<p>That possibility sounds a bit mythical. Universities don’t rescind aid eligibility for reporting money in the wrong (and might actually be correct) category. The audits done on a random sample of applications every year disclose bigger problems, and rarely jeopardize grant aid.</p>
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<p>Scholarships that pay the recipient directly are functionally similar to raffle tickets. If they also don’t constrain the use of the funds, those scholarships are functionally identical to raffle tickets. Raffle winnings are income and don’t come with a W-2. </p>
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<p>Declaring “that’s how the world works” (without clear expertise) and volunteering as arbiter of what’s Real, is patronizing. Pushing a legitimate question from OP into the category of shadowy scams and loopholes, is patronizing. Telling the OP “you’re rationalizing, dear” is beyond patronizing. </p>
<p>Like many posters in CC, your view (judging only from writings in this thread) of student-university relations appears to be a paternalistic one. Universities are benevolent authorities that do no wrong. In case of any doubt, students should humbly or even eagerly submit themselves to the merciful judgement of the school-father-Master. Above all the student should not displease the angry school-god.</p>
<p>Sorry, I did not mean all aid eligibility, only the university grant. I actually do have several decades of experience in financial management, including at the federal and university level, and as administrator of a scholarship fund. I have seen grants rescinded for various reasons, including dishonesty, which is certainly not something any of the principals want. </p>
<p>The language I have seen attached to grant aid is generally quite simple, so no one is in doubt about the requirements or has to retain an attorney to figure it out. But, it often does not spell out every possible scenario or indicate what the consequence of receiving outside funds might be. As Chevda pointed out, if an award is need-based, the amount of need must be calculated correctly to distribute aid. That is why I urged the OP, who acknowledged that he knew the school expects all outside awards to be reported, to get the answer from the source and to be straightforward at all times. Imho, the matter of “interpretation” is best left to the university, not because they’re god-like in any way, but because they do make, and fully understand, the rules for distributing their own aid. It’s very possible, even likely, that he will be allowed to keep the outside funds with a reduction in self-help aid. </p>
<p>People will have differing viewpoints, mine probably represents a conservative route. If the OP can’t attend college at all without the university’s grant aid, playing it safe is probably in his best interest and has the advantage of allowing him to sleep at night!</p>
<p>Rescission due to NON-reporting or due to (what we are talking about here) reporting the same amount in a different category than the university deems correct? The FAO has the same option that is applied during audits, which is to use the given numbers to calculate their version and adjust the package accordingly. Or do you know of situations where penalties accrued beyond that simply for presenting $1000 scholarship as $1000 student income?</p>
<p>From this, the OP didn’t seem to be considering reporting it as income, just not reporting it at all. If he ended up with scholarships and other aid in excess of the COA, there would definitely be a problem that could come back to haunt him. That is one scenario which resulted in reclaiming funds that had been incorrectly disbursed. There can be be other penalties as well but I can’t comment on specific situations due to confidentiality rules.</p>
<p>Ask some of the fin aid officers here and they will likely tell you that, from long experience, schools tend to take a dim view of anything that seems like an attempt to subvert the rules. Not saying that this is the OP’s intention, and of course honest mistakes can happen, but unfortunately the consequences may not be much different. I am not an FA officer, but my alarm bells would be going off if I saw that I had a student who later reported some scholarships as income and never reported the scholarship to the school. I would likely wonder what else he had not done correctly and would certainly have to make sure that this did not result in an excess distribution of federal and state aid, or a distribution otherwise contrary to policy. If it had, or if it seemed that this had been done intentionally, I believe it’s customary for the FA officer to notify those in upper-level administrative positions and the determination of future aid would be in question.</p>
<p>There was no clear answer to the question raised above: have there been any cases where financial aid was rescinded or jeopardized because a university financial aid office disagreed with a student’s good-faith (honest, but possibly strategic and seemingly consistent with FA and IRS rules) classification of some funds as income rather than scholarship? For instance, a scholarship that pays the student directly and does not constrain the use of the funds or demand a refund in case of disenrollment.</p>
<p>Triggering an audit or other review is not a risk if everything else in the FA application is aboveboard. The question (in post #21 and 23, not necessarily the OP) was whether the disagreement between student and university as to which classification applies, is by itself enough to endanger the financial aid, or could lead to anything worse than the university recalculating the award based on its own interpretation of the income as being a scholarship.</p>
<p>The way it usually works is that financial aid is reduced by outside scholarships, and merit money is not. Regardless of that, or what you think or feel, or anyone, for that matter, thinks or feels, when a college offers you money with stipulations, you are supposed to meet those stipulations or you can risk consequences. What those consequences are depends on the college and the situation. If you are getting federal money in that aid package, it can be a big problem if you have gotten other money that you did not report.</p>
<p>Yes, there are cases where kids did not report scholarship money and no one found out or cared, but there are also cases where it was discovered.</p>
<p>In one situation that I know, it turned into a mess and a lot of unpleasantness when a demand was made for the return of the funds and the student had long spent the windfall.</p>
<p>^Please read the thread to understand the question, which is not about declining to report a scholarship, but reporting (some types of) scholarship as income when they appear to qualify as such under applicable definitions.</p>