Looking from a textbook perspective, the primary purpose of a student being differentiated as a full-time student is to give him a legal tax status, which will play a significant role in finding the dependency exceptions.
But when it comes to determining what constitutes a full-time student, it ultimately depends on the school. There are different tax filing requirements required for both the full-time student and parents or guardians who are claiming that student is a dependent and paying any applicable educational costs.
What constitutes a full-time student will differ in each country. In Australia, a student is required to complete 20 hours of classes per week to be considered as a full-time student, whereas in Canada, you have to take up to 60 percent of the semester programs. So in this article, we will look from the US perspective. So what are we waiting for? Let us get started!
1. Significance of a Full-Time Student
Only undergraduates who have enrolled full-time in college are eligible for federal financial help. If a student receives a Federal Pell Grant, the grant amount will be prorated based on the student’s admission status, resulting in award amounts of 25% to 100% of the student’s eligibility.
Not to forget, even 12 credits per semester is considered full-time for the purpose of financial aid. With only 12 credits every semester, an undergraduate student cannot complete a Bachelor’s degree in four years. If the pace is five credits per semester, it will take at least five years to complete the prerequisites for graduation. You can get your bachelor’s or associate’s degree in as little as two years if you take 15 credits per semester.
Whether or whether you are a full-time student has a significant impact on various areas of your education, one of which is taxes. Some tax credits and deductions are only accessible to full-time students, while others are only available to part-time students. In this scenario, however, you won’t have to bother about legal jargon. The IRS has simplified in defining what constitutes a full-time student; if a student is ‘attending an education program for at least five months per calendar year,’ he is supposed to be a full-time student.
Another aspect to consider is that if you are a full-time student, you will face different tax consequences if your parent or guardian lists you as a dependent. You must be under the age of 24 and a full-time student to qualify.
If you alter your status, your student loan payments may start sooner than expected. Allowing yourself to be blindsided by reducing your course load only to realize that you must begin making student loan payments, which you assumed would be deferred until after graduation, is not a good idea.
2. Understanding a Full Time Student
Well, we looked onto some basics on the tax-paying requirements a full-time student has to go through. It is pertinent to note that being a full-time student will not help you be exempt from paying federal income taxes.
According to the IRS website, full-time students who are U.S. residents or U.S. citizens should consider the following information to determine whether they will be required to file an income tax.
- Your earned and unearned income
- Your dependency status, which determines whether you are considered self-sufficient or if someone else claims you as a dependent on their tax return.
- Filing status
Financial aid eligibility is entirely determined by the college or institution’s awarding organization. It is strongly advised that you contact the financial aid office of the institution to which you wish to apply. You also don’t have to be concerned if you don’t qualify for government financial aid. Not only does the state provide help and scholarships, but so do various organizations, local and state governments, academic institutions, employers, and other grantors.
However, if you want to borrow money from the federal government, you must be a part-time student. Part-time students, on the other hand, receive less federal student aid than full-time students. However, keep in mind that all students, both part-time and full-time, will be eligible for federal loans, albeit the amount will fluctuate significantly. It’s because student loan awards are frequently determined by the cost of attendance and the maximum loan amount available.
Being a full-time student has various advantages. The biggest benefit of being a full-time student is that you can finish your degree faster than a part-time student.
A four-year bachelor’s degree normally requires 120 credit hours to complete. You can finish your program in four years if you are able to complete 15 credit hours per semester. However, if you elect to take only 8-9 hours of credit every semester, the same degree will take you roughly 7 years to accomplish. Not only that, but you will be eligible for less financial help than a full-time student.
Many scholarships, grants, and even full-ride scholarships expect students to take a full-time program. Even for tuition reimbursement, employers may stipulate you to be on a full-time basis.
This tax benefit can help reduce taxes and lessen the blow from what is spent on tuition, dorms, food, drinks for college students. Hence we looked into what constitutes a full-time student.