Almost all scholarship sponsors have rules for using their money. Make sure you understand those rules and the consequences of breaking them, especially before you apply!
Typical Scholarship Rules for Using the Money
Many students avidly read the rules for scholarship eligibility, but do not realize that there are more rules to follow for using the money. These rules may affect just how valuable the scholarship may be to you. Here are some questions to ask yourself as you evaluate potential awards:
- Is it renewable? If a scholarship is renewable every year, it can pay your college costs for up to four years. But you will have to meet certain annual benchmarks, such as a minimum GPA, in order to keep it.
- What expenses does it cover (and not cover)? Some scholarships cover only tuition and fees but others cover expenses such as room and board, books, computers, commuting expenses, and school-related supplies.
- Are there any rules related to financial aid? Some scholarships require you to apply for and accept federal financial aid each year. In these cases, the scholarship is meant to only cover any unmet need.
- What is required to keep the scholarship? There are often rules for using the scholarship money for specific purposes, such as pursuing a particular major or career. If you change your mind about your studies or career plans, you may be required to give up the scholarship or even return the money you have spent.
What's the bottom line? Before you accept a scholarship award, make sure you understand your end of the arrangement.
The Consequences of Misspent Scholarship Money
What happens if you use scholarship money for something the rules don't allow? In most cases, you will have to repay the entire award—sometimes with interest—even if you drop out of college. Even bankruptcy might not save you from your legal responsibility.
If possible, choose to have your scholarship money sent directly to the college. If the money is awarded in a lump sum and only a portion of it must be used for direct college expenses, you are still better off sending the entire scholarship directly to the college. The college can then deduct its expenses first and issue you the balance.
If the entire amount is sent to you or your portion is sent in a separate check, plan exactly what you will do when the check arrives. Know what college-related expenses you will pay for and stick to your plan. If you're given money for a computer and spend it on spring break, you may have a rude awakening when that computer isn't there when you need it.
There's nothing like staring at a check worth several thousand dollars. It's natural to dream a little. But stick to the rules and support your college dreams instead.