[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1277 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 1277

   To expand college opportunities by significantly simplifying the 
                Federal student aid application process.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 14, 2005

Mr. Emanuel (for himself, Mr. George Miller of California, Mr. Ryan of 
  Ohio, Mr. Bishop of New York, Mr. Tierney, Mr. Lynch, Mr. Holt, Mr. 
Cummings, Mr. Delahunt, Mr. Brown of Ohio, Ms. Solis, Mr. Grijalva, Mr. 
    McDermott, Mr. Hinchey, Ms. Watson, Mr. Filner, Mr. Owens, Mr. 
 Costello, Mr. McGovern, Mr. McNulty, Mr. Skelton, Mr. Jefferson, Mr. 
Scott of Georgia, Mr. Hinojosa, Mr. Payne, Mr. DeFazio, Mr. Etheridge, 
Mr. Israel, Mr. Pallone, Ms. Slaughter, Mr. Neal of Massachusetts, Mr. 
 Sanders, Ms. Linda T. Sanchez of California, and Mr. Ford) introduced 
 the following bill; which was referred to the Committee on Education 
                           and the Workforce

_______________________________________________________________________

                                 A BILL


 
   To expand college opportunities by significantly simplifying the 
                Federal student aid application process.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCE.

    (a) Short Title.--This Act may be cited as the ``College Aid Made 
EZ Act''.
    (b) References.--Except as otherwise expressly provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

SEC. 2. EXPANDING THE AUTO-ZERO AND FURTHER SIMPLIFYING THE SIMPLIFIED 
              NEEDS TEST.

    (a) Simplified Needs Test.--Section 479 (20 U.S.C. 1087ss) is 
amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) by striking clause (i) of subparagraph 
                        (A) and inserting the following:
                            ``(i) the student's parents--
                                    ``(I) file, or are eligible to 
                                file, a form described in paragraph 
                                (3); or
                                    ``(II) certify that they are not 
                                required to file an income tax return; 
                                or
                                    ``(III) or the student received 
                                benefits at some time during the 
                                previous 12-month period under a means-
                                tested Federal benefit program as 
                                defined under subsection (d); and''; 
                                and
                            (ii) by striking clause (i) of subparagraph 
                        (B) and inserting the following:
                            ``(i) the student (and the student's 
                        spouse, if any)--
                                    ``(I) files, or is eligible to 
                                file, a form described in paragraph 
                                (3); or
                                    ``(II) certifies that the student 
                                (and the student's spouse, if any) is 
                                not required to file an income tax 
                                return; or
                                    ``(III) received benefits at some 
                                time during the previous 12-month 
                                period under a means-tested Federal 
                                benefit program as defined under 
                                subsection (d); and''; and
                    (B) in paragraph (3), by striking ``A student or 
                family files a form described in this subsection, or 
                subsection (c), as the case may be, if the student or 
                family, respectively, files'' and inserting ``In the 
                case of an independent student, the student, or in the 
                case of a dependent student, the parent, files a form 
                described in this subsection, or subsection (c), as the 
                case may be, if the student or parent, as appropriate, 
                files'';
            (2) in subsection (c)--
                    (A) in paragraph (1), by striking subparagraphs (A) 
                and (B) and inserting the following:
                    ``(A) the student's parents--
                            ``(i) file, or are eligible to file, a form 
                        described in subsection (b)(3); or
                            ``(ii) certify that they are not required 
                        to file an income tax return; or
                            ``(iii) or the student received benefits at 
                        some time during the previous 12-month period 
                        under a means-tested Federal benefit program as 
                        defined under subsection (d); and
                    ``(B) the sum of the adjusted gross income of the 
                parents is less than or equal to $25,000; or''; and
                    (B) in paragraph (2), by striking subparagraphs (A) 
                and (B) and inserting the following:
                    ``(A) the student (and the student's spouse, if 
                any)--
                            ``(i) files, or is eligible to file, a form 
                        described in subsection (b)(3); or
                            ``(ii) certifies that the student (and the 
                        student's spouse, if any) is not required to 
                        file an income tax return; or
                            ``(iii) received benefits at some time 
                        during the previous 12-month period under a 
                        means-tested Federal benefit program as defined 
                        under subsection (d); and
                    ``(B) the sum of the adjusted gross income of the 
                student and spouse (if appropriate) is less than or 
                equal to $25,000.''; and
                    (C) by inserting after the last sentence of such 
                subsection the following: ``The Secretary shall 
                annually adjust the income level necessary to qualify 
                an applicant for the zero expected family contribution 
                under this subsection. The income level shall be 
                adjusted according to increases in the Consumer Price 
                Index, as specified in section 478(f).''; and
            (3) by adding at the end the following new subsections:
    ``(d) Means-Tested Federal Benefit Program.--For the purposes of 
this section, the term `means-tested Federal benefit program' means a 
mandatory spending program of the Federal Government in which 
eligibility for the program's benefits, or the amount of such benefits, 
or both, are determined on the basis of income or resources of the 
individual or family seeking the benefit, and includes the supplemental 
security income program under title XVI of the Social Security Act, the 
food stamp program under the Food Stamp Act of 1977, the free and 
reduced price school lunch program established under the Richard B. 
Russell National School Lunch Act, the temporary assistance to needy 
families program established under part A of title IV of the Social 
Security Act, and the women, infants and children program established 
under Section 17 of the Child Nutrition Act of 1966.
    ``(e) Reporting Requirements.--The Secretary shall regularly 
evaluate the impact of the eligibility guidelines in subsections 
(b)(1)(A)(i), (b)(1)(B)(i), (c)(1)(A) and (c)(2)(A) of this section. In 
particular, the Secretary shall evaluate whether the means-tested 
Federal benefit programs (as defined by subsection (d)) ensure that the 
Simplified Needs Test continues to be targeted to the maximum number of 
low- and moderate-income students.''.

SEC. 3. IMPROVEMENTS TO PAPER AND ELECTRONIC FORMS.

    (a) Common Financial Aid Form Development and Processing.--Section 
483 (20 U.S.C. 1090) is amended--
            (1) in subsection (a)--
                    (A) by striking paragraphs (1), (2), and (5);
                    (B) by redesignating paragraphs (3), (4), (6), and 
                (7), as paragraphs (9), (10), (11), and (12), 
                respectively;
                    (C) by inserting before paragraph (9), as 
                redesignated by subparagraph (B), the following:
            ``(1) In general.--The Secretary, in cooperation with 
        representatives of agencies and organizations involved in 
        student financial assistance, shall produce, distribute, and 
        process free of charge common financial reporting forms as 
        described in this subsection to be used for application and 
        reapplication to determine the need and eligibility of a 
        student for financial assistance under parts A through E (other 
        than subpart 4 of part A). These forms shall be made available 
        to applicants in both paper and electronic formats and shall be 
        referred to as the `Free Application for Federal Student Aid' 
        or the `FAFSA' .
            ``(2) Early estimates.--The Secretary shall permit 
        applicants to complete such forms as described in this 
        subsection in the years prior to enrollment in order to obtain 
        an estimate of the family contribution, as defined by section 
        473. Such applicants shall be permitted to update information 
        submitted on forms described in this subsection using the 
        process required under paragraph (5)(A).
            ``(3) Paper format.--
                    ``(A) In general.--The Secretary shall produce, 
                distribute, and process common forms in paper format to 
                meet the requirements of paragraph (1). The Secretary 
                shall develop a common paper form for applicants who do 
                not meet the requirements of subparagraph (B).
                    ``(B) Ez fafsa.--
                            ``(i) In general.--The Secretary shall 
                        develop and use a simplified paper application 
                        form, to be known as the `EZ FAFSA', to be used 
                        for applicants meeting the requirements of 
                        section 479(c).
                            ``(ii) Reduced data requirements.--The EZ 
                        FAFSA shall permit an applicant to submit for 
                        financial assistance purposes, only the data 
                        elements required to make a determination of 
                        whether the applicant meets the requirements 
                        under section 479(c).
                            ``(iii) State data.--The Secretary shall 
                        include on the EZ FAFSA such data items as may 
                        be necessary to award State financial 
                        assistance, as provided under paragraph (6), 
                        except that the Secretary shall not include a 
                        State's data if that State does not permit its 
                        applicants for State assistance to use the EZ 
                        FAFSA.
                            ``(iv) Free availability and processing.--
                        The provisions of paragraph (7) shall apply to 
                        the EZ FAFSA, and the data collected by means 
                        of the EZ FAFSA shall be available to 
                        institutions of higher education, guaranty 
                        agencies, and States in accordance with 
                        paragraph (9).
                            ``(v) Testing.--The Secretary shall conduct 
                        appropriate field testing on the EZ FAFSA.
                    ``(C) Promoting the use of electronic fafsa.--
                            ``(i) In general.--The Secretary shall make 
                        all efforts to encourage all applicants to 
                        utilize the electronic forms described in 
                        paragraph (4).
                            ``(ii) Maintenance of the fafsa in a 
                        printable electronic file.--The Secretary shall 
                        maintain a version of the paper forms described 
                        in subparagraphs (A) and (B) in a printable 
                        electronic file that is easily portable. The 
                        printable electronic file will be made easily 
                        accessible and downloadable to students on the 
                        same website used to provide students with the 
                        electronic application forms described in 
                        paragraph (4) of this subsection. The Secretary 
                        shall enable students to submit a form created 
                        under this subparagraph that is downloaded and 
                        printed from an electronic file format in order 
                        to meet the filing requirements of this section 
                        and in order to receive aid from programs under 
                        this title.
                            ``(iii) Reporting requirement.--The 
                        Secretary shall report annually to Congress on 
                        the impact of the digital divide on students 
                        completing applications for title IV aid 
                        described under this paragraph and paragraph 
                        (4). The Secretary will also report on the 
                        steps taken to eliminate the digital divide and 
                        phase out the paper form described in 
                        subparagraph (A) of this paragraph. The 
                        Secretary's report will specifically address 
                        the impact of the digital divide on the 
                        following student populations: independent 
                        students, adults, and dependent students.
            ``(4) Electronic format.--
                    ``(A) In general.--The Secretary shall produce, 
                distribute, and process common forms in electronic 
                format to meet the requirements of paragraph (1). The 
                Secretary shall develop common electronic forms for 
                applicants who do not meet the requirements of 
                subparagraph (C) of this paragraph.
                    ``(B) State data.--The Secretary shall include on 
                the common electronic forms space for information that 
                needs to be submitted from the applicant to be eligible 
                for State financial assistance, as provided under 
                paragraph (6), except the Secretary shall not require 
                applicants to complete data required by any State other 
                than the applicant's State of residence.
                    ``(C) Simplified applications: fafsa on the web.--
                            ``(i) In general.--The Secretary shall 
                        develop and use a simplified electronic 
                        application form to be used by applicants 
                        meeting the requirements under subsection (c) 
                        of section 479 and an additional, separate 
                        simplified electronic application form to be 
                        used by applicants meeting the requirements 
                        under subsection (b) of section 479.
                            ``(ii) Reduced data requirements.--The 
                        simplified electronic application forms shall 
                        permit an applicant to submit for financial 
                        assistance purposes, only the data elements 
                        required to make a determination of whether the 
                        applicant meets the requirements under 
                        subsection (b) or (c) of section 479.
                            ``(iii) State data.--The Secretary shall 
                        include on the simplified electronic 
                        application forms such data items as may be 
                        necessary to award state financial assistance, 
                        as provided under paragraph (6), except that 
                        the Secretary shall not require applicants to 
                        complete data required by any State other than 
                        the applicant's state of residence.
                            ``(iv) Availability and processing.--The 
                        data collected by means of the simplified 
                        electronic application forms shall be available 
                        to institutions of higher education, guaranty 
                        agencies, and States in accordance with 
                        paragraph (9).
                            ``(v) Testing.--The Secretary shall conduct 
                        appropriate field testing on the forms 
                        developed under this subparagraph.
                    ``(D) Use of forms.--Nothing in this subsection 
                shall be construed to prohibit the use of the forms 
                developed by the Secretary pursuant to this paragraph 
                by an eligible institution, eligible lender, guaranty 
                agency, State grant agency, private computer software 
                provider, a consortium thereof, or such other entities 
                as the Secretary may designate.
                    ``(E) Privacy.--The Secretary shall ensure that 
                data collection under this paragraph complies with 
                section 552a of title 5, United States Code, and that 
                any entity using the electronic version of the forms 
                developed by the Secretary pursuant to this paragraph 
                shall maintain reasonable and appropriate 
                administrative, technical, and physical safeguards to 
                ensure the integrity and confidentiality of the 
                information, and to protect against security threats, 
                or unauthorized uses or disclosures of the information 
                provided on the electronic version of the forms. Data 
                collected by such electronic version of the forms shall 
                be used only for the application, award, and 
                administration of aid awarded under this title, State 
                aid awarded under section 415C, or aid awarded by 
                eligible institutions or such entities as the Secretary 
                may designate. No data collected by such electronic 
                version of the forms shall be used for making final aid 
                awards under this title until such data have been 
                processed by the Secretary or a contractor or designee 
                of the Secretary, except as may be permitted under this 
                title.
                    ``(F) Signature.--Notwithstanding any other 
                provision of this Act, the Secretary may permit an 
                electronic form under this paragraph to be submitted 
                without a signature, if a signature is subsequently 
                submitted by the applicant or if the applicant uses a 
                personal identification number provided by the 
                Secretary under subparagraph (G) of this paragraph.
                    ``(G) Personal identification numbers authorized.--
                The Secretary may assign to applicants personal 
                identification numbers--
                            ``(i) to enable the applicants to use such 
                        numbers in lieu of a signature for purposes of 
                        completing a form under this paragraph;
                            ``(ii) to enable the applicants to use such 
                        numbers in lieu of a signature for purposes of 
                        completing forms required by States under 
                        section 415C; and
                            ``(iii) for any purpose determined by the 
                        Secretary to enable the Secretary to carry out 
                        this title.
            ``(5) Streamlining.--
                    ``(A) Streamlined reapplication process.--
                            ``(i) In general.--The Secretary shall 
                        develop streamlined reapplication forms and 
                        processes, including both paper and electronic 
                        reapplication processes, consistent with the 
                        requirements of this subsection, for an 
                        applicant who applies for financial assistance 
                        under this title in the next succeeding 
                        academic year subsequent to the year in which 
                        such applicant first applied for financial 
                        assistance under this title.
                            ``(ii) Mechanisms for reapplication.--The 
                        Secretary shall develop appropriate mechanisms 
                        to support reapplication.
                            ``(iii) Identification of updated data.--
                        The Secretary shall determine, in cooperation 
                        with States, institutions of higher education, 
                        agencies, and organizations involved in student 
                        financial assistance, the data elements that 
                        can be updated from the previous academic 
                        year's application.
                            ``(iv) Reduced data authorized.--Nothing in 
                        this title shall be construed as limiting the 
                        authority of the Secretary to reduce the number 
                        of data elements required of reapplicants.
                            ``(v) Zero family contribution.--Applicants 
                        determined to have a zero family contribution 
                        pursuant to section 479(c) shall not be 
                        required to provide any financial data in a 
                        reapplication form, except that which is 
                        necessary to determine eligibility under such 
                        section.
                    ``(B) Reduction of data elements.--
                            ``(i) Reduction required.--Of the number of 
                        data elements on the FAFSA on the date of 
                        enactment of the College Aid Made EZ Act 
                        (including questions on the FAFSA for the 
                        purposes described in paragraph (6)), the 
                        Secretary, in cooperation with representatives 
                        of agencies and organizations involved in 
                        student financial assistance, shall reduce the 
                        number of such data elements by 50 percent 
                        within 5 years after such date of enactment. 
                        Reductions of data elements under paragraph 
                        (3)(B), (4)(C), or (5)(A)(iv) shall not be 
                        counted towards such 50 percent reduction 
                        unless those data elements are reduced for all 
                        applicants.
                            ``(ii) Report.--The Secretary shall submit 
                        a report on the process of this reduction to 
                        each House of Congress within 2 years after 
                        such date of enactment.
            ``(6) State requirements.--
                    ``(A) In general.--The Secretary shall include on 
                the forms developed under this subsection, such State-
                specific nonfinancial data items as the Secretary 
                determines are necessary to meet State requirements for 
                need-based State aid under section 415C, except as 
                provided in paragraphs (3)(B)(iii) and (4)(C)(iii) of 
                this subsection. Such items shall be selected in 
                consultation with State agencies that submit 
                applications under section 415C in order to assist in 
                the awarding of State financial assistance in 
                accordance with the terms of this subsection, except as 
                provided in paragraphs (3)(B)(iii) and (4)(C)(iii) of 
                this subsection. The number of such data items shall 
                not be less than the number included on the form on 
                October 7, 1998, unless a State notifies the Secretary 
                that the State no longer requires those data items for 
                the distribution of State need-based aid.
                    ``(B) Annual review.--The Secretary shall conduct 
                an annual review process to determine which forms and 
                nonfinancial data items the States require to award 
                need-based State aid and other application requirements 
                that the States may impose.
                    ``(C) State use of simplified forms.--The Secretary 
                shall encourage states to take such steps as necessary 
                to encourage the use of simplified application forms, 
                including those described in paragraphs (3)(B) and 
                (4)(C), to meet the requirements under subsection (b) 
                or (c) of section 479.
                    ``(D) Federal register notice.--The Secretary shall 
                publish on an annual basis a notice in the Federal 
                Register requiring State agencies to inform the 
                Secretary--
                            ``(i) if the State agency is unable to 
                        permit applicants to utilize the simplified 
                        application forms described in paragraphs 
                        (3)(B) and (4)(C); and
                            ``(ii) of the State-specific nonfinancial 
                        data that the State agency requires for 
                        delivery of State need-based financial aid.
                    ``(E) State notification to the secretary.--
                            ``(i) In general.--Each State agency that 
                        submits an application under section 415C shall 
                        notify the Secretary--
                                    ``(I) whether the State permits an 
                                applicant to file a form described in 
                                paragraph (3)(B) or (4)(A) of this 
                                subsection for purposes of determining 
                                eligibility for State need-based grant 
                                aid; and
                                    ``(II) the State-specific 
                                nonfinancial data that the State agency 
                                requires for delivery of State need-
                                based financial aid.
                            ``(ii) Acceptance of forms.--In the event 
                        that a State does not permit an applicant to 
                        file a form described in paragraph (3)(B) or 
                        (4)(A) of this subsection for purposes of 
                        determining eligibility for State need-based 
                        grant aid--
                                    ``(I) the State shall notify the 
                                Secretary if the State is not permitted 
                                to do so because of either State law or 
                                because of agency policy; and
                                    ``(II) the notification under 
                                subclause (I) shall include an estimate 
                                of the program cost to permit 
                                applicants to complete simplified 
                                application forms under paragraphs 
                                (3)(B) and (4)(A) of this subsection.
                            ``(iii) Lack of notification by the 
                        state.--If a State does not notify the 
                        Secretary pursuant to clause (i), the Secretary 
                        shall--
                                    ``(I) permit residents of that 
                                State to complete simplified 
                                application forms under paragraphs 
                                (3)(B) and (4)(A) of this subsection; 
                                and
                                    ``(II) not require any resident of 
                                that State to complete any nonfinancial 
                                data previously required by that State 
                                under this section.
            ``(7) Charges to students and parents for use of forms 
        prohibited.--
                    ``(A) Fees prohibited.--The FAFSA, in whatever form 
                (including the EZ-FAFSA, paper, electronic, simplified, 
                or reapplication), shall be produced, distributed, and 
                processed by the Secretary and no parent or student 
                shall be charged a fee for the collection, processing, 
                or delivery of financial aid through the use of the 
                FAFSA. The need and eligibility of a student for 
                financial assistance under parts A through E of this 
                title (other than under subpart 4 of part A) may only 
                be determined by using the FAFSA developed by the 
                Secretary pursuant to this subsection. No student may 
                receive assistance under parts A through E of this 
                title (other than under subpart 4 of part A), except by 
                use of the FAFSA developed by the Secretary pursuant to 
                this subsection. No data collected on a form for which 
                a fee is charged shall be used to complete the FAFSA.
                    ``(B) Notice.--Any entity that provides to students 
                and parents, or charges students or parents for, any 
                value-added services with respect to or in connection 
                with the FAFSA, such as completion of the FAFSA, 
                submission of the FAFSA, or tracking of the FAFSA for a 
                student, shall provide to students and parents clear 
                and conspicuous notice that--
                            ``(i) the FAFSA is a free Federal student 
                        aid application;
                            ``(ii) the FAFSA can be completed without 
                        professional assistance; and
                            ``(iii) includes the current Internet 
                        address for the FAFSA on the Department's web 
                        site.
            ``(8) Application processing cycle.--The Secretary shall 
        enable students to submit a form created under this subsection 
        in order to meet the filing requirements of this section and in 
        order to receive aid from programs under this title and shall 
        initiate the processing of applications under this subsection 
        as early as practicable prior to January 1 of the student's 
        planned year of enrollment.'';
            (2) by adding at the end of subsection (a) the following 
        paragraph:
            ``(13) Early application and award demonstration program.--
                    ``(A) Program required.--The Secretary shall, no 
                later than two years after the date of enactment of the 
                College Aid Made EZ Act, implement an early application 
                demonstration program enabling dependent students to 
                complete applications under this subsection in their 
                junior year of high school, or in the academic year 
                that is two years prior to their intended year of 
                enrollment, and to be eligible to receive aid under 
                this title and such aid as may be available from 
                participants, including State financial assistance as 
                provided under section 415C and other aid provided by 
                participating institutions.
                    ``(B) Purpose and objectives.--The purpose of the 
                demonstration program under this paragraph shall be to 
                measure the benefits, in terms of student aspirations 
                and plans to attend college, and the adverse effects, 
                in terms of program costs, integrity, distribution, and 
                delivery of aid under this title, of implementing an 
                early application system for all dependent students 
                that allows dependent students to apply for financial 
                aid using information from the year prior to the year 
                prior to enrollment. Additional objectives associated 
                with implementation of the demonstration program are 
                the following:
                            ``(i) Measure the feasibility of enabling 
                        dependent students to apply for Federal, State, 
                        and institutional financial aid in their junior 
                        year of high school, using information from the 
                        year prior to the year prior to enrollment, by 
                        completing any of the application forms under 
                        this subsection.
                            ``(ii) Determine the feasibility, benefits, 
                        and adverse effects of implementing a data 
                        match with the Internal Revenue Service (IRS).
                            ``(iii) Identify whether receiving final 
                        financial aid awards no later than the fall of 
                        the senior year provides students with 
                        additional time to compete for the limited 
                        resources available for State and institutional 
                        financial aid and positively impacts the 
                        college aspirations and plans of these 
                        students.
                            ``(iv) Measure the impact of using income 
                        information from the year prior to the year 
                        prior to enrollment on--
                                    ``(I) eligibility for financial aid 
                                under this title and for other 
                                institutional aid; and
                                    ``(II) the cost of financial aid 
                                programs under this title.
                            ``(iv) Effectively evaluate the benefits 
                        and adverse effects of the demonstration 
                        program on program costs, integrity, 
                        distribution, and delivery of aid.
                    ``(C) Participants.--The Secretary shall select 
                States and institutions within those States to 
                participate in the demonstration program under this 
                paragraph that are participating in the programs under 
                this title and that are willing to make final financial 
                aid awards to students based on their application 
                information from the year prior to the year prior to 
                enrollment. The Secretary shall also select as 
                participants in the demonstration program secondary 
                schools and dependent students that are located in the 
                participating States.
                    ``(D) Application process.--The Secretary shall 
                insure that the following provisions are included in 
                the demonstration program:
                            ``(i) Participating States and institutions 
                        shall allow participating students to apply for 
                        financial aid during their junior year of high 
                        school using information from the year prior to 
                        the year prior to enrollment and all provisions 
                        available under this title and shall award 
                        final financial aid awards to participating 
                        students based on the applications provided 
                        under this demonstration program.
                            ``(ii) Participating States and 
                        institutions shall not require students 
                        participating in this demonstration program to 
                        complete an additional application in the year 
                        prior to enrollment in order to receive State 
                        aid under section 415C and any other 
                        institutional aid.
                            ``(iii) Financial aid administrators at 
                        participating institutions shall be allowed to 
                        use their discretion in awarding financial aid 
                        to participating students, as outlined under 
                        section 479A and section 480(d)(7).
                    ``(E) Data match with the internal revenue 
                service.--The Secretary shall include in this 
                demonstration project a data match with the Internal 
                Revenue Service in order to verify data provided by 
                participating students and gauge the feasibility of 
                implementing such a data match for all students 
                applying for aid under this title.
                    ``(F) Evaluation.--The Secretary shall conduct a 
                rigorous evaluation of this demonstration program in 
                order to measure its benefits and adverse effects as 
                indicated under subparagraph (A).
                    ``(G) Outreach.--The Secretary shall make 
                appropriate efforts in order to notify States of the 
                demonstration program under this paragraph. Upon 
                determination of participating States, the Secretary 
                shall continue to make efforts to notify institutions 
                and dependent students within participating States of 
                the opportunity to participate in the demonstration 
                program and of the participation requirements.''
            (3) by striking subsection (b);
            (4) by redesignating subsections (c), (d), and (e) as 
        subsections (b), (c), and (d), respectively.
    (b) Master Calendar.--Section 482(a)(1)(B) (20 U.S.C. 1089) is 
amended to read as follows:
                    ``(B) by March 1: proposed modifications, updates, 
                and notices pursuant to sections 479(c)(2)(C), 478, and 
                483(a)(6) published in the Federal Register;''.

SEC. 4. INCREASING ACCESS TO TECHNOLOGY.

    Section 483 (20 U.S.C. 1087ss) is further amended by adding at the 
end the following:
    ``(e) Addressing the Digital Divide.--The Secretary shall utilize 
savings accrued by moving more applicants to the electronic forms 
described in subsection (a)(4) to improve access to the electronic 
forms described in subsection (a)(4) for applicants meeting the 
requirements of section 479(c).''

SEC. 5. SIMPLIFY THE TREATMENT OF INCOME: REDUCING UNTAXED INCOME AND 
              BENEFITS.

    Subsection (b) of section 480 (20 U.S.C. 1087vv(b)) is amended to 
read as follows:
    ``(b) Untaxed Income and Benefits.--
            ``(1) The term `untaxed income and benefits' means--
                    ``(A) child support received;
                    ``(B) workman's compensation;
                    ``(C) veteran's benefits such as death pension, 
                dependency, and indemnity compensation, but excluding 
                veterans' education benefits as defined in subsection 
                (c);
                    ``(D) interest on tax-free bonds;
                    ``(E) housing, food, and other allowances 
                (excluding rent subsidies for low-income housing) for 
                military, clergy, and others (including cash payments 
                and cash value of benefits);
                    ``(F) cash support or any money paid on the 
                student`s behalf, except, for dependent students, funds 
                provided by the student's parents;
                    ``(G) untaxed portion of pensions;
                    ``(H) payments to individual retirement accounts 
                and Keogh accounts excluded from income for Federal 
                income tax purposes; and
                    ``(I) any other untaxed income and benefits, such 
                as Black Lung Benefits, Refugee Assistance, railroad 
                retirement benefits, or Job Training Partnership Act 
                noneducational benefits or benefits received through 
                participation in employment and training activities 
                under title I of the Workforce Investment Act of 1998.
            ``(2) The term `untaxed income and benefits' shall not 
        include the amount of additional child tax credit claimed for 
        Federal income tax purposes.''.

SEC. 6. REDUCING THE NUMBER OF QUESTIONS.

    Section 484 (20 U.S.C. 1091) is amended by striking subsection (r).

SEC. 7. ALLOWANCE FOR STATE AND OTHER TAXES.

    (a) Allowance for State and Local Taxes.--Section 478 (20 U.S.C. 
1087rr) is amended--
            (1) by striking subsection (g);
            (2) by redesignating subsection (h) as subsection (g).
    (b) Holding Students Harmless.--Section 475(c) (20 U.S.C. 
1087oo(c)) is amended--
            (1) in paragraph (1):
                    (A) by striking subparagraph (B);
                    (B) by redesignating subparagraphs (C), (D), (E), 
                and (F) as subparagraphs (B), (C), (D), and (E), 
                respectively;
            (2) by striking paragraph (2);
            (3) by striking paragraph (4) and inserting the following:
            ``(4) Income protection allowance.--The income protection 
        allowance is determined by the following table (or a successor 
        table prescribed by the Secretary under section 478):


                      ``Income Protection Allowance
------------------------------------------------------------------------
            Family Size                   Number     in
------------------------------------------------- College --------------
                                                 ---------     For each
        (including student)         1  2     3             5  additional
                                                     4         subtract:
------------------------------------------------------------------------
2                                   $  $  ......  .......  .  $3,641
                                    1  1
                                    5  2
                                    ,  ,
                                    2  5
                                    0  9
                                    7  9
3                                   1  1  $13,74  .......  .
                                    8  6    2
                                    ,  ,
                                    9  3
                                    3  5
                                    7  0
4                                   2  2  18,193  $15,596  .
                                    3  0
                                    ,  ,
                                    3  7
                                    8  7
                                    8  9
5                                   2  2  22,400  19,802   $
                                    7  4                   1
                                    ,  ,                   7
                                    5  9                   ,
                                    9  8                   2
                                    5  6                   1
                                                           6
6                                   3  2  27,084  24,487   2
                                    2  9                   1
                                    ,  ,                   ,
                                    2  6                   9
                                    6  7                   0
                                    8  0                   0
For each additional add:            2  2  2,586   2,586    2     ''
                                    ,  ,                   ,
                                    5  5                   5
                                    8  8                   8
                                    6  6                   6
------------------------------------------------------------------------

            (4) by redesignating paragraphs (3), (4) and (5) as 
        paragraphs (2), (3) and (4), respectively.
    (c) Dependent Student Increase in Income Protection Allowance.--
Section 475(g) (20 U.S.C. 1087oo(g)) is amended--
            (1) in paragraph (2)--
                    (A) by striking subparagraph (B);
                    (B) by striking subparagraph (D) and inserting the 
                following:
                    ``(D) an income protection allowance of $2,589 (or 
                a successor amount prescribed by the Secretary under 
                section 478);''
                    (C) by redesignating subparagraphs (C), (D), (E), 
                and (F) as subparagraphs (B), (C), (D), and (E), 
                respectively;
            (2) by striking paragraph (3); and
            (3) by redesignating paragraphs (4), (5), and (6) as 
        paragraphs (3), (4), and (5), respectively.
    (d) Independent Student (Without Dependents) Increase in Income 
Protection Allowance.--Section 476(b) (20 U.S.C. 1087pp(b)) is 
amended--
            (1) in subparagraph (A) of paragraph (1)--
                    (A) by striking clause (ii);
                    (B) by striking subclauses (I), (II) and (III) of 
                clause (iv) and inserting the following:
                                    ``(I) $5,874 for single students;
                                    ``(II) $5,874 for married students 
                                who are both enrolled pursuant to 
                                subsection (a)(2); and
                                    ``(III) $9,395 for married students 
                                where one is enrolled pursuant to 
                                subsection (a)(2);'';
                    (C) by redesignating clauses (iii), (iv), (v), 
                (vi), as clauses (ii), (iii), (iv), and (v), 
                respectively;
            (2) by striking paragraph (2);
            (3) by redesignating paragraphs (3), (4), and (5) as 
        paragraphs (2), (3), and (4), respectively.
    (e) Independent Student (With Dependents) Increase in Income 
Protection Allowance.--Section 477(b) (20 U.S.C. 1087qq(b)) is 
amended--
            (1) in paragraph (1)--
                    (A) by striking subparagraph (B);
                    (B) by redesignating (C), (D), (E), and (F) as 
                subparagraphs (B), (C), (D), and (E), respectively;
            (2) by striking paragraph (2);
            (3) by striking paragraph (4) and inserting the following:
            ``(4) Income protection allowance.--The income protection 
        allowance is determined by the following table (or a successor 
        table prescribed by the Secretary under section 478):


                      ``Income Protection Allowance
------------------------------------------------------------------------
            Family Size                   Number     in
------------------------------------------------- College --------------
                                                 ---------     For each
        (including student)         1  2     3             5  additional
                                                     4         subtract:
------------------------------------------------------------------------
2                                   $  $  ......  .......  .  $3,641
                                    1  1
                                    6  2
                                    ,  ,
                                    9  5
                                    3  9
                                    5  9
3                                   1  1  $13,74  .......  .
                                    8  6    2
                                    ,  ,
                                    9  3
                                    3  5
                                    7  0
4                                   2  2  18,193  $15,596  .
                                    3  0
                                    ,  ,
                                    3  7
                                    8  7
                                    4  9
5                                   2  2  22,400  19,802   $
                                    7  4                   1
                                    ,  ,                   7
                                    5  9                   ,
                                    9  8                   2
                                    6  6                   1
                                                           6
6                                   3  2  27,084  24,487   2
                                    2  9                   1
                                    ,  ,                   ,
                                    2  6                   9
                                    6  7                   0
                                    8  0                   0
For each additional add:            2  2  2,586   2,586    2     ''
                                    ,  ,                   ,
                                    5  5                   5
                                    8  8                   8
                                    6  6                   6
------------------------------------------------------------------------

            (4) by redesignating paragraphs (3), (4), and (5) as 
        paragraphs (2), (3), and (4), respectively.
    (f) Conforming Amendment: Updates.--Section 478(b) (20 U.S.C. 
1087rr(b)) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``1993-1994'' and inserting ``2005-
                2006'';
                    (B) by striking ``475(c)(4) and 477(b)(4)'' and 
                inserting ``475(c)(3) and 477(b)(3)''; and
                    (C) by striking ``December 1992'' and inserting 
                ``December 2004''; and
            (2) in paragraph (2)--
                    (A) by striking ``2000-2001'' and inserting ``2005-
                2006'';
                    (B) by striking ``475(g)(2)(D) and 
                476(b)(1)(A)(iv)'' and inserting ``475(g)(2)(C) and 
                476(b)(1)(A)(iii)''; and
                    (C) by striking ``December 1999'' and inserting 
                ``December 2004''.

SEC. 8. RELIEF FOR WORKING STUDENTS.

    (a) Dependent Students.--Paragraph (4) of section 475(g) (20 U.S.C. 
1087oo(g)(4)), as redesignated by section 7(c)(3) of this Act, is 
amended to read as follows:
            ``(4) the student's available income (determined in 
        accordance with paragraph (1) of this subsection) is assessed 
        at 40 percent.''
    (b) Independent Students Without Dependents Other Than a Spouse.--
Paragraph (4) of section 476(b) (20 U.S.C. 1087pp(b)), as redesignated 
by section 7(d)(3) of this Act, is amended to read as follows:
            ``(4) Assessment of available income.--The family's 
        available income (determined in accordance with paragraph 
        (1)(A) of this subsection) is assessed at 40 percent.''.
                                 <all>