The Scholarship Provider's Guide to Data Retention: What to Keep, What to Shred, and For How Long

You're looking at a filing cabinet full of scholarship applications from five years ago. Or a digital folder with 10,000 files from applicants who didn't make it past the preliminary round. What are you supposed to do with all this?

Data retention sounds boring until you're facing an audit, responding to a legal request, or demonstrating your program's impact to donors. 

Most scholarship providers operate in a gray area: keep too little and you can't prove compliance or defend decisions. 

Keep too much and you're storing sensitive personal information unnecessarily, creating privacy risks and administrative burden.

Let’s explore what you actually need to know about scholarship data retention.

The Baseline: What Federal Law Requires

The IRS requires tax-exempt organizations that provide scholarships to maintain records proving your program operates for charitable or educational purposes, not private benefit. 

The minimum is three years after filing your annual return, but most scholarship providers need to keep records longer.

For example, private foundations face stricter rules. 

You must maintain detailed documentation of your selection process, committee decisions, and recipient monitoring to demonstrate scholarships serve charitable purposes without private benefit or self-dealing.

State laws add another layer, with some requiring nonprofits to retain records for five to seven years.

The practical answer? Plan for seven years as your baseline retention period for essential records.

What You Must Keep

Start with the records that prove your program exists and operates legitimately.

– Program documentation: Scholarship criteria, application forms, and selection rubrics. Keep master versions permanently, with annual updates archived for seven years.

– Committee records: Meeting minutes, score sheets, and decision documentation showing fair, consistent application of your criteria. Seven years minimum.

– Recipient information: Names, addresses, amounts awarded, and disbursement records. Seven years minimum, ten years better.

– Financial records: All documentation related to scholarship funding, investment income, and disbursements. Seven years minimum, longer for private foundations.

– Correspondence about awards: Letters to recipients, communications with financial aid offices, and disbursement documentation. Three to seven years.

What You Can Shred/Delete (Eventually)

Not everything needs permanent storage. Some records serve their purpose and can be disposed of according to a regular schedule.

– Preliminary applications that didn't advance: Keep for one to three years to handle immediate inquiries, then dispose.

– Supporting documents with privacy concerns: Letters of recommendation, transcripts, and other sensitive materials about non-recipients. One to three years after selection is complete.

– Routine correspondence: Emails confirming receipt, scheduling messages, and general inquiries unrelated to award decisions. One year is adequate.

– Duplicate copies: If you have the same information in multiple formats, maintain one authoritative version and dispose of duplicates after the current cycle concludes.

The key is having a documented retention schedule and following it consistently. Don't keep things just because you haven't gotten around to purging them.

Special Considerations for Digital Records

Digital storage changes the calculus. It's easy to keep everything because storage is cheap. But that creates its own problems.

More data means more risk, complexity, and compliance burden

• Every file you store is a potential target for data breaches. 
• Every applicant record you maintain beyond its useful life is a privacy exposure you don't need.
• When you need to find something specific, searching through years of disorganized files wastes time and increases frustration.
• If your state has data privacy laws (and many now do), you may need to respond to requests from individuals wanting to know what data you have about them. 
• The less unnecessary data you store, the simpler these requests become.

For digital records, implement these practices:

Keep current year data readily accessible. Previous years' data can move to archive storage that's secure but not part of your daily working environment.

After seven years (or your chosen retention period), permanently delete files containing personal information about non-recipients. Don't just move them to a backup drive and forget about them.

Maintain a clear folder structure that makes it obvious what should be kept and for how long. Include retention dates in folder names if helpful.

Use your scholarship management software's built-in retention tools. Platforms like SmarterSelect can help you manage retention schedules automatically, flagging records that are eligible for deletion and maintaining appropriate security for records you need to keep.

Creating Your Retention Schedule

Every scholarship program should have a written retention schedule. It doesn't need to be complicated, but it should be documented and followed.

Start by listing every type of record your program creates. Applications, award letters, committee notes, financial documentation, correspondence, everything.

For each record type, determine:

• How long you must keep it (legal requirement)
• How long you should keep it (practical need)
• When and how you'll dispose of it
• Who is responsible for retention decisions

Document this in a simple chart that staff can reference. Include the reasoning behind retention periods so future staff understand the decisions.

Review your retention schedule annually. Laws change, your program evolves, and what made sense three years ago might not work now.

Handling Inquiries After Records Are Destroyed

Someone may eventually ask about an award decision from six years ago after you've disposed of records according to your retention schedule. 

This is fine if you can demonstrate a reasonable retention policy, and you’ve followed it consistently. 

Keep documentation showing your retention schedule was in place when records were destroyed, maintain summary statistics about each program year even after detailed records are purged, and preserve your current criteria and selection process as evidence of fair practices. 

The key is consistency! Destroying all detailed application records after three years is defensible, but selectively keeping some records while destroying others with no clear policy creates problems.

Privacy Considerations Beyond Legal Requirements

Legal compliance is one thing. Ethical data handling is another.

Consider the 17-year-old who applied and was declined. Eight years later, they want confirmation you've deleted their personal information. Or the applicant who shared mental health struggles, family trauma, or financial hardship in their personal statement. Do you need to retain that indefinitely?

Many scholarship providers are moving toward shorter retention periods for non-recipient data, even when law doesn't require it. 

Keep what you need to operate effectively and prove compliance. 

Delete what you don't. This reduces risk, respects privacy, and simplifies operations.

When to Consult Professionals

Some situations warrant expert advice.

Consult an attorney familiar with nonprofit law when:

• Your organization is a private foundation with complex IRS requirements
• You operate in multiple states with conflicting retention laws
• You're facing a legal dispute or audit
• You're implementing a new scholarship management system and need to dispose of historical records

Consult a data security professional if:

• You're storing large amounts of applicant data digitally
• You're transitioning from paper to digital records
• You experience a data breach

The cost of occasional expert advice is small compared to the cost of getting retention wrong.

Practical Next Steps

If you don't have a formal retention policy, create one this month. Start simple: list what you keep, how long you keep it, and when you dispose of it. 

Review your current storage and dispose of records you don't need.

Document your retention schedule and make sure staff know where to find it. Build retention management into your workflow by noting which records to retain when you close out each scholarship cycle.

Use technology to help. Scholarship management platforms can automate much of this, flagging records eligible for deletion and maintaining appropriate security for what you need to keep.

The goal isn't perfection. It's a reasonable, documented approach that protects your program, respects applicant privacy, and demonstrates compliance when needed.

Managing retention schedules manually is tedious and error-prone. SmarterSelect helps you automate record retention with secure data storage, customizable retention policies, and built-in tools that flag records eligible for deletion. Our platform maintains the documentation you need for compliance while protecting applicant privacy through enterprise-grade security. Schedule a demo to see how we can simplify your data retention process and reduce your compliance burden.