Scholarships That Don't Displace Financial Aid
And That Also Improve Your Resume
As someone that spends a lot of time in college-bound social media groups, I see many parents and students concerned with the issue of “scholarship displacement.” Scholarship displacement happens when a college reduces a student’s financial aid package because that student won an outside scholarship. The outside scholarship “displaces” the aid that the college was previously offering.
While parents and students are smart to be concerned about scholarship displacement, those concerns are often overblown. For example, if the “aid” that a scholarship displaces is a student loan, then that is an absolute win for the student! Calling student debt “aid” shows just how financially unsound our society has become. But I digress. Avoiding student debt is our primary goal, after all, so who cares if a scholarship “displaces” it?
I encourage parents and students to fully understand their college’s scholarship displacement and “stacking” (when a college allows outside scholarships to be “stacked” on top of their aid packages) policies. I also encourage students and parents to let that policy inform part of their college selection decision. Personally, we took one college off our son’s list, even though he was accepted into the college, because of their punitive scholarship stacking policy.
Having said all of that, the point of this post is to talk about a type of scholarship that won’t displace merit aid offered by colleges, and will have minimal negative impact on a student’s need-based aid. These scholarships are more properly called “contests,” and include things like essay contests, video contests, art contests, etc. Whether labeled as a scholarship or a contest, what makes these different from other scholarships is that they pay the student directly rather than sending the funds to the college.
Because the funds are sent directly to the student, it is my opinion that there is no obligation to report these “scholarships” to the college as outside financial aid. However, these funds should be reported to the college as part of a student’s income and assets. That doesn’t mean that the funds have to be reported as “scholarships.” Instead, the student might list the funds as income as a “freelance writer” or something similar. Reporting the income in this manner has the same impact as if the student earned money as a paid employee at a fast food restaurant, mowing lawns, or any other job that a student might have. It might slightly reduce need-based aid. However, the reduction is not usually one-to-one, and the student almost always comes out ahead with more money for college.
My son’s very first scholarship win was second place at our local Post for the VFW’s Voice of Democracy Scholarship. He was awarded $375 in cash, which was promptly placed into his savings account. Since then, my son has won over $12,000 in scholarships paid to him directly, making up more than 16% of his total scholarship winnings. Those funds have not only been used for traditional colleges expenses like tuition, books, and housing, but have also allowed him to buy airline tickets to fly home during short breaks from school and to pay for the gas to drive home during longer breaks.
Aside from having more money for college, another benefit of these types of “scholarships” is that winning boosts a student’s resume. Several of the scholarship contests that my son has won over the past 4 years have been related to his college major. Being able to list “National Winner” for scholarship contests related to his college major was an excellent resume enhancer when applying to colleges. Those accomplishments also help him earn things like internships, fellowships, and other fantastic opportunities.
As I was writing this post, I received an email from one of my client-students sharing photos from the award ceremony for her recent first place win for the State of Georgia in the SAR's Knight Essay Contest. In addition to a medal, Macayla received a check that she will be able to spend or save as she and her parents see fit. These funds are on top of the money she was already awarded by her local SAR Chapter. And, Macayla now goes on to compete at the national level for even more money! No matter where her essay ranks at the national level, Macayla has another feather in her cap to put on her resume and college applications.
I have already mentioned two scholarship contests in which a student can win money paid to them directly. Here are a few more to consider: