Scholarship Discounts and Allowances

• NACUBO Advisory Report 2000-05 – Accounting

and Reporting Scholarship Discounts and Allowances to Tuition and Other Fee Revenues by Public Institutions of Higher Education

– Available on NACUBO’s website at

http://www.nacubo.org/ under Accounting/Advisory Reports

– Preferred industry practice – GASB Statement No. 34,

and Management’s Discussion and Analysis – for State and Local Governments, Basic Financial Statements – requires that revenues be reported net of discounts and allowances

• Applies to tuition and fees, housing

and meal plans

• Classified as a contra-revenue – Reduces tuition and fee and auxiliary

revenue

• Also reduces scholarship and

fellowship expense

• What is or is not revenue – Amounts received to satisfy student

tuition and fees will be reported as revenue only once (e.g., student fees, gifts, federal grants and contracts)

– Only amounts actually received by

students and third party payers to satisfy tuition and fees and room and board payments will be reported as tuition and fee revenue and room and board revenue

• Institutional resources provided to

students as financial aid will be recorded as scholarship allowances in amounts up to and equal to amounts owed by the students to the institution

Aid Exceeds Charges

• When the amount of institutional aid

awarded exceeds the tuition and fees, housing and meals provided by or procured by the institution, the excess of aid should be treated as an expense (scholarships and fellowships)

Elimination of Double Counting

• The historical practice of double

counting revenue was effectively eliminated with GASB No. 34 and 35

Service Related Waivers

• Waivers provided to graduate

assistants

• Tuition and fee remission given in

exchange for services

• Not reported as scholarship discounts

and allowances

Third Party Payer

• Payments made by third party payers

are not gift or grant revenue and are not scholarship allowances

• Purpose is to pay student’s tuition and

fees

Definition

• A scholarship allowance is defined as

the difference between the stated charge for goods and services provided by the institution and the amount that is billed to the student and/or third parties making payments on behalf of the student

• When considering what is, or is not,

revenue, the institution’s published rate structure must be considered

– A discounted, published rate is not

considered a scholarship allowance

Bulk Sales

• For bulk sales of educational services,

the fixed price is separately negotiated

– Not based on number of students • Not considered a scholarship

allowance

• Bulk sale amount reported as tuition

and fees as long as revenue is equal to amount actually received

• Pell Grant Award

Debit Cash Credit Federal Pell Grants To record financial aid received by external source Debit Scholarships and Fellowships Credit Cash To record student request of partial payment of Pell award Debit Scholarship Allowance Credit Accounts Receivable – Students To record Pell award applied to student’s account Example #1 $3,000 $3,000 $1,000 $1,000 $2,000 $2,000

Example #2

• Third Party Contract

Debit Cash $5,000 Credit Sales and Services of Educational Activities $5,000 To record funding received from external party Debit Accounts Receivable – Students Credit Tuition and Fees $5,000 $5,000 To record charges to student’s account Debit Scholarships and Fellowships Credit Accounts Receivable – Students To record third party payment applied to student’s account $5,000 $5,000 INCORRECT!!!!

Example #2 (continued)

• Third Party Contract

Debit Accounts Receivable – Students Credit Tuition and Fees To record charges to student’s account Debit Cash Credit Accounts Receivable – Students To record third party payment applied to student’s account CORRECT!!!!

$5,000 $5,000 $5,000 $5,000

Alternate Method

• Case-by-case approach too

cumbersome for most institutions

• Institutions may use the alternate

method to determine that portion of applicable financial aid support to be applied as scholarship allowances and scholarship and fellowship expenses

Alternate Method

• To use the alternate method,

institutions calculate categories of resources that influence financial aid and their amounts

• Amounts should be available from

Banner

Alternate Method Does your institution calculate Scholarship Discounts and Allowances on a case by case basis OR by the alternate method?

Alternate Method

• Allocate scholarship allowance

between tuition and fees and auxiliary fee revenue

– Based on total of tuition and fees and

auxiliary fees

Alternate Method

• Journal Entry:

Debit Scholarship Allowance – Tuition and Fees (a contra revenue account) Debit Scholarship Allowance – Auxiliary Fees (a contra revenue account) Credit Scholarship and Fellowship Expense

Contact Information Kathy Day E-Mail: [email protected]

Phone: (304) 293-8766 Patty Eckels E-Mail: [email protected]

Phone: (304) 293-8886

Questions?