[Federal Register Volume 68, Number 104 (Friday, May 30, 2003)]
[Notices]
[Pages 32468-32478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13680]



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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

AGENCY: Federal Student Aid, Department of Education.

ACTION: Notice of revision of the Federal need analysis methodology for 
the 2004-2005 award year.

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SUMMARY: The Secretary of Education announces the annual updates to the 
tables that will be used in the statutory ``Federal Need Analysis 
Methodology'' to determine a student's expected family contribution 
(EFC) for award year 2004-2005 under Part F of Title IV of the Higher 
Education Act (HEA) of 1965, as amended (Title IV, HEA Programs). An 
EFC is the amount a student and his or her family may reasonably be 
expected to contribute toward the student's postsecondary educational 
costs for purposes of determining financial aid eligibility. The Title 
IV, HEA Programs include the Federal Pell Grant, campus-based (Federal 
Perkins Loan, Federal Work-Study, and Federal Supplemental Educational 
Opportunity Grant Programs), Federal Family Education Loan, and William 
D. Ford Federal Direct Loan Programs.

FOR FURTHER INFORMATION CONTACT: Ms. Edith Bell, Management and Program 
Analysis, U.S. Department of Education, Union Center Plaza, 830 First 
Street, NE., Washington, DC 20202. Telephone: (202) 377-3231. If you 
use a telecommunications device for the deaf (TDD), you may call the 
Federal Information Relay Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape or computer 
diskette) on request to the contact person listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION: Part F of Title IV of the HEA specifies the 
criteria, data elements, calculations, and tables used in the Federal 
Need Analysis Methodology EFC calculations.
    Section 478 of Part F of the HEA 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. The changes are based, in general, upon 
increases in the Consumer Price Index.
    For the award year 2004-2005 the Secretary is charged with updating 
the income protection allowance, adjusted net worth of a business or 
farm, and the assessment schedules and rates to account for inflation 
that took place between December 2002 and December 2003. However, since 
the Secretary must publish these tables before December 2003, 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 2002. The Secretary estimates that the increase in the 
Consumer Price Index for all Urban Consumers for the period December 
2002 through December 2003 will be 2.2 percent. The updated tables are 
in sections 1, 2, and 4 of this notice.
    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 2004-2005 has been updated in section 3 of this notice.
    Section 477(b)(5) of Part F of the HEA 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-worker compared to a 
one-worker family for meals away from home, apparel and upkeep, 
transportation, and housekeeping services. However, the Secretary has 
determined that the magnitude of the marginal differences in the 
applicable employment expenses adjusted for inflation does not support 
increasing the amount of the Employment Expense Allowance. Furthermore, 
because the statute does not provide for a reduction in this allowance, 
it will remain the lesser of $3,000 or 35% of the earned income for the 
2004-2005 award year.
    The HEA provides for the following annual updates:
    1. Income Protection Allowance. This allowance is the amount of 
living expenses associated with the maintenance of an individual or 
family that may be offset against the family's income. It varies by 
family size. The income protection allowance for the dependent student 
is $2,420. The income protection allowances for parents of dependent 
students and independent students with dependents other than a spouse 
for award year 2004-2005 are:

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                                                                        Number in college
                  Family size                   ----------------------------------------------------------------
                                                      1            2            3            4            5
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2..............................................       13,700       11,350  ...........  ...........  ...........
3..............................................       17,060       14,730       12,380  ...........  ...........
4..............................................       21,070       18,720       16,390       14,050  ...........
5..............................................       24,860       22,510       20,180       17,840       15,510
6..............................................       29,070       26,730       24,400       22,060      19,730
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For each additional family member add $3,280.
For each additional college student subtract $2,330.

    The income protection allowances for independent students and 
independent students without dependents other than a spouse for award 
year 2004-2005 are:

------------------------------------------------------------------------
                                                   Number in
                 Marital status                     college
------------------------------------------------------------------------
Single..........................................           1      $5,490
Married.........................................           2       5,490
Married.........................................           1       8,780
------------------------------------------------------------------------

    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 these 
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, independent students 
without

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dependents other than a spouse, and independent students with 
dependents other than a spouse.
[GRAPHIC][TIFF OMITTED]TN30MY03.006

    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.
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    4. Assessment Schedules and Rates. Two schedules that are subject 
to updates, one for dependent students and one for independent students 
with dependents other than a spouse, are used to determine the expected 
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 a family's financial strength, 
which considers both income and assets.
    The parents' contribution for a dependent student is computed 
according to the following schedule:
[GRAPHIC][TIFF OMITTED]TN30MY03.010

    The contribution for an independent student with dependents other 
than a spouse is computed according to the following schedule:
[GRAPHIC][TIFF OMITTED]TN30MY03.011

    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-worker family compared to a one-worker family for meals 
away from home, apparel and upkeep, transportation, and housekeeping 
services.
    The Secretary is not increasing this allowance for the 2004-2005 
award year for the reasons stated above. 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 $3,000 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 educational expenses. 
There are four tables for State and other taxes, one each for parents 
of dependent students, independent students with dependents other than 
a spouse, dependent students, and independent students without 
dependents other than a spouse.

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Electronic Access to This Document

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Education documents published in the Federal Register, in text or Adobe 
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    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.access.gpo.gov/nara/index.html.

(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; 
William D. Ford Federal Direct Loan Program, 84.268)

    Dated: May 28, 2003.
Theresa S. Shaw,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 03-13680 Filed 5-29-03; 8:45 am]
BILLING CODE 4000-01-P