[Congressional Record Volume 150, Number 73 (Friday, May 21, 2004)]
[Senate]
[Pages S6099-S6105]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Ms. Collins, Mr. Kennedy, and Mrs. 
        Murray):
  S. 2477. A bill to amend the Higher Education Act of 1965 to expand 
college access and increase college persistence, to simplify the 
process of applying for student assistance, and for other purposes; to 
the Committee on Health, Education, Labor, and Pensions.
  Mr. REED. Mr. President, I rise today to introduce bipartisan 
legislation to expand access to college. I am pleased to be joined in 
this effort by Senators Collins, Kennedy, and Murray.
  In a year in which we are slated to reauthorize the Higher Education 
Act, we have had only a few hearings on the reauthorization in the HELP 
Committee. In these hearings and the discussions ongoing in the other 
body, there has been scant mention of our insufficient investment in 
need-based financial aid. Instead, the discussions have been dominated 
by proposals that will hurt, rather than help, the neediest students.
  This is troubling, particularly as more and more students are being 
priced out of college, which shortchanges their future and that of our 
nation. Economic security is a necessity not just for the wealthy, but 
for every American. And the key to economic security is education.
  An individual's climb up the economic ladder is directly related to 
the amount of education he or she receives. Given the strong 
correlation among educational attainment, employment, and wages, the 
cost of not going to college is just too high.
  Almost a third of the growth in employment over the next decade is 
expected to occur in occupations that require at least a bachelor's 
degree. College graduates, on average, earn 60 percent more than high 
school graduates, while an individual with a professional degree earns 
almost four times what a high school graduate earns.
  And yet, too many college students are under-prepared, underfinanced, 
and overworked. Those who make it through are saddled by nearly 
insurmountable loan debt. But many more cannot afford the cost of 
college at all.
  Even though there have been gains due to the Higher Education Act, 
the current approach to student aid isn't alleviating the gaps between 
our lowest and highest income students nor is it addressing the gaps 
between the aid low-income students receive and the actual cost of 
attendance.
  7 times as many students from high-income families 48 percent 
graduate from college by age 24 as students from low-income families 7 
percent. Low-income, college-qualified high school graduates have an 
annual ``unmet need'' of nearly $4,000 in college expenses. Without 
drastic increases in need-based aid, over the next decade, according to 
a report by the Advisory Committee on Student Financial Assistance, 4.4 
million low- and moderate-income college qualified high school 
graduates will not be able to pursue a four year degree full time and 2 
million will not go to college at all.
  A combination of factors has arisen to create this unfortunate 
situation, chief among them a decline in the purchasing power of the 
Pell Grant and sharp increases in the cost of college.
  My predecessor, Senator Claiborne Pell, established what is now known 
as the Pell Grant in order to ensure higher education wasn't an 
``unachievable dream.'' Almost one quarter of undergraduate students 
from colleges and universities nationwide receive a Pell Grant. It is 
the single largest source of grant aid for higher education funded by 
the Federal government.
  Unfortunately, the Pell Grant's purchasing power has plummeted due to 
the slow growth in funding and the rapid rise of college prices. In the 
late 70s, the maximum grant covered 77 percent of costs at a public 
four-year institution. Today, the maximum Pell Grant of $4,050 covers 
only 41 percent.
  On top of that, an estimated 60 percent of student aid is now in the 
form of loans and 40 percent in grants, a reversal of the distribution 
20 years ago. Indeed, the average graduate has a student loan debt of 
$17,000. Pell Grant recipients, who represent the lowest income sectors 
of students, graduate with an average of $20,000 in student loan debt.

[[Page S6100]]

  Over the last ten years, public and private 4-year college costs, 
tuition and fees, rose 47 percent and 42 percent, respectively, after 
adjusting for inflation, which is a more rapid growth rate than 
consumer prices. Over the last three years, since President Bush 
entered office, tuition has increased by 28 percent on average, even 
after inflation. Students have felt the bite as states have drastically 
cut funding for public colleges.
  There is a further convergence of economic and demographic factors. 
In 2008, the largest number of students in our history will graduate 
from high school. A high percentage of these students will be from low-
income, minority families, who will need student aid. At the same time, 
our Nation will need replacement workers as aging, college-educated 
baby boomers begin to retire in increasing numbers.
  This crisis calls out for action. It should be a national imperative 
to ensure an educated citizenry and a world class workforce. Our Nation 
cannot afford to lose out on the countless returns from a robust 
education investment.
  The legislation we introduce today, the ACCESS, Accessing College 
through Comprehensive Early outreach, State partnerships, and 
Simplification, Act, seeks to set our Nation back on the course that 
Senator Pell sought when he authored the grants later named after him 
in 1972.
  The ACCESS Act revitalizes the Leveraging Educational Assistance 
Partnership (LEAP) program, which was established over thirty years ago 
to encourage States to play a role in helping low-income students go to 
college. Without this important, although extremely modest, Federal 
incentive, many States would never have established need-based grant 
programs and many States would not continue to maintain such programs.
  Recognizing that LEAP can do even more to address the barriers to 
college access and persistence, the ACCESS Act forges a new Federal 
incentive for states--via higher levels of Federal match--to spur 
greater investments by states, colleges, businesses, and philanthropies 
in need-based grants for low-income students. At a time when public 
higher education is bearing the brunt of the fiscal crises confronting 
our States, we need to do more to encourage States to help low-income 
students attend college.
  We want States to focus their energies on enhancing coordination and 
cohesion among Federal, State, and local programs and efforts of 
colleges, philanthropies, and businesses, with the goal of generating 
new investments in need-based aid sufficient to provide low-income 
students with an access and persistence grant to fill the gap in aid 
they face. All too often successful middle school students give up the 
dream of college because they think there is no way they can ever 
afford college. The ACCESS Act also requires States to notify low-
income students beginning in middle school of their potential 
eligibility for student financial aid and encourages increased 
participation in early intervention, mentoring, and outreach programs.
  The legislation is modeled after initiatives like the Rhode Island 
Children's Crusade in my home state and Indiana's 21st Century Scholars 
Program. A Lumina Foundation evaluation found that 21st Century 
Scholars--low-income students who receive an early notification of 
assistance, early intervention and support, and scholarships equivalent 
to the cost of in-state college tuition--were nearly 5 times more 
likely than non-participants to enroll in college. Indeed, successful 
college access programs are those that offer early intervention and 
mentoring services coupled with early information about estimated 
financial aid awards and adequate grant funding to make the dream of 
higher education a reality. Students participating in such programs are 
more financially and academically prepared, and thus more likely to 
enroll in college and persist to degree completion.
  Our legislation also simplifies the financial aid process for low-
income students. It allows more students to qualify for an Automatic-
Zero Expected Family Contribution, aligning its eligibility with the 
standards for other Federal means-tested programs, like free school 
lunch, SSI, and Food Stamps. Students and families should not have to 
prove over and over again that they are low-income, and asking students 
to fill out lengthy forms when they already meet the eligibility level 
for Pell Grants is a burden we should ease.
  In a similar vein, the legislation establishes a short, paper FAFSA-
EZ application form for students qualifying for the auto-zero along 
with a tailored web-based system and a free telefile system for 
students without Internet access.
  The ACCESS Act also expands college access for low-income students, 
in part by prohibiting a qualified education benefit, like education 
savings plans, from being considered as a student asset and by reducing 
the work penalty. The current income protection allowance levels are 
unrealistically low, creating a disincentive for students who work in 
order to pay college costs. I look forward to receiving further 
information on this and other problems addressed in the legislation 
when the Advisory Committee on Student Financial Assistance completes 
work on the congressionally mandated financial aid simplification study 
later this year.
  We must act on this legislation and others to make sure that every 
student who works hard and plays by the rules gets the opportunity to 
live the American Dream.
  I was pleased to work with the Advisory Committee on Student 
Financial Assistance, and a host of other higher education 
organizations and charitable foundations, including Scholarship 
America, on this legislation. I am also pleased that this legislation 
has the support of a range of higher education and student groups, 
including the American Association of Community Colleges, the American 
Association of State Colleges and Universities, the American Council on 
Education, the Association of American Universities, the Association of 
Jesuit Colleges and Universities, the Center for Law and Social Policy, 
the Council for Opportunity in Education, National Association for 
College Admission Counseling, the National Association of Independent 
Colleges and Universities, National Association of State Student Grant 
and Aid Programs, the National Association of State Universities and 
Land-Grant Colleges, the National Association of Student Financial Aid 
Administrators, the United Negro College Fund, and the United States 
Student Association.
  I urge my colleagues to cosponsor this important legislation and work 
for its inclusion in the upcoming reauthorization of the Higher 
Education Act.
  I ask unanimous consent that the text of this legislation be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2477

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Accessing College through 
     Comprehensive Early Outreach, State Partnerships, and 
     Simplification Act''.

     SEC. 2. GRANTS FOR ACCESS AND PERSISTENCE.

       (a) Authorization of Appropriations.--Section 415A(b) of 
     the Higher Education Act of 1965 (20 U.S.C. 1070c(b)) is 
     amended by striking paragraphs (1) and (2) and inserting the 
     following:
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this subpart $500,000,000 for fiscal year 2005, 
     and such sums as may be necessary for each of the 5 
     succeeding fiscal years.
       ``(2) Reservation.--For any fiscal year for which the 
     amount appropriated under paragraph (1) exceeds $30,000,000, 
     the excess amount shall be available to carry out section 
     415E.''.
       (b) Applications for Leveraging Educational Assistance 
     Partnership Programs.--Section 415C(b) of the Higher 
     Education Act of 1965 (20 U.S.C. 1070c-2(b)) is amended--
       (1) in paragraph (2), by striking ``$5,000'' and inserting 
     ``$12,500'';
       (2) in paragraph (9), by striking ``and'' after the 
     semicolon;
       (3) in paragraph (10), by striking the period at the end 
     and inserting ``; and''; and
       (4) by adding at the end the following:
       ``(11) provides notification to eligible students that such 
     grants are--
       ``(A) Leveraging Educational Assistance Partnership Grants; 
     and
       ``(B) funded by the Federal Government and the State.''.
       (c) Grants for Access and Persistence.--Section 415E of the 
     Higher Education Act of 1965 (20 U.S.C. 1070c-3a) is amended 
     to read as follows:

[[Page S6101]]

     ``SEC. 415E. GRANTS FOR ACCESS AND PERSISTENCE.

       ``(a) Purpose.--It is the purpose of this section to expand 
     college access and increase college persistence by making 
     allotments to States to enable the States to--
       ``(1) expand and enhance partnerships with institutions of 
     higher education, early information and intervention, 
     mentoring, or outreach programs, private corporations, 
     philanthropic organizations, and other interested parties to 
     carry out activities under this section and to provide 
     coordination and cohesion among Federal, State, and local 
     governmental and private efforts that provide financial 
     assistance to help low-income students attend college;
       ``(2) provide need-based access and persistence grants to 
     eligible low-income students;
       ``(3) provide early notification to low-income students of 
     their eligibility for financial aid; and
       ``(4) encourage increased participation in early 
     information and intervention, mentoring, or outreach 
     programs.
       ``(b) Allotments to States.--
       ``(1) In general.--
       ``(A) Authorization.--From sums reserved under section 
     415A(b)(2) for each fiscal year, the Secretary shall make an 
     allotment to each State that submits an application for an 
     allotment in accordance with subsection (c) to enable the 
     State to pay the Federal share of the cost of carrying out 
     the activities under subsection (d).
       ``(B) Determination of allotment.--In making allotments 
     under subparagraph (A), the Secretary shall consider the 
     following:
       ``(i) Continuation of award.--If a State continues to meet 
     the specifications established in its application under 
     subsection (c), the Secretary shall make an allotment to such 
     State that is not less than the allotment made to such State 
     for the previous fiscal year.
       ``(ii) Priority.--The Secretary shall give priority in 
     making allotments to States that meet the requirements under 
     paragraph (2)(B)(iii).
       ``(2) Federal share.--
       ``(A) In general.--The Federal share of the cost of 
     carrying out the activities under subsection (d) for any 
     fiscal year may not exceed 66.66 percent.
       ``(B) Different percentages.--The Federal share under this 
     section shall be determined in accordance with the following:
       ``(i) If a State applies for an allotment under this 
     section in partnership with any number of degree granting 
     institutions of higher education in the State whose combined 
     full-time enrollment represents less than a majority of all 
     students attending institutions of higher education in the 
     State, then the Federal share of the cost of carrying out the 
     activities under subsection (d) shall be equal to 50 percent.
       ``(ii) If a State applies for an allotment under this 
     section in partnership with any number of degree granting 
     institutions of higher education in the State whose combined 
     full-time enrollment represents less than a majority of all 
     students attending institutions of higher education in the 
     State, and philanthropic organizations that are located in, 
     or who provide funding in, the State or private corporations 
     that are located in, or who do business in, the State, then 
     the Federal share of the cost of carrying out the activities 
     under subsection (d) shall be equal to 57 percent.
       ``(iii) If a State applies for an allotment under this 
     section in partnership with any number of degree granting 
     institutions of higher education in the State whose combined 
     full-time enrollment represents a majority of all students 
     attending institutions of higher education in the State, 
     philanthropic organizations that are located in, or who 
     provide funding in, the State, and private corporations that 
     are located in, or who do business in, the State, then the 
     Federal share of the cost of carrying out the activities 
     under subsection (d) shall be equal to 66.66 percent.
       ``(c) Application for Allotment.--
       ``(1) In general.--
       ``(A) Submission.--A State that desires to receive an 
     allotment under this section shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       ``(B) Content.--An application submitted under subparagraph 
     (A) shall include the following:
       ``(i) A description of the State's plan for using the 
     allotted funds.
       ``(ii) Assurances that the State will provide matching 
     funds, from State, institutional, philanthropic, or private 
     funds, of not less than 33.33 percent of the cost of carrying 
     out the activities under subsection (d). The State shall 
     specify the methods by which matching funds will be paid and 
     include provisions designed to ensure that funds provided 
     under this section will be used to supplement, and not 
     supplant, Federal and non-Federal funds available for 
     carrying out the activities under this title. A State that 
     uses non-Federal funds to create or expand existing 
     partnerships with nonprofit organizations or community-based 
     organizations in which such organizations match State funds 
     for student scholarships, may apply such matching funds from 
     such organizations toward fulfilling the State's matching 
     obligation under this clause.
       ``(iii) Assurances that early information and intervention, 
     mentoring, or outreach programs exist within the State or 
     that there is a plan to make such programs widely available.
       ``(iv) A description of the organizational structure that 
     the State has in place to administer the activities under 
     subsection (d), including a description of the system the 
     State will use to track the participation of students who 
     receive grants under this section to degree completion.
       ``(v) Assurances that the State has a method in place, such 
     as acceptance of the automatic zero expected family 
     contribution determination described in section 479, to 
     identify eligible low-income students and award State grant 
     aid to such students.
       ``(vi) Assurances that the State will provide notification 
     to eligible low-income students that grants under this 
     section are--

       ``(I) Leveraging Educational Assistance Partnership Grants; 
     and
       ``(II) funded by the Federal Government and the State.

       ``(2) State agency.--The State agency that submits an 
     application for a State under section 415C(a) shall be the 
     same State agency that submits an application under paragraph 
     (1) for such State.
       ``(3) Partnership.--
       ``(A) Mandatory partners.--In applying for an allotment 
     under this section, the State agency shall apply for the 
     allotment in partnership with--
       ``(i) not less than 1 public and 1 private degree granting 
     institution of higher education that are located in the 
     State; and
       ``(ii) new or existing early information and intervention, 
     mentoring, or outreach programs located in the State.
       ``(B) Permissive partners.--In addition to applying for an 
     allotment under this section in partnership with degree 
     granting institutions of higher education and early 
     information and intervention, mentoring, or outreach 
     programs, a State agency may also apply in partnership with 
     philanthropic organizations that are located in, or who 
     provide funding in, the State and private corporations that 
     are located in, or who do business in, the State.
       ``(C) Roles of partners.--
       ``(i) State agency.--A State agency that is in a 
     partnership receiving an allotment under this section--

       ``(I) shall--

       ``(aa) serve as the primary administrative unit for the 
     partnership;
       ``(bb) provide or coordinate matching funds, and coordinate 
     activities among partners;
       ``(cc) encourage each institution of higher education in 
     the State to participate in the partnership;
       ``(dd) make determinations and early notifications of 
     assistance as described under subsection (d)(2); and
       ``(ee) annually report to the Secretary on the 
     partnership's progress in meeting the purpose of this 
     section; and

       ``(II) may provide early information and intervention, 
     mentoring, or outreach programs.

       ``(ii) Degree granting institutions of higher education.--A 
     degree granting institution of higher education that is in a 
     partnership receiving an allotment under this section--

       ``(I) shall--

       ``(aa) recruit and admit participating qualified students 
     and provide such additional institutional grant aid to 
     participating students as agreed to with the State agency;
       ``(bb) provide support services to students who receive an 
     access and persistence grant under this section and are 
     enrolled at such institution; and
       ``(cc) assist the State in the identification of eligible 
     students and the dissemination of early notifications of 
     assistance as agreed to with the State agency; and

       ``(II) may provide funding for early information and 
     intervention, mentoring, or outreach programs or provide such 
     services directly.

       ``(iii) Programs.--An early information and intervention, 
     mentoring, or outreach program that is in a partnership 
     receiving an allotment under this section shall provide 
     direct services, support, and information to participating 
     students.
       ``(iv) Permissive partners.--A philanthropic organization 
     or private corporation that is in a partnership receiving an 
     allotment under this section shall provide funds for access 
     and persistence grants for participating students, or provide 
     funds or support for early information and intervention, 
     mentoring, or outreach programs.
       ``(d) Authorized Activities.--
       ``(1) In general.--
       ``(A) Establishment of partnership.--Each State receiving 
     an allotment under this section shall use the funds to 
     establish a partnership to award access and persistence 
     grants to eligible low-income students in order to increase 
     the amount of financial assistance such students receive 
     under this subpart for undergraduate education expenses.
       ``(B) Amount.--
       ``(i) Partnerships with institutions serving less than a 
     majority of students in the state.--

       ``(I) In general.--In the case where a State receiving an 
     allotment under this section is in a partnership described in 
     clause (i) or (ii) of subsection (b)(2)(B), the amount of an 
     access and persistence grant awarded by such State shall be 
     not less than the amount that is equal to the average 
     undergraduate tuition and mandatory fees at 4-year public 
     institutions of higher education in the State where the 
     student resides (less any other

[[Page S6102]]

     Federal or State sponsored grant amount, college work study 
     amount, and scholarship amount received by the student) and 
     such amount shall be used toward the cost of attendance at an 
     institution of higher education, located in the State, that 
     is a partner in the partnership.
       ``(II) Cost of attendance.--A State that has a program, 
     apart from the partnership under this section, of providing 
     eligible low-income students with grants that are equal to 
     the average undergraduate tuition and mandatory fees at 4-
     year public institutions of higher education in the State, 
     may increase the amount of access and persistence grants 
     awarded by such State up to an amount that is equal to the 
     average cost of attendance at 4-year public institutions of 
     higher education in the State (less any other Federal or 
     State sponsored grant amount, college work study amount, and 
     scholarship amount received by the student).

       ``(ii) Partnership with institutions serving the majority 
     of students in the state.--In the case where a State 
     receiving an allotment under this section is in a partnership 
     described in subsection (b)(2)(B)(iii), the amount of an 
     access and persistence grant awarded by such State shall be 
     up to an amount that is equal to the average cost of 
     attendance at 4-year public institutions of higher education 
     in the State where the student resides (less any other 
     Federal or State sponsored grant amount, college work study 
     amount, and scholarship amount received by the student) and 
     such amount shall be used by the student to attend an 
     institution of higher education, located in the State, that 
     is a partner in the partnership.
       ``(2) Early notification.--
       ``(A) In general.--Each State receiving an allotment under 
     this section shall annually notify low-income students, such 
     as students who are eligible to receive a free lunch under 
     the school lunch program established under the Richard B. 
     Russell National School Lunch Act, in grade 7 through grade 
     12 in the State of their potential eligibility for student 
     financial assistance, including an access and persistence 
     grant, to attend an institution of higher education.
       ``(B) Content of notice.--The notification under 
     subparagraph (A)--
       ``(i) shall include--

       ``(I) information about early information and intervention, 
     mentoring, or outreach programs available to the student;
       ``(II) information that a student's candidacy for an access 
     and persistence grant is enhanced through participation in an 
     early information and intervention, mentoring, or outreach 
     program;
       ``(III) an explanation that student and family eligibility 
     and participation in other Federal means-tested programs may 
     indicate eligibility for an access and persistence grant and 
     other student aid programs;
       ``(IV) a nonbinding estimation of the total amount of 
     financial aid a low-income student with a similar income 
     level may expect to receive, including an estimation of the 
     amount of an access and persistence grant and an estimation 
     of the amount of grants, loans, and all other available types 
     of aid from the major Federal and State financial aid 
     programs;
       ``(V) an explanation that in order to be eligible for an 
     access and persistence grant, at a minimum, a student shall 
     meet the requirement under paragraph (3), graduate from 
     secondary school, and enroll at an institution of higher 
     education that is a partner in the partnership;
       ``(VI) information on any additional requirements (such as 
     a student pledge detailing student responsibilities) that the 
     State may impose for receipt of an access and persistence 
     grant under this section; and
       ``(VII) instructions on how to apply for an access and 
     persistence grant; and

       ``(ii) may include a disclaimer that access and persistence 
     grant awards are contingent upon--

       ``(I) a determination of the student's financial 
     eligibility at the time of the student's enrollment at an 
     institution of higher education that is a partner in the 
     partnership;
       ``(II) annual Federal and State appropriations; and
       ``(III) other aid received by the student at the time of 
     the student's enrollment at an institution of higher 
     education that is a partner in the partnership.

       ``(3) Eligibility.--In determining which students are 
     eligible to receive access and persistence grants, the State 
     shall ensure that each such student meets not less than 2 of 
     the following criteria and give priority to students meeting 
     all of the following criteria:
       ``(A) Has an expected family contribution equal to zero (as 
     described in section 479) or a comparable alternative based 
     upon the State's approved criteria in section 415C(b)(4).
       ``(B) Is participating in, or has participated in, a 
     Federal, State, institutional, or community early information 
     and intervention, mentoring, or outreach program, as 
     recognized by the State agency administering activities under 
     this section.
       ``(C) Has qualified for a free lunch, or at the State's 
     discretion a reduced price lunch, under the school lunch 
     program established under the Richard B. Russell National 
     School Lunch Act.
       ``(D) Qualifies for the State's maximum undergraduate 
     award, as authorized under section 415C(b).
       ``(E) Receives, or has received, an access and persistence 
     grant under this section.
       ``(4) Grant award.--Once a student, including those who 
     have received early notification under paragraph (2) from the 
     State, applies for admission to an institution that is a 
     partner in the partnership, files a Free Application for 
     Federal Student Aid and any related existing State form, and 
     is determined eligible by the State under paragraph (3), the 
     State shall--
       ``(A) issue the student a preliminary access and 
     persistence grant award certificate with tentative award 
     amounts; and
       ``(B) inform the student that payment of the access and 
     persistence grant award amounts is subject to certification 
     of enrollment and award eligibility by the institution of 
     higher education.
       ``(5) Duration of award.--An eligible student that receives 
     an access and persistence grant under this section shall 
     receive such grant award for each year of such student's 
     undergraduate education in which the student remains eligible 
     for assistance under this title, including pursuant to 
     section 484(c), and remains financially eligible as 
     determined by the State, except that the State may impose 
     reasonable time limits to baccalaureate degree completion.
       ``(e) Administrative Cost Allowance.--A State that receives 
     an allotment under this section may reserve not more than 3.5 
     percent of the funds made available annually through the 
     allotment for State administrative functions required to 
     carry out this section.
       ``(f) Statutory and Regulatory Relief for Institutions of 
     Higher Education.--The Secretary may grant, upon the request 
     of an institution of higher education that is in a 
     partnership described in subsection (b)(2)(B)(iii) and that 
     receives an allotment under this section, a waiver for such 
     institution from statutory or regulatory requirements that 
     inhibit the ability of the institution to successfully and 
     efficiently participate in the activities of the partnership.
       ``(g) Applicability Rule.--The provisions of this subpart 
     which are not inconsistent with this section shall apply to 
     the program authorized by this section.
       ``(h) Maintenance of Effort Requirement.--Each State 
     receiving an allotment under this section for a fiscal year 
     shall provide the Secretary an assurance that the aggregate 
     amount expended per student or the aggregate expenditures by 
     the State, from funds derived from non-Federal sources, for 
     the authorized activities described in subsection (d) for the 
     preceding fiscal year were not less than the amount expended 
     per student or the aggregate expenditure by the State for the 
     activities for the second preceding fiscal year.
       ``(i) Reports.--Not later than 3 years after the date of 
     enactment of the Accessing College through Comprehensive 
     Early Outreach, State Partnerships, and Simplification Act, 
     and annually thereafter, the Secretary shall submit a report 
     describing the activities and the impact of the partnerships 
     under this section to the Committee on Health, Education, 
     Labor, and Pensions of the Senate and the Committee on 
     Education and the Workforce of the House of 
     Representatives.''.
       (d) Continuation and Transition.--During the 2-year period 
     commencing on the date of enactment of this Act, the 
     Secretary shall continue to award grants under section 415E 
     of the Higher Education Act of 1965 (20 U.S.C. 1070c-3a), as 
     such section existed on the day before the date of enactment 
     of this Act, to States that choose to apply for grants under 
     such predecessor section.
       (e) Implementation and Evaluation.--Section 491(j) of the 
     Higher Education Act of 1965 (20 U.S.C. 1098(j)) is amended--
       (1) in paragraph (4), by striking ``and'' after the 
     semicolon; and
       (2) by striking paragraph (5) and inserting the following:
       ``(5) not later than 6 months after the date of enactment 
     of the Accessing College through Comprehensive Early 
     Outreach, State Partnerships, and Simplification Act, advise 
     the Secretary on means to implement the activities under 
     section 415E, and the Advisory Committee shall continue to 
     monitor, evaluate, and make recommendations on the progress 
     of partnerships that receive allotments under such section; 
     and''.

     SEC. 3. SIMPLIFIED NEEDS TEST AND AUTOMATIC ZERO 
                   IMPROVEMENTS.

       (a) Simplified Needs Test.--Section 479 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ss) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)--
       (i) by striking subparagraph (A)(i) and inserting the 
     following:
       ``(i) the student's parents--

       ``(I) file, or are eligible to file, a form described in 
     paragraph (3);
       ``(II) certify that they are not required to file an income 
     tax return;
       ``(III) 1 of whom is a dislocated worker; or
       ``(IV) or the student received benefits at some time during 
     the previous 24-month period under a means-tested Federal 
     benefit program as defined under subsection (d); and''; and

       (ii) by striking subparagraph (B)(i) 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);
       ``(II) certifies that the student (and the student's 
     spouse, if any) is not required to file an income tax return;
       ``(III) is a dislocated worker; or
       ``(IV) received benefits at some time during the previous 
     24-month period under a

[[Page S6103]]

     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 family, files a form described in this subsection, or 
     subsection (c), as the case may be, if the student or family, 
     as appropriate, files'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) the student's parents--
       ``(i) file, or are eligible to file, a form described in 
     subsection (b)(3);
       ``(ii) certify that they are not required to file an income 
     tax return;
       ``(iii) 1 of whom is a dislocated worker; or
       ``(iv) or the student received benefits at some time during 
     the previous 24-month period under a means-tested Federal 
     benefit program as defined under subsection (d); and''; and
       (ii) by striking subparagraph (B) and inserting the 
     following:
       ``(B) the sum of the adjusted gross income of the parents 
     is less than or equal to $25,000; or'';
       (B) in paragraph (2)--
       (i) by striking subparagraph (A) 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);
       ``(ii) certifies that the student (and the student's 
     spouse, if any) is not required to file an income tax return;
       ``(iii) is a dislocated worker; or
       ``(iv) received benefits at some time during the previous 
     24-month period under a means-tested Federal benefit program 
     as defined under subsection (d); and''; and
       (ii) by striking subparagraph (B) and inserting the 
     following:
       ``(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 striking the flush matter at the end and inserting 
     the following:

     ``The Secretary shall annually adjust the income level 
     necessary to qualify an applicant for the zero expected 
     family contribution. The income level shall be adjusted 
     according to increases in the Consumer Price Index, as 
     defined in section 478(f).''; and
       (3) by adding at the end the following:
       ``(d) Definitions.--In this section:
       ``(1) Dislocated worker.--The term `dislocated worker' has 
     the same meaning given the term in section 101 of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2801).
       ``(2) Means-Tested Federal Benefit Program.--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, and the free and reduced 
     price school lunch program established under the Richard B. 
     Russell National School Lunch Act.''.
       (b) Discretion of Student Financial Aid Administrators.--
     Section 479A(a) of the Higher Education Act of 1965 (20 
     U.S.C. 1087tt(a)) is amended in the third sentence by 
     inserting ``a family member who is a dislocated worker (as 
     defined in section 101 of the Workforce Investment Act of 
     1998 (29 U.S.C. 2801)),'' after ``recent unemployment of a 
     family member,''.

     SEC. 4. IMPROVING PAPER AND ELECTRONIC FORMS.

       (a) Simplified Needs Test.--Section 479(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ss(a)) is amended by 
     adding at the end the following:
       ``(3) Simplified forms.--The Secretary shall make special 
     efforts to notify families meeting the requirements of 
     subsection (c) that such families may use the FAFSA-EZ or the 
     simplified electronic application form established under 
     section 483(a).''.
       (b) Common Financial Aid Form Development and Processing.--
     Section 483 of the Higher Education Act of 1965 (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 (7), (8), (9), and (10), respectively;
       (C) by inserting before paragraph (7), 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'.
       ``(2) 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) FAFSA-EZ.--
       ``(i) In general.--The Secretary shall develop and use a 
     simplified paper application form, to be known as the `FAFSA-
     EZ', to be used for applicants meeting the requirements of 
     section 479(c).
       ``(ii) Reduced data requirements.--The FAFSA-EZ 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 
     FAFSA-EZ space for information that needs to be submitted 
     from the applicant to be eligible for State financial 
     assistance, as provided under paragraph (5), except the 
     Secretary shall not include a State's data if that State does 
     not permit its applicants for State assistance to use the 
     FAFSA-EZ.
       ``(iv) Free availability and processing.--The provisions of 
     paragraph (6) shall apply to the FAFSA-EZ, and the data 
     collected by means of the FAFSA-EZ shall be available to 
     institutions of higher education, guaranty agencies, and 
     States in accordance with paragraph (7).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the FAFSA-EZ.
       ``(C) Phasing out the paper form for students who do not 
     meet the requirements of the automatic zero expected family 
     contribution.--
       ``(i) In general.--The Secretary shall make all efforts to 
     encourage all applicants to utilize the electronic forms 
     described in paragraph (3).
       ``(ii) Phaseout of full fafsa.--Not later than award year 
     2009-2010, the Secretary shall phaseout the long paper form 
     for applicants who do not qualify for the FAFSA-EZ.
       ``(iii) Use of savings to address the digital divide.--The 
     Secretary shall utilize savings accrued by moving more 
     applicants to the electronic forms to improve access to the 
     electronic forms for applicants meeting the requirements of 
     section 479(c).
       ``(3) 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 a 
     common electronic form for applicants who do not meet the 
     requirements of subparagraph (B).
       ``(B) Simplified application: 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 (b) or 
     (c) of section 479.
       ``(ii) Reduced data requirements.--The simplified 
     electronic application form 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 form space for information 
     that needs to be submitted from the applicant to be eligible 
     for State financial assistance, as provided under paragraph 
     (5), except the Secretary shall not include a State's data if 
     that State does not permit its applicants for State 
     assistance to use the simplified electronic application form.
       ``(iv) Free availability and processing.--The provisions of 
     paragraph (6) shall apply to the simplified electronic 
     application form, and the data collected by means of the 
     simplified electronic application form shall be available to 
     institutions of higher education, guaranty agencies, and 
     States in accordance with paragraph (7).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the form developed under this subparagraph.
       ``(C) Rule of construction.--Nothing in this subsection 
     shall be construed to prohibit the use of the form developed 
     by the Secretary pursuant to this paragraph by an eligible 
     institution, eligible lender, guaranty agency, State grant 
     agency, private computer software providers, a consortium 
     thereof, or such other entities as the Secretary may 
     designate.
       ``(D) 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 form. Data collected by such 
     electronic version of the form shall be used only for the 
     application, award, and administration of aid awarded under 
     this title, State aid, or aid awarded by eligible 
     institutions or such entities as the Secretary may designate. 
     No data collected by such electronic version of the form 
     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.

[[Page S6104]]

       ``(E) Signature.--Notwithstanding any other provision of 
     this Act, the Secretary may permit an electronic form to be 
     submitted without a signature, if a signature is subsequently 
     submitted by the applicant.
       ``(F) Personal identification numbers authorized.--The 
     Secretary is authorized to 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; and
       ``(ii) for any purpose determined by the Secretary to 
     enable the Secretary to carry out this title.
       ``(4) Reapplication.--
       ``(A) 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.
       ``(B) Updated.--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.
       ``(C) Rule of construction.--Nothing in this title shall be 
     construed as limiting the authority of the Secretary to 
     reduce the number of data elements required of reapplicants.
       ``(D) 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.
       ``(5) 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. Such items shall be selected in consultation with States 
     to assist in the awarding of State financial assistance in 
     accordance with the terms 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 States notify the 
     Secretary that they no longer require 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 nonfinancial data items the 
     States require to award need-based State aid and other 
     application requirements that the States may impose.
       ``(C) 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 they are unable to permit applicants to utilize 
     the FAFSA-EZ or the simplified electronic application form; 
     and
       ``(ii) of the State-specific nonfinancial data that the 
     State agency requires for delivery of State need-based 
     financial aid.
       ``(D) State notification to the secretary.--
       ``(i) In general.--Each State shall notify the Secretary 
     whether it permits an applicant to file a form described in 
     paragraph (2)(B) or (3)(B) for purposes of determining 
     eligibility for State need-based grant aid.
       ``(ii) No permission.--In the event that a State does not 
     permit an applicant to file a form described in paragraph 
     (2)(B) or (3)(B) for purposes of determining eligibility for 
     State need-based grant aid--

       ``(I) the State shall notify the Secretary if it 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 FAFSA-EZs and simplified electronic application 
     forms.

       ``(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 a FAFSA-EZ 
     or a simplified electronic application form; and
       ``(II) not require any resident of that State to complete 
     any nonfinancial data previously required by that State.

       ``(E) Restriction.--The Secretary shall not require 
     applicants to complete any nonfinancial data or financial 
     data that are not required by the applicant's State agency, 
     except as may be required for applicants who use the common 
     paper form.
       ``(6) Charges to students and parents for use of forms 
     prohibited.--The common financial reporting forms prescribed 
     by the Secretary under this subsection shall be produced, 
     distributed, and processed by the Secretary and no parent or 
     student shall be charged a fee by the Secretary, a 
     contractor, a third party servicer or private software 
     provider, or any other public or private entity for the 
     collection, processing, or delivery of financial aid through 
     the use of such forms. The need and eligibility of a student 
     for financial assistance under parts A through E (other than 
     under subpart 4 of part A) may only be determined by using a 
     form developed by the Secretary pursuant to this subsection. 
     No student may receive assistance under parts A through E 
     (other than under subpart 4 of part A), except by use of a 
     form developed by the Secretary pursuant to this subsection. 
     No data collected on a paper or electronic form, worksheet, 
     or other document for which a fee is charged shall be used to 
     complete the form prescribed under this subsection. No 
     person, commercial entity, or other entity shall request, 
     obtain, or utilize an applicant's Personal Identification 
     Number for purposes of submitting an application on an 
     applicant's behalf except State agencies that have entered 
     into an agreement with the Secretary to streamline 
     applications, eligible institutions, or programs under this 
     title as permitted by the Secretary.'';
       (2) by striking subsection (b) and inserting the following:
       ``(b) Early Notification of Aid Eligibility.--
       ``(1) In general.--The Secretary shall make every effort to 
     provide students with early information about potential 
     financial aid eligibility.
       ``(2) Availability of means to determine eligibility.--
       ``(A) In general.--The Secretary shall provide, in 
     cooperation with States, institutions of higher education, 
     agencies, and organizations involved in student financial 
     assistance, both through a widely disseminated printed form 
     and the Internet or other electronic means, a system for 
     individuals to determine easily, by entering relevant data, 
     approximately the amount of grant, work-study, and loan 
     assistance for which an individual would be eligible under 
     this title upon completion and verification of form under 
     subsection (a).
       ``(B) Determination of whether to use simplified 
     application.--The system established under this paragraph 
     shall also permit users to determine whether or not they may 
     apply for aid using a FAFSA-EZ or a simplified electronic 
     application form under subsection (a).
       ``(3) Availability of means to communicate eligibility.--
       ``(A) Lower-income students.--The Secretary shall--
       ``(i) make special efforts to notify students who qualify 
     for a free or reduced price lunch under the school lunch 
     program established under the Richard B. Russell National 
     School Lunch Act, benefits under the food stamp program under 
     the Food Stamp Act of 1977, or benefits under such programs 
     as the Secretary shall determine, of such students' potential 
     eligibility for a maximum Federal Pell Grant under subpart 1 
     of part A; and
       ``(ii) disseminate informational materials regarding the 
     linkage between eligibility for means-tested Federal benefit 
     programs and eligibility for a Federal Pell Grant, as 
     determined necessary by the Secretary.
       ``(B) Middle school students.--The Secretary shall, in 
     cooperation with States, middle schools, programs under this 
     title that serve middle school students, and other 
     cooperating independent outreach programs, make special 
     efforts to notify middle school students of the availability 
     of financial assistance under this title and of the 
     approximate amounts of grant, work-study, and loan assistance 
     an individual would be eligible for under this title.
       ``(C) Secondary school students.--The Secretary shall, in 
     cooperation with States, secondary schools, programs under 
     this title that serve secondary school students, and 
     cooperating independent outreach programs, make special 
     efforts to notify students in their junior year of secondary 
     school the approximate amounts of grant, work-study, and loan 
     assistance an individual would be eligible for under this 
     title upon completion and verification of an application form 
     under subsection (a).'';
       (3) in subsection (c), by striking ``Labor and Human 
     Resources'' and inserting ``Health, Education, Labor, and 
     Pensions'';
       (4) by striking subsection (d); and
       (5) by redesignating subsection (e) as subsection (d).
       (c) Toll-Free Application and Information.--Section 479 of 
     the Higher Education Act of 1965 (20 U.S.C. 1087ss), as 
     amended by section 3, is further amended by adding at the end 
     the following:
       ``(e) Toll-Free Application and Information.--The Secretary 
     shall contract for, or establish, and publicize a toll-free 
     telephone service to provide an application mechanism and 
     timely and accurate information to the general public. The 
     information provided shall include specific instructions on 
     completing the application form for assistance under this 
     title. Such service shall also include a service accessible 
     by telecommunications devices for the deaf (TDD's) and shall, 
     in addition to the services provided for in the previous 
     sentence, refer such students to the national clearinghouse 
     on postsecondary education that is authorized under section 
     685(d)(2)(C) of the Individuals with Disabilities Education 
     Act. Not later than 2 years after the date of enactment of 
     the Accessing College through Comprehensive Early Outreach, 
     State Partnerships, and Simplification Act, the Secretary 
     shall test and implement a toll-free telephone-based 
     application system to permit applicants to utilize the FAFSA-
     EZ or simplified electronic application form under section 
     483(a) over such system.''.
       (d) Master Calendar.--Section 482(a)(1)(B) of the Higher 
     Education Act of 1965 (20 U.S.C. 1089) is amended to read as 
     follows:
       ``(B) by March 1: proposed modifications and updates 
     pursuant to sections 478 and 483(a)(5) published in the 
     Federal Register;''.

[[Page S6105]]

     SEC. 5. ALLOWANCE FOR STATE AND OTHER TAXES.

       Section 478(g) of the Higher Education Act of 1965 (20 
     U.S.C. 1087rr(g)) is amended to read as follows:
       ``(g) State and Other Tax Allowance.--For each award year 
     after award year 2004-2005, the Secretary shall publish in 
     the Federal Register a revised table of State and other tax 
     allowances for the purpose of sections 475(c)(2), 475(g)(3), 
     476(b)(2), and 477(b)(2). The Secretary shall develop such 
     revised table after review of the Department of the 
     Treasury's Statistics of Income file and determination of the 
     percentage of income that each State's taxes represent. 
     Updates shall be phased in proportionately over a period of 
     time equal to the number of years since the last update.''.

     SEC. 6. SUPPORT FOR WORKING STUDENTS.

       (a) Dependent Students.--Section 475(g)(2)(D) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087oo(g)(2)(D)) is amended 
     to read as follows:
       ``(D) $9,000;''.
       (b) Independent Students Without Dependents Other Than a 
     Spouse.--Section 476(b)(1)(A)(iv) of the Higher Education Act 
     of 1965 (20 U.S.C. 1087pp(b)(1)(A)(iv)) is amended to read as 
     follows:
       ``(iv) an income protection allowance of the following 
     amount (or a successor amount prescribed by the Secretary 
     under section 478)--

       ``(I) $10,000 for single students;
       ``(II) $10,000 for married students where both are enrolled 
     pursuant to subsection (a)(2); and
       ``(III) $13,000 for married students where 1 is enrolled 
     pursuant to subsection (a)(2);''.

       (c) Independent Students With Dependents Other Than a 
     Spouse.--Section 477(b)(4) of the Higher Education Act of 
     1965 (20 U.S.C. 1087qq(b)(4)) is amended to read as follows:
       ``(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
----------------------------------------------------------------------------------------------------------------
                                                                        Number in College
                                    Family Size ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
                                         2         $17,580      $15,230
                                         3          20,940       17,610      $16,260
                                         4          24,950       22,600       20,270      $17,930
                                         5          28,740       26,390       24,060       21,720      $19,390
                                         6          32,950       30,610       28,280       25,940       23,610
----------------------------------------------------------------------------------------------------------------
  NOTE: For each additional family member, add $3,280.
  For each additional college student, subtract $2,330.''.

     SEC. 7. TREATMENT OF PREPAYMENT AND SAVINGS PLANS UNDER 
                   STUDENT FINANCIAL AID NEEDS ANALYSIS.

       (a) Definition of Assets.--Section 480(f) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087vv(f)) is amended--
       (1) in paragraph (1), by inserting ``qualified education 
     benefits (except as provided in paragraph (3)),'' after ``tax 
     shelters,''; and
       (2) by adding at the end the following:
       ``(3) A qualified education benefit shall not be considered 
     an asset of a student for purposes of section 475.
       ``(4) In this subsection, the term `qualified education 
     benefit' means--
       ``(A) a program that is described in clause (i) of section 
     529(b)(1)(A) of the Internal Revenue Code of 1986 and that 
     meets the requirements of section 529(b)(1)(B) of such Code;
       ``(B) a State tuition program described in clause (ii) of 
     section 529(b)(1)(A) of the Internal Revenue Code of 1986 
     that meets the requirements of section 529(b)(1)(B) of such 
     Code; and
       ``(C) a Coverdell education savings account (as defined in 
     section 530(b)(1) of the Internal Revenue Code of 1986).''.
       (b) Definition of Other Financial Assistance.--Section 
     480(j) of the Higher Education Act of 1965 (20 U.S.C. 
     1087vv(j)) is amended--
       (1) in the heading, by striking ``; Tuition Prepayment 
     Plans';
       (2) by striking paragraph (2); and
       (3) by redesignating paragraph (3) as paragraph (2).
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to determinations of need under part 
     F of title IV of the Higher Education Act of 1965 (20 U.S.C. 
     1087kk et seq.) for academic years beginning on or after July 
     1, 2005.

     SEC. 8. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

       Section 491 of the Higher Education Act of 1965 (20 U.S.C. 
     1098), as amended by section 2, is further amended--
       (1) in subsection (a)(2)--
       (A) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (C), by striking the period at the end 
     and inserting a semicolon; and
       (C) by adding at the end the following:
       ``(D) to provide knowledge and understanding of early 
     intervention programs and make recommendations that will 
     result in early awareness by low- and moderate-income 
     students and families of their eligibility for assistance 
     under this title, and, to the extent practicable, their 
     eligibility for other forms of State and institutional need-
     based student assistance; and
       ``(E) to make recommendations that will expand and improve 
     partnerships among the Federal Government, States, 
     institutions, and private entities to increase the awareness 
     and total amount of need-based student assistance available 
     to low- and moderate-income students.'';
       (2) in subsection (d)--
       (A) in paragraph (6), by striking ``, but nothing in this 
     section shall authorize the committee to perform such 
     studies, surveys, or analyses'';
       (B) in paragraph (8), by striking ``and'' after the 
     semicolon;
       (C) by redesignating paragraph (9) as paragraph (10); and
       (D) by inserting after paragraph (8) the following:
       ``(9) monitor the adequacy of total need-based aid 
     available to low- and moderate-income students from all 
     sources, assess the implications for access and persistence, 
     and report those implications annually to Congress and the 
     Secretary; and'';
       (3) in subsection (j), by adding at the end the following:
       ``(6) monitor and assess implementation of improvements 
     called for under this title, make recommendations to the 
     Secretary that ensure the timely design, testing, and 
     implementation of the improvements, and report annually to 
     Congress and the Secretary on progress made toward 
     simplifying overall delivery, reducing data elements and 
     questions, incorporating the latest technology, aligning 
     Federal, State, and institutional eligibility, enhancing 
     partnerships, and improving early awareness of total student 
     aid eligibility for low- and moderate-income students and 
     families.''; and
       (4) in subsection (k), by striking ``2004'' and inserting 
     ``2010''.
                                 ______