After reading Stephanie Kennedy’s blog on outside scholarships, I thought I would jump into the conversation and give some of my own perspective on using them as a valid money saving strategy for college.
Know The Limitations
Though Stephanie already mentioned that many schools will replace other grants with these scholarships, resulting in no benefit to the family, some will allow you to use them to reduce your student loans. Still others will apply them to your “unmet need”.
No school, however, will allow third party scholarships to cover a portion of your EFC (Expected Family Contribution). Colleges are never required to reward a student in a manner which will lower this all important number.
Check Out the College’s Policy on Outside Scholarships
Colleges each have their own unique policies on how they treat outside scholarships. You will want to know this information in advance before your student spends countless hours of wasted time pursuing them.
Expect Colleges to Be More Generous In the Future In How They Treat Outside Scholarships
The practice of replacing grant money with outside scholarships is called “Displacement.” According to a National Scholarship Providers Association Survey, about 60 percent of its award recipients had some portion of their scholarship monies displaced by an offsetting reduction in grants.
The Gates Millennium Scholar Program has also expressed concern over these displacement practices. Finally, there is a lot of pressure from scholarship providers on colleges to not displace their scholarships.
I agree with Stephanie that Scholarship America stands out among many of the others. They are now asking schools to sign a pledge that their scholarships will not be displaced and, furthermore, that they can be used to reduce the student’s unmet need.
So how much can you fill in unmet need through these scholarships?
That will all depend on the school’s scholarship policy and the amount of work your student is willing to put into them.
Again, be sure to do your homework!