http://www.finaid.org/scholarships/outside.phtml
“The school’s outside scholarship policy dictates how the outside scholarship is used to reduce the financial aid package. Most schools have favorable policies that first apply the outside scholarship to unmet need, and then reduce self-help (loans and work-study) before touching institutional grants. This lets you replace your loans, which must be repaid, with the outside scholarship. After all, it is in the school’s best interest to encourage you to win outside scholarships.” And they were VERY encouraging at open house to apply, apply, apply. But no mention of how they’d apply them.