(a) Foreign income and federal pell grant eligibility.—
(1) ADJUSTED GROSS INCOME DEFINED.—Section 401(a)(2)(A) of the Higher Education Act of 1965 (20 U.S.C. 1070a(a)(2)(A)) is amended to read as follows:
“(A) the term ‘adjusted gross income’ means—
“(i) in the case of a dependent student, for the second tax year preceding the academic year—
“(I) the adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986) of the student’s parents; plus
“(II) for Federal Pell Grant determinations made for academic years beginning on or after July 1, 2026, the foreign income (as described in section 480(b)(5)) of the student’s parents; and
“(ii) in the case of an independent student, for the second tax year preceding the academic year—
“(I) the adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986) of the student (and the student’s spouse, if applicable); plus
“(II) for Federal Pell Grant determinations made for academic years beginning on or after July 1, 2026, the foreign income (as described in section 480(b)(5)) of the student (and the student’s spouse, if applicable);”.
(2) SUNSET.—Section 401(b)(1)(D) of the Higher Education Act of 1965 (20 U.S.C. 1070a(b)(1)(D)) is amended—
(A) by striking “A student” and inserting “For each academic year beginning before July 1, 2026, a student”; and
(B) by inserting “, as in effect for such academic year,” after “section 479A(b)(1)(B)(v)”.
(3) CONFORMING AMENDMENTS.—
(A) IN GENERAL.—Section 479A(b)(1)(B) of the Higher Education Act of 1965 (20 U.S.C. 1087tt(b)(1)(B)) is amended—
(i) by striking clause (v); and
(ii) by redesignating clauses (vi) and (vii) as clauses (v) and (vi), respectively.
(B) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall take effect on July 1, 2026.
(b) Federal pell grant ineligibility due to a high student aid index.—
(1) IN GENERAL.—Section 401(b)(1) of the Higher Education Act of 1965 (20 U.S.C. 1070a(b)(1)) is amended by adding at the end the following:
“(F) INELIGIBILITY OF STUDENTS WITH A HIGH STUDENT AID INDEX.—Notwithstanding subparagraphs (A) through (E), a student shall not be eligible for a Federal Pell Grant under this subsection for an academic year in which the student has a student aid index that equals or exceeds twice the amount of the total maximum Federal Pell Grant for such academic year.”.
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) shall take effect on July 1, 2026.