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Tax Factor – Are Scholarships Taxable?

The studentships are basically an amount that is paid to students or educational institute to aid in the pursuit of studies. Scholarships programs are intended both for undergraduate studies as well as for graduate students.

There are fellowship programs that are specifically awarded to PhD students to aid in the pursuit of research or study. However, The grants may or may not be taxable indeed. Honestly speaking, the fellowships and opportunities are totally tax free, especially in the case if you are pursuing your degree studies or The grant is used to pay tuition fee, and other required fees including equipments, supplies and books. There are some scholarship programs that are not tax exempted. So, you need to check with the financial department of the college for the same.

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Any amount that is used by the students to cover their living expenses is subject to taxable. Usually, whether the aid amount is tax exempted or taxable depends on the expenses paid with the aid amount and whether you are a degree student.

The aid amount can only be tax exempted if you meet the below creation:Are Scholarships Taxable

-You need to be a candidate pursing a full time degree program at any authorized and registered educational institution that maintains a regular curriculum and faculty and must have a regularly enrolled student body.
-If you use the aid amount to cover the qualified education expenses

The Qualified Education Expenses Include

-Tuition fees and other fees required to enroll or attend any eligible educational program or institution
-Other course related expenses including supplies, books, fees, and equipments required during the course at registered educational institution. All these items must be required by all students enrolled in the specific program.

However, to make your scholarship tax exempted it is necessary to avoid using the aid amount for un-qualified education expenses including, paying for board or room or other expenses that are not related to the course program.

The Expenses that Don‡t Qualify

-Room and board
-Clerical assistance
-Equipments and all other expenses that are not required for enrollment or enrolling in an non-eligible educational institution

This is even true in the case if the aid amount is directly transferred to institute‡s account as a condition of attendance or enrollment. The scholarship or fellowship amount used to cover all these expenses is completely taxable.


Financial aid officers are of great help for students in such situation. They have great knowledge about tax issues that usually surround the students in their school years. Any student facing tax problems with their financial aid award may directly approach the financial aid office of their nation and try to reformulate the conditions of the scholarship program to either eliminate or minimize the tax implications.

Also go through:
A Guide to Student Loan Forgiveness to Eliminate Debt
International Student Loans Without a Co-Signer