The Difference Between Fellowships and Scholarships

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You may have heard other students talk about applying for a scholarship or a fellowship and wondered what the difference is between the two. Scholarships and fellowships are forms of financial aid, but they aren't exactly the same thing. In this article, we'll explore the difference between fellowships and scholarships so that you can learn what each type of aid means for you.

Scholarships Defined

A scholarship is a type of funding that can be applied to educational costs, such as tuition, books, fees, etc. Scholarships are also known as grants or financial aid. There are many different types of scholarships. Some are awarded based on financial need, while others are awarded based on merit. You can also receive scholarships from random drawings, membership in a particular organization, or through a contest (such as an essay competition).

A scholarship is a desirable form of financial aid because it does not have to be paid back like a student loan. The amounts awarded to a student through a scholarship could be as little as $100 or as high as $120,000 on up. Some scholarships are renewable, which means that you can use the scholarship to pay for your first year of undergraduate school and then renew it in your second year, third year, and fourth year. Scholarships are available for undergraduate and graduate level study, but scholarships are typically more plentiful for undergraduate students.

Scholarship Example

The National Merit Scholarship is an example of a well-known, longstanding scholarship for students seeking an undergraduate degree. Each year, the National Merit Scholarship Program awards scholarships worth $2,500 each to thousands of high school students who achieve exceptionally high scores on the Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQT). Each $2,500 scholarship is issued through a single one-time payment, meaning the scholarship cannot be renewed each year.

Another example of a scholarship is the Jack Kent Cooke Foundation College Scholarship. This scholarship is awarded to high school students with financial need and a record of academic achievement. Scholarship winners receive up to $40,000 per year to put towards tuition, living expenses, books, and required fees. This scholarship can be renewed each year for up to four years, making the entire award worth up to $120,000.

Fellowships Defined

Like a scholarship, a fellowship is also a type of grant that can be applied to educational costs such as tuition, books, fees, etc. It does not need to be paid back like a student loan. These awards are usually geared toward students who are earning a master's degree or doctorate degree. Although many fellowships include a tuition stipend, some of them are designed to fund a research project. Fellowships are sometimes available for pre-baccalaureate research projects but are more commonly available to graduate-level students who are performing some form of post-baccalaureate research.

Service commitments, such as a commitment to complete a particular project, teach other students, or participate in an internship, may be required as part of the fellowship. These service commitments may be required for a specific period of time, such as six months, one year, or two years. Some fellowships are renewable.

Unlike scholarships, fellowships are not usually need-based. They are also rarely awarded at random to contest winners. Fellowships are typically merit-based, which means you must demonstrate some form of achievement in your chosen field, or at the very least, demonstrate potential to achieve or do something impressive in your field.

Fellowship Example

The Paul and Daisy Soros Fellowships for New Americans is a fellowship program for immigrants and children of immigrants who are earning a graduate degree in the United States. The fellowship covers 50 percent of tuition and includes a $25,000 stipend. Thirty fellowships are awarded each year. This fellowship program is merit-based, meaning that applicants must be able to demonstrate a commitment to, or at least a capacity for, accomplishment and contributions in their field of study.

Another example of a fellowship is the Department of Energy National Nuclear Security Administration Stewardship Science Graduate Fellowship (DOE NNSA SSGF). This fellowship program is for students who are seeking a Ph.D. in science and engineering fields. Fellows receive full tuition for their chosen program, a $36,000 yearly stipend, and an annual $1,000 academic allowance. They must participate in a fellowship conference in the summer and a 12-week research practicum at one of DOE's national defense laboratories. This fellowship can be renewed annually for up to four years.

Applying for Scholarships and Fellowships

Most scholarship and fellowship programs have an application deadline, which means that you must apply by a certain date to be eligible. These deadlines vary by program. However, you typically apply for a scholarship or fellowship the year before you need it or in the same year that you need it. Some scholarship and fellowship programs also have additional eligibility requirements. For example, you may need a GPA of at least 3.0 to apply or you may be required to be a member of a particular organization or demographic to be eligible for the award.

No matter what the program requirements are, it is important to follow all of the rules when submitting your application to increase your chances of success. It is also important to remember that many scholarship and fellowship competitions are competitive—there are a lot of people who want free money for school—so you should always take your time to put your best foot forward and submit an application that you can be proud of. For example, if you have to submit an essay as part of the application process, make sure that the essay reflects your best work.

Tax Implications of Fellowships and Scholarships

There are tax implications that you should be aware of when accepting a fellowship or scholarship in the United States. The amounts that you receive may be tax-free or you may be required to report them as taxable income.

A fellowship or scholarship is tax-free if you will be using the money you receive to pay for required tuition, fees, books, supplies, and equipment for courses at an academic institution where you're a candidate for a degree. The academic institution you are attending must conduct regular educational activities and have a faculty, curriculum, and body of students. In other words, it has to be a real school.

A fellowship or scholarship is considered taxable income and must be reported as part of your gross income if the money you receive is used to pay for incidental expenses not required by the courses you need to take to earn your degree. Examples of incidental expenses include travel or commuting expenses, room and board, and optional equipment (i.e., materials that are not required to complete the necessary courses).

A fellowship or scholarship is also considered taxable income if the money you receive serves as a payment for research, teaching, or other services that you must perform in order to receive the scholarship or fellowship. For example, if you are given a fellowship as payment for your teaching one or more courses at the school, the fellowship is considered income and must be claimed as income.

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Schweitzer, Karen. "The Difference Between Fellowships and Scholarships." ThoughtCo, Feb. 16, 2021, Schweitzer, Karen. (2021, February 16). The Difference Between Fellowships and Scholarships. Retrieved from Schweitzer, Karen. "The Difference Between Fellowships and Scholarships." ThoughtCo. (accessed March 20, 2023).