[Congressional Record Volume 151, Number 62 (Thursday, May 12, 2005)]
[Senate]
[Pages S5160-S5168]
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. 1030. A bill to amend the Higher Education Act of 1965 to simplify 
and improve the process of applying for student assistance, and for 
other purposes; to the Committee on Health, Education, Labor, and 
Pensions.
  Mr. REED. Mr. President, today I introduce two bills to expand access 
to college. I am pleased to be joined in this effort by Senators 
Collins, Kennedy, and Murray.
  We are slated to reauthorize the Higher Education Act this Congress, 
after being unable to do so in the 108th Congress. Over the course of 
this time, the discussions on higher education have not focused on 
proposals that would help the neediest students attend college. This is 
troubling, particularly as more and more students are being priced out 
of college, which shortchanges their future and that of our Nation.
  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.
  And yet, too many college students are underprepared, underfinanced, 
and overworked. Those who make it through are saddled by huge loans. 
But as reports such as Empty Promises by the Advisory Committee on 
Student Financial Assistance have shown, 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 is not working to close the gap in 
college attendance between our lowest and highest income students or 
the gap between the aid low-income students receive and the actual cost 
of attendance. Indeed, about seven times as many students from high-
income families graduate from college by age 24 as students from low-
income families. Low-income, college-qualified high school graduates 
have an annual ``unmet need'' of $4,000 and rising in college expenses.
  A decline in real dollars spent on grants and sharp increases in the 
cost of college have been key causal factors of this unfortunate 
situation. Indeed, there has been a steep decline in the purchasing 
power of the Pell Grant, which was established by my predecessor, 
Senator Claiborne Pell, to ensure higher education was not an 
``unachievable dream.'' According to the State PIRGs' Higher Education 
Project, the maximum Pell Grant covered 84 percent of average four-year 
public tuition costs in 1976. Today, the maximum Pell Grant of $4,050 
covers only about 39 percent.
  Over the last 10 years, tuition and fees at public and private 4-year 
colleges rose 51 percent and 36 percent, respectively, (after adjusting 
for inflation), which is a more rapid growth rate than consumer prices. 
Students have felt the bite as states have drastically cut funding for 
public colleges.
  In 2008, the largest number of students in our history will graduate 
from high school. Another demographic reality is that our nation will 
need to ensure a steady stream of replacement workers as college-
educated baby boomers begin to retire in increasing numbers.
  This crisis calls out for action. An educated citizenry and a world 
class workforce should be a national imperative. Our nation cannot 
afford to lose out on the countless returns from a robust education 
investment.
  Today we introduce two bills to expand college access.
  The first bill, the ACCESS--Accessing College through Comprehensive 
Early Outreach and State Partnerships--Act, focuses on a program I have 
long worked with Senator Collins and the other cosponsors to save, 
reinvigorate, and fund the Leveraging Educational Assistance 
Partnership or LEAP program. LEAP is the only program in which the 
federal and state governments are partners in extending higher 
education opportunities to financially needy students.
  The ACCESS Act forges a new Federal incentive for States to do even 
more to help low-income students by creating within LEAP an access and 
persistence partnership program. States will be rewarded--via higher

[[Page S5161]]

levels of federal matching dollars--for creating vibrant partnerships 
with colleges, early intervention and mentoring programs, foundations, 
and businesses and providing cohesion and coordination among these 
entities. Access and persistence partnerships have three main goals: to 
provide low-income students with a grant that fills the gap of their 
unmet need; to increase participation of low-income students in early 
information, intervention, mentoring, and outreach programs; and to 
provide early notification to low-income students of their eligibility 
for financial aid. Research has shown that 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.
  The second bill we introduce today, the FAFSA--Financial Aid Form 
Simplification and Access Act--has several key components designed to 
make the college application process both simple and certain. As the 
advisory committee's recent report, The Student Aid Gauntlet, has 
shown, students today confront an overly burdensome and complex 
financial aid application process. Our legislation would simplify this 
process by allowing more students to qualify for an Automatic-Zero--
auto-zero--Expected Family Contribution by aligning its eligibility 
with the standards of 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 EZ-
FAFSA application form for students qualifying for the auto-zero; 
phases out the printing of the long paper form and utilizes the savings 
to bridge the digital divide for students without web access; requires 
the utilization of smart technology to create a tailored web-based 
application form that ensures students answer only the questions needed 
to determine financial aid eligibility in the State in which they 
reside; and creates a free telefile system for students without 
Internet access. Additionally, the FAFSA Act requires the Secretary, in 
cooperation with states and colleges, to develop a system for students 
to get early estimates of aid from multiple sources, learn if they 
qualify to fill out an EZ FAFSA, and notify those participating in 
Federal means-tested programs of their potential eligibility for a 
maximum Pell Grant. Simplified forms and an early information system 
providing details on what filling out these forms means to students is 
critical, particularly given the American Council on Education's 
findings that one of every five dependent low-income students and one 
of every four independent low-income students failed to take advantage 
of financial aid programs because they did not submit a FAFSA.
  The FAFSA Act also expands college access for low-income students, in 
part by simplifying the application process for students with special 
circumstances, including students in foster care and emancipated youth; 
ensuring the equitable treatment of prepaid tuition and college savings 
plans; and reducing the work penalty. The current income protection 
allowance levels are unrealistically low, creating a disincentive for 
students to work in order to pay college costs.
  We must act on these bills 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 on these bills.
  I urge my colleagues to cosponsor these bills and work for their 
inclusion in the upcoming reauthorization of the Higher Education Act.
  Mr. President, I ask unanimous consent that the text of these bills 
be printed in the Record.
  There being no objection, the bills were ordered to be printed in the 
Record, as follows:

                                S. 1029

       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 and State Partnerships 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 2006, 
     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:

     ``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)(ii).
       ``(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, and philanthropic organizations that are located in, 
     or that provide funding in, the State or private corporations 
     that are located in, or that 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.
       ``(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 a majority of all students 
     attending institutions of higher education in the State, 
     philanthropic organizations that are located in, or that 
     provide funding in, the State, and private corporations that 
     are located in, or that do business in, the State, then the 
     Federal

[[Page S5162]]

     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). Matching funds from 
     philanthropic organizations used to provide early information 
     and intervention, mentoring, or outreach programs may be in 
     cash or in kind. 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.--In applying for an allotment under this 
     section, the State agency shall apply for the allotment in 
     partnership with--
       ``(A) not less than 1 public and 1 private degree granting 
     institution of higher education that are located in the 
     State;
       ``(B) new or existing early information and intervention, 
     mentoring, or outreach programs located in the State; and
       ``(C) not less than 1--
       ``(i) philanthropic organization located in, or that 
     provides funding in, the State; or
       ``(ii) private corporation located in, or that does 
     business in, the State.
       ``(4) Roles of partners.--
       ``(A) State agency.--A State agency that is in a 
     partnership receiving an allotment under this section--
       ``(i) shall--

       ``(I) serve as the primary administrative unit for the 
     partnership;
       ``(II) provide or coordinate matching funds, and coordinate 
     activities among partners;
       ``(III) encourage each institution of higher education in 
     the State to participate in the partnership;
       ``(IV) make determinations and early notifications of 
     assistance as described under subsection (d)(2); and
       ``(V) 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.
       ``(B) 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--

       ``(I) recruit and admit participating qualified students 
     and provide such additional institutional grant aid to 
     participating students as agreed to with the State agency;
       ``(II) provide support services to students who receive an 
     access and persistence grant under this section and are 
     enrolled at such institution; and
       ``(III) 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.
       ``(C) 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.
       ``(D) Philanthropic organization or private corporation.--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 
     subsection (b)(2)(B)(i), 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 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)(ii), the amount of an 
     access and persistence grant awarded by such State shall be 
     not more than 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 an explanation that a student is 
     required to file a Free Application for Federal Student Aid 
     authorized under section 483(a) to be eligible for such grant 
     and assistance from other Federal and State financial aid 
     programs; and

[[Page S5163]]

       ``(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 1 of 
     the following:
       ``(A) Meets not less than 2 of the following criteria, with 
     priority given to students meeting all of the following 
     criteria:
       ``(i) 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).
       ``(ii) 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.
       ``(iii) Qualifies for the State's maximum undergraduate 
     award, as authorized under section 415C(b).
       ``(iv) 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.
       ``(B) Is receiving, or has received, an access and 
     persistence grant under this section, in accordance with 
     paragraph (5).
       ``(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)(ii) 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) Special Rule.--Notwithstanding subsection (h), for 
     purposes of determining a State's share of the cost of the 
     authorized activities described in subsection (d), the State 
     shall consider only those expenditures from non-Federal 
     sources that exceed its total expenditures for need-based 
     grants, scholarships, and work-study assistance for fiscal 
     year 1999 (including any such assistance provided under this 
     subpart).
       ``(j) Reports.--Not later than 3 years after the date of 
     enactment of the Accessing College through Comprehensive 
     Early Outreach and State Partnerships 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 
     and State Partnerships 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''.

                                S. 1030

       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 ``Financial Aid Form 
     Simplification and Access Act''.

     SEC. 2. 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 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

[[Page S5164]]

     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 (42 U.S.C. 1381 et seq.), the food 
     stamp program under the Food Stamp Act of 1977 (7 U.S.C. 2011 
     et seq.), and the free and reduced price school lunch program 
     established under the Richard B. Russell National School 
     Lunch Act (42 U.S.C. 1751 et seq.).''.
       (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,''.
       (c) Reporting Requirements.--
       (1) Eligibility guidelines.--The Secretary of Education 
     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 section 479 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ss(b)(1)(A)(i), 
     (b)(1)(B)(i), (c)(1)(A), and (c)(2)(A)).
       (2) Means-tested federal benefit program.--The Secretary 
     shall evaluate every 3 years the impact of including whether 
     a student or parent received benefits under a means-tested 
     Federal benefit program (as defined in section 479(d) of the 
     Higher Education Act of 1965 (20 U.S.C. 1087ss(d)) as a 
     factor in determining eligibility under subsections (b) and 
     (c) of section 479 of the Higher Education Act of 1965 (20 
     U.S.C. 1087ss(b) and (c)).

     SEC. 3 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 EZ FAFSA 
     described in section 483(a)(2)(B) and notify families meeting 
     the requirements of subsection (b) that such families may use 
     the simplified electronic application form described in 
     section 483(a)(3)(B).''.
       (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 (8), (9), (10), and (11), respectively;
       (C) by inserting before paragraph (8), as redesignated by 
     subparagraph (B), the following:
       ``(1) In general.--
       ``(A) Common financial reporting forms.--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 (except 
     as otherwise provided in this subsection) as the `Free 
     Application for Federal Student Aid' or `FAFSA'.
       ``(B) Early analysis.--The Secretary shall permit an 
     applicant to complete a form described in this subsection 
     prior to enrollment in order to obtain an estimate from the 
     Secretary of the applicant's expected family contribution, as 
     defined in section 473. Such applicant shall be permitted to 
     update information submitted on a form described in this 
     subsection completed prior to enrollment using the process 
     described in paragraph (4).
       ``(2) Paper format.--
       ``(A) In general.--Subject to subparagraph (C), 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 space for information that is required of an 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 EZ FAFSA.
       ``(iv) Free availability and processing.--The provisions of 
     paragraph (6) 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 (8).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the EZ FAFSA.
       ``(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 paper fafsa.--Not later than 5 
     years after the date of enactment of the Financial Aid Form 
     Simplification and Access Act, to the extent practicable, the 
     Secretary shall phaseout the printing of the full paper Free 
     Application for Federal Student Aid described in subparagraph 
     (A) and used by applicants who do not meet the requirements 
     of the EZ FAFSA described in subparagraph (B).
       ``(iii) Availability of full paper fafsa.--

       ``(I) In general.--Prior to and after the phaseout 
     described in clause (ii), the Secretary shall maintain an 
     online printable version of the paper forms described in 
     subparagraphs (A) and (B).
       ``(II) Accessibility.--The online printable version 
     described in subclause (I) shall be made easily accessible 
     and downloadable to students on the same website used to 
     provide students with the electronic application forms 
     described in paragraph (3).
       ``(III) Submission of forms.--The Secretary shall enable, 
     to the extent practicable, students to submit a form 
     described in this clause that is downloaded and printed in 
     order to meet the filing requirements of this section and to 
     receive aid from programs established under this title.

       ``(iv) Use of savings to address the digital divide.--

       ``(I) In general.--The Secretary shall utilize savings 
     accrued by phasing out the full paper Free Application for 
     Federal Student Aid and moving more applicants to the 
     electronic forms, to improve access to the electronic forms 
     for applicants meeting the requirements of section 479(c).
       ``(II) Report.--The Secretary shall report annually 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 on steps taken to eliminate the 
     digital divide and on the phaseout of the full paper Free 
     Application for Federal Student Aid described in subparagraph 
     (A). The report shall specifically address the impact of the 
     digital divide on independent students, adults, and dependent 
     students, including students completing applications 
     described in this paragraph and paragraphs (3) and (4).

       ``(3) Electronic format.--
       ``(A) In general.--
       ``(i) Establishment.--The Secretary shall produce, 
     distribute, and process common financial reporting forms in 
     electronic format (such as through a website called `FAFSA on 
     the Web') to meet the requirements of paragraph (1). The 
     Secretary shall include an electronic version of the EZ FAFSA 
     form for applicants who meet the requirements of paragraph 
     (2)(B) and develop common electronic forms for applicants who 
     meet the requirements of subparagraph (B) and common 
     electronic forms for applicants who do not meet the 
     requirements of subparagraph (B).
       ``(ii) State data.--The Secretary shall include on the 
     common electronic forms described in clause (i) space for 
     information that is required of an applicant to be eligible 
     for State financial assistance, as provided under paragraph 
     (5). The Secretary may not require an applicant to complete 
     data required by any State other than the applicant's State 
     of residence.
       (iii) Streamlined format.--The Secretary shall use, to the 
     fullest extent practicable, all available technology to 
     ensure that a student answers only the minimum number of 
     questions necessary.
       ``(B) Simplified application.--
       ``(i) In general.--The Secretary shall develop and use a 
     simplified electronic application form to be used by 
     applicants meeting the requirements under section 479(b).
       ``(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 section 479(b).
       ``(iii) State data.--The Secretary shall include on the 
     simplified electronic application form space for information 
     that is required of an 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 (8).
       ``(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 of 
     such entities, or such other entities as the Secretary may 
     designate.

[[Page S5165]]

       ``(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.
       ``(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, 
     and 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 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 forms and 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 
     each State agency to inform the Secretary--
       ``(i) if the agency is unable to permit applicants to 
     utilize the forms described in paragraphs (2)(B) and (3)(B); 
     and
       ``(ii) of the State-specific data that the 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--

       ``(I) whether the State 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; and
       ``(II) of the State-specific data that the State requires 
     for delivery of State need-based financial 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 the forms described in paragraphs (2)(B) and (3)(B).

       ``(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 the forms 
     described in paragraphs (2)(B) and (3)(B); and
       ``(II) not require any resident of that State to complete 
     any 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 paper 
     forms described in subparagraphs (A) and (B) of paragraph 
     (2).
       ``(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 or other 
     document, which the Secretary determines was created to 
     replace a form prescribed under this subsection and therefore 
     violates the integrity of a simplified and free financial aid 
     application process, 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.
       ``(7) Application processing cycle.--The Secretary shall, 
     prior to January 1 of a student's planned year of enrollment 
     to the extent practicable--
       ``(A) enable the student to submit a form described under 
     this subsection in order to meet the filing requirements of 
     this section and receive aid from programs under this title; 
     and
       ``(B) initiate the processing of a form under this 
     subsection submitted by the student.''; and
       (D) by adding at the end the following:
       ``(12) Early application and award demonstration program.--
       ``(A) In general.--Not later than 2 years after the date of 
     enactment of this paragraph, the Secretary shall implement an 
     early application demonstration program enabling dependent 
     students to--
       ``(i) complete applications under this subsection in such 
     students' junior year of secondary school, or in the academic 
     year that is 2 years prior to such students' intended year of 
     enrollment at an institution of higher education; and
       ``(ii) be eligible to receive aid under this title, aid 
     from participants under this paragraph, State financial 
     assistance as provided under section 415C, and other aid 
     provided by participating institutions through the submission 
     of an application as described in clause (i).
       ``(B) Purpose.--The purpose of the demonstration program 
     under this paragraph is 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 at an institution of higher 
     education. 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 such students' junior year of secondary 
     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.
       ``(iii) Identify whether receiving final financial aid 
     awards not later than the fall of a student's senior year 
     positively impacts the college aspirations and plans of such 
     student.
       ``(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.

       ``(v) 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, in 
     consultation with States and institutions of higher 
     education, States and institutions within the States 
     interested in participating in the demonstration program 
     under this paragraph. The States and institutions of higher 
     education shall participate in programs under this title and 
     be willing to make final financial aid awards to students

[[Page S5166]]

     based on such students' application information from the year 
     prior to the year prior to enrollment. Such awards may be 
     contingent on the student being admitted to and enrolling in 
     the participating institution the following year. The 
     Secretary shall also select as participants in the 
     demonstration program secondary schools that are located in 
     the participating States and dependent students who reside in 
     the participating States.
       ``(D) Application process.--The Secretary shall ensure that 
     the following provisions are included in the demonstration 
     program:
       ``(i) Participating States and institutions of higher 
     education shall--

       ``(I) allow participating students to apply for financial 
     aid as provided under this title during such students' junior 
     year of secondary school using information from the year 
     prior to the year prior to enrollment; and
       ``(II) award final financial aid awards to participating 
     students based on the applications provided under the 
     demonstration program.

       ``(ii) Participating States and institutions of higher 
     education shall not require students participating in the 
     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 of higher education shall be allowed to use such 
     administrators' discretion in awarding financial aid to 
     participating students, as outlined under sections 479A and 
     480(d).
       ``(E) Data match with the internal revenue service.--The 
     Secretary shall include in the 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 the demonstration program in order to measure 
     the program's benefits and adverse effects as required under 
     subparagraph (B).
       ``(G) Outreach.--The Secretary shall make appropriate 
     efforts in order to notify States of the demonstration 
     program. Upon determination of which States will be 
     participating in the demonstration program, the Secretary 
     shall continue to make efforts to notify institutions of 
     higher education and dependent students within such 
     participating States of the opportunity to participate in the 
     demonstration program and of the participation requirements.
       ``(H) Consultation.--The Secretary shall consult with the 
     Advisory Committee on Student Financial Assistance, 
     established under section 491, on the design and 
     implementation of the demonstration program and on the 
     evaluation described in paragraph (F).'';
       (2) by striking subsection (b) and inserting the following:
       ``(b) Early Awareness 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 a form under 
     subsection (a).
       ``(B) Determination of whether to use simplified 
     application.--The system established under this paragraph 
     shall also permit an individual to determine whether or not 
     the individual may apply for aid using an EZ FAFSA described 
     in subsection (a)(2)(B) or a simplified electronic 
     application form described in subsection (a)(3)(B).
       ``(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 (42 U.S.C. 1751 et seq.), benefits under the 
     food stamp program under the Food Stamp Act of 1977 (7 U.S.C. 
     2011 et seq.), 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);
       (5) by redesignating subsection (e) as subsection (d); and
       (6) by amending subsection (d), as redesignated by 
     paragraph (5), to read as follows:
       ``(d) Assistance in Preparation of Financial Aid 
     Application.--
       ``(1) Preparation authorized.--Nothing in this Act shall 
     limit an applicant from using a preparer for consultative or 
     preparation services for the completion of the common 
     financial reporting forms described in subsection (a).
       ``(2) Preparer identification.--Any common financial 
     reporting form required to be made under this title shall 
     include the name, signature, address or employer's address, 
     social security number or employer identification number, and 
     organizational affiliation of the preparer of such common 
     financial reporting form.
       ``(3) Special rule.--Nothing in this Act shall limit 
     preparers of common financial reporting forms required to be 
     made under this title from collecting source information, 
     including Internal Revenue Service tax forms, in providing 
     consultative and preparation services in completing the 
     forms.
       ``(4) Additional requirements.--A preparer that provides 
     consultative or preparation services pursuant to this 
     subsection shall--
       ``(A) clearly inform individuals upon initial contact 
     (including advertising in clear and conspicuous language on 
     the website of the preparer, including by providing a link 
     directly to the website described in subsection (a)(3), if 
     the preparer provides such services through a website) that 
     the common financial reporting forms that are required to 
     determine eligibility for financial assistance under parts A 
     through E (other than subpart 4 of part A) may be completed 
     for free via paper or electronic forms provided by the 
     Secretary;
       ``(B) refrain from producing or disseminating any form 
     other than the forms produced by the Secretary under 
     subsection (a); and
       ``(C) not charge any fee to any individual seeking such 
     services who meets the requirements under subsection (b) or 
     (c) of section 479.''.
       (c) Toll-Free Application and Information.--Section 479 of 
     the Higher Education Act of 1965 (20 U.S.C. 1087ss), as 
     amended by section 2, 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 or another appropriate provider of 
     technical assistance and information on postsecondary 
     educational services, that is supported under section 663 of 
     the Individuals with Disabilities Education Act. Not later 
     than 2 years after the date of enactment of the Financial Aid 
     Form Simplification and Access Act, the Secretary shall test 
     and implement, to the extent practicable, a toll-free 
     telephone-based application system to permit applicants who 
     are eligible to utilize the EZ FAFSA described in 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(a)(1)(B)) is amended to 
     read as follows:
       ``(B) by March 1: proposed modifications and updates 
     pursuant to sections 478, 479(c), and 483(a)(5) published in 
     the Federal Register;''.
       (e) Simplifying the Verification Process.--Section 484 of 
     the Higher Education Act of 1965 (20 U.S.C. 1091) is amended 
     by adding at the end the following:
       ``(s) Verification of Student Eligibility.--
       ``(1) Regulatory review.--The Secretary shall review all 
     regulations of the Department related to verifying the 
     information provided on a student's financial aid application 
     in order to simplify the verification process for students 
     and institutions.
       ``(2) Report.--Not later than 2 years after the date of 
     enactment of this subsection, the Secretary shall prepare and 
     submit a final report 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 
     on steps taken, to the extent practicable, to simplify the 
     verification process. The report shall specifically address 
     steps taken to--
       ``(A) reduce the burden of verification on students who are 
     selected for verification at multiple institutions;

[[Page S5167]]

       ``(B) reduce the number of data elements that are required 
     to be verified for applicants meeting the requirements of 
     subsection (b) or (c) of section 479, so that only those data 
     elements required to determine eligibility under subsection 
     (b) or (c) of section 479 are subject to verification;
       ``(C) reduce the burden and costs associated with 
     verification for institutions that are eligible to 
     participate in Federal student aid programs under this title; 
     and
       ``(D) increase the use of technology in the verification 
     process.''.

     SEC. 4. 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.--
       ``(1) Hold harmless.--Notwithstanding any other provision 
     of law, the annual updates to the allowance for State and 
     other taxes in the tables used in the Federal Need Analysis 
     Methodology to determine a student's expected family 
     contribution for the award year 2005-2006 under part F of 
     title IV, published in the Federal Register on Thursday, 
     December 23, 2004 (69 Fed. Reg. 76926), shall not apply to a 
     student to the extent the updates will reduce the amount of 
     Federal student assistance for which the student is eligible.
       ``(2) Publication in the federal register.--For each award 
     year after award year 2005-2006, 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. 
     The Secretary shall phase-in the State and other tax 
     allowances from the revised table for an award year 
     proportionately over a period of time of not less than 2 
     years if a revised table was not published in the Federal 
     Register during the previous award year.
       ``(3) Agreement.--The Secretary is authorized to enter into 
     agreement with the Commissioner of the Internal Revenue 
     Service to develop the data required to revise the 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).''.

     SEC. 5. 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 or separated 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. 6. SIMPLIFICATION FOR STUDENTS WITH SPECIAL 
                   CIRCUMSTANCES.

       (a) Independent Student.--Section 480(d) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087vv(d)) is amended to 
     read as follows:
       ``(d) Independent Student.--
       ``(1) Definition.--The term `independent', when used with 
     respect to a student, means any individual who--
       ``(A) is 24 years of age or older by December 31 of the 
     award year;
       ``(B) is an orphan, in foster care, or a ward of the court, 
     or was in foster care or a ward of the court until the 
     individual reached the age of 18;
       ``(C) is an emancipated minor or is in legal guardianship 
     as determined by a court of competent jurisdiction in the 
     individual's State of legal residence;
       ``(D) is a veteran of the Armed Forces of the United States 
     (as defined in subsection (c)(1)) or is currently serving on 
     active duty in the Armed Forces;
       ``(E) is a graduate or professional student;
       ``(F) is a married individual;
       ``(G) has legal dependents other than a spouse; or
       ``(H) is a student for whom a financial aid administrator 
     makes a documented determination of independence by reason of 
     other unusual circumstances.
       ``(2) Simplifying the dependency override process.--Nothing 
     in this section shall prohibit a financial aid administrator 
     from making a determination of independence, as described in 
     paragraph (1)(H), based upon a determination of independence 
     previously made by another financial aid administrator in the 
     same application year.''.
       (b) Tailoring Electronic Applications for Students with 
     Special Circumstances.--Section 483(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1090(a)), as amended by 
     section 3, is further amended by adding at the end the 
     following:
       ``(13) Applications for students seeking a documented 
     determination of independence.--In the case of a dependent 
     student seeking a documented determination of independence by 
     a financial aid administrator, as described in section 
     480(d), nothing in this section shall prohibit the Secretary 
     from--
       ``(A) allowing such student to--
       ``(i) indicate the student's request for a documented 
     determination of independence on an electronic form developed 
     pursuant to this subsection; and
       ``(ii) submit such form for preliminary processing that 
     only contains those data elements required of independent 
     students, as defined in section 480(d);
       ``(B) collecting and processing on a preliminary basis data 
     provided by such a student using the electronic forms 
     developed pursuant to this subsection; and
       ``(C) distributing such data to institutions of higher 
     education, guaranty agencies, and States for the purposes of 
     processing loan applications and determining need and 
     eligibility for institutional and State financial aid awards 
     on a preliminary basis, pending a documented determination of 
     independence by a financial aid administrator.''.

     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 subparagraph (2),'' after 
     ``tax shelters,'';
       (2) by redesignating paragraph (2) as paragraph (4); and
       (3) by inserting after paragraph (1) the following:
       ``(2) A qualified education benefit shall not be considered 
     an asset of a dependent student for purposes of section 475. 
     The value of a qualified education benefit for purposes of 
     determining the assets of parents or an independent student 
     shall be--
       ``(A) the refund value of any tuition credits or 
     certificates purchased under a qualified education benefit; 
     or
       ``(B) the current balance of any account that is 
     established as a qualified education benefit for the purpose 
     of meeting the qualified higher education expenses of the 
     designated beneficiary of the account.
       ``(3) In this subsection, the term `qualified education 
     benefit' means--
       ``(A) a qualified tuition program (as defined in section 
     529(b)(1) of the Internal Revenue Code of 1986) or another 
     prepaid tuition plan offered by a State; or
       ``(B) 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);
       (3) in paragraph (3), by inserting ``, or a distribution 
     that is not includable in gross income under section 529 of 
     such Code, under another prepaid tuition plan offered by a 
     State, or under a Coverdell education savings account under 
     section 530 of such Code'' after ``1986''; and
       (4) by redesignating paragraph (3) as paragraph (2).
       (c) Total Income.--Section 480(a)(2) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087vv(a)(2)) is amended to 
     read as follows:
       ``(2) No portion of any student financial assistance 
     received from any program by an individual, no portion of a 
     national service educational award or post-service benefit 
     received by an individual under title I of the National and 
     Community Service Act of 1990 (42 U.S.C. 12571 et seq.), no 
     portion of any tax

[[Page S5168]]

     credit taken under section 25A of the Internal Revenue Code 
     of 1986, and no distribution from any qualified education 
     benefit defined in subsection (f)(3) that is not subject to 
     Federal income tax, shall be included as income or assets in 
     the computation of expected family contribution for any 
     program funded in whole or in part under this Act.''.

     SEC. 8. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

       Section 491 of the Higher Education Act of 1965 (20 U.S.C. 
     1098) 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)--
       (A) in paragraph (4), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (5), by striking the period at the end and 
     inserting ``; and''; and
       (C) 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 
     ``2011''.
                                 ______