[Federal Register Volume 77, Number 103 (Tuesday, May 29, 2012)]
[Notices]
[Pages 31600-31605]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-12939]


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DEPARTMENT OF EDUCATION


Federal Need Analysis Methodology for the 2013-2014 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

AGENCY: Federal Student Aid, Department of Education.

ACTION: Notice.

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

    Overview Information: Catalog of Federal Domestic Assistance (CFDA) 
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.
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 
2013-2014 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) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

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 (CPI).
    For award year 2013-2014, 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 
2011 and December 2012. However, because the Secretary must publish 
these tables before December 2012, 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 2012. The 
Secretary must also account for any misestimation of inflation for the 
prior year. In developing the table values for the 2012-13 award year, 
the Secretary assumed a 0.8 percent increase in the CPI-U for the 
period December 2010 through December 2011. Actual inflation for this 
time period was 2.9 percent. The Secretary estimates that the increase 
in the CPI-U for the period December 2011 through December 2012 will be 
2.2 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 2013-2014 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 2013-2014 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

[[Page 31601]]

table for award year 2013-2014 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 $6,130. The IPAs for 
parents of dependent students for award year 2013-2014 are:

                                          Parents of Dependent Students
----------------------------------------------------------------------------------------------------------------
                                                                        Number in college
                  Family size                   ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
2..............................................      $17,100      $14,170  ...........  ...........  ...........
3..............................................       21,290       18,380       15,450  ...........  ...........
4..............................................       26,290       23,370       20,460       17,530  ...........
5..............................................       31,020       28,100       25,190       22,260       19,350
6..............................................       36,290       33,360       30,450       27,530       24,620
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $4,100.
    For each additional college student subtract $2,910.
    The IPAs for independent students with dependents other than a 
spouse for award year 2013-14 are:

                            Independent Students With Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                        Number in college
                  Family size                   ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
2..............................................      $24,150      $20,020  ...........  ...........  ...........
3..............................................       30,070       25,960       21,830  ...........  ...........
4..............................................       37,130       33,010       28,900       24,760  ...........
5..............................................       43,810       39,670       35,570       31,450       27,340
6..............................................       51,230       47,110       43,020       38,870       34,770
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $5,780.
    For each additional college student subtract $4,110.
    The IPAs for single independent students and independent students 
without dependents other than a spouse for award year 2013-14 are:

------------------------------------------------------------------------
                                             Number in
             Marital status                   college           IPA
------------------------------------------------------------------------
Single..................................               1          $9,540
Married.................................               2           9,540
Married.................................               1          15,290
------------------------------------------------------------------------

    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 is--
               farm is--
------------------------------------------------------------------------
Less than $1...........................  $0.
$1 to $120,000.........................  0 + 40% of NW.
$120,001 to $365,000...................  48,000 + 50% of NW over
                                          $120,000.
$365,001 to $610,000...................  170,500 + 60% of NW over
                                          $365,000.
$610,001 or more.......................  317,500 + 100% of NW over
                                          $610,000.
------------------------------------------------------------------------

    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.

[[Page 31602]]



                                          Parents of 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............................................................                    2,100                      600
27............................................................                    4,300                    1,300
28............................................................                    6,400                    1,900
29............................................................                    8,600                    2,500
30............................................................                   10,700                    3,200
31............................................................                   12,800                    3,800
32............................................................                   15,000                    4,400
33............................................................                   17,100                    5,100
34............................................................                   19,300                    5,700
35............................................................                   21,400                    6,300
36............................................................                   23,500                    7,000
37............................................................                   25,700                    7,600
38............................................................                   27,800                    8,200
39............................................................                   30,000                    8,900
40............................................................                   32,100                    9,500
41............................................................                   32,900                    9,700
42............................................................                   33,700                    9,900
43............................................................                   34,500                   10,100
44............................................................                   35,400                   10,300
45............................................................                   36,200                   10,600
46............................................................                   37,100                   10,800
47............................................................                   38,000                   11,100
48............................................................                   39,000                   11,300
49............................................................                   39,900                   11,600
50............................................................                   40,900                   11,900
51............................................................                   42,100                   12,200
52............................................................                   43,100                   12,500
53............................................................                   44,200                   12,800
54............................................................                   45,500                   13,100
55............................................................                   46,800                   13,400
56............................................................                   47,900                   13,700
57............................................................                   49,300                   14,100
58............................................................                   50,800                   14,400
59............................................................                   52,200                   14,800
60............................................................                   53,500                   15,100
61............................................................                   55,000                   15,600
62............................................................                   56,900                   16,000
63............................................................                   58,500                   16,400
64............................................................                   60,100                   16,900
65 or older...................................................                   61,800                   17,400
----------------------------------------------------------------------------------------------------------------


                           Independent Students Without Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                                  And they are
              If the age of the older student is               -------------------------------------------------
                                                                        Married                   Single
----------------------------------------------------------------------------------------------------------------
                                                                 Then the education savings and asset protection
                                                                                 allowance is--
----------------------------------------------------------------------------------------------------------------
25 or less....................................................                        0                        0
26............................................................                    2,100                      600
27............................................................                    4,300                    1,300
28............................................................                    6,400                    1,900
29............................................................                    8,600                    2,500
30............................................................                   10,700                    3,200
31............................................................                   12,800                    3,800
32............................................................                   15,000                    4,400
33............................................................                   17,100                    5,100
34............................................................                   19,300                    5,700
35............................................................                   21,400                    6,300
36............................................................                   23,500                    7,000
37............................................................                   25,700                    7,600
38............................................................                   27,800                    8,200
39............................................................                   30,000                    8,900
40............................................................                   32,100                    9,500
41............................................................                   32,900                    9,700
42............................................................                   33,700                    9,900
43............................................................                   34,500                   10,100
44............................................................                   35,400                   10,300

[[Page 31603]]

 
45............................................................                   36,200                   10,600
46............................................................                   37,100                   10,800
47............................................................                   38,000                   11,100
48............................................................                   39,000                   11,300
49............................................................                   39,900                   11,600
50............................................................                   40,900                   11,900
51............................................................                   42,100                   12,200
52............................................................                   43,100                   12,500
53............................................................                   44,200                   12,800
54............................................................                   45,500                   13,100
55............................................................                   46,800                   13,400
56............................................................                   47,900                   13,700
57............................................................                   49,300                   14,100
58............................................................                   50,800                   14,400
59............................................................                   52,200                   14,800
60............................................................                   53,500                   15,100
61............................................................                   55,000                   15,600
62............................................................                   56,900                   16,000
63............................................................                   58,500                   16,400
64............................................................                   60,100                   16,900
65 or older...................................................                   61,800                   17,400
----------------------------------------------------------------------------------------------------------------


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

[[Page 31604]]

 
65 or older...................................................                   61,800                   17,400
----------------------------------------------------------------------------------------------------------------

    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 $15,300....................  22% of AAI
$15,301 to $19,200.....................  $3,366 + 25% of AAI over
                                          $15,300
$19,201 to $23,100.....................  $4,341 + 29% of AAI over
                                          $19,200
$23,101 to $27,000.....................  $5,472 + 34% of AAI over
                                          $23,100
$27,001 to $30,900.....................  $6,798 + 40% of AAI over
                                          $27,000
$30,901 or more........................  $8,358 + 47% of AAI over
                                          $30,900
------------------------------------------------------------------------

    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 $15,300....................  22% of AAI
$15,301 to $19,200.....................  $3,366 + 25% of AAI over
                                          $15,300
$19,201 to $23,100.....................  $4,341 + 29% of AAI over
                                          $19,200
$23,101 to $27,000.....................  $5,472 + 34% of AAI over
                                          $23,100
$27,001 to $30,900.....................  $6,798 + 40% of AAI over
                                          $27,000
$30,901 or more........................  $8,358 + 47% of AAI over
                                          $30,900
------------------------------------------------------------------------

    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 $3,900 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.

----------------------------------------------------------------------------------------------------------------
                                                                 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...................................................                 4                 3                 2
Arkansas..................................................                 4                 3                 3
California................................................                 8                 7                 5

[[Page 31605]]

 
Colorado..................................................                 5                 4                 3
Connecticut...............................................                 8                 7                 5
Delaware..................................................                 5                 4                 3
District of Columbia......................................                 7                 6                 5
Florida...................................................                 3                 2                 1
Georgia...................................................                 6                 5                 3
Hawaii....................................................                 4                 3                 3
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.................................................                 3                 2                 2
Maine.....................................................                 6                 5                 4
Maryland..................................................                 8                 7                 6
Massachusetts.............................................                 7                 6                 4
Michigan..................................................                 5                 4                 3
Minnesota.................................................                 6                 5                 4
Mississippi...............................................                 3                 2                 3
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                 4
New Mexico................................................                 3                 2                 2
New York..................................................                 9                 8                 6
North Carolina............................................                 6                 5                 4
North Dakota..............................................                 3                 2                 1
Ohio......................................................                 6                 5                 3
Oklahoma..................................................                 4                 3                 3
Oregon....................................................                 7                 6                 5
Pennsylvania..............................................                 5                 4                 3
Rhode Island..............................................                 7                 6                 4
South Carolina............................................                 5                 4                 3
South Dakota..............................................                 2                 1                 1
Tennessee.................................................                 2                 1                 1
Texas.....................................................                 3                 2                 1
Utah......................................................                 5                 4                 3
Vermont...................................................                 6                 5                 3
Virginia..................................................                 6                 5                 4
Washington................................................                 4                 3                 1
West Virginia.............................................                 3                 2                 2
Wisconsin.................................................                 7                 6                 4
Wyoming...................................................                 2                 1                 1
Other.....................................................                 2                 1                 2
----------------------------------------------------------------------------------------------------------------

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

    Dated: May 23, 2012.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 2012-12939 Filed 5-25-12; 8:45 am]
BILLING CODE 4000-01-P