[Federal Register Volume 79, Number 104 (Friday, May 30, 2014)]
[Notices]
[Pages 31103-31109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-12569]


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DEPARTMENT OF EDUCATION


Federal Need Analysis Methodology for the 2015-16 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.

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    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

[[Page 31104]]

statutory Federal Need Analysis Methodology that determines a student's 
expected family contribution (EFC) for award year 2015-16 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 the following four tables for 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 updates are based, in general, upon 
increases in the Consumer Price Index (CPI).
    For award year 2015-16, 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 December 2013 and December 2014. 
However, because the Secretary must publish these tables before 
December 2014, 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 2014. The Secretary 
must also account for any misestimation of inflation for the 
immediately preceding year.
    In developing the table values for the 2014-15 award year, the 
Secretary assumed a 2.5 percent increase in the CPI-U for the period 
December 2012 through December 2013. Actual inflation for this time 
period was 1.5 percent. The Secretary estimates that the increase in 
the CPI-U for the period December 2013 through December 2014 will be 
1.8 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 affecting the income protection allowance (IPA) tables for the 
2009-10 through 2012-13 award years and required the Department to use 
a percentage of the estimated Consumer Price Index to update the table 
in subsequent years. 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 2015-16 award 
year values for the IPA tables. The updated tables are in sections 1 
(Income Protection allowance), 2 (Adjusted Net Worth (NW) of a Business 
or Farm), and 4 (Assessment Schedules and Rates) of this notice.
    As provided for in HEA section 478(d), the Secretary must also 
revise the education savings and asset protection allowances for each 
award year. The Education Savings and Asset Protection Allowance table 
for award year 2015-16 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' marginal costs budget 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 2015-16 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 $6,310. The 
IPAs for parents of dependent students for award year 2015-16 are as 
follows:

                                          Parents of Dependent Students
----------------------------------------------------------------------------------------------------------------
                                                                           Number in college
                     Family size                     -----------------------------------------------------------
                                                           1           2           3           4           5
----------------------------------------------------------------------------------------------------------------
2...................................................     $17,580     $14,570  ..........  ..........  ..........
3...................................................      21,890      18,900     $15,890  ..........  ..........
4...................................................      27,040      24,030      21,040     $18,030  ..........
5...................................................      31,900      28,890      25,900      22,890     $19,900
6...................................................      37,310      34,310      31,310      28,310      25,320
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $4,210. For each additional 
college student subtract $2,990.
    The IPAs for independent students with dependents other than a 
spouse for award year 2015-16 are as follows:

                            Independent Students With Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                           Number in college
                     Family size                     -----------------------------------------------------------
                                                           1           2           3           4           5
----------------------------------------------------------------------------------------------------------------
2...................................................     $24,840     $20,590  ..........  ..........  ..........
3...................................................      30,920      26,700     $22,450  ..........  ..........
4...................................................      38,180      33,950      29,720     $25,470  ..........
5...................................................      45,060      40,800      36,570      32,340     $28,110

[[Page 31105]]

 
6...................................................      52,690      48,450      44,240      39,970      35,760
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $5,950.
    For each additional college student subtract $4,230.
    The IPAs for single independent students and independent students 
without dependents other than a spouse for award year 2015-16 are as 
follows:

------------------------------------------------------------------------
                                                 Number in
                Marital status                    college        IPA
------------------------------------------------------------------------
Single........................................            1       $9,810
Married.......................................            2        9,810
Married.......................................            1       15,720
------------------------------------------------------------------------

    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.

 
----------------------------------------------------------------------------------------------------------------
     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 $625,000........................  $175,000 + 60% of NW over $375,000.
$625,001 or more............................  $325,000 + 100% of NW over $625,000.
----------------------------------------------------------------------------------------------------------------

    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
                                                               -------------------------------------------------
                                                                        Married                   Single
----------------------------------------------------------------------------------------------------------------
If the age of the older parent is                                Then the education savings and asset protection
                                                                                  allowance is
----------------------------------------------------------------------------------------------------------------
25 or less....................................................                        0                        0
26............................................................                    1,700                      500
27............................................................                    3,300                      900
28............................................................                    5,000                    1,400
29............................................................                    6,700                    1,800
30............................................................                    8,400                    2,300
31............................................................                   10,000                    2,700
32............................................................                   11,700                    3,200
33............................................................                   13,400                    3,600
34............................................................                   15,100                    4,100
35............................................................                   16,700                    4,500
36............................................................                   18,400                    5,000
37............................................................                   20,100                    5,400
38............................................................                   21,800                    5,900
39............................................................                   23,400                    6,300
40............................................................                   25,100                    6,800
41............................................................                   25,600                    6,900
42............................................................                   26,200                    7,100
43............................................................                   26,900                    7,200
44............................................................                   27,500                    7,400
45............................................................                   28,200                    7,500
46............................................................                   28,800                    7,700
47............................................................                   29,500                    7,900
48............................................................                   30,300                    8,100
49............................................................                   31,100                    8,300
50............................................................                   31,800                    8,500

[[Page 31106]]

 
51............................................................                   32,700                    8,700
52............................................................                   33,500                    8,900
53............................................................                   34,400                    9,100
54............................................................                   35,400                    9,300
55............................................................                   36,300                    9,500
56............................................................                   37,300                    9,800
57............................................................                   38,300                   10,000
58............................................................                   39,400                   10,200
59............................................................                   40,500                   10,500
60............................................................                   41,700                   10,800
61............................................................                   42,900                   11,000
62............................................................                   44,100                   11,300
63............................................................                   45,400                   11,600
64............................................................                   46,700                   11,900
65 or older...................................................                   48,100                   12,300
----------------------------------------------------------------------------------------------------------------


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


[[Page 31107]]


                           Independent Students Without Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                                  And they are
                                                               -------------------------------------------------
                                                                        Married                   Single
----------------------------------------------------------------------------------------------------------------
If the age of the student is                                     Then the education savings and asset protection
                                                                                  allowance is
----------------------------------------------------------------------------------------------------------------
25 or less....................................................                        0                        0
26............................................................                    1,700                      500
27............................................................                    3,300                      900
28............................................................                    5,000                    1,400
29............................................................                    6,700                    1,800
30............................................................                    8,400                    2,300
31............................................................                   10,000                    2,700
32............................................................                   11,700                    3,200
33............................................................                   13,400                    3,600
34............................................................                   15,100                    4,100
35............................................................                   16,700                    4,500
36............................................................                   18,400                    5,000
37............................................................                   20,100                    5,400
38............................................................                   21,800                    5,900
39............................................................                   23,400                    6,300
40............................................................                   25,100                    6,800
41............................................................                   25,600                    6,900
42............................................................                   26,200                    7,100
43............................................................                   26,900                    7,200
44............................................................                   27,500                    7,400
45............................................................                   28,200                    7,500
46............................................................                   28,800                    7,700
47............................................................                   29,500                    7,900
48............................................................                   30,300                    8,100
49............................................................                   31,100                    8,300
50............................................................                   31,800                    8,500
51............................................................                   32,700                    8,700
52............................................................                   33,500                    8,900
53............................................................                   34,400                    9,100
54............................................................                   35,400                    9,300
55............................................................                   36,300                    9,500
56............................................................                   37,300                    9,800
57............................................................                   38,300                   10,000
58............................................................                   39,400                   10,200
59............................................................                   40,500                   10,500
60............................................................                   41,700                   10,800
61............................................................                   42,900                   11,000
62............................................................                   44,100                   11,300
63............................................................                   45,400                   11,600
64............................................................                   46,700                   11,900
65 or older...................................................                   48,100                   12,300
----------------------------------------------------------------------------------------------------------------

    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 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 $15,700.........................  22% Of AAI.
$15,701 To $19,700..........................  $3,454 + 25% Of AAI over $15,700.
$19,701 To $23,700..........................  $4,454 + 29% Of AAI over $19,700.
$23,701 To $27,700..........................  $5,614 + 34% Of AAI over $23,700.
$27,701 To $31,700..........................  $6,974 + 40% Of AAI over $27,700.
$31,701 or more.............................  $8,574 + 47% Of AAI over $31,700.
----------------------------------------------------------------------------------------------------------------

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

[[Page 31108]]



----------------------------------------------------------------------------------------------------------------
                  If AAI is                                        Then the contribution is
----------------------------------------------------------------------------------------------------------------
Less than -$3,409...........................  -$750.
($3,409) To $15,700.........................  22% Of AAI.
$15,701 To $19,700..........................  $3,454 + 25% Of AAI over $15,700.
$19,701 To $23,700..........................  $4,454 + 29% Of AAI over $19,700.
$23,701 To $27,700..........................  $5,614 + 34% Of AAI over $23,700.
$27,701 To $31,700..........................  $6,974 + 40% Of AAI over $27,700.
$31,701 or more.............................  $8,574 + 47% Of AAI over $31,700.
----------------------------------------------------------------------------------------------------------------

    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 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
                           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
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                 4
Idaho.....................................................                 5                 4                 3
Illinois..................................................                 6                 5                 3
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                 4
Oklahoma..................................................                 3                 2                 2
Oregon....................................................                 7                 6                 5
Pennsylvania..............................................                 5                 4                 3
Rhode Island..............................................                 7                 6                 4
South Carolina............................................                 5                 4                 3

[[Page 31109]]

 
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................................................                 3                 2                 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 
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 
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as all other documents of this Department published in the Federal 
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    You may also access documents of the Department published in the 
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by the Department.

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

    Dated: May 27, 2014.
James W. Runcie,
Chief Operating Officer Federal Student Aid.
[FR Doc. 2014-12569 Filed 5-29-14; 8:45 am]
BILLING CODE 4000-01-P