SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pell for Performance Act''.

SEC. 2. REPAYMENT FOR FAILURE TO COMPLETE PROGRAM.

    Section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) 
is amended--
            (1) in subsection (c), by striking ``The period'' and 
        inserting ``Except as provided in subsection (k), the period''; 
        and
            (2) by adding at the end the following:
    ``(k) Repayment for Failure To Complete Program.--
            ``(1) In general.--Except as provided in paragraph (3), if 
        a recipient of a Federal Pell Grant fails to complete the 
        program for which the Federal Pell Grant was awarded within the 
        maximum timeframe for completion of such program, the sum of 
        the amounts of any Federal Pell Grants received by the 
        recipient for the program shall--
                    ``(A) be treated as a Federal Direct Unsubsidized 
                Stafford Loan under part D; and
                    ``(B) be subject to repayment, together with 
                interest thereon accruing from the date of the grant 
                award, in accordance with terms and conditions 
                specified by the Secretary.
            ``(2) Period for completion.--For purposes of this 
        subsection, the term `maximum timeframe', used with respect to 
        the completion of an undergraduate program, has the meaning 
        given such term in paragraph (1) or (2) of section 668.34(b) of 
        title 34, Code of Federal Regulations (as in effect on the date 
        of enactment of this Act), as applicable to such program.
            ``(3) Exceptions.--
                    ``(A) In general.--Paragraph (1) shall not apply 
                with respect to a student who fails to complete a 
                program within the maximum timeframe for completion of 
                such program--
                            ``(i) because the student enrolls in 
                        another program at an institution of higher 
                        education--
                                    ``(I) not later than 12 months 
                                after the date of the student's last 
                                day of the previous program; and
                                    ``(II) for which the previous 
                                program provided substantial 
                                preparation;
                            ``(ii) in the case of a student who has a 
                        Federal Pell Grant that is being treated as a 
                        loan under paragraph (1) and who meets the 
                        requirements of subparagraph (B) of this 
                        paragraph, with respect to a subsequent Federal 
                        Pell Grant for which the student is eligible 
                        and which is awarded beyond such maximum 
                        timeframe; or
                            ``(iii) due to undue hardship, including--
                                    ``(I) active duty military service;
                                    ``(II) the death of a relative of 
                                the student;
                                    ``(III) the personal injury or 
                                illness of the student; or
                                    ``(IV) other special circumstances 
                                as determined by the institution.
                    ``(B) Requirements.--In order to qualify for the 
                exception under subparagraph (A)(ii) of this paragraph, 
                a student shall--
                            ``(i) have a Federal Pell Grant that is 
                        being treated as a loan under paragraph (1) for 
                        which the student has met the loan repayment 
                        obligations for not less than 6 months; and
                            ``(ii) not be an individual described in 
                        paragraph (4)(B).
            ``(4) Loss of federal pell grant eligibility.--
                    ``(A) Default.--An individual who is in default of 
                an obligation to repay a Federal Pell Grant that is 
                being treated as a loan under paragraph (1) shall be 
                ineligible to receive a Federal Pell Grant under this 
                section.
                    ``(B) Second time dropout.--An individual who has 
                received a Federal Pell Grant for enrollment in a 
                program that is being treated as a loan under paragraph 
                (1), and who leaves such program for a second time 
                (other than for a reason described in clause (i) or 
                (iii) of paragraph (3)(A)), shall be ineligible to 
                receive a Federal Pell Grant under this section.
            ``(5) Notice.--The Secretary shall ensure that each 
        recipient of a Federal Pell Grant receives notice of the terms 
        of this subsection.
            ``(6) Record.--An institution shall keep a record that 
        tracks the progress (including the graduation and default rate) 
        of any student described in paragraph (3)(B) who receives a 
        Federal Pell Grant for enrollment in a program beyond the 
        maximum timeframe for completion of such program.''.
Pell for Performance Act This bill amends the Higher Education Act of 1965 to modify the Federal Pell Grant program. Specifically, if a Pell Grant recipient fails to complete an education program within the maximum timeframe for completion, then the Pell Grants received for such program convert to a Federal Direct Unsubsidized Stafford Loan and are subject to repayment, in accordance with applicable terms and conditions.
Pell for Performance Act