Part E—Need Analysis
Codification
This part was added as part F of title IV of
Part Referred to in Other Sections
This part is referred to in
§1087kk. Amount of need
Except as otherwise provided therein, the amount of need of any student for financial assistance under this subchapter and part C of subchapter I of
(1) the cost of attendance of such student, minus
(2) the expected family contribution for such student, minus
(3) estimated financial assistance not received under this subchapter and part C of subchapter I of
(
Amendments
1998—
1992—
Effective Date of 1998 Amendment
"(a)
"(b)
Effective Date of 1992 Amendment
Section 471(b) of
Effective Date
Section 406(b)(1)–(3) of
"(1) Except as provided in paragraphs (2) through (4)—
"(A) part F of title IV of the Act [this part] shall apply with respect to determinations of need under such title for academic years beginning with academic year 1988–1989 and succeeding academic years; and
"(B) for any preceding academic year, determinations of need shall be made in accordance with regulations prescribed by the Secretary of Education in accordance with the Student Financial Assistance Technical Amendments Act of 1982 [
"(2) With respect to an application filed after the date of enactment of this Act [Oct. 17, 1986] for a loan under part B of such title [part B of this subchapter] for any academic year preceding academic year 1988–1989, any determination of expected family contribution shall be made using the system of financial need analysis approved by the Secretary of Education for use under subpart 2 of part A and parts C and E of such title [subpart 2 of part A of this subchapter and part C of subchapter I of
"(3) For purposes of sections 413D(d)(2)(B) [now 413D(c)(2)(B)], 442(d)(2)(B) and 462(d)(2)(B) [
"(4) Section 479B of the Act [
[References to subpart 2 of part A of title IV of
Section Referred to in Other Sections
This section is referred to in
1 So in original. Probably should be "subpart".
§1087ll. Cost of attendance
For the purpose of this subchapter and part C of subchapter I of
(1) tuition and fees normally assessed a student carrying the same academic workload as determined by the institution, and including costs for rental or purchase of any equipment, materials, or supplies required of all students in the same course of study;
(2) an allowance for books, supplies, transportation, and miscellaneous personal expenses, including a reasonable allowance for the documented rental or purchase of a personal computer, for a student attending the institution on at least a half-time basis, as determined by the institution;
(3) an allowance (as determined by the institution) for room and board costs incurred by the student which—
(A) shall be an allowance determined by the institution for a student without dependents residing at home with parents;
(B) for students without dependents residing in institutionally owned or operated housing, shall be a standard allowance determined by the institution based on the amount normally assessed most of its residents for room and board; and
(C) for all other students shall be an allowance based on the expenses reasonably incurred by such students for room and board;
(4) for less than half-time students (as determined by the institution) tuition and fees and an allowance for only books, supplies, and transportation (as determined by the institution) and dependent care expenses (in accordance with paragraph (8));
(5) for a student engaged in a program of study by correspondence, only tuition and fees and, if required, books and supplies, travel, and room and board costs incurred specifically in fulfilling a required period of residential training;
(6) for incarcerated students only tuition and fees and, if required, books and supplies;
(7) for a student enrolled in an academic program in a program of study abroad approved for credit by the student's home institution, reasonable costs associated with such study (as determined by the institution at which such student is enrolled);
(8) for a student with one or more dependents, an allowance based on the estimated actual expenses incurred for such dependent care, based on the number and age of such dependents, except that—
(A) such allowance shall not exceed the reasonable cost in the community in which such student resides for the kind of care provided; and
(B) the period for which dependent care is required includes, but is not limited to, class-time, study-time, field work, internships, and commuting time;
(9) for a student with a disability, an allowance (as determined by the institution) for those expenses related to the student's disability, including special services, personal assistance, transportation, equipment, and supplies that are reasonably incurred and not provided for by other assisting agencies;
(10) for a student receiving all or part of the student's instruction by means of telecommunications technology, no distinction shall be made with respect to the mode of instruction in determining costs;
(11) for a student engaged in a work experience under a cooperative education program, an allowance for reasonable costs associated with such employment (as determined by the institution); and
(12) for a student who receives a loan under this or any other Federal law, or, at the option of the institution, a conventional student loan incurred by the student to cover a student's cost of attendance at the institution, an allowance for the actual cost of any loan fee, origination fee, or insurance premium charged to such student or such parent on such loan, or the average cost of any such fee or premium charged by the Secretary, lender, or guaranty agency making or insuring such loan, as the case may be.
(
Amendments
1998—Par. (2).
Par. (3)(A).
Par. (3)(C).
Par. (10).
Par. (11).
1993—Par. (12).
1992—
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Section Referred to in Other Sections
This section is referred to in
§1087mm. Family contribution
For the purpose of this subchapter and part C of subchapter I of
(
Amendments
1998—
1992—
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
§1087nn. Determination of expected family contribution; data elements
(a) General rule for determination of expected family contribution
The expected family contribution—
(1) for a dependent student shall be determined in accordance with
(2) for a single independent student or a married independent student without dependents (other than a spouse) shall be determined in accordance with
(3) for an independent student with dependents other than a spouse shall be determined in accordance with
(b) Data elements
The following data elements are considered in determining the expected family contribution:
(1) the available income of (A) the student and the student's spouse, or (B) the student and the student's parents, in the case of a dependent student;
(2) the number of dependents in the family of the student;
(3) the number of dependents in the family of the student, excluding the student's parents, who are enrolled or accepted for enrollment, on at least a half-time basis, in a degree, certificate, or other program leading to a recognized educational credential at an institution of higher education that is an eligible institution in accordance with the provisions of
(4) the net assets of (A) the student and the student's spouse, and (B) the student and the student's parents, in the case of a dependent student;
(5) the marital status of the student;
(6) the age of the older parent, in the case of a dependent student, and the student; and
(7) the additional expenses incurred (A) in the case of a dependent student, when both parents of the student are employed or when the family is headed by a single parent who is employed, or (B) in the case of an independent student, when the student is married and the student's spouse is employed, or when the employed student qualifies as a surviving spouse or as a head of a household under
(
Amendments
1998—Subsec. (b)(3).
1992—
1988—Par. (8).
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
§1087oo. Family contribution for dependent students
(a) Computation of expected family contribution
For each dependent student, the expected family contribution is equal to the sum of—
(1) the parents' contribution from adjusted available income (determined in accordance with subsection (b) of this section);
(2) the student contribution from available income (determined in accordance with subsection (g) of this section); and
(3) the student contribution from assets (determined in accordance with subsection (h) of this section).
(b) Parents' contribution from adjusted available income
The parents' contribution from adjusted available income is equal to the amount determined by—
(1) computing adjusted available income by adding—
(A) the parents' available income (determined in accordance with subsection (c) of this section); and
(B) the parents' contribution from assets (determined in accordance with subsection (d) of this section);
(2) assessing such adjusted available income in accordance with the assessment schedule set forth in subsection (e) of this section; and
(3) dividing the assessment resulting under paragraph (2) by the number of the family members, excluding the student's parents, who are enrolled or accepted for enrollment, on at least a half-time basis, in a degree, certificate, or other program leading to a recognized educational credential at an institution of higher education that is an eligible institution in accordance with the provisions of
except that the amount determined under this subsection shall not be less than zero.
(c) Parents' available income
(1) In general
The parents' available income is determined by deducting from total income (as defined in
(A) Federal income taxes;
(B) an allowance for State and other taxes, determined in accordance with paragraph (2);
(C) an allowance for social security taxes, determined in accordance with paragraph (3);
(D) an income protection allowance, determined in accordance with paragraph (4);
(E) an employment expense allowance, determined in accordance with paragraph (5); and
(F) the amount of any tax credit taken by the parents under
(2) Allowance for State and other taxes
The allowance for State and other taxes is equal to an amount determined by multiplying total income (as defined in
| If parents' State or territory of residence is— | And parents' total income is— | |
|---|---|---|
| less than $15,000 or | $15,000 or more | |
| then the percentage is— | ||
| Alaska, Puerto Rico, Wyoming | 3 | 2 |
| American Samoa, Guam, Louisiana, Nevada, Texas, Trust Territory, Virgin Islands | 4 | 3 |
| Florida, South Dakota, Tennessee, New Mexico | 5 | 4 |
| North Dakota, Washington | 6 | 5 |
| Alabama, Arizona, Arkansas, Indiana, Mississippi, Missouri, Montana, New Hampshire, Oklahoma, West Virginia | 7 | 6 |
| Colorado, Connecticut, Georgia, Illinois, Kansas, Kentucky | 8 | 7 |
| California, Delaware, Idaho, Iowa, Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Utah, Vermont, Virginia, Canada, Mexico | 9 | 8 |
| Maine, New Jersey | 10 | 9 |
| District of Columbia, Hawaii, Maryland, Massachusetts, Oregon, Rhode Island | 11 | 10 |
| Michigan, Minnesota | 12 | 11 |
| Wisconsin | 13 | 12 |
| New York | 14 | 13 |
| Other | 9 | 8 |
(3) Allowance for social security taxes
The allowance for social security taxes is equal to the amount earned by each parent multiplied by the social security withholding rate appropriate to the tax year of the earnings, up to the maximum statutory social security tax withholding amount for that same tax year.
(4) Income protection allowance
The income protection allowance is determined by the following table (or a successor table prescribed by the Secretary under
| Family Size | Number in College | |||||
|---|---|---|---|---|---|---|
| (including student) | 1 | 2 | 3 | 4 | 5 | For each additional subtract: |
| 2 | $10,520 | $8,720 | $1,790 | |||
| 3 | 13,100 | 11,310 | $9,510 | |||
| 4 | 16,180 | 14,380 | 12,590 | $10,790 | ||
| 5 | 19,090 | 17,290 | 15,500 | 13,700 | $11,910 | |
| 6 | 22,330 | 20,530 | 18,740 | 16,940 | 15,150 | |
| For each additional add: | 2,520 | 2,520 | 2,520 | 2,520 | 2,520 | |
(5) Employment expense allowance
The employment expense allowance is determined as follows (or using a successor provision prescribed by the Secretary under
(A) If both parents were employed in the year for which their income is reported and both have their incomes reported in determining the expected family contribution, such allowance is equal to the lesser of $2,500 or 35 percent of the earned income of the parent with the lesser earned income.
(B) If a parent qualifies as a surviving spouse or as a head of household as defined in
(d) Parents' contribution from assets
(1) In general
The parents' contribution from assets is equal to—
(A) the parental net worth (determined in accordance with paragraph (2)); minus
(B) the education savings and asset protection allowance (determined in accordance with paragraph (3)); multiplied by
(C) the asset conversion rate (determined in accordance with paragraph (4)), except that the result shall not be less than zero.
(2) Parental net worth
The parental net worth is calculated by adding—
(A) the current balance of checking and savings accounts and cash on hand;
(B) the net value of investments and real estate, excluding the net value of the principal place of residence; and
(C) the adjusted net worth of a business or farm, computed on the basis of the net worth of such business or farm (hereafter in this subsection referred to as "NW"), determined in accordance with the following table (or a successor table prescribed by the Secretary under
| If the net worth of a business or farm is— | Then the adjusted net worth is: |
|---|---|
| Less than $1 | $0 |
| $1–$75,000 | 40 percent of NW |
| $75,001–$225,000 | $30,000 plus 50 percent of NW over $75,000 |
| $225,001–$375,000 | $105,000 plus 60 percent of NW over $225,000 |
| $375,001 or more | $195,000 plus 100 percent of NW over $375,000 |
(3) Education savings and asset protection allowance
The education savings and asset protection allowance is calculated according to the following table (or a successor table prescribed by the Secretary under
| If the age of the oldest parent is— | And there are | |
|---|---|---|
| two parents | one parent | |
| then the allowance is— | ||
| 25 or less | $ 0 | $0 |
| 26 | 2,200 | 1,600 |
| 27 | 4,300 | 3,200 |
| 28 | 6,500 | 4,700 |
| 29 | 8,600 | 6,300 |
| 30 | 10,800 | 7,900 |
| 31 | 13,000 | 9,500 |
| 32 | 15,100 | 11,100 |
| 33 | 17,300 | 12,600 |
| 34 | 19,400 | 14,200 |
| 35 | 21,600 | 15,800 |
| 36 | 23,800 | 17,400 |
| 37 | 25,900 | 19,000 |
| 38 | 28,100 | 20,500 |
| 39 | 30,200 | 22,100 |
| 40 | 32,400 | 23,700 |
| 41 | 33,300 | 24,100 |
| 42 | 34,100 | 24,700 |
| 43 | 35,000 | 25,200 |
| 44 | 35,700 | 25,800 |
| 45 | 36,600 | 26,300 |
| 46 | 37,600 | 26,900 |
| 47 | 38,800 | 27,600 |
| 48 | 39,800 | 28,200 |
| 49 | 40,800 | 28,800 |
| 50 | 41,800 | 29,500 |
| 51 | 43,200 | 30,200 |
| 52 | 44,300 | 31,100 |
| 53 | 45,700 | 31,800 |
| 54 | 47,100 | 32,600 |
| 55 | 48,300 | 33,400 |
| 56 | 49,800 | 34,400 |
| 57 | 51,300 | 35,200 |
| 58 | 52,900 | 36,200 |
| 59 | 54,800 | 37,200 |
| 60 | 56,500 | 38,100 |
| 61 | 58,500 | 39,200 |
| 62 | 60,300 | 40,300 |
| 63 | 62,400 | 41,500 |
| 64 | 64,600 | 42,800 |
| 65 or more | 66,800 | 44,000 |
(4) Asset conversion rate
The asset conversion rate is 12 percent.
(e) Assessment schedule
The adjusted available income (as determined under subsection (b)(1) of this section and hereafter in this subsection referred to as "AAI") is assessed according to the following table (or a successor table prescribed by the Secretary under
| If AAI is— | Then the assessment is— |
|---|---|
| Less than ^$3,409 | ^$750 |
| ^$3,409 to $9,400 | 22% of AAI |
| $9,401 to $11,800 | $2,068 + 25% of AAI over $9,400 |
| $11,801 to $14,200 | $2,668 + 29% of AAI over $11,800 |
| $14,201 to $16,600 | $3,364 + 34% of AAI over $14,200 |
| $16,601 to $19,000 | $4,180 + 40% of AAI over $16,600 |
| $19,001 or more | $5,140 + 47% of AAI over $19,000 |
(f) Computations in case of separation, divorce, remarriage, or death
(1) Divorced or separated parents
Parental income and assets for a student whose parents are divorced or separated is determined under the following procedures:
(A) Include only the income and assets of the parent with whom the student resided for the greater portion of the 12-month period preceding the date of the application.
(B) If the preceding criterion does not apply, include only the income and assets of the parent who provided the greater portion of the student's support for the 12-month period preceding the date of application.
(C) If neither of the preceding criteria apply, include only the income and assets of the parent who provided the greater support during the most recent calendar year for which parental support was provided.
(2) Death of a parent
Parental income and assets in the case of the death of any parent is determined as follows:
(A) If either of the parents has died, the student shall include only the income and assets of the surviving parent.
(B) If both parents have died, the student shall not report any parental income or assets.
(3) Remarried parents
If a parent whose income and assets are taken into account under paragraph (1) of this subsection, or if a parent who is a widow or widower and whose income is taken into account under paragraph (2) of this subsection, has remarried, the income of that parent's spouse shall be included in determining the parent's adjusted available income only if—
(A) the student's parent and the stepparent are married as of the date of application for the award year concerned; and
(B) the student is not an independent student.
(g) Student contribution from available income
(1) In general
The student contribution from available income is equal to—
(A) the student's total income (determined in accordance with
(B) the adjustment to student income (determined in accordance with paragraph (2)); multiplied by
(C) the assessment rate as determined in paragraph (5);
except that the amount determined under this subsection shall not be less than zero.
(2) Adjustment to student income
The adjustment to student income is equal to the sum of—
(A) Federal income taxes of the student;
(B) an allowance for State and other income taxes (determined in accordance with paragraph (3));
(C) an allowance for social security taxes determined in accordance with paragraph (4);
(D) an income protection allowance of $2,200 (or a successor amount prescribed by the Secretary under
(E) the amount of any tax credit taken by the student under
(F) an allowance for parents' negative available income, determined in accordance with paragraph (6).
(3) Allowance for State and other income taxes
The allowance for State and other income taxes is equal to an amount determined by multiplying total income (as defined in
| If the students' State or territory of residence is— | The percentage is— |
|---|---|
| Alaska, American Samoa, Florida, Guam, Nevada, South Dakota, Tennessee, Texas, Trust Territory, Virgin Islands, Washington, Wyoming | 0 |
| Connecticut, Louisiana, Puerto Rico | 1 |
| Arizona, New Hampshire, New Mexico, North Dakota | 2 |
| Alabama, Colorado, Illinois, Indiana, Kansas, Mississippi, Missouri, Montana, Nebraska, New Jersey, Oklahoma | 3 |
| Arkansas, Georgia, Iowa, Kentucky, Maine, Pennsylvania, Utah, Vermont, Virginia, West Virginia, Canada, Mexico | 4 |
| California, Idaho, Massachusetts, North Carolina, Ohio, Rhode Island, South Carolina | 5 |
| Hawaii, Maryland, Michigan, Wisconsin | 6 |
| Delaware, District of Columbia, Minnesota, Oregon | 7 |
| New York | 8 |
| Other | 4 |
(4) Allowance for social security taxes
The allowance for social security taxes is equal to the amount earned by the student multiplied by the social security withholding rate appropriate to the tax year of the earnings, up to the maximum statutory social security tax withholding amount for that same tax year.
(5) Assessment of available income
The student's available income (determined in accordance with paragraph (1) of this subsection) is assessed at 50 percent.
(6) Allowance for parents' negative available income
The allowance for parents' negative available income is the amount, if any, by which the sum of the amounts deducted under subparagraphs (A) through (F) of subsection (c)(1) of this section exceeds the sum of the parents' total income (as defined in
(h) Student contribution from assets
The student contribution from assets is determined by calculating the net assets of the student and multiplying such amount by 35 percent, except that the result shall not be less than zero.
(i) Adjustments to parents' contribution for enrollment periods other than 9 months for purposes other than subpart 2 of part A of this subchapter
For periods of enrollment other than 9 months, the parents' contribution from adjusted available income (as determined under subsection (b) of this section) is determined as follows for purposes other than subpart 2 of part A of this subchapter:
(1) For periods of enrollment less than 9 months, the parents' contribution from adjusted available income is divided by 9 and the result multiplied by the number of months enrolled.
(2) For periods of enrollment greater than 9 months—
(A) the parents' adjusted available income (determined in accordance with subsection (b)(1) of this section) is increased by the difference between the income protection allowance (determined in accordance with subsection (c)(4) of this section) for a family of four and a family of five, each with one child in college;
(B) the resulting revised parents' adjusted available income is assessed according to subsection (e) of this section and adjusted according to subsection (b)(3) of this section to determine a revised parents' contribution from adjusted available income;
(C) the original parents' contribution from adjusted available income is subtracted from the revised parents' contribution from adjusted available income, and the result is divided by 12 to determine the monthly adjustment amount; and
(D) the original parents' contribution from adjusted available income is increased by the product of the monthly adjustment amount multiplied by the number of months greater than 9 for which the student will be enrolled.
(j) Adjustments to student's contribution for enrollment periods of less than nine months
For periods of enrollment of less than 9 months, the student's contribution from adjusted available income (as determined under subsection (g) of this section) is determined, for purposes other than subpart 2 of part A of this subchapter, by dividing the amount determined under such subsection by 9, and multiplying the result by the number of months in the period of enrollment.
(
Amendments
1998—Subsec. (b)(3).
Subsec. (g)(2)(D).
Subsec. (g)(2)(F).
Subsec. (g)(6).
Subsec. (j).
1997—Subsec. (c)(1)(F).
Subsec. (g)(2)(E).
1993—Subsec. (c)(4).
Subsec. (f)(3).
Subsec. (g)(1)(B).
Subsec. (g)(3).
1992—
1987—Subsec. (c)(2), (4).
Subsec. (c)(7).
Subsec. (d)(2)(B).
Subsec. (d)(2)(C).
| If the net worth of a business or farm is— | Then the adjusted net worth is: |
|---|---|
| Less than $1 | $0 |
| $1–$65,000 | 40 percent of NW |
| $65,001–$195,000 | $26,000 plus 50 percent of NW over $65,000 |
| $195,001–$325,000 | $91,000 plus 60 percent of NW over $195,000 |
| $325,001 or more | $169,000 plus 100 percent of NW over $325,000". |
Subsec. (d)(4)(B).
Subsec. (d)(4)(C).
Subsec. (d)(4)(D).
Subsec. (e).
Subsec. (g)(1)(C).
Subsec. (g)(3).
Subsec. (h).
"(1) the current balance of checking and savings accounts and cash on hand; and
"(2) the net value of investments and real estate, including the net value in the principal place of residence except in the case of a dislocated worker (certified in accordance with title III of the Job Training Partnership Act) or a dislocated homemaker (as defined in
Subsec. (i).
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Section Referred to in Other Sections
This section is referred to in
§1087pp. Family contribution for independent students without dependents other than a spouse
(a) Computation of expected family contribution
For each independent student without dependents other than a spouse, the expected family contribution is determined by—
(1) adding—
(A) the family's contribution from available income (determined in accordance with subsection (b) of this section); and
(B) the family's contribution from assets (determined in accordance with subsection (c) of this section);
(2) dividing the sum resulting under paragraph (1) by the number of students who are enrolled or accepted for enrollment, on at least a half-time basis, in a degree, certificate, or other program leading to a recognized educational credential at an institution of higher education that is an eligible institution in accordance with the provisions of
(3) for periods of enrollment of less than 9 months, for purposes other than subpart 2 of part A of this subchapter—
(A) dividing the quotient resulting under paragraph (2) by 9; and
(B) multiplying the result by the number of months in the period of enrollment;
except that the amount determined under this subsection shall not be less than zero.
(b) Family's contribution from available income
(1) In general
The family's contribution from income is determined by—
(A) deducting from total income (as defined in
(i) Federal income taxes;
(ii) an allowance for State and other taxes, determined in accordance with paragraph (2);
(iii) an allowance for social security taxes, determined in accordance with paragraph (3);
(iv) an income protection allowance of the following amount (or a successor amount prescribed by the Secretary under
(I) $5,000 for single students;
(II) $5,000 for married students where both are enrolled pursuant to subsection (a)(2) of this section; and
(III) $8,000 for married students where one is enrolled pursuant to subsection (a)(2) of this section;
(v) in the case where a spouse is present, an employment expense allowance, as determined in accordance with paragraph (4); and
(vi) the amount of any tax credit taken under
(B) assessing such available income in accordance with paragraph (5).
(2) Allowance for State and other taxes
The allowance for State and other taxes is equal to an amount determined by multiplying total income (as defined in
| If the students' State or territory of residence is— | The percentage is— |
|---|---|
| Alaska, American Samoa, Florida, Guam, Nevada, South Dakota, Tennessee, Texas, Trust Territory, Virgin Islands, Washington, Wyoming | 0 |
| Connecticut, Louisiana, Puerto Rico | 1 |
| Arizona, New Hampshire, New Mexico, North Dakota | 2 |
| Alabama, Colorado, Illinois, Indiana, Kansas, Mississippi, Missouri, Montana, Nebraska, New Jersey, Oklahoma | 3 |
| Arkansas, Georgia, Iowa, Kentucky, Maine, Pennsylvania, Utah, Vermont, Virginia, West Virginia, Canada, Mexico | 4 |
| California, Idaho, Massachusetts, North Carolina, Ohio, Rhode Island, South Carolina | 5 |
| Hawaii, Maryland, Michigan, Wisconsin | 6 |
| Delaware, District of Columbia, Minnesota, Oregon | 7 |
| New York | 8 |
| Other | 4 |
(3) Allowance for social security taxes
The allowance for social security taxes is equal to the amount earned by the student (and spouse, if appropriate), multiplied by the social security withholding rate appropriate to the tax year preceding the award year, up to the maximum statutory social security tax withholding amount for that same tax year.
(4) Employment expenses allowance
The employment expense allowance is determined as follows (or using a successor provision prescribed by the Secretary under
(A) If the student is married and the student's spouse is employed in the year for which income is reported, such allowance is equal to the lesser of $2,500 or 35 percent of the earned income of the student or spouse with the lesser earned income.
(B) If a student is not married, the employment expense allowance is zero.
(5) Assessment of available income
The family's available income (determined in accordance with paragraph (1)(A) of this subsection) is assessed at 50 percent.
(c) Family contribution from assets
(1) In general
The family's contribution from assets is equal to—
(A) the family's net worth (determined in accordance with paragraph (2)); minus
(B) the asset protection allowance (determined in accordance with paragraph (3)); multiplied by
(C) the asset conversion rate (determined in accordance with paragraph (4));
except that the family's contribution from assets shall not be less than zero.
(2) Family's net worth
The family's net worth is calculated by adding—
(A) the current balance of checking and savings accounts and cash on hand;
(B) the net value of investments and real estate, excluding the net value in the principal place of residence; and
(C) the adjusted net worth of a business or farm, computed on the basis of the net worth of such business or farm (hereafter referred to as "NW"), determined in accordance with the following table (or a successor table prescribed by the Secretary under
| If the net worth of a business or farm is— | Then the adjusted net worth is— |
|---|---|
| Less than $1 | $0 |
| $1–$75,000 | 40 percent of NW |
| $75,001–$225,000 | $30,000 plus 50 percent of NW over $75,000 |
| $225,001–$375,000 | $105,000 plus 60 percent of NW over $225,000 |
| $375,001 or more | $195,000 plus 100 percent of NW over $375,000 |
(3) Asset protection allowance
The asset protection allowance is calculated according to the following table (or a successor table prescribed by the Secretary under
| If the age of the student is— | And the student is | |
|---|---|---|
| married | single | |
| then the allowance is— | ||
| 25 or less | $ 0 | $0 |
| 26 | 2,200 | 1,600 |
| 27 | 4,300 | 3,200 |
| 28 | 6,500 | 4,700 |
| 29 | 8,600 | 6,300 |
| 30 | 10,800 | 7,900 |
| 31 | 13,000 | 9,500 |
| 32 | 15,100 | 11,100 |
| 33 | 17,300 | 12,600 |
| 34 | 19,400 | 14,200 |
| 35 | 21,600 | 15,800 |
| 36 | 23,800 | 17,400 |
| 37 | 25,900 | 19,000 |
| 38 | 28,100 | 20,500 |
| 39 | 30,200 | 22,100 |
| 40 | 32,400 | 23,700 |
| 41 | 33,300 | 24,100 |
| 42 | 34,100 | 24,700 |
| 43 | 35,000 | 25,200 |
| 44 | 35,700 | 25,800 |
| 45 | 36,600 | 26,300 |
| 46 | 37,600 | 26,900 |
| 47 | 38,800 | 27,600 |
| 48 | 39,800 | 28,200 |
| 49 | 40,800 | 28,800 |
| 50 | 41,800 | 29,500 |
| 51 | 43,200 | 30,200 |
| 52 | 44,300 | 31,100 |
| 53 | 45,700 | 31,800 |
| 54 | 47,100 | 32,600 |
| 55 | 48,300 | 33,400 |
| 56 | 49,800 | 34,400 |
| 57 | 51,300 | 35,200 |
| 58 | 52,900 | 36,200 |
| 59 | 54,800 | 37,200 |
| 60 | 56,500 | 38,100 |
| 61 | 58,500 | 39,200 |
| 62 | 60,300 | 40,300 |
| 63 | 62,400 | 41,500 |
| 64 | 64,600 | 42,800 |
| 65 or more | 66,800 | 44,000 |
(4) Asset conversion rate
The asset conversion rate is 35 percent.
(d) Computations in case of separation, divorce, or death
In the case of a student who is divorced or separated, or whose spouse has died, the spouse's income and assets shall not be considered in determining the family's contribution from income or assets.
(
Amendments
1998—Subsec. (a)(3).
Subsec. (b)(1)(A)(iv).
Subsec. (b)(1)(A)(iv)(I), (II).
Subsec. (b)(1)(A)(iv)(III).
1997—Subsec. (b)(1)(A)(vi).
1993—Subsec. (d).
1992—
1987—Subsec. (b)(1)(A), (B).
Subsec. (b)(1)(C).
Subsec. (b)(1)(D).
Subsec. (b)(2).
Subsec. (b)(4)(A).
Subsec. (b)(4)(B).
Subsec. (c)(1).
Subsec. (c)(2)(B).
Subsec. (c)(2)(C).
| If the net worth of a business or farm is— | Then the adjusted net worth is— |
|---|---|
| Less than $1 | $0 |
| $1–$65,000 | 40 percent of NW |
| $65,001–$195,000 | $26,000 plus 50 percent of NW over $65,000 |
| $195,001–$325,000 | $91,000 plus 60 percent of NW over $195,000 |
| $325,001 or more | $169,000 plus 100 percent of NW over $325,000". |
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Section Referred to in Other Sections
This section is referred to in
§1087qq. Family contribution for independent students with dependents other than a spouse
(a) Computation of expected family contribution
For each independent student with dependents other than a spouse, the expected family contribution is equal to the amount determined by—
(1) computing adjusted available income by adding—
(A) the family's available income (determined in accordance with subsection (b) of this section); and
(B) the family's contribution from assets (determined in accordance with subsection (c) of this section);
(2) assessing such adjusted available income in accordance with an assessment schedule set forth in subsection (d) of this section;
(3) dividing the assessment resulting under paragraph (2) by the number of family members who are enrolled or accepted for enrollment, on at least a half-time basis, in a degree, certificate, or other program leading to a recognized educational credential at an institution of higher education that is an eligible institution in accordance with the provisions of
(4) for periods of enrollment of less than 9 months, for purposes other than subpart 2 of part A of this subchapter—
(A) dividing the quotient resulting under paragraph (3) by 9; and
(B) multiplying the result by the number of months in the period of enrollment;
except that the amount determined under this subsection shall not be less than zero.
(b) Family's available income
(1) In general
The family's available income is determined by deducting from total income (as defined in
(A) Federal income taxes;
(B) an allowance for State and other taxes, determined in accordance with paragraph (2);
(C) an allowance for social security taxes, determined in accordance with paragraph (3);
(D) an income protection allowance, determined in accordance with paragraph (4);
(E) an employment expense allowance, determined in accordance with paragraph (5); and
(F) the amount of any tax credit taken under
(2) Allowance for State and other taxes
The allowance for State and other taxes is equal to an amount determined by multiplying total income (as defined in
| If student's State or territory of residence is— | And family's total income is— | |
|---|---|---|
| less than $15,000 | $15,000 or more | |
| then the percentage is— | ||
| Alaska, Puerto Rico, Wyoming | 3 | 2 |
| American Samoa, Guam, Louisiana, Nevada, Texas, Trust Territory, Virgin Islands | 4 | 3 |
| Florida, South Dakota, Tennessee, New Mexico | 5 | 4 |
| North Dakota, Washington | 6 | 5 |
| Alabama, Arizona, Arkansas, Indiana, Mississippi, Missouri, Montana, New Hampshire, Oklahoma, West Virginia | 7 | 6 |
| Colorado, Connecticut, Georgia, Illinois, Kansas, Kentucky | 8 | 7 |
| California, Delaware, Idaho, Iowa, Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Utah, Vermont, Virginia, Canada, Mexico | 9 | 8 |
| Maine, New Jersey | 10 | 9 |
| District of Columbia, Hawaii, Maryland, Massachusetts, Oregon, Rhode Island | 11 | 10 |
| Michigan, Minnesota | 12 | 11 |
| Wisconsin | 13 | 12 |
| New York | 14 | 13 |
| Other | 9 | 8 |
(3) Allowance for social security taxes
The allowance for social security taxes is equal to the amount estimated to be earned by the student (and spouse, if appropriate) multiplied by the social security withholding rate appropriate to the tax year preceding the award year, up to the maximum statutory social security tax withholding amount for that same tax year.
(4) Income protection allowance
The income protection allowance is determined by the following table (or a successor table prescribed by the Secretary under
| Family Size | Number in College | |||||
|---|---|---|---|---|---|---|
| (including student) | 1 | 2 | 3 | 4 | 5 | For each additional subtract: |
| 2 | $10,520 | $8,720 | $1,790 | |||
| 3 | 13,100 | 11,310 | $9,510 | |||
| 4 | 16,180 | 14,380 | 12,590 | $10,790 | ||
| 5 | 19,090 | 17,290 | 15,500 | 13,700 | $11,910 | |
| 6 | 22,330 | 20,530 | 18,740 | 16,940 | 15,150 | |
| For each additional add: | 2,520 | 2,520 | 2,520 | 2,520 | 2,520 | |
(5) Employment expense allowance
The employment expense allowance is determined as follows (or a successor table prescribed by the Secretary under
(A) If the student is married and the student's spouse is employed in the year for which their income is reported, such allowance is equal to the lesser of $2,500 or 35 percent of the earned income of the student or spouse with the lesser earned income.
(B) If a student qualifies as a surviving spouse or as a head of household as defined in
(c) Family's contribution from assets
(1) In general
The family's contribution from assets is equal to—
(A) the family net worth (determined in accordance with paragraph (2)); minus
(B) the asset protection allowance (determined in accordance with paragraph (3)); multiplied by
(C) the asset conversion rate (determined in accordance with paragraph (4)), except that the result shall not be less than zero.
(2) Family net worth
The family net worth is calculated by adding—
(A) the current balance of checking and savings accounts and cash on hand;
(B) the net value of investments and real estate, excluding the net value in the principal place of residence; and
(C) the adjusted net worth of a business or farm, computed on the basis of the net worth of such business or farm (hereafter referred to as "NW"), determined in accordance with the following table (or a successor table prescribed by the Secretary under
| If the net worth of a business or farm is— | Then the adjusted net worth is— |
|---|---|
| Less than $1 | $0 |
| $1–$75,000 | 40 percent of NW |
| $75,001–$225,000 | $30,000 plus 50 percent of NW over $75,000 |
| $225,001–$375,000 | $105,000 plus 60 percent of NW over $225,000 |
| $375,001 or more | $195,000 plus 100 percent of NW over $375,000 |
(3) Asset protection allowance
The asset protection allowance is calculated according to the following table (or a successor table prescribed by the Secretary under
| If the age of the student is— | And the student is | |
|---|---|---|
| married | single | |
| then the allowance is— | ||
| 25 or less | $ 0 | $0 |
| 26 | 2,200 | 1,600 |
| 27 | 4,300 | 3,200 |
| 28 | 6,500 | 4,700 |
| 29 | 8,600 | 6,300 |
| 30 | 10,800 | 7,900 |
| 31 | 13,000 | 9,500 |
| 32 | 15,100 | 11,100 |
| 33 | 17,300 | 12,600 |
| 34 | 19,400 | 14,200 |
| 35 | 21,600 | 15,800 |
| 36 | 23,800 | 17,400 |
| 37 | 25,900 | 19,000 |
| 38 | 28,100 | 20,500 |
| 39 | 30,200 | 22,100 |
| 40 | 32,400 | 23,700 |
| 41 | 33,300 | 24,100 |
| 42 | 34,100 | 24,700 |
| 43 | 35,000 | 25,200 |
| 44 | 35,700 | 25,800 |
| 45 | 36,600 | 26,300 |
| 46 | 37,600 | 26,900 |
| 47 | 38,800 | 27,600 |
| 48 | 39,800 | 28,200 |
| 49 | 40,800 | 28,800 |
| 50 | 41,800 | 29,500 |
| 51 | 43,200 | 30,200 |
| 52 | 44,300 | 31,100 |
| 53 | 45,700 | 31,800 |
| 54 | 47,100 | 32,600 |
| 55 | 48,300 | 33,400 |
| 56 | 49,800 | 34,400 |
| 57 | 51,300 | 35,200 |
| 58 | 52,900 | 36,200 |
| 59 | 54,800 | 37,200 |
| 60 | 56,500 | 38,100 |
| 61 | 58,500 | 39,200 |
| 62 | 60,300 | 40,300 |
| 63 | 62,400 | 41,500 |
| 64 | 64,600 | 42,800 |
| 65 or more | 66,800 | 44,000 |
(4) Asset conversion rate
The asset conversion rate is 12 percent.
(d) Assessment schedule
The adjusted available income (as determined under subsection (a)(1) of this section and hereafter referred to as "AAI") is assessed according to the following table (or a successor table prescribed by the Secretary under
| If AAI is— | Then the assessment is— |
|---|---|
| Less than ^$3,409 | ^$750 |
| ^$3,409 to $9,400 | 22% of AAI |
| $9,401 to $11,800 | $2,068 + 25% of AAI over $9,400 |
| $11,801 to $14,200 | $2,668 + 29% of AAI over $11,800 |
| $14,201 to $16,600 | $3,364 + 34% of AAI over $14,200 |
| $16,601 to $19,000 | $4,180 + 40% of AAI over $16,600 |
| $19,001 or more | $5,140 + 47% of AAI over $19,000 |
(e) Computations in case of separation, divorce, or death
In the case of a student who is divorced or separated, or whose spouse has died, the spouse's income and assets shall not be considered in determining the family's available income or assets.
(
Amendments
1998—Subsec. (a)(4).
1997—Subsec. (b)(1)(F).
1993—Subsec. (b)(4).
Subsec. (e).
1992—
1987—Subsec. (a)(1)(C).
Subsec. (b)(2).
Subsec. (b)(5)(A).
Subsec. (b)(7).
Subsec. (c)(2)(B).
Subsec. (c)(2)(C).
| If the net worth of a business or farm is— | Then the adjusted net worth is: |
|---|---|
| Less than $1 | $0 |
| $1–$65,000 | 40 percent of NW |
| $65,001–$195,000 | $26,000 plus 50 percent of NW over $65,000 |
| $195,001–$325,000 | $91,000 plus 60 percent of NW over $195,000 |
| $325,001 or more | $169,000 plus 100 percent of NW over $325,000". |
Subsec. (c)(4)(B).
Subsec. (c)(4)(C).
Subsec. (d).
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Section Referred to in Other Sections
This section is referred to in
§1087rr. Regulations; updated tables
(a) Authority to prescribe regulations restricted
(1) Notwithstanding any other provision of law, the Secretary shall not have the authority to prescribe regulations to carry out this part except—
(A) to prescribe updated tables in accordance with subsections (b) through (h) of this section; or
(B) to propose modifications in the need analysis methodology required by this part.
(2) Any regulation proposed by the Secretary that (A) updates tables in a manner that does not comply with subsections (b) through (h) of this section, or (B) that proposes modifications under paragraph (1)(B) of this subsection, shall not be effective unless approved by joint resolution of the Congress by May 1 following the date such regulations are published in the Federal Register in accordance with
(b) Income protection allowance
(1) Revised tables
For each academic year after academic year 1993–1994, the Secretary shall publish in the Federal Register a revised table of income protection allowances for the purpose of
(2) Revised amounts
For each academic year after academic year 2000–2001, the Secretary shall publish in the Federal Register revised income protection allowances for the purpose of
(c) Adjusted net worth of a farm or business
For each award year after award year 1993–1994, the Secretary shall publish in the Federal Register a revised table of adjusted net worth of a farm or business for purposes of
(1) by increasing each dollar amount that refers to net worth of a farm or business by a percentage equal to the estimated percentage increase in the Consumer Price Index (as determined by the Secretary) between December 1992 and the December next preceding the beginning of such award year, and rounding the result to the nearest $5,000; and
(2) by adjusting the dollar amounts "$30,000", "$105,000", and "$195,000" to reflect the changes made pursuant to paragraph (1).
(d) Education savings and asset protection allowance
For each award year after award year 1993–1994, the Secretary shall publish in the Federal Register a revised table of allowances for the purpose of
(1) inflation shall be presumed to be 6 percent per year;
(2) the rate of return of an annuity shall be presumed to be 8 percent; and
(3) the sales commission on an annuity shall be presumed to be 6 percent.
(e) Assessment schedules and rates
For each award year after award year 1993–1994, the Secretary shall publish in the Federal Register a revised table of assessments from adjusted available income for the purpose of
(1) by increasing each dollar amount that refers to adjusted available income by a percentage equal to the estimated percentage increase in the Consumer Price Index (as determined by the Secretary) between December 1992 and the December next preceding the beginning of such academic year, rounded to the nearest $100; and
(2) by adjusting the other dollar amounts to reflect the changes made pursuant to paragraph (1).
(f) "Consumer Price Index" defined
As used in this section, the term "Consumer Price Index" means the Consumer Price Index for All Urban Consumers published by the Department of Labor. Each annual update of tables to reflect changes in the Consumer Price Index shall be corrected for misestimation of actual changes in such Index in previous years.
(g) State and other tax allowance
For each award year after award year 1993–1994, the Secretary shall publish in the Federal Register a revised table of State and other tax allowances for the purpose of
(h) Employment expense allowance
For each award year after award year 1993–1994, the Secretary shall publish in the Federal Register a revised table of employment expense allowances for the purpose of
(
Amendments
1998—Subsec. (b).
1993—Subsec. (b).
Subsec. (c).
Subsecs. (d), (e), (g).
Subsec. (h).
1992—
1987—Subsec. (c)(2).
Subsec. (d).
Subsec. (f).
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Section Referred to in Other Sections
This section is referred to in
§1087ss. Simplified needs test
(a) Simplified application section
(1) In general
The Secretary shall develop and use an easily identifiable simplified application section as part of the common financial reporting form prescribed under
(2) Reduced data requirements
The simplified application form shall—
(A) in the case of a family meeting the requirements of subsection (b)(1) of this section, permit such family to submit only the data elements required under subsection (b)(2) of this section for the purposes of establishing eligibility for student financial aid under this part; and
(B) in the case of a family meeting the requirements of subsection (c) of this section, permit such family to be treated as having an expected family contribution equal to zero for purposes of establishing such eligibility and to submit only the data elements required to make a determination under subsection (c) of this section.
(b) Simplified needs test
(1) Eligibility
An applicant is eligible to file a simplified form containing the elements required by paragraph (2) if—
(A) in the case of an applicant who is a dependent student—
(i) the student's parents file or are eligible to file a form described in paragraph (3) or certify that they are not required to file an income tax return and the student files or is eligible to file such a form or certifies that the student is not required to file an income tax return; and
(ii) the total adjusted gross income of the parents (excluding any income of the dependent student) is less than $50,000; or
(B) in the case of an applicant who is an independent student—
(i) the student (and the student's spouse, if any) files or is eligible to file a form described in paragraph (3) or certifies that the student (and the student's spouse, if any) is not required to file an income tax return; and
(ii) the adjusted gross income of the student (and the student's spouse, if any) is less than $50,000.
(2) Simplified test elements
The six elements to be used for the simplified needs analysis are—
(A) adjusted gross income,
(B) Federal taxes paid,
(C) untaxed income and benefits,
(D) the number of family members,
(E) the number of family members in postsecondary education, and
(F) an allowance (A) for State and other taxes, as defined in
(3) Qualifying forms
A student or family files a form described in this subsection, or subsection (c) of this section, as the case may be, if the student or family, respectively, files—
(A) a form 1040A or 1040EZ (including any prepared or electronic version of such form) required pursuant to title 26;
(B) a form 1040 (including any prepared or electronic version of such form) required pursuant to title 26, except that such form shall be considered a qualifying form only if the student or family files such form in order to take a tax credit under
(C) an income tax return (including any prepared or electronic version of such return) required pursuant to the tax code of the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau.
(c) Zero expected family contribution
The Secretary shall consider an applicant to have an expected family contribution equal to zero if—
(1) in the case of a dependent student—
(A) the student's parents file, or are eligible to file, a form described in subsection (b)(3) of this section, or certify that the parents are not required to file an income tax return and the student files, or is eligible to file, such a form, or certifies that the student is not required to file an income tax return; and
(B) the sum of the adjusted gross income of the parents is less than or equal to the maximum amount of income (rounded annually to the nearest thousand dollars) that may be earned in 1992 or the current year, whichever is higher, in order to claim the maximum Federal earned income credit; or
(2) in the case of an independent student with dependents other than a spouse—
(A) the student (and the student's spouse, if any) files, or is eligible to file, a form described in subsection (b)(3) of this section, or certifies that the student (and the student's spouse, if any) is not required to file an income tax return; and
(B) the sum of the adjusted gross income of the student and spouse (if appropriate) is less than or equal to the maximum amount of income (rounded annually to the nearest thousand dollars) that may be earned in 1992 or the current year, whichever is higher, in order to claim the maximum Federal earned income credit.
An individual is not required to qualify or file for the earned income credit in order to be eligible under this subsection.
(
Amendments
1998—Subsec. (b)(3).
Subsec. (b)(3)(A).
Subsec. (b)(3)(B), (C).
Subsec. (c)(1)(A).
Subsec. (c)(2)(A).
1993—Subsec. (a)(1).
Subsec. (b)(1)(B)(i).
Subsec. (b)(2).
Subsec. (b)(3)(A).
Subsec. (b)(3)(B).
Subsec. (c)(1)(A).
Subsec. (c)(1)(B).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
1992—
1991—Subsec. (a).
1988—Subsec. (a).
1987—Subsec. (a).
Subsec. (b)(2).
Subsec. (b)(6).
Subsec. (c).
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Section Referred to in Other Sections
This section is referred to in
§1087tt. Discretion of student financial aid administrators
(a) In general
Nothing in this part shall be interpreted as limiting the authority of the financial aid administrator, on the basis of adequate documentation, to make adjustments on a case-by-case basis to the cost of attendance or the values of the data items required to calculate the expected student or parent contribution (or both) to allow for treatment of an individual eligible applicant with special circumstances. However, this authority shall not be construed to permit aid administrators to deviate from the contributions expected in the absence of special circumstances. Special circumstances may include tuition expenses at an elementary or secondary school, medical or dental expenses not covered by insurance, unusually high child care costs, recent unemployment of a family member, the number of parents enrolled at least half-time in a degree, certificate, or other program leading to a recognized educational credential at an institution with a program participation agreement under
(b) Adjustments to assets taken into account
A student financial aid administrator shall be considered to be making a necessary adjustment in accordance with subsection (a) of this section if—
(1) the administrator makes adjustments excluding from family income any proceeds of a sale of farm or business assets of a family if such sale results from a voluntary or involuntary foreclosure, forfeiture, or bankruptcy or an involuntary liquidation; or
(2) the administrator makes adjustments in the award level of a student with a disability so as to take into consideration the additional costs such student incurs as a result of such student's disability.
(c) Refusal or adjustment of loan certifications
On a case-by-case basis, an eligible institution may refuse to certify a statement that permits a student to receive a loan under part B or C of this subchapter, or may certify a loan amount or make a loan that is less than the student's determination of need (as determined under this part), if the reason for the action is documented and provided in written form to the student. No eligible institution shall discriminate against any borrower or applicant in obtaining a loan on the basis of race, national origin, religion, sex, marital status, age, or disability status.
(
Prior Provisions
A prior section 1087tt,
Amendments
1998—Subsec. (a).
Subsec. (c).
1993—Subsec. (c).
1992—
1989—Subsec. (a).
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date
Section effective as if enacted as part of the Higher Education Amendments of 1986,
Section Referred to in Other Sections
This section is referred to in
§1087uu. Disregard of student aid in other Federal programs
Notwithstanding any other provision of law, student financial assistance received under this subchapter and part C of subchapter I of
(
Prior Provisions
A prior section 1087uu,
Amendments
1992—
Effective Date of 1992 Amendment
Amendment by
Effective Date
Section effective as if enacted as part of the Higher Education Amendments of 1986,
Section applicable with respect to financial assistance provided for any academic year beginning after Oct. 17, 1986, see section 406(b)(4) of
§1087uu–1. Native American students
In determining family contributions for Native American students, computations performed pursuant to this part shall exclude—
(1) any income and assets of $2,000 or less per individual payment received by the student (and spouse) and student's parents under the Per Capita Act or the Distribution of Judgment Funds Act [
(2) any income received by the student (and spouse) and student's parents under the Alaskan Native Claims Settlement Act [
(
References in Text
The Per Capita Act, referred to in par. (1), probably means
The Distribution of Judgment Funds Act, referred to in par. (1), is
The Alaskan Native Claims Settlement Act, referred to in par. (2), probably means the Alaska Native Claims Settlement Act,
The Maine Indian Claims Settlement Act, referred to in par. (2), probably means the Maine Indian Claims Settlement Act of 1980,
Amendments
1992—
Effective Date of 1992 Amendment
Amendment by
Effective Date
Section effective as if enacted as part of the Higher Education Amendments of 1986,
§1087vv. Definitions
As used in this part:
(a) Total income
(1) Except as provided in paragraph (2), the term "total income" is equal to adjusted gross income plus untaxed income and benefits for the preceding tax year minus excludable income (as defined in subsection (e) of this section).
(2) No portion of any student financial assistance received from any program by an individual, no portion of a national service educational award or post-service benefit received by an individual under title I of the National and Community Service Act of 1990 [
(b) Untaxed income and benefits
The term "untaxed income and benefits" means—
(1) child support received;
(2) welfare benefits, including assistance under a State program funded under part A of title IV of the Social Security Act [
(3) workman's compensation;
(4) veterans' benefits such as death pension, dependency, and indemnity compensation, but excluding veterans' education benefits as defined in subsection (c) of this section;
(5) interest on tax-free bonds;
(6) housing, food, and other allowances (excluding rent subsidies for low-income housing) for military, clergy, and others (including cash payments and cash value of benefits);
(7) cash support or any money paid on the student's behalf, except, for dependent students, funds provided by the student's parents;
(8) the amount of earned income credit claimed for Federal income tax purposes;
(9) untaxed portion of pensions;
(10) credit for Federal tax on special fuels;
(11) the amount of foreign income excluded for purposes of Federal income taxes;
(12) untaxed social security benefits;
(13) payments to individual retirement accounts and Keogh accounts excluded from income for Federal income tax purposes; and
(14) any other untaxed income and benefits, such as Black Lung Benefits, Refugee Assistance, railroad retirement benefits, or Job Training Partnership Act [
(c) Veteran and veterans' education benefits
(1) The term "veteran" means any individual who—
(A) has engaged in the active duty in the United States Army, Navy, Air Force, Marines, or Coast Guard; and
(B) was released under a condition other than dishonorable.
(2) The term "veterans' education benefits" means veterans' benefits the student will receive during the award year, including but not limited to the following:
(A) Title 10,
(B) Title 10,
(C) Title 10,
(D) Title 37,
(E) Title 38,
(F) Title 38,
(G) Title 38,
(H) Title 38,
(I)
(J)
(d) Independent student
The term "independent", when used with respect to a student, means any individual who—
(1) is 24 years of age or older by December 31 of the award year;
(2) is an orphan or ward of the court or was a ward of the court until the individual reached the age of 18;
(3) is a veteran of the Armed Forces of the United States (as defined in subsection (c)(1) of this section);
(4) is a graduate or professional student;
(5) is a married individual;
(6) has legal dependents other than a spouse; or
(7) is a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances.
(e) Excludable income
The term "excludable income" means—
(1) any student financial assistance awarded based on need as determined in accordance with the provisions of this part, including any income earned from work under part C of subchapter I of
(2) any living allowance received by a participant in a program established under the National and Community Service Act of 1990 [
(3) child support payments made by the student or parent; and
(4) payments made and services provided under part E of title IV of the Social Security Act [
(f) Assets
(1) The term "assets" means cash on hand, including the amount in checking and savings accounts, time deposits, money market funds, trusts, stocks, bonds, other securities, mutual funds, tax shelters, and the net value of real estate, income producing property, and business and farm assets.
(2) With respect to determinations of need under this subchapter and part C of subchapter I of
(A) the family's principal place of residence; or
(B) a family farm on which the family resides.
(g) Net assets
The term "net assets" means the current market value at the time of application of the assets (as defined in subsection (f) of this section), minus the outstanding liabilities or indebtedness against the assets.
(h) Treatment of income taxes paid to other jurisdictions
(1) The tax on income paid to the Governments of the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, or the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau under the laws applicable to those jurisdictions, or the comparable tax paid to the central government of a foreign country, shall be treated as Federal income taxes.
(2) References in this part to title 26, Federal income tax forms, and the Internal Revenue Service shall, for purposes of the tax described in paragraph (1), be treated as references to the corresponding laws, tax forms, and tax collection agencies of those jurisdictions, respectively, subject to such adjustments as the Secretary may provide by regulation.
(i) Current balance
The term "current balance of checking and savings accounts" does not include any funds over which an individual is barred from exercising discretion and control because of the actions of any State in declaring a bank emergency due to the insolvency of a private deposit insurance fund.
(j) Other financial assistance; tuition prepayment plans
(1) For purposes of determining a student's eligibility for funds under this subchapter and part C of subchapter I of
(2)(A) Except as provided in subparagraph (B), for purposes of determining a student's eligibility for funds under this subchapter and part C of subchapter I of
(B) If the institutional expense covered by the prepayment must be part of the student's cost of attendance for accounting purposes, the prepayment shall be considered estimated financial assistance.
(3) Notwithstanding paragraph (1), a tax credit taken under
(k) Dependents
(1) Except as otherwise provided, the term "dependent of the parent" means the student, dependent children of the student's parents, including those children who are deemed to be dependent students when applying for aid under this subchapter and part C of subchapter I of
(2) Except as otherwise provided, the term "dependent of the student" means the student's dependent children and other persons (except the student's spouse) who live with and receive more than one-half of their support from the student and will continue to receive more than half of their support from the student during the award year.
(l) Family size
(1) In determining family size in the case of a dependent student—
(A) if the parents are not divorced or separated, family members include the student's parents, and the dependents of the student's parents including the student;
(B) if the parents are divorced or separated, family members include the parent whose income is included in computing available income and that parent's dependents, including the student; and
(C) if the parents are divorced and the parent whose income is so included is remarried, or if the parent was a widow or widower who has remarried, family members also include, in addition to those individuals referred to in subparagraph (B), the new spouse and any dependents of the new spouse if that spouse's income is included in determining the parents' adjusted available income.
(2) In determining family size in the case of an independent student—
(A) family members include the student, the student's spouse, and the dependents of the student; and
(B) if the student is divorced or separated, family members do not include the spouse (or ex-spouse), but do include the student and the student's dependents.
(m) Business assets
The term "business assets" means property that is used in the operation of a trade or business, including real estate, inventories, buildings, machinery, and other equipment, patents, franchise rights, and copyrights.
(
Amendment of Subsection (b)(14)
References in Text
The National and Community Service Act of 1990, referred to in subsecs. (a)(2), (e)(2), and (j)(1), is
This chapter, referred to in subsec. (a)(2), was in the original "this Act", meaning
The Social Security Act, referred to in subsecs. (b)(2) and (e)(4), is act Aug. 14, 1935, ch. 531,
The Job Training Partnership Act, referred to in subsec. (b)(14), is
The Workforce Investment Act of 1998, referred to in subsec. (b)(14), is
Title 10,
Title 10,
Title 37,
Codification
Amendment by section 2(g)(19) of
Amendments
1998—Subsec. (b)(14).
Subsec. (j)(1).
Subsec. (j)(3), (4).
1997—Subsec. (a)(2).
Subsec. (j)(4).
1996—Subsec. (b)(2).
1993—Subsec. (a)(2).
Subsec. (c)(2).
Subsec. (d)(2).
Subsec. (j)(3).
Subsecs. (k) to (m).
1992—
1990—Subsec. (d)(2)(F).
Subsec. (f)(3).
1988—Subsec. (i).
1987—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (a)(4).
Subsecs. (b), (c).
Subsec. (d)(2)(F).
Subsecs. (f) to (h).
Effective Date of 1998 Amendments
Amendment by
Amendment by section 101(f) [title VIII, §405(d)(15)(B)] of
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1993 Amendments
Amendment by
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Definition of "Independent Student"; Application to Specified Periods of Enrollment
Section 406(b)(5), formerly section 406(b)(4), of
[References to subpart 2 of part A of title IV of
Section Referred to in Other Sections
This section is referred to in