Scholarships and Other Educational Assistance

Scholarships Excluded from Income Under Section 117

Federal, state, and University scholarship and grant programs are excluded from income, and therefore reduce the amount of qualified tuition and fees for the American Opportunity Credit Scholarship and Lifetime Learning tax credits.  Vocational rehabilitation tuition payments also reduce qualified tuition and fees.

Federal College Work Study

The tuition portion of this program is included in Section 117.  The income the student has earned does NOT reduce the amount of qualified tuition and related expenses.

Work Experience

Campus jobs not associated with financial aid do not reduce the amount of qualified tuition and related expenses.

Student Loans

Student loans do not reduce the amount of qualified tuition and expenses unless the loans are in repayment.  See IRS Publication 970, Chapter 4, Student Loan Interest Deduction for more information.

Veterans/Armed Forces Educational Assistance

The following types of Veteran's benefits reduce the amount of qualified tuition and expenses:

  • Training and Rehabilitation for Veterans with Disabilities (Chapter 31)
  • Veteran's Educational Assistance Program (VEAP) (Chapter 32)
  • Vietnam Era G.I. Bill (Chapter 34)
  • Survivor's and Dependents Educational Assistance (Chapter 35)