<p>Thanks, everyone! This has been really informative. I know she’s going to have to make probably 2 more flights this summer with the group she is part of at Yale. I’ll advise them to take the GO Shuttle, and I’ll definitely use them the next time she travels home to see us.</p>
<p>My son starts in the fall, so this is new to us. As a freshman, he can apply outside merit scholarships to his Student Income and Term-Time Job amounts (total $4475). He can also an apply and additional $2500 to a one-time purchase of computer equipment. If the check is written to Yale, then it seems that it will be applied to our bill, reducing tuition, not some sort of imaginary self-help bill. Does this mean that the scholarship is not-taxable? If the scholarship is in my son’s name, then he puts it into his own bank account and uses it as he sees fit, and it’s taxable? Then there is the one-time computer equipment purchase. How does that work if the scholarship is sitting in my son’s account? Is this taxable since it’s not applied to tuition? And what if he gets more than the self-help and computer allowance of $6975? What happens to that money? Does it decrease the Yale “Scholarship” dollar for dollar? That seems like a pre-tax dollar for a after-tax dollar situation. I was told that the student could try to get some organizations to defer “excess” scholarships to following years. Is there such a thing as getting too many outside scholarships? The last thing my son wants to do is to accept money (that he can’t use) which could be used by another local student for their college costs. He is now over that limit and is expecting more scholarships which might not be movable to future years.</p>
<p>PianoParent, you may want to ask this question on the Financial Aid forum–the folks there are expert on this kind of stuff.</p>
<p>I think you might want to talk to the Yale financial aid people. In my experience, they do not give you (or your son) any money to put into a bank account. What they do is charge you the full amount for the semester ($30,000 or whatever it is these days), and then subtract off the amount of the Yale scholarship.</p>
<p>If you have other scholarships (say a $2500 national merit scholarship), then you tell them about it. The national merit people will send the money to Yale, not you, and Yale will then subtract that from the amount that you owe.</p>
<p>They will show all of this to you on the bill, and at the end of the bill will be the amount left over (not covered by aid), which is what you pay. Where that money comes from does not concern Yale. So your son could get a job, or a gift from a family member, or you could pay it directly. Just because they say they expect him to get a term time job does not mean that he has to, or that he is guaranteed one.</p>
<p>As you have seen, there is a limit to the amount of outside scholarship aid that Yale will accept each year, and eventually if your son gets more aid than that then they simply reduce the amount of the Yale scholarship. They have basically determined how much scholarship aid you can have total (from all sources) each year, and they won’t let you go over that. That is why you may want to defer some aid until sophomore year, if you can.</p>
<p>Anyway, you should call the Yale financial aid people and have them explain it all you you - how it all works. They are very nice people, and you will not be the first parent who has questions about what is going on.</p>
<p>There are a number of details that I haven’t had answered with several emails to financial aid. Perhaps I need to ask more specific questions, like what, exactly, do they do with the information on their scholarship form? What happens to the scholarships made out to Yale and the scholarships made out to our son? If excess scholarship money is in my son’s name, is that taxable to him, but Yale will reduce our grant by the pretax amount? In that case, it would cost us money to accept the scholarship. I guess I will just have to keep asking specific questions.</p>
<p>My advice would be to call and talk over the phone with someone at Yale financial aid. Emails work for many things, but an actual conversation can sometimes really be the ticket. I’ve called them twice, and both times I got people who were really friendly and helpful. </p>
<p>You might also want to look at IRS Publication 790, which deals with taxes and education - it might also answer some of your questions about how scholarships are taxed (the financial aid people may not know how to answer those questions).</p>
<p>Thank you. I’m learning more about the issue from IRS Pub 790. I was thinking that the scholarship money had to be paid directly (earmarked) to the college specifically for “qualified educational expenses”, like tuition. However, money is money and the IRS form only looks at the total scholarships received and the total qualified educational expenses. It doesn’t seem to care that the actual scholarship check (in his name) goes into my son’s bank account and used for whatever. However, the form does talk about “your qualified educational expenses” (e.g. tuition), and I assume that “your” means my son and that all of his tuition belongs to him even if the Yale refers to it as belonging (in part) to the parent contribution and we pay the bills. In which case, all of his scholarships should be tax free because it will never reach the tuition amount. </p>
<p>There is still the issue of how any excess scholarships are handled by Yale. However, since the excess will still be deductible, then if they reduce our grant dollar for dollar, it will be a wash. Then again, paying tuition with our after-tax dollar is much more expensive than paying tuition with his after-tax dollar. I’m getting more confused again.</p>
<p>Then there is the issue of whether computer equipment is a qualified expense. It seems that if Yale “allows” up to $2500 for computer equipment, that is really an IRS rule, or, it could be that Yale allows scholarship money to be used for computers, but you have to pay for it with after-tax dollars.</p>
<p>This has to be written up in detail somewhere, but I can’t find it, or is this just something that all newbie college parents go through?</p>
<p>Any scholarships written to your son are his to use as he pleases. They are taxable, but will not reduce the Yale scholarship if you don’t report them to Yale. </p>
<p>Scholarships written to Yale will be credited to his student account up to the maximum allowance of $4475. If he owes Yale more than that, $4475 will be subtracted from what he owes. If he owes less, any money left in his student account is his - it will either role over to the next semester, or it can be transferred to a bank account by direct deposit. </p>
<p>I would recommend against accepting more than $4475 in non-delayable scholarship money written to Yale. It will reduce his Yale scholarship dollar for dollar, so there isn’t really any point. It’s possible that it could even cost you more, because (if he files as a dependent) tuition money in his name will likely be taxed at a higher rate than the Yale scholarship in your name, most of which isn’t taxed (though this depends on individual circumstances). </p>
<p>FYI, only the tuition/books part of the Yale scholarship / Financial aid is tax exempt. Apparently, you have to pay taxes on the ( ~$16,000 if you’re on full financial aid) that you receive for room and board. </p>
<p>OK, now I’m even more confused after reading this and talking with a financial aid officer this afternoon for 20 minutes and reading IRS Pub. 970.</p>
<p>"… but will not reduce the Yale scholarship if you don’t report them to Yale."</p>
<p>Isn’t this, well, illegal?</p>
<p>I don’t think it’s illegal unless Yale has it written into their terms for matriculation/financial aid which I don’t remember seeing anywhere. Most scholarships pay directly to the school so those should be reported to Yale - there is a form for that each year. Scholarships that pay directly to the student are usually small and one time only. There are many expenses associated with attending college beyond tuition, room and board, books/supplies. If a student uses scholarship money to offset the cost of a car or other travel expenses, a new or first suit or dress for job/internship interviews or social functions (Note: Yale students really need and use formal clothing!), or the occasional meal out with newly made friends I don’t see any ethical problem with not reporting such funds. The Yale financial officer may see it this way as well.</p>
<p>Yale does require the student to reveal their cash on hand at the time of applying for aid. The school then takes a portion of that savings (25% I believe) and reduces aid by that amount each year.
A kid with $240,000 in savings or in a trust fund will not get aid and I assume there are a good number of those kids at Yale.</p>
<p>I think what clandarkfire is saying is that there are basically two types of outside “scholarships:” </p>
<p>There are the kind like the National Merit scholarship, or a scholarship from a big corporation or a contest, which does not give the money directly to the student. They send the money to the school to pay for some of the tuition on the student’s behalf. This is the type that, if you get too much, Yale will reduce the amount of the Yale Scholarship amount. (as far ask I can tell, they don’t save the extra amount of scholarship money and then transfer it to the student’s bank account)</p>
<p>The other type of “scholarship” is when a group gives the money directly to the student - a local business may do this, for instance, writing a check directly to the student that the student will then deposit in their bank account. These are the type that clandarkfire is saying that you don’t have to report to Yale. I don’t see anything illegal about that. These should be looked at more as “gifts” and not “scholarships” and, as such, can be used by the student for whatever the student needs - books, supplies, etc.</p>
<p>If you are concerned about taxes, you might consider consulting a tax specialist. People here on this board and the Yale financial aid people can only talk in generalities. You might want to talk to someone who can see how much you make, how much your son makes, what scholarships your son has, and how it all fits together with the tax code. It sounds like that’s the sort of advice that you really need at this point.</p>
<p>The Yale scholarship form wants students to list all scholarships. You have to check off whether the scholarship will be paid to the college or to the student. I was told by a financial aid officer that if he goes over the limit for scholarships, he can ask the local organization to pay him in a following year, if possible. Am I being told here that all scholarships made out in my son’s name don’t need to be listed on this form? These scholarships add up to many thousands of dollars, one is renewable, and he expecting more. This is on top of a large, four year scholarship that will be made out to Yale. He has the potential of getting more scholarships than he can use over four years ($6975 + 3 * $6400). I don’t see any fuzzy area about “gifts” versus “scholarships”.</p>
<p>I think, since your situation is complicated (lots of scholarships, with money going to your son and the school), you should probably contact a professional for help - a lawyer or accountant who can talk to the Yale people and know the tax code and can figure out for you what you need to do. As you said, it may be prudent for you to decline some scholarships to reduce your (or your son’s) tax amount. I think you have really gone beyond the type of help that people here can really offer.</p>
<p>I can relate, as we faced much the same issue with both my sons. However, it appeared to us that the most truthful thing to do was to report all scholarships to Yale. Yes, it reduced the Yale financial need scholarship–there is an obligation to only provide unmet need by Yale, and to be fair, if one can bring in outside scholarship money to cover that, Yale really isn’t obligated to duplicate it and put money in your pocket. You can look at it as ‘losing’ a Yale scholarship, or you can look at it as freeing up Yale scholarship money so that it can go to others not able to bring in outside money. Either way you have a lot of financial assistance to attend Yale, which is a good thing. If you can defer monies to other years, great–try to balance it out over the four years if you can.</p>
<p>Thanks Clarimom. He may turn down some scholarships because he would rather see other local students get the money and he would not have to (potentially) pay tax on the money, since he is still going to work.</p>
<p>Late to the party about transportation to New Haven, but on United Airlines you can book through to New Haven Union Station. This gets you your plane ticket to Newark and your Amtrak ticket to New Haven. Booking to New Haven Union Station can be less expensive than the plane ticket to Newark alone and is almost always less than purchasing the plane and train tickets separately. ZVE is the codeshare name for New Haven when you make your reservations.</p>
<p>My D has a time clock on her phone that is counting down the days until she goes to Yale - as in 68 days, 12 hours, 19 minutes!! Though she is currently at beach week (she graduated on Sunday, June 8), she is getting e-mails from Yale and she is so excited. A lot of her friends going to other schools already have roommate assignments, so she is anxiously awaiting that. She will be assigned to Jonathan Edwards which means she will be in Farnam Hall on Old Campus freshman year. I am truly excited, more so because she is following in my footsteps (Class of 82). Yale is really an amazing place and I hope to meet a lot of you during move in weekend. You and your child could not have made a better choice. I am looking forward to experiencing it from a parent’s perspective.</p>
<p>@Tperry1982 </p>
<p>DD will be attending the FSY summer program which starts July 2nd. It will last 5 weeks. She isn’t crazy about having no summer but realizes that the summer program will be of great benefit to her. </p>
<p>
Congratulations to her for being assigned to the best residential college. (I was JE '80, and my wife was JE '82, so I’m sure we knew you.)</p>
<p>For the rest of you, don’t worry–your kid will also be convinced in short order that he or she is in the best residential college.</p>