<p>Hi, I am new to msg boards so bare with me.</p>
<p>My daughter received a full scholarship, covers tuition, books, room and board. Is any portion of this scholarship taxable? and if so, how do I determine the correct amount? I work from home and need all the tax breaks I can get.</p>
<p>Money that covers room and board will be taxable.
It should be broken down in info you get from school.</p>
<p>Great! I am assuming that “turbo” tax will tell me where this information is to be listed.</p>
<p>Nice article, especially statement #2: “Your error, your problem”, heard this sooo many times :)</p>
<p>How do you do that research?..</p>
<p>
vonlost - sorry for the late reply.</p>
<p>Here is the deal - 3 kids and three need based grants through financial aid. Although our EFC would bounce up and down over the years the grants never, ever moved… until my youngest’s junior year.</p>
<p>Here is what happened -
Freshman year, EFC just above Pell cut off. She was awarded a nice merit plus $6000 need based grant, plus another $1000 grant. Grants totaled cost of tuition.
Sophomore year - we had to liquidate some real estate (ugh) got hit with capital gains, plus her sister had graduated, down to one kid in college. The EFC was ~$12,000 (school was $30,000). The merit scholarship stayed and the $1000 grant stayed. The need based grant went away.
Junior year - Income was cut in half. Savings depleted, qualified for Pell with a $1600 EFC. Got her Financial aid and she was awarded the Merit scholarship and the $1000 grant. No need based grant. I nearly cried.</p>
<p>Here is the conversation with FA. She was very apologetic and said the computer automatically gives you what you had last year - unless the EFC goes up. She said they should have caught it - it was a mistake and she would be getting her $6000 need based grant BASED ON THE FINANCIAL AID AWARD FROM FRESHMAN YEAR.
She went on to say - Freshmen year is the biggie. Need based grants are awarded and budgeted on that EFC and a student should never expect it to rise. I said “Ohhhhhhhh, so if she had not been awarded that grant her freshman year, she would not see any additional need based grant now?” Was told this was correct.</p>
<p>Senior year - roughly same EFC as junior year - same FA package. </p>
<p>One more thing to add -
Freshman year her grants totaled 94% of her tuition cost. She went essentially <em>free</em> and loans, earnings etc covered books, room and board etc.
Flash forward to senior year - her grants totaled only 68% of her tuition cost; even though her EFC was lower - due to tuition increases.</p>
<p>If you can barely afford a college freshman year - most likely you will NOT be able to afford it in the later years.</p>
<p>I hope this is not too confusing.</p>
<p>^ A bit! So is what happened the policy of this school (still don’t know which one–does it meet need?), all schools, the result of a mistake, or something else?</p>
<p>This school like the vast majority of private colleges does not meet need. Actually - very very few colleges promise to meet financial need.<br>
This is the policy of this school and is very typical. In a nutshell, if your financial situtation deteriorates then do not expect any increase in need based grants from the college. I suspected this for a long time and finally got a FA counselor to admit it.</p>
<p>The pattern followed with my other kids - when more went to college. If the EFC went down and tuition goes up - the need based grant never changed.</p>
<p>In our experience with multiple children attending college at the same time we saw how being at the tippy top of the academic pool allowed them to benefit in college admissions. For our kids who did very well they were able to attend top schools at a cost that was far less than the full pay kids cost at a state school. For our child who was not in the same academic category we paid far more than what we paid for any of our other children who attended the more selective schools. </p>
<p>Yes there was a benefit to having our children in four consecutive years when college rolled around. During our childrens early years we lost income because four babies does not make it easy to work a full time job and of course the cost of raising multiples and four kids born within four years is an expense that families who choose spacing will never know. I would say that either way parents are paying in one way or the other. In our case we had to do without two full time incomes for a few years until I thought that the children would be fine without having me at home during the day.</p>
<p>So is what happened the policy of this school (still don’t know which one–does it meet need?), all schools, the result of a mistake, or something else? </p>
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<p>Every school is different. The majority of schools do not have a lot of money to spread out among those who need it. I can tell you that at the public U where I worked, a reduced EFC in subsequent years would be eligible for the same grant aid that any other student would receive. That said, the school doesn’t meet need, so the increased grant might not be sufficient to cover the shortfall. I think that is the lesson … if you can’t really afford it freshman year, you very well may not be able to afford it by senior year. And if something unforeseen happens, you might be in a world of trouble.</p>
<p>. Umich however seems to use a formula of covering tuition minus 10% of EFC.</p>
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<p>In state, only, of course! :)</p>