FAFSA effect on Scholarships

cptofthehouse
Sun, 05 May 2013 10:56:16 +0000

As a rule, and this is only a very general rule and there are many exceptions, but AS A RULE, pure merit awards are given out by the Admissions Office in order to get the best candidates to the school and are awarded regardless of financial need. Taking a school, like the Marquis Scholarship, like Lafayette gives out, the school decides who the best applicants are, and the kid could be a Trump or have to have full costs covered to go there, and it makes no difference. Having seen such awards given over the years, to those with and without financial need, for those schools I know that seems to be the case. It does not matter if you have need or not, for many of these merit awards.

If you have no financial need, the award is all gravy. Such students’ parents just don’t have to pay as much or some parents even will let the kid keep the money or a portion of it. They were planning to pay full freight anyways. But some students apply to such schools, needing that award, since parents have the money according to fin aid statements, but may not be able to pay it or just won’t do so. In our case, we have told our kids how much we would pay, so any award like that would have to bring our cost down to that level, and then we’ll talk about what to do with any excess. Hasn’t happened yet.

But if you have financial need, what usually happens is that the award information is passed on to the financial aid office, and the bean counters there will simply take the need any such students have and reduce it by the award. If the need of such a student was $35K, the aid office now considers that student needing $15K, and will then put together a package on that basis.

If the award is big enough that it meets COA (cost of attendance), then yes, it will affect federal aid other than PELL. You can get PELL, regardless, but if you can’t borrow, as the Feds do want other awards be taken into consideration. If COA is not covered, but need is, you can only borrow on an unsubsidized basies, and your COA will be reduced by the award as well. You can’t borrow for more than COA. For example if the COA of a school is $60K and you have need of $40K, and you get an merit award of $20K, you can still get subsidized federal aid for the $20K of need still remaining. and you can also get unsubsidized loans through Staffords and PLUS (your parents can) but your COA for those loans is lowered bythat $20K merit. You can’t borrow what that is covering even on an unsub basis.