How Do Scholarships Affect Your College Financial Aid?
College is expensive and students getting scholarships to lessen the burden of financial aid is every parent's dream. Students generally apply to anywhere between five and ten colleges, and the final choice of which college they will attend often comes down to the financial aid package a college offers.
Anyone who used to be a fan of the televison show "Gilmore Girls" will recognize the scene from the show depicting that dream turned into a nightmare. The student, Rory Gilmore, is accepted at Yale and her single mom, Lorelei, unselfishly passes up an opportunity to start her own business so she can finance Rory's college career. Then a miracle happens, Lorelei receives a large check from an investment her father made in her name as a child and, having already settled Rory's Yale tuition bill, she uses her newfound cash surplus to buy into a business. After the money has been spent, Lorlelei receives a quick phone call from Yale informing her that Rory has lost her financial aid package because of the money Lorelei had received - it would have covered the cost of tuition and so she would be expected to pay it herself - yikes!
Okay, maybe most students don't come into cash windfalls that will cover the entire cost of college like the fictional Gilmore family did, but students do apply for and receive scholarships outside of what a college offers in its finacial aid package and colleges require students to report these scholarships. The fear many parents have is that receiving an outside scholarship will reduce the amount of financial aid a college gives their student, and If that's the case then why would anyone go through all the hassle of finding and applying for those scholarships?
I recently had the opportunity to speak with Betsy Scola of Providence College's Financial Aid Office and I asked her how colleges handle the inclusion of outside scholarship money in a student's financial aid package. "Most colleges," Scola explained, "will allow you to use outside scholarship money to reduce the amount of unmet need first."
Scola broke down a college's financial aid calculation like this: A college's Cost of Attendance includes its tuition, fees, and room & board costs. When a parent fills out the FAFSA (Free Application For Federal Student Aid), a calculation is made which determines a family's Expected Family Contribution to college tuition costs. Colleges then determine Need by subtracting the Expected Family Contribution from the Cost of Attendance. Need is therefore different at each college and each college meets financial need with a Financial Aid Package, including federal loans and grants as well as college-based grants and scholarships. These scholarships are not applied for - students become eligible for them by filling out the FAFSA and meeting the schools' academic or other requirements.
The Cost of Attendance minus the Expected Family Contribution minus the Financial Aid Package is what is considered your Unmet Need. It is up to each family to cover this cost on their own unmet need by either applying for personal loans or scholarship money.
Once a student's Unmet Need has been met, colleges will begin applying leftover scholarship funds to other portions of a finacial aid package. At Providence College, it would first reduce your federal Work Study award, and then your federal student loan amounts. Scola points out that everyone should check a college's website to determine if this is the case for the schools they are applying to, as different colleges can have different rules for incorporating outside scholarship money.
Visiting the Financial Aid Office web page is a good idea as colleges now provide Net Price Calculators and other useful tools on their sites to make estimating your college tuition bill more easily than ever before. Once you accept a college's offer of attendance, be sure to double-check with the college's policies for applying outside scholarships to your bill, and then begin the search for scholarships.
What advice do you have for paying for college? Let us know in the comments below.