What to Do if Your Scholarships Exceed Tuition

Receiving too much free money doesn’t seem like a problem, but when it comes to scholarships and college expenses, it can be. Some schools practice what’s called “scholarship displacement,” (also called “stacking”) which is when any need-based financial aid you’ve been awarded by the school – like loans, work-study, and grants – is reduced after winning a private scholarship, usually by the same amount of however much money you’ve received in the scholarship. This is because winning a scholarship makes it look like you have more money available to pay for school, so your demonstrated financial need decreases.

Hopefully, your school’s financial aid office will see that you’ve won a scholarship and will reduce your loans or work-study to compensate…but that’s not always the case. A grant or scholarship you were awarded by the college, for example, might be taken away and replaced with the private scholarship, so you essentially gain nothing by winning it.

Too Much Scholarship Money? There’s a Hack for That

If you’ve found yourself in a similar situation, don’t panic! There are a few things you can try to keep more of the money you’ve won:

• Leave the free money alone

Like we said, some schools might take away free money you’ve been awarded (like a grant), instead of money you have to repay or work for (like student loans or work-study). If this is the case, talk to the financial aid office about reducing or replacing student loans or student employment with your scholarship, so you still benefit from winning the money.

• Increase cost of attendance

See if your school will factor in costs like a computer, transportation, or health insurance into the cost of attendance to let you keep more of your scholarship. About a third of colleges will let you do this, so it’s worth asking!

• Decrease unmet need

Most schools don’t have the financial resources to meet every student’s demonstrated financial need. As a result, many students are often left with a gap between their school’s financial aid package and the total cost of attendance (also called “unmet need”). If you’re in this situation, see if your school will let you use the scholarship you’ve won to “fill the gap,” or cover your unmet need.

• Defer the scholarship

If using your scholarship this year will result in losing other forms of financial aid (like a grant), ask the scholarship provider if you can defer your scholarship to a future year. The amount of financial aid you’re eligible for can vary year by year, so it might be more beneficial financially to save your scholarship for a later academic year.

Want to learn more? See how our parent site, Edvisors, tackles this question.