How do scholarships work? A complete guide

College is expensive, and many students seek ways to lower the cost. That’s where scholarships come in! Scholarships are a form of financial aid that does not need to be repaid.

Each year, there are over 1.7 million scholarships available, allowing around 58% of families to use scholarships to help pay for college. But how do scholarships really work? Where do you find them? And how do you increase your chances of winning one? Let's explore how the scholarship process works.

How do scholarships work?

If a student receives a scholarship, the award money either goes directly to the school or to the student. If it goes to the student, they then have to either send the money to the college or use it for approved expenses.

In most cases, the scholarship winner is expected to use the money towards education expenses, such as tuition, room and board, and meal plans. Some awards can also be put towards related costs, such as books or computers. In rarer cases, the student could use the money for anything they wish, including expenses not directly related to their education.

If you win a scholarship, always read over the terms and conditions to know how you can (and can’t) spend the money. If you’re caught using the cash for something not approved, you could have to pay it back.

What types of scholarships are there?

The two main types of scholarships are merit-based and need-based. They can come from institutions, private organizations, individuals, or government agencies.

Merit-based scholarships are for students who excel in school, extracurriculars, or volunteer service. They have varying minimum requirements.

Need-based awards provide financial support to those who face economic challenges and have demonstrated financial need. In most cases, you’ll have to complete your Free Application for Federal Student Aid (FAFSA) to win one of these scholarships. Even private-funded awards may ask for your Student Aid Index (SAI), which comes from the FAFSA.

What are the benefits of a scholarship?

The main benefit of a scholarship is the fact you can use it towards education-related expenses and it doesn’t have to be repaid. In comparison, loans have to be repaid, with interest. If you win enough scholarships, it cuts back on the amount of loans you need or the amount you have to pay out of pocket. Even small amounts can add up.

Scholarship application tips

To increase your chances of winning, follow these tips:

• Track deadlines. Track all scholarship deadlines with a spreadsheet or calendar so you don’t miss one.
• Start your search early. Start as soon as you can to increase the number of awards you can apply to.
• Apply to small and large scholarships. Don’t ignore the smaller awards in favor of the big ones. The small ones add up if you win enough, and they tend to have less competition.
• Put your best foot forward. Whether you’re writing a 100-word personal statement or a 1,000 word essay for the scholarship, always give it your all.

How do you find scholarships?

Students can find scholarships through free online search databases, guidance counselors, and their college.

• Online scholarship search tools: These resources match you with awards you qualify for, saving you hours in research. You’ll also receive notifications when new scholarships pop up that you can apply to.
• Guidance counselors: Your guidance counselor or high school academic advisor likely knows of local, smaller awards you qualify for.
• College: A lot of scholarships come from the colleges and universities themselves. To apply, you just have to apply to the college itself. However, many schools also require a FAFSA and/or the CSS Profile to qualify.

How do you apply for scholarships?

When you’re ready to apply, make sure to read each award’s description, eligibility requirements, and deadlines. Here’s a general process you should follow:

1. Verify that you qualify. Who is the scholarship for? Do you meet all of the eligibility requirements? Some awards will be for specific people based on location, age, major, or another factor, while others are open to anyone.
2. Note the deadline. You’ll have to get your scholarship application in by a specific date to enter. Keep a running list of upcoming deadlines so you can create priorities and stay organized.
3. Complete the application. Depending on the award, you might have to simply send in a completed form with basic information. Other scholarships might require your Student Aid Index (SAI), an essay, transcripts, letters of recommendation, resume, or something else.
4. Submit. Some scholarships may use an online portal, while others require you to submit the application to an email.

The scholarship’s description often lets you know how and when you’ll be notified if you win, so keep a lookout for updates after you submit your application.

How are scholarship winners selected?

How scholarship winners are selected depends on the organization and purpose of the awards. Many use a selection committee, which reviews the applications starting with an eligibility screening. If a student is found not to qualify or didn’t fully complete the requirements, their application is put aside.

The committee then uses a set of criteria to evaluate each application fairly. Winners will align with or exceed the scholarship’s goals. Once a winner (or winners) is selected, the organization contacts them. If the winner declines the award or is no longer eligible, the award may go to the next qualifying individual.

How do you maintain a scholarship?

Some scholarships require you to meet specific criteria even after you receive them, and others are renewable for a set number of semesters or years. To maintain your scholarships:

• Take the required number of classes. If the scholarship requires you to be a full-time student, you’ll need 12 to 15 credit hours per semester. Others might only ask you to take 6.
• Use your funds only as permitted. If the award specifies that the money is only for tuition, don’t use it to buy books. If you’re caught, you could have to pay it back.
• Meet minimum GPA requirements. Renewable scholarships usually have a minimum GPA requirement to receive the award the following year.
• Complete other stipulations. Some awards come with specified responsibilities, such as attending an event or mentoring a future scholarship winner.

What can you use scholarship money for?

Just as every organization has unique application requirements, some also have their own rules regarding what the money can be used for. The terms are usually detailed by the scholarship provider. Almost all rewards can be used towards tuition, but many can also be used for books, course materials, or living expenses.

More scholarship FAQs

Is there a limit to the number of scholarships I can accept?

No, you can apply to as many scholarships as you want, provided that you meet their qualification criteria and you can accept all the scholarships that are awarded to you.

However, winning outside scholarships can affect how much financial aid you qualify for. Communicate with your school’s financial aid office to ensure your bills are paid for properly.

Do I have to inform the college I am attending about my scholarship awards?

Yes, you should inform the college as soon as you know you’ve won a scholarship. They may need to adjust your financial aid offer as the school can’t offer more federal financial aid than you need. Your scholarship winnings may alter your financial need. Consult with the financial aid office if you have any questions.

Do I have to return the scholarship money after I graduate? If not, are there any other conditions that I need to meet?

No, in most cases, you don’t have to return scholarship money. However, you may have to pay it back if you fail to meet requirements set by the organization when you applied.

Will I be awarded any scholarship I apply to if I meet all the eligibility requirements?

No, simply meeting the scholarship’s requirements doesn’t guarantee you’ll win. Awards can be highly competitive. However, the more scholarships you apply to, the more chances you have to win.

What should I write about for my scholarship essay?

What you write about for your scholarship essay depends on the award and your personal preferences. Some scholarships ask you to write about a very specific topic, while others accept any essay or personal statement. Choose a topic that helps you stand out.

What is required in high school to get a scholarship?

Requirements are scholarship-specific. Some awards might require a minimum high school GPA, while others state you have to have competed in a specific sport throughout your entire high school education. If you meet the requirements, you can apply for that scholarship.

How can high school juniors and seniors get scholarships for college?

Scholarships aren’t just for students going to college in the fall. There are awards for high school seniors, juniors, and even younger students available. You can use a scholarship database to find awards you qualify for, even if you’re not a high school senior.

Scholarships don't require repayment and can help cover college costs if you invest time in searching and applying for those that match your interests.

Ready to start applying? Use our free Scholarship Search tool to find scholarships that you can apply to.