ADJUSTMENTS TO LIVING ALLOWANCE.

SEC. 1315. ADJUSTMENTS TO LIVING ALLOWANCE. Section 140 (42 U.S.C. 12594) is amended—(1) in subsection (a)—(A) in paragraph (1), by striking “paragraph (3)” and inserting “paragraphs (2) and (3)”;(B) by striking paragraph (2);(C) by redesignating paragraph (3) as paragraph (2);(D) by inserting after paragraph (2) (as so redesignated) the following:“(3) Federal work-study students.—The living allowance that may be provided under paragraph (1) to an individual whose term of service includes hours for which the individual receives a Federal work-study award under part C of title IV of the Higher Education Act of 1965 (42 U.S.C. 2751 et seq.) shall be reduced by the amount of the individual’s Federal work study award.”; and(E) in paragraph (4), by striking “a reduced term of service under section 139(b)(3)” and inserting “a term of service that is less than 12 months”;(2) in subsection (b), by striking “shall include an amount sufficient to cover 85 percent of such taxes” and all that follows through the period at the end and inserting “may be used to pay the taxes described in this subsection.”;(3) in subsection (c)—(A) in the matter preceding paragraph (1)—(i) by striking “section 122(a)(8)” and inserting “section 122(c)(1)(D)”; and(ii) by striking “subsection (a)(3)” and inserting “subsection (a)(2)”;(B) in paragraph (1), by adding “and” at the end;(C) by striking paragraph (2); and(D) by redesignating paragraph (3) as paragraph (2);(4) in subsection (d)—(A) in paragraph (1)—(i) by striking “shall provide” and inserting “shall provide or make available”; and(ii) by striking the second sentence; and(B) in paragraph (2), by striking “provide from its own funds” and inserting “provide from its own funds or make available”; and(5) by striking subsections (g) and (h).