Is my college ripping me off?
October 28, 2010 3:40 PM   Subscribe

Is it normal for a college to not refund someone if they have paid above the cost of tuition and fees?

Before I came to school I was awarded many outside scholarships, federal grants, and I received an institutional scholarship from my college. At this point, I have no loans. It turns out that after everything has been added up, the amount of money credited to my bill is slightly above the total cost of tuition and fees, but below the cost of attendance (counting books, personal expenses, etc.). My school is telling me that I will not receive this difference, and they will instead reduce the total scholarship that they are giving me so that my amount of aid is exactly equal to the cost of tuition and fees. This seems completely unethical because they aren't actually paying for my tuition with their scholarship, they are just reducing the cost, so by cutting the aid that they are giving me, they are really just pocketing my scholarship and grant money.

Am I wrong? Is it normal for a school to selectively reduce scholarships so that they don't have to send out refund checks?

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posted by anonymous to Education (17 answers total)
Yep its normal. I know that I have to tell my university about all outside scholarships that I will be receiving and it says in really big letters on the page that any outside funds may reduce the amount of financial aid I receive from the school. I have to check a box that says "I Agree" to move on. I'm willing to bet they said this to you somewhere as well.

They aren't "pocketing" your scholarship and grant money. They are merely deciding to give you less of their money because you don't need it. They will then take their money and give it to someone else who needs it more. It isn't like it just gets put in the bank for the university to sit on.

I personally got an extra scholarship from the school about half way through the semester because they had extra funds to give out. And believe me, I needed it.

And yes, actually they are paying for their tuition with their own scholarship money. The money comes out of the scholarship account and is added to the tuition account. At least that is how I've always seen it done.
posted by magnetsphere at 3:50 PM on October 28, 2010 [4 favorites]

Well, my college has a somewhat similar approach- your total aid + your family's calculated ability to pay (in this case, an institutionally calculated variant on your FAFSA-derived Expected Family Contribution) can not be more than your total cost of attendance. In practice, this means that when I got an outside scholarship freshman year, my institutional grant was reduced. My school, however, both includes books and cost of living and so forth into the total cost of attendance they use, and at the time had a policy of "meeting all determined need." You need to closely read your school's fin aid policy.

Also, the money that they're basically writing off by giving you a grant is coming from somewhere. You're getting the same education as someone who pays full price, but professors still need to be paid, and the money that makes up the difference in price comes from donors or the endowment or the state (at a public school) or wherever. They aren't reducing the cost, they're reducing the cost *to you*.
posted by MadamM at 3:50 PM on October 28, 2010

.....but even if they refund the money, wouldn't it be to the originators of the outside scholarships and federal grants?

As I understand it, going to school costs $x. Various sources give money to you to go to the school, which amounts to nearly $x. Then the school also offers to waive the full amount of money you would otherwise owe (without the grants and scholarships) so you'll attend. It all adds up to more than $x.

Rather than contact each other originator of grant / scholarship money and tell them that they gave you too much (which the originators would then probably want back), they just lower the difference they would otherwise require of you, then waive it all together so that you can go to school with no loans and / or minimal out of pocket expenses.

Considered another way, the school reduced the amount of its scholarship to you so it would cover the gap between grants and tuition. That doesn't mean they owe you the remaining amount of a scholarship that would cover full tuition. The scholarship is a gift. Waiving tuition to entice you is one thing, but I can't imagine any school paying you (or anyone else) just to attend.

Please do clarify if it appears that I misunderstood. I did my share of running around finance offices on scholarship; it's not always easy to wrap my mind around.
posted by motsque at 3:50 PM on October 28, 2010

Do I have this right: they say they are reducing the scholarship THEY 'gave' you? If that's the case, then yeah, that's probably totally kosher. I see where you're coming from, but the scholarships most schools give out are need based, so if you don't 'need' the full amount because of other grants received, they probably are not wont to just give you some cash on top of helping you out with tuition.

It's like this kind of: I work for a non-profit. If we get a grant for a project and the project ends up costing less than the amount of the grant, we don't get to just give ourselves bonuses; we'd have to return the excess money.

Don't complain. Your insanely lucky to be going to school without taking on debt. Let the school give that money to someone else who needs it.
posted by Lutoslawski at 3:51 PM on October 28, 2010 [1 favorite]

I assume when you say "your school" is telling you, you mean the financial aid office. And I also assume that when you say "an institutional scholarship" you mean a "needs-based scholarship." There are a lot of moving parts here, but the scholarship is probably based on an "expected contribution" from you that is calculated based on your FAFSA (if you are in the US) or related application. The expected student contributions are supposed to be calculated right up to the very limit of what you can afford to contribute. If you contribute further than that, it may be that you are demonstrating that you are not as "needy" as they originally thought and have adjusted your aid downward. It may also be that the scholarship, if it is internal, does not involve money "changing hands" per se but may involve some kind of tuition waiver, such that the money is simply not there for them to give you back, meaning that the scholarship fund does not have cash available to dispense back to you. These are just speculations based on the little information you have provided. In my experience, simply contacting the financial aid office on multiple occasions to speak with different people often yields wildly* different responses, so you might simply try starting over and talking to someone else.

* Seriously, I was told that I would be dropped for insufficient progress (due to an unresolved incomplete in grad school), then told by another person that I HAD made sufficient progress (due to taking more credits than necessary) but that the incomplete would give me problems in the future, and then told by a third person that both of these are wrong and that everything is fine (this turned out to be the right answer). I have about eight stories that have a similar narrative.
posted by proj at 3:53 PM on October 28, 2010

That's normal. Usually internal scholarships are in some part need-based, and if your need is less than what they're originally prepared to offer you, they'll just offer less. Unless I'm reading wrong, you haven't paid the college anything.

The only possibility of seeing any of the extra money is if the outside scholarship organizations are willing to send you the check, presumably for books and supplies instead of sending it directly to your school. You can say that your tuition (and room, board, fees) is already covered and you instead need the money for books.

Of course, you probably won't be able to renegotiate the terms of any scholarships this semester. Sorry.
posted by supercres at 3:53 PM on October 28, 2010

Depends on the terms of the scholarship. Scholarships I got always said they could be reduced for whatever reason (though the only time it happened, was after my time, and it was because the investments for the fund that paid for the scholarships were hurt.) I never got institutional cash aid except emergency loans - everything came from the Feds (who cared about the official Cost of Attendance stuff) and private agencies (who had their own rules) and co-op reduced-cost-for-working "scholarships" from the school. Oh, and a couple of tiny "yay for you" awards mid-term, which they actually gave me checks for.

Anyway, look at the terms of the scholarship application and rules. I bet they say they'll only pay certain fees, or define "need" in a certain way that lets them do this. My employer's tuition reimbursement won't cover books or even some lab fees, for instance.

(It does seem weird to me that they're essentially holding federal grants against you, but I only went to public schools, and again, never got an institutional scholarship of this sort.)
posted by SMPA at 3:53 PM on October 28, 2010

Another thought:

Does your school have a system whereby you can add books and supplies (only from the University bookstore, of course) to a "bursar" account, and they get added to your tuition/fees/etc bill? They might be willing to use the surplus funds to cover that.

But no, they're not going to write you a check.
posted by supercres at 4:03 PM on October 28, 2010

This policy actually changed at my undergrad institution while I was there. I had a friend who was a national merit semifinalist or something like that so he got a full ride plus a stipend. He then applied for (and was awarded) a prestigious honors program scholarship, which was also a full ride plus a stipend. His first couple years, he actually made a good chunk of money for attending college. Then the university wised up and changed policy so that the sum of your scholarships could not exceed your attendance costs, and his largess dried up. Nobody was particularly sympathetic--especially those of us that paid for his "folding money" with our tuition checks.
posted by jtfowl0 at 4:08 PM on October 28, 2010

I am an accountant for a higher education institution. I was tempted to write out the accounting transactions that take place with you tuition and scholarships to illustrate the point that your school actually is paying your tuition for you.

I'm assuming that your scholarship was needs based, and the information about how the amount may vary should be in the paperwork you signed to get the scholarship. Where I work the need is much greater than the pool of funds available for scholarships. When a student needs less, it means that we have the flexibility needed to help another student out.
posted by Zophi at 4:33 PM on October 28, 2010 [2 favorites]

Yes, it is very normal for the terms of an institutional scholarship to be worded so as to only cover certain things and only after other sources of remuneration are accounted for. This is not unethical unless they are violating any terms of the agreements you made with them, but this is very unlikely.
posted by nanojath at 4:49 PM on October 28, 2010

Yep, my aid + scholarships worked the same way - I picked up a couple institutional scholarships while I was in undergrad, and my financial aid from the school was reduced accordingly.
posted by pemberkins at 5:04 PM on October 28, 2010

Yes, this is exactly how mine worked. In subsequent semesters/years when I had fewer scholarships (as some were only for freshman year), the school up'ed theirs, but basically they're not going to give you anything back unless that extra money is part of a loan that you signed for a certain amount.
posted by questionsandanchors at 5:28 PM on October 28, 2010 [1 favorite]

Totally okay. They've just offered to cover your "need", i.e. the gap between whatever money you have and tuition costs, in the form of scholarships.
posted by halogen at 6:51 PM on October 28, 2010

Normal, depressing, unethical but still "okay" by the bureacracy that is going through higher education. My university outright denied me the opportunity I earned to have a full ride by revoking the grants I'd received (which technically they shouldn't have) and instead made me take on loans to make it "equitable". Rat bastards. But, such is life.
posted by patronuscharms at 8:00 PM on October 28, 2010

*bureaucracy, excuse my inability to spell words sometimes
posted by patronuscharms at 8:00 PM on October 28, 2010

This is standard operating procedure, and exactly what happened to me when I was at UC Berkeley. Your need is estimated to be $X, and then give you whatever you need to make up the rest of $X once your other awards (grants, loans, and scholarships) are accounted for. If the other awards end up being higher than originally expected, the university reduces their award to you so that you still end up getting $X.
posted by rhiannonstone at 11:10 PM on October 28, 2010

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