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Notice

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

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Start Preamble

AGENCY:

Federal Student Aid, U.S. Department of Education.

ACTION:

Notice of revision of the Federal Need Analysis Methodology for the 2011-2012 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 2011-2012 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, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, William D. Ford Federal Direct Loan, and the Teach Grant 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, 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), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or computer diskette) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT.

End Further Info End Preamble Start Supplemental Information

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 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 for general price inflation. The changes are based, in general, upon increases in the Consumer Price Index.

For award year 2011-2012, the Secretary is charged with updating the income protection allowance for parents of dependent students, adjusted net worth of a business or farm, and the assessment schedules and rates to account for inflation that took place between December 2009 and December 2010. However, because the Secretary must publish these tables before December 2010, 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 (CPI-U) for 2010. The Secretary must also account for any misestimation of inflation for the prior year. In developing the table values for the 2010-2011 award year, the Secretary assumed a 4.1 percent increase in the CPI-U for the period December 2008 through December 2009. Actual inflation for this time period was 2.7 percent. The Secretary estimates that the increase in the CPI-U for the period December 2009 through December 2010 will be 1.2 percent. Last year's overestimate of inflation for 2009 (4.1 percent minus 2.7 percent) exceeds this year's estimate of inflation for 2010. However, the Secretary lacks statutory authority to reduce the table values in the need analysis formula. Thus, the income protection allowance for parents of dependent students, the adjusted net worth of a business or farm, and the assessment schedules and rates are unchanged from 2010-2011. 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 by updating the procedures for determining the income protection allowance for dependent students as well as the income protection allowance tables for both independent students with dependents other than a spouse and Start Printed Page 29745independent students without dependents other than a spouse. As amended by the CCRAA, the HEA established new 2011-2012 award year values for these income protection allowances. 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 2011-2012 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 2011-2012 has been updated in section 5 of this notice.

The HEA provides for the following annual updates:

1. Income Protection Allowance (IPA). 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 IPA for the dependent student is $5,250. The IPAs for parents of dependent students for award year 2011-2012 are:

Parents of Dependent Students

Number in college
Family size12345
2$16,230$13,450
320,21017,450$14,670
424,97022,19019,430$16,650
529,46026,68023,92021,140$18,380
634,46031,68028,92026,14023,380

For each additional family member add $3,890.

For each additional college student subtract $2,760.

The IPAs for independent students with dependents other than a spouse for award year 2011-12 are:

Independent Students With Dependents Other Than a Spouse

Number in college
Family size12345
2$21,660$17,960
326,96023,280$19,580
433,30029,60025,920$22,210
539,30035,59031,90028,200$24,520
645,95042,25038,58034,86031,190

For each additional family member add $5,180.

For each additional college student subtract $3,690.

The IPAs for single independent students and independent students without dependents other than a spouse for award year 2011-12 are:

Marital statusNumber in collegeIPA
Single1$8,550
Married28,550
Married113,710

2. Adjusted Net Worth (NW) of a Business or Farm. A portion of the full net value of a business or farm 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 (NW) is—
Less than $1$0.
$1 to $115,000$0 + 40% of NW.
$115,001 to $345,000$46,000 + 50% of NW over $115,000.
$345,001 to $580,000$161,000 + 60% of NW over $345,000.
$580,001 or more$302,000 + 100% of NW over $580,000.

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.Start Printed Page 29746

Dependent Students

And they are
MarriedSingle
If the age of the older parent isThen the education savings and asset protection allowance is—
25 or less00
262,500900
275,1001,800
287,6002,700
2910,2003,500
3012,7004,400
3115,3005,300
3217,8006,200
3320,4007,100
3422,9008,000
3525,5008,900
3628,0009,800
3730,60010,600
3833,10011,500
3935,70012,400
4038,20013,300
4138,90013,600
4239,90013,900
4340,90014,200
4441,90014,500
4542,90014,900
4644,00015,200
4745,10015,500
4846,20015,900
4947,40016,300
5048,80016,700
5150,00017,100
5251,20017,500
5352,80018,000
5454,30018,400
5555,60018,800
5657,30019,300
5758,70019,800
5860,40020,300
5962,20020,800
6064,00021,400
6165,80022,000
6267,70022,600
6370,00023,200
6472,00023,800
65 or older74,00024,500

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
262,500900
275,1001,800
287,6002,700
2910,2003,500
3012,7004,400
3115,3005,300
3217,8006,200
3320,4007,100
3422,9008,000
3525,5008,900
3628,0009,800
3730,60010,600
3833,10011,500
3935,70012,400
4038,20013,300
4138,90013,600
4239,90013,900
Start Printed Page 29747
4340,90014,200
4441,90014,500
4542,90014,900
4644,00015,200
4745,10015,500
4846,20015,900
4947,40016,300
5048,80016,700
5150,00017,100
5251,20017,500
5352,80018,000
5454,30018,400
5555,60018,800
5657,30019,300
5758,70019,800
5860,40020,300
5962,20020,800
6064,00021,400
6165,80022,000
6267,70022,600
6370,00023,200
6472,00023,800
65 or older74,00024,500

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
262,500900
275,1001,800
287,6002,700
2910,2003,500
3012,7004,400
3115,3005,300
3217,8006,200
3320,4007,100
3422,9008,000
3525,5008,900
3628,0009,800
3730,60010,600
3833,10011,500
3935,70012,400
4038,20013,300
4138,90013,600
4239,90013,900
4340,90014,200
4441,90014,500
4542,90014,900
4644,00015,200
4745,10015,500
4846,20015,900
4947,40016,300
5048,80016,700
5150,00017,100
5251,20017,500
5352,80018,000
5454,30018,400
5555,60018,800
5657,30019,300
5758,70019,800
5860,40020,300
5962,20020,800
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6064,00021,400
6165,80022,000
6267,70022,600
6370,00023,200
6472,00023,800
65 or older74,00024,500

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 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 $14,50022% of AAI.
$14,501 to $18,200$3,190 + 25% of AAI over $14,500.
$18,201 to $21,900$4,115 + 29% of AAI over $18,200.
$21,901 to $25,600$5,188 + 34% of AAI over $21,900.
$25,601 to $29,300$6,446 + 40% of AAI over $25,600.
$29,301 or more$7,926 + 47% of AAI over $29,300.

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 $14,50022% of AAI.
$14,501 to $18,200$3,190 + 25% of AAI over $14,500.
$18,201 to $21,900$4,115 + 29% of AAI over $18,200.
$21,901 to $25,600$5,188 + 34% of AAI over $21,900.
$25,601 to $29,300$6,446 + 40% of AAI over $25,600.
$29,301 or more$7,926 + 47% of AAI over $29,300.

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 $3,500 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 (in percent)$15,000 & Up (in percent)All (in percent)
Alabama322
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Alaska210
Arizona543
Arkansas433
California875
Colorado543
Connecticut764
Delaware543
District of Columbia766
Florida431
Georgia654
Hawaii434
Idaho544
Illinois652
Indiana433
Iowa543
Kansas543
Kentucky544
Louisiana322
Maine654
Maryland876
Massachusetts654
Michigan543
Minnesota654
Mississippi322
Missouri543
Montana543
Nebraska543
Nevada431
New Hampshire541
New Jersey1095
New Mexico322
New York986
North Carolina654
North Dakota321
Ohio654
Oklahoma433
Oregon875
Pennsylvania543
Rhode Island764
South Carolina543
South Dakota211
Tennessee211
Texas321
Utah544
Vermont653
Virginia654
Washington431
West Virginia322
Wisconsin764
Wyoming211
Other322

Electronic Access to This Document: You can view this document, as well as all other documents of this Department published in the Federal Register, in text or Adobe Portable Document Format (PDF) on the Internet at the following site: http://www.ed.gov/​news/​fedregister. To use PDF you must have Adobe Acrobat Reader, which is available free at this site.

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: 84.063 Federal Pell Grant Program; 84.038 Federal Perkins Loan Program; 84.033 Federal Work-Study Programs; 84.007 Federal Supplemental Educational Opportunity Grant Program; 84.268 William D. Ford Federal Direct Loan Program; 84.379 TEACH Grant Program)

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

End Authority Start Signature

Dated: May 24, 2010.

William J. Taggart,

Chief Operating Officer, Federal Student Aid.

End Signature End Supplemental Information

[FR Doc. 2010-12799 Filed 5-26-10; 8:45 am]

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