Order Code RL32687
CRS Report for Congress
Received through the CRS Web
Federal Student Aid Need Analysis Simplification:
Legislative Action
Updated March 24, 2005
Charmaine Mercer
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress
Federal Student Aid Need Analysis Simplification:
Legislative Action
Summary
A federal need analysis system underlies the annual allocation of billions of
dollars (over $73 billion in FY2005) in student financial aid supported by Title IV
of the Higher Education Act (HEA) (P.L. 89-329 as amended). Prior to 1992, many
characterized the need analysis system as too complex, arguing that the system was
a barrier to students seeking financial assistance, especially low-income students. In
the 1992 amendments to the HEA, the Congress sought to create a “simplified”
system consisting of a common application form and a single methodology for
determining the expected family contribution (EFC) for students desiring to attend
postsecondary school. The new system was intended to simplify the process not only
for applying for federal student aid, but also for state and institutional aid as well.
Today, many researchers and policymakers contend that the need analysis system
remains too complex and can be further simplified, particularly for low-income
students.
Several members of Congress have expressed interest in this issue. During the
108th Congress, the federal Advisory Committee on Student Financial Assistance was
charged with conducting a study of need analysis and simplification (P.L. 108-199).
On January 23, 2005, the Advisory Committee issued its final report regarding need
analysis simplification entitled The Student Aid Gauntlet: Making Access to College
Simple and Certain. The report offers ten recommendations pertaining to
simplification of federal need analysis and improving access to higher education.
According to the Advisory Committee, “Eight of the ten recommendations do not
require an increase in program costs. Aspects of two of the recommendations require
a small investment that, if necessary, can be phased in over several years (p. i).” Of
the ten recommendations, two call for specific changes to the calculation of the EFC
that in general would reduce the number of data items that some filers will have to
supply or respond to eligibility issues identified in P.L. 108-199; five speak directly
to the structure, form, and processing of the FAFSA; and three address the broader
issues of how potential college students learn about available financial aid and when
they file the FAFSA.
During both the 108th and 109th Congresses, there have been numerous bills
proposed by Members regarding need analysis simplification. It is expected that the
entire HEA, including need analysis simplification, will be considered for
reauthorization during the 109th Congress. Debate over proposals to simplify need
analysis will likely consider how to balance simplification-related changes with other
possible concerns, such as gathering sufficient information to make reasonable
distinctions among applicants; maintaining the applications’ utility not only for
federal aid, but also for state and institutional aid; and minimizing adverse effects on
applicants’ eligibility status and on program costs.
This report will be updated as warranted by significant legislation or other
relevant developments.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Need Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Expected Family Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Free Application for Federal Student Aid . . . . . . . . . . . . . . . . . . . . . . . 3
Advisory Committee’s Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Legislative Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
EFC Calculation Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Non-Financial Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Structure, Form, and Processing of the FAFSA . . . . . . . . . . . . . . . . . . . 7
Early Awareness and Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Legislative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Legislation During the 108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Current Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Federal Student Aid Need Analysis
Simplification: Legislative Action
Introduction1
In the 1992 Higher Education Act (HEA) amendments, the Congress overhauled
the federal need analysis system to create a “simplified” system consisting of a
common application form and a single methodology for determining the expected
family contribution (EFC) for students desiring to attend postsecondary school. The
new system was intended to simplify the process for applying for not only federal
student aid, but also for state and institutional aid as well. More than 12 years later,
simplification of need analysis remains a perennial issue.
A federal need analysis system underlies the annual allocation of billions of
dollars (over $73 billion in FY2005) in student financial aid supported by Title IV
of the HEA (P.L. 89-329 as amended). Prior to the 1992 HEA amendments, the
system was characterized by many as too complex, creating a barrier for students
seeking financial assistance, especially low-income students. In spite of changes
made in the 1992 amendments, many researchers and policymakers continue to
debate the complexity of the federal need analysis system.
During the 108th Congress, the federal Advisory Committee on Student
Financial Assistance (Advisory Committee)2 was charged with undertaking a study
of need analysis and simplification (P.L. 108-199). The final report, entitled The
Student Aid Gauntlet: Making Access to College Simple and Certain, was released
in January of 2004.3 Congress also required the Secretary of Education to redesign
the existing Free Application for Federal Student Aid (FAFSA) — the application
used to apply for federal, state, and institutional financial assistance. It was specified
that the redesign should include testing of simplified versions of the FAFSA. In
addition to P.L. 108-199, a number of bills addressing need analysis simplification
were introduced during the 108th Congress; need analysis simplification bills have
also been introduced in the 109th Congress (see Legislative Action, below).
1 James Stedman, Specialist in Social Legislation, Domestic Social Policy Division, was a
coauthor of prior versions of this report.
2 Under the provisions of the Higher Education Act (Section 491(a)), the Advisory
Committee is established as an independent entity in the U.S. Department of Education to
“provide advice and counsel to the Congress and to the Secretary on student financial
matters.”
3 The full report is available at [http://www.ed.gov/about/bdscomm/list/acsfa/
edlite-simplification.html]. The Advisory Committee also released interim
recommendations in July 2004. These recommendations are available at [http://www.ed.gov/
about/bdscomm/list/acsfa/jgregg_SimplificationStudyRecs.pdf].
CRS-2
It is expected that the entire HEA, including need analysis simplification, will
be considered for reauthorization during the 109th Congress. Debate over proposals
to simplify need analysis will likely consider how to balance simplification-related
changes with other possible concerns, such as gathering sufficient information to
make reasonable distinctions among applicants; maintaining the applications’ utility
for not only federal aid, but also state and institutional aid; and minimizing adverse
effects on applicants’ eligibility status and on program costs.
This report will provide a brief description of federal need analysis. It also
reviews the final recommendations for need analysis simplification issued by the
Advisory Committee, and concludes with an overview of legislative action relating
to need analysis simplification during the 108th and 109th Congresses. This report will
be updated as warranted by significant legislation or other relevant developments.4
Need Analysis
Need analysis is a complex system that is used to allocate billions of dollars of
federal student aid under Title IV of the HEA. It entails gathering financial data,
which is provided by the student via the FAFSA,5 calculating the expected family
contribution (EFC), and packaging of the applicant’s financial aid award by the
postsecondary institution’s financial aid administrator. This section provides a brief
description of the EFC and how it is calculated and the role of the FAFSA. This
description is very generic. For detailed information regarding the EFC calculation
and the FAFSA, the U.S. Department of Education (ED) has posted descriptions for
recent years.6
Expected Family Contribution. The EFC is the amount that the family is
expected to contribute toward postsecondary education expenses. In calculating the
EFC, consideration is given to available income, and for some families, available
assets. In addition, living expenses, retirement needs and federal and state tax
liability are factored in. Cost of attendance (COA) is determined by each higher
education institution. The aid administrator determines the student’s need for federal
student aid and other sources of aid, based primarily upon the EFC and COA. This
is true for all federal student aid programs except for the Pell Grant program. For
nearly all Pell recipients, the award is calculated by subtracting the EFC from the
maximum appropriated Pell Grant for the year (i.e., without regard to the COA).7
The final outcome is the financial aid award or package, which consists of the
4 A separate companion report, CRS Report RL32083, Federal Student Aid Need Analysis:
Background and Selected Simplification Issues, by Adam Stoll and James B. Stedman,
discusses federal need analysis and simplification in more depth.
5 The FAFSA can be submitted through the Internet using FAFSA at
[http://www.fafsa.ed.gov], electronically through a higher education institution, or with a
standard paper application.
6 [http://www.ifap.ed.gov/IFAPWebApp/currentEFCInformationPag.jsp].
7 For additional information regarding the Pell grant program, see CRS Report RL31668,
Federal Pell Grant Program of the Higher Education Act: Background and
Reauthorization, by Charmaine Mercer.
CRS-3
specific sources and amounts of student aid each applicant will receive to help pay
for his/her education related expenses.
The calculation of the EFC varies depending upon the applicant’s dependency
status. This is important because parental financial information is not considered if
the applicant meets the statutory definition of an independent student. There are three
separate dependency classifications for individual applicants: dependent student,
independent student without dependents, and independent student with dependents.
To be classified as statutorily independent (Title IV, Section 480(d)), an applicant
must meet one of the following conditions:
! 24 years of age or older;
! married;
! enrolled in a graduate or professional program;
! have a dependent other than a spouse;
! orphan or ward of the court (or was up until age 18); or
! a military veteran.
Students who do not meet any of the aforementioned conditions are considered to be
dependent for the purposes of Title IV student aid.
In addition to creating a common application form and a single methodology for
determining need, the Congress has also sought to further reduce the application
burden for those applicants with family incomes at or below a specified threshold.
Under the simplified needs test (SNT), the EFC calculation does not consider assets
for the student (or spouse if married) or parent (if student is a dependent) if their
adjusted gross income (AGI) is less than $50,000, and certain conditions regarding
federal tax returns are met.8 The automatic zero EFC (hereinafter auto-zero EFC) 9
sets the expected family contribution to zero for a dependent student’s parents and
the dependent student, or an independent student who has dependents, and has an
AGI that is not greater than $15,000.10 The auto-zero EFC is not provided to
independent students without dependents.
Free Application for Federal Student Aid. The FAFSA is used to collect
most of the information that is utilized to calculate the EFC. Applicants are required
to report identifying information such as their name and social security number;
information about the institutions where their information should be forwarded; and
financial information pertaining to income and assets. As mentioned above, there are
three ways to complete the FAFSA — via the web, electronically through a higher
education institution, or using a paper form. The number of applicants completing
8 To be eligible for the simplified needs test, the student and his or her parents must not have
to file an income tax return, or must file or be eligible to file a federal tax form 1040A or
1040EZ. This requirement is also met if the parents or student file a form 1040 if that form
is filed only to claim the federal Hope or Lifetime Learning tax credit. The same
requirement applies to independent students and their spouse, if any.
9 The tax form/filing requirements specified for the simplified needs test must also be met.
10 This amount is the current maximum amount of income rounded to the nearest $1,000 that
one can earn and still be able to claim the maximum federal earned income tax credit.
CRS-4
FAFSA on the web continues to increase annually, however, a substantial number of
applicants continue to complete the paper form.
The paper and electronic (including the web) versions of the FAFSA differ in
the way that submitted data are treated. As a result, the electronic versions of the
FAFSA provide advantages that the paper form does not. For example, the electronic
versions contain internal and end-of-entry data edits which require the applicant to
resolve conflicts and complete all necessary fields prior to submission. In addition,
the electronic versions contain “skip logic,” which enables applicants, if they choose,
to skip over the sections of the FAFSA that do not pertain to them. As a result,
applicants who apply via the electronic formats are able to take advantage of either
the SNT or auto-zero EFC, because the technology allows sections to be skipped
where applicable. At present there is no comparable approach available for paper
form filers.
Advisory Committee’s Recommendations
This section reviews the charges to the Advisory Committee on Student
Financial Assistance concerning need analysis simplification, and its final
recommendations released on January 23, 2005.
Legislative Charges
In response to growing concern about need analysis complexity, the Congress
mandated that the Advisory Committee study the feasibility of simplifying the
methodology for determining financial need and the process of applying for federal
student aid (Consolidated Appropriations Act for FY2004, P.L. 108-199). The
Advisory Committee’s primary objectives in this effort are simplifying aid
application forms and the aid application process, and substantially reducing the
number of data items requested. The Committee is to pay particular attention to the
needs of low-income and moderate-income families in the aid process. The
legislation identifies specific topics to be addressed in this feasibility study:
! simplifying the calculation of the EFC without significant negative
impact on such elements as program intent, cost, and distribution of
aid;
! reducing the data used in calculating the EFC and reducing the
number and complexity of questions asked of aid filers;
! considering whether the process of determining the data used in the
EFC calculation, including the updating of offsets and allowances,
is the fairest, most effective, and most efficient way to determine
available income and assets;
! considering whether the treatment of income earned by dependent
students and the impact of that treatment on Pell eligibility
effectively and fairly determines available income and student need;
! identifying additional “streamlining” of, among other elements of
the aid process, the nature and timing of the FAFSA, determination
of eligibility and awards, and delivery of aid;
CRS-5
! permitting students to complete just the portions of the FAFSA
considered necessary based on their financial circumstances and
state of residence;
! estimating “approximate” eligibility for different forms of federal
aid when the simplified application is completed and verified;
! qualifying students for the simplified needs test based on data
provided on forms used to determine eligibility for other federal
need-based aid programs (e.g., Supplemental Security Income, Food
Stamps, and Earned Income Tax Credits); and
! considering whether proposed changes to data elements, the
application form, or aid application process may have adverse
consequences for program costs, integrity, award distribution, and
application development or processing.
As part of its analysis, the Advisory Committee is to consult broadly with
different interested parties, as well as with a “forms design expert” regarding a
revised application form that is easily read and understood. The Advisory Committee
is also to consult regularly with the education committees of the Congress — the
House Committee on Education and the Workforce and the Senate Committee on
Health, Education, Labor, and Pensions. ED is to provide requested assistance as
practicable. Within six months of enactment of P.L. 108-199,11 the Advisory
Committee was required to issue an interim report to the education committees of the
Congress, and the Secretary of Education. The final report was due within one year
of enactment.
On January 23, 2005, the Advisory Committee issued its final report regarding
need analysis simplification. The report offers ten recommendations pertaining to
simplification of federal need analysis and improving access to higher education.
According to the Advisory Committee, “Eight of the ten recommendations do not
require an increase in program costs. Aspects of two of the recommendations require
a small investment that, if necessary, can be phased in over several years (p. i).” Of
the ten recommendations, two call for specific changes to the calculation of the EFC
that in general would reduce the number of data items that some filers would have
to supply or respond to eligibility issues identified in P.L. 108-199; five speak
directly to the structure, form, and processing of the FAFSA; and three address the
broader issues of how potential college students learn about available financial aid
and when they file the FAFSA.
Most of the recommendations are not accompanied by an estimate of their
potential impact on the costs of federal student aid programs or on the number of
students receiving benefits. The two recommendations that the Advisory Committee
states require an investment are accompanied by estimates, however, they are limited
to the federal Pell Grant program. The estimates are included where available.
EFC Calculation Recommendations. In general, the Advisory Committee
recommendations regarding the calculation of the EFC seek to expand the population
for whom no EFC is expected, increase the eligibility of working students for aid,
11 The legislation was enacted on Jan. 23, 2004.
CRS-6
and reduce the amount of asset and untaxed income information collected.
Specifically, the Advisory Committee recommends that:
! the automatic zero EFC apply to applicants with an AGI of $25,000
or less (an increase from the current $15,000 threshold);
! the AGI threshold for the automatic zero EFC be indexed to the
Consumer Price Index (CPI);12
! eligibility for the simplified needs test be expanded to include
applicants with an AGI of less than $50,000, and who qualify for
benefits from a federal means-tested program, such as Food
Stamps;13
! the income protection allowances14 for all students be raised by
$1,000;
! the assessment rate on available income for dependent students
themselves and for independent students without dependents be
lowered to 40% (from the current 50% rate);
! the state and other tax allowances15 be eliminated and all income
protection allowances be raised sufficiently to protect as many
students as possible from any adverse consequence of its
elimination;16 and
! some questions on worksheets A and B17 regarding nontaxable
income be eliminated — specifically those involving nontaxable
income primarily received by individuals with AGIs below $25,000,
or nontaxable income, which is received by few applicants or in
12 The CPI is a measure over time of changes in prices paid for various goods and services.
For additional information, see [http://www.bls.gov/cpi/cpifaq.htm#Question_1].
13 It is unclear whether this recommendation is in addition to, or replaces, the current
simplified needs test eligibility criteria that involve a determination of the IRS tax returns
filed by the applicant.
14 The income protection allowance is an exclusion for the basic living expenses of the
family. The amount varies according to the number of persons in the household and the
number of students in college.
15 The state and other tax allowance represents an exclusion of a percentage of the parent’s
total income and approximates the average amount paid in these taxes. The percentage
varies depending upon the state of residence and if the parent’s income is equal to or more
than $15,000, or is less than $15,000.
16 It would appear that the state and other tax allowance tables would still have to be
produced in order to determine the size of the increases in the income protection allowances
and whether they were adequate to hold harmless as many students as possible. The
Committee recommends that, in the event sufficient funding to increase the income
protection allowances as required is not appropriated, future updates of the state and other
tax tables should be phased in to avoid loss of Pell Grant eligibility for large numbers of
students.
17 Worksheets A and B are forms that accompany the FAFSA, and assist the applicant with
determining annual amounts received from sources such as tax credits, the earned income
credit, untaxed social security benefits and child support. The forms are not submitted with
the FAFSA.
CRS-7
small amounts (examples offered include the Earned Income Tax
Credit, the child tax credit, and untaxed Social Security benefits).
Estimated Impact. According to the Advisory Committee, increasing the
IPA by $1,000 for all students would result in approximately 130,000 new students
acquiring eligibility for Pell, and 1.9 million students receiving higher awards, for a
total cost of approximately $523 million. The report further states that reducing the
income assessment rate from 50% to 40% for independent recipients without
dependents and for dependent recipients themselves, would add an estimated 140,000
new Pell recipients, and increase the Pell awards for more than 930,000 recipients,
for a cost of approximately $292 million. Additionally, the Advisory Committee
estimates that increasing the auto-zero EFC to $25,000 would increase the number
of new Pell recipients by approximately 29,000 for a total increase in program costs
of $319 million.
Non-Financial Eligibility. The Advisory Committee proposes that the
FAFSA questions related to past drug convictions18 and Selective Service registration
be dropped from the application. The Committee further recommends that the
underlying statues be amended, presumably to eliminate Selective Service
registration and prior drug convictions as conditions for aid eligibility.
Structure, Form, and Processing of the FAFSA. The Advisory
Committee’s recommendations concerning structure, form, and processing of the
FAFSA center primarily on the role of technology in simplifying the process of
filling out and submitting the FAFSA. To that end, it recommends that:
! a paper “FAFSA-EZ” be created for all students eligible for an
automatic zero EFC and the full paper FAFSA be gradually
eliminated;
! the use of the “FAFSA-EZ” be extended to independent recipients
without dependents, who are also eligible for the SNT, and earn less
than $25,000 per year ;
! the FAFSA on the Web be modified to eliminate all questions for
each applicant that are unnecessary to calculate his or her EFC,
including tailoring the questions asked to each applicant’s state of
residence; and
! the application verification process that higher education institutions
are required to conduct be simplified.19
18 For additional information regarding federal student aid eligibility and drug convictions,
see CRS Report RS21824, Student Eligibility: Drug Convictions and Federal Financial Aid,
by Charmaine Mercer and Laura Monagle.
19 34 CFR 668.54 states: “An institution shall require each applicant whose application is
selected for verification on the basis of edits specified by the Secretary, to verify all of the
applicable items specified in Sec. 668.56, except that no institution is required to verify the
applications of more than 30 percent of its total number of applicants for assistance under
the Federal Pell Grant, Federal Direct Stafford/Ford Loan, campus-based, and Federal
Stafford Loan programs in an award year.”
CRS-8
Estimated Impact. Assuming the recommendation to increase the auto-zero
income threshold to $25,000 is adopted, the Advisory Committee estimates that 2.3
million students would be eligible to use the paper FAFSA-EZ. In addition,
extending the use of FAFSA-EZ to independent recipients without dependents who
are eligible for the simplified needs test would allow an additional 1.7 million
applicants to utilize the form. It is estimated that this would cost approximately $64
million. The Advisory Committee estimates that the eventual phase-out of the full
paper FAFSA will save approximately $5 to $9 million.
Early Awareness and Filing. Responding to its charge concerning the
nature and timing of aid applications and the award process, the Advisory
Committee recommends that:
! an early awareness system be implemented that will provide students
with information about financial aid, including potential eligibility
for Pell Grants and other aid, earlier in the middle and high school
years;
! EFCs be calculated earlier in the college application process — at
least in the fall of the year prior to enrollment (with a pilot program
to identify the consequences of not requiring updating of the
estimated income and asset data used in determining these early
EFCs); and
! a national partnership be created to make access to college and
financial aid simple and certain.
Legislative Action
This section reviews major legislation in the 108th and 109th Congresses that
addresses need analysis simplification. There have been several bills introduced that
pertain to need analysis, however, this section is limited to those that specifically
address simplification. These proposals are discussed below.
Legislation During the 108th Congress
Two of the proposals introduced during the 108th Congress charged the Advisory
Committee with undertaking a study relating to simplification of the FAFSA and the
need analysis process (H.R. 2956 and H.R. 3039). In addition, the proposals would
have required the Secretary of Education to undertake special outreach efforts
targeted toward individual applicants who are eligible for the simplified needs test
or the auto-zero EFC. Both H.R. 2956 and H.R. 3039 would have required the
Secretary of Education to make special efforts to notify families participating in the
School Lunch and Food Stamp programs, and other programs the Secretary
identifies, of their potential eligibility for the maximum Pell award.
Some bills charged the Secretary to develop a FAFSA-EZ for applicants who
are eligible for the simplified needs test and automatic zero EFC (H.R. 3180 and S.
2477). Similar to the Advisory Committee’s recommendation, this new form would
require filers to provide only the data needed to determine aid eligibility under either
CRS-9
of those conditions. In addition, the Secretary was to provide potential aid applicants
with a way to determine whether they were eligible to file the FAFSA-EZ, as well as
determine the approximate amount of grants, work-study earnings, and loans for
which they might be eligible.
All of the bills proposed changes to the existing eligibility criteria for the
simplified needs test and automatic zero EFC. Three of them (H.R. 3039, H.R. 2956
and H.R. 3180) proposed making recipients of “means-tested” federal benefits
exempt from eligibility requirements regarding federal income tax forms and filing
for either condition (H.R. 3039 would have limited this change to independent
students, H.R. 2956 would have included dependent students). In addition to
proposing that applicants who received benefits under a federal means-tested benefit
program be automatically eligible for the SNT and auto-zero EFC, S. 2477 also
would have extended eligibility when one parent is a dislocated worker (in the case
of a dependent student), or the student (or student’s spouse where applicable) is a
dislocated worker.
Current Legislation
To date, there have been a limited number of bills introduced during the 109th
Congress that deal with need analysis simplification. Two bills have been introduced
that would preclude implementation of the revised state and other tax allowance
tables for any student, to the extent such revision would reduce their level of federal
aid (S. 187 and H.R. 114).20 Both bills have identical titles — “Ensuring College
Access for all Americans Act” — and both state that the updated state and other tax
tables “shall not apply to a student to the extent the updates will reduce the amount
of federal student aid for which the student is eligible.” In addition, the two bills
would preclude the application of the revised tables to the calculation of student aid
awards for the 2005-2006 Pell Grant award year.21 H.R. 1277 proposes that the state
other tax allowance tables be eliminated from federal need analysis.22 Thus far, no
action has been taken on any of these bills.
The Veterans Education Affordability Act of 2005 (H.R. 1206)23 was introduced
on March 9, 2005 and referred to the House Committee on Education and the
Workforce. It proposes that education benefits received under the Montgomery GI
bill be excluded from determining need.
Similar to two bills introduced during the 108th Congress, H.R. 1277 would
require the Secretary to create a simplified, paper financial aid form, known as the
20 S. 187 was introduced by Sen. Corzine (and 30 cosponsors) on Jan. 26, 2005, and was
referred to the Senate Committee on Health, Education, Labor and Pensions on the same
day. H.R. 114 was introduced by Rep. Holt (and 16 cosponsors) on Jan. 4, 2005, and
referred to the House Subcommittee on 21st Century Competitiveness on Feb. 9, 2005.
21 The 2005-2006 Pell Grant award year starts on July 1, 2005 and ends June 30, 2006.
22 H.R. 1277 was introduced by Rep. Rahm (and 33 cosponsors) on Mar. 14, 2005 and
referred to the House Committee on Education and the Workforce on the same day.
23 H.R. 1206 was introduced by Rep. M. Simpson.
CRS-10
“EZ FAFSA,” for applicants who are eligible for SNT and auto-zero EFC. This is
also one of the Advisory Committee’s recommendations. Among other things, H.R.
1277 would provide that applicants who are eligible for SNT and auto-zero EFC only
be required to complete the data elements necessary to determine their eligibility for
SNT or auto-zero EFC. H.R. 1277 also would require the Secretary to report to the
Congress the impact of the digital divide (the difference between individuals with
access to technology and those without) on students who apply for Title IV student
aid, and what steps are being taken to eliminate the digital divide.
H.R. 609 and H.R. 15124 both propose changes in the way that college savings
plans are treated in federal need analysis.25 H.R. 151 states that qualified education
benefits shall be treated as assets, as defined in section 480(f) of the HEA, but they
should not be considered an asset of the student. Similarly, H.R. 609 also proposes
to treat college savings plans as an asset of the parent of a dependent student. It
further defines the value of such plans as follows:
! the refund value of any tuition credits or certificates purchased under
section 529 of the Internal Revenue Code of 1986 on behalf of a
beneficiary; or
! the current balance of any account which is established under such
section for the purpose of meeting the qualified higher education
expenses of the designated beneficiary of the account.
Any distribution from a qualified tuition plan established under section 529 of the
Internal Revenue Code of 1986 that is not included in gross income under such
section 529 would be excluded under section 480(e) of the HEA.
In addition, H.R. 609 and H.R. 1277 propose changes to the eligibility
requirements for SNT and auto-zero EFC eligibility. Comparable to the three bills
introduced during the 108th Congress (H.R. 3039, H.R. 2956, and H.R. 3180), H.R.
609 and H.R. 1277 would require that applicants who receive benefits under a federal
means-tested benefit program (e.g., social security, food stamps, free and reduced
lunch or other programs determined by the Secretary) be automatically eligible for
the simplified needs test and automatic zero EFC.
Finally, H.R. 609 also proposes to increase the income protection allowance for
dependent students from $2,200 to $3,000, and designate active duty members of the
armed services as having independent status for the purposes of federal financial aid.
H.R. 1277 proposes that all of the existing dollar figures in the income protection
allowance tables, for all dependency groups, be increased.
24 H.R. 609 was introduced on Feb. 8, 2005, by Rep. Boehner and referred to the House
Committee on Education and the Workforce on the same day. H.R. 151was introduced by
Rep. Menendez, on Jan. 4, 2005, and referred to the House Subcommittee on 21st Century
Competitiveness on Feb. 9, 2005.
25 For additional information regarding college savings plans, see CR S Report RL31214,
Saving for College Through Qualified Tuition (Section 529) Plans, by Linda Levine; and
CRS Report RL32155, Tax-Favored Higher Education Savings Benefits and Their
Relationship to Traditional Federal Student Aid, by Linda Levine and James B. Stedman.