The IRS allows a person to receive tuition, fees, and books as a tax free event, but other parts of a scholarship, including room and board, travel costs, and insurance premium costs are taxable to the recipient (the student). A change this year allows a taxpayer a $12k standard deduction (so the first $12k of income has no taxed owed) but after that it is taxable.
Your daughter will file a return and have to include any amounts received from Agnes Scott or other outside scholarship that isn’t used for tuition, fees, or books. If she receives $50k in scholarships, and tuition is $30k, she’ll pay taxes on $20k. If they also ‘give’ her $3300 for insurance, she’ll pay taxes on that too.
@twoinanddone , GREAT to know! Thank you SO much for the information! (Man, I feel ill equipped to be an adult).
Now, do you mind explaining subsidized and unsubsidized loans people keep mentioning here?
Her package says:
Federal Direct Stafford - subsidized $3,500 total for year
Federal Direct Loan - unsubsidized $2,000 total for year
Well, considering she is a dual citizen, she could just go to Germany for a year and do whatever - go to school (a sort of postgrad year, the way exchange students sometimes do it), work and travel all over Europe. Stay with grandparents for a bit, stay with aunts and uncles for a bit. The one thing I believe she could not do, as a homeschooled student, would be start at a public university right away. She would have to apply for a specific course (lots of places still accepting applications) but be redirected to do a bridge year, with an entrance examination at the end. Of course she wouldn’t have to stay after…
Other posters could weigh in whether a college that waitlisted her might be more amenable to accept her after an interesting gap year?
Even if she had been accepted to Reed or the other schools she wanted, would they have been affordable? And the OOS issue with insurance would be the same.
I suggested a gap year to give her time to earn money, and possibly find other schools she can get excited about and afford.
The subsidized portion of the loan means it will not accrue interest while she is in college.
The unsubsidized portion starts accruing interest immediately.
I think someone mentioned this up thread, make sure you provide the policy to the school before you purchase it to make sure it meets there requirements. My kid’s school asked for me to send our policy in every year to make sure the deductible is not too high and the maximum pay out is sufficient.
I would not let the health insurance derail your daughter’s plans to attend Agnes Scott. Take the subsidized loans and buy her insurance through the college. She should be able to handle the debt at graduation.
In spite of the fact that I attended both college and graduate school, things have changed so much that I could also detail the mistakes we’ve made during the process. I typed out a list of notes to self to refer to when my younger child applies to college in two years.
@oldfort, the OPs kid would be attending Bard Berlin, an American university, not a German public.
A German public would not accept a homeschooled student (frankly, there might be a problem even getting accepted to the bridge program) and I am not actually recommending she apply, merely pointing out that if she were unable to find a formal gap year program, getting accepted to a bridge program and do it while staying with her relatives might make for an interesting gap year (that’s why I was asking where the relatives lived. There will be a university or college with a bridge program around).
A high school could just accept her as an exchange student (as a rule, up to the principal) and if she were to agree to take part in lots of English classes helping out as an informal teaching assistant they’d probably roll out the red carpet. She couldn’t make any money as a formal teaching assistant because she’d need two years of college under her belt, but she could offer English tutoring for money. Work any kind of low skill job really, since she’s a citizen. Again, only works if she could stay with the relatives, which is of course not a given. Though there are parts of Germany where you can make 2.500 € a month without qualifications, while easily living on 1000 €.
@oldfort thank you for that link! I see that @Tigerle was there, too! Wow, Germans. Listen, i’ve been married to one for 20 years now. He’s a wonderful, talented man - and oh so pretty - but also VERY VERY GERMAN!! (I’m just an old hippie so it’s rather like a bad reality show at our house)
@Tigerle , I knew it was illegal to homeschool in Germany which is why it took me years (until 6th grade) to get my hubby on board with it thought I started trying to convince him when she started kindergarten. ( I mean, public school in Mississippi…you know?) . But when he saw her thriving, he was on board. We visited Germany during those years so he could see his parents and were told not to mention that we homeschool since they are dual and we homeschooled. It was all very weird for me.
So, it did not even occur to me that she probably couldn’t even get into a public German university so thank you for that. Again, just plain ignorance or naivety. The TA/High school thing is interesting. The parents live in Kleve (near the Holland border) but mother doesn’t speak any English but the dad is pretty fluent (but NOT politically progressive so might be hard on everyone!) . But worth talking to her about, maybe. She’s been taking Swedish for years and we have friends there and looked into the folk schools there but missed the deadline, sadly.
I adore my nieces, nephews, and college aged cousins (and have dozens of them on both sides) and would happily (and have) roll out the red carpet for a two week stay between jobs; a three week stint before the first paycheck comes in; free storage for the summer, or just the crash pad every other weekend (with a loaner car) for a year or two.
I would NOT be thrilled to have one of my siblings assume that I’d be happy to have an 18 year old who I’ve met once living with me for a year. This is not a conversation to have as a “Hey, her college choices didn’t pan out, so she’s going to move in with you in August, get some kind of job, she’s super responsible so don’t worry about a thing” .
If the German family knew she was applying to a program in Berlin, wouldn’t the “if she’d like a gap year to learn German, we hope she’ll live with us” conversation have already happened?
There were periods when I was dealing with elderly in-laws, medical issues with my own kids, etc, and as much as the two week/three week crash pads was fabulous, I was NOT in a position to have another family member assume I’d be able to take on another teenager for a year.
Or is it just me? Y’all are pretty generous with someone else’s hospitality, finances, and supervision…
@blossom , hubby left his home country and all his kin for a reason, let’s just say. He has not even mentioned to them that she was accepted to a school in Berlin. I don’t think it would be a good fit for anyone for her to stay there for a year. Which is why we never pursued it any further. Let’s just say she has more American hippie in her than German
I think she has 2 choices. 1, go to Agnes Scott and buy the insurance either with saved money or by earning money. I don’t think you’ll find a cheaper alternative under a Georgia ACA policy and Agnes Scott seems quite strict in its requirements (or a major med policy won’t work). 2. go to a Mississippi school or take a gap year.
I don’t think you’ll find better or cheaper alternatives after a gap year but you can try. Germany just doesn’t seem like what she wants any more than a Mississippi school.
It sounds like the subsidized portion of her offer would cover the insurance. Since it wouldn’t be accruin interest while she’s in school every little bit thrown at it would go directly to principal. Maybe some months you could throw $20 at it. Other months maybe you could spare $50. That could make it manageable and since it’s not technically due you could decide monthly what you can throw at it. Just a thought.
I don’t really have any good advice- our insurance luckily has nationwide coverage and my homeschooled D19 lucked into acceptance at schools that were willing to take a chance- but I wanted to just say that I can feel how frustrating this is for you all, and tell you that it sucks completely to be in this situation. I’m in the camp that says take the unsub loans and buy the school’s insurance. My daughter was lucky to get into a meets-full-need school, but she’ll still be taking the unsub loans to cover the taxes on her scholarship and her travel/personal needs. At the end of the day, $20,000 in loans or less should be doable for almost any graduate.
Just entering this conversation. Wondering if your D has followed up with the schools where she was waitlisted. Has she shown continued interest? There still could be a chance.
From a previous post by the OP she was not planning on taking the loan this year (planning on loans for two of the for years).
Taking it this year for the insurance this year could allow a year to figure and research other options in future. Also, as I stated before, rather than being tied to $279 a month, they can still pay monthly to principal but each month decide what’s affordable.
