Will scholarship money impact my daughter's FAFSA SAI next year?

congrats on the scholarship! pretty sure it doesnt count as income on fafsa if it goes straight to the school. my son got one last yr and we didnt have to report it anywhere on this yrs application

This is a great question that confuses many families. For FAFSA purposes, scholarships that go directly toward qualifying educational expenses (tuition, fees, books) are not counted as income for the student. However, there are two important caveats: 1. If any portion of the scholarship exceeds the cost of qualified educational expenses and is used for room, board, or given directly to your daughter, that portion would be considered untaxed income on the next FAFSA. 2. Some schools will practice what's called "scholarship displacement" where they may reduce their institutional aid when they see outside scholarships. This varies by school policy. Based on what you've described (merit scholarship applied directly to tuition), this should not impact your daughter's SAI calculation for next year's FAFSA.

Financial aid advisor here. Scholarships that go directly to qualified educational expenses are not counted as income on the FAFSA. They are reported in a different section called "Student's Additional Financial Information" as "scholarships reported to the IRS." However, this reporting doesn't increase the SAI. What people often confuse is: 1. FAFSA SAI calculation (federal formula) 2. Institution-specific aid policies (can vary wildly) Many schools will reduce their own institutional gift aid when a student receives outside scholarships - this process is called scholarship displacement. This is not the same as the scholarship affecting your FAFSA SAI. For merit scholarships awarded by the school itself, they are typically already factored into your financial aid package and don't affect future FAFSA calculations.

Correct! Since it's a merit scholarship from the university itself, it's already part of their financial aid package calculation. You don't need to report it separately on the FAFSA as an outside scholarship. The university already knows about it since they awarded it. The only time you'd need to report scholarships on the FAFSA is when they come from external sources (community organizations, private foundations, etc.) AND when any portion was included as taxable income on your daughter's tax return.

i had this exact same worry last year!! my son got a big scholarship from his grandparents foundation and i spent HOURS trying to figure out if it would hurt his aid. ended up calling federal student aid like 5 times but kept getting disconnected or waiting forever. finally my neighbor told me about claimyr.com which got me through to an actual fafsa person in like 10 mins! they confirmed that scholarships that go to educational expenses don't count as income for fafsa purposes. there's a video that shows how it works: https://youtu.be/TbC8dZQWYNQ - total lifesaver when you need an official answer!

I went thru this with my twins last year! Something else to keep in mind - if the scholarship is renewable for all 4 years, nothing changes. But if it's just a one-time freshman year scholarship, your daughter's financial aid package might look different next year even though her SAI doesn't change. The package might have more loans and less gift aid compared to freshman year when they were trying to recruit her with that scholarship. My kids' financial aid packages freshman year were WAY better than sophomore year, even with the same SAI. Just something to plan for financially...

Thank you all for the helpful responses! I feel much better knowing that her university merit scholarship won't negatively impact her FAFSA SAI for next year. I'll double-check with the financial aid office about whether the scholarship is renewable (the letter wasn't clear). And I'll be prepared for the possibility that her overall aid package might change for sophomore year even if her SAI stays the same. Really appreciate all your insights!