“Stacking” Scholarships

By Karen Treon, Senior Editor & College Parent

Students receiving significant financial support for college should understand "scholarship stacking" - when multiple scholarships and grants are combined.

Here's an illustrative example: Suppose Susie Student attends a college with a $45,000 annual Cost of Attendance. She receives:

• Merit aid scholarship: $20,000

• Pell Grant and state grant: $23,000

• Local Garden Club scholarship: $5,000

This totals $48,000, which is $3,000 over her Cost of Attendance. Most schools will then reduce her need-based financial aid by either $3,000 or $5,000.

Why? Because the need-based scholarships were originally awarded based on a calculated financial need. The additional $5,000 Garden Club scholarship effectively reduces her demonstrated need. Schools aim to redistribute financial aid to where it is most required, so this extra funding will likely be reallocated.

This is a simplified scenario, but it demonstrates how scholarship stacking works and why schools adjust financial aid packages when students receive additional scholarships.

There are many different variations on this. Importantly, some schools prohibit stacking of scholarships even if the student is receiving less than the Cost of Attendance. Still others allow stacking up to the Cost of Attendance. As with so many other things, IT DEPENDS ON THE SCHOOL. Students and families should make sure they understand the policies of the school the student is attending.

How do these situations play out? Let’s stick with Susie Student’s example:

• What if Susie Student’s school doesn’t prohibit stacking, and Susie Student receives more than the Cost of Attendance? This is a very unlikely scenario, but if it were to happen Susie Student might find herself with unexpected taxable income. She could also find that when the Garden Club sends the scholarship check to the school bursar’s office (as happens with most scholarships), the school says they can’t accept it because it would exceed the Cost of Attendance. 

• What if Susie Student accepts the Garden Club scholarship, and her school reduces her financial aid due to their policy on scholarship stacking? In this case Susie might find that her freshman year is covered, but that the Garden Club scholarship isn’t renewable while the grants would have been. Again, there are a lot of factors and variables involved here but Susie Student should talk this through with the financial aid office at her school. It’s almost always better to prioritize renewable awards and grants.

We see this issue come up more than you might expect. If students are receiving a financial package from a school and also applying for outside scholarships, it is worth their time to contact the school they are attending to ask about stacking and make sure they understand the policy. Not understanding it can lead to a lot of wasted time and frustration.