If people are reading this next year it is quite simple. Up to cost of attendance (let’s assume $25,000) the money is deposited into the students UMD account and the student’s expenses are drawn against that account. About a month into the semester any money left in that account is sent to the student in the form of a check. That check is meant to cover books etc. that are not directly charged to the students UMD account. If total scholarships total more than $25,000 the amount that UMD puts into the account for the B/K scholarship is reduced to make the total $25,000. That money does not go to the student, UMD holds on to it. So other than prestige it does not make sense to apply for outside scholarships above the COA.
As far as taxes tuition money is not taxed. Any money over tuition is taxable and you will receive a 1099T from UMD stating what that dollar amount is. Still beneficial to receive scholarships up to full COA because obviously after taxes you still have money left over!