What to Do if Your Scholarships Exceed Tuition

By Rebecca Holley

Updated on July 3, 2024

Despite seeming contradictory, receiving an abundance of "free money" through scholarships can introduce unanticipated challenges. Some educational institutions employ a tactic called "scholarship displacement," also known as "stacking." This practice involves reducing any need-based financial aid initially provided by the school— like loans, work-study opportunities, and grants — once a private scholarship is obtained. The decrease usually matches the scholarship amount received. The reasoning behind this approach is that attaining a scholarship implies a rise in your available funds, leading to a decreased demonstrated financial need for extra assistance.

Hopefully, your school’s financial aid office will see that you’ve won a scholarship and will reduce your loans or work-study to compensate…but that’s not always the case. A grant or scholarship you were awarded by the college, for example, might be taken away and replaced with the private scholarship, so you essentially gain nothing by 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.