[tolbish]

Scholarship money is tax free, since it goes to tuition, books, etc.

Unless you are referring to money for housing? That is probably far more affordable of a tax bill relative to tuition.

[whymauri]

What's happened over the last 15 years is that schools keep bumping room and board rates (at nearly 10% year-over-year, which is insane). Since anything outside tuition is taxable, that liability has been increasing. The 'income' of a full-ride scholarship student with parents making less than 25k could be 55-60k+ on paper, which then gets taxed. This leads to income that should be used for food and quality of life, like work study, being used to offset a growing tax liability instead.

So you have students who are poor and working way more than their wealthier counterparts not for savings, emergency funds, money for their family, or food, but simply to offset a tax liability they incur... because they are poor and smart. Absolutely bonkers.

I just don't understand why there isn't an income-based tax exemption on need-based full-rides. Like, ideally a need-based full-ride should have parity with the wealthy students with parents footing the entire bill. It could certainly help with the slightly higher attrition rate for poor students.

[tolbish]

I suppose you might live in the dorm your freshman year, but there is no reason why you need to take the most expensive housing. I paid $600 a month for my place my last 2 years of undergrad, and I would just take a few loans and/or a job.

[whymauri]

Moving out is a popular and valid option, especially with how expensive on-campus meals are. Even if you move out, the school will still calculate a 1098-T based on the total cost of attendance (it might be possible to go out of your way to decline part of your scholarship, but I have no idea how this works). But yes, moving out is a way to save money (but some of that money just funnels back into paying a tax liability, lol).