TN 51 (09-04)

Citations:

Soc. Sec. Act as amended, Section 1613(a)(14);

P.L. 108-203, § 435

A. Introduction

Section 435 of The Social Security Protection Act of 2004, Public Law 108-203, provides a 9-month resource exclusion for grants, scholarships, fellowships, and gifts used to pay for tuition, fees, and other necessary educational expenses at any educational institution, including vocational and technical education.

B. 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.).

C. 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.

D. Policy - Other grants, scholarships, fellowships, and gifts

1. Benefits Payable on or after June 1, 2004

a. Grants, Scholarships, Fellowships, or Gifts Set Aside to Pay Educational Expenses

Beginning with benefits payable on or after June 1, 2004, any portion of a grant, scholarship, fellowship, or gift used or intended to be used to pay the cost of tuition, fees, or other necessary educational expenses at any educational institution, including vocational and technical education, is excluded from resources for 9 months beginning the month after the month it was received. This exclusion does not apply to any portion set aside or actually used for food or shelter.

b. Excluded Funds Not Spent

Grants, scholarships, fellowships, and gifts that are retained after the 9-month exclusion period are countable resources beginning the month following the end of the 9th month.

c. Excluded Funds Spent For Another Purpose

If any portion of this excluded educational assistance is used for something other than tuition, fees, or other necessary educational expenses or the individual no longer intends for the funds to be used to pay tuition, fees, or other necessary educational expenses, then the funds are income at the earliest of the following points: in the month they are spent, or the month the individual no longer intends to use the funds to pay tuition, fees, or other necessary educational expenses.

See SI 00830.455 for income exclusions of grants, scholarships, fellowships, and gifts.

2. Benefits Payable Prior to June 1, 2004

For benefits payable prior to June 1, 2004, any portion of grants, scholarships, or fellowships not used to pay for tuition, fees, or other necessary educational expenses in the month received is counted as income in the month received and a resource the month after the month of receipt. The 9-month resource exclusion for educational assistance is not applicable for benefits prior to June 1, 2004. See SI 00830.455 for income exclusion of grants, scholarships, fellowships.

3. Grants, Scholarships, Fellowships, or Gifts Received before June 2004 and Subject to the 9-Month Resource Exclusion

Grants, scholarships, fellowships, and gifts received in September 2003 through May 2004 also can be excluded from resources under this provision beginning in June 2004. The funds can be excluded only for the number of months that remain in the 9-month period following the month of receipt as of June 2004. Beginning the 10^th month after the month of receipt any portion of grants, scholarships, fellowships, or gifts is counted as a resource.

For example, if a scholarship was received in April 2004 and set aside for necessary educational expenses at an educational institution, then beginning June 2004 the scholarship is excluded from resources. The scholarship would be an excluded resource beginning June 2004 through January 2005 (9 months after the month of receipt). The resource exclusion cannot begin before June 2004.

4. Interest and Dividends Earned on Grants, Scholarships, Fellowships, or Gifts

a. Benefits Payable on or after July 1, 2004

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. Interest or dividends earned on other forms of excluded educational assistance are counted as income. Interest or 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 or dividends earned on unspent educational assistance, including assistance under Title IV of HEA or BIA, is countable income.

E. Procedure – Determine countable and excludable amounts of educational assistance

1. Verification of Educational Assistance and Costs

Follow the instructions in SI 00830.455D to verify the amount of grants, scholarships, fellowships, or gifts received by students and the current and anticipated costs of tuition, fees and other necessary educational expenses.

2. Benefits Payable on or after June 1, 2004

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

Determine the portion of grants, scholarships, fellowships, or gifts that is used or will be used to pay for tuition, fees, or other necessary educational expenses at any educational institution, including vocational or technical education. Exclude amounts for paying for tuition, fees, or other necessary educational expenses from income in the month received and from resources for up to 9 months beginning the month after the month the assistance was received.

Use documents in the individuals’ possession, documents provided by the school, other documentation, and obtain the individual’s statement either signed or recorded on a DROC to determine amounts set aside for tuition, fees, or other necessary expenses.

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

Count any portion of grants, scholarships, fellowships, or gifts not used or retained to pay for tuition, fees, or other necessary educational expenses as income in the month received and as a resource the month after the month received.

Count any portion of grants, scholarships, fellowships, or gifts retained to pay for tuition, fees, or other necessary educational expenses as a resource beginning the month following the month the assistance in no longer set aside for paying educational expenses. For example, if excluded funds are being used to pay for expenses other than tuition, fees, or other necessary educational expenses, then count any remaining funds as resources in the month following the month the spending began.

3. Benefits Payable Prior to June 1, 2004

a. Grants, Scholarships, Fellowships

For benefits payable prior to June 1, 2004, count any portion of grants, scholarships, or fellowships retained beyond the month received as a resource in the month after the month of receipt.

b. Gifts

For benefits payable prior to June 1, 2004, evaluate gifts for paying tuition, fees, or other necessary educational expenses under normal income and resource counting rules. See SI 00830.520.

4. Excluded Grants, Scholarships, Fellowships, and Gifts Commingled with Non-Excluded Funds

Follow policy and procedures in SI 01130.700 to determine how to identify excluded grants, scholarships, fellowships, and grants that were commingled with non-excluded funds.

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 the Other Resource (ROTH) page to enter resource amounts as “Alleged Value” or “Verified Value”, as appropriate, and “Excluded Amount.”

• 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. Procedure - When to issue a notice

Issue a manual notice only in cases where:

• grants, scholarships, fellowships, or gifts are excluded from resources according to SI 01130.455D.1.; and

• there is at least 1 month remaining in the exclusion period.

H. Procedure - How to issue a notice

1. Issue the manual notice on a Form SSA-L8166-U2.

2. See NL 00801.010E on sending manual notices and NL 00804.100 for the appropriate standard notice paragraphs.

3. Include the appropriate language in SI 01130.455G.

NOTE: If the individual is blind or visually impaired, see instructions at NL 01001.010 for more information on the special blind or visually impaired notice options.

I. Exhibit - Insert paragraph for manual notices

1 received grants, scholarships, fellowships, or gifts of 2 in 3 . You told us 4 to use this money for tuition, fees, or other necessary educational expenses at any educational institution, including vocational and technical education. Therefore, we will not count this money toward 5 resource limit for up to 9 months after 6 . In 7 , we will then count any money that is left over as part of 8 resources. In any month, the funds are no longer intended to be used for tuition, fees, or other necessary educational expenses at any educational institution, then the funds will be counted as income. The following month we will begin counting this money toward 9 resource limit. We determine the money is no longer intended to be used for tuition, fees, or other necessary educational expenses when 10 this money for something other than tuition, fees, or other necessary educational expenses or you tell us that 11 to use the money for tuition, fees, or other necessary educational expenses.

Fill-ins

1. Choice 1: You

    Choice 2: She

    Choice 3: He

    Choice 4: Your spouse

    Choice 5: Her spouse

    Choice 6: His spouse

    Choice 7: You and your spouse

    Choice 8: She and her spouse

    Choice 9: He and his spouse

    Choice 10: Your parent

    Choice 11: Her parent

    Choice 12: His parent

    Choice 13: You and your parent

    Choice 14: She and her parent

    Choice 15: He and his parent

    Choice 16: Your parents

    Choice 17: Her parents

    Choice 18: His parents

    Choice 19: You and your parents

    Choice 20: She and her parents

    Choice 21: He and his parents

2. Money amount

3. Month/Year

4. Choice 1: you plan

    Choice 2: she plans

    Choice 3: he plans

    Choice 4: they plan

5. Choice 1: your

    Choice 2: her

    Choice 3: his

    Choice 4: their

6. Choice 1: you receive it

    Choice 2: she receives it

    Choice 3: he receives it

    Choice 4: they receive it

7. Month /Year

8. Choice 1: your

    Choice 2: her

    Choice 3: his

    Choice 4: their

9. Choice 1: your

    Choice 2: her

    Choice 3: his

    Choice 4: their

10. Choice 1: you spend

    Choice 2: she spends

    Choice 3: he spends

    Choice 4: they spend

11. Choice 1: you no longer plan

    Choice 2: she no longer plans

    Choice 3: he no longer plans

    Choice 4: they no longer plan

J. References

Department of Veterans Affairs Educational Benefits, SI 00830.306
Dividends and Interest, SI 00830.500
Educational Assistance, SI 00830.450
Gifts, SI 00830.520
Grants, Scholarships, Fellowships, and Gifts, SI 00830.455
Plans for Achieving Self-Support, SI 00870.001
Treatment of Grants, Scholarships, Fellowships, and Gifts received by a Deemor, SI 01320.115