How Does the Use Of Electronic Books and Access Codes Impact Title IV Aid?

Scenario: Many schools are now being asked if the cost of electronic books (e-books) can be passed through the student’s ledger account and paid with Title IV funds. Schools often partner with third parties (e.g., a book publisher) that the student pays directly. The issue arises regarding how the payment flow occurs if the charge appears on the student’s ledger account. In one example, the school pays the third party directly and not the school-owned bookstore. In a different example, the book publisher channels the charge through the school's bookstore, and the charge is pushed through the student’s account. In this example, the school charges for the books, the Title IV funds disburse, and the school releases the funds directly to the bookstore to cover the bookstore’s expenses. In yet another example, some schools are also partnering with a business entity that acts as an agency contractor for multiple entities. This is an “umbrella” entity that many third parties utilize to handle the process. Instead of having to deal with multiple businesses, schools can partner with the umbrella company, which in turn works with other companies so the financial solution is much easier. The money flow can be different than the previous two examples.

Answer: According to guidance NASFAA has received from the U.S. Department of Education (ED): "The [Policy] group didn’t have any concerns about Title IV aid being used to pay for the books in this scenario. The only potential concern has to do with cash management, in the event that the school requires the student to use this method to purchase books. The student would need an opportunity to opt-out, etc.”

Under 34 CFR 668.164(c)(ii), the student's permission/consent is required to credit Title IV funds to the student's ledger account to pay for books and supplies that are not part of tuition and fees. However, for return of Title IV funds (R2T4) purposes, the book charges can only be included in institutional charges if the student does not have a real and reasonable opportunity to purchase the required books or course materials from any place but the school. Books that can be purchased directly from an entity other than the school or school-owned bookstore are non-institutional charges for R2T4 purposes. Please see Volume 5, Chapter 1 of the FSA Handbook.

Student Aid Reference Desk: For additional information, try the Student Aid Reference Desk. It is a central hub of all the important financial aid resources you need with direct links to legislation, regulation, Dear Colleague Letters, and other ED and NASFAA references. It is updated on a rolling basis with the latest news and changes. Search Cash Management.