How Do We Determine Living Expenses For Students Living At Home With Parents?

Effective with the 2023-24 award year, schools must include a housing component in the cost of attendance (COA) for dependent students who are living at home with their parents and that allowance cannot be zero.

In Dear Colleague Letter GEN-22-15, the U.S. Department of Education (ED) provided the following guidance in COA-Q7:

"Under the new component associated with living expenses for students attending at least half-time, an institution must develop a living expenses allowance for students living at home with parents that cannot be zero. What are some examples of ways for institutions to derive a non-zero amount when the student is not charged for housing or food by the parents?

Aside from any specific requirements outlined in the HEA, institutions have very broad discretion when developing reasonable costs associated with COA elements. For this component, institutions should develop reasonable methods to determine a dollar amount greater than zero for living expenses of students living at home with their parents. This may include costs associated with food when taking in-person classes or participating in internships/externships. Institutions could use surveys or other methods to determine if there are any typical housing costs incurred by students while living at home, such as parents charging rent. Institutions must develop an amount greater than zero that is reasonable and supportable."

NASFAA has received confirmation from ED that the food component of the COA for this group may include three meals per day, or it may include fewer than three, stating "How the school determines the appropriate amount is up to the school." ED also noted that if a specific student finds their food budget is too low because they purchase more meals away from home due to their schedule, etc., the student can request a professional judgment (PJ) adjustment to the food cost component.

Note: Effective with the 2023-24 award year, the COA component for “room and board” has been renamed "living expenses." "Room" has been renamed "housing" and "board" has been renamed "food."

See also Section 472 of the Higher Education Act of 1965 (HEA), as amended, [20 USC 1087LL].