[Federal Register Volume 70, Number 101 (Thursday, May 26, 2005)]
[Notices]
[Pages 30425-30429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-10584]


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

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 2006-2007 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 2006-2007 under Part F of Title IV of the Higher 
Education Act of 1965, as amended (HEA). 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 Part F 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 (Title IV, HEA 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 Relay Service (FRS) 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.

[[Page 30426]]

    For the award year 2006-2007 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 2004 and December 2005. However, since 
the Secretary must publish these tables before December 2005, 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 2004. The Secretary estimates that the increase in the 
Consumer Price Index for all urban consumers for the period December 
2004 through December 2005 will be 2.3 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 2006-2007 has been updated in section 3 of this notice. 
Section 478(h) 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. The Employment Expense Allowance table for the 
award year 2006-2007 has been updated in section 5 of this notice.
    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 $2,550. The income protection allowances for parents of dependent 
students and independent students with dependents other than a spouse 
for award year 2006-2007 are:

----------------------------------------------------------------------------------------------------------------
                                                                        Number in college
                  Family size                   ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
2..............................................      $14,430      $11,960  ...........  ...........  ...........
3..............................................       17,970       15,520      $13,050  ...........  ...........
4..............................................       22,200       19,730       17,270      $14,800  ...........
5..............................................       26,190       23,720       21,270       18,800      $16,340
6..............................................       30,640       28,170       25,710       23,240       20,790
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $3,460.
    For each additional college student subtract $2,460.
    The income protection allowances for single independent students 
and independent students without dependents other than a spouse for 
award year 2006-2007 are:

------------------------------------------------------------------------
                                                         Number
                    Marital status                         in      IPA
                                                        college
------------------------------------------------------------------------
Single................................................        1   $5,790
Married...............................................        2    5,790
Married...............................................        1    9,260
------------------------------------------------------------------------

    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 $105,000.........................  $0 + 40% of NW.
$105,001 to $310,000...................  $42,000 + 50% of NW over
                                          $105,000.
$310,001 to $515,000...................  $144,500 + 60% of NW over
                                          $310,000.
$515,001 or more.......................  $267,500 + 100% of NW over
                                          $515,000.
------------------------------------------------------------------------

    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 one
                                                  parents     one parent
                                                   then the education
                                                    savings and asset
                                                protection allowance is--
 
-----------------------------------------------
25 or less....................................            0            0
26............................................        2,600        1,200
27............................................        5,200        2,400
28............................................        7,800        3,600
29............................................       10,500        4,800
30............................................       13,100        6,000
31............................................       15,700        7,200
32............................................       18,300        8,400
33............................................       20,900        9,600
34............................................       23,500       10,800
35............................................       26,100       12,000
36............................................       28,700       13,200
37............................................       31,400       14,400
38............................................       34,000       15,600
39............................................       36,600       16,800
40............................................       39,200       18,000

[[Page 30427]]

 
41............................................       40,200       18,400
42............................................       41,200       18,800
43............................................       42,200       19,200
44............................................       43,200       19,700
45............................................       44,300       20,100
46............................................       45,400       20,600
47............................................       46,600       21,000
48............................................       47,700       21,500
49............................................       48,900       22,100
50............................................       50,100       22,600
51............................................       51,600       23,000
52............................................       52,900       23,600
53............................................       54,500       24,100
54............................................       55,800       24,800
55............................................       57,500       25,400
56............................................       58,900       26,000
57............................................       60,600       26,600
58............................................       62,400       27,400
59............................................       64,200       28,000
60............................................       66,100       28,800
61............................................       68,000       29,500
62............................................       70,000       30,300
63............................................       72,300       31,100
64............................................       74,400       32,000
65 or older...................................       76,900       32,900
------------------------------------------------------------------------


------------------------------------------------------------------------
       Independent students without dependents other than a spouse
-------------------------------------------------------------------------
                                                      and they are
        If the age of the student is--         -------------------------
                                                  married       single
                                                   then the education
                                                    savings and asset
                                                protection allowance is--
 
-----------------------------------------------
25 or less....................................            0            0
26............................................        2,600        1,200
27............................................        5,200        2,400
28............................................        7,800        3,600
29............................................       10,500        4,800
30............................................       13,100        6,000
31............................................       15,700        7,200
32............................................       18,300        8,400
33............................................       20,900        9,600
34............................................       23,500       10,800
35............................................       26,100       12,000
36............................................       28,700       13,200
37............................................       31,400       14,400
38............................................       34,000       15,600
39............................................       36,600       16,800
40............................................       39,200       18,000
41............................................       40,200       18,400
42............................................       41,200       18,800
43............................................       42,200       19,200
44............................................       43,200       19,700
45............................................       44,300       20,100
46............................................       45,400       20,600
47............................................       46,600       21,000
48............................................       47,700       21,500
49............................................       48,900       22,100
50............................................       50,100       22,600
51............................................       51,600       23,000
52............................................       52,900       23,600
53............................................       54,500       24,100
54............................................       55,800       24,800
55............................................       57,500       25,400
56............................................       58,900       26,000
57............................................       60,600       26,600
58............................................       62,400       27,400
59............................................       64,200       28,000
60............................................       66,100       28,800
61............................................       68,000       29,500
62............................................       70,000       30,300
63............................................       72,300       31,100
64............................................       74,400       32,000
65 or older...................................       76,900       32,900
------------------------------------------------------------------------


------------------------------------------------------------------------
        Independent students with dependents other than a spouse
-------------------------------------------------------------------------
                                                      and they are
        If the age of the student is--         -------------------------
                                                  married       single
                                                   then the education
                                                    savings and asset
                                                protection allowance is--
 
-----------------------------------------------
25 or less....................................            0            0
26............................................        2,600        1,200
27............................................        5,200        2,400
28............................................        7,800        3,600
29............................................       10,500        4,800
30............................................       13,100        6,000
31............................................       15,700        7,200
32............................................       18,300        8,400
33............................................       20,900        9,600
34............................................       23,500       10,800
35............................................       26,100       12,000
36............................................       28,700       13,200
37............................................       31,400       14,400
38............................................       34,000       15,600
39............................................       36,600       16,800
40............................................       39,200       18,000
41............................................       40,200       18,400
42............................................       41,200       18,800
43............................................       42,200       19,200
44............................................       43,200       19,700
45............................................       44,300       20,100
46............................................       45,400       20,600
47............................................       46,600       21,000
48............................................       47,700       21,500
49............................................       48,900       22,100
50............................................       50,100       22,600
51............................................       51,600       23,000
52............................................       52,900       23,600
53............................................       54,500       24,100
54............................................       55,800       24,800
55............................................       57,500       25,400
56............................................       58,900       26,000
57............................................       60,600       26,600
58............................................       62,400       27,400
59............................................       64,200       28,000
60............................................       66,100       28,800
61............................................       68,000       29,500
62............................................       70,000       30,300
63............................................       72,300       31,100
64............................................       74,400       32,000
65 or older...................................       76,900       32,900
------------------------------------------------------------------------

    4. Assessment Schedules and Rates. Two schedules that are subject 
to updates, one for parents of dependent students and one for 
independent students with dependents other than a spouse, are used to 
determine the EFC toward educational expenses from family financial 
resources. For dependent students, the EFC is derived from an 
assessment of the parents' adjusted available income (AAI). For 
independent students with dependents other than a spouse, the EFC 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 $12,900...................  -22% of AAI.
$12,901 to $16,200...................  $2,838 + 25% of AAI over $12,900.
$16,201 to $19,500...................  $3,663 + 29% of AAI over $16,200.
$19,501 to $22,800...................  $4,620 + 34% of AAI over $19,500.
$22,801 to $26,100...................  $5,742 + 40% of AAI over $22,800.
$26,101 or more......................  $7,062 + 47% of AAI over $26,100.
------------------------------------------------------------------------

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

[[Page 30428]]



------------------------------------------------------------------------
             If AAI is--                   Then the contribution is--
------------------------------------------------------------------------
Less than -$3,409....................  -$750
-$3,409 to $12,900...................  22% of AAI.
$12,901 to $16,200...................  $2,838 +25% of AAI over $12,900.
$16,201 to $19,500...................  $3,663+29% of AAI over $16,200.
$19,501 to $22,800...................  $4,620+34% of AAI over $19,500.
$22,801 to $26,100...................  $5,742+40% of AAI over $22,800.
$26,101 or more......................  $7,062+47% of AAI over $26,100.
------------------------------------------------------------------------

    5. Employment Expense Allowance. This allowance for employment-
related expenses, which is used for the parents of dependent students 
and for married independent students, 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 $3,100 or 35 percent of earned income.
    6. Allowance for State and Other Taxes. The allowance for State and 
other taxes protects a portion of the parents' and students' 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. 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 considered the 
preliminary findings of this analysis as she reviewed the Statistics of 
Income file data.

----------------------------------------------------------------------------------------------------------------
                                                               Parents of dependents and         Dependents and
                                                          independents with dependents other      independents
                                                                     than a spouse                  without
                         State                          --------------------------------------  dependents other
                                                                                                 than a spouse
                                                           Under $15,000       $15,000 & up   ------------------
                                                                                                      All
----------------------------------------------------------------------------------------------------------------
Alabama................................................                  3                  2                  2
Alaska.................................................                  2                  1                  0
Arizona................................................                  4                  3                  2
Arkansas...............................................                  3                  2                  3
California.............................................                  7                  6                  5
Colorado...............................................                  4                  3                  3
Connecticut............................................                  7                  6                  4
Delaware...............................................                  4                  3                  3
District of Columbia...................................                  7                  6                  6
Florida................................................                  2                  1                  0
Georgia................................................                  5                  4                  3
Hawaii.................................................                  4                  3                  4
Idaho..................................................                  5                  4                  3
Illinois...............................................                  5                  4                  2
Indiana................................................                  4                  3                  3
Iowa...................................................                  5                  4                  3
Kansas.................................................                  5                  4                  3
Kentucky...............................................                  5                  4                  4
Louisiana..............................................                  2                  1                  2
Maine..................................................                  6                  5                  4
Maryland...............................................                  7                  6                  5
Massachusetts..........................................                  6                  5                  4
Michigan...............................................                  5                  4                  3
Minnesota..............................................                  6                  5                  4
Mississippi............................................                  3                  2                  2
Missouri...............................................                  4                  3                  3
Montana................................................                  5                  4                  3
Nebraska...............................................                  5                  4                  3
Nevada.................................................                  2                  1                  1
New Hampshire..........................................                  4                  3                  1
New Jersey.............................................                  8                  7                  4
New Mexico.............................................                  4                  3                  3
New York...............................................                  8                  7                  5
North Carolina.........................................                  6                  5                  4
North Dakota...........................................                  2                  1                  1
Ohio...................................................                  6                  5                  4
Oklahoma...............................................                  4                  3                  3
Oregon.................................................                  7                  6                  5

[[Page 30429]]

 
Pennsylvania...........................................                  5                  4                  3
Rhode Island...........................................                  7                  6                  4
South Carolina.........................................                  5                  4                  3
South Dakota...........................................                  1                  0                  0
Tennessee..............................................                  1                  0                  0
Texas..................................................                  2                  1                  0
Utah...................................................                  5                  4                  4
Vermont................................................                  6                  5                  3
Virginia...............................................                  5                  4                  3
Washington.............................................                  2                  1                  0
West Virginia..........................................                  3                  2                  2
Wisconsin..............................................                  7                  6                  4
Wyoming................................................                  1                  0                  0
Other..................................................                  3                  2                  2
----------------------------------------------------------------------------------------------------------------

    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: May 23, 2005.
Theresa S. Shaw,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 05-10584 Filed 5-25-05; 8:45 am]
BILLING CODE 4000-01-P