« on: January 31, 2007, 12:12:35 PM »
Nah, I don't think it would appear that they were giving you the money. They're just zeroing out tuition.You get taxed on what you make. So if you make 135k you actually have 100k to spend after taxes for instance. So if you had a 135k loan, you would need to make like 200k that has been taxed to have enough dollars to pay the 135k. There is also things like interest that would grow on a loan and maybe the opportunity cost of not being able to invest that money. There are a bunch of ways to look at it. A scholarship is worth more than its face value though. Does that make sense?
Not really, but probably because I'm missing something. If you get a full ride, would they GIVE YOU the $$$ or would they just not bill you for tuition? I'd think the latter...does it make a difference?
You can look at it either way, but I don't think the tax thing is a huge deal. Yes, it's true that you don't have to pay tax on the scholarship from GW (aside from income tax on the value of housing at the Aston, as someone pointed out), but it's not like you get to keep, pre-tax, what you would've paid to GW.
(For clarity, I'm making up the below numbers).
Let's say you make $60,000 a year salary and keep $45,000 after taxes. You want to go to a school that costs $30,000. If you have to pay tuition, you'll have $15,000 left over. If you get a full scholarship, you'll have $45,000 left over. They have in fact only saved you $30,000 -- you still have to pay tax on the money that would've gone to GW.
The only way I can think the "tax" question would be relevant is if you planned to squirrel away that post-tax $30,000 in various pre-tax or tax-deferred programs (in which case it would be worth $40,000 pre-tax), but it'd be tricky to shield all that money from taxes, even if you contributed the maximum to a 403b or 401k, had a health savings account, had pre-tax transit benefits, etc, etc. Anyway, I ramble. It just seems kind of weird to think about the amount of money a gift would be pre-tax.
I think the point is that if you had to pay the money yourself, you would probably have to take out loans. In order to pay back the loans with interest you'd end up paying a lot more than the value of the tuition cost if it had been gifted to you in the first place. Meaning a full ride saves you the cost of tuition plus the cost of interest on that tuition so it counts for more than the money stated in your offer letter.