[Federal Register Volume 80, Number 101 (Wednesday, May 27, 2015)]
[Notices]
[Pages 30217-30223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12803]


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DEPARTMENT OF EDUCATION


Federal Need Analysis Methodology for the 2016-17 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 statutory Federal Need Analysis Methodology that determines a 
student's expected family contribution (EFC) for award year 2016-17 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 of Education (Department) uses 
in the Federal Need Analysis Methodology to determine the EFC.
    Section 478 of the HEA requires the Secretary to annually update 
the following four tables for price inflation--the Income Protection 
Allowance (IPA), the Adjusted Net Worth (NW) 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 2016-17, the Secretary is charged with updating the 
IPA for parents of dependent students, adjusted NW 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 2014 and December 2015. However, because the Secretary 
must publish these tables before December 2015, 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 2015. The Secretary must also account for any under- or over-
estimation of inflation for the preceding year.
    In developing the table values for the 2015-16 award year, the 
Secretary assumed a 1.8 percent increase in the CPI-U for the period 
December 2013 through December 2014. Actual inflation for this time 
period was .8 percent. The Secretary estimates that the increase in the 
CPI-U for the period December 2014 through December 2015 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 IPA tables for the 2009-10 through 2012-13 award 
years and required the Department to use a percentage of the estimated 
CPI 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. This notice includes the new 2016-17 
award year values for the IPA tables, which reflect the CCRAA 
amendments. The updated tables are in sections 1 (Income Protection 
Allowance), 2 (Adjusted Net Worth of a Business or Farm), and 4 
(Assessment Schedules and Rates) of this notice.
    As provided for in section 478(d) of the HEA, 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 2016-17 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 2016-17 has been updated in section 5 of this notice.
    The HEA requires the following annual updates:
    1. Income Protection Allowance. This allowance is the amount of 
living

[[Page 30218]]

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 $6,400. The IPAs for 
parents of dependent students for award year 2016-17 are as follows:

                                          Parents of Dependent Students
----------------------------------------------------------------------------------------------------------------
                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
2...............................         $17,840         $14,790  ..............  ..............  ..............
3...............................          22,220          19,180         $16,130  ..............  ..............
4...............................          27,440          24,390          21,350         $18,300  ..............
5...............................          32,380          29,320          26,290          23,240         $20,200
6...............................          37,870          34,820          31,780          28,730          25,690
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $4,270. For each additional 
college student subtract $3,040.
    The IPAs for independent students with dependents other than a 
spouse for award year 2016-17 are as follows:

                            Independent Students With Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
2...............................         $25,210         $20,900  ..............  ..............  ..............
3...............................          31,390          27,100         $22,790  ..............  ..............
4...............................          38,760          34,460          30,170         $25,850  ..............
5...............................          45,740          41,420          37,130          32,830         $28,540
6...............................          53,490          49,190          44,910          40,580          36,300
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $6,040. For each additional 
college student subtract $4,290.
    The IPAs for single independent students and independent students 
without dependents other than a spouse for award year 2016-17 are as 
follows:

------------------------------------------------------------------------
                                                   Number in
                 Marital status                     college       IPA
------------------------------------------------------------------------
Single..........................................           1      $9,960
Married.........................................           2       9,960
Married.........................................           1      15,960
------------------------------------------------------------------------

    2. Adjusted Net Worth 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 $380,000........................  $50,000 + 50% of NW over $125,000.
$380,001 to $635,000........................  $177,500 + 60% of NW over $380,000.
$635,001 or more............................  $330,500 + 100% of NW over $635,000.
----------------------------------------------------------------------------------------------------------------

    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................................                400                200

[[Page 30219]]

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


        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................................                400                200
27................................                700                400
28................................              1,100                600
29................................              1,500                900
30................................              1,900              1,100
31................................              2,200              1,300
32................................              2,600              1,500
33................................              3,000              1,700
34................................              3,400              1,900
35................................              3,700              2,100
36................................              4,100              2,300
37................................              4,500              2,600
38................................              4,900              2,800
39................................              5,200              3,000
40................................              5,600              3,200
41................................              5,700              3,300
42................................              5,900              3,400

[[Page 30220]]

 
43................................              6,000              3,500
44................................              6,100              3,500
45................................              6,300              3,600
46................................              6,400              3,700
47................................              6,600              3,800
48................................              6,800              3,900
49................................              6,900              4,000
50................................              7,100              4,000
51................................              7,300              4,100
52................................              7,500              4,200
53................................              7,700              4,300
54................................              7,900              4,400
55................................              8,100              4,600
56................................              8,300              4,700
57................................              8,500              4,800
58................................              8,800              4,900
59................................              9,000              5,000
60................................              9,300              5,100
61................................              9,500              5,300
62................................              9,800              5,400
63................................             10,100              5,500
64ENT>10,400...........              5,700
65 or older.......................             10,700              5,800
------------------------------------------------------------------------


       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................................                400                200
27................................                700                400
28................................              1,100                600
29................................              1,500                900
30................................              1,900              1,100
31................................              2,200              1,300
32................................              2,600              1,500
33................................              3,000              1,700
34................................              3,400              1,900
35................................              3,700              2,100
36................................              4,100              2,300
37................................              4,500              2,600
38................................              4,900              2,800
39................................              5,200              3,000
40................................              5,600              3,200
41................................              5,700              3,300
42................................              5,900              3,400
43................................              6,000              3,500
44................................              6,100              3,500
45................................              6,300              3,600
46................................              6,400              3,700
47................................              6,600              3,800
48................................              6,800              3,900
49................................              6,900              4,000
50................................              7,100              4,000
51................................              7,300              4,100
52................................              7,500              4,200
53................................              7,700              4,300
54................................              7,900              4,400
55................................              8,100              4,600
56................................              8,300              4,700
57................................              8,500              4,800
58................................              8,800              4,900

[[Page 30221]]

 
59................................              9,000              5,000
60................................              9,300              5,100
61................................              9,500              5,300
62................................              9,800              5,400
63................................             10,100              5,500
64................................             10,400              5,700
65 or older.......................             10,700              5,800
------------------------------------------------------------------------

    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 $15,900..........................  22% of AAI.
$15,901 to $20,000..........................  $3,498 + 25% of AAI over $15,900.
$20,001 to $24,100..........................  $4,523 + 29% of AAI over $20,000.
$24,101 to $28,200..........................  $5,712 + 34% of AAI over $24,100.
$28,201 to $32,200..........................  $7,106 + 40% of AAI over $28,200.
$32,201 or more.............................  $8,706 + 47% of AAI over $32,200.
----------------------------------------------------------------------------------------------------------------

    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 $15,900..........................  22% of AAI.
$15,901 to $20,000..........................  $3,498 + 25% of AAI over $15,900.
$20,001 to $24,100..........................  $4,523 + 29% of AAI over $20,000.
$24,101 to $28,200..........................  $5,712 + 34% of AAI over $24,100.
$28,201 to $32,200..........................  $7,106 + 40% of AAI over $28,200.
$32,201 or more.............................  $8,706 + 47% of AAI over $32,200.
----------------------------------------------------------------------------------------------------------------

    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.

[[Page 30222]]



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                                                               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.............................................                  7                  6                  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.................................................                  5                  4                  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..........................................                  6                  5                  4
Michigan...............................................                  4                  3                  3
Minnesota..............................................                  6                  5                  4
Mississippi............................................                  3                  2                  2
Missouri...............................................                  4                  3                  3
Montana................................................                  4                  3                  3
Nebraska...............................................                  5                  4                  3
Nevada.................................................                  2                  1                  1
New Hampshire..........................................                  5                  4                  1
New Jersey.............................................                  9                  8                  4
New Mexico.............................................                  3                  2                  2
New York...............................................                  9                  8                  6
North Carolina.........................................                  5                  4                  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                  3
South Carolina.........................................                  4                  3                  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.............................................                  3                  2                  1
West Virginia..........................................                  3                  2                  2
Wisconsin..............................................                  7                  6                  4
Wyoming................................................                  1                  0                  1
Other..................................................                  2                  1                  1
----------------------------------------------------------------------------------------------------------------

    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 
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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.


[[Page 30223]]


    Dated: May 21, 2015.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 2015-12803 Filed 5-26-15; 8:45 am]
BILLING CODE 4000-01-P