What the scholarship pays for

A scholarship can pay only for costs on one list, the one Congress wrote for Coverdell education savings accounts. (Source: §25F(c)(4); §530(b)(3)(A)) It has three parts.

Software for sports, games or hobbies is left out unless it's mainly educational. And school means a public, private or religious school teaching kindergarten through 12th grade, as state law defines it. (Source: §530(b)(3)(A); §530(b)(3)(B))

Some pages list standardized test fees, dual enrollment or outside educational therapies. Those come from the rules for 529 savings plans, which the same 2025 law widened. The scholarship credit points to the Coverdell list instead, and that list doesn't name them. (Source: §25F(c)(4))

Treasury says more guidance on the Coverdell list will follow its main rules, and that it intends scholarships to support added academic tutoring and special needs services. Until that guidance is out, the list above is what the law says. (Source: Treasury guidance preview, June 2026)

At CEN partner schools, scholarships are applied to tuition and fees. The law's list is the outer edge. Each SGO chooses how much of it to fund, and no SGO may fund anything outside it. (Source: §25F(d)(1)(C))

So for other costs on the list, such as uniforms, books or a laptop, plan to pay them yourself unless CEN tells you otherwise. Wondering about one cost? The expense checker tells you whether the law allows it and whether CEN funds it.

Scholarships are paid directly to your school and credited against your tuition account. They don't come to you as cash. That keeps things simple for you and keeps the money on the law's list.

Example. The Garcias' school charges $8,000 in tuition and a $400 registration fee. Their daughter receives a $6,000 scholarship. CEN pays the school, the school credits $6,000 to their account, and the Garcias owe $2,400.

Example. The Lees' school requires a uniform from its own supplier. The law allows uniforms a school requires. CEN applies scholarships to tuition and fees, so the Lees buy the uniform themselves.

Example. The Okafors have a son in 2nd grade and a daughter in pre-K at the same school. Their son can receive a scholarship. Their daughter can't until kindergarten, because the list starts there. (Source: §530(b)(3)(B))

• The award is more than you owe. That can happen when other aid also covers your bill. Scholarships pay the school for costs on the list, not cash to you. Ask us how the extra is handled before you expect a refund.
• Your child leaves mid-year. Tell your school and CEN right away. Money not used for your child stays scholarship money for eligible students in your state. (Source: §25F(c)(3))
• You switch to another partner school. Tell us before the move so we can work out the rest of the year with both schools.
• You move to a school that isn't a partner. CEN pays partner schools only. Recommend the new school.
• Your child has special needs. The law lists special needs services. At partner schools, CEN applies scholarships to tuition and fees, so ask your school which services it provides. (Source: §530(b)(3)(A))

The federal law doesn't stop a family from also getting a state scholarship, a voucher or aid from the school. Treasury does want states to prevent two awards paying for the same cost. One idea it floated is a signed acceptance saying no other award covers that expense. (Source: Treasury guidance preview, June 2026)

State programs set their own rules on outside scholarships, and schools often weigh outside awards when they set their own aid. Ask your school, and check your state page.

A scholarship from CEN SGO for costs on the list isn't income to you or your child. It's excluded from gross income by the same law that created the credit. (Source: §139K)

That rule covers federal income tax. State taxes, benefit programs and college aid forms have their own rules, so ask a tax preparer or the program itself.