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Notice

Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, Federal Family Education Loan, and William D. Ford Federal Direct Loan Programs

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AGENCY:

Federal Student Aid, Department of Education.

ACTION:

Notice of revision of the Federal Need Analysis Methodology for the 2006-2007 award year.

SUMMARY:

The Secretary of Education announces the annual updates to the tables that will be used in the statutory “Federal Need Analysis Methodology” to determine a student's expected family contribution (EFC) for award year 2006-2007 under Part F of Title IV of the Higher Education Act of 1965, as amended (HEA). An EFC is the amount a student and his or her family may reasonably be expected to contribute toward the student's postsecondary educational costs for purposes of determining financial aid eligibility. The Part F Programs include the Federal Pell Grant, campus-based (Federal Perkins Loan, Federal Work-Study, and Federal Supplemental Educational Opportunity Grant Programs), Federal Family Education Loan, and William D. Ford Federal Direct Loan Programs (Title IV, HEA Programs).

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FOR FURTHER INFORMATION CONTACT:

Ms. Marya Dennis, Management and Program Analyst, U.S. Department of Education, Union Center Plaza, 830 First Street, NE., Washington, DC 20202. Telephone: (202) 377-3385. If you use a telecommunications device for the deaf (TDD), you may call the Federal Relay Service (FRS) at 1-800-877-8339.

Individuals with disabilities may obtain this document in an alternative format (e.g., Braille, large print, audiotape or computer diskette) on request to the contact person listed in the preceding paragraph.

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SUPPLEMENTARY INFORMATION:

Part F of Title IV of the HEA specifies the criteria, data elements, calculations, and tables used in the Federal Need Analysis Methodology EFC calculations.

Section 478 of Part F of the HEA requires the Secretary to adjust four of the tables—the Income Protection Allowance, the Adjusted Net Worth of a Business or Farm, the Education Savings and Asset Protection Allowance, and the Assessment Schedules and Rates—each award year to take into account inflation. The changes are based, in general, upon increases in the Consumer Price Index. Start Printed Page 30426

For the award year 2006-2007 the Secretary is charged with updating the Income Protection Allowance, Adjusted Net Worth of a Business or Farm, and the Assessment Schedules and Rates to account for inflation that took place between December 2004 and December 2005. However, since the Secretary must publish these tables before December 2005, the increases in the tables must be based upon a percentage equal to the estimated percentage increase in the Consumer Price Index for all urban consumers for 2004. The Secretary estimates that the increase in the Consumer Price Index for all urban consumers for the period December 2004 through December 2005 will be 2.3 percent. The updated tables are in sections 1, 2, and 4 of this notice.

The Secretary must also revise, for each award year, the table on asset protection allowance as provided for in section 478(d) of the HEA. The Education Savings and Asset Protection Allowance table for the award year 2006-2007 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 to account for inflation based upon increases in the Bureau of Labor Statistics budget of the marginal costs for a two-worker compared to a one-worker family for meals away from home, apparel and upkeep, transportation, and housekeeping services. The Employment Expense Allowance table for the award year 2006-2007 has been updated in section 5 of this notice.

The HEA provides for 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. It varies by family size. The income protection allowance for the dependent student is $2,550. The income protection allowances for parents of dependent students and independent students with dependents other than a spouse for award year 2006-2007 are:

Family sizeNumber in college
12345
2$14,430$11,960
317,97015,520$13,050
422,20019,73017,270$14,800
526,19023,72021,27018,800$16,340
630,64028,17025,71023,24020,790

For each additional family member add $3,460.

For each additional college student subtract $2,460.

The income protection allowances for single independent students and independent students without dependents other than a spouse for award year 2006-2007 are:

Marital statusNumber in collegeIPA
Single1$5,790
Married25,790
Married19,260

2. Adjusted Net Worth (NW) of a Business or Farm. A portion of the full net value of a farm or business is excluded from the calculation of an expected contribution since—(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 net worth of a business or farm is—Then the adjusted net worth is—
Less than $1$0
$1 to $105,000$0 + 40% of NW.
$105,001 to $310,000$42,000 + 50% of NW over $105,000.
$310,001 to $515,000$144,500 + 60% of NW over $310,000.
$515,001 or more$267,500 + 100% of NW over $515,000.

3. Education Savings and Asset Protection Allowance. This allowance protects a portion of net worth (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.

Dependent students
If the age of the older parent is—and there are
two one parentsone parent
then the education savings and asset protection allowance is—
25 or less00
262,6001,200
275,2002,400
287,8003,600
2910,5004,800
3013,1006,000
3115,7007,200
3218,3008,400
3320,9009,600
3423,50010,800
3526,10012,000
3628,70013,200
3731,40014,400
3834,00015,600
3936,60016,800
4039,20018,000
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4140,20018,400
4241,20018,800
4342,20019,200
4443,20019,700
4544,30020,100
4645,40020,600
4746,60021,000
4847,70021,500
4948,90022,100
5050,10022,600
5151,60023,000
5252,90023,600
5354,50024,100
5455,80024,800
5557,50025,400
5658,90026,000
5760,60026,600
5862,40027,400
5964,20028,000
6066,10028,800
6168,00029,500
6270,00030,300
6372,30031,100
6474,40032,000
65 or older76,90032,900
Independent students without dependents other than a spouse
If the age of the student is—and they are
marriedsingle
then the education savings and asset protection allowance is—
25 or less00
262,6001,200
275,2002,400
287,8003,600
2910,5004,800
3013,1006,000
3115,7007,200
3218,3008,400
3320,9009,600
3423,50010,800
3526,10012,000
3628,70013,200
3731,40014,400
3834,00015,600
3936,60016,800
4039,20018,000
4140,20018,400
4241,20018,800
4342,20019,200
4443,20019,700
4544,30020,100
4645,40020,600
4746,60021,000
4847,70021,500
4948,90022,100
5050,10022,600
5151,60023,000
5252,90023,600
5354,50024,100
5455,80024,800
5557,50025,400
5658,90026,000
5760,60026,600
5862,40027,400
5964,20028,000
6066,10028,800
6168,00029,500
6270,00030,300
6372,30031,100
6474,40032,000
65 or older76,90032,900
Independent students with dependents other than a spouse
If the age of the student is—and they are
marriedsingle
then the education savings and asset protection allowance is—
25 or less00
262,6001,200
275,2002,400
287,8003,600
2910,5004,800
3013,1006,000
3115,7007,200
3218,3008,400
3320,9009,600
3423,50010,800
3526,10012,000
3628,70013,200
3731,40014,400
3834,00015,600
3936,60016,800
4039,20018,000
4140,20018,400
4241,20018,800
4342,20019,200
4443,20019,700
4544,30020,100
4645,40020,600
4746,60021,000
4847,70021,500
4948,90022,100
5050,10022,600
5151,60023,000
5252,90023,600
5354,50024,100
5455,80024,800
5557,50025,400
5658,90026,000
5760,60026,600
5862,40027,400
5964,20028,000
6066,10028,800
6168,00029,500
6270,00030,300
6372,30031,100
6474,40032,000
65 or older76,90032,900

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 toward educational expenses from family financial resources. 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 $12,900−22% of AAI.
$12,901 to $16,200$2,838 + 25% of AAI over $12,900.
$16,201 to $19,500$3,663 + 29% of AAI over $16,200.
$19,501 to $22,800$4,620 + 34% of AAI over $19,500.
$22,801 to $26,100$5,742 + 40% of AAI over $22,800.
$26,101 or more$7,062 + 47% of AAI over $26,100.

The contribution for an independent student with dependents other than a spouse is computed according to the following schedule: Start Printed Page 30428

If AAI is—Then the contribution is—
Less than −$3,409−$750
−$3,409 to $12,90022% of AAI.
$12,901 to $16,200$2,838 +25% of AAI over $12,900.
$16,201 to $19,500$3,663+29% of AAI over $16,200.
$19,501 to $22,800$4,620+34% of AAI over $19,500.
$22,801 to $26,100$5,742+40% of AAI over $22,800.
$26,101 or more$7,062+47% of AAI over $26,100.

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 upon the marginal differences in costs for a two-worker family compared to a one-worker family for meals away from home, apparel and upkeep, transportation, and housekeeping services.

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 $3,100 or 35 percent of earned income.

6. Allowance for State and Other Taxes. The allowance for State and other taxes protects a portion of the parents' and students' income from being considered available for postsecondary educational expenses. There are four tables 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 part F of the HEA directs the Secretary to update the tables for State and other taxes after reviewing the Statistics of Income file data. Also, a provision in the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), directs the Advisory Committee on Student Financial Assistance to examine the efficiency, effectiveness and fairness of the current procedures to update formula offsets and allowances. The Secretary considered the preliminary findings of this analysis as she reviewed the Statistics of Income file data.

StateParents of dependents and independents with dependents other than a spouseDependents and independents without dependents other than a spouse
Under $15,000$15,000 & upAll
Alabama322
Alaska210
Arizona432
Arkansas323
California765
Colorado433
Connecticut764
Delaware433
District of Columbia766
Florida210
Georgia543
Hawaii434
Idaho543
Illinois542
Indiana433
Iowa543
Kansas543
Kentucky544
Louisiana212
Maine654
Maryland765
Massachusetts654
Michigan543
Minnesota654
Mississippi322
Missouri433
Montana543
Nebraska543
Nevada211
New Hampshire431
New Jersey874
New Mexico433
New York875
North Carolina654
North Dakota211
Ohio654
Oklahoma433
Oregon765
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Pennsylvania543
Rhode Island764
South Carolina543
South Dakota100
Tennessee100
Texas210
Utah544
Vermont653
Virginia543
Washington210
West Virginia322
Wisconsin764
Wyoming100
Other322

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Note:

The official version of this document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available on GPO Access at: http://www.gpoaccess.gov/​nara/​index.html.

(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal Supplemental Educational Opportunity Grant; 84.032 Federal Family Education Loan Program; 84.033 Federal Work-Study Program; 84.038 Federal Perkins Loan Program; 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program)

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Dated: May 23, 2005.

Theresa S. Shaw,

Chief Operating Officer, Federal Student Aid.

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[FR Doc. 05-10584 Filed 5-25-05; 8:45 am]

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