[Federal Register Volume 61, Number 106 (Friday, May 31, 1996)]
[Notices]
[Pages 27762-27765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13799]




[[Page 27761]]


_______________________________________________________________________

Part V





Department of Education





_______________________________________________________________________



Postsecondary Education: Updates to Tables Used in the Need Analysis 
Methodology for the 1997-98 Award Year; Notice

  Federal Register / Vol. 61, No. 106 / Friday, May 31, 1996 / 
Notices  

[[Page 27762]]



DEPARTMENT OF EDUCATION


Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, 
Federal Supplemental Educational Opportunity Grant, Federal Family 
Education Loan, and William D. Ford Federal Direct Loan Programs; 
Updates to Tables Used in the Need Analysis Methodology for the 1997-98 
Award Year

AGENCY: Department of Education.

ACTION: Notice.

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

SUMMARY: The Secretary of Education announces the annual updates to the 
tables included in the need analysis methodology that will be used to 
calculate expected family contributions for the 1997-98 award year 
under the Federal Pell Grant, campus-based (Federal Perkins Loan, 
Federal Work-Study, and Federal Supplemental Educational Opportunity 
Grant), Federal Family Education Loan and William D. Ford Federal 
Direct Loan programs. These programs are known collectively as the 
Title IV, HEA programs. The Secretary takes this action under the 
authority of sections 477 and 478 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, 600 Independence Avenue, S.W. (Room 3053, ROB-3), 
Washington, D.C. 20202-5444, telephone (202) 708-7888. Deaf and hearing 
impaired individuals may call the Federal Information Relay Service at 
1-800-877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through 
Friday.

SUPPLEMENTARY INFORMATION: The need analysis methodology, referred to 
as the ``Federal Needs Analysis Methodology,'' is set forth in Subpart 
F of Title IV of the HEA. It is used to determine a student's 
eligibility for assistance under the Title IV, HEA programs.

Federal Needs Analysis Methodology

    Part F of Title IV of the HEA specifies the criteria, data 
elements, calculations, and tables used in the computation of expected 
family contributions for the Title IV, HEA programs. Section 478 of 
Part F requires the Secretary to adjust annually for inflation four of 
the tables included in Part F: 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. The 
inflation changes are based, in general, upon the reported annual 
inflation increase set forth in the Consumer Price Index for All Urban 
Consumers that is issued by the United States Department of Labor.
    For award year 1997-98, the Secretary is charged with updating the 
tables for income protection allowances, adjusted net worth of a 
business or farm, and the assessment schedules and rates to account for 
inflation that took place in calendar year 1996. However, the Secretary 
must publish these updated tables by June 1, 1996. Therefore, the 
Secretary must update the tables based upon an estimate of the increase 
in the Consumer Price Index for All Urban Consumers for that period.
    The Secretary estimates that the Consumer Price Index for All Urban 
Consumers will rise 3.3 percent during calendar year 1996. In making 
this estimate, the Secretary assumed that the rate of increase for 
calendar year 1996 will be the same as that reported for calendar year 
1995.
    The table in section 1 reflects the changes in the income 
protection allowances. This change reflects a consumer price increase 
of 3.3 percent rounded to the nearest $10.
    The table in section 2 reflects the changes in the adjusted net 
worth of a farm or business. This change reflects a consumer price 
increase of 3.3 percent rounded to the nearest $5,000.
    The table in section 3 reflects the changes in the education 
savings and asset protection allowance. This change reflects a consumer 
price increase of 3.3 percent rounded to the nearest $100.
    The table in section 4 reflects the changes in the assessment 
schedules and rates. This change reflects a consumer price increase of 
3.3 percent rounded to the nearest $100.
    Section 477(b)(5) of the HEA 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 table in section 5 reflects that 
change.
    The table in section 6, statutory allowances for State and other 
taxes, has not been revised, but is included for informational 
purposes.
    The following sections set forth the above described tables.

1. Income Protection Allowance

    This statutory allowance represents 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 and family members in college. The income 
protection allowances for parents of dependent students and independent 
students with dependents other than a spouse for the award year 1997-98 
are:

----------------------------------------------------------------------------------------------------------------
                                                                                Number in college               
                Family size (including student)                -------------------------------------------------
                                                                    1         2         3         4         5   
----------------------------------------------------------------------------------------------------------------
2.............................................................   $11,750    $9,740                              
3.............................................................    14,630    12,630   $10,620                    
4.............................................................    18,070    16,060    14,060   $12,050          
5.............................................................    21,320    19,310    17,310    15,300   $13,300
6.............................................................    24,940    22,930    20,930    18,920   16,920 
----------------------------------------------------------------------------------------------------------------
For each additional family member add $2,810.                                                                   
For each additional college student subtract $2,000.                                                            

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 
statutory 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.

[[Page 27763]]



------------------------------------------------------------------------
If the net worth of a business or farm is--  Then the adjusted net worth
                                                         is:            
------------------------------------------------------------------------
Less than $1..............................  $0.                         
$1 to $85,000.............................  $0 + 40% of NW.             
$85,001 to $250,000.......................  $34,000 + 50% of NW over    
                                             $85,000.                   
$250,001 to $420,000......................  $116,500 + 60% of NW over   
                                             $250,000.                  
$420,001 or more..........................  $218,500 + 100% of NW over  
                                             $420,000.                  
------------------------------------------------------------------------

3. Education Savings and Asset Protection Allowance

    This statutory 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
------------------------------------------------------------------------
                                                                        
(1)then the education savings and asset                                 
 protection allowance is--                                              
                                               -------------------------
25 or less....................................  ...........  ...........
26............................................        2,400        1,700
27............................................        4,700        3,300
28............................................        7,100        5,000
29............................................        9,500        6,600
30............................................       11,800        8,300
31............................................       14,200       10,000
32............................................       16,600       11,600
33............................................       18,900       13,300
34............................................       21,300       14,900
35............................................       23,700       16,600
36............................................       26,000       18,300
37............................................       28,400       19,900
38............................................       30,800       21,600
39............................................       33,100       23,200
40............................................       35,500       24,900
41............................................       36,400       25,400
42............................................       37,300       26,000
43............................................       38,300       26,500
44............................................       39,300       27,100
45............................................       40,300       27,800
46............................................       41,300       28,300
47............................................       42,400       29,000
48............................................       43,400       29,700
49............................................       44,500       30,400
50............................................       45,900       31,200
51............................................       47,100       31,900
52............................................       48,300       32,700
53............................................       49,800       33,500
54............................................       51,300       34,300
55............................................       52,600       35,100
56............................................       54,200       36,100
57............................................       55,900       36,900
58............................................       57,600       38,000
59............................................       59,600       39,100
60............................................       61,400       40,000
61............................................       63,200       41,100
62............................................       65,400       42,300
63............................................       67,700       43,500
64............................................       70,000       44,900
65 and over...................................       72,400       46,100
------------------------------------------------------------------------


       Independent Students Without Dependents Other Than a Spouse      
------------------------------------------------------------------------
                                                   And the student is   
         If the age of the student is          -------------------------
                                                  Married       Single  
------------------------------------------------------------------------
                                                                        
(1) then the education savings and asset                                
 protection allowance is--                                              
                                               -------------------------
25 or less....................................  ...........  ...........
26............................................        2,400        1,700
27............................................        4,700        3,300
28............................................        7,100        5,000
29............................................        9,500        6,600
30............................................       11,800        8,300
31............................................       14,200       10,000
32............................................       16,600       11,600
33............................................       18,900       13,300
34............................................       21,300       14,900
35............................................       23,700       16,600
36............................................       26,000       18,300
37............................................       28,400       19,900
38............................................       30,800       21,600
39............................................       33,100       23,200
40............................................       35,500       24,900
41............................................       36,400       25,400
42............................................       37,300       26,000
43............................................       38,300       26,500
44............................................       39,300       27,100
45............................................       40,300       27,800
46............................................       41,300       28,300
47............................................       42,400       29,000
48............................................       43,400       29,700
49............................................       44,500       30,400
50............................................       45,900       31,200
51............................................       47,100       31,900
52............................................       48,300       32,700
53............................................       49,800       33,500
54............................................       51,300       34,300
55............................................       52,600       35,100
56............................................       54,200       36,100
57............................................       55,900       36,900
58............................................       57,600       38,000
59............................................       59,600       39,100
60............................................       61,400       40,000
61............................................       63,200       41,100
62............................................       65,400       42,300
63............................................       67,700       43,500
64............................................       70,000       44,900
65 and over...................................       72,400       46,100
------------------------------------------------------------------------


        Independent Students With Dependents Other Than a Spouse        
------------------------------------------------------------------------
                                                   And the student is   
         If the age of the student is          -------------------------
                                                  Married       Single  
------------------------------------------------------------------------
                                                                        
(1) then the education savings and asset                                
 protection allowance is--                                              
                                               -------------------------
25 or less....................................  ...........  ...........
26............................................        2,400        1,700
27............................................        4,700        3,300
28............................................        7,100        5,000
29............................................        9,500        6,600
30............................................       11,800        8,300
31............................................       14,200       10,000
32............................................       16,600       11,600
33............................................       18,900       13,300
34............................................       21,300       14,900
35............................................       23,700       16,600
36............................................       26,000       18,300
37............................................       28,400       19,900
38............................................       30,800       21,600
39............................................       33,100       23,200
40............................................       35,500       24,900
41............................................       36,400       25,400
42............................................       37,300       26,000
43............................................       38,300       26,500
44............................................       39,300       27,100
45............................................       40,300       27,800
46............................................       41,300       28,300
47............................................       42,400       29,000
48............................................       43,400       29,700
49............................................       44,500       30,400
50............................................       45,900       31,200
51............................................       47,100       31,900
52............................................       48,300       32,700
53............................................       49,800       33,500
54............................................       51,300       34,300
55............................................       52,600       35,100
56............................................       54,200       36,100
57............................................       55,900       36,900
58............................................       57,600       38,000
59............................................       59,600       39,100
60............................................       61,400       40,000
61............................................       63,200       41,100
62............................................       65,400       42,300
63............................................       67,700       43,500
64............................................       70,000       44,900
65 and over...................................       72,400       46,100
------------------------------------------------------------------------

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. The statutory assessment schedules are as 
follows:

[[Page 27764]]



                           Dependent Students                           
------------------------------------------------------------------------
                If AAI is--                  Then the contribution is-- 
------------------------------------------------------------------------
Less than -$3,409.........................  -$750.                      
-$3,409 to $10,500........................  22% of AAI.                 
$10,501 to $13,200........................  $2,310 + 25% of AAI over    
                                             $10,500.                   
$13,201 to $15,900........................  $2,985 + 29% of AAI over    
                                             $13,200.                   
$15,901 to $18,500........................  $3,768 + 34% of AAI over    
                                             $15,900.                   
$18,501 to $21,200........................  $4,652 + 40% of AAI over    
                                             $18,500.                   
$21,201 or more...........................  $5,732 + 47% of AAI over    
                                             $21,200.                   
------------------------------------------------------------------------


        Independent Students With Dependents Other Than a Spouse        
------------------------------------------------------------------------
                If AAI is--                  Then the contribution is-- 
------------------------------------------------------------------------
Less than -$3,409.........................  -$750.                      
-$3,409 to $10,500........................  22% of AAI.                 
$10,501 to $13,200........................  $2,310 + 25% of AAI over    
                                             $10,500.                   
$13,201 to $15,900........................  $2,985 + 29% of AAI over    
                                             $13,200.                   
$15,901 to $18,500........................  $3,768 + 34% of AAI over    
                                             $15,900.                   
$18,501 to $21,200........................  $4,652 + 40% of AAI over    
                                             $18,500.                   
$21,201 or more...........................  $5,732 + 47% of AAI over    
                                             $21,200.                   
------------------------------------------------------------------------

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 $2,700 or 35 percent of earned income.

6. Allowance for State and Other Taxes

    The statutory 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 of residence is -------------------------
                                                 Less than    $15,000 or
                                                 $15,000 or      more   
------------------------------------------------------------------------
                                                                        
(1) 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   
------------------------------------------------------------------------
                                                                        
(1) 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
------------------------------------------------------------------------


[[Page 27765]]



                           Dependent Students                           
------------------------------------------------------------------------
                                                                 The    
      If student's state or territory of residence is         percentage
                                                                 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
                                                                       2
------------------------------------------------------------------------


       Independent Students Without Dependents Other Than a Spouse      
------------------------------------------------------------------------
                                                                 The    
      If student's state or territory of residence is         percentage
                                                                 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
------------------------------------------------------------------------

    Dated: May 29, 1996.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.
(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal 
Supplemental Educational Opportunity Grant; 84.032 Federal Family 
Education Loan Program; 84.033 Federal Work-Study Program; 84.038 
Federal Perkins Loan Program; 84.063 Federal Pell Grant Program; 
84.268 William D. Ford Federal Direct Loan Program)

[FR Doc. 96-13799 Filed 5-30-96; 8:45 am]
BILLING CODE 4000-01-P