I know this is a year later but this just happened to us. I submitted the FAFSA and the calculations for EFC seems way off because the only taxable income my daughter had was from scholarships/grants and work study. I transferred her tax return using the IRS retrieval tool and then listed the scholarships that were income in income on 43d assuming the FAFSA will reduce her “income” by this amount since the scholarships/grants are need based and not true income. To our surprise our EFC was quite a bit more than want should be. I contacted FAFSA and a supervisor at FAFSA and they couldn’t help me and said their calculations are correct and to contact my daughter’s school. Can you let me know how you resolved this issue…am I reporting the wrong amount on 43d (I simply used the amount from her tax return that was taxable wages and reported under wages to IRS), or were you able to get resolution from your daughter’s school? I am at a lost and not sure what to do or who to get help from. Any advice or help would be greatly appreciated from you or from anyone on here. I know it’s early for 2022-2023 but here in California it needs to be finalized for certain aid before March 1. Thank you.
It is unearned income, but still income.
The amount of wages from the tax return that were actually from scholarships/grants is what you should report for 43d. If that is what you did, you did it correctly. That is how you “fix” the income amount so that it properly reflects actual earned income. The higher than expected EFC is probably due to something else. Did you have a rollover, by any chance?
OK, so I had 0 luck trying to work with the federal department of ed on this. I had to work directly with the colleges (i had a 2nd daughter in the same situation) and they had to correct it on their end. My approach was to do the calculations manually, using the form FAFSA has available to do the estimate on your own. I double checked that and sent the information to the colleges financial aid department. If you have no luck at the lower level staff, do some research and find the VPs/executives that oversee that department and reach out directly to them. You are correct that ALL scholarship income (even if it counts as taxable income) should NOT be used as a basis for the EFC calculation. The online FAFSA site has a bug, and if you have taxable income it does not calculate correctly (at least that was the case last year),
Here’s the link for the worksheet (i think it’s current):
It sometimes happens that the FAFSA calculations are programmed incorrectly. I found a bug once years ago when I reviewed a student’s file & the EFC seemed too high. I did the calculation by hand & got a lower EFC, so I asked my boss to do the calculation. Hers matched mine. We reported it to Federal Student Aid, and they had to reprocess all prior transactions (it didn’t affect a lot of students, but it affected more than a few). It is not a particularly common thing for the FAFSA to have bugs, but it does happen. By contacting the school, you have helped uncover an issue. Any other students who reported scholarship income will benefit from you following up on this.
@kelsmom you were the one who helped me out in my original thread - giving me the advice to reach out to the college’s financial aid supervisors/directors. That was good advice, and led me to an actual resolution. Hopefully Cornell reported it to the feds, but based on what @momma41 posted, it seems like that bug might still be there?
@kelsmom - i know you are very knowing in these matters. thanks for your wisdom.
is this right? if the scholarship is for tuition, books, fees and required supplies, it’s not taxable, nor seen as income.
but if the scholarship covers your all or part of room and board and other non-qualified expenses, that’s the taxable part, right?
Yes, that’s correct. And even if tuition isn’t fully covered, if a scholarship is specifically for room & board, it’s taxable.
Yes, it’s possible that the bug is still there. Schools should contact Federal Student Aid to alert them to issues.