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Notice

Federal Need Analysis Methodology for the 2016-17 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 statutory Federal Need Analysis Methodology that determines a student's expected family contribution (EFC) for award year 2016-17 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 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 award year 2016-17, 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 2014 and December 2015. However, because the Secretary must publish these tables before December 2015, 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 2015. The Secretary must also account for any under- or over-estimation of inflation for the preceding year.

In developing the table values for the 2015-16 award year, the Secretary assumed a 1.8 percent increase in the CPI-U for the period December 2013 through December 2014. Actual inflation for this time period was .8 percent. The Secretary estimates that the increase in the CPI-U for the period December 2014 through December 2015 will be 2.5 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 award years 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 2016-17 award year 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.

As provided for in section 478(d) of the HEA, 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 2016-17 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 2016-17 has been updated in section 5 of this notice.

The HEA requires the following annual updates:

1. Income Protection Allowance. This allowance is the amount of living Start Printed Page 30218expenses 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 $6,400. The IPAs for parents of dependent students for award year 2016-17 are as follows:

Parents of Dependent Students

Family sizeNumber in college
12345
2$17,840$14,790
322,22019,180$16,130
427,44024,39021,350$18,300
532,38029,32026,29023,240$20,200
637,87034,82031,78028,73025,690

For each additional family member add $4,270. For each additional college student subtract $3,040.

The IPAs for independent students with dependents other than a spouse for award year 2016-17 are as follows:

Independent Students With Dependents Other Than a Spouse

Family sizeNumber in college
12345
2$25,210$20,900
331,39027,100$22,790
438,76034,46030,170$25,850
545,74041,42037,13032,830$28,540
653,49049,19044,91040,58036,300

For each additional family member add $6,040. For each additional college student subtract $4,290.

The IPAs for single independent students and independent students without dependents other than a spouse for award year 2016-17 are as follows:

Marital statusNumber in collegeIPA
Single1$9,960
Married29,960
Married115,960

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 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 $380,000$50,000 + 50% of NW over $125,000.
$380,001 to $635,000$177,500 + 60% of NW over $380,000.
$635,001 or more$330,500 + 100% of NW over $635,000.

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

If the age of the older parent isAnd they are
MarriedSingle
Then the education savings and asset protection allowance is
25 or less00
26400200
Start Printed Page 30219
27700400
281,100600
291,500900
301,9001,100
312,2001,300
322,6001,500
333,0001,700
343,4001,900
353,7002,100
364,1002,300
374,5002,600
384,9002,800
395,2003,000
405,6003,200
415,7003,300
425,9003,400
436,0003,500
446,1003,500
456,3003,600
466,4003,700
476,6003,800
486,8003,900
496,9004,000
507,1004,000
517,3004,100
527,5004,200
537,7004,300
547,9004,400
558,1004,600
568,3004,700
578,5004,800
588,8004,900
599,0005,000
609,3005,100
619,5005,300
629,8005,400
6310,1005,500
6410,4005,700
65 or older10,7005,800

Independent Students With Dependents Other Than a Spouse

If the age of the student isAnd they are
MarriedSingle
Then the education savings and asset protection allowance is
25 or less00
26400200
27700400
281,100600
291,500900
301,9001,100
312,2001,300
322,6001,500
333,0001,700
343,4001,900
353,7002,100
364,1002,300
374,5002,600
384,9002,800
395,2003,000
405,6003,200
415,7003,300
425,9003,400
Start Printed Page 30220
436,0003,500
446,1003,500
456,3003,600
466,4003,700
476,6003,800
486,8003,900
496,9004,000
507,1004,000
517,3004,100
527,5004,200
537,7004,300
547,9004,400
558,1004,600
568,3004,700
578,5004,800
588,8004,900
599,0005,000
609,3005,100
619,5005,300
629,8005,400
6310,1005,500
64"ENT>10,4005,700
65 or older10,7005,800

Independent Students Without Dependents Other Than a Spouse

If the age of the student isAnd they are
MarriedSingle
Then the education savings and asset protection allowance is
25 or less00
26400200
27700400
281,100600
291,500900
301,9001,100
312,2001,300
322,6001,500
333,0001,700
343,4001,900
353,7002,100
364,1002,300
374,5002,600
384,9002,800
395,2003,000
405,6003,200
415,7003,300
425,9003,400
436,0003,500
446,1003,500
456,3003,600
466,4003,700
476,6003,800
486,8003,900
496,9004,000
507,1004,000
517,3004,100
527,5004,200
537,7004,300
547,9004,400
558,1004,600
568,3004,700
578,5004,800
588,8004,900
Start Printed Page 30221
599,0005,000
609,3005,100
619,5005,300
629,8005,400
6310,1005,500
6410,4005,700
65 or older10,7005,800

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 $15,90022% of AAI.
$15,901 to $20,000$3,498 + 25% of AAI over $15,900.
$20,001 to $24,100$4,523 + 29% of AAI over $20,000.
$24,101 to $28,200$5,712 + 34% of AAI over $24,100.
$28,201 to $32,200$7,106 + 40% of AAI over $28,200.
$32,201 or more$8,706 + 47% of AAI over $32,200.

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

If AAI isThen the contribution is
Less than −$3,409−$750.
−$3,409 to $15,90022% of AAI.
$15,901 to $20,000$3,498 + 25% of AAI over $15,900.
$20,001 to $24,100$4,523 + 29% of AAI over $20,000.
$24,101 to $28,200$5,712 + 34% of AAI over $24,100.
$28,201 to $32,200$7,106 + 40% of AAI over $28,200.
$32,201 or more$8,706 + 47% of AAI over $32,200.

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.Start Printed Page 30222

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
Alabama322
Alaska210
Arizona432
Arkansas433
California765
Colorado433
Connecticut875
Delaware543
District of Columbia765
Florida321
Georgia543
Hawaii544
Idaho543
Illinois653
Indiana433
Iowa543
Kansas543
Kentucky544
Louisiana322
Maine654
Maryland875
Massachusetts654
Michigan433
Minnesota654
Mississippi322
Missouri433
Montana433
Nebraska543
Nevada211
New Hampshire541
New Jersey984
New Mexico322
New York986
North Carolina544
North Dakota211
Ohio543
Oklahoma322
Oregon765
Pennsylvania543
Rhode Island763
South Carolina433
South Dakota211
Tennessee211
Texas321
Utah543
Vermont653
Virginia654
Washington321
West Virginia322
Wisconsin764
Wyoming101
Other211

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Start Authority

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

End Authority Start Signature
Start Printed Page 30223

Dated: May 21, 2015.

James W. Runcie,

Chief Operating Officer, Federal Student Aid.

End Signature End Supplemental Information

[FR Doc. 2015-12803 Filed 5-26-15; 8:45 am]

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