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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2477 Introduced in Senate (IS)]

108th CONGRESS
  2d Session
                                S. 2477

To amend the Higher Education Act of 1965 to expand college access and 
 increase college persistence, to simplify the process of applying for 
              student assistance, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 21, 2004

   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 expand college access and 
 increase college persistence, to simplify 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 ``Accessing College through 
Comprehensive Early Outreach, State Partnerships, and Simplification 
Act''.

SEC. 2. GRANTS FOR ACCESS AND PERSISTENCE.

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

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

    ``(a) Purpose.--It is the purpose of this section to expand college 
access and increase college persistence by making allotments to States 
to enable the States to--
            ``(1) expand and enhance partnerships with institutions of 
        higher education, early information and intervention, 
        mentoring, or outreach programs, private corporations, 
        philanthropic organizations, and other interested parties to 
        carry out activities under this section and to provide 
        coordination and cohesion among Federal, State, and local 
        governmental and private efforts that provide financial 
        assistance to help low-income students attend college;
            ``(2) provide need-based access and persistence grants to 
        eligible low-income students;
            ``(3) provide early notification to low-income students of 
        their eligibility for financial aid; and
            ``(4) encourage increased participation in early 
        information and intervention, mentoring, or outreach programs.
    ``(b) Allotments to States.--
            ``(1) In general.--
                    ``(A) Authorization.--From sums reserved under 
                section 415A(b)(2) for each fiscal year, the Secretary 
                shall make an allotment to each State that submits an 
                application for an allotment in accordance with 
                subsection (c) to enable the State to pay the Federal 
                share of the cost of carrying out the activities under 
                subsection (d).
                    ``(B) Determination of allotment.--In making 
                allotments under subparagraph (A), the Secretary shall 
                consider the following:
                            ``(i) Continuation of award.--If a State 
                        continues to meet the specifications 
                        established in its application under subsection 
                        (c), the Secretary shall make an allotment to 
                        such State that is not less than the allotment 
                        made to such State for the previous fiscal 
                        year.
                            ``(ii) Priority.--The Secretary shall give 
                        priority in making allotments to States that 
                        meet the requirements under paragraph 
                        (2)(B)(iii).
            ``(2) Federal share.--
                    ``(A) In general.--The Federal share of the cost of 
                carrying out the activities under subsection (d) for 
                any fiscal year may not exceed 66.66 percent.
                    ``(B) Different percentages.--The Federal share 
                under this section shall be determined in accordance 
                with the following:
                            ``(i) If a State applies for an allotment 
                        under this section in partnership with any 
                        number of degree granting institutions of 
                        higher education in the State whose combined 
                        full-time enrollment represents less than a 
                        majority of all students attending institutions 
                        of higher education in the State, then the 
                        Federal share of the cost of carrying out the 
                        activities under subsection (d) shall be equal 
                        to 50 percent.
                            ``(ii) If a State applies for an allotment 
                        under this section in partnership with any 
                        number of degree granting institutions of 
                        higher education in the State whose combined 
                        full-time enrollment represents less than a 
                        majority of all students attending institutions 
                        of higher education in the State, and 
                        philanthropic organizations that are located 
                        in, or who provide funding in, the State or 
                        private corporations that are located in, or 
                        who do business in, the State, then the Federal 
                        share of the cost of carrying out the 
                        activities under subsection (d) shall be equal 
                        to 57 percent.
                            ``(iii) If a State applies for an allotment 
                        under this section in partnership with any 
                        number of degree granting institutions of 
                        higher education in the State whose combined 
                        full-time enrollment represents a majority of 
                        all students attending institutions of higher 
                        education in the State, philanthropic 
                        organizations that are located in, or who 
                        provide funding in, the State, and private 
                        corporations that are located in, or who do 
                        business in, the State, then the Federal share 
                        of the cost of carrying out the activities 
                        under subsection (d) shall be equal to 66.66 
                        percent.
    ``(c) Application for Allotment.--
            ``(1) In general.--
                    ``(A) Submission.--A State that desires to receive 
                an allotment under this section shall submit an 
                application to the Secretary at such time, in such 
                manner, and containing such information as the 
                Secretary may require.
                    ``(B) Content.--An application submitted under 
                subparagraph (A) shall include the following:
                            ``(i) A description of the State's plan for 
                        using the allotted funds.
                            ``(ii) Assurances that the State will 
                        provide matching funds, from State, 
                        institutional, philanthropic, or private funds, 
                        of not less than 33.33 percent of the cost of 
                        carrying out the activities under subsection 
                        (d). The State shall specify the methods by 
                        which matching funds will be paid and include 
                        provisions designed to ensure that funds 
                        provided under this section will be used to 
                        supplement, and not supplant, Federal and non-
                        Federal funds available for carrying out the 
                        activities under this title. A State that uses 
                        non-Federal funds to create or expand existing 
                        partnerships with nonprofit organizations or 
                        community-based organizations in which such 
                        organizations match State funds for student 
                        scholarships, may apply such matching funds 
                        from such organizations toward fulfilling the 
                        State's matching obligation under this clause.
                            ``(iii) Assurances that early information 
                        and intervention, mentoring, or outreach 
                        programs exist within the State or that there 
                        is a plan to make such programs widely 
                        available.
                            ``(iv) A description of the organizational 
                        structure that the State has in place to 
                        administer the activities under subsection (d), 
                        including a description of the system the State 
                        will use to track the participation of students 
                        who receive grants under this section to degree 
                        completion.
                            ``(v) Assurances that the State has a 
                        method in place, such as acceptance of the 
                        automatic zero expected family contribution 
                        determination described in section 479, to 
                        identify eligible low-income students and award 
                        State grant aid to such students.
                            ``(vi) Assurances that the State will 
                        provide notification to eligible low-income 
                        students that grants under this section are--
                                    ``(I) Leveraging Educational 
                                Assistance Partnership Grants; and
                                    ``(II) funded by the Federal 
                                Government and the State.
            ``(2) State agency.--The State agency that submits an 
        application for a State under section 415C(a) shall be the same 
        State agency that submits an application under paragraph (1) 
        for such State.
            ``(3) Partnership.--
                    ``(A) Mandatory partners.--In applying for an 
                allotment under this section, the State agency shall 
                apply for the allotment in partnership with--
                            ``(i) not less than 1 public and 1 private 
                        degree granting institution of higher education 
                        that are located in the State; and
                            ``(ii) new or existing early information 
                        and intervention, mentoring, or outreach 
                        programs located in the State.
                    ``(B) Permissive partners.--In addition to applying 
                for an allotment under this section in partnership with 
degree granting institutions of higher education and early information 
and intervention, mentoring, or outreach programs, a State agency may 
also apply in partnership with philanthropic organizations that are 
located in, or who provide funding in, the State and private 
corporations that are located in, or who do business in, the State.
                    ``(C) Roles of partners.--
                            ``(i) State agency.--A State agency that is 
                        in a partnership receiving an allotment under 
                        this section--
                                    ``(I) shall--
                                            ``(aa) serve as the primary 
                                        administrative unit for the 
                                        partnership;
                                            ``(bb) provide or 
                                        coordinate matching funds, and 
                                        coordinate activities among 
                                        partners;
                                            ``(cc) encourage each 
                                        institution of higher education 
                                        in the State to participate in 
                                        the partnership;
                                            ``(dd) make determinations 
                                        and early notifications of 
                                        assistance as described under 
                                        subsection (d)(2); and
                                            ``(ee) annually report to 
                                        the Secretary on the 
                                        partnership's progress in 
                                        meeting the purpose of this 
                                        section; and
                                    ``(II) may provide early 
                                information and intervention, 
                                mentoring, or outreach programs.
                            ``(ii) Degree granting institutions of 
                        higher education.--A degree granting 
                        institution of higher education that is in a 
                        partnership receiving an allotment under this 
                        section--
                                    ``(I) shall--
                                            ``(aa) recruit and admit 
                                        participating qualified 
                                        students and provide such 
                                        additional institutional grant 
                                        aid to participating students 
                                        as agreed to with the State 
                                        agency;
                                            ``(bb) provide support 
                                        services to students who 
                                        receive an access and 
                                        persistence grant under this 
                                        section and are enrolled at 
                                        such institution; and
                                            ``(cc) assist the State in 
                                        the identification of eligible 
                                        students and the dissemination 
                                        of early notifications of 
                                        assistance as agreed to with 
                                        the State agency; and
                                    ``(II) may provide funding for 
                                early information and intervention, 
                                mentoring, or outreach programs or 
                                provide such services directly.
                            ``(iii) Programs.--An early information and 
                        intervention, mentoring, or outreach program 
                        that is in a partnership receiving an allotment 
                        under this section shall provide direct 
                        services, support, and information to 
                        participating students.
                            ``(iv) Permissive partners.--A 
                        philanthropic organization or private 
                        corporation that is in a partnership receiving 
                        an allotment under this section shall provide 
                        funds for access and persistence grants for 
                        participating students, or provide funds or 
                        support for early information and intervention, 
                        mentoring, or outreach programs.
    ``(d) Authorized Activities.--
            ``(1) In general.--
                    ``(A) Establishment of partnership.--Each State 
                receiving an allotment under this section shall use the 
                funds to establish a partnership to award access and 
                persistence grants to eligible low-income students in 
                order to increase the amount of financial assistance 
                such students receive under this subpart for 
                undergraduate education expenses.
                    ``(B) Amount.--
                            ``(i) Partnerships with institutions 
                        serving less than a majority of students in the 
                        state.--
                                    ``(I) In general.--In the case 
                                where a State receiving an allotment 
                                under this section is in a partnership 
                                described in clause (i) or (ii) of 
                                subsection (b)(2)(B), the amount of an 
                                access and persistence grant awarded by 
                                such State shall be not less than the 
                                amount that is equal to the average 
                                undergraduate tuition and mandatory 
                                fees at 4-year public institutions of 
                                higher education in the State where the 
                                student resides (less any other Federal 
                                or State sponsored grant amount, 
                                college work study amount, and 
                                scholarship amount received by the 
                                student) and such amount shall be used 
                                toward the cost of attendance at an 
                                institution of higher education, 
                                located in the State, that is a partner 
                                in the partnership.
                                    ``(II) Cost of attendance.--A State 
                                that has a program, apart from the 
                                partnership under this section, of 
                                providing eligible low-income students 
                                with grants that are equal to the 
                                average undergraduate tuition and 
                                mandatory fees at 4-year public 
                                institutions of higher education in the 
                                State, may increase the amount of 
                                access and persistence grants awarded 
                                by such State up to an amount that is 
                                equal to the average cost of attendance 
                                at 4-year public institutions of higher 
                                education in the State (less any other 
Federal or State sponsored grant amount, college work study amount, and 
scholarship amount received by the student).
                            ``(ii) Partnership with institutions 
                        serving the majority of students in the 
                        state.--In the case where a State receiving an 
                        allotment under this section is in a 
                        partnership described in subsection 
                        (b)(2)(B)(iii), the amount of an access and 
                        persistence grant awarded by such State shall 
                        be up to an amount that is equal to the average 
                        cost of attendance at 4-year public 
                        institutions of higher education in the State 
                        where the student resides (less any other 
                        Federal or State sponsored grant amount, 
                        college work study amount, and scholarship 
                        amount received by the student) and such amount 
                        shall be used by the student to attend an 
                        institution of higher education, located in the 
                        State, that is a partner in the partnership.
            ``(2) Early notification.--
                    ``(A) In general.--Each State receiving an 
                allotment under this section shall annually notify low-
                income students, such as students who are eligible to 
                receive a free lunch under the school lunch program 
                established under the Richard B. Russell National 
                School Lunch Act, in grade 7 through grade 12 in the 
                State of their potential eligibility for student 
                financial assistance, including an access and 
                persistence grant, to attend an institution of higher 
                education.
                    ``(B) Content of notice.--The notification under 
                subparagraph (A)--
                            ``(i) shall include--
                                    ``(I) information about early 
                                information and intervention, 
                                mentoring, or outreach programs 
                                available to the student;
                                    ``(II) information that a student's 
                                candidacy for an access and persistence 
                                grant is enhanced through participation 
                                in an early information and 
                                intervention, mentoring, or outreach 
                                program;
                                    ``(III) an explanation that student 
                                and family eligibility and 
                                participation in other Federal means-
                                tested programs may indicate 
                                eligibility for an access and 
                                persistence grant and other student aid 
                                programs;
                                    ``(IV) a nonbinding estimation of 
                                the total amount of financial aid a 
                                low-income student with a similar 
                                income level may expect to receive, 
                                including an estimation of the amount 
                                of an access and persistence grant and 
                                an estimation of the amount of grants, 
                                loans, and all other available types of 
                                aid from the major Federal and State 
                                financial aid programs;
                                    ``(V) an explanation that in order 
                                to be eligible for an access and 
                                persistence grant, at a minimum, a 
                                student shall meet the requirement 
                                under paragraph (3), graduate from 
                                secondary school, and enroll at an 
                                institution of higher education that is 
                                a partner in the partnership;
                                    ``(VI) information on any 
                                additional requirements (such as a 
                                student pledge detailing student 
                                responsibilities) that the State may 
                                impose for receipt of an access and 
                                persistence grant under this section; 
                                and
                                    ``(VII) instructions on how to 
                                apply for an access and persistence 
                                grant; and
                            ``(ii) may include a disclaimer that access 
                        and persistence grant awards are contingent 
                        upon--
                                    ``(I) a determination of the 
                                student's financial eligibility at the 
                                time of the student's enrollment at an 
                                institution of higher education that is 
                                a partner in the partnership;
                                    ``(II) annual Federal and State 
                                appropriations; and
                                    ``(III) other aid received by the 
                                student at the time of the student's 
                                enrollment at an institution of higher 
                                education that is a partner in the 
                                partnership.
            ``(3) Eligibility.--In determining which students are 
        eligible to receive access and persistence grants, the State 
        shall ensure that each such student meets not less than 2 of 
        the following criteria and give priority to students meeting 
        all of the following criteria:
                    ``(A) Has an expected family contribution equal to 
                zero (as described in section 479) or a comparable 
                alternative based upon the State's approved criteria in 
                section 415C(b)(4).
                    ``(B) Is participating in, or has participated in, 
                a Federal, State, institutional, or community early 
                information and intervention, mentoring, or outreach 
                program, as recognized by the State agency 
                administering activities under this section.
                    ``(C) Has qualified for a free lunch, or at the 
                State's discretion a reduced price lunch, under the 
                school lunch program established under the Richard B. 
                Russell National School Lunch Act.
                    ``(D) Qualifies for the State's maximum 
                undergraduate award, as authorized under section 
                415C(b).
                    ``(E) Receives, or has received, an access and 
                persistence grant under this section.
            ``(4) Grant award.--Once a student, including those who 
        have received early notification under paragraph (2) from the 
        State, applies for admission to an institution that is a 
        partner in the partnership, files a Free Application for 
        Federal Student Aid and any related existing State form, and is 
        determined eligible by the State under paragraph (3), the State 
        shall--
                    ``(A) issue the student a preliminary access and 
                persistence grant award certificate with tentative 
                award amounts; and
                    ``(B) inform the student that payment of the access 
                and persistence grant award amounts is subject to 
                certification of enrollment and award eligibility by 
                the institution of higher education.
            ``(5) Duration of award.--An eligible student that receives 
        an access and persistence grant under this section shall 
        receive such grant award for each year of such student's 
        undergraduate education in which the student remains eligible 
        for assistance under this title, including pursuant to section 
        484(c), and remains financially eligible as determined by the 
        State, except that the State may impose reasonable time limits 
        to baccalaureate degree completion.
    ``(e) Administrative Cost Allowance.--A State that receives an 
allotment under this section may reserve not more than 3.5 percent of 
the funds made available annually through the allotment for State 
administrative functions required to carry out this section.
    ``(f) Statutory and Regulatory Relief for Institutions of Higher 
Education.--The Secretary may grant, upon the request of an institution 
of higher education that is in a partnership described in subsection 
(b)(2)(B)(iii) and that receives an allotment under this section, a 
waiver for such institution from statutory or regulatory requirements 
that inhibit the ability of the institution to successfully and 
efficiently participate in the activities of the partnership.
    ``(g) Applicability Rule.--The provisions of this subpart which are 
not inconsistent with this section shall apply to the program 
authorized by this section.
    ``(h) Maintenance of Effort Requirement.--Each State receiving an 
allotment under this section for a fiscal year shall provide the 
Secretary an assurance that the aggregate amount expended per student 
or the aggregate expenditures by the State, from funds derived from 
non-Federal sources, for the authorized activities described in 
subsection (d) for the preceding fiscal year were not less than the 
amount expended per student or the aggregate expenditure by the State 
for the activities for the second preceding fiscal year.
    ``(i) Reports.--Not later than 3 years after the date of enactment 
of the Accessing College through Comprehensive Early Outreach, State 
Partnerships, and Simplification Act, and annually thereafter, the 
Secretary shall submit a report describing the activities and the 
impact of the partnerships under this section to the Committee on 
Health, Education, Labor, and Pensions of the Senate and the Committee 
on Education and the Workforce of the House of Representatives.''.
    (d) Continuation and Transition.--During the 2-year period 
commencing on the date of enactment of this Act, the Secretary shall 
continue to award grants under section 415E of the Higher Education Act 
of 1965 (20 U.S.C. 1070c-3a), as such section existed on the day before 
the date of enactment of this Act, to States that choose to apply for 
grants under such predecessor section.
    (e) Implementation and Evaluation.--Section 491(j) of the Higher 
Education Act of 1965 (20 U.S.C. 1098(j)) is amended--
            (1) in paragraph (4), by striking ``and'' after the 
        semicolon; and
            (2) by striking paragraph (5) and inserting the following:
            ``(5) not later than 6 months after the date of enactment 
        of the Accessing College through Comprehensive Early Outreach, 
        State Partnerships, and Simplification Act, advise the 
        Secretary on means to implement the activities under section 
        415E, and the Advisory Committee shall continue to monitor, 
        evaluate, and make recommendations on the progress of 
        partnerships that receive allotments under such section; and''.

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

    (a) Simplified Needs Test.--Section 479 of the Higher Education Act 
of 1965 (20 U.S.C. 1087ss) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) by striking subparagraph (A)(i) and 
                        inserting the following:
                            ``(i) the student's parents--
                                    ``(I) file, or are eligible to 
                                file, a form described in paragraph 
                                (3);
                                    ``(II) certify that they are not 
                                required to file an income tax return;
                                    ``(III) 1 of whom is a dislocated 
                                worker; or
                                    ``(IV) or the student received 
                                benefits at some time during the 
                                previous 24-month period under a means-
                                tested Federal benefit program as 
                                defined under subsection (d); and''; 
                                and
                            (ii) by striking subparagraph (B)(i) and 
                        inserting the following:
                            ``(i) the student (and the student's 
                        spouse, if any)--
                                    ``(I) files, or is eligible to 
                                file, a form described in paragraph 
                                (3);
                                    ``(II) certifies that the student 
                                (and the student's spouse, if any) is 
                                not required to file an income tax 
                                return;
                                    ``(III) is a dislocated worker; or
                                    ``(IV) received benefits at some 
                                time during the previous 24-month 
                                period under a means-tested Federal 
                                benefit program as defined under 
                                subsection (d); and''; and
                    (B) in paragraph (3), by striking ``A student or 
                family files a form described in this subsection, or 
                subsection (c), as the case may be, if the student or 
                family, respectively, files'' and inserting ``In the 
                case of an independent student, the student, or in the 
                case of a dependent student, the family, files a form 
                described in this subsection, or subsection (c), as the 
                case may be, if the student or family, as appropriate, 
                files'';
            (2) in subsection (c)--
                    (A) in paragraph (1)--
                            (i) by striking subparagraph (A) and 
                        inserting the following:
                    ``(A) the student's parents--
                            ``(i) file, or are eligible to file, a form 
                        described in subsection (b)(3);
                            ``(ii) certify that they are not required 
                        to file an income tax return;
                            ``(iii) 1 of whom is a dislocated worker; 
                        or
                            ``(iv) or the student received benefits at 
                        some time during the previous 24-month period 
                        under a means-tested Federal benefit program as 
                        defined under subsection (d); and''; and
                            (ii) by striking subparagraph (B) and 
                        inserting the following:
                    ``(B) the sum of the adjusted gross income of the 
                parents is less than or equal to $25,000; or'';
                    (B) in paragraph (2)--
                            (i) by striking subparagraph (A) and 
                        inserting the following:
                    ``(A) the student (and the student's spouse, if 
                any)--
                            ``(i) files, or is eligible to file, a form 
                        described in subsection (b)(3);
                            ``(ii) certifies that the student (and the 
                        student's spouse, if any) is not required to 
                        file an income tax return;
                            ``(iii) is a dislocated worker; or
                            ``(iv) received benefits at some time 
                        during the previous 24-month period under a 
                        means-tested Federal benefit program as defined 
                        under subsection (d); and''; and
                            (ii) by striking subparagraph (B) and 
                        inserting the following:
                    ``(B) the sum of the adjusted gross income of the 
                student and spouse (if appropriate) is less than or 
                equal to $25,000.''; and
                    (C) by striking the flush matter at the end and 
                inserting the following:
``The Secretary shall annually adjust the income level necessary to 
qualify an applicant for the zero expected family contribution. The 
income level shall be adjusted according to increases in the Consumer 
Price Index, as defined in section 478(f).''; and
            (3) by adding at the end the following:
    ``(d) Definitions.--In this section:
            ``(1) Dislocated worker.--The term `dislocated worker' has 
        the same meaning given the term in section 101 of the Workforce 
        Investment Act of 1998 (29 U.S.C. 2801).
            ``(2) Means-tested federal benefit program.--The term 
        `means-tested Federal benefit program' means a mandatory 
        spending program of the Federal Government in which eligibility 
        for the program's benefits, or the amount of such benefits, or 
        both, are determined on the basis of income or resources of the 
        individual or family seeking the benefit, and includes the 
        supplemental security income program under title XVI of the 
        Social Security Act, the food stamp program under the Food 
        Stamp Act of 1977, and the free and reduced price school lunch 
        program established under the Richard B. Russell National 
        School Lunch Act.''.
    (b) Discretion of Student Financial Aid Administrators.--Section 
479A(a) of the Higher Education Act of 1965 (20 U.S.C. 1087tt(a)) is 
amended in the third sentence by inserting ``a family member who is a 
dislocated worker (as defined in section 101 of the Workforce 
Investment Act of 1998 (29 U.S.C. 2801)),'' after ``recent unemployment 
of a family member,''.

SEC. 4. IMPROVING PAPER AND ELECTRONIC FORMS.

    (a) Simplified Needs Test.--Section 479(a) of the Higher Education 
Act of 1965 (20 U.S.C. 1087ss(a)) is amended by adding at the end the 
following:
            ``(3) Simplified forms.--The Secretary shall make special 
        efforts to notify families meeting the requirements of 
        subsection (c) that such families may use the FAFSA-EZ or the 
        simplified electronic application form established under 
        section 483(a).''.
    (b) Common Financial Aid Form Development and Processing.--Section 
483 of the Higher Education Act of 1965 (20 U.S.C. 1090) is amended--
            (1) in subsection (a)--
                    (A) by striking paragraphs (1), (2), and (5);
                    (B) by redesignating paragraphs (3), (4), (6), and 
                (7), as paragraphs (7), (8), (9), and (10), 
                respectively;
                    (C) by inserting before paragraph (7), as 
                redesignated by subparagraph (B), the following:
            ``(1) In general.--The Secretary, in cooperation with 
        representatives of agencies and organizations involved in 
        student financial assistance, shall produce, distribute, and 
        process free of charge common financial reporting forms as 
        described in this subsection to be used for application and 
        reapplication to determine the need and eligibility of a 
        student for financial assistance under parts A through E (other 
        than subpart 4 of part A). These forms shall be made available 
        to applicants in both paper and electronic formats and shall be 
        referred to as the `Free Application for Federal Student Aid'.
            ``(2) Paper format.--
                    ``(A) In general.--The Secretary shall produce, 
                distribute, and process common forms in paper format to 
                meet the requirements of paragraph (1). The Secretary 
                shall develop a common paper form for applicants who do 
not meet the requirements of subparagraph (B).
                    ``(B) FAFSA-EZ.--
                            ``(i) In general.--The Secretary shall 
                        develop and use a simplified paper application 
                        form, to be known as the `FAFSA-EZ', to be used 
                        for applicants meeting the requirements of 
                        section 479(c).
                            ``(ii) Reduced data requirements.--The 
                        FAFSA-EZ shall permit an applicant to submit 
                        for financial assistance purposes, only the 
                        data elements required to make a determination 
                        of whether the applicant meets the requirements 
                        under section 479(c).
                            ``(iii) State data.--The Secretary shall 
                        include on the FAFSA-EZ space for information 
                        that needs to be submitted from the applicant 
                        to be eligible for State financial assistance, 
                        as provided under paragraph (5), except the 
                        Secretary shall not include a State's data if 
                        that State does not permit its applicants for 
                        State assistance to use the FAFSA-EZ.
                            ``(iv) Free availability and processing.--
                        The provisions of paragraph (6) shall apply to 
                        the FAFSA-EZ, and the data collected by means 
                        of the FAFSA-EZ shall be available to 
                        institutions of higher education, guaranty 
                        agencies, and States in accordance with 
                        paragraph (7).
                            ``(v) Testing.--The Secretary shall conduct 
                        appropriate field testing on the FAFSA-EZ.
                    ``(C) Phasing out the paper form for students who 
                do not meet the requirements of the automatic zero 
                expected family contribution.--
                            ``(i) In general.--The Secretary shall make 
                        all efforts to encourage all applicants to 
                        utilize the electronic forms described in 
                        paragraph (3).
                            ``(ii) Phaseout of full fafsa.--Not later 
                        than award year 2009-2010, the Secretary shall 
                        phaseout the long paper form for applicants who 
                        do not qualify for the FAFSA-EZ.
                            ``(iii) Use of savings to address the 
                        digital divide.--The Secretary shall utilize 
                        savings accrued by moving more applicants to 
                        the electronic forms to improve access to the 
                        electronic forms for applicants meeting the 
                        requirements of section 479(c).
            ``(3) Electronic format.--
                    ``(A) In general.--The Secretary shall produce, 
                distribute, and process common forms in electronic 
                format to meet the requirements of paragraph (1). The 
                Secretary shall develop a common electronic form for 
                applicants who do not meet the requirements of 
                subparagraph (B).
                    ``(B) Simplified application: fafsa on the web.--
                            ``(i) In general.--The Secretary shall 
                        develop and use a simplified electronic 
                        application form to be used by applicants 
                        meeting the requirements under subsection (b) 
                        or (c) of section 479.
                            ``(ii) Reduced data requirements.--The 
                        simplified electronic application form shall 
                        permit an applicant to submit for financial 
                        assistance purposes, only the data elements 
                        required to make a determination of whether the 
                        applicant meets the requirements under 
                        subsection (b) or (c) of section 479.
                            ``(iii) State data.--The Secretary shall 
                        include on the simplified electronic 
                        application form space for information that 
                        needs to be submitted from the applicant to be 
                        eligible for State financial assistance, as 
                        provided under paragraph (5), except the 
                        Secretary shall not include a State's data if 
                        that State does not permit its applicants for 
                        State assistance to use the simplified 
                        electronic application form.
                            ``(iv) Free availability and processing.--
                        The provisions of paragraph (6) shall apply to 
                        the simplified electronic application form, and 
                        the data collected by means of the simplified 
                        electronic application form shall be available 
                        to institutions of higher education, guaranty 
                        agencies, and States in accordance with 
                        paragraph (7).
                            ``(v) Testing.--The Secretary shall conduct 
                        appropriate field testing on the form developed 
                        under this subparagraph.
                    ``(C) Rule of construction.--Nothing in this 
                subsection shall be construed to prohibit the use of 
                the form developed by the Secretary pursuant to this 
                paragraph by an eligible institution, eligible lender, 
                guaranty agency, State grant agency, private computer 
                software providers, a consortium thereof, or such other 
                entities as the Secretary may designate.
                    ``(D) Privacy.--The Secretary shall ensure that 
                data collection under this paragraph complies with 
                section 552a of title 5, United States Code, and that 
                any entity using the electronic version of the forms 
                developed by the Secretary pursuant to this paragraph 
                shall maintain reasonable and appropriate 
                administrative, technical, and physical safeguards to 
                ensure the integrity and confidentiality of the 
                information, and to protect against security threats, 
                or unauthorized uses or disclosures of the information 
                provided on the electronic version of the form. Data 
                collected by such electronic version of the form shall 
                be used only for the application, award, and 
                administration of aid awarded under this title, State 
                aid, or aid awarded by eligible institutions or such 
                entities as the Secretary may designate. No data 
collected by such electronic version of the form shall be used for 
making final aid awards under this title until such data have been 
processed by the Secretary or a contractor or designee of the 
Secretary, except as may be permitted under this title.
                    ``(E) Signature.--Notwithstanding any other 
                provision of this Act, the Secretary may permit an 
                electronic form to be submitted without a signature, if 
                a signature is subsequently submitted by the applicant.
                    ``(F) Personal identification numbers authorized.--
                The Secretary is authorized to assign to applicants 
                personal identification numbers--
                            ``(i) to enable the applicants to use such 
                        numbers in lieu of a signature for purposes of 
                        completing a form under this paragraph; and
                            ``(ii) for any purpose determined by the 
                        Secretary to enable the Secretary to carry out 
                        this title.
            ``(4) Reapplication.--
                    ``(A) In general.--The Secretary shall develop 
                streamlined reapplication forms and processes, 
                including both paper and electronic reapplication 
                processes, consistent with the requirements of this 
                subsection, for an applicant who applies for financial 
                assistance under this title in the next succeeding 
                academic year subsequent to the year in which such 
                applicant first applied for financial assistance under 
                this title.
                    ``(B) Updated.--The Secretary shall determine, in 
                cooperation with States, institutions of higher 
                education, agencies and organizations involved in 
                student financial assistance, the data elements that 
                can be updated from the previous academic year's 
                application.
                    ``(C) Rule of construction.--Nothing in this title 
                shall be construed as limiting the authority of the 
                Secretary to reduce the number of data elements 
                required of reapplicants.
                    ``(D) Zero family contribution.--Applicants 
                determined to have a zero family contribution pursuant 
                to section 479(c) shall not be required to provide any 
                financial data in a reapplication form, except that 
                which is necessary to determine eligibility under such 
                section.
            ``(5) State requirements.--
                    ``(A) In general.--The Secretary shall include on 
                the forms developed under this subsection, such State-
                specific nonfinancial data items as the Secretary 
                determines are necessary to meet State requirements for 
                need-based State aid. Such items shall be selected in 
                consultation with States to assist in the awarding of 
                State financial assistance in accordance with the terms 
                of this subsection. The number of such data items shall 
                not be less than the number included on the form on 
                October 7, 1998, unless States notify the Secretary 
                that they no longer require those data items for the 
                distribution of State need-based aid.
                    ``(B) Annual review.--The Secretary shall conduct 
                an annual review process to determine which 
                nonfinancial data items the States require to award 
                need-based State aid and other application requirements 
                that the States may impose.
                    ``(C) Federal register notice.--The Secretary shall 
                publish on an annual basis a notice in the Federal 
                Register requiring State agencies to inform the 
                Secretary--
                            ``(i) if they are unable to permit 
                        applicants to utilize the FAFSA-EZ or the 
                        simplified electronic application form; and
                            ``(ii) of the State-specific nonfinancial 
                        data that the State agency requires for 
                        delivery of State need-based financial aid.
                    ``(D) State notification to the secretary.--
                            ``(i) In general.--Each State shall notify 
                        the Secretary whether it permits an applicant 
                        to file a form described in paragraph (2)(B) or 
                        (3)(B) for purposes of determining eligibility 
                        for State need-based grant aid.
                            ``(ii) No permission.--In the event that a 
                        State does not permit an applicant to file a 
                        form described in paragraph (2)(B) or (3)(B) 
                        for purposes of determining eligibility for 
                        State need-based grant aid--
                                    ``(I) the State shall notify the 
                                Secretary if it is not permitted to do 
                                so because of either State law or 
                                because of agency policy; and
                                    ``(II) the notification under 
                                subclause (I) shall include an estimate 
                                of the program cost to permit 
                                applicants to complete FAFSA-EZs and 
                                simplified electronic application 
                                forms.
                            ``(iii) Lack of notification by the 
                        state.--If a State does not notify the 
                        Secretary pursuant to clause (i), the Secretary 
                        shall--
                                    ``(I) permit residents of that 
                                State to complete a FAFSA-EZ or a 
                                simplified electronic application form; 
                                and
                                    ``(II) not require any resident of 
                                that State to complete any nonfinancial 
                                data previously required by that State.
                    ``(E) Restriction.--The Secretary shall not require 
                applicants to complete any nonfinancial data or 
                financial data that are not required by the applicant's 
                State agency, except as may be required for applicants 
                who use the common paper form.
            ``(6) Charges to students and parents for use of forms 
        prohibited.--The common financial reporting forms prescribed by 
        the Secretary under this subsection shall be produced, 
        distributed, and processed by the Secretary and no parent or 
        student shall be charged a fee by the Secretary, a contractor, 
        a third party servicer or private software provider, or any 
        other public or private entity for the collection, processing, 
        or delivery of financial aid through the use of such forms. The 
        need and eligibility of a student for financial assistance 
        under parts A through E (other than under subpart 4 of part A) 
        may only be determined by using a form developed by the 
        Secretary pursuant to this subsection. No student may receive 
        assistance under parts A through E (other than under subpart 4 
        of part A), except by use of a form developed by the Secretary 
        pursuant to this subsection. No data collected on a paper or 
        electronic form, worksheet, or other document for which a fee 
        is charged shall be used to complete the form prescribed under 
        this subsection. No person, commercial entity, or other entity 
        shall request, obtain, or utilize an applicant's Personal 
        Identification Number for purposes of submitting an application 
        on an applicant's behalf except State agencies that have 
        entered into an agreement with the Secretary to streamline 
        applications, eligible institutions, or programs under this 
        title as permitted by the Secretary.'';
            (2) by striking subsection (b) and inserting the following:
    ``(b) Early Notification of Aid Eligibility.--
            ``(1) In general.--The Secretary shall make every effort to 
        provide students with early information about potential 
        financial aid eligibility.
            ``(2) Availability of means to determine eligibility.--
                    ``(A) In general.--The Secretary shall provide, in 
                cooperation with States, institutions of higher 
                education, agencies, and organizations involved in 
                student financial assistance, both through a widely 
                disseminated printed form and the Internet or other 
                electronic means, a system for individuals to determine 
                easily, by entering relevant data, approximately the 
                amount of grant, work-study, and loan assistance for 
                which an individual would be eligible under this title 
                upon completion and verification of form under 
                subsection (a).
                    ``(B) Determination of whether to use simplified 
                application.--The system established under this 
                paragraph shall also permit users to determine whether 
                or not they may apply for aid using a FAFSA-EZ or a 
                simplified electronic application form under subsection 
                (a).
            ``(3) Availability of means to communicate eligibility.--
                    ``(A) Lower-income students.--The Secretary shall--
                            ``(i) make special efforts to notify 
                        students who qualify for a free or reduced 
                        price lunch under the school lunch program 
                        established under the Richard B. Russell 
                        National School Lunch Act, benefits under the 
                        food stamp program under the Food Stamp Act of 
                        1977, or benefits under such programs as the 
                        Secretary shall determine, of such students' 
                        potential eligibility for a maximum Federal 
                        Pell Grant under subpart 1 of part A; and
                            ``(ii) disseminate informational materials 
                        regarding the linkage between eligibility for 
                        means-tested Federal benefit programs and 
                        eligibility for a Federal Pell Grant, as 
                        determined necessary by the Secretary.
                    ``(B) Middle school students.--The Secretary shall, 
                in cooperation with States, middle schools, programs 
                under this title that serve middle school students, and 
                other cooperating independent outreach programs, make 
                special efforts to notify middle school students of the 
                availability of financial assistance under this title 
                and of the approximate amounts of grant, work-study, 
                and loan assistance an individual would be eligible for 
                under this title.
                    ``(C) Secondary school students.--The Secretary 
                shall, in cooperation with States, secondary schools, 
                programs under this title that serve secondary school 
                students, and cooperating independent outreach 
                programs, make special efforts to notify students in 
                their junior year of secondary school the approximate 
                amounts of grant, work-study, and loan assistance an 
                individual would be eligible for under this title upon 
                completion and verification of an application form 
                under subsection (a).'';
            (3) in subsection (c), by striking ``Labor and Human 
        Resources'' and inserting ``Health, Education, Labor, and 
        Pensions'';
            (4) by striking subsection (d); and
            (5) by redesignating subsection (e) as subsection (d).
    (c) Toll-Free Application and Information.--Section 479 of the 
Higher Education Act of 1965 (20 U.S.C. 1087ss), as amended by section 
3, is further amended by adding at the end the following:
    ``(e) Toll-Free Application and Information.--The Secretary shall 
contract for, or establish, and publicize a toll-free telephone service 
to provide an application mechanism and timely and accurate information 
to the general public. The information provided shall include specific 
instructions on completing the application form for assistance under 
this title. Such service shall also include a service accessible by 
telecommunications devices for the deaf (TDD's) and shall, in addition 
to the services provided for in the previous sentence, refer such 
students to the national clearinghouse on postsecondary education that 
is authorized under section 685(d)(2)(C) of the Individuals with 
Disabilities Education Act. Not later than 2 years after the date of 
enactment of the Accessing College through Comprehensive Early 
Outreach, State Partnerships, and Simplification Act, the Secretary 
shall test and implement a toll-free telephone-based application system 
to permit applicants to utilize the FAFSA-EZ or simplified electronic 
application form under section 483(a) over such system.''.
    (d) Master Calendar.--Section 482(a)(1)(B) of the Higher Education 
Act of 1965 (20 U.S.C. 1089) is amended to read as follows:
                    ``(B) by March 1: proposed modifications and 
                updates pursuant to sections 478 and 483(a)(5) 
                published in the Federal Register;''.

SEC. 5. ALLOWANCE FOR STATE AND OTHER TAXES.

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

SEC. 6. SUPPORT FOR WORKING STUDENTS.

    (a) Dependent Students.--Section 475(g)(2)(D) of the Higher 
Education Act of 1965 (20 U.S.C. 1087oo(g)(2)(D)) is amended to read as 
follows:
                    ``(D) $9,000;''.
    (b) Independent Students Without Dependents Other Than a Spouse.--
Section 476(b)(1)(A)(iv) of the Higher Education Act of 1965 (20 U.S.C. 
1087pp(b)(1)(A)(iv)) is amended to read as follows:
                            ``(iv) an income protection allowance of 
                        the following amount (or a successor amount 
                        prescribed by the Secretary under section 
                        478)--
                                    ``(I) $10,000 for single students;
                                    ``(II) $10,000 for married students 
                                where both are enrolled pursuant to 
                                subsection (a)(2); and
                                    ``(III) $13,000 for married 
                                students where 1 is enrolled pursuant 
                                to subsection (a)(2);''.
    (c) Independent Students With Dependents Other Than a Spouse.--
Section 477(b)(4) of the Higher Education Act of 1965 (20 U.S.C. 
1087qq(b)(4)) is amended to read as follows:
            ``(4) Income protection allowance.--The income protection 
        allowance is determined by the following table (or a successor 
        table prescribed by the Secretary under section 478):
      

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
                                                                        Number in College
                                    Family Size ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
                                         2         $17,580      $15,230
                                         3          20,940       17,610      $16,260
                                         4          24,950       22,600       20,270      $17,930
                                         5          28,740       26,390       24,060       21,720      $19,390
                                         6          32,950       30,610       28,280       25,940       23,610
----------------------------------------------------------------------------------------------------------------
      NOTE: For each additional family member, add $3,280.
      For each additional college student, subtract $2,330.''.

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

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

SEC. 8. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

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