What to Do if Your Scholarships Exceed Tuition

By Rebecca Holley

Updated on September 11, 2024

Getting a lot of "free money"from scholarships might sound perfect, but it can sometimes bring unexpected problems. Some schools use a method called "scholarship displacement" or "stacking." This means that when you receive a private scholarship, the school might reduce your need-based financial aid, such as loans, grants, and work-study opportunities, by the same amount. They do this because a scholarship suggests you now have more funds, which lowers your need for additional help.

Ideally, your college's financial aid office might reduce your loans or work-study to balance things out when you win a scholarship. However, that's not always guaranteed. In some cases, a grant or scholarship from the college could be withdrawn and replaced with the private scholarship, leaving you with no net gain from winning it.

Too Much Scholarship Money? There’s a Hack for That

If you’ve found yourself in a similar situation, don’t panic! There are a few things you can try to keep more of the money you’ve won:

Leave the free money alone

Like we said, some schools might take away free money you’ve been awarded (like a grant), instead of money you have to repay or work for (like student loans or work-study). If this is the case, talk to the financial aid office about reducing or replacing student loans or student employment with your scholarship, so you still benefit from winning the money.

Increase cost of attendance

See if your school will factor in costs like a computer, transportation, or health insurance into the cost of attendance to let you keep more of your scholarship. About a third of colleges will let you do this, so it’s worth asking!

Decrease unmet need

Most schools don’t have the financial resources to meet every student’s demonstrated financial need. As a result, many students are often left with a gap between their school’s financial aid package and the total cost of attendance (also called “unmet need”). If you’re in this situation, see if your school will let you use the scholarship you’ve won to “fill the gap,” or cover your unmet need.

Defer the scholarship

If using your scholarship this year will result in losing other forms of financial aid (like a grant), ask the scholarship provider if you can defer your scholarship to a future year. The amount of financial aid you’re eligible for can vary year by year, so it might be more beneficial financially to save your scholarship for a later academic year.