I don’t know about you but for the longest time, I thought that college scholarships could only be used to cover your tuition, school fees, and the cost of your textbooks.
But who would have thought that there’s such as a thing called a “scholarship refund.”
In simple terms, a scholarship refund basically happens when the dollar amount you win in scholarships exceeds the cost of your tuition and school fees. And whatever is leftover gets directly “refunded” or more like “deposited” directly into your bank account like a paycheck!
Crazy right?
First of all, it’s already crazy that you could win enough separate scholarship to cover the entire cost of your tuition.
Then it’s even crazier to think that if your scholarships exceed your tuition costs, you might be able to keep all the money! Be it $500 or $5000.
But there is a caveat. Whenever you get a scholarship refund, especially if it is a substantial amount, the IRS can consider that income so you can be liable to pay income taxes on the scholarships you receive.
That’s exactly what happened to me during my junior year. Here I was super psyched that I not only covered all of my tuition costs, I also earned all this additional money.
Then before I even had a chance to celebrate, I realized that I was liable to pay a four-digit income tax! A four-digit income tax when I was still a student!
So I had to figure out the best to spend my scholarship refund money to
1) reduce the amount of taxes I’ll have to pay through education deductibles and
2) to invest it in a way that helps set me up for a better future.
Here’s what I did.
Study Abroad
Even though studying abroad is completely optional, it was something I really wanted to do because I was an International Affairs Major, and having some experience studying abroad would really help boost my resume.
But study abroad programs these days have been extremely commercialized and are really expensive! Think $4000 for a two-week experience or upwards of $30,000 for a semester abroad.
I was successful in securing study abroad scholarships for a few programs I participated in. But there are always some prestigious programs that just don’t provide any scholarships.
So if I wanted to participate in those programs, it still comes down to money. I need money to buy the experiences that can help boost my resume and can help make me more competitive in the job market after I graduate.
And lucky for me, I had the money available from my scholarship refunds.
Participated in Leadership Programs
In addition to study-abroad programs, I also participated in a whole bunch of leadership conferences.
I figured it would be a good way for me to learn some valuable leadership skills, network with top professionals, and gain access to resources that might prove to be useful when I graduate and start my job hunt.
Yeah, I still remember how daunting it was to look for my first job! I definitely wanted to be as prepared as possible.
And on the surface, leadership conferences appear to be much more affordable than study abroad programs. But what they don’t tell you on their flyers and emails is all the hidden costs of participating in a leadership conference.
Participation fees, transportation, food, accommodations, networking dinners, the printing of business cards & resumes, the list goes on.
In order to participate, you need to have the basic means to make it happen and that’s when my scholarship funds came in handy.
Took on Unpaid Internships
As someone that had aspired to become a diplomat, I wanted to intern in Washington D.C. or at an American Embassy/Consulate in China.
But here’s the dirty secret. The U.S. government and many other corporations only offer unpaid internships.
If you want to get your foot in the door and a chance to build up your resume, you need to foot the bill for all relocation costs, rent, food, transportation, and all other miscellaneous fees.
And it’s even worse if you wanted to intern overseas like me (I received an offer to intern at the American Consulate in Shanghai).
You’re not only preoccupied with finding a place to live, but you also have to shoulder the costs of travel insurance, an international SIM card, overseas medical insurance, visa expenses, visa runs, the list goes on.
Do you notice a theme here? Often times, you can’t pay your dues if you’re not already in a financial place to do so. So if you have the funds, make sure you use it wisely. Don’t squander it by going shopping or vacationing.
Started My Own Company
In addition to investing my scholarship refunds in educational opportunities, I also used part of it to start my own company.
This not only helped me hone my entrepreneurial skills and earn some additional money on the side. It turns out that starting a company also gives me a lot more options when it comes to claiming tax deductions.
Created an Education Fund
As for the remainder of my scholarship refunds, I invested it to create an educational fund. By investing the money, I was able to help grow the funds that I already had and it meant that I would have more disposable cash whenever a new, promising educational or professional opportunity came my way.
Interested in learning how you can also secure a ton of scholarships, receive scholarship refunds, and live it up?
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