HUD Appropriations Act Limits Section 8 Eligibility for Some College Students

by Jim Schaafsma, MPLP Housing Law Attorney

Last week someone asked me about limitations on college student eligibility for HUD rental housing assistance. The recently enacted FY2006 HUD appropriations bill contains a provision which restricts eligibility for Section 8 housing for some members of this population. Acting on the congressional directive that it do so within 30 days of enactment, HUD has already issued a final rule (without opportunity for public comment which HUD says the tight time line justified) on this subject.

Here is a summary of the legislation and the regulation. The basic outcome of these new laws is that for college students younger than 24, who are not married or veterans, and do not have dependents, both their own income (including financial aid, but not loans) and their parents/guardians’ income will be considered in determining eligibility for HUD housing. The provisions were adopted as a result of numerous incidents, perhaps the most celebrated one was at the University of Iowa, where single college student/athletes in their early 20s with no dependents and wealthy parents were living in HUD assisted low income rental housing.

This handout also includes a summary of a 2005 HUD Notice on this subject for the public housing and Section 8 voucher programs, and also information about the eligibility of full-time students for living in Low Income Housing Tax Credit (LIHTC) rental units.

New Statutory Language

Section 327 of the HUD FY2006 appropriations act (P.L. 109-115) says that no assistance shall be provided under Section 8 (of the U.S. Housing Act of 1937, 42 USC 1437f) to anyone who:

• is enrolled as a student at a higher education institution;
• is less than 24 years old;
• is not a veteran;
• is not married;
• does not have a dependent child; and
• is not otherwise individually eligible, or has parents who individually or jointly are not eligible for Section 8 assistance

For purposes of determining eligibility to receive Section 8 assistance, any financial aid a covered student receives, beyond amounts received for tuition, will be considered income.

The restriction applies to both Section 8 project-based and voucher assistance.

The full text of Section 327 appears in the first page of the HUD final rule discussed below.

New Regulatory Language

Beyond restating the Section 327 statutory language, the final rule issued by HUD amends 24 CFR 5.609 (Annual income) to say that higher education financial assistance (but not loan proceeds) is income.

The rule also creates a new 24 CFR 5.612 which restates the statutory language limiting higher education student eligibility.

The rule amends the regulation for the project-based Section 8 programs (24 CFR 880, 883, 884, and 886) to make clearer reference to the income sections of 24 CFR Part 5.

Finally, the rule amends the Section 8 voucher regulation to say that a family member failing to meet the student eligibility requirements is grounds for denial or termination of assistance. 24 CFR 982.552(b)(5)

To see the final rule, go to: http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?position=all&page=77742&dbname=2005_register

2005 HUD Notice – Public Housing and Section 8 Voucher

Last year, HUD issued a notice (PIH 2005-16) applying to the public housing and Section 8 voucher programs that advised public housing agencies/commissions (PHA) about how to deal with full-time college student applicants and residents. The notice contains tables of “required” and “suggested” steps for determining and verifying eligibility. The required steps are verifying age and income eligibility. The suggested steps are certification that the student is not or does not anticipate receiving parental financial support, has established for a least 1 year a household separate from parents, and is not claimed as a dependent for tax purposes.

The notice also refers to Section 224 of the FY2005 HUD Appropriations Act which required that for the public housing and Section 8 voucher programs that the portion of any college athletic scholarship assistance available be considered income for HUD housing purposes. Section 224 also instructed HUD to establish criteria under which athletic scholarship recipients can be denied HUD housing assistance. The notice allows PHAs to deny assistance to any student whose athletic scholarship had an amount specified for housing costs in excess of $5,000. The notice is at http://www.hud.gov/offices/pih/publications/notices/05/pih2005-16.pdf

Low Income Housing Tax Credit Rules

In Michigan, MSHDA administers the LIHTC program. Interpreting the Internal Revenue Code LIHTC provisions (26 USC §42), MSDHA has issued a LIHTC Compliance Manual. (http://www.michigan.gov/mshda/0,1607,7-141-8002_26576_26578-76417--,00.html; see Section VIII) 26 USC §42(i)(3)(D) limits the eligibility of full-time students for tax credit units. If an applicant household consists entirely of full-time students (which as of September 2005 includes children in elementary and secondary school), it is ineligible for occupying a tax credit unit unless any of its members meets one of the following exceptions:

• married and filing a joint tax return;
• receiving assistance under Title IV of the Social Security Act (i.e. FIP benefits);
• enrolled in a governmental job training program;
• a single parent with minor children, none of whom is a dependent of a 3rd party.

February 2006