The Adobe Flash Player is required to view this multimedia interactive. Get it here.

Bill aims to eliminate income tax on college grant

Commissioner questions county payments
3/16/10
BAE Systems to lay off an additional 200 workers
3/15/10
AK sues ex-employees over theft of trade secrets
3/15/10
SunCoke air permit faces 3 appeals
3/15/10
Committee would review levy proposals
3/15/10
> More headlines

By Meagan Engle, Staff Writer Updated 7:00 PM Friday, January 22, 2010

OXFORD — A local state representative submitted a bill this week that would put a stop to low-income college students paying state income tax on some grants.

State Rep. Timothy Derickson, R-Hanover Twp., is proposing Ohio broaden its tax-exempt status on two needs-based grants: the federal Pell Grant and the Ohio College Opportunity Grant.

“In the end what this does is it really makes going to college and obtaining a degree a little more affordable for those who can least afford it,” Derickson said. “It’s just a small step in that direction, but it is a step.”

The issue was first brought to Derickson’s attention by local mom Marlene Troike, whose daughter Lauren Moss, a 2007 graduate of Talawanda High School, was paying about $1,000 on federal and state income taxes on a scholarship to attend Ball State University in Indiana.

Derickson said as he did research, he was surprised to learn students pay income tax on a Pell Grant if it is used for room and board or meal plans. Students do not pay income tax if the money is used for tuition or books, but they have no say in how the money is used, he said.

Derickson spent about a year researching, meeting with state officials and, more recently, gathering support from both sides of the political aisle.

Rep. Dale Mallory, D-Cincinnati, signed on as a primary sponsor. Fourteen Republicans and 13 Democrats also signed as co-sponsors of the bill, which Derickson called a high showing of bipartisan support.

The change is also supported by Miami University, where 1,969 students at the Oxford campus receive a Pell Grant, according to Chuck Knepfle, director of student financial assistance.

Knepfle said Miami could recruit more students receiving Pell Grants to live on campus without worrying about being taxed.

“It’s just another small that we’d be more affordable to come and live at college,” he said.

Derickson said the bill will not have a large impact on the state’s revenue and does not change what the grants can be used for.

Contact this reporter at (513) 523-4139 or mengle@coxohio.com.

Share this article

ADD COMMENT

Comments feed

About 2 years after I graduated I had a really bad week. One of my friends moved to the East coast, my car was stolen and I received a bill from the IRS for back taxes on my grants from college. I didn't know they were taxable and hadn't declared them. All money I had went to paying for school including loans. With interest and penalties, it was more than the amount of the grants themselves which were spent for tuition. I paid for my room and board by working.
I paid it off with a payment plan.

Jeffrey John Hodapp
1:58 PM, 1/23/2010

REPORT ABUSE

Congress increased the amount of <a href="http://www.collegeloanconsultant.co...">Pell grant</a> money for students in the stimulus bill this year, but this tax effectively negates their efforts. It should be eliminated.

collegeloanconsultant
1:22 PM, 1/23/2010

REPORT ABUSE

We welcome your comments. Please remember this is a public forum and behave appropriately. Your comments must conform to our visitor's agreement.