Policy Manual

Tuition Benefit for Dependent Children Attending Other Colleges and Universities (Direct Grants)

The Direct Grant Program for dependent children assists faculty and staff in meeting the cost of college tuition for their children who attend undergraduate programs at accredited colleges or universities other than the University of Pennsylvania. Note that trade and technical programs are not covered. 

The faculty/staff member is responsible for managing the tuition benefit for his/her dependents in accordance with the policies and procedures below.

Click here to begin using the online tuition management system for the Direct Grant Program. With this easy-to-use online system you can apply for tuition benefits, track the status and view the history of requested tuition benefits, and print out Confirmation of Benefit letters.

408.1 ELIGIBILITY

Children who are dependents of the following faculty and staff members and who are qualified students* under this plan are eligible to receive tuition assistance at a Penn approved, accredited college or university other than the University of Pennsylvania (trade, certificate and diploma programs are not covered):

a.     Full-time faculty in a benefits-eligible title, regular full-time or limited service staff who have completed at least three (3) years of regular full-time service at the University.

b.     A deceased member of the faculty or regular full-time or limited service staff, provided the parent was regular full-time on the date of death and had been so for at least seven (7) years.

c.     A retired University of Pennsylvania faculty or regular full-time or limited service staff member, provided the parent meets University eligibility requirements and retirement criteria as verified by a retirement specialist within the Division of Human Resources Benefits Office.

d.     Visiting members of the instructional staff, only if specifically authorized by the Provost.

e.     All staff members affected by position discontinuation and eligible for benefits in accordance with Policy 628 whose dependent children were receiving tuition benefits in accordance with this policy at the time of notice of position discontinuation. Tuition benefits will continue through the end of the semester in which notice of separation was given.

* A qualified student is one who is enrolled as a degree candidate, and meets the University's definition of a dependent child under the University's tuition benefit program.

In the case of faculty/staff eligible for the tuition benefit, the following special situations may affect a faculty or staff member’s continued eligibility:

  • Leave of Absence without Pay: Faculty and staff on a leave of absence without pay are not eligible to receive tuition benefits during the leave.
  • Workers’ Compensation: Faculty and staff on workers’ compensation will continue to be eligible for the tuition benefit for one year from the date workers’ compensation began.
  • Long-Term Disability (LTD): Faculty and staff on long-term disability are eligible to receive the tuition benefit for as long as the faculty/staff member continues to qualify for long-term disability per the University of Pennsylvania’s LTD policy.
  • Faculty/staff who are active, but not being paid, may be considered ineligible.
  • Family and Medical Leave (FML) or Short-term Disability (STD): Faculty and staff on approved family medical leave or short-term disability are eligible to receive the tuition benefits they are normally eligible for as follows:
    • If a faculty/staff member is on approved family medical leave (FML) or short-term disability (STD) and the end date of his/her leave is before the eligibility cutoff date for the semester, the faculty/staff member must return to work on his/her approved FML or STD end date and work past the eligibility cut-off date for the term, or continue to be out on official FML or STD. If the faculty/staff member is put on an unpaid leave of absence after family medical leave or short-term disability has been exhausted, but before the eligibility cut-off date for the term, s/he will not be eligible for tuition benefits.
  • If a faculty/staff member is on approved family medical leave or short-term disability and the end date of his/her leave is after the eligibility cut off date for the term, the faculty/staff member is eligible for the tuition benefit.

Tuition assistance benefits are administered by the Tuition Office in the Division of Human Resources. The Tuition Office makes final administrative determinations if any questions arise concerning an individual’s employment relationship with the University and eligibility for tuition assistance under the program.  

408.2 HIRE/TERMINATION DATES

Eligible faculty/staff with a three-year anniversary date* on or before the cut-off date of a given academic term are eligible to receive tuition benefits for their dependent children during the term in which the anniversary occurs. Tuition benefits are awarded on or after the faculty/staff member’s three-year anniversary date. Faculty/staff with a three-year anniversary date after the cut-off date of a given academic term are not eligible to receive tuition benefits for their dependent children until the first academic term following the term in which the three-year anniversary occurs. 

If a faculty/staff member terminates or becomes otherwise ineligible on or before the cut-off date of a semester, the University reserves the right to revoke or not award the dependent child's tuition benefit. Payments are revoked near or at the end of the term. If a faculty/staff member terminates after the cut-off date of a semester, the dependent child's tuition benefit will continue through that semester.

In the case that the official academic calendar of a dependent’s school is on a trimester or quarter system, the Fall term will be treated as the Fall semester, Winter and Spring terms will be treated as the Spring semester and Summer terms will be treated as the Summer 2 term in the table below.

The cut-off dates are:

 
Spring semester: March 1
Summer Session I and 12-week Summer Session: June 1
Summer Session II: July 15
Fall semester: October 15

*Only time served in a regular full-time staff or limited service position, or full-time faculty benefits-eligible position is counted in the calculation of a faculty/staff member’s anniversary date for tuition benefits eligibility.

408.3 DEPENDENCY

The student must be the dependent child of the faculty/staff member. A child is considered a dependent when the faculty/staff member provides 50% or more of the child’s support. The child must be the faculty/staff member’s dependent at the time the benefit is awarded and for any previous three years during the child’s lifetime. The faculty/staff member must continue to provide more than 50% or more of the child’s support during the term(s) the benefit is received. 

The dependent child must be one of the following:

  • your biological child, for whom you are the legally designated parent;
  • your stepchild, who is the biological or adopted child of your spouse;
  • your legally adopted child, for whom you are the legally designated parent; or,
  • the biological or adopted child of your same-sex domestic partner as registered with the University prior to July 1, 2016.

408.4 TUITION AMOUNT

The University of Pennsylvania will pay whichever is less of the following: the other school's line-item tuition charge per term, or 40% of the line-item of Penn’s undergraduate tuition based upon the tuition rate for one regular full-time Penn semester. All other fees and charges are the responsibility of the faculty/staff member. The benefit is calculated and awarded on a term-by-term basis. The payment schedule is based upon the academic calendar of the other school. 

Children of faculty and staff who made a onetime, irrevocable election of the OLD PLAN, effective July 1, 1983, receive Direct Grant tuition benefits in amounts not to exceed $900 per year. 

If both parents are employed at the University of Pennsylvania, the Direct Grant benefit is limited to the benefit that would be provided to one faculty/staff member. If a dependent is employed in a benefits-eligible position at Penn, the faculty/staff benefit (Policy 406) supersedes the dependent tuition benefit, and the dependent is limited to tuition benefits through Policy 406 only.

Renewal of the benefit is contingent upon the recipient continuing to meet Penn’s dependency and enrollment requirements and the continued eligibility of the faculty/staff member.

If any changes to the charges on the bill result in an overpayment of the tuition benefit, the Human Resources Tuition Benefit Office must be notified immediately. Under no circumstances can the Penn tuition benefit payment be refunded to a student. If it is, the student must return the overpayment to Human Resources as soon as they receive the refund or the faculty/staff member will be liable. Failure to refund the University of Pennsylvania is in violation of the University’s tuition benefit policy and will result in the University taking appropriate actions to recapture the funds.

If a student withdraws during a term for which payment has already been made, the University will request that the benefit payment be returned to Penn by the student’s school. 

408.5 UNDERGRADUATE TUITION LIMIT

The University's Direct Grant tuition benefit is limited to four (4) academic years, defined as eight (8) semesters, twelve (12) trimesters, or sixteen (16) quarters. Students are not guaranteed payment of the benefit for the maximum number of terms. Students who for any reason obtain their degree and do not use the benefit for the maximum number of terms are not eligible to receive any additional undergraduate benefits after completing their degree. Payment of the benefit for undergraduate tuition during a summer session is subject to the limitations stated in these regulations and will count as a term used toward the maximum number allowable.

408.6 STUDENTS RECEIVING OUTSIDE SCHOLARSHIPS

If the dependent of a faculty/staff member is receiving the tuition benefit and will also receive another scholarship, then one of the following must be true:

 
  • If the other scholarship is restricted to cover only tuition, the gross tuition benefit from Penn plus the other scholarship cannot exceed the line item of tuition charge.
  • If the other scholarship can be used for charges other than tuition, the recipient must make sure that the scholarship plus the Penn benefit does not exceed the total bill. If the scholarship plus the Penn benefit exceeds the bill, the recipient must make sure that the other scholarship's overpayment can be refunded to the student. If not, the excess must be returned to the granting organization or the Penn Tuition Benefit Office.

Please note, loans are not considered in the calculation of the tuition benefit amount and therefore are not subject to this policy.  

408.7 APPLYING FOR BENEFITS

The Direct Grant tuition benefit program is administered by the Tuition Office in the Division of Human Resources. To apply for tuition benefits, use the online tuition system at www.hr.upenn.edu/tuition, then send a copy of the student's itemized tuition bill (including the student's name and term name) and a copy of your confirmation page from the online system to the Tuition Office at 3401 Walnut Street, Suite 527A, Philadelphia, PA 19104-6228. 

Applicants are encouraged to apply as soon as the student has received an itemized tuition bill. 

The Direct Grant tuition benefit application cannot be processed without verification of the school's tuition amount, which should be in the form of an itemized tuition bill from the school that contains the student's name, student identification number and term name. The faculty/staff member is responsible for ensuring that the online request changes from “pending” to “approved” within seven business days and that the school has received and properly credited the payment to their dependent’s tuition bill. The tuition benefit cannot cover late fees. 

The faculty/staff member can request payment as soon as the online tuition benefit system opens for each term. The latest you can submit a request for payment is as follows:

 
Semester System Opens to Requests Deadline for Submitting Requests
Winter November 1 March 15
Spring November 1 April 15
Summer terms April 1 August 15
Fall June 1 November 15

Benefits will not be approved for requests that are submitted after the deadline dates listed above for a specified term. 

After completing the online process, faculty/staff return to the online system to view the status of the request. After a request is approved, payment is sent directly to the college or university in which the student is enrolled. Checks are mailed directly to the appropriate office at the student's college or university, generally within ten business days from the date the Human Resources Tuition Benefit Office receives a copy of the dependent tuition bill. Some schools will receive electronically transferred payments, depending on whether Penn and the other school have an electronic agreement in place. The Tuition Benefit Office cannot guarantee that a payment will arrive by the due date. For this reason, the “Confirmation of Benefits Statement” letter can be downloaded from the tuition management site at the time the faculty/staff member applies for the benefit. It is the faculty/staff member’s responsibility to print and send this letter to the school to show proof of Penn’s pending payment. 

Faculty/staff assume full responsibility for the entire bill until the benefit payment has been applied. Resulting balances due to fees not covered by the benefit such as other course fees, late fees or withholding are the responsibility of the faculty/staff member.

408.8 TAX LIABILITY

Faculty/staff are fully responsible for any tax liability incurred as a result of these benefits being treated as taxable income to the faculty/staff member at any time. If benefits are considered taxable, taxes are withheld directly from the benefit and the net amount is awarded to the student as the tuition benefit. The gross tuition amount and taxes withheld are reported to the IRS as a part of the faculty or staff member's earnings. The taxpayer is responsible for making appropriate payroll withholding adjustments, if desired. The taxpayer is also responsible for settling his/her tax liability on year-end tax filing. The University reserves the right to report benefits amount as income to any taxing authority and withhold taxes from such benefit amounts or from the faculty/staff member’s other salary income. 

Under current law, undergraduate tuition benefits are generally not subject to withholding as long as the faculty/staff member’s dependent meets one of the two federal definitions of Dependent Children outlined below (unless the tuition benefit provided is on behalf of the un-adopted biological child of a same-sex domestic partner). Please see the next paragraph for more information. Graduate tuition benefits for dependent children of faculty and staff are subject to federal income tax, FICA (Social Security tax), Medicare tax, and city wage tax.

You should be aware that recent changes in federal tax law may change the taxable nature of undergraduate tuition benefits for some children. If your dependent child does not meet one of the two federal tax law definitions described below, the tuition benefits received will be taxable to you as additional income. (Note that benefits provided on behalf of the child of a same-sex domestic partner will be taxable unless you have adopted the child. This is true even if you can claim the child as a dependent on your federal income tax return.) 

If the benefit is taxable to you, appropriate taxes will be withheld from the benefit before it’s awarded. As part of the tuition benefit application process, you will be asked to declare if your child meets the federal definition of a dependent. This policy regarding the taxability of tuition benefits was effective beginning with the Summer 2007 terms.

If benefits are considered taxable, taxes are withheld directly from the benefit and the net amount is awarded to the student as the tuition benefit. The gross tuition amount and taxes withheld are reported to the IRS as a part of the faculty or staff member's earnings. The taxpayer is responsible for making appropriate payroll withholding adjustments, if desired. The taxpayer is also responsible for settling his/her tax liability on year-end tax filing.

Federal Definitions of Dependent Children

Your dependent children eligible to receive tuition benefits include a "qualifying child" or a "qualifying relative" under applicable federal law.

A "qualifying child" is a child who:

1.     is your biological child, adopted child or stepchild;

2.     lives with you for more than one-half of the year;

3.     has not attained age 19 as of the close of the year or has not attained age 24 as of the close of the year if the child was a full-time student for at least five months of the year (Note: These age limits do not apply in the case of a child who is permanently and totally disabled); and

4.     does not provide over one-half of his or her own support for the year.

A "qualifying relative" is a child who: 

1.     is your biological child, adopted child or stepchild;

2.     receives over one-half of his/her support for the year from you (subject to a special rule in situations where a child's support is provided by two or more individuals);

3.     does not have gross income in excess of a specified amount ($3,650 for 2010, but not including certain income earned by a disabled individual at a sheltered workshop); and

4.     is not a qualifying child (as defined above) of you or any other taxpayer for the year.

For purposes of any requirement above that a child live in your household, temporary absences due to special circumstances, including absences due to illness, education, business, vacation or military service are not treated as absences. Special rules apply in the case of parents who are divorced or legally separated. Please contact your tax advisor for more information regarding these definitions.  

408.9 AUDITING

Faculty/staff taking advantage of the dependent tuition benefit may be randomly chosen for participation in an audit conducted each semester or at the discretion of the Division of Human Resources. This audit requires proof of dependency and accuracy of benefit requests.


Policy Number: 408
Effective Date: 05/09/2017
Supersedes Policy Number(s): 408 (08/15/1995, 07/01/1997, 05/17/2006, 04/09/2007, 11/08/2008, 04,11,2011)
Applicability:  Full-time Faculty; Regular Full-time and Limited Service Staff
Cross-reference:

Policy 406 , Policy 407 , Policy 409 , Policy 628


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