[Federal Register Volume 59, Number 94 (Tuesday, May 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11881]


[[Page Unknown]]

[Federal Register: May 17, 1994]


_______________________________________________________________________

Part IV





Department of Education





_______________________________________________________________________




Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, Federal 
Supplemental Educational Opportunity Grant, Federal Stafford Loan, and 
Federal Direct Student Loan Programs; Notice
DEPARTMENT OF EDUCATION

 
Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, 
Federal Supplemental Educational Opportunity Grant, Federal Stafford 
Loan, and Federal Direct Student Loan Programs

AGENCY: Department of Education.

ACTION: Notice--Revision of the need analysis methodology for the 1995-
96 Award Year.

-----------------------------------------------------------------------

SUMMARY: The Secretary of Education announces the annual update to the 
tables used in the need analysis methodology that an institution of 
higher education must use in calculating expected family contributions 
for the 1995-96 award year under the Federal Pell Grant, campus-based 
(Federal Perkins Loan, Federal Work-Study, and Federal Supplemental 
Educational Opportunity Grant), Federal Stafford Loan and Federal 
Direct Student Loan programs. The Secretary takes this action under the 
authority of Title IV of the Higher Education Act of 1965, as amended 
(HEA).

FOR FURTHER INFORMATION CONTACT: Ms. Edith Bell, Program Specialist, 
General Provisions Branch, Policy Development Division, U.S. Department 
of Education, 400 Maryland Avenue, SW. (Room 4318, ROB-3), Washington, 
DC 20202-5444, telephone (202) 708-7888. Individuals who use a 
telecommunications device for the deaf (TDD) may call the Federal 
Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 
p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The need analysis methodology is used to 
determine student eligibility for assistance under Title IV of the HEA. 
This methodology, referred to as the Federal Needs Analysis 
Methodology, is used to calculate the expected family contribution 
(EFC) for the Federal Pell Grant, the campus-based (Federal Perkins 
Loan, Federal Work-Study, and Federal Supplemental Educational 
Opportunity Grant), Federal Stafford Loan, and Federal Direct Student 
Loan programs. This methodology is established by statute.

Federal Needs Analysis Methodology

    Part F of Title IV of the HEA specifies the criteria, data 
elements, calculations, and tables for the computation of expected 
family contributions for the Federal Pell Grant, campus-based, Federal 
Stafford Loan, and Federal Direct Student Loan programs. In addition, 
section 478 requires the Secretary to adjust four of the tables--the 
Income Protection Allowance, the Adjusted Net Worth of a Business or 
Farm, the Education Savings and Asset Protection Allowance, and the 
Assessment Schedules and Rates--each award year to take into account 
inflation for the 12 months between December 31 of the previous year 
and December 31 of the current year. The changes are based, in general, 
upon increases in the Consumer Price Index.
    For the award year 1995-96, the Secretary is charged with updating 
the income protection allowances, adjusted net worth of a business or 
farm, and the assessment schedules and rates to account for inflation 
that took place between December 1993 and December 1994. However, since 
the Secretary must publish these tables before December 1994, the 
increases in the tables must be based upon a percentage equal to the 
estimated percentage increase in the Consumer Price Index for all Urban 
Consumers for 1993. The Secretary estimates that the increase in the 
Consumer Price Index for all Urban Consumers for the period December 
1993 through December 1994 will be 3.0 percent. The updated tables for 
the 1995-96 award year are set forth in sections 1, 2, and 4.
    The Secretary must also revise, for each award year, the table on 
asset protection allowance as provided for in section 478(d) of the 
HEA. The Education Savings and Asset Protection Allowance table for the 
award year 1995-96 has been updated below in section 3.
    Section 477(b)(5) also requires the Secretary to increase the 
amount specified for the Employment Expense Allowance to account for 
inflation based upon increases in the Bureau of Labor Statistics budget 
of the marginal costs for a two-earner compared to a one-earner family 
for meals away from home, apparel and upkeep, transportation, and 
housekeeping services. Therefore, the Secretary is increasing this 
allowance as described in section 5.
    The HEA provides for the following annual updates:

1. Income Protection Allowance

    This allowance is the amount of reasonable living expenses that 
would be associated with the maintenance of an individual or family. 
The allowance is offset against the family's income and varies by 
family size. The income protection allowances for parents of dependent 
students and independent students with dependents other than a spouse 
for the award year 1995-96 are: 

----------------------------------------------------------------------------------------------------------------
                                                                             Number in college                  
             Family size (including student)              ------------------------------------------------------
                                                               1          2          3          4          5    
----------------------------------------------------------------------------------------------------------------
2........................................................    $11,150     $9,240                                 
3........................................................     13,890     11,990    $10,080                      
4........................................................     17,150     15,240     13,350    $11,440           
5........................................................     20,240     18,330     16,430     14,520    $12,620
6........................................................     23,670     21,760     19,860     17,960     16,060
                                                                                                                
----------------------------------------------------------------------------------------------------------------
For each additional family member add $2,670.                                                                   
For each additional college student subtract $1,900.                                                            
----------------------------------------------------------------------------------------------------------------

2. Adjusted Net Worth (NW) of a Business or Farm

    A portion of the full net value of a farm or business is excluded 
from the calculation of an expected contribution since: (1) the income 
produced from such assets is already assessed in another part of the 
formula; and (2) the formula protects a portion of the value of the 
assets. The portion of these assets included in the contribution 
calculation is computed according to the following schedule. This 
schedule is used for parents of dependent students, independent 
students without dependents other than a spouse, and independent 
students with dependents other than a spouse. 

----------------------------------------------------------------------------------------------------------------
         If the net worth of a business or farm is--                   Then the adjusted net worth is:          
----------------------------------------------------------------------------------------------------------------
Less than $1................................................  $0                                                
$1 to $80,000...............................................  0+40% of NW.                                      
$80,001 to $240,000.........................................  32,000+50% of NW over $80,000.                    
$240,001 to $400,000........................................  112,000+60% of NW over $240,000.                  
$400,001 or more............................................  208,000+100% of NW over $400,000.                 
----------------------------------------------------------------------------------------------------------------

3. Education Savings and Asset Protection Allowance

    This allowance protects a portion of net worth (assets less debts) 
from being considered available for postsecondary educational expenses. 
There are three asset protection allowance tables--one for parents of 
dependent students, one for independent students without dependents 
other than a spouse, and one for independent students with dependents 
other than a spouse. 

                           Dependent Students                           
------------------------------------------------------------------------
                                                  And there are         
    If the age of the older parent is    -------------------------------
                                            two parents     one parent  
------------------------------------------------------------------------
                                          then the education savings and
                                          asset protection allowance is--
                                                                        
                                                                        
                                         -------------------------------
25 or less..............................               0               0
26......................................           2,300           1,600
27......................................           4,600           3,200
28......................................           6,900           4,900
29......................................           9,100           6,500
30......................................          11,400           8,100
31......................................          13,700           9,700
32......................................          16,000          11,300
33......................................          18,300          13,000
34......................................          20,600          14,600
35......................................          22,900          16,200
36......................................          25,200          17,800
37......................................          27,400          19,400
38......................................          29,700          21,100
39......................................          32,000          22,700
40......................................          34,300          24,300
41......................................          35,200          24,700
42......................................          36,100          25,300
43......................................          37,000          25,800
44......................................          38,000          26,500
45......................................          38,900          26,900
46......................................          39,900          27,600
47......................................          40,900          28,300
48......................................          42,000          29,000
49......................................          43,000          29,500
50......................................          44,100          30,200
51......................................          45,500          30,900
52......................................          46,700          31,700
53......................................          48,100          32,500
54......................................          49,700          33,400
55......................................          50,900          34,200
56......................................          52,500          35,000
57......................................          54,100          36,000
58......................................          55,700          37,100
59......................................          57,700          37,900
60......................................          59,500          39,000
61......................................          61,600          40,100
62......................................          63,400          41,300
63......................................          65,600          42,400
64......................................          67,900          43,600
65 or more..............................          70,200         45,100 
------------------------------------------------------------------------


      Independent Students Without Dependents Other Than a Spouse       
------------------------------------------------------------------------
                                                And the student is      
      If the age of the student is       -------------------------------
                                             married          single    
------------------------------------------------------------------------
                                          then the education savings and
                                          asset protection allowance is--
                                                                        
                                                                        
                                         -------------------------------
25 or less..............................               0               0
26......................................           2,300           1,600
27......................................           4,600           3,200
28......................................           6,900           4,900
29......................................           9,100           6,500
30......................................          11,400           8,100
31......................................          13,700           9,700
32......................................          16,000          11,300
33......................................          18,300          13,000
34......................................          20,600          14,600
35......................................          22,900          16,200
36......................................          25,200          17,800
37......................................          27,400          19,400
38......................................          29,700          21,100
39......................................          32,000          22,700
40......................................          34,300          24,300
41......................................          35,200          24,700
42......................................          36,100          25,300
43......................................          37,000          25,800
44......................................          38,000          26,500
45......................................          38,900          26,900
46......................................          39,900          27,600
47......................................          40,900          28,300
48......................................          42,000          29,000
49......................................          43,000          29,500
50......................................          44,100          30,200
51......................................          45,500          30,900
52......................................          46,700          31,700
53......................................          48,100          32,500
54......................................          49,700          33,400
55......................................          50,900          34,200
56......................................          52,500          35,000
57......................................          54,100          36,000
58......................................          55,700          37,100
59......................................          57,700          37,900
60......................................          59,500          39,000
61......................................          61,600          40,100
62......................................          63,400          41,300
63......................................          65,600          42,400
64......................................          67,900          43,600
65 or more..............................          70,200         45,100 
------------------------------------------------------------------------


        Independent Students With Dependents Other Than a Spouse        
------------------------------------------------------------------------
                                                And the student is      
      If the age of the student is       -------------------------------
                                             married          single    
------------------------------------------------------------------------
                                          then the education savings and
                                          asset protection allowance is--
                                                                        
                                                                        
                                         -------------------------------
25 or less..............................               0               0
26......................................           2,300           1,600
27......................................           4,600           3,200
28......................................           6,900           4,900
29......................................           9,100           6,500
30......................................          11,400           8,100
31......................................          13,700           9,700
32......................................          16,000          11,300
33......................................          18,300          13,000
34......................................          20,600          14,600
35......................................          22,900          16,200
36......................................          25,200          17,800
37......................................          27,400          19,400
38......................................          29,700          21,100
39......................................          32,000          22,700
40......................................          34,300          24,300
41......................................          35,200          24,700
42......................................          36,100          25,300
43......................................          37,000          25,800
44......................................          38,000          26,500
45......................................          38,900          26,900
46......................................          39,900          27,600
47......................................          40,900          28,300
48......................................          42,000          29,000
49......................................          43,000          29,500
50......................................          44,100          30,200
51......................................          45,500          30,900
52......................................          46,700          31,700
53......................................          48,100          32,500
54......................................          49,700          33,400
55......................................          50,900          34,200
56......................................          52,500          35,000
57......................................          54,100          36,000
58......................................          55,700          37,100
59......................................          57,700          37,900
60......................................          59,500          39,000
61......................................          61,600          40,100
62......................................          63,400          41,300
63......................................          65,600          42,400
64......................................          67,900          43,600
65 or more..............................          70,200         45,100 
------------------------------------------------------------------------

4. Assessment Schedules and Rates

    Two separate assessment schedules--one for dependent students, and 
one for independent students with dependents other than a spouse--are 
used in determining the expected family contribution toward educational 
expenses from family financial resources.
    For dependent students, the expected parental contribution is 
derived from an assessment of the parents' adjusted available income 
(AAI). For independent students with dependents other than a spouse, 
the expected contribution is derived from an assessment of the family's 
AAI. The AAI represents a measure of financial strength which considers 
both income and assets. 

                           Dependent Students                           
------------------------------------------------------------------------
          If AAI is--                  Then the contribution is--       
------------------------------------------------------------------------
Less than -$3,409.............   -$750                                  
-$3,409 to $10,000............  22% of AAI.                             
$10,001 to $12,500............  $2,200+25% of AAI over $10,000.         
$12,501 to $15,100............  2,825+29% of AAI over $12,500.          
$15,101 to $17,600............  3,579+34% of AAI over $15,100.          
$17,601 to $20,100............  4,429+40% of AAI over $17,600.          
$20,101 or more...............  5,429+47% of AAI over $20,100.          
------------------------------------------------------------------------


        Independent Students With Dependents Other Than a Spouse        
------------------------------------------------------------------------
         If AAI is--                   Then the contribution is--       
------------------------------------------------------------------------
Less than -$3,409.............  -$750                                   
-$3,409 to $10,000............  22% of AAI.                             
$10,001 to $12,500............  $2,200+25% of AAI over $10,000.         
$12,501 to $15,100............  $2,825+29% of AAI over $12,500.         
$15,101 to $17,600............  $3,579+34% of AAI over $15,100.         
$17,601 to $20,100............  $4,429+40% of AAI over $17,600.         
$20,101 or more...............  $5,429+47% of AAI over $20,100.         
------------------------------------------------------------------------

5. Employment Expense Allowance

    This allowance for employment-related expenses, which is used for 
the parents of dependent students and for married independent students 
with dependents, recognizes additional expenses incurred by working 
spouses and single-parent households. The allowance is based upon the 
marginal differences in costs for a two-earner family compared to a 
one-earner family for meals away from home, apparel and upkeep, 
transportation, and housekeeping services.
    The employment expense allowance for parents of dependent students, 
married independent students without dependents other than a spouse, 
and independent students with dependents other than a spouse is the 
lesser of $2,500 or 35 percent of earned income.

6. Allowance for State and Other Taxes

    This allowance for state and other taxes protects a portion of the 
parents' and student's income from being considered available for 
postsecondary education expenses. There are four tables for state and 
other taxes, one each for parents of dependent students, dependent 
students, independent students without dependents other than a spouse, 
and independent students with dependents other than a spouse. 

                      Parents of Dependent Students                     
------------------------------------------------------------------------
                                          And parents' total income is--
                                                                        
If parents' State or territory income of -------------------------------
              residence is                   less than      $15,000 or  
                                            $15,000 or         more     
------------------------------------------------------------------------
                                             then the percentage is--   
                                                                        
                                         -------------------------------
Wyoming, Tennessee, Nevada, Alaska,                                     
 Texas..................................               3               2
Louisiana, Florida, Washington, South                                   
 Dakota.................................               4               3
Alabama, Mississippi....................               5               4
North Dakota, Illinois, Connecticut, New                                
 Mexico, Missouri, West Virginia,                                       
 Arizona, Indiana, Oklahoma, Arkansas...               6               5
New Hampshire, Pennsylvania, Colorado,                                  
 Georgia, Kansas, Kentucky, Idaho.......               7               6
North Carolina, Virginia, Delaware,                                     
 South Carolina, Ohio, Utah, Nebraska,                                  
 Montana, California, New Jersey, Iowa,                                 
 Vermont, Hawaii........................               8               7
Massachusetts, Rhode Island, Michigan,                                  
 Minnesota, Maine, Maryland.............               9               8
District of Columbia, Wisconsin, Oregon.              10               9
New York................................              11              10
Other...................................               4               3
------------------------------------------------------------------------


        Independent Students With Dependents Other Than a Spouse        
------------------------------------------------------------------------
                                          And student's total income is--
                                                                        
   If student's State or territory of    -------------------------------
              residence is                   less than      $15,000 or  
                                            $15,000 or         more     
------------------------------------------------------------------------
                                             then the percentage is--   
                                                                        
                                         -------------------------------
Wyoming, Tennessee, Nevada, Alaska,                                     
 Texas..................................               3               2
Louisiana, Florida, Washington, South                                   
 Dakota.................................               4               3
Alabama, Mississippi....................               5               4
North Dakota, Illinois, Connecticut, New                                
 Mexico, Missouri, West Virginia,                                       
 Arizona, Indiana, Oklahoma, Arkansas...               6               5
New Hampshire, Pennsylvania, Colorado,                                  
 Georgia, Kansas, Kentucky, Idaho.......               7               6
North Carolina, Virginia, Delaware,                                     
 South Carolina, Ohio, Utah, Nebraska,                                  
 Montana, California, New Jersey, Iowa,                                 
 Vermont, Hawaii........................               8               7
Massachusetts, Rhode Island, Michigan,                                  
 Minnesota, Maine, Maryland District of                                 
 Columbia, Wisconsin, Oregon............               9               8
                                                      10               9
New York................................              11              10
Other...................................               4               3
------------------------------------------------------------------------


                           Dependent Students                           
------------------------------------------------------------------------
                                                          The percentage
    If student's State or territory of residence is            is--     
------------------------------------------------------------------------
Alaska, Texas, South Dakota, Wyoming, Washington,                       
 Tennessee, Nevada......................................               0
Florida, New Hampshire..................................               1
Connecticut, Louisiana, Illinois, North Dakota..........               2
Mississippi, Arizona, Alabama, Pennsylvania, New Jersey,                
 Missouri...............................................               3
Nebraska, Indiana, Colorado, New Mexico, Oklahoma,                      
 Kansas, West Virginia, Rhode Island, Virginia, Georgia,                
 Arkansas, Vermont, Michigan............................               4
Montana, Idaho, Utah, Kentucky, Massachusetts,                          
 California, North Carolina, South Carolina, Ohio, Iowa,                
 Delaware, Maine, Wisconsin.............................               5
Oregon, Maryland, Minnesota, Hawaii.....................               6
District of Columbia, New York..........................               7
Other...................................................              2 
------------------------------------------------------------------------


      Independent Students Without Dependents Other Than a Spouse       
------------------------------------------------------------------------
                                                          The percentage
    If student's State or territory of residence is            is--     
------------------------------------------------------------------------
Alaska, Texas, South Dakota, Wyoming, Washington,                       
 Tennessee, Nevada......................................               0
Florida, New Hampshire..................................               1
Connecticut, Louisiana, Illinois, North Dakota..........               2
Mississippi, Arizona, Alabama, Pennsylvania, New Jersey,                
 Missouri...............................................               3
Nebraska, Indiana, Colorado, New Mexico, Oklahoma,                      
 Kansas, West Virginia, Rhode Island, Virginia, Georgia,                
 Arkansas, Vermont, Michigan............................               4
Montana, Idaho, Utah, Kentucky, Massachusetts,                          
 California, North Carolina, South Carolina, Ohio, Iowa,                
 Delaware, Maine, Wisconsin.............................               5
Oregon, Maryland, Minnesota, Hawaii.....................               6
District of Columbia, New York..........................               7
Other...................................................               2
------------------------------------------------------------------------

(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal 
Supplemental Educational Opportunity Grant; 84.032 Federal Stafford 
Loan Program; 84.033 Federal Work-Study Program; 84.038 Federal 
Perkins Loan Program; 84.063 Federal Pell Grant Program; Federal 
Direct Student Loan Program, 84.268)

    Dated: May 10, 1994.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.
[FR Doc. 94-11881 Filed 5-16-94; 8:45 am]
BILLING CODE 4000-01-P