<p>Because we have two others in college, took a huge hit in our savings account because of huge medical expenses this year,(and a H out of work for 50% of the year) we are actually going to qualify for FA for the first time in a very long time. From what I project (and this is only a projection at this time) our D entering college will qualify for some grant money. Ok so with that said, if she gets some scholarship awards, how does all that work? In other words on her schools FA website, it says after tuition and fees are paid, that extra money is awarded to the student. Can she then use that for off campus room and board? What type of records does she need to keep to justify what she spends it on?</p>
<p>My understanding is that if the college awards grant money to the student - it never touches your hands - they just apply it to the bill. So, if the grant money exceeds tuition, then it will be used to offset room and board as well. At that point, however, it will be taxable income. So - says she gets a $10,000 grant for the semester and tuition is $8000 - the remaining $2000 will be applied towards romm and board and will be taxable income. </p>
<p>I don’t know of any reason why the college would hand the $2000 to the student - if that is your impression from their website - I would call and clarify. The only money that the student actually receives from what I have experienced is work study - where they get a paycheck just like any other job. That money will be taxable income if their total income is high enough to require a single individual to file a tax return.</p>
<p>Financial aid is based on the cost of attendance (COA) for the school. When need based aid is involved total aid including merit scholarships can not generally exceed the total COA. </p>
<p>The COA generally includes averaged amounts for tuition and fees, room and board, books, travel expenses, and miscellaneous or personal expenses. Several of these are not direct charges to the school (travel, miscellaneous) and others may not be direct charges to the school (books and room&board). When the school has covered all the direct charges then the excess (if there is any) is paid to the student as a “refund” and the student can use the money to pay for other non direct charges.</p>
<p>For instance my daughter has a combination of merit scholarship money, need based grants, and a small amount of loans. She does not live on campus and buys her books elsewhere. Her only direct charges are tuition and fees. Once those are covered the school sends her the rest of the money and she uses it to pay her rent, food, bills etc etc. </p>
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Yes, she should be able to use it for off campus rent/food etc. She does not have to justify how she spends that money. It is based on the school’s COA which is an average figure. SO if the COA for room and board is $3000 a semester then her aid is based on that, not on what she actually pays for rent/food/utilities etc. Two things to check. If there is institutional grant money involved check that it is not restricted in some way (for instance one of my daughter’s friends had an award that paid specifically for room an board on her campus). Also check if the school has a different COA for students living off campus and how/if that may affect aid. </p>
<p>Scholarship/grant money used to pay qualified education expenses (generally tuition/fees/required books) is non taxable. Scholarship/grant money used to pay non qualified expenses (everything else such as room and board) is taxable income to the student.</p>
<p>Thanks for the reply. I think that is exactly the information I was looking for.</p>
<p>Two things:</p>
<p>1) For institutional need based aid, merit awards generally reduce need and thus reduce need based aid. It doesn’t necessarily reduce your contribution below what they calculate your need as. It may reduce the loan component of the need based aid first though. It depends on the school.</p>
<p>2) If your other two will still be in college, they may qualify for aid also.</p>