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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1030 Introduced in Senate (IS)]

  1st Session
                                S. 1030

 To amend the Higher Education Act of 1965 to simplify and improve the 
  process of applying for student assistance, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 12, 2005

   Mr. Reed (for himself, Ms. Collins, Mr. Kennedy, and Mrs. Murray) 
introduced the following bill; which was read twice and referred to the 
          Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 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.

    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 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.
                    ``(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 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;
                    ``(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 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''.
                                 <all>
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