Welcome to "Curt's Chalk Talk." The late game college funding series. I'm Curt Sheldon with C.L. Sheldon & Company, and today I'd like to talk to you about the GI Bill.
Now, the good thing about the GI Bill is they'll pay for pretty much 100% qualified tuition and bills. That's a good thing, but what we need to be concerned about is what happens if there are scholarships. And it has to do with your taxes.
Scholarships are tax free, if they're used for qualified tuition and fees. But if GI Bill already pays for full qualified tuition and fees for in state college, and your child gets a scholarship, that scholarship becomes taxable income. Now whether your child will actually have to pay taxes on, it depends on how big the scholarship is and how good the summer job is, but you'll want to think about this.
And if you have more than one child, you want to be very careful about how you split it up. Just don't go 50-50 if you have two kids, because you'll love them both the same. If one of them like Junior is not going to get any scholarships, then you might want to put 100 percent on the GI Bill towards him because his sister's pretty smart and she's going to get some scholarships. In any event you're going to want to think it through and make sure you don't turn tax free income into taxable income.
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