AROTC Scholarship Taxes Explaination?

[senior2k17]

Hello everyone, i know that if I choose room and board, it'll be taxed. I'm not so sure on how this is a bad thing compare to tuition that is not taxed. Does this affects my FAFSA and so on?

 

[Animal 44]

Hello everyone, i know that if I choose room and board, it'll be taxed. I'm not so sure on how this is a bad thing compare to tuition that is not taxed. Does this affects my FAFSA and so on?

The reason that it is a bad thing is that whatever your tax rate is is the amount at the end of the year you will owe the government on the award. Which means if the award is worth $10k and you are taxed at 20% the $10k only has an $8k value. Whereas if the tuition is $10k and you use the value toward tuition you get the full value of the award.