An outside scholarship is one that is not part of the financial aid package awarded to you by the college. You need to report any outside scholarships to the financial aid office because it will affect your need-based aid. Schools are required by Federal rules to adjust financial aid package so that the total of all of your aid does not exceed the school’s cost of attendance by $300.
Each school has their own policy on how they apply the outside scholarship to your financial aid package. The best case scenario allows the student to use the money to help meet the Expected Family Contribution (EFC).
Out-side scholarships can reduce need-based financial aid
For students receiving any need-based financial aid, the best case scenario is a little different. The outside scholarship is essentially considered another form of income or financial support. This means that the student’s financial need has been reduced by the amount of the outside scholarship just as if the student had extra money in the bank. In this situation, the best case scenario is the college applies the value of the outside scholarship to reducing the amount of any loans that are currently part of the package. So a $1,000 scholarship would reduce a $2,500 loan to only $1,500.
The outside scholarship cannot reduce the amount of a Pell Grant. Depending on the school, it could reduce the institutional grant.
You will have to check with each school for their policy. You should be able to find this out on a school’s financial aid webpage like George Mason University does. However, you may need to contact the financial office to get information specific to your situation.
If you don’t report outside scholarships, you could end up having to repay the “overaward” amount back.
For more information:
- The Truth About Scholarships
- 5 Ways for Learning About Financial Aid
- Can Outside Scholarships Impact My Financial Aid?
- Outside Scholarship Policies