Are Scholarships Considered Taxable Income?

Are scholarships taxable income?

Flickr user 401(k)2012

Money always seems to be fraught with complications. Who wants to worry about taxes while figuring out financial aid and how to pay for your college education. Hopefully, this article will help clarify and simplify some questions you may have.

So, are scholarships taxable income? It depends on what you use their funds for.

Tuition Payments & Required Fees

If you’re a degree-seeking student who plans on using scholarship funds to pay for university required fees–like tuition, books, mandatory materials, etc. then that scholarship is tax-exempt. No need to worry about taxes here.

Many scholarships will actually require you to use their funds for tuition payments anyway. A lot of scholarship aid opportunities have strict guidelines about what you can and cannot use their funds for.

Room and Board & Living Expenses

If you’re using funds from a scholarship to pay for your housing situation or to purchase food, clothes, etc. then that scholarship will be considered taxable. Since the things you’re using the money for is not directly related to your college education itself, it plays by different rules.

If you are still uncertain whether or not a certain scholarship is taxable, ask the scholarship provider or your college’s financial aid office for more detailed information on that specific award. Different scholarships will have different requirements.

Use College Raptor to discover personalized college matches, cost estimates, acceptance odds, and potential financial aid for schools around the US—for FREE!

 

Lender Rates (APR) Eligibility
Citizens logo.
5.50%-16.12%* Variable
3.99%-15.61%* Fixed
Undergraduate and Graduate
VISIT CITIZENS
Sallie Mae logo.
5.54% - 15.70% Variable
3.99% - 15.49% Fixed
Undergraduate and Graduate
VISIT SALLIE MAE
Credibe company logo.
4.63% - 17.99% Variable
3.49% - 17.99% Fixed
Undergraduate and Graduate
VISIT CREDIBLE
Lendkey company logo.
6.00% - 13.75% Variable
3.99% - 13.75% Fixed
Undergraduate and Graduate
VISIT LENDKEY
Ascent company logo.
5.66% - 14.72% Variable
3.69% - 14.56% Fixed
Undergraduate and Graduate
VISIT ASCENT
3.70% - 8.75% Fixed
Undergraduate and Graduate
VISIT ISL
Earnest company logo.
5.62% - 16.85% Variable
3.69% - 16.49% Fixed
Undergraduate and Graduate
VISIT EARNEST
5.00% - 14.22% Variable
3.69% - 14.22% Fixed
Undergraduate and Graduate
VISIT ELFI
College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.

Subscribe to Our Newsletter

Join thousands of students and parents learning about finding the right college, admissions secrets, scholarships, financial aid, and more.