I liked your explanation. In your example (Second Scenario) you said UPenn allowed student to bring an outside Scholarship award thereby reducing Out Of Pocket expenses to 220 dollars. However I was told by UPenn Fin Aid Officer that it is not possible to do so. The amount UPenn grants in need-based, work-study, etc is basically computed as follows
Money provided by UPenn = COA - ( EFC + Any Non-UPenn Scholarships)
Per the above formula the 5950 scholarship amount would be added to 7110 EFC to compute
What am I missing