I wrote an article earlier in the week providing 5 useful tips to help students find outside scholarships. Spurred by this article, I have received a few questions from readers about outside scholarships and I am glad to help.
A reoccurring question from families inquired about the how an outside scholarship can impact the financial aid package that they receive from the college or university that they are attending. The answer on this is unfortunately not a clear cut one and really depends upon a number of different variables (school rules, financial aid package, FAFSA results) but I will do my best to provide a proper answer.
The best scenario that you can have with outside scholarships is that the funds you receive help to offset the financial expense that your family was expecting to put toward educational costs. This means that whatever you were expecting to spend for educational expenses (out of pocket) is now reduced by whatever you are able to secure in the form of outside scholarships. This is probably the most common outcome.
The next to best scenario… If you are receiving any need-based financial aid (calculated from your FAFSA results), you may be susceptible to losing some of that aid if you find extra funding from outside sources. It is up to the discretion of each school to decide what need-based aid they are going to reduce but most schools seem to lean toward decreasing the federal loan monies that a student will receive. It is not ideal but at least the student gets the benefit of finding the extra scholarship dollars and reducing the amount that they have to take out in loans.
The not so great scenario but pretty good given the situation… If you have been able to secure the necessary funding (scholarships and grants) required to cover ALL your school expenses and you decide to go out and find yet another outside scholarship, your financial aid will have to be reduced by whatever dollar figure that new scholarship happens to be. The reason for this.. you can not receive more financial aid than the cost of attendance at your college.
If you find yourself in this situation, you may want to go back to some of your outside scholarship programs and ask them if you can defer the award until your second year of college. Chances are that some of your outside scholarships are probably only one-year awards (non-renewable) and won’t be available in subsequent years. If that is the case, you won’t be at risk of having your financial aid reduced during the second year because of over funding (like I said.. that is usually a good problem to have!).
All-in-all, outside scholarships are probably going to benefit the student in approximately 98% of situations. So, there is no reason why you should not put some energy and effort into trying to secure these types of funds. Every dollar counts when it comes to paying for college.