[Federal Register Volume 84, Number 105 (Friday, May 31, 2019)]
[Notices]
[Pages 25244-25248]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11354]


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DEPARTMENT OF EDUCATION


Federal Need Analysis Methodology for the 2020-21 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) 2020-
21 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 2020-21, 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 2018 and December 2019. However, because the Secretary must 
publish these tables before December 2019, 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 2019. The Secretary must also account for any under- or over-
estimation of inflation for the preceding year.
    In developing the table values for the 2019-20 AY, the Secretary 
assumed a 1.6 percent increase in the CPI-U for the period December 
2017 through December 2018. The actual inflation for this time period 
was 1.9 percent. The Secretary estimates that the increase in the CPI-U 
for the period December 2018 through December 2019 will be 2.4 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 2020-21 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.
    Under 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 2020-21 
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 2020-21 has been updated in section 5 of this notice.
    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. This

[[Page 25245]]

table has been updated in section 6 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 $6,840. The 
IPAs for parents of dependent students for AY 2020-21 are as follows:

                                          Parents of Dependent Students
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                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
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2...............................         $19,080         $15,810  ..............  ..............  ..............
3...............................          23,760          20,510         $17,250  ..............  ..............
4...............................          29,340          26,080          22,830         $19,570  ..............
5...............................          34,620          31,350          28,110          24,840         $21,600
6...............................          40,490          37,230          33,980          30,720          27,470
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    For each additional family member add $4,570. For each additional 
college student subtract $3,250.
    The IPAs for independent students with dependents other than a 
spouse for AY 2020-21 are as follows:

                            Independent Students With Dependents Other Than a Spouse
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                                                                 Number in college
           Family size           -------------------------------------------------------------------------------
                                         1               2               3               4               5
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2...............................         $26,940         $22,340  ..............  ..............  ..............
3...............................          33,550          28,960         $24,360  ..............  ..............
4...............................          41,420          36,830          32,250         $27,630  ..............
5...............................          48,880          44,260          39,680          35,080         $30,500
6...............................          57,160          52,560          47,990          43,360          38,790
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    For each additional family member add $6,450. For each additional 
college student subtract $4,580.
    The IPAs for single independent students and independent students 
without dependents other than a spouse for AY 2020-21 are as follows:

------------------------------------------------------------------------
                                             Number in
             Marital status                   college           IPA
------------------------------------------------------------------------
Single..................................               1         $10,640
Married.................................               2          10,640
Married.................................               1          17,060
------------------------------------------------------------------------

    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.

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     If the NW of a business or farm is                             Then the adjusted NW is
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Less than $1................................  $0.
$1 to $135,000..............................  $0 + 40% of NW.
$135,001 to $410,000........................  $54,000 + 50% of NW over $135,000.
$410,001 to $680,000........................  $191,500 + 60% of NW over $410,000.
$680,001 or more............................  $353,500 + 100% of NW over $680,000.
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    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.

[[Page 25246]]



 Parents of Dependent Students, and Independent Students With Dependents
 Other Than a Spouse, and Independent Students Without Dependents Other
                              Than a Spouse
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                                            And the older parent or the
If the age of the older parent is, or if      independent student is
  the age of the independent student is  -------------------------------
                                              Married         Single
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                                          Then the allowance is
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25 or less..............................               0               0
26......................................             300             100
27......................................             700             200
28......................................           1,000             300
29......................................           1,300             500
30......................................           1,600             600
31......................................           2,000             700
32......................................           2,300             800
33......................................           2,600             900
34......................................           2,900           1,000
35......................................           3,300           1,100
36......................................           3,600           1,200
37......................................           3,900           1,400
38......................................           4,200           1,500
39......................................           4,600           1,600
40......................................           4,900           1,700
41......................................           5,100           1,700
42......................................           5,200           1,700
43......................................           5,300           1,800
44......................................           5,400           1,800
45......................................           5,500           1,900
46......................................           5,700           1,900
47......................................           5,800           1,900
48......................................           6,000           2,000
49......................................           6,100           2,000
50......................................           6,300           2,100
51......................................           6,400           2,100
52......................................           6,600           2,200
53......................................           6,800           2,200
54......................................           6,900           2,300
55......................................           7,100           2,300
56......................................           7,300           2,400
57......................................           7,500           2,500
58......................................           7,700           2,500
59......................................           7,900           2,600
60......................................           8,200           2,700
61......................................           8,400           2,700
62......................................           8,600           2,800
63......................................           8,900           2,900
64......................................           9,200           2,900
65 or older.............................           9,400           3,000
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    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 contribution of parents of dependent students, and independent 
students with dependents other than a spouse, is computed according to 
the following schedule:

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                  If AAI is                                        Then the contribution is
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Less than -$3,409...........................  -$750.
-$3,409 to $17,000..........................  22% of AAI.
$17,001 to $21,400..........................  $3,740 + 25% of AAI over $17,000.
$21,401 to $25,700..........................  $4,840 + 29% of AAI over $21,400.
$25,701 to $30,100..........................  $6,087 + 34% of AAI over $25,700.
$30,101 to $34,500..........................  $7,583 + 40% of AAI over $30,100.
$34,501 or more.............................  $9,343 + 47% of AAI over $34,500.
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[[Page 25247]]

    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.

              Percent of Income Paid in State Taxes, by State, Dependency Status, and Income Level
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                                                                   Parents of dependent students     Dependent
                                                                   and independent students with   students and
                                                                  dependents other than a spouse    independent
                                                                 --------------------------------    students
                                                                      Percent of total income         without
                              State                              --------------------------------   dependents
                                                                                                   other than a
                                                                                                      spouse
                                                                   Under $15,000   $15,000 & up  ---------------
                                                                                                        All
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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........................................................               5               4               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
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               3
Wisconsin.......................................................               6               5               4

[[Page 25248]]

 
Wyoming.........................................................               2               1               1
Other...........................................................               3               2               2
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    Accessible Format: Individuals with disabilities can obtain this 
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under FOR FURTHER INFORMATION CONTACT.
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    Program Authority: 20 U.S.C. 1087rr.

Mark A. Brown,
Chief Operating Officer Federal Student Aid.
[FR Doc. 2019-11354 Filed 5-30-19; 8:45 am]
BILLING CODE 4000-01-P