To begin the process of simplifying the Federal student financial aid process, making it easier and more understandable for students and families to participate in Federal student financial aid programs.

Summary: Financial Aid Simplification Act - Amends the Higher Education Act of 1965 to direct the Advisory Committee on Student Financial Assistance to study and report to specified congressional committees on the feasibility of simplifying the need analysis methodology for all Federal student financial assistance programs and the process of applying for such assistance through the Free Application for Federal Student Aid (FAFSA).

Requires the Secretary of Education within one year after the report's submission to initiate a redesign of the FAFSA

Revises eligibility requirements for filing of a simplified FAFSA to allow, as an alternative to not being required to file an income tax return, that the student's parents or the student (and the student's wife, if any) received benefits under a means-tested Federal benefit program.

Directs the Secretary to make special efforts, in conjunction with State efforts, to: (1) notify students and their parents who qualify for a free lunch under the Richard B. Russell National School Lunch Act, the Food Stamps program, or other such programs of their potential eligibility for a maximum Pell Grant; and (2) disseminate such informational materials as necessary.

SEC. 1. SHORT TITLE; REFERENCE.

    (a) Short Title.--This Act may be cited as the ``Financial Aid 
Simplification Act''.
    (b) Reference.--Whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of the Higher Education Act of 1965 (20 U.S.C. 1001 et 
seq.).

SEC. 2. SIMPLIFICATION OF THE FREE APPLICATION FOR FEDERAL STUDENT AID 
              (FASFA).

    Section 491 (20 U.S.C. 1098) is amended--
            (1) by redesignating subsection (k) as subsection (l); and
            (2) by inserting after subsection (j) the following new 
        subsection:
    ``(k) Special Study of Simplification of Need Analysis and 
Application for Title IV Aid.--
            ``(1) Study required.--The Advisory Committee shall conduct 
        a thorough study of the feasibility of simplifying the need 
        analysis methodology for all Federal student financial 
        assistance programs and the process of applying for such 
        assistance.
            ``(2) Required subjects of study.--In performing the study, 
        the Advisory Committee shall, at a minimum, examine the 
        following:
                    ``(A) whether the methodology used to calculate the 
                expected family contribution can be simplified without 
                significant adverse effects on program intent, costs, 
                integrity, delivery, and distribution of awards;
                    ``(B) whether the number of data elements, and, 
                accordingly, the number and complexity of questions 
                asked of students and families, used to calculate the 
                expected family contribution can be reduced without 
                such adverse effects;
                    ``(C) whether the procedures for determining such 
                data elements, including determining and updating 
                offsets and allowances, is the most efficient, 
                effective, and fair means to determine a family's 
                available income and assets;
                    ``(D) whether the nature and timing of application 
                required in section 483 (a)(1), eligibility and award 
                determination, financial aid processing, and funds 
                delivery can be streamlined further for students and 
                families, institutions, and States;
                    ``(E) whether it is feasible to allow students to 
                complete limited sections of the financial aid 
                application that only apply to their specific 
                circumstances and the State in which they reside;
                    ``(F) whether a widely disseminated printed form, 
                or the use of an Internet or other electronic means, 
                can be developed to notify individuals of an estimation 
                of their approximate eligibility for grant, work-study 
                and loan assistance upon completion and verification of 
                the simplified application form; and
                    ``(G) whether information provided on other Federal 
                forms (such as the form applying for supplemental 
                security income under title XVI of the Social Security 
                Act, the form for applying for food stamps under the 
                Food Stamp Act of 1977, and the schedule for applying 
                for the earned income tax credit under section 32 of 
                the Internal Revenue Code of 1986) that are designed to 
                determine eligibility for various Federal need-based 
                assistance programs could be used to qualify potential 
                students for the simplified needs test.
            ``(3) Additional considerations.--In conducting the 
        feasibility study, the Advisory Committee's primary objective 
        under this subsection shall be simplifying the financial aid 
        application forms and process and obtaining a substantial 
        reduction in the number of required data items. In carrying out 
        that objective, the Advisory Committee shall pay special 
        attention to the needs of low-income and moderate-income 
        students and families.
            ``(4) Consultation.--
                    ``(A) In general.--The Advisory Committee shall 
                consult with a broad range of interested parties in 
                higher education, including parents and students, high 
                school guidance counselors, financial aid and other 
                campus administrators, and administrators of 
                intervention and outreach programs.
                    ``(B) Forms design expert.--With the goal of making 
                significant changes to the form to make the questions 
                more easily understandable, the Advisory Committee 
                shall consult a forms design expert to ensure that the 
                revised application form is easily readable and 
                understood by parents, students and other members of 
                the public.
                    ``(C) Congressional consultation.--The Advisory 
                Committee shall consult on a regular basis with the 
                Committee on Education and the Workforce of the House 
                of Representatives and the Committee on Health, 
                Education, Labor and Pensions of the Senate in carrying 
                out the feasibility study required by this subsection.
                    ``(D) Departmental consultation.--The Secretary of 
                Education shall provide such assistance to the Advisory 
                Committee as is requested and practicable in conducting 
                the study required by this subsection.
            ``(5) Report.--The Advisory Committee shall, not later than 
        2 years after the date of enactment of the Financial Aid 
        Simplification Act, prepare and submit a report on the study 
        required by this section to the Committee on Education and the 
        Workforce of the House of Representatives and the Committee on 
        Health, Education, Labor and Pensions of the Senate.
            ``(6) Implementation.--Within 1 year of submission of such 
        report, the Secretary of Education shall consult with the 
        Committee on Education and the Workforce of the House of 
        Representatives and the Committee on Health, Education, Labor 
        and Pensions of the Senate and shall subsequently initiate a 
        redesign of the form required by the Secretary under section 
        483. Such redesign shall include the testing of alternative 
        simplified versions of the free Federal form. The Secretary 
        shall report on the progress of these efforts to the Committee 
        on Education and the Workforce of the House of Representatives 
        and the Committee on Health, Education, Labor and Pensions of 
        the Senate not later than one year after receipt of the 
        Advisory Committee report required by this section.''.

SEC. 3. SIMPLIFIED NEEDS TEST IMPROVEMENTS.

    Section 479 (20 U.S.C. 1087ss) is amended--
            (1) by striking clause (i) of subsection (b)(1)(A) and 
        inserting the following:
                            ``(i) the student's parents file a form 
                        described in paragraph (3) or certify that they 
                        are not required to file an income tax return, 
                        or the student's parents or the student 
                        received benefits under a means-tested Federal 
                        benefit program;'';
            (2) by striking clause (i) of subsection (b)(1)(B) and 
        inserting the following:
                            ``(i) the student (and the student's 
                        spouse, if any) files a form described in 
                        paragraph (3) or certifies that the student 
                        (and the student's spouse, if any) is not 
                        required to file an income tax return, or the 
                        student (or the student's spouse, if any) 
                        received benefits under a means-tested Federal 
                        benefit program;'';
            (3) by striking subparagraph (A) of subsection (c)(1) and 
        inserting the following:
                    ``(A) the student's parents file a form described 
                in subsection (b)(3) or certify that they are not 
                required to file an income tax return, or the student's 
                parents or the student received benefits under a means-
                tested Federal benefit program;'';
            (4) by striking subparagraph (A) of subsection (c)(2) and 
        inserting the following:
                    ``(A) the student (and the student's spouse, if 
                any) files a form described in subsection (b)(3) or 
                certifies that the student (and the student's spouse, 
                if any) is not required to file an income tax return, 
                or the student (or the student's spouse, if any) 
                received benefits under a means-tested Federal benefit 
                program;''; and
            (5) by adding at the end the following new subsection:
    ``(d) Definition of Means-Tested Federal Benefit Program.--For 
purposes of this section, the term `means-tested Federal benefit 
program' means a mandatory spending program of the Federal Government 
in which eligibility for the programs' 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, the food stamp program under the Food Stamp Act of 1977, and 
the free and reduced price school lunch program under the Richard B. 
Russell National School Lunch Act.''.

SEC. 4. EXPANDING INFORMATION DISSEMINATION REGARDING ELIGIBILITY FOR 
              PELL GRANTS.

    Sec 483(a) (20 U.S.C. 1090(a)) is amended by adding at the end the 
following new paragraph:
            ``(8) Expanding information dissemination regarding 
        eligibility for pell grants.--The Secretary shall make special 
        efforts, in conjunction with State efforts, to notify students 
        and their parents who qualify for a free lunch under the 
        Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et 
        seq.), the Food Stamps program, or such programs as the 
        Secretary shall determine, of their potential eligibility for a 
        maximum Pell Grant, and shall disseminate such informational 
        materials as the Secretary deems necessary.''.

SEC. 5. IMPLEMENTATION.

    Sections 482(c) and 492 of the Higher Education Act of 1965 (20 
U.S.C. 1089(c), 1098a) shall not apply to the regulations implementing 
the amendments made by section 2 of this Act.