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SI 00830: Unearned Income

Effective Dates: 11/30/2009 - Present

TN 95 (09-04)

Citations:

Soc. Sec. Act as amended, Section 1612(b)(7); P.L. 108-203, § 435; 20 CFR § 416.1124(c)(3)

A. Definitions

1. Grants, Scholarships, and Fellowships

Grants, scholarships, and fellowships are amounts paid by private nonprofit agencies, the U.S. Government, instrumentalities or agencies of the U.S., State and local governments, foreign governments, and private concerns (e.g. a private citizen) to enable qualified individuals to further their education and training by scholastic or research work, etc.

2. Gifts

A gift is something a person receives which is not repayment for goods or services the person provided and is not given because of a legal obligation on the giver's part. To be a gift, something must be given irrevocably (i.e., the donor relinquishes all control). “Donations” and “contributions” may meet the definition of a gift. See SI 00830.520.

3. Tuition, Fees, and Other Necessary Educational Expenses

Educational expenses include laboratory fees, student activity fees, transportation, stationery supplies, books, technology fees, and impairment-related expenses necessary to attend school or perform schoolwork (e.g., special transportation to and from classes, special prosthetic devices necessary to operate school machines or equipment, etc.).

B. Policy – Assistance Under Title IV of the Higher Education Act of 1965 (HEA) or Bureau of Indian Affairs (BIA)

1. Title IV of HEA or BIA Involvement

All student financial assistance received under HEA or under BIA student assistance programs, is excluded from income and resources, regardless of use. The resource exclusion for this educational assistance does not have a time limit, i.e. regardless of how long the assistance is held, it is excluded from resources.

Examples of HEA Title IV Programs:

  • Pell grants

  • State Student Incentives

  • Academic Achievement Incentive Scholarships

  • Byrd Scholars

  • Federal Supplemental Educational Opportunities Grants (FSEOG)

  • Federal Educational Loans (Federal PLUS Loans, Perkins Loans, Stafford Loans, Ford Loans, etc.)

  • Upward Bound

  • Gear Up (Gaining Early Awareness and Readiness for Undergraduate Programs)

  • LEAP (Leveraging Educational Assistance Partnership)

  • SLEAP (Special Leveraging Educational Assistance Partnership)

  • Work-Study Programs.

NOTE: State educational assistance programs, including work-study, funded by LEAP or SLEAP are programs under Title IV of HEA.

2. Interest and Dividends Earned on Title IV of HEA or BIA Educational Assistance

  • For benefits payable on or after July 1, 2004, interest and dividends earned on unspent educational assistance under Title IV of HEA or under BIA are excluded from income.

  • For benefits payable prior to July 1, 2004, interest and dividends earned on unspent educational assistance under Title IV of HEA or BIA, are counted as income. See SI 00830.500.

C. Policy - Other Grants, Scholarships, Fellowships, and Gifts

1. Benefits Payable on or after June 1, 2004

a. Grants, Scholarships, Fellowships, or Gifts Used for Paying Educational Expenses

Any portion of a grant, scholarship, fellowship, or gift used for paying tuition, fees, or other necessary educational expenses at any educational institution, including vocational or technical education, is excluded from income. Any portion of such educational assistance that is not used to pay current tuition, fees or other necessary educational expenses but will be used for paying this type of educational expense at a future date is excluded from income in the month of receipt. This exclusion does not apply to any portion set aside or actually used for food, clothing, or shelter. (See SI 00830.455B. if Title IV of HEA or BIA is involved.)

b. Grants, Scholarships, Fellowships, or Gifts Not Used or Set Aside for Paying Educational Expenses

Any portion of grants, scholarships, fellowships, or gifts that is not used or set aside for paying tuition, fees, or other necessary educational expenses is income in the month received and a resource the month after the month of receipt, if retained.

c. Grants, Scholarships, Fellowships, or Gifts Set Aside But Not Used for Paying Educational Expenses

  • Excluded Funds Used for Another Purpose

    If any portion of grants, scholarships, fellowships, or gifts that is excluded from resource because it is set aside to pay for tuition, fees, or other necessary educational expenses is used for some other purpose, the funds are income at the earliest of the following points: in the month that it is spent, or the month the individual no longer intends to use the funds to pay tuition, fees, or other necessary educational expenses.

  • Excluded Funds Not Spent

    If funds are not spent after the 9th month, they are countable resources as of the 10th month following the month of receipt.

2. Benefits Payable Prior to June 1, 2004

Any portion of a grant, scholarship, or fellowship used for paying tuition, fees, or other necessary educational expenses at any educational institution, including vocational and technical education, is excluded from income. This exclusion does not apply to any portion set aside or actually used for food, clothing, or shelter. (See SI 00830.455B. if Title IV of HEA or BIA is involved.)

For benefits payable prior to June 1, 2004, any portion of a gift used for paying tuition, fees, or other necessary educational expenses is not excluded from income. See SI 00830.520.

NOTE: Grants, scholarships, or fellowships that are not used for paying tuition, fees, or other necessary educational expenses are income in the month received and a resource the month after the month of receipt.

3. Interest and Dividends Earned on Educational Assistance

a. Benefits Payable on or after July 1, 2004

For benefits payable on or after July 1, 2004, interest and dividends earned on excluded grants, scholarships, fellowships, or gifts are counted as income. Interest and dividends earned on countable educational assistance are excluded from income. See SI 00830.500.

b. Benefits Payable Prior to July 1, 2004

For benefits payable prior to July 1, 2004, interest and dividends earned on unspent educational assistance are counted as income. See SI 00830.500.

D. Procedure - Determine Countable and Excludable Amounts of Educational Assistance

Step

Action

1

Verify that the assistance is a grant, scholarship, fellowship, or gift using documents in the individual's possession, contact with the institution or provider, or a precedent to verify the nature of the assistance (e.g., scholarship, grant, etc.). If not totally excluded under another provision, verify the amount, date(s) of payment, payee, source of payment/payer, etc.

2

  • If Title IV of HEA or BIA is involved, exclude the assistance. STOP.

  • If Title IV of HEA or BIA is not involved, go to Step 3.

3

Determine the amount of tuition, fees, and other necessary educational expenses.

  • Use receipts, bills with cancelled checks, contact with the provider, etc., to verify expenses paid. If an expense is verified as incurred but not paid, assume the individual will pay the expense unless you have reason to question the situation. No follow-up is required if the assumption is applied.

  • Use your judgment to determine whether payment of an expense was a necessary part of obtaining an education.

  • A signed allegation is acceptable evidence of expenses when it is unreasonable to obtain other evidence (e.g., daily bus-fare, small expendable items, etc.). Do not apply this tolerance to major expenses such as tuition, fees, and books.

4

Deduct the amount of tuition, fees, and other necessary educational expenses from the gross amount of the assistance. Use any reasonable method for deducting educational expenses from income.

Benefits Payable on or after June 1, 2004

  • Exclude the remainder from income if the individual alleges that it will be used for tuition, fees, or other necessary educational expenses.

  • Inform the individual that they must tell us if they spend the money for a purpose other than educational expenses or change their intent to spend it on educational expenses.

  • Count any portion of grants, scholarships, fellowships, or gifts as income the earliest of the either the month that it is spent for something other than tuition, fees, or other necessary educational expenses, or the month the individual no longer intends to use the funds to pay tuition, fees, or other necessary educational expenses. These excluded resources may only be counted as income during the 9-month period beginning the month after the month the funds were received. The unspent assistance is counted as a resource beginning the 10th month following the month of receipt.

Benefits Payable Prior to June 1, 2004

  • Count any remainder as income in the month received.

  • For the month following the month the educational assistance is counted as income; follow general resource rules for any remaining unspent assistance.

E. Examples

1. Benefits Payable on or after June 1, 2004

a. Grants, Scholarships, Fellowships, or Gifts Excluded from Income and Resources

An SSI beneficiary who attends an educational institution receives a $1,000 scholarship and a $1,000 grant in September 2004. The educational assistance is not under Title IV of HEA or BIA. The student uses $1,500 to pay for tuition, fees, and other necessary educational expenses in September 2004. The student plans to use the remaining $500 to help pay tuition, fees, and other educational expenses in February 2005.

The claims representative verifies the type and amount of assistance and expenses and excludes $2,000 from income in September 2004 because this assistance is or will be used to pay tuition, fees or other necessary educational expenses. The unused $500 is an excluded resource for October 2004 through June 2005, 9 months after the month of receipt. Any interest or dividends earned on the excluded resource are counted as income during the 9-month exclusion period.

b. A Portion of Grants, Scholarships, Fellowships, or Gifts is Counted as Resources after the 9-Month Exclusion

In January 2005, the SSI beneficiary in SI 00830.455E.1.a. decides to postpone attendance at an educational institution until September 2005. The SSI beneficiary intends to use the $500 in September 2005 to help pay for books and other necessary educational supplies.

The remaining $500 remains excluded from income in September 2004 and from resources from October 2004 through June 2005 because the educational assistance will be used to pay for tuition, fees, or other necessary educational expenses. Since the 9-month exclusion period ends in June 2005, the claims representative determines the $500 is a countable resource beginning July 2005, the month after the end of the 9-month period.

c. A portion of Grants, Scholarships, Fellowships, or Gifts is Counted as a Resource Before the End of the 9-Month Exclusion

In January 2005, the SSI beneficiary in SI 00830.455E.1.a. decides to postpone attendance at an educational institution until September 2005 and uses the $200 to pay credit card bills and save $300 in case of an emergency.

The $500 is income in January 2005, the month the assistance is spent and is no longer to be used for paying tuition, fees, or other necessary educational expenses. Beginning February 2005, the remaining $300 is a countable resource.

d. Grants, Scholarships, Fellowships Received Before June 1, 2004 and Excluded from Income and Resources

An SSI beneficiary who attends an educational institution receives a $500 gift in April 2004. The assistance is not under Title IV of HEA or BIA. The student plans to use $500 to pay for tuition, fees, and other necessary educational expenses in September 2004.

The claims representative verifies the type and amount of assistance and gets a signed statement from the student that the gift will be used for paying tuition, fees, or other necessary expenses at an educational institution. The SSI beneficiary has no other income or resources. The $500 is income in April 2004. Beginning May 2004, the educational assistance is a countable resource. The resource exclusion cannot begin before June 2004. The $500 can be excluded from resources from June 2004 through January 2005, 9 months after the month the assistance was received, or until it is spent for tuition, fees, or other necessary educational expenses, whichever is earlier.

2. Benefits Payable Prior to June 1, 2004

A Portion of Grants, Scholarships, Fellowships is Counted as Income and Resources

An SSI beneficiary who attends an educational institution receives a $1,000 scholarship and a $1,000 grant in August 2003. The assistance is not under Title IV of HEA or BIA. The student uses $1,500 to pay for tuition, fees, and other necessary educational expenses. The student plans to use the remaining $500 to help pay tuition, fees, and other educational expenses in January 2004.

The claims representative verifies the type and amount of assistance and expenses and excludes $1,500 from income in August 2003. The unused $500 is a counted as income in August 2003 and a resource beginning September 2003.

3. Educational Assistance Under Title IV of HEA or BIA

In September 2004, an SSI beneficiary receives $2,000 in grants and scholarships that are under Title IV of HEA. The SSI beneficiary uses $1,000 for tuition and fees and another $300 for books. The remaining $700 is set aside for unspecified reasons.

The claims representative determines the $2,000 is excluded from income beginning September 2004 and the remaining $700 is excluded from resources. Educational assistance under Title IV of HEA or BIA is excluded from income and resources. Any interest or dividends earned on the $700 are also excluded from income.

F. Procedure – Systems Input

1. Non-MSSICS Cases

For Non-MSSICS cases, enter amounts excluded from resources and the beginning and ending dates for the 9-month exclusion period in the “RMKS” segment of the SSR. If appropriate, enter amounts of interest and dividends in the “UMIH” segment of the SSR.

2. MSSICS Cases

For MSSICS cases:

  • Use “IOTH” screen to enter income amounts as “Alleged Amount” or “Verified Amount”, as appropriate, and “Amt Not Counted”.

  • Use “ROTH” screen to enter resource amounts as “Alleged Amount” or “Verified Amount”, as appropriate, and “Amt Not Counted”.

  • Use “IINT” screen to enter interest amounts as “Alleged Amount” or “Verified Amount”, as appropriate, and “Amt Not Counted”.

  • Use “IDIV” screen to enter dividend amounts as “Alleged Amount” or “Verified Amount”, as appropriate, and “Amt Not Counted”.

G. References

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