Are scholarships taxable?

Many college students receive scholarships or fellowships to help pay for their education. If you are in college and received a scholarship or fellowship grant, there are a few key points to keep in mind. Qualified scholarships and fellowships are treated as tax-free and not included in taxable income if all of the following conditions are met:

• You are a candidate for a degree at an educational institution.
• The amount received as a scholarship or fellowship is used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction.
• The amounts received are not a payment for services.

If the scholarship or fellowship received exceeds the cost of tuition, fees, books, or other qualified expenses listed above, the excess will be taxable.