Student has close to full ride. Low income, so gets insurance paid too, $1500. Room and board $15k and other expenses$500, net of books. Works for summer and school year and makes $6k. Maybe more in some internships. $23k. Low income or no taxable income parent. Do the math.
For kids who are getting full ride type merit awards and are from high income families where the parents’ marginal tax rate is edging up to that 37%, they can make out. But the kid with a single parent on social security disability or very low income… that one is hit with more tax. And if pay didn’t have much in tax witholdings because who was thinking about this last year, it can be a hefty bill for someone already on a very tight budget.
I haven’t seen an actual case of this as ithe very low income families I worked with did not have kids on full rides of that sort for college. Bad enough that there were recent college grads who ended up owing a lot more state tax because of that state’s formula that didn’t take that $12k deduction into account if kid was still a dependent that year.