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The key is to be courteous. Thank the entrant for trying, and let him or her know that you appreciated their efforts. But you do need to let the person know in a timely fashion that they did not win the scholarship this time, since they may have applied for several awards and are waiting to find out whether there is hope of receiving any money or tuition rebates from anyone.

It is up to you how specific you want to be in saying the person's entry was not up to your criteria (whatever those criteria were), since rejecting a person tactfully is always a good idea-- there is no benefit to being harsh when sending a rejection letter; be as professional as possible. If there were a large number of entrants or the competition was especially intense, you might want to say something like that, so the person does not feel as if somehow it was evidence of a failure on their part.

That said, it is a sad fact of life that we live in a very litigious society, so be careful not to seem as if you are insulting or denigrating the candidate, as that could create a reason for legal action against you. Make sure the applicant knows you gave every consideration to the entry, but decided to give the scholarship to someone else. Thank the person for their effort and invite them to apply again at some future time.

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