(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));
(2) the student contribution from available income (determined in accordance with subsection (g)); and
(3) the student contribution from assets (determined in accordance with subsection (h)).
(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)); and
(B) the parents' contribution from assets (determined in accordance with subsection (d));
(2) assessing such adjusted available income in accordance with the assessment schedule set forth in subsection (e); 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 section 1094 of this title during the award period for which assistance under this subchapter is requested;
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 section 1087vv of this title)—
(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 section 25A of title 26.
(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 section 1087vv of this title) by a percentage determined according to the following table (or a successor table prescribed by the Secretary under section 1087rr of this title):
| If parents' State or territory of residence is— | And parents' total income is— | |
|---|---|---|
| less than $15,000 or | $15,000 or more | |
| (1)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 section 1087rr of this title):
| 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 section 1087rr of this title):
(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 section 2 of title 26, such allowance is equal to the lesser of $2,500 or 35 percent of such parent's earned income.
(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 section 1087rr of this title), except as provided under section 1087vv(f) of this title:
Open Table| 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 section 1087rr of this title):
| If the age of the oldest parent is— | And there are | |
|---|---|---|
| two parents | one parent | |
| (1)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) 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 section 1087rr of this title):
| 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 section 1087vv of this title); minus
(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 the following amount (or a successor amount prescribed by the Secretary under section 1087rr of this title)—
(i) for academic year 2009–2010, $3,750;
(ii) for academic year 2010–2011, $4,500;
(iii) for academic year 2011–2012, $5,250; and
(iv) for academic year 2012–2013, $6,000;
(E) the amount of any tax credit taken by the student under section 25A of title 26; and
(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 section 1087vv of this title) by a percentage determined according to the following table (or a successor table prescribed by the Secretary under section 1087rr of this title):
| 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) exceeds the sum of the parents' total income (as defined in section 1087vv of this title) and the parents' contribution from assets (as determined in accordance with subsection (d)).
(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 20 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)) 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)) is increased by the difference between the income protection allowance (determined in accordance with subsection (c)(4)) 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) and adjusted according to subsection (b)(3) 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)) is determined, for purposes other than subpart 2 of part A, 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
2009—Subsec. (c)(5)(B). Pub. L. 111–39 made technical amendment to reference in original act which appears in text as reference to section 2 of title 26.
2007—Subsec. (g)(2)(D). Pub. L. 110–84 amended subpar. (D) generally. Prior to amendment, subpar. (D) read as follows: "an income protection allowance of $3,000 (or a successor amount prescribed by the Secretary under section 1087rr of this title);".
2006—Subsec. (g)(2)(D). Pub. L. 109–171, §8017(a)(1)(A), substituted "$3,000" for "$2,200".
Subsec. (h). Pub. L. 109–171, §8017(a)(1)(B), substituted "20" for "35".
1998—Subsec. (b)(3). Pub. L. 105–244, §473(a), which directed insertion of ", excluding the student's parents," after "number of family members", was executed by making the insertion after "number of the family members" to reflect the probable intent of Congress.
Subsec. (g)(2)(D). Pub. L. 105–244, §473(b)(1)(A), substituted "$2,200 (or a successor amount prescribed by the Secretary under section 1087rr of this title);" for "$1,750; and".
Subsec. (g)(2)(F). Pub. L. 105–244, §473(b)(1)(B), (C), added subpar. (F).
Subsec. (g)(6). Pub. L. 105–244, §473(b)(2), added par. (6).
Subsec. (j). Pub. L. 105–244, §473(c), added subsec. (j).
1997—Subsec. (c)(1)(F). Pub. L. 105–78, §609(g)(1), added subpar. (F).
Subsec. (g)(2)(E). Pub. L. 105–78, §609(g)(2), added subpar. (E).
1993—Subsec. (c)(4). Pub. L. 103–208, §2(g)(2), substituted "$9,510" for "9,510" in table.
Subsec. (f)(3). Pub. L. 103–208, §2(g)(3), in introductory provisions, substituted "If a parent" for "Income in the case of a parent", "(1) of this subsection, or if a parent" for "(1) of this subsection, or a parent", and "the income" for "is determined as follows: The income".
Subsec. (g)(1)(B). Pub. L. 103–208, §2(g)(4), inserted closing parenthesis after "paragraph (2)".
Subsec. (g)(3). Pub. L. 103–208, §2(g)(5), in table added last item relating to Other.
1992—Pub. L. 102–325 amended section generally, making minor changes in subsecs. (a) to (c) and (e) to (g), in subsec. (d) substituting provisions relating to parents' contribution from assets for provisions relating to parents' income supplemental amount from assets, in subsec. (h) substituting provisions relating to student contribution from assets for provisions relating to student and spouse income supplemental amount from assets, and in subsec. (i) substituting provisions relating to adjustments to parents' contribution for enrollment periods other than 9 months for purposes other than subpart 2 of part A of this subchapter for provisions relating to adjustments for enrollment periods other than 9 months.
1987—Subsec. (c)(2), (4). Pub. L. 100–50, §14(1), substituted "section 1087rr of this title" for "section 1087ss of this title".
Subsec. (c)(7). Pub. L. 100–50, §14(2), struck out "National" before "Center".
Subsec. (d)(2)(B). Pub. L. 100–50, §14(3), substituted "displaced homemaker" for "dislocated homemaker".
Subsec. (d)(2)(C). Pub. L. 100–50, §14(1), substituted "section 1087rr of this title" for "section 1087ss of this title".
Pub. L. 100–50, §14(4), added table after subpar. (C) and struck out former table which read as follows:
Open Table| 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). Pub. L. 100–50, §14(5), substituted "$15,999" for "$15,000".
Subsec. (d)(4)(C). Pub. L. 100–50, §14(6), substituted "$16,000" for "$15,000" in three places.
Subsec. (d)(4)(D). Pub. L. 100–50, §14(7), substituted "income is less than zero" for "income is equal to or less than zero".
Subsec. (e). Pub. L. 100–50, §14(8), inserted a minus sign before "$3,409" in two places in table.
Subsec. (g)(1)(C). Pub. L. 100–50, §14(9), substituted "paragraph (2)" for "paragraph (3)".
Subsec. (g)(3). Pub. L. 100–50, §14(10), inserted "(or a successor table prescribed by the Secretary under section 1087rr of this title)" after "following table".
Subsec. (h). Pub. L. 100–50, §14(11), added subsec. (h) and struck out former subsec. (h) which read as follows: "The student (and spouse) supplemental income amount from assets is determined by multiplying by 35 percent the sum of—
"(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 section 1087vv(e) of this title)."
Subsec. (i). Pub. L. 100–50, §14(12), added subsec. (i).
Effective Date of 2009 Amendment
Amendment by Pub. L. 111–39 effective as if enacted on the date of enactment of Pub. L. 110–315 (Aug. 14, 2008), see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title.
Effective Date of 2007 Amendment
Pub. L. 110–84, title VI, §601(e), Sept. 27, 2007, 121 Stat. 804, provided that: "The amendments made by this section [amending this section and sections 1087pp, 1087qq, and 1087rr of this title] shall be effective on July 1, 2009."
Effective Date of 2006 Amendment
Amendment by Pub. L. 109–171 effective July 1, 2006, except as otherwise provided, see section 8001(c) of Pub. L. 109–171, set out as a note under section 1002 of this title.
Pub. L. 109–171, title VIII, §8017(a)(2), Feb. 8, 2006, 120 Stat. 173, provided that: "The amendments made by paragraph (1) [amending this section] shall apply with respect to determinations of need for periods of enrollment beginning on or after July 1, 2007."
Effective Date of 1998 Amendment
Amendment by Pub. L. 105–244, effective Oct. 7, 1998, and applicable with respect to determinations of need under this part for academic years beginning on or after July 1, 2000, see section 480A of Pub. L. 105–244, set out as a note under section 1087kk of this title.
Effective Date of 1993 Amendment
Amendment by Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) of Pub. L. 103–208, set out as a note under section 1051 of this title.
Effective Date of 1992 Amendment
Amendment by Pub. L. 102–325 applicable with respect to determinations of need under this part for award years beginning on or after July 1, 1993, see section 471(b) of Pub. L. 102–325, set out as a note under section 1087kk of this title.
Effective Date of 1987 Amendment
Amendment by Pub. L. 100–50 effective as if enacted as part of the Higher Education Amendments of 1986, Pub. L. 99–498, see section 27 of Pub. L. 100–50, set out as a note under section 1001 of this title.
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