How a full cost tuition rate is built

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1. Two costing schemes, three kinds of cost

Tuition rates for international students are priced on one of two schemes, full cost or incremental cost, under Chapter 7 of Volume 15 of the Financial Management Regulation (FMR) (FMR Vol. 15, Ch. 7, para. 23.1.1). Within each scheme, costs are sorted into direct costs, indirect costs and other billable costs. This piece covers the full cost scheme. The incremental scheme is covered in how an additional cost tuition rate is built.

A direct cost is identified specifically with training a student (FMR Vol. 15, Ch. 7, para. 23.1.2). It includes directly associated costs that would not have arisen without the other direct costs, allocated on a measurable basis such as cost per student week, per flying hour or sortie, per steaming hour or per range hour. An indirect cost is the cost of resources used jointly by all activities at an installation and not identifiable with any one user (FMR Vol. 15, Ch. 7, para. 23.1.3). Other billable costs are those that legislation or policy adds to the cost of training an international student (FMR Vol. 15, Ch. 7, para. 23.1.4). The examples given are the administrative surcharge, the Field Studies Program, attrition and retainable instructional materials.

2. What full cost means

Full cost includes all direct costs and a proportional share of indirect costs to the government, whatever the funding source (FMR Vol. 15, Ch. 7, para. 23.3.1). It takes account of training both American and international students, and for international students it adds the other billable costs. Tuition Rates A and B are priced on full cost. Each direct cost is divided by the total number of students who can be enrolled in the course, giving a cost per student, and the per-student costs are added together (FMR Vol. 15, Ch. 7, para. 23.3.2).

3. Instructors and staff

Instructor cost is annual salaries, allowances and entitlements divided by 52 weeks, multiplied by the course weeks, then divided by the maximum class size (FMR Vol. 15, Ch. 7, para. 23.3.2.1.1.1). Instructor contact hours are one alternative basis for a fair spread (FMR Vol. 15, Ch. 7, para. 23.3.2.1.1.2). Another is total training man weeks, which multiplies course weeks by students enrolled and sums the result for the whole training activity (FMR Vol. 15, Ch. 7, para. 23.3.2.1.1.3). Total salaries divided by that sum give a weekly rate, applied to each course’s length. School support staff are priced on the same patterns (FMR Vol. 15, Ch. 7, para. 23.3.2.1.2.1). The cost of the International Military Student Office and its staff is allocated on actual or planned international student weeks (FMR Vol. 15, Ch. 7, para. 23.3.2.1.3).

Travel is split in two (FMR Vol. 15, Ch. 7, para. 23.3.2.2). Travel caused by or benefiting specific courses is charged directly to them. Travel benefiting the training operation as a whole goes into the indirect pool, and care is taken that nothing is charged twice.

4. Equipment, simulators and supplies

Depot-level maintenance of aircraft, engines, vehicles and equipment is charged at the budgeted average hourly repair cost, adjusted for military pay and centrally procured parts, times the hours planned for the course (FMR Vol. 15, Ch. 7, para. 23.3.2.3.1). Base-level maintenance, including munitions maintenance, is spread by total maintenance cost over total training hours supported, unless charged by job order (FMR Vol. 15, Ch. 7, para. 23.3.2.3.2). Range costs follow the course’s share of sorties or rounds fired (FMR Vol. 15, Ch. 7, para. 23.3.2.3.3). Simulator costs, including operators, supplies and maintenance, follow the ratio of hours used to hours available (FMR Vol. 15, Ch. 7, para. 23.3.2.4).

Fuel for aircraft, vehicles, ships and landing craft is the hourly fuel cost times the course’s operating hours (FMR Vol. 15, Ch. 7, para. 23.3.2.5.1). Training materials, supplies, aids, munitions, flight clothing and personal equipment are charged to the course (FMR Vol. 15, Ch. 7, para. 23.3.2.5.2). Directly associated costs, such as flight line operations for flying training or port operations for shipboard training, are spread by training hours or another usage factor (FMR Vol. 15, Ch. 7, para. 23.3.2.6.1). Training American instructor pilots is charged only for special aircraft outside the active American inventory (FMR Vol. 15, Ch. 7, para. 23.3.2.6.2).

5. Indirect costs

Indirect base operating costs are first allocated among the installation’s major claimants, such as training activities and tenants, then between distinct areas of training, then divided by annual student weeks (FMR Vol. 15, Ch. 7, para. 23.3.3.1.1). Quarters, family housing and food service for instructors and support staff are excluded if already recouped in base personnel salaries (FMR Vol. 15, Ch. 7, para. 23.3.3.1.2). Facility maintenance and repair is normally part of base operating support (FMR Vol. 15, Ch. 7, para. 23.3.3.2). Implementing agencies may not unilaterally dedicate facilities to international students and then recover the full maintenance cost through tuition.

Some costs are left out of the indirect allocation (FMR Vol. 15, Ch. 7, para. 23.3.3.5). They include combat development, training development other than course development, non-resident instruction and other activity that does not support the training mission. Units attached to the installation but based elsewhere and not training international students are excluded. So are costs of underutilized capacity and mobilization requirements, when specifically identified and documented.

6. Billable additions

For fiscal years 1996 through 2016, Rate A included an attrition factor where courses used training or operational equipment as aids (FMR Vol. 15, Ch. 7, para. 23.3.4.1). For all years, Rate B carries the liability statement for damage caused by student negligence. The Field Studies Program cost is included where a program exists at the location (FMR Vol. 15, Ch. 7, para. 23.3.4.2), and so is the cost of retainable instructional materials where applicable (FMR Vol. 15, Ch. 7, para. 23.3.4.3). The administrative surcharge applies to Rate A, subject to exceptions in the manual (FMR Vol. 15, Ch. 7, para. 23.3.4.4).

Key terms

Full cost	All direct costs plus a proportional share of indirect costs, used for Rates A and B.
Direct cost	A cost identified specifically with training a student.
Indirect cost	The cost of resources used jointly across an installation.
Total training man weeks	Course weeks times students enrolled, summed across a training activity.
Other billable costs	Additions required by law or policy, such as the surcharge and the Field Studies Program.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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