Streamline the 1098-T reporting process for financial aid offices.

The 1098-T Tuition Statement is one of the most important forms a financial aid office prepares. It’s a federal tax document for the Internal Revenue Service that details a student’s tuition costs and other related expenses. 

Most importantly, this form allows students – or their parents if they are dependents – to potentially qualify for a tax credit or income adjustment on their tax returns. But the process of gathering information on each student and generating the 1098-T reports is a time-consuming and labor-intensive process. 

A student information system with an integrated billing and financial aid module helps financial aid teams keep student data organized, so everyone is working with the same information that’s pulled from a centralized location. But among the biggest benefits are that it minimizes errors and expedites the reporting process.  

This post will help your financial aid team understand the basics of a 1098-T form, including who is required to receive one, the best time for schools to begin the reporting process, what financial aid teams are responsible for producing, and how a student information system can make the process easier.

What is a 1098-T form and who receives one?

The 1098-T Tuition Statement reports the expenses paid for college tuition. Schools must produce a 1098-T form for every enrolled student who pays “qualified educational expenses” regardless of whether a student receives financial aid. Those expenses may qualify a student (or their parents/guardians) for an income adjustment or educational tax credit. 

According to federal rules, students accepting loans that are subsidized, guaranteed and financed by federal, state or local governments, or by a post-secondary school, require a 1098-T form.  

Students can’t fill out the 1098-T form on their own and submit it, it’s the responsibility of the school, which collects the data and process it into the form – often with the help of a third-party partner. 

From there, the form is sent electronically and by mail to students and filed with the IRS. A student is eligible to receive a 1098-T every year they are enrolled in school and paying tuition, except in the following circumstances:

  • When a student takes courses for no academic credit
  • Some international students
  • Students whose qualified tuition and related expenses are waived or covered entirely with scholarships
  • Students who have their qualified tuition and expenses covered by a third party, such as an employer or a government agency

What Counts as Qualified Educational Expenses

Students – and their parents or guardians – may disagree with the government on what qualifies as tuition-related expenses, but the regulations are strict.

Qualified Expenses
Not Qualified Expenses
Fees for room and board
Enrollment fees
Insurance, medical expenses or student health fees
Expenses for required course materials
Transportation costs
Personal, living and family-related expenses
Fees for sports, games or hobbies

When should a school start reporting for 1098-Ts?

The earlier financial aid teams can produce 1098-T reports, the better, especially if the school has a large student body that receives federal financial aid.  

While many schools operate on an academic calendar, the IRS’s tax year runs from January 1 to December 31. According to IRS rules, schools are required to send a 1098-T to students by January 31 and to submit it to the IRS by February 28. 

It may sound like reporting can be squeezed in during January, but don’t wait! Gathering the data and producing the reports takes time. Ideally, schools should produce their 1098-T reports as soon as possible to avoid the end-of-year or January crush.

To manage the process smoothly, it is a good idea to start producing your students’ 1098-Ts well in advance of the January deadline. If possible, start working on them over the summer, when many campuses are empty and staff can dedicate the time to entering data and creating the reports

What information goes on a 1098-T form?

A 1098-T form requires very specific and detailed information. A student information system doesn’t actually plug the information into the boxes or complete the form. Rather, schools use their student information systems to produce a report that a third-party vendor will use to populates the 1098-T form. 

Next, the third-party vendor sends an electronic copy and a hard copy to students and files another version with the IRS.  

If you’re involved in the financial aid process, it’s helpful to be familiar with the 1098-T form and what goes into each of the specific sections, or “boxes.” 

Specific Instructions for Form 1098-T*
Box 1
Enter the total amount of payments received for qualified tuition and related expenses from all sources during the calendar year.
Box 2
Not used at this time.
Box 3
Not used at this time.
Box 4
Used for adjustments to prior years. Enter reimbursements or refunds of qualified tuition and related expenses made in the current year that relate to payments received that were reported for any prior year.
Box 5
The amount of any scholarships or grants administered and processed during the calendar year for the payment of the student’s costs of attendance.
Box 6
Enter any reduction to the total scholarships or grants.
Box 7
Mark this if the student received payments for qualified tuition and related expenses reported for the current tax year that cover January to March the following year.
Box 8
Mark if the student was a half-time student or more.
Box 9
Check if the student is a graduate student.
Box 10
This is for insurers: Enter the total amount of reimbursements or refunds of qualified tuition and related expenses made to the student during 2022.

Three Ways a Student Information System Makes it Easier to Produce 1098-T Reports

Campus Cafe Software cuts down on the 1098-T workload by automatically calculating the federal aid, non-federal aid, cash, credit and check payments. The system compiles the data into a format that can be quickly used to create the 1098-T forms internally or sent out to third-party vendors to process those forms electronically or by mail. Here’s how it works:

  1. Track student payments and expenses: With a comprehensive financial aid module, Campus Cafe’s student information system allows your team to track and organize student expenses, then sort them into qualified and non-qualified items. 
  2. Easily build reports: With a library of pre-built reports, Campus Cafe’s student information system has the financial reporting tools that your financial aid staff needs to build the 1098-T reports and then easily search, sort and save the reports. 
  3. Transmit data to third-party vendors: With an integrated student information system, your financial aid office can quickly and easily upload the reports to the company that produces the forms and sends them to students and the IRS. This saves your team considerable time and resources. It also ensures that students will receive their tax documents on time, as well as the forms going to the IRS by the deadline.

The Bottom Line

When students receive federal financial aid, some rules and requirements come along with that money. Schools are required to produce government-mandated reports and, in the case of 1098-T forms, file those with the federal government.

For students and their parents or guardians, the 1098-T form is crucial because it provides access to tax credits and financial benefits. If the forms are not filed on time, that puts them at risk of missing out on money. 

The 1098-T form requires a lot of information, so it’s essential to have a student information system that can track student expenses with the horsepower to create the reports to populate the 1098-T forms. With the right technology tools, your financial aid team can work faster and smarter, and ensure that your students will receive the tax benefits that they’re entitled to.

Find out how our Campus Cafe Software’s integrated financial aid module makes government reporting easier. Contact us for a free demo. 


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