20 U.S.C. § 1087vv (EDUCATION)
§ 1087vv. Definitions
As used in this part:
(a) Total income
(1)
(A) Except as provided in subparagraph (B) and paragraph (2), the term “total income” is equal to adjusted gross income plus untaxed income and benefits for the preceding tax year minus excludable income (as defined in subsection (e)).
(B) Notwithstanding section 1087rr(a) of this title, the Secretary may provide for the use of data from the second preceding tax year when and to the extent necessary to carry out the simplification of applications (including simplification for a subset of applications) used for the estimation and determination of financial aid eligibility. Such simplification may include the sharing of data between the Internal Revenue Service and the Department, pursuant to the consent of the taxpayer.
(2) No portion of any student financial assistance received from any program by an individual, no portion of veterans’ education benefits received by an individual, no portion of a national service educational award or post-service benefit received by an individual under title I of the National and Community Service Act of 1990 (42 U.S.C. 12511 et seq.), no portion of any tax credit taken under section 25A of title 26, and no distribution from any qualified education benefit described in subsection (f)(3) that is not subject to Federal income tax, shall be included as income or assets in the computation of expected family contribution for any program funded in whole or in part under this chapter.
(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 pension, 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 housing) for military, clergy, and others (including cash payments and cash value of benefits), except that the value of on-base military housing or the value of basic allowance for housing determined under section 403(b) of title 37 received by the parents, in the case of a dependent student, or the student or student’s spouse, in the case of an independent student, shall be excluded;
(F) cash support or any money paid on the student’s behalf, except, for dependent students, funds provided by the student’s parents;
(G) untaxed portion of pensions;
(H) payments to individual retirement accounts and Keogh accounts excluded from income for Federal income tax purposes; and
(I) any other untaxed income and benefits, such as Black Lung Benefits, Refugee Assistance, or railroad retirement benefits, or benefits received through participation in employment and training activities under title I of the Workforce Innovation and Opportunity Act [29 U.S.C. 3111 et seq.].
(2) The term “untaxed income and benefits” shall not include—
(A) the amount of additional child tax credit claimed for Federal income tax purposes;
(B) welfare benefits, including assistance under a State program funded under part A of title IV of the Social Security Act [42 U.S.C. 601 et seq.] and aid to dependent children;
(C) the amount of earned income credit claimed for Federal income tax purposes;
(D) the amount of credit for Federal tax on special fuels claimed for Federal income tax purposes;
(E) the amount of foreign income excluded for purposes of Federal income taxes; or
(F) untaxed social security benefits.
(c) Veteran and veterans’ education benefits
(1) The term “veteran” means any individual who—
(A) has engaged in the active duty in the United States Army, Navy, Air Force, Marines, or Coast Guard; and
(B) was released under a condition other than dishonorable.
(2) The term “veterans’ education benefits” means veterans’ benefits the student will receive during the award year, including but not limited to benefits under the following provisions of law:
(A) Chapter 103 of title 10 (Senior Reserve Officers’ Training Corps).
(B) Chapter 106A of title 10 (Educational Assistance for Persons Enlisting for Active Duty).
(C) Chapter 1606 of title 10 (Selected Reserve Educational Assistance Program).
(D) Chapter 1607 of title 10 (Educational Assistance Program for Reserve Component Members Supporting Contingency Operations and Certain Other Operations).
(E) Chapter 30 of title 38 (All-Volunteer Force Educational Assistance Program, also known as the “Montgomery GI Bill—active duty”).
(F) Chapter 31 of title 38 (Training and Rehabilitation for Veterans with Service-Connected Disabilities).
(G) Chapter 32 of title 38 (Post-Vietnam Era Veterans’ Educational Assistance Program).
(H) Chapter 33 of title 38 (Post-9/11 Educational Assistance).
(I) Chapter 35 of title 38 (Survivors’ and Dependents’ Educational Assistance Program).
(J) Section 903 of the Department of Defense Authorization Act, 1981 (10 U.S.C. 2141 note) (Educational Assistance Pilot Program).
(K) Section 156(b) of the “Joint Resolution making further continuing appropriations and providing for productive employment for the fiscal year 1983, and for other purposes” (42 U.S.C. 402 note) (Restored Entitlement Program for Survivors, also known as “Quayle benefits”).
(L) The provisions of chapter 3 of title 37, related to subsistence allowances for members of the Reserve Officers Training Corps.
(d) Independent student
(1) Definition
The term “independent”, when used with respect to a student, means any individual who—
(A) is 24 years of age or older by December 31 of the award year;
(B) is an orphan, in foster care, or a ward of the court, or was an orphan, in foster care, or a ward of the court at any time when the individual was 13 years of age or older;
(C) is, or was immediately prior to attaining the age of majority, an emancipated minor or in legal guardianship as determined by a court of competent jurisdiction in the individual’s State of legal residence;
(D) is a veteran of the Armed Forces of the United States (as defined in subsection (c)(1)) or is currently serving on active duty in the Armed Forces for other than training purposes;
(E) is a graduate or professional student;
(F) is a married individual;
(G) has legal dependents other than a spouse;
(H) has been verified during the school year in which the application is submitted as either an unaccompanied youth who is a homeless child or youth (as such terms are defined in section 725 of the McKinney-Vento Homeless Assistance Act [42 U.S.C. 11434a]), or as unaccompanied, at risk of homelessness, and self-supporting, by—
(i) a local educational agency homeless liaison, designated pursuant to section 722(g)(1)(J)(ii) of the McKinney-Vento Homeless Assistance Act [42 U.S.C. 11432(g)(1)(J)(ii)];
(ii) the director of a program funded under the Runaway and Homeless Youth Act [34 U.S.C. 11201 et seq.] or a designee of the director;
(iii) the director of a program funded under subtitle B of title IV of the McKinney-Vento Homeless Assistance Act [42 U.S.C. 11371 et seq.] (relating to emergency shelter grants) or a designee of the director; or
(iv) a financial aid administrator; or
(I) is a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances.
(2) Simplifying the dependency override process
A financial aid administrator may make a determination of independence under paragraph (1)(I) based upon a documented determination of independence that was previously made by another financial aid administrator under such paragraph in the same award year.
(e) Excludable income
The term “excludable income” means—
(1) any student financial assistance awarded based on need as determined in accordance with the provisions of this part, including any income earned from work under part C of this subchapter;
(2) any income earned from work under a cooperative education program offered by an institution of higher education;
(3) any living allowance received by a participant in a program established under the National and Community Service Act of 1990 [42 U.S.C. 12501 et seq.];
(4) child support payments made by the student or parent;
(5) payments made and services provided under part E of title IV of the Social Security Act [42 U.S.C. 670 et seq.]; and
(6) special combat pay.
(f) Assets
(1) The term “assets” means cash on hand, including the amount in checking and savings accounts, time deposits, money market funds, trusts, stocks, bonds, other securities, mutual funds, tax shelters, qualified education benefits (except as provided in paragraph (3)), and the net value of real estate, income producing property, and business and farm assets.
(2) With respect to determinations of need under this subchapter, other than for subpart 4 of part A of this subchapter, the term “assets” shall not include the net value of—
(A) the family’s principal place of residence;
(B) a family farm on which the family resides; or
(C) a small business with not more than 100 full-time or full-time equivalent employees (or any part of such a small business) that is owned and controlled by the family.
(3) A qualified education benefit shall be considered an asset of—
(A) the student if the student is an independent student; or
(B) the parent if the student is a dependent student, regardless of whether the owner of the account is the student or the parent.
(4) In determining the value of assets in a determination of need under this subchapter (other than for subpart 4 of part A of this subchapter), the value of a qualified education benefit shall be—
(A) the refund value of any tuition credits or certificates purchased under a qualified education benefit; and
(B) in the case of a program in which contributions are made to an account that is established for the purpose of meeting the qualified higher education expenses of the designated beneficiary of the account, the current balance of such account.
(5) In this subsection:
(A) The term “qualified education benefit” means—
(i) a qualified tuition program (as defined in section 529(b)(1)(A) of title 26) or other prepaid tuition plan offered by a State; and
(ii) a Coverdell education savings account (as defined in section 530(b)(1) of title 26).
(B) The term “qualified higher education expenses” has the meaning given the term in section 529(e) of title 26.
(g) Net assets
The term “net assets” means the current market value at the time of application of the assets (as defined in subsection (f)), minus the outstanding liabilities or indebtedness against the assets.
(h) Treatment of income taxes paid to other jurisdictions
(1) The tax on income paid to the Governments of the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, or the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau under the laws applicable to those jurisdictions, or the comparable tax paid to the central government of a foreign country, shall be treated as Federal income taxes.
(2) References in this part to title 26, Federal income tax forms, and the Internal Revenue Service shall, for purposes of the tax described in paragraph (1), be treated as references to the corresponding laws, tax forms, and tax collection agencies of those jurisdictions, respectively, subject to such adjustments as the Secretary may provide by regulation.
(i) Current balance
The term “current balance of checking and savings accounts” does not include any funds over which an individual is barred from exercising discretion and control because of the actions of any State in declaring a bank emergency due to the insolvency of a private deposit insurance fund.
(j) Other financial assistance
(1) For purposes of determining a student’s eligibility for funds under this subchapter, estimated financial assistance not received under this subchapter shall include all scholarships, grants, loans, or other assistance known to the institution at the time the determination of the student’s need is made, including national service educational awards or post-service benefits under title I of the National and Community Service Act of 1990 (42 U.S.C. 12511 et seq.), but excluding veterans’ education benefits as defined in subsection (c).
(2) Notwithstanding paragraph (1), a tax credit taken under section 25A of title 26, or a distribution that is not includable in gross income under section 529 of such title, under another prepaid tuition plan offered by a State, or under a Coverdell education savings account under section 530 of such title, shall not be treated as estimated financial assistance for purposes of section 1087kk(3) of this title.
(3) Notwithstanding paragraph (1) and section 1087ll of this title, assistance not received under this subchapter may be excluded from both estimated financial assistance and cost of attendance, if that assistance is provided by a State and is designated by such State to offset a specific component of the cost of attendance. If that assistance is excluded from either estimated financial assistance or cost of attendance, it shall be excluded from both.
(4) Notwithstanding paragraph (1), special combat pay shall not be treated as estimated financial assistance for purposes of section 1087kk(3) of this title.
(k) Dependents
(1) Except as otherwise provided, the term “dependent of the parent” means the student, dependent children of the student’s parents, including those children who are deemed to be dependent students when applying for aid under this subchapter, and other persons who live with and receive more than one-half of their support from the parent and will continue to receive more than half of their support from the parent during the award year.
(2) Except as otherwise provided, the term “dependent of the student” means the student’s dependent children and other persons (except the student’s spouse) who live with and receive more than one-half of their support from the student and will continue to receive more than half of their support from the student during the award year.
(l) Family size
(1) In determining family size in the case of a dependent student—
(A) if the parents are not divorced or separated, family members include the student’s parents, and the dependents of the student’s parents including the student;
(B) if the parents are divorced or separated, family members include the parent whose income is included in computing available income and that parent’s dependents, including the student; and
(C) if the parents are divorced and the parent whose income is so included is remarried, or if the parent was a widow or widower who has remarried, family members also include, in addition to those individuals referred to in subparagraph (B), the new spouse and any dependents of the new spouse if that spouse’s income is included in determining the parents’ adjusted available income.
(2) In determining family size in the case of an independent student—
(A) family members include the student, the student’s spouse, and the dependents of the student; and
(B) if the student is divorced or separated, family members do not include the spouse (or ex-spouse), but do include the student and the student’s dependents.
(m) Business assets
The term “business assets” means property that is used in the operation of a trade or business, including real estate, inventories, buildings, machinery, and other equipment, patents, franchise rights, and copyrights.
(n) Special combat pay
The term “special combat pay” means pay received by a member of the Armed Forces because of exposure to a hazardous situation.
(Pub. L. 89–329, title IV, § 480, as added Pub. L. 99–498, title IV, § 406(a), Oct. 17, 1986, 100 Stat. 1472; amended Pub. L. 100–50, § 14(28), June 3, 1987, 101 Stat. 353; Pub. L. 100–369, § 7(b), July 18, 1988, 102 Stat. 837; Pub. L. 101–610, title I, § 185(3), (4), Nov. 16, 1990, 104 Stat. 3168; Pub. L. 102–325, title IV, § 471(a), July 23, 1992, 106 Stat. 606; Pub. L. 103–82, title I, § 102(c)(4), (5), Sept. 21, 1993, 107 Stat. 824; Pub. L. 103–208, § 2(g)(17)–(20), Dec. 20, 1993, 107 Stat. 2474; Pub. L. 104–193, title I, § 110(h)(2), Aug. 22, 1996, 110 Stat. 2172; Pub. L. 105–78, title VI, § 609(j), (k), Nov. 13, 1997, 111 Stat. 1524; Pub. L. 105–244, title IV, § 479, Oct. 7, 1998, 112 Stat. 1732; Pub. L. 105–277, div. A, § 101(f) [title VIII, § 405(d)(15)(B), (f)(12)(B)], Oct. 21, 1998, 112 Stat. 2681–337, 2681–421, 2681–431; Pub. L. 109–171, title VIII, § 8019, Feb. 8, 2006, 120 Stat. 176; Pub. L. 110–84, title VI, § 604(a), Sept. 27, 2007, 121 Stat. 806; Pub. L. 110–153, § 1(a), Dec. 21, 2007, 121 Stat. 1824; Pub. L. 110–315, title IV, § 473(a)–(e), Aug. 14, 2008, 122 Stat. 3270, 3271; Pub. L. 111–39, title IV, § 406(a)(6)–(8), July 1, 2009, 123 Stat. 1949, 1950; Pub. L. 113–128, title V, § 512(n)(4), July 22, 2014, 128 Stat. 1710; Pub. L. 116–260, div. FF, title VII, § 702(l)(2), Dec. 27, 2020, 134 Stat. 3163.)
heading: Amendment of Section
text: Pub. L. 116–260, div. FF, title VII, §§ 701(b), 702(l)(2), Dec. 27, 2020, 134 Stat. 3137, 3163; Pub. L. 117–103, div. R, § 102(a), (c)(1)(A)(iii) Mar. 15, 2022, 136 Stat. 819, provided that, effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, this section is amended to read as follows:
§ 1087vv. Definitions
In this part:
(a) Total income
The term “total income” means the amount equal to adjusted gross income for the second preceding tax year plus untaxed income and benefits for the second preceding tax year minus excludable income for the second preceding tax year. The factors used to determine total income shall be derived from the Federal income tax return, if available, except for the applicant’s ability to indicate a qualified rollover in the second preceding tax year as outlined in section 1090 of this title or foreign income described in subsection (b)(5).
(b) Untaxed income and benefits
The term “untaxed income and benefits” means—
(1) deductions and payments to self-employed SEP, SIMPLE, Keogh, and other qualified individual retirement accounts excluded from income for Federal tax purposes, except such term shall not include payments made to tax-deferred pension and retirement plans, paid directly or withheld from earnings, that are not delineated on the Federal tax return;
(2) tax-exempt interest income;
(3) untaxed portion of individual retirement account distributions;
(4) untaxed portion of pensions; and
(5) foreign income of permanent residents of the United States or United States citizens exempt from Federal taxation, or the foreign income for which such a permanent resident or citizen receives a foreign tax credit.
(c) Veterans and veterans’ education benefits
(1) The term “veteran” has the meaning given the term in section 101(2) of title 38 and includes individuals who served in the United States Armed Forces as described in sections 101(21), 101(22), and 101(23) of title 38.
(2) The term “veterans’ education benefits” means veterans’ benefits under the following provisions of law:
(A) Chapter 103 of title 10 (Senior Reserve Officers’ Training Corps).
(B) Chapter 106A of title 10 (Educational Assistance for Persons Enlisting for Active Duty).
(C) Chapter 1606 of title 10 (Selected Reserve Educational Assistance Program).
(D) Chapter 1607 of title 10 (Educational Assistance Program for Reserve Component Members Supporting Contingency Operations and Certain Other Operations).
(E) Chapter 30 of title 38 (All-Volunteer Force Educational Assistance Program, also known as the “Montgomery GI Bill—active duty”).
(F) Chapter 31 of title 38 (Training and Rehabilitation for Veterans with Service-Connected Disabilities).
(G) Chapter 32 of title 38 (Post-Vietnam Era Veterans’ Educational Assistance Program).
(H) Chapter 33 of title 38 (Post-9/11 Educational Assistance).
(I) Chapter 35 of title 38 (Survivors’ and Dependents’ Educational Assistance Program).
(J) Section 903 of the Department of Defense Authorization Act, 1981 (10 U.S.C. 2141 note) (Educational Assistance Pilot Program).
(K) Section 156(b) of the “Joint Resolution making further continuing appropriations and providing for productive employment for the fiscal year 1983, and for other purposes” (42 U.S.C. 402 note) (Restored Entitlement Program for Survivors, also known as “Quayle benefits”).
(L) The provisions of chapter 3 of title 37, related to subsistence allowances for members of the Reserve Officers Training Corps.
(d) Independent students and determinations
The term “independent”, when used with respect to a student, means any individual who—
(1) is 24 years of age or older by December 31 of the award year;
(2) is, or was at any time when the individual was 13 years of age or older—
(A) an orphan;
(B) a ward of the court; or
(C) in foster care;
(3) is, or was immediately prior to attaining the age of majority, an emancipated minor or in legal guardianship as determined by a court of competent jurisdiction in the individual’s State of legal residence;
(4) is a veteran of the Armed Forces of the United States (as defined in subsection (c)) or is currently serving on active duty in the Armed Forces for other than training purposes;
(5) is a graduate or professional student;
(6) is married and not separated;
(7) has legal dependents other than a spouse;
(8) is an unaccompanied homeless youth or is unaccompanied, at risk of homelessness, and self-supporting, without regard to such individual’s age; and
(9) is a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances pursuant to section 1087tt(c) of this title in which the student is unable to contact a parent or where contact with parents poses a risk to such student, which includes circumstances of—
(A) human trafficking, as described in the Trafficking Victims Protection Act of 2000 (22 U.S.C. 7101 et seq.);
(B) legally granted refugee or asylum status;
(C) parental abandonment or estrangement; or
(D) student or parental incarceration.
(e) Excludable income
The term “excludable income” means—
(1) an amount equal to the education credits described in paragraphs (1) and (2) of section 25A(a) of title 26;
(2) if an applicant elects to report it, college grant and scholarship aid included in gross income on a Federal tax return, including amounts attributable to grant and scholarship portions of fellowships and assistantships and any national service educational award or post-service benefit received by an individual under title I of the National and Community Service Act of 1990 (42 U.S.C. 12511 et seq.), including awards, living allowances, and interest accrual payments; and
(3) income earned from work under part C of this subchapter.
(f) Assets
(1) In general
The term “assets” means the amount in checking and savings accounts, time deposits, money market funds, investments, trusts, stocks, bonds, derivatives, securities, mutual funds, tax shelters, qualified education benefits (except as provided in paragraph (3)), the annual amount of child support received and the net value of real estate, vacation homes, income producing property, and business and farm assets, determined in accordance with section 1087rr(c) of this title.
(2) Exclusions
With respect to determinations of need under this subchapter, the term “assets” shall not include the net value of the family’s principal place of residence.
(3) Consideration of qualified education benefit
A qualified education benefit shall be considered an asset of—
(A) the student if the student is an independent student; or
(B) the parent if the student is a dependent student and the account is designated for the student, regardless of whether the owner of the account is the student or the parent.
(4) Definition of qualified education benefit
In this subsection, the term “qualified education benefit” means—
(A) a qualified tuition program (as defined in section 529(b)(1)(A) of title 26) or other prepaid tuition plan offered by a State; and
(B) a Coverdell education savings account (as defined in section 530(b)(1) of title 26).
(g) Net value
The term “net value” means the market value at the time of application of the assets (as defined in subsection (f)), minus the outstanding liabilities or indebtedness against the assets.
(h) Treatment of income taxes paid to other jurisdictions
(1) The tax on income paid to the Governments of the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, or the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau under the laws applicable to those jurisdictions, or the comparable tax paid to the central government of a foreign country, shall be treated as Federal income taxes.
(2) References in this part to title 26, Federal income tax forms, and the Internal Revenue Service shall, for purposes of the tax described in paragraph (1), be treated as references to the corresponding laws, tax forms, and tax collection agencies of those jurisdictions, respectively, subject to such adjustments as the Secretary may provide by regulation.
(i) Other financial assistance
(1) For purposes of determining a student’s eligibility for funds under this subchapter, other financial assistance not received under this subchapter shall include all scholarships, grants, loans, or other assistance known to the institution at the time the determination of the student’s need is made, including national service educational awards or post-service benefits under title I of the National and Community Service Act of 1990 (42 U.S.C. 12511 et seq.), but excluding veterans’ education benefits.
(2) Notwithstanding paragraph (1), a tax credit taken under section 25A of title 26, or a distribution that is not includable in gross income under section 529 of such title, under another prepaid tuition plan offered by a State, or under a Coverdell education savings account under section 530 of such title, shall not be treated as other financial assistance for purposes of section 1087kk(a)(3) of this title.
(3) Notwithstanding paragraph (1) and section 1087ll of this title, assistance not received under this subchapter may be excluded from both other financial assistance and cost of attendance, if that assistance is provided by a State and is designated by such State to offset a specific component of the cost of attendance. If that assistance is excluded from either other financial assistance or cost of attendance, it shall be excluded from both.
(4) Notwithstanding paragraph (1), payments made and services provided under part E of title IV of the Social Security Act to or on behalf of any child or youth over whom the State agency has responsibility for placement, care, or supervision, including the value of vouchers for education and training and amounts expended for room and board for youth who are not in foster care but are receiving services under section 477 of such Act, shall not be treated as other financial assistance for purposes of section 1087kk(a)(3) of this title.
(5) Notwithstanding paragraph (1), emergency financial assistance provided to the student for unexpected expenses that are a component of the student’s cost of attendance, and not otherwise considered when the determination of the student’s need is made, shall not be treated as other financial assistance for purposes of section 1087kk(a)(3) of this title.
(j) Dependents
(1) Except as otherwise provided, the term “dependent of the parent” means the student who is deemed to be a dependent student when applying for aid under this subchapter, and any other person who lives with and receives more than one-half of their support from the parent (or parents) and will continue to receive more than half of their support from the parent (or parents) during the award year.
(2) Except as otherwise provided, the term “dependent of the student” means the student’s dependent children and other persons (except the student’s spouse) who live with and receive more than one-half of their support from the student and will continue to receive more than half of their support from the student during the award year.
(k) Family size
(1) Dependent student
Except as provided in paragraph (3), in determining family size in the case of a dependent student—
(A) if the parents are not divorced or separated, family members include the student’s parents, and any dependent (within the meaning of section 152 of title 26 or an eligible individual for purposes of the credit under section 24 of title 26) of the student’s parents for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter;
(B) if the parents are divorced or separated, family members include the parent whose income is included in computing available income and any dependent (within the meaning of section 152 of title 26 or an eligible individual for purposes of the credit under section 24 of title 26) of that parent for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter;
(C) if the parents are divorced and the parents whose income is so included are remarried, or if the parent was a widow or widower who has remarried, family members also include, in addition to those individuals referred to in subparagraph (B), the new spouse and any dependent (within the meaning of section 152 of title 26 or an eligible individual for purposes of the credit under section 24 of title 26) of the new spouse for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter, if that spouse’s income is included in determining the parent’s adjusted available income; and
(D) if the student is not considered as a dependent (within the meaning of section 152 of title 26 or an eligible individual for purposes of the credit under section 24 of title 26) of any parent, the parents’ family size shall include the student and the family members applicable to the parents’ situation under subparagraph (A), (B), or (C).
(2) Independent student
Except as provided in paragraph (3), in determining family size in the case of an independent student—
(A) family members include the student, the student’s spouse, and any dependent (within the meaning of section 152 of title 26 or an eligible individual for purposes of the credit under section 24 of title 26) of that student for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter; and
(B) if the student is divorced or separated, family members do not include the spouse (or ex-spouse), but do include the student and any dependent (within the meaning of section 152 of title 26 or an eligible individual for purposes of the credit under section 24 of title 26) of that student for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter.
(3) Procedures and modification
The Secretary shall provide procedures for determining family size in cases in which information for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter has changed or does not accurately reflect the applicant’s current household size, including when a divorce settlement only allows a parent to file for the Earned Income Tax Credit available under section 32 of title 26.
(l) Business assets
The term “business assets” means property that is used in the operation of a trade or business, including real estate, inventories, buildings, machinery, and other equipment, patents, franchise rights, and copyrights.
(m) Homeless youth
The term “homeless youth” has the meaning given the term “homeless children and youths” in section 11434a of title 42.
(n) Unaccompanied
The terms “unaccompanied”, “unaccompanied youth”, or “unaccompanied homeless youth” have the meaning given the term “unaccompanied youth” in section 11434a of title 42.
See 2020 Amendment note below.
heading: Editorial Notes
heading: References in Text
text: The National and Community Service Act of 1990, referred to in subsecs. (a)(2), (e)(3), and (j)(1), is Pub. L. 101–610, Nov. 16, 1990, 104 Stat. 3127, which is classified principally to chapter 129 (§ 12501 et seq.) of Title 42, The Public Health and Welfare. Title I of the Act enacted subchapter I (§ 12511 et seq.) of chapter 129 of Title 42 and amended this section and section 1070a–6 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 12501 of Title 42 and Tables.
The Workforce Innovation and Opportunity Act, referred to in subsec. (b)(1)(I), is Pub. L. 113–128, July 22, 2014, 128 Stat. 1425. Title I of the Act is classified generally to subchapter I (§ 3111 et seq.) of chapter 32 of Title 29, Labor. For complete classification of this Act to the Code, see Short Title note set out under section 3101 of Title 29 and Tables.
The Social Security Act, referred to in subsecs. (b)(2)(B) and (e)(5), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Parts A and E of title IV of the Act are classified generally to parts A (§ 601 et seq.) and E (§ 670 et seq.) of subchapter IV of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.
Section 903 of the Department of Defense Authorization Act, 1981, referred to in subsec. (c)(2)(J), is section 903 of Pub. L. 96–342, which is set out as a note under section 2141 of Title 10, Armed Forces.
Section 156(b) of the “Joint Resolution making further continuing appropriations and providing for productive employment for the fiscal year 1983, and for other purposes”, referred to in subsec. (c)(2)(K), is section 156(b) of Pub. L. 97–377, which is set out as a note under section 402 of Title 42, The Public Health and Welfare.
The Runaway and Homeless Youth Act, referred to in subsec. (d)(1)(H)(ii), is title III of Pub. L. 93–415, Sept. 7, 1974, 88 Stat. 1129, which is classified generally to subchapter III (§ 11201 et seq.) of chapter 111 of Title 34, Crime Control and Law Enforcement. For complete classification of this Act to the Code, see Short Title of 1974 Act note set out under section 10101 of Title 34 and Tables.
The McKinney-Vento Homeless Assistance Act, referred to in subsec. (d)(1)(H)(iii), is Pub. L. 100–77, July 22, 1987, 101 Stat. 482. Subtitle B of title IV of the Act is classified generally to part B (§ 11371 et seq.) of subchapter IV of chapter 119 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 11301 of Title 42 and Tables.
heading: Codification
text: Amendment by section 2(g)(19) of Pub. L. 103–208 (which was effective as if included in Pub. L. 102–325) was executed to this section as amended by Pub. L. 102–325 and Pub. L. 103–82, to reflect the probable intent of Congress.
heading: Amendments
text: 2020—Pub. L. 116–260 amended section generally. Prior to amendment, section provided definitions for this part, including current balance of checking and savings accounts and special combat pay.
2014—Subsec. (b)(1)(I). Pub. L. 113–128 substituted “benefits received through participation in employment and training activities under title I of the Workforce Innovation and Opportunity Act” for “benefits received through participation in employment and training activities under title I of the Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.)”.
2009—Subsec. (a)(2). Pub. L. 111–39, § 406(a)(6), substituted “12511” for “12571”.
Subsec. (c)(2). Pub. L. 111–39, § 406(a)(7), substituted “benefits under the following provisions of law” for “the following” in introductory provisions, added subpars. (A) to (L), and struck out former subpars. (A) to (J) which listed, respectively, the following provisions of law: title 10, chapter 2; title 10, chapter 106; title 10, chapter 107; title 37, chapter 2; title 38, chapter 30; title 38, chapter 31; title 38, chapter 32; title 38, chapter 35; Public Law 97–376, section 156; and Public Law 96–342, section 903.
Subsec. (j)(1). Pub. L. 111–39, § 406(a)(8), substituted “12511” for “12571”.
2008—Subsec. (a)(1). Pub. L. 110–315, § 473(a)(1), designated existing provisions as subpar. (A), inserted “subparagraph (B) and” after “provided in”, and added subpar. (B).
Subsec. (a)(2). Pub. L. 110–315, § 473(a)(2), inserted “no portion of veterans’ education benefits received by an individual,” after “any program by an individual,”.
Subsec. (b)(1)(E). Pub. L. 110–315, § 473(b), inserted “, except that the value of on-base military housing or the value of basic allowance for housing determined under section 403(b) of title 37 received by the parents, in the case of a dependent student, or the student or student’s spouse, in the case of an independent student, shall be excluded” before semicolon.
Subsec. (d)(1)(B), (C). Pub. L. 110–315, § 473(c), added subpars. (B) and (C) and struck out former subpars. (B) and (C) which read as follows:
“(B) is an orphan, in foster care, or a ward of the court, at any time when the individual is 13 years of age or older;
“(C) is an emancipated minor or is in legal guardianship as determined by a court of competent jurisdiction in the individual’s State of legal residence;”.
Subsec. (e)(2) to (6). Pub. L. 110–315, § 473(d), added par. (2) and redesignated former pars. (2) to (5) as (3) to (6), respectively.
Subsec. (j)(1). Pub. L. 110–315, § 473(e), struck out “veterans’ education benefits as defined in subsection (c) of this section, and” before “national service educational awards” and inserted “, but excluding veterans’ education benefits as defined in subsection (c)” before period at end.
2007—Subsec. (a)(2). Pub. L. 110–84, § 604(a)(1), substituted “no portion of any” for “and no portion of any” and inserted “and no distribution from any qualified education benefit described in subsection (f)(3) that is not subject to Federal income tax,” after “section 25A of title 26,”.
Subsec. (b). Pub. L. 110–84, § 604(a)(2), added subsec. (b) and struck out former subsec. (b) which defined “untaxed income and benefits”.
Subsec. (b)(2). Pub. L. 110–153 added par. (2) and struck out former par. (2) which read as follows: “The term ‘untaxed income and benefits’ shall not include the amount of additional child tax credit claimed for Federal income tax purposes.”
Subsec. (d). Pub. L. 110–84, § 604(a)(3)(A), (B), designated existing provisions as par. (1), inserted par. heading, redesignated former pars. (1), (2), (3) to (6), and (7) as subpars. (A), (B), (D) to (G), and (I), respectively, and realigned margins.
Subsec. (d)(1)(B), (C). Pub. L. 110–84, § 604(a)(3)(C), added subpars. (B) and (C) and struck out former subpar. (B) which read as follows: “is an orphan or ward of the court or was a ward of the court until the individual reached the age of 18;”.
Subsec. (d)(1)(H). Pub. L. 110–84, § 604(a)(3)(D), (E), added subpar. (H).
Subsec. (d)(2). Pub. L. 110–84, § 604(a)(3)(F), added par. (2).
Subsec. (e)(5). Pub. L. 110–84, § 604(a)(4), added par. (5).
Subsec. (f)(3). Pub. L. 110–84, § 604(a)(5), added par. (3) and struck out former par. (3) which read as follows: “A qualified education benefit shall not be considered an asset of a student for purposes of section 1087oo of this title.”
Subsec. (j)(2). Pub. L. 110–84, § 604(a)(6)(A), inserted “, or a distribution that is not includable in gross income under section 529 of such title, under another prepaid tuition plan offered by a State, or under a Coverdell education savings account under section 530 of such title,” after “title 26”.
Subsec. (j)(4). Pub. L. 110–84, § 604(a)(6)(B), added par. (4).
Subsec. (n). Pub. L. 110–84, § 604(a)(7), added subsec. (n).
2006—Subsec. (d)(3). Pub. L. 109–171, § 8019(a), inserted “or is currently serving on active duty in the Armed Forces for other than training purposes” before semicolon at end.
Subsec. (f)(1). Pub. L. 109–171, § 8019(b), inserted “qualified education benefits (except as provided in paragraph (3)),” after “tax shelters,”.
Subsec. (f)(2)(C). Pub. L. 109–171, § 8019(c), added subpar. (C).
Subsec. (f)(3) to (5). Pub. L. 109–171, § 8019(d), added pars. (3) to (5).
Subsec. (j). Pub. L. 109–171, § 8019(e)(1), struck out “; tuition prepayment plans” at end of heading.
Subsec. (j)(2), (3). Pub. L. 109–171, § 8019(e)(2)–(4), struck out par. (2), redesignated par. (3) as (2), and added par. (3). Prior to amendment, par. (2) read as follows:
“(2)(A) Except as provided in subparagraph (B), for purposes of determining a student’s eligibility for funds under this subchapter, tuition prepayment plans shall reduce the cost of attendance (as determined under section 1087ll of this title) by the amount of the prepayment, and shall not be considered estimated financial assistance.
“(B) If the institutional expense covered by the prepayment must be part of the student’s cost of attendance for accounting purposes, the prepayment shall be considered estimated financial assistance.”
1998—Subsec. (b)(14). Pub. L. 105–277, § 101(f) [title VIII, § 405(f)(12)(B)], struck out “Job Training Partnership Act noneducational benefits or” after “railroad retirement benefits, or”.
Pub. L. 105–277, § 101(f) [title VIII, § 405(d)(15)(B)], substituted “Job Training Partnership Act noneducational benefits or benefits received through participation in employment and training activities under title I of the Workforce Investment Act of 1998” for “Job Training Partnership Act noneducational benefits”.
Subsec. (j)(1). Pub. L. 105–244, § 479(1), inserted before period at end “, and national service educational awards or post-service benefits under title I of the National and Community Service Act of 1990”.
Subsec. (j)(3), (4). Pub. L. 105–244, § 479(2), (3), redesignated par. (4) as (3) and struck out former par. (3) which read as follows: “Notwithstanding paragraph (1), a national service educational award or post-service benefit under title I of the National and Community Service Act of 1990 shall not be treated as financial assistance for purposes of section 1087kk(3) of this title.”
1997—Subsec. (a)(2). Pub. L. 105–78, § 609(j), substituted “program by an individual, no” for “program by an individual, and no” and inserted “and no portion of any tax credit taken under section 25A of title 26,” before “shall be included”.
Subsec. (j)(4). Pub. L. 105–78, § 609(k), added par. (4).
1996—Subsec. (b)(2). Pub. L. 104–193 substituted “assistance under a State program funded” for “aid to families with dependent children under a State plan approved”.
1993—Subsec. (a)(2). Pub. L. 103–82, § 102(c)(4), inserted “, and no portion of a national service educational award or post-service benefit received by an individual under title I of the National and Community Service Act of 1990,” after “by an individual”.
Subsec. (c)(2). Pub. L. 103–208, § 2(g)(17), made technical amendment to references to titles of the United States Code in subpars. (A) to (H).
Subsec. (d)(2). Pub. L. 103–208, § 2(g)(18), inserted before semicolon “or was a ward of the court until the individual reached the age of 18”.
Subsec. (j)(3). Pub. L. 103–208, § 2(g)(19), realigned margin. See Codification note above.
Pub. L. 103–82, § 102(c)(5), added par. (3).
Subsecs. (k) to (m). Pub. L. 103–208, § 2(g)(20), added subsecs. (k) to (m).
1992—Pub. L. 102–325 amended section generally, substituting subsecs. (a) to (j) for former subsecs. (a) to (i).
1990—Subsec. (d)(2)(F). Pub. L. 101–610, § 185(4), inserted “and living allowances as a result of participation in a program established under the National and Community Service Act of 1990)” after “other than parents”.
Subsec. (f)(3). Pub. L. 101–610, § 185(3), added par. (3).
1988—Subsec. (i). Pub. L. 100–369 added subsec. (i).
1987—Subsec. (a)(1). Pub. L. 100–50, § 14(28)(A), (B), substituted “paragraphs (2) through (4)” for “paragraphs (2) and (3)” and inserted “minus excludable income (as defined in subsection (f) of this section)” before period at end.
Subsec. (a)(2). Pub. L. 100–50, § 14(28)(C), added par. (2) and struck out former par. (2) which read as follows: “The Secretary shall promulgate special regulations to permit, in the computation of family contributions for the programs under subpart 2 of part A and parts B, C, and E of this subchapter for any academic year the exclusion from family income of any proceeds of a sale of farm or business assets of that family if such sale results from a voluntary or involuntary foreclosure, forfeiture, liquidation, or bankruptcy.”
Subsec. (a)(4). Pub. L. 100–50, § 14(28)(D), added par. (4).
Subsecs. (b), (c). Pub. L. 100–50, § 14(28)(E), substituted subsec. (b) consisting of pars. (1) to (14) for former subsec. (b) consisting of pars. (1) to (19), and substituted subsec. (c) consisting of pars. (1) to (14) for former subsec. (c) consisting of pars. (1) to (16).
Subsec. (d)(2)(F). Pub. L. 100–50, § 14(28)(F), substituted “annual total resources (including all sources of resources other than parents)” for “an annual total income”.
Subsecs. (f) to (h). Pub. L. 100–50, § 14(28)(G), added subsecs. (f) to (h).
heading: Statutory Notes and Related Subsidiaries
heading: Effective Date of 2020 Amendment
text: Amendment by Pub. L. 116–260 effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, see section 701(b) of Pub. L. 116–260, set out as a note under section 1001 of this title. Implementation of amendment by Pub. L. 116–260 allowed on or after July 1, 2023, see section 102(c)(1)(A)(iii) of Pub. L. 117–103, set out as an On-Time Effective Date Permitted note under section 1070a of this title.
heading: Effective Date of 2014 Amendment
text: Amendment by Pub. L. 113–128 effective on the first day of the first full program year after July 22, 2014 (July 1, 2015), see section 506 of Pub. L. 113–128, set out as an Effective Date note under section 3101 of Title 29, Labor.
heading: Effective Date of 2009 Amendment
text: Amendment by Pub. L. 111–39 effective as if enacted on the date of enactment of Pub. L. 110–315 (Aug. 14, 2008), see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title.
heading: Effective Date of 2008 Amendment
text: Pub. L. 110–315, title IV, § 473(f), Aug. 14, 2008, 122 Stat. 3271, as amended by Pub. L. 111–39, title IV, § 406(c), July 1, 2009, 123 Stat. 1950, provided that: “The amendments made by this section [amending this section] shall take effect on July 1, 2010, except that the amendments made in subsection (e) [amending this section] shall take effect on July 1, 2009.”
heading: Effective Date of 2007 Amendment
text: Pub. L. 110–153, § 1(b), Dec. 21, 2007, 121 Stat. 1824, provided that: “This section [amending this section] and the amendment made by this section shall take effect on July 1, 2009.”
Pub. L. 110–84, title VI, § 604(b), Sept. 27, 2007, 121 Stat. 808, provided that: “The amendments made by this section [amending this section] shall be effective on July 1, 2009.”
heading: Effective Date of 2006 Amendment
text: Amendment by Pub. L. 109–171 effective July 1, 2006, except as otherwise provided, see section 8001(c) of Pub. L. 109–171, set out as a note under section 1002 of this title.
heading: Effective Date of 1998 Amendments
text: Amendment by Pub. L. 105–244 effective Oct. 7, 1998, see section 480A of Pub. L. 105–244, set out as a note under section 1087kk of this title.
Amendment by section 101(f) [title VIII, § 405(d)(15)(B)] of Pub. L. 105–277 effective Oct. 21, 1998, and amendment by section 101(f) [title VIII, § 405(f)(12)(B)] of Pub. L. 105–277 effective July 1, 2000, see section 101(f) [title VIII, § 405(g)(1), (2)(B)] of Pub. L. 105–277, set out as a note under section 3502 of Title 5, Government Organization and Employees.
heading: Effective Date of 1996 Amendment
text: Amendment by Pub. L. 104–193 effective July 1, 1997, with transition rules relating to State options to accelerate such date, rules relating to claims, actions, and proceedings commenced before such date, rules relating to closing out of accounts for terminated or substantially modified programs and continuance in office of Assistant Secretary for Family Support, and provisions relating to termination of entitlement under AFDC program, see section 116 of Pub. L. 104–193, as amended, set out as an Effective Date note under section 601 of Title 42, The Public Health and Welfare.
heading: Effective Date of 1993 Amendments
text: Amendment by Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) of Pub. L. 103–208, set out as a note under section 1051 of this title.
Amendment by Pub. L. 103–82 effective Oct. 1, 1993, see section 123 of Pub. L. 103–82, set out as a note under section 1701 of Title 16, Conservation.
heading: Effective Date of 1992 Amendment
text: Amendment by Pub. L. 102–325 applicable with respect to determinations of need under this part for award years beginning on or after July 1, 1993, see section 471(b) of Pub. L. 102–325, set out as a note under section 1087kk of this title.
heading: Effective Date of 1987 Amendment
text: Amendment by Pub. L. 100–50 effective as if enacted as part of the Higher Education Amendments of 1986, Pub. L. 99–498, see section 27 of Pub. L. 100–50, set out as a note under section 1001 of this title.
heading: Transfer of Functions
text: For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security, and for treatment of related references, see sections 468(b), 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6.
heading: Definition of “Independent Student”; Application to Specified Periods of Enrollment
text: Pub. L. 99–498, title IV, § 406(b)(5), formerly § 406(b)(4), Oct. 17, 1986, 100 Stat. 1475; renumbered § 406(b)(5), Pub. L. 100–50, § 22(e)(2), June 3, 1987, 101 Stat. 361, provided that: “The definition of independent student contained in section 480(d) of the Act [20 U.S.C. 1087vv(d)] as amended by subsection (a) of this section shall apply with respect to the determination of such need for periods of enrollment beginning on or after January 1, 1987, in the case of programs operated under part B of title IV of the Act [part B of this subchapter], or for periods of enrollment beginning on or after July 1, 1987, in the case of programs operated under subpart 2 of part A and parts C and E of such title [subpart 2 of part A of this subchapter and parts C and E of this subchapter].”
[References to subpart 2 of part A of title IV of Pub. L. 89–329 deemed, after July 23, 1992, to refer to subpart 3 of such part, see section 402(b) of Pub. L. 102–325, set out as a note under section 1070a–11 of this title.]