Section 1 Short title
This Act may be cited as the “Higher Education Savings Accounts Act of 2015”.
Higher Education Savings Accounts Act of 2015
A BILL
To direct the Secretary of Education to carry out a pilot program under which higher education savings accounts are established for the benefit of eligible secondary school students.
Sec. 2 Higher education pledge accounts pilot program
In general— 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.
Eligibility and selection of participants—
Eligible students— 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.).
Selection of eligible students— The Secretary shall select eligible students for participation in the pilot program based on such criteria as the Secretary determines to be appropriate.
Deposits—
Initial deposit—
In general— The Secretary shall deposit an initial amount into each higher education pledge account.
Amount of initial deposit— 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.
Subsequent deposits—
In general— 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).
Amount of subsequent deposits— 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.
Distributions— A student may use funds from the student’s higher education pledge account only to pay the cost of attendance at a qualified institution.
Tax treatment of accounts—
In general— A higher education pledge account is exempt from taxation under subtitle A of the Internal Revenue Code of 1986.
Contributions and distributions— 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.
Offset of Federal Pell Grant Amounts— 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.
Monitoring of academic progress— The Secretary shall monitor the academic progress of each student for whose benefit a higher education pledge account is maintained.
Financial counseling— 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.
Sec. 3 Definitions
In this Act:
Cost of attendance— The term cost of attendance has the meaning given the term in section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll).
Federal financial assistance— The term Federal financial assistance means any grant, loan, or other financial assistance that may be provided to an individual student under the Higher Education Act of 1965.
Institution of higher education— The term institution of higher education has the meaning given the term in section 102(a) of the Higher Education Act of 1965 (20 U.S.C. 1002(a)) except that such term does not include proprietary institutions of higher education (as defined in section 102(b) of such Act (20 U.S.C. 1002(b))).
Qualified institution— The term qualified institution means an institution of higher education that—
has in effect a program participation agreement under section 487 of the Higher Education Act of 1965 (20 U.S.C. 1094); and
is eligible to participate in programs under title IV of such Act (20 U.S.C. 1070 et seq.).
Secondary school— The term secondary school has the meaning given the term in section 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801).
Secretary— The term Secretary means the Secretary of Education.