Student Aid Reward Act of 2005 - Amends the Higher Education Act of 1965 (HEA) title IV (Student Assistance) to direct the Secretary of Education to carry out a Student Aid Reward (SAR) Program of payments to institutions of higher education (IHEs) to encourage them to participate in the student loan program under title IV that is most cost-effective for taxpayers.
Requires that a SAR payment to an IHE equal at least 50 percent of the savings to the Federal Government generated by the IHE's participation in the most cost-effective student loan program, rather than one not cost-effective for taxpayers.
Requires IHEs receiving SAR payments to: (1) provide student loans under that most cost-effective program for five years after the payment date; and (2) use payment funds, where appropriate, to supplement students Pell Grants. Allows such funds to be used also to award need-based grants to lower and middle income graduate students.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1425 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 1425
To ensure that the Federal student loans are delivered as efficiently
as possible, so that there is more grant aid for students.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 17, 2005
Mr. Petri (for himself, Mr. George Miller of California, Mr. Doggett,
Mr. Brown of Ohio, Mr. Sanders, Mr. Bishop of New York, Mr. Filner, Mr.
McDermott, Ms. Kilpatrick of Michigan, Ms. Lee, Mr. Grijalva, Mr.
Hinchey, Mr. Kucinich, Mr. Wu, Mr. Van Hollen, Ms. Watson, Mr.
Etheridge, Ms. Moore of Wisconsin, Mr. Cummings, Ms. McCollum of
Minnesota, Mr. Israel, Mrs. Jones of Ohio, Ms. Bordallo, Mr. Crowley,
Ms. Schakowsky, Mr. Hastings of Florida, Mr. Tierney, Mr. Kildee, Mr.
Brown of South Carolina, Ms. Pelosi, and Mr. Alexander) introduced the
following bill; which was referred to the Committee on Education and
the Workforce
_______________________________________________________________________
A BILL
To ensure that the Federal student loans are delivered as efficiently
as possible, so that there is more grant aid for 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 ``Student Aid Reward Act of 2005''.
SEC. 2. STUDENT AID REWARD PROGRAM.
Part G of title IV of the Higher Education Act of 1965 is amended
by inserting after section 489 (20 U.S.C. 1096) the end the following:
``SEC. 489A. STUDENT AID REWARD PROGRAM.
``(a) Program Authorized.--The Secretary shall carry out a Student
Aid Reward Program to encourage institutions of higher education to
participate in the student loan program under this title that is most
cost-effective for taxpayers.
``(b) Program Requirements.--In carrying out the Student Aid Reward
Program, the Secretary shall--
``(1) provide to each institution of higher education
participating in the student loan program under this title that
is most cost-effective for taxpayers a Student Aid Reward
Payment, in an amount determined in accordance with subsection
(c), to encourage the institution to participate in that
student loan program;
``(2) require each institution of higher education
receiving a payment under this section to provide student loans
under that student loan program for a period of 5 years from
the date the payment is made;
``(3) where appropriate, 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;
``(4) permit such funds to also be used to award lower and
middle income graduate students need-based grants; and
``(5) encourage all institutions of higher education to
participate in the Student Aid Reward Program.
``(c) Amount.--The amount of a Student Aid Reward Payment under
this section shall be not less than 50 percent of the savings to the
Federal Government generated by the institution's participation in the
student loan program under this title that is most cost-effective for
taxpayers instead of the institution's participation in the student
loan program not cost-effective for taxpayers.
``(d) Trigger to Ensure Cost Neutrality.--
``(1) Limit to ensure cost neutrality.--Notwithstanding
subsection (c), the Secretary shall not distribute Student Aid
Reward Payments under the Student Aid Reward Program that, in
the aggregate, exceed the Federal savings resulting from
implementation of the Student Aid Reward Program.
``(2) Federal savings.--In calculating Federal savings, as
used in paragraph (1), the Secretary shall determine Federal
savings on loans made to students at institutions of higher
education that participate the student loan program under this
title that is most cost-effective for taxpayers and that, on
the date of enactment of the Student Aid Reward Program,
participated in the student loan program that is not the most
cost-effective for taxpayers, resulting from the difference
of--
``(A) the Federal cost of loan volume made under
the student loan program under this title that is most
cost-effective for taxpayers; and
``(B) the Federal cost of an equivalent type and
amount of loan volume made, insured, or guaranteed
under the student loan program under this title that is
not the most cost-effective for taxpayers.
``(3) Distribution rules.--If the Federal savings
determined under paragraph (2) is not sufficient to distribute
full Student Aid Reward Payments under the Student Aid Reward
Program, the Secretary shall--
``(A) first make Student Aid Reward Payments to
those institutions of higher education that
participated in the student loan program under this
title that is not the most cost-effective for taxpayers
on the date of enactment of the Student Aid Reward
Program; and
``(B) with any remaining Federal savings after
making Payments under subparagraph (A), make Student
Aid 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 Student Aid Reward Payment under this
section--
``(A) shall distribute, where appropriate, part or
all of such payment among the students of such
institution who are Pell Grant recipients by awarding
such students a supplemental grant; and
``(B) may distribute part of such payment as a
supplemental grant to graduate students in financial
need.
``(5) Estimates, adjustments, and carry over.--
``(A) Estimates and adjustments.--The Secretary may
make Student Aid Reward Payments to institutions of
higher education on the basis of estimates, using the
best data available at the beginning of an academic/
fiscal year. If the Secretary determines thereafter
that loan program costs for that academic/fiscal year
were different than such estimate, the Secretary shall
adjust (reduce or increase) subsequent Student Aid
Reward Payments rewards paid to such institutions of
higher education to reflect such difference.
``(B) Carry over.--Any institution of higher
education that receives a reduced Student Aid 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 academic or fiscal years.
``(e) Definition.--For purposes of this section--
``(1) the student loan program under this title that is
most cost-effective for taxpayers is the loan program under
part B or D of this title that has the lowest overall cost to
the Federal Government (including administrative costs) for the
loans authorized by such parts; and
``(2) the student loan program under this title that is not
most cost-effective for taxpayers is the loan program under
part B or D of this title that does not have the lowest overall
cost to the Federal Government (including administrative costs)
for the loans authorized by such parts.''.
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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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