Hoping to clarify how housing works for these two scholarships. The website lists “on-campus housing at regular room rate,” within the scholarship specifics. Does that mean only less expensive options or are the suites part of this deal? S19 already qualifies for presidential elite but with the newly expanded NMF scholarship and S19 a possible NMSF next fall, I am trying to get a clear understanding of details. Thanks!
Yes the suites are an option as part of this deal. Our NMF kid is in a suite in RCS.
It was explained to us that the NMF package would cover the cost of a “regular” room in any hall you choose. So that’s whatever the normal arrangement is for that hall (for example, a 4 person suite in RCS).
If you choose a more expensive option (for example, you pick a single room in a building where doubles are the “regular”) then you only get the scholarship amount for the “regular” amount.
Ok - thanks! This is actually better than what I had calculated earlier. UA was already at the top of S19’s list after our amazing visit but this sweetens the deal even more!
I don’t think it covers the 2 person supersuites, but will cover the 4 room supersuites.
The beauty of saying “regular room rate” is that housing is taxable, so instead of having the high rate reported, the regular room rate is reported.
@mom2collegekids thanks! Good point about the taxes!
Can someone explain the tax issues with the NMF scholarship to me? I see @mom2collegekids mentioned that the housing part is taxable. What other parts are taxable? Also, would that taxable stuff go on my D’s return or our (parents) return? Thanks.
@droppedit We just did DS’s taxes. Oversimplified: scholarships in excess of tuition/fees/materials are taxable. They become “unearned income” on the student’s return. Exceed a certain amount and it get taxed at the kiddie tax rates (the parents’ rate).
@flatKansas – thanks
The first about $6k that a student has in earnings isn’t taxable, so if the student only earns about $3k and then is given free housing with a value of about $5k, then maybe only $2k is taxable. And paying taxes on that is far less than actually paying for housing.
@mom2collegekids @flatkansas – How about the $3500/year stipend and $500/year book scholarship? Do those get included in the “unearned income” as well?
I’m totally ignorant when it comes to merit scholarships (which, for me, was laughable back in the Stone Age). For example, what exactly is a $3500/year stipend? Is it funds on my D18’s Bama account for spending at Bama?
Scholarships that cover tuition, fees and books are not taxed.
So the book scholarship isn’t taxed. And if some of the 3500 stipend is used to buy books or to pay course fees, then that portion isn’t taxed either. Anything remaining of the 3500 goes to your daughter’s bank account to be spend however you want.
I can’t speak for how the book stipend works as we dont have that one. (We had the tech stipend which just paid directly to the Supe as DS used it.)
All the other scholarships and stipends go directly into DS’s Bama account along with all the school’s charges. There’s no deciding what to apply to what. When the dust settles there’s just a refund of the excess funds into DS’s bank account.
UA just notified us that they have increased the NMF package to include four years of on-campus housing. This increases their offer to $194,100! Roll Tide!
@mom2collegekids or anyone else with
Info. Speaking of UA scholarships in general…how does UA handle outside scholarships? If S19 received the Presidential Elite or ends up qualifying next year for the NMF scholarship but also received outside scholarships, will UA reduce their scholarship or will the excess go to him?
I believe the excess will go to him, @mountainmomof3, but remember he’ll be paying taxes on the extra too. (Although it will likely be nominal.)
@dodgersmom would know for certain.
@mountainmomof3 - All the scholarships will just add up, and anything left over after your son’s bills get paid will just be refunded to him. My son was awarded several additional scholarships during his tenure—some from outside sources and some from UA—and anything in excess of his bills was just refunded.
Make no mistake, though, the taxes on the excess scholarship monies—anything not applied to tuition, books, supplies—can be significant, so be prepared for that. But is it worth it to get the extra money? Heck, yeah!!!
P.S. Remember, the American Opportunity Credit (AOC) is your friend, and you can still claim it even if your student’s expenses are fully covered by scholarships. There’s been discussion of this in the Financial Aid forum. In a nutshell, what you need to do is move $4,000 in expenses from the “tax-free” (tuition) column to the “taxable” (other expenses) column. The IRA won’t complain that you want to pay the additional tax . . . and paying that tax qualifies the $4,000 as money that YOU spent, making you eligible for the AOC. Consult the Financial Aid forum for more info.
@dodgersmom thanks so much! Totally understand extra will be taxed but still extra! Just trying to understand process before S19 pursues outside scholarships next year. UA is looking more and more like his top pick so need to take stock of more of the details at this point. All of you are great help!
There are significant changes to the tax treatment, due to the Tax Cut and Jobs Act
Next year the standard deduction for dependents will be the greater of $1050 or earned income plus $350, up to a maximum of $12,000. So for a student with earned income, all but $350 of that scholarship will be taxable. The Kiddie tax is no longer based on the parents’ income, but on the tax table for trusts and estates (found here: https://www.■■■■■■■■■■■■■■■■■/documents/4404038-T-E-2018-CONF.html )
The first $350 falls under the standard deduction (assuming the student has $700 or more in wages from a summer job)
The first $2100 above that is taxed at 10% “single” rate, before moving to the trust/estate table ($210)
The next $2550 is taxed at 10% ($255)
(so the first $5000 will result in $465 in taxes)
Above that it jumps to a 24% tax rate (for the next $6,600)
And then a whopping 35% (next $3,350)
Anything above that is 37%
… and everybody thought the old kiddie tax sucked! Those Academic Elite scholarships come with a significant tax bill ($1,305 just for the 8,500 stipend - not including the first year of housing). The good news is they won’t owe federal income tax on their wages up to $11,350
At the 24% rate, it’s only worth shifting the first $2000 toward tax credits (The first $2000 produces 100% credit, the second $2000 is a 25% credit.