<p>I have a friend who asked me last night at our xmas party if FAFSA or scholarships can be used to buy laptops or spending money. I referred her to this site, because it is a great fountain of info and I didn't have the answer.</p>
<p>I told her that the scholarships/FAFSA DS got was sent straight to the Bursar and did not know. Does anyone here know if there are scholarships, grants, FAFSA that will pay for laptop, books, spending besides the school. (I.E. UMD BK pays for laptop and IPod) </p>
<p>Her DD is a 09 HS grad. looking at mostly privates</p>
<p>The schools COA (Cost of Attendance) usually includes allowances for personal or miscellaneous expenses, travel expenses, and books. As 'need' is based on the school's COA less the student's EFC then any financial aid awarded does include an amount for these things. My daughter's aid and scholarships are paid direct to the bursars account. Any excess (after tuition etc) is paid to her and she uses it for her other expenses. In he case this includes her rent and food as she lives off campus. She also has WS which is paid direct to her, the amount depending on how many hours she has worked.</p>
<p>I think I have read that sometimes a computer can be included in the COA if it is required by the school or a particular major (I may have imagined that - it happens - but I think that is the case). If it were included in the COA then the financial aid would include money for it.</p>
<p>Of course the aid award does not say $x is for books, $y for personal expenses. If the students parents have an EFC that is half the schools COA and he/she gets aid for the other 1/2 there is no way of defining who is paying for what.</p>
<p>Any scholarships/grants over the cost of tuition/fees/required supplies are taxable income. In fact even some fees, even if required, may not be allowed as untaxable. My daughter has a few hundred dollars of fees that she is required by the schoolto pay, that are not allowed as required fees by the IRS. Found that out when she got her 1098T last year.</p>
<p>I explained to her last night that our DS (freshman) for our EFC was 0, but we are still paying monthly because his dream school and the FA offered was not enough. We are fortunate b/c next yr he goes full ride (scholarship guidelines for OOS). I explained from what I know most scholarships, grants and aid go directly to the Bursar and not into your acct.</p>
<p>I know for DS1 he got a lot of merit scholarships that included laptops and Ipods fro, schools that accepted him, unfortunately not for where he is at, and I explained that colleges do give this for selective students.</p>
<p>Quick question DS got merit do we need to claim this...it is not over tuition, but is it taxable? What is a 1098T?</p>
<p>Also If anyone knows, I told her that she should look into a Pell, would that help her?</p>
<p>1098T is a tax form the student gets from the school telling her what scholarships/grants she got during the school year. If the money she got is not over the amount of tuition then it should not be taxable. The exception is if an award is specifically for a certain expense - for instance room and board. If the award is specifically for such an expense that is not allowed as tax free then it would be taxable. Of course whether it is taxable and by how much also depends on what other income she has.</p>
<p>The IRS publication for education expenses is the IRS970. It details (confusingly being a govt document) all the different tax allowances/credits for education expenses. It is worth perusing closely as different expenses are allowed for different benefits. For instance room and board is allowed as an expense for 529 account withdrawals but not for Hope tax credit. Here is a link to the 2007 document, don't know if the 2008 one is available yet.
<a href="http://www.irs.gov/pub/irs-pdf/p970.pdf%5B/url%5D">http://www.irs.gov/pub/irs-pdf/p970.pdf</a>
I actually started a spread sheet to make sure I maximize the tax benefits for my son as he is eligible for the Hope and we use some 529 account money for him. You cannot double dip and use an expense for more than one tax benefit and sometimes one is more beneficial than the other.</p>
<p>The Pell grant is awarded based on the FAFSA EFC. For 2007-2008 the maximum Pell was $4731. A 0 EFC gets the max of $4731 and it reduces as the EFC increases until at 4042 there is no Pell eligibility. So it would help her if her EFC is below 4042 (or whatever the 2009-2010 number is) - otherwise it would not.</p>
<p>caveat - I am not a tax expert or a financial aid officer so my so my advice is based on my personal experience . Check the appropriate IRS rules for definitive rules.</p>
<p>The money a student receives in financial aid funding can be used for any educationally related expenses. If the aid exceeds the amount billed by the school, the student will get a refund. The money refunded may be used as the student sees fit for his school related costs.</p>