 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
                          Part E--Need Analysis
 
Sec. 1087vv. Definitions

    As used in this part:

(a) Total income

    (1) Except as provided in 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) of this section).
    (2) No portion of any student financial assistance received from any 
program 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.], and no portion of any tax credit taken under section 25A of title 
26, 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

    The term ``untaxed income and benefits'' means--
        (1) child support received;
        (2) 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;
        (3) workman's compensation;
        (4) veterans' benefits such as death pension, dependency, and 
    indemnity compensation, but excluding veterans' education benefits 
    as defined in subsection (c) of this section;
        (5) interest on tax-free bonds;
        (6) 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);
        (7) cash support or any money paid on the student's behalf, 
    except, for dependent students, funds provided by the student's 
    parents;
        (8) the amount of earned income credit claimed for Federal 
    income tax purposes;
        (9) untaxed portion of pensions;
        (10) credit for Federal tax on special fuels;
        (11) the amount of foreign income excluded for purposes of 
    Federal income taxes;
        (12) untaxed social security benefits;
        (13) payments to individual retirement accounts and Keogh 
    accounts excluded from income for Federal income tax purposes; and
        (14) any other untaxed income and benefits, such as Black Lung 
    Benefits, Refugee Assistance, railroad retirement benefits, or 
    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.].

(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 the following:
        (A) Title 10, chapter 2: Reserve Officer Training Corps 
    scholarship.
        (B) Title 10, chapter 106: Selective Reserve.
        (C) Title 10, chapter 107: Selective Reserve Educational 
    Assistance Program.
        (D) Title 37, chapter 2: Reserve Officer Training Corps Program.
        (E) Title 38, chapter 30: Montgomery GI Bill--active duty.
        (F) Title 38, chapter 31: vocational rehabilitation.
        (G) Title 38, chapter 32: Post-Vietnam Era Veterans' Educational 
    Assistance Program.
        (H) Title 38, chapter 35: Dependents Educational Assistance 
    Program.
        (I) Public Law 97-376, section 156: Restored Entitlement Program 
    for Survivors (or Quayle benefits).
        (J) Public Law 96-342, section 903: Educational Assistance Pilot 
    Program.

(d) Independent student

    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 an orphan or ward of the court or was a ward of the court 
    until the individual reached the age of 18;
        (3) is a veteran of the Armed Forces of the United States (as 
    defined in subsection (c)(1) of this section);
        (4) is a graduate or professional student;
        (5) is a married individual;
        (6) has legal dependents other than a spouse; or
        (7) is a student for whom a financial aid administrator makes a 
    documented determination of independence by reason of other unusual 
    circumstances.

(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 subchapter I of chapter 
    34 of title 42;
        (2) 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.];
        (3) child support payments made by the student or parent; and
        (4) payments made and services provided under part E of title IV 
    of the Social Security Act [42 U.S.C. 670 et seq.].

(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, 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 and 
part C of subchapter I of chapter 34 of title 42, 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; or
        (B) a family farm on which the family resides.

(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) of this 
section), 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; tuition prepayment plans

    (1) For purposes of determining a student's eligibility for funds 
under this subchapter and part C of subchapter I of chapter 34 of title 
42, estimated financial assistance not received under this subchapter 
and part C of subchapter I of chapter 34 of title 42 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 veterans' education benefits as defined in subsection (c) of 
this section, and 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.].
    (2)(A) Except as provided in subparagraph (B), for purposes of 
determining a student's eligibility for funds under this subchapter and 
part C of subchapter I of chapter 34 of title 42, 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.
    (3) Notwithstanding paragraph (1), a tax credit taken under section 
25A of title 26 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 part C of subchapter I of 
chapter 34 of title 42, 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.

(Pub. L. 89-329, title IV, Sec. 480, as added Pub. L. 99-498, title IV, 
Sec. 406(a), Oct. 17, 1986, 100 Stat. 1472; amended Pub. L. 100-50, 
Sec. 14(28), June 3, 1987, 101 Stat. 353; Pub. L. 100-369, Sec. 7(b), 
July 18, 1988, 102 Stat. 837; Pub. L. 101-610, title I, Sec. 185(3), 
(4), Nov. 16, 1990, 104 Stat. 3168; Pub. L. 102-325, title IV, 
Sec. 471(a), July 23, 1992, 106 Stat. 606; Pub. L. 103-82, title I, 
Sec. 102(c)(4), (5), Sept. 21, 1993, 107 Stat. 824; Pub. L. 103-208, 
Sec. 2(g)(17)-(20), Dec. 20, 1993, 107 Stat. 2474; Pub. L. 104-193, 
title I, Sec. 110(h)(2), Aug. 22, 1996, 110 Stat. 2172; Pub. L. 105-78, 
title VI, Sec. 609(j), (k), Nov. 13, 1997, 111 Stat. 1524; Pub. L. 105-
244, title IV, Sec. 479, Oct. 7, 1998, 112 Stat. 1732; Pub. L. 105-277, 
div. A, Sec. 101(f) [title VIII, Sec. 405(d)(15)(B), (f)(12)(B)], Oct. 
21, 1998, 112 Stat. 2681-337, 2681-421, 2681-431.)

                       References in Text

    The National and Community Service Act of 1990, referred to in 
subsecs. (a)(2), (e)(2), and (j)(1), is Pub. L. 101-610, Nov. 16, 1990, 
104 Stat. 3127, as amended, which is classified principally to chapter 
129 (Sec. 12501 et seq.) of Title 42, The Public Health and Welfare. 
Title I of the Act enacted subchapter I (Sec. 12511 et seq.) of chapter 
129 of Title 42 and amended sections 1070a-6 and 1087vv 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.
    This chapter, referred to in subsec. (a)(2), was in the original 
``this Act'', meaning Pub. L. 89-329, as amended, known as the Higher 
Education Act of 1965. For complete classification of this Act to the 
Code, see Short Title note set out under section 1001 of this title and 
Tables.
    The Social Security Act, referred to in subsecs. (b)(2) and (e)(4), 
is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Parts A and E 
of title IV of the Act are classified generally to parts A (Sec. 601 et 
seq.) and E (Sec. 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.
    The Workforce Investment Act of 1998, referred to in subsec. 
(b)(14), is Pub. L. 105-220, Aug. 7, 1998, 112 Stat. 936, as amended. 
Title I of the Act is classified principally to chapter 30 (Sec. 2801 et 
seq.) of Title 29, Labor. For complete classification of this Act to the 
Code, see Short Title note set out under section 9201 of this title and 
Tables.
    Title 10, chapter 2, referred to in subsec. (c)(2)(A), relates to 
the organization of the Department of Defense. For provisions relating 
to the Reserve Officer Training Corps, see chapters 102 and 103 of Title 
10, Armed Forces.
    Title 10, chapter 107, referred to in subsec. (c)(2)(C), relates to 
educational assistance for active duty enlistees. For provisions 
relating to the Selective Reserve educational assistance program, see 
chapter 106 of Title 10.
    Title 37, chapter 2, referred to in subsec. (c)(2)(D), has never 
been enacted. For provisions relating to the Reserve Officer Training 
Corps, see chapters 102 and 103 of Title 10.
    Public Law 97-376, section 156, referred to in subsec. (c)(2)(I), 
probably means Pub. L. 97-377, title I, Sec. 156, Dec. 21, 1982, 96 
Stat. 1920, as amended, which is set out as a note under section 402 of 
Title 42, The Public Health and Welfare. Pub. L. 97-376 does not contain 
a section 156.
    Public Law 96-342, section 903, referred to in subsec. (c)(2)(J), is 
set out as a note under section 2141 of Title 10, Armed Forces.

                          Codification

    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.


                               Amendments

    1998--Subsec. (b)(14). Pub. L. 105-277, Sec. 101(f) [title VIII, 
Sec. 405(f)(12)(B)], struck out ``Job Training Partnership Act 
noneducational benefits or'' after ``railroad retirement benefits, or''.
    Pub. L. 105-277, Sec. 101(f) [title VIII, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 2(g)(19), realigned margin. 
See Codification note above.
    Pub. L. 103-82, Sec. 102(c)(5), added par. (3).
    Subsecs. (k) to (m). Pub. L. 103-208, Sec. 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, Sec. 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, Sec. 185(3), added par. (3).
    1988--Subsec. (i). Pub. L. 100-369 added subsec. (i).
    1987--Subsec. (a)(1). Pub. L. 100-50, Sec. 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, Sec. 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 and 
D of this subchapter and part C of subchapter I of chapter 34 of title 
42 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, Sec. 14(28)(D), added par. (4).
    Subsecs. (b), (c). Pub. L. 100-50, Sec. 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, Sec. 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, Sec. 14(28)(G), added subsecs. 
(f) to (h).


                    Effective Date of 1998 Amendments

    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, Sec. 405(d)(15)(B)] of Pub. 
L. 105-277 effective Oct. 21, 1998, and amendment by section 101(f) 
[title VIII, Sec. 405(f)(12)(B)] of Pub. L. 105-277 effective July 1, 
2000, see section 101(f) [title VIII, Sec. 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.


                    Effective Date of 1996 Amendment

    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.


                    Effective Date of 1993 Amendments

    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.


                    Effective Date of 1992 Amendment

    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.


                    Effective Date of 1987 Amendment

    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.


Definition of ``Independent Student''; Application to Specified Periods 
                              of Enrollment

    Section 406(b)(5), formerly section 406(b)(4), of Pub. L. 99-498, 
renumbered Pub. L. 100-50, Sec. 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 part C of subchapter I of chapter 34 of Title 42, The 
Public Health and Welfare, and part D 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.]

                  Section Referred to in Other Sections

    This section is referred to in sections 1070a-11, 1078, 1087kk, 
1087oo, 1087pp, 1087qq of this title; title 42 sections 12604, 12651d.
