A bill to amend the Higher Education Act of 1965 to reduce the default rate on student loans, and for other purposes.

Amends title IV (Student Assistance) of the Higher Education Act of 1965 (HEA) to revise provisions relating to the disbursement of guaranteed student loans. Requires that such loans be disbursed by check and either: (1) sent to the eligible institution the student attends or plans to attend, and made payable to the order of the student; or (2) in the case of auxiliary loans, sent to the borrower and made payable to the order of the borrower, with the endorsement of the borrower required, and with the lender or guarantee agency required to notify such institution of such disbursement.

Requires multiple disbursement of guaranteed student loans. Repeals specified provisions relating to incentives for the making of multiple disbursements. Makes conforming amendments.

Extends the grace periods for repayment of federally insured student loans and guaranteed student loans from six months to nine months.

Restricts eligibility for student assistance under HEA to citizens, nationals, and permanent resident aliens of the United States, with specified exceptions.

Directs the Secretary of Education to evaluate the feasibility and efficiency of permitting students to establish lines of credit with eligible lenders, under the federally insured student loan and guaranteed student loan programs under part B (Federal, State, and Private Programs of Low-Interest Insured Loans to Students in Institutions of Higher Education) of title IV of HEA, that cover more than one year of attendance at an institution of higher education. Requires that such evaluation: (1) determine the extent of administrative cost reduction under such an arrangement; and (2) be conducted in consultation with institutions of higher education and eligible lenders. Directs the Secretary, within six months after the date of enactment of this Act, to report to the Congress on the results of such evaluation, with recommendations.