Archived Information

Reauthorization of the Higher Education Act


Part F--Need Analysis

Section-by-Section Analysis

Section 471. Section 471 of the bill would make conforming amendments to sections 471 and 473 of the Act that would eliminate references to the State Student Incentive Grant (SSIG) program, which would be repealed elsewhere in the bill.

Section 472. Section 472 of the bill would eliminate paragraphs (5) and (10) from the definition of "cost of attendance" in section 472 of the Act. Section 472(5) of the Act limits the costs that may be included for a student engaged in a program of study by correspondence to tuition and fees and, if required, books and supplies, travel, and room and board costs incurred specifically in fulfilling a required period of residential training. Section 472(10) of the Act prohibits the inclusion of equipment rental or purchase costs for a student receiving instruction via telecommunications technology. These distinctions between the allowable cost of attendance for students in distance learning programs and students in more traditional, classroom-based programs of study are not justified, since students in both types of programs have room and board costs, and often have similar needs for equipment (such as personal computers). Other changes pertaining to distance learning programs are proposed in sections 481 and 494 of the bill.

Section 473. Section 473 of the bill would amend the calculation of the expected family contribution (EFC) for a dependent student in section 475 of the Act by updating the numbers used in sections 475(c)(2), (4), and (5), (d)(2)(C) and (3), and (e) of the Act, respectively, for the computation of State and other tax allowances, the income protection allowance, the employment expense allowance, the adjusted net worth of a business or farm, the education savings and asset protection allowances for families and students, and the parent's assessment from adjusted available income.

In addition, sections 473(2)(A) and (D) of the bill would amend section 475(d) of the Act to authorize the Secretary, after consultation with relevant parties, to prescribe in regulation an alternative calculation of the parental contribution. This contribution would be in lieu of the contribution from assets calculated under section 475(d) of the Act, which discourages saving for postsecondary education and could include adjustments to other calculations under section 475 of the Act. Similar amendments are proposed for sections 475(h), 476(c), and 477(c) of the Act in sections 473(5), 474, and 475 of the bill, respectively.

The Secretary of Education and the Secretary of the Treasury are in the process of examining this issue in detail, as it applies to determinations of need for both dependent and independent students, and shall complete and release their study of the issue prior to the Secretary of Education beginning any regulatory actions with respect to an alternative contribution calculation.

Section 473(4) of the bill would amend section 475(g)(2)(D) of the Act to increase the IPA for the dependent student's own income to $3,500 (subject to adjustment in the applicable appropriations Acts) . As indicated in the effective dates for the bill, the numbers used for the IPA would be effective beginning with determinations of need for academic year 2000-2001.

Section 473(5) of the bill would amend section 475(h) of the Act to permit the Secretary, to prescribe in regulation an alternative calculation of the student contribution. This contribution would be in lieu of the contribution from the dependent student's assets calculated under section 475(h) of the Act, which discourages saving for postsecondary education, and could include adjustments to the calculations under section 475(g) of the Act.

Finally, section 473(6) of the bill would make minor technical changes to section 475(i) of the Act.

Section 474. Section 474 of the bill would amend the calculation of the EFC for an independent student without dependents (other than a spouse) in section 476 of the Act, in ways similar to the changes proposed in section 473 of the bill to section 475 of the Act regarding the updating of the numbers used in the various allowances that are part of the EFC calculation. In addition, the Secretary would be authorized to prescribe in regulation an alternative calculation of the family contribution. This contribution would be in lieu of the contribution from assets calculated under section 476(c) of the Act, which discourages saving for postsecondary education and could include adjustments to other calculations under section 476 of the Act.

Sections 474(2)(A) and (E) of the bill would also amend section 476(b) of the Act to make the IPA for independent students without dependents (other than a spouse) more comparable to the IPAs used for parents of dependent students and for independent students with dependents. For the three groups of independent students to which this section of the Act applies - - single, married with one in college, and married with two in college, the IPAs would be increased to $6,000, $9,000, and $6,000, respectively (subject to adjustment in the applicable appropriations Acts). As indicated in the effective dates for the bill, the numbers used for the IPA would be effective beginning with determinations of need for academic year 2000-2001. This change would increase the Pell Grant and other need-based aid available to low- and moderate-income students in this category.

Finally, section 474(1) of the bill would amend section 476(a) of the Act to include an authority, comparable to that found in section 475(i) of the Act for dependent students, to adjust the EFC of an independent student without dependents (other than a spouse) for periods of enrollment of other than 9 months. A similar change is proposed in section 475 of the bill for independent students with dependents other than a spouse. This amendment is consistent with the purpose of the EFC calculation: to determine what a student and his or her family can reasonably expect to contribute during the student's period of enrollment. If the period of enrollment is other than the "traditional" 9 month period, the EFC should logically be adjusted as well.

Section 475. Section 475 of the bill would amend the calculation of the EFC for an independent student with dependents (other than a spouse) in section 477 of the Act, in ways similar to the changes proposed in sections 473 and 474 of the bill to section 475 and 477 of the Act, respectively: the numbers used in the various allowances that are part of the EFC calculation would be updated, the Secretary would be permitted to prescribe in regulation an alternative calculation of the family contribution in lieu of the contribution from assets currently calculated under section 477(c) of the Act (and could include adjustments to other calculations under section 477 of the Act), and an adjustment of the EFC for periods of enrollment for other than 9 months would be authorized.

Section 476. Section 476 of the bill would amend section 478 of the Act to update the academic years referred to in this section, include a reference to the income protection allowance table that would be added to section 476(b) of the Act by section 474 of the bill, and to broaden the regulatory authority in section 478(a)(1) of the Act to permit the Secretary to prescribe regulations to carry out the provisions of part F of title IV of the Act where specifically permitted by the provisions of part F. Currently, the Secretary may update the tables used in part F and propose modifications in the need analysis methodology only by regulation. This limited exception would provide the Secretary with the necessary flexibility to carry out specific provisions of part F.

Section 477. Section 477 of the bill would amend section 479A(a) of the Act to add a specific reference to economic dislocation as one example of special circumstances in which a financial aid administrator may exercise his or her professional judgment, to clarify that dislocated workers are not considered a "class of students" in determining what constitutes special circumstances warranting the exercise of professional judgment, and to expand a financial aid administrator's authority to use professional judgment to adjust the amount of the EFC. While financial aid administrators may, under current law, make adjustments to accommodate the special circumstances of dislocated workers just like any other students, anecdotal evidence indicates that this may not be occurring uniformly, and that the statute should be clarified. This clarification could be particularly beneficial in assisting dislocated workers in areas where there are large­scale dislocations, such as plant closings.

With respect to the proposed authority to adjust the EFC, current law permits the use of professional judgment only to adjust the data elements used in calculating the EFC, and can result in an unnecessary, awkward, and burdensome recalculation of the EFC, when the adjustment could have been more appropriately and easily made by adjusting the EFC itself. This amendment would permit a financial aid administrator to make adjustments that more accurately reflect a student's circumstances. To prevent abuse of this provision, this expanded authority could only be used in extraordinary circumstances that would be defined by the Secretary in regulation.

Section 478. Section 478 of the bill would amend the definitions in section 480 of the Act. First, section 478(1)(A) of the bill would amend section 480(a)(1) of the Act to require the Secretary to specify the year to be used as the base year for purposes of the definition of "total income." (Currently, the tax year preceding the first calendar year of the academic year for which the determination of need is calculated is considered the base year.)

Under the proposed amendment, if the Secretary determines, after consultation with representatives of the higher education community, that a year other than the preceding tax year should be used as the base year, an institution of higher education could adjust a student's EFC, as calculated using the base year specified by the Secretary, by using the student's income and asset information from the preceding tax year (the base year under current law). This adjustment could be made without meeting the requirements of individual special circumstances and documentation for the exercise of financial aid administrator discretion under section 479A of the Act. The Secretary could also specify in regulation any necessary adjustment factors to update base year information to reflect changes in the national economy, and would ensure that any change in the base year would be implemented in a way that minimizes any possible disruption to the student aid delivery process.

These changes would provide the Secretary with the flexibility needed to reduce burden on applicants and institutions in the data collection and verification of information processes. This flexibility would enable the Secretary to receive aid applications for an award year significantly earlier than January 1, as under current law, which would allow many schools to inform students of their eligibility for financial aid at the same time they do their admissions. This change would be a major step toward creating a "virtual application," which is a core concept of the Project EASI (Easy Access for Students and Institutions) delivery system.

Section 478(2) of the bill would amend the definition of a "veteran" in section 480(c)(1) to conform with the definition used by the Department of Veterans' Affairs (DVA). This change would remove an obstacle to data matching between the DVA and the Department of Education.

This change would provide an additional tool for a financial aid administrator to assess an individual student's circumstances. There is reason to believe that, under current law, some students are being treated as independent who, in fact, remain dependent on their parents and receive parental support, or who would be able to receive parental support in lieu of Federal student assistance.

Section 478(4) of the bill would amend section 480(e) of the Act by eliminating an outdated reference in current paragraph (4) to payments made, and services provided, under part E of title IV of the Social Security Act.

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Last updated: June 4, 2002 by [pss]

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