Pell Grant and full time vs. part time

Paying for College
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<p>Okay, thanks.</p>

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<p>I was thinking of it as an employee benefit, not financial aid, but it’s not specifically mentioned in the FAFSA instructions. You could probably call/email the FAFSA help desk for a more definitive answer (though that may depend on who you get on the other end!).</p>

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<p>sk8mom, I still have a hard time not thinking of this as income. According to the information so kindly shared by kelsmom it seems to be viewed as non-need based aid (see post #10).</p>

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<p>I do too but this is what the ifap handbook for 10/11 (which I happened to have bookmarked - there are more current versions) says:</p>

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<p>Reading that, it seems that the student reports the whole thing to the college and it’s treated as a scholarship (so may reduce other need-based aid) but the taxable portion is also reported on FAFSA.</p>

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<p>Well that’s what has me so confused. It apparently is not supposed to reduce need based aid like a Pell grant at all. Also, if this is taxed (and apprently rules are through 2010, so that would not even tell us what happens currently, or for the next school year) wouldn’t this raise the EFC by being viewed as income? Also, through 2010, I read that it is not taxed if the reimbursement is under $5k and change, depending upon income. I read some anecdotal questions employees had who were actually taxed and they were not expecting to be taxed on the reimbursement. I also read that some high earners (ie: executives were cited) are taxed on this, but someone who is earning a much lower salary is not taxed not taxed on the reimbursement.</p>

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<p>Well, nothing reduces Pell since that’s an entitlement and is awarded first. But if the student had a COA of $15K and a Pell of $5K, an employer tuition reimbursement of $5K, and a state grant of $5K, they would have no other need-based award like SEOG, student loans, etc. because they would have hit the COA. The taxable portion of the reimbursement would be included in the AGI and might raise the student’s EFC for the year following the reimbursement unless it’s excluded for FASA. All of my employers imposed a grade requirement for reimbursement, so there was a 4-6 month lag in actually receiving the funds. </p>

<p>I didn’t see an income requirement on the taxability issue but you should read the exact regs at irs.gov…it’s in Pub 970, page 63:</p>

<p><a href=“http://www.irs.gov/pub/irs-pdf/p970.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/p970.pdf&lt;/a&gt;&lt;/p&gt;

<p>Btw, any financial aid, including Pell can be taxable income if it exceeds the qualified expenses (tuition, fees, books).</p>

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<p>sk8rmom is correct … only Pell would not be reduced. The employer payment is counted as aid. Our business office informed us & we would reduce aid, if necessary, when a payment was received from the employer for the student. If the money was taxed by the IRS, then that money would be counted in AGI & thus would theoretically reduce eligibility for need based aid the following year. If the money was not taxed, it might have to be reported on the return as skrmom suggests. If it doesn’t get included on the tax return or reduce by taxes by the employer,then I am not aware of any regulation that requires that amount to be reported on a FAFSA as income.</p>

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<p>Thank you!</p>

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Please start your own thread rather than bringing up a very old one.