The Internal Revenue Service (IRS) defines a scholarship or fellowship grant as an amount given to an individual for study, training, or research, and which does not constitute compensation for personal services. Proceeds of the scholarship offset the cost of the student's education for an upcoming or current academic year, depending on when the student receives the funds. Synonyms include grant, award, housing stipend, fellowship, prize, gift, waiver, allowance, etc.
Generally, tuition scholarships are not taxable to any student, provided the amount does not exceed tuition, required fees, and books. The amount exceeding these qualified expenses is taxable income for both US and international students. There is no tax withholding on scholarships for US citizens. International students are subject to federal tax withholding at the rate of 14% for financial assistance that exceeds basic tuition and fees, including monthly stipends. Tax treaties exist between the U.S. and numerous countries that may provide some tax relief, however each country has different provisions, requirements, and limitations and each student’s situation must be analyzed to determine whether any treaty benefits apply to that individual
Note: All of these forms of payments must be considered educational resources for the student per federal regulations. Therefore, awards will appear in the student’s Financial Aid Summary and may impact their eligibility for other types of financial assistance. To ensure that students receive accurate financial information, we recommend units finalize awarding decisions with ample time for processing.
Indiana State University does not engage in discriminatory practices when awarding scholarship assistance. Criteria for awards are published and accessible to applicants in the online scholarship system The Branch to ensure equal opportunity. Questions may be directed to the Office of Scholarships.
Units select recipients in The Branch based on the criteria of the scholarship agreement (major, grade level, grade point average, financial need, or a combination of other restrictive criteria). Decisions should be rendered within a timely manner.
The Office of Scholarships will work with the Controller’s Office and the Office of Student Financial Aid to ensure fund codes and detail codes align. The Financial Aid Office will disburse the scholarship so that the payment is reflected on the student's account. Outstanding charges, such as tuition, fees, or housing, shall be paid prior to any scholarship refunds being issued.
NOTE: Neither the Foundation nor the University will reimburse any faculty or staff member for payments made to students or on behalf of students.