# Presentation: 916950

## Need Analysis:What You Should Know

- Dan Madzelan

***Session 29***

- Session 29

## News Roundup: 1954

- Brown vs. Board of Education
- France Ends Colonial Rule in Viet Nam
- TI Begins Producing Silicon Transistors
- Elvis Presley Cuts First Record
- College Board Establishes a National Need Analysis

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## The CSS Model

- Parents Have Primary Responsibility for Their Children’s Postsecondary Education
- Student Contributes More As the Principal Beneficiary of Postsecondary Education
- Families Are Accepted in Their Current Financial Circumstance
- A Portion of Discretionary Income Is Available for College Costs

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## More on the CSS Model

- “Ability to Pay” Calculation
- Total Income Plus a Portion of Assets
- Less Non-discretionary Expenses
- Progressive Assessment of Discretionary Resources
- Consideration of Siblings in College
- Student Contribution

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## Federal Involvement

- BEOG Family Contribution Schedule
- 1980 Amendments – Single Formula
- 1982 Technicals – Not So Fast!
- 1986 Amendments – Two Formulas / No Regulating!
- 1992 Amendments – Single Formula That Acknowledges Families With Children
- 1998 Amendments – Tweaks & Complements

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## Federal Methodology Today

- Regular Formula
- One for Dependent Students
- Two for Independent Students
- With Dependents Other Than a Spouse
- Unmarried Or Spouse Is Only Dependent

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## Federal Methodology Today

- Simplified Needs Test
- Less Than $50,000 AGI*
- Not Required To File a 1040 Tax Return
- Automatic Zero EFC
- Less Than $15,001 AGI*
- Not Required To File a 1040 Tax Return
- Have Dependents Other Than a Spouse

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## Federal Methodology Today

- Alternate Expected Family Contribution
- Parents of Dependent Students
- Pro Rata for Less Than Nine Months
- Subtraction Method for Longer Enrollment
- Students
- Pro Rata for Less Than Nine Months

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## Primary Determinants of Ability to Pay

- Income
- Taxable (Adjusted Gross Income)
- Untaxed
- Taxes Paid
- Household Size
- Number in College

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## Details – Available Income

- Total Income (Base Year)
- Adjusted Gross Income
- Untaxed Income (Worksheet B)
- Less Exclusions (Worksheet C)
- Allowances
- Taxes (Federal Income, FICA, State Taxes)
- Living Expenses
- Basic Subsistence
- Additional Employment-related

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## Income Protection Allowance

- 1967 BLS Survey for a Family of Four
- Current Value is $20,710
- $6,760 for Food
- $4,490 for Housing
- $1,960 for Transportation
- $2,870 for Clothing and Personal Care
- $2,370 for Medical Care
- $2,260 for Other Family Consumption

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## More Details – Assets

- Net Value of Liquid/Non-Liquid Assets
- Except Home, Family Farm, Retirement Plans
- Part of Business/Other Farm Equity
- Allowance for Retirement Savings
- Conversion Rate/Income Supplement
- Dependent Student:
- No Allowance
- Contribution Rate

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## Education Savings andAsset Protection Allowance

-      P  =   _D __**(**__1+f__**)**__n+1 __**(**__1+L__**) [ (**__1+i__**)**__r-n __- __**(**__1+f__**)**__r-n __**]**_
**(**1+i**)**r **(**i-f**)**
- Where...
- D: BLS Moderate Budget Minus SSA Retirement Benefits
- f  : 6% Annual Inflation (HEA)
- i  : 8% Annual Interest Earnings (HEA)
- L : 6% Sales Commission on the Annuity (HEA)
- r  : Remaining Life Expectancy
- c : Current Age of Future Annuitant
- n : Number of Years to Retirement (65 - c)

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## Expected Contribution People With Kids

- Available Income
- Income Supplement
- Marginal Assessment
- 22 to 47 Percent
- For All Family Members – Except Parents – In College

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## Expected Contribution Dependent Students

- Total Base-year Income
- Allowances:
- Taxes
- Living Expenses
- Negative Parental Available Income
- 50 Percent Assessment
- 35 Percent of Net Assets

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## Expected Contribution Independents Without Kids

- Total Base-year Income
- Allowances:
- Taxes
- Living Expenses
- Additional Employment-related If Married and Both Work
- 50 Percent Assessment
- 35 Percent of Available Net Assets

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## Professional Judgment

- Case-by-Case Basis
- Independent Student Status
- Adjust Data Elements
- Not Limited/Documentation Required
- HEA Special Circumstances?
- K-12 Tuition
- Uncommon Medical/Dental Expenses
- Unusual Child Care Costs
- Recent Unemployment

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## Technical Assistance

- We appreciate your feedback and comments.
- You can contact me by:
- Phone:   (202) 502-7816
- Fax:	 (202) 502-7873
- Email:	dan.madzelan@ed.gov

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