You were super excited when you opened that email that you were awarded a $2,500 scholarship for future engineering students from the regional association. Since you don’t start college until the fall, you are asking yourself “How do I get that money to help pay for my college costs?” Depending on the timing of its disbursement, scholarship rules, your age, the scholarship amount, and your enrollment, the deliver method may differ by scholarship organization.
Fill out the forms
Before sending the scholarship funds, most scholarship organizations want you to fill out or send some specific information. Many scholarship organizations may require that you send official documentation to document that you are enrolled at a specific college. Others want you to fill out a legal agreement to certify that you are who you are, you plan to meet the terms and conditions of the scholarship, you will take responsibility for taxes or expenses related to the scholarship, and/or that they can use your name or image on publicity releases about the scholarship. In some cases, you may even need to complete eh W-9 Form. Plus, if you are not yet 18 years old, some of the documents may need to be signed by you and your parent or guardian, especially if they are legal agreements. Whatever the forms or documentation is, make certain to know if there are deadlines to send the documents to the scholarship organization and ask any questions to ensure you are know why they need the information and that you are comfortable providing it in order to receive the scholarship funds.
Understand the Implications Based on Your Age and Enrollment
Many scholarships are open to applicants’ years before they attend college. If this is the case, be certain to read the scholarship rules or terms and conditions. For some, they may wait to be attending college at least half time at an accredited postsecondary institution before they will release the funds. This means that both you and the organization need to stay in touch for years to ensure that the funds are still available when you enroll and that you know what you need to do to release the funds to your college.
Other organizations like to distribute the scholarship funds to the individual shortly after awarding the scholarship. This may mean that they must send the money to you directly. Then, depending on the amount of the scholarship and how it is deposited, there may be tax implications. If the amount is over $600, the organization may request that you complete an IRS W-9 Form so that they can issue a 1099 Miscellaneous Income at the end of the relevant calendar year. Consult your tax expert to understand your personal tax implications.
When it is time to distribute the scholarship funds, there are several routes that scholarship organizations take.
Check Made to You
Some scholarships may send a check payable to you directly. If you receive the funds well before attending college, then consider creating a 529 college savings plan account or put the funds into your existing 529 plan. If you are attending college already, check with the college to see if you can sign over the check to the college directly.
Check Made to Your College
Typically, when a scholarship organization makes the check out the college, they send the check directly to the college with details about you and the scholarship. If the scholarship organization sends the check to you which is made payable or co-payable to the college, then most often the school recommends that you send the check to the financial aid office so that it can be reflected in your financial aid offer and then applied to your college student account.
Check to Made to Your 529 College Savings Plan
There are a growing number of scholarships that offer to send funds directly into your qualified 529 college savings plan account. Since 529 college savings plan account can only be used to pay for qualified education expenses, the scholarship organization has the confidence that the funds will be used for their intended purpose, especially if the student is not yet enrolled in college.
Reminder: If you receive other forms of federal, state, or institutional financial aid, the college needs to incorporate any other scholarships you receive into your financial aid package. If you want to read more to understand the scholarship math used by college, dive into The Scholarship Equation post.
If you have questions about the timing of the disbursement or the forms, reach out to your directly to the scholarship organization.
Colleen MacDonald Krumwiede is a financial aid and paying for college expert with over a decade of financial aid experience at Stanford GSB, Caltech, and Pomona College and another decade at educational finance and technology companies servicing higher education. She guides go-to-market strategy and product development at Quatromoney to transform the way families afford college.