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Are Scholarships Taxable?

Wednesday, September 12, 2018  

From 1954 to 1980, scholarships, grants and fellowships for degree candidates were entirely tax-free, including amounts used for tuition & fees, textbooks, equipment, travel and research. Since then, several amendments to 26 USC 117 began taxing scholarships, grants and fellowships for the first time, significantly narrowing the tax-free status. Taxing financial aid prevents students from making full use of their scholarships, fellowships and grants. Scholarships, fellowships and grants are the only form of generosity that is taxed by the federal government.

 Mark Kantrowitz, NSPA Advocacy and Research Committee member and Publisher for clarifies the tax treatment of scholarships, grants and fellowships under current law, explores the harmful consequences of these taxation policies to students, and offers recommended changes to address these issues. Click here to read more. If you would like more information on this topic and/or are willing to support NSPA advocacy efforts related to this issue, please email

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