FAFSA does include housing.
Forty-seven percent of all students received federal financial with an average award of $9,100 in 2008 by filing the Free Application for Federal Student Aid (FAFSA), according to the U.S. Department of Education. The expected family contribution (EFC), how much the student or his family can afford, is calculated by including any pertinent college expense, such as tuition, books and housing. Housing, however, has a small impact on EFC.
Identification
The FAFSA includes housing and subsistence expenses when calculating the cost to attend school as of 2010, according to the FAFSA website. Housing options include living on campus in a dorm room, off campus in private housing or at home with a parent or legal guardian.
Impact
Housing can have a dramatic impact on a student's expected college costs. Room and board at a private school can exceed $8,500 a year. If you plan to live with a parent during the school year, you will likely see far less financial aid than if you live off campus in private housing or on campus.
How Colleges Calculate Living Expenses
If you choose to live on campus, the college will use the cost of the dorm or university-run apartment and any meal plan when calculating your expected costs for the year and financial aid need. When you choose to live off campus, the college will use one of either the average rent on a local survey, cost-of-living adjustment from your previous year figure or estimated costs from the College Board's Living Expense Budget. The college may allow a student to claim higher housing costs for special cases, such as retrofitting a dwelling to accommodate a disability. Costs deemed a luxury, such as cable TV, would not qualify unless required by the student's degree plan.
Warning
Scholarships and grants are taxable income if they pay for room, board and/or transportation, according to the Internal Revenue Service. The exception to this is when the college or university requires students to live on campus. You can offset potential tax obligations by claiming an education tax credit if you qualify. You are allowed only one per year. Some of these credits may be refundable, meaning the IRS owes you money, if you have no other tax due.
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