<p>On my 1098-T, my scholarships/grants outweigh my tuition payments. From what I've been reading, it seems that the "excess" scholarship/grant money will count as student income, which if above a set amount will drive up the EFC for the upcoming school year. Doesn't it seem counter-intuitive to count excess grants as income that can potentially reduces student financial need (and therefore aid) in the upcoming year? The whole point of awarding scholarships/grants in the first place is on the basis of financial need, and if you take away the scholarships/grants for one year because of "no need," then you enter a vicious cycle in which at one year, there's a financially needy student and another, in which there is not a financially needy student. Anyone else feeling frustrated?</p>
<p>It won't increase your EFC a dime. On FAFSA you have to include it in your AGI reported from the tax return, but it asks you in other questions what amounts in your AGI were from WS and taxable scholarships/grants. These figures are deducted from your AGI in the EFC formula before your EFC is calculated. So if your AGI was $10,000 and $3500 was from WS and $4,000 was from taxable scholarships your income used in the formula would be $10,000-$3500-$4000=$2500 (which would fall below the protected income allowance so would have not impact either).</p>