Outside scholarship offset against grant before loan but EFC reduced

Paying for College
1

Interesting financial aid situation for my son. Details:

  1. Received financial award that included grants and loans ($3.5K Perkins, $3.5K Direct subsidized, $2K Direct unsubsidized)
  2. Received $8K in outside scholarship
  3. Reported $8K outside scholarship to school
  4. School reduced grant by $2K and removed $3.5 Perkins loan but left $3.5K Direct subsidized loan.

So, they didn’t offset the whole $8K (better for me), but they did offset more against the grant (not better for me). I had expected them to offset the $8K by $3.5K Perkins, $3.5K Direct subsidized, $1K Grant. So, we lost $1K in grant money but got to keep the $3.5K loan (this effectively lowered my EFC calculated by the school by giving more total aid).

Questions:

  1. Although every college can do whatever they want, I thought the convention was generally to offset the loans first (Perkins/subsidized). Sounds like that is not always the case. Anyone else encounter that?
  2. Although I’d prefer to have $1K in extra grant over the $3.5K Direct subsidized, it’s really not a huge deal (I can borrow the $3.5K, pay no interest and pay it back in full after my son graduates. The extra money, although not really necessary, certainly helps). Is it even worth it to complain?

Thanks for any input. It’s amazing how many things don’t go as expected.

2

I don’t think there is a ‘conventional’ way to do it.

3

What would you be complaining about?

4

Good question. Guess I’d just want them to consider not offsetting the extra $1K of grant and instead take away the loan. They may think they are doing me a favor by offering me a larger total aid package.

5

Some colleges apply outside scholarships against more types of loans and student work expectations first before reducing grants. For example: https://students.ucsd.edu/finances/financial-aid/types/scholarships/ and https://financialaid.stanford.edu/aid/outside/ . It looks like the college the OP’s kid is at is less generous in this respect.

6

The old phrase “don’t look a gift horse in the mouth” comes to mind. Before the $8k outside scholarship was awarded, the amount of “free” money (grants and scholarships) available was $X. After being notified of the $8k outside scholarship, the amount of “free” money available is $X+6k. Unless you are reasonably certain that the school violated its policies and procedures regarding outside scholarships, I don’t think that any action is warranted. If you want to pursue this, the first step would be to get up to speed on those policies and procedures (if you haven’t done this already).

7

When I spoke to someone on the phone a couple of months ago, I was told they do it that way (I think they said that). However, that was one person talking and not necessarily their policy. Also, as I said, it’s not such a big deal, meaning having the loan for 4 years wouldn’t be that bad. Will not rock the boat here.

Thanks

8

For $1000, I think it is worth a call just to ask if you understood the person you spoke to a few months ago correctly. If Best case, you get $1000. Worst case you spend 15 minutes on the phone.

9

It depends on the sxhool and the nature of scholarships. There is no convention in it. Also, some schools may still update the award summary over the next few weeks. My D just got another unexpected scholarship from school that shown in her award summary together with other scholarships, grant and loan. Obviously they did not finalize the number yet as there is almost nothing left in EFC right now. That has happened before as the report of scholarships usually is faster than the financial aid recalculation.

10

So I called this morning to find out more and got a little more insight into the process. He explained that they look at need from 2 points of view - Federal point of of view and their own institution point of view. The Perkins loan got wiped out from the federal point of view, but at that point they didn’t take away the Direct subsidized loan because the need was apparently met. However, when they then looked at it from their own institution point of view, they removed some from the grant. I clearly don’t fully understand it (nor do I think it’s their goal for me to), but I’m fine with what they did (not that I really have a choice anyway).