Community Foundation Leaders Push to Change Scholarship Tax Policy That Penalizes Low-Income Students

Nearly 150 community foundation leaders are asking Congress to exempt scholarships and grant aid used by students to pay for non-tuition expenses like room and board from being taxed.

In a joint letter to the House Ways and Means and Senate Finance committees, the community foundation leaders argue that the current policy — which categorizes payments for these expenses as a form of unearned income — places an undue burden on low- and middle-income students.

Prominent education groups — including the American Council on Education, the American Association of Community Colleges, and Scholarship America — also support the change.

The community foundation effort was organized by the Community Foundation Public Foundation Initiative.