How an outside scholarship changes your aid offer

Why the aid office counts outside money

Federal rules require the aid office to count scholarships from outside groups when it builds your aid. Your total aid, including those awards, cannot be more than the cost of attendance the college sets. Aid based on financial need also has to stay within your need, which the office figures from the cost of attendance, the Student Aid Index and the other aid you hold.

When an outside award would push you over either limit, the office has to reduce something. That reduction is often called scholarship displacement, and each college writes its own policy for how it happens.

What the office may reduce

Many colleges lower loans or work-study first, which leaves grants in place. Others reduce the college's own grant, and a few spread the change across several types of aid. Some states have laws that limit how colleges there reduce aid when a student brings in an outside scholarship, so ask the aid office whether such a rule applies.

The college's policy is usually written on its aid website or in its financial aid handbook. If the policy lowers your college grant by the full value of the outside award, the outside money replaces aid you already had. Ask the office how the award would change your offer before you accept it.

Working with the sponsor

Some sponsors allow their money to be split across terms or held for a later year, and some let it be used for books or a required computer. Ask the sponsor what flexibility it allows, then ask the aid office which choice keeps more of your other grants. A short email to each, kept on file, avoids confusion later.

Report each award on the form or portal the aid office uses, with the sponsor's name and the amount. Expect a revised offer once the office adds it. If something on the revised offer looks wrong, contact the office promptly and ask for an explanation.