Do Schools Have To Resolve a Comment Code For a Foreign Earned Income Exclusion For Graduate Students?

Award Year: 2024-25 KA-36984 Helpfulness Rating 296 page views

This guidance is specific to the 2024-25 award year and later.

No. The U.S. Department of Education (ED) has informed NASFAA that because a graduate student is not eligible for a Federal Pell Grant, the school is not required to evaluate the student's adjusted gross income (AGI) to resolve the new C flag and comment code added to the Institutional Student Information Record (ISIR) when an applicant manually enters an amount in the Foreign Earned Income Exclusion field on the FAFSA. The school can document that the graduate student is not eligible for Pell and no other action is necessary. In other words, the evaluation in AskRegs Knowledgebase Q&A, What Must a School Do When a Contributor Reports a Foreign Earned Income Exclusion?, is not necessary for graduate students.

Note, however, that guidance has not changed related students whose applications are selected for verification. If an application is selected for verification and reported an amount for the Foreign Earned Income Exclusion, you must complete verification, as explained in AskRegs Q&A, Do We Only Verify the Foreign Earned Income Exclusion If an Amount Is Reported On the FAFSA? Under 34 CFR 668.54(b)(1)(iii), except for identity and Statement of Educational Purpose, verification is not required if the student is only eligible for unsubsidized Title IV aid. If a student is eligible for only unsubsidized aid and is selected for verification tracking group V5, they need to verify only identity and Statement of Educational Purpose; they do not need to verify any other FAFSA information, such as income or family size. Keep in mind, however, that a graduate student may be eligible for Federal Work-Study (FWS), which is subsidized aid. In that situation, the student would have to complete verification, including the Foreign Earned Income Exclusion amount if reported on the FAFSA. A student may not circumvent the verification process by opting not to accept the FWS and accept only unsubsidized Title IV aid.

AskRegs Q&As represent NASFAA's understanding of regulatory and compliance issues. They are FOR INTERNAL USE ONLY. While NASFAA believes AskRegs Q&As are accurate and factual, they have not been reviewed or approved by the U.S. Department of Education (ED). If you should need written confirmation of AskRegs information for audit or program review purposes, please contact your ED School Participation Division. NASFAA shall not be liable for technical or editorial errors or omissions contained herein; nor for incidental or consequential damages resulting from the furnishing, performance, or use of this material.