Scholarships may reduce grants, trigger taxes
One thing to keep in mind when applying for the awards is that some colleges reduce their grants to a student if they receive one, Kantrowitz said. These so-called displacement policies are something to be on the lookout for as you weigh college offers — although some states have actually set limits on the practice.
And while many scholarships are renewable, you may be required to maintain a certain grade point average to remain eligible.
Kantrowitz recommends students search for scholarships every year. “Some scholarships are open to just high school seniors,” he said. “There are also some scholarships that are only open to students who are already enrolled in college.”
In addition, some scholarships may be taxable, Kantrowitz said. It all depends on what you use the money for.
The awards are shielded from taxation if they’re directed only at tuition and books. Amounts applied to room and board, transportation or other living expenses, meanwhile, can count as taxable income.
“They can also ask the scholarship provider for help,” Kantrowitz said. “Some will allow the student to defer their scholarship for a year to avoid needing to spend it on taxable expenses.”
Article Appeared @https://www.cnbc.com/2023/04/04/everything-students-need-to-know-about-college-scholarships.html