Bloomberg Article Nails Outside-Scholarship and Summer-Earnings Policies

Paying for College
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<p>Anyone who has been irked by summer-earnings requirements and outside-scholarship deductions from aid awards, should read this article by Janet Lorin, although it may make your blood boil as it did mine.</p>

<p>See Poor</a> Scholars Hit by Money Squeeze From Wealthy Colleges - Bloomberg</p>

<p>Granted, there will never be a truly fair way to award financial aid, but I don't agree with the college honchos who feel that students should not be permitted to use outside scholarships to pay summer-earnings contributions, even if it means that these students must take out loans to do so or forfeit plum career-boosting internships. </p>

<p>Why can't each college allow families to pay one single annual contribution (which lumps student earnings with the parental requirement) and also allow that money to come from outside scholarships or from wherever else the family can scrounge it up? That seems to be the fairest solution, in my opinion. </p>

<p>Students who score big scholarships usually earn them through hard work and often by making sacrifices (e.g., One student in my orbit some years ago gave up a club he loved so that he could use the high school computers in the afternoon for homework while the school building was still open. He didn't have a computer at home.) These same students commonly have less access to good summer jobs than their advantaged peers (as noted in the Bloomberg story). </p>

<p>And where's the parity when it comes to forcing financial-aid recipients to work in the summer while the well-heeled kids can pump up r</p>

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<p>What I found interesting was the story at the end about Winston-Salem. They gave money back to the Gates Foundation.</p>

<p>Looks like it’s not worth it for the College to aggrevate a large corporate sponsor of scholarships, which would be like biting the hand that feeds you, I suppose.</p>

<p>I was a little confused by the article and the concept. It sounds like the colleges discussed required the student to work. That is different from having an expectation, I would say.</p>

<p>I’ve assumed that work-study was variable and not to be relied on. I also assumed that if the college expects a contribution from a student from summer work, but the student can’t find the work or can’t make enough, that we would foot the bill. This article goes beyond that?</p>

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<p>The way it used to work was that if you got outside scholarships, on top of financial aid, you could pocket whatever the excess was. The schools did not go after outside awards and neither did the federal government. Now if you get any outside awards they generally reduce the financial aid package, starting with the self help items and then eating at the meat of the awards–the grants. They often cannot go towards the parent’s or student’s expected contributions. The reason behind this is that the ONLY reason the financial aid was given to the student was due to need, not merit, and so when the need is covered by anything, it is now gone, so the need based grants are also rescinded. Those students who get a merit award from a college usually will not get it affected by outside scholarships because that award was given as a tribute, enticement, reward for the excellence of that student when being evaluated. Merit awards tend to be given by the Admissions officers and they give them to the students they want the most. Financial aid is given as a bean counting award and is supposed to be to address the need only, though it doesn’t always work that way.</p>

<p>I double and triple dipped in my day, pocketing all of the many outside awards I got and my school did not care. They also gave me merit money and financial aid, some of it government funds, no loans or works study in my package. I was pretty danged flush with the money my first two years. </p>

<p>But the school did not guarantee to meet need, and there were kids pounding salt with aid packages with few grants, full loans permitted and work study and taking outside jobs in addition. In theory, if I gave up my financial aid grants, they may have gone to some of those kids. Which would have been nice. Looking at my school’s current NPR, it still gives packages loaded with self help, and they are unusual in that they do allow students to keep their first year outside scholarships and will only reduce aid as necessary to stay within federal rules. You aren’t alllowed to get subsidized Staffords, Perkins or SEOG unless you have need according to their rules, and certain COA rules have to be followed with PELL that I don;t quite understand but are in place, none the less. </p>

<p>I dislike the integration of government loans and grants, as paltry as they are, by those schools that cost so much anyways, so. yes the student required contribution bugs me. They should require all student to work at a paying job each summer for that amount and show the pay checks and W2s as proof if they really wanted to be fair, but that is not going to happen. </p>

<p>I’d love to strip these colleges of the Federal goodies which they tend to tuck in the aid packages which them prevent those families who can least afford it, use those amounts to meet EFC. A full pay kid with a family EFC of 99999 can use the Stafford money towards what the family has to pay, and the parents call it “skin in the game”. He can also grab a job at the local burger joint or where ever for $50 per week, or more for spending money, many times on top of allowance mom and dad are giving. Such kids are doing just fine, especially since any summer earnings go into the pocket too, and though there may be some payment requirement on part of the parents, we all know that the money is there all along. </p>

<p>Not so the kid with a family EFC of $10k. That $10K is going to be hard to get. When you look at the income and assets that generate such an EFC, such families are going to have a tough time coming up with that money. So when a school tucks those Staffords all $5500 into the Fin aid package, yes, some of it subsidized, but still, and the awards $2500 in work study funds, that’s $8K that cannot go towards the EFC that the well to do kid can so access. Throw in an additional summer work requirement , and you are really cutting off avenues that the wealthy have to pay their EFC from those who most need it which is is crazy. This is done routinely at most schools and is really more of a concern to me than what is happening with those kids who have to use scholarship money to reduce their financial aid starting with the self help which they can then turn around and use to pay the summer contribution and put towards their family EFC. The winners of these big awards are very few, and often have a lot of options. Whereas the example I gave is hitting the majority of college kids getting any kind of financial aid as most packages are loaded with the federal self help funds.</p>

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<p>The big scholarships are indeed rare but even the small ones can SEEM big to a disadvantaged family, and it’s common for students to have to fill out many applications (and write onerous extra essays) simply to score one outside grant of $2,000. But, as the Bloomberg article notes, $2K can make a big difference in some households and it may even cover the entire EFC.</p>

<p>So my point is that colleges should allow students to use their scholarship funds however they wish … to cover the parental portion of the EFC (currently not allowed), to cover the student summer earnings portion (which is allowed at some colleges but not at others), to buy books, pay for travel, etc. </p>

<p>I also feel that the EFC should be a true EFC, meaning that the designated sum should come from the family, which includes the student, and that no distinction should be made between what the parents must chip in and what the student should add.</p>

<p>Insisting that the student should cough up a specific amount of money, separate from the family share, seems to hark back to the Horatio Alger era, where Junior was taught the pride that comes from hard work and from making one’s own way in the world. While I have no gripes about that philosophy in general, I think that the routes that students take to college these days are so varied and their household backgrounds so diverse that it makes sense for colleges to notify each family of the amount expected and then it’s up to the family to determine how to meet that demand, with outside scholarships added to the list of options.</p>

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<p>Sally, I know what you are saying, but I am not as concerned about this very small group of privielged students who are being asked to pay their student share as “skin in the game”. I don’t look at so much as a Horatio Alger lesson as I do Margaret Thatcher’s sentiments in everyone paying something so to be full part of it. Those students asked to pay those contributions, can do so with PELL which is never replaced if they are of the lowest income or through unsubsidized Stafford loans if the students are not PELL eligible. The only change I would make to the way it works is not to replace financial aid by PELL as this was not intended to be so integrated.</p>

<p>I wrote a long post last night on how I felt about this, but it was late, and I was rambling, so I’m going ot the abridged version of my sentiments which I poorly stated in the long post as I was kind of rounding in on it.</p>

<p>If it were up to me, I would strip federal funding from private schools altogether and work on making the community colleges and local state school better options than the currently are instead of one step up for the state penitentiary as they are too often regarded. The way some of these expensive schools have their ugly mouths to the Federal teat and are packaging these entitlements as though its their own money and making these amateurs , as that is what most parents and students are in this process, think they are getting something, and ruining credit ratings due the general ignorance of this group who really when it comes down to it, want the best education for their kids, is sickening. So a kid who ends up owing a grand to BC and Amherst are the teeniest minority in who gets hurt, and they really don’t when it comes to it. They are colllege royalty and pretty much have it made. I’m more worried about the kid and parent who is holding onto a scrap of Atlantic Private U who has made them feel that taking on $40 k of debt a year is what is need to keep them out of the horrors of community college.</p>

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<p>cptofthehouse–But what do you think about the current regulations that prohibit students from using outside scholarships toward the EFC, regardless of where they are enrolled? It bugs me a lot but I am open to explanations of why this policy should remain as it.</p>

<p>On another note, related to your last post … one problem I encounter often is that too many parents and students still approach the college process with an unshakable “private is better than public” mind set. This is what can lead to $40K debts after graduating from lesser-known private colleges and with questionable job prospects.</p>

<p>I do a grant-funded college counseling program in NYC that provides private college counseling to girls who would not otherwise get it. Every year I encounter students who are delighted to get a $20K merit scholarship from some Obscure U. … a place with a high price tag and low admission standards. I have to point out that a degree from one of NY’s top SUNY schools would cost a lot less than the private college, despite the merit grant, and it would put these students in a campus environment where the typical GPA and test scores are on a par with their own, not considerably below. Yet the “it’s private so it must be better” mentality is hard to eradicate.</p>

<p>The snazziest private colleges, however, do tend to provide great financial aid to my girls that allows them to graduate debt-free or with manageable debt. So if it takes federal funding for this to happen, I’m all for it. Over the decade that I’ve been doing this program, I’ve seen many students have life-changing experiences at the top private colleges, thanks to generous financial aid. </p>

<p>But that’s really fodder for a separate thread. My issue on this one centers on the restrictions on how outside scholarships can be used.</p>

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<p>Never made sense to me. Outside scholarships are still dollars paid to the college in question. How dare they put stipulations on the way those dollars are obtained. One question we ask at every visit is “How do you handle outside scholarships?” Here’s something we’ve found–schools that don’t promise to meet need (mostly FAFSA only schools) are more likely to allow a student to keep outside money and use it as they see fit, as long as COA isn’t exceeded.</p>

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<p>You are looking at it as the outside scholarships going towards EFC without taking into consideration that the money given by the colleges to meet the need was only given due to need. If those kids had gotten the outside award first, which some of them do, this NEVER comes up because they don’t see the FINACIAL AID that they would have gotte if they had need not met by the scholarship. The same rules go for the federal subsidized Staffords, SEOG, Perkins that are given out by the government. You are not permitted to get it without the NEED component. That need pot is often very limited and there is much more need than what can be distributed. Some of that money can go to those on the waitlist (almost always need aware even at schools need blind for regular applicants) or for those who come up with some more need and did not win an outside award. The financial aid is only given because those kids family’s do not have the money. When they get the money from most sources, it si taken into account, and the aid goes away, because it is purely need based. The only reason A gets the award over B is because A’s family has less money. Nothing to do with anything else. If A’s family wins the lottery or Dad makes a windfall the next year, they lose the aid. If A wins a scholarship, the aid is also adjusted, right away, since it would truly cause a problem if the money is included for the following year instead. </p>

<p>I agree that the whole thing with merit schoarships is unfair, in that a well to do student who wins a merit award at college and then snags another merit award else where, pockets the whole danged thing. That’s because that’s what the award is money to be pocketed and used for whatever. Not so financial aid which is only given when there is need and has stipulation that it is given only because of need. This is where something that in place to help the needy, turns into an entitlement once the numbers are on the page. </p>

<p>Outside Scholarships absolutely can go towards EFC, In fact they go 100% towards EFC for those who have no need. The issue is whether they should go toward financial aid grants before they go to EFC. A kid who gets a full tuition merit scholarship for a school and has to pay the $20K left for room and board can take an outside award of $25K towards his EFC or anything he pleases and have $5K left in his pocket. If another kid gets his tuition paid through Financial AID funds, not merit fund, then, yes, the scholarship will be applied to that aid first, and only what is left will go towards his EFC.</p>

<p>You are mixing need and merit money. There are differences and how outside scholarships are applied is one of them.</p>

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<p>Yes, I am blurring that line, but I don’t think it’s as clear as private schools would have us beleive. State/federal aid comes with stipulations and if it has to be taken out of the equation because of large or numerous outside scholarships, well so be it. Those need rules are pretty clear. BUT, institutions have quite a bit of discretion in how they award their own aid, and I don’t believe there are such black and white lines between what they’re calling “need” and what they’re calling “merit,” hence the practice of referring to a lot institutional aid as “scholarships.”</p>

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<p>I don’t have a problem with a student taking out an affordable amount of subsidized federal loans or working a summer job. It is one or the other, not even both, in this story. </p>

<p>In addition to taking out federally subsidized loans, my son is working full time this summer (which he has done every summer since he was 15, and which I did every summer since I was 16) AND he is doing an unpaid internship. That’s life. I’m just extremely happy that my son’s college provides enough aid so that he doesn’t need to work during the academic year.</p>

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<p>There is often a very clear line between merit and aid at most schools. Merit is given by the Admissions Office and Financial aid is given by that office and they are not exactly always chummy-chummy. The financial aid folks are the bean counters and they have to stretch the money they are given to fit the students that the admissions staff accepts. They go by the need, not the merit in giving out the aid, except at those schools where there is merit within need and then they go by the rating system that Admissions uses to guide them as to who gets what. Sometimes the offices are intetwined, granted, but not usually, especially not at the most selective schools. There is never enough financial aid and you only have to read these boards to get a sampling of what these officers have to hear and read with kids and families that need, need, need more. NEED being the operative word. So no, if that need disappears, then it should be taken out of the package to address other needs. These folks need to have ice running through their veins to be ladling out what is never enough to families and not being permitted to out and out say to them that they cannot afford the school and should not be going there. Really, for those who want to have their cake and eat it too, find another school that will let you do so. For some colleges, it’s a very painful thing to have to stretch the aid funds, and to give it to a student that the college has not deemed worthy of their merit money, and is just giving out the money because there is need. when the need is not there any more, the money goes back. Need based aid is just that. The rules are clear about this up front as well. It’s no big surprise. So there are very few situations, though, yes, there are some, that I would advocate allowing a student keep the need money on top of the scholarship</p>

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<p>I know people who deliberately ignore scholarship applications because they dont get to decrease their portion of payments at the school and school just lowers the FA portion. The college FA policies don’t incentize the students to go after scholarships at all.</p>

<p>If colleges change their policies to reward students for winning outside scholarship by doing some sort of revenue sharing, then more students will be amenable to putting in the time to apply.</p>

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<p>That is a fallacy, in that most outside scholarships are not huge, and what they usually replace in a package first is the inevitable loan and work study part of the award. There really is not a whole lot of grant money being given out by college. Those who deliberately ignore the apps do so to the benefit of those who don’t. My son was the only applicant in 3 years to apply for an outside scholarship so they gave him all the money left in the fund and closed it down that year! </p>

<p>The big fat scholarships get plenty of applicants. And many do have a need component to them, often a strong one, so that in order to win, you gotta have some need.</p>

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<p>"That is a fallacy, in that most outside scholarships are not huge, and what they usually replace in a package first is the inevitable loan and work study part of the award. There really is not a whole lot of grant money being given out by college. Those who deliberately ignore the apps do so to the benefit of those who don’t. My son was the only applicant in 3 years to apply for an outside scholarship so they gave him all the money left in the fund and closed it down that year! </p>

<p>The big fat scholarships get plenty of applicants. And many do have a need component to them, often a strong one, so that in order to win, you gotta have some need. "</p>

<p>Not necessarily. There are 10k or 5k renewable scholarships and one can apply for more than one. A parent who is paying 25k out of pocket told me her athlete kid did not apply to a single scholarship because the college would not let her keep it based on the policies and she would need to continue paying the 25k. My kid is not an athlete and could not even apply for those specific scholarships.</p>

<p>It is immaterial that someone else would get it. The idea is that current policies don’t encourage kids from pursuing scholarship money when schools give them FA. When the kid gets merit money, it usually seems fine to tack on more scholarships from other sources.</p>

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<p>My experience: My daughter is a sophomore at a private FAFSA only school that pretty much pledges to meet full need. She also won a LOT of one time only scholarships her senior year of high school. Every time she was awarded one, we dutifully reported it to her school. I think we had 10-12 revisions of her financial aid. She also received a large merit scholarship from the school. That did not change, but it was upsetting to see her grant aid go down as we reported her scholarships, and her work-study disappeared entirely (which ended up being ok because she was able to snag a campus job anyhow). </p>

<p>I understand WHY the school did it, so I am only complaining a wee little bit. However, it would have been so nice to be able to spread those scholarships out over four years to help with our efc or to keep her loans down. She worked hard to win those things! The second year the school actually cut her grant aid, although on appeal they raised it some. My income had dropped considerably due to the end of child support for my daughter when she turned eighteen, so I was kind of perplexed on that one. I’m afraid to see what the next two years will bring.</p>

<p>One thing we did do once we saw how all her scholarships changed her aid was wait a year to claim one of her scholarships; that was an option given to her by that particular scholarship committee. I don’t know if that helped her financially, but I feel like it likely did. </p>

<p>I also found it interesting to note that at at least two of the dinners/functions we attended to receive her scholarship, the sponsors pulled her aside and actually requested that she NOT report their scholarship to the school, because they were aware of how it might impact her aid. Unfortunately, guilt and the fear of being found out kept us from doing that–we reported them. </p>

<p>She has two outside scholarships that are renewable for a total of $4000 yearly, but they send the funds directly to the school, and sometimes I feel as if all those scholarships do is cut her grant aid by a similar amount. Of course, I can’t be certain since we will never see what the pkg. would have been like without those two scholarships, but it is frustrating, nonetheless.</p>

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<p>Ctinct yes, the financial aid is almost certainly decreased due to the outside scholarship, as the way it almost always works is that the scholarship is applied immediately to the need based aid given. No need, no aid, and the scholarship reduces the need. Federal Work study, subsidized loans and SEOG funds have to be reduced when need is reduced and that is what usually comes off the aid package first. The impact there is small because with the loans, you are really only losing the subsidy on the interest while in school and the reduced interest rate. You can still get the loan to put towards EFC, but the interest is no longer subsidized. And as you noted with work study, those hours are now freed up and the student can find a job and those proceeds now go towards the EFC, rather than the need. </p>

<p>Where it hurts is when there is a grant that gets cut too. If the grant is need based, not merit, yes, you lose it when you lose the need, because you did not get for "how great thou art"but because your family showed that they needed the money. The "how great thou art ", merit money does not get cut by the outside scholarships. </p>

<p>So yes, those outside scholarships very likely cut her grant aid, though if her school does give everyone some loans and work study, they’ll cut those out first.</p>

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<p>See, I disagree that there is a clear line between need and merit, or that the two are awarded by entirely different offices at “most” colleges. The very limited number of schools discussed on CC are primarily Profile schools, who we know collect a huge volume of information and then determine “need” using formulas they don’t share, nor do I believe we can safely assume all students within a school are subjected to the same “need” formulas. If they were, chances are no one would ever get a favorable decision on review when bringing in a better offer from a peer school.</p>

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<p>With all due respect, this is such a small niche of issues that are “unfair” in terms of those who are needy, and does not even address the issue of getting more money for those who are in need. It does not make my blood boil at all that someone whose need is fulfilled should not get the need when there are hundreds of thousands out there who have unmet need. </p>

<p>If a student does not want to fill out forms of scholarships because he has nothing to gain in getting them, that’s all right. Why should the school care when they aren’'t going benefit from it anyways by changing their policy? If the kid gets to use scholarship towards his EFC, it isn’t going to help the school any. It isn’t helping the school any when the kid uses the scholarship towards his Stafford loans either. That isn’t the school’s money. It helps the kid because now he can use those loans towards his EFC with just the interest being the increased cost. So I fail to see the travesty in all of this. </p>

<p>Where I see unfairness is where low EFC kids are given NO aid but a bunch of loans packaged up like it’s aid and s/he and parent is sweet talked into taking $30 or more in loans to attend a school with a 2nd year return rate that is less than half You have a better chance of beating cancer than graduating from that school and the sooner you drop out, the better because if you are going ot end up 6 figures in debt for the rest of your life most likely and hurting your parents too. ANd that happens far more than those kids who have to use their Stafford loans to pay their EFCs. </p>

<p>It is galling when a Rockefellow or Trump type kid gets a huge merit award when it’'s just bragging rights and chump change for them with so many kids in the above plight. But merit is merit and need is need. Yes, some schools do have fuzzy lines between the two, but I’ll tell you such schools are the ones that may succumb when a large outside scholarship does hit the deck. The schools like Amherst and BC don’t play that game. They give aid for need , little or no merit money, so you get any extra money it goes towards that aid so it can go to other students. Yes, a few hundred dollars a year is a lot of a family with a low EFC, so the near full rides with the small student contribution needed are truly a bonanza as compared to how such an offer may feel to a kid who will turn it down to pay full tuition for a school he simply prefers. </p>

<p>I am saying it’s not such a big deal in the sea of unfairness and what is wrong with our college pay system. Let the kid who doesn’t need the outside scholarship NOT apply for it so someone who does need it gets it. I think that’s perfectly fine.</p>

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<p>Well, we’d agree on that. There are far greater injustices in the world of equity than how a particular school decides to handle an outside scholarship. And this issue doesn’t rise to the level of boiling blood for me either, since we really are talking about very few students who will be affected and because outside scholarships are generally pretty small. </p>

<p>Like someone posted above, my D1’s local scholarship was given to her with instructions from the service organization that said she should not report it to her school if it would reduce her aid. She’d won it; it should be hers. We did report because her school allows students to keep any outside scholarships. They want a record so they can put it in their aid material (over X # of dollars in outside scholarship over and above what we give out). Beyond a little promotion, it certainly doesn’t benefit (or hurt) the college because it’s all just cash coming in for them.</p>

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<p>Those who don’t want to take the chance that they win an award, only to have it replace financial aid, dollar for dollar, don’t have to apply for outside scholarships. The chances are small in winning the sizeable ones anyways. But if you do win, at least some of your self help will be reduced, in most cases, and the loans and work hours thus freed up can go towards your EFC. It’s a rare financial aid package these days that doesn’t have loans in it. Those very, very few who do get a full grant scholarship and find that they cannot use it towards their EFC, though I can understand their disappointment, they are one of the annointed few to get accepted to such schools and get such aid, so it’s hard for my blood to boil over the fact that the person still has to pay his EFC. </p>

<p>My college is not the most generous of all in that it does not give all grant need packages, but for the kids they most want, however, it does have a policy that outside scholarships do not reduce aid for the first year. That seems to quell the complaints, as most of the awards are for just one year. But starting with the second year, the awards are taken into account so the aid is accordingly reduced. Bu they don’ t get much blood boiling because the financial aid awards do not come out showing the reduction so that the recipient feels cheated. They are on file as recurring scholarships and the student never gets to see the aid he would have gotten that second year on. Yeah, we are a bit shallow that way in that when we see it and then it’s taken away, we feel that we have lost something ,so by doing it that way, kids can have their cake and eat it too for the first year. Federal and state money does have to be reduced according to the rules when that happens, but other than that, kids can double, triple, quadruple dip that first year. </p>

<p>So that might be a solution to make things more palatable to those getting these merit awards and finding that they don’t go straight to the EFC but have to go to the federal/state awards first, then to the school aid fund. </p>

<p>So, yes, I am sympathetic and I do understand that it is a disappointment,but no blood boiling and I don’t think the Bloomberg article nails anything other than reiterating that financial aid is for need and when the need disappears so does the aid. The same schools (BC, for example) with that policy will not take away the merit money they give out to those who get outside awards. That money is a reward, an enticement and comes with no strings attached. Financial aid funds are given with a lot of caveats. Any thing that comes up that shows that the need was not there can cause the award t be rescinded. You often have to report the value of your cars ,any savings accounts of other kids, practically the fillings in your teeth and have them taken into account. A direct receipt of money that goes directly to the school is certainly going to reduce the need. You can’t even run short on money due to all sorts of bad luck and tap your 401 K without having that counted as income! So, yes, if you get money that is stipulated for college a scholarship, it does reduce need very directly and it’s no secret in that the info is right out there as to how this is treated.</p>