Sec. 5. Grants for State Pay It Forward Pilot Program
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Unless the Secretary determines, as a result of the initial studies described in section 4, that the Pay It Forward model is not feasible or otherwise not in the public interest or in the best interest of students, the Secretary shall, not later than 1 year after the completion of such initial study, award grants, on a competitive basis, to not more than 3 States in the first 2 years and not more than 7 additional States in subsequent years (while limiting the number of students participating to 15,000 annually in the first 2 years and 50,000 annually in subsequent years in all States) to enable such States to establish and carry out a Pay It Forward model State pilot program as described in subsection (e).
Each State that desires to receive a grant under this section shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may reasonably require. Grants awarded under this section shall be for a period of not less than 10 years and not more than 25 years and the Secretary shall make grant funds available to each State on an annual basis. A State receiving a grant under this section shall provide, either directly or through private contributions, non-Federal funds for each award year in an amount that is not less than the greater of— the difference between— the amount for an award year that the State has agreed to pay for all students participating in the State Pay It Forward Contribution Plan described in subsection (e); and the amount of the Federal funds described in subsection (e)(2); or the amount that is 10 percent of the amount of the Federal funds described in subsection (e)(2).
Each State receiving a grant under this section for a fiscal year shall provide the Secretary with an assurance that the aggregate expenditures by the State, from funds derived from non-Federal sources, for the contribution to higher education costs, including student loans and grants for higher education for each fiscal year for which a grant is awarded under this section (excluding funds for a State Pay It Forward model) are not less than the aggregate expenditures by the State for the contribution to higher education costs, including student loans and grants for higher education, for the fiscal year preceding the first fiscal year for which a grant was awarded to the State under this section, as adjusted for inflation using the Consumer Price Index for All Urban Consumers published by the Department of Labor (CPI–U).
In accordance with subsection (a), each State receiving a grant under this section shall establish and carry out a State Pay It Forward model pilot program, through which the State shall— select eligible institutions, in accordance with subsection (f), for participation in the program; in coordination with the Secretary, establish an application and enrollment process through which a student who is enrolled at a participating eligible institution who wishes to participate in the program, and fulfills the requirements of the enrollment process, as determined by the State, shall be enrolled in the Pay It Forward Contribution Plan, subject to paragraph (3); provide each student at each participating eligible institution with a written notice— that such student has the option to participate, or to decline to participate, in the Pay It Forward Contribution Plan on an annual renewable basis, subject to paragraph (3); of the application and enrollment process described in subparagraph (B); and of the terms and conditions of the Pay It Forward Contribution Plan, as described in subsection (g); ensure that, subject to subsection (g)(5)(A) and in accordance with paragraphs
(4)and
(5)of subsection (g), an eligible student’s cost of attendance will be reduced by the amount of any assistance considered estimated financial assistance, as defined in section 428(a)(2)(C) of the Higher Education Act of 1965 ( 20 U.S.C. 1078(a)(2)(C) ) prior to the awarding of aid under the Pay It Forward Contribution Plan toward the student’s cost of attendance; award funds, from amounts made available under subsection (c), any other State funds, and amounts made available under paragraph (2)(B) to pay— each participating institution an amount equal to the tuition and mandatory fees for each student at that institution who is enrolled in the Pay It Forward Contribution Plan, as described in subsection (g), except that such amount shall, for each student not exceed— the amount of the tuition and mandatory fees for each such student at the most expensive public institution of higher education in the State for the type of institution the participating student attends (including a 4-year institution, 2-year institution, or 1-year institution) for that award year; or the cost of attendance for each such student to attend the institution at which the student is enrolled; and each participating student any additional costs of attendance that have been agreed to in the student’s contract described in subsection (g), except that such additional costs shall be in an amount such that the sum of such additional costs and the amount of tuition and fees described in clause
(i)shall, for each such student, not exceed— the amount of the tuition and mandatory fees for a student at the most expensive public institution of higher education in the State for the type of institution the participating student attends (including a 4-year institution, 2-year institution, or 1-year institution) for that award year; or the cost of attendance for the student to attend the institution at which the student is enrolled. The Secretary shall pay each State receiving a grant under this section, for each award year for the purpose of carrying out paragraph (1)(E), an amount equal to the product of— the number of students in the State that are enrolled in the Pay It Forward Contribution Plan for that award year; multiplied by an amount equal to the sum of— the maximum amount that a student is eligible to receive through a Federal Direct Stafford loan under part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq. ) for that award year; plus the maximum amount that a student is eligible to receive through a Federal Direct Unsubsidized Stafford loan under part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq. ) for that award year. An eligible institution, for purposes of this section, means an institution of higher education, that— submits an application to the State at such time, in such manner, and containing such information as the State may reasonably require; agrees to participate in the Pay It Forward Contribution Plan and commits to participation in research that may be related to the Pay It Forward Contribution Plan; and agrees to maintain— in the case of an institution of higher education in which the entire institution is participating, the level of institutional financial aid, including the level of institutional funding for student grants and loans, as adjusted for inflation by the Consumer Price Index for All Urban Consumers published by the Department of Labor (CPI–U), that the institution provides at the time of the application to participate in the Pay It Forward Contribution Plan throughout the duration of the Pay It Forward Contribution Plan; or in the case of a department, school, or program within an institution of higher education, maintain the level of aid described in clause
(i)on a department, school, or program-wide basis. If a sufficient number of eligible institutions in a State receiving a grant under this section wish to participate in the Pay It Forward Contribution Plan, such State shall establish methods for selecting eligible institutions to participate, or otherwise set standards for participation, in such a way that meets the requirements of this paragraph and maximizes the utility of the research that results from the evaluation of the Pay It Forward Contribution Plan. In selecting eligible institutions under subparagraph (A), the State shall consider the extent to which selected institutions will represent varied geographic locations and types of institutions (such as community colleges, institutions that offer 4-year programs, or other variations in the types of institutions that are selected). In selecting eligible institutions under subparagraph (A), the State shall give preference to eligible institutions that have a history of making an effort to reduce or hold constant tuition and mandatory fees and cost of attendance or have a plan to reduce or hold constant tuition and mandatory fees and cost of attendance, as determined by the State. Each State receiving a grant under this section shall announce each eligible institution that is selected for participation in the Pay It Forward Contribution Plan at a time that provides students at participating eligible institutions with adequate notice in advance of the commencement of the Pay It Forward Contribution Plan at that institution. The Secretary may award grants to States that have developed, or are in the process of developing, pilot Pay It Forward grant programs at the State level to enable the State to carry out the activities described in this Act as if such State were an eligible institution selected for participation in the Pay It Forward Contribution Plan. If a student who attends a participating eligible institution has applied for and enrolled in the Pay It Forward Contribution Plan as described in subsection (e)(1)(B)— the State shall pay— to the participating institution that such student attends not less than an amount equal to the cost of tuition and mandatory fees during the time that the student is enrolled as an undergraduate at the participating eligible institution and is participating in the Pay It Forward Contribution Plan, and for a period of not more than— 4 years; or another period of time (such as a certain number of college credits or academic years completed) that the State, the institution, and the student shall determine and specify in the agreement described under paragraph (3); and a student who attends a participating eligible institution and has applied for and enrolled in the Pay It Forward Contribution Plan any additional costs of attendance that are agreed to by the State, the institution, and the student and are established in the contract described in paragraph (3), except that such additional costs shall be in an amount such that the sum of such additional costs and the amount of tuition and fees described in subparagraph
(A)shall, for each such student and for each award year, not exceed the amount of the tuition and mandatory fees for a student at the most expensive public institution of higher education in the State for the type of institution the participating student attends (including a 4-year institution, 2-year institution, or 1-year institution) for that award year; the State shall ensure that variations in the time that a student's tuition and mandatory fees is paid by the State shall be reflected in— the length of the contribution period established in the student's Pay It Forward Contribution Plan agreement described under paragraph (3), except that the length of such contribution period shall not exceed 25 years; and the percentage of annual income that such student shall contribute, as established in the student's Pay It Forward Contribution Plan agreement described under paragraph (3); the student shall sign a contract agreement, which shall include— the period of time (such as a certain number of college credits or academic years completed) during which the State will pay the institution that the student attends not less than an amount equal to the cost of tuition and mandatory fees that the student requests to have provided through the Pay It Forward Contribution Plan while the student is enrolled at such participating eligible institution; and any additional costs of attendance that the State agrees to pay for such student through the Pay It Forward Contribution Plan while the student is enrolled at such participating eligible institution; and a statement that the student will contribute to the State a certain percentage (not to exceed 5 percent) of the student’s annual income for a specified number of years upon graduation from such institution of higher education, successful completion of the student's course of study, or when such student ceases to be enrolled at such institution of higher education, as determined by the State, and the student shall be required to begin making such contributions on the date that is the later of— 1 calendar year after graduation from such institution of higher education, successful completion of the student's course of study, or when such student ceases to be enrolled at such institution of higher education, as determined by the State; or 1 calendar year after the completion of a year that the student is enrolled in the Pay It Forward Contribution Plan; the student shall continue to be eligible to obtain any grants, scholarships, or funds that do not have to be repaid (including Federal Pell Grants or any other Federal, State, or institutional grant money) that the student would otherwise be eligible to receive if the student was not a participant in the Pay It Forward Contribution Plan and that are applied toward the student's tuition and mandatory fees at the eligible institution, and the amount of such grants, scholarships, or funds shall be deducted from the amount that the State would otherwise pay toward the student's tuition and mandatory fees under the Pay It Forward Contribution Plan, thereby proportionately reducing the percentage of a participating student's annual income that the student will be required to contribute or the duration of the student's contribution period, as described under paragraph (3); the student shall continue to be eligible to obtain any other student loans, including Federal student loans (except for Federal Direct Stafford Loans under part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq. )), that the student would otherwise be eligible to receive if the student was not a participant in the Pay It Forward Contribution Plan except that— any funds received by a student under the Pay It Forward Contribution Plan shall be considered estimated financial assistance for purposes of calculations under section 428(a)(2)(C) of the Higher Education Act of 1965 ( 20 U.S.C. 1078(a)(2)(C) ); and the amount of such loans shall be deducted from the amount that the State would otherwise pay toward the student’s tuition and mandatory fees under the Pay It Forward Contribution Plan, thereby proportionately reducing the percentage of a participating student's annual income that the student will be required to contribute or the duration of the student's contribution period, as described under paragraph (3); and if the student obtains Federal student loans, such student shall remain eligible for applicable Federal loan repayment, forgiveness, or similar programs regarding such Federal student loans to the same extent that the student would be eligible for such repayment, forgiveness, or similar programs if the student were not also participating in the Pay It Forward Contribution Plan. The Secretary, in consultation with the Secretary of the Treasury or a designee of the Secretary of the Treasury, shall work with appropriate State agencies to develop an efficient mechanism for students who enroll in the Pay It Forward Contribution Plan, including using existing student loan repayment structures, wage withholding (such as preauthorized automatic electronic funds transfers), or other suitable methods as the respective State agencies may determine and as approved by the Secretary. Each State receiving a grant under this section shall annually prepare and submit a report to the Secretary containing such information about the grant program as the Secretary may require.
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