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Notice

Federal Pell Grant, Academic Competitiveness Grant, National Science and Mathematics Access To Retain Talent 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, U.S. Department of Education.

ACTION:

Notice of revision of the Federal Need Analysis Methodology for the 2008-2009 award year.

SUMMARY:

The Secretary 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 2008-2009 for the student financial aid programs authorized under 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 Title IV programs include the Federal Pell Grant, Academic Competitiveness Grant, National Science and Mathematics Access to Retain Talent Grant, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, 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 Title IV requires the Secretary to adjust four of the tables—the Income Protection Allowance, the Adjusted Net Worth of a Farm or Business, the Education Savings and Asset Protection Allowance, and the Assessment Schedules and Rates—each award year to adjust for general price inflation. The changes are based, in general, upon increases in the Consumer Price Index.

For award year 2008-2009 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 2006 and December 2007. However, because the Secretary must publish these tables before December 2007, 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 2006. The Secretary estimates that the increase in the Consumer Price Index for All Urban Consumers (CPI-U) for the period December 2006 through December 2007 will be 2.8 percent. Additionally, the Higher Education Reconciliation Act of 2005 (HERA, Pub. L. 109-171) modified the updating procedure for the income protection allowance for dependent students and the income protection allowance tables for both independent students with dependents other than a spouse and independent students without dependents other than a spouse. HERA established new 2007-08 award year values for these income protection allowances, which are being updated for the 2008-09 award year using the Secretary's estimated inflation rate of 2.8 percent. The updated tables are in sections 1, 2, and 4 of this notice.

The Secretary must also revise, for each award year, the education savings and asset protection allowances as provided for in section 478(d) of the HEA. The Education Savings and Asset Protection Allowance table for award year 2008-2009 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 upon increases in the Bureau of Labor Statistics budget of the marginal costs for a two-worker family compared to a one-worker family for food away from home, apparel, transportation, and household furnishings and operations. The Employment Expense Allowance table for award year 2008-2009 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 $3,080. The income protection allowances for parents of dependent students for award year 2008-2009 are:

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Parents of Dependent Students

Family sizeNumber in college
12345
2$15,380$12,750
319,15016,540$13,900
423,66021,02018,410$15,770
527,91025,28022,66020,030$17,410
632,65030,01027,40024,77022,150

For each additional family member add $3,680.

For each additional college student subtract $2,620.

The income protection allowances for independent students with dependents other than a spouse for award year 2008-2009 are:

Independent Students With Dependents Other Than a Spouse

Family sizeNumber in college
12345
2$15,750$13,060
319,61016,930$14,240
424,22021,53018,850$16,150
528,58025,88023,20020,510$17,830
633,42030,73028,06025,35022,680

For each additional family member add $3,770.

For each additional college student subtract $2,680.

The income protection allowances for single independent students and independent students without dependents other than a spouse for award year 2008-2009 are:

Marital statusNumber in collegeIPA
Single1$6,220
Married26,220
Married19,970

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 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 net worth of a business or farm is—Then the adjusted net worth is—
Less than $1$0.
$1 to $110,000$0 + 40% of NW.
$110,001 to $330,000$44,000 + 50% of NW over $110,000.
$330,001 to $550,000$154,000 + 60% of NW over $330,000.
$550,001 or more$286,000 + 100% of NW over $550,000.

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.

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Dependent Students

And they are
Two parentsOne parent
If the age of the student isThen the education savings and asset protection allowance is—
25 or less00
262,6001,100
275,1002,100
287,7003,200
2910,2004,300
3012,8005,300
3115,4006,400
3217,9007,500
3320,5008,500
3423,0009,600
3525,60010,700
3628,20011,700
3730,70012,800
3833,30013,900
3935,80014,900
4038,40016,000
4139,30016,400
4240,30016,700
4341,30017,100
4442,30017,600
4543,40017,900
4644,50018,300
4745,60018,800
4846,70019,200
4947,90019,700
5049,00020,100
5150,50020,500
5251,80021,000
5353,30021,500
5454,60022,100
5556,30022,600
5657,60023,200
5759,30023,700
5861,10024,400
5962,90025,000
6064,70025,700
6166,60026,300
6268,50027,000
6370,80027,800
6472,80028,500
65 or older75,20029,300

Independent Students Without Dependents Other Than a Spouse

And they are
MarriedSingle
If the age of the student isThen the education savings and asset protection allowance is—
25 or less00
262,6001,100
275,1002,100
287,7003,200
2910,2004,300
3012,8005,300
3115,4006,400
3217,9007,500
3320,5008,500
3423,0009,600
3525,60010,700
3628,20011,700
3730,70012,800
3833,30013,900
3935,80014,900
4038,40016,000
4139,30016,400
4240,30016,700
4341,30017,100
4442,30017,600
4543,40017,900
4644,50018,300
4745,60018,800
4846,70019,200
4947,90019,700
5049,00020,100
5150,50020,500
5251,80021,000
5353,30021,500
5454,60022,100
5556,30022,600
5657,60023,200
5759,30023,700
5861,10024,400
5962,90025,000
6064,70025,700
6166,60026,300
6268,50027,000
6370,80027,800
6472,80028,500
65 or older75,20029,300

Independent Students With Dependents Other Than a Spouse

And they are
MarriedSingle
If the age of the student isThen the education savings and asset protection allowance is—
25 or less00
262,6001,100
275,1002,100
287,7003,200
2910,2004,300
3012,8005,300
3115,4006,400
3217,9007,500
3320,5008,500
3423,0009,600
3525,60010,700
3628,20011,700
3730,70012,800
3833,30013,900
3935,80014,900
4038,40016,000
4139,30016,400
4240,30016,700
4341,30017,100
4442,30017,600
4543,40017,900
4644,50018,300
4745,60018,800
4846,70019,200
4947,90019,700
5049,00020,100
5150,50020,500
5251,80021,000
5353,30021,500
5454,60022,100
5556,30022,600
5657,60023,200
5759,30023,700
5861,10024,400
5962,90025,000
6064,70025,700
6166,60026,300
6268,50027,000
6370,80027,800
6472,80028,500
65 or older75,20029,300

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 $13,70022% of AAI.
$13,701 to $17,300$3,014 + 25% of AAI over $13,700.
$17,301 to $20,800$3,914 + 29% of AAI over $17,300.
$20,801 to $24,300$4,929 + 34% of AAI over $20,800.
$24,301 to $27,800$6,119 + 40% of AAI over $24,300.
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$27,801 or more$7,519 + 47% of AAI over $27,800.

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 $13,70022% of AAI.
$13,701 to $17,300$3,014 + 25% of AAI over $13,700.
$17,301 to $20,800$3,914 + 29% of AAI over $17,300.
$20,801 to $24,300$4,929 + 34% of AAI over $20,800.
$24,301 to $27,800$6,119 + 40% of AAI over $24,300.
$27,801 or more$7,519 + 47% of AAI over $27,800.

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 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 $3,300 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 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.

StateParents of dependents and independents with dependents other than a spouseDependents and independents without dependents other than a spouse
Under $15,000 (percent)$15,000 & up (percent)All (percent)
Alabama322
Alaska210
Arizona433
Arkansas433
California765
Colorado433
Connecticut764
Delaware433
District of Columbia766
Florida321
Georgia653
Hawaii434
Idaho543
Illinois542
Indiana433
Iowa543
Kansas543
Kentucky544
Louisiana322
Maine654
Maryland765
Massachusetts654
Michigan543
Minnesota654
Mississippi432
Missouri543
Montana543
Nebraska543
Nevada321
New Hampshire541
New Jersey874
New Mexico433
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New York986
North Carolina654
North Dakota211
Ohio654
Oklahoma653
Oregon765
Pennsylvania543
Rhode Island764
South Carolina543
South Dakota211
Tennessee211
Texas321
Utah544
Vermont543
Virginia543
Washington432
West Virginia322
Wisconsin764
Wyoming211
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; 84.375 Academic Competitiveness Grant; 84.376 National Science and Mathematics Access to Retain Talent Grant)

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Dated: May 29, 2007.

Theresa S. Shaw,

Chief Operating Officer, Federal Student Aid.

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[FR Doc. E7-10621 Filed 5-31-07; 8:45 am]

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