reasonable allowance for the 
    documented rental or purchase of a personal computer,'';
        (2) in paragraph (3)--
            (A) in subparagraph (A), by striking ``of not less than 
        $1,500'' and inserting ``determined by the institution''; and
            (B) in subparagraph (C), by striking ``, except that the 
        amount may not be less than $2,500'';
        (3) in paragraph (10), by striking everything after 
    ``determining costs'' and inserting a semicolon; and
        (4) in paragraph (11), by striking ``placed'' and inserting 
    ``engaged''.

SEC. 472. DATA ELEMENTS.

    Section 474(b)(3) (20 U.S.C. 1087nn(b)(3)) is amended by inserting 
``, excluding the student's parents,'' after ``family of the student''.

SEC. 473. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.

    (a) Parents' Contribution from Adjusted Available Income.--Section 
475(b)(3) (20 U.S.C. 1087oo(b)(3)) is amended by inserting ``, 
excluding the student's parents,'' after ``number of family members''.
    (b) Student Contribution From Available Income.--Section 475(g) is 
amended--
        (1) in paragraph (2)--
            (A) in subparagraph (D), by striking ``$1,750; and'' and 
        inserting ``$2,200 (or a successor amount prescribed by the 
        Secretary under section 478);'';
            (B) by striking the period at the end of subparagraph (E) 
        and inserting ``; and''; and
            (C) by inserting after subparagraph (E) the following new 
        subparagraph:
            ``(F) an allowance for parents' negative available income, 
        determined in accordance with paragraph (6).''; and
        (2) by adding at the end the following new paragraph:
        ``(6) Allowance for parents' negative available income.--The 
    allowance for parents' negative available income is the amount, if 
    any, by which the sum of the amounts deducted under subparagraphs 
    (A) through (F) of subsection (c)(1) exceeds the sum of the 
    parents' total income (as defined in section 480) and the parents' 
    contribution from assets (as determined in accordance with 
    subsection (d)).''.
    (c) Adjustments to Student's Contribution for Enrollment Periods 
Other Than Nine Months.--Section 475 is amended by adding at the end 
the following:
    ``(j) Adjustments to Student's Contribution for Enrollment Periods 
of Less Than Nine Months.--For periods of enrollment of less than 9 
months, the student's contribution from adjusted available income (as 
determined under subsection (g)) is determined, for purposes other than 
subpart 2 of part A, by dividing the amount determined under such 
subsection by 9, and multiplying the result by the number of months in 
the period of enrollment.''.

SEC. 474. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT 
              DEPENDENTS OTHER THAN A SPOUSE.

    (a) Adjustments for Enrollment Periods of Less Than Nine Months.--
Section 476(a) (20 U.S.C. 1087pp(a)) is amended--
        (1) by striking ``and'' at the end of paragraph (1)(B);
        (2) by inserting ``and'' after the semicolon at the end of 
    paragraph (2); and
        (3) by inserting after paragraph (2) the following new 
    paragraph:
        ``(3) for periods of enrollment of less than 9 months, for 
    purposes other than subpart 2 of part A--
            ``(A) dividing the quotient resulting under paragraph (2) 
        by 9; and
            ``(B) multiplying the result by the number of months in the 
        period of enrollment;''.
    (b) Contribution from Available Income.--Section 476(b)(1)(A)(iv) 
is amended--
        (1) by striking ``allowance of--'' and inserting ``allowance of 
    the following amount (or a successor amount prescribed by the 
    Secretary under section 478)--'';
        (2) in subclauses (I) and (II), by striking ``$3,000'' each 
    place the term appears and inserting ``$5,000''; and
        (3) in subclause (III), by striking ``$6,000'' and inserting 
    ``$8,000''.

SEC. 475. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH DEPENDENTS 
              OTHER THAN A SPOUSE.

    Section 477(a) (20 U.S.C. 1087qq(a)) is amended--
        (1) by striking ``and'' at the end of paragraph (2);
        (2) by inserting ``and'' after the semicolon at the end of 
    paragraph (3); and
        (3) by inserting after paragraph (3) the following new 
    paragraph:
        ``(4) for periods of enrollment of less than 9 months, for 
    purposes other than subpart 2 of part A--
            ``(A) dividing the quotient resulting under paragraph (3) 
        by 9; and
            ``(B) multiplying the result by the number of months in the 
        period of enrollment;''.

SEC. 476. REGULATIONS; UPDATED TABLES AND AMOUNTS.

    Section 478(b) (20 U.S.C. 1087rr(b)) is amended--
        (1) by striking ``For each academic year'' and inserting the 
    following:
        ``(1) Revised tables.--For each academic year''; and
        (2) by adding at the end the following new paragraph:
        ``(2) Revised amounts.--For each academic year after academic 
    year 2000-2001, the Secretary shall publish in the Federal Register 
    revised income protection allowances for the purpose of sections 
    475(g)(2)(D) and 476(b)(1)(A)(iv). Such revised allowances shall be 
    developed by increasing each of the dollar amounts contained in 
    such section by a percentage equal to the estimated percentage 
    increase in the Consumer Price Index (as determined by the 
    Secretary) between December 1999 and the December next preceding 
    the beginning of such academic year, and rounding the result to the 
    nearest $10.''.

SEC. 477. SIMPLIFIED NEEDS TEST; ZERO EXPECTED FAMILY CONTRIBUTION.

    Section 479 (20 U.S.C. 1087ss) is amended--
        (1) in subsection (b)(3)--
            (A) in the matter preceding subparagraph (A), by striking 
        ``this paragraph'' and inserting ``this subsection, or 
        subsection (c), as the case may be,'';
            (B) in subparagraph (A), by striking ``or'' at the end 
        thereof;
            (C) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (D) by inserting after subparagraph (A) the following new 
        subparagraph:
            ``(B) a form 1040 (including any prepared or electronic 
        version of such form) required pursuant to the Internal Revenue 
        Code of 1986, except that such form shall be considered a 
        qualifying form only if the student or family files such form 
        in order to take a tax credit under section 25A of the Internal 
        Revenue Code of 1986, and would otherwise be eligible to file a 
        form described in subparagraph (A); or'';
        (2) in subsection (c)--
            (A) by amending paragraph (1)(A) to read as follows:
            ``(A) the student's parents file, or are eligible to file, 
        a form described in subsection (b)(3), or certify that the 
        parents are not required to file an income tax return and the 
        student files, or is eligible to file, such a form, or 
        certifies that the student is not required to file an income 
        tax return; and''; and
            (B) by amending paragraph (2)(A) to read as follows:
            ``(A) the student (and the student's spouse, if any) files, 
        or is eligible to file, a form described in subsection (b)(3), 
        or certifies that the student (and the student's spouse, if 
        any) is not required to file an income tax return; and''.

SEC. 478. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

    Section 479A (20 U.S.C. 1087tt) is amended--
        (1) in subsection (a), by inserting after the second sentence 
    the following: ``Special circumstances may include tuition expenses 
    at an elementary or secondary school, medical or dental expenses 
    not covered by insurance, unusually high child care costs, recent 
    unemployment of a family member, the number of parents enrolled at 
    least half-time in a degree, certificate, or other program leading 
    to a recognized educational credential at an institution with a 
    program participation agreement under section 487, or other changes 
    in a family's income, a family's assets, or a student's status.''; 
    and
        (2) by amending subsection (c) to read as follows:
    ``(c) Refusal or Adjustment of Loan Certifications.--On a case-by-
case basis, an eligible institution may refuse to certify a statement 
that permits a student to receive a loan under part B or D, or may 
certify a loan amount or make a loan that is less than the student's 
determination of need (as determined under this part), if the reason 
for the action is documented and provided in written form to the 
student. No eligible institution shall discriminate against any 
borrower or applicant in obtaining a loan on the basis of race, 
national origin, religion, sex, marital status, age, or disability 
status.''.

SEC. 479. TREATMENT OF OTHER FINANCIAL ASSISTANCE.

    Section 480(j) (20 U.S.C. 1087vv(j)) is amended--
        (1) in paragraph (1), by inserting before the period at the end 
    the following: ``, and national service educational awards or post-
    service benefits under title I of the National and Community 
    Service Act of 1990 (42 U.S.C. 12571 et seq.)'';
        (2) by striking paragraph (3); and
        (3) by redesignating paragraph (4) as paragraph (3).

SEC. 480. CLERICAL AMENDMENTS.

    (a) Amount of Need.--Section 471 (20 U.S.C. 1087kk) is amended by 
striking ``or 4'' and inserting ``or 2''.
    (b) Family Contribution.--Section 473 (20 U.S.C. 1087mm) is amended 
by striking ``subpart 4'' and inserting ``subpart 2''.

SEC. 480A. EFFECTIVE DATES.

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this part are effective on the date of enactment of 
this Act.
    (b) Provisions Effective for Academic Year 2000-2001, and 
Thereafter.--The amendments made by sections 472, 473, 474, and 475 
shall apply with respect to determinations of need under part F of 
title IV of the Higher Education Act of 1965 for academic years 
beginning on or after July 1, 2000.

                       PART G--GENERAL PROVISIONS

SEC. 481. MASTER CALENDAR.

    (a) Required Schedule.--Section 482(a) (20 U.S.C. 1089(a)) is 
amended by adding at the end the following:
        ``(3) The Secretary shall, to the extent practicable, notify 
    eligible institutions, guaranty agencies, lenders, interested 
    software providers, and, upon request, other interested parties, by 
    December 1 prior to the start of an award year of minimal hardware 
    and software requirements necessary to administer programs under 
    this title.
        ``(4) The Secretary shall attempt to conduct training 
    activities for financial aid administrators and others in an 
    expeditious and timely manner prior to the start of an award year 
    in order to ensure that all participants are informed of all 
    administrative requirements.''.
    (b) Delay of Effective Date of Late Publications.--Subsection (c) 
of section 482 is amended to read as follows:
    ``(c) Delay of Effective Date of Late Publications.--(1) Except as 
provided in paragraph (2), any regulatory changes initiated by the 
Secretary affecting the programs under this title that have not been 
published in final form by November 1 prior to the start of the award 
year shall not become effective until the beginning of the second award 
year after such November 1 date.
    ``(2)(A) The Secretary may designate any regulatory provision that 
affects the programs under this title and is published in final form 
after November 1 as one that an entity subject to the provision may, in 
the entity's discretion, choose to implement prior to the effective 
date described in paragraph (1). The Secretary may specify in the 
designation when, and under what conditions, an entity may implement 
the provision prior to that effective date. The Secretary shall publish 
any designation under this subparagraph in the Federal Register.
    ``(B) If an entity chooses to implement a regulatory provision 
prior to the effective date described in paragraph (1), as permitted by 
subparagraph (A), the provision shall be effective with respect to that 
entity in accordance with the terms of the Secretary's designation.''.

SEC. 482. FORMS AND REGULATIONS.

    (a) Common Financial Aid Form Development.--Section 483(a) (20 
U.S.C. 1090(a)) is amended--
        (1) in the subsection heading, by striking ``Form'' and 
    inserting ``Form Development'';
        (2) in paragraph (1)--
            (A) by striking ``A, C, D, and E'' and inserting ``A 
        through E'';
            (B) by striking ``and to determine the need of a student 
        for the purpose of part B of this title'';
            (C) by striking the second sentence and inserting the 
        following: ``The Secretary shall include on the form developed 
        under this subsection such data items as the Secretary 
        determines are appropriate for inclusion. Such items shall be 
        selected in consultation with States to assist in the awarding 
        of State financial assistance. In no case shall the number of 
        such data items be less than the number included on the form on 
        the date of enactment of the Higher Education Amendments of 
        1998.''; and
            (D) by striking the last sentence;
        (3) in paragraph (2)--
            (A) by striking ``A, C, D, and E'' each place the term 
        appears and inserting ``A through E'';
            (B) by striking ``and the need of a student for the purpose 
        of part B of this title,''; and
            (C) by striking ``or have the student's need established 
        for the purpose of part B of this title'';
        (4) by amending paragraph (3) to read as follows:
        ``(3) Distribution of data.--Institutions of higher education, 
    guaranty agencies, and States shall receive, without charge, the 
    data collected by the Secretary using the form developed pursuant 
    to this section for the purposes of processing loan applications 
    and determining need and eligibility for institutional and State 
    financial aid awards. Entities designated by institutions of higher 
    education, guaranty agencies, or States to receive such data shall 
    be subject to all the requirements of this section, unless such 
    requirements are waived by the Secretary.'';
        (5) by adding at the end the following:
        ``(5) Electronic forms.--(A) The Secretary, in cooperation with 
    representatives of agencies and organizations involved in student 
    financial assistance, including private computer software 
    providers, shall develop an electronic version of the form 
    described in paragraph (1). As permitted by the Secretary, such an 
    electronic version shall not require a signature to be collected at 
    the time such version is submitted, if a signature is subsequently 
    submitted by the applicant. The Secretary shall prescribe such 
    version not later than 120 days after the date of enactment of the 
    Higher Education Amendments of 1998.
        ``(B) Nothing in this section shall be construed to prohibit 
    the use of the form developed by the Secretary pursuant to 
    subparagraph (A) by an eligible institution, eligible lender, 
    guaranty agency, State grant agency, private computer software 
    providers, a consortium thereof, or such other entities as the 
    Secretary may designate.
        ``(C) No fee shall be charged to students in connection with 
    the use of the electronic version of the form, or of any other 
    electronic forms used in conjunction with such form in applying for 
    Federal or State student financial assistance.
        ``(D) The Secretary shall ensure that data collection complies 
    with section 552a of title 5, United States Code, and that any 
    entity using the electronic version of the form developed by the 
    Secretary pursuant to subparagraph (A) shall maintain reasonable 
    and appropriate administrative, technical, and physical safeguards 
    to ensure the integrity and confidentiality of the information, and 
    to protect against security threats, or unauthorized uses or 
    disclosures of the information provided on the electronic version 
    of the form. Data collected by such version of the form shall be 
    used only for the application, award, and administration of aid 
    awarded under this title, State aid, or aid awarded by eligible 
    institutions or such entities as the Secretary may designate. No 
    data collected by such version of the form shall be used for making 
    final aid awards under this title until such data have been 
    processed by the Secretary or a contractor or designee of the 
    Secretary.
        ``(6) Third party servicers and private software providers.--To 
    the extent practicable and in a timely manner, the Secretary shall 
    provide, to private organizations and consortia that develop 
    software used by eligible institutions for the administration of 
    funds under this title, all the necessary specifications that the 
    organizations and consortia must meet for the software the 
    organizations and consortia develop, produce, and distribute 
    (including any diskette, modem, or network communications) which 
    are so used. The specifications shall contain record layouts for 
    required data. The Secretary shall develop in advance of each 
    processing cycle an annual schedule for providing such 
    specifications. The Secretary, to the extent practicable, shall use 
    means of providing such specifications, including conferences and 
    other meetings, outreach, and technical support mechanisms (such as 
    training and printed reference materials). The Secretary shall, 
    from time to time, solicit from such organizations and consortia 
    means of improving the support provided by the Secretary.
        ``(7) Parent's social security number and birth date.--The 
    Secretary is authorized to include on the form developed under this 
    subsection space for the social security number and birth date of 
    parents of dependent students seeking financial assistance under 
    this title.''.
    (b) Streamlined Reapplication Process.--Section 483(b)(1) is 
amended by striking ``, within 240 days'' and all that follows through 
``of 1992,''.
    (c) Information to Committees.--Section 483(c) is amended by 
striking ``and Labor'' and inserting ``and the Workforce''.
    (d) Toll-Free Information.--Section 483(d) is amended by striking 
``section 633(c)'' and inserting ``section 685(d)(2)(C)''.
    (e) Repeal.--Subsection (f) of section 483 is repealed.

SEC. 483. STUDENT ELIGIBILITY.

    (a) In General.--Section 484(a) (20 U.S.C. 1091(a)) is amended--
        (1) in paragraph (4), by striking ``the institution'' and 
    everything that follows through ``lender), a document'' and 
    inserting ``the Secretary, as part of the original financial aid 
    application process, a certification,''; and
        (2) in paragraph (5), by striking ``or a permanent resident of 
    the Trust Territory of the Pacific Islands, Guam, or the Northern 
    Mariana Islands'' and inserting ``a citizen of any one of the 
    Freely Associated States''.
    (b) Home-Schooled Students.--Section 484(d) is amended--
        (1) in the matter preceding paragraph (1), by striking 
    ``either''; and
        (2) by adding at the end the following:
        ``(3) The student has completed a secondary school education in 
    a home school setting that is treated as a home school or private 
    school under State law.''.
    (c) Termination of Eligibility.--Section 484(j) is amended to read 
as follows:
    ``(j) Assistance Under Subparts 1 and 3 of Part A, and Part C.--
Notwithstanding any other provision of law, a student shall be eligible 
until September 30, 2004, for assistance under subparts 1 and 3 of part 
A, and part C, if the student is otherwise qualified and--
        ``(1) is a citizen of any one of the Freely Associated States 
    and attends an institution of higher education in a State or a 
    public or nonprofit private institution of higher education in the 
    Freely Associated States; or
        ``(2) meets the requirements of subsection (a)(5) and attends a 
    public or nonprofit private institution of higher education in any 
    one of the Freely Associated States.''.
    (d) Correspondence Courses.--Paragraph (1) of section 484(l) is 
amended to read as follows:
        ``(1) Relation to correspondence courses.--
            ``(A) In general.--A student enrolled in a course of 
        instruction at an institution of higher education that is 
        offered in whole or in part through telecommunications and 
        leads to a recognized certificate for a program of study of 1 
        year or longer, or a recognized associate, baccalaureate, or 
        graduate degree, conferred by such institution, shall not be 
        considered to be enrolled in correspondence courses unless the 
        total amount of telecommunications and correspondence courses 
        at such institution equals or exceeds 50 percent of the total 
        amount of all courses at the institution.
            ``(B) Requirement.--An institution of higher education 
        referred to in subparagraph (A) is an institution of higher 
        education--
                ``(i) that is not an institute or school described in 
            section 521(4)(C) of the Carl D. Perkins Vocational and 
            Applied Technology Education Act; and
                ``(ii) for which at least 50 percent of the programs of 
            study offered by the institution lead to the award of a 
            recognized associate, baccalaureate, or graduate degree.''.
    (e) Verification of Income Data.--Section 484 is amended by adding 
at the end the following:
    ``(q) Verification of Income Data.--
        ``(1) Confirmation with irs.--The Secretary of Education, in 
    cooperation with the Secretary of the Treasury, is authorized to 
    confirm with the Internal Revenue Service the adjusted gross 
    income, Federal income taxes paid, filing status, and exemptions 
    reported by applicants (including parents) under this title on 
    their Federal income tax returns for the purpose of verifying the 
    information reported by applicants on student financial aid 
    applications.
        ``(2) Notification.--The Secretary shall establish procedures 
    under which an applicant is notified that the Internal Revenue 
    Service will disclose to the Secretary tax return information as 
    authorized under section 6103(l)(13) of the Internal Revenue Code 
    of 1986.''.
    (f) Suspension of Eligibility for Drug-Related Offenses.--
        (1) Amendment.--Section 484 is amended by adding at the end 
    thereof the following:
    ``(r) Suspension of Eligibility for Drug-Related Offenses.--
        ``(1) In general.--A student who has been convicted of any 
    offense under any Federal or State law involving the possession or 
    sale of a controlled substance shall not be eligible to receive any 
    grant, loan, or work assistance under this title during the period 
    beginning on the date of such conviction and ending after the 
    interval specified in the following table:

``If convicted of an offense involving:

  The possession of a con-
    
    trolled substance:
  Ineligibility period is:
      First offense
      1 year 
      Second offense
      2 years 
      Third offense
      Indefinite.

  The sale of a controlled
    
    substance:
  Ineligibility period is:
      First offense
      2 years 
      Second offense
      Indefinite.

        ``(2) Rehabilitation.--A student whose eligibility has been 
    suspended under paragraph (1) may resume eligibility before the end 
    of the ineligibility period determined under such paragraph if--
            ``(A) the student satisfactorily completes a drug 
        rehabilitation program that--
                ``(i) complies with such criteria as the Secretary 
            shall prescribe in regulations for purposes of this 
            paragraph; and
                ``(ii) includes two unannounced drug tests; or
            ``(B) the conviction is reversed, set aside, or otherwise 
        rendered nugatory.
        ``(3) Definitions.--In this subsection, the term `controlled 
    substance' has the meaning given the term in section 102(6) of the 
    Controlled Substances Act (21 U.S.C. 802(6)).''.
        (2) Effective date.--The amendment made by paragraph (1), 
    regarding suspension of eligibility for drug-related offenses, 
    shall apply with respect to financial assistance to cover the costs 
    of attendance for periods of enrollment beginning after the date of 
    enactment of this Act.

SEC. 484. STATE COURT JUDGMENTS.

    Section 484A (20 U.S.C. 1091a) is amended--
        (1) in the heading of the section by inserting ``, and state 
    court judgments'' after ``limitations''; and
        (2) by adding at the end the following:
    ``(c) State Court Judgments.--A judgment of a State court for the 
recovery of money provided as grant, loan, or work assistance under 
this title that has been assigned or transferred to the Secretary under 
this title may be registered in any district court of the United States 
by filing a certified copy of the judgment and a copy of the assignment 
or transfer. A judgment so registered shall have the same force and 
effect, and may be enforced in the same manner, as a judgment of the 
district court of the district in which the judgment is registered.''.

SEC. 485. INSTITUTIONAL REFUNDS.

    Section 484B (20 U.S.C. 1091b) is amended to read as follows:

``SEC. 484B. INSTITUTIONAL REFUNDS.

    ``(a) Return of Title IV Funds.--
        ``(1) In general.--If a recipient of assistance under this 
    title withdraws from an institution during a payment period or 
    period of enrollment in which the recipient began attendance, the 
    amount of grant or loan assistance (other than assistance received 
    under part C) to be returned to the title IV programs is calculated 
    according to paragraph (3) and returned in accordance with 
    subsection (b).
        ``(2) Leave of absence.--
            ``(A) Leave not treated as withdrawal.--In the case of a 
        student who takes a leave of absence from an institution for 
        not more than a total of 180 days in any 12-month period, the 
        institution may consider the student as not having withdrawn 
        from the institution during the leave of absence, and not 
        calculate the amount of grant and loan assistance provided 
        under this title that is to be returned in accordance with this 
        section if--
                ``(i) the institution has a formal policy regarding 
            leaves of absence;
                ``(ii) the student followed the institution's policy in 
            requesting a leave of absence; and
                ``(iii) the institution approved the student's request 
            in accordance with the institution's policy.
            ``(B) Consequences of failure to return.--If a student does 
        not return to the institution at the expiration of an approved 
        leave of absence that meets the requirements of subparagraph 
        (A), the institution shall calculate the amount of grant and 
        loan assistance provided under this title that is to be 
        returned in accordance with this section based on the day the 
        student withdrew (as determined under subsection (c)).
        ``(3) Calculation of amount of title iv assistance earned.--
            ``(A) In general.--The amount of grant or loan assistance 
        under this title that is earned by the recipient for purposes 
        of this section is calculated by--
                ``(i) determining the percentage of grant and loan 
            assistance under this title that has been earned by the 
            student, as described in subparagraph (B); and
                ``(ii) applying such percentage to the total amount of 
            such grant and loan assistance that was disbursed (and that 
            could have been disbursed) to the student, or on the 
            student's behalf, for the payment period or period of 
            enrollment for which the assistance was awarded, as of the 
            day the student withdrew.
            ``(B) Percentage earned.--For purposes of subparagraph 
        (A)(i), the percentage of grant or loan assistance under this 
        title that has been earned by the student is--
                ``(i) equal to the percentage of the payment period or 
            period of enrollment for which assistance was awarded that 
            was completed (as determined in accordance with subsection 
            (d)) as of the day the student withdrew, provided that such 
            date occurs on or before the completion of 60 percent of 
            the payment period or period of enrollment; or
                ``(ii) 100 percent, if the day the student withdrew 
            occurs after the student has completed 60 percent of the 
            payment period or period of enrollment.
            ``(C) Percentage and amount not earned.--For purposes of 
        subsection (b), the amount of grant and loan assistance awarded 
        under this title that has not been earned by the student shall 
        be calculated by--
                ``(i) determining the complement of the percentage of 
            grant or loan assistance under this title that has been 
            earned by the student described in subparagraph (B); and
                ``(ii) applying the percentage determined under clause 
            (i) to the total amount of such grant and loan assistance 
            that was disbursed (and that could have been disbursed) to 
            the student, or on the student's behalf, for the payment 
            period or period of enrollment, as of the day the student 
            withdrew.
        ``(4) Differences between amounts earned and amounts 
    received.--
            ``(A) In general.--If the student has received less grant 
        or loan assistance than the amount earned as calculated under 
        subparagraph (A) of paragraph (3), the institution of higher 
        education shall comply with the procedures for late 
        disbursement specified by the Secretary in regulations.
            ``(B) Return.--If the student has received more grant or 
        loan assistance than the amount earned as calculated under 
        paragraph (3)(A), the unearned funds shall be returned by the 
        institution or the student, or both, as may be required under 
        paragraphs (1) and (2) of subsection (b), to the programs under 
        this title in the order specified in subsection (b)(3).
    ``(b) Return of Title IV Program Funds.--
        ``(1) Responsibility of the institution.--The institution shall 
    return, in the order specified in paragraph (3), the lesser of--
            ``(A) the amount of grant and loan assistance awarded under 
        this title that has not been earned by the student, as 
        calculated under subsection (a)(3)(C); or
            ``(B) an amount equal to--
                ``(i) the total institutional charges incurred by the 
            student for the payment period or period of enrollment for 
            which such assistance was awarded; multiplied by
                ``(ii) the percentage of grant and loan assistance 
            awarded under this title that has not been earned by the 
            student, as described in subsection (a)(3)(C)(i).
        ``(2) Responsibility of the student.--
            ``(A) In general.--The student shall return assistance that 
        has not been earned by the student as described in subsection 
        (a)(3)(C)(ii) in the order specified in paragraph (3) minus the 
        amount the institution is required to return under paragraph 
        (1).
            ``(B) Special rule.--The student (or parent in the case of 
        funds due to a loan borrowed by a parent under part B or D) 
        shall return or repay, as appropriate, the amount determined 
        under subparagraph (A) to--
                ``(i) a loan program under this title in accordance 
            with the terms of the loan; and
                ``(ii) a grant program under this title, as an 
            overpayment of such grant and shall be subject to--

                    ``(I) repayment arrangements satisfactory to the 
                institution; or
                    ``(II) overpayment collection procedures prescribed 
                by the Secretary.

            ``(C) Requirement.--Notwithstanding subparagraphs (A) and 
        (B), a student shall not be required to return 50 percent of 
        the grant assistance received by the student under this title, 
        for a payment period or period of enrollment, that is the 
        responsibility of the student to repay under this section.
        ``(3) Order of return of title iv funds.--
            ``(A) In general.--Excess funds returned by the institution 
        or the student, as appropriate, in accordance with paragraph 
        (1) or (2), respectively, shall be credited to outstanding 
        balances on loans made under this title to the student or on 
        behalf of the student for the payment period or period of 
        enrollment for which a return of funds is required. Such excess 
        funds shall be credited in the following order:
                ``(i) To outstanding balances on loans made under 
            section 428H for the payment period or period of enrollment 
            for which a return of funds is required.
                ``(ii) To outstanding balances on loans made under 
            section 428 for the payment period or period of enrollment 
            for which a return of funds is required.
                ``(iii) To outstanding balances on unsubsidized loans 
            (other than parent loans) made under part D for the payment 
            period or period of enrollment for which a return of funds 
            is required.
                ``(iv) To outstanding balances on subsidized loans made 
            under part D for the payment period or period of enrollment 
            for which a return of funds is required.
                ``(v) To outstanding balances on loans made under part 
            E for the payment period or period of enrollment for which 
            a return of funds is required.
                ``(vi) To outstanding balances on loans made under 
            section 428B for the payment period or period of enrollment 
            for which a return of funds is required.
                ``(vii) To outstanding balances on parent loans made 
            under part D for the payment period or period of enrollment 
            for which a return of funds is required.
            ``(B) Remaining excesses.--If excess funds remain after 
        repaying all outstanding loan amounts, the remaining excess 
        shall be credited in the following order:
                ``(i) To awards under subpart 1 of part A for the 
            payment period or period of enrollment for which a return 
            of funds is required.
                ``(ii) To awards under subpart 3 of part A for the 
            payment period or period of enrollment for which a return 
            of funds is required.
                ``(iii) To other assistance awarded under this title 
            for which a return of funds is required.
    ``(c) Withdrawal Date.--
        ``(1) In general.--In this section, the term `day the student 
    withdrew'--
            ``(A) is the date that the institution determines--
                ``(i) the student began the withdrawal process 
            prescribed by the institution;
                ``(ii) the student otherwise provided official 
            notification to the institution of the intent to withdraw; 
            or
                ``(iii) in the case of a student who does not begin the 
            withdrawal process or otherwise notify the institution of 
            the intent to withdraw, the date that is the mid-point of 
            the payment period for which assistance under this title 
            was disbursed or a later date documented by the 
            institution; or
            ``(B) for institutions required to take attendance, is 
        determined by the institution from such attendance records.
        ``(2) Special rule.--Notwithstanding paragraph (1), if the 
    institution determines that a student did not begin the withdrawal 
    process, or otherwise notify the institution of the intent to 
    withdraw, due to illness, accident, grievous personal loss, or 
    other such circumstances beyond the student's control, the 
    institution may determine the appropriate withdrawal date.
    ``(d) Percentage of the Payment Period or Period of Enrollment 
Completed.--For purposes of subsection (a)(3)(B)(i), the percentage of 
the payment period or period of enrollment for which assistance was 
awarded that was completed, is determined--
        ``(1) in the case of a program that is measured in credit 
    hours, by dividing the total number of calendar days comprising the 
    payment period or period of enrollment for which assistance is 
    awarded into the number of calendar days completed in that period 
    as of the day the student withdrew; and
        ``(2) in the case of a program that is measured in clock hours, 
    by dividing the total number of clock hours comprising the payment 
    period or period of enrollment for which assistance is awarded into 
    the number of clock hours--
            ``(A) completed by the student in that period as of the day 
        the student withdrew; or
            ``(B) scheduled to be completed as of the day the student 
        withdrew, if the clock hours completed in the period are not 
        less than a percentage, to be determined by the Secretary in 
        regulations, of the hours that were scheduled to be completed 
        by the student in the period.
    ``(e) Effective Date.--The provisions of this section shall take 
effect 2 years after the date of enactment of the Higher Education 
Amendments of 1998. An institution of higher education may choose to 
implement such provisions prior to that date.''.

SEC. 486. INSTITUTIONAL AND FINANCIAL ASSISTANCE INFORMATION FOR 
              STUDENTS.

    (a) Information Dissemination Activities.--Section 485(a) (20 
U.S.C. 1092(a)) is amended--
        (1) in paragraph (1)--
            (A) in the second sentence, by striking ``, through 
        appropriate publications and mailings, to all current students, 
        and to any prospective student upon request'' and inserting 
        ``upon request, through appropriate publications, mailings, and 
        electronic media, to an enrolled student and to any prospective 
        student'';
            (B) by inserting after the second sentence the following: 
        ``Each eligible institution shall, on an annual basis, provide 
        to all enrolled students a list of the information that is 
        required to be provided by institutions to students by this 
        section and section 444 of the General Education Provisions Act 
        (also referred to as the Family Educational Rights and Privacy 
        Act of 1974), together with a statement of the procedures 
        required to obtain such information.'';
            (C) by amending subparagraph (F) to read as follows:
        ``(F) a statement of--
            ``(i) the requirements of any refund policy with which the 
        institution is required to comply;
            ``(ii) the requirements under section 484B for the return 
        of grant or loan assistance provided under this title; and
            ``(iii) the requirements for officially withdrawing from 
        the institution;''; and
            (D) by striking ``and'' at the end of subparagraph (M);
            (E) by striking the period at the end of subparagraph (N) 
        and inserting ``; and''; and
            (F) by adding at the end the following:
        ``(O) the campus crime report prepared by the institution 
    pursuant to subsection (f), including all required reporting 
    categories.'';
        (2) in paragraph (3), by amending subparagraph (A) to read as 
    follows:
        ``(A) shall be made available by July 1 each year to enrolled 
    students and prospective students prior to the students enrolling 
    or entering into any financial obligation; and''; and
        (3) by adding at the end the following:
    ``(6) Each institution may provide supplemental information to 
enrolled and prospective students showing the completion or graduation 
rate for students described in paragraph (4) or for students 
transferring into the institution or information showing the rate at 
which students transfer out of the institution.''.
    (b) Exit Counseling for Borrowers.--Section 485(b) (20 U.S.C. 
1092(b)) is amended--
        (1) in paragraph (1)(A), by striking ``(individually or in 
    groups)''; and
        (2) in paragraph (2), by adding at the end the following:
    ``(C) Nothing in this subsection shall be construed to prohibit an 
institution of higher education from utilizing electronic means to 
provide personalized exit counseling.''.
    (c) Departmental Publications.--Section 485(d) is amended--
        (1) by striking ``(1) assist'' and inserting ``(A) assist'';
        (2) by striking ``(2) assist'' and inserting ``(B) assist'';
        (3) by inserting ``(1)'' before ``The Secretary'' the first 
    place the term appears; and
        (4) by adding at the end the following:
    ``(2) The Secretary, to the extent the information is available, 
shall compile information describing State and other prepaid tuition 
programs and savings programs and disseminate such information to 
States, eligible institutions, students, and parents in departmental 
publications.
    ``(3) The Secretary, to the extent practicable, shall update the 
Department's Internet site to include direct links to databases that 
contain information on public and private financial assistance 
programs. The Secretary shall only provide direct links to databases 
that can be accessed without charge and shall make reasonable efforts 
to verify that the databases included in a direct link are not 
providing fraudulent information. The Secretary shall prominently 
display adjacent to any such direct link a disclaimer indicating that a 
direct link to a database does not constitute an endorsement or 
recommendation of the database, the provider of the database, or any 
services or products of such provider. The Secretary shall provide 
additional direct links to information resources from which students 
may obtain information about fraudulent and deceptive practices in the 
provision of services related to student financial aid.''.
    (d) Disclosures.--Section 485(e) is amended--
        (1) in paragraph (2)--
            (A) by striking ``his parents, his guidance'' and inserting 
        ``the student's parents, guidance''; and
            (B) by adding at the end the following: ``If the 
        institution is a member of a national collegiate athletic 
        association that compiles graduation rate data on behalf of the 
        association's member institutions that the Secretary determines 
        is substantially comparable to the information described in 
        paragraph (1), the distribution of the compilation of such data 
        to all secondary schools in the United States shall fulfill the 
        responsibility of the institution to provide information to a 
        prospective student athlete's guidance counselor and coach.''; 
        and
        (2) by amending paragraph (9) to read as follows:
    ``(9) The reports required by this subsection shall be due each 
July 1 and shall cover the 1-year period ending August 31 of the 
preceding year.''.
    (e) Disclosure of Campus Security Policy and Campus Crime 
Statistics.--Section 485(f) (20 U.S.C. 1092(f)) is amended--
        (1) in paragraph (1)--
            (A) by amending subparagraph (F) to read as follows:
        ``(F) Statistics concerning the occurrence on campus, in or on 
    noncampus buildings or property, and on public property during the 
    most recent calendar year, and during the 2 preceding calendar 
    years for which data are available--
            ``(i) of the following criminal offenses reported to campus 
        security authorities or local police agencies:
                ``(I) murder;
                ``(II) sex offenses, forcible or nonforcible;
                ``(III) robbery;
                ``(IV) aggravated assault;
                ``(V) burglary;
                ``(VI) motor vehicle theft;
                ``(VII) manslaughter;
                ``(VIII) arson; and
                ``(IX) arrests or persons referred for campus 
            disciplinary action for liquor law violations, drug-related 
            violations, and weapons possession; and
            ``(ii) of the crimes described in subclauses (I) through 
        (VIII) of clause (i), and other crimes involving bodily injury 
        to any person in which the victim is intentionally selected 
        because of the actual or perceived race, gender, religion, 
        sexual orientation, ethnicity, or disability of the victim that 
        are reported to campus security authorities or local police 
        agencies, which data shall be collected and reported according 
        to category of prejudice.'';
            (B) by striking subparagraph (H); and
            (C) by redesignating subparagraph (I) as subparagraph (H);
        (2) in paragraph (4)--
            (A) by striking ``Upon request of the Secretary, each'' and 
        inserting ``On an annual basis, each'';
            (B) by striking ``paragraphs (1)(F) and (1)(H)'' and 
        inserting ``paragraph (1)(F)'';
            (C) by striking ``and Labor'' and inserting ``and the 
        Workforce'';
            (D) by striking ``1995'' and inserting ``2000'';
            (E) by striking ``and'' at the end of subparagraph (A);
            (F) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (G) by inserting after subparagraph (A) the following:
        ``(B) make copies of the statistics submitted to the Secretary 
    available to the public; and'';
        (3) by amending paragraph (5)(A) to read as follows:
    ``(5)(A) In this subsection:
        ``(i) The term `campus' means--
            ``(I) any building or property owned or controlled by an 
        institution of higher education within the same reasonably 
        contiguous geographic area of the institution and used by the 
        institution in direct support of, or in a manner related to, 
        the institution's educational purposes, including residence 
        halls; and
            ``(II) property within the same reasonably contiguous 
        geographic area of the institution that is owned by the 
        institution but controlled by another person, is used by 
        students, and supports institutional purposes (such as a food 
        or other retail vendor).
        ``(ii) The term `noncampus building or property' means--
            ``(I) any building or property owned or controlled by a 
        student organization recognized by the institution; and
            ``(II) any building or property (other than a branch 
        campus) owned or controlled by an institution of higher 
        education that is used in direct support of, or in relation to, 
        the institution's educational purposes, is used by students, 
        and is not within the same reasonably contiguous geographic 
        area of the institution.
        ``(iii) The term `public property' means all public property 
    that is within the same reasonably contiguous geographic area of 
    the institution, such as a sidewalk, a street, other thoroughfare, 
    or parking facility, and is adjacent to a facility owned or 
    controlled by the institution if the facility is used by the 
    institution in direct support of, or in a manner related to the 
    institution's educational purposes.'';
        (4) in paragraph (6)--
            (A) by striking ``paragraphs (1)(F) and (1)(H)'' and 
        inserting ``paragraph (1)(F)''; and
            (B) by adding at the end the following: ``Such statistics 
        shall not identify victims of crimes or persons accused of 
        crimes.'';
        (5) by redesignating paragraphs (4) through (7) as paragraphs 
    (5) through (8), respectively;
        (6) by inserting after paragraph (3) the following:
    ``(4)(A) Each institution participating in any program under this 
title that maintains a police or security department of any kind shall 
make, keep, and maintain a daily log, written in a form that can be 
easily understood, recording all crimes reported to such police or 
security department, including--
        ``(i) the nature, date, time, and general location of each 
    crime; and
        ``(ii) the disposition of the complaint, if known.
    ``(B)(i) All entries that are required pursuant to this paragraph 
shall, except where disclosure of such information is prohibited by law 
or such disclosure would jeopardize the confidentiality of the victim, 
be open to public inspection within two business days of the initial 
report being made to the department or a campus security authority.
    ``(ii) If new information about an entry into a log becomes 
available to a police or security department, then the new information 
shall be recorded in the log not later than two business days after the 
information becomes available to the police or security department.
    ``(iii) If there is clear and convincing evidence that the release 
of such information would jeopardize an ongoing criminal investigation 
or the safety of an individual, cause a suspect to flee or evade 
detection, or result in the destruction of evidence, such information 
may be withheld until that damage is no longer likely to occur from the 
release of such information.''; and
        (7) by adding at the end the following:
    ``(9) The Secretary shall provide technical assistance in complying 
with the provisions of this section to an institution of higher 
education who requests such assistance.
    ``(10) Nothing in this section shall be construed to require the 
reporting or disclosure of privileged information.
    ``(11) The Secretary shall report to the appropriate committees of 
Congress each institution of higher education that the Secretary 
determines is not in compliance with the reporting requirements of this 
subsection.
    ``(12) For purposes of reporting the statistics with respect to 
crimes described in paragraph (1)(F), an institution of higher 
education shall distinguish, by means of separate categories, any 
criminal offenses that occur--
        ``(A) on campus;
        ``(B) in or on a noncampus building or property;
        ``(C) on public property; and
        ``(D) in dormitories or other residential facilities for 
    students on campus.
    ``(13) Upon a determination pursuant to section 487(c)(3)(B) that 
an institution of higher education has substantially misrepresented the 
number, location, or nature of the crimes required to be reported under 
this subsection, the Secretary shall impose a civil penalty upon the 
institution in the same amount and pursuant to the same procedures as a 
civil penalty is imposed under section 487(c)(3)(B).
    ``(14)(A) Nothing in this subsection may be construed to--
        ``(i) create a cause of action against any institution of 
    higher education or any employee of such an institution for any 
    civil liability; or
        ``(ii) establish any standard of care.
    ``(B) Notwithstanding any other provision of law, evidence 
regarding compliance or noncompliance with this subsection shall not be 
admissible as evidence in any proceeding of any court, agency, board, 
or other entity, except with respect to an action to enforce this 
subsection.
    ``(15) This subsection may be cited as the `Jeanne Clery Disclosure 
of Campus Security Policy and Campus Crime Statistics Act'.''.
    (f) Data Required.--Section 485(g) is amended--
        (1) in paragraph (1), by adding at the end the following:
            ``(I)(i) The total revenues, and the revenues from 
        football, men's basketball, women's basketball, all other men's 
        sports combined and all other women's sports combined, derived 
        by the institution from the institution's intercollegiate 
        athletics activities.
            ``(ii) For the purpose of clause (i), revenues from 
        intercollegiate athletics activities allocable