Section 1087vv · Definitions

As used in In this part:

(a) Total income (1) (A) Except as provided in subparagraph (B) and paragraph (2), the The term “total income” is 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 (as defined in subsection (e) of this section). (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 year. The factors used to carry out determine total income shall be derived from the simplification of applications (including simplification for a subset of applications) used Federal income tax return, if available, except 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 applicant’s ability 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 indicate a national service educational award or post-service benefit received by an individual under title I of qualified rollover in the National and Community Service Act of 1990 ( 42 U.S.C. 12511 et seq.), no portion of any second preceding tax credit taken under year as outlined in section 25A 1090 of this title 26 , and no distribution from any qualified education benefit or foreign income 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 and part C of subchapter I of chapter 34 of title 42. (b)(5).

(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 (1) deductions 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 self-employed SEP, SIMPLE, Keogh, and other qualified individual retirement accounts and Keogh accounts excluded from income for Federal income tax purposes; and (I) any other untaxed income and benefits, purposes, except 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) include payments made to tax-deferred pension and retirement plans, paid directly or withheld from earnings, that are not delineated on 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 return; (2) tax-exempt interest income; (3) untaxed portion of title IV individual retirement account distributions; (4) untaxed portion of the Social Security Act [ 42 U.S.C. 601 et seq.] pensions; and aid to dependent children; (C) the amount of earned income credit claimed for Federal (5) foreign income tax purposes; (D) the amount of credit for Federal tax on special fuels claimed for permanent residents of the United States or United States citizens exempt from Federal income tax purposes; (E) taxation, or the amount of foreign income excluded for purposes of Federal income taxes; which such a permanent resident or (F) untaxed social security benefits. citizen receives a foreign tax credit.

(c) Veteran Veterans and veterans’ education benefits (1) The term “veteran” means any individual who— (A) has engaged in the active duty meaning given the term in section 101(2) of title 38 and includes individuals who served in the United States Army, Navy, Air Force, Marines, or Coast Guard; Armed Forces as described in sections 101(21), 101(22), and (B) was released under a condition other than dishonorable. 101(23) of title 38. (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 students and determinations The term “independent”, when used with respect to a student, means any individual who— (A) (1) 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, (2) is, 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; 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; (D) (4) is a veteran of the Armed Forces of the United States (as defined in subsection (c)(1) of this section) (c)) or is currently serving on active duty in the Armed Forces for other than training purposes; (E) (5) is a graduate or professional student; (F) (6) is a married individual; (G) and not separated; (7) has legal dependents other than a spouse; (H) has been verified during the school year in which the application (8) 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 is unaccompanied, at risk of homelessness, and self-supporting, by— (i) a local educational agency homeless liaison, designated pursuant without regard 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 such individual’s age; and Homeless Youth Act [ 42 U.S.C. 5701 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) (9) is a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances. (2) Simplifying circumstances pursuant to section 1087tt(c) of this title in which the dependency override process A financial aid administrator may make student is unable to contact a determination of independence under paragraph (1)(I) based upon parent or where contact with parents poses a documented determination of independence that was previously made by another financial aid administrator under risk to such paragraph student, which includes circumstances of— (A) human trafficking, as described in the same award year. 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) any student financial assistance awarded based on need as determined in accordance with an amount equal to the provisions of this part, including any income earned from work under part C of subchapter I education credits described in paragraphs (1) and (2) of chapter 34 section 25A(a) of title 42; 26 ; (2) any if an applicant elects to report it, college grant and scholarship aid included in gross income earned from work under on a cooperative education program offered by an institution Federal tax return, including amounts attributable to grant and scholarship portions of higher education; (3) fellowships and assistantships and any living allowance national service educational award or post-service benefit received by a participant in a program established an individual under title I of the National and Community Service Act of 1990 [ ( 42 U.S.C. 12501 12511 et seq.]; (4) child support payments made by the student or parent; (5) payments made seq.), including awards, living allowances, and services provided interest accrual payments; and (3) income earned from work under part E of title IV C of the Social Security Act [ 42 U.S.C. 670 et seq.]; and (6) special combat pay. this subchapter.

(f) Assets (1) In general The term “assets” means cash on hand, including the amount in checking and savings accounts, time deposits, money market funds, investments, trusts, stocks, bonds, other 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. assets, determined in accordance with section 1087rr(c) of this title . (2) Exclusions 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) of 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. 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) In determining the value of assets in a determination 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 value Definition 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 subsection, the term “qualified education benefit” means— (i) (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 (ii) (B) 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 value The term “net assets” value” means the current market value at the time of application of the assets (as defined in subsection (f) of this section), (f)), minus the outstanding liabilities or indebtedness against the assets.

(i) Current balance The term “current balance Other financial assistance (1) For purposes of checking 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 accounts” does account under section 530 of such title, shall not include any funds over which an individual be treated as other financial assistance for purposes of section 1087kk(a)(3) 1 of this title. (3) Notwithstanding paragraph (1) and section 1087 ll 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 barred 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 exercising discretion either other financial assistance or cost of attendance, it shall be excluded from both. (4) Notwithstanding paragraph (1), payments made and control because services provided under part E of title IV of the actions Social Security Act [ 42 U.S.C. 670 et seq.] 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 declaring a bank foster care but are receiving services under section 477 of such Act [ 42 U.S.C. 677 ], shall not be treated as other financial assistance for purposes of section 1087kk(a)(3) 1 of this title. (5) Notwithstanding paragraph (1), emergency due financial assistance provided to the insolvency of student for unexpected expenses that are a private deposit insurance fund. 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) 1 of this title.

(j) Other financial assistance Dependents (1) For purposes Except as otherwise provided, the term “dependent of determining the parent” means the student who is deemed to be a student’s eligibility dependent student when applying for funds aid under this subchapter subchapter, and part C of subchapter I of chapter 34 of title 42, estimated financial assistance not received under this subchapter any other person who lives with and part C of subchapter I of chapter 34 receives more than one-half of title 42 shall include all scholarships, grants, loans, or other assistance known to the institution at the time their support from the determination parent (or parents) and will continue to receive more than half of their support from the student’s need is made, including national service educational awards or post-service benefits under title I of parent (or parents) during 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). award year. (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 Except as estimated financial assistance for purposes of section 1087kk(3) otherwise provided, the term “dependent of this title . (3) Notwithstanding paragraph (1) the student” means the student’s dependent children and section 1087 ll of this title, assistance not received under this subchapter other persons (except the student’s spouse) who live with and part C of subchapter I of chapter 34 receive more than one-half of title 42 may be excluded their support from both estimated financial assistance and cost of attendance, if that assistance is provided by a State the student and is designated by such State will continue to offset a specific component of the cost of attendance. If that assistance is excluded from either estimated financial assistance or cost receive more than half of attendance, it shall be excluded their support 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 . the student during the award year.

(k) Dependents Family size (1) Dependent student Except as otherwise provided, provided in paragraph (3), in determining family size in the term “dependent case of a dependent student— (A) if the parent” means parents are not divorced or separated, family members include the student, student’s parents, and any dependent children (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, including those children who are deemed to be dependent students when applying parents for aid the taxable year used in determining the amount of need of the student for financial assistance under this subchapter subchapter; (B) if the parents are divorced or separated, family members include the parent whose income is included in computing available income and part C any dependent (within the meaning of subchapter I section 152 of chapter 34 title 26 or an eligible individual for purposes of the credit under section 24 of title 42, 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 other persons the parents whose income is so included are remarried, or if the parent was a widow or widower who live with has remarried, family members also include, in addition to those individuals referred to in subparagraph (B), the new spouse and receive more than one-half any dependent (within the meaning of their support from section 152 of title 26 or an eligible individual for purposes of the parent 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 will continue to receive more than half (D) if the student is not considered as a dependent (within the meaning of their support from section 152 of title 26 or an eligible individual for purposes of the parent during credit under section 24 of title 26 ) of any parent, the award year. 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 otherwise provided, provided in paragraph (3), in determining family size in the term “dependent case of an independent student— (A) family members include the student” means student, the student’s spouse, and any dependent children (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 other persons (except (B) if the student’s spouse) who live with student is divorced or separated, family members do not include the spouse (or ex-spouse), but do include the student and receive more than one-half any dependent (within the meaning of their support from 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 will continue to receive more than half 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 their support from need of the student during for financial assistance under this subchapter has changed or does not accurately reflect the award year. 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) Family size (1) In determining family size Business assets The term “business assets” means property that is used in the case operation 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 trade or separated, family members include the parent whose income is included in computing available income and that parent’s dependents, business, 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; real estate, inventories, buildings, machinery, and (B) if the student is divorced or separated, family members do not include the spouse (or ex-spouse), but do include the student other equipment, patents, franchise rights, and the student’s dependents. copyrights.

(m) Business assets Homeless youth The term “business assets” means property that is used in “homeless youth” has the operation of a trade or business, including real estate, inventories, buildings, machinery, and other equipment, patents, franchise rights, meaning given the term “homeless children and copyrights. youths” in section 11434a of title 42 .

(n) Special combat pay Unaccompanied The term “special combat pay” means pay received by a member of terms “unaccompanied”, “unaccompanied youth”, or “unaccompanied homeless youth” have the Armed Forces because meaning given the term “unaccompanied youth” in section 11434a of exposure to a hazardous situation. title 42 .