‘‘(4) OUTLYING
AREA.—The term ‘outlying 
area’ means the Northern Mariana Islands, Amer-
ican Samoa, the United States Virgin Islands, 
Guam, and the Freely Associated States.’’. 
TITLE III—FEDERAL PELL 
GRANT IMPROVEMENTS 
SEC. 301. FEDERAL PELL GRANT IMPROVEMENTS. 
(a) REPEAL OF SCORING REQUIREMENT.—Section 
406 of H. Con. Res. 95 (109th Congress) is amended— 
(1) by striking subsection (b); and 
(2) by striking ‘‘(A) IN GENERAL’’ and insert-
ing the following: ‘‘Upon’’. 
(b) AMENDMENT TO FEDERAL PELL GRANTS.—Sec-
tion 401 of the Higher Education Act of 1965 (20 U.S.C. 
1070a) is amended— 
(1) in subsection (b), by striking paragraphs 
(5), (6), and (7) and inserting the following: 
‘‘(5) MAXIMUM FEDERAL PELL GRANT.— 
‘‘(A) AWARD YEAR 2026–2027.—For award 
year 2026–2027, the total maximum Federal 
Pell Grant shall be— 
‘‘(i) in the case of an eligible student 
who is in attendance at an institution of 
higher education described in section 101 
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or a Tribal College or University described 
in section 316(b)(3), $14,790; or 
‘‘(ii) in the case of an eligible student 
who is in attendance at an institution of 
higher education not described in clause 
(i), $7,395. 
‘‘(B) SUBSEQUENT
AWARD
YEARS.—For 
award year 2027–2028, and each subsequent 
award year, the total maximum Federal Pell 
Grant shall be equal to the total maximum Fed-
eral Pell Grant for the preceding award year 
(applicable to the institution at which the eligi-
ble student is in attendance)— 
‘‘(i) increased by the annual adjust-
ment percentage for the award year for 
which the amount under this subparagraph 
is being determined; and 
‘‘(ii) rounded to the nearest $5. 
‘‘(C) DEFINITION
OF
ANNUAL
ADJUST-
MENT
PERCENTAGE.—In this paragraph, the 
term ‘annual adjustment percentage,’ as applied 
to an award year, is equal to the estimated per-
centage increase in the Consumer Price Index 
(as determined by the Secretary, using the defi-
nition in section 478(f)) for the most recent cal-
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endar year ending prior to the beginning of that 
award year. 
‘‘(6) APPROPRIATION
OF
FUNDS.—There are 
authorized to be appropriated, and there are appro-
priated, out of any money in the Treasury not other-
wise appropriated, such sums as may be necessary 
for fiscal year 2026 and each subsequent fiscal year 
to provide the maximum Federal Pell Grant for 
which a student shall be eligible under this section 
during an award year. 
‘‘(7) NO
EFFECT
ON
PREVIOUS
APPROPRIA-
TIONS.—The amendments made to this section by 
the FAFSA Simplification Act shall not— 
‘‘(A) increase or decrease the amounts that 
have been appropriated or are available to carry 
out this section for fiscal year 2017, 2018, 
2019, 2020, 2021, 2022, 2023, 2024, or 2025 
as of the day before the effective date of such 
Act; or 
‘‘(B) extend the period of availability for 
obligation that applied to any such amount, as 
of the day before such effective date.’’; 
(2) in subsection (d)(5)(A), by striking ‘‘shall 
not exceed 12 semesters, or the equivalent of 12 se-
mesters, as determined by the Secretary by regula-
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tion’’ and inserting ‘‘shall not exceed 7 years and 6 
months’’; 
(3) in subsection (f), by striking ‘‘Any disburse-
ment allowed to be made by crediting the student’s 
account shall be limited to tuition and fees, and food 
and housing if that food and housing is institution-
ally owned or operated. The student may elect to 
have the institution provide other such goods and 
services by crediting the student’s account.’’ and in-
serting ‘‘Payments under this section may be used 
by the student for living and nontuition expenses.’’; 
(4) by striking subsections (g) and (h); and 
(5) by redesignating subsections (i) and (j) as 
subsections (g) and (h), respectively. 
(c) ELIGIBILITY FOR DREAMER STUDENTS AND STU-
DENTS WITH OTHER IMMIGRATIONS STATUSES.—Section 
484 of the Higher Education Act of 1965 (20 U.S.C. 
1091) is amended— 
(1) by striking subsection (a)(5) and inserting 
the following: 
‘‘(5) be— 
‘‘(A) a citizen or national of the United 
States, a permanent resident of the United 
States, or able to provide evidence from the Im-
migration and Naturalization Service that he or 
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she is in the United States for other than a 
temporary purpose with the intention of becom-
ing a citizen or permanent resident, or be a 
Dreamer student, as defined in subsection (u); 
or 
‘‘(B) in the case of eligibility to receive a 
Federal Pell Grant, a citizen or national of the 
United States, a permanent resident of the 
United States, able to provide evidence from the 
Immigration and Naturalization Service that he 
or she is in the United States for other than a 
temporary purpose with the intention of becom-
ing a citizen or permanent resident, a Dreamer 
student (as defined in subsection (u)), or sub-
ject to a grant of deferred enforced departure, 
a grant of deferred action pursuant to the De-
ferred Action for Childhood Arrivals policy an-
nounced by the Secretary of Homeland Security 
on June 15, 2012, or temporary protected sta-
tus under section 244 of the Immigration and 
Nationality Act (8 U.S.C. 1254a); and’’; and 
(2) by adding at the end the following: 
‘‘(u) DREAMER STUDENTS.— 
‘‘(1) IN GENERAL.—In this section, the term 
‘Dreamer student’ means an individual who— 
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‘‘(A) was younger than 16 years of age on 
the date on which the individual initially en-
tered the United States; 
‘‘(B) has provided a list of each secondary 
school that the individual attended in the 
United States; and 
‘‘(C)(i) has earned a high school diploma, 
the recognized equivalent of such diploma from 
a secondary school, or a high school equivalency 
diploma in the United States or is scheduled to 
complete the requirements for such a diploma 
or equivalent before the next academic year be-
gins; 
‘‘(ii) has earned a degree from an institu-
tion of higher education or has completed not 
less than 2 years in a program for a bacca-
laureate degree or higher degree at an institu-
tion of higher education in the United States 
and has made satisfactory academic progress, 
as defined in subsection (c), during such time 
period; 
‘‘(iii) at any time was eligible for a grant 
of deferred action under— 
‘‘(I) the June 15, 2012, memorandum 
from the Secretary of Homeland Security 
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entitled ‘Exercising Prosecutorial Discre-
tion with Respect to Individuals Who 
Came to the United States as Children’; or 
‘‘(II) the November 20, 2014, memo-
randum from the Secretary of Homeland 
Security entitled ‘Exercising Prosecutorial 
Discretion with Respect to Individuals 
Who Came to the United States as Chil-
dren and with Respect to Certain Individ-
uals Who Are the Parents of U.S. Citizens 
or Permanent Residents’; or 
‘‘(iv) has served in the uniformed services, 
as defined in section 101 of title 10, United 
States Code, for not less than 4 years and, if 
discharged, received an honorable discharge. 
‘‘(2) HARDSHIP
EXCEPTION.—The Secretary 
shall issue regulations that direct when the Depart-
ment shall waive the requirement of subparagraph 
(A) or (B), or both, of paragraph (1) for an indi-
vidual to qualify as a Dreamer student under such 
paragraph, if the individual— 
‘‘(A) 
demonstrates 
compelling 
cir-
cumstances for the inability to satisfy the re-
quirement of such subparagraph (A) or (B), or 
both; and 
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‘‘(B) satisfies the requirement of para-
graph (1)(C).’’. 
(d) FULL EXCLUSION FROM GROSS INCOME FOR 
PELL GRANTS.— 
(1) IN GENERAL.—Section 117(b) of the Inter-
nal Revenue Code of 1986 is amended by adding at 
the end the following new paragraph: 
‘‘(3) SPECIAL
RULE
FOR
PELL
GRANTS.— 
Amounts received under a Federal Pell Grant under 
subpart 1 of part A of title IV of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1070a et seq.) shall 
be treated as an amount received as a qualified 
scholarship notwithstanding whether such amount 
was used for qualified tuition and related expenses.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to amounts received in 
taxable years beginning after the date of the enact-
ment of this Act. 
TITLE IV—INCLUSIVE STUDENT 
SUCCESS GRANTS 
SEC. 401. INCLUSIVE STUDENT SUCCESS GRANTS. 
Part F of title VII of the Higher Education Act of 
1965, as added by section 101 and amended by sections 
201 and 202, is further amended by adding at the end 
the following: 
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‘‘Subpart 4—Inclusive Student Success Grants 
‘‘SEC. 800. DEFINITIONS. 
‘‘In this subpart: 
‘‘(1) ELIGIBLE
STATE.—The term ‘eligible 
State’ means a State that is a recipient of a grant 
under subpart 1. 
‘‘(2) EVIDENCE TIERS.— 
‘‘(A) EVIDENCE TIER 1.—The term ‘evi-
dence tier 1’, when used with respect to a re-
form or practice, means a reform or practice 
that meets the criteria for receiving an expan-
sion grant from the education innovation and 
research program under section 4611(a)(2) of 
the Elementary and Secondary Education Act 
of 1965, as determined by the Secretary in ac-
cordance with such section. 
‘‘(B) EVIDENCE TIER 2.—The term ‘evi-
dence tier 2’, when used with respect to a re-
form or practice, means a reform or practice 
that meets the criteria for receiving a mid- 
phase grant from the education innovation and 
research program under section 4611(a)(2) of 
the Elementary and Secondary Education Act 
of 1965, as determined by the Secretary in ac-
cordance with such section. 
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‘‘(3) FIRST GENERATION COLLEGE STUDENT.— 
The term ‘first generation college student’ has the 
meaning given the term in section 402A(h)(3). 
‘‘(4) ELIGIBLE INSTITUTION.—The term ‘eligi-
ble institution’ means— 
‘‘(A) an underfunded institution; or 
‘‘(B) an institution that is— 
‘‘(i) a part B institution (as defined in 
section 322); 
‘‘(ii) a Hispanic-serving institution (as 
defined in section 502(a)); 
‘‘(iii) an Alaska Native-serving insti-
tution (as defined in section 317(b)); 
‘‘(iv) a Native Hawaiian-serving insti-
tution (as defined in section 317(b)); 
‘‘(v) a Predominantly Black Institu-
tion (as defined in section 318(b)); 
‘‘(vi) an Asian American and Native 
American Pacific Islander-serving institu-
tion (as defined in section 320(b)); or 
‘‘(vii) a Native American-serving, non-
tribal institution (as defined in section 
319(b)). 
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‘‘(5) TRIBAL COLLEGE OR UNIVERSITY.—The 
term ‘Tribal College or University’ has the meaning 
given the term in section 316. 
‘‘(6) UNDERFUNDED INSTITUTION.—The term 
‘underfunded institution’ means a public 2-year in-
stitution of higher education or public 4-year institu-
tion of higher education that receives less than the 
national average of State appropriations per full- 
time equivalent student. 
‘‘SEC. 801. INCLUSIVE STUDENT SUCCESS GRANTS. 
‘‘(a) IN
GENERAL.—The Secretary shall award 
grants to eligible States and Tribal Colleges and Univer-
sities to improve student outcomes by carrying out or scal-
ing the activities described in section 804. 
‘‘(b) DISTRIBUTION OF FUNDS.—From amounts ap-
propriated to carry out this subpart, the Secretary shall— 
‘‘(1) distribute 10 percent of the appropriated 
amount in any fiscal year for grants to Tribal Col-
leges or Universities, which shall be distributed ac-
cording to the formula in section 316(d)(3)(B), to 
carry out the activities described in section 804 to 
implement reforms or practices that meet evidence 
tier 1 or evidence tier 2; 
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‘‘(2) use 2 percent of the appropriated amount 
in any fiscal year to evaluate the effectiveness of the 
activities carried out under this subpart; 
‘‘(3) distribute 60 percent of the appropriated 
amount in any fiscal year to award competitive 
grants to eligible States to carry out activities de-
scribed in section 804; 
‘‘(4) distribute 18 percent of the appropriated 
amount in any fiscal year to supplement the com-
petitive grant amounts awarded to eligible States 
under paragraph (3) to implement reforms or prac-
tices that meet evidence tier 1; and 
‘‘(5) distribute 10 percent of the appropriated 
amount in any fiscal year to supplement the com-
petitive grant amounts awarded to eligible States 
under paragraph (3) to implement reforms or prac-
tices that meet evidence tier 1 or evidence tier 2, or 
a combination of such reforms or practices. 
‘‘SEC. 802. APPLICATION. 
‘‘(a) IN GENERAL.—An eligible State or Tribal Col-
lege or University that desires to receive a grant under 
this subpart shall submit an application to the Secretary 
at such time, in such manner, and accompanied by such 
information as the Secretary may require. The application 
shall include, at a minimum, a description of— 
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