Scholarships for Merit or Financial Need

Scholarship for Financial Need

Teachers who teach "on scholarship" - at a reduced fee - often make this concession to a student whose family has suffered financial reversal.

I advise against teaching for a reduced fee.

First, it devalues your service. The family will wonder if your teaching is worth the normal fee if you are willing to deliver it for less. Second, the family realizes that changes in spending priorities will have to occur; shelter and food stand higher in position than music instruction. The student is part of that family, and he must face reality, too. (In fact, you deprive him of valuable lessons if you step in and offer to keep him on at a reduced rate so he feels no impact.) Third, sometimes there is a noticeable drop in the student's effort; what he's getting for free somehow seems less important to him than when his family must pay for it.

How deeply would you have to discount your fee to make music study plausible during the family's hard times? 75%? 100%? Could you teach this student for nothing? If so, how long?

I believe it's far better for you to design a program to help the student through this period so he doesn't lose too much ground. Together, you can look forward to resumption of lessons.

You would be surprised to hear - or maybe you wouldn't - the number of teachers who reduce their fees to keep a student from having to stop study only to find out later that the family managed to find money to take a vacation, purchase a new car, or do something else extravagant while silently enjoying the teacher's generosity all the while! And usually while being late in making the reduced payment!

Your time, in which you deliver your expertise, is all you have. Once your time is gone, you have no more. Don't deliver it at bargain-basement prices that devalue what you have to offer.

Scholarship for Merit

Some teachers select special students for a full tuition waiver. This student might be one of exceptional promise and/or one who is disadvantaged socio-economically. If you do this, no one can fault you, and everyone can applaud you.

If you do teach a student gratis, make sure you do this for the right reasons: out of the goodness of your heart. A charitable deduction is not a right reason.

The "normal value" of any tuition-waiver scholarship you give is -not- tax-deductible. The IRS considers this a gift of your services. Since no fee is collected by you, no tax is due on it, and therefore no business expense can be claimed.

Note: If you use "accrual basis" accounting - which I don't recommend for music teachers, as it offers no benefits - you would claim as income the normal fee for all lessons given the scholarship student and -pay tax- on that amount. Then you would write off the same amount as a deduction. Therefore, the tax outcome is identical to the "cash basis" teacher who teaches for free, collects no fee, pays no tax on it, and doesn't claim a business expense.

copyright 1998, Martha Beth Lewis, Ph.D.
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