NATIONAL SERVICE TRUST AND PROVISION OF NATIONAL SERVICE EDUCATIONAL AWARDS.

SEC. 102. NATIONAL SERVICE TRUST AND PROVISION OF NATIONAL SERVICE EDUCATIONAL AWARDS. (a) Establishment of Trust; Provision of Awards.— Subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.) is amended to read as follows: 107 STAT. 817 “Subtitle D— National Service Trust and Provision of National Service Educational Awards “SEC. 145. ESTABLISHMENT OF THE NATIONAL SERVICE TRUST. “(a) Establishment.— There is established in the Treasury of the United States an account to be known as the National Service Trust. The Trust shall consist of— “(1) from the amounts appropriated to the Corporation and made available to carry out this subtitle pursuant to section 501(a)(2), such amounts as the Corporation may designate to be available for the payment of— “(A) national service educational awards; and “(B) interest expenses pursuant to section 148(e); “(2) any amounts received by the Corporation as gifts, bequests, devises, or otherwise pursuant to section 196(a)(2); and “(3) the interest on, and proceeds from the sale or redemption of, any obligations held by the Trust. “(b) Investment of Trust.— It shall be the duty of the Secretary of the Treasury to invest in full the amounts appropriated to the Trust. Except as otherwise expressly provided in instruments concerning a gift, bequest, devise, or other donation and agreed to by the Corporation, such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose, such obligations may be acquired on original issue at the issue price or by purchase of outstanding obligations at the market price. Any obligation acquired by the Trust may be sold by the Secretary at the market price. “(c) Expenditures From Trust.— Amounts in the Trust shall be available, to the extent provided for in advance by appropriation, for payments of national service educational awards in accordance with section 148. “(d) Reports to Congress on Receipts and Expenditures.— Not later than March 1 of each year, the Corporation shall submit a report to the Congress on the financial status of the Trust during the preceding fiscal year. Such report shall— “(1) specify the amount deposited to the Trust from the most recent appropriation to the Corporation, the amount received by the Corporation as gifts, bequests, devises, or otherwise pursuant to section 196(a)(2) during the period covered by the report, and any amounts obtained by the Trust pursuant to subsection (a)(3); “(2) identify the number of individuals who are currently performing service to qualify, or have qualified, for national service educational awards; “(3) identify the number of individuals whose expectation to receive national service educational awards during the period covered by the report— “(A) has been reduced pursuant to section 147(c); or “(B) has lapsed pursuant to section 146(d); and “(4) estimate tne number of additional approved national service positions that the Corporation will be able to make available under subtitle C on the basis of any accumulated 107 STAT. 818surplus in the Trust above the amount required to provide national service educational awards to individuals identified under paragraph (2), including any amounts available as a result of the circumstances referred to in paragraph (3). “SEC. 146. INDIVIDUALS ELIGIBLE TO RECEIVE A NATIONAL SERVICE EDUCATIONAL AWARD FROM THE TRUST. “(a) Eligible Individuals.— An individual shall receive a national service educational award from the National Service Trust if the individual— “(1) successfully completes the required term of service described in subsection (b) in an approved national service position; “(2) was 17 years of age or older at the time the individual began serving in the approved national service position or was an out-of-school youth serving in an approved national service position with a youth cores program described in section 122(a)(2) or a program described in section 122(a)(9); “(3) at the time the individual uses the national service educational award— “(A) has received a high school diploma, or the equivalent of such diploma; “(B) is enrolled at an institution of higher education on the basis of meeting the standard described in paragraph (1) or (2) of subsection (a) of section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) and meets the requirements of subsection (a) of such section; or “(C) has received a waiver described in section 137(c); and “(3) has received a high school diploma, or the equivalent of such diploma, at the time the individual uses the national service educational award, unless this requirement has been waived based on an individual education assessment conducted by the program; and “(4) is a citizen or national of the United States or lawful permanent resident alien of the United States. “(b) Term of Service.— The term of service for an approved national service position shall not be less than the full- or part-time term of service specified in section 139(b). “(c) Limitation on Number of Terms of Service for Awards.— Although an individual may serve more than 2 terms of service described in subsection (b) in an approved national service position, the individual shall receive a national service educational award from the National Service Trust only on the basis of the first and second of such terms of service. “(d) Time for Use of Educational Award.— “(1) Seven-year requirement.— An individual eligible to receive a national service educational award under this section may not use such award after the end of the 7-year period beginning on the date the individual completes the term of service in an approved national service position that is the basis of the award. “(2) Exception.— The Corporation may extend the period within which an individual may use a national service educational award if the Corporation determines that the individual— 107 STAT. 819 “(A) was unavoidably prevented from using the national service educational award during the original 7- year period; or “(B) performed another term of service in an approved national service position during that period. “(e) Suspension of Eligibility for Drug-Related Offenses.— “(1) In general.— An individual who, after qualifying under this section as an eligible individual, has been convicted under any Federal or State law of the possession or sale of a controlled substance shall not be eligible to receive a national service educational award during the period beginning on the date of such conviction and ending after the interval specified in the following table: “If convicted of: The possession of a controlled substance: Ineligibility period is: 1st conviction 1 year 2nd conviction 2 years 3rd conviction indefinite The sale of a controlled substance: 1st conviction 2 years 2nd conviction indefinite “(2) Rehabilitation.— An individual whose eligibility has been suspended under paragraph (1) shall resume eligibility before the end of the period determined under such paragraph if the individual satisfactorily completes a drug rehabilitation program that complies with such criteria as the Corporation shall prescribe for purposes of this paragraph. “(3) First convictions—An individual whose eligibility has been suspended under paragraph (1) and is convicted of a first offense may resume eligibility before the end of the period determined under such paragraph if the individual demonstrates that he or she has enrolled or been accepted for enrollment in a drug rehabilitation program described in paragraph (2). “(4) Definitions.— As used in this subsection, the term ‘controlled substance’ has the meaning given in section 102(6) of the Controlled Substances Act (21 U.S.C. 802(6)). “(5) Effective date.— This subsection shall be effective upon publication by the Corporation in the Federal Register of criteria prescribed under paragraph (2). “(f) Authority To Establish Demonstration Programs.— The Corporation may establish by regulation demonstration programs for the creation and evaluation of innovative volunteer and community service programs. “SEC. 147. DETERMINATION OF THE AMOUNT OF THE NATIONAL SERVICE EDUCATIONAL AWARD. “(a) Amount for Full-Time National Service.— Except as provided in subsection (c), an individual described in section 146(a) who successfully completes a required term of full-time national service in an approved national service position shall receive a national service educational award having a value, for each of not more than 2 of such terms of service, equal to 90 percent of— 107 STAT. 820 “(1) one-half of an amount equal to the aggregate basic educational assistance allowance provided in section 3015(b)(1) of title 38, United States Code (as in effect on July 28, 1993), for the period referred to in section 3013(a)(1) of such title (as in effect on July 28, 1993), for a member of the Armed Forces who is entitled to such an allowance under section 3011 of such title and whose initial obligated period of active duty is 2 years; less “(2) one-half of the aggregate basic contribution required to be made by the member in section 3011(b) of such title (as in effect on July 28, 1993). “(b) Amount for Part-Time National Service.— Except as provided in subsection (c), an individual described in section 146(a) who successfully completes a required term of part-time national service in an approved national service position shall receive a national service educational award having a value, for each of not more than 2 of such terms of service, equal to 50 percent of value of the national service educational award determined under subsection (a). “(c) Award for Partial Completion of Service.— If an individual serving in an approved national service position is released in accordance with section 139(c)(1)(A) from completing the full-time or part-time term of service agreed to by the individual, the Corporation may provide the individual with that portion of the national service educational award approved for the individual that corresponds to the quantity of the term of service actually completed by the individual. “SEC. 148. DISBURSEMENT OF NATIONAL SERVICE EDUCATIONAL AWARDS. “(a) In General.— Amounts in the Trust shall be available— “(1) to repay student loans in accordance with subsection (b); “(2) to pay all or part of the cost of attendance at an institution of higher education in accordance with subsection (O; “(3) to pay expenses incurred in participating in an approved school-to-work program in accordance with subsection “(4) to pay interest expenses in accordance with regulations prescribed pursuant to subsection (e). “(b) Use of Educational Award To Repay Outstanding Student Loans.— “(1) Application by eligible individuals.— An eligible individual under section 146 who desires to apply the national service educational award of the individual to tne repayment of qualified student loans shall submit, in a manner prescribed by the Corporation, an application to the Corporation that— “(A) identifies, or permits the Corporation to identify readily, the holder or holders of such loans; “(B) indicates, or permits the Corporation to determine readily, the amounts of principal and interest outstanding on the loans; “(C) specifies, if the outstanding balance is greater than the amount disbursed under paragraph (2), which of the loans the individual prefers to be paid by the Corporation; and 107 STAT. 821 “(D) contains or is accompanied by such other information as the Corporation may require. “(2) Disbursement of repayments.— Upon receipt of an application from an eligible individual of an application that complies with paragraph (1), the Corporation shall, as promptly as practicable consistent with paragraph (5), disburse the amount of the national service educational award that the eligible individual has earned. Such disbursement shall be made by check or other means that is payable to the holder of the loan and requires the endorsement or other certification by the eligible individual. “(3) Application of disbursed amounts.— If the amount disbursed under paragraph (2) is less than the principal and accrued interest on any qualified student loan, such amount shall be applied according to the specified priorities of the individual. “(4) Reports by holders.— Any holder receiving a loan payment pursuant to this subsection shall submit to the Corporation such information as the Corporation may require to verify that such payment was applied in accordance with this subsection and any regulations prescribed to carry out this subsection. “(5) Notification of individual.— The Corporation upon disbursing the national service educational award, shall notify the individual of the amount paid for each outstanding loan and the date of payment. “(6) Authority to aggregate payments.— The Corporation may, by regulation, provide for the aggregation of payments to holders under this subsection. “(7) Definition of qualified student loans.— As used in this subsection, the term ‘qualified student loans’ means— “(A) any loan made, insured, or guaranteed pursuant to title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), other than a loan to a parent of a student pursuant to section 428B of such Act (20 U.S.C. 1078–2); and “(B) any loan made pursuant to title VII or VIII of the Public Health Service Act (42 U.S.C. 292a et seq.). “(8) Definition of holder.— As used in this subsection, the term ‘Holder’ with respect to any eligible loan means the original lender or, if the loan is subsequently sold, transferred, or assigned to some other person, and such other person acquires a legally enforceable right to receive payments from the borrower, such other person. “(c) Use of Educational Awards To Pay Current Educational Expenses.— “(1) Application by eligible individual.— An eligible individual under section 146 who desires to apply the individual’s national service educational award to the payment of current full-time or part-time educational expenses shall, on a form prescribed by the Corporation, submit an application to the institution of higher education in which the student will be enrolled that contains such information as the Corporation may require to verify the individual’s eligibility. “(2) Submission of requests for payment by institutions.— An institution of higher education that receives one or more applications that comply with paragraph (1) shall sub-107 STAT. 822mit to the Corporation a statement, in a manner prescribed by the Corporation, that— “(A) identifies each eligible individual filing an application under paragraph (1) for a disbursement of the individual’s national service educational award under this subsection; “(B) specifies the amounts for which such eligible individuals are, consistent with paragraph (6), qualified for disbursement under this subsection; “(C) certifies that— “(i) the institution of higher education has in effect a program participation agreement under section 487 of the Higher Education Act of 1965 (20 U.S.C. 1094); “(ii) the institution’s eligibility to participate in any of the programs under title IV of such Act (20 U.S.C. 1070 et seq.) has not been limited, suspended, or terminated; and “(iii) individuals using national service educational awards received under this subtitle to pay for educational costs do not comprise more than 15 percent of the total student population of the institution; and “(D) contains such provisions concerning financial compliance as the Corporation may require. “(3) Disbursement of payments.— Upon receipt of a statement from an institution of higher education that complies with paragraph (2), the Corporation shall, subject to paragraph (4), disburse the total amount of the national service educational awards for which eligible individuals who have submitted applications to that institution under paragraph (1) are scheduled to receive. Such disbursement shall be made by check or other means that is payable to the institution and requires the endorsement or other certification by the eligible individual. “(4) Multiple disbursements required.— The total amount required to be disbursed to an institution of higher education under paragraph (3) for any period of enrollment shall be disbursed by the Corporation in 2 or more installments, none of which exceeds ½ of such total amount. The interval between the first and second such installment shall not be less than ½ of such period of enrollment, except as necessary to permit the second installment to be paid at the beginning of the second semester, quarter, or similar division of such period of enrollment. “(5) Refund rules.— The Corporation shall, by regulation, provide for the refund to the Corporation (and the crediting to the national service educational award of an eligible individual) of amounts disbursed to institutions for the benefit of eligible individuals who withdraw or otherwise fail to complete the period of enrollment for which the assistance was provided. Such regulations shall be consistent with the fair and equitable refund policies required of institutions pursuant to section 484B of the Higher Education Act of 1965 (20 U.S.C. 1091b). Amounts refunded to the Trust pursuant to this paragraph may be used by the Corporation to fund additional approved national service positions under subtitle C. “(6) Maximum award.— The portion of an eligible individual’s total available national service educational award that 107 STAT. 823may be disbursed under this subsection for any period of enrollment shall not exceed the difference between— “(A) the eligible individual’s cost of attendance for such period of enrollment, determined in accordance with section 472 of the Higher Education Act of 1965 (20 U.S.C. 108711); and “(B) the sum of— “(i) the student’s estimated financial assistance for such period under part A of title IV of such Act (20 U.S.C. 1070 et seq.); and “(ii) the student’s veterans’ education benefits, determined in accordance with section 480(c) of such Act (20 U.S.C. 1087w(c)). “(d) Use of Educational Award To Participate in Approved School-to-Work Programs.— The Corporation shall by regulation provide for the payment of national service educational awards to permit eligible individuals to participate in school-to-work programs approved by the Secretaries of Labor and Education. “(e) Interest Payments During Forbearance on Loan Repayment.— The Corporation shall provide by regulation for the payment on behalf of an eligible individual of interest that accrues during a period for which such individual has obtained forbearance in the repayment of a qualified student loan (as defined in subsection (b)(6)), if the eligible individual successfully completes the individual’s required term of service (as determined under section 146(b)). Such regulations shall be prescribed after consultation with the Secretary of Education. “(f) Exception.— With the approval of the Director, an approved national service program funded under section 121, may offer participants the option of waiving their right to receive a national service educational award in order to receive an alternative post-service benefit funded by the program entirely with non-Federal funds. “(g) Definition of Institution of Higher Education.— Notwithstanding section 101 of this Act, for purposes of this section the term ‘institution of higher education’ has tne meaning provided by section 481(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)).”. (b) Table of Contents.— Section 1(b) of the National and Community Service Act of 1990 (Public Law 101–610; 104 Stat. 3127) is amended by striking the items relating to subtitle D of title I of such Act and inserting the following new items: Subtitle D— National Service Trust and Provision of National Service Educational Awards “Sec. 145. Establishment of the National Service Trust “Sec. 146. Individuals eligible to receive a national service educational award from the Trust “Sec. 147. Determination of the amount of the national service educational award. Sec. 148. Disbursement of national service educational awards.”. (c) Conforming Amendments.— (1) Forbearance in the collection of Stafford LOANS.— Section 428 of the Higher Education Act of 1965 (20 U.S.C. 1078) is amended— (A) in subsection (b)(1)— (i) by redesignating subparagraphs (W), (X), and (Y) as subparagraphs (X), (Y), and (Z), respectively; and 107 STAT. 824 (ii) by inserting immediately after subparagraph (V) the following new subparagraph: “(W) (i) provides that, upon written request, a lender shall grant a borrower forbearance on such terms as are otherwise consistent with the regulations of the Secretary, during periods in which the borrower is serving in a national service position, for which the borrower receives a national service educational award under the National and Community Service Trust Act of 1993; “(ii) provides that clauses (iii) and (iv) of subparagraph (V) shall also apply to a forbearance granted under this subparagraph; and “(iii) provides that interest shall continue to accrue on a loan for which a borrower receives forbearance under this subparagraph and shall be capitalized or paid by the borrower;”; and (B) in subsection (c)(3)(A), by striking “subsection (b)(1)(V)” and inserting “subparagraphs (V) and (W) of subsection (b)(1)”. (2) Eligibility for Stafford loan forgiveness.— Section 428J of the Higher Education Act of 1965 (20 U.S.C. 1078–10) is amended— (A) in subsection (b)(1), by striking “October 1, 1992” and inserting “October 1, 1989”; and (B) in subsection (c), by adding at the end the following new paragraph: “(5) Ineligibility of national service educational AWARD recipients.— No student borrower may, for the same volunteer service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.).”. (3) Eligibility for perkins loan forgiveness.— Section 465(a) of the Higher Education Act of 1965 (20 U.S.C. 1087ee(a)) is amended by adding at the end the following new paragraph: “(6) No borrower may, for the same volunteer service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.).”. (4) Definition of income.— Section 480(a)(2) of the Higher Education Act of 1965 (20 U.S.C. 1087w(a)(2)) is amended by inserting after “by an individual” the following: “, and no portion of a national service educational award or post-service benefit received by an individual under title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.),”. (5) Impact on general needs analysis.— Section 480(j) of the Higher Education Act of 1965 (20 U.S.C. 1087w(j)) is amended by adding at the end the following new paragraph: “(3) Notwithstanding paragraph (1), a national service educational award or post-service benefit under title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.) shall not be treated as financial assistance for purposes of section 471(3).”.