4 Perks of Accepting Grant Aid

Believe it or not, there are a few additional ways grants can benefit you aside from the obvious one — interest-free money that doesn’t have to be repaid. If you have education expenses left over after your employer benefit, grants can be a great way to cover some of those costs. Even if your employer if paying your full bill, if your employer puts more than $5250 toward your education every year, there can be a few unexpected drawbacks.

In most states and for federal tax purposes, after your employer hits that $5250 mark, the government views any additional money they spend on your education as part of your income, meaning your reported income level rises. This isn’t necessarily a bad thing, but depending on your situation, it could impact a few areas of your life.

Note: The states of Alabama, New Jersey, Pennsylvania, and Puerto Rico will tax your benefit even if your employer is spending less than $5250.

Perk 1: Taxes

If you receive any additional reported income because of your education benefit, you could be bumped from one tax bracket into another. This means you could have to pay more in taxes, even if you aren’t making any more money than you were before.

Because grant money comes from the government, it doesn’t count as income. If you accept a grant, you can use it to cover part of your tuition and reduce the amount of money that your employer may have to pay, so your reported income does not rise.

Perk 2: Income-Based Programs

If you receive government benefits based on your income (such as food stamps or housing assistance), a boost in your reported income could impact your eligibility for those programs. Federal grant money will not increase your reported income.

Keep in mind that grants are generally reserved for those with the most financial need, so if you are a participant in one of these income-based programs, there’s a good chance that you’ll receive grant aid after filling out the FAFSA.

Perk 3: Reduce Tuition Cost

If your employer isn’t covering the whole bill, accepting grant money will reduce the amount you have to pay! Plus, since you don’t have to pay back grants, there’s really no reason not to accept.

Perk 4: Extra Protection

Life can be unpredictable, which is why it’s always good to be prepared. Finalizing your FAFSA and accepting grant aid gives you a nice safety net in case anything unexpected happens.

For example, grant aid can be used to cover any materials that your employer won’t pay for such as lab supplies or textbooks. In the situation that your employment was terminated, you could also use grant aid to continue attending classes.

Have questions? Make sure to check out our Grants vs Loans post, along with our Financial Aid FAQ!

 

Guild Education, Inc. makes no representations or warranties about your eligibility for financial aid. Universities are solely responsible for any and all financial aid decisions. Employers are solely responsible for decisions regarding tuition benefits.

Written by Guild Education

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