<p>The university my son will attend this fall offered a modest financial aid package - with a huge gap between FAFSA EFC and their own EFC - after repeated discussion and plea - a huge improvement given that originally they did not offer anything.</p>
<p>My son just got a top prize in a national scholarship competition in the field of economics and finance (his passion) sponsored by an industry association. My son is entering a few more competitions: this summer, he is hunting scholarship prize money instead of working at Starbucks: he is making much more money winning prizes than pouring coffee. </p>
<p>The University told me previously that external prize money will reduce their aid offer, probably not dollar to dollar but a good chunk of it. </p>
<p>Is my son obligated to report the prize he won and any future prizes he may win knowing that the university will use this information to reduce his fin aid? If they are really taking financial aid money away because of his prizes, it really disincentivizes students from taking an initiative to work hard to win scholarship prizes in various venues..... It is especially galling to me since there was such a HUGE gap between their EFC and FAFSA EFC....</p>
<p>Anybody out there with this kind of predicament? I guess this is a good problem to have, especially given that his top prize came with not only just money but also a very prestigious 10 week paid internship in Wall Street next summer after his finishes his first year in college that will put him on an excellent track for building a terrific portfolio for post graduation prospect.</p>
<p>You are absolutely legally required to report all outside scholarships. The school will evaluate and determine whether to reduce other FA. Not reporting outside scholarships can have serious consequences.<br>
Congrats to your son. It sounds like a great opportunity.</p>
<p>The scholarships are valuable honors but getting them reduces your need in the eyes of colleges. The more generous ones will first reduce loans and work study which does benefit the student. He is absolutely obligated to report them, it’s Federal financial aid fraud if he doesn’t.</p>
<p>Gee, that school calculated our EFC as lower than our FAFSA number!</p>
<p>Now you have to decide which is the better financial scenario for you – taking the FA and having scholarships reduce aid, or going full-pay and getting 100% of the benefits of your S’s hard work. Is this a one-time award? All four years? That makes a big difference, too.</p>
<p>This school is not as generous as others when offsetting scholarships against FA, and given the relatively low level of need the school calculated, we figured out we were better off letting S take his scholarships and not having any other strings attached to them, rather than fighting for scraps of FA. (NB: With the scholarships, we paid much less than our calculated EFC. Won’t be as big a difference next year, but every bit helps, esp. with another one who will be heading to college in another year.)</p>
<p>…Changing the scholarship to an award for computer, etc. may well cause it to become taxable income to your son at that point. S1 won a laptop last year and he was 1099-ed for it and had to pay taxes. He had summer employment income that, combined with the laptop, put him over the standard deduction.</p>
<p>While the scholarship may reduce FA, it won’t be taxable as long as it is less than the amount you pay in <em>tuition</em> expenses (not room & board).</p>
<p>I have NO intention to do anything fishy and commit what may be considered a fraud. This whole college thing is complete new to me so I have to learn what’s allowed or not.</p>
<p>The sponsoring organization may give my son an option to receive cash scholarship which will be sent to the University or to receive allowance for laptops and credit other educational services and products. If he take the second option, is it something he still needs to report to the university with an approx. cash value?</p>
<p>thanks everybody. Your answers really helped us. I had no idea how these all work. though they are getting us coming and going, I am not complaining as it is a good problem to have.</p>
<p>It looks like winning this competition is going to open doors for him: the sponsoring Wall Street company is making an exception and offering him a paid internship position this summer(normally reserved for college kids only) before he starts college in the fall. That’s in addition to the guaranteed paid internship position next summer when he finishes his freshman year. </p>
<p>We will see what happens with other competitions he entered. </p>
<p>By the way, I highly recommend the kids hunt for outside competition prizes and scholarship money. you will be amazed how many known and not so well known scholarship competitions there are even in this economy. Think of it as a full time job. If you have what it takes, it pays much better than any kind of summer job available to students - plus the resume building prestige. That’s the path I put my son on. He is a very intellectually gifted kid and I figure he will make more money getting the prizes than working in Starbucks, even if he can find a position in this economic environment. I told him as a joke “Hey, I could ship you to a god forgotten place somewhere on the opposite end of the globe where you will weave carpet in a dungeon dawn to dusk for a few pennies a day, or you could churn out analytical research papers and write essays with all of your 5 syllable vocabularies”</p>
<p>Alas, only if we thought about it last summer: it would have also strengthened his college application EC portfolio. No matter though: he is going to a school that I think is perfect for him.</p>
<p>I did a bunch of research on scholarships last winter, and (to D’s relief) told her that she needn’t bother. </p>
<p>First I figured out that even for targeted local scholarships, the odds of her winning anything were small. Then I figured out that since most awards are in the $500-2000 range, she’d have to win a whole boatload to make a meaningful difference. Then I figured out how much time she’d have to spend entering/applying when she should be working on her primary job, school. But when I finally figured out that even if she won anything, it would most likely not even help her – well, that was the nail in the scholarship coffin for me. </p>
<p>One speaker at a financial aid seminar I attended said, “Unless you expect to get no financial aid at all, don’t bother with private scholarships. It probably will not benefit you, and it’s small potatoes. Concentrate on getting all the institutional aid you can. That’s where the money is.”</p>
<p>ETA: hyeonjlee – Obviously our scholarship goal would have been purely financial. It sounds like your S is taking an entirely different approach – building a resume and gaining valuable experience; those are completely valid reasons for his quest and will undoubtedly stand him in good stead. Good luck to him!</p>
<p>Also, not reporting scholarships & other awards isn’t “considered fraud.” It IS fraud, or something akin to it. Colleges are pretty intolerant of unreported outside aid, from what I hear. Please don’t try to get around the reporting requirement, it will come back to bite you. Just wanted to clarify. :)</p>
<p>Point well taken. You are right about different goals for scholarship application. I am not recommending my son to go after small scholarships. He is only entering competition for over $10K per pop. Scholarships of this kind also tend to be a prestigious one that really helps build the resume. Furthermore, it may even land the student on a prestigious internship path - which is what’s happening to my son. we are all excited about that since it puts him 2-3 years ahead of his peers who want to join the Wall Street upon graduation - through my search, I found out that prestigious internship in the financial sector (which is a requirement for landing a good position after college) is very difficult to get before the summer after the junior year. The fact that he is already getting a prestigious paid internship even before he starts college triggers a virtuous cycle for increasingly more attractive internships possibilities throughout college years.</p>
<p>PS: I hear you loud and clear about outside scholarship reporting. I will cross all the T’s and dot all the I’s. My son wants to become an unrepentant capitalist the least I should do is to make sure that he stay straight and narrow when it comes to legal and ethical matters…</p>
<p>hyeonjlee: I think my ETA cross-posted you. </p>
<p>I agree those are great reasons for your S to continue his pursuit, and if he can lay his hands on $10K, more power to him! He sounds like he has a great future with that kind of work ethic.</p>
<p>Wow. We did not know that this could happen. We have a budding situation here without the perk of the internship for the resume. Is this common knowledge–that scholarships reduce FA? If so, we really missed the boat. If not, it’s something other families seeking FA should be aware of.</p>
I really think this is very bad advice for the vast majority of students. The exception would be for a student attending one of the very few schools that promise to meet full need without loans (and early in the game you would not know for sure if they were going to get into such a school). The vast majority of schools do not promise to meet full need at all. Many others that do do not promise the ‘no loan’ part. Students attending the vast majority of school that do not meet full need, or do not meet it without loans, would absolutely benefit from scholarships earned either by helping meet ‘the gap’ or by reducing the amount of loans is the aid package. Federal rules are that the FAFSA EFC plus scholarships plus financial aid cannot exceed the COA. If there is a gap or loans then the scholarships are still beneficial. </p>
<p>My daughter has a low EFC, gets good merit aid that covers about half her COA and good federal and a little State need based aid at a school that does not have their own need based grants. The balance of her costs are covered with WS and loans (fortunately not excessive loans). Any additional scholarships would have reduced those loans and WS before affecting her need based grants. How could that have been anything but a good thing? Unfortunately she did not qualify for the ‘small potatoes’ local scholarships as they required that she graduate from the local high school and she went to the State math/science school. If she had qualified I would have been happy to see her get a $250 or $500 or $1000 local scholarship rather than a $250 or $500 or $1000 loan. </p>
<p>Now for those students going to schools that do meet full need without loans the advice may be good. For the majority of students not such good advice.</p>
<p>Well…you’re half right. It isn’t common but it is knowledge. Individual schools may choose to treat it differently than the norm. You have to research each school and if you don’t find a clear cut answer- be sure to ask (and keep the answer handy). I have seen schools reduce FA $ for $ and that is the norm BUT within that “norm” WHAT they reduce first is important. If they reduce student contribution (work study or summer earnings) or loans, it’s still VERY worthwhile (think of it as replacing it with grant money). Some schools will only reduce by half (again , what do they reduce?). Some few schools let you keep it. </p>
<p>FYI (and not to hijack): A good bit of this is also applicable to institutional (the college’s own money) merit scholarships. Scholarships rarely increase the total amount of FA for a kid qualifying for need-based aid (unless the scholarship is for more than the total aid award). They often DO change the nature of the package very favorably. In addition (and getting way OT), some schools will change the entire FA process for a scholarship kid. Two schools that granted my D scholarships changed us from a Profile based FA to a FAFSA based FA. ( That info was most decidedly NOT available from their websites and came straight from conversations with FA. We own and live on a ranch which means it helped us a lot.) </p>
<p>Bottom line: Know your situation. For us it was better to concentrate on institutional awards that were higher than expected FA. It worked out well.</p>
<p>Thanks Curmudgeon. Yes, the college, which does not gap, does apply roughly half to loans so I am glad you brought up the point about the importance of how scholarship is applied. We were definitely surprised to learn of yet another twist of paying for college.</p>
<p>My daughter’s school suggested asking scholarship providers to wait til next year to actually give the student their award if it put them over the campus job figure for freshman year. They will let you replace that amount with outside scholarships.</p>
<p>Curmudgeon stole my response !!! Obviously I agree with his assessment.</p>
<p>Weird things happen when scholarships collide. We had one case where the school initially refused to accept the outside scholarship $$. When pressed they relented, and replaced the outside scholarship (which was automatically renewable for four years) with a one-time one-year grant. Weird. YMMV.</p>
<p>The university my son will join this fall told me the following:</p>
<ol>
<li>they will first eliminate the work study money. Turns out, it was never a guaranteed aid any way: if there are too many applicants for available positions, some kids may not get all the hours of work to earn the money to the tune they listed on the fin aid package.<br></li>
</ol>
<p>I have no problem with this, since even before this, I felt that he could do better (better long term return) by beefing up his professional qualification with the time, rather than doing campus work 10-15 hours a week not related to his intended career. As it stands now, he won the top prize in the competition and is getting the prestigious paid internship this summer even before he starts college (and guaranteed paid internship next summer) because last two years or so he spent 15-20 hours a week in a local Barnes and Noble reading all types of books on economics/international finance he could lay his hands on. I believe even for a short term $ perspective his time was better spent this way, as opposed to working at a local Starbucks. </p>
<ol>
<li>Once the outside scholarship exceeds the Work Study m, they may or may not start eliminating outright grant. It may be $ to $, probably not. It could be a portion of the money they eliminate. It sounds like paying tax. When you earn $X, you get a portion of that depending on the “tax rate”. If the tax rate is 100%, there is no point in “earning” the money. If the tax rate is less than 100%, it’s still worth something.<br></li>
</ol>
<p>They couldn’t tell me the exact amount of “tax” they are going to levy on him until they get formal notification. </p>
<p>Oh, by the way, he was selected for National Merit Finalist scholarship sponsored by the University ($2000 a year), then they went ahead and took that exact amount of money from their grant so the next was same. It sort left a bad taste in my mouth since they made a big ado about NMFS as additional source of funding: bottom line, it ONLY is an additional source of funding if you DON’T need financial aid to begin with. That miffed me, but then again, it sounds like it’s the case with most other universities also… Oh, welllllllllllll</p>
<p>If we had gotten FA, the NMF award would have reduced S1’s institutional scholarship.</p>
<p>OTOH, MIT was very flexible about letting students stagger their external scholarship funds. Scholarships reduced the student’s term-time or summer work expectation, too. For a kid who was already planning to work, the external scholarship $$ actually benefited the student. I don’t remember all the details now, but among the privates S considered, MIT was most favorable towards making the external $$ count for something.</p>
the least I should do is to make sure that he stay straight and narrow when it comes to legal and ethical matters…</p>