[Federal Register Volume 78, Number 97 (Monday, May 20, 2013)]
[Notices]
[Pages 29353-29359]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11982]


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DEPARTMENT OF EDUCATION


Federal Need Analysis Methodology for the 2014-15 Award Year--
Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, Federal 
Supplemental Educational Opportunity Grant, William D. Ford Federal 
Direct Loan, Iraq and Afghanistan Service Grant and TEACH Grant 
Programs

AGENCY: Federal Student Aid, Department of Education.

ACTION: Notice.

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

    Catalog of Federal Domestic Assistance (CFDA) Numbers: 84.063; 
84.038; 84.033; 84.007; 84.268; 84.408; 84.379.
SUMMARY: The Secretary announces the annual updates to the tables used 
in the statutory Federal Need Analysis Methodology that determines a 
student's expected family contribution (EFC) for award year 2014-2015 
for these student financial aid programs. The intent of this notice is 
to alert the financial aid community and the broader public, to these 
required annual updates used in the determination of student aid 
eligibility.

FOR FURTHER INFORMATION CONTACT: Marya Dennis, 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 Higher Education 
Act of 1965, as amended (HEA), specifies the criteria, data elements, 
calculations, and tables the Department uses in the Federal Need 
Analysis Methodology to determine the EFC.
    Section 478 of part F of title IV of the HEA requires the Secretary 
to annually update four tables for general price inflation--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. The changes are based, in general, upon increases 
in the Consumer Price Index (CPI).
    For award year 2014-2015, the Secretary is charged with updating 
the income protection allowance for parents of dependent students, 
adjusted net worth of a business or farm, the Education Savings and 
Asset Protection Allowance, and the assessment schedules and rates to 
account for inflation that took place between

[[Page 29354]]

December 2012 and December 2013. However, because the Secretary must 
publish these tables before December 2013, the increases in the tables 
must be based on a percentage equal to the estimated percentage 
increase in the Consumer Price Index for All Urban Consumers (CPI-U) 
for 2013. The Secretary must also account for any misestimation of 
inflation for the immediately preceding year.
    In developing the table values for the 2013-14 award year, the 
Secretary assumed a 2.2 percent increase in the CPI-U for the period 
December 2011 through December 2012. Actual inflation for this time 
period was 2.1 percent. The Secretary estimates that the increase in 
the CPI-U for the period December 2012 through December 2013 will be 
2.5 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 affecting the income protection allowance (IPA) tables for the 
2009-2010 through 2012-2013 award years and indexed the annual update 
by a percentage of the estimated Consumer Price Index thereafter. These 
changes to the IPA impact dependent students, as well as independent 
students with dependents other than a spouse and independent students 
without dependents other than a spouse. As amended by the CCRAA, this 
notice includes the new 2014-2015 award year values for the IPA tables. 
The updated tables are in sections 1, 2, and 4 of this notice.
    As provided for in section 478(d) of the HEA, for each award year 
the Secretary must also revise the education savings and asset 
protection allowances. The Education Savings and Asset Protection 
Allowance table for award year 2014-2015 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 on increases in the Bureau of 
Labor Statistics budget of the marginal costs for a two-worker family 
compared to a one-worker family. The items covered by this calculation 
are: food away from home, apparel, transportation, and household 
furnishings, and operations. The Employment Expense Allowance table for 
award year 2014-2015 has been updated in section 5 of this notice.
    The HEA requires 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. The allowance 
varies by family size. The IPA for the dependent student is $6,260. The 
IPAs for parents of dependent students for award year 2014-2015 are as 
follows:

                                          Parents of Dependent Students
----------------------------------------------------------------------------------------------------------------
                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
2...............................         $17,440         $14,460  ..............  ..............  ..............
3...............................          21,720          18,750         $15,770  ..............  ..............
4...............................          26,830          23,840          20,870         $17,890  ..............
5...............................          31,650          28,670          25,700          22,710         $19,750
6...............................          37,020          34,040          31,070          28,090          25,120
----------------------------------------------------------------------------------------------------------------

For each additional family member add $4,180. For each additional 
college student subtract $2,970.
    The IPAs for independent students with dependents other than a 
spouse for award year 2014-2015 are as follows:

                            Independent Students With Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
2...............................         $24,650         $20,430  ..............  ..............  ..............
3...............................          30,690          26,490         $22,280  ..............  ..............
4...............................          37,890          33,690          29,500         $25,270  ..............
5...............................          44,710          40,490          36,300          32,090         $27,900
6...............................          52,290          48,080          43,900          39,670          35,480
----------------------------------------------------------------------------------------------------------------

For each additional family member add $5,900.
    For each additional college student subtract $4,190.

    The IPAs for single independent students and independent students 
without dependents other than a spouse for award year 2014-2015 are as 
follows:

------------------------------------------------------------------------
                                                    Number in
                  Marital status                     college      IPA
------------------------------------------------------------------------
Single............................................          1     $9,730
Married...........................................          2      9,730
Married...........................................          1     15,600
------------------------------------------------------------------------

    2. Adjusted Net Worth (NW) of a Business or Farm. A portion of the 
full NW (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.

[[Page 29355]]



------------------------------------------------------------------------
   If the NW of a business or farm is        Then the adjusted NW is
------------------------------------------------------------------------
Less than $1...........................  $0.
$1 To $125,000.........................  $0 + 40% of NW.
$125,001 To $375,000...................  $50,000 + 50% of NW over
                                          $125,000.
$375,001 To $620,000...................  $175,000 + 60% of NW over
                                          $375,000.
$620,001 or more.......................  $322,000 + 100% of NW over
                                          $620,000.
------------------------------------------------------------------------

    3. Education Savings and Asset Protection Allowance. This allowance 
protects a portion of NW (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.

                      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......................................           1,800             400
27......................................           3,600             800
28......................................           5,500           1,300
29......................................           7,300           1,700
30......................................           9,100           2,100
31......................................          10,900           2,500
32......................................          12,700           2,900
33......................................          14,600           3,400
34......................................          16,400           3,800
35......................................          18,200           4,200
36......................................          20,000           4,600
37......................................          21,800           5,000
38......................................          23,700           5,500
39......................................          25,500           5,900
40......................................          27,300           6,300
41......................................          27,900           6,500
42......................................          28,500           6,600
43......................................          29,200           6,800
44......................................          30,000           6,900
45......................................          30,700           7,100
46......................................          31,500           7,200
47......................................          32,200           7,400
48......................................          33,000           7,600
49......................................          33,800           7,800
50......................................          34,600           8,000
51......................................          35,700           8,100
52......................................          36,500           8,300
53......................................          37,600           8,500
54......................................          38,500           8,700
55......................................          39,700           9,000
56......................................          40,600           9,200
57......................................          41,800           9,400
58......................................          43,000           9,700
59......................................          44,200           9,900
60......................................          45,500          10,200
61......................................          46,800          10,400
62......................................          48,100          10,700
63......................................          49,500          11,000
64......................................          50,900          11,300
65 or older.............................          52,600          11,600
------------------------------------------------------------------------


[[Page 29356]]


        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......................................           1,800             400
27......................................           3,600             800
28......................................           5,500           1,300
29......................................           7,300           1,700
30......................................           9,100           2,100
31......................................          10,900           2,500
32......................................          12,700           2,900
33......................................          14,600           3,400
34......................................          16,400           3,800
35......................................          18,200           4,200
36......................................          20,000           4,600
37......................................          21,800           5,000
38......................................          23,700           5,500
39......................................          25,500           5,900
40......................................          27,300           6,300
41......................................          27,900           6,500
42......................................          28,500           6,600
43......................................          29,200           6,800
44......................................          30,000           6,900
45......................................          30,700           7,100
46......................................          31,500           7,200
47......................................          32,200           7,400
48......................................          33,000           7,600
49......................................          33,800           7,800
50......................................          34,600           8,000
51......................................          35,700           8,100
52......................................          36,500           8,300
53......................................          37,600           8,500
54......................................          38,500           8,700
55......................................          39,700           9,000
56......................................          40,600           9,200
57......................................          41,800           9,400
58......................................          43,000           9,700
59......................................          44,200           9,900
60......................................          45,500          10,200
61......................................          46,800          10,400
62......................................          48,100          10,700
63......................................          49,500          11,000
64......................................          50,900          11,300
65 or older.............................          52,600          11,600
------------------------------------------------------------------------


       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......................................           1,800             400
27......................................           3,600             800
28......................................           5,500           1,300
29......................................           7,300           1,700
30......................................           9,100           2,100
31......................................          10,900           2,500
32......................................          12,700           2,900
33......................................          14,600           3,400
34......................................          16,400           3,800
35......................................          18,200           4,200
36......................................          20,000           4,600
37......................................          21,800           5,000
38......................................          23,700           5,500
39......................................          25,500           5,900
40......................................          27,300           6,300

[[Page 29357]]

 
41......................................          27,900           6,500
42......................................          28,500           6,600
43......................................          29,200           6,800
44......................................          30,000           6,900
45......................................          30,700           7,100
46......................................          31,500           7,200
47......................................          32,200           7,400
48......................................          33,000           7,600
49......................................          33,800           7,800
50......................................          34,600           8,000
51......................................          35,700           8,100
52......................................          36,500           8,300
53......................................          37,600           8,500
54......................................          38,500           8,700
55......................................          39,700           9,000
56......................................          40,600           9,200
57......................................          41,800           9,400
58......................................          43,000           9,700
59......................................          44,200           9,900
60......................................          45,500          10,200
61......................................          46,800          10,400
62......................................          48,100          10,700
63......................................          49,500          11,000
64......................................          50,900          11,300
65 or older.............................          52,600          11,600
------------------------------------------------------------------------

    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 from family financial resources toward educational 
expenses. 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 $15,600...........................  22% Of AAI.
$15,601 To $19,600............................  $3,432 + 25% Of AAI over $15,600.
$19,601 To $23,500............................  $4,432 + 29% Of AAI over $19,600.
$23,501 To $27,500............................  $5,563 + 34% Of AAI over $23,500.
$27,501 To $31,500............................  $6,923 + 40% Of AAI over $27,500.
$31,501 or more...............................  $8,523 + 47% Of AAI over $31,500.
----------------------------------------------------------------------------------------------------------------

    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 $15,600...........................  22% Of AAI.
$15,601 To $19,600............................  $3,432 + 25% Of AAI over $15,600.
$19,601 To $23,500............................  $4,432 + 29% Of AAI over $19,600.
$23,501 To $27,500............................  $5,563 + 34% Of AAI over $23,500.
$27,501 To $31,500............................  $6,923 + 40% Of AAI over $27,500.
$31,501 or more...............................  $8,523 + 47% Of AAI over $31,500.
----------------------------------------------------------------------------------------------------------------

    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 on the marginal differences in costs for a two-worker family 
compared to a one-worker family. The items covered by these additional 
expenses are: Food away from home, apparel, transportation, and 
household furnishings and operations.
    The employment expense allowance for parents of dependent students, 
married independent students without

[[Page 29358]]

dependents other than a spouse, and independent students with 
dependents other than a spouse is the lesser of $4,000 or 35 percent of 
earned income.
    6. Allowance for State and Other Taxes. The allowance for State and 
other taxes protects a portion of parents' and students' incomes 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
                                                           ------------------------------------    dependents
                           State                                  Percent of total income         other than a
                                                           ------------------------------------      spouse
                                                                                               -----------------
                                                              Under $15,000     $15,000 & Up      All (percent)
----------------------------------------------------------------------------------------------------------------
Alabama...................................................                 3                 2                 2
Alaska....................................................                 2                 1                 0
Arizona...................................................                 4                 3                 2
Arkansas..................................................                 4                 3                 3
California................................................                 8                 7                 5
Colorado..................................................                 4                 3                 3
Connecticut...............................................                 8                 7                 5
Delaware..................................................                 5                 4                 3
District of Columbia......................................                 7                 6                 5
Florida...................................................                 3                 2                 1
Georgia...................................................                 5                 4                 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                 5
Massachusetts.............................................                 7                 6                 4
Michigan..................................................                 5                 4                 3
Minnesota.................................................                 6                 5                 4
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                 4
New Mexico................................................                 3                 2                 2
New York..................................................                 9                 8                 6
North Carolina............................................                 6                 5                 4
North Dakota..............................................                 2                 1                 1
Ohio......................................................                 5                 4                 3
Oklahoma..................................................                 3                 2                 2
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                 3
Wisconsin.................................................                 7                 6                 4
Wyoming...................................................                 2                 1                 1
Other.....................................................                 2                 1                 2
----------------------------------------------------------------------------------------------------------------

    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the contact person listed

[[Page 29359]]

under FOR FURTHER INFORMATION CONTACT in this notice.
    Electronic Access to This Document: 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 via the Federal Digital System 
at: www.gpo.gov/fdsys. At this site you can 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). To use PDF 
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    You may also access documents of the Department published in the 
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www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

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

    Dated: May 15, 2013.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 2013-11982 Filed 5-17-13; 8:45 am]
BILLING CODE 4000-01-P