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If an AG member has both exempt and non-exempt income (see Sections 2860.05.00) then: • allowable educational expenses are deducted from exempt income first. • All remaining allowable expenses are then deducted from the non-exempt income. • If any non-exempt income remains, it is prorated over the number of months it was intended to cover and counted as unearned income.

Note: The second step only applies to non-exempt educational income received directly by the student. If the entire amount is received and retained by the school, it is completely excluded from the budgeting process. If the school receives the income directly and refunds any unused portion to the student, only the refunded amount is budgeted as unearned income (after allowable additional educational expenses are deducted).

EXAMPLE:

Mr. Smith is a graduate student. His verified educational income and expenses are listed below:

Financial Aid: Educational Expenses: $3000 Perkins Loan (exempt) $4000 tuition, fees $3500 Kiwanis Scholarship (non-exempt) $500 books, supplies

$100 transportation

=$4600 (total)

Step One: Subtract exempt educational income from the expenses: $4600 -$3000 =$1600 (unmet educational expenses)

Step Two:

Establish what portion, if any, of the non-exempt scholarship money is accessible to the student. It has been verified that the scholarship funds are sent directly to the school. The financial aid office verifies that a refund check for $2500 will be sent to Mr. Smith. $1000 of the total scholarship money is excluded from consideration since it was retained by the school and is not available to the recipient/student. This leaves $2500 available non-exempt income.

Step Three:

Subtract the unmet expenses in Step One ($1600) from the remaining non-exempt income: $2500 (available non-exempt educational income) -$1600 (unmet educational expenses) =$900 countable educational income