The most important attribute of any scholarship letter is clarity. Applicants should consider how many letters the recipient will be reading and how much time is available for each one. Each paragraph should clearly spell out its central idea -- a particular trait qualifying the applicant for the scholarship -- and make its connection to the next paragraph obvious. Elegance and fluency in writing are important, but they are based expressed in simple, easy-to-read prose.
Those who award scholarships are looking for candidates who embody the qualities they want to promote. The scholarship letter should make it clear, in a matter-of-fact way, that the applicant's qualities make him the right candidate. Many letter writers, however, simply list achievements or activities without explaining them. The key to standing out among the large number of qualified applicants is to explain convincingly why these achievements and abilities make him particularly qualified for the scholarship, particularly in terms of what he has learned from them.
Some scholarship applicants make the mistake of drafting a single cover letter, perhaps with a few simple modifications, and using it for every scholarship they seek. Given the work involved in applying for scholarships, it's easy to understand why applicants do this. But it is better to draft a new letter for each scholarship. Since each scholarship has a slightly different goal, each cover letter will require a different emphasis. The increased specificity should make the letter more appealing to the reader.
A scholarship application letter is a type of business letter, and a formal style is preferable. Some applicants, however, adopt such an artificial tone that they suppress any personal quality to their writing, preventing the reader from getting to know them. A scholarship letter shouldn't be a personal letter, but it needs to have some trace of the applicant's personality, whether that's a personal anecdote, a discussion of the lessons learned from a particular activity or an explanation of what a particular topic means to the applicant.