Eligible Organizations for Scholarships

SamanthaCribbs

Good Morning,

Has anyone had experience issuing a post secondary scholarship to a school that was deemed not an "eligible educational institution" (see below definition from the IRS). We recently came across a scenario where a trade specific school (i.e. Welding, Electrical) said that they cannot accept funds from a college savings plan because they are not considered an eligible educational institution for financial aid, and that has brought up a question on whether our Foundation should (or can) issue scholarships to those same schools.

Does this potentially cause taxable income to the recipient? Has anyone had any experience with any of their scholarships causing taxable income to an individual and it cause any problems for the Foundation?

An eligible educational institution is a school offering higher education beyond high school. It is any college, university, trade school, or other post secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education.

Any help, or policy examples would be greatly appreciated.

Thank you in advance!