Institutional Charges vs. Non-Institutional Charges

The U.S. Department of Education’s Office of Postsecondary Education (OPE) recently released a lengthy electronic announcement about the regulations found at 34 CFR 668.164(c) which require institutions to credit a student’s account with Title IV funds to pay for allowable charges associated with a payment period.  These regulations were part of the cash management final regulations that went into effect on July 1, 2016 which required institutions to prorate costs for books and equipment if an institution charges a student for some or all of the student’s books and supplies at the beginning of the student’s enrollment and the student does not have a real and reasonable opportunity to obtain those materials elsewhere, when determining the amount of Title IV aid to provide to the student as a credit balance during each payment period.

The Department’s longstanding guidance has been that a charge for books and supplies must be considered an institutional charge if a student does not have a real and reasonable opportunity to purchase the required course materials from any other source but the school. A student has a “real and reasonable” opportunity to obtain required course materials from another source if:

The required course materials are available for purchase at a relatively convenient location unaffiliated in any way with the institution; and

The institution does not restrict the availability of financial aid funds, so the student can exercise the option to purchase the required course materials from alternative sources in a timely manner.

If students do not have a real and reasonable opportunity to obtain the required books, supplies, and equipment from another source, the institution must ensure that it meets the requirements found in 34 CFR 668.164(c)(2) for including those items in tuition and fees, e.g., having an arrangement with a book publisher or other entity that enables it to make those books or supplies available to students below competitive market rates.