<p>My daughter did very well with scholarships this past year. We qualified for Pell, state grants, plus received several outside scholarships for this academic year. So, she was very fortunate for this past year. Most of the outside scholarships are one-time deals.</p>
<p>The taxable portion of her scholarships (unqualified education expense) is $14,000 for this year. So, she's got a big tax bill for Federal and State (about $2,000 total in taxes between feds and state). I understand the reality of this.</p>
<p>However, for next year, her income is listed as $16,000 on the FAFSA (SCH amount is the $14,000). I did the FAFSA forecaster and last year our EFC qualified us for Pell Grants. Now we don't. </p>
<p>Our income did not change. Her income was boosted by scholarship money that was spent on room and board and such. Without the Pell Grant, we won't qualify for state grants.</p>
<p>Next year is when we'll REALLY need the Pell grant in a big way. </p>
<p>Is there a way of qualifying for a Pell Grant next year?</p>
<p>Question 43d on the fafsa asks how much of the student’s reported AGI was from scholarships/grants. If you put $14,000 on that line, it will be subtracted from her income for the purpose of determining EFC. Have you already done the 2012-13 fafsa? If so, look at the SAR to see her EFC.</p>
<p>Also, the amount she paid in federal taxes and an allowance for state taxes will be subtracted to determine available student income.</p>
<p>Taxable scholarships are income as far as taxes are concerned but not for FAFSA, as stated above, if nothing else changed you missed the question that would subtract the scholarship money back out of the equation for FA. Correct ASAP and best of luck!</p>
<p>Unless you made a mistake on FAFSA, your daughter is ineligible for Pell grant regardless of how money were spent (which looks like you did). </p>
<p>If your daughter indeed is ineligible for Pell grant, she should apply for a student loan, pick up some work-study (if eligible) or get a part-time job (perhaps starting now) during school year and work during summer. You can also apply for parent loan to cover whatever the gap is.</p>
<p>Try making the changes on the FAFSA as recommended above. If that still doesn’t help, try asking kelsmom. She’s the expert on this kind of issue.</p>
<p>We are likely to be in a similar boat next year. I am curious to hear kelsmom’s answer or to hear back from f8andbthere. It doesn’t seem right that kids are penalized for their outside scholarships…</p>
<p>If the OP was Pell eligible last year and the only difference is the scholarship money that should not change the Pell eligibility for this year beyond any adjustment to the federal formula. The mistake is in filing the FAFSA in such a way that the scholarship money looks like money earned from work.</p>
<p>If scholarship dollars used for room and board changed kids FA eligibility we would have a whole lot of kids going to college for one year only!</p>
<p>I think this is a case of the online question not being fully explained without scrolling through the help box on the side. Kelsmom - we need your line by line FAFSA expertise!</p>
<p>Look over your FAFSA again. You should have reported her Federal income tax paid on line 36. If part of her income was reported on her taxes as “scholarship income” then you should have reported that amount on the FAFSA in line 43d? Basically, the FAFSA does NOT penalize you for earning scholarships, and excludes those amounts IF you entered the data correctly. For reference, would you be willing to tell us how much your PELL Grant award was for last year? If you got a very small award, it is possible that something small could have made a difference, but if your award was generous, you probably made an error somewhere on your FAFSA. EVERYTHING stayed the same with family size, kids in college, etc?</p>
<p>The scholarship dollars will have no affect on your Pell eligibility (assuming dependent student). I did the FAFSA worksheets by hand and the student’s income is based on AGI minus scholarship income as well as any need-based employment income (basically 43a thru 43f is subtracted). In addition, any federal and state taxes paid, plus a $6000 income protection allowance, and a social security tax allowance is subtracted from the income to arrive at a final number. In most, if not all, cases the students contribution will be a negative number. The only thing that would affect the student’s contribution toward EFC is checking and savings which is calculated at 20%. So if your son or daughter had $1000 total it would bump your EFC by $200.</p>
<p>P.S. In case anyone is wondering the EFC cut-off for Pell eligibility is $4,617.</p>
<p>If you want to see the student worksheet see page 10 of the link.</p>
<p>Report the tax information on the FAFSA as instructed in the FAFSA directions. The taxable portion of grants/scholarships is included in “income from work,” which is taken directly from line 1/line 7, depending on the type of return (EZ or other). The AGI and taxes paid are also taken right from the return. When asked for the taxable portion of grants/scholarships in a subsequent question, the amount in the income from work attributed to grants/scholarships is reported. That income is NOT counted against a student. If you would be eligible for Pell without that income, you will be eligible for Pell with it.</p>
<p>As Kelsmom and others have said, taxable scholarships (and work study) do no negatively affect the EFC. They are reported as part of the AGI and then reported again in the question that asks how much of the AGI is from taxable scholarships and work study. These amounts are then deducted from the AGI in the EFC formula. So if total income was 16,000 and 14,000 was from taxable scholarships, then the amount of income for FAFSA ends up being 2,000 (which is well below the protected income allowance).</p>
<p>If you have reported the taxable scholarship income correctly on FAFSA and are not eligible for Pell, then there must be something else affecting the EFC. If you were eligible for the automatic 0 EFC last year, the cut off AGI for that dropped from $32,000 to $23,000. That impacted a lot of students.</p>
<p>Wow, lots of really useful information in a big way. My original numbers were based on the FAFSA forecaster, which indicated that we qualified for work study, but not for any Pell dollars this year. So, your info helped me revise and do a better job of accurately reporting the FAFSA figures.</p>
<p>Takeaways from this years scenario:</p>
<p>1.We had not subtracted all of her qualified expenses. It still left her with $12,000 or so in taxable income. </p>
<ol>
<li><p>We hadn’t subtracted her taxes owed from her savings account balance. She had a whopper of a tax bill on the taxable portion of her scholarships. She also signed up for an online class that was direct billed to her. We paid for that and subtracted that amount from her bank account.</p></li>
<li><p>The bank account might have been a big factor. Because she is going to summer school, some of the money is for the summer session expense. It will be long gone by the time the next school year rolls around, but it doesn’t seem like financial aid plans and FAFSA really figure summer sessions into the mix.</p></li>
<li><p>Our situation is complicated by the fact that private scholarships generally are paid for fall/spring terms. My daughter has done summer school the past two years in order to cut off an entire year of college. We got one scholarship to write a letter so that that scholarship would only apply to the summer session. This kept us for going over the COA for a standard school year.</p></li>
</ol>
<p>Net result; she qualified on the initial application for about $1,800 in Pell Grant money. That is big for us. That means she can qualify for a state grant as well, as well as other need based outside scholarships. It’s less than last year, but it’s till big.</p>
<p>Like I said, we did great for this one year. The dirty secret about scholarships is that many of them are just one year deals.</p>
<p>Also, to correct an error on my post. The Pell eligibility EFC cut-off for 2012-13 is currently $4,995 not the $4,617 I originally indicated. :o</p>