Scholarships are thought of as a solution for funding college studies. But, you may not be aware of that fact that there is a scholarship penalty according to which the college reduces money that college students can get because of the external money they receive as an external scholarship. Scholarships awarded by organizations like the DAR, Wal-Mart, the Gates Foundation, and other similar awarding bodies, are just 2% to 3% of the scholarships available to students looking to study in college; but the attention they get, would lead you think that these would be a much larger percentage of the total.
Relation between External and Internal Scholarships
An external scholarship is the money that you get from organizations other than your college or university. Internal scholarships are those scholarships that you can get directly, and they are usually given on the basis of your academic record. As mentioned above, a little known fact about external scholarships is that colleges reduce the money that you are awarded if you also get an external scholarship. However, this reduction in money does not have any effect on the overall financial aid you receive, because the amount subtracted from your college scholarship is equal to the amount of the external scholarship.
For example, you are awarded a scholarship of $15,000 by a big university. You have also applied for external scholarships in your local home town and are able to win one of these scholarships, which is worth $5,000. What the university will do is that it will reduce your financial award by $5,000 to compensate the external scholarship.
Here is an example of a scholarship policy. The Northwestern University in Evanston, Illinois says:
“Because outside scholarships are a resource that you will be receiving, your financial aid will have to be adjusted accordingly. Northwestern’s policy is to reduce self-help first (subsidized loans and Federal Work-Study), and then University Scholarship assistance. Scholarship funds are generally divided and applied equally over your quarters of enrollment.”
This policy is based on the federal government’s loan program. If you are going to be awarded a scholarship, the government requires you to give its loan money back first. The higher education institutions normally follow this government policy.
Scholarships, whether external or internal, can provide the money that enables you continue your studies, so make sure that you take the time to select scholarships that you can apply for and win. Get as many applications in as possible; who knows which scholarship program brings success!