College Scholarships are not free money

The Minneapolis Star-Tribune had a nice article that outlined how getting outside scholarships may actually affect your students when it comes to getting grants and financial-aid from a College.

November is national scholarship month. You are probably encouraging your students to apply for as many scholarships as they can. This is good advice but many students and their parents don’t know that scholarships won from corporations, non-profits, and other outside sources can reduce the amount of grants and financial aid given by the college dollar for dollar.

Students with financial need should be aware of this potential disincentive before they spend countless hours pursuing scholarships that may leave them no better off. The same scholarships could, however, benefit affluent families by reducing the amount they have to pay or borrow.

Federal rules require schools to reduce need-based financial aid when students win outside scholarships to ensure that their total financial aid does not exceed their costs by more than $300. If the college does not meet students’ full financial need — and most do not — it may opt to let the outside money help fill that gap.

When colleges do include loans as part of a need-based package, some use outside scholarships to reduce those loans and thus the ultimate cost of going to college. Others do not.

Because colleges’ policies vary so much, the only way to know how an outside scholarship might affect financial aid is for families to ask the individual schools.

Here is a link to the article: College Scholarships are not free money