Son accepted and Presidential Scholar and NMF. Engineering scholarship winner too. He’s applied and gotten numerous outside scholarships up to about $10k so far. If he does choose UA what happens to that outside scholarship money? Can he use it towards meal plan and other bills from university or is it absorbed into the UA scholarship portion he would already be getting? I know each college is different.
The outside scholarships are used first, Than the ones from Alabama will be applied to the outstanding balance. For example if after the outside scholarships are applied to balance and the Alabama scholarships are applied and you have 5,000 left over from The Alabama ones and you still have housing and meal plan left on your student bill the 5,000 form the Alabama Scholarships that are left over will be applied to that balance.
Should your scholarship cover more than the UA billables, as I understand, it the balance would be refunded to your student. Your student will pay taxes on anything over COA. There are other threads discussing this “problem.”
The extra money will go towards your balance and any left-over money will be refunded to you.
I dont’ agree with the comment that outside awards get applied first. The awards get added to the acct as they come in or as they are awarded.
The UA money just goes to the acct…and outside awards do as well…as they come in.
Our son received a refund at the end of freshman year
^^
He may not have had a credit balance for first semester. If there is one, you’re supposed to get one then.
We always receive a refund a couple of weeks into every semester. My daughter has outside scholarships, full tuition, and additional scholarships awarded through the communications college.
Taxes will be on the amount over tuition, fees, and books minus the child’s standard tax deduction. That will be taxed at the parent’s tax rate.
Ok got it. Already dreading doing taxes next year! So anything over school costs directly from school will be taxable and seen as income if I understand correctly? And they send 1099s for that? I remember seeing some scholarship tax threads on the financial board I think. I’d better go find those. Thanks!
Yes, a 1099 is generated in January. Keep all receipts. This is difficult for a kid sometimes to do, so drill it into 'em! 
Publication 970 from the IRS will have tax on scholarship information. Pretty straight forward.
aeromom, what kind of receipts would you suggest? Receipts from the university of course but what else? Thanks!
Keep receipts for everything you spend money on while away at school - these expenses fall into two categories: tax-deductible and non-tax deductible. Tax-allowed are purely educational expenses only: tuition, course fees, books, and some supplies (within the tax law). All other expenses can, in some cases, be used as documentation, so keep a record of everything additional you spend money on: food (dining plans and groceries), room cost (dorm or apt), utilities, phone, travel, insurance…
My advice is mostly geared towards any student who receives additional or outside scholarships. Here’s why. Let’s say if you have an outside scholarship which can be used to offset tuition only…but you already have the UA tuition scholarship (the wording is “up to the value of …X$$$…”)…you can technically use the outside scholarship to offset your tuition, and use the UA scholarship for other things. UA applies its moneys first, because those moneys are usually already in the account (posted before outside scholarships), and then UA refunds you the difference (if there is a refund due to you)…but, again, technically, YOU can apply the outside scholarships first to tuition-related expenses, and then apply the UA moneys after that to non-tuition-related expenses. You just should keep a record of everything so you can justify how the moneys were spent, especially to scholarship committees, should they ask.
Also, very important for you to take a screen shot of your student’s bill BEFORE you pay it and/or BEFORE scholarships have been applied each semester. Learned this the hard way: in the past that UA had a different billing system where you could only view the current semester’s bill…and then 9 months later when you’re doing your taxes and wanted last year’s bill poof it was no longer viewable online! They have changed systems this year (fall 2014), and it will be interesting to see if we can now have a record of previous semesters showing on the mybama accounts. The new billing system also has a printable bill, and I would print these each semester, just to be safe.
I’ve always been annoyed that students cannot (easily) purchase books using clearly available funds from their bama accounts. There is a way to ask UA to do it, but my S never could be bothered. Remember that with online book rentals, keep a receipt from those services, too (Chegg, e.g.). PM me with any particular questions about how to apply outside scholarships and documentation you might need.
Wonderful information! Screenshot your response as well. Thank you!