 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
   Part A--Grants to Students in Attendance at Institutions of Higher 
                                Education
 
     subpart 3--federal supplemental educational opportunity grants
 
Sec. 1070b-3. Allocation of funds


(a) Allocation based on previous allocation

    (1) From the amount appropriated pursuant to section 1070b(b) of 
this title for each fiscal year, the Secretary shall first allocate to 
each eligible institution an amount equal to 100 percent of the amount 
such institution received under subsections (a) and (b) of this section 
for fiscal year 1999 (as such subsections were in effect with respect to 
allocations for such fiscal year).
    (2)(A) From the amount so appropriated, the Secretary shall next 
allocate to each eligible institution that began participation in the 
program under this subpart after fiscal year 1999 but is not a first or 
second time participant, an amount equal to the greater of--
        (i) $5,000; or
        (ii) 90 percent of the amount received and used under this 
    subpart for the first year it participated in the program.

    (B) From the amount so appropriated, the Secretary shall next 
allocate to each eligible institution that began participation in the 
program under this subpart after fiscal year 1999 and is a first or 
second time participant, an amount equal to the greatest of--
        (i) $5,000;
        (ii) an amount equal to (I) 90 percent of the amount received 
    and used under this subpart in the second preceding fiscal year by 
    eligible institutions offering comparable programs of instruction, 
    divided by (II) the number of students enrolled at such comparable 
    institutions in such fiscal year, multiplied by (III) the number of 
    students enrolled at the applicant institution in such fiscal year; 
    or
        (iii) 90 percent of the institution's allocation under this part 
    for the preceding fiscal year.

    (C) Notwithstanding subparagraphs (A) and (B) of this paragraph, the 
Secretary shall allocate to each eligible institution which--
        (i) was a first-time participant in the program in fiscal year 
    2000 or any subsequent fiscal year, and
        (ii) received a larger amount under this subsection in the 
    second year of participation,

an amount equal to 90 percent of the amount it received under this 
subsection in its second year of participation.
    (3)(A) If the amount appropriated for any fiscal year is less than 
the amount required to be allocated to all institutions under paragraph 
(1) of this subsection, then the amount of the allocation to each such 
institution shall be ratably reduced.
    (B) If the amount appropriated for any fiscal year is more than the 
amount required to be allocated to all institutions under paragraph (1) 
but less than the amount required to be allocated to all institutions 
under paragraph (2), then--
        (i) the Secretary shall allot the amount required to be 
    allocated to all institutions under paragraph (1), and
        (ii) the amount of the allocation to each institution under 
    paragraph (2) shall be ratably reduced.

    (C) If additional amounts are appropriated for any such fiscal year, 
such reduced amounts shall be increased on the same basis as they were 
reduced (until the amount allocated equals the amount required to be 
allocated under paragraphs (1) and (2) of this subsection).
    (4)(A) Notwithstanding any other provision of this section, the 
Secretary may allocate an amount equal to not more than 10 percent of 
the amount by which the amount appropriated in any fiscal year to carry 
out this part exceeds $700,000,000 among eligible institutions described 
in subparagraph (B).
    (B) In order to receive an allocation pursuant to subparagraph (A) 
an institution shall be an eligible institution from which 50 percent or 
more of the Pell Grant recipients attending such eligible institution 
graduate from or transfer to a 4-year institution of higher education.

(b) Allocation of excess based on fair share

    (1) From the remainder of the amount appropriated pursuant to 
section 1070b(b) of this title for each year (after making the 
allocations required by subsection (a) of this section), the Secretary 
shall allocate to each eligible institution which has an excess eligible 
amount an amount which bears the same ratio to such remainder as such 
excess eligible amount bears to the sum of the excess eligible amounts 
of all such eligible institutions (having such excess eligible amounts).
    (2) For any eligible institution, the excess eligible amount is the 
amount, if any, by which--
        (A)(i) the amount of that institution's need (as determined 
    under subsection (c) of this section), divided by (ii) the sum of 
    the need of all institutions (as so determined), multiplied by (iii) 
    the amount appropriated pursuant to section 1070b(b) of this title 
    of the fiscal year; exceeds
        (B) the amount required to be allocated to that institution 
    under subsection (a) of this section.

(c) Determination of institution's need

    (1) The amount of an institution's need is equal to--
        (A) the sum of the need of the institution's eligible 
    undergraduate students; minus
        (B) the sum of grant aid received by students under subparts 1 
    and 3 \1\ of this part.
---------------------------------------------------------------------------
    \1\ See References in Text note below.

    (2) To determine the need of an institution's eligible undergraduate 
students, the Secretary shall--
        (A) establish various income categories for dependent and 
    independent undergraduate students;
        (B) establish an expected family contribution for each income 
    category of dependent and independent undergraduate students, 
    determined on the basis of the average expected family contribution 
    (computed in accordance with part E of this subchapter) of a 
    representative sample within each income category for the second 
    preceding fiscal year;
        (C) compute 75 percent of the average cost of attendance for all 
    undergraduate students;
        (D) multiply the number of eligible dependent students in each 
    income category by 75 percent of the average cost of attendance for 
    all undergraduate students determined under subparagraph (C), minus 
    the expected family contribution determined under subparagraph (B) 
    for that income category, except that the amount computed by such 
    subtraction shall not be less than zero;
        (E) add the amounts determined under subparagraph (D) for each 
    income category of dependent students;
        (F) multiply the number of eligible independent students in each 
    income category by 75 percent of the average cost of attendance for 
    all undergraduate students determined under subparagraph (C), minus 
    the expected family contribution determined under subparagraph (B) 
    for that income category, except that the amount computed by such 
    subtraction shall not be less than zero;
        (G) add the amounts determined under subparagraph (F) for each 
    income category of independent students; and
        (H) add the amounts determined under subparagraphs (E) and (G).

    (3)(A) For purposes of paragraph (2), the term ``average cost of 
attendance'' means the average of the attendance costs for undergraduate 
students, which shall include (i) tuition and fees determined in 
accordance with subparagraph (B), (ii) standard living expenses 
determined in accordance with subparagraph (C), and (iii) books and 
supplies determined in accordance with subparagraph (D).
    (B) The average undergraduate tuition and fees described in 
subparagraph (A)(i) shall be computed on the basis of information 
reported by the institution to the Secretary, which shall include (i) 
total revenue received by the institution from undergraduate tuition and 
fees for the second year preceding the year for which it is applying for 
an allocation, and (ii) the institution's enrollment for such second 
preceding year.
    (C) The standard living expense described in subparagraph (A)(ii) is 
equal to 150 percent of the difference between the income protection 
allowance for a family of five with one in college and the income 
protection allowance for a family of six with one in college for a 
single independent student.
    (D) The allowance for books and supplies described in subparagraph 
(A)(iii) is equal to $450.

(d) Reallocation of excess allocations

    (1) If an institution returns to the Secretary any portion of the 
sums allocated to such institution under this section for any fiscal 
year the Secretary shall, in accordance with regulations, reallocate 
such excess to other institutions.
    (2) If under paragraph (1) of this subsection an institution returns 
more than 10 percent of its allocation, the institution's allocation for 
the next fiscal year shall be reduced by the amount returned. The 
Secretary may waive this paragraph for a specific institution if the 
Secretary finds that enforcing this paragraph would be contrary to the 
interest of the program.

(e) Filing deadlines

    The Secretary shall, from time to time, set dates before which 
institutions must file applications for allocations under this part.

(Pub. L. 89-329, title IV, Sec. 413D, as added Pub. L. 99-498, title IV, 
Sec. 401(a), Oct. 17, 1986, 100 Stat. 1330; amended Pub. L. 100-50, 
Sec. 4, June 3, 1987, 101 Stat. 340; Pub. L. 102-325, title IV, 
Sec. 403(g), (h), July 23, 1992, 106 Stat. 506; Pub. L. 103-208, 
Sec. 2(b)(26), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 105-244, title IV, 
Sec. 406(c)(1), (2), Oct. 7, 1998, 112 Stat. 1665.)

                       References in Text

    Subpart 3 of this part, referred to in subsec. (c)(1)(B), was 
redesignated subpart 4 by Pub. L. 102-325, title IV, Sec. 402(a)(2), 
July 23, 1992, 106 Stat. 482, and former subpart 2 [this subpart] was 
redesignated as subpart 3.


                            Prior Provisions

    A prior section 1070b-3, Pub. L. 89-329, title IV, Sec. 413D, as 
added Pub. L. 92-318, title I, Sec. 131(b)(1), June 23, 1972, 86 Stat. 
254; amended Pub. L. 96-374, title IV, Sec. 403(e), (f), title XIII, 
Sec. 1391(a)(1), Oct. 3, 1980, 94 Stat. 1405, 1406, 1503, related to 
apportionment and allocation of funds for supplemental educational 
opportunity grants, prior to the general revision of this part by Pub. 
L. 99-498.


                               Amendments

    1998--Subsec. (a)(1). Pub. L. 105-244, Sec. 406(c)(1)(A), which 
directed substitution of ``received under subsections (a) and (b) of 
this section for fiscal year 1999 (as such subsections were in effect 
with respect to allocations for such fiscal year)'' for ``received and 
used under this part for fiscal year 1985'', was executed by making the 
substitution for ``received and used under this subpart for fiscal year 
1985'' to reflect the probable intent of Congress.
    Subsec. (a)(2)(A), (B). Pub. L. 105-244, Sec. 406(c)(1)(B)(i), 
substituted ``1999'' for ``1985'' in introductory provisions.
    Subsec. (a)(2)(C)(i). Pub. L. 105-244, Sec. 406(c)(1)(B)(ii), 
substituted ``2000'' for ``1986''.
    Subsec. (b). Pub. L. 105-244, Sec. 406(c)(2)(A), (D), redesignated 
subsec. (c) as (b) and struck out heading and text of former subsec. 
(b). Text read as follows: ``From one-quarter of the remainder of the 
amount appropriated pursuant to section 1070b(b) of this title for any 
fiscal year (after making the allocations required by subsection (a) of 
this section), the Secretary shall allocate to each eligible institution 
an amount which bears the same ratio to such one-quarter as the amount 
the eligible institution receives for such fiscal year under subsection 
(a) of this section bears to the amount all such institutions receive 
under such subsection (a) of this section.''
    Subsec. (c). Pub. L. 105-244, Sec. 406(c)(2)(D), redesignated 
subsec. (d) as (c). Former subsec. (c) redesignated (b).
    Subsec. (c)(1). Pub. L. 105-244, Sec. 406(c)(2)(B), substituted 
``the remainder'' for ``three-quarters of the remainder''.
    Subsec. (c)(2)(A)(i). Pub. L. 105-244, Sec. 406(c)(2)(C), 
substituted ``subsection (c)'' for ``subsection (d)''.
    Subsecs. (d) to (f). Pub. L. 105-244, Sec. 406(c)(2)(D), 
redesignated subsecs. (e) and (f) as (d) and (e), respectively. Former 
subsec. (d) redesignated (c).
    1993--Subsec. (d)(3)(C). Pub. L. 103-208 substituted ``150 percent 
of the difference between the income protection allowance for a family 
of five with one in college and the income protection allowance for a 
family of six with one in college'' for ``three-fourths in the Pell 
Grant family size offset''.
    1992--Subsec. (a)(4). Pub. L. 102-325, Sec. 403(g), added par. (4).
    Subsec. (e). Pub. L. 102-325, Sec. 403(h), designated existing 
provisions as par. (1) and added par. (2).
    1987--Subsec. (d)(2)(D). Pub. L. 100-50, Sec. 4(a)(1), added subpar. 
(D) and struck out former subpar. (D) which read as follows: ``multiply 
the number of eligible dependent students in each income category by the 
lesser of--
        ``(i) 75 percent of the average cost of attendance for all 
    undergraduate students determined under subparagraph (C); or
        ``(ii) the average cost of attendance for all undergraduate 
    students minus the expected family contribution determined under 
    subparagraph (B) for that income category, except that the amount 
    computed by such subtraction shall not be less than zero;''.
    Subsec. (d)(2)(F). Pub. L. 100-50, Sec. 4(a)(2), added subpar. (F) 
and struck out former subpar. (F) which read as follows: ``multiply the 
number of eligible independent students in each income category by the 
lesser of--
        ``(i) 75 percent of the average cost of attendance for all 
    undergraduate students determined under subparagraph (C); or
        ``(ii) the average cost of attendance for all undergraduate 
    students minus the expected family contribution determined under 
    subparagraph (B) for that income category, except that the amount 
    computed by such subtraction for any income category shall not be 
    less than zero;''.
    Subsec. (d)(3)(A). Pub. L. 100-50, Sec. 4(b)(1), struck out ``and 
for graduate and professional students'' after ``undergraduate 
students''.
    Subsec. (d)(3)(B). Pub. L. 100-50, Sec. 4(b)(2), struck out ``and 
graduate and professional'' after ``average undergraduate'' and struck 
out ``and graduate'' after ``from undergraduate''.


                    Effective Date of 1998 Amendment

    Pub. L. 105-244, title IV, Sec. 406(c)(3), Oct. 7, 1998, 112 Stat. 
1665, provided that: ``The amendments made by this subsection [amending 
this section] shall apply with respect to allocations of amounts 
appropriated pursuant to section 413A(b) of the Higher Education Act of 
1965 [20 U.S.C. 1070b(b)] for fiscal year 2000 or any succeeding fiscal 
year.''


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-208 effective as if included in the Higher 
Education Amendments of 1992, Pub. L. 102-325, except as otherwise 
provided, see section 5(a) of Pub. L. 103-208, set out as a note under 
section 1051 of this title.


                    Effective Date of 1987 Amendment

    Amendment by Pub. L. 100-50 effective as if enacted as part of the 
Higher Education Amendments of 1986, Pub. L. 99-498, see section 27 of 
Pub. L. 100-50, set out as a note under section 1001 of this title.


                             Effective Date

    Section 401(b)(6) of Pub. L. 99-498, as added by Pub. L. 100-50, 
Sec. 22(a)(2), June 3, 1987, 101 Stat. 361, provided that: ``The changes 
made in section 413D of the Act [this section] shall apply with respect 
to the allocation of funds for the academic year 1988-1989 and 
succeeding academic years.''

                  Section Referred to in Other Sections

    This section is referred to in sections 1070b-2, 1089, 1095 of this 
title.
