Can you use scholarship money for anything?

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The tuition and related fees of attending college cost $35,551 on average per student every year. The financial toll can be even higher for students who take out student loans. Considering the accumulation of student loan interest and loss of income, the ultimate cost of a bachelor’s degree can even exceed $500,000.

The best alternative instead of taking on student loan debt is to find scholarships and other forms of financial aid to pay for college. Scholarship money is a form of aid that helps students pay for college tuition and other education-related expenses. It is considered free money since it does not have to be paid back, unlike other forms of financial aid like loans.

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The concept of receiving free money can confuse some people. Winning these awards can be tempting and the question many people may ask upon receiving their scholarship winnings is often the same: can you use scholarship money for anything?

Here at, you have access to hundreds of exclusive scholarships to help you pay for college. Create a your profile and check which scholarships you're eligible to apply for now.

Can you turn scholarships into cash?

Unfortunately, turning scholarship money into cash is not allowed. Despite being considered free money, scholarship funds are financial aid awarded for an intended purpose. That specific purpose is to pay educational expenses like college tuition, student fees, and other college costs.

Many of the private scholarships found on are funded by individual donors and scholarship providers. A scholarship award from is paid directly to the college the recipient is enrolled in to ensure the financial aid package is being used appropriately. Therefore, students actually have no access to the funds outside of college and can only use the money for qualified educational costs.

The scholarship rules put in place by the scholarship providers, especially for smaller scholarships, prevent recipients from turning scholarships into cash for personal use.

people exchanging a 10 dollar bill

There are some cases where you can receive a portion of the funds for yourself. If your scholarship award exceeds your tuition and expenses for the year, the extra money may be refunded to you for you to use as you please.

However, this refund is still under the jurisdiction of the scholarship committee so they may opt to give the excess funds to another recipient. Additionally, if you receive a scholarship refund, keep in mind that you'll likely have to pay taxes on it since it can be considered income.

Can scholarships be used for student loans?

Many college students take on a mix of both student loans and scholarships to meet the rising cost of college attendance. Since one does not need to be repaid but the other does, can scholarship money be used for student loan repayments?

Scholarships provide students with funds for an intended purpose: to help students pay for education-related expenses. Although what expenses fall under this category are conditional to the scholarship itself, student loans are often considered to be education-related expenses.

The spending rules specify how students can use the scholarship money. The specifications will be conditional for every scholarship: even if the scholarship funds can be used for paying back student loans, tuition and other education expenses will take priority first.

However, if your scholarship money exceeds your education expenses for the enrollment period, you can end up with some extra money to spend. This extra money can be used for student loans.

Can you negotiate a scholarship?

It can never hurt to try negotiating for your scholarship amount from your school. The worst they can say is no, but negotiating may allow you to maximize your scholarship funds. Don't be afraid to contact your financial aid office about increasing the amount of scholarship money. However, to be able to negotiate you'll need to be prepared.

Understand what the purpose of the scholarship award is and how it can benefit you. Maybe it's to encourage you to start your college career in a specific program or college major. Be timely about when you begin negotiations; contact the right people once you've received your financial aid offers but before the deadline for tuition deposit and financial aid package disbursement. Also, be aware of the details of your scholarship. Many students can miss the fine print when accepting financial aid packages.

Once you're prepared, start by telling your story of why you need to increase your scholarship amount and why you deserve it. Maybe you need more scholarship money to pay for room and board. Or, maybe you or a parent lost a job, changing your financial situation. Several scholarships that are need-based aid will need documentation of demonstrated financial need.

person counting dollar bills

It is best to not approach it as a negotiation from the beginning; approach this exchange by asking about how you can receive more financial assistance to match your financial need. Keep your scholarship request within a reasonable amount considering your expenses.

The scholarship providers won't take away any award money already being offered, so it doesn't hurt to ask for more. To maximize your scholarship funds, you can apply for more scholarships or grants and pool the earnings together.

Frequently asked questions about scholarship money

What happens if you use scholarship money for something else?

To spend scholarship money on something other than education-related expenses is subject to the scholarship's spending rules enforced by the scholarship committee. Students who use scholarship money to pay for personal expenses and other expenses unrelated to college may be required to pay the full cost of the spent scholarship money back to the scholarship sponsor.

You can still find some financial aid where the scholarship funds can be used on select expenses other than tuition, such as room and board, living expenses, course materials, and other costs. If the stipulations regarding your scholarship are unclear, reach out to your scholarship provider to ask about living expenses, materials, etc.

Using your scholarship money on other things like a spring break trip or that new car you want makes your funds tax liable as well, where you can face legal action by the scholarship sponsor.

What happens if you don't use a scholarship?

When you do not use scholarship money right away, the scholarship funds are held for you until they are needed. However, many scholarship providers will call for a refund on most scholarships you've earned if they continue to go unused.

Holding onto unused scholarship money makes you responsible for any tax liabilities and financial consequences that can pop up. If the money has not been spent, it is best to notify the scholarship fund provider if you no longer have intentions to use it.

If you return the funds to the scholarship fund provider, the money will be able to be transferred to another worthy student facing financial difficulty while attending college.

If you are a high school student, any earnings on will be held in an account for you until you enroll in a college. However, high school students and seniors who win a scholarship award but decide to not attend college after graduation can have their scholarship awards taken back from this account to be given to another applicant. If you're planning on using the scholarship but will need a gap year, you can alert the scholarship provider so the funds can be held for you.

person putting coins into piggy bank

Since the scholarship cannot be transferred into the recipient's college student account, the money will remain with the donor. In this case, recipients won't have to pay back the scholarship since none of the award money was used. However, you will have to apply for other scholarships to cover your costs if you enroll in college at a later time.

If you intend to use your scholarship money at a later time, it's possible to hold on to the money until then. You can try contacting your scholarship source and your school's financial aid office about how to reserve your scholarship money for later use. For federal student aid, students should double-check how they can maintain eligibility beyond high school graduation until they decide to pursue higher education.

Do scholarships expire?

Yes, scholarships can expire. There are many reasons why a scholarship award can expire:

  • Use it or lose it - You do not enroll in college, you drop out of college, or you take a break from college and do not use your scholarship money within a certain timeframe.
  • You have maxed out your financial aid package - You have reached your limit on the scholarship funds.
  • FAFSA and annual scholarships - You failed to reapply for the annual scholarship for the academic year.

If the scholarship expires, you will not be able to spend the scholarship money on tuition and related costs. Students are encouraged to use scholarship money as soon as possible. If you are in a "use it or lose it" scenario, recipients can try to contact their scholarship source about how they can keep their scholarships for later use.

Are scholarships counted as income?

Since scholarship money won through is sent directly to the college you are attending, scholarships awarded through are not considered taxable income. If you are a high school student, your earnings will be held in an account for you until you go to college.

However, if you win a scholarship from another source and you receive an amount that's greater than your total educational costs, the money may be taxed. Scholarships also become taxable if you receive the money directly and apply it to costs other than tuition, books, course fees, and education expenses.

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