Daily Aid 85: Taxing online degrees, financial aid scams

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Daily Aid 85: Taxing online degrees, financial aid scams

23 February 2009 1 views No Comment

Daily Aid 85: Taxing online degrees, financial aid scams

Student Financial Aid News

“People claiming to represent the U.S. Education Department are calling students to offer scholarships and grants,” the Star-Telegram reports. “The callers ask for a bank or credit-card number, saying the information will be used for a $249 processing fee. But it’s a fake. … ‘Do not give your financial information to individuals making these claims,’ the department warns. If you receive a call, report it to 1-800-MIS-USED, or send an e-mail to oig.hotline@ed.gov. The government Web site www.ftc.gov/scholarshipscams shares telltale signs of fraud.”

Commentary

No surprise here. Whenever times get tough, scammers come out in droves, eager to take advantage of desperation. Thanks to NASFAA and the Star Telegram for timely reporting.

File under “desperate for tax revenue of any kind” from Inside Higher Ed:

In a move that could prove a harbinger of things to come, a New York agency now contends that a distance education course is subject to state sales tax.

While it does not carry the weight of law, the New York State Department of Taxation and Finance’s January 29 opinion has potentially far-reaching implications, given the state’s role as a trend setter for other states. The department asserts that an e-course offered by SkillSoft Corporation, a New Hampshire-based company, should be subject to sales tax as “software” purchased by the student. In so ruling, the department has justified an unprecedented tax on educational services, according to a tax consultant familiar with the case.

Commentary

Expect to see more desperate measures of any and every kind from governments as they realize their tax receipts and revenues are plummeting faster than a brick balloon. If you’re considering taking an online degree, enroll now before the tax man wants his cut.

Here’s where it will get ugly. Skillsoft is based in New Hampshire. New York wants to tax it. What if the other 49 states, 46 of which are facing severe budget problems, want their cut, too? Will an online education program have to pay 50 different state taxes? Perhaps a burgeoning market in overseas online programs is about to erupt.

What’s especially of note is how short-sighted the politicians are being (again) in education. Every time you stick a tax in front of an activity, you automatically add a disincentive for that activity. That’s simple economics – a tax makes the price go higher, and rising prices reduces demand. If education, as the same politicians like to say on the stump, is the best investment for the future we can make, then putting an economic disincentive in front of education – especially online degrees – makes no sense.

It would make far more sense to add or increase a tax on something you want to disincentivize, like gambling, alcohol, tobacco or carbon emissions.

Scholarship Update

The Texas Retired Teachers Foundation (TRTF) will award ten $500 scholarships for the 2009-2010 school year to ten students who are relatives of a member of the Texas Retired Teachers Association (TRTA), and who are pursuing an undergraduate or masters degree in Education at a Texas university or college.

Details at our free college scholarship search site.

Mail Bag

Gwen writes in:

My daughter Kelsi will begin her freshman year at college this fall. Kelsi has a child of her own and they both live with us, her parents. Kelsi receives child support for her daughter. Can she file as an independent student if she provides over 1/2 of the support for her daughter by paying household bills (such as gas, electric, groceries) with the child support she receives, but we (her parents) provide 100% of Kelsi’s support?

Yes, she can file as an independent student. Being a parent who provides more than half the support for a child qualifies you as an independent student on the FAFSA.

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