<p>My friend applied to a school early action. He got 17,000 financial aid, and $2500 stafford loan. He tells me the school said that if he got any scholarships less than $2500, they would go toward paying off the loans. If he got more than $2500 in scholarships, they would take money away from his financial aid…ie…he would only get 16,500 a year if he got 3000 in scholarship money. does this make sense? i’ve never heard of it before.</p>
<p>It makes sense and is pretty much common practice at many colleges. Your friends aid package has 2 components:</p>
<p>The self help aid (student loan) $2500
College Scholarship/grant aid $17,000</p>
<p>Total aid $19,500</p>
<p>So if your friend get an outside scholarship of $2500 or less, it will frist be used to reduce his self help aid (pay off his loan) Say he gets a 2500 scholarship
his package will be as follows:</p>
<p>Outside scholarship $2500
College scholarship $17,000</p>
<p>Total aid $19,500</p>
<p>Should he get more than $2500, the school will then reduce the their grant aid, especially if they have met 100% of his demonstrated need. </p>
<p>The school is not going to let him make money. so any extra money will go back to their scholarhip fund hopefully for someone else. But just because his grant aid is going to be reduced, that should not stop him from seeking outside scholarhips, becasue it would be great to graduate with no debt.</p>
<p>Okay, I’m not really familiar with financial aid, so thank you.</p>
<p>The only thing is, he did not get 100% of need, since this school only covers 67%, so he was hoping he could add to that, but I guess not. That’s why I don’t think it’s totally fair.</p>
<p>Replacing loans with outside scholarships is indeed a common practice. </p>
<p>If your friend obtains additional scholarships, he may ask the donor to write a letter to the school stating that the scholarship cannot reduce the finaid award if the school does not meet 100% of need. This procedure does not have any guarantee to succeed, but it may help start a discussion between the financial aid office and the private donor. This is especially helpful for multi-year awards. </p>
<p>It is not uncommom to reach a point where outside scholarships make no difference in the bottom line cost of attending.</p>
<p>If the aid is need-based it would be a zero sum game. Scholarships are still way better than loans. Paying back school loans is a bit$$.</p>