The following new guidance from ED provides clarification on the treatment of books and supplies when an institution chooses to include them in their tuition and fees. It was widely believed that schools that listed these kinds of charges as separate line items on an enrollment agreement were exempt from the Cash Management regulations summarized below. However Ed officials have only just confirmed that simply disaggregating the costs of books and supplies as separate line item charges on an enrollment agreement does not exclude those charges from being considered tuition and fees under the cash management regulations published last year. This is because the act of signing the enrollment agreement obligates the student to pay the amount specified for the program. According to a Department official, “itemizing the underlying costs does not affect the calculus of whether such charges are required to be paid (and therefore included in the overall tuition and fees). This clarifying guidance will have a significant impact on institutions that choose to include charges for books, supplies, tools, and kits in their tuition and fees.
Books and supplies may only be included in tuition and fees if:
- the school has an arrangement with a book publisher or other entity that makes the books and supplies available to at costs below competitive market rates,
- the school provides a means for students to obtain the books and supplies by the 7th day of the associated payment period, and
- the school has a policy that allows students to decline or opt-out of obtaining their books and supplies through the school by the 7th day of the payment period.
Additionally books and supplies may be included if:
- the books and supplies are not available or accessible from sources other than those provided by the school, or,
- there is a compelling health or safety reason for the school to provide the books and supplies directly to students.
Schools which include books and supplies in their tuition and fees must give students an option to opt out of purchasing materials provided by school. Ed recommends that schools provide a separate notice from the enrollment agreement to ensure students are aware of their right to do so.
Books and supplies should be prorated over the whole program when determining R2T4 costs and credit balances. Ed advises institutions to prorate the total of the books and supplies just like tuition, by the applicable payment periods for R2T4 and to determine if a credit balance exists.
Institutions with questions pertaining to this or other matters of compliance with Accreditation, Federal Student Aid standards are welcome to contact our offices for additional assistance.