I absolutely agree with the fact that getting a full scholarship, room and board award is much better than not. The issue here is that the way this new tax rate does affect the lower income families was an unexpected outcome. They didn’t think it out. It doesn’t affect that many people.
The old kiddie tax on taxable scholarships was always a pain that hit up kids from low income families the worse because an unanticipated tax bill or any bill can cause a lot of stress when there is not the money to pay it.
That Stanford football player would owe over $4k on his scholarship. If he comes from a low income family as a number of full ride football players do, and his parents tax bracket was at the lowest level, he’d owe $1550. That’s a big difference and a problem as to where he’s going to get that money.
As part of the package, schools often help their full ride athletes with the pending tax bill, and taxes owed on the Taxable scholarships are included in the discretionary income part of the award. Or, they have part of that scholarship paid as a job, and they do work, usually in the athletic center and events setting where they get paid, and get withholdings. My one athlete son always assisted with track and other events that were not his sport and was paid for the work done. That can alleviate the tax bill as that is taxed as earned income, and can be s vehicle for withholdings
A problem is that the Congress, tax advisors, schools, let alone the athletic departments and the scholarship recipients and families, we’re not aware of hiwbthis changes the tax bill for students who are low income.
The whole treatment of college students is far more complex than it should be anyways. Many of the families are not doing it properly. IRS has attempted to crack down on this by having Due Diligence rules with penalties for verified tax preparer when calculating AOTC, but it’s still often done incorrectly.