The Federal Hostel at Payne Bay was part of the Northern Affairs Branch (NAB) Small Hostels program launched in 1960. The Small Hostel setting was supposed to come close to the traditional home life of Inuit children. The hostels usually held eight beds each, and local community members worked as Hostel Mothers or Hostel Parents. They operated the residences under the supervision of the Federal Day School Principal. Children staying in the hostels attended local day schools. Payne Bay began with two small hostels.
