I have read that institutional grants and education loans do not count as income or assets for the purpose of FAFSA. Here is my question.
We currently have a significant credit balance on my son’s University student account. This is because he is living off campus, so his room and board are not being billed through the university. However, university grants, federal loans, and private loans were applied to his account as if his room and board were being billed through the university. The credit balance is pretty much equal to the Spring COA for room and board.
We are about to fill out his FAFSA and CSS Profile for next year. How do I account for this credit balance? Can I exclude it from assets based on the above? If so, does that differ between FAFSA and CSS Profile?
(One option is of course to pre-pay his private housing costs, and I will do that if I have to, but I am reluctant to do so).
Responding to my own post to bump this up, in case anyone with relevant knowledge might have missed it (I hope that’s not against the rules😊). I’m trying to get FAFSA and CSS profile done in the next few days for at least one of my kids, so would appreciate any advice.
Any loan amount in your account (bank, or I assume the university account) isn’t income or an asset for FAFSA. If it were $2000 in your account that you borrowed you would just subtract it from the account balance before filling in FAFSA.
It doesn’t matter where the money is, it matters where the money came from. Student loans, university grants are not income or assets. Private loans can be an asset if in your bank account, but I’m assuming you mean private STUDENT loans, and then they wouldn’t be.
University grants that cover room and board are taxable income (but grants for tuition are not not)…but it’s not clear to me that the credit in your account was meant for R&B expenses. Read here, it is a bit complicated because any CARES and/or Rescue Act money, no matter what it’s for, are not taxable. Topic No. 421, Scholarships, Fellowship Grants, and Other Grants | Internal Revenue Service
You don’t report any money attributed to financial aid on the FAFSA or Profile. Taxation of financial aid is a separate issue. The bottom line is that any money in an account that can be attributed to financial aid (scholarships, grants and/or loans) is exempt from being reported on financial aid forms.
Here are the actual details, and my understanding.
COA is 81k: tuition and fees are 61k; housing and meals allowance is 17k; books, personal and transportation allowance is 3k.
On the credit side, we have payments we made directly from our savings account; a need-based University grant that was less than the cost of tuition and fees; a small HEERF grant; federal student loans; and private parent-plus loans paid directly to the University. Together, these total the COA.
This left a credit balance of 11k, because we have not yet paid for spring semester’s room and board, since my son is living off-campus and that is paid monthly (housing) and as-needed (meals). We also haven’t yet paid for his books. I intend to have that 11k refunded from the university account and will draw against it for housing, meals, books and miscellaneous COA-related expenses for second semester.
My understanding is:
I don’t need to report the 11k as an asset to FAFSA because it is from grants, federal loans, or private parent-plus loans that were paid directly to our university account and total less than our COA.
I don’t need to report the 11k as an asset to CSS Profile for the same reason.
I don’t need to pay taxes on the University grant because it is less than the tuition and fees, and thus can be allocated to that before room and board.
I also don’t need to report the 11k as an asset on my other child’s FAFSA or CSS Profile, for a different university.
Is this correct?
Tagging @twoinanddone , @Mwfan1921 , @kelsmom since I used information from all three of your answers to arrive at my understanding.