I'll be starting my MSc next year, and just got informed that I won a Merit-based scholarship that covers tuition (although the school is in Israel, where tuition is heavily subsidized anyway), and also a generous monthly allowance.

I already have an advisor, (for whom I worked for the past year on a research project), and she told me she can fund an additional scholarship for me, on top of the first one. However it turns out that the amount I'll get in the first scholarship reaches the maximal amount the university allows MSc students, and exceptions need special permission.

I'm not greedy, but after 4 years of school I'm not in great financial shape, and that extra monthly sum would really help. But before I meet with whomever to get that special permission, I wanted to know what reason the university has to impose the restriction in the first place? It makes no sense to me.

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    It makes sense that the university would like to help more rather than fewer students. – Solar Mike May 22 at 15:31
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    @SolarMike True, and this makes perfect sense as an argument for an upper limit on university funded scholarships, but the money from the PI isn't coming out of the university's pocket, so what difference does it make? – just_me May 22 at 15:56
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    So, in other words, the university thinks the PI can fund you and they can then spend their scholarship money on another student... – Solar Mike May 22 at 16:48
  • Often universities may also set caps on total scholarships as a matter of policy for several reasons. As one example, back in the 1980's when income tax was first applied to graduate stipends, the STEM faculty at my university wanted to increase stipends to compensate. They lost the vote amongst the faculty since the non-STEM departments could not increase their stipends. For better or worse, the feeling was that nobody wanted to get into a bidding war for grad students between the different faculties. – Jon Custer May 22 at 20:36

It's likely not coming out of the PI's personal pocket but out of a grant they have.

The purpose of that grant is probably to advance some research project. Paying you double is probably not an efficient use of those funds when they could instead be used towards 1 more student. One of the things universities do is to administer grants and see that the funds are spent according to the goals of the university and granting organization.

Additionally, the merit scholarship you received is not coming out of nowhere. I don't know exactly where that money is coming from in your specific case, but in my experience these scholarships are often endowed from some donation to a university/professional organization/some other administering body. Those donations are typically to further some cause, such as education in a particular field. For example, a longtime politician and businessman just gave a large donation to my institution to fund graduate students researching public policy.

Giving these funds to someone who is already funded in another way doesn't really advance the educational goal of the donation intended to increase/support scholarship in some area. If I was a donor, I'd want to know that my donation was going to lead to more research.

In my experience these limits also apply to graduate student work (i.e., assistantships), not only to scholarships, for some of the same reasons. If a student is already funded by scholarships, and a teaching assistant position is available, the university likely prefers that the position is filled by a student who is without full funding rather than someone who already has a funded position.

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    If paying double is half as efficient, according to your logic paying half would be twice as efficient, and so fourth. Your answer is wrong, because it ignores the fact that demand for scholarships depends on the pay level. – Anonymous Physicist May 23 at 10:27
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    @AnonymousPhysicist You are making a straw man argument. I am talking about funding students at the normal compensation rate for graduate students. Paying one student double means 1 fewer student. Setting the actual standard stipend level is a completely separate consideration. – Bryan Krause May 23 at 13:52

The reasons are not very good.

  1. Pay limits discourage students from asking for more money.
  2. Pay limits create a perception of fairness, but not a reality of fairness.

If students seek pay from multiple universities, and select the one that offers them the best financial package, then they will be paid according to the equilibrium of supply and demand. The real pay limit is not what one university will pay; students can get around that limit by moving to another university. If a university sets its pay limit too low, it will soon be without good quality students.

  • This answer does not apply in cases where governments or union agreements set pay. – Anonymous Physicist May 23 at 10:28
  • Thank you for your answer. I believe you are right and the "fairness" argument is vary likely to be a major factor – just_me May 23 at 12:34

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