Sec. 480. DEFINITIONS

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## SEC. 480 DEFINITIONS **[**[20 U.S.C. 1087vv](/us/usc/t20/s1087vv)**]** In this part: ###

(a)Total Income The term “**total income**” means the amount equal to adjusted gross income for the second preceding tax year plus untaxed income and benefits for the second preceding tax year minus excludable income for the second preceding tax year. The factors used to determine total income shall be derived from the Federal income tax return, if available, except for the applicant’s ability to indicate a qualified rollover in the second preceding tax year as outlined in section 483 or foreign income described in subsection (b)(5). ###

(b)Untaxed Income and Benefits The term “**untaxed income and benefits**” means— ####

(1)deductions and payments to self-employed SEP, SIMPLE, Keogh, and other qualified individual retirement accounts excluded from income for Federal tax purposes, except such term shall not include payments made to tax-deferred pension and retirement plans, paid directly or withheld from earnings, that are not delineated on the Federal tax return; ####

(2)tax-exempt interest income; ####

(3)untaxed portion of individual retirement account distributions; ####

(4)untaxed portion of pensions; and ####

(5)foreign income of permanent residents of the United States or United States citizens exempt from Federal taxation, or the foreign income for which such a permanent resident or citizen receives a foreign tax credit. ###

(c)Veterans and Veterans’ Education Benefits ####

(1)The term “**veteran**” has the meaning given the term in section 101(2) of title 38, United States Code, and includes individuals who served in the United States Armed Forces as described in sections 101(21), 101(22), and 101(23) of title 38, United States Code. ####

(2)The term “**veterans**” education benefits’ means veterans’ benefits under the following provisions of law: #####

(A)Chapter 103 of title 10, United States Code (Senior Reserve Officers’ Training Corps). #####

(B)Chapter 106A of title 10, United States Code (Educational Assistance for Persons Enlisting for Active Duty). #####

(C)Chapter 1606 of title 10, United States Code (Selected Reserve Educational Assistance Program). #####

(D)Chapter 1607 of title 10, United States Code (Educational Assistance Program for Reserve Component Members Supporting Contingency Operations and Certain Other Operations). #####

(E)Chapter 30 of title 38, United States Code (All-Volunteer Force Educational Assistance Program, also known as the “**Montgomery GI Bill—active duty**”). #####

(F)Chapter 31 of title 38, United States Code (Training and Rehabilitation for Veterans with Service-Connected Disabilities). #####

(G)Chapter 32 of title 38, United States Code (Post-Vietnam Era Veterans’ Educational Assistance Program). #####

(H)Chapter 33 of title 38, United States Code (Post-9/11 Educational Assistance). #####

(I)Chapter 35 of title 38, United States Code (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, United States Code, related to subsistence allowances for members of the Reserve Officers Training Corps. ###

(d)Independent Students and Determinations The term “**independent**”, when used with respect to a student, means any individual who— ####

(1)is 24 years of age or older by December 31 of the award year; ####

(2)is, or was at any time when the individual was 13 years of age or older— #####

(A)an orphan; #####

(B)a ward of the court; or #####

(C)in foster care; ####

(3)is, or was immediately prior to attaining the age of majority, an emancipated minor or in legal guardianship as determined by a court of competent jurisdiction in the individual’s State of legal residence; ####

(4)is a veteran of the Armed Forces of the United States (as defined in subsection (c)) or is currently serving on active duty in the Armed Forces for other than training purposes; ####

(5)is a graduate or professional student; ####

(6)is married and not separated; ####

(7)has legal dependents other than a spouse; ####

(8)is an unaccompanied homeless youth or is unaccompanied, at risk of homelessness, and self-supporting, without regard to such individual's age; and ####

(9)is a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances pursuant to section 479A(c) in which the student is unable to contact a parent or where contact with parents poses a risk to such student, which includes circumstances of— #####

(A)human trafficking, as described in the Trafficking Victims Protection Act of 2000 (22 U.S.C. 7101 et seq.); #####

(B)legally granted refugee or asylum status; #####

(C)parental abandonment or estrangement; or #####

(D)student or parental incarceration. ###

(e)Excludable Income The term “**excludable income**” means— ####

(1)an amount equal to the education credits described in paragraphs

(1)and

(2)of section 25A(a) of the Internal Revenue Code of 1986; ####

(2)if an applicant elects to report it, college grant and scholarship aid included in gross income on a Federal tax return, including amounts attributable to grant and scholarship portions of fellowships and assistantships and any national service educational award or post-service benefit received by an individual under title I of the National and Community Service Act of 1990 (42 U.S.C. 12511 et seq.), including awards, living allowances, and interest accrual payments; and ####

(3)income earned from work under part C of this title. ###

(f)Assets ####

(1)In general The term “**assets**” means the amount in checking and savings accounts, time deposits, money market funds, investments, trusts, stocks, bonds, derivatives, securities, mutual funds, tax shelters, qualified education benefits (except as provided in paragraph (3)), the annual amount of child support received and the net value of real estate, vacation homes, income producing property, and business and farm assets, determined in accordance with section 478(c). #### (2)58 Exclusions With respect to determinations of need under this title, the term “**assets**” shall not include the net value of the family’s principal place of residence. 58For a second version of law for section 480(f)(2), as amended by section 80001(a) of Public Law 119–21, see note below. **[**Note: Effective on July 1, 2026, section 80001(a) of Public Law 119–21 provides for several amendments to section 480(f)(2). Upon such date, paragraph

(2)( as so amended) will read as follows:**]** ####

(2)Exclusions With respect to determinations of need under this title, the term “**assets**” shall not include the net value of— #####

(A)the family’s principal place of residence; #####

(B)a family farm on which the family resides; #####

(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; or #####

(D)a commercial fishing business and related expenses, including fishing vessels and permits owned and controlled by the family. ####

(3)Consideration of qualified education benefit A qualified education benefit shall be considered an asset of— #####

(A)the student if the student is an independent student; or #####

(B)the parent if the student is a dependent student and the account is designated for the student, regardless of whether the owner of the account is the student or the parent. ####

(4)Definition of qualified education benefit In this subsection, the term “**qualified education benefit**” means— #####

(A)a qualified tuition program (as defined in section 529(b)(1)(A) of the Internal Revenue Code of 1986) or other prepaid tuition plan offered by a State; and #####

(B)a Coverdell education savings account (as defined in section 530(b)(1) of the Internal Revenue Code of 1986). ###

(g)Net Value The term “**net value**” means the market value at the time of application of the assets (as defined in subsection (f)), minus the outstanding liabilities or indebtedness against the assets. ###

(h)Treatment of Income Taxes Paid to Other Jurisdictions ####

(1)The tax on income paid to the Governments of the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, or the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau under the laws applicable to those jurisdictions, or the comparable tax paid to the central government of a foreign country, shall be treated as Federal income taxes. ####

(2)References in this part to the Internal Revenue Code of 1986, Federal income tax forms, and the Internal Revenue Service shall, for purposes of the tax described in paragraph (1), be treated as references to the corresponding laws, tax forms, and tax collection agencies of those jurisdictions, respectively, subject to such adjustments as the Secretary may provide by regulation. ###

(i)Other Financial Assistance ####

(1)For purposes of determining a student’s eligibility for funds under this title, other financial assistance not received under this title 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 the Internal Revenue Code of 1986, or a distribution that is not includable in gross income under section 529 of such Code, under another prepaid tuition plan offered by a State, or under a Coverdell education savings account under section 530 of such Code, shall not be treated as other financial assistance for purposes of section 471(a)(3). ####

(3)Notwithstanding paragraph

(1)and section 472, assistance not received under this title may be excluded from both other financial assistance and cost of attendance, if that assistance is provided by a State and is designated by such State to offset a specific component of the cost of attendance. If that assistance is excluded from either other financial assistance or cost of attendance, it shall be excluded from both. ####

(4)Notwithstanding paragraph (1), payments made and services provided under part E of title IV of the Social Security Act to or on behalf of any child or youth over whom the State agency has responsibility for placement, care, or supervision, including the value of vouchers for education and training and amounts expended for room and board for youth who are not in foster care but are receiving services under section 477 of such Act, shall not be treated as other financial assistance for purposes of section 471(a)(3). ####

(5)Notwithstanding paragraph (1), emergency financial assistance provided to the student for unexpected expenses that are a component of the student’s cost of attendance, and not otherwise considered when the determination of the student’s need is made, shall not be treated as other financial assistance for purposes of section 471(a)(3). ###

(j)Dependents ####

(1)Except as otherwise provided, the term “**dependent of the parent**” means the student who is deemed to be a dependent student when applying for aid under this title, and any other person who lives with and receives more than one-half of their support from the parent (or parents) and will continue to receive more than half of their support from the parent (or parents) during the award year. ####

(2)Except as otherwise provided, the term “**dependent of the student**” means the student’s dependent children and other persons (except the student’s spouse) who live with and receive more than one-half of their support from the student and will continue to receive more than half of their support from the student during the award year. ###

(k)Family Size ####

(1)Dependent student Except as provided in paragraph (3), in determining family size in the case of a dependent student— #####

(A)if the parents are not divorced or separated, family members include the student’s parents, and any dependent (within the meaning of section 152 of the Internal Revenue Code of 1986 or an eligible individual for purposes of the credit under section 24 of the Internal Revenue Code of 1986) of the student’s parents for the taxable year used in determining the amount of need of the student for financial assistance under this title; #####

(B)if the parents are divorced or separated, family members include the parent whose income is included in computing available income and any dependent (within the meaning of section 152 of the Internal Revenue Code of 1986 or an eligible individual for purposes of the credit under section 24 of the Internal Revenue Code of 1986) of that parent for the taxable year used in determining the amount of need of the student for financial assistance under this title; #####

(C)if the parents are divorced and the parents whose income is so included are remarried, or if the parent was a widow or widower who has remarried, family members also include, in addition to those individuals referred to in subparagraph (B), the new spouse and any dependent (within the meaning of section 152 of the Internal Revenue Code of 1986 or an eligible individual for purposes of the credit under section 24 of the Internal Revenue Code of 1986) of the new spouse for the taxable year used in determining the amount of need of the student for financial assistance under this title, if that spouse’s income is included in determining the parent’s adjusted available income; and #####

(D)if the student is not considered as a dependent (within the meaning of section 152 of the Internal Revenue Code of 1986 or an eligible individual for purposes of the credit under section 24 of the Internal Revenue Code of 1986) of any parent, the parents’ family size shall include the student and the family members applicable to the parents’ situation under subparagraph (A), (B), or (C). ####

(2)Independent student Except as provided in paragraph (3), in determining family size in the case of an independent student— #####

(A)family members include the student, the student’s spouse, and any dependent (within the meaning of section 152 of the Internal Revenue Code of 1986 or an eligible individual for purposes of the credit under section 24 of the Internal Revenue Code of 1986) of that student for the taxable year used in determining the amount of need of the student for financial assistance under this title; and #####

(B)if the student is divorced or separated, family members do not include the spouse (or ex-spouse), but do include the student and any dependent (within the meaning of section 152 of the Internal Revenue Code of 1986 or an eligible individual for purposes of the credit under section 24 of the Internal Revenue Code of 1986) of that student for the taxable year used in determining the amount of need of the student for financial assistance under this title. ####

(3)Procedures and modification The Secretary shall provide procedures for determining family size in cases in which information for the taxable year used in determining the amount of need of the student for financial assistance under this title has changed or does not accurately reflect the applicant’s current household size, including when a divorce settlement only allows a parent to file for the Earned Income Tax Credit available under section 32 of the Internal Revenue Code of 1986. ###

(l)Business Assets The term “**business assets**” means property that is used in the operation of a trade or business, including real estate, inventories, buildings, machinery, and other equipment, patents, franchise rights, and copyrights. ###

(m)Homeless Youth The term “**homeless youth**” has the meaning given the term “**homeless children and youths**” in section 725 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a). ###

(n)Unaccompanied The terms “**unaccompanied**”, “**unaccompanied youth**”, or “**unaccompanied homeless youth**” have the meaning given the term “**unaccompanied youth**” in section 725 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a). ### Part G General Provisions Relating to Student Assistance Programs

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