Scholarship Disbursement -- How do you get specifics?

My daughter has ben an awarded a few one time scholarships, mostly $1,000. All of them are paid directly to the college. But, none of the letters specifically state they be used for tuition? When I inquire to the college, they refer to their stacking policy which is they allow scholarships, up until it meets what she is getting in NEED BASED AID for tuition. But, if the scholarships don’t specifically state for tuition only, can’t we ask that the be credited for other educational expenses like fees, books or room and board? Anyone have similar experiences?

What is the school’s policy on outside scholarships?

Some schools allow outside scholarships to first replace the self help portion (work study and loans) part of the the financial aid package.

Does your D have work study or loans in her financial aid package.

After the self help has been met with outside scholarships, the school then reduces their need base portion.

remember that room/board are not considered qualified educational expenses. Scholarship for these will be considered taxable income to your D.

My D has a tuition scholarship. In freshman year she also had two outside scholarships. They were not restricted in their use towards a particular education expense.

Since the tuition scholarship was covering tuition in particular, it was tax free but we could not claim tuition expenses for American Opportunity Tax credit.

We allocated her outside scholarships towards room and board and reported them as taxable income to her on her tax return.

Then we were able to claim qualified fees and books as expenses for AOTC. We were able to get about a $1,000 education credit, and she paid some tax on her scholarships.

Is the grant from the college restricted to tuition or is the need based aid also credited to any billed costs, which include fees, room and board? My daughter’s situation is sort of a mess with some grants that can only be used for tuition, but most can be used for any billed cost. The catch is that any money coming from the school won’t be refunded to us, so it if exceeds billed costs it is forfeited. Money coming from the outside, which isn’t specified for tuition, can be refunded.

Oh, this is all super helpful, regarding the tax stuff… Her Need Based Grant cover almost all the tuition, but not quite “Full Tuition”-- a few thousand short. ($,4000) . The college’s policy says scholarships can first offset loans and work-study, then Need Based Aid. She was awarded all this. Subsidized, UnSub, and the Federal Work Study. All those total more than her tuition gap (about $7,000 if she took all the loans and worked all the hours)- which is somewhat confusing. But I read the Loans and Work Study can go towards Room Board… Which is why, it all seems a little muddy. Like @mommdc said, I wonder if we can “allocate” her scholarships, if they don’t specifically state for tuition, if we chose to report them as income? That is something we ask Financial Aid. These one time scholarships also don’t indicate whether they disperse the school by semester, but the Financial Aid office just said, “they all do it that way”

My D’s school split up all aid, including outside scholarships, between both semesters.

In your case, it sounds like grants cover all but $4,000 of tuition.

If you qualify to take the AOTC, you could allocate the outside scholarships to be used for room and board and have your D report them as taxable income.

If you don’t qualify for AOTC then you could allocate up to $4,000 of outside scholarships towards tuition and they would be tax free.

If she has need based aid of work study and subsidized loans of $7,000 and the outside scholarships, would reduce that, she could still pribably take out some of the subsidized loan, and if she loses the work study, she could still get a non work study on campus job.

When you notify the school about the outside scholarships, they might revise her aid package.

https://www.irs.gov/individuals/aotc

info about AOTC

Thanks. This is very good information. Will look into it.

Also ask the organization(s) granting the scholarship. Some require that it be used for tuition, some are much more flexible.

For a couple scholarships my D got, they were also not clear what things other than tuition is eligible. The financial aid office did not make it clear for their scholarships. Fortunately, she had some grant money that can be moved around to cover other expenses in the CoA to leave enough room for us to claim the tax credit. This year she lives off campus and the R&B is not on the bill. Her tuition and fees got completely covered by scholarships and grant with some extra that shows nothing left on the 1098T. I am not sure how to deal with that and just use the 529 to cover her R&B amount and claimed tax credit only on the textbooks.