Scholarship Allowance (Tuition Discounting)
Recording a school-funded scholarship that reduces the student's net tuition cost.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Scholarship Allowance | Contra-Revenue (+) | 2,000.00 | - |
| Student Accounts Receivable | Asset (-) | - | 2,000.00 |
💡 Accountant's Note
Scholarships are not expenses. Per NACUBO standards, they are 'allowances' that reduce Gross Tuition to Net Tuition on the financial statements.
Practitioner & Systems Framework
💻 ERP Architecture
Institutional scholarships are configured in the SIS as financial aid awards linked to the student's account. When applied, the system credits the student's receivable and debits the scholarship allowance (contra-revenue) account. The SIS maintains a scholarship award register by fund source (institutional, endowed, external). For endowed scholarships, the award is funded from the endowment spending distribution — a separate transfer entry links the scholarship to the restricted fund. The financial statements present gross tuition and scholarship allowances separately.
⚠️ Audit Flags
Auditors confirm that institutional scholarships are classified as contra-revenue (not expense) per NACUBO guidance. Verify that each scholarship award is supported by a signed award letter and meets the stated eligibility criteria (GPA, financial need, programme). Test that the total scholarship allowance reconciles to the awards register. Confirm that externally funded scholarships (donor-restricted or government) flow through the correct fund and are not classified as institutional discounts.
📄 Required Documentation
Scholarship award letters signed by the student, scholarship eligibility criteria and selection documentation, awards register by fund source, reconciliation of total allowances to the awards register, and financial statement presentation of gross tuition vs. net tuition.
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