The Impact of Outside Scholarships

By Thomas McWhorter

  • March 11, 2022
  • 2 min read


Mother and teenage daughter baking together in the kitchen

Tom McWhorter

Thomas McWhorter
Dean of Student Financial Services
Northeastern University

Can a scholarship affect my financial aid?

It could. Because all outside scholarships need to be reported to the colleges you’re applying to, they could impact financial aid. But in most cases, the student still benefits. Here’s why: A student’s financial aid package (including outside scholarships) cannot exceed their financial need.

Some colleges meet each student’s full financial need using a combination of grants, loans, and work-study. Any additional aid would “over award” the student. So if a student receives an outside scholarship, the college would adjust their award to make room for the additional funds.

How a college adjusts its award depends on the institution. In most cases, the financial aid office will reduce the least favorable funds first (like loans or work-study) before getting to grants and scholarships. In this case, the student’s free money from an outside scholarship is essentially replacing the money they would have had to repay or earn through work-study.

At my previous institution, USC, which participates in Private College 529 Plan, we may have also worked with the student to see if there were any eligible expenses greater than or not covered in our Cost of Attendance (COA), like housing or a one-time computer purchase. This would allow us to increase the student’s COA and make room for the additional scholarship.

For institutions that are not able to meet the full financial need for all students, outside scholarships can help fill any unmet need before impacting other funds in the award.

Since policies vary from one college to the next, it’s best to check with each school directly.

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