I would much rather have an $8000 outside scholarship than $6000 in need based grant, work study, and a loan.
I’d also rather have an $8000 outside scholarship than an $8000 need based grant from the school. Even though it is the same net to me, I just feel better earning the scholarship (as long as it is just a few essays) and have the school keep its money for other things that will improve my education. For my kids, they got to say “Yeah, I earned this merit scholarship” rather than “Yeah, my mom is poor so they gave me some money.” Vanity plays a part.
There are also times it works out that you get both. Usually school based merit isn’t reduced by outside scholarships so you get an $8000 outside merit award and an $8000 school merit scholarship, you get to keep them both. There are some very lucky (and smart) kids going to Florida schools who get a full ride from the Benacquisto scholarship, then they get to keep, cash in pocket, any other money. If they receive need based aid from their schools, it most likely will be used to pay the bill first and then the Benacquisto will be refunded.