Notice2021-15217
Federal Need Analysis Methodology for the 2022-23 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
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Published
July 19, 2021
Issuing agencies
Education Department
Abstract
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) 2022- 23 for student financial aid programs, Assistance Listing 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.
Full Text
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<title>Federal Register, Volume 86 Issue 135 (Monday, July 19, 2021)</title>
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[Federal Register Volume 86, Number 135 (Monday, July 19, 2021)]
[Notices]
[Pages 38067-38071]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-15217]
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DEPARTMENT OF EDUCATION
Federal Need Analysis Methodology for the 2022-23 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, U.S. 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) 2022-
23 for student financial aid programs, Assistance Listing 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: Kerri Moseley-Hobbs, U.S. Department
of Education, Union Center Plaza, 830 First Street NE, Washington, DC
20202-5454. Telephone: (202) 377-3291.
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 2022-23, 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 2020 and December 2021. However, because the Secretary must
publish these tables before December 2021, 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 2021. The Secretary must also account for any under- or over-
estimation of inflation for the preceding year.
In developing the table values for the 2021-22 AY, the Secretary
assumed a 2.0 percent increase in the CPI-U for the period December
2019 through December 2020. The actual inflation for this time period
was 1.2 percent. The Secretary estimates that the increase in the CPI-U
for the period December 2020 through December 2021 will be 1.8 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 2022-23 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
[[Page 38068]]
savings and asset protection allowances for each AY. The Education
Savings and Asset Protection Allowance table for AY 2021-22 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 2022-23 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. After
review of the 2018 Statistics of Income data file, the Secretary has
determined that for AY 2022-2023 this table will not be updated.
Changes to tax law in 2018 resulted in a cap of state, local, and other
taxes that can be claimed as deductions on federal income tax returns.
This led to a large drop in the share of filers claiming the deduction
and thus the total amount of these taxes paid, causing the Statistics
of Income data file to less accurately reflect state, local, and other
taxes paid in 2018. While the 2018 Statistics of Income data file shows
a substantial decline in state, local, and other taxes paid as share of
income, more accurate data confirms that the year-over-year change in
share of income put toward state and local taxes paid as a share of
income grew from 9.80 percent to 9.89 percent. Therefore, the table in
section 6 of this notice has not been updated and will remain the same
as AY 2021-2022.
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 $7,040. The
IPAs for parents of dependent students for AY 2022-23 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............................... $19,630 $16,270 .............. .............. ..............
3............................... 24,440 21,100 $17,740 .............. ..............
4............................... 30,190 26,830 23,490 $20,130 ..............
5............................... 35,620 32,260 28,920 25,560 $22,220
6............................... 41,670 38,310 34,970 31,610 28,270
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For each additional family member add $4,700. For each additional
college student subtract $3,340.
The IPAs for independent students with dependents other than a
spouse for AY 2022-23 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............................... $27,720 $22,980 .............. .............. ..............
3............................... 34,520 29,800 $25,060 .............. ..............
4............................... 42,620 37,900 33,180 $28,430 ..............
5............................... 50,300 45,550 40,830 36,100 $31,380
6............................... 58,820 54,090 49,380 44,620 39,910
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For each additional family member add $6,640. For each additional
college student subtract $4,720.
The IPAs for single independent students and independent students
without dependents other than a spouse for AY 2022-23 are as follows:
Independent Students Without Dependents Other Than Spouse
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Number in college
Marital status -------------------------------
1 2
------------------------------------------------------------------------
Single.................................. $10,950 ..............
Married................................. 17,550 $10,950
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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,
[[Page 38069]]
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 $140,000.............................. $0 + 40% of NW.
$140,001 to $420,000........................ $56,000 + 50% of NW over $140,000.
$420,001 to $700,000........................ $196,500 + 60% of NW over $420,000.
$700,001 or more............................ $364,000 + 100% of NW over $700,000.
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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.
Parents of Dependent Students, and Independent Students With Dependents
Other Than a Spouse, and Independent Students Without Dependents Other
Than a Spouse
------------------------------------------------------------------------
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
-------------------------------
25 or less.............................. 0 0
26...................................... 200 0
27...................................... 400 0
28...................................... 600 0
29...................................... 800 0
30...................................... 1,000 0
31...................................... 1,200 0
32...................................... 1,400 0
33...................................... 1,700 0
34...................................... 1,900 0
35...................................... 2,100 0
36...................................... 2,300 0
37...................................... 2,500 0
38...................................... 2,700 0
39...................................... 2,900 0
40...................................... 3,100 0
41...................................... 3,200 0
42...................................... 3,200 0
43...................................... 3,300 0
44...................................... 3,400 0
45...................................... 3,500 0
46...................................... 3,600 0
47...................................... 3,700 0
48...................................... 3,700 0
49...................................... 3,800 0
50...................................... 3,900 0
51...................................... 4,000 0
52...................................... 4,100 0
53...................................... 4,200 0
54...................................... 4,400 0
55...................................... 4,500 0
56...................................... 4,600 0
57...................................... 4,700 0
58...................................... 4,900 0
59...................................... 5,000 0
60...................................... 5,100 0
61...................................... 5,300 0
62...................................... 5,400 0
63...................................... 5,600 0
64...................................... 5,800 0
65 or older............................. 5,900 0
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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 that contribute to
educational expenses. For dependent students, the EFC is derived
[[Page 38070]]
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 $17,500.......................... 22% of AAI.
$17,501 to $22,000.......................... $3,850 + 25% of AAI over $17,500.
$22,001 to $26,500.......................... $4,975 + 29% of AAI over $22,000.
$26,501 to $31,000.......................... $6,280 + 34% of AAI over $26,500.
$30,001 to $35,500.......................... $7,810 + 40% of AAI over $31,000.
$35,501 or more............................. $9,610 + 47% of AAI over $35,500.
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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
----------------------------------------------------------------------------------------------------------------
Parents of dependent students Dependent
and independent students with students and
dependents other than a spouse independent
-------------------------------- students
without
State dependents
Income under Income $15,000 other than a
$15,000 & up spouse
---------------
All income
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Alabama......................................................... 3 2 2
Alaska.......................................................... 2 1 0
Arizona......................................................... 4 3 2
Arkansas........................................................ 4 3 3
California...................................................... 9 8 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 4
Hawaii.......................................................... 5 4 4
Idaho........................................................... 5 4 4
Illinois........................................................ 6 5 3
Indiana......................................................... 4 3 3
Iowa............................................................ 5 4 3
Kansas.......................................................... 4 3 3
Kentucky........................................................ 5 4 4
Louisana........................................................ 3 2 2
Maine........................................................... 6 5 3
Maryland........................................................ 8 7 6
Massachussets................................................... 7 6 4
Michigan........................................................ 5 4 3
Minnesota....................................................... 7 6 5
Mississippi..................................................... 3 2 2
Missouri........................................................ 5 4 3
Montana......................................................... 5 4 3
Nebraska........................................................ 5 4 3
Nevada.......................................................... 3 2 1
New Hampshire................................................... 4 3 1
New Jersey...................................................... 9 8 5
New Mexico...................................................... 3 2 2
[[Page 38071]]
New York........................................................ 10 9 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 4
South Carolina.................................................. 4 3 3
South Dakota.................................................... 2 1 1
Tennessee....................................................... 2 1 1
Texas........................................................... 3 2 1
Utah............................................................ 5 4 4
Vermont......................................................... 6 5 3
Virginia........................................................ 6 5 4
Washington...................................................... 3 2 1
West Virginia................................................... 3 2 3
Wisconsin....................................................... 6 5 4
Wyoming......................................................... 2 1 1
Other........................................................... 2 1 1
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Accessible Format: On request to the program contact person listed
under FOR FURTHER INFORMATION CONTACT, individuals with disabilities
can obtain this document in an accessible format. The Department will
provide the requestor with an accessible format that may include Rich
Text Format (RTF) or text format (txt), a thumb drive, an MP3 file,
Braille, large print, audiotape, or compact disc, or other accessible
format.
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You may also access documents of the Department published in the
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by the Department.
Program Authority: 20 U.S.C. 1087rr.
Richard Cordray,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 2021-15217 Filed 7-16-21; 8:45 am]
BILLING CODE 4000-01-P
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</html>Indexed from Federal Register on July 19, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.