Unique scholarship question

As I ponder your question, I just wanted to say thanks.

What, if any tax implications come with such a scholarship? (E.G., is it taxable?)

Goosegg posted:

What, if any tax implications come with such a scholarship? (E.G., is it taxable?)

Thank you.  No, it is not taxable.

I assume this is a use it or lose it and reimbursement is limited to the actual amount paid out (so no opportunity to convert the Bill money to cash).

You have a kid going through now, but for other parents just dipping the toe into the college process, Ill digress a bit.

Private colleges cost upwards to 70k per year when books and travel is added; out of state tuition for state flagships can be 50k. State flagships can run 30k, etc. At times it seems the purpose of college is to make parents work a heck of a lot longer than they would like.

The trick is to see how much can be knocked off the sticker prices.

For D1, financial aid, athletic scholarships and academic scholarships are the typical vehicle. For D3, no athletic scholarships are available. All colleges allow outside scholarships to be used (subject to those scholarships' individual restrictions). Some subsets of each division may not offer all forms of aid (e.g., only FA is available in the Ivies, albeit the best FA of all schools). Also, a kid could receive an academic scholarship (with its restrictions) from one school which seeks to entice him from matriculating at another school. 

All these types of aid may not be renewed - each according to its terms.

OP has in essence an "insurance policy" to be held - if needed - for grad school; or to be used before grad school if no other type of aid is available.

So, your kid from one perspective is a coaches dream; assuming he has the necessary baseball skills, he has independent financial means to attend. In the coach's mind this frees up any money which may be offered; this (theoretically, and in the coach's mind) means a better team can be constructed. (Maybe even at the same position your son will compete for, but that is life.)

We could develop theories about who benefits most from this, but IMO, you have plenty of time to think this through.

In our experience, money is talked about latter during the process. First, the coach decides his skills are wanted; then coach begins to scheme (plan) how to land the recuit at the least cost.

You have plenty of time before that. Moreover, one huge puzzle piece - how to pay for college - is a bit less complex for your family. To me, it seems he is on the right track: good grades and a professed desire to play ball. Perhaps you can begin to winnow possible colleges for him (lucky you probably still have the last kid's material). Keep on the skills and grades and we'll sort out when to tell anyone about the Bill over the next few years.

As your son begins to fill out applications, and coaches who are interested start asking questions, it will come out, don't volunteer that info until necessary.

As GOOSEGG has posted, he has plenty of time.

JMO

You will have a lot of financial flexibility.  If your son's dream school becomes and Ivy League, Patriot or other school that does not provide athletic scholarships you will not have to worry much about the cost.  There is also the Yellow Ribbon program which may fill some gaps on private schools.  From my experience coaches did not ask about GI Bill benefits or academic scholarships.  They made their offers and did not ask.  It isn't a bad thing for the coaches to have some scholarship dollars invested, it takes the player off the invited walk on list. 

My son has leveraged the local community college in the Summer to take general education classes which provides more academic flexibility during baseball season.  The classes are also relatively inexpensive in the scheme of things.  If your son can complete some AP courses it also provides flexibility.  Being able to take 12 credit hours during the baseball season really makes the season more manageable, especially the first year.  As the student gets further in the Major there is less flexibility since some classes are full or not available. 

You have set your family up for great financial flexibility.  I also realize how much you probably have personally paid for the flexibility you have earned in missing Birthdays, Holidays, and other once in a lifetime personal events. 

Thanks for serving, hopefully you get to see your son play for the next few years.

Wow, a 2022 throwing in the low 80's and a LHP?  That's fantastic!

I wouldn't disclose until the absolute last minute. let them offer whatever is available and then use the GI bill as a personal benefit to cover the extra...if you don't use it all grad school still counts!! I am not sure why at any point you would have any real obligation to disclose it to anyone?

Thank you for your service to our country!

old_school posted:

I wouldn't disclose until the absolute last minute. let them offer whatever is available and then use the GI bill as a personal benefit to cover the extra...if you don't use it all grad school still counts!! I am not sure why at any point you would have any real obligation to disclose it to anyone?

Thank you for your service to our country!

I agree.

I think of it like this, you wouldn't disclose to college coaches that you inherited a million dollars and could pay for the kids college yourself, right?  Why disclose up front that his college is paid for?  See what they offer, then if he wants to go there, talk with financial aid office about what forms to fill out.  Thank you for your service.

What are your son's plans for life?  I would not tell them until I had to because he may need/want it for graduate school.   If I understand it, he can use it for both just has to be used by 26.  I would only use what i needed for bachelors and save the rest if he wants to get graduate degree.  I truly believe that in college and the pros, the amount spent on a kid is the amount invested in them which goes a long way when considering what to do with a kid.

You may want to check the details regarding the GI Bill (Post 9/11--the only one with a transfer benefit).  Sounds like you have completed the transfer (hence the additional 4 years) so it sounds like your son is good to go.  The total number of months for the benefit is 36--essentially 3 years of school.  Still can't beat it though!

An interesting point was made earlier about taxation.  Know that an athletic scholarship will have PORTIONS of it that are taxable, specifically, those benefits that are applied to anything outside of tuition.

Use that information to your advantage.  For example, just assume your son is offered a 50% total cost of attendance scholarship.  If the school utilizes that in a way that it applies all or most of the money toward his dorm and meal plan, then leaves you to pay the tuition (using personal or your GI Bill money), then you're on the hook to claim all of that athletic scholarship and having to pay taxes on it.  If you flip that where his athletic scholarship is applied toward his tuition first, and the balance to non-scholarship (assuming there is some balance), then you'll only need to claim and pay taxes on that portion paid outside of tuition.  Then you can your your tax free GI Bill to pay those items outside of tuition.

Do what you can to educate yourself on the taxation of this and what changes between now and then.  Could be the difference of you having to come out of pocket to IRS each year.

Nuke83 posted:

An interesting point was made earlier about taxation.  Know that an athletic scholarship will have PORTIONS of it that are taxable, specifically, those benefits that are applied to anything outside of tuition.

Use that information to your advantage.  For example, just assume your son is offered a 50% total cost of attendance scholarship.  If the school utilizes that in a way that it applies all or most of the money toward his dorm and meal plan, then leaves you to pay the tuition (using personal or your GI Bill money), then you're on the hook to claim all of that athletic scholarship and having to pay taxes on it.  If you flip that where his athletic scholarship is applied toward his tuition first, and the balance to non-scholarship (assuming there is some balance), then you'll only need to claim and pay taxes on that portion paid outside of tuition.  Then you can your your tax free GI Bill to pay those items outside of tuition.

Do what you can to educate yourself on the taxation of this and what changes between now and then.  Could be the difference of you having to come out of pocket to IRS each year.

Wow, thanks for posting this.  I never in a million years would have thought of this angle but this could save thousands!

Nuke83 posted:

An interesting point was made earlier about taxation.  Know that an athletic scholarship will have PORTIONS of it that are taxable, specifically, those benefits that are applied to anything outside of tuition.

 

Since all football and basketball scholarships are 100% (with $10-15K being R&B), do most of those kids end up with a tax bill at the end of the year, or does it not really amount to anything if they don't have other income?

I don't speak from experience as my 2019 is going through the process.  Financially, we are in a position to cover the equivalent of in-state tuition (25% off of that doesn't make or break anything, for example).  I have a friend I work with (younger than me) that played at my kid's dream school (I will be chastised for using that phrase).  He helped me shoot some video with the kid and I asked him if he thought letting the coach know at said dream school that we don't need financial aid would increase chances of an opportunity to play there (contact has been limited and just via email at this point).  He said he felt resoundingly that the coaches would like that information due to the flexibility it offers them.

So, we plan to share that information earlier rather than later in the hopes that the door opens earlier or wider than it would without.

For what it's worth, my son has a short list of schools that he'd play at.  He's prepared to stop playing if nothing opens up.  Not all feel the same.

MidAtlanticDad posted:

Nuke83 posted:

An interesting point was made earlier about taxation.  Know that an athletic scholarship will have PORTIONS of it that are taxable, specifically, those benefits that are applied to anything outside of tuition.

 

Since all football and basketball scholarships are 100% (with $10-15K being R&B), do most of those kids end up with a tax bill at the end of the year, or does it not really amount to anything if they don't have other income?

Adidas likely picks up the tax bill . . . .