College can be expensive, and it can be hard to figure out how to pay for it. There are financial aid options and scholarships that can help make college more affordable, but many students miss out on scholarships because they don’t know where to look or think they won’t qualify.
Scholarships aren’t just for top athletes or students with perfect grades. There are a lot of different kinds of scholarships for students with different interests, skills, and qualifications. A recent study done by Barnes and Noble Insights for College Ave found that 51% of students got scholarships or grants to help pay for college.
But how do scholarships work, and how do you find the best ones? If you know how scholarships and other forms of financial aid work, you can ease some of the financial stress that comes with college.
How do scholarships work?
Scholarships are a type of gift aid that doesn’t have to be paid back. They can be used to pay for tuition, fees, room and board, books, supplies, and more.
Scholarships can give you a one-time lump sum, or they can be renewed so you can use them to pay for your education for several semesters or even years.
Scholarships come in many different forms, such as:
- Academic merit: These scholarships are given out based on how well you do in school, such as your GPA and how well you do on standardized tests.
- Athletic: These scholarships are given to students who are very good at a sport, like football or swimming.
Identity-based scholarships are based on things like gender, race, religion, disability status, or membership in the military.
- These scholarships are given to students who are good at something like music, theater, or robotics.
- Some scholarships are given to high-achieving students who don’t have a lot of money to help make college more affordable.
- Chance: Students don’t have to meet any requirements to get a scholarship based on chance. Instead, anyone can apply, and the winners of the scholarships are picked at random, like in a sweepstakes. The monthly College Ave scholarship is easy to apply for and is a great example of a scholarship that is based on luck.
- Scholarships can come from private companies, non-profit groups, government agencies, and colleges or universities.
What can I buy with the money I won?
How you get money from a scholarship depends on what kind of scholarship you get. Most institutional and government scholarships are in-kind aid, which means that your college costs are waived or lowered.
When you get a scholarship from a private company or a non-profit organization, you may get a check for the amount of the scholarship.
Some scholarships have rules and requirements that must be met. For example, it may say that the scholarship can only be used for tuition and not for other education-related costs. Or you might have to go to an awards ceremony or keep up a certain grade point average.
When you get a scholarship, the organization that gives it to you will tell you how much money you’ll get and if there are any rules about how you can spend it. Most of the time, scholarships can be used to pay for the following:
Tuition: Fees for school
Scholarship money can often be used for other school-related costs, like room and board or transportation, but keep in mind that there are some downsides to doing so.
Scholarship money isn’t taxed as long as it’s used to pay for qualified education costs. But room and board, travel, and equipment that isn’t required by the school aren’t qualified expenses, so scholarships used for those things will be taxed as income. Because that money is considered income, it could make it harder for you to get other kinds of financial help in the future.
Tip: If you get a scholarship, tell the financial aid office at your school. Your total financial aid can’t be more than the total cost of going to school, so the college will subtract the amount of the scholarship from the cost of going to school.
Where can I look for scholarships?
There are many places where scholarships can come from:
- Your school or college: The best place to start is at your college or university. Most schools have scholarship and grant programs, and some of them are based on academic performance. The
- College Board says that 53% of all undergraduate gift aid comes from college-based awards.
- Organizations that don’t make money or private businesses: 12% of gift aid comes from scholarships and grants from companies and organizations that don’t make money from them.
- Some states have programs that give out grants and scholarships. About 9% of all gift aid comes from grants and scholarships from the state.
Follow these tips to find opportunities:
- Fill out the Federal Student Aid Free Application (FAFSA): For federal grants and student loans, as well as other types of financial aid, you need to fill out the FAFSA. Some schools and organizations also use the FAFSA to figure out if you are eligible for grants and scholarships.
- Talk to the financial aid office at your school: The financial aid office at your school can tell you what kinds of school-based financial aid are available and what you need to do to apply for scholarships or grants. They might also be able to help you find other ways to get money.
- Go to the website of your state’s education agency: Your state’s education department or agency may have information about grants and scholarships offered by the state, including how to apply for scholarships and when the deadlines are.
- Use tools to look for scholarships: There are a lot of reliable databases where you can look for scholarship opportunities. The best tools for looking for scholarships are:
FAQ about Scholarships
Does it make sense for a scholarship to cost money?
No, reputable scholarship programs don’t charge fees to apply, to process applications, or for anything else. If you have to pay money or give credit card or payment information to apply, that’s a sign that the program is a scam.
Some companies will charge you a lot of money to look for and apply for scholarships on your behalf. You shouldn’t use these services. There’s nothing they can do that you can’t do yourself for free.
When should I start looking for scholarship opportunities?
The earlier you start looking for scholarships, the better. Many students don’t start looking for scholarships until their senior year of high school, but there are a few that are open to first-year high school students as well.
Students in grades 9–12 can enter the American Foreign Service National High School Essay Contest, for example. The winner of the scholarship can get $2,500, a paid trip to the nation’s capital, and a Semester at Sea trip that covers all costs.
Are taxes due on scholarship money?
In general, college scholarships and grants that pay for tuition and other school fees are not considered income and are not taxed. But if you use scholarship money for other things, like room and board or travel, you have to include that money in your gross income on your tax return.
Do I have to pay back a grant?
Scholarships are a form of gift aid, which means they don’t have to be paid back. But scholarships can have rules that you have to follow, like staying in school at least half-time and getting a certain GPA. And if you quit school, you may have to pay back a part of some scholarships.
Review the terms and conditions of the scholarship to make sure you know what the scholarship provider wants from you and when you might have to pay it back.
How long do you have to apply for a scholarship?
The deadlines for applying for scholarships vary from one program to the next. Some have to be sent in months in advance, while others don’t have to be. And while some scholarships only need a simple application form, others need videos, essays, letters of recommendation, and transcripts. It can take a long time to gather all the materials needed for a scholarship, so start your search and gather all the materials several months before the deadline.
How to Pay for College
How do scholarship programs work? Now that you know the answer, you can start looking for gift-aid opportunities and sending in your applications. By starting early, you can apply for (and possibly win!) a number of scholarships, which can help you pay for college with less money from your own pocket.