'Residency Grant' taxable?

[fourisenough]

At one of DD's school options, she was offered a merit scholarship that was broken down into a tuition scholarship and a residency grant (for on-campus housing).  It is our understanding that the residency grant will taxable. Do you all agree with this? Here's my source. https://www.irs.gov/publications/p970/ch01.html

 

I will call the financial aid department today to verify and ask why they do it this way, but I thought I'd get any words of wisdom from the hive first.

[angela in ohio]

Is it an out-of-state school? Usually anything with residency in the title is to cover the difference between instate and out of state student tuition. 

[Kareni]

At one of DD's school options, she was offered a merit scholarship that was broken down into a tuition scholarship and a residency grant (for on-campus housing).  It is our understanding that the residency grant will taxable. Do you all agree with this? Here's my source. https://www.irs.gov/publications/p970/ch01.html

 

Yes, this is my understanding.

 

We paid taxes for monies received above the amount that covered tuition, fees, and books.

 

Regards,

Kareni

[fourisenough]

Is it an out-of-state school? Usually anything with residency in the title is to cover the difference between instate and out of state student tuition.

No, it's a private school. They have a 4-year residency requirement, meaning that students must live on campus for 4 years. I believe they structure their merit aid this way to counteract the inevitable argument that it's expensive to live on campus- no it isn't, because we give you a grant for some of it. Does that make sense?

 

I called them today and they said we would have to get tax advice from an accountant and that their policy is firm- take or leave the scholarship, but that is what they're offering. Probably not a huge deal, but it's just unusual.

[plansrme]

Does the tuition scholarship cover all of tuition?  Or is it, say, a 75% tuition scholarship?  If so, by designating part of the total scholarship as being for room and board, they're keeping you from applying the room and board component to any tuition you pay out-of-pocket, i.e., the 25% not covered by the tuition scholarship.  This makes the entire room and board component taxable income.  That would be really silly on their part; I mean, what do they care where your scholarship is applied?  Of course, if tuition is covered at 100% by the tuition scholarship, this doesn't matter nearly as much, though it might be useful to allocate part of it towards miscellaneous fees and books not covered by the full tuition scholarship.  But by designating part of the scholarship as being for room and board, they're guaranteeing that that part is taxable.

[fourisenough]

Does the tuition scholarship cover all of tuition? Or is it, say, a 75% tuition scholarship? If so, by designating part of the total scholarship as being for room and board, they're keeping you from applying the room and board component to any tuition you pay out-of-pocket, i.e., the 25% not covered by the tuition scholarship. This makes the entire room and board component taxable income. That would be really silly on their part; I mean, what do they care where your scholarship is applied? Of course, if tuition is covered at 100% by the tuition scholarship, this doesn't matter nearly as much, though it might be useful to allocate part of it towards miscellaneous fees and books not covered by the full tuition scholarship. But by designating part of the scholarship as being for room and board, they're guaranteeing that that part is taxable.

Yes, that's my assessment of the situation. The tuition scholarship is not 100%. *Insert mad face here*