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April 12, 2024

Scholarships: The Smart Education Investment

Scholarships: The Smart Education Investment

By Matt Konrad

As the world of higher education faces an uncertain future, there are two things we know for sure: education will be a key to our recovery, and students will need our support more than ever as they return to school.

Support for students can take many forms; starting a scholarship program can ensure you have an impact now, and well into the future. Getting started can be a challenge – but partnering with an experienced nonprofit like Scholarship America ensures you the simplest setup, the greatest financial flexibility and the most trusted management you can get.

Establishing a Scholarship Fund

The first step toward establishing a scholarship program is determining where the funds will come from – and there are as many options available as there are donors.

The most straightforward way to fund any scholarship, of course, is through a cash transfer. You have liquid assets, and you transfer them to a school, foundation or nonprofit for the purpose of creating a scholarship fund. In the case of a nonprofit partner like Scholarship America, that contribution can be tax-deductible, provided you follow certain criteria.

But cash is only the start. Scholarship America can create scholarship funds with gifts of stock; with grants from Donor Advised Funds; with bequests or planned gifts; and with IRA charitable rollover dollars. (As of the 2022 tax year, investors who have reached 70.5 years of age can transfer up to $100,000 per year to charity and avoid a sizable tax bill.)

What’s more, Scholarship America can create a scholarship fund on your behalf that can receive donations from others – helping you take your own passion for education and inspire others to make an even bigger impact.

Flexible Fund Management to Fit Your Needs

Our team works with all kinds of individuals, foundations and companies to design scholarships, and that includes determining the best way to structure the investment, management and disbursement of your funds.

The most common type of scholarship fund that our partners create is an endowed scholarship fund, also known as a permanently restricted fund. This type of fund uses the interest earned on the principal to pay out scholarship awards (as well as our program management fee), while leaving the principal invested for future earnings. A temporarily restricted fund allows for both the principal and the earned interest to be distributed.

Our partners have an array of choices when it comes to investing. We offer a range of investment portfolio options to choose from, ranging from conservative to growth-oriented. Funds are managed in partnership with Graystone Consulting, a part of Morgan Stanley with over 40 years of investment advisory experience; the firm was selected and approved by our Board of Trustees.

Starting small but making big plans for the future? The principal of a scholarship fund can be built up to any specified level before earnings are spent, and we often work with partners on deferred investments, bequests and other ways to increase fund levels over the life of the scholarship program. All scholarship funds established with Scholarship America are protected from creditors, and investors receive periodic reports from our Finance team.

Tax Regulations of Charitable Scholarship Donations

Due to IRS regulations, most scholarship programs are legally required to be operated by a registered  501(c)(3) organization. Creating a scholarship through Scholarship America saves you from having to set up your own foundation and get IRS approval.

Because of Scholarship America’s 501(c)(3) nonprofit status, the funds you use to start a scholarship program may be tax-deductible, provided Scholarship America is given exclusive legal control over the assets: funds are permanently transferred to one of our portfolios, and Scholarship America is responsible for the selection of scholarship recipients, based on the criteria you define.

Funds cannot be returned once transferred, but all of our scholarship fund agreements include a sunset clause.

Making an Impact, Your Way

Scholarship America’s decades of experience designing scholarship programs give us an edge when it comes to getting your funds into the right hands.

We will work with you to identify the kinds of students you want to support, and to develop a custom program designed to reach them. Our team collaborates with each and every partner to establish award amounts, selection criteria and evaluation metrics that ensure you’re making a real impact on what matters to you.

Your Scholarship America scholarship fund isn’t a one-size-fits-all charitable donation. It’s a custom, purpose-built program that helps you make educational dreams come true for the next generation of learners.

Ready To Talk? Contact Scholarship America Today

Note: This information is not to be considered legal advice. Please consult with an attorney, wealth advisor or tax consultant to learn how investing in a scholarship can work with your personal finances.
April 12, 2024

Scholarships: Your Company’s Most Impactful Investment

Scholarships: Your Company’s Most Impactful Investment

By Matt Konrad

For companies of all sizes, leading with purpose—that is, working toward a mission and considering corporate social responsibility (CSR) in decision-making—has never been more important. 78% of Americans “believe companies must do more than just make money; they must positively impact society as well,” and companies that put their corporate responsibility goals front and center are more likely to recruit and retain employees, create consumer loyalty and build trust across all types of stakeholders.

Of course, leading with purpose requires investing in the people, programs and initiatives that make it possible. And when it comes to that investment, there’s no better way to make a lasting and targeted impact than with a scholarship program.

Scholarships are an investment in your future workforce.

No matter what your company does, one thing is always true: your success comes down to the people doing the work. Whether you’re a family plumbing company, a regional retailer or a Fortune 500 finance firm, you’re relying on a trained, skilled and committed workforce to be at your best—and finding and maintaining that workforce is historically challenging right now.

The Bureau of Labor Statistics reports that there are nearly 10 million job openings in the United States, and only around 6 million unemployed workers. Thanks to the COVID-19 pandemic and its follow-on effects, economists predict that the current labor shortage may last for several years, leaving companies struggling to find staff.

Investing in education can make an immediate difference, helping your current employees or others in your industry boost their skills and advance their careers, like the United Health Foundation’s Diversity in Health Care Scholarship. And it also means you’re creating a pipeline of diverse talent for the future, by identifying and supporting the next generation of makers, doers and leaders in your industry or community, as is the goal of the Amazon Future Engineer Scholarship. As companies look for sustainable ways to create diverse talent pipelines, there’s no smarter way to do so than by investing in education.

Private scholarships give students the freedom to pursue what works for them.

Of course, there are lots of ways to make your educational investment—and many corporations and foundations have traditionally done so by supporting colleges and universities.

But while a gift or an endowment can help leave your mark on your community or alma mater, the truth is that giving directly to a single school doesn’t allow your dollars to make the biggest possible impact. Those funds can only go to a student who opts to attend that school, and are distributed at the college’s discretion. The student who receives them may or may not ever have a connection to your company, and they may not even need the support in the first place.

On the other hand, funding a private scholarship ensures that your dollars support the exact population of students you care about. Scholarship dollars follow the student who earns them, wherever their academic journey takes them. And that means you follow that student, and can provide them with access to mentoring, internships or other supports as they move from college to the workforce.

Scholarship partnerships bring you closer to the communities and people that matter to you.

As a result, the connection you build with students through scholarships goes much deeper than a check and a handshake. By investing directly in the communities you care about, you’re putting your company’s money where it matters. And by making a commitment to students in need, you’re telling those students and their families that you’ve got their backs—an investment that means so much more than a company logo on a plaque at your local college.

The world of higher education stands at an inflection point right now. Schools are settling into new post-pandemic realities; the Supreme Court’s decisions on affirmative action and student loan forgiveness are reverberating through historically marginalized communities; upcoming changes to the FAFSA will impact how students in need access federal help.

As students begin and continue their college careers in the face of this generational change, the generosity, flexibility and impact of private scholarships are more vital than ever. Together, we have the chance to lead with purpose, build the future workforce and change lives for the better. If you’re ready for your dollars to make the biggest impact they can, get in touch and let’s talk about making an investment in students.

Get in touch. Boost your impact.
April 10, 2024

Featured Partner Scholarships: February/March 2024

Featured Partner Scholarships: February/March 2024

By Matt Konrad

As we move into spring, scholarship season is heating up too—our featured programs this time around include a $25,000 STEM award, a scholarship specific to students with disabilities and an innovative program from the United Health Foundation for medical professionals to boost their skills and earn new credentials. Check them out here, and visit our Browse Scholarships page to see all currently open applications!

Constellation Scholars

Constellation is the nation’s largest producer of carbon-free energy and a leading supplier of energy products and services. Through Constellation Scholars, a philanthropic program combining existing and new educational support initiatives, the company is working with colleges and nonprofit organizations to create scholarship opportunities—including renewable $5,000/year scholarships to eligible students from traditionally underrepresented populations in Illinois, Maryland, New York and Pennsylvania. 

“Part of our commitment to accelerate the clean energy transition is growing our investment in the communities we serve and the talented young men and women who will help lead us toward a more sustainable future,” said Joe Dominguez, president and CEO, Constellation. “We’re dedicated to bridging the educational and opportunity gaps that exist in our society and supporting the bright young minds who have the potential to become leaders in our industry and in STEM fields overall.” 

Applicants must be high school seniors who self-identify as Black or African American, American Indian or Alaska Native, Hispanic or Latino, Asian, Native Hawaiian or other Pacific Islander, and must be planning to enroll in part-time or full-time undergraduate study at an accredited college or university or for the entire upcoming academic year. To qualify, applicants must also be pursuing a major in Engineering (specifically Mechanical, Electric, Computer, or Nuclear) Computer Science, Data Science, IT, Cybersecurity, Finance or Business. 

Awards are renewable for up to five total years or until a bachelor’s degree is earned, with a maximum total of $25,000 over five years. 

Applications are open through March 15. Apply Now > 

United Health Foundation Diversity in Health Care Scholarship 

Now in its second year, the United Health Foundation’s Diversity in Health Care Scholarship supports underrepresented health professionals in obtaining additional certifications or degrees in medicine, nursing, midwifery, mental health and other specialties to advance their careers.  

This program is open to current or former health professionals and will award 325 scholarships of $3,200 to students from historically underrepresented populations who are seeking to advance their clinical skills. To check your eligibility, you can review the lists of acceptable degree programs and eligible current or active licenses and certificates. Please note that physicians who are seeking additional certifications or degrees are not eligible. 

You must currently hold an active license/certificate to practice in a clinical health career, and plan to enroll in full-time or part-time study at an accredited two- or four-year college, university, vocational-technical or graduate school, starting in Fall 2024.   

The United Health Foundation’s Diversity in Health Care Scholarship is open to students from historically underrepresented communities, including those who identify as Black or African American, Hispanic or Latino, American Indian or Alaska Native, Asian, and Native Hawaiian or other Pacific Islander.   

“I’m currently trying to get my Doctor of Nursing practice in midwifery… I want to help individuals who feel like they are not being represented in the medical field,” says Tuyet Nhu Truong, a registered nurse who is using her scholarship to work toward becoming a certified nurse midwife with a Doctorate of Nursing Practice.

Application is open through March 22. Apply Now >  

Wells Fargo Scholarship for People With Disabilities 

According to U.S. Department of Labor statistics, Americans with disabilities face an uphill battle when it comes to joining the workforce. While nearly 77% of working-age people (ages 16-64) without disabilities are currently employed, less than 40% of those with disabilities are active in the workforce. Educational opportunities can help close that gap, that’s why Wells Fargo is proud to offer the Wells Fargo Scholarship Program for People with Disabilities. This program is geared specifically toward part-time and full-time college students with disabilities, helping them pursue the education or training they need to succeed in their chosen career path.  

In partnership with Scholarship America, Wells Fargo has provided more than $1 million to help 228 scholarship recipients with disabilities achieve their educational goals. In 2024, the Wells Fargo Scholarship for Program for People with Disabilities will once again provide awards of up to $2,500 to qualifying full-time students, renewable up to three years. Awards of up to $1,250 are available to qualifying part-time students and are renewable up to seven years, or until a bachelor’s degree is earned, whichever occurs first.  

“I believe programs like this pushed me to use my voice to advocate for myself and others,” said Gloria Li, a 2019 University of Florida graduate with Tourette’s syndrome, who received the Wells Fargo Scholarship for People with Disabilities for two years. “I am truly grateful for scholarship programs like Wells Fargo’s because it sends the message that people with disabilities have potential that transcends the limitations they were born with and that we deserve a voice and representation in society.” 

Applications are open through March 20. Apply Now > 

Browse Scholarships
April 9, 2024

Featured Partner Scholarships: March 2024 (Part 2)

Featured Partner Scholarships: March 2024 (Part 2)

By Matt Konrad

Scholarship season is as busy as it gets—and even if you’re still waiting on FAFSA information, you can apply right now for all of the open programs on Scholarship America’s Browse Scholarships page! There are lots of great options; today we’re featuring a program to help students from low-income communities pursue financial services careers, and a nationwide scholarship for veterans from Wells Fargo.

CME Group Foundation Scholarship

CME Group Foundation strives to empower future generations through education—equipping today’s students to meet tomorrow’s challenges. Their specific focus is on preparing students from low-income and historically underserved communities for careers in financial services, and they work with a prestigious group of partner schools that provide evidence-based support programs for this group of students majoring in fields related to the financial services and technology industries. 

Each year, a new cohort of 15 CME Group Foundation Scholars are able to pursue their college dreams thanks to support from this program. Aiko Castrejon, a member of the Class of 2023 at the University of Illinois-Chicago and a CME Group Foundation Scholar, said of her award: “The CME Group Foundation Scholarship means I can relieve the financial burden and stress of my education on my family as I become a first-generation college graduate. I am also beyond grateful for the networking opportunities and other resources.” 

Eligible students can now apply for renewable scholarships of up to $20,000 to be used toward a degree in finance, computer science, math, cybersecurity, data science, financial engineering, accounting, information technology or statistics at one of eleven CME Group Foundation partner schools (located in Illinois and New Jersey).  

CME Group Foundation Scholars must come from a low-income and historically underserved community, and must be current or rising sophomores, juniors or seniors who plan to enroll full-time at one of the specified partner schools for the entire upcoming academic year. Students enrolled in a 4+1 MS program are eligible. Applicants must have a minimum GPA of 2.5 on a 4.0 scale (or its equivalent).  

In addition to receiving a scholarship, CME Group Foundation Scholars will earn an expenses-paid trip to attend a one-day market education program at CME Group in Chicago in August 2024. 

Applications are open until April 4. Apply now > 

Wells Fargo Veterans Scholarship and Emergency Grant Programs  

While military service comes with education benefits, many veterans returning to school still face gaps in funding – especially when it comes to unexpected costs and living expenses. The Wells Fargo Veterans Scholarship and Wells Fargo Veterans Emergency Grant programs are designed to help veterans complete the postsecondary education or training they need to return to — and succeed in — civilian life and work.  

The Wells Fargo Veterans Scholarship provides scholarships up to $5,000 per year, helping veterans and the spouses and widows of service-disabled veterans cover costs that remain after they’ve used their military benefits and other grants. Scholarships are renewable each year, to help recipients focus on completing their degrees rather than worrying about paying for future costs.  

Thanks to the Wells Fargo Veterans Scholarship, students like Carmelos Brown have been able to pursue their post-service career goals. Carmelos is a U.S. Army veteran and serves as the president of the Student Veterans of America (SVA) chapter at Florida’s Santa Fe College.  

“Receiving a scholarship has been a game-changer for me,” he said. “I can’t express enough gratitude for the support that’s eased the financial burden. It’s not just about the funds; it’s about the doors of opportunity that have opened up. “Of course, the college journey isn’t always smooth, and that’s why the Emergency Grant component of the program is there to help when financial setbacks strike. Veterans enrolled in higher education can apply for emergency grants when faced with unexpected bills or costs. Ranging up to $1,000, these immediate, one-time grants are designed to keep recipients in school and on track without creating undue financial hardship.  

If you or a family member are a veteran, you may be able to benefit. If not, please take a moment to share the link with veterans and military families you know. The more we can spread the word, the more veterans we can help get through college!  

Wells Fargo Veterans Scholarships are open through April 10. Emergency grant applications are open via the same link as long as funds are available. Apply Now >

Scholarship America Dream Award

The Scholarship America Dream Award is designed to help you keep moving toward a degree, by providing a scholarship that sticks with you for up to four total years. College undergraduates can earn renewable awards of up to $10,000 per year.

We believe in tearing down the barriers to a college degree — and that’s why the Dream Award is a scholarship open to all. Your ethnicity, family history, school access, gender, sexual orientation or immigration status should not be an impediment to attending college and pursuing your dreams.

If you’re at least 17, a current college undergraduate* in the U.S. with a minimum cumulative GPA of 3.0 on a 4.0 scale (or its equivalent), and plan to enroll in full-time undergraduate study next year, you’re invited to apply.

The Dream Award is open to U.S. citizens, U.S. permanent residents (holders of a Permanent Resident card), or individuals granted deferred action status under the Deferred Action for Childhood Arrivals program (DACA).

Our Dream Award Scholars have overcome incredible challenges ranging from family tragedies to physical struggles to systematic inequities. We are proud to support their educational dreams — and if you’re struggling to pay for college, we encourage you to learn more about eligibility details and apply.

(*High school seniors or graduates from Bayfield, Wisconsin and Cleveland, Minnesota are eligible to apply for the Jon G. Carlstrom Dream Award scholarship, using the standard application.)
April 9, 2024

The Big Questions About Scholarship Taxability

The Big Questions About Scholarship Taxability

By Matt Konrad

Updated April 2024

Students who receive financial aid may have an unexpected bill to pay—a tax bill. While most scholarship awards are not taxed, there are a number or circumstances in which they can be, and many students and parents may not know the details. Here are some of the most pressing questions we’ve heard regarding scholarships and taxation right now.

Do college students have to file tax returns?

If a student’s taxable income exceeds $12,950, they are required to file a tax return – even if their parents still claim them as a dependent. If a student’s taxable income is less than that threshold, it can still be a good idea to file – they may be eligible for a refund of federal taxes withheld by their employer, or may qualify for the Earned Income Tax Credit.

Is my private scholarship subject to taxing?

In general, scholarship funds cannot be treated as taxable income as long as you’re (a) pursuing a degree and (b) using the funds for tuition, fees or anything else that the IRS considers a “qualified education expense.” Those include books and supplies that are required for your program of study.

However, if you’re using all or part of your scholarship funds to cover room and board, travel, tutoring services or optional supplies, that money will be treated as taxable income.

Since private scholarships are often lenient about how funds can be used, it’s important to know in advance that you might face tax penalties if you’re using private scholarship funds to pay for extra living expenses, technology or travel costs. In addition, stipends or cash payments received in addition to the scholarship and used for non-tuition expenses will be considered taxable. (These payments should be accompanied by a 1099 tax form, making it easier to include them in your taxable income calculations.)

Here’s more on scholarship taxability from TaxSlayer, including a guide to the necessary IRS forms and worksheets. Keep reading for our tips on reducing your potential tax burden.

Do I have to pay taxes emergency grants or relief funds?

If you’ve received an emergency grant from your school or a nonprofit, those funds are generally treated the same way as scholarships: funds used for qualified education expenses are not likely to be taxable, while funds used for other purposes (transportation, child care, medical bills) will be.

The exception to this rule is funding received as a result of a federally declared state of emergency—this is a broad category of federal assistance that helps people recover in the face of natural disasters, and part of its legal definition is that it is not considered taxable income. For example, when the federal government declared a state of emergency related to COVID-19, it meant that stimulus checks and COVID relief payments would be non-taxable. If you’re displaced by a hurricane, earthquake or fire and you receive money from the federal government, it would fall into that category as well.

(Note, however, if you receive emergency aid funds in the form of a grant or scholarship from your state or a private provider, the tax rules outlined above may apply. As always: be aware of tax implications when you receive your funds, and avoid surprises later.)

What about student loan repayments and forgiveness?

While much is up in the air about student loan forgiveness, we do know that all student loans forgiven by December 31, 2025 will not be taxed. The tax-free status is also extended to employer provided student loan repayment assistance programs. Previously, employers were able to provide up to $5,250 of tax-free aid to assist employees with student loan payments. The $5,250 cap has been lifted and employers can now provide student loan repayment assistance without limitations until December 31, 2025.

Are postgrad scholarships or teaching stipends subject to income tax?

Graduate student funding tends to be more of a gray area in terms of taxation. The same basic rule applies—scholarship funds used for tuition or required supplies are not taxable—but teaching stipends and fellowships can come with their own tax burdens.

Intuit, makers of TurboTax, offer a useful example:

In some cases, a scholarship is really more of a stipend, providing compensation for services while you’re in school or for services you’ll provide in the future. If, for example:

You receive a $5,000 scholarship with $1,500 of it designated to pay for your teaching services.

The $1,500 counts toward your taxable income for the year.

If you receive a scholarship with the condition that you provide services in the future, you’ll need to count the scholarship as income in the year you receive it. Payment for services at a military academy also count toward your taxable income.

This is obviously contingent on how your funding is structured, so it’s important to talk with your financial aid office before committing to an offer. (The same is true for any work-study funds, but teaching stipends are most likely to be bundled together with nontaxable scholarship funding.)

Postgraduate fellowships fall into a similar category, as you can hear in this episode of the Personal Finance for PhDs podcast. Since these funds are often used for living or traveling expenses, they’re among the most likely type of financial aid to be taxed—especially if you’re receiving them for a discrete research project rather than part of a degree program.

What do I need to know about the taxability of my scholarships or grants?

In addition to staying aware, it is also important to keep track of your scholarships and grants. For example, did it cover tuition and fees or other expenses, and what semester was it applied to?

Typically, at the end of January, your campus should issue a summary (Form 1098-T) of what financial aid was applied to your tuition, and, a total of all scholarships and grants received on your behalf. If you do not receive this document through your financial aid portal, via email or mail, please contact your financial aid office. You can share all of this information with your tax preparer; if you or your family don’t have a tax preparer you may qualify to work with one free through the IRS Volunteer Income Tax Assistance Program.

If you receive private scholarships that can be used for living expenses, let your college financial aid office know. You can talk with your financial aid advisor about deferring part or all of your scholarship to a year when your taxable income may be lower.

Finally, you and your family may also want to explore putting funds into your state’s 529 college savings plan. Setting this up may require a professional financial adviser, but 529 funds also avoid some of the tax penalties that can affect scholarships.

To help you figure out the taxability of your scholarships or emergency grants, consult our infographic.

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