Sec. 2. Higher education pledge accounts pilot program
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The Secretary shall carry out a pilot program under which savings accounts (to be known as higher education pledge accounts ) are established for the benefit of eligible students in accordance with this section. To be eligible to participate in the pilot program, a student must be— enrolled in the 9th or 10th grade at a secondary school; and eligible to receive free or reduced price lunches under the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1751 et seq. ). The Secretary shall select eligible students for participation in the pilot program based on such criteria as the Secretary determines to be appropriate.
The Secretary shall deposit an initial amount into each higher education pledge account. The amount of the initial deposit described in subparagraph
(A)shall be equal to the amount of the maximum Federal Pell Grant under section 401(b) of the Higher Education Act of 1965, as specified in the last enacted appropriation Act applicable to that award year. The Secretary may make additional deposits into a higher education pledge account based on an evaluation of the academic progress of the student in accordance with subsection (g). The amount of an additional deposit made under subparagraph
(A)for an award year beginning after the date of the initial deposit under paragraph
(1)shall be not less than the amount of the maximum Federal Pell Grant under section 401(b) of the Higher Education Act of 1965, as specified in the last enacted appropriation Act applicable to that award year. A student may use funds from the student’s higher education pledge account only to pay the cost of attendance at a qualified institution. A higher education pledge account is exempt from taxation under subtitle A of the Internal Revenue Code of 1986. For purposes of such subtitle— any contribution to a higher education pledge account by the Secretary under this Act shall not be includible in gross income; and any distribution from a higher education pledge account which is permitted under this Act shall not be includible in the gross income of the individual for whose benefit such account is maintained. The amount of any Federal Pell Grant awarded to a student attending a qualified institution shall be reduced by the amount in such student’s higher education pledge account. The Secretary shall monitor the academic progress of each student for whose benefit a higher education pledge account is maintained. The Secretary shall ensure that each student for whose benefit a higher education pledge account is maintained receives not less than 12 hours of financial counseling with respect to— the rules pertaining to deposits, distributions, and the tax treatment of funds in the higher education pledge account; and sources of Federal financial assistance for higher education.
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Sec. 2
Higher education pledge accounts pilot program
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