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Notice

Federal Need Analysis Methodology for the 2018-19 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 (AY) 2018-19 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 AY 2018-19, 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 2016 and December 2017. However, because the Secretary must publish these tables before December 2017, 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 2017. The Secretary must also account for any under- or over-estimation of inflation for the preceding year.

In developing the table values for the 2017-18 AY, the Secretary's assumed 2.1 percent increase in the CPI-U for the period December 2015 through December 2016 was the actual inflation for this time period. The Secretary estimates that the increase in the CPI-U for the period December 2016 through December 2017 will be 2.3 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 AYs 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 2018-19 AY 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 AY. The Education Savings and Asset Protection Allowance table for AY 2018-19 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 AY 2018-19 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 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 $6,570. The IPAs for parents of dependent students for AY 2018-19 are as follows:

Parents of Dependent Students

Family sizeNumber in college
12345
2$18,320$15,180
322,81019,690$16,560
428,17025,04021,920$18,790
533,24030,10026,99023,850$20,740
638,88035,74032,63029,49026,380
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For each additional family member add $4,390. For each additional college student subtract $3,120.

The IPAs for independent students with dependents other than a spouse for AY 2018-19 are as follows:

Independent Students With Dependents Other Than a Spouse

Family sizeNumber in college
12345
2$25,870$21,450
332,21027,810$23,390
439,78035,37030,960$26,530
546,94042,50038,10033,690$29,290
654,89050,48046,08041,64037,250

For each additional family member add $6,200. For each additional college student subtract $4,400.

The IPAs for single independent students and independent students without dependents other than a spouse for AY 2018-19 are as follows:

Marital statusNumber in collegeIPA
Single1$10,220
Married210,220
Married116,380

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 EFC 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 $130,000$0 + 40% of NW.
$130,001 to $390,000$52,000 + 50% of NW over $130,000.
$390,001 to $655,000$182,000 + 60% of NW over $390,000.
$655,001 or more$341,000 + 100% of NW over $655,000.

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
261,200700
272,4001,400
283,5002,200
294,7002,900
305,9003,600
317,1004,300
328,3005,000
339,4005,800
3410,6006,500
3511,8007,200
3613,0007,900
3714,2008,600
3815,3009,400
3916,50010,100
4017,70010,800
4118,10011,000
4218,50011,300
4318,90011,500
4419,30011,800
4519,80012,000
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4620,30012,300
4720,70012,600
4821,30012,900
4921,80013,200
5022,30013,500
5122,90013,800
5223,50014,100
5324,10014,400
5424,80014,800
5525,40015,200
5626,10015,500
5726,80015,900
5827,60016,300
5928,30016,700
6029,10017,100
6130,00017,600
6230,80018,000
6331,70018,500
6432,60019,000
65 or older33,60019,500

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
261,200700
272,4001,400
283,5002,200
294,7002,900
305,9003,600
317,1004,300
328,3005,000
339,4005,800
3410,6006,500
3511,8007,200
3613,0007,900
3714,2008,600
3815,3009,400
3916,50010,100
4017,70010,800
4118,10011,000
4218,50011,300
4318,90011,500
4419,30011,800
4519,80012,000
4620,30012,300
4720,70012,600
4821,30012,900
4921,80013,200
5022,30013,500
5122,90013,800
5223,50014,100
5324,10014,400
5424,80014,800
5525,40015,200
5626,10015,500
5726,80015,900
5827,60016,300
5928,30016,700
6029,10017,100
6130,00017,600
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6230,80018,000
6331,70018,500
6432,60019,000
65 or older33,60019,500

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
261,200700
272,4001,400
283,5002,200
294,7002,900
305,9003,600
317,1004,300
328,3005,000
339,4005,800
3410,6006,500
3511,8007,200
3613,0007,900
3714,2008,600
3815,3009,400
3916,50010,100
4017,70010,800
4118,10011,000
4218,50011,300
4318,90011,500
4419,30011,800
4519,80012,000
4620,30012,300
4720,70012,600
4821,30012,900
4921,80013,200
5022,30013,500
5122,90013,800
5223,50014,100
5324,10014,400
5424,80014,800
5525,40015,200
5626,10015,500
5726,80015,900
5827,60016,300
5928,30016,700
6029,10017,100
6130,00017,600
6230,80018,000
6331,70018,500
6432,60019,000
65 or older33,60019,500

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 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:

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If AAI isThen the contribution is
Less than −$3,409−$750.
($3,409) to $16,40022% of AAI.
$16,401 to $20,500$3,608 + 25% of AAI over $16,400.
$20,501 to $24,700$4,633 + 29% of AAI over $20,500.
$24,701 to $28,900$5,851 + 34% of AAI over $24,700.
$28,901 to $33,100$7,279 + 40% of AAI over $28,900.
$33,101 or more$8,959 + 47% of AAI over $33,100.

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 $16,40022% of AAI.
$16,401 to $20,500$3,608 + 25% of AAI over $16,400.
$20,501 to $24,700$4,633 + 29% of AAI over $20,500.
$24,701 to $28,900$5,851 + 34% of AAI over $24,700.
$28,901 to $33,100$7,279 + 40% of AAI over $28,900.
$33,101 or more$8,959 + 47% of AAI over $33,100.

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 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.

Percent of Income Paid in State Taxes, by Status of Having Dependents Other Than a Spouse, Income Level, and State

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
Arizona322
Arkansas433
California876
Colorado433
Connecticut875
Delaware433
District of Columbia766
Florida321
Georgia543
Hawaii544
Idaho433
Illinois653
Indiana433
Iowa543
Kansas432
Kentucky543
Louisiana322
Maine653
Maryland875
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Massachusetts654
Michigan432
Minnesota654
Mississippi322
Missouri433
Montana433
Nebraska543
Nevada211
New Hampshire431
New Jersey984
New Mexico322
New York986
North Carolina543
North Dakota211
Ohio543
Oklahoma322
Oregon765
Pennsylvania543
Rhode Island653
South Carolina433
South Dakota211
Tennessee211
Texas321
Utah543
Vermont653
Virginia654
Washington321
West Virginia322
Wisconsin654
Wyoming211
Other211

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.

Electronic Access to This Document: 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 via the Federal Digital System at: www.gpo.gov/​fdsys. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at this site.

You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

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

Start Signature

Dated: April 26, 2017.

James W. Runcie,

Chief Operating Officer Federal Student Aid.

End Signature End Supplemental Information

[FR Doc. 2017-08779 Filed 4-28-17; 8:45 am]

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