Can’t help. Our kids could have gone tuition free to the parent college of DH’s med school, a place that would have been a terrible fit for either of them. So all we got was a few thousand dollars of tuition credit which since it was counted as income and taxed was even less than the theoretical dollar amount. It sounds like maybe we shouldn’t have been taxed on it from above post, so perhaps it was less annoying than I remember, DH does most of the tax work.
@ProfessorMom1 My husband’s university pays “cash” – but not to us. There are forms to file every year with employer university – which starts the process of payment directly from employer U to kid’s college/university. We never see any money. I can’t recall specifics, but it is NOT taxable income to us, as long as kid is under 24 or something. And I think our benefit stops at that age anyway. I apologize if that is not the kind of benefit you were asking about.
@Midwestmomofboys and @mathmom, thanks. Ours is a tuition grant program and is only available to tenured faculty (there is a separate TE program available to all employees). B/c the grant benefit is not available to everyone, it is taxable. The process sounds like yours: we have to re-up each year and we send HR our tuition bill and they pay it directly. We cover the remaining. But we were specifically told it would be reported as income and would be taxable, which makes sense since it excludes some employees.
I can estimate with turbotax how this will affect our tax bracket and so anticipate the net amount of the grant. But I’m trying to figure out if there is any way that S’s college would see it as a separate benefit and treat it differently than just income. If it’s reported in Box 1, then they would not know (aside from getting a check from our employer). If they see it not as income but as a grant, then I wonder how they might treat it. And since I don’t know how this works, I don’t know what FAFSA or CSS or the school sees (our 1040? our W2s?). We will end up filing both FAFSA and CSS for all schools b/c some require for scholarship consideration and in a few cases we would qualify for a modest amount of aid, even after the grant kicks in.
My husband works at a TE and CIC school. I work at a state school where the benefit is tuition only but the fees are 5 times that if tuition. We have a junior and have already started looking strongly at mainly TE schools but know that the awards are competitive.
Neither of my children wanted to attend the public university where I teach. Had they wanted to, they’d have to pay only 50% of the normal tuition (this would not have been treated as our taxable “income”). They wouldn’t have qualified for need-based financial aid. It turned out that #1 could have had a full-tuition merit-based scholarship at my university based on his scores on a special test. But he wanted to attend college in a “major league city,” by which he meant major-league sports. He ended up attending the University of Chicago. We paid full freight, though he did receive a nominal National Merit Scholarship cash award. He took in many sports events during his college career, including cutting classes in his first year to attend the opening day games of both the Cubs and the White Sox.
2 didn't want to attend any college where she might find herself sitting in class with students from her high school. She also wanted to attend school in a "real city," preferably one in the East. She also wanted to attend art school, not a university or a college with a broader curriculum. The only non-art school that she applied to was Carnegie Mellon University. She was accepted there but Pittsburgh wasn't on the East Coast. She attended Rhode Island School of Design, after deciding that Providence was "enough of a real city" and also close enough to New York and Boston. We paid full freight.
@ProfessorMom1 That’s tricky! How is your HR dept? Do they do info sessions for faculty/staff? Or can you schedule a one-on-one meeting with an HR rep about the benefit program? I realize they’d be careful about saying anything too definitive about taxes, but they could discuss how and where the benefit is reported, and that would give you some more info to plan with. Good luck!
@Midwestmomofboys I’m at a top 50 LAC, so it’s fairly small and folks are generally really accommodating. The HR dept is great and will meet with me individually any time. I met with the guy who handles this benefit last month, but I didn’t think to ask this question. I’ll schedule another meeting.
I’m not faculty but work at a TE member school. My oldest is a senior at my Institute but my daughter is a freshman at another TE school that she was lucky enough to be awarded one of the few TE scholarships. Having recently concluded the process here are some thoughts.
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Know how you qualify to export from your own school. My school has enough imports where we can export out without a problem. Other schools you have to qualify within your own institution before you’re even eligible to try and get in elsewhere.
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Like others noted on here, I didn’t realize how competitive TE was. The 3 TE schools she was accepted at only offered 2 (received), 4 (received), and 5 (wait-list) scholarships respectively. The one she attends was the University offering 5 and there were over 150 applications for it.
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Contact the liaisons. the TE website shows who is the TE contact for the school. They were all very helpful and gave me info on selection criteria, timelines (all over the place), number available, etc. That enabled me to keep my daughter (and myself, honestly) grounded in the process. Also, know the amount of the award. Min last year was 35K. That may not be all that helpful at a school with tuition of 48K. Some do full, some in between.Some offer room, board, or both (not many).
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Strategy matters. With most TE schools awarding on a competitive basis (not all, but most, as they can use whatever criteria they want to select the recipients), you need to apply to schools where your student is in at least a top third to top quartile of applicants.
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Lastly - you can get off the wait-list! My daughter was originally #19 on the list for the 5 scholarships being awarded. I asked the liaison the chances and she thought it was at least 50/50 she’d reach her on the list. The school is a backup for many of the ‘high level’ Northeast schools so most of the kids above her on the list were probably pursuing the Ivys, BU, BC, Northeastern, etc so they reached her…on May 1st.
To summarize: Go in with your eyes open and learn what you don’t know. Go for schools where your student is higher on the accepted student stat curve…and hope for the best. Good luck.
Hi, all. Thanks for all that info. I’m now working on the CSS profile and am not sure what to put in a particular section. We have two options, depending on where child goes to school and what sort of scholarships he gets and/or if he gets into a tuition exchange school and manages to secure one of the “trade” spots. If he doesn’t get a “trade” spot or goes to a non-exchange school, our school will add a specific amount of funds to our income (only tenured faculty are eligible for this and so it is considered income and taxed as such…the rest of our income will thus be taxed more b/c our bracket will go up).
On the CSS profile, we are asked to estimate our income for next year (so I could include this additional income $ there). But on another page is this question: “How much does the student expect to receive from the following sources to pay for educational expenses for the 2018-19 academic year?” So I’m not sure what to do here. I don’t want to include it both places b/c that looks like double the $. And if I enter it into the other section, it may appear untaxed. After taxes, our net gain from the benefit is 65% of the total.
How did you all handle this one?
I would not enter extra income into the income section as at this time it is just a possibility. You wouldn’t but on the CSS that student could receive a scholarship he’s just applied for but hasn’t been granted. I’d put the income you expect to receive (regular salary) and not put the TE on the CSS. Those schools are used to making FA adjustments when students receive scholarships, grants, or awards.
Thanks, @twoinanddone That makes sense. All of this is speculation at this point (b/c I realized that our income would not increase if he did get the trade spot). I will ignore the issue/question for now b/c no idea what will happen. Too many variables.
“the rest of our income will thus be taxed more b/c our bracket will go up”
Umm, no – only the additional income that is above the bracket threshold is taxed at the higher rate…
@colfac92 Okay. But the net result, according to my accountant, is that my overall tax rate goes up by 4%. I mentioned this only because it’s something I’d not thought all the way through. Parents with a taxable benefit like this may not realize how much they will have to discount it to account for the taxes. Our benefit and thus the “additional income” will be taxed at a rate of 33%, which is markedly higher than our regular rate.
Yes, that is true.
Our tuition reimbursement only kicked in the last year of youngest D’s college (based on pay grade of DH and years at that pay grade) making her then a full pay student. She got more in need based aid (generous LAC) then she did from the generous university tuition reimbursement. Additionally, tuition reimbursement where DH works makes private college tuition about the same as the cost of the state school.