Direct Loan Reward Act of 2004 - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to direct the Secretary of Education to carry out a Direct Loan Reward Program to encourage institutions of higher education to participate in the student loan program under part D, Federal Perkins Loans.
Makes the amount of financial reward payment to an institution under this Act equal to 50 percent of the savings to the Federal Government generated by the institution's participation in such part D student loan program instead of its participation in the student loan program under the part B Federal Family Education Loan Program.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4370 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 4370
To ensure that the Direct Loan Program is a competitive alternative to
the Federal Family Education Loan Program for schools and students.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 17, 2004
Mr. Petri (for himself and Mr. George Miller of California) introduced
the following bill; which was referred to the Committee on Education
and the Workforce
_______________________________________________________________________
A BILL
To ensure that the Direct Loan Program is a competitive alternative to
the Federal Family Education Loan Program for schools and students.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Direct Loan Reward Act of 2004''.
SEC. 2. DIRECT LOAN REWARD PROGRAM.
Part D of title IV of the Higher Education Act of 1965 (20 U.S.C.
1087a et seq.) is amended by adding at the end the following:
``SEC. 460A. DIRECT LOAN REWARD PROGRAM.
``(a) Program Authorized.--The Secretary shall carry out a Direct
Loan Reward Program to encourage institutions of higher education to
participate in the student loan program under this part.
``(b) Program Requirements.--In carrying out the Direct Loan Reward
Program, the Secretary shall--
``(1) provide to each institution of higher education
participating in the student loan program under this part a
financial reward payment, in an amount determined in accordance
with subsection (c), to encourage the institution to provide
student loans under this part;
``(2) require each institution of higher education
receiving a payment under this section to provide student loans
under this part for a period of 5 years from the date the
payment is made;
``(3) require that funds paid to institutions of higher
education under this section be used to award students a
supplement to such students' Pell Grants under subpart 1 of
part A; and
``(4) for a period of 2 years beginning on the date of
enactment of this section, encourage all institutions of higher
education to participate in the Direct Loan Reward Program.
``(c) Amount.--The amount of a financial reward payment under this
section shall be an amount equal to 50 percent of the savings to the
Federal Government generated by the institution's participation in the
student loan program under this part instead of the institution's
participation in the student loan program under part B.
``(d) Trigger to Ensure Cost Neutrality.--
``(1) Limit to ensure cost neutrality.--Notwithstanding
subsection (c), the Secretary shall not distribute financial
reward payments under the Direct Loan Reward Program that, in
the aggregate, exceed the Federal savings resulting from
implementation of the Direct Loan Reward Program.
``(2) Federal savings.--In calculating Federal savings, as
used in paragraph (1), the Secretary shall determine any
Federal savings on loans made to students at institutions of
higher education that participate in the Direct Loan Reward
Program and that, on the date of enactment of the Direct Loan
Reward Program, participated in the student loan program under
part B, resulting from the difference of--
``(A) the Federal cost of loan volume made under
this part; and
``(B) the Federal cost of an equivalent type and
amount of loan volume made, insured, or guaranteed
under part B.
``(3) Distribution rules.--If the Federal savings
determined under paragraph (2) is not sufficient to distribute
full financial reward payments under the Direct Loan Reward
Program, the Secretary shall--
``(A) first make financial reward payments to those
institutions of higher education that participated in
the student loan program under part B on the date of
enactment of the Direct Loan Reward Program; and
``(B) with any remaining Federal savings after
making payments under subparagraph (A), make financial
reward payments to the institutions of higher education
not described in subparagraph (A) on a pro-rata basis.
``(4) Distribution to students.--Any institution of higher
education that receives a financial reward payment under this
section shall distribute such payment among the students of
such institution who are Pell Grant recipients by awarding each
such student an equal supplemental grant. Such supplemental
grant shall be known as a `Pell Reward'.
``(5) Carry over.--Any institution of higher education that
receives a reduced financial reward payment under paragraph
(3)(B), shall remain eligible for the unpaid portion of such
institution's financial reward payment, as well as any
additional financial reward payments for which the institution
is otherwise eligible, in subsequent fiscal years.''.
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Introduced in House
Introduced in House
Referred to the House Committee on Education and the Workforce.
Referred to the Subcommittee on 21st Century Competitiveness.
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