Federal Need Analysis Methodology for the 2020-21 Award Year-Federal Pell Grant, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, William D. Ford Federal Direct Loan, Iraq and Afghanistan Service Grant, and TEACH Grant Programs
| Citation | 84 FR 25244 |
| Published date | 31 May 2019 |
| Record Number | 2019-11354 |
| Section | Notices |
| Court | Education Department |
Federal Register, Volume 84 Issue 105 (Friday, May 31, 2019)
[Federal Register Volume 84, Number 105 (Friday, May 31, 2019)]
[Notices]
[Pages 25244-25248]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11354]
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DEPARTMENT OF EDUCATION
Federal Need Analysis Methodology for the 2020-21 Award Year--
Federal Pell Grant, Federal Work-Study, Federal Supplemental
Educational Opportunity Grant, William D. Ford Federal Direct Loan,
Iraq and Afghanistan Service Grant, and TEACH Grant Programs
AGENCY: Federal Student Aid, Department of Education.
ACTION: Notice.
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SUMMARY: The Secretary announces the annual updates to the tables used
in the statutory Federal Need Analysis Methodology that determines a
student's expected family contribution (EFC) for award year (AY) 2020-
21 for student financial aid programs, Catalog of Federal Domestic
Assistance (CFDA) Numbers 84.063, 84.033, 84.007, 84.268, 84.408, and
84.379. The intent of this notice is to alert the financial aid
community and the broader public to these required annual updates used
in the determination of student aid eligibility.
FOR FURTHER INFORMATION CONTACT: Marya Dennis, U.S. Department of
Education, Room 63G2, Union Center Plaza, 830 First Street NE,
Washington, DC 20202-5454. Telephone: (202) 377-3385.
If you use a telecommunications device for the deaf (TDD) or a text
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.
SUPPLEMENTARY INFORMATION: Part F of title IV of the Higher Education
Act of 1965, as amended (HEA), specifies the criteria, data elements,
calculations, and tables the Department of Education (Department) uses
in the Federal Need Analysis Methodology to determine the EFC.
Section 478 of the HEA requires the Secretary to annually update
the following four tables for price inflation--the Income Protection
Allowance (IPA), the Adjusted Net Worth (NW) of a Business or Farm, the
Education Savings and Asset Protection Allowance, and the Assessment
Schedules and Rates. The updates are based, in general, upon increases
in the Consumer Price Index (CPI).
For AY 2020-21, the Secretary is charged with updating the IPA for
parents of dependent students, adjusted NW of a business or farm, the
education savings and asset protection allowance, and the assessment
schedules and rates to account for inflation that took place between
December 2018 and December 2019. However, because the Secretary must
publish these tables before December 2019, the increases in the tables
must be based on a percentage equal to the estimated percentage
increase in the Consumer Price Index for All Urban Consumers (CPI-U)
for 2019. The Secretary must also account for any under- or over-
estimation of inflation for the preceding year.
In developing the table values for the 2019-20 AY, the Secretary
assumed a 1.6 percent increase in the CPI-U for the period December
2017 through December 2018. The actual inflation for this time period
was 1.9 percent. The Secretary estimates that the increase in the CPI-U
for the period December 2018 through December 2019 will be 2.4 percent.
Additionally, section 601 of the College Cost Reduction and Access
Act of 2007 (CCRAA, Pub. L. 110-84) amended sections 475 through 478 of
the HEA affecting the IPA tables for the 2009-10 through 2012-13 AYs
and required the Department to use a percentage of the estimated CPI to
update the table in subsequent years. These changes to the IPA impact
dependent students, as well as independent students with dependents
other than a spouse and independent students without dependents other
than a spouse. This notice includes the new 2020-21 AY values for the
IPA tables, which reflect the CCRAA amendments. The updated tables are
in sections 1 (Income Protection Allowance), 2 (Adjusted Net Worth of a
Business or Farm), and 4 (Assessment Schedules and Rates) of this
notice.
Under section 478(d) of the HEA, the Secretary must also revise the
education savings and asset protection allowances for each AY. The
Education Savings and Asset Protection Allowance table for AY 2020-21
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 on increases in the Bureau of
Labor Statistics' marginal costs budget for a two-worker family
compared to a one-worker family. The items covered by this calculation
are: Food away from home, apparel, transportation, and household
furnishings and operations. The Employment Expense Allowance table for
AY 2020-21 has been updated in section 5 of this notice.
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. This
[[Page 25245]]
table has been updated in section 6 of this notice.
The HEA requires 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. The allowance
varies by family size. The IPA for dependent students is $6,840. The
IPAs for parents of dependent students for AY 2020-21 are as follows:
Parents of Dependent Students
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Number in college
Family size -------------------------------------------------------------------------------
1 2 3 4 5
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2............................... $19,080 $15,810 .............. .............. ..............
3............................... 23,760 20,510 $17,250 .............. ..............
4............................... 29,340 26,080 22,830 $19,570 ..............
5............................... 34,620 31,350 28,110 24,840 $21,600
6............................... 40,490 37,230 33,980 30,720 27,470
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For each additional family member add $4,570. For each additional
college student subtract $3,250.
The IPAs for independent students with dependents other than a
spouse for AY 2020-21 are as follows:
Independent Students With Dependents Other Than a Spouse
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Number in college
Family size -------------------------------------------------------------------------------
1 2 3 4 5
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2............................... $26,940 $22,340 .............. .............. ..............
3............................... 33,550 28,960 $24,360 .............. ..............
4............................... 41,420 36,830 32,250 $27,630 ..............
5............................... 48,880 44,260 39,680 35,080 $30,500
6............................... 57,160 52,560 47,990 43,360 38,790
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For each additional family member add $6,450. For each additional
college student subtract $4,580.
The IPAs for single independent students and independent students
without dependents other than a spouse for AY 2020-21 are as follows:
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Number in
Marital status college IPA
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Single.................................. 1 $10,640
Married................................. 2 10,640
Married................................. 1 17,060
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2. Adjusted Net Worth of a Business or Farm. A portion of the full
NW (assets less debts) of a business or farm is excluded from the
calculation of an EFC 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.
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If the NW of a business or farm is Then the adjusted NW is
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Less than $1................................ $0.
$1 to $135,000.............................. $0 + 40% of NW.
$135,001 to $410,000........................ $54,000 + 50% of NW over $135,000.
$410,001 to $680,000........................ $191,500 + 60% of NW over $410,000.
$680,001 or more............................ $353,500 + 100% of NW over $680,000.
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3. Education Savings and Asset Protection Allowance. This allowance
protects a portion of NW (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.
[[Page 25246]]
Parents of Dependent Students, and Independent Students With Dependents
Other Than a Spouse, and Independent Students Without Dependents Other
Than a Spouse
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And the older parent or the
If the age of the older parent is, or if independent student is
the age of the independent student is -------------------------------
Married Single
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Then the allowance is
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25 or less.............................. 0 0
26...................................... 300 100
27...................................... 700 200
28...................................... 1,000 300
29...................................... 1,300 500
30...................................... 1,600 600
31...................................... 2,000 700
32...................................... 2,300 800
33...................................... 2,600 900
34...................................... 2,900 1,000
35...................................... 3,300 1,100
36...................................... 3,600 1,200
37...................................... 3,900 1,400
38...................................... 4,200 1,500
39...................................... 4,600 1,600
40...................................... 4,900 1,700
41...................................... 5,100 1,700
42...................................... 5,200 1,700
43...................................... 5,300 1,800
44...................................... 5,400 1,800
45...................................... 5,500 1,900
46...................................... 5,700 1,900
47...................................... 5,800 1,900
48...................................... 6,000 2,000
49...................................... 6,100 2,000
50...................................... 6,300 2,100
51...................................... 6,400 2,100
52...................................... 6,600 2,200
53...................................... 6,800 2,200
54...................................... 6,900 2,300
55...................................... 7,100 2,300
56...................................... 7,300 2,400
57...................................... 7,500 2,500
58...................................... 7,700 2,500
59...................................... 7,900 2,600
60...................................... 8,200 2,700
61...................................... 8,400 2,700
62...................................... 8,600 2,800
63...................................... 8,900 2,900
64...................................... 9,200 2,900
65 or older............................. 9,400 3,000
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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 from family financial resources toward educational
expenses. 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 contribution of parents of dependent students, and independent
students with dependents other than a spouse, is computed according to
the following schedule:
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If AAI is Then the contribution is
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Less than -$3,409........................... -$750.
-$3,409 to $17,000.......................... 22% of AAI.
$17,001 to $21,400.......................... $3,740 + 25% of AAI over $17,000.
$21,401 to $25,700.......................... $4,840 + 29% of AAI over $21,400.
$25,701 to $30,100.......................... $6,087 + 34% of AAI over $25,700.
$30,101 to $34,500.......................... $7,583 + 40% of AAI over $30,100.
$34,501 or more............................. $9,343 + 47% of AAI over $34,500.
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[[Page 25247]]
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 on the marginal differences in costs for a two-worker family
compared to a one-worker family. The items covered by these additional
expenses are: 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 $4,000 or 35 percent of earned income.
6. Allowance for State and Other Taxes. The allowance for State and
other taxes protects a portion of parents' and students' incomes 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.
Percent of Income Paid in State Taxes, by State, Dependency Status, and Income Level
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Parents of dependent students Dependent
and independent students with students and
dependents other than a spouse independent
-------------------------------- students
Percent of total income without
State -------------------------------- dependents
other than a
spouse
Under $15,000 $15,000 & up ---------------
All
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Alabama......................................................... 3 2 2
Alaska.......................................................... 2 1 0
Arizona......................................................... 4 3 2
Arkansas........................................................ 4 3 3
California...................................................... 8 7 6
Colorado........................................................ 4 3 3
Connecticut..................................................... 9 8 5
Delaware........................................................ 5 4 3
District of Columbia............................................ 7 6 6
Florida......................................................... 3 2 1
Georgia......................................................... 5 4 3
Hawaii.......................................................... 5 4 4
Idaho........................................................... 5 4 3
Illinois........................................................ 5 4 3
Indiana......................................................... 4 3 3
Iowa............................................................ 5 4 3
Kansas.......................................................... 4 3 2
Kentucky........................................................ 5 4 4
Louisiana....................................................... 3 2 2
Maine........................................................... 6 5 3
Maryland........................................................ 8 7 6
Massachusetts................................................... 7 6 4
Michigan........................................................ 4 3 3
Minnesota....................................................... 6 5 5
Mississippi..................................................... 3 2 2
Missouri........................................................ 5 4 3
Montana......................................................... 5 4 3
Nebraska........................................................ 5 4 3
Nevada.......................................................... 2 1 1
New Hampshire................................................... 4 3 1
New Jersey...................................................... 9 8 5
New Mexico...................................................... 3 2 2
New York........................................................ 9 8 7
North Carolina.................................................. 5 4 3
North Dakota.................................................... 2 1 1
Ohio............................................................ 5 4 3
Oklahoma........................................................ 3 2 2
Oregon.......................................................... 7 6 5
Pennsylvania.................................................... 5 4 3
Rhode Island.................................................... 6 5 3
South Carolina.................................................. 4 3 3
South Dakota.................................................... 2 1 1
Tennessee....................................................... 2 1 1
Texas........................................................... 3 2 1
Utah............................................................ 5 4 3
Vermont......................................................... 6 5 3
Virginia........................................................ 6 5 4
Washington...................................................... 3 2 1
West Virginia................................................... 3 2 3
Wisconsin....................................................... 6 5 4
[[Page 25248]]
Wyoming......................................................... 2 1 1
Other........................................................... 3 2 2
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Program Authority: 20 U.S.C. 1087rr.
Mark A. Brown,
Chief Operating Officer Federal Student Aid.
[FR Doc. 2019-11354 Filed 5-30-19; 8:45 am]
BILLING CODE 4000-01-P
