<p>It depends upon the school as to how outside scholarships will be applied. There are some school that will take that the outside award and replace a school grant with it FIRST. Yes, I’ve seen that, and at some schools doing this their web site makes it clear that the grants are solely for financial need and will be so reduced.</p>
<p>Typically, what I have seen, (and Stanford is not typical from what I’ve seen), schools will take the outside scholarship and apply it to the self help part of the package first. Workstudy, Direct Loans (unsub first, as some schools will put unsub direct loans in an aid package), subsidized loans, grants and only reduce the student and parental EFCs once the aid package is depleted, with the exception of PELL which can remain. If the Direct loan is replaced, the student can then use it on an unsubsidized basis towards the EFC.</p>
<p>But some schools will permit stacking of scholarships. Though federal aid cannot be given until a family pays the FAFSA EFC, the school will allow the students to keep whatever grants they give, treating them as merit instead of need grants. So in such cases, the federal (and sometimes state) funds will be reduced, the school grants will remain intact and the student can possibly double dip.</p>
<p>Again, it all depends upon the school. </p>