Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

The Secretary of Education 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 2005-2006 under Part F of Title IV of

Publication Date: June 2004
FRPart:
RegPartsAffected:

Page Numbers: 33890-33895

The Secretary of Education 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 2005-2006 under Part F of Title IV of the Higher Education Act of 1965 (HEA), as amended (Title IV, HEA Programs). 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, HEA Programs include the Federal Pell Grant, campus-based (Federal Perkins Loan, Federal Work-Study, and Federal Supplemental Educational Opportunity Grant Programs), Federal Family Education Loan, and William D. Ford Federal Direct Loan Programs.

Posted on 06-17-2004

[Federal Register: June 17, 2004 (Volume 69, Number 116)]
[Notices]
[Page 33890-33895]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jn04-38]

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DEPARTMENT OF EDUCATION


Federal Pell Grant, Federal Perkins Loan, Federal Work-Study,
Federal Supplemental Educational Opportunity Grant, Federal Family
Education Loan, and William D. Ford Federal Direct Loan Programs

AGENCY: Federal Student Aid, Department of Education.

ACTION: Notice of revision of the Federal need analysis methodology for
the 2005-2006 award year.

-----------------------------------------------------------------------

SUMMARY: The Secretary of Education 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 2005-2006 under Part F of Title IV of the Higher
Education Act of 1965 (HEA), as amended (Title IV, HEA Programs). 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, HEA Programs include the Federal Pell Grant, campus-based (Federal
Perkins Loan, Federal Work-Study, and Federal Supplemental Educational
Opportunity Grant Programs), Federal Family Education Loan, and William
D. Ford Federal Direct Loan 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: (202) 377-3385. If
you use a telecommunications device for the deaf (TDD), you may call
the Federal Information Relay Service (FIRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an
alternative format (e.g., Braille, large print,

[[Page 33891]]

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 the HEA requires the Secretary to adjust four of the
tables--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--each award year to
take into account inflation. The changes are based, in general, upon
increases in the Consumer Price Index.

For the award year 2005-2006 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 2003 and December 2004. However, since
the Secretary must publish these tables before December 2004, 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 2003. The Secretary estimates that the increase in the
Consumer Price Index for all Urban Consumers for the period December
2003 through December 2004 will be 1.5 percent. The updated tables are
in sections 1, 2, and 4 of this notice.

The Secretary must also revise, for each award year, the table on
asset protection allowance as provided for in section 478(d) of the
HEA. The Education Savings and Asset Protection Allowance table for the
award year 2005-2006 has been updated in section 3 of this notice.

Section 478(h) of Part F of the HEA also requires the Secretary to
increase the amount specified for the Employment Expense Allowance to
account for inflation based upon increases in the Bureau of Labor
Statistics budget of the marginal costs for a two-worker compared to a
one-worker family for meals away from home, apparel and upkeep,
transportation, and housekeeping services. However, the Secretary has
determined that the magnitude of the marginal differences in the
applicable employment expenses adjusted for inflation does not support
increasing the amount of the Employment Expense Allowance. Furthermore,
because the statute does not provide for a reduction in this allowance,
it will remain the lesser of $3,000 or 35% of earned income for the
2005-2006 award year.

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 $2,440. The income protection allowances for parents of dependent
students and independent students with dependents other than a spouse
for award year 2005-2006 are:

----------------------------------------------------------------------------------------------------------------
Number in college
Family size ------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
2........................................................ $13,870 $11,490
3........................................................ 17,270 14,910 $12,530
4........................................................ 21,330 18,950 16,590 $14,220
5........................................................ 25,160 22,790 20,430 18,060 $15,700
6........................................................ 29,430 27,060 24,700 22,330 19,970
----------------------------------------------------------------------------------------------------------------

For each additional family member add $3,320.
For each additional college student subtract $2,360.
The income protection allowances for single independent students
and independent students without dependents other than a spouse for
award year 2005-2006 are:

------------------------------------------------------------------------
Number in
Marital status college IPA
------------------------------------------------------------------------
Single........................................... 1 $5,560
Married.......................................... 2 5,560
Married.......................................... 1 8,890
------------------------------------------------------------------------

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 since--(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 Then the adjusted net worth is--
is--
------------------------------------------------------------------------
Less than $1........................... $0
$1 to $100,000......................... $0 + 40% of NW
$100,001 to $295,000................... $40,000 + 50% of NW over
$100,000
$295,001 to $495,000................... $137,500 + 60% of NW over
$295,000
$495,001 or more....................... $257,500 + 100% of NW over
$495,000
------------------------------------------------------------------------

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.

BILLING CODE 4000-01-P

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BILLING CODE 4000-01-P

4. Assessment Schedules and Rates. Two schedules that are subject
to updates, one for parents of dependent students and one for
independent

[[Page 33895]]

students with dependents other than a spouse, are used to determine the
expected contribution toward educational expenses from family financial
resources. For dependent students, the expected parental contribution
is derived from an assessment of the parents adjusted available income
(AAI). For independent students with dependents other than a spouse,
the expected contribution 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 $12,400.................... 22% of AAI
$12,401 to $15,600..................... $2,728 + 25% of AAI over
$12,400
$15,601 to $18,700..................... $3,528 + 29% of AAI over
$15,600
$18,701 to $21,900..................... $4,427 + 34% of AAI over
$18,700
$21,901 to $25,000..................... $5,515 + 40% of AAI over
$21,900
$25,001 or more........................ $6,755 + 47% of AAI over
$25,000
------------------------------------------------------------------------

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 $12,400.................... 22% of AAI
$12,401 to $15,600..................... $2,728 + 25% of AAI over
$12,400
$15,601 to $18,700..................... $3,528 + 29% of AAI over
$15,600
$18,701 to $21,900..................... $4,427 + 34% of AAI over
$18,700
$21,901 to $25,000..................... $5,515 + 40% of AAI over
$21,900
$25,001 or more........................ $6,755 + 47% of AAI over
$25,000
------------------------------------------------------------------------

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 meals away from home, apparel and
upkeep, transportation, and housekeeping services.

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 $3,000 or 35 percent of earned income.

6. Allowance for State and Other Taxes. This allowance for State
and other taxes protects a portion of the parents' and student's income
from being considered available for postsecondary educational expenses.
There are four tables 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.

The Secretary is delaying publication of these four tables in order
to complete a thorough review of the available information from the
Statistics of Income file data maintained by the Internal Revenue
Service. Section 478(g) of Part F of the HEA directs the Secretary to
update the tables for State and other taxes after reviewing the
Statistics of Income file data. Also, a provision in the Consolidated
Appropriations Act, 2004 (Pub. L. 108-199), directs the Advisory
Committee on Student Financial Assistance to examine the efficiency,
effectiveness and fairness of the current procedures to update formula
offsets and allowances. The Secretary will consider the preliminary
findings of this analysis as he reviews the Statistics of Income file
data.

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Note: The official version of this document is the document
published in the Federal Register. Free Internet access to the
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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)

Dated: June 14, 2004.
Theresa S. Shaw,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 04-13722 Filed 6-16-04; 8:45 am]

BILLING CODE 4000-01-C

Last Modified: 06/16/2004