Can you stack your scholarships? Unfortunately, there is no simple answer to this very popular question. Most colleges and universities have created their own policies for how to award, distribute, and organize any financial aid a student receives (from the college or outside scholarships). Parents of high school juniors and seniors often ask where to find scholarships and how to obtain them, believing that more scholarships, regardless of their source, are beneficial. However, having more scholarships isn’t always necessarily a good thing. My goal in this blog is to bust that myth by explaining two different financial aid practices and their impacts on the cost of college:
Scholarship Displacement
Many schools employ scholarship displacement, and it often results in students paying more over time than they would have if they hadn’t earned an additional scholarship. I can hear how absurd that sounds as I type it, but it’s true.
Essentially, scholarship displacement is where other institutional financial aid (e.g. scholarships, grants, loans, etc.) is minimized as more outside aid is added, so the overall cost of attendance doesn’t actually change with an additional scholarship award. But since most non-institutional scholarships are non-renewable or not guaranteed for all four years, if the school displaces their institutional scholarship first, it means the student will have to continue to apply for and obtain more scholarships each year to make up the difference resulting from the lower institutional award.
Scholarship Displacement Example:
Scenario A:
Cost of Attendance: $60,000
Institutional Scholarships Awarded: $30,000 (renewable) & $5,000 (renewable)
Bottom Line Cost Annually: $25,000
Scenario B:
Cost of Attendance: $60,000
Institutional Scholarships Awarded: $30,000 (renewable) & $5,000 (renewable)
Outside Scholarship: $5,000 (only first year)
Institutional Scholarship Displaced: $5,000 (renewable)
Bottom Line Cost First Year: $25,000
Bottom Line Cost Second Year: $30,000
But even displacement practices vary by institution. At some schools, any additional aid will automatically displace loans first, then gift aid (scholarships and grants–aid that doesn’t need to be repaid ever). At others, the gift aid is minimized first. Additionally, some schools will begin aid displacement once the cost of tuition is hit, but others will displace if the financial aid exceeds the total cost of attendance (which includes tuition, fees, room, and board).
Displacement is a very common practice, and it’s important to ask the financial aid offices at each school of interest if they practice aid/scholarship displacement. If a school’s displacement policy is particularly draconian, it may not be worth spending two hours a week for a full school year applying to outside scholarships. Keep in mind, these practices also vary from student to student and are often dependent on the kind of aid (if any) that has been received, and what kind of aid the school typically provides (example: schools that meet full demonstrated need are less likely to displace gift aid first).
Scholarship Stacking
On the flip side, we have scholarship stacking. If a school allows scholarship stacking, it means the student can earn other free money without fear of reducing other forms of financial aid. We love scholarship stacking, and wish every school would allow it, but unfortunately, most do not. It’s important to be aware that institutions often limit stacking up to tuition, but not necessarily the full cost of attendance (which, once again, includes tuition, fees, room, and board). However, there are schools that not only allow stacking up to the total cost of attendance but also beyond. In these latter cases, the school often cuts a check to the student for the amount of overage.
Scholarship Stacking Example:
Scenario A:
Cost of Attendance: $60,000
Institutional Scholarships Awarded: $30,000 (renewable) & $5,000 (renewable)
Bottom Line Cost Annually: $25,000
Scenario B:
Cost of Attendance: $60,000
Institutional Scholarships Awarded: $30,000 (renewable) & $5,000 (renewable)
Outside Scholarship: $5,000 (only first year)
Bottom Line Cost First Year: $20,000
Bottom Line Cost Second Year: $25,000
There are many nuances when it comes to understanding financial aid practices across institutions, but being aware of scholarship stacking and scholarship displacement will be important when navigating financial aid.
Good luck (but I know you won't need it),
Jessica Chermak, LPC, CEP
Independent College Counselor
Co-Founder of Virtual College Counselors
