Housing providers face a little less confusion surrounding the calculation of excess student financial assistance income for Section 8 programs with the passage of the Consolidated Appropriations Act of 2026.
In 2023, Notice H 2023-10 Â introduced a new method for calculating Student Financial Assistance for all housing programs that use CFR Part 5.609 to determine income. Once HOTMA has been fully implemented for such programs, we must consider two categories of Student Financial Assistance.
The first category contains all amounts received under Title IV of the Higher Education Act and student financial assistance from the Bureau of Indian Affairs. This includes, but is not limited to, Federal Pell Grants, Higher Education Tribal Grants, Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Federal Work-Study programs. Section 479B of the Higher Education Act of 1965, as amended, excludes any funds from the first category from being counted as income, even in the unlikely event that a student receives more than is needed to cover their actual cost of education.
The second category includes any other grant, scholarship, or other student financial assistance. Under HOTMA, we are required to count only the excess amounts of student financial assistance from the second category and exclude any potential excess from the first category.
Unfortunately, the Consolidated Appropriations Act of 2023, contained language that created an exception to this income exclusion. In Notice H 2023-10, Section G.16.d, page 90, HUD interpreted such language to require housing providers to count any and all excess student financial assistance as income for a family receiving Section 8 with a head, co-head, or spouse who is a student age 23 or younger, or who does not have dependent children. This exception has been removed as of February 3, 2026, when Congress passed the Consolidated Appropriations Act of 2026 without such language.
Going forward, we will only count an excess of student financial assistance from the second category, without exception. This is a welcome change that removes a complicated exception that caused many housing professionals confusion since the publication of Notice H 2023-10.