Ethics of Outside Scholarships

swimcatsmom
Fri, 06 Jul 2007 14:28:52 +0000

I still think they have a legal and ethical obligation to report the outside scholarships, but I don’t understand the logic that treats investment income in the name of the child more favorably than the proceeds of an outside scholarship.



I don’t think FAFSA differentiats between earned and unearned income. However I would think for the majority of students the income is probably earned income (though maybe I am basing this on most of the students I know none of whom have large sums of unearned income). Any student who is getting more than $3000 in unearned income will have assets that probably exclude him from getting any financial aid anyway. Penalising students at 100% of what they earn would discourage them from working at all so I think the logic is directed toward that majority rather than the minority with unearned income. Personally I think the $3000 income protection allowance is a little low for those students who have to work to pay part of their way through college.

The logic of scholarships being treated differently is still (in my opinion) that scholarship money is awarded specifically to pay for college. Financial aid is to help pay for the portion of college the family cannot afford to pay for (the problem is that sometimes a families idea of what they can afford and the schools idea of what they can afford differ).