[Federal Register Volume 82, Number 82 (Monday, May 1, 2017)]
[Notices]
[Pages 20322-20327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08779]


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DEPARTMENT OF EDUCATION


Federal Need Analysis Methodology for the 2018-19 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 (AY) 2018-
19 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 AY 2018-19, 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 2016 and December 2017. However, because the Secretary must 
publish these tables before December 2017, 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 2017. The Secretary must also account for any under- or over-
estimation of inflation for the preceding year.
    In developing the table values for the 2017-18 AY, the Secretary's 
assumed 2.1 percent increase in the CPI-U for the period December 2015 
through December 2016 was the actual inflation for this time period. 
The Secretary estimates that the increase in the CPI-U for the period 
December 2016 through December 2017 will be 2.3 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 AYs 
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 2018-19 AY 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 AY. The Education Savings and Asset Protection Allowance table for 
AY 2018-19 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 
AY 2018-19 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 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 $6,570. The 
IPAs for parents of dependent students for AY 2018-19 are as follows:

                                          Parents of Dependent Students
----------------------------------------------------------------------------------------------------------------
                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
2...............................         $18,320         $15,180
3...............................          22,810          19,690         $16,560
4...............................          28,170          25,040          21,920         $18,790
5...............................          33,240          30,100          26,990          23,850         $20,740
6...............................          38,880          35,740          32,630          29,490          26,380
----------------------------------------------------------------------------------------------------------------


[[Page 20323]]

    For each additional family member add $4,390. For each additional 
college student subtract $3,120.
    The IPAs for independent students with dependents other than a 
spouse for AY 2018-19 are as follows:

                            Independent Students With Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
2...............................         $25,870         $21,450
3...............................          32,210          27,810         $23,390
4...............................          39,780          35,370          30,960         $26,530
5...............................          46,940          42,500          38,100          33,690         $29,290
6...............................          54,890          50,480          46,080          41,640          37,250
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $6,200. For each additional 
college student subtract $4,400.
    The IPAs for single independent students and independent students 
without dependents other than a spouse for AY 2018-19 are as follows:

------------------------------------------------------------------------
                                             Number in
             Marital  status                  college           IPA
------------------------------------------------------------------------
Single..................................               1         $10,220
Married.................................               2          10,220
Married.................................               1          16,380
------------------------------------------------------------------------

    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 EFC 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 $130,000.........................  $0 + 40% of NW.
$130,001 to $390,000...................  $52,000 + 50% of NW over
                                          $130,000.
$390,001 to $655,000...................  $182,000 + 60% of NW over
                                          $390,000.
$655,001 or more.......................  $341,000 + 100% of NW over
                                          $655,000.
------------------------------------------------------------------------

    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................................              1,200                700
27................................              2,400              1,400
28................................              3,500              2,200
29................................              4,700              2,900
30................................              5,900              3,600
31................................              7,100              4,300
32................................              8,300              5,000
33................................              9,400              5,800
34................................             10,600              6,500
35................................             11,800              7,200
36................................             13,000              7,900
37................................             14,200              8,600
38................................             15,300              9,400
39................................             16,500             10,100
40................................             17,700             10,800
41................................             18,100             11,000
42................................             18,500             11,300
43................................             18,900             11,500
44................................             19,300             11,800
45................................             19,800             12,000

[[Page 20324]]

 
46................................             20,300             12,300
47................................             20,700             12,600
48................................             21,300             12,900
49................................             21,800             13,200
50................................             22,300             13,500
51................................             22,900             13,800
52................................             23,500             14,100
53................................             24,100             14,400
54................................             24,800             14,800
55................................             25,400             15,200
56................................             26,100             15,500
57................................             26,800             15,900
58................................             27,600             16,300
59................................             28,300             16,700
60................................             29,100             17,100
61................................             30,000             17,600
62................................             30,800             18,000
63................................             31,700             18,500
64................................             32,600             19,000
65 or older.......................             33,600             19,500
------------------------------------------------------------------------


        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................................              1,200                700
27................................              2,400              1,400
28................................              3,500              2,200
29................................              4,700              2,900
30................................              5,900              3,600
31................................              7,100              4,300
32................................              8,300              5,000
33................................              9,400              5,800
34................................             10,600              6,500
35................................             11,800              7,200
36................................             13,000              7,900
37................................             14,200              8,600
38................................             15,300              9,400
39................................             16,500             10,100
40................................             17,700             10,800
41................................             18,100             11,000
42................................             18,500             11,300
43................................             18,900             11,500
44................................             19,300             11,800
45................................             19,800             12,000
46................................             20,300             12,300
47................................             20,700             12,600
48................................             21,300             12,900
49................................             21,800             13,200
50................................             22,300             13,500
51................................             22,900             13,800
52................................             23,500             14,100
53................................             24,100             14,400
54................................             24,800             14,800
55................................             25,400             15,200
56................................             26,100             15,500
57................................             26,800             15,900
58................................             27,600             16,300
59................................             28,300             16,700
60................................             29,100             17,100
61................................             30,000             17,600

[[Page 20325]]

 
62................................             30,800             18,000
63................................             31,700             18,500
64................................             32,600             19,000
65 or older.......................             33,600             19,500
------------------------------------------------------------------------


       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................................              1,200                700
27................................              2,400              1,400
28................................              3,500              2,200
29................................              4,700              2,900
30................................              5,900              3,600
31................................              7,100              4,300
32................................              8,300              5,000
33................................              9,400              5,800
34................................             10,600              6,500
35................................             11,800              7,200
36................................             13,000              7,900
37................................             14,200              8,600
38................................             15,300              9,400
39................................             16,500             10,100
40................................             17,700             10,800
41................................             18,100             11,000
42................................             18,500             11,300
43................................             18,900             11,500
44................................             19,300             11,800
45................................             19,800             12,000
46................................             20,300             12,300
47................................             20,700             12,600
48................................             21,300             12,900
49................................             21,800             13,200
50................................             22,300             13,500
51................................             22,900             13,800
52................................             23,500             14,100
53................................             24,100             14,400
54................................             24,800             14,800
55................................             25,400             15,200
56................................             26,100             15,500
57................................             26,800             15,900
58................................             27,600             16,300
59................................             28,300             16,700
60................................             29,100             17,100
61................................             30,000             17,600
62................................             30,800             18,000
63................................             31,700             18,500
64................................             32,600             19,000
65 or older.......................             33,600             19,500
------------------------------------------------------------------------

    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:


[[Page 20326]]



------------------------------------------------------------------------
               If AAI is                     Then the contribution is
------------------------------------------------------------------------
Less than -$3,409......................  -$750.
($3,409) to $16,400....................  22% of AAI.
$16,401 to $20,500.....................  $3,608 + 25% of AAI over
                                          $16,400.
$20,501 to $24,700.....................  $4,633 + 29% of AAI over
                                          $20,500.
$24,701 to $28,900.....................  $5,851 + 34% of AAI over
                                          $24,700.
$28,901 to $33,100.....................  $7,279 + 40% of AAI over
                                          $28,900.
$33,101 or more........................  $8,959 + 47% of AAI over
                                          $33,100.
------------------------------------------------------------------------

    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 $16,400....................  22% of AAI.
$16,401 to $20,500.....................  $3,608 + 25% of AAI over
                                          $16,400.
$20,501 to $24,700.....................  $4,633 + 29% of AAI over
                                          $20,500.
$24,701 to $28,900.....................  $5,851 + 34% of AAI over
                                          $24,700.
$28,901 to $33,100.....................  $7,279 + 40% of AAI over
                                          $28,900.
$33,101 or more........................  $8,959 + 47% of AAI over
                                          $33,100.
------------------------------------------------------------------------

    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.

  Percent of Income Paid in State Taxes, by Status of Having Dependents Other Than a Spouse, Income Level, and
                                                      State
----------------------------------------------------------------------------------------------------------------
                                                               Parents of dependents and        Dependents  and
                                                             independents with dependents        independents
                                                                  other 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.................................................                 3                 2                   2
Arkansas................................................                 4                 3                   3
California..............................................                 8                 7                   6
Colorado................................................                 4                 3                   3
Connecticut.............................................                 8                 7                   5
Delaware................................................                 4                 3                   3
District of Columbia....................................                 7                 6                   6
Florida.................................................                 3                 2                   1
Georgia.................................................                 5                 4                   3
Hawaii..................................................                 5                 4                   4
Idaho...................................................                 4                 3                   3
Illinois................................................                 6                 5                   3
Indiana.................................................                 4                 3                   3
Iowa....................................................                 5                 4                   3
Kansas..................................................                 4                 3                   2
Kentucky................................................                 5                 4                   3
Louisiana...............................................                 3                 2                   2
Maine...................................................                 6                 5                   3
Maryland................................................                 8                 7                   5

[[Page 20327]]

 
Massachusetts...........................................                 6                 5                   4
Michigan................................................                 4                 3                   2
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...........................................                 4                 3                   1
New Jersey..............................................                 9                 8                   4
New Mexico..............................................                 3                 2                   2
New York................................................                 9                 8                   6
North Carolina..........................................                 5                 4                   3
North Dakota............................................                 2                 1                   1
Ohio....................................................                 5                 4                   3
Oklahoma................................................                 3                 2                   2
Oregon..................................................                 7                 6                   5
Pennsylvania............................................                 5                 4                   3
Rhode Island............................................                 6                 5                   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...............................................                 6                 5                   4
Wyoming.................................................                 2                 1                   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 
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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 
Register, in text or Portable Document Format (PDF). To use PDF you 
must have Adobe Acrobat Reader, which is available free at this site.
    You may also access documents of the Department published in the 
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www.federalregister.gov. Specifically, through the advanced search 
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by the Department.
    Program Authority: 20 U.S.C. 1087rr.

    Dated: April 26, 2017.
James W. Runcie,
Chief Operating Officer Federal Student Aid.
[FR Doc. 2017-08779 Filed 4-28-17; 8:45 am]
BILLING CODE 4000-01-P