Under the Housing Opportunity Through Modernization Act (HOTMA), specific rules govern how educational assistance is treated as income for Section 8 residents.

HOTMA Educational Assistance Rule Overview

HOTMA clarified and simplified the treatment of educational assistance in determining a household’s income for many affordable housing programs, including most HUD programs, Rural Development Section 515, and the LIHTC program. Under the HOTMA rule:

HOTMA’s goal in modifying these rules was to reduce administrative complexity and ensure that educational aid meant to support academic success does not create a financial penalty for low-income families participating in HUD programs.

Amounts Received Under Section 479B of the Higher Education Act (HEA) of 1965

Educational assistance received under the Higher Education Act is almost always excluded from income—even if it exceeds the cost of actual educational expenses. The one exception is for Section 8 residents, where the full amount of educational assistance in excess of actual expenses is included in income. The one exception to this is for Section 8 residents over age 23 with dependent children. HEA assistance is always excluded for this category of resident, as it is for residents in all other affordable housing programs subject to HOTMA.

Section 479B provides that certain types of student financial assistance are excluded in determining eligibility for benefits made available through federal, state, or local programs financed with federal funds. The types of financial assistance listed below are considered 479B student financial assistance programs.

Other student financial assistance may also be excluded from income, but only to the extent it pays for actual educational expenses. Such assistance includes grants or scholarships from the following sources:

Other monetary contributions will generally not be excluded from income, and may include -

Covered Costs

Costs that may be considered educational expenses include:

Property managers operating properties subject to HOTMA need to be familiar with the various types of financial assistance students will likely receive and whether or not such assistance may be excluded from income.

Bottom Line

The Housing Opportunity Through Modernization Act (HOTMA) streamlines the treatment of educational assistance as income for residents receiving housing support, such as Section 8. In general, most forms of educational assistance, including scholarships and grants, are excluded from income calculations for both the student and their household members. There are limited exceptions, which include amounts that exceed tuition costs and payments designated for living expenses. This rule applies to both dependent and independent students, with more extensive exclusions for Section 8 students over 23 who have dependents. HOTMA seeks to reduce administrative burdens and ensure that educational aid does not financially penalize low-income families.