There is $49 Billion of scholarship money that is out there to help students earn a higher education and that money is growing each year. Of the $49 Billion, approximately $3 Billion came from private donors in the community, and the rest from institutions (i.e colleges). So what is the difference between private and institutional scholarships and how can you get them?

Here is a chart to help distinguish the difference between the two (read through the whole article to get the details of each line item)

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How can I spend the money?

 Each scholarship is different from one another and donors have the rights to set rules on how the money should be spent. That being said, there are private scholarships out there that can be used for expenses that do not include tuition and miscellaneous fees, such as rent for shelter, food, and transportation. Private scholarship providers are more flexible and sometimes make exceptions to their rules based on the situation. For example, I was very fortunate to receive the Diamonds in the Rough Scholarship from the Metropolitan Rotary Club of Honolulu ( Their scholarship was only to be used for tuition books and fees. However, I already received the Pell Grant from FAFSA that would cover all of those expenses. When they asked me in the interview about my situation, they made an exception for me because they knew that I would have to start living on my own (off campus) once college started. Private scholarships have this flexibility because their committee can make the decision on the spot, but generally, institutional scholarships are not as flexible and even are subject to a deduction based on how much money you are already receiving from FAFSA or other scholarships.


Does the scholarship count against FAFSA? 

This is a case-by-case basis for private scholarships. In recent years, private scholarships have become more aware that their scholarship money can deduct from the amount a student is supposed to receive from FAFSA so some scholarship providers have switched from giving out “Scholarships” to “Monetary Awards”. A monetary award is pretty much a scholarship in terms of the process of application. The difference though is that the scholarship does not count against FAFSA (if the financial aid office says that it does, you should contact your donor to clarify), however, it is not tax deductible for an individual, but can still be written off as an expense for an organization. Institutional scholarships on the other hand always count against FAFSA, so be sure to do some calculations before school starts if you received one.


How to apply?

Applying for these scholarships is very different depending on the instructions implemented to process the application. Generally speaking, private scholarships need to be applied to individuals (unless they are under a community foundation) and require essays to be turned in. On average, a private scholarship takes five hours to complete the application. Institutional scholarships, on the other hand, are submitted upon your registration to the college, so applicants shouldn’t have to worry too much about applying.


To conclude, both types of scholarships have their differences in good and bad ways. As a good habit, you should ask the donor (provider) about the specific rules before applying to them as they might change every year. As always, if you have any questions about this please feel free ask me at


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