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Summary:Notice of revision of the Federal Need Analysis Methodology for the 2007-2008 award year.

Publication Date: July 17, 2006

FRPart:

Page Numbers: 30899-30903

Summary: Notice of revision of the Federal Need Analysis Methodology for the 2007-2008 award year.

Posted on 07-17-2006

[Federal Register: May 31, 2006 (Volume 71, Number 104)]
[Notices]               
[Page 30899-30903]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31my06-67]                         

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DEPARTMENT OF EDUCATION

 
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

AGENCY: Federal Student Aid, Department of Education.

ACTION: Notice of revision of the Federal Need Analysis Methodology for 
the 2007-2008 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 2007-2008 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, 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 
adjust for general price inflation. The changes are based, in general, 
upon increases in the Consumer Price Index.
    For award year 2007-2008 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 2005 and December 2006. However, because 
the Secretary must publish these tables before December 2006, 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 2005. The Secretary estimates that the increase in the 
Consumer Price Index for All Urban Consumers (CPI-U) for the period 
December 2005 through December 2006 will be 2.8 percent. Additionally, 
the Higher Education Reconciliation Act of 2005 (Pub. L. 109-171) 
modified the updating procedure for the income protection allowance 
table for independent students with dependents other than a spouse. 
These table values are increased by the greater of 5 percent or the 
Secretary's estimated increase in the CPI-U (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 2007-2008 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 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 2007-2008 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 $3,000. The income protection allowances for parents of dependent 
students for award year 2007-2008 is:

CHART HAS BEEN OMITTED (SEE 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 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.

CHART HAS BEEN OMITTED (SEE 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.

CHART HAS BEEN OMITTED (SEE 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:

CHART HAS BEEN OMITTED (SEE 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 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 $3,200 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.

CHART HAS BEEN OMITTED (SEE 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; 84.375 Academic 
Competitiveness Grant; 84.376 National Science and Mathematics 
Access to Retain Talent Grant)

    Dated: May 25, 2006.
Theresa S. Shaw,
Chief Operating Officer, Federal Student Aid.
[FR Doc. E6-8403 Filed 5-30-06; 8:45 am]

BILLING CODE 4000-01-P

Last Modified: 07/16/2006