[Federal Register Volume 60, Number 104 (Wednesday, May 31, 1995)]
[Notices]
[Pages 28454-28459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13199]




[[Page 28453]]

_______________________________________________________________________

Part III





Department of Education





_______________________________________________________________________



Federal Pell Grant Program; Need Analysis Methodology for 1996-97 Award 
Year, Revision; Notice

Federal Register / Vol. 60, No. 104 / Wednesday, May 31, 1995 / 
Notices  
[[Page 28454]] 

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; 
Revision of the Need Analysis Methodology for the 1996-97 Award Year

AGENCY: Department of Education.

ACTION: Notice.

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

SUMMARY: The Secretary of Education announces the annual update to the 
tables used in the need analysis methodology that an institution of 
higher education must use in calculating expected family contributions 
for the 1996-97 award year under the Federal Pell Grant, campus-based 
(Federal Perkins Loan, Federal Work-Study, and Federal Supplemental 
Educational Opportunity Grant), Federal Family Education Loan and 
William D. Ford Federal Direct Loan programs. The Secretary takes this 
action under the authority of Title IV of the Higher Education Act of 
1965, as amended (HEA).

FOR FURTHER INFORMATION CONTACT: Ms. Edith Bell, Program Specialist, 
General Provisions Branch, Policy Development Division, U.S. Department 
of Education, 600 Independence Avenue, S.W. (Room 3053, ROB-3), 
Washington, DC. 20202-5444, telephone (202) 708-7888. Deaf and hearing 
impaired individuals may call the Federal Information Relay Service at 
1-800-877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through 
Friday.

SUPPLEMENTARY INFORMATION: The need analysis methodology is used to 
determine student eligibility for assistance under Title IV of the HEA. 
This methodology, referred to as the Federal Needs Analysis 
Methodology, is used to calculate the expected family contribution 
(EFC) for the Federal Pell Grant, the campus-based (Federal Perkins 
Loan, Federal Work-Study, and Federal Supplemental Educational 
Opportunity Grant), Federal Family Education Loan, and William D. Ford 
Federal Direct Loan programs. This methodology is established by 
statute.

Federal Needs Analysis Methodology

    Part F of Title IV of the HEA specifies the criteria, data 
elements, calculations, and tables for the computation of expected 
family contributions for the Federal Pell Grant, campus-based, Federal 
Family Education Loan, and William D. Ford Federal Direct Loan 
programs. In addition, section 478 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 for the 12 months between December 31 of 
the previous year and December 31 of the current year. The changes are 
based, in general, upon increases in the Consumer Price Index.
    For the award year 1996-97, the Secretary is charged with updating 
the income protection allowances, adjusted net worth of a business or 
farm, and the assessment schedules and rates to account for inflation 
that took place between December 1994 and December 1995. However, since 
the Secretary must publish these tables before December 1995, 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 1994. The Secretary estimates that the increase in the 
Consumer Price Index for all Urban Consumers for the period December 
1994 through December 1995 will be 3.0 percent. The updated tables for 
the 1996-97 award year are set forth in sections 1, 2, and 4.
    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 1996-97 has been updated below in section 3.3.
    Section 477(b)(5) 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-earner compared to a one-earner family 
for meals away from home, apparel and upkeep, transportation, and 
housekeeping services. Therefore, the Secretary is increasing this 
allowance as described in section 5.
    The HEA provides for the following annual updates:

1. Income Protection Allowance

    This allowance is the amount of reasonable living expenses that 
would be associated with the maintenance of an individual or family. 
The allowance is offset against the family's income and varies by 
family size. The income protection allowances for parents of dependent 
students and independent students with dependents other than a spouse 
for the award year 1996-97 are:

----------------------------------------------------------------------------------------------------------------
                                                                        Number in College                       
        Family size (including student)         ----------------------------------------------------------------
                                                      1            2            3            4            5     
----------------------------------------------------------------------------------------------------------------
2..............................................      $11,480       $9,510  ...........  ...........  ...........
3..............................................      $14,290      $12,340      $10,380  ...........  ...........
4..............................................      $17,650      $15,690      $13,740      $11,770  ...........
5..............................................      $20,830      $18,860      $16,910      $14,950      $12,990
6..............................................      $24,360      $22,400      $20,450      $18,480     $16,530 
----------------------------------------------------------------------------------------------------------------
 For each additional family member add $2,750.                                                                  
 For each additional college student subtract $1,950.                                                           

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 such 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.

                                                                                                                
[[Page 28455]]
------------------------------------------------------------------------
   If the net worth of a                                                
   business or farm is--           Then the adjusted net worth is:      
------------------------------------------------------------------------
Less than $1...............  $0.                                        
1 to $80,000...............  0+40% of NW.                               
80,001 to $245,000.........  32,000+50% of NW over $80,000.             
245,001 to $410,000........  114,500+60% of NW over $245,000.           
410,001 or more............  213,500+100% of NW over $410,000.          
------------------------------------------------------------------------

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


                                                                        
[[Page 28456]]
       Independent Students Without Dependents Other Than a Spouse      
------------------------------------------------------------------------
                                                And the student is      
                                         -------------------------------
                                                              Single    
                                                         ---------------
                                                             Then the   
      If the age of the student is                           education  
                                              Married       savings and 
                                                               asset    
                                                            protection  
                                                          allowance is--
------------------------------------------------------------------------
25 or less..............................               0               0
26......................................           2,300           1,600
27......................................           4,600           3,300
28......................................           7,000           4,900
29......................................           9,300           6,500
30......................................          11,600           8,200
31......................................          13,900           9,800
32......................................          16,200          11,400
33......................................          18,600          13,100
34......................................          20,900          14,700
35......................................          23,200          16,300
36......................................          25,500          18,000
37......................................          27,800          19,600
38......................................          30,200          21,200
39......................................          32,500          22,900
40......................................          34,800          24,500
41......................................          35,500          25,000
42......................................          36,400          25,600
43......................................          37,300          26,100
44......................................          38,300          26,700
45......................................          39,200          27,200
46......................................          40,300          27,900
47......................................          41,300          28,600
48......................................          42,300          29,300
49......................................          43,700          29,800
50......................................          44,800          30,500
51......................................          45,900          31,300
52......................................          47,400          32,000
53......................................          48,500          33,000
54......................................          50,100          33,700
55......................................          51,600          34,500
56......................................          53,200          35,500
57......................................          54,800          36,400
58......................................          56,500          37,400
59......................................          58,200          38,300
60......................................          60,000          39,400
61......................................          62,100          40,500
62......................................          64,300          41,700
63......................................          66,200          42,900
64......................................          68,400          44,100
65 and older............................          70,800          45,500
------------------------------------------------------------------------


        Independent Students With Dependents Other Than a Spouse        
------------------------------------------------------------------------
                                                And the student is      
                                         -------------------------------
                                                              Single    
                                                         ---------------
                                                             Then the   
      If the age of the student is                           education  
                                              Married       savings and 
                                                               asset    
                                                            protection  
                                                          allowance is--
------------------------------------------------------------------------
25 or less..............................               0               0
26......................................           2,300           1,600
27......................................           4,600           3,300
28......................................           7,000           4,900
29......................................           9,300           6,500
30......................................          11,600           8,200
31......................................          13,900           9,800
32......................................          16,200          11,400
33......................................          18,600          13,100
34......................................          20,900          14,700
35......................................          23,200         16,300 
[[Page 28457]]
                                                                        
36......................................          25,500          18,000
37......................................          27,800          19,600
38......................................          30,200          21,200
39......................................          32,500          22,900
40......................................          34,800          24,500
41......................................          35,500          25,000
42......................................          36,400          25,600
43......................................          37,300          26,100
44......................................          38,300          26,700
45......................................          39,200          27,200
46......................................          40,300          27,900
47......................................          41,300          28,600
48......................................          42,300          29,300
49......................................          43,700          29,800
50......................................          44,800          30,500
51......................................          45,900          31,300
52......................................          47,400          32,000
53......................................          48,500          33,000
54......................................          50,100          33,700
55......................................          51,600          34,500
56......................................          53,200          35,500
57......................................          54,800          36,400
58......................................          56,500          37,400
59......................................          58,200          38,300
60......................................          60,000          39,400
61......................................          62,100          40,500
62......................................          64,300          41,700
63......................................          66,200          42,900
64......................................          68,400          44,100
65 and older............................          70,800          45,500
------------------------------------------------------------------------

4. Assessment Schedules and Rates

    Two separate assessment schedules--one for dependent students, and 
one for independent students with dependents other than a spouse--are 
used in determining the expected family 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 financial strength which considers 
both income and assets.

                          Independent Students                          
------------------------------------------------------------------------
             If AAI is--                   Then the contribution is--   
------------------------------------------------------------------------
Less than -$3,409....................  -$750.                           
$3,409 to $10,300....................  22% of AAI.                      
$10,301 to $12,900...................  $2,266 +25% of AAI over $10,300. 
$12,901 to $15,500...................  $2,916 +29% of AAI over $12,900. 
$15,501 to $18,100...................  $3,670 +34% of AAI over $15,500. 
$18,101 to $20,700...................  $4,554 +40% of AAI over $18,100. 
$20,701 or more......................  $5,594 +47% of AAI over $20,700. 
------------------------------------------------------------------------


        Independent Students With Dependents Other Than a Spouse        
------------------------------------------------------------------------
             If AAI is--                   Then the contribution is--   
------------------------------------------------------------------------
Less than -$3,409....................  -$750.                           
$3,409 to $10,300....................  22% of AAI.                      
$10,301 to $12,900...................  $2,266 +25% of AAI over $10,300. 
$12,901 to $15,500...................  $2,916 +29% of AAI over $12,900. 
$15,501 to $18,100...................  $3,670 +34% of AAI over $15,500. 
$18,101 to $20,700...................  $4,554 +40% of AAI over $18,100. 
$20,701 or more......................  $5,594 +47% of AAI over $20,700. 
------------------------------------------------------------------------

5. Employment Expense Allowance

    This allowance for employment-related expenses, which is used for 
the parents of dependent students and for married independent students 
with dependents, recognizes additional expenses incurred by working 
spouses and single-parent households. The allowance is based upon the 
marginal differences in costs for a two-earner family compared to a 
one-earner 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 [[Page 28458]] dependents other 
than a spouse, and independent students with dependents other than a 
spouse is the lesser of $2,600 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 education expenses. There are four tables for state and 
other taxes, one each for parents of dependent students, dependent 
students, independent students without dependents other than a spouse, 
and independent students with dependents other than a spouse.

                      Parents of Dependent Students                     
------------------------------------------------------------------------
                                                   And parents' total   
                                                       income is--      
                                               -------------------------
                                                              $15,000 of
If parents' State or territory of residence is                   more   
                                                 less than  ------------
                                                 $15,000 or    Then the 
                                                              percentage
                                                                 is--   
------------------------------------------------------------------------
Wyoming, Tennessee, Nevada, Alaska, Texas.....            3            2
Louisiana, Florida, Washington, South Dakota..            4            3
Alabama, Mississippi..........................            5            4
North Dakota, Illinois, Connecticut, New                                
 Mexico, Missouri, West Virginia, Arizona,                              
 Indiana, Oklahoma, Arkansas..................            6            5
New Hampshire, Pennsylvania, Colorado,                                  
 Georgia, Kansas, Kentucky, Idaho.............            7            6
North Carolina, Virginia, Delaware, South                               
 Carolina, Ohio, Utah, Nebraska, Montana,                               
 California, New Jersey, Iowa, Vermont, Hawaii            8            7
Massachusetts, Rhode Island, Michigan,                                  
 Minnesota, Maine, Maryland...................            9            8
District of Columbia, Wisconsin, Oregon.......           10            9
New York......................................           11           10
Other.........................................            4            3
------------------------------------------------------------------------


        Independent Students With Dependents Other Than a Spouse        
------------------------------------------------------------------------
                                                   And student's total  
                                                       income is--      
                                               -------------------------
                                                              $15,000 or
 If student's State or territory of residence                    more   
                      is                         less than  ------------
                                                 $15,000 or    Then the 
                                                              percentage
                                                                 is--   
------------------------------------------------------------------------
Wyoming, Tennessee, Nevada, Alaska, Texas.....            3            2
Louisiana, Florida, Washington, South Dakota..            4            3
Alabama, Mississippi..........................            5            4
North Dakota, Illinois, Connecticut, New                                
 Mexico, Missouri, West Virginia, Arizona,                              
 Indiana, Oklahoma, Arkansas..................            6            5
New Hampshire, Pennsylvania, Colorado,                                  
 Georgia, Kansas, Kentucky, Idaho.............            7            6
North Carolina, Virginia, Delaware, South                               
 Carolina, Ohio, Utah, Nebraska, Montana,                               
 California, New Jersey, Iowa, Vermont, Hawaii            8            7
Massachusetts, Rhode Island, Michigan,                                  
 Minnesota, Maine, Maryland...................            9            8
District of Columbia, Wisconsin, Oregon.......           10            9
New York......................................           11           10
Other.........................................            4            3
------------------------------------------------------------------------


                           Dependent Students                           
------------------------------------------------------------------------
                                                                 The    
      If student's State or territory of residence is         percentage
                                                                 is--   
------------------------------------------------------------------------
Alaska, Texas, South Dakota, Wyoming, Washington,                       
 Tennessee, Nevada.........................................            0
Florida, New Hampshire.....................................            1
Connecticut, Louisiana, Illinois, North Dakota.............            2
Mississippi, Arizona, Alabama, Pennsylvania, New Jersey,                
 Missouri..................................................            3
Nebraska, Indiana, Colorado, New Mexico, Oklahoma, Kansas,              
 West Virginia, Rhode Island, Virginia, Georgia, Arkansas,              
 Vermont, Michigan.........................................            4
Montana, Idaho, Utah, Kentucky, Massachusetts, California,              
 North Carolina, South Carolina, Ohio, Iowa, Delaware,                  
 Maine, Wisconsin..........................................            5
Oregon, Maryland, Minnesota, Hawaii........................            6
District of Columbia, New York.............................            7
Other......................................................            2
------------------------------------------------------------------------


                                                                        
[[Page 28459]]
       Independent Students Without Dependents Other Than a Spouse      
------------------------------------------------------------------------
                                                                 The    
      If student's State or territory of residence is         percentage
                                                                 is--   
------------------------------------------------------------------------
Alaska, Texas, South Dakota, Wyoming, Washington,                       
 Tennessee, Nevada.........................................            0
Florida, New Hampshire.....................................            1
Connecticut, Louisiana, Illinois, North Dakota.............            2
Mississippi, Arizona, Alabama, Pennsylvania, New Jersey,                
 Missouri..................................................            3
Nebraska, Indiana, Colorado, New Mexico, Oklahoma, Kansas,              
 West Virginia, Rhode Island, Virginia, Georgia, Arkansas,              
 Vermont, Michigan.........................................            4
Montana, Idaho, Utah, Kentucky, Massachusetts, California,              
 North Carolina, South Carolina, Ohio, Iowa, Delaware,                  
 Maine, Wisconsin..........................................            5
Oregon, Maryland, Minnesota, Hawaii........................            6
District of Columbia, New York.............................            7
Other......................................................            2
------------------------------------------------------------------------

(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; 
William D. Ford Federal Direct Loan Program, 84.268)

    Dated: May 24, 1995.
David A. Longanecker
Assistant Secretary for Postsecondary Education
[FR Doc. 95-13199 Filed 5-30-95; 8:45 am]
BILLING CODE 4000-01-P