E7-10621. Federal Pell Grant, Academic Competitiveness Grant, National Science and Mathematics Access To Retain Talent Grant, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, Federal Family Education Loan,...

AGENCY:

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

ACTION:

Notice of revision of the Federal Need Analysis Methodology for the 2008-2009 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 2008-2009 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, Academic Competitiveness Grant, National Science and Mathematics Access to Retain Talent Grant, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, Federal Family Education Loan, and William D. Ford Federal Direct Loan Programs (Title IV HEA Programs).

FOR FURTHER INFORMATION CONTACT:

Ms. Marya Dennis, Management and Program Analyst, U.S. Department of Education, Union Center Plaza, 830 First Street, NE., Washington, DC 20202. Telephone: [phone]. If you use a telecommunications device for the deaf (TDD), you may call the Federal Relay Service (FRS) at 1-800-877-8339.

Individuals with disabilities may obtain this document in an alternative format (e.g., Braille, large print, audiotape or computer diskette) on request to the contact person listed in the preceding paragraph.

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 requires the Secretary to adjust four of the tables—the Income Protection Allowance, the Adjusted Net Worth of a Farm or Business, the Education Savings and Asset Protection Allowance, and the Assessment Schedules and Rates—each award year to adjust for general price inflation. The changes are based, in general, upon increases in the Consumer Price Index.

For award year 2008-2009 the Secretary is charged with updating the income protection allowance, adjusted net worth of a business or farm, and the assessment schedules and rates to account for inflation that took place between December 2006 and December 2007. However, because the Secretary must publish these tables before December 2007, 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 for 2006. The Secretary estimates that the increase in the Consumer Price Index for All Urban Consumers (CPI-U) for the period December 2006 through December 2007 will be 2.8 percent. Additionally, the Higher Education Reconciliation Act of 2005 (HERA, Pub. L. 109-171) modified the updating procedure for the income protection allowance for dependent students and the income protection allowance tables for both independent students with dependents other than a spouse and independent students without dependents other than a spouse. HERA established new 2007-08 award year values for these income protection allowances, which are being updated for the 2008-09 award year using the Secretary's estimated inflation rate of 2.8 percent. 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 2008-2009 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 2008-2009 has been updated in section 5 of this notice.

The HEA provides for 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. It varies by family size. The income protection allowance for the dependent student is $3,080. The income protection allowances for parents of dependent students for award year 2008-2009 are:

Parents of Dependent Students

Family size	Number in college
	1	2	3	4	5
2	$15,380	$12,750
3	19,150	16,540	$13,900
4	23,660	21,020	18,410	$15,770
5	27,910	25,280	22,660	20,030	$17,410
6	32,650	30,010	27,400	24,770	22,150

For each additional family member add $3,680.

For each additional college student subtract $2,620.

The income protection allowances for independent students with dependents other than a spouse for award year 2008-2009 are:

Independent Students With Dependents Other Than a Spouse

Family size	Number in college
	1	2	3	4	5
2	$15,750	$13,060
3	19,610	16,930	$14,240
4	24,220	21,530	18,850	$16,150
5	28,580	25,880	23,200	20,510	$17,830
6	33,420	30,730	28,060	25,350	22,680

For each additional family member add $3,770.

For each additional college student subtract $2,680.

The income protection allowances for single independent students and independent students without dependents other than a spouse for award year 2008-2009 are:

Marital status	Number in college	IPA
Single	1	$6,220
Married	2	6,220
Married	1	9,970

2. Adjusted Net Worth (NW) of a Business or Farm. A portion of the full net value of a farm or business 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 is—
Less than $1	$0.
$1 to $110,000	$0 + 40% of NW.
$110,001 to $330,000	$44,000 + 50% of NW over $110,000.
$330,001 to $550,000	$154,000 + 60% of NW over $330,000.
$550,001 or more	$286,000 + 100% of NW over $550,000.

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.

Dependent Students

	And they are
	Two parents	One parent
If the age of the student is	Then the education savings and asset protection allowance is—
25 or less	0	0
26	2,600	1,100
27	5,100	2,100
28	7,700	3,200
29	10,200	4,300
30	12,800	5,300
31	15,400	6,400
32	17,900	7,500
33	20,500	8,500
34	23,000	9,600
35	25,600	10,700
36	28,200	11,700
37	30,700	12,800
38	33,300	13,900
39	35,800	14,900
40	38,400	16,000
41	39,300	16,400
42	40,300	16,700
43	41,300	17,100
44	42,300	17,600
45	43,400	17,900
46	44,500	18,300
47	45,600	18,800
48	46,700	19,200
49	47,900	19,700
50	49,000	20,100
51	50,500	20,500
52	51,800	21,000
53	53,300	21,500
54	54,600	22,100
55	56,300	22,600
56	57,600	23,200
57	59,300	23,700
58	61,100	24,400
59	62,900	25,000
60	64,700	25,700
61	66,600	26,300
62	68,500	27,000
63	70,800	27,800
64	72,800	28,500
65 or older	75,200	29,300

Independent Students Without Dependents Other Than a Spouse

	And they are
	Married	Single
If the age of the student is	Then the education savings and asset protection allowance is—
25 or less	0	0
26	2,600	1,100
27	5,100	2,100
28	7,700	3,200
29	10,200	4,300
30	12,800	5,300
31	15,400	6,400
32	17,900	7,500
33	20,500	8,500
34	23,000	9,600
35	25,600	10,700
36	28,200	11,700
37	30,700	12,800
38	33,300	13,900
39	35,800	14,900
40	38,400	16,000
41	39,300	16,400
42	40,300	16,700
43	41,300	17,100
44	42,300	17,600
45	43,400	17,900
46	44,500	18,300
47	45,600	18,800
48	46,700	19,200
49	47,900	19,700
50	49,000	20,100
51	50,500	20,500
52	51,800	21,000
53	53,300	21,500
54	54,600	22,100
55	56,300	22,600
56	57,600	23,200
57	59,300	23,700
58	61,100	24,400
59	62,900	25,000
60	64,700	25,700
61	66,600	26,300
62	68,500	27,000
63	70,800	27,800
64	72,800	28,500
65 or older	75,200	29,300

Independent Students With Dependents Other Than a Spouse

	And they are
	Married	Single
If the age of the student is	Then the education savings and asset protection allowance is—
25 or less	0	0
26	2,600	1,100
27	5,100	2,100
28	7,700	3,200
29	10,200	4,300
30	12,800	5,300
31	15,400	6,400
32	17,900	7,500
33	20,500	8,500
34	23,000	9,600
35	25,600	10,700
36	28,200	11,700
37	30,700	12,800
38	33,300	13,900
39	35,800	14,900
40	38,400	16,000
41	39,300	16,400
42	40,300	16,700
43	41,300	17,100
44	42,300	17,600
45	43,400	17,900
46	44,500	18,300
47	45,600	18,800
48	46,700	19,200
49	47,900	19,700
50	49,000	20,100
51	50,500	20,500
52	51,800	21,000
53	53,300	21,500
54	54,600	22,100
55	56,300	22,600
56	57,600	23,200
57	59,300	23,700
58	61,100	24,400
59	62,900	25,000
60	64,700	25,700
61	66,600	26,300
62	68,500	27,000
63	70,800	27,800
64	72,800	28,500
65 or older	75,200	29,300

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 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 $13,700	22% of AAI.
$13,701 to $17,300	$3,014 + 25% of AAI over $13,700.
$17,301 to $20,800	$3,914 + 29% of AAI over $17,300.
$20,801 to $24,300	$4,929 + 34% of AAI over $20,800.
$24,301 to $27,800	$6,119 + 40% of AAI over $24,300.
$27,801 or more	$7,519 + 47% of AAI over $27,800.

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 $13,700	22% of AAI.
$13,701 to $17,300	$3,014 + 25% of AAI over $13,700.
$17,301 to $20,800	$3,914 + 29% of AAI over $17,300.
$20,801 to $24,300	$4,929 + 34% of AAI over $20,800.
$24,301 to $27,800	$6,119 + 40% of AAI over $24,300.
$27,801 or more	$7,519 + 47% of AAI over $27,800.

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 $3,300 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.

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

You may 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. If you have questions about using PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, area at [phone].

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: 84.007 Federal Supplemental Educational Opportunity Grant; 84.032 Federal Family Education Loan Program; 84.033 Federal Work-Study Program; 84.038 Federal Perkins Loan Program; 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program; 84.375 Academic Competitiveness Grant; 84.376 National Science and Mathematics Access to Retain Talent Grant)

Dated: May 29, 2007.

Theresa S. Shaw,

Chief Operating Officer, Federal Student Aid.