The CA Quarterly Review

Spring 2026 Edition

Spring Edition

                                                                                               

Student Financial Assistance Under the Consolidated Appropriations Act (CAA): What Project-Based Rental Assistance (PBRA) Staff Need to Know

The Consolidated Appropriations Act (CAA) introduces important updates to how student financial assistance is treated when determining annual income for HUD programs. While the overall methodology has not dramatically changed for most households, the biggest impact applies to students under age 24 who were previously subject to special Section 8 rules.

A key change is the elimination of the former Section 8 “student rule.” Under the CAA, HUD now applies a single, unified methodology for all programs—aligned with Public Housing/HOTMA income rules. Although the approach is consistent with HOTMA methods, this is not considered a HOTMA implementation; it is simply the new regulatory standard.

Key changes to Student Financial Aid Treatment:

1. Title IV aid is always excluded from income.
   • Below is a non-exhaustive list of Title IV student financial aid:
     • Federal Grants:
       • Pell Grant
       • Federal Supplemental Educational Opportunity Grant (FSEOG)
       • Iraq & Afghanistan Service Grant
       • TEACH Grant
     • Federal Work-Study (FWS)
     • Federal Student Loans
       • Direct Subsidized Loan
       • Direct Unsubsidized Loan
       • Direct PLUS Loans
       • Parent PLUS
       • Graduate PLUS
       • Direct Consolidation Loans
     • Other Title IV Programs
       • Federal Perkins Loan Program (legacy program; no new loans since 2017, but still Title IV for students repaying)
   • PBRA staff do not evaluate how Title IV aid is used (tuition vs. living expenses). Staff only verify that the aid is, in fact, Title IV.
2. Non‑Title IV aid (private scholarships, stipends, employer grants) must be evaluated using a two-step process:
   • First applied to tuition and required fees
   • Any amount exceeding tuition/fees → that leftover is counted as income

   Additionally, if aid is specifically designated for living expenses → that portion is counted, even if tuition isn’t fully covered.

   • A scholarship or stipend is considered “designated for living expenses” when the award letter, financial aid description, or school documentation uses terms such as:
     • “Housing allowance”
     • “Meal stipend”
     • “Room and board”
     • “Living expenses”
     • “Transportation allowance”
     • “Cost‑of‑attendance stipend”
     • “Personal expenses”
     • “Books and supplies” (when clearly not required fees)
   • PBRA staff now must focus on how aid is labeled, not just whether it exceeds tuition.
3. PBRA staff must focus on proper verification. PBRA staff must verify:
   • All forms of student aid were received. Separate clearly:
     • Title IV
     • Loans
     • Scholarships/grants
     • Aid designated as living expenses
   • Tuition and required fees
     • Obtain documentation from the school
     • Ensure fees and tuition are correctly applied before determining excess aid
   • Aid vs. Tuition Calculation
     • Confirm whether non-Title IV aid exceeds tuition/fees
     • Determine if any portion is designated for living expenses
4. Age and dependency rules no longer matter
   • Under the old Section 8 rule, income treatment depended on whether a student was:
     • Under 24
     • A dependent
     • The head/co-head/spouse
   • These distinctions no longer apply. All students are treated under the same unified methodology.

Example: How the New Rule Works

• Student Profile:
  • Full‑time college student age 22
  • Lives away from parents
  • Receives:
    • Pell Grant: $6,500
    • State scholarship: $4,000
    • University housing stipend: $3,000
  • Tuition and mandatory fees: $7,500

Old Method (Before FY2026) – Section 8 Student Rule:

Under the old rules, most student financial aid for certain students was counted as income, unless it was used directly for tuition and mandatory fees.

Step‑by‑step:

• Total Student Aid: $6,500 + $4,000 + $3,000 = $13,500
• Subtract tuition/fees: $13,500 – $7,500 = $6,000
• Amount counted as income: $6,000

So, under the old method, this student would have $6,000 added to annual income for rent and eligibility decisions.

New Method (After FY2026 Appropriations + HOTMA Alignment) – Unified Student Rule:

The new rule removed the special Section 8 exception. All HUD programs now follow the methodology specified in the HOTMA rule.

Key rules:

• Title IV aid (like Pell Grants) is fully excluded.
• Other aid is counted only if it exceeds tuition/fees or if it is used for living expenses (not for tuition/fees).

Step‑by‑step:

• Pell Grant ($6,500): excluded
• State scholarship ($4,000):
  • $4,000 is applied towards $7,500 in tuition/fees → $4,000 does not exceed tuition/fees and therefore, the state scholarship of $4,000 is not counted
• Remaining tuition/fees needed: $3,500 still unfunded after applying the state scholarship (the Pell Grant is excluded and therefore not considered)
• Housing stipend ($3,000):
  • Used for living costs → counted as income

Amount counted as income under the new rule: $3,000 (Only the living‑expense stipend produces countable income.)

For More Information

Please refer to the Consolidated Appropriations Act of 2021 for full statutory details

FY26 HUD Published Factors and Amounts

Operating Cost Adjustment Factors (OCAF)

Click here to view the FY26 OCAF published in the Federal Register.

Utility Allowance Factors (UAF)

Click here to view the FY26 UAF published on the HUD webpage.

Annual Inflationary Adjustments and Passbook Rate

Click here to view the FY26 inflation-adjusted values.

Cost-of-living Adjustment (COLA)

Click here to view the Social Security announcement.

Memo to Owner Agents on Citizenship and Immigration Status Verification

HUD distributed a memo to owner agents reminding the industry that Eligibility for federal housing assistance is limited to U.S. citizens and noncitizens who have eligible immigration status. Specifically, section 214 of the Housing and Community Development Act of 1980 prohibits HUD from making financial assistance available to ineligible noncitizens.

The letter reminds the industry of the steps that must be taken to verify citizenship and immigration status and calculate prorated assistance for mixed-status households.

In short, to ensure that only eligible individuals receive federal housing assistance, Owners/Agents (O/As) must:

• Document and verify the citizenship or eligible immigration status of individuals prior to admission to the Section 8 Project Based Rental Assistance (PBRA) program; and
• Prorate assistance for any “mixed-status household” in which an ineligible noncitizen resides.

The complete document steps through the process as defined in the HUD handbook and contains an Appendix A which is a crosswalk of SAVE System Responses and eligibility for HUD assistance that may be beneficial to review.

Click here to read the memo.

Notice H 2026-03: Implementation of the Reduced Blood Lead Level Triggering Response

This summary provides an overview of HUD’s updated requirements for Multifamily owners of assisted target housing following the reduction of the Elevated Blood Lead Level (EBLL) threshold to 3.5 µg/dL. These changes impact compliance obligations, environmental response actions, and resident notification procedures for properties built prior to 1978.

Click here to read Notice H 2026-03.

Key Changes to EBLL Requirements

• HUD has reduced the EBLL threshold from 5 µg/dL to 3.5 µg/dL for children under age 6.
• Compliance with the reduced threshold was required by July 16, 2025.
• HUD will begin formal enforcement of the reduced EBLL threshold on June 1, 2026.
• These requirements apply whenever a health department or medical provider notifies HUD or the owner of a qualifying EBLL case.

Applicability to Multifamily Housing

The requirements apply to most HUD-assisted Multifamily properties classified as “target housing,” defined by Title X as housing built prior to 1978, except for elderly housing, housing for persons with disabilities, or zero-bedroom units—unless a child under age 6 resides or is expected to reside in the unit.

Required Actions for Multifamily Owners

• Initiate an environmental investigation of the affected unit and relevant common areas immediately upon notification of a qualifying EBLL case.
• Implement lead hazard reduction measures in compliance with the Lead Safe Housing Rule.
• Ensure residents receive required disclosures and educational materials regarding lead hazards.
• Document all actions taken and maintain records for HUD monitoring or audit.
• Coordinate with HUD staff, contractors, and public health authorities as required.

Multifamily Regulatory Requirements

• Multifamily properties receiving project-based assistance (PBRA, PBV, HOPWA, CoC, ESG) must follow the EBLL response procedures at 24 CFR 35.730.
• HUD-owned or mortgagee-in-possession (MIP) Multifamily properties must follow the EBLL procedures at 24 CFR 35.830, as required by 24 CFR 35.800.
• All actions must align with Subparts B–R of the Lead Safe Housing Rule (24 CFR Part 35).

Contact Information

For technical questions on the Lead Safe Housing Rule, email LeadRegulations@HUD.gov.

Spring Cleaning—Records Retention Requirement Reminders

Applicant File Retention –

Applicant Files must be maintained from the time the application is accepted, through the wait list period and for three years after the applicant is removed from the waiting list.

HUD Handbook 4350.3 Chapter 4, 4-22

• The owner must retain current applications as long as their status on the waiting list is active.
• Once the applicant is taken off the waiting list, the owner must retain the application, *form HUD-92006 completed by the applicant*, initial rejection notice, applicant reply, copy of the owner’s final response, and all documentation supporting the reason for removal from the list for three years.
• When an applicant moves in and begins to receive assistance, the application *and form HUD-92006 completed by the applicant* must be maintained in the tenant file for the duration of the tenancy and for three years after the tenant leaves the property.

Resident File Retention –

Resident files (all documentation) must be maintained for the term of tenancy plus three years thereafter.

HUD Handbook 4350.3 Chapter 5, 5-23

• Owners must keep the following documents in the tenant’s file at the project site:
  1. All original, signed forms HUD-9887 and HUD-9887-A;
  2. A copy of signed individual consent forms;
  3. *A copy of the EIV Income Report, regardless of whether or not any income is reported for the household, along with the HUD-50059 and any other documentation obtained supporting income and rent determinations; and*
  4. Third-party verifications received from third-party sources.*
• Owners must maintain documentation of all verification efforts throughout the term of each tenancy and for at least three years after the tenant moves out

Retention of EIV Reports –

HUD Handbook 4350.3 Chapter 9, 9-14

• Owners must retain:
  1. The Income Report, the Summary Report(s) showing Identity Verification Status as “Verified” and the Income Discrepancy Report(s) and supporting documentation must be retained in the tenant file for the term of tenancy plus three years.
  2. Any tenant provided documentation, or other third party verification of income, received to supplement the SSA or NDNH data must be retained in the tenant file for the term of tenancy plus three years.
  3. Results of the Existing Tenant Search must be retained with the application:
     • (a) If applicant is not admitted, the application and search results must be retained for three years.
     • (b) If applicant is admitted, the application and search results must be retained in the tenant file for the term of tenancy plus three years.
  4. The master files for the New Hires Report, Identity Verification Reports, Multiple Subsidy Report and Deceased Tenants Report must be retained for three years.

Disposing of Files –

HUD Handbook 4350.3

Once the retention period has expired, owners must dispose of the data in a manner that will prevent any unauthorized access to personal information, e.g., burn, pulverize, shred, etc.

 

Springtime Reminders

 

SAHMA Housing Conference

Registration for the 2026 SAHMA Affordable Housing Conference: Tennessee is now open!

When:
May 20 - 21, 2026
Add-ons: May 19, 2026

Conference Attire: Business Casual

What to Expect at a SAHMA Event

Information:
Event Page
Event Website
Event Toolkit

Where:
*New Location*
Sheraton Music City
777 McGavock Pike
Nashville, TN 37214
(615) 885-2200

Click Here to Make Your Hotel Reservation Online

*Make your reservations early as the room block is subject to sell out

Hotel Cutoff Date: April 27th

Fees:
Conference Registration
SAHMA Member Fee: $360 before April 22nd ($410 after April 22nd)
Non-member Fee: $460 before April 22nd ($510 after April 22nd)
Additional Add-Ons available (see Event Website for details)

Registration Deadline:
Wednesday, May 6th, 2026

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