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NACUBO Advisory 19-02 addresses tuition and residential revenue and why such contracts with students typically would not be combined under Topic 606, Revenue from Contracts with Customers.

In a publicly broadcasted meeting on July 17, the Financial Accounting Standards Board discussed NACUBO’s interpretation of contract combination guidance under Topic 606. FASB members agreed with NACUBO’s interpretation and advisory for education and residential contracts. As a result, the vast majority of private institutions will not have to change how tuition and residential contract revenue and associated financial aid (the scholarship allowance or discount) are recognized and reported.

NACUBO began working on this issue in February when several audit firms were coalescing around an opinion that colleges and universities could not adequately demonstrate anything less than a single commercial objective for education and residential services. This interpretation would have resulted in combining education and residential contracts and allocating institutional financial aid between tuition and auxiliaries on a pro rata price basis.

According to FASB members participating in the discussion, not combining tuition and residential contracts will more faithfully represent the economics of tuition and housing contracts with students.


Sue Menditto

Senior Director, Accounting Policy


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