I forgot to report a $20k scholarship for last year & want to tell financial aid. What should I do?

Paying for College
1

While preparing my financial aid documents for next year, I realized recently that I accidentally did not report an outside scholarship from last year. I honestly thought that it was reported already, I thought that I had taken care of it when I was notified about receiving it, but I guess I either remembered incorrectly, attempted to do it but did not finish, or otherwise messed up. I am really freaking out because I want to be honest and let financial aid know what happened, but I am also terrified that they will not believe it was a mistake (it honestly was, please don’t try to accuse me otherwise), or cut me off from financial aid in the future, or expel me, or arrest me, or something.

The scholarship was to study abroad at a university affiliated with my home uni, totaling $20,000. The majority of that was for housing, plane tickets, extra expenses, etc. that would not have gone to my home university anyway, but I think about $4,000 was specifically for tuition for that semester. The scholarship went straight to my personal bank bank account in separate installments throughout the 8 months I was abroad.

There are some additional complications.

  1. My family is going through a financial crisis and an extremely nasty, bitter divorce right now. Long story short, my dad has been emotionally, physically, and emotionally abusing my mother, who is very mentally ill, and my family recently had to get a restraining order against him. He racked up tens of thousands of dollars in credit card debt and hasn’t paid rent, phone bills, medical bills, etc in months, and there are collection agencies constantly calling my house. He usually does most of my financial aid paperwork because he doesn’t want me to see our family income or tax information. This includes taking out loans. I have been told the loans are in my name and I am responsible for paying them back, but I have never signed or even seen any documents so I am now not sure if this is true.
  2. I am currently taking a semester off studying in China. I was originally going to study abroad with a program affiliated with my home university, but thought it was unreasonable to pay private US tuition ($30,000+ without financial aid) for Chinese university classes that cost only about $1,000. Therefore, I can’t go to financial aid in person and explain everything, and will have to do everything over email while abroad. a. I used some of the leftover scholarship money to finance this semester, because I thought that everything was taken care of through the loans and stuff that my dad applied for, but now I am not sure. The money I used for this was given to me at the very end of my study abroad program, like 2 weeks before it was over, so I would have had this money on me whether I had reported the scholarship or not.

Basically, I am really really financially illiterate, have very little information about the nature of my financial situation, and am not sure exactly what happened, or who to reach out to for help. My family cannot help me. I want to pay anything that is owed and am even willing to take time off school and work full time in order to pay everything back if I need to. I don’t want to commit fraud, I don’t want to have this guilt on me, I just want to set the record straight and be honest, but I also don’t know what to expect. I almost wish I had just not even seen this and gone on being blissfully unaware of the situation, but I also don’t want to get a call 10 years from now from the IRS or my school rescinding my degree or saying I owe the government money or something…

I want to email financial aid, what do you think I should say? What do you think their response will be? Could I lose all financial aid for the remaining three semesters I have left, or would I just have to pay back the $4,000? Could I do that through taking out extra loans, or would I have to pay it up front?

Thank you, and sorry for the long post. I just don’t know who to reach out to for help. I am very confused and I feel guilty even though it was a mistake and I just don’t want to have this on my back anymore. I wish I had just properly documented the scholarship last year because this wouldn’t even be a problem, I swear I thought it was taken care of, I am really not sure what happened, but I need to fess up to my mistake and set things right, I just don’t know how to do so without ruining my academic, financial and professional future.

2

I am confused that the scholarship awarding entity would disburse that much money directly to the student.

Yes, your home university needs to know about this scholarship. You might have received institutional aid or federal/state aid based on need that you might not have had.

I am not sure how that works for a semester that you don’t attend your university, but do study abroad instead.

You need to get a hold of the financial aid manager at your home university and tell them about the study abroad scholarship and ask about any impact on aid received.

Then if they determine that you owe back money, for aid you might have received that you were not eligible for, you will have to pay that back.

With your home situation in personal and financial turmoil, it might be better to take a leave of absence from your university after you finish up in China. And get a job and work for a while.

You have another problem, any scholarship that covers expenses other than tuition, qualified fees and books, is taxable income for you.

So $16,000 of that study abroad scholarship might be taxable. If tuition was only $4,000.

Also you might have gotten scholarships and grants for your home university in 2016 that exceeded tuition, fees, books.

If you had income from a job in 201506, that also gets reported on your 2016 tax return.

So you might be owing taxes as well.

3

Do you have any responsible adult to help you sort this mess out?

You need to find out what loans have been taken in your name. It is very easy for a parent to take out the student federal direct loans without a student’s consent if he has access to the student’s school account. Doing so is fraud and illegal but I sure some do it except most (I hope) get the full consent and agreement of their students. Did you give your parents access to your student account? Look at all the billing statements from your college. See if they have credits applied that are from student federal loans. This information should be available on your school portal. Look at your FA statements, do you see loans? Call the FA department and ask if you have student loans. There is no excuse for not knowing what federal loans you have taken. If you take time off from school, these loans will need to be paid.

I am not sure how private loans can be taken in your name without you physically signing the loan documents. Maybe others can comment. If this has happened then it would also be fraud by the person that signed your name.

If you owe money to school that is not paid (either immediately or payment plan) then the school will not allow you to attend until the debt is repaid. They will not release a transcript until all outstanding debt is paid. So transferring will not be an option.

As others mentioned, you also have tax problems. You will likely have to file an amended return add pay penalties. Don’t let this scare you. It will likely be nothing more then filing the necessary forms and paying what you owe.

4

Maybe you did report it. If you received the funds directly from the sponsor, those funds would not be included on the 1098T you receive from your school. You should receive some tax document from the sponsor (sometimes a 1099) and you do have to report it on your taxes.

I’d send an email or letter to your school saying something like “I received a $20k scholarship for my study abroad program in 2016. I believe I did notify you, but when completing my tax forms I don’t see any indication of it. Just want to make sure I’m doing everything correctly. The program was (wasn’t?) through State U.” (If the program wasn’t through your university, you might have to let them know what the costs were).

I don’t think it will cause any issues unless you have a large need based grant from this school. They don’t want you receiving more than the COA, but if this program was extra, that would increase your COA anyway.

5

Ok it turns out I did report it and I remembered correctly, I was just looking at the wrong year for aid in the portal… oh my gosh though thank you for replying and helping me, I almost had a heart attack and was freaking out for days haha.