S15 has tuition (merit) covered. He had about $1500 in fees, which we claimed on our taxes for AOTC. The next year he received a scholarship for $1500; it was made directly to the public school. And while we didnt pay the fees out of pocket, we didnt get to claim those expenses. It was a wash. like someone said above, it was a line on a resume.
i kept thinking like you - how could that $1500 scholarship best helped my son? It would have been great if it could have gone for supplies or room and board instead of directly going to the school. I wish the scholarship donor could have contacted us and asked what best suited his needs and would have actually helped him.
so that would be hard, but if you could contact each winner on a case-by-case basis and see where the need is – perhaps it might help more than sending it to a school, and reducing need grants or off-setting the AOTC credits. It’s very very thoughtful of you to give scholarships and think about it all!
^^Paying the $1500 in fees definitely helped your son. If it would have been used for another purpose than fees, he would have been taxed on the $1500 and had to pay the fees OOP. You would have gotten an AOTC for a percentage of the $1500.
You could have ‘shifted’ the $1500 to taxable payments (travel, room and board), had him pay the taxes on it, and claimed the AOTC.
…or if he hadn’t reached his exempted amount of income for the year, he would not even have had to pay taxes on it.
I believe most schools have to follow Federal guide lines about external scholarships. For examples
Rice Outside scholarship
https://financialaid.rice.edu/Content.aspx?id=40
Outside Scholarships are non-Rice funds received from a third-party source. It is crucial for Rice to know of any outside scholarships that you expect to receive. These scholarships are first used to replace self-help aid in the need-based package, such as loans and work study.
SMU Off-campus scholarships
(http://www.smu.edu/Admission/AcceptedStudents/FinancialAid/ScholarshipsAndAssistance)
If an adjustment to a need-based financial aid package is necessary, the outside scholarship will be used first to replace a student’s earnings expectation, Federal Work Study and Subsidized Stafford loans before reducing SMU need-based assistance
So is it best to say the ideal amount external scholarship should be less than or equal amounts of (Work Study + Sub Loan)?
It seems for a lot of expensive private colleges, outside scholarships will reduce loans and work-study first, but only up to the demonstrated financial need. So many of these small, one-time scholarships will reduce the student’s loan burden or requirement to work as a freshman assuming the financial aid packages included those. The scholarships, however, cannot be used to pay a family’s EFC.