July 25, 2021

Mark A. Stein: Scholarships beat student loans; here’s how to find them | News

Mark A. Stein: Scholarships beat student loans; here’s how to find them | News

Scholarships and grants can slash the cost of attending a private university by nearly half. They also can reduce the average cost of attending a state college by almost 40%, on average, according to the National Center for Education Statistics.

Colleges and universities routinely offer students “financial aid” packages that include some scholarships and grants, but big loans as well. Scholarships and grants are much better because they are gifts that don’t have to be paid back, unlike loans.

Before signing up for a student loan, exhaust all opportunities to secure as many scholarships or grants as you can. There are thousands of them out there, ranging in size from $250 to $40,000, but they can be hard to find because they come from a multitude of sources — community groups, employers, individuals, nonprofits, private companies, professional and social organizations, religious groups, and even colleges and universities themselves.

The hunt is complicated by the conditions placed on many scholarships. Some are for students studying certain majors, or students who come from a particular state or attend a particular university. Some are for veterans or children of active military personnel, others for cancer survivors or the children of people who died from cancer. A few are only for students with certain family names, such as Gatling or Zolp. One is limited to convicted criminals living in Kalamazoo County, Mich., who can demonstrate how they overcame adversity.

Use a scholarship search website. There are dozens, including one sponsored by the U.S. Department of Labor and another run by the College Board. You can find them by typing “scholarship search” into your browser. Popular private search sites include Fastweb, Peterson’s, Sallie Mae and Scholarships.com.

Beware of fees, scams and of your data being sold. Some sites charge a fee to conduct a search or a fee to process an application. Several have been paid to steer potential students to for-profit institutions with high tuition and low graduation rates. Even a few well-regarded sites sell your profile information to nonprofit colleges or companies that make student loans, which can open the floodgates of marketing messages and mail.

“Never pay money to search for scholarships, or to apply for a scholarship,” says Mark Kantrowitz, a financial aid expert. The Federal Trade Commission, which investigates complaints against scholarship-finding sites, recommends searching online for a website’s name and the words “complaint” and “scam” to see what others have said about it.

Start early — even before you decide which colleges you might apply to. Wait to apply for scholarships until after you apply to college — or, worse, until you are accepted — and you will miss deadlines, Kantrowitz says. “Many of the best scholarships have deadlines in October, November and December.”

One of the country’s most generous scholarship programs, run by the Jack Kent Cooke Foundation, stopped accepting applications for the coming school year back on Oct. 31. The Cooke Foundation provides as much as $40,000 to students entering their first year of college. It also gives grants to community college students who are transferring to four-year institutions.

The application deadline at another generous nonprofit, the Ascend Educational Fund, was in February. Ascend gives $2,500 to $20,000 to immigrant students and children of immigrants who graduate from a New York City high school.

Small scholarships add up. Most range from $500 to $2,500, which is only a small fraction of the cost of college. However, there are few limits on how many scholarships you can pursue and accept, and technology is making it easier to apply for a lot of them.

One search site, Going Merry, does you the favor of bundling applications with similar requirements, such as an essay on a particular topic, to make it easy for students to apply for several at the same time.

Will students receive all or even most of the scholarships they apply for? No. Despite misleading malarkey about billions of “unclaimed” scholarships every year, very few go uncollected, and the competition is real. But you can tilt the odds a little in your favor by taking advantage of the fact that many applications are similar, and you can complete several in an evening and a dozen over a weekend — even without using Going Merry-style techno-bundling, Kantrowitz says.

“Let’s say you have a one-in-10 chance of winning a $500 scholarship, and it takes you an hour for each application,” he says. “So, 10 applications take you 10 hours, and you have pretty good odds of winning a $500 scholarship. That works out to $50 an hour. I don’t know any secondary-school students who can earn $50 an hour doing something legal.”

Even if you don’t land a full ride, remember that every scholarship dollar you receive is one less dollar to be borrowed and repaid with interest to realize your college education.

( Rate.com/research/news covers the worlds of personal finance and residential real estate.)

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