Section 05.02: Grants and Contracts -- Graduate Fee Remissions

The content of this policy is current, although it has not yet been transitioned to the new Fiscal Policy format.  This will be accomplished as time and resources permit.

A. General

Graduate students with bona fide appointments as teaching assistants and research assistants are exempt from paying the instruction fee portion of tuition. Instruction fees are assessed at resident rates only and are based on the actual credit hours for which the graduate student is registered. A graduate assistant with a bona fide appointment has instruction fees remitted up to the maximum amount allowed for full-time graduates. The student must pay any overtime fees directly. FASOM 05.02 explains the A-21 requirements for recovering graduate fee remission costs. It also explains the accounting procedure for recording remissions.

B. Recovery Requirements

For graduate fee remissions to be an allowable expense, A-21 requires the following criteria to be met:

  • A bona fide employer-employee relationship exists between the institution and the graduate student.
  • The combined student compensation is reasonable and based explicitly upon performance of work. The institution must formally notify the student that fee remission is a fringe benefit related to work performed, not a form of student financial aid.
  • The institution similarly compensates students in non-sponsored activities.

Remission is recorded as a fringe benefit expense according to the graduate's salary charges. This results in the remission being shown as a direct or indirect cost depending upon where the graduate's salary is accounted for. If the graduate student's work performed does not justify the payroll charges, the salary and related benefits should be adjusted.

C. Accounting Procedure

Tuition and fees should be recorded as revenue even though collection from the student is not intended. Remissions are treated as follows:

  • Remissions are recorded as expenditures and classified as staff benefits.
  • Benefits are assigned specifically rather than as an average monthly automated percentage assessment.
  • The remissions are distributed on the same basis as salaries or FTE assignments.
  • Both salary and non-cash compensation are subject to verification of effort on Personnel Activity Reports (see FASOM 05.05).

The following accounting entries comply with A-21 standards and standards of the National Association of College and University Business Officers and the American Institute of Certified Public Accountants regarding graduate fee remissions. For additional grant and contract accounting information, see FASOM 01.22.

[1] Fee Remission Accounts

The following accounts are established to accommodate fee-remission accounting:

  • Undistributed Academic Year Fee Remissions Expense
  • Undistributed Summer Session Fee Remissions Expense
  • Undistributed Graduate Fee Remitted Income - Academic Year
  • Undistributed Graduate Fee Remitted Income - Summer Session
  • Instruction Fee Remitted - Self-Supporting (Subject to limitation)
  • Instruction Fee Remitted - Educational and General Funds (Non-limited)
  • Cooperative Extension Service Instruction Fee Remitted
  • Agricultural Experiment Station Instruction Fee Remitted
  • Forest Research Laboratory Instruction Fee Remitted

[2] Types of Accounting Entries

Fee remissions are recorded using one of two similar groups of accounting entries depending upon the term the graduate student is enrolled. FASOM 05.02C[2]a and 05.02C[2]b explain these accounting entries.

[a] Academic Year Accounting

When a graduate student registers for a term, the remitted instruction fee is credited to Undistributed Graduate Fee Remitted Income - Academic Year using account code 01104 (Resident Graduate Instruction Fee). At the same time, the fee remission is charged to the FOAPAL from which the graduate student is budgeted to be paid for the term. If the student's pay distribution is unknown at the time of registration or if a monthly cost allocation is made, the debit entry may be made temporarily to Undistributed Academic Year Fee Remissions Expense using account code 10951 (Graduate Assistant - Fee Remission) and cleared to the actual FOAPAL.

Instruction fees in excess of the full-time rate eventually must be credited to Resident Graduate Instruction Fee Income using account code 01104 (Resident Graduate Instruction Fee). For budgeting purposes, cash revenues must be identified and accounted for separately from non-cash instruction fees. All instruction fees from graduate assistants may be recorded in Undistributed Graduate Fee Remitted Income - Academic Year and cleared to the FOAPALs listed in FASOM 05.02C[1] at the same time as the distribution discussed below.

The FOAPALs charged for fee remissions are analyzed after registration and periodically throughout the term. Based on fee remissions charged to each fund group, the undistributed instruction fee income is credited as follows using account code 01104 (Resident Graduate Instruction Fee) for each entry:

  • Instruction Fee Remitted - Self-Supporting (Subject to limitation): for amounts of fee remissions charged to Designated Operating Funds, Auxiliary Funds and Restricted Funds.
  • Instruction Fee Remitted - Educational and General Funds (Non-limited): for amounts of fee remissions charged to the State-Wide Public Service FOAPALs.

The debit entry is to Undistributed Graduate Fee Remitted Income - Academic Year, using account code 01799 (Miscellaneous Fees). These entries direct the fee remission costs to the appropriate expense accounts and identify the revenues recorded as limited or non-limited.

Variations of the above process may occur. However, the end result is expected in the final recording of income and expense.

[b] Summer Session Accounting

Summer session accounting is similar to academic year accounting described above except for prepayment of revenue and expense if incurred prior to July 1.

When a graduate student registers, the remitted instruction fee is credited to Undistributed Graduate Fee Remitted Income - Summer Session using account code 01112 (Summer Term Resident Graduate). At the same time, a debit is made to Undistributed Summer Session Fee Remissions Expense using account code 10951 (Graduate Assistant - Fee Remission).

After June 30 or registration, whichever is later, the prepaid fee remission expense in Undistributed Summer Session Fee Remissions Expense is redistributed to the actual FOAPAL from which graduate salaries are paid for the summer. Graduates paid during the summer from Unrestricted Budgeted Operations, including Summer Session, have the fee remission costs funded from the Fee Remission income account. Fee remission costs should not affect program levels.

D. Fee Remissions Excluded from Negotiated Awards

Some federal agencies have awarded -- or may attempt to award -- grants and contracts to fund direct and indirect costs at a level insufficient to cover fee remission expenditures. This practice does not conform to the regulations of the Office of Management and Budget (OMB). Institutions should not accept this practice, but rather resolve the problem with the federal agency and OMB. The Controller's Division is available to assist in resolving such controversies. FASOM 05.02D[1] explains the accounting for a temporary solution to this problem.

[1] Accounting Entries

If a fee remission cannot be charged to a grant or contract as a program direct cost, it may be charged to an Unrestricted Budgeted Operations Fund. This results in the institution subsidizing the sponsored program so that it may continue at the same level as originally planned.

E. Budgeting Procedure

The following section reflects the budgeting process for reduced indirect cost recoveries and accounting for fee remissions required by A-21.

[1] Limited and Non-Limited Funds

The concept of limited and non-limited funds in Educational and General Funds and State-Wide Public Service Funds is used in the budgeting process. The non-limited funds apply to Unrestricted Budgeted Operations Fee Remission Expense accounts and the related Instruction Fee Income accounts. Transactions subject to expenditure limitations involve Instruction Fee Income accounts and the related Fee Remission Expenditures on self-sustaining funds. The Institutional Income accounts and the income accounts for State-Wide Public Service activities are used to record instruction fee revenues necessary to cover the fee remission expenses and indirect cost losses.

[2] Budget Adjustments

Budget adjustments require estimates, or plans, for the amount of limited instruction fee and expense related to self-sustaining activities as well as non-limited instruction fee income and fee remission expenses recorded in Unrestricted Budgeted Operations. The loss of indirect cost recoveries, which are subject to expenditure limitation, approximately offsets the limited instruction fee income and fee remission expense recorded on the self-sustaining operating accounts. The levels of this activity must be reviewed and reported periodically to the Office of Budgets and Fiscal Policies.

Note: This electronic document supersedes all previous versions and is subject to change.

Last Updated: 11/23/94