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GEN-89-49: Cost of Attendance Questions & Answers

GEN-89-49
Cost of Attendance Questions and Answers
United States Department of Education
Washington, D.C. 20202
September, 1989

SUMMARY: Questions and Answers on cost of attendance provisions
FEDERAL STUDENT FINANCIAL AID HANDBOOK REFERENCE: Chapter 2, Section 2 of the 1989-90
Federal Student Financial Aid Handbook.

Dear Colleague:

Attached are several Questions and Answers based on recent inquiries. These Questions and Answers
primarily concern issues related to the new cost of attendance provisions implemented by the Higher
Education Amendments of 1986. Also, clarification is provided regarding minimum program lengths
required in the Stafford Loan, Supplemental Loans for Students (SLS), and PLUS programs.
If you have further questions concerning information in this letter, please contact the Federal Student
Information Center at 1-800-333-INFO.

Sincerely,
Roberta B. Dunn William L. Moran
Deputy Assistant Secretary for Director, Student Financial
Student Financial Assistance Assistance Programs

COST OF ATTENDANCE

Pell Grant

1. Q. In determining the tuition and fees component for the Pell Grant cost of attendance, must
an institution continue to use only allowable fees as defined in previous years?
A. Yes.
Fees which may be included in the Pell Grant cost of attendance are limited to those which
meet all of the following criteria:
1. Must be mandatory for all students or for an identifiable group of students, such as
all students taking a laboratory course (equipment breakage fee) or all students
enrolled in a court reporting program (dictation tape rental fee).
2. Must accrue to the institution and be charged for services performed by the
institution, not by a third party such as a State licensing agency or an insurance
company for a series of individual insurance policies (the institution cannot merely
collect and transfer the money to another entity).
3. Must not be for items which should be covered under the allowance for room,
board, and miscellaneous expenses, such as uniforms, beauty kits, and parking
permits.

2. Q. For the Pell Grant cost of attendance, must an institution prorate the tuition and fees
component for programs longer or shorter than an academic year?
A. The Pell Grant cost of attendance always reflects costs incurred by a full-time student for a
full academic year. Therefore, if tuition and fees are charged to a student for the entire
program and the program is longer or shorter than an academic year, the charges must be
prorated to establish the student's cost for one full academic year. The actual calculation
of the Pell Grant award adjusts for attendance for less than an academic year and for parttime
enrollment.

3. Q. For the 1989-90 award year, students who are enrolled less than half-time with an SAI of
"0" are eligible for a Pell Grant award. How is the Pell Grant cost of attendance calculated
for these less than half-time students?
A. The Pell Grant cost of attendance is always calculated using costs incurred by a full-time
student for a full academic year. However, the cost of attendance components for less
than half-time students are limited to the following:
· actual or average tuition and fees for a full-time undergraduate student for a full
academic year
· an institutionally determined allowance for books, supplies, and transportation only
· an allowance for child care which shall not exceed $1000
As schools will already have established standard allowances for room, board, books,
supplies, transportation, and miscellaneous expenses for Pell Grant recipients (calculated
based on full-time costs for a full academic year), the allowance for books, supplies, and
transportation for less than half-time students can be determined by subtracting the
excluded allowances (room, board, and miscellaneous) from the standard allowances.
One method of determining the amount to be excluded would be to calculate the ratio of
the room, board, and miscellaneous expenses components in the campus-based, Stafford
Loan, SLS, and PLUS cost of attendance to the total of the components for room, board,
books, supplies, miscellaneous, and transportation expenses in the campus-based,
Stafford Loan, SLS, and PLUS cost of attendance and apply that ratio to the standard Pell
Grant allowances.
Please note: Less than half-time means any enrollment less than an institution's definition
of half-time status (in accordance with section 690.2). Under the law, a student who is
taking as few as one or two credit hours will be eligible to receive payment, if the student
meets the definition of eligible student, is enrolled in an eligible program, and has an SAI of
"0".
Campus-based (Perkins Loan, College Work-Study and Supplemental Educational Opportunity Grant),
Stafford Loan, SLS, and PLUS programs

4. Q. May an institution include costs associated with the general maintenance of family
members as "dependent care" in the cost of attendance for a student?
A. Institutional officials are authorized, through the language of the statute (with specific
reference to "allowance" and "as determined by the institution"), to make a judgment about
the costs to be included in the "dependent care" allowance. For example, it is permissible
for a financial aid administrator to determine to include the costs of food and shelter for
dependents in the "dependent care" allowance in those circumstances where the family's
available income is less than the standard maintenance allowance.

5. Q. May an institution include a "handicapped" allowance in developing the standard cost of
attendance provisions for less than half-time students?
A. The cost of attendance components listed in the statute for less than half-time students are
limited to:
- tuition and fees;
- an allowance for books, supplies, and transportation (as determined by the
institution); and
- dependent care expenses.
However, a financial aid administrator may use his or her professional judgment to include
a "handicapped" allowance to reflect an individual student's special circumstances.

6. Q. Must an institution establish one standard allowance for students residing in institutionally
owned or operated housing?
A. No. The statutory language states that the allowance for room and board costs incurred by
the student "for students without dependents residing in institutionally owned or operated
housing shall be a standard allowance based on the amount normally assessed most of its
residents for room and board." As outlined in GEN 88-7, an institution may establish
different categories to reflect different dormitory costs or meal plans. If such categories are
established, the institution must uniformly apply the appropriate allowances to all students
within each category established by the institution.


7. Q. An institution owns and operates housing for students with dependents. How should an
institution calculate a standard room and board allowance that reflects only the costs
incurred by the student?
A. The institution may determine the appropriate method for calculating the room and board
allowance for such students. Examples of appropriate methods of calculation include, but
are not limited to, (1) proration of the charge according to the number of dependents and
(2) use of the standard charge for single student housing. The standard allowance may not
be less than $2500 (however, a lower amount may be set on an individual basis under the
authority of section 479A of the Higher Education Act of 1965, as amended (HEA)). This
allowance is based on the expenses reasonably incurred by such students and must be
consistently applied.

8. Q. In the campus-based, Stafford Loan, SLS, and PLUS cost of attendance provisions, do the
minimum room and board allowances of $1500 for students without dependents residing at
home with parents and $2500 for all other students (students with dependents or students
without dependents not residing with parents or in institutional housing) assume a ninemonth
enrollment period?

A. The cost of attendance for a student, in general, only covers the student's period of actual
enrollment. While the statute is silent as to the period of time upon which these allowances
are based, the family contribution calculation used by the Department is based on an
assumption of student enrollment for nine months. As such, an institution may reasonably
assume that these allowances are based upon a nine-month enrollment period and may
prorate accordingly.

All programs

9. Q. In previous years, the Pell Grant Program regulations required different treatment for
calculating the cost of attendance for certain special categories of students, including
incarcerated students. The new statutory provisions eliminated these distinctions in the Pell
Grant Program. In light of this change, how should an institution calculate the costs of
attendance for incarcerated students for the Pell Grant and the campus-based, Stafford
Loan, SLS, and PLUS programs?
A. An institution must establish its standard costs of attendance in accordance with the
statute. The statute permits an institution to establish different categories of students within
an allowance in developing the individual components of the costs of attendance. The
institution must uniformly apply the appropriate allowances to all students within a category
it establishes. Any variances must be considered on an individual basis and represent an
adjustment based on professional judgment under section 479A of the HEA.
In constructing the Pell Grant cost of attendance for an incarcerated student, an institution
may establish a category within the allowance for room, board, books, supplies, and
miscellaneous expenses to reflect costs incurred by an incarcerated student. This
allowance may be less than, but cannot exceed, $2200.
In constructing the cost of attendance for the campus-based, Stafford Loan, SLS, and
PLUS programs for an incarcerated student, the institution may establish a category for
incarcerated students within the allowances it establishes. However, the standard room
and board allowance it establishes may not be less than $2500. An institution may wish to
review these cases on an individual basis to determine if a reduction in the standard
allowance using professional judgment as authorized by section 479A of the HEA would
be appropriate for incarcerated students to reflect their actual room and board costs.

10. Q. How should an institution develop an average tuition and fees component to use in
calculating costs of attendance if it has both in-State and out-of-State tuition charges?
A. An institution may establish a separate average tuition and fee charge for each category
upon which it bases tuition and fee charges.
In calculating an average tuition and fee component without any categories, it is not
permissible for an institution simply to add the full-time charge of an in-State student to the
full-time charge of an out-of-State student and divide the sum by two. This calculation
results in an inflated tuition and fees component for some students and an understated
tuition and fees component for others. Instead, a school may use the weighted average
tuition and fees for all students. For example, a school with 100 students of which 10 are
out-of-State may proceed as follows:

90 x in-State charge = X
10 x out-of-State charge = Y
Total = Z
Z / 100 = Weighted Average tuition and fees

AWARD PACKAGING

11. Q. In completing the Application for Federal Student Aid (AFSA) or other Multiple Data Entry
(MDE) application, under what circumstances should an applicant answer "1st year
undergraduate" to the question "What year will you be in college?" It is important that
students answer this question correctly as the Family Contribution formula includes a
minimum "mandatory self-help amount" of $700 for a first year undergraduate student or
$900 for any other student for dependent students (section 475(g)(1) of the HEA) and a
minimum "family's available income" of $700 for a first year undergraduate student or $900
for any other student for independent students with dependents (section 477(b) of the
HEA).
A. The only time an applicant should answer "1st year undergraduate" is for the first award
year (July 1 - June 30) the applicant is enrolled in postsecondary school. For any
subsequent award year application, the applicant must answer either "2nd year
undergraduate," "other undergraduate," or "graduate," whichever most accurately reflects
the student's status.

12. Q. In developing an award package for a student who has received a Byrd Scholarship, how
should a financial aid administrator treat the Byrd Scholarship award?
A. A student's Byrd Scholarship of $1500 may not be reduced by either the State agency or
the financial aid administrator. If the scholarship, when combined with other Title IV aid,
resources, and the student's expected family contribution (EFC), exceeds the student's
cost of attendance, the Byrd Scholarship must be used as a substitute for the student's
EFC. If any overaward results after substitution of the EFC with the Byrd Scholarship, the
financial aid administrator must follow the overaward provisions in the campus-based
program regulations (34 CFR 673.27, 674.14, 675.14, and 676.14).

13. Q. With regard to developing an award package, can a Douglas Teacher Scholarship be used
to substitute for the EFC? How should a financial aid administrator treat the Douglas
Teacher Scholarship award?
A. The Douglas Teacher Scholarship may not be substituted for a student's expected family
contribution. When packaging Title IV aid, the financial aid administrator must treat the
Douglas Teacher Scholarship as he or she would treat most other types of scholarships. If
the aid administrator becomes aware of the Douglas Teacher Scholarship prior to
packaging Title IV aid for the student, the Douglas Teacher Scholarship is considered as a
resource in determining the student's eligibility for campus-based assistance and as
estimated student financial assistance in certifying the student's eligibility for a Stafford,
SLS or PLUS loan. If the aid administrator becomes aware of the Douglas Teacher
Scholarship after packaging Title IV aid for the student, the administrator must adhere to
the applicable overaward provision in the campus-based program regulations (34 CFR
673.27, 674.14, 675.14, and 676.14). Also, a State agency must reduce a Douglas
Teacher Scholarship if the scholarship, or the scholarship plus Title IV aid, exceeds the
cost of attendance under section 472 of the HEA. However, if a Douglas Teacher
Scholarship plus other non -Title IV aid exceeds the cost of attendance, the Douglas
Teacher Scholarship may not be reduced by the State agency or the institution. The
institution or State agency may, in this circumstance, counsel the student to decline the
excess funds but may not require the student to decline these excess funds.

INSTITUTIONAL ELIGIBILITY
14. Q. What is the minimum program length for an institution's educational programs to qualify as
eligible programs in the Stafford Loan, SLS, and PLUS programs?
A. If the institution qualifies as a nonprofit or public "institution of higher education," the
minimum program length is one year (i.e., 24 semester or trimester hours, 36 quarter
hours, or 900 clock hours). If the institution qualifies as a "vocational school," the minimum
program length is 8 semester or trimester hours, 12 quarter hours, or 300 clock hours.
Public and private, nonprofit institutions may meet only one of these definitions or may
simultaneously meet both of them. A for-profit institution may qualify only as a vocational
school. For further discussion of this issue, see pages 3-3 to 3-4, Chapter 3, of the 1989-90
Federal Student Aid Handbook.

 

Publication Date: 9/1/1989

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