[Federal Register Volume 69, Number 116 (Thursday, June 17, 2004)]
[Notices]
[Pages 33890-33895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13722]


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

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 2005-2006 award year.

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

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 2005-2006 under Part F of Title IV of the Higher 
Education Act of 1965 (HEA), 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. Marya Dennis, Management and 
Program Analyst, U.S. Department of Education, Union Center Plaza, 830 
First Street, NE., Washington, DC 20202. Telephone: (202) 377-3385. 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,

[[Page 33891]]

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 2005-2006 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 2003 and December 2004. However, since 
the Secretary must publish these tables before December 2004, 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 2003. The Secretary estimates that the increase in the 
Consumer Price Index for all Urban Consumers for the period December 
2003 through December 2004 will be 1.5 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 2005-2006 has been updated in section 3 of this notice.
    Section 478(h) 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 earned income for the 
2005-2006 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 $2,440. The income protection allowances for parents of dependent 
students and independent students with dependents other than a spouse 
for award year 2005-2006 are:

----------------------------------------------------------------------------------------------------------------
                                                                             Number in college
                       Family size                        ------------------------------------------------------
                                                               1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
2........................................................    $13,870    $11,490
3........................................................     17,270     14,910    $12,530
4........................................................     21,330     18,950     16,590    $14,220
5........................................................     25,160     22,790     20,430     18,060    $15,700
6........................................................     29,430     27,060     24,700     22,330     19,970
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $3,320.
    For each additional college student subtract $2,360.
    The income protection allowances for single independent students 
and independent students without dependents other than a spouse for 
award year 2005-2006 are:

------------------------------------------------------------------------
                                                     Number in
                  Marital status                      college      IPA
------------------------------------------------------------------------
Single...........................................            1    $5,560
Married..........................................            2     5,560
Married..........................................            1     8,890
------------------------------------------------------------------------

    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 without dependents other 
than a spouse, and independent students with dependents other than a 
spouse.

------------------------------------------------------------------------
 If the net worth of a business or farm  Then the adjusted net worth is--
                  is--
------------------------------------------------------------------------
Less than $1...........................  $0
$1 to $100,000.........................  $0 + 40% of NW
$100,001 to $295,000...................  $40,000 + 50% of NW over
                                          $100,000
$295,001 to $495,000...................  $137,500 + 60% of NW over
                                          $295,000
$495,001 or more.......................  $257,500 + 100% of NW over
                                          $495,000
------------------------------------------------------------------------

    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.
BILLING CODE 4000-01-P

[[Page 33892]]

[GRAPHIC] [TIFF OMITTED] TN17JN04.000


[[Page 33893]]


[GRAPHIC] [TIFF OMITTED] TN17JN04.001


[[Page 33894]]


[GRAPHIC] [TIFF OMITTED] TN17JN04.002

BILLING CODE 4000-01-P
    4. Assessment Schedules and Rates. Two schedules that are subject 
to updates, one for parents of dependent students and one for 
independent

[[Page 33895]]

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:

------------------------------------------------------------------------
              If AAI is--                   Then the contribution is--
------------------------------------------------------------------------
Less than-$3,409.......................  -$750
($3,409) to $12,400....................  22% of AAI
$12,401 to $15,600.....................  $2,728 + 25% of AAI over
                                          $12,400
$15,601 to $18,700.....................  $3,528 + 29% of AAI over
                                          $15,600
$18,701 to $21,900.....................  $4,427 + 34% of AAI over
                                          $18,700
$21,901 to $25,000.....................  $5,515 + 40% of AAI over
                                          $21,900
$25,001 or more........................  $6,755 + 47% of AAI over
                                          $25,000
------------------------------------------------------------------------

    The contribution for an independent student with dependents other 
than a spouse is computed according to the following schedule:

------------------------------------------------------------------------
              If AAI is--                   Then the contribution is--
------------------------------------------------------------------------
Less than -$3,409......................  -$750
($3,409) to $12,400....................  22% of AAI
$12,401 to $15,600.....................  $2,728 + 25% of AAI over
                                          $12,400
$15,601 to $18,700.....................  $3,528 + 29% of AAI over
                                          $15,600
$18,701 to $21,900.....................  $4,427 + 34% of AAI over
                                          $18,700
$21,901 to $25,000.....................  $5,515 + 40% of AAI over
                                          $21,900
$25,001 or more........................  $6,755 + 47% of AAI over
                                          $25,000
------------------------------------------------------------------------

    5. Employment Expense Allowance. This allowance for employment-
related expenses, which is used for the parents of dependent students 
and for married independent students, 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 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.
    The Secretary is delaying publication of these four tables in order 
to complete a thorough review of the available information from the 
Statistics of Income file data maintained by the Internal Revenue 
Service. Section 478(g) of Part F of the HEA directs the Secretary to 
update the tables for State and other taxes after reviewing the 
Statistics of Income file data. Also, a provision in the Consolidated 
Appropriations Act, 2004 (Pub. L. 108-199), directs the Advisory 
Committee on Student Financial Assistance to examine the efficiency, 
effectiveness and fairness of the current procedures to update formula 
offsets and allowances. The Secretary will consider the preliminary 
findings of this analysis as he reviews the Statistics of Income file 
data.

Electronic Access to This Document

    You may view this document, as well as all other documents of this 
Department published in the Federal Register, in text or Adobe Portable 
Document Format (PDF) on the Internet at the following site: http://www.ed.gov/news/fedregister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.

    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.gpoaccess.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; 
84.268 William D. Ford Federal Direct Loan Program)

    Dated: June 14, 2004.
Theresa S. Shaw,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 04-13722 Filed 6-16-04; 8:45 am]
BILLING CODE 4000-01-C