Do Scholarships Have to Be Paid Back? Understanding the Nuances of "Free" Money for College
Receiving a college acceptance letter is an achievement, and once you've gotten your foot in the door, it's time to start forming a game plan. Whether you're going to be paying out-of-pocket each term or relying on private or federal loans, it's wise to consider how you can offset the cost of your college degree by applying for scholarships. Scholarships, along with grants, represent a significant opportunity to fund higher education without incurring debt. But the question remains: Are scholarships and grants really free money? The simple answer is generally yes. While you have to meet certain requirements to receive scholarships and grants, you do not have to pay them back. However, a deeper dive reveals nuances and specific situations where repayment might be necessary. This article explores the conditions under which scholarships remain "free" and when they might require reimbursement.
What are Scholarships?
A scholarship is an award of money that is provided for a student to support their pursuit of a college degree. Typically, you'll need to identify a scholarship you qualify for and submit an application to be considered. "While it takes time, it is one of the best ways you can fund your education because it is money you do not have to repay," said Donna Camire, the director of Student Financial Services for the Southern New Hampshire University (SNHU) Global Campus. Scholarships are oftentimes awarded after an application process. To be eligible for most federal, state or institutional scholarships, you must complete the FAFSA (Free Application for Federal Student Aid). The FAFSA is used to determine the eligibility for need-based scholarships and grants for each attendee as it is through the FAFSA that the amount the family is expected to pay for education expenses is determined.
Merit-Based vs. Need-Based Scholarships
There are two common types of scholarships. Merit scholarships are awarded based on academic achievement or extracurricular activities. Merit-based aid might be given for academics, sports, arts or leadership, for instance. The second are need-based scholarships and grants, which are awarded based on financial need. Need is determined by the school’s cost of attendance and the amount the family is expected to pay for education expenses using family income and assets. Eligibility for need-based grants is determined by your family’s ability to pay for college, with income being one important factor. Scholarships and grants can come from government sources or from private sources (such as colleges and universities, nonprofit foundations and religious or service organizations). All federal and state aid, as well as many forms of school-based and private aid, requires you to file the FAFSA.
Benefits of Receiving Scholarships
Perhaps the best benefit of getting a scholarship is that the money awarded to you can help you pay for college. You may not need to borrow as much. This is because scholarship money awarded to you does not need to be paid back. As a result, you may not need to take out as much in student loans and, therefore, owe a lender less. The more money awarded through scholarships means less out of your pocket. Scholarships are a way to reduce student loan debt. If you do not have enough grants, scholarships, and savings to cover the cost of college, you may need to borrow money. Student loans have terms of repayment and charge interest on the money owed which really adds up over time.
You can keep applying for them. Unlike the Free Application for Federal Student Aid (FAFSA), which is important to apply for annually, you can seek out scholarships year-round. Just because you've been awarded one scholarship does not mean you can't qualify for others that same year.
Read also: Camp Scholarships Guide
How they're spent may be up to you. While some scholarship money will be sent directly to your college's financial aid office, others may go directly to you. You can then decide whether you want to apply your scholarship to your tuition or textbooks or some other fee. According to Camire, each scholarship is unique, so it's important to understand how potential award money could be applied to your education.
They're not all need-based, and they're not all merit-based. Unlike most federal aid you could receive in your financial aid offer letter, scholarships are not necessarily need-based, although some organizations and scholarship donors may want to consider your financial position. In general, scholarships are broken out by the criteria considered for a candidate's eligibility - merit, financial need, personal background, athletics and so on. It's important to dig deeper, however. "Start with your program, gender, special interests, etc.," Camire said.
Types of Scholarships
Many scholarships require specific qualifications and are offered by many different organizations - schools, businesses, individuals, nonprofits, communities, and social organizations.
Scholarships for Current College Students - Scholarships aren't only for those students just starting their college careers.
Scholarships for military and their families is a point of pride for many institutions, and you will find a number of scholarships designed around that same goal. For example, SNHU partners with Operation Homefront to offer full-tuition scholarships to military spouses.
Read also: Benefits of NSHSS Scholarships
Scholarships for Minority Groups - Cultural diversity is another significant factor for many scholarships.
Scholarships for Specific Majors - If you already have your major picked out, be sure to check for scholarships that are designed with you in mind.
Scholarships for Students with Disabilities - Students with disabilities may also find themselves eligible for scholarships intended to provide financial support for them.
Scholarships for Women - There are many scholarships available for women, and you don't need to be a traditional 18-year-old to be eligible for them. Some institutions and organizations may also award scholarships to the general public contingent on being accepted into a program.
Finding and Applying for Scholarships
Searching for information about scholarships and finding scholarships to apply for can be confusing, but you do not have to do it alone. At OVC Scholarship Network, we connect students with valuable scholarship opportunities that will pay off in the present and well into the future. If you're searching for external scholarship opportunities, you may come across many different sites that can simplify the search process. However, some of these scholarships may be misleading or fake. "Scholarship Universe is a database that has over 17,000 scholarships in it at any given time," said Tanner Shaw, a project manager on the financial literacy team at SNHU. Databases such as Scholarship Universe can help you find scholarships that you may qualify for. According to Shaw, the tool provides a questionnaire to help students narrow down their scholarship options.
Read also: Scholarship Guide
Many colleges require completion of the FAFSA to be eligible for scholarships. Some colleges require the completion of a common scholarship application form. If a scholarship application asks for an essay, set humility aside-it’s time to be confident. While boasting about your best accomplishments may feel uncomfortable, those reviewing the scholarship applications will only know what’s on the essay submission. Once the application documents are ready, which require some time proofreading and editing everything, submit all application materials by the deadline. Some scholarships have deadlines more than a year in advance. With this in mind, make a list of potential scholarships as early as 18 months BEFORE the planned start date of college. Look into how to apply, the documents required for the application, and the deadline. Think of applying for scholarships as the best-paying part-time job. Now that you have a better understanding about how scholarships work, it’s time to get to work! Cast a wide net to find scholarships and apply before the deadlines. In 2022, a high school senior made the news for receiving $1.3 million in scholarship offers.
Beyond figuring out the rules and requirements of how to get a scholarship, it's important to have a strong, positive mindset as you begin the scholarship application process. Like applying for a job, you'll want to present your best self. "The more you share, the better your chances will be to receive one," she said. Sarah A. Easley '12 '18MA is a content writer and proofreader.
When Scholarships Might Need to Be Repaid
Unlike federal or private student loans, scholarships do not usually have to be paid back. However, there are certain situations where you might be required to repay a scholarship. Understanding these situations can help you avoid surprises and stay on track to fund your education. While most scholarships are "free" money for your education, there are a few circumstances where repayment could come into play.
Dropping Out of College
Dropping out of college can be a tough decision for many reasons. It’s important to inform yourself about all the possible outcomes before you make any final choice. In this article, we’ll go over the possible scenarios that may require you or not require you to pay back your scholarships upon dropping out. Remember - this guide is a general set of rules that applies to many situations.
In general, students do not have to pay back scholarships. If a student receives a scholarship and completes the schooling for which the student was awarded the scholarship, they will have nothing to repay.
So, what can cause you to have to repay scholarships? Well, the most common culprit is dropping out of school mid-semester. If you have received money to complete a semester, but did not complete it, you may have to pay for the remaining funds out-of-pocket. If you drop out of school between semesters, you are in a much better place in terms of repaying scholarships. Typically, you will not have to repay anything. Of course, you won’t receive the future disbursements of the scholarship that you would have received if you continued attending school. If you plan on going back to school and only want to take a break, make sure to check in with your scholarship provider to see if you can retain your scholarship benefits when you return to class. If you drop out of your school, your best bet for not owing any money to your scholarship provider is to finish out your semester and drop out at the end of it. These include taking courses Pass/Fail, meaning that a low grade won’t negatively impact your GPA so long as you don’t fail. You can also be sure to speak with your professors candidly about whatever is holding you back from doing your best.
Failing to Meet Scholarship Requirements
Many scholarships require you to maintain a minimum grade point average (GPA). Scholarships are typically awarded to help you complete your education. Some scholarships are tied to specific fields of study, like engineering, nursing, or teaching. Scholarships are intended for tuition, fees, books, and other school-related costs. Always read the terms and conditions before you apply to a scholarship - and definitely before you accept it. Qualifications don't always end after you've won the award. You might even have to meet certain academic requirements to receive the scholarship again next year.
Dropping out isn’t the only thing that can cause you to have to repay scholarships. If you change your enrollment status from full-time to half-time, your scholarship eligibility may change.
How Scholarship Money Can Be Used
Scholarships can go a long way in helping you afford the high cost of college. You can typically use the money towards tuition, room and board, and other education-related expenses. However, some organizations restrict how you can spend the cash. What can I use scholarship money for? Unlike loans, you don't have to pay back scholarship money…in most cases. Some awards come with stipulations or requirements that you need to meet in order to receive the cash. For example, if you have to attend a banquet as a winner, you need to attend. In addition, many organizations dictate how you can spend the money. Some might restrict you to using it just for tuition, while others say you can use it for anything education related. A select few allow you to use the money however you see fit.
Education-related expenses: Some scholarships can be used to cover other expenses, such as books and supplies.
If the scholarship is sent to your college, your school will use the money towards its intended purpose, such as tuition or room and board. If your scholarship money is sent directly to you, by check or direct deposit, the awarding organization should advise you of any next steps. If the cash needs to cover tuition or similar costs, you have to send the money to your college. Colleges use any institutional scholarships and grants you received to cover your outstanding bill with them first.
If you receive enough scholarship and grant money that you have some leftover after paying for your tuition and cost of attendance, it is possible that your university will refund you the money.
Ineligible expenses
What should you not spend the money on? If your scholarship comes with no restrictions on how you can spend it, you may be tempted to use it for whatever takes your fancy. Put it towards your major college costs first, including tuition, fees, room and board, and supplies. If you have any cash left over, save it for next year. After all, college costs typically go up year after year.
Importance of Understanding Scholarship Terms
Always read the fine print when it comes to scholarships and grants. To avoid repayment, it is important to carefully read and follow the rules of your scholarship. Keep track of GPA requirements, deadlines, and other obligations.
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