How to Use Scholarship Money

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Scholarships come from both public and private institutions.
Scholarships come from both public and private institutions. (Image: Jupiterimages/Photos.com/Getty Images)

Scholarships make a difference to your financial situation during school no matter how much money an organization awards you. Whether the sum is large or small, scholarships reduce the amount of money you must borrow or pay out of your work income. Take full advantage of scholarship money and open up an interest earning account to hold the sum, if you do not spend all of it immediately on tuition.

Ask the scholarship organization if it can pay the money directly to your school. A direct money transfer lessens the temptation to spend the scholarship on other items. If you pay for school using loans or out-of-pocket money, a scholarship can relieve some financial burden. Your monthly loan payment will be less upon graduation if you limit the amount of loans you take out for tuition costs.

Read what restrictions apply to your scholarship money. The organization that awarded the scholarship to you will stipulate what you can and cannot buy with your money. For example, buying textbooks with a college scholarship is permissible, but buying a trampoline is probably not. If you spend scholarship money in restricted ways and the awarding organization finds out about it, you may have to pay the money back with interest.

Create a bank checking account that is solely for handling your scholarship money. Keeping the scholarship money in its own account makes monitoring the scholarship balance and spending much simpler. Additionally, a separate account eliminates the possibility of spending scholarship money on restricted items.

Budget the remaining scholarship money with your other income and expenses. Knowing the amount of money you have will prevent overspending. You can use the remaining money for textbooks, school supplies or toward bigger items like a new computer.

Save any unspent scholarship money and place it in a savings account. The money will gain interest as it sits. Earning interest on free money is smart investing.

Tips & Warnings

  • Scholarship students should meet at least once a semester with their college counselor to discuss their academic progress and current financial situation and learn about opportunities for new scholarships.

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