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Help me understand financial aid


Janeway
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Please help me understand financial aid. These are fake numbers....Let's say a college costs $65K a year. And the EFC is $10K (again, fake numbers). The college gives $30K in  grant/scholarship aid (fake numbers). That would leave the parents $35K to come up with. The college offers loans to cover the rest.  The parents/student go out and applies for outside scholarships and aid and brings in $30K. So with the school aid and the outside stuff, that equals $60K in a variety of grant and scholarship aid with $5K left for the parents to pay. Will the school simply take away the $5K in aid? I already called the financial aid office and tried to ask but the person answering the phone did not understand the question.

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51 minutes ago, Janeway said:

Please help me understand financial aid. These are fake numbers....Let's say a college costs $65K a year. And the EFC is $10K (again, fake numbers). The college gives $30K in  grant/scholarship aid (fake numbers). That would leave the parents $35K to come up with. The college offers loans to cover the rest.  The parents/student go out and applies for outside scholarships and aid and brings in $30K. So with the school aid and the outside stuff, that equals $60K in a variety of grant and scholarship aid with $5K left for the parents to pay. Will the school simply take away the $5K in aid? I already called the financial aid office and tried to ask but the person answering the phone did not understand the question.

No, that is not how it works. It can vary, but often outside aid replaces institutional aid $1 for $1. Some will reduce student contribution, but parental contribution is rarely reduced.

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If the school does NOT allow "stacking" of outside scholarships on top of the "inside" scholarships offered by the school, it is as 8FillTheHeart says -- the school will reduce their scholarships by the amount of the outside scholarships, so there is no net increase in aid. In your example, if it is a school with a "no stacking" policy, the school would then provide $0 in scholarships, the student would have $30,000 in outside scholarships, and the family is still on the hook for the remaining $35,000.

An additional downside is that outside scholarships are very frequently 1-time awards (not renewable), while the school's freshmen scholarships are the renewable scholarships. So in this hypothetical situation, not only would the student NOT get to reduce total costs down to $5000 (because of no stacking), but the student would probably lose out on that $30,000/year in renewable scholarships from the school. So for the remaining 3 years of college, the family would need to come up with the full $65,000 per year.

In the case that the school ALLOWS stacking of outside scholarships on top of their scholarships, then for the freshman year, the student would have $60,000 in scholarships ($30,000 in "inside" scholarships from the school + $30,000 in "outside" scholarships stacked on top), and the family would still be expected to contribute $5000. Assuming those outside scholarships were the typical 1-time-awards, then in the student's sophomore, junior, and senior years, the family will go back up to needing to supply $35,000 per year, provided that the student maintains the requirements for keeping/renewing the $30,000 in scholarships from the school.

Edited by Lori D.
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17 minutes ago, Lori D. said:

If the school does NOT allow "stacking" of outside scholarships on top of the "inside" scholarships offered by the school, it is as 8FillTheHeart says -- the school will reduce their scholarships by the amount of the outside scholarships, so there is no net increase in aid. In your example, if it is a school with a "no stacking" policy, the school would then provide $0 in scholarships, the student would have $30,000 in outside scholarships, and the family is still on the hook for the remaining $35,000..

Just to clarify, would grants be affected by a no stacking rule, or only scholarships? (My understanding is the latter.) 

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OP I read, years ago, that the vast majority of Financial Aid most students receive is from the school they attend.  For that reason, I did not encourage my DD to spend much time, if any, applying for outside scholarships. Scholarships associated/affiliated with the university are another matter and IMO one should apply for them, if qualified and will probably not lose any other aid from the school.

ETA: I think the Breakthrough Junior Challenge was the only huge outside scholarship my DD applied for. That was several years ago and she made her first Video for that competition. https://breakthroughjuniorchallenge.org/about

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It may also depend on the school.

At both of my kids' private colleges-- one meets fulls need and the other not quite, but very generous -- outside scholarships can be used to reduce work study and federal loans, but not any institutional grants. 

Usually the college will have this info posted on their financial aid pages.

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That's one of those questions where the answer will vary among schools. It's best to ask the financial aid rep directly. You might want to simplify the question though. Perhaps ask, "How does the school handle outside scholarships earned by students?"

My oldest could have earned any number of outside scholarships and it would have lowered her bill. She only had one merit scholarship, a loan, and GI Bill payments. Stacking with the merit scholarship was fine.

My second gets a huge amount of need-based aid/grants, and any scholarships she earns past about $3500 only serve to cut back the grants from the school, not the amount the parents are supposed to pay. Now, if she had enough in scholarships to cover the entire amount, that would be a different story.

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