If you’ve done well with school or sports or are connected with a particular social or cultural group, you might qualify for a scholarship. Scholarship providers typically choose recipients based on an application process.

Scholarships are small gifts of money that do not have to be repaid. In general, very few students receive scholarships and scholarship amounts are modest — the average scholarship runs at about $2,500. Scholarships can help offset college costs and reduce student loan borrowing, but they won’t cover all the costs of education.

How do scholarships work?

Scholarships are generally awarded based on academic merit, but there are options for athletics, leadership, community service and more. There’s no limit to how many scholarships a student can apply to or receive. However, the amount of scholarship funds you receive can affect your eligibility for other forms of financial aid, such as grants and student loans.

• See also: Grants, Student loans

What are the types of scholarships?

Academic institutions typically provide three types of scholarships: academic, or merit-based scholarships, needs-based scholarships and athletic scholarships. Other institutions offer many kinds of private scholarships that interested students apply for.

Merit-based scholarships

A merit-based scholarship is a sum of money awarded to student based on his or her good academic performance in school. This type of financial aid does not have to be repaid.

Needs-based scholarships

A needs-based scholarship is a sum of money awarded to a low or limited income student to help him or her cover the cost of education. This type of financial aid does not have to be repaid.

Athletic scholarships

An athletic scholarship is funding an academic institution awards a student athlete if he or she attends that institution, participates in an organized sport and maintains certain enrollment and academic performance standards. Often the scholarship comes directly from the athletic department, which recruits the student during or after high school.

• National Collegiate Athletic Association (NCAA): www.ncaa.org

Private and government scholarships

Many private institutions award scholarships based on merit, need and other social and cultural factors. Sometimes students can apply for scholarships through state and local government programs. These programs can be set up to help students by subject matter, by cultural or ethnic background or by a specific social interest, such as leadership, volunteerism or social entrepreneurship.

How do I get a scholarship?

Many academic institutions award scholarships to students as part of the college application process. In these cases, the school evaluates students’ admissions applications and notifies qualifying students of their scholarship award when the admission notification goes out.

Many companies, non-profits, foundations and state and local governments also have scholarship programs. You apply for these scholarships directly through the provider and they award scholarships based on a competitive application — usually they require background information, academic information and essays, personal statements or interviews.

Here are some online sources for finding scholarships:

• Fastweb: www.fastweb.com
• FinAid Scholarships: www.finaid.org/scholarships 
• College Board: apps.collegeboard.org/cbsearch_ss/welcome.jsp
• Foundation Center: fdncenter.org 
• U.S. Department of States Scholarships: www.state.gov/m/dghr/flo/c21963.htm

Not all scholarship providers are legitimate, and there are even scams targeted at applicants. To avoid fraud, beware of scholarship scams and never apply to organizations that:

• Charge money to find scholarships

• Offer guaranteed scholarships

• Ask for credit card or bank account information

• Claim to provide scholarships that can’t be found elsewhere

These are common warning signs that the scholarship is a scam designed to steal your identity or money.

Why should I apply for a scholarship?

While scholarship applications can be time consuming, they are worth the effort. If you win several scholarships, you may have enough money to cover a semester of education or more. The work you put in up front may save you in student loan debt.

Are there scholarships for graduate school?

Scholarship-like funding that academic institutions provide for graduate study is usually called a fellowship or assistantship. In some cases, graduate programs award scholarships — but it less common than fellowships and assistantships.

Fellowships

A fellowship can be a grant of money awarded to a graduate student to help pay for education or it can be a position awarded to the student to work within an academic department (usually as a teacher or researcher).

Assistantships

An assistantship — usually a teaching assistantship or research assistantship — is a work position awarded to a graduate student that typically pays a small stipend and, in some cases, also covers the cost of tuition.

• See also: Going to graduate school

There are private scholarship providers that offer funding for graduate students. These websites can help you find sources of funding:

• Fastweb: www.fastweb.com
• FinAid Scholarships: www.finaid.org/scholarships 
• College Board: apps.collegeboard.org/cbsearch_ss/welcome.jsp
• Foundation Center: fdncenter.org 
• U.S. Department of States Scholarships: www.state.gov/m/dghr/flo/c21963.htm

Words to know

Unsure about something you read? Many of the financial terms you came across in this article are defined in our financial glossary. A-Z Glossary

Links we like

Here are a few online resources you might find useful:

• Fastweb: www.fastweb.com
• FinAid Scholarships: www.finaid.org/scholarships 
• College Board: apps.collegeboard.org/cbsearch_ss/welcome.jsp
• Foundation Center: fdncenter.org
• Athletics: www.ncaa.org
• U.S. Department of States Scholarships: www.state.gov/m/dghr/flo/c21963.htm