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Notice

Federal Need Analysis Methodology for the 2015-16 Award Year-Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, William D. Ford Federal Direct Loan, Iraq and Afghanistan Service Grant and TEACH Grant Programs

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Start Preamble

AGENCY:

Federal Student Aid, Department of Education.

ACTION:

Notice.

Catalog of Federal Domestic Assistance (CFDA) Numbers: 84.063; 84.038; 84.033; 84.007; 84.268; 84.408; 84.379.

SUMMARY:

The Secretary announces the annual updates to the tables used in the Start Printed Page 31104statutory Federal Need Analysis Methodology that determines a student's expected family contribution (EFC) for award year 2015-16 for these student financial aid programs. 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.

Start Further Info

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.

End Further Info End Preamble Start Supplemental Information

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 uses in the Federal Need Analysis Methodology to determine the EFC.

Section 478 of part F of title IV of the HEA requires the Secretary to annually update the following four tables for price inflation—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. The updates are based, in general, upon increases in the Consumer Price Index (CPI).

For award year 2015-16, the Secretary is charged with updating the income protection allowance for parents of dependent students, adjusted net worth 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 2013 and December 2014. However, because the Secretary must publish these tables before December 2014, 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 2014. The Secretary must also account for any misestimation of inflation for the immediately preceding year.

In developing the table values for the 2014-15 award year, the Secretary assumed a 2.5 percent increase in the CPI-U for the period December 2012 through December 2013. Actual inflation for this time period was 1.5 percent. The Secretary estimates that the increase in the CPI-U for the period December 2013 through December 2014 will be 1.8 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 income protection allowance (IPA) tables for the 2009-10 through 2012-13 award years and required the Department to use a percentage of the estimated Consumer Price Index 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. As amended by the CCRAA, this notice includes the new 2015-16 award year values for the IPA tables. The updated tables are in sections 1 (Income Protection allowance), 2 (Adjusted Net Worth (NW) of a Business or Farm), and 4 (Assessment Schedules and Rates) of this notice.

As provided for in HEA section 478(d), the Secretary must also revise the education savings and asset protection allowances for each award year. The Education Savings and Asset Protection Allowance table for award year 2015-16 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 award year 2015-16 has been updated in section 5 of this notice.

The HEA requires 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. The allowance varies by family size. The IPA for the dependent student is $6,310. The IPAs for parents of dependent students for award year 2015-16 are as follows:

Parents of Dependent Students

Family sizeNumber in college
12345
2$17,580$14,570
321,89018,900$15,890
427,04024,03021,040$18,030
531,90028,89025,90022,890$19,900
637,31034,31031,31028,31025,320

For each additional family member add $4,210. For each additional college student subtract $2,990.

The IPAs for independent students with dependents other than a spouse for award year 2015-16 are as follows:

Independent Students With Dependents Other Than a Spouse

Family sizeNumber in college
12345
2$24,840$20,590
330,92026,700$22,450
438,18033,95029,720$25,470
545,06040,80036,57032,340$28,110
Start Printed Page 31105
652,69048,45044,24039,97035,760

For each additional family member add $5,950.

For each additional college student subtract $4,230.

The IPAs for single independent students and independent students without dependents other than a spouse for award year 2015-16 are as follows:

Marital statusNumber in collegeIPA
Single1$9,810
Married29,810
Married115,720

2. Adjusted Net Worth (NW) 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 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 NW of a business or farm isThen the adjusted NW is
Less than $1$0.
$1 To $125,000$0 + 40% of NW.
$125,001 To $375,000$50,000 + 50% of NW over $125,000.
$375,001 To $625,000$175,000 + 60% of NW over $375,000.
$625,001 or more$325,000 + 100% of NW over $625,000.

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
MarriedSingle
If the age of the older parent isThen the education savings and asset protection allowance is
25 or less00
261,700500
273,300900
285,0001,400
296,7001,800
308,4002,300
3110,0002,700
3211,7003,200
3313,4003,600
3415,1004,100
3516,7004,500
3618,4005,000
3720,1005,400
3821,8005,900
3923,4006,300
4025,1006,800
4125,6006,900
4226,2007,100
4326,9007,200
4427,5007,400
4528,2007,500
4628,8007,700
4729,5007,900
4830,3008,100
4931,1008,300
5031,8008,500
Start Printed Page 31106
5132,7008,700
5233,5008,900
5334,4009,100
5435,4009,300
5536,3009,500
5637,3009,800
5738,30010,000
5839,40010,200
5940,50010,500
6041,70010,800
6142,90011,000
6244,10011,300
6345,40011,600
6446,70011,900
65 or older48,10012,300

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
261,700500
273,300900
285,0001,400
296,7001,800
308,4002,300
3110,0002,700
3211,7003,200
3313,4003,600
3415,1004,100
3516,7004,500
3618,4005,000
3720,1005,400
3821,8005,900
3923,4006,300
4025,1006,800
4125,6006,900
4226,2007,100
4326,9007,200
4427,5007,400
4528,2007,500
4628,8007,700
4729,5007,900
4830,3008,100
4931,1008,300
5031,8008,500
5132,7008,700
5233,5008,900
5334,4009,100
5435,4009,300
5536,3009,500
5637,3009,800
5738,30010,000
5839,40010,200
5940,50010,500
6041,70010,800
6142,90011,000
6244,10011,300
6345,40011,600
6446,70011,900
65 or older48,10012,300
Start Printed Page 31107

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
261,700500
273,300900
285,0001,400
296,7001,800
308,4002,300
3110,0002,700
3211,7003,200
3313,4003,600
3415,1004,100
3516,7004,500
3618,4005,000
3720,1005,400
3821,8005,900
3923,4006,300
4025,1006,800
4125,6006,900
4226,2007,100
4326,9007,200
4427,5007,400
4528,2007,500
4628,8007,700
4729,5007,900
4830,3008,100
4931,1008,300
5031,8008,500
5132,7008,700
5233,5008,900
5334,4009,100
5435,4009,300
5536,3009,500
5637,3009,800
5738,30010,000
5839,40010,200
5940,50010,500
6041,70010,800
6142,90011,000
6244,10011,300
6345,40011,600
6446,70011,900
65 or older48,10012,300

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 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 isThen the contribution is
Less than −$3,409−$750.
($3,409) To $15,70022% Of AAI.
$15,701 To $19,700$3,454 + 25% Of AAI over $15,700.
$19,701 To $23,700$4,454 + 29% Of AAI over $19,700.
$23,701 To $27,700$5,614 + 34% Of AAI over $23,700.
$27,701 To $31,700$6,974 + 40% Of AAI over $27,700.
$31,701 or more$8,574 + 47% Of AAI over $31,700.

The contribution for an independent student with dependents other than a spouse is computed according to the following schedule:Start Printed Page 31108

If AAI isThen the contribution is
Less than −$3,409−$750.
($3,409) To $15,70022% Of AAI.
$15,701 To $19,700$3,454 + 25% Of AAI over $15,700.
$19,701 To $23,700$4,454 + 29% Of AAI over $19,700.
$23,701 To $27,700$5,614 + 34% Of AAI over $23,700.
$27,701 To $31,700$6,974 + 40% Of AAI over $27,700.
$31,701 or more$8,574 + 47% Of AAI over $31,700.

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.

StateParents of dependents and independents with dependents other than a spouseDependents and independents without dependents other than a spouse
Percent of total incomeAll
Under $15,000$15,000 & Up
Alabama3%2%2%
Alaska210
Arizona432
Arkansas433
California875
Colorado433
Connecticut875
Delaware543
District of Columbia765
Florida321
Georgia543
Hawaii434
Idaho543
Illinois653
Indiana433
Iowa543
Kansas543
Kentucky544
Louisiana322
Maine654
Maryland875
Massachusetts764
Michigan543
Minnesota654
Mississippi322
Missouri543
Montana543
Nebraska543
Nevada321
New Hampshire541
New Jersey984
New Mexico322
New York986
North Carolina654
North Dakota211
Ohio544
Oklahoma322
Oregon765
Pennsylvania543
Rhode Island764
South Carolina543
Start Printed Page 31109
South Dakota2%1%1%
Tennessee211
Texas321
Utah543
Vermont653
Virginia654
Washington321
West Virginia323
Wisconsin764
Wyoming211
Other212

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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Start Authority

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

End Authority Start Signature

Dated: May 27, 2014.

James W. Runcie,

Chief Operating Officer Federal Student Aid.

End Signature End Supplemental Information

[FR Doc. 2014-12569 Filed 5-29-14; 8:45 am]

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