A scholarship may be part of the financial aid package a college or university offers you. Many groups and organizations also award scholarships to students who meet their criteria.

In most cases, scholarships do not have to be repaid and are not considered income, which means they are not taxable. This makes them preferable to loans, which must be repaid.

Some scholarships are need-based, and that need is often determined by the information you provide when you complete the Free Application for Student Aid (FAFSA). Other scholarships are merit-based and reward you for your academic or athletic achievements. Some scholarships are awarded based on:

  • A particular field of study
  • A specific ethnic background
  • A religious affiliation
  • Another special interest

Colleges and universities may offer scholarships to allow students with financial need to attend the school.