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Video related to this article is available below.Issue date: 8/28/08 Section: News
Scholarships can reduce aid
Money awarded outside Penn can be deducted from students' grant money
Alyssa Schwenk
Although winning a slew of scholarships in high school sounds like a great way to fund a college education, a combination of federal regulations and institutional policies often prevent students from seeing where their money goes.
If the total amount of scholarship money exceeds $300, that money must go toward reducing need-based financial aid awarded by the school, according to Mark Kantrowitz, director of advanced projects for the scholarship-searching Web site FastWeb.com.
At Penn, which will switch to no-loan financial-aid packages starting in fall 2009, these "outside scholarship" earnings first go toward a student's expected contribution, typically comprised of work-study hours, summer savings and, through this academic year, a student loan, said Bill Schilling, director of student financial services.
"Since we meet [a student's] full need, we have to make an adjustment when an outside scholarship comes in," Schilling said, adding that the grant portion of a student's aid package - which does not need to be repaid - is only affected once other portions of a student's contribution are eliminated.
Some problems arise, however, when students attend schools that can't afford to give as much grant money as Penn does, Sally Rubenstone, a senior advisor to college advice Web site CollegeConfidential.com, said.
In some instances, according to Rubenstone and Kantrowitz, outside scholarships may first be applied directly to a student's grant package in an effort to spread the financial-aid net to cover more students.
Rubenstone considers this "typical college outside-scholarship policy [to be] one of the worst secrets in college admission," adding that many parents and students are "blindsided" when they see how their scholarships subtract from their aid.
At Penn, the upcoming switch in the financial-aid policy will mean a change in the application of scholarship funds, Schilling said.
Because aid packages will no longer include loans, outside scholarships will only replace a student's summer contribution and work-study allocation before beginning to replace grant aid.
If the total amount of scholarship money exceeds $300, that money must go toward reducing need-based financial aid awarded by the school, according to Mark Kantrowitz, director of advanced projects for the scholarship-searching Web site FastWeb.com.
At Penn, which will switch to no-loan financial-aid packages starting in fall 2009, these "outside scholarship" earnings first go toward a student's expected contribution, typically comprised of work-study hours, summer savings and, through this academic year, a student loan, said Bill Schilling, director of student financial services.
"Since we meet [a student's] full need, we have to make an adjustment when an outside scholarship comes in," Schilling said, adding that the grant portion of a student's aid package - which does not need to be repaid - is only affected once other portions of a student's contribution are eliminated.
Some problems arise, however, when students attend schools that can't afford to give as much grant money as Penn does, Sally Rubenstone, a senior advisor to college advice Web site CollegeConfidential.com, said.
In some instances, according to Rubenstone and Kantrowitz, outside scholarships may first be applied directly to a student's grant package in an effort to spread the financial-aid net to cover more students.
Rubenstone considers this "typical college outside-scholarship policy [to be] one of the worst secrets in college admission," adding that many parents and students are "blindsided" when they see how their scholarships subtract from their aid.
At Penn, the upcoming switch in the financial-aid policy will mean a change in the application of scholarship funds, Schilling said.
Because aid packages will no longer include loans, outside scholarships will only replace a student's summer contribution and work-study allocation before beginning to replace grant aid.
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Mark Kantrowitz
posted 8/28/08 @ 8:18 AM EST
To clarify the $300 figure, in case this article is being read by students who attend colleges other than the University of Pennsylvania: When total financial aid, including outside scholarships, exceeds financial need by more than the overaward tolerance of $300, the college must reduce need-based aid until the total drops under financial need. (Continued…)
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