To establish a scholarship program, in partnership with the States, to enable students from Poland and Hungary to study in the United States.

Directs the Administrator of the Agency for International Development to establish a program of scholarship assistance for students from Poland and Hungary to study in the United States.

Authorizes the Administrator to make grants to States to help provide such scholarship assistance for undergraduate and training programs in study areas related to the critical developmental needs of such students' respective countries. Provides for private sector participation in such program. Provides for forgiveness of such scholarship assistance if the student recipient promptly returns to his or her respective country for a certain period.

Requires that funding for such program be derived from funds available to carry out specified provisions of the Foreign Assistance Act of 1961 relating to the economic support fund.