Q.I’ve heard I shouldn’t apply for outside scholarships because it will impact my financial aid. Is that true?
A. All outside scholarships need to be reported to the financial aid office at the colleges you are applying to. This can impact the financial aid award, but in most cases, the student still benefits.
Here’s why: the financial aid package (including scholarships from outside sources) cannot exceed the student’s financial need according to their financial aid forms.
For the few colleges (like USC) that meet each student’s full need using a combination of grants, loans and work-study, additional awards from outside sources would cause the student to be “over-awarded.” This requires the college to adjust the award and make room for the additional funds. Exactly how the college will adjust the package depends on the institution, but in most cases, the financial aid office will reduce the least favorable funds like loans or work-study before other grants and scholarships. In this case, the student benefits from replacing money that needs to be repaid or earned through work with free money in the form of scholarships. At USC, we may also work with the student to see if there are any educational expenses greater than or not covered in our Cost of Attendance (COA), such as housing or a one-time computer purchase. This allows us to increase the student’s COA, allowing room for the additional scholarship.
For institutions that are not able to meet the full financial need for all students, outside scholarships can help fill any unmet need before impacting other funds in the award. Policies vary from one college to the next, especially when it comes to how they treat their own institutional grants and scholarships. Check with each college directly regarding their policies.
You may also like:
Going through financial planning for college, especially for the first time, can feel overwhelming. Luckily, you have us. Here are some key terms to get a jump on. 1. FAFSA The Free Application for Federal Student Aid (FAFSA) is required by all colleges. In...
Even if you are new to the financial aid process, you’ve most likely heard of the FAFSA. But this might be the first time you are hearing about the “other” financial aid form, the CSS Profile. Used by roughly 400 institutions, the CSS Profile helps colleges,...
True or False? You can only enroll in one 529 plan. False! Amy Irvine, financial planner at the Rooted Planning Group, explains what's really possible. True or False? You can only enroll in one 529 plan. Amy: That is absolutely not true. There are several...