 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
                          Part E--Need Analysis
 
Sec. 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 section 1094 of this title during the award period for 
    which assistance under this subchapter and part C of subchapter I of 
    chapter 34 of title 42 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):

      Percentages for Computation of State and Other Tax Allowance
------------------------------------------------------------------------
                                      And parents' total income is--
 If parents' State or territory ----------------------------------------
       of residence is--          less than $15,000
                                          or            $15,000 or more
------------------------------------------------------------------------
                                  then the percentage is--
                                ----------------------------------------
Alaska, Puerto Rico, Wyoming...            3                   2
American Samoa, Guam,                      4                   3
 Louisiana, Nevada, Texas,
 Trust Territory, Virgin
 Islands.......................
Florida, South Dakota,                     5                   4
 Tennessee, New Mexico.........
North Dakota, Washington.......            6                   5
Alabama, Arizona, Arkansas,                7                   6
 Indiana, Mississippi,
 Missouri, Montana, New
 Hampshire, Oklahoma, West
 Virginia......................
Colorado, Connecticut, Georgia,            8                   7
 Illinois, Kansas, Kentucky....
California, Delaware, Idaho,               9                   8
 Iowa, Nebraska, North
 Carolina, Ohio, Pennsylvania,
 South Carolina, Utah, Vermont,
 Virginia, Canada, Mexico......
Maine, New Jersey..............           10                   9
District of Columbia, Hawaii,             11                  10
 Maryland, Massachusetts,
 Oregon, Rhode Island..........
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):

                                           Income Protection Allowance
-------------------------------------------------------------------------------
---------------------------------
          Family Size                                           Number in Colle
ge
-------------------------------------------------------------------------------
---------------------------------
                                                                               
                      For each
      (including student)             1            2            3            4 
           5         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:

                Adjusted Net Worth of a Business or Farm
------------------------------------------------------------------------
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):

   Education Savings and Asset Protection Allowances for Families and
                                Students
------------------------------------------------------------------------
                                              And there are
If the age of the oldest parent ----------------------------------------
              is--                   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 section 1087rr of this title):

        Parents' Assessment From Adjusted Available Income (AAI)
------------------------------------------------------------------------
         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 $2,200 (or a successor 
        amount prescribed by the Secretary under section 1087rr of this 
        title);
            (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):

      Percentages for Computation of State and Other Tax Allowance
------------------------------------------------------------------------
 If the students' State or territory of
             residence is--                    The percentage is--
------------------------------------------------------------------------
Alaska, American Samoa, Florida, Guam,                  0
 Nevada, South Dakota, Tennessee,
 Texas, Trust Territory, Virgin
 Islands, Washington, Wyoming..........
Connecticut, Louisiana, Puerto Rico....                 1
Arizona, New Hampshire, New Mexico,                     2
 North Dakota..........................
Alabama, Colorado, Illinois, Indiana,                   3
 Kansas, Mississippi, Missouri,
 Montana, Nebraska, New Jersey,
 Oklahoma..............................
Arkansas, Georgia, Iowa, Kentucky,                      4
 Maine, Pennsylvania, Utah, Vermont,
 Virginia, West Virginia, Canada,
 Mexico................................
California, Idaho, Massachusetts, North                 5
 Carolina, Ohio, Rhode Island, South
 Carolina..............................
Hawaii, Maryland, Michigan, Wisconsin..                 6
Delaware, District of Columbia,                         7
 Minnesota, Oregon.....................
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 section 
    1087vv of this title) and the parents' contribution from assets (as 
    determined in accordance with subsection (d) of this section).

(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.

(Pub. L. 89-329, title IV, Sec. 475, as added Pub. L. 99-498, title IV, 
Sec. 406(a), Oct. 17, 1986, 100 Stat. 1456; amended Pub. L. 100-50, 
Sec. 14(1)-(12), June 3, 1987, 101 Stat. 349, 350; Pub. L. 102-325, 
title IV, Sec. 471(a), July 23, 1992, 106 Stat. 587; Pub. L. 103-208, 
Sec. 2(g)(2)-(5), Dec. 20, 1993, 107 Stat. 2472; Pub. L. 105-78, title 
VI, Sec. 609(g), Nov. 13, 1997, 111 Stat. 1523; Pub. L. 105-244, title 
IV, Sec. 473, Oct. 7, 1998, 112 Stat. 1729.)


                               Amendments

    1998--Subsec. (b)(3). Pub. L. 105-244, Sec. 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, Sec. 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, Sec. 473(b)(1)(B), (C), added 
subpar. (F).
    Subsec. (g)(6). Pub. L. 105-244, Sec. 473(b)(2), added par. (6).
    Subsec. (j). Pub. L. 105-244, Sec. 473(c), added subsec. (j).
    1997--Subsec. (c)(1)(F). Pub. L. 105-78, Sec. 609(g)(1), added 
subpar. (F).
    Subsec. (g)(2)(E). Pub. L. 105-78, Sec. 609(g)(2), added subpar. 
(E).
    1993--Subsec. (c)(4). Pub. L. 103-208, Sec. 2(g)(2), substituted 
``$9,510'' for ``9,510'' in table.
    Subsec. (f)(3). Pub. L. 103-208, Sec. 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, Sec. 2(g)(4), inserted closing 
parenthesis after ``paragraph (2)''.
    Subsec. (g)(3). Pub. L. 103-208, Sec. 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, Sec. 14(1), substituted 
``section 1087rr of this title'' for ``section 1087ss of this title''.
    Subsec. (c)(7). Pub. L. 100-50, Sec. 14(2), struck out ``National'' 
before ``Center''.
    Subsec. (d)(2)(B). Pub. L. 100-50, Sec. 14(3), substituted 
``displaced homemaker'' for ``dislocated homemaker''.
    Subsec. (d)(2)(C). Pub. L. 100-50, Sec. 14(1), substituted ``section 
1087rr of this title'' for ``section 1087ss of this title''.
    Pub. L. 100-50, Sec. 14(4), added table after subpar. (C) and struck 
out former table which read as follows:

               ``Adjusted Net Worth of a Business or Farm
------------------------------------------------------------------------
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, Sec. 14(5), substituted 
``$15,999'' for ``$15,000''.
    Subsec. (d)(4)(C). Pub. L. 100-50, Sec. 14(6), substituted 
``$16,000'' for ``$15,000'' in three places.
    Subsec. (d)(4)(D). Pub. L. 100-50, Sec. 14(7), substituted ``income 
is less than zero'' for ``income is equal to or less than zero''.
    Subsec. (e). Pub. L. 100-50, Sec. 14(8), inserted a minus sign 
before ``$3,409'' in two places in table.
    Subsec. (g)(1)(C). Pub. L. 100-50, Sec. 14(9), substituted 
``paragraph (2)'' for ``paragraph (3)''.
    Subsec. (g)(3). Pub. L. 100-50, Sec. 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, Sec. 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, Sec. 14(12), added subsec. (i).


                    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.

                  Section Referred to in Other Sections

    This section is referred to in sections 1087nn, 1087rr, 1087ss of 
this title.
