What's the difference between grants and scholarships?

[mazewanderer]

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@swimcastsmom

Grants and scholarships are treated the same taxwise. If they are used for tuition/fees/required books they are non taxable. If they are used for non qualified expenses such as room and board they are taxable.

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<p>There are certain grants by the govt. where they need to be treated differently i.e. as capital for investment projects etc. Grants can be give for a variety of purposes
and treated differently ([Analyzing</a> the Tax Implications of Grants Received for Investment Tax Credit?Eligible Property](<a href=“http://www.aicpa.org/Publications/TaxAdviser/2010/August/Pages/clinic-story-01.aspx]Analyzing”>http://www.aicpa.org/Publications/TaxAdviser/2010/August/Pages/clinic-story-01.aspx)).</p>

<p>However, you are absolutely right that in the limited educational context that CC deals with, they are treated the same. I had in fact mentioned that in my posting and I should not have muddied the waters by mentioning that as it not relevant to college grants.</p>

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@thumper1

Depends on the school. DD’s grant from her university was both a merit AND need based award. The continuation of the award required a GPA of a certain level. Her senior year, this same grant was continued AND increased, and we had NOT A PENNY of financial need (her brother had graduated from college).

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<p>In many cases the difference between grants and scholarships is semantic. Many grants are treated like scholarships etc. as you point out. In many cases it does not make a difference if it is called scholarship or grant from the students point of view, it has the same effect.</p>

<p>However grants can be for non educational purposes (community development grant, reinvestment grant), scholarships are generally educational.</p>