2017-08779. 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 ...

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.

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: [phone].

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.

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 size	Number in college
	1	2	3	4	5
2	$18,320	$15,180
3	22,810	19,690	$16,560
4	28,170	25,040	21,920	$18,790
5	33,240	30,100	26,990	23,850	$20,740
6	38,880	35,740	32,630	29,490	26,380

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 size	Number in college
	1	2	3	4	5
2	$25,870	$21,450
3	32,210	27,810	$23,390
4	39,780	35,370	30,960	$26,530
5	46,940	42,500	38,100	33,690	$29,290
6	54,890	50,480	46,080	41,640	37,250

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 status	Number in college	IPA
Single	1	$10,220
Married	2	10,220
Married	1	16,380

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 is	Then 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 is	And they are
	Married	Single
	Then the education savings and asset protection allowance is
25 or less	0	0
26	1,200	700
27	2,400	1,400
28	3,500	2,200
29	4,700	2,900
30	5,900	3,600
31	7,100	4,300
32	8,300	5,000
33	9,400	5,800
34	10,600	6,500
35	11,800	7,200
36	13,000	7,900
37	14,200	8,600
38	15,300	9,400
39	16,500	10,100
40	17,700	10,800
41	18,100	11,000
42	18,500	11,300
43	18,900	11,500
44	19,300	11,800
45	19,800	12,000
46	20,300	12,300
47	20,700	12,600
48	21,300	12,900
49	21,800	13,200
50	22,300	13,500
51	22,900	13,800
52	23,500	14,100
53	24,100	14,400
54	24,800	14,800
55	25,400	15,200
56	26,100	15,500
57	26,800	15,900
58	27,600	16,300
59	28,300	16,700
60	29,100	17,100
61	30,000	17,600
62	30,800	18,000
63	31,700	18,500
64	32,600	19,000
65 or older	33,600	19,500

Independent Students With Dependents Other Than a Spouse

If the age of the student is	And they are
	Married	Single
	Then the education savings and asset protection allowance is
25 or less	0	0
26	1,200	700
27	2,400	1,400
28	3,500	2,200
29	4,700	2,900
30	5,900	3,600
31	7,100	4,300
32	8,300	5,000
33	9,400	5,800
34	10,600	6,500
35	11,800	7,200
36	13,000	7,900
37	14,200	8,600
38	15,300	9,400
39	16,500	10,100
40	17,700	10,800
41	18,100	11,000
42	18,500	11,300
43	18,900	11,500
44	19,300	11,800
45	19,800	12,000
46	20,300	12,300
47	20,700	12,600
48	21,300	12,900
49	21,800	13,200
50	22,300	13,500
51	22,900	13,800
52	23,500	14,100
53	24,100	14,400
54	24,800	14,800
55	25,400	15,200
56	26,100	15,500
57	26,800	15,900
58	27,600	16,300
59	28,300	16,700
60	29,100	17,100
61	30,000	17,600
62	30,800	18,000
63	31,700	18,500
64	32,600	19,000
65 or older	33,600	19,500

Independent Students Without Dependents Other Than a Spouse

If the age of the student is	And they are
	Married	Single
	Then the education savings and asset protection allowance is
25 or less	0	0
26	1,200	700
27	2,400	1,400
28	3,500	2,200
29	4,700	2,900
30	5,900	3,600
31	7,100	4,300
32	8,300	5,000
33	9,400	5,800
34	10,600	6,500
35	11,800	7,200
36	13,000	7,900
37	14,200	8,600
38	15,300	9,400
39	16,500	10,100
40	17,700	10,800
41	18,100	11,000
42	18,500	11,300
43	18,900	11,500
44	19,300	11,800
45	19,800	12,000
46	20,300	12,300
47	20,700	12,600
48	21,300	12,900
49	21,800	13,200
50	22,300	13,500
51	22,900	13,800
52	23,500	14,100
53	24,100	14,400
54	24,800	14,800
55	25,400	15,200
56	26,100	15,500
57	26,800	15,900
58	27,600	16,300
59	28,300	16,700
60	29,100	17,100
61	30,000	17,600
62	30,800	18,000
63	31,700	18,500
64	32,600	19,000
65 or older	33,600	19,500

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:

 

If AAI is	Then the contribution is
Less than −$3,409	−$750.
($3,409) to $16,400	22% 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 is	Then the contribution is
Less than −$3,409	−$750.
($3,409) to $16,400	22% 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

State	Parents of dependents and independents with dependents other than a spouse		Dependents and independents without dependents other than a spouse
	Percent of total income		All
	Under $15,000	$15,000 & Up
Alabama	3	2	2
Alaska	2	1	0
Arizona	3	2	2
Arkansas	4	3	3
California	8	7	6
Colorado	4	3	3
Connecticut	8	7	5
Delaware	4	3	3
District of Columbia	7	6	6
Florida	3	2	1
Georgia	5	4	3
Hawaii	5	4	4
Idaho	4	3	3
Illinois	6	5	3
Indiana	4	3	3
Iowa	5	4	3
Kansas	4	3	2
Kentucky	5	4	3
Louisiana	3	2	2
Maine	6	5	3
Maryland	8	7	5
Massachusetts	6	5	4
Michigan	4	3	2
Minnesota	6	5	4
Mississippi	3	2	2
Missouri	4	3	3
Montana	4	3	3
Nebraska	5	4	3
Nevada	2	1	1
New Hampshire	4	3	1
New Jersey	9	8	4
New Mexico	3	2	2
New York	9	8	6
North Carolina	5	4	3
North Dakota	2	1	1
Ohio	5	4	3
Oklahoma	3	2	2
Oregon	7	6	5
Pennsylvania	5	4	3
Rhode Island	6	5	3
South Carolina	4	3	3
South Dakota	2	1	1
Tennessee	2	1	1
Texas	3	2	1
Utah	5	4	3
Vermont	6	5	3
Virginia	6	5	4
Washington	3	2	1
West Virginia	3	2	2
Wisconsin	6	5	4
Wyoming	2	1	1
Other	2	1	1

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.

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

Dated: April 26, 2017.

James W. Runcie,

Chief Operating Officer Federal Student Aid.