Imagine you get a college financial aid offer that says your cost after financial aid will be $12,500. You got an outside scholarship for $2500. Score! You just reduced your cost to $10,000, right?
Maybe, maybe not.
Generally, scholarships get reported to the school you choose. The foundation often sends the check directly to the school. If a school allows “stacking,” they will apply the money to the portion you owe. Awesome. That’s the best-case scenario.
But that doesn’t always happen. Some schools use outside scholarships to save THEMSELVES money. They collapse (often called displacement) the money into their existing offer, leaving you with the same $12,500 bill. I think it is robbery.
How will you know? You have to ask each school. They won’t volunteer the information, so email them and ask. Every school sets its own policy regarding outside scholarships.