<p>If I am awarded a scholarship I will have to declare it on my CSS Profile and my college will deduct my award amount from my financial aid.</p>
<p>So, for someone in my situation with financial aid, what's the point of scholarships?</p>
<p>It really depends on which school you are attending, how much in financial aid you are getting and how it is distributed. For some very lucky people, the point of outside scholarships is to give back to a school that has been so generous in awards to you. It’s not just all about YOU, you should know</p>
<p>MOST of the time, the way it works when a student get financial aid, is that the student is getting this money ONLY because his family finances are such that the school deems him NEEDY. Not that he is any better than another student whose family makes more and has more, but just to put him on the level paying field as that student. So when you get a windfall of money like an outside scholarship, that need is filled, HALLELUJAH, and you are no longer needy by that amount and therefore not entitled to the welfare that the financial aid you were awarded.</p>
<p>Most of the time, financial aid packages have workstudy and loans in it, and if that is the case, the outside scholarship will reduce those parts of your package first and will only start reducing the financial aid grant if it is large enough that it goes through the self help component. If the school did not meet full need, they may permit the aid to go towards the unmet need as well. Usually workstudy and subsidized loans are from the federal government, and are set up for NEED only , and if the person no longer has the need, whether it’s from winning the lottery, getting a work bonus, getting a merit award or scholarship, those subsidies are no longer permitted. Just like any federal welfare, assistance type plans. Just keep in mind that the AID is not a gift because you are so great, but because you are NEEDY. So when the need disappears, so does the help. That’s the way NEED based programs tend to work. However, you can still work on your own and if you lose work study, whatever you earn will go directly into your pocket and not towards your need package. And you can still borrow up to $5500 in Stafford loans as long as you don’t have so much merit money that the official cost of attendance (COA) is exceeded. You just lose the federal subsidy.</p>
<p>Some colleges are so generous that they will let you keep some or all of the money they gave you in financial aid as long as they are not running afoul of federal laws (can’t do that or they and you will be in trouble), but most schools really are so strapped for financial aid funds that they need every dollar they can get. So when you get outside funds form anywhere, it really helps them out. Merit money is a whole other thing, since that pot is budgeted to give out to those who truly EARNED it. A Trump kid can get merit scholarships. They do not come from the same pots most of the time. </p>
<p>So that is the point of scholarships. Also, a lot of times when you apply for outside scholarships, you have no idea what schools are going to be accepting you, much less how much financial and merit aid you will be getting and how much would be self help. So you are giving yourself a lot more flexibility and hedging your bets. </p>
<p>Usually, the way it works, is that you let a school know what your outside award is–it’s important because all of this can have tax and federal implications and YOU DO NOT want to mess with that. Can come back and bit you in the back side when you are looking at jobs in the future or if you are audited,not to mention the fact that “them’s the rules” and an awful lotta agencies are giving you money to help you out and are assuming your are going to be honest and grateful. </p>
<p>Congratulations on getting some scholarships and becoming a GIVER instead of a TAKER in the system, in one more thing. We desperately need more givers, as there is ever so much need.</p>
<p>For some people, scholarships don’t make a lot of difference, but they can eliminate loans. People who have low EFCs and who are attending schools that “meet need” may find that their scholarships eliminate loans and work study. </p>
<p>For other people, scholarships can be large enough that they reduce the amount that a family has to pay. For instance, if a school costs $30k and the EFC is $25k, and the student gets a $15k per year scholarship, then the family pays $10k less.</p>
<p>And, since most schools do NOT meet need, then scholarships can mean having a much smaller gap.</p>
<p>Thanks! That makes a lot of sense, although I think excessive debt does not figure into your use of the word NEED. Everyone knows tuition has increased way faster than inflation (about 3 times faster in the last 20 years). So, to compare financial aid to welfare is bit twisted, in my opinion. Colleges are “generous” with financial aid, yet they hike their tuition enough to put graduates in debt for many thousands of dollars.</p>
<p>I, like most students, received financial aid mostly as loans, so I know I, like most students, will be “a giver” for many years.</p>
<p>Let’s also keep in mind that most colleges do not meet the full need of a student. Most of those colleges will not reduce their aid offers because of an outside scholarship (unless it is unusually large).</p>
<p>As noted above, for the typical modest sizes of outside scholarships, for most colleges, they will reduce your loans for most students.</p>
<p>Look at how your college treats the outside aid, and suggest that they follow models like Johns Hopkins in terms of how that school treats it. By letting first year students keep their outside scholarships the first year up to what the federal government permits, they encourage these kids to apply AND they also get some kids to go there that want to keep that money. Think about it. You get a $25K outside award. You are accepted to JHU and Georgetown, two schools that do compete with each other for students due to vicinity to each other and commonalities. You also get a financial aid package from each that is just about the same, with, say about $20K in need based school grant. Both schools do give packages that are competitive, a good part of the time. If you go to Hopkins, you pocket the $25K. You go to GTU, you get $5K of it and have to apply $20K to your need, so that the grant goes back to the pot for others. Though you might be generous, being $20K generous is asking a a bit much. So schools should have some give in this area. However, the general idea is that when you have need. every dime you get pretty much reduces it so that the need pot can be given to more kids with need. </p>
<p>There is no really good solution to this, as you can see. I think schools should do some sort of share on this sort of thing because it really is an ugly thing that the full pay student whose parents can pay it all can pocket a large grant whereas the one who is on full financial need can get nothing after returning to the pot. This leaves a bad taste in everyone’s mouth regardless of how FAIR it is in terms of how financial aid is constructed in that it is based sheerly on NEED at some of these schools.</p>