Third-party scholarships (in short, scholarships not granted by the school itself) are a great way to reduce the cost of education, but in some cases outside scholarships can reduce the amount of aid the college will provide. Colleges are often required to reduce aid provided based on need to students who receive third-party scholarships. Some grants as well as Perkins loans may also be reduced.

What should you do? Contact the school to determine its policies. Even if a scholarship eliminates a grant and a subsidized loan, you might be better off in the long run since scholarships don't have to be repaid – but loans, even low-interest loans – still do. Scholarships could also make it more affordable to attend certain schools, especially if the school can only offer federal student loans to lower the total cost of education. Either way, before you accept an outside scholarship, consider the overall effect on your college savings plans and other aid plans.