It’s likely that a number of the households you certify each year include full-time students who are 18 or older. Certifying these households isn’t complicated. But if you don’t know the specific rules on how to handle full-time students’ income, it’s easy to make mistakes. Here’s a brief rundown on how to calculate full-time students’ income correctly.

Exclude Full-Time Students’ Earned Income over $480

Students who go to school full time are entitled to have earned (employment) income above $480 excluded from the household’s annual income if the student is 18 or older and isn’t the household head, co-head, or spouse [HUD Handbook 4350.3, par. 5-6(a)(3)(d)]. To qualify as “full time” under HUD rules, the student must carry a subject load considered full time by the school’s standards.

Example: John Doe is a 20-year-old who lives with his parents at your assisted site. He’s a full-time student at a local college and has a part-time job. He expects to earn $3,000 over the next 12 months. When calculating the Does’ household income, include only $480 of John’s employment income. Exclude the remaining $2,520.

If the full-time student is 18 years of age or older and is the head of the family, spouse, or co-head, all income is counted [HUD Handbook 4350.3, par. 5-6(A)(3)(f)]. Also note that the income of full-time students 18 years of age or older who are members of the household but away at school is counted the same as the income for other full-time students. And the income of minors who are members of the household but away at school is counted as the income for other minors [[HUD Handbook 4350.3, par. 5-6(A)(3)(e)].

Don’t Count Financial Assistance

When calculating household income, you must exclude all financial assistance to any student, whether full time or part time. Student financial assistance includes grants, scholarships, educational entitlements, work-study programs, and financial aid packages. This is true whether the assistance is paid to the student or directly to the educational institution [HUD Handbook 4350.3, par. 5-6(E)].

However, for students receiving Section 8 assistance, all financial assistance a student receives (1) under the Higher Education Act of 1965; (2) from private sources; or (3) from an institution of higher education that is in excess of amounts received for tuition is included in annual income except if the student is over the age of 23 with dependent children or the student is living with his or her parents who are receiving Section 8 assistance [HUD Handbook 4350.3, par. 5-6(E)].

Count Unearned Income from All Other Sources

Benefits or other unearned income of a full-time student is counted. You must count a full-time student’s unearned income from all sources listed in Exhibit 5-1 of Handbook 4350.3. For instance, if a full-time student gets monthly Social Security income or child support payments from an ex-spouse, you must include these payments in household income [Handbook 4350.3, par. 5-6 (A)(3)(b)].

Give Household Dependent Allowance for Each Eligible Full-Time Student

A household receives a deduction of $480 for each family member who is under 18 years of age, a person with disabilities, or a full-time student of any age [HUD Handbook 4350.3, par. 5-10(A)(1)].

When calculating the household’s adjusted income, subtract a $480 dependent allowance for each qualifying full-time student from the household’s annual income. To qualify for the allowance, the full-time student must be age 18 or older and not be the household head, co-head, or spouse.

Remember to verify with the member’s school that he is in fact a student there and is considered full time by the school when certifying a household with a full-time student member. And if a student household member gets financial assistance, verify the amount that the household member says she gets, even if the member isn’t full time. This is important to make sure the member isn’t overstating the amount of financial assistance you must exclude from her annual income.