findings and declaration of policy

    Sec. 2. The Congress hereby finds that the security and welfare of 
the United States requires that this and future generations of American 
youth be assured ample opportunity for the fullest development of their 
intellectual capacities, and that this opportunity will be jeopardized 
unless the financial barrier against youth of college ability obtaining 
a higher education can be overcome. It shall be the policy of the 
United States that no high school graduate who can secure admission to 
an institution of higher education shall be denied an opportunity to 
attend such institution as a result of inadequate financial resources 
and that it is incumbent upon the Nation to take positive and immediate 
action to meet these needs through a program providing loans for young 
people who need financial assistance for post high school education or 
training.

                  TITLE I--LOANS FOR COLLEGE STUDENTS

                      agreements with institutions

    Sec. 101. (a) The Secretary of Education is authorized to enter 
into an agreement with any institution of higher education which 
desires to participate in a program making financial loans to students. 
Such payments to institutions shall be made during the period beginning 
October 1, 1993, and ending September 30, 1999, but no such loan shall 
cover any period after September 30, 2000.
    (b) An agreement between the Secretary and an institution of higher 
education for making such loans shall--
            (1) provide that funds paid to the institution under this 
        Act will be used solely to make loans to students in such 
        institution;
            (2) provide that (A) no loan made to a recipient under this 
        Act will cover more than two academic years, and (B) the amount 
        of each such loan will be determined in the case of each 
        recipient thereof with respect to each academic year in which 
        such recipient receives such a loan, except that no such 
        recipient shall receive more than $6,000 under the provisions 
        of this Act in any academic year of undergraduate enrollment; 
        or $8,500 in any academic year of graduate enrollment;
            (3) provide that the average loan per recipient for 
        undergraduate students shall not exceed $4,500 and for graduate 
        students shall not exceed $6,000 per academic year and shall be 
        reduced proportionately for those students enrolled in such 
        institution on less than a full-time basis;
            (4) provide that payments under such loan will continue 
        only during such periods as the recipient is in good standing 
        at the institution;
            (5) provide that each recipient of such a loan for the 
        first and second academic years of undergraduate study must be 
        selected solely on the basis of his being (A) capable of doing 
        at least satisfactory academic work in the course of study 
        which he will pursue in such institution, (B) in need of the 
        amount of such loan in order to pursue a course of study in 
        such institution and without reasonable expectation of 
        obtaining grant assistance from any other source sufficient to 
        enable him to undertake such course of study, and (C) of good 
        character, with an earnest desire to obtain an education at an 
        institution of higher education;
            (6) provide that at the completion of the second academic 
        year, if such recipient has maintained good standing during the 
        first and second academic years and would be unable to pursue a 
        course of study in such institution during the third and fourth 
        academic years without such a loan, the institution in which 
        such recipient enrolls for the third academic year is 
        authorized to award an additional loan for the third and fourth 
        academic years;
            (7) include such provisions and be supported by such 
        assurances as the Secretary may determine to be necessary to 
        assure that there will be no reduction of the amount of student 
        financial assistance offered by the institution from its own 
        resources as a result of participation in the program under 
        this Act;
            (8) include such other provisions as the Secretary may 
        determine to be necessary to protect the financial interest of 
        the United States and promote the purposes of this Act and as 
        are agreed to by the Secretary and the institution;
            (9) provide that the institution will secure the proper 
        execution of such documents by a recipient of a loan as are 
        necessary to assure repayment of such loans in accordance with 
        the provisions of section 103 of this Act;
            (10) provide that the liability to repay any such loan 
        shall be cancelled upon the death of the borrower or if he 
        becomes permanently and totally disabled; and
            (11) provide that such a loan by an institution for any 
        year shall be made in such installments as will reasonably 
        protect against the disbursement of funds to cover expenses for 
        any period after a recipient of a loan has failed to maintain a 
        satisfactory standing at such institution.

                        payments to institutions

    Sec. 102. (a) Sums appropriated under this Act for any fiscal year 
shall be available in accordance with agreements between the Secretary 
and the institution of higher education for payment of contributions 
which together with the repayment of loans to the institutions shall be 
used for the establishment and maintenance of a Federal student loan 
fund at each institution. The Federal contribution to an institution 
shall be paid to it from time to time in such sums as the Secretary 
shall determine will not result in unnecessary accumulation in the 
Federal student loan fund of such institution established pursuant to 
this Act. Payments allotted to such institutions for loans for graduate 
students shall not be used to provide loans for undergraduate students 
and payments made to provide loans for undergraduate students shall not 
be used to provide loans for graduate students.
    (b) If the amount appropriated for any fiscal year is less than the 
aggregate of amounts authorized to be paid under subsection (a) for 
such year, the amount authorized to be paid under such subsection to 
each institution of higher education with which the Secretary has an 
agreement under the Act shall be reduced in proportion to the student 
enrollments in each institution for such year so that the aggregate of 
such amounts does not exceed the amount appropriated for such year.

                          repayments of loans

    Sec. 103. Each year beginning with the second taxable year that a 
scholar who received a loan under this Act is no longer a bona fide 
students of an accredited institution of higher education and working 
toward a degree, the recipient shall pay to the Secretary a sum equal 
to 5 per centum of his personal net taxable income, as defined or 
determined by section 63 of the 1986 Internal Revenue Code, as amended, 
from sources other than pay for military service. Said sums to be paid 
each year until the total of the sums received by the student without 
interest is repaid. The Secretary shall issue such regulations as are 
reasonably necessary to assure receipt of necessary documents and 
information to secure such payments and such required documents and 
assurances shall be secured prior to payment of an individual loan.
    The recipient shall be given an alternative of repaying each year 
10 per centum of the total of the sums received by the student and such 
payments shall begin with the second calendar year in which the student 
is no longer a bona fide student of an accredited institution of higher 
education for a period of six or more months and working toward a 
degree.
    Any sums due and unpaid shall bear interest compounded annually at 
the annual rate the Secretary determines to be 2 per centum more than 
the average interest rate paid on new issues of obligations of the 
United States for each calendar year such sums are due and owing.

                             appropriations

    Sec. 104. In order to carry out the provisions of this Act, there 
are hereby authorized to be appropriated such sums as may be necessary 
to effectuate the purposes of this Act for fiscal year 1994 and each 
fiscal year thereafter through fiscal year 1999. Sums appropriated 
pursuant to the preceding sentence for fiscal years shall remain 
available for the award of financial assistance loans under this Act 
until the close of the fiscal year succeeding the fiscal year for which 
they were appropriated.

  TITLE II--DEFINITIONS AND OTHER PROVISIONS APPLICABLE TO ENTIRE ACT

                              definitions

    Sec. 201. As used in this Act--
    (a) The term ``institution of higher education'' means a pubic or 
other nonprofit educational institution in any State which--
            (1) admits as regular students only individuals having a 
        certificate of graduation from a high school, or the recognized 
        equivalent of such a certificate;
            (2) is legally authorized within such State to provide a 
        program of education beyond high school;
            (3) provides an educational program for which it awards a 
        degree, or provides not less than a two-year program which is 
        acceptable for full credit toward such a degree; and
            (4) is accredited by a nationally recognized accrediting 
        agency or association listed by the Secretary pursuant to this 
        paragraph or, if not so accredited, is an institution whose 
        credits are accepted, on transfer, by not less than three 
        institutions which are so accredited, for credit on the same 
        basis as if transferred from an institution so accredited or is 
        an institution which the Secretary determines provides an 
        educational program at least equal to the program provided by 
        at least three accredited institutions. For the purposes of 
        this paragraph the Secretary shall publish a list of nationally 
        accrediting agencies or associations which he determines to be 
        reliable authorities as to the quality of education or training 
        offered.
    (b) The term ``high school'' does not include any grade beyond 
grade 12.
    (c) The term ``nonprofit educational institution'' means an 
educational institution owned and operated by one or more 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.
    (d) The term ``public educational institution'' does not include a 
school or institution of any agency of the United States.
    (e) The term ``State'' includes, in addition to the several States, 
the District of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands, Guam, and American Samoa.
    (f) the term ``Secretary'' means the United States Secretary of 
Education.

                         federal administration

    Sec. 202. (a) The Secretary may delegate any of his functions under 
this Act, except the making of regulations, or determining the 
accrediting of institutions to any officer or employee of the 
Department of Education.
    (b) In administering the provisions of this Act for which he is 
responsible, the Secretary is authorized to utilize the services and 
facilities of any agency of the Federal Government and of any other 
public or nonprofit agency or institution in accordance with 
appropriate agreements, and to pay for such services either in advance 
or by way of reimbursement, as may be agreed upon.
    (c) The Secretary, may appoint one or more advisory committees to 
advise and consult with the Secretary with respect to the 
administration of any of his functions under this Act. Members of any 
such committee, while attending conferences or meetings of the 
committee, shall be entitled to receive compensation at a rate to be 
fixed by the Secretary but not to exceed $150 per diem, and while away 
from their homes or regular places of business they may be allowed 
travel expenses, including per diem in lieu of subsistence, as 
authorized by law (5 U.S.C. 5703) for persons in the Government service 
employed intermittently. The provisions of General Education Provisions 
Act shall apply to members of such committees.

                   method of payment to institutions

    Sec. 203. Payments under this Act to any individual or to any State 
or Federal agency, institution of higher education, or any other 
organization, may be made in installments, and in advance or by way of 
reimbursement, and with necessary adjustments on account of 
overpayments or underpayments.

                administrative appropriations authorized

    Sec. 204. There are hereby authorized to be appropriated for the 
fiscal year ending September 30, 1994, and for each fiscal year 
thereafter through fiscal year 1999, such sums as may be necessary for 
the cost of administering the provisions of this Act.
    Sec. 205. Nothing contained in this Act shall be construed as 
authorizing a department, agency, officer, or employee of the United 
States to exercise any direction, supervision, or control over, or 
impose any requirements or condition with respect to, the personnel, 
curriculum, methods of instruction, or administration of any 
educational institution.

                       TITLE III--NATIONAL STUDY

    Sec. 301. (a) The Secretary shall undertake a study to determine 
the extent to which the provisions of this Act can reasonably replace 
various other Federal grants or assistance programs.
    (b) The Secretary shall submit a report of his findings made 
pursuant to the study carried out under this section, together with 
such recommendations as he may deem appropriate, to the President and 
the Congress within two years after the date of the enactment of this 
section.
    Sec. 302. This Act shall be cited as the ``Federal Student Loan 
Act''.
Federal Student Loan Act - 
Title I:  Loans for College Students
 - Authorizes the Secretary of Education to enter into agreements with institutions of higher education for a program of student loans.  Provides for payments to such institutions during FY 1992 through 1997, for student loans to cover periods through FY 1998. 
Sets forth the terms of such agreements, including maximum individual and average amounts of such loans per academic year ($4,000 individual and $3,250 average for undergraduates; $5,500 individual and $4,000 average for graduate students). 
Provides that payments to institutions be used for the establishment and maintenance of separate Federal student loan funds for graduate and undergraduate students at such institutions. 
Authorizes appropriations. 
Title II:  Definitions and Other Provisions Applicable to Entire Act
 - Sets forth the manner of Federal administration of such program (including the appointment of advisory committees by the Secretary) and the method of payment to institutions.  Authorizes appropriations. 
Title III:  National Study
 - Directs the Secretary to study, and to report to the President and the Congress on, the extent to which the provisions of this Act can reasonably replace various other Federal grants or assistance programs.
Federal Student Loan Act