Are scholarships, fellowships, and grants considered taxable income?
Generally speaking, scholarships, fellowships, and Pell grants are considered tax-free benefits if paid to an eligible student at an eligible institution.
A scholarship or grant is tax-free if you meet the following qualifications:
- You are a candidate for a degree at a primary or secondary school or are pursuing a degree at a college or university, and
- You use the scholarship, grant, or fellowship to pay qualified education expenses.
- You attend an accredited educational institution that is authorized to provide a program that is acceptable for full credit toward a bachelor’s or higher degree or a program training to prepare students for gainful employment in a recognized field.
For taxation purposes, federal assistance or Pell Grants are considered scholarships.