Wednesday, June 9, 2010

Day 3: What happens to your aid package with scholarships

Yesterday I spoke about going after small scholarships. This post talks about what happens when you get a small scholarship. Today's post might counteract everything I've said so far.

So you've applied for scholarships -- and won $5,000. That's terrific. The money may be sent directly to you or to your school depending on the organization. Most colleges will have you report that outside scholarship to them. And then what happens? Well many schools will reduce your financial aid package accordingly. They won't attack the precious grant money at first. They'll usually reduce the "self-help" portion first. Self-help usually includes expected summer earnings and work study. Some people like not having the work study -- why not just have $3,000 in your pocket instead of working all year -- but if you want to have a good campus job, not having work study will screw you. Wanted that cool (paid) research assistant position? Sorry work study only. The summer earnings contribution is usually somewhere in the range of $2,300. So let's say you surpass $5,300 in outside scholarships. Good for you, but your need based aid will just go down. So you really aren't helping yourself out of the hole very much.

For example I got about 10,000 in aid last year. With my contribution, I would have had to surpass $12,000 in outside scholarships to make a meaningful dent in my parent's contribution.

So is it worth applying to dozens of small scholarships in the hopes of reducing your financial burden? In reality probably not. Though they add up, these private scholarships aren't a realistic way to fund an education. It would be nice to have a few thousand dollars in your pocket to deal with expenses like books and maybe technology (think: laptop). Most of these scholarships are not renewable. They are one time deals. So even if you did manage to take a substantial bite out of your family's contribution in one year, there's no way of telling if you'll be able to pull off the same feat for the next year.

By all means pursue small scholarships though. If there is only a small gap that you need to fill, you'll probably have a lot of luck, and they will be quite helpful to you. But if your need extends into the tens of thousands of dollars, better luck elsewhere.

Happy Trails,

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