[Federal Register Volume 76, Number 100 (Tuesday, May 24, 2011)]
[Notices]
[Pages 30139-30142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-12812]


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DEPARTMENT OF EDUCATION


Federal Need Analysis Methodology for the 2012-2013 Award Year

AGENCY: Federal Student Aid, Department of Education.

ACTION: Notice of revision of the Federal Need Analysis Methodology for 
the 2012-2013 award year.

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

    Overview Information:

[CFDA Numbers 84.063; 84.038; 84.033; 84.007; 84.268; 84.379].

Federal Need Analysis Methodology for the 2012-2013 award year; Federal 
Pell Grant, Federal Perkins Loan, Federal Work-Study, Federal 
Supplemental Educational Opportunity Grant, William D. Ford Federal 
Direct Loan, and TEACH Grant Programs.

SUMMARY: The Secretary 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 
2012-2013 for the student financial aid programs authorized under title 
IV of the Higher Education Act of 1965, as amended (HEA). An EFC is the 
amount that 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 
programs include the Federal Pell Grant, Federal Perkins Loan, Federal 
Work-Study, Federal Supplemental Educational Opportunity Grant, William 
D. Ford Federal Direct Loan, and the Teach Grant Programs (Title IV, 
HEA Programs).

FOR FURTHER INFORMATION CONTACT: Ms. Marya Dennis, Management and 
Program Analyst, U.S. Department of Education, room 63G2, Union Center 
Plaza, 830 First Street, NE., Washington, DC 20202-5454. Telephone: 
(202) 377-3385.
    If you use a telecommunications device for the deaf (TDD), call the 
Federal Relay Service (FRS), toll free, at 1-800-877-8339.
    Individuals with disabilities can obtain this document in an 
accessible format (e.g., braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

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 title IV 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 for general price inflation. The changes are based, in 
general, upon increases in the Consumer Price Index.
    For award year 2012-2013, the Secretary is charged with updating 
the income protection allowance for parents of dependent students, 
adjusted net worth of a business or farm, and the assessment schedules 
and rates to account for inflation that took place between December 
2010 and December 2011. However, because the Secretary must publish 
these tables before December 2011, 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 (CPI-U) for 2011. The 
Secretary must also account for any misestimation of inflation for the 
prior year. In developing the table values for the 2011-2012 award 
year, the Secretary assumed a 1.2 percent increase in the CPI-U for the 
period December 2009 through December 2010. Actual inflation for this 
time period was 1.4 percent. The Secretary estimates that the increase 
in the CPI-U for the period December 2010 through December 2011 will be 
0.8 percent. Additionally, section 601 of the College Cost Reduction 
and Access Act of 2007 (CCRAA, Pub. L. 110-84) amended sections 475 
through 478 of the HEA by updating the procedures for determining the 
income protection allowance for dependent students, as well as the 
income protection allowance tables for both independent students with 
dependents other than a spouse, and independent students without 
dependents other than a spouse. As amended by the CCRAA, the HEA now 
includes new 2012-2013 award year values for these income protection 
allowances. The updated tables are in sections 1, 2, and 4 of this 
notice.
    The Secretary must also revise, for each award year, the education 
savings and asset protection allowances as provided for in section 
478(d) of the HEA. The Education Savings and Asset Protection Allowance 
table for award year 2012-2013 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, adjusted for 
inflation. This calculation is based upon increases in the Bureau of 
Labor Statistics budget of the marginal costs for a two-worker family 
compared to a one-worker family for food away from home, apparel, 
transportation, and household furnishings and operations. The 
Employment Expense Allowance table for award year 2012-2013 has been 
updated in section 5 of this notice.
    The HEA provides for the following annual updates:
    1. Income Protection Allowance (IPA). 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 IPA for the dependent student is $6,000. The IPAs for 
parents of dependent students for award year 2012-2013 are:
    The IPAs for independent students with dependents other than a 
spouse for award year 2012-13 are:

[[Page 30140]]



                                          Parents of Dependent Students
----------------------------------------------------------------------------------------------------------------
                                                                           Number in college
                     Family size                     -----------------------------------------------------------
                                                           1           2           3           4           5
----------------------------------------------------------------------------------------------------------------
2...................................................     $16,390     $13,590  ..........  ..........  ..........
3...................................................      20,410      17,620     $14,820  ..........  ..........
4...................................................      25,210      22,400      19,620     $16,810  ..........
5...................................................      29,740      26,940      24,150      21,340     $18,560
6...................................................      34,790      31,990      29,200      26,390      23,600
----------------------------------------------------------------------------------------------------------------
For each additional family member add $3,930.
For each additional college student subtract $2,790.


                            Independent Students With Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                           Number in college
                     Family size                     -----------------------------------------------------------
                                                           1           2           3           4           5
----------------------------------------------------------------------------------------------------------------
2...................................................     $23,630     $19,590  ..........  ..........  ..........
3...................................................      29,420      25,400     $21,360  ..........  ..........
4...................................................      36,330      32,300      28,280     $24,230  ..........
5...................................................      42,870      38,820      34,800      30,770     $26,750
6...................................................      50,130      46,100      42,090      38,030      34,020
----------------------------------------------------------------------------------------------------------------
For each additional family member add $5,660.
For each additional college student subtract $4,020.

    The IPAs for single independent students and independent students 
without dependents other than a spouse for award year 2012-13 are:

 
------------------------------------------------------------------------
                                                   Number in
                 Marital status                     college       IPA
------------------------------------------------------------------------
Single..........................................           1      $9,330
Married.........................................           2       9,330
Married.........................................           1      14,960
------------------------------------------------------------------------

    2. Adjusted Net Worth (NW) of a Business or Farm. A portion of the 
full net worth (assets less debts) of a business or farm is excluded 
from the calculation of an expected contribution because--(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 (NW) of a business or     Then the Adjusted Net Worth
                 farm is--                              is--
------------------------------------------------------------------------
Less than $1..............................  $0
$1 to $115,000............................  $0 + 40% of NW
$115,00 to $350,000.......................  $46,000 + 50% of NW over
                                             $115,000
$350,001 to $585,000......................  $163,500 + 60% of NW over
                                             $350,000
$585,001 or more..........................  $304,500 + 100% of NW over
                                             $585,000
------------------------------------------------------------------------

    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 they are
         If the age of the older parent is         ---------------------
                                                     Married     Single
------------------------------------------------------------------------
                                                     Then the education
                                                      savings and asset
                                                    protection allowance
                                                            is--
------------------------------------------------------------------------
25 or less........................................         $0         $0
26................................................      2,400        800
27................................................      4,900      1,700
28................................................      7,300      2,500
29................................................      9,700      3,400
30................................................     12,200      4,200
31................................................     14,600      5,100
32................................................     17,000      5,900
33................................................     19,500      6,800
34................................................     21,900      7,600
35................................................     24,300      8,500
36................................................     26,800      9,300
37................................................     29,200     10,200
38................................................     31,600     11,000
39................................................     34,100     11,900
40................................................     36,500     12,700
41................................................     37,500     13,000
42................................................     38,400     13,300
43................................................     39,300     13,600
44................................................     40,300     13,900
45................................................     41,300     14,200
46................................................     42,300     14,500
47................................................     43,400     14,900
48................................................     44,400     15,200
49................................................     45,500     15,600
50................................................     46,600     16,000
51................................................     48,000     16,300
52................................................     49,200     16,700
53................................................     50,700     17,100
54................................................     51,900     17,500
55................................................     53,400     17,900
56................................................     54,700     18,500
57................................................     56,300     18,900
58................................................     58,000     19,400
59................................................     59,700     19,900
60................................................     61,400     20,400
61................................................     63,100     20,900
62................................................     65,000     21,500
63................................................     66,800     22,100
64................................................     68,700     22,700
65 or older.......................................     71,000     23,300
------------------------------------------------------------------------


[[Page 30141]]


       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................................................      2,400        800
27................................................      4,900      1,700
28................................................      7,300      2,500
29................................................      9,700      3,400
30................................................     12,200      4,200
31................................................     14,600      5,100
32................................................     17,000      5,900
33................................................     19,500      6,800
34................................................     21,900      7,600
35................................................     24,300      8,500
36................................................     26,800      9,300
37................................................     29,200     10,200
38................................................     31,600     11,000
39................................................     34,100     11,900
40................................................     36,500     12,700
41................................................     37,500     13,000
42................................................     38,400     13,300
43................................................     39,300     13,600
44................................................     40,300     13,900
45................................................     41,300     14,200
46................................................     42,300     14,500
47................................................     43,400     14,900
48................................................     44,400     15,200
49................................................     45,500     15,600
50................................................     46,600     16,000
51................................................     48,000     16,300
52................................................     49,200     16,700
53................................................     50,700     17,100
54................................................     51,900     17,500
55................................................     53,400     17,900
56................................................     54,700     18,500
57................................................     56,300     18,900
58................................................     58,000     19,400
59................................................     59,700     19,900
60................................................     61,400     20,400
61................................................     63,100     20,900
62................................................     65,000     21,500
63................................................     66,800     22,100
64................................................     68,700     22,700
65 or older.......................................     71,000     23,300
------------------------------------------------------------------------


        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................................................      2,400        800
27................................................      4,900      1,700
28................................................      7,300      2,500
29................................................      9,700      3,400
30................................................     12,200      4,200
31................................................     14,600      5,100
32................................................     17,000      5,900
33................................................     19,500      6,800
34................................................     21,900      7,600
35................................................     24,300      8,500
36................................................     26,800      9,300
37................................................     29,200     10,200
38................................................     31,600     11,000
39................................................     34,100     11,900
40................................................     36,500     12,700
41................................................     37,500     13,000
42................................................     38,400     13,300
43................................................     39,300     13,600
44................................................     40,300     13,900
45................................................     41,300     14,200
46................................................     42,300     14,500
47................................................     43,400     14,900
48................................................     44,400     15,200
49................................................     45,500     15,600
50................................................     46,600     16,000
51................................................     48,000     16,300
52................................................     49,200     16,700
53................................................     50,700     17,100
54................................................     51,900     17,500
55................................................     53,400     17,900
56................................................     54,700     18,500
57................................................     56,300     18,900
58................................................     58,000     19,400
59................................................     59,700     19,900
60................................................     61,400     20,400
61................................................     63,100     20,900
62................................................     65,000     21,500
63................................................     66,800     22,100
64................................................     68,700     22,700
65 or older.......................................     71,000     23,300
------------------------------------------------------------------------

    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.
    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 $14,600.......................  22% of AAI
$14,601 to $18,400........................  $3,212 + 25% of AAI over
                                             $14,600
$18,401 to $22,100........................  $4,162 + 29% of AAI over
                                             $18,400
$22,101 to $25,900........................  $5,235 + 34% of AAI over
                                             $22,100
$25,901 to $29,600........................  $6,527 + 40% of AAI over
                                             $25,900
$29,601 or more...........................  $8,007 + 47% of AAI over
                                             $29,600
------------------------------------------------------------------------

    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 $14,600.......................  22% of AAI
$14,601 to $18,400........................  $3,212 + 25% of AAI over
                                             $14,600
$18,401 to $22,100........................  $4,162 + 29% of AAI over
                                             $18,400
$22,101 to $25,900........................  $5,235 + 34% of AAI over
                                             $22,100
$25,901 to $29,600........................  $6,527 + 40% of AAI over
                                             $25,900
$29,601 or more...........................  $8,007 + 47% of AAI over
                                             $29,600
------------------------------------------------------------------------

    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 food away from home, apparel, 
transportation, and household furnishings and operations.
    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 $3,600 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 categories 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 the HEA 
directs the Secretary to update the tables for State and other taxes 
after reviewing the Statistics of Income file data maintained by the 
Internal Revenue Service.

[[Page 30142]]



----------------------------------------------------------------------------------------------------------------
                                                                 Parents of dependents and       Dependents and
                                                            independents with dependents other    independents
                                                                       than a spouse                 without
                           State                           ------------------------------------ dependents other
                                                                  Percent of total income         than a spouse
                                                           -----------------------------------------------------
                                                              Under $15,000     $15,000 & up         All (%)
----------------------------------------------------------------------------------------------------------------
Alabama...................................................                3                 2                 2
Alaska....................................................                2                 1                 0
Arizona...................................................                5                 4                 3
Arkansas..................................................                4                 3                 3
California................................................                8                 7                 5
Colorado..................................................                5                 4                 3
Connecticut...............................................                8                 7                 5
Delaware..................................................                5                 4                 4
District of Columbia......................................                8                 7                 6
Florida...................................................                4                 3                 1
Georgia...................................................                6                 5                 4
Hawaii....................................................                5                 4                 4
Idaho.....................................................                5                 4                 4
Illinois..................................................                5                 4                 2
Indiana...................................................                4                 3                 3
Iowa......................................................                5                 4                 3
Kansas....................................................                5                 4                 3
Kentucky..................................................                6                 5                 4
Louisiana.................................................                4                 3                 2
Maine.....................................................                6                 5                 4
Maryland..................................................                9                 8                 6
Massachusetts.............................................                7                 6                 4
Michigan..................................................                5                 4                 3
Minnesota.................................................                7                 6                 5
Mississippi...............................................                3                 2                 2
Missouri..................................................                5                 4                 3
Montana...................................................                5                 4                 3
Nebraska..................................................                5                 4                 3
Nevada....................................................                3                 2                 1
New Hampshire.............................................                5                 4                 1
New Jersey................................................                9                 8                 5
New Mexico................................................                3                 2                 2
New York..................................................               10                 9                 7
North Carolina............................................                6                 5                 4
North Dakota..............................................                3                 2                 1
Ohio......................................................                6                 5                 4
Oklahoma..................................................                4                 3                 3
Oregon....................................................                8                 7                 5
Pennsylvania..............................................                6                 5                 3
Rhode Island..............................................                7                 6                 4
South Carolina............................................                5                 4                 4
South Dakota..............................................                2                 1                 1
Tennessee.................................................                2                 1                 1
Texas.....................................................                3                 2                 1
Utah......................................................                5                 4                 4
Vermont...................................................                6                 5                 3
Virginia..................................................                6                 5                 4
Washington................................................                4                 3                 1
West Virginia.............................................                3                 2                 3
Wisconsin.................................................                8                 7                 4
Wyoming...................................................                2                 1                 1
Other.....................................................                3                 2                 3
----------------------------------------------------------------------------------------------------------------

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(Catalog of Federal Domestic Assistance Numbers: 84.063 Federal Pell 
Grant Program; 84.038 Federal Perkins Loan Program; 84.033 Federal 
Work-Study Programs; 84.007 Federal Supplemental Educational 
Opportunity Grant Program; 84.268 William D. Ford Federal Direct 
Loan Program; 84.379 TEACH Grant Program)

    Program Authority:  20 U.S.C. 1087rr.

    Dated: May 19, 2011.
James Runcie,
Deputy Chief Operating Officer, Federal Student Aid.
[FR Doc. 2011-12812 Filed 5-23-11; 8:45 am]
BILLING CODE 4000-01-P