Imagine this scenario: your child applies to college and anxiously waits for a response. Finally, the exciting moment arrives when they receive an acceptance letter from their dream school, along with a scholarship offer. You can't help but feel overjoyed, and you start celebrating by busting out your happy dance. However, before you get too carried away, it's important to be aware of some scholarship facts you should know.
In this article, we will cover the essentials that every parent should know about college scholarships, such as the different types available, the policies regarding renewal, and the potential tax implications.
By the time you finish reading, you'll have the knowledge necessary to secure the best financial aid package for your child's education.
1. What is the difference between merit scholarships and need-based scholarships?
The two main types of scholarships are merit-based and need-based scholarships.
Merit-based scholarships are awarded based on a student's academic, athletic, artistic, or other achievements. Merit scholarships often have high academic standards, making them competitive but rewarding.
Need-based Scholarships, on the other hand, are awarded to families who have financial need. A family's financial need is determined by a formula using information from FAFSA or other financial aid application. These scholarships are meant to help families who otherwise couldn't afford college.
Although some colleges, like Rice University, offer need-based aid to families with high six-figure incomes.
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2. What is the difference between outside scholarships and institutional scholarships?
Most people refer to all scholarships that are used for college as "college scholarships." However, scholarships can be categorized as "institutional scholarships" and "outside scholarships."
Individual colleges and universities offer Institutional Scholarships. These scholarships may be based on academic merit, specific majors, or other criteria the institution sets.
Outside Scholarships come from various organizations, companies, foundations, or community groups. They can be based on a wide range of criteria, such as ethnicity, hobbies, or community involvement.
Understanding these different types of scholarships will help you figure out your overall financial aid strategy.
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3. Are all scholarships renewable?
Colleges use scholarships to attract students, so what a freshman receives may not be available in later years.
When looking at scholarships in a financial aid package, it's important to find out if they can be renewed. Sometimes, students and parents get so excited about getting a scholarship that they forget to ask this important question. Not all scholarships automatically continue after the first year of college.
If the scholarship is renewable, you need to know the requirements for renewing it.
Most renewable scholarships require students to maintain a certain GPA and complete a minimum number of credit hours each semester. Some scholarships may also require students to be involved in activities, community service, or other things on campus.
To avoid surprises, ensure you know what needs to be done to renew the scholarship. And encourage your child to meet or even exceed the requirements.
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4. Can I appeal my scholarship award?
If the scholarship offer your child gets doesn't meet your family's financial needs or expectations, don't worry. You can try appealing it. Scholarship amounts aren't always fixed, and colleges might be willing to reconsider if you make a good case.
To appeal, you typically need to provide supporting documentation such as pay stubs in case of reduced parent salary or medical bill receipts for unexpected medical expenses.
Sometimes, you can use a better financial aid package from another college to try and get the college to increase their offer. However, some colleges are not open to matching offers.
Appealing a scholarship can be a smart way to get more money for your child's education. It might lead to a better offer that works for your family.
>>RELATED: 5 Tips to Win Your Financial Aid Appeal
5. Can outside scholarships affect my financial aid award?
It's really important to understand how "outside scholarships" can affect your child's financial aid package from the college. Be sure to inform the college's financial aid office about any scholarship awards your child receives.
Colleges want to know about outside scholarships to see if they need to change their financial aid award. Don't worry too much about this, though, since most colleges will cut loans or family contribution first.
Some colleges have specific rules about how scholarships can be combined. The practice of stacking, for example, is allowed to varying degrees by some colleges.
Stacking means you can use scholarships from different places until they cover the cost of tuition or the total cost of attendance (including room and board). like food and housing). Each college has its own rules about this, so it's important to find out how it works at the college your child wants to go to.
Figuring out how scholarships and other forms of financial aid fit together can be tricky, so it's a good idea to talk to the financial aid office.
6. Can Early Decision (ED) affect my financial aid award?
If your child applies to colleges through Early Decision (ED), they might have a slightly higher chance of getting in. However, it could affect how much aid they receive.
ED is a type of application that binds the student to enroll at a specific college if they get accepted. If accepted, they have to withdraw all other college applications. Students are expected to make this decision long before the typical May 1 deadline most colleges have.
One downside to ED is that students give up the opportunity for a potential better offer down the road. ED can also impact the opportunities for scholarships. ED applicants may have less flexibility in negotiating financial aid packages since they are committed to attending that specific college.
Additionally, colleges don't have to give students as much merit aid, because ED means the student has already agreed to attend if accepted. Remember, colleges often use scholarships to entice students to say "yes" to them.
ED applicants should make it a priority to discuss financial aid and scholarship options with the college's financial aid office if they feel comfortable doing so.
It is important to note that although Early Decision (ED) is a binding agreement between the student and the college. However, there may be exceptions if the financial aid package does not adequately cover the family's financial needs.
In general, ED is not for students with considerable financial need, unless applying to a very generous college (one known for meeting 100% of financial need without loans).
7. Can I lose my scholarship?
Yes, you can!
Students can lose scholarships for a variety of reasons. One common reason is academic performance. Many scholarships require students to maintain a certain grade point average (GPA) to remain eligible. If a student's GPA falls below the required threshold, they may lose their scholarship.
Another factor that can lead to the loss of a scholarship is a change in circumstances. Some scholarships are contingent upon specific criteria, such as continued financial need or enrollment in a particular program. Students who receive a scholarship based on their major should notify the scholarship provider if they switch majors.
Failure to comply with the terms and conditions of the scholarship can also result in the loss of a scholarship. Not fulfilling community service, breaking rules, or disregarding other obligations in the scholarship contract can result in losing funding.
Students should stick to the scholarship provider's requirements to keep their funding during college
8. How can I avoid scholarship scams?
When looking for scholarships, it's essential to watch out for scams. Some people and groups will try to take advantage of families needing money for college. Here's how you can tell if a scholarship is real or a scam:
- Don't pay to apply: Real scholarships don't make you pay money to submit an application.
- Check out the sponsor: Look into the organization or company giving the scholarship. Usually, real scholarships come from well-known schools, businesses, or non-profit groups.
- Don't fall for guarantees: If a scholarship says you've won without even applying, it's probably a scam.
- Keep your personal information safe: Only give personal or financial information to scholarship providers if you're sure they're trustworthy.
- Use good scholarship search websites: Look for scholarships on websites like TheCollegePod or RaiseMe. These sites have reliable scholarship opportunities.
9. Are scholarships taxable?
Another important scholarship fact to know is that scholarships are usually not taxed if used for school expenses like tuition, fees, books, and supplies.
However, some scholarships may be considered taxable income if they exceed the cost of qualified educational expenses as defined by the IRS. Reportable scholarships are generally rare but require careful accounting.
To avoid any tax implications, it's best to talk to the financial aid officer at the college your child plans to attend and/or a tax advisor.
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10. Do I have to complete a FAFSA for merit scholarships?
Completing the FAFSA can help you qualify for need-based financial aid, but it's also important for securing merit scholarships. Colleges use the FAFSA to assess financial need and award merit-based scholarships.
When you submit the FAFSA, you're not only providing colleges with a snapshot of your family's financial situation but also signaling your interest in scholarships and other forms of financial aid.
Some colleges automatically consider all applicants for their merit-based scholarships even those students from high-income families. This means that even if your family's financial need is minimal, your child can still be in the running for scholarships.
So don't miss out on potential scholarship opportunities! Complete the FAFSA early to have more financial aid options for your college-bound student.
Conclusion
As a parent, it's important to understand these key scholarship facts. Some scholarships are renewable, which means they can get the money for more than one year if they meet certain requirements. Make sure you know what those requirements are.
Another thing to think about is how scholarships can affect other financial aid. Sometimes, getting a scholarship can mean less financial aid from the college. It's important to know what the impact will be and plan accordingly.
Finally, remember that planning ahead, doing research, and understanding taxes can make a big difference. The sooner you start looking for scholarships, the better.
