College Students and the Section 8 Housing Loophole
Between 1995 and 2005, college students were allowed to apply for subsidized housing from the U.S. Department of Housing and Urban Development (HUD) without reporting their parents' income or any financial aid they had been awarded. The intent had been to make higher education more accessible to poor students by reducing or eliminating their housing costs.
College Students' Use of the Section 8 Housing Program
In 2005, ESPN aired a story about how student athletes were taking advantage of federal Section 8 housing provisions while at the same time accepting thousands in housing stipends from colleges and universities. Although it's not known exactly how widespread the problem was, Virginia Tech, the University of Iowa, and the University of Nebraska were featured in the ESPN story to illustrate how athletes who received housing stipends as part of their scholarships were taking advantage of the Section 8 program. Four days after the ESPN story, President George W. Bush signed legislation that closed the financial disclosure loophole the students had been using.
What is the Section 8 Housing Program?
The Section 8 Housing assistance programs are offered by the Department of Housing and Urban Development Public Housing division. Both the Section 8 Rental Certificate Program and the Section 8 Rental Voucher Program increase affordable housing choices for very low-income households by helping families pay for privately owned rental housing rather than living in public housing.
Section 8 Certificate Program
In the Section 8 Certificate Program, a family's local Public Housing Authority (PHA) generally pays the private landlord the difference between 30% of the family's household income and a payment standard determined by the Public Housing Authority — usually about 80% to 100% of the fair market rent (FMR), which must be reasonable. The family may choose an apartment with a higher rent than the fair market rent and pay the landlord the difference or choose a lower-cost apartment and keep the difference.
Section 8 Rental Voucher Program
The Section 8 Rental Voucher Program, which is now known as the Housing Choice Voucher Program, is similar to the Section 8 certificate program but gives households more choices, especially in high-demand markets where landlords may be reluctant to accept HUD's fair market rent level. In the Section 8 Rental Voucher Program, the local Public Housing Authority issues a voucher to an income-qualified family, who then finds an apartment to rent on their own. If the unit meets the Section 8 quality standards, then the Public Housing Authority will generally pay the private landlord along the same guidelines described in the Certificate program: the difference between 30% of the family's household income and a pre-determined payment standard somewhere between 80% and 100% of the fair market rent.
HUD and Public Housing
HUD determines the median income levels for Public Housing Authority areas once a year. A system of "portability" allows families to use the assistance outside the boundaries of the Public Housing Authority that originally admits them. HUD pays the administering agency an administration fee to cover costs of running the program, including accepting and reviewing applications, recertifying participants, and inspecting the rental units for quality.
Section 8 Loophole Now Closed
Because the 1995 Section 8 legislation did not require students to disclose their funding from parents or financial aid or scholarship sources, students and student-athletes throughout the country benefited from the loophole. The 2005 law closed it. Students are now required to include their parents' income and any financial aid they receive beyond tuition costs when they apply for Section 8 housing certification each year. (Students who are 24 or older, married, have children, or are military veterans do not need to include their parents' income when applying.)
For more information on Section 8 Housing, see HUD's Housing Choice Vouchers Fact Sheet.
Sources:1) U.S. Department of Housing and Urban Development
2) Roanoke Times, December 3, 2005