By tkrause

Did your grandfather ever play the disappearing quarter game with you? You know the trick. He takes a quarter, shows it to you, and magically makes it disappear. Then, seconds later, it reappears behind one of your ears. It may be a fun trick when you’re a child, but not so much when you get to college. Unfortunately, you may experience the old “now you see it, now you don’t” parlor trick when it comes to college financial aid. That’s why it’s so important for you to understand how outside scholarships and other gift aid may affect your financial aid package.

Best scenario: nothing changes

There’s this magic little number called Cost of Attendance (COA), and that is the threshold for the amount of financial aid you may receive per year. If you’re attending a school with a high COA, chances are pretty good that any outside scholarships and grants you receive won’t change the financial aid package offered by your college. In fact, it may even help you keep more money in your personal bank account.

Good scenario: less student loans

It’s not uncommon for colleges to shuffle around your financial aid when you receive outside scholarships and grants, especially if you are already receiving a financial aid package that meets 100 percent of your COA. But, thankfully, most schools have a heart and will actually decrease the amount of the student loans offered by exactly the amount of outside aid you have been awarded. This means you will graduate with less student loan debt, which is always a good thing.

Worst-case scenario: less institutional aid

Unfortunately, not all colleges handle outside financial aid in the same fashion. There are actually some schools that will decrease the amount of institutional grants and scholarships by the same amount of outside aid you have received. Their reasoning usually falls along the lines of gifting the aid to another student who has not been fortunate enough to receive any additional assistance. No matter how they spin it, you’ll still feel like someone stole your money and gave it to a stranger.

There’s a silver lining … well, sort of

Regardless of which scenario plays out, there’s one thing to keep in mind: you haven’t actually lost any financial aid. It’s simply been diverted to another location. If your award package was worth $22,000 prior to winning the outside aid, it will still be worth $22,000 (or more). The only difference will be where the money is coming from and how much you may owe once you graduate. The best way to avoid any harsh feelings toward your financial aid office is to understand its outside financial aid policy. If you can’t find it on your school’s financial aid website, call the office and ask about it. You may even have a say in how your money is redistributed, but you won’t know unless you ask.