additional time to compete for the limited 
resources available for State and institu-
tional financial aid and positively impacts 
the college aspirations and plans of these 
students. 
‘‘(iv) Measure the impact of using in-
come information from the year prior to 
the year prior to enrollment on— 
‘‘(I) eligibility for financial aid 
under this title and for other institu-
tional aid; and 
‘‘(II) the cost of financial aid 
programs under this title. 
‘‘(iv) Effectively evaluate the benefits 
and adverse effects of the demonstration 
program on program costs, integrity, dis-
tribution, and delivery of aid. 
‘‘(C) PARTICIPANTS.—The Secretary shall 
select States and institutions within those 
States to participate in the demonstration pro-
gram under this paragraph that are partici-
pating in the programs under this title and that 
are willing to make final financial aid awards to 
students based on their application information 
from the year prior to the year prior to enroll-
ment. The Secretary shall also select as partici-
pants in the demonstration program secondary 
schools and dependent students that are located 
in the participating States. 
‘‘(D) APPLICATION
PROCESS.—The Sec-
retary shall insure that the following provisions 
are included in the demonstration program: 
‘‘(i) Participating States and institu-
tions shall allow participating students to 
apply for financial aid during their junior 
year of high school using information from 
the year prior to the year prior to enroll-
ment and all provisions available under 
this title and shall award final financial aid 
awards to participating students based on 
the applications provided under this dem-
onstration program. 
‘‘(ii) Participating States and institu-
tions shall not require students partici-
pating in this 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 shall be allowed 
to use their discretion in awarding finan-
cial aid to participating students, as out-
lined under section 479A and section 
480(d)(7). 
‘‘(E) DATA MATCH WITH THE INTERNAL 
REVENUE
SERVICE.—The Secretary shall in-
clude in this demonstration project a data 
match with the Internal Revenue Service in 
order to verify data provided by participating 
students and gauge the feasibility of imple-
menting such a data match for all students ap-
plying for aid under this title. 
‘‘(F) EVALUATION.—The Secretary shall 
conduct a rigorous evaluation of this dem-
onstration program in order to measure its ben-
efits and adverse effects as indicated under sub-
paragraph (A). 
‘‘(G) OUTREACH.—The Secretary shall 
make appropriate efforts in order to notify 
States of the demonstration program under this 
paragraph. Upon determination of participating 
States, the Secretary shall continue to make ef-
forts to notify institutions and dependent stu-
dents within participating States of the oppor-
tunity to participate in the demonstration pro-
gram and of the participation requirements.’’ 
(3) by striking subsection (b); 
(4) by redesignating subsections (c), (d), and 
(e) as subsections (b), (c), and (d), respectively. 
(b) MASTER CALENDAR.—Section 482(a)(1)(B) (20 
U.S.C. 1089) is amended to read as follows: 
‘‘(B) by March 1: proposed modifications, 
updates, and notices pursuant to sections 
479(c)(2)(C), 478, and 483(a)(6) published in 
the Federal Register;’’. 
SEC. 4. INCREASING ACCESS TO TECHNOLOGY. 
Section 483 (20 U.S.C. 1087ss) is further amended 
by adding at the end the following: 
‘‘(e) ADDRESSING THE DIGITAL DIVIDE.—The Sec-
retary shall utilize savings accrued by moving more appli-
cants to the electronic forms described in subsection (a)(4) 
to improve access to the electronic forms described in sub-
section (a)(4) for applicants meeting the requirements of 
section 479(c).’’ 
SEC. 5. SIMPLIFY THE TREATMENT OF INCOME: REDUCING 
UNTAXED INCOME AND BENEFITS. 
Subsection (b) of section 480 (20 U.S.C. 1087vv(b)) 
is amended to read as follows:
‘‘(b) UNTAXED INCOME AND BENEFITS.— 
‘‘(1) The term ‘untaxed income and benefits’ 
means— 
‘‘(A) child support received; 
‘‘(B) workman’s compensation; 
‘‘(C) veteran’s benefits such as death pen-
sion, dependency, and indemnity compensation, 
but excluding veterans’ education benefits as 
defined in subsection (c); 
‘‘(D) interest on tax-free bonds; 
‘‘(E) housing, food, and other allowances 
(excluding rent subsidies for low-income hous-
ing) for military, clergy, and others (including 
cash payments and cash value of benefits); 
‘‘(F) cash support or any money paid on 
the student‘s behalf, except, for dependent stu-
dents, funds provided by the student’s parents; 
‘‘(G) untaxed portion of pensions; 
‘‘(H) payments to individual retirement ac-
counts and Keogh accounts excluded from in-
come for Federal income tax purposes; and 
‘‘(I) any other untaxed income and bene-
fits, such as Black Lung Benefits, Refugee As-
sistance, railroad retirement benefits, or Job 
Training Partnership Act noneducational bene-
fits or benefits received through participation in 
employment and training activities under title I 
of the Workforce Investment Act of 1998. 
‘‘(2) The term ‘untaxed income and benefits’ 
shall not include the amount of additional child tax 
credit claimed for Federal income tax purposes.’’. 
SEC. 6. REDUCING THE NUMBER OF QUESTIONS. 
Section 484 (20 U.S.C. 1091) is amended by striking 
subsection (r). 
SEC. 7. ALLOWANCE FOR STATE AND OTHER TAXES. 
(a) ALLOWANCE FOR STATE AND LOCAL TAXES.— 
Section 478 (20 U.S.C. 1087rr) is amended— 
(1) by striking subsection (g); 
(2) by redesignating subsection (h) as sub-
section (g). 
(b) 
HOLDING
STUDENTS
HARMLESS.—Section 
475(c) (20 U.S.C. 1087oo(c)) is amended— 
(1) in paragraph (1): 
(A) by striking subparagraph (B); 
(B) by redesignating subparagraphs (C), 
(D), (E), and (F) as subparagraphs (B), (C), 
(D), and (E), respectively; 
(2) by striking paragraph (2); 
(3) by striking paragraph (4) and inserting the 
following:
‘‘(4) INCOME
PROTECTION
ALLOWANCE.—The 
income protection allowance is determined by the fol-
lowing table (or a successor table prescribed by the 
Secretary under section 478): 
‘‘Income Protection Allowance 
Family Size 
Number 
in College 
(including 
student) 
For each 
additional 
subtract: 
$15,207 
$12,599 
................
................
................
$3,641
18,937 
16,350 
$13,742 
................
................
23,388 
20,779 
18,193 
$15,596 
................
27,595 
24,986 
22,400 
19,802 
$17,216 
32,268 
29,670 
27,084 
24,487 
21,900 
For each ad-
ditional add: 
2,586 
2,586 
2,586 
2,586 
2,586 
’’ 
(4) by redesignating paragraphs (3), (4) and 
(5) as paragraphs (2), (3) and (4), respectively. 
(c) DEPENDENT STUDENT INCREASE
IN INCOME 
PROTECTION ALLOWANCE.—Section 475(g) (20 U.S.C. 
1087oo(g)) is amended— 
(1) in paragraph (2)— 
(A) by striking subparagraph (B); 
(B) by striking subparagraph (D) and in-
serting the following: 
‘‘(D) an income protection allowance of 
$2,589 (or a successor amount prescribed by 
the Secretary under section 478);’’ 
(C) by redesignating subparagraphs (C), 
(D), (E), and (F) as subparagraphs (B), (C), 
(D), and (E), respectively;
(2) by striking paragraph (3); and 
(3) by redesignating paragraphs (4), (5), and 
(6) as paragraphs (3), (4), and (5), respectively. 
(d) INDEPENDENT STUDENT (WITHOUT DEPEND-
ENTS) INCREASE IN INCOME PROTECTION ALLOWANCE.— 
Section 476(b) (20 U.S.C. 1087pp(b)) is amended— 
(1) in subparagraph (A) of paragraph (1)— 
(A) by striking clause (ii); 
(B) by striking subclauses (I), (II) and 
(III) of clause (iv) and inserting the following: 
‘‘(I) $5,874 for single students; 
‘‘(II) $5,874 for married stu-
dents who are both enrolled pursuant 
to subsection (a)(2); and 
‘‘(III) $9,395 for married stu-
dents where one is enrolled pursuant 
to subsection (a)(2);’’; 
(C) by redesignating clauses (iii), (iv), (v), 
(vi), as clauses (ii), (iii), (iv), and (v), respec-
tively; 
(2) by striking paragraph (2); 
(3) by redesignating paragraphs (3), (4), and 
(5) as paragraphs (2), (3), and (4), respectively.
(e) INDEPENDENT STUDENT (WITH DEPENDENTS) 
INCREASE IN INCOME PROTECTION ALLOWANCE.—Sec-
tion 477(b) (20 U.S.C. 1087qq(b)) is amended— 
(1) in paragraph (1)— 
(A) by striking subparagraph (B); 
(B) by redesignating (C), (D), (E), and 
(F) as subparagraphs (B), (C), (D), and (E), 
respectively; 
(2) by striking paragraph (2); 
(3) by striking paragraph (4) and inserting the 
following: 
‘‘(4) INCOME
PROTECTION
ALLOWANCE.—The 
income protection allowance is determined by the fol-
lowing table (or a successor table prescribed by the 
Secretary under section 478): 
‘‘Income Protection Allowance 
Family Size 
Number 
in College 
(including 
student) 
For each 
additional 
subtract: 
$16,935 
$12,599 
................
................
................
$3,641
18,937 
16,350 
$13,742 
................
................
23,384 
20,779 
18,193 
$15,596 
................
27,596 
24,986 
22,400 
19,802 
$17,216 
32,268 
29,670 
27,084 
24,487 
21,900 
For each ad-
ditional add: 
2,586 
2,586 
2,586 
2,586 
2,586 
’’ 
(4) by redesignating paragraphs (3), (4), and 
(5) as paragraphs (2), (3), and (4), respectively. 
(f) CONFORMING AMENDMENT: UPDATES.—Section 
478(b) (20 U.S.C. 1087rr(b)) is amended—
(1) in paragraph (1)— 
(A) by striking ‘‘1993–1994’’ and inserting 
‘‘2005–2006’’; 
(B) by striking ‘‘475(c)(4) and 477(b)(4)’’ 
and inserting ‘‘475(c)(3) and 477(b)(3)’’; and 
(C) by striking ‘‘December 1992’’ and in-
serting ‘‘December 2004’’; and 
(2) in paragraph (2)— 
(A) by striking ‘‘2000–2001’’ and inserting 
‘‘2005–2006’’; 
(B) 
by 
striking 
‘‘475(g)(2)(D) 
and 
476(b)(1)(A)(iv)’’ and inserting ‘‘475(g)(2)(C) 
and 476(b)(1)(A)(iii)’’; and 
(C) by striking ‘‘December 1999’’ and in-
serting ‘‘December 2004’’. 
SEC. 8. RELIEF FOR WORKING STUDENTS. 
(a) DEPENDENT STUDENTS.—Paragraph (4) of sec-
tion 475(g) (20 U.S.C. 1087oo(g)(4)), as redesignated by 
section 7(c)(3) of this Act, is amended to read as follows: 
‘‘(4) the student’s available income (determined 
in accordance with paragraph (1) of this subsection) 
is assessed at 40 percent.’’ 
(b) INDEPENDENT STUDENTS WITHOUT DEPEND-
ENTS OTHER THAN A SPOUSE.—Paragraph (4) of section
476(b) (20 U.S.C. 1087pp(b)), as redesignated by section 
7(d)(3) of this Act, is amended to read as follows: 
‘‘(4) ASSESSMENT
OF
AVAILABLE
INCOME.— 
The family’s available income (determined in accord-
ance with paragraph (1)(A) of this subsection) is as-
sessed at 40 percent.’’. 
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