There are many different college costs to cover — tuition and fees, books and supplies, living expenses and transportation, to name just a few. If you received a scholarship to help pay for school, you might be wondering, can I use scholarship money for anything? In short, it depends on the scholarship terms.
If you were awarded a scholarship, congratulations! But before earmarking those funds for any specific purpose, it’s important to understand the way scholarships work and how to use scholarship money.
Key Points
• Scholarship funds don’t need to be repaid, but they typically do come with spending restrictions.
• Scholarships are primarily designated for tuition and fees and often also cover room and board.
• Scholarship money may cover textbooks and other educational materials.
• Noncompliance with scholarship spending terms can lead to having to repay the money and possibly owing taxes on it.
• The organization that awarded the scholarship can offer guidance on spending restrictions and eligible expenses.
How Scholarships Work
Scholarships are a type of financial aid that students can use to pay for tuition and other school-related expenses. A key difference between scholarships vs. loans is that scholarships usually don’t need to be paid back, but student loans need to be repaid with interest.
Depending on the type of scholarship, these awards can be based on academics, financial need, participation in extracurricular activities, or a student’s chosen major, among other things.
There are different application requirements and selection criteria for each scholarship. But in general, students need to submit an essay, letters of recommendation, transcripts, and financial information to apply.
Scholarships often require students to complete the Free Application for Federal Student Aid (FAFSA). It’s a good idea to do that as soon as possible since scholarship deadlines vary.
Scholarships are available from a range of sources, including schools, nonprofit organizations, local government, and private companies. Using a
scholarship database can help narrow your search to find awards that align with your background, studies, and interests.
Recommended: Grants vs Scholarships
Does It Matter What Kind of Scholarship You Have?
The type of scholarship you have may be the key factor in how to use scholarship money.
Many scholarships stipulate the types of costs they cover. A scholarship may be limited to qualified education expenses, such as tuition, books, and supplies required for academic coursework, or it may extend to a broader set of education-related costs, including room and board and living expenses.
Typically, scholarships are paid directly to the school to ensure that financial aid goes toward a student’s education costs. Review a scholarship’s details to verify how the funds will be disbursed and any requirements on how it is spent.
What Can Scholarship Money Be Used For?
Can you use scholarship money for anything? Typically, scholarship money must be used for a student’s education and related expenses, but it depends on the specific scholarship requirements.
Here are some costs that could be covered by scholarship money.
Tuition and Fees
Scholarship funds are usually intended to be used to pay for tuition and fees at a college, graduate school, or trade school. Tuition is often the greatest expense when calculating the cost of attendance for college.
For the 2024-2025 academic year, the average sticker price for tuition and fees was $11,610 for students at public four-year institutions with in-state tuition, according to the College Board. For students at private nonprofit four-year colleges, the average tuition costs is $43,350.
If scholarships plus other federal financial aid you’ve been given don’t cover the total cost of your tuition and fees, private student loans could help cover the gap. These loans are offered by banks, credit unions, and online lenders.
How private student loans work is that their interest rate may be fixed or variable. The rate you get is based on your credit history and other financial factors. Interest on student loans accrues while you’re in school, and you may need to start repaying private loans while you’re in school or within a certain amount of time after graduation.
Keep in mind that it’s possible to refinance private student loans at a later date should you choose to. With student loan refinancing, you replace your current loans with a new loan, ideally one with a lower rate and more favorable terms, which could help lower student loan payments.
Education-Related Expenses
Along with tuition, students typically have to pay for other education-related expenses. Depending on your major and coursework, this could involve books, lab equipment, or other supplies required for classes.
Research
Students may be able to use scholarship money for research activities. For example, there are STEM scholarships specifically intended to help students advance their research in the fields of science, technology, engineering, and mathematics (STEM).
Supplies
Some of the supplies you need for school, such as a laptop, notebooks and pens, and even a backpack may be eligible expenses for scholarship funds.
Books
Books are another expense that could be covered by scholarship money. How much students need to spend on books and supplies varies by school, major, and from semester to semester. On average, students can expect to pay between $930 to $1,500 on books and supplies, according to the Education Data Initiative.
Living Expenses
Whether you live at home, on campus, or in an off-campus apartment, living expenses are another significant cost to plan for. What college students spend monthly on living expenses is around $2,932, according to the College Board.
Not all scholarships cover living expenses, but some of them do consider these expenses to be part of a college student’s cost of attendance.
Housing
You may wonder, can I use scholarship money for rent or student housing? Scholarship funds can often be used for room and board, but there may be limitations on the type of housing that’s covered.
In general, on-campus housing, which is a cost that is verified by schools, is more likely to be an eligible use of scholarship money than off-campus housing.
Bills
Students may have a number of bills to pay, including transportation costs.
Scholarships may help cover some transportation-related expenses, such as campus parking fees, but can you use scholarship money to buy a car — or pay for monthly car loan payments? It’s unlikely your scholarship funds can be used for car payments, unless the scholarship funds are completely unrestricted in their use.
Food
How much students spend on food depends on a number of factors, but the average monthly cost is $673 according to the Education Data Initiative.
Purchasing a school meal plan is a fixed cost that may be covered by scholarship funds. However, spending on groceries and dining at restaurants could be harder to justify as an eligible use of scholarship money.
Should You Save Scholarship Money for Certain Things?
Receiving a scholarship can change your expected family contribution on the FAFSA and impact what financial aid you qualify for. Additionally, students are typically limited to borrowing only up to the cost of attendance at their school if taking out student loans for undergrads. So if you don’t spend scholarship money wisely, you could come up short.
That’s why it’s wise to use a scholarship to cover education-related and eligible living expenses like tuition and fees, room and board, and supplies needed for classes.
Consequences of Misspent Scholarship Money
Using scholarship money inappropriately can have consequences. While scholarship funds aren’t meant to be repaid, it’s possible that an organization providing an award will have stipulations for how money is spent. This means that students could be on the hook for repaying a scholarship if it’s used for personal expenses instead of their education.
Additionally, scholarship money can be taxable if it’s used for living expenses not related to being enrolled in school.
If you have questions about whether an expense is eligible for scholarship money, check with your school’s financial aid office or the organization that issued the award.
The Takeaway
Scholarship funds are typically sent directly to a school to cover a student’s education costs, including tuition and fees, books and supplies, and room and board. Using scholarship money for personal expenses could mean having to pay taxes on the award or even repaying the funds if it violates the scholarship terms.
If, after applying for scholarships and grants and taking out federal loans, you still have a funding gap, you may want to consider private student loans. And remember, you can refinance student loans in the future for a lower interest rate and more favorable loan terms, if you qualify for them, which could help make your payments more manageable.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Can you cash scholarship money out?
Scholarship money is typically sent directly to your school. If there are leftover scholarship funds, your school might send the unused money to you as a refund check. This money would be subject to taxes, however, and its use may be restricted by the awarding organization.
Could you use scholarship money to buy a car
Buying a car is considered a personal expense, so it’s unlikely that a car purchase would be eligible for scholarship funds.
Are there any restrictions on what scholarship money can be spent on?
Many scholarships include restrictions on how the money can be spent. Some scholarships may limit funds to tuition and fees, while other awards might also cover education-related expenses and room and board. Check with the organization that awarded you a scholarship for specific funding restrictions.
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