When it comes to affordable housing student rules, it gets complicated. Many households have at least one student in grade school or post-high school education. Due to the growing demand for affordable housing, property owners must make sure that housing is available to those who need it and maintain Fair Housing laws. Affordable housing student restrictions are more about providing program benefits to those most in need instead of funds and resources going to students who end up paying little-to-no rent and are adult dependents of wealthy parents.

It is critical to verify student status requirements to determine eligibility. When properties have multiple or layered funding sources, a student applicant may need to qualify by adhering to multiple sets of student restrictions.

Why a Student Rule?

Why is there a student rule in the first place? When the LIHTC program first started, there was concern about how the funds were to be used. The program sought to avoid circumstances where affordable housing would be used up for dormitory or transient housing, thus, taking away housing funds from families and individuals with substantial needs. Hence, a student rule was put in place. Other affordable housing programs like HUD HOME and Section 8 also have student rule restrictions.

What is Considered a Full-Time Student?

A student is considered a full-time student if the individual is enrolled as a full-time student (Kindergarten through 12th grade or a qualifying educational organization) for any time within any five months of the calendar year; the months do not have to be consecutive. A month is counted if the student attends or attended at least one day in that month. HUD and LIHTC accept a student as “full-time” if the student is considered a full-time student by the educational institution.  

Low-Income Housing Tax Credit Student Rule Exemptions

Without meeting an exception to the student rule, the LIHTC program prevents a household entirely comprised of full-time students to lease at tax credit properties. A full-time student household can qualify for LIHTC housing if:

·        A student receives assistance under Title IV of the Social Security Act (the Temporary Assistance for Needy Families (TANF) program)

·        A student was previously in the foster care program

·        A student is enrolled in a job training program and receiving assistance under the Job Training Partnership Act or under other federal, state, or local laws

·        The household comprises of single parents and their children. Such parents must not be dependents of another individual and the children must not be dependents of another individual other than their parent. None of the tenants (parents or children) can be dependents of a third party

·        The household is comprised of a married couple entitled to file joint tax returns

Section 8 Student Rule Exemptions

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The rule applies to both full-time and part-time students. A student becomes eligible if one of the following criteria are met:

·        Is 24 years-old or older

·        A United States military veteran

·        Married

·        A dependent child living with the student

·        Isa person with disabilities receiving Section 8 assistance as of November 30,2005

·        The student or the student’s parents (individually or jointly) are eligible to receive Section 8 assistance

·        If the student is able to prove independence from parents who are not eligible for Section 8 assistance

HUD HOME Student Rule Exemptions

The HOME program adopted the same exemptions as the Section 8 program. Note that to determine current student status, the five-month enrollment rule does not apply to HUD HOME and Section 8—only to the LIHTC program. Also, HOME requires that a married student cannot live separate from his or her spouse.

If a Student Claims to Be Independent from His Parents, How Do I Certify It?

To determine a student’s independence from his or her parents, property owners and managers should use the following standard:

·        The student must be of legal contract age under state law

·        The student must have established a household separate from parents or legal guardians for at least one-year prior for applying for occupancy, or the student must meet the United States Department of Education’s definition of an independent student

The U.S. Department of Education defines an independent student as on one the following:

·        The student is at least 24 years-old

·        The student is married (or separated but not divorced)

·        The student has legal dependents other than a spouse

·        The student was orphaned, meaning that at any times since the student turned 13years-old, both his parents were deceased, he was in foster care, or was a ward of the court

·        The student is an emancipated minor as determined by a court judge

·        The student is homeless or is at risk of homelessness

·        The student is a “professional student,” working on a degree beyond a bachelor’s degree such as a master’s or doctorate

·        The student is a veteran of the U.S. military

·        The student must not be claimed as a dependent by his parents or legal guardian pursuant to IRS regulations

·        The student must provide certification of the amount of financial assistance that will be provided by the student’s parents, signed by the person(s) providing the support. This certification is required regardless whether assistance is provided

Income Eligibility

LIHTC. Income eligibility for LIHTC housing might differ from each housing project, but typically is based on applicants earning less than 60 percent of the Area Median Income (AMI).

There are a couple scenarios to consider for student income eligibility in LIHTC housing. If an applicant does not receive Section 8 assistance, all forms of education financial assistance are excluded from annual income (e.g., grants, scholarships, entitlements, financial aid packages, work-study programs, etc.). If a student is receiving Section 8 assistance, all financial assistance in excess of tuition and required student fees and charges are included as income. The only exceptions are for students who live with their parents and the parents are applying for or receiving Section 8 assistance or if the student is 24 years-old or older and has dependent children. Note that extra expenses, such as room and board, books, supplies, meals, transportation, parking, and other similar charges are not part of a student’s tuition.

If a student is employed but is not the head of the household, a co-head of the household, or a spouse, and is a dependent of the household, only $480 of the student’s wages are counted as income for the entire 12-month period. All unearned income (e.g., unemployment, Social Security benefits, TANF, etc.) must also be included.

HOME. The HUD HOME program bases income limits on household size and Area Median Income (also called median family income). Household incomes that are less than 30 percent of the AMI are eligible, but adjustments might be considered based on family size. For example, family sizes in excess of eight people are calculated by adding 8 percent of a four-person income limit for each additional family member. The HUD Exchange explains, “That is, a 9-person limit should be 140% of the 4-person limit, the 10-person limit should be 148%.”

Section 8. Income eligibility for Section 8 vouchers are based not only on household income, but also household size. HUD divides income limits into three categories: low-income, very low-income, or extremely low-income. Low-income households have an income that is no more than 80 percent of the Area Median Income (AMI). Very low-income households earn no more than

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50 percent of the AMI, and extremely low-income earn no more than 30 percent of the AMI. Other forms of income, such as assets, retirement funds, child support, alimony, unemployment, Social Security benefits, disability, etc. are also included in determining total income.

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Conclusion

Students can qualify for affordable housing. Although there are limitations on the types of student households permitted in affordable housing, knowing how to administer each program to the individual circumstances of your student tenants will keep your property in compliance. If you have questions about student rule restrictions, exemptions, or qualifications for full-time or part-time students, reach out to Preferred Compliance Solutions. We will help you make the right compliance decisions for your community.

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