Scholarship Payments and Policies

Jodi and Lauren,

I received additional feedback via a KACF (Kansas Association of CFs) colleague. This CF allows room and board expense in their scholarship payments to the university. They received help with this when going through National Standards last year. A section of the student's award letter is below:

"This $AMOUNT award will be provided as long as you are enrolled full-time (as defined by the school). The scholarship funds will be paid directly to the college you are attending. This scholarship may be used for payment of tuition. If needed, this scholarship may also be used for room and board which would result in a taxable gift, please check with your accountant if using the scholarship for these items. "

The CF does not know or keep track of how the student spends the scholarship funds. The language above makes taxable gift report the student's responsibility.

Also check out this information from the IRS:

https://www.irs.gov/publications/p970

Qualified education expenses. For purposes of tax-free scholarships and fellowship grants, these are expenses for:

Tuition and fees required to enroll at or attend an eligible educational institution; and

Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.

Expenses that don't qualify. Qualified education expenses don't include the cost of:

Room and board,

Travel,

Research,

Clerical help, or

Equipment and other expenses that aren't required for enrollment in or attendance at an eligible educational institution.

Sorry for the long post. Hope this is helpful!

Thank you. This is helpful!

Jodi