Ultimate Scholarship Guide: What You Need to Know

It’s no secret that college is expensive — and it’s only getting more pricey with each passing year.

In fact, the cost to attend college is growing by roughly 6.8% each year.

Many students are forced to take out hefty loans in order to fund their education. Today, the average student loan borrower has $37,693 of student debt.

With costs rising, and student loans too often resulting in long-term debt, one of the best approaches is to maximize scholarships.

Scholarships help students pay for tuition and other expenses — and unlike loans, scholarships don’t need to be repaid.

This complete scholarship guide will show you everything you need to know to land as many scholarships as possible.

What are scholarships?

Scholarships are essentially free money for school. If you receive a scholarship, you can use the money to pay for tuition (and, in some cases, books and supplies). You won’t usually need to pay the money back.

Free money for school

Most scholarships send the awarded funds directly to your school to help cover the cost of tuition. Others may be more flexible, allowing you to spend the money on supplies, books, or even student housing.

Scholarships are offered by schools themselves. But they’re also offered by federal and state governments, private businesses, nonprofits, and individuals.

In most cases, scholarships are designed to reduce the burden of college tuition expenses. And they are quite common: In the 2020–2021 academic year, scholarships and grants covered approximately 25% of the cost of college for the average student.

And in the 2019–2020 school year, up to 73% of families relied on scholarships and grants to pay for school.

To learn more about saving and paying for college, you can read our guide here.

Scholarship eligibility requirements

You won’t qualify for all scholarships, as each has its own eligibility requirements. Some examples of potential requirements include:

  • Academic requirements: A certain grade point average (GPA) or test scores
  • Athletic requirements: A certain performance rating in a given sport
  • Financial requirements: Income under a certain level (this often includes student income and parental income)
  • Extracurricular requirements: Participating in a club or student government body
  • Identity requirements: Citizenship status, ethnic heritage, LGBTQ+ identity, etc.

Eligibility requirements vary for each scholarship. The above are just examples, and other requirements are possible.

Most college scholarships are specifically for students pursuing a degree (usually an undergraduate degree). There are one-year scholarships as well as multi-year scholarships, and generally, students can apply for opportunities each academic year.

Additionally, there are several types of scholarships — more on this below.

Types of scholarships

Scholarships come in all shapes and sizes, from academic scholarships that require a certain GPA to needs-based scholarships that simply require students and their families to be under a certain income level.

Common types of scholarships

Here’s an overview of some of the most common types of scholarships.

Academic scholarships

Academic scholarships are awarded to students who display academic excellence, usually in the form of an exceptional GPA or test scores.

Academic scholarships come from a variety of sources: universities, businesses, government agencies, individuals, and more. Likewise, they have a variety of requirements, depending on the specific scholarship.

Some academic scholarships can be very generous. For instance, some schools offer “full-ride” scholarships to a handful of students each year. These scholarships cover the full cost to attend school, and some even include stipends for food and other essentials.

Athletic scholarships

Athletic scholarships are awarded to students who display excellence in a specific sport or athletic endeavor. Usually, the scholarship is awarded with the requirement that the student joins that school’s sports program.

For instance, a star high school running back may be offered a scholarship to study at a specific university and join their football team. These scholarships are generally offered by the schools themselves.

Identity-based scholarships

Identity-based scholarships are available to students of a certain identity or background. For example, a scholarship may be available to students with disabilities, students with a Hispanic background, or students in the LGBTQ+ community.

Examples include the Hispanic Scholarship Fund for Hispanic students and the Ron Brown Scholarship for Black students.

Need-based scholarships

Need-based scholarships are awarded to students who can show that they have significant financial needs and cannot reasonably afford college. Financial need is usually determined by comparing the cost of attending college with the income level of the student’s family.

Many students from low-income families will qualify for these scholarships. Students will usually need to submit information about their financial situation in order to apply.

Community service scholarships

Community service scholarships are awarded to students who strive to make a difference in their communities, generally through volunteer work.

Nonprofit organizations, foundations, and individuals may offer these scholarships.

Extracurricular scholarships

Extracurricular scholarships are available to students who show an interest in specific extracurricular activities or hobbies.

For instance, a student in a high school computer science club may be eligible for a specific scholarship, while a student involved in cross-country running may qualify for another.

Employer and military scholarships

Some employers may offer scholarships directly to their employees or the family members of their employees. Likewise, a variety of scholarships are available to military members, veterans, and their families.

Employer scholarships may not necessarily be listed on online scholarship search sites, particularly if they are smaller employers. Instead, you can ask your employer (and your parents’ employers) if they offer any scholarship opportunities.

Federal grants

Federal grants come directly from the federal government and can be applied for by submitting the Free Application for Federal Student Aid(FAFSA) (see our guide to the FAFSA here).

These grants aren’t technically scholarships, but they reward eligible students in a similar way — with money to pay for college that usually doesn’t need to be paid back.

However, there are a few specific situations in which grants must be repaid (for instance, if you withdraw early from the program, you may need to repay the grant).

Grants are mostly need-based. For example, the Pell Grant awards up to $6,495 to students who “display exceptional financial need” and are working toward a qualifying degree. Eligibility for these grants is determined by submitting the FAFSA.

Who pays for scholarships — and why?

Scholarships are offered and paid for by a variety of individuals, businesses, schools, and organizations. The person or organization who pays for a scholarship is typically called the scholarship sponsor.

Governments, organizations, businesses and individuals

Some of the most common scholarship sponsors include:

  • The federal government
  • State governments
  • Colleges and universities
  • College and university foundations
  • Small businesses
  • Large corporations
  • Religious organizations
  • Nonprofit organizations
  • Individuals and estates/trusts of deceased individuals
  • Student loan providers
  • Banks and other financial institutions

Typically when you view a scholarship, it will be clear who the sponsor of that opportunity is. In some cases, the sponsor may even be in the title of the scholarship — for example, the Coca-Cola Scholars Program Scholarship is sponsored by Coca-Cola.

Why scholarships exist

We’ve covered the who, but what about the why? Why do companies, schools, and individuals offer free money for students?

For school-specific scholarships, the answer is obvious. Colleges want to attract specific types of students, and so they offer to cover a portion of the student’s tuition. The school may want more socioeconomic or racial diversity, or it may want to attract star athletes or exceptional students.

For opportunities funded by businesses and organizations, scholarships are a way to give back to the community. They may also serve the secondary purpose of providing positive marketing for the organization.

And for scholarships funded by individuals, trusts, and estates, scholarships are often a way to distribute wealth back to the community or to support the individual’s alma mater (the school they graduated from).

Where to find scholarships

Where do you actually find scholarships to apply for? Here are a variety of options:

Main sources of scholarships
  • High school students should speak with their counselors or advisors.
  • Current college students (and incoming freshmen) should speak with their school’s financial aid department.
  • Students should also do their own research online, using scholarship search sites.

Some of the best online resources for scholarships include:

  • BigFuture: Run by the nonprofit CollegeBoard.org, the BigFuture Scholarship Search allows students to search for scholarships, grants, and more from over 2,200 different programs.

  • Fastweb: Fastweb.com is a scholarship search engine with a database of more than 1.5 million scholarships and a total of $3.4 billion in funding. The platform can also be useful for finding internships and student jobs.

  • Mos: Mos.com is a bank for students that also provides access to a huge scholarship pool, with personalized matching based on eligibility. The company can also help students file for federal financial aid and has 1:1 coaches available to help students directly.

  • Scholarships.com: Scholarships.com is a scholarship search engine that also has a very useful scholarship directory, which can be used to filter by academic major, ethnicity, gender, SAT score, and dozens of other factors.

  • CareerOneStop: Careeronestop.org is a scholarship search tool run by the U.S. Department of Labor. It hosts a database of over 8,000 scholarship opportunities.

  • Sallie Mae: Sallie Mae is a student loan provider that has an extensive scholarship database that students can search. Sallie Mae also offers their own scholarship opportunities directly.

  • Niche: Niche.com is a college ranking site that also has a scholarship portal. The portal has good filtering options, but it is not as extensive as other databases.

How to get a scholarship

The basics of getting a scholarship are relatively straightforward. You need to find opportunities that you are eligible for and closely follow the instructions to submit your application.

Steps to get a scholarship

While the basics are simple, there are some important things to keep in mind that may not seem obvious at first. Here’s a detailed list of steps you can take to land a scholarship (or several).

1. File the FAFSA

The Free Application for Federal Student Aid (FAFSA) is the first step that any college student or incoming freshman should take. This is the federal government’s main form that must be submitted to qualify for any sort of federal funding, including grants, work-study, and federal student loans.

It’s vital to file the FAFSA for several reasons:

  • The FAFSA is the only way to qualify for federal grants, like the Pell grant.
  • The FAFSA is required to qualify for federal student loans and work-study programs.
  • Many external scholarships require that the FAFSA be submitted before you can apply for them.

The FAFSA collects basic information about you and your family, including income data. Data collected is used to gauge your eligibility for various federal programs.

Before you apply for any third-party scholarships, make sure you have submitted the FAFSA first. And remember, the FAFSA must be submitted every academic year.

See our full guide to getting through the FAFSA to learn more.

2. Search for eligible scholarships

Now it’s time to search for other scholarship opportunities outside of the FAFSA. There are millions of scholarships out there, so it can feel overwhelming to sort through them all. Here are some things to keep in mind.

Utilize your resources. For high schoolers, this means talking to guidance counselors or advisors. For college students, school financial aid advisors can help. Utilize the internet. There are dozens of useful search engines and scholarship matching tools online that you can use to identify scholarships that you are eligible for. BigFuture, FastWeb.com and Scholarships.com are great options — see our full list in the “Where to Find Scholarships” section above.

Get clear on eligibility requirements. Each scholarship will have its own eligibility criteria (income level, GPA, etc.). It’s important to understand these requirements in order to find scholarships that you actually qualify for. The tools listed above can help you narrow things down.

Cast a wide net. At this point, it’s best to take note of any scholarship opportunities that you qualify for and seem worth the time. You don't necessarily need to actually apply for every opportunity, however.

3. Make a list — and prioritize

Now it’s time to narrow down your search to find the scholarships that you want to prioritize.

Start by making a list of all the scholarships that you are eligible for and may want to apply for. Then, prioritize them by considering:

  • How much money is available
  • How long the application might take
  • How well the scholarship matches your interests, talents, and planned area of study
  • Your estimated odds of approval
  • The deadlines for each scholarship

While it’s tempting to only target the highest-value scholarships, keep in mind that more money also means more competition. Those $5,000 or $10,000 scholarships often have thousands of applicants, while smaller opportunities may have far fewer.

4. Start applying, and follow the application instructions closely

When you’re actually applying for opportunities, be sure to follow the instructions very closely.

Each opportunity will have its own set of requirements and instructions. In most cases, not following every instruction may automatically disqualify you from consideration.

5. Keep applying

Once you have applied for a good number of opportunities, it may be tempting to sit back and wait. However, to improve your odds of getting the most money possible for school, it’s best to keep applying.

Follow your priority list that you created in Step 3. If you make it through the entire list and still have time on your hands, it’s beneficial to keep applying for any scholarships that you find.

Approach applications systematically

Finally, keep an eye out for any new opportunities that come about. It may be helpful to do a second scholarship search a month or two after your initial search.

Tips for landing scholarships

Whenever you apply for a scholarship, you’ll be competing with many other applicants. To improve your odds of receiving a scholarship, keep these tips in mind.

Start early, don’t miss deadlines

1. File the FAFSA first. As discussed above, filing the FAFSA should be your first step. This will help you qualify for other aid programs. And in some cases, you may get enough grants that scholarships won’t be as necessary.

2. Triple-check scholarship requirements. Because each scholarship has slightly different requirements and instructions, it’s important to pay close attention. You may be automatically disqualified if you don’t exactly follow the provided instructions or if you don’t match the requirements.

3. Start early. Scholarships may be available all year, but the earlier you start, the better off you’ll be. The two main “scholarship seasons” are in the fall and spring. Most scholarship deadlines fall during these two seasons.

4. Apply every year. Most incoming freshmen are told to apply for scholarship opportunities — but plenty of sophomores, juniors, seniors, and even graduate students may overlook opportunities available to them. Keep applying every academic year to maximize the amount of funds you have for tuition.

5. Apply for a wide variety of scholarships. It’s helpful to apply for a variety of opportunities. This means a combination of large and small scholarships and a variety of academic-focused, community-focused, and identity-based scholarship opportunities.

6. Consider smaller scholarships. There are many scholarship opportunities that offer relatively small amounts of money — $500, for example. Although the payoff is smaller, these scholarships tend to have fewer applicants. This means you may have better odds of receiving them compared to larger opportunities. Plus, receiving numerous small scholarships can add up quickly.

7. Volunteer to boost your resume. Particularly for competitive scholarships, sponsors like to see community service on an applicant’s resume or application. For best results, find a volunteer opportunity that is related to your field of study.

8. Appear professionally online. In some cases, sponsors may research applicants outside of their submitted applications. This typically means browsing an applicant’s LinkedIn or even personal social media profiles. To prepare for this, students should appear as professional as possible on their social media.

9. Complete optional questions. Some scholarships have “optional” questions. To maximize your odds of landing a scholarship, always answer these questions honestly and thoughtfully. This can round out your application and help you stand out from the crowd.

10. Get help with your essays. Many scholarships have essay requirements. You should always write your own scholarship essays — however, it’s perfectly acceptable to ask someone else to help you edit and refine these essays.

11. Keep an eye on deadlines. It’s very important to submit all applications by their applicable deadlines. In most cases, late submissions will not be considered.

12. Use a scholarship matching tool. Using an online tool that helps match you with eligible scholarships can save you a lot of time. See our “Where to find scholarships” section above for details.

13. Go local. There are often many local scholarships that aren’t necessarily well advertised. For instance, small local banks often offer scholarships, as do many employers. You may have to ask around or use Google to search phrases like “Scholarship + [your town name].”

14. Collect letters of recommendation. Many opportunities may ask for letters of recommendation. These can come from past teachers, coaches, advisors, or community members. You should ask for these letters early on so that you have them on hand when applying.

15. Stand out from the crowd. Do what you can to make your applications stand out from the rest. This could mean highlighting your unique talents or attributes or your personal history. Remember that scholarship sponsors look at the entire picture — not just at your GPA.

How scholarships affect taxes and financial aid

Scholarships are “free money” for school. But how do they affect your taxes or your financial aid? Are scholarships taxable?

Scholarships and taxes

Scholarships are (usually) tax-free. Most scholarships and grants don’t need to be reported as income and are tax-free, so long as:

  1. You're a candidate for a degree at a qualifying educational institution.
  2. The amounts you receive are used to pay for tuition, fees, books, supplies, and equipment required for courses at the educational institution.

On the other hand, you may need to report as income:

  1. Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
  2. Amounts received as payments for teaching, research, or other services.

See this IRS guide for more information.

Scholarships can affect financial aid eligibility. This is because your total student aid (scholarships, grants, etc.) cannot exceed the total amount required to attend school. In some cases, receiving scholarships may lower your other financial aid sources.

See this Federal Student Aid guide for more information. You can also speak to your school’s financial aid department for details.

How to avoid scholarship scams

Scams are everywhere, and, unfortunately, scholarships scams exist. Here’s what you need to know to avoid them.

For the most part, you’ll simply need to follow the age-old logic: If it sounds too good to be true, it probably is.

For instance, if any scholarship “guarantees” an award, it’s a scam. Scholarships are always on an application basis and are only awarded to the most deserving applicants.

Additionally, avoid any scholarships that charge application fees. These are scams: No legitimate scholarship should charge students a fee to apply.

There are certain scholarship search services that may charge a fee. These aren’t necessarily scams, but because there are many free options out there, you can simply avoid these as well.

FAQs about scholarships

Didn’t find exactly what you were looking for? Here are some answers to commonly asked questions about scholarships.

Scholarship frequently asked questions

Which scholarships are easy to get?

It’s impossible to gauge how easy it will be to actually be approved for a given scholarship. An independent panel or individual will determine which applicants should receive the scholarship award, and students have no control over this process.

However, students can look for applications that are easy to apply for. Opportunities that don’t require an essay are usually the quickest.

What GPA do I need for a scholarship?

Many scholarships are academically-focused and may require a certain grade point average (GPA). An academic scholarship application may ask for a GPA of 3.5–4.0.

However, there are plenty of scholarships that aren’t dependent on your GPA. In fact, some applications don’t even ask for your grades. If you have a lower GPA, don’t worry — there will still be scholarships that you qualify for.

Can you buy a laptop or supplies with a scholarship?

In most cases, scholarship awards are sent directly to the college or university. The scholarship money can usually only be used for tuition and related fees. However, there are some scholarships that award checks directly to students. In some cases, these funds are more flexible in how they can be used. Check with the scholarship sponsor for details.

What is the best way to apply for scholarships?

The best method to apply for scholarships is to use an online scholarship matching tool or an online database. These websites allow you to enter your information (GPA, planned major, gender, etc.) and find opportunities that you qualify for.

From there, simply follow the application instructions carefully to apply.

Do I need to pay taxes on scholarships?

In general, no. As long as you are pursuing a degree at a qualifying school and the scholarship funds are used to pay for tuition, fees, or books, you should not owe any taxes on scholarship awards.

However, there are some circumstances in which you may owe tax. See this IRS guide for details.

Do scholarships affect financial aid?

Scholarships can affect financial aid in many cases. All your student aid added together cannot exceed the total cost of attending school.

That means that if you qualify for financial aid and then earn a lucrative scholarship, you may have more money than you actually need to pay for school. In this case, your financial aid may be lowered. See this guide for more information.

What is the difference between scholarships and grants?

Grants are based on financial need. This is usually calculated based on the difference between the school's cost of attendance and the student’s expected family contribution (EFC). For instance, students from low-income families may qualify for federal Pell grants based on their financial needs alone.

Most grants are issued by federal and state governments or directly by schools.

Scholarships are available for a variety of reasons, including financial need, academic excellence, athletic performance, and more. You don’t necessarily need to come from a low-income family in order to qualify for a scholarship.

Scholarships also come from a wider variety of sponsors, including schools, businesses, individuals, nonprofits, religious organizations, and more.

How do I receive scholarship funds?

In many cases, scholarship funds will be sent directly to the school you are attending. They will be directly used to pay for college tuition.

Other scholarships may send students funds directly, usually via check or direct deposit.

Conclusion

Navigating the world of scholarships can feel overwhelming, but it will be time well spent. You could be rewarded with thousands of dollars of savings for just a few hours of work.

At a minimum, all students should fill out the FAFSA — but applying for private scholarships is well worth the effort, as well.

Finally, remember that scholarships aren’t the only way for students to save money. For all you savvy savers out there, check out our guide to saving money in college.

about the author

Marc Mezzacca
Marc Mezzacca is CEO of CouponFollow, a consumer savings engine that surfaces popular coupons. He has been in the coupon and deals industry for over a decade with a deep interest in evolving e-commerce technologies.