Sigh. I know this is a good problem to have, but I wonder if there are any tax experts/accountants out there who can help us.
My daughter got what I consider to be really good aid from her school. Almost her entire need was met, in contrast to some other schools which left gaps of over $10000. My efc this year is pretty hefty because the school calculates my efc using both my alimony and child care, which both end this year. I understand and accept that. I am responsible for paying the efc amount no matter how much scholarship money she wins. My dd's loans are not even the max allowed ($5500 I think for freshmen, right?), so that is another good thing.
So what's the problem, you're thinking. Well, d has done very well in the local scholarship area. I think her total so far is around 9 or 10 grand, and she has an interview as a finalist for another one, along with the possibility for several more that have not yet announced winners. In addition, I know she will receive another one at graduation based on her class rank--just not sure how much that one will be. So, naturally, all scholarships are reportable to her college. They will take scholarships first off of her loans, which means she will have no loans for her first year. Yeah! Next to go will be her work-study. That will be gone, too. I'm not sure if they will let her use some of her scholarship funds to cover her unmet need. After that, they start deducting from her institutional grant. (She has a renewable $25000 yearly scholarship from the school which will not be impacted at all.) I don't want to seem ungrateful, but is there a way to LEGALLY and ETHICALLY save some of her scholarship money for her sophomore year? my guess is maybe there is a legal way, but perhaps not an ethical way, since I must report all scholarship money to the college. I'm not sure I could wait and report it the SECOND year rather than this year.
Please, I know how incredibly lucky (not to mention hard-working and smart) she is to be awarded all this money. It just seems kind of counter-productive to replace her grant with scholarship money. (Obviously, the college will not see it that way. They will see it as saving their money and possibly being able to award it to someone else). I'm even wondering if she should politely decline some of the scholarships, with an explanation, and ask that the organizations award the money to someone it will have a real financial bonus to.
BTW, at least two of the scholarship providers "sort of" understand the issue with scholarships. There were three winners of one particular scholarship from our credit union, and at the dinner the woman in charge took them aside and told them the money would be deposited to their accounts so they could do "whatever they wanted to with it. Wink, wink." She actually said the wink, wink part. Another organization, in their notification letter, said that they understood that scholarships often do impact institutional aid, and for this reason, they would not disburse the funds until the semester has started and tuition has been paid. I guess they think that by doing this the student will not lose anything, but for us , it won't be the case, since I am still bound to report the funds. Any advice?