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Notice of revision of the Federal Need Analysis Methodology for the 2006-2007 award year.

Publication Date: May 2005
FRPart:

Page Numbers: 30425-30429

Notice of revision of the Federal Need Analysis Methodology for the 2006-2007 award year.

Posted on 05-26-2005


[Federal Register: May 26, 2005 (Volume 70, Number 101)]
[Notices]
[Page 30425-30429]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26my05-52]

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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 2006-2007 award year.

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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 2006-2007 under Part F of 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 Part F 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 (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: (202) 377-3385. 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 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 2006-2007 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 2004 and December 2005. However, since the Secretary must publish these tables before December 2005, 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 2004. The Secretary estimates that the increase in the Consumer Price Index for all urban consumers for the period December 2004 through December 2005 will be 2.3 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 2006-2007 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 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. The Employment Expense Allowance table for the award year 2006-2007 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 $2,550. The income protection allowances for parents of dependent students and independent students with dependents other than a spouse for award year 2006-2007 are:

SEE CHART IN ATTACHED PDF FILE

For each additional family member add $3,460. For each additional college student subtract $2,460.
The income protection allowances for single independent students and independent students without dependents other than a spouse for award year 2006-2007 are:

SEE CHART IN ATTACHED PDF FILE

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 ependents other than a spouse.

SEE CHART IN ATTACHED PDF FILE

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.

SEE CHART IN ATTACHED PDF FILE

[[Page 30427]]


SEE CHART IN ATTACHED PDF FILE

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:

SEE CHART IN ATTACHED PDF FILE

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 $3,100 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 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. 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 considered the preliminary findings of this analysis as she reviewed the Statistics of Income file data.

SEE CHART IN ATTACHED PDF FILE

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SEE CHART IN ATTACHED PDF FILE

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 (202) 512-1530.

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)

Dated: May 23, 2005.
Theresa S. Shaw, Chief Operating Officer, Federal Student Aid.
[FR Doc. 05-10584 Filed 5-25-05; 8:45 am]

BILLING CODE 4000-01-P

Last Modified: 05/25/2005