(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 familys available income (determined in accordance with subsection (b) of this section); and
(B) the familys 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 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; and
(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 familys 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 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):
(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 section
1087rr of this title):
(5) Employment expense allowance The employment expense allowance is determined as follows (or a successor table prescribed by the Secretary under section
1087rr of this title):
(A) If the
student is married and the students 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 section
2 of title
26, such allowance is equal to the lesser of $2,500 or 35 percent of the students earned income.
(c) Family’s contribution from assets
(1) In general The familys 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 section
1087rr of this title), except as provided under section
1087vv (f) of this title:
(3) Asset protection allowance The asset protection allowance is calculated according to the following table (or a successor table prescribed by the Secretary under section
1087rr of this title):
(4) Asset conversion rate
The asset conversion rate is 7 percent.
(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 spouses income and assets shall not be considered in determining the familys available income or assets.
