[Federal Register Volume 83, Number 96 (Thursday, May 17, 2018)]
[Notices]
[Pages 22967-22971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10586]


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DEPARTMENT OF EDUCATION


Federal Need Analysis Methodology for the 2019-20 Award Year--
Federal Pell Grant, 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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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) 2019-
20 for student financial aid programs, Catalog of Federal Domestic 
Assistance (CFDA) Numbers 84.063, 84.033, 84.007, 84.268, 84.408, and 
84.379. 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 2019-20, 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 2017 and December 2018. However, because the Secretary must 
publish these tables before December 2018, 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 2018. The Secretary must also account for any under- or over-
estimation of inflation for the preceding year.
    In developing the table values for the 2018-19 AY, the Secretary 
assumed a 2.3 percent increase in the CPI-U for the period December 
2016 through December 2017. The actual inflation for this time period 
was 2.1 percent. The Secretary estimates that the increase in the CPI-U 
for the period December 2017 through December 2018 will be 1.6 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 2019-20 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 2019-20 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 2019-20 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 dependent students is $6,660. The 
IPAs for parents of dependent students for AY 2019-20 are as follows:

[[Page 22968]]



                                          Parents of Dependent Students
----------------------------------------------------------------------------------------------------------------
                                                                 Number in College
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
2...............................         $18,580         $15,400
3...............................          23,140          19,980         $16,800
4...............................          28,580          25,400          22,240         $19,060
5...............................          33,720          30,540          27,380          24,200         $21,040
6...............................          39,430          36,260          33,100          29,920          26,760
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $4,450. For each additional 
college student subtract $3,160.
    The IPAs for independent students with dependents other than a 
spouse for AY 2019-20 are as follows:

                            Independent Students With Dependents Other Than a Spouse
----------------------------------------------------------------------------------------------------------------
                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
2...............................         $26,250         $21,760
3...............................          32,680          28,210         $23,730
4...............................          40,360          35,880          31,410         $26,920
5...............................          47,620          43,120          38,660          34,180         $29,710
6...............................          55,690          51,210          46,750          42,240          37,790
----------------------------------------------------------------------------------------------------------------

    For each additional family member add $6,290. For each additional 
college student subtract $4,470.
    The IPAs for single independent students and independent students 
without dependents other than a spouse for AY 2019-20 are as follows:

------------------------------------------------------------------------
                                                   Number in
                 Marital status                     college       IPA
------------------------------------------------------------------------
Single..........................................           1     $10,360
Married.........................................           2      10,360
Married.........................................           1      16,620
------------------------------------------------------------------------

    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 $395,000...................  $52,000 + 50% of NW over
                                          $130,000.
$395,001 to $660,000...................  $184,500 + 60% of NW over
                                          $395,000.
$660,001 or more.......................  $343,500 + 100% of NW over
                                          $660,000.
------------------------------------------------------------------------

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

[[Page 22969]]

 
45............................................       11,100        5,800
46............................................       11,400        6,000
47............................................       11,600        6,100
48............................................       11,900        6,200
49............................................       12,200        6,400
50............................................       12,500        6,500
51............................................       12,900        6,700
52............................................       13,200        6,800
53............................................       13,500        7,000
54............................................       13,900        7,200
55............................................       14,300        7,300
56............................................       14,700        7,500
57............................................       15,100        7,700
58............................................       15,500        7,900
59............................................       15,900        8,100
60............................................       16,400        8,300
61............................................       16,800        8,500
62............................................       17,300        8,800
63............................................       17,800        9,000
64............................................       18,300        9,200
65 or older...................................       18,900        9,500
------------------------------------------------------------------------


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


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

    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:

------------------------------------------------------------------------
             If AAI is                     Then the contribution is
------------------------------------------------------------------------
Less than -3,409...................  -$750.
($3,409) to $16,600................  22% of AAI.
$16,601 to $20,800.................  $3,652 + 25% of AAI over $16,600.
$20,801 to $25,100.................  $4,702 + 29% of AAI over $20,800.
$25,101 to $29,300.................  $5,949 + 34% of AAI over $25,100.
$29,301 to $33,600.................  $7,377 + 40% of AAI over $29,300.
$33,601 or more....................  $9,097 + 47% of AAI over $33,600.
------------------------------------------------------------------------


[[Page 22970]]

    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 $16,600................  22% of AAI.
$16,601 to $20,800.................  $3,652 + 25% of AAI over $16,600.
$20,801 to $25,100.................  $4,702 + 29% of AAI over $20,800.
$25,101 to $29,300.................  $5,949 + 34% of AAI over $25,100.
$29,301 to $33,600.................  $7,377 + 40% of AAI over $29,300.
$33,601 or more....................  $9,097 + 47% of AAI over $33,600.
------------------------------------------------------------------------

    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 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                  6
Colorado...............................................                  4                  3                  3
Connecticut............................................                  9                  8                  5
Delaware...............................................                  5                  4                  3
District of Columbia...................................                  7                  6                  6
Florida................................................                  3                  2                  1
Georgia................................................                  5                  4                  3
Hawaii.................................................                  5                  4                  4
Idaho..................................................                  5                  4                  3
Illinois...............................................                  5                  4                  3
Indiana................................................                  4                  3                  3
Iowa...................................................                  5                  4                  3
Kansas.................................................                  4                  3                  2
Kentucky...............................................                  5                  4                  4
Louisiana..............................................                  3                  2                  2
Maine..................................................                  6                  5                  3
Maryland...............................................                  8                  7                  6
Massachusetts..........................................                  7                  6                  4
Michigan...............................................                  4                  3                  3
Minnesota..............................................                  6                  5                  5
Mississippi............................................                  3                  2                  2
Missouri...............................................                  4                  3                  3
Montana................................................                  5                  4                  3
Nebraska...............................................                  5                  4                  3
Nevada.................................................                  2                  1                  1
New Hampshire..........................................                  4                  3                  1
New Jersey.............................................                  9                  8                  5
New Mexico.............................................                  3                  2                  2
New York...............................................                  9                  8                  7
North Carolina.........................................                  5                  4                  3

[[Page 22971]]

 
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                  4
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                  3
Wisconsin..............................................                  6                  5                  4
Wyoming................................................                  2                  1                  1
Other..................................................                  3                  2                  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.
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document is the document published in the Federal Register. You may 
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by the Department.

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

    Dated: May 14, 2018.
James F. Manning,
Acting Chief Operating Officer, Federal Student Aid.
[FR Doc. 2018-10586 Filed 5-16-18; 8:45 am]
BILLING CODE 4000-01-P