Ethics of Outside Scholarships

swimcatsmom
Fri, 06 Jul 2007 13:20:56 +0000

Are you saying the outside scholarships reduce need based aid dollar for dollar and that other income in the name of the student reduces need based aid 50 cents on the dollar after the first $3,000 of such income?



Yes. The 50% of the income is reflected directly in the EFC. The scholarship money is not in the EFC but has to be reported to the college and will directly reduce the financial aid.



And that additional other assets in the name of the child reduce the need based grant by 20 % of the assets each year?



Yes - under FAFSA student assets (of the financial sort - not cars etc) are assessed at 20% towards the EFC. Not sure what you mean by ‘additional other assets’. Assets and income are reported and treated seperately on FAFSA. But this is where students need to be careful as there an element of ‘double dipping’ here - if they have saved some of the income it becomes an asset. For instance - if they earn $2000 over the protected allowance then $1000 goes to the EFC from income reported on FAFSA - if the $2000 is in the bank on the date they file FAFSA then 20% of that goes to the EFC from assets reported on FAFSA. So pay anything that needs paying before filing FAFSA.