Don’t Fight the College Bill Inferno With a Squirt Gun

When pursuing college financial aid, the first thing most people think of is a scholarship.

Don’t get me wrong. Scholarships can be great. There’s nothing wrong with scholarships.

Except for the fact that they’re relatively puny. 

Before I go any further and people get their bloomers ruffled, let me explain what I mean when I say “scholarship.” What I’m referring to are local scholarships – from the Rotary Club or Kiwanis or Women’s Club or Knights of Columbus or Daughters of American Revolution, etc.

These awards are well meaning and are a wonderful pat on the back to receive. But most average between $500 - $1,000. Certainly nothing to ignore. But with many colleges costing $200,000 to $250,000 over four years, it’s going to take a boatload of $500 scholarships to make a dent.

Here are the numbers: private scholarships make up only 3% of all the money that exists for college funding.

Most of the remaining 97% is comprised of federal need aid and college merit aid. Need aid is the money you qualify for by filling out the FAFSA (Free Application for Federal Student Aid) form. Merit aid is the money that comes from college coffers – mostly endowment money. Federal need aid and college merit aid total in the billions. 

Families would likely benefit more from trying to attract a financial aid package from their school rather than spending time trying to win small scholarships.

A recent ABC News story had this to say: “Advisers estimate millions of dollars are left on the floor in financial aid money every year because families don’t get everything they’re eligible for.” My own experience confirms this. Many families who attend our Cash For College workshops are stepping over dollars to pick up pennies. Because they don’t know the rules, they miss out on aid that could be and should be theirs.

This scenario can easily be avoided by finding out which colleges and universities have a good history or giving generous financial aid packages.

The key is, don’t procrastinate. Memorial Day officially kicks off the summer season. As the weather starts getting nice, people have a tendency to procrastinate until the summer ends. Don’t wait until your student’s senior year commences to start your college planning. Since the financial aid your child will be awarded is based on the current tax year, it is imperative that you start your planning now.

Failure to do so will cost you lost opportunities and maybe a lot of money.