Found this on the web. I meet all the criteria which means that the grants that I receive are Tax-free. Interest/Dividends/Other Types of Income: Grants, Scholarships, Student Loans, Work Study I received an academic scholarship that is designated to be used for tuition and books. Is this taxable? Qualified scholarships and fellowships are treated as tax-free amounts if all of the following conditions are met: 1) You are a candidate for a degree at an educational institution, 2) Amounts you receive as a scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the educational institution, or for books, supplies, and equipment required for courses of instruction, and 3) The amounts received are not a payment for your services.