1Providing for middle income student debt reduction; and imposing
2powers and duties on the Pennsylvania Higher Education
3Assistance Agency.

4The General Assembly of the Commonwealth of Pennsylvania
5hereby enacts as follows:

6CHAPTER 1

7GENERAL PROVISIONS

8Section 101. Short title.

9This act shall be known and may be cited as the Middle Income
10Student Debt Reduction Act.

11Section 102. Definitions.

12The following words and phrases when used in this act shall
13have the meanings given to them in this section unless the
14context clearly indicates otherwise:

15"Agency." The Pennsylvania Higher Education Assistance
16Agency.

1"Approved institution of higher education." Any institution
2of higher learning approved by the agency.

3"Family financial data." Income information submitted to the
4agency by a middle income student applicant, an applicant's
5parents and stepparent and the applicant's spouse, as required
6under 22 Pa. Code § 121.44 (relating to required family
7financial data).

8"Financial need." The need of a full-time student or half-
9time student satisfying the middle income requirement of this
10act.

11"Full-time student." A student carrying a full-time academic
12workload the equivalent of any of the following:

13(1) Twelve semester credits.

14(2) Four hundred and fifty clock hours of instruction
15per academic term.

16(3) If the schedule of a program of study offered on a
17clock-hour basis does not permit the equivalent of 450 clock
18hours of instruction per academic term, 24 clock hours of
19instruction per week.

20"Grant program." A grant program administered by the agency
21under this act.

22"Half-time student." A student with at least half the
23academic workload of a full-time student.

24"Middle income requirement." As follows:

25(1) A middle income student whose family financial data
26indicates an annual family income of at least $80,000 but not
27more than $110,000 and has demonstrated financial need as
28determined by the agency.

29(2) Beginning July 1, 2014, the agency shall annually
30adjust the middle income requirement amounts under paragraph

1(1) to reflect any upward changes in the Consumer Price Index
2for All Urban Consumers for the Pennsylvania, New Jersey,
3Delaware and Maryland area in the preceding 12 months.

4"Middle income student." A full-time or half-time student
5satisfying the middle income requirement.

6"Parent." A middle income student's mother, father or legal
7guardian.

8Section 103. Legislative purpose.

9The General Assembly finds as follows:

10(1) Since 1965, the Pennsylvania Higher Education
11Assistance Agency has provided over 5,000,000 financial aid
12awards to needy Pennsylvania students attending and pursuing
13a postsecondary education through its administration of the
14PHEAA grant program.

15(2) The income limits for the agency's student financial
16assistance program, however, are set at a range that
17precludes many middle income students from the opportunity of
18receiving a State grant to pursue their postsecondary
19endeavors.

20(3) With the cost of higher education increasing,
21financial aid should be expanded to reduce debt on middle
22income students.

23(4) It is the intent of this General Assembly and the
24purpose of this act to establish a targeted State grant
25program to assist the Commonwealth's students from middle-
26income families and give them the opportunity to continue
27their program of self-improvement in an approved institution
28of higher education of their choice.

29(5) The grant program created shall augment and not
30replace other State-supported financial aid.

1CHAPTER 2

2GRANT PROGRAM

3Section 201. Administration.

4This act shall be administered by the agency.

5Section 202. Agency.

6(a) Powers and duties.--The agency shall have the following
7powers and duties:

8(1) To prepare and supervise the issuance of public
9information concerning the provisions of the grant program.

10(2) To prescribe the form and regulate the submission of
11applications for grants.

12(3) To determine if an applicant meets middle income
13requirements and is eligible for a grant under this act.

14(4) To select qualified recipients.

15(5) To award the appropriate grants.

16(6) To determine eligibility for, and annual renewal of,
17grants.

18(b) Authorization.--The agency is authorized to make
19necessary rules, consistent with this act, for the efficient
20exercise of the functions under subsection (a).

21Section 203. Additional responsibilities.

22The agency shall assume the same duties, responsibilities and
23relationships for this act as for the following:

24(1) The act of August 7, 1963 (P.L.549, No.290),
25referred to as the Pennsylvania Higher Education Assistance
26Agency Act.

27(2) The act of January 25, 1966 (1965 P.L.1546, No.541),
28referred to as the Higher Education Scholarship Law.

29CHAPTER 3

30ELIGIBILITY

1Section 301. Eligibility.

2A student shall be eligible for consideration for a grant if
3the student meets all of the following criteria:

4(1) Middle income requirements established under this
5act.

6(2) Citizen requirements of 22 Pa. Code § 121.2
7(relating to citizenship).

8(3) Domicile requirements of 22 Pa. Code § 121.57
9(relating to higher education grant domicile).

10(4) Graduation requirements of 22 Pa. Code § 121.21
11(relating to requirement for higher education grant
12applicants).

13(5) Character and academic promise, as established by
14the agency.

15Section 302. Choice.

16The grant recipient shall be free to attend any approved
17institution of higher education of the recipient's choice and
18apply the grant toward the agency's allowable education costs of
19that institution. The institution shall not be required to
20accept the grant recipient for enrollment, but may require
21compliance with its admission requirements, standards and
22policies.

23Section 303. Special provisions.

24(a) Nondiscrimination.--Grant awards must be made without
25regard to the applicant's race, creed, color, sex, national
26origin or ancestry.

27(b) Eligibility.--Students who are declared eligible for
28first year undergraduate awards but do not receive a grant
29because they are not able to demonstrate that they meet the
30middle income requirements may be awarded a grant during their

1undergraduate study at any time that they are able to
2demonstrate that they meet the eligibility requirements under
3this act. Nothing under this act shall preclude a student who
4fails to meet the middle income requirement from applying for or
5receiving a grant, loan or award from the agency.

6(c) Limit.--Undergraduate awards granted during the first
7year shall be limited to students currently enrolled or accepted
8for enrollment at an approved institution of higher education.
9Awards shall be based on the level of appropriation provided
10annually by the Commonwealth's enacted budget for this program
11and as determined by the agency. Awards shall be renewable under
12Chapter 6 and agency policy.

13(d) Age.--Any middle income student qualifying for a grant
14may not be disqualified because the student is under 18 years of
15age. For the purpose of applying for and receiving grants, an
16individual under 18 years of age shall be deemed to have full
17legal capacity to act and shall have all the rights, powers,
18privileges and obligations of an individual of full age.

19(e) Other grants.--If a student fails to meet the middle
20income requirements under this act, but meets the requirements
21of another grant, loan or award issued by the agency, the agency
22shall notify the student applicant of the other grant, loan or
23award that the student may be eligible for and direct the
24student's application to the appropriate administrative office
25within the agency for consideration, except that a student
26eligible for an award under this act may not simultaneously be
27eligible for a Pennsylvania State Grant award.

28CHAPTER 4

29SELECTION

30Section 401. Grouping of applicants.

1The agency shall select from among current applicants those
2students currently enrolled or accepted for enrollment in an
3approved institution of higher education who, in the agency's
4sole discretion, are successfully pursuing a course of study or
5who have been accepted as first year undergraduate students and
6who need financial assistance to complete their educational
7programs.

8Section 402. Grant awards.

9(a) Amount.--The amount of the grant to a middle income
10student shall be determined on the basis of the financial need
11of the applicant, the funds available for grants and the number
12of eligible applicants for grants.

13(b) Need analysis procedures.--Grants awarded to eligible
14middle income student applicants shall be determined according
15to the need analysis procedures established annually by the
16agency and published in the State Higher Education Grant Program
17Manual as required under 22 Pa. Code § 121.47 (relating to State
18Higher Education Grant Program Manual). Financial need shall be
19computed according to policies established by the agency.

20CHAPTER 5

21FUNDS

22Section 501. Appropriation and financial need.

23(a) Appropriation.--For fiscal year 2013-2014, the sum of
24$36,000,000 is appropriated to the agency for middle income
25higher education grants. Funding for the middle income higher
26education grant program shall be provided from an annual
27appropriation by the General Assembly.

28(b) Financial need.--All middle income student grant awards
29will be based on the applicant's financial need. The minimum
30grant award for middle income students shall be determined

1annually by the board of directors of the agency. The maximum
2grant for middle income students shall be established annually
3by the board of directors of the agency at a level so as to keep
4expenditures within the funds available through reenactment of
5appropriations relating to the forward funding of the PHEAA
6grant program as provided for under the act of March 28, 1974
7(P.L.228, No.50), referred to as the Higher Education Assistance
8Continuation Law, and from funds appropriated or made available
9from Federal, State or other sources for grants during a fiscal
10year.

11(c) Limitation.--The total State financial assistance may
12not exceed the financial need of the applicant or the annual
13limits established under the authority of this act and the act
14of August 7, 1963 (P.L.549, No.290), referred to as the
15Pennsylvania Higher Education Assistance Agency Act. If awards
16exceed available resources, applicants shall be funded as the
17agency shall determine.

18CHAPTER 6

19GRANT RENEWAL

20Section 601. Use of grants.

21(a) Renewal.--

22(1) Each grant shall be renewable until the program of
23study is completed, but may not exceed an additional three
24full-time academic years or its equivalent beyond the first
25year of the award or an additional four academic years for
26students enrolled in five-year undergraduate programs of
27study approved by the agency. Additional years may be
28consecutive or nonconsecutive years.

29(2) Qualifications for renewal shall include maintaining
30satisfactory academic standing, making normal progress toward

1completion of the course of study and continued eligibility
2as determined by the agency, including legal Pennsylvania
3residency.

4(b) Transfer.--If a grant recipient transfers from one
5eligible institution to another, the recipient's grant shall be
6transferable only with the approval of the agency.

7(c) Additional grants.--The agency shall have the right to
8use the unused grant funds for additional grants in any fiscal
9year and in any category.

10(d) Payments.--Payments of grants shall be made by the
11agency in accordance with this act and the rules and regulations
12established by the agency. If the recipient terminates
13enrollment during the academic year, the unused portion of the
14grant shall be returned to the agency by the institution
15according to the institution's own policy for issuing refunds.

16CHAPTER 7

17DENIAL

18Section 701. Procedure.

19(a) Grounds.--The agency may deny financial assistance to a
20middle income student that meets any of the following:

21(1) Is convicted of any of the offenses listed under 22
22Pa. Code § 121.6 (relating to denial of eligibility for
23financial assistance).

24(2) Has been expelled, dismissed or denied enrollment by
25an approved institution of higher education.

26(3) Has defaulted on a loan under 22 Pa. Code § 121.4
27(relating to denial of eligibility to loan defaulters).

28(b) Appeal.--A middle income student who is denied financial
29assistance may follow appeal procedures under 22 Pa. Code §
30121.7 (relating to notice of denial and preliminary review

1procedures) and 22 Pa. Code § 121.8 (relating to applicant and
2recipient appeals and hearings).

3(c) Information.--Each approved institution of higher
4education shall, within ten business days, furnish to the
5agency, the name and address of a student who is a resident of
6this Commonwealth and who is expelled, dismissed or denied
7enrollment or of whom the approved institution of higher
8education has knowledge that the student has been convicted of
9an offense under subsection (a)(1).

10(d) Refund.--Whenever a recipient fails to complete a term,
11the agency shall initiate refund procedures under 22 Pa. Code §
12121.51 (relating to refund of State higher education grants).

13(e) Status.--Any institution of higher learning which
14refuses to execute an agreement with the agency to comply with
15subsection (c) shall be denied the status of an approved
16institution of higher education under this act.

17CHAPTER 9

18MISCELLANEOUS PROVISIONS

19Section 901. Effective date.

20This act shall take effect July 31, 2013, or immediately,
21whichever is later.